Calmena Energy Services Inc.

Calmena Energy Services Inc.

August 14, 2014 20:56 ET

Calmena Announces Second Quarter 2014 Results

CALGARY, ALBERTA--(Marketwired - Aug. 14, 2014) - Calmena Energy Services Inc. ("Calmena" or the "Company") (TSX:CEZ) -


Calmena Energy Services Inc. announces its financial results for the second quarter ended June 30, 2014. All figures are reported in Canadian dollars unless otherwise stated. Our unaudited condensed consolidated financial statements and related management's discussion and analysis for the period will be filed separately on SEDAR (, which should be reviewed in conjunction with this press release.


The tables below provide a summary of Calmena's financial and operating results as at and for the three and six months ended June 30, 2014 and 2013.

Three months ended June 30, Six months ended June 30,
($ thousands, except per share amounts) 2014 2013 2014 2013
Revenue 9,456 21,437 23,285 44,319
EBITDAS* (1,577 ) (2,106 ) (2,289 ) (2,641 )
Net earnings (loss) from continued operations (21,373 ) (33,644 ) (23,768 ) (38,750 )
Net earnings (loss) from discontinued operations (756 ) (927 ) (948 ) 2,550
Net earnings (loss) (22,129 ) (34,571 ) (24,716 ) (36,200 )
Funds flow from continuing operations* (1,906 ) (954 ) (910 ) 1,353
Net earnings (loss) income per share - basic and diluted (0.08 ) (0.12 ) (0.08 ) (0.13 )
Funds flow from operations per share-basic and diluted* (0.01 ) (0.00 ) (0.00 ) 0.00
* see non-GAAP measures section of this release for a description of this term.
June 30, December 31,
($ thousands) 2014 2013
Total assets 94,154 132,578
Borrowings and debt, net of cash 31,285 40,111
Shareholders' equity 412,373 412,373


  • For the three and six months ended June 30, 2014, the Company recorded revenue of $9.5 million and $23.3 million compared to $21.4 million and $44.3 million for the comparable periods in 2013. The main drivers of the decrease is the continued slowdown in industry drilling in Mexico initiated during the second quarter of 2013 which resulted in the termination of our drilling contracts; the closing of contract drilling operations in Brazil and Colombia, the closing of the directional services business in Colombia and Mexico and the sale of Calmena's Canadian operations in 2014 and 2013. For the three and six months ended June 30, 2014 EBITDAS of negative $1.6 million and negative $2.3 million compared to negative $2.1 million and $2.6 million for the comparable periods in 2013. In addition to the effect of the revenue decrease, second quarter 2013 included large costs for bad debts in Colombia and labour settlements in Libya.

  • On March 31, 2014, Calmena and the Senior Lender entered into an extension agreement (the "Extension") pursuant to which the Senior Lender agreed to continue to forbear from demanding payment or enforcing its security under the Credit Facilities until June 30, 2014 (the "Deadline"). The Extension also provided that the Company was required, on or before April 30, 2014, to have either paid $9.0 million as a permanent reduction under the Credit Facilities or to have entered into one or more binding transactions to sell assets allowing the Company to fund the required $9.0 million reduction by May 31, 2014. This funding requirement was met by Calmena on May 15, 2014 out of proceeds from the two transactions noted above. Calmena and the Senior Lender subsequently agreed to extend the Deadline to August 31, 2014 in order to enable Calmena to continue actively marketing certain of its assets for sale.

  • During the second quarter of 2014 we closed two transactions that completed the divestiture of all of our remaining Canadian service lines:

  • On May 15, 2014 we completed the sale of our Equipment Rentals and Frac Fluids Management service lines for cash consideration of $10.0 million. Proceeds from this sale in the amount of $9.0 million funded a reduction of amounts owing by Calmena under its credit facilities with its senior lender. The remaining $1.0 million funded general working capital requirements. On closing, the $9.0 million repayment met the initial repayment condition described in the Extension described below.

  • On May 9, 2014 we completed the sale of our Canadian based Drilling Technologies research and manufacturing operations which is a part of directional services and certain related assets for consideration comprised of US$1.0 million cash and US$1.2 million of in kind consideration, in the form of services and technology products to be provided to Calmena by the purchaser over the next four years. The US$1.0 million cash proceeds from this transaction was used to fund a reduction of amounts owing by Calmena under its credit facilities with its senior lender.

  • During the first half of 2014 we made the decision to close down the directional services operations in Colombia and Mexico to reduce costs and re-deploy the assets to the more profitable US market. These shutdowns will be substantially complete in the third quarter of 2014.

  • Net debt* as at June 30, 2014 was $27.6 million compared to $40.7 million as at June 30, 2013.

* see non-GAAP measures of this report for description of this term.


Our US directional services business is experiencing a strong start to the third quarter and we anticipate it will continue to show growth year over year as we continue our focus on our core midcontinent operating area. The redeployment of equipment from Latin America to service increased activity levels in the US is expected to be concluded by the end of the third quarter.

In Mexico, we have signed a five month contract for one drilling rig and are mobilizing to spud by the end of August. We have responded to several other bids and are optimistic that this could result in additional rigs returning to work in 2014 resulting in positive cash flow. The shutdown of our Mexico directional services operation was undertaken to reduce costs and re-deploy the assets to the more profitable US market and is substantially complete.

The shutdown of our directional services operations in Colombia is expected to be complete by the end of the third quarter, and will result in a significant reduction in ongoing costs. The majority of the Colombia directional services assets are being re-deployed to our US operations.

Calmena's Brazilian rigs are not currently contracted. The Company continues to explore opportunities to divest of these rigs.

Drilling operations on both drilling rigs in Libya remain suspended by our customer as a result of the political environment. The political environment in Libya remains volatile and will continue to have a significant influence on financial results.

Management continues to focus on opportunities to deploy our Mexico drilling rigs, increase utilization of our directional drilling assets in the US and manage costs across the Company to reflect current activity levels. In parallel, management continues to explore strategic alternatives to monetize under-utilized assets, and consider business combination opportunities.


Calmena is a diversified energy services company that provides well construction services to its customers operating in Canada, the United States, Latin America and the Middle East and North Africa. The common shares of Calmena trade on the Toronto Stock Exchange under the symbol "CEZ".


This press release contains certain forward-looking statements relating to Calmena's plans, strategies, objectives, expectations and intentions. Expressions such as "may", "anticipate", "expect", "project", "believe", "hope", "estimate", "intend", "will", "continue", "foresee", and "forecast" and similar expressions and statements are intended to identify forward looking statements. Such statements represent Calmena's internal projections, estimates or beliefs concerning, among other things, an outlook for the Company's operations and other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions and actual events or results may differ materially. Although Calmena believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Calmena's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Calmena.

In particular, forward-looking statements included in this press release include, but are not limited to, statements with respect to the anticipated timing of completion of the shut down of Calmena's directional operations in Colombia and Mexico; the deadline for payment by Calmena of amounts owing under its Credit Facilities and the potential for an extension of the deadline if certain conditions are met; the satisfaction of the conditions to closing of the transaction with Great Prairie and the anticipated timing of closing of the transaction; the anticipated use of the proceeds received by Calmena from the transaction with Great Prairie; Calmena's expectations regarding directional services operations in the US for the remainder of the year and the Company's focus on its core midcontinent operating area; anticipated effect of increased bidding activity on utilization for Calmena's drilling rigs; the Company's expectations that improvements in utilization may start in the coming months; the Company's plans to continue to explore strategic opportunities to divest of its Brazilian rigs; the Company's expectations that the volatile political environment in Libya could have a significant impact on financial results; the Company's plans to continue to focus on opportunities to deploy its Mexico drilling rigs, to increase utilization in the US and manage costs across the Company to reflect current activity levels; the Company's plans to explore alternatives to monetize under-utilized assets and consider business combination opportunities; and the statements under the heading "Outlook" in this press release.

These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Calmena's control, including, but not limited to, the risk that the Company is unable to refinance or extend the deadline for repayment of the Credit Facilities; risk that the lender under the Credit Facilities will take further steps to demand payment under the Credit Facilities or enforce its security thereunder in the immediate future; failure to realize the anticipated benefits of strategic dispositions; failure to successfully negotiate and/or complete further transactions pursuant to the Company's strategic alternatives process; failure to achieve an increase in demand for the Company's drilling rigs and other product offerings; failure to complete the transaction with Great Prairie on the timing anticipated or at all; the impact of general economic conditions; industry conditions and changes in industry conditions; volatility of commodity prices; decreased demand for energy services; competition from other energy services providers; the lack of availability of qualified personnel or management; ability of Calmena to re-finance or extend the maturity date of its senior debt and generate positive cash flow; failure of counter parties to perform on contracts; failure to successfully negotiate new contracts or renew existing contracts; failure to successfully deploy rigs; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; risks associated with international operations, including, but not limited to, effect of civil unrest on the Company's operations in Libya; seasonality; loss of key customers; fluctuations in foreign exchange or interest rates and stock market volatility; supply and demand for oilfield services relating to the drilling, completion and maintenance of oil and gas wells as well as services related to, oilfield equipment rentals and production and ancillary services; liabilities and risks, including environmental liabilities and risks inherent in oil and natural gas operations; uncertainties in weather and temperature affecting the duration of the service periods and the activities that can be completed; ability to access sufficient capital from internal and external sources; and the other risks considered under "Risk Factors" in our annual information form for the year ended December 31, 2013 which is available on

With respect to forward-looking statements contained in this press release, Calmena has made assumptions regarding, but not limited to: the implementation of the Company's business prospects and strategies; the ability of the Company to continue as a going concern and continue operations; current commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; ability of Calmena to re-finance or extend the deadline for repayment of its senior debt; that the Senior Lender will forbear from taking further steps to demand repayment or enforcing their security under the Credit Facilities; ability of Calmena to renew existing contracts and enter into new contracts; rig utilization and pricing; future exchange rates; the impact of increasing competition; conditions in general economic and financial markets; industry conditions; supply and demand for oilfield services relating to the drilling, completion and maintenance of oil and gas wells as well as services related to oilfield equipment rentals and production and ancillary services; effects of regulation by governmental agencies; trends in Calmena's operations; and future operating costs.

Management has included the above summary of assumptions and risks related to forward-looking statements provided in this press release in order to provide shareholders with a more complete perspective on Calmena's current and future operations and such information may not be appropriate for other purposes. Calmena's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Calmena will derive therefrom. Readers are cautioned that the foregoing lists of factors are not exhaustive.

These forward-looking statements are made as of the date of this press release and Calmena disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.


The following measures are used within this release, but not recognized under GAAP. As a result, the method of calculation may not be comparable with other companies. These measures should not be considered alternatives to net (loss) income and net (loss) income per share as calculated in accordance with GAAP:

EBITDAS (Earnings before interest, income taxes, depreciation and amortization, other items of income and expense and share based compensation) - Management believes that EBITDAS as derived from information reported in the unaudited condensed Consolidated Statement of Operations is a useful supplemental measure as it provides an indication of the Company's ability to generate funds by the Company's core business activities prior to consideration of how those activities are financed, the impact of foreign exchange, how the results are taxed, how funds are invested or how non-cash depreciation and amortization charges affect results. See the reconciliation of EBITDAS to net income (loss) in the Company's management's discussion and analysis for the three and six months ended June 30, 2014.

Funds flow from operations: Management believes that in addition to cash generated from operations, funds flow from operations is a useful supplemental measure because it provides an indication of the funds generated by the Corporation's principal business activities prior to the consideration of working capital, which is primarily made up of highly liquid balances. See the reconciliation of funds flow from operations in the Company's management's discussion and analysis for the six months ended June 30, 2014.

Net debt: Management believes that net debt is a useful supplemental measure because it provides an indication of the Company's leverage compared to liquid assets. Net debt is computed by taking current assets less current liabilities and long-term borrowings and debt.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Calmena Energy Services Inc.
    John King
    President and Chief Executive Officer
    (403) 225-3879

    Calmena Energy Services Inc.
    Peter Balkwill
    Vice President, Finance & CFO
    (403) 225-3879
    (403) 366-2066 (FAX)