Xtreme Drilling and Coil Services Reports 1st Quarter 2016 Financial and Operating Results and Appointment of Director
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E-mailCALGARY, ALBERTA -- (Marketwired) -- 05/04/16 -- Xtreme Drilling and Coil Services Corp. ("Xtreme", the "Company") (TSX: XDC) announce first quarter 2016 financial and operating results. It is anticipated that filing will take place on SEDAR of interim Consolidated Financial Statements as well as Management's Discussion and Analysis for the three months ended March 31, 2016 by May 6th, 2016.
Q1 2015 Highlights
(amounts in thousands of Canadian dollars, unless otherwise noted)
-- On April 27, 2016, Xtreme and Schlumberger signed an agreement for the
sale of Xtreme's XSR Coiled Tubing Services Segment for $205,000. The
agreement contemplates the sale of substantially all of the assets of
the XSR segment, including the operating units and related equipment,
inventory and consumables, and related patents and intellectual
property, as well as customer lists and the transfer of rights under
contracts held by the XSR business segment. Assets excluded from the
sale include real property and land belonging to the XSR segment.
Xtreme's Coiled Tubing Services Segment includes well intervention
services in the United States and coiled tubing drilling in Saudi
Arabia. Xtreme will be retaining its XDR Drilling Segment and its fleet
of XDR rigs.
-- The operating units and related equipment, inventory and consumables,
and related patents and intellectual property have been presented as
"Assets of disposal group held for sale" on the Company's consolidated
statement of financial position for the period ended March 31, 2016, in
anticipation of the sale. There are no liabilities contemplated to be
assumed as part of the transaction. The earnings of the Coil Services
Segment for the first quarter of 2016 have been presented on the
Company's consolidated statements of (loss) income as discontinued
operations.
The information below is presented for both continued and discontinued operations on a combined basis for purposes of comparison with prior periods. Related amounts in the financial statements attached may differ.
-- Adjusted EBITDA was $9.2 million in the first quarter of 2016, down from
$9.9 million in the previous quarter. Adjusted EBITDA margin as a
percent of revenue increased in the first quarter of 2016 to 26.1% from
21.8% in the fourth quarter of 2015.
-- Revenue of $35.4 million in the first quarter of 2016, a decrease of 22
percent from $45.4 million in the previous quarter. XDR revenue
decreased to $16.3 million in the first quarter of 2016, from $23.4
million in the fourth quarter of 2015. XSR revenue decreased to $19.1 in
the first quarter of 2016, from $22.1 million in the fourth quarter of
2015. The decrease in revenue for the period was primarily a function of
decreased operating days and utilization in the US Drilling Segment.
Total operating days across the Company decreased to 894 for first
quarter of 2016 as compared to 1,324 in the fourth quarter of 2015.
-- For the first quarter of 2016, overall revenue per operating day
increased by 15% to $39,600 from the prior quarter, driven primarily by
mobilization and standby revenue in India. XDR drilling revenue, less
India revenue, per day decreased by 25% during the first quarter to
$18,790 while XSR coiled tubing revenue per day decreased by 5% during
the first quarter to $53,778.
-- For the first quarter of 2016, the Drilling Segment achieved utilization
of 30% on 565 operating days. This was comprised of a 32% utilization
rate for the 16 rig US XDR fleet, 0% for the three rig Canadian XDR
fleet and 52% for the two rigs demobilizing from India. The two XDR rigs
in India ceased operations in December 2015, but earned standby revenue
while mobilizing back to the US.
-- For the first quarter of 2016, the Coil Services Segment achieved
utilization of 65% on 329 operating days. This was comprised of a 98%
utilization rate for the two XSR units in Saudi Arabia and a 46%
utilization rate for the five actively marketed XSR units in the US. Not
included in the total Coil Services utilization were four additional
units that are currently idle and not marketed in the US.
-- The Drilling Segment (which includes US, Canada and India) operating
profit decreased to $5.5 million in the first quarter of 2016 as
compared to $7.5 million in the previous quarter. This was driven
primarily by lower revenues in the US segment. Overall operating margin
in the first quarter of 2015, increased to 33.9% in the Drilling Segment
as compared to 31.9% in the previous quarter. The Coil Services Segment
(which includes US and Saudi Arabia) operating profit increased to $8.3
million in the first quarter of 2016 as compared to $7.8 million in the
previous quarter.
-- Total capital expenditures were $3.2 million during the first quarter of
2016, up from $2.8 million in the previous quarter. The increase is
attributable primarily to maintenance capital expenditures. Currently
the Company anticipates that 2016 capital expenditures will total $8
million and will be funded through operating cash flow.
-- During the first quarter the Company recognized $1.3 million in early
termination revenue on take or pay contracts and $5.1 million in
mobilization revenue on the two drilling rigs that moved back to the US
from India. The Company also recorded $383k in severance expense during
the quarter.
-- The Company finished the first quarter of 2016 with $96.2 million in
total debt and $90.2 million in net debt (total debt less cash). The
funded debt to EBITDA ratio was 1.9x and the net debt to EBITDA was to
1.8x. This is an increase from 1.7x and 1.5x respectively at year end
2015. On a US Dollar basis, in which the Company primarily borrows, the
funded debt decreased $3 million USD during the first quarter of 2016 to
an ending balance of $75.0 million USD.
-- Currently the Company has four of 21 XDR rigs earning revenue and seven
of eleven XSR units operating. At the end of the quarter, the Company
had approximately 675 days contracted under term contracts across the
fleet.
-- As a result of the optionality and flexibility provided through the
completion of the announced transaction, the management and Board of
Xtreme will be reviewing all available strategic alternatives available
to Xtreme which may include potential acquisitions, merger or
combination, international growth program, sale of Xtreme or its assets,
return of capital via a dividend, a substantial issuer bid or a
combination thereof.
Selected Quarterly Financial Information
Mar 31, Dec 31, Sep 30, Jun 30,
Three months ended 2016 2015 2015 2015
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Revenue(1) 35,395 45,438 52,238 53,668
Adjusted EBITDA (1) 9,248 9,911 15,444 15,036
Adjusted EBITDA as a percentage of
Revenue(1) 26% 22% 30% 28%
Adjusted EBITDA per share (1) -
basic ($) 0.11 0.11 0.18 0.18
Net loss(1) (3,734) (21,728) (48,595) (776)
Net loss per share(1) - basic ($) (0.04) (0.26) (0.59) (0.01)
Capital assets(1) 410,985 446,417 445,591 473,030
Total assets(1) 458,987 512,226 528,120 567,050
Net debt(1) 90,242 96,123 93,389 112,133
----------------------------------------------------------------------------
Operating days (1) 894 1,324 1,459 1,451
Utilization (percentage) - XDR 30 48 55 56
Utilization (percentage) - XSR 51 61 60 61
Utilization (percentage) - Total(1) 35 51 56 57
Weighted average rigs in service (1) 32.0 31.0 30.0 30.0
Total rigs, end of quarter (1) 32 31 31 30
----------------------------------------------------------------------------
Mar 31, Dec 31, Sep 30, Jun 30,
2015 2014 2014 2014
----------------------------------------------------------------------------
Revenue(1) 70,015 69,459 65,980 62,299
Adjusted EBITDA (1) 20,761 18,617 18,299 19,421
Adjusted EBITDA as a percentage of
Revenue(1) 30% 27% 28% 31%
Adjusted EBITDA per share (1) -
basic ($) 0.25 0.23 0.22 0.24
Net (loss) income(1) 2,755 (2,258) 853 (902)
Net (loss) income per share(1) -
basic ($) 0.03 (0.03) 0.01 (0.01)
Capital assets(1) 488,300 452,974 443,304 413,296
Total assets(1) 592,194 547,958 536,713 513,651
Net debt(1) 126,869 115,520 116,768 105,358
----------------------------------------------------------------------------
Operating days (1) 1,823 2,053 2,173 1,779
Utilization (percentage) - XDR 73 86 92 75
Utilization (percentage) - XSR 71 74 73 68
Utilization (percentage) - Total(1) 73 83 88 73
Weighted average rigs in service (1) 30.0 28.0 28.0 28.0
Total rigs, end of quarter (1) 30 29 28 28
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(1)Results from continuing and discontinued operations
Appointment of Director
Xtreme is pleased to announce that the Board of Directors has appointed Mr. Colin Burnett, of Aberdeen, United Kingdom, to be a member of the Board of Directors. Mr. Burnett has over 20 years of Oil and Gas experience and represents Shell Technology Ventures Fund 1 B.V. on the Board. Mr. Burnett is a Chartered Accountant and has spent the last 17 years in oil and gas private equity, spending 10 years with 3i Group plc and the last 7 years as a private investor.
The Company also announces the resignation of Shell Technology Ventures previous representative Mr. Erik J. Vollebregt from the Board of Directors. The Board would like to thank Mr. Vollebregt for his dedicated service to the Company.
Conference Call Details
Xtreme has scheduled a conference call to discuss results with investors, analysts, and stakeholders on Thursday, May 5, 2016, beginning promptly at 9:00 am MT (10:00 am CT, 11:00 pm ET).
Tom Wood, Chief Executive Officer, will host the conference call with participation from Matt Porter, President and Chief Financial Officer.
Conference operator dial-in numbers
To participate in the conference call, please dial in as follows approximately ten minutes before the start time in your time zone.
+1 800-952-6845 (North America Toll-Free) or 1 416-340-8527 (Alternate)
Webcast link: http://www.gowebcasting.com/7460
An audio replay of the call will be available until Thursday, May 12, 2016. To access the replay, call +1 800-408-3053 or +1 905-694-9451 and enter pass code 5000344.
Xtreme Drilling and Coil Services Corp.
Interim Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
(unaudited)
Mar 31, Dec 31,
2016 2015
-----------------------
-----------------------
Assets
Current assets
Cash and cash equivalents 5,948 11,223
Accounts receivable 29,537 39,771
Other receivables 250 351
Prepaid expenses and other 1,209 2,461
Inventory 2,805 8,693
-----------------------
39,749 62,499
Assets of disposal group held for sale 142,717 -
Non-current assets
Property and equipment 276,521 446,417
Intangible assets - 3,310
-----------------------
Total Assets 458,987 512,226
-----------------------
-----------------------
Liabilities and Equity
Current liabilities
Accounts payable and accrued liabilities 15,887 29,729
Income tax payable 3,817 3,918
Current portion of long-term debt - 107,346
-----------------------
19,704 140,993
Long-term liabilities
Long-term debt 96,190 -
-----------------------
Total Liabilities 115,894 140,993
-----------------------
Shareholders' equity
Share capital 333,622 333,515
Share option reserve 15,952 15,478
Accumulated deficit (84,565) (80,831)
Foreign currency translation reserve 78,084 103,071
-----------------------
Total Shareholders' Equity 343,093 371,233
-----------------------
Total Liabilities and Shareholders' Equity 458,987 512,226
-----------------------
-----------------------
Xtreme Drilling and Coil Services Corp.
Interim Consolidated Statements of (Loss) Income
For the three months ended March 31, 2016 and 2015
(in thousands of Canadian dollars, except share
and per share data)
(unaudited)
2016 2015
-------------------------
-------------------------
Revenue 16,269 44,523
-------------------------
Expenses
Operating expenses 10,748 28,076
General and administrative expenses 4,603 4,035
Depreciation of property and equipment 9,686 11,452
Stock-based compensation 588 654
Foreign exchange (gain) loss (3,875) 118
Gain on disposal of equipment (81) (44)
Other expense - 2
Interest expense 1,673 1,144
-------------------------
Loss before tax for the period (7,073) (914)
Tax expense
Current 310 374
Deferred - 770
-------------------------
Total tax expense 310 1,144
-------------------------
Net loss from continuing operations for the period (7,383) (2,058)
Net income from discontinued operations, net of
tax 3,649 4,813
-------------------------
Net (loss) income for the period (3,734) 2,755
-------------------------
-------------------------
Net loss per common share from continuing
operations
- basic (0.09) (0.02)
- diluted (0.09) (0.02)
Net income per common share from discontinued
operations
- basic 0.04 0.06
- diluted 0.04 0.06
Net (loss) income per common share
- basic (0.04) 0.03
- diluted (0.04) 0.03
Weighted average number of common shares
- basic 83,125,541 82,498,302
- diluted 83,125,541 82,637,937
Xtreme Drilling and Coil Services Corp.
Interim Consolidated Statements of Comprehensive (Loss) Income
For the three months ended March 31, 2016 and 2015
(in thousands of Canadian dollars)
(unaudited)
2016 2015
----------------
----------------
Net (loss) income for the period (3,734) 2,755
Other comprehensive (loss) income
Items may be subsequently reclassified to profit or loss
Unrealized (loss) gain on translating financial statements
of foreign operations (24,987) 31,962
----------------
Comprehensive (loss) income for the period (28,721) 34,717
----------------
----------------
Total comprehensive (loss) income for the period arising
from:
Continuing operations (32,671) 29,811
Discontinued operations 3,950 4,906
Xtreme Drilling and Coil Services Corp.
Interim Consolidated Statements of Changes in Equity
For the three months ended March 31, 2016 and 2015
(in thousands of Canadian dollars)
(unaudited)
Foreign
Share currency Total
Share option Accumulated translation Shareholders'
capital reserve deficit reserve Equity
--------------------------------------------------------
--------------------------------------------------------
Balance at Jan 1,
2015 330,964 14,803 (12,487) 43,213 376,493
--------------------------------------------------------
--------------------------------------------------------
Net income for the
period - - 2,755 - 2,755
Other comprehensive
income
Currency
translation
differences - - - 31,962 31,962
--------------------------------------------------------
Total comprehensive
income - - 2,755 31,962 34,717
--------------------------------------------------------
Employee share
option scheme:
Value of employees
services - 659 - - 659
Transfer from
share option 22 (22) - - -
Proceeds from
shares issued 60 - - - 60
--------------------------------------------------------
Total transactions
with owners 82 637 - - 719
--------------------------------------------------------
Balance at Mar 31,
2015 331,046 15,440 (9,732) 75,175 411,929
--------------------------------------------------------
--------------------------------------------------------
Balance at Jan 1,
2016 333,515 15,478 (80,831) 103,071 371,233
--------------------------------------------------------
--------------------------------------------------------
Net loss for the
period - - (3,734) - (3,734)
Other comprehensive
loss
Currency
translation
differences - - - (24,987) (24,987)
--------------------------------------------------------
Total comprehensive
loss - - (3,734) (24,987) (28,721)
--------------------------------------------------------
Employee share
option scheme:
Value of employee
services - 581 - - 581
Transfer from
share option 107 (107) - - -
Proceeds from
shares issued - - - - -
--------------------------------------------------------
Total transactions
with owners 107 474 - - 581
--------------------------------------------------------
--------------------------------------------------------
Balance at Mar 31,
2016 333,622 15,952 (84,565) 78,084 343,093
--------------------------------------------------------
--------------------------------------------------------
Xtreme Drilling and Coil Services Corp.
Interim Consolidated Statements of Cash Flows
For the three months ended March 31, 2016 and 2015
(in thousands of Canadian dollars)
(unaudited)
2016 2015
---------------------
---------------------
Cash flow provided by:
Operating activities
Net loss for the period from continuing operations (7,383) (2,058)
Items not affecting cash:
Depreciation and amortization 9,686 11,452
Stock-based compensation 588 654
Gain on disposal of equipment (81) (44)
Provisions for doubtful accounts - (333)
Interest expense 1,673 1,144
Interest paid (936) (989)
Amortization of debt issuance costs 626 132
Unrealized foreign exchange (gain) loss (4,766) 118
Current tax expense 310 374
Deferred tax expense - 770
Taxes paid (1,761) (2,454)
Operating activities of discontinued operations 8,330 8,349
Changes in items of working capital (1,442) (7,551)
---------------------
Net cash generated from operating activities 4,844 9,564
---------------------
Financing activities
Proceeds from exercise of stock options - 60
Repayment of long-term debt (3,896) (2,533)
Debt issuance cost (1,270) -
---------------------
Net cash used in financing activities (5,166) (2,473)
---------------------
Investing activities
Proceeds from sale of equipment 81 102
Capital expenditures (2,718) (3,033)
Investing activities of discontinued operations (445) (6,736)
Changes in items of working capital relating to
capital items (72) (1,117)
---------------------
Net cash used in investing activities (3,154) (10,784)
---------------------
Effect of exchange rate changes on cash and cash
equivalents (1,799) 1,567
---------------------
Decrease in cash and cash equivalents (5,275) (2,126)
Cash and cash equivalents - beginning of period 11,223 13,102
---------------------
Cash and cash equivalents - end of period 5,948 10,976
---------------------
---------------------
Xtreme Drilling and Coil Services Corp.
EBITDA and Adjusted EBITDA
For the three months ended March 31, 2016 and 2015
(in thousands of Canadian dollars)
(unaudited)
2016 2015
----------------------------------------------------------------------------
Net (loss) income from continuing and discontinued
operations (3,734) 2,755
Tax expense from continuing and discontinued operations 1,193 1,845
Interest expense from continuing and discontinued
operations 1,673 1,144
Amortization of intangibles from continuing and
discontinued operations 76 76
Depreciation and impairment from continuing and
discontinued operations 13,408 14,211
----------------------------------------------------------------------------
EBITDA from continuing and discontinued operations 12,616 20,031
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2016 2015
----------------------------------------------------------------------------
EBITDA from continuing and discontinued operations 12,616 20,031
Adjustments for non-cash items from continuing and
discontinued operations (3,368) 730
----------------------------------------------------------------------------
Adjusted EBITDA from continuing and discontinued
operations 9,248 20,761
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted EBITDA from continuing and discontinued
operations as a percentage of revenue 26% 30%
Adjusted EBITDA from continuing and discontinued
operations per share ($) 0.11 0.25
Net (loss) income from continuing and discontinued
operations per share ($) (0.04) 0.03
2015 2014
----------------------------------------------------------------------------
Stock-based compensation from continuing and discontinued
operations 588 654
Gain on disposal of equipment from continuing and
discontinued operations (81) (44)
Foreign exchange (gain) loss from continuing and
discontinued operations (3,875) 118
Other expense from continuing and discontinued operations - 2
----------------------------------------------------------------------------
Total adjustments for non-cash items from continuing and
discontinued operations (3,368) 730
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reader Advisory
This news release contains forward-looking statements ("FLS"). The use of the words "may", "believe", "could", "would", "might", "will be taken", "occur" or "be achieved" and similar expressions identify FLS. More particularly, this news release contains statements that may relate to contracting, marketing, financing, construction, modifications, deployment, operation, utilization of drilling rigs in the Company's current and future fleet. Although Xtreme believes expectations reflected in these FLS are reasonable, readers should not place undue reliance on them because Xtreme can give no assurance they will prove to be correct. There are many factors that could cause FLS not to be correct, including risks and uncertainties inherent in the Company's business.
These statements are based on certain factors and assumptions including, but not limited to: the assessment of current and projected future operations; ongoing and future strategic business alliances, negotiations and opportunities to enter new, extend or complete existing contracts; the availability and cost of financing; foreign currency exchange rates; timing and magnitude of capital expenditures; expenses and other variables affecting rig operation, modification and construction; the ability and commitment of vendors to provide rig component equipment, services and supplies, including labor, in a cost-effective and timely manner; the issuance of applied-for patents; changes in tax rates; and government regulations. Although Xtreme considers the assumptions used to prepare this news release reasonable, based on information available to management as of May 3, 2016, ultimately the assumptions may prove to be incorrect.
Forward-looking statements are also subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from management's current expectations. These factors include, but are not limited to: the cyclical nature of drilling market demand, foreign currency exchange rates, and commodity prices; access to credit and to equity markets; the availability of qualified personnel; vendor-provided rig components; and, competition for customers.
Management's assumptions considered the following: compliance with the terms of the Company's current and proposed new credit facility; ongoing access to key supplies and components required to continue operating and maintaining equipment, including fuel; continued successful performance of drilling and related equipment; expectations regarding gross margin; recruitment and retention of qualified personnel; continuation or extension of existing long-term or multi-well contracts; revenue expectations related to shorter-term drilling opportunities; willingness and ability of customers to remit amounts owing to Xtreme in accordance with normal industry practices; and management of accounts receivable in direct relation to revenue generation.
In preparing this news release, management considered the following risk factors: fluctuations in crude oil and natural gas prices, supply and demand; fluctuation in foreign currency exchange and interest rates; financial stability of Xtreme's customers; current and future applications for Xtreme's proprietary technology; competition from other drilling contractors; regulatory and economic conditions in regions where Xtreme operates; environmental constraints; changes to government legislation; international trade barriers or restrictions; and, where appropriate, global political and military events.
Financial outlook information contained in this news release about prospective results of operations, financial position or cash provided by operating activities is based on assumptions about future events, including economic conditions and proposed courses of action, and on management's assessment of relevant information currently available. Readers are cautioned such financial outlook information contained in this news release is not appropriate for purposes other than for which it is disclosed here. Readers should not place undue importance on FLS and should not rely on this information as of any other date. Except as required pursuant to applicable securities laws, Xtreme disclaims any intention, and assumes no obligation, to update publicly or revise FLS to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such FLS or otherwise, or to explain any material difference between subsequent actual events and such FLS.
About Xtreme
Xtreme Drilling and Coil Services Corp. ("XDC" on the Toronto Stock Exchange) designs, builds, and operates a fleet of high specification drilling rigs and coiled tubing well service units featuring leading-edge proprietary technology including AC high capacity coil injectors, deep re-entry drilling capability, modular transportation systems and continuous integration of in-house advances in methodologies.
Currently Xtreme operates two service lines: Drilling Services (XDR) and Coil Services (XSR) under contracts with oil and natural gas exploration and production companies and integrated oilfield service providers in Canada, the United States, Saudi Arabia and India. For more information about the Company, please visit www.xtremecoil.com.
Contacts: Xtreme Drilling and Coil Services Corp. Matt Porter Chief Financial Officer +1 281 994 4600 [email protected] www.xtremecoil.com
Source: Xtreme Drilling and Coil Services
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