CanElson Drilling Inc.

CanElson Drilling Inc.

March 24, 2011 08:00 ET

CanElson Announces Record Fourth Quarter and Year End Financial Results

CALGARY, ALBERTA--(Marketwire - March 24, 2011) - CanElson Drilling Inc. ("CanElson" or the "Corporation") (TSX VENTURE:CDI) announces record fourth quarter financial results for the three months and year ended December 31, 2010.


  • Revenue of $29.9 million
  • EBITDA of $6.8 million
  • Net income of $3.3 million ($0.07 per share)
  • Canadian utilization of 70% compared to the industry level of approximately 50%
  • United States utilization of 93% and commencement of the joint venture operations on December 30, 2010
  • Completed construction and deployment of 2 small footprint ultra heavy-duty telescoping double drilling rigs; allotted one rig to the south eastern Saskatchewan operation and the other one to the newly formed partnership for the west Texas operations.

During the fourth quarter of 2010, revenue increased 44.2% to $29.9 million from $20.7 million in the third quarter of 2010. The increase in revenue quarter over quarter was the result of higher utilization, increased rates and revenue from the rig construction segment. The fourth quarter net income of $3.3 million ($0.07 per share) increased significantly from 2009 net income levels of $1.8 million (0.04 per share).

For the year ended December 31, 2010 the Corporation generated revenue of $73.3 million compared to $6.6 million from the previous year, a 1005% increase. The net income for the year ending December 31, 2010 was $5.4 million ($0.14 income per share) compared to a net loss of $0.4 million ($0.02 loss per share) in 2009. The favorable variances are mainly attributable to the increase in rig fleet size which increased to 16 (net: 14.5) and 2 (net: 1) service rigs, from 7 drilling rigs (net: 6) at the end of 2009.

President Randy Hawkings states, "The Corporation's record fourth quarter results are a product of strong operating performance and dedicated personnel combined with a good market for the right sized rigs positioned to drill in the resource plays. We continue to be positioned with a strong balance sheet to undertake our previously announced 5 rig construction program and take advantage of selected growth opportunities."

FINANCIAL HIGHLIGHTS                                    
(tabular amounts are stated in thousands)                                    
  Three months ended December 31,   For the year ended December 31,      
  2010   2009   change   2010 2009   change   2008  
Revenue $ 29,865   $ 3,021   889 % $ 73,281 $ 6,631   1005 % $ 477  
EBITDA (i) $ 6,843   $ 45   nm   $ 13,895 $ 777   1688 % $ (168 )
Net income (loss) $ 3,304   $ (236 ) nm   $ 5,448 $ (401 ) nm   $ 13  
Net income (loss) per share                                    
  Basic $ 0.07   $ (0.01 ) nm   $ 0.14 $ (0.02 ) nm   $ 0.00  
  Diluted $ 0.07   $ (0.01 ) nm   $ 0.14 $ (0.02 ) nm   $ 0.00  
Funds flow (ii) $ 6,506   $ 45   nm   $ 13,096 $ 938   1296 % $ 152  
Weighted average diluted shares outstanding   50,054     26,406   90 %   39,242   26,389   49 %   20,236  

Subsequent to December 31, 2010, CanElson completed two transactions significant to the Corporation. On January 28, 2011 CanElson closed the acquisition of Eagle Drilling Services Ltd. ("Eagle") which operated 8 small footprint ultra heavy-duty telescoping double drilling rigs in the Bakken resource play of south east Saskatchewan and south west Manitoba. Additionally, on January 28, 2011, the Corporation's credit facilities were increased to a maximum of $73.4 million as previously disclosed. On March 16, 2011, the Corporation closed an equity offering by issuing 9,315,000 common shares at a price of $4.35 per share. The offering provides additional capital for the Corporation to actively grow its drilling rig fleet through a rig construction program with the expected addition of five small footprint ultra heavy-duty telescoping double drilling rigs.

At the date of this press release, CanElson was operating 27 rigs: 18 drilling rigs in the western Canadian sedimentary basin ("WCSB"); 5 (net: 4) drilling rigs in Texas; and 2 (net: 1) drilling rigs and 2 (net: 1) service rigs in the Misantla-Tampico Basin of Mexico.


This press release contains references to EBITDA and funds flow. These financial measures are not measures that have any standardized meaning prescribed by GAAP and are therefore referred to as non- GAAP measures. The non-GAAP measures used by the Corporation may not be comparable to similar measures used by other companies.

(i) EBITDA is defined as "income before interest expense (income), income taxes, depreciation, stock based compensation expense, foreign exchange and gain on disposal of property and equipment." Management believes that in addition to net and comprehensive income (loss), EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Corporation's principal business activities prior to consideration of how these activities are financed, how the results are taxed in various jurisdictions, or how the results are effected by the accounting standards associated with the Corporation's stock based compensation plan.

  Three months ended December 31,     For the year ended December 31,    
For the year ended December 31,   2010     2009     2010     2009     2008  
Income (loss) before taxes $ 4,908   $ (270 ) $ 8,037   $ (290 ) $ 13  
Interest expense (income)   95     (6 )   434     (146 )   (320 )
Depreciation   1,620     209     4,870     517     40  
Stock-based compensation   176     112     595     717     99  
Foreign exchange loss (gain)   134     -     242     (21 )   -  
Gain on disposal of property and equipment   (90 )   -     (283 )   -     -  
EBITDA $ 6,843   $ 45   $ 13,895   $ 777   $ (168 )

(ii) Funds flow from operations is defined as "cash provided by operating activities before the change in non-cash working capital". Funds flow from operations is a measure that provides shareholders and potential investors additional information regarding the Corporation's liquidity and its ability to generate funds to finance its operations. Management utilizes this measurement to assess the Corporation's ability to finance operating activities and capital expenditures.

  Three months ended December 31,     For the year ended December 31,    
    2010     2009     2010     2009     2008  
Operating cash flow $ 6,142   $ (1,114 ) $ 9,338   $ 827   $ (1,286 )
Changes in working capital   364     1,159     3,758     111     1,438  
Funds flow $ 6,506   $ 45   $ 13,096   $ 938   $ 152  

The full text of the audited financial statements and management's discussion and analysis are to be posted on the SEDAR website at

CanElson is an Alberta, Canada Corporation that is currently engaged in the manufacture, acquisition and operation of drilling rigs for the oil and gas industry. The Corporation currently operates in the WCSB, the United States and Mexico.


This press release contains certain statements or disclosures relating to CanElson that are based on the expectations of CanElson as well as assumptions made by and information currently available to CanElson which may constitute forward-looking information under applicable securities laws. In particular, this press release contains forward-looking information related to a strong balance sheet to undertake a five-rig construction program and take advantage of selected growth opportunities. Such forward looking information involves material assumptions and known and unknown risks and uncertainties, certain of which are beyond CanElson's control. Such assumptions, risks and uncertainties include, without limitation, those associated with loss of markets, support from the Corporation's lenders, ability to procure parts for the rig construction program, and/or the lack of qualified personnel. CanElson's actual achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking information will transpire or occur, or occur on such dates, or if any of them do so, what benefits CanElson will derive therefrom. The forward-looking information is made as at the date of this press release and CanElson does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • CanElson Drilling Inc.
    Randy Hawkings
    President & Chief Executive Officer
    (403) 266-3922
    CanElson Drilling Inc.
    Robert Skilnick
    Chief Financial Officer
    (403) 266-3922
    CanElson Drilling Inc.
    Suite 700, 808 - 4th Avenue SW
    Calgary, Alberta T2P 3E8