Stoneham Drilling Trust
TSX : SDG.UN

Stoneham Drilling Trust

March 26, 2007 09:00 ET

Stoneham Drilling Trust (TSX:SDG.UN)- Financial Results for the Fourth Quarter and Year Ended December 31, 2006

CALGARY, ALBERTA--(CCNMatthews - March 26, 2007) - Stoneham Drilling Trust (TSX:SDG.UN)("Stoneham" or the "Trust") continued to significantly exceed industry average utilization contributing to strong financial results for the fourth quarter of 2006.



HIGHLIGHTS Three months ended Years ended
December 31, December 31,
(000s except for per 2006 2005 Change 2006 2005 Change
trust unit amounts $ $ % $ $ %
(Restated)(1) (Restated)(1)

Revenue 17,782 15,239 17% 63,215 40,575 56%
Net earnings 4,243 5,133 -17% 16,006 10,774 49%
Per unit (basic and diluted) 0.53 0.77 -31% 2.00 1.80 11%
Cash flow from operations (2) 6,220 6,479 -4% 22,321 14,473 54%
Per unit (basic and diluted) 0.78 0.98 -20% 2.78 2.42 15%
EBITDA (3) 6,280 6,412 -2% 21,758 14,351 52%

Distributions paid and payable 3,410 2,542 34% 12,436 9,172 36%
Payout ratio 55% 39% 41% 56% 63% -11%
Units outstanding (weighted
average and
diluted) 8,023 6,644 21% 8,023 5,991 34%

Operating Highlights
Average number of rigs (4) 11.2 9 24% 10.3 7.7 34%
Rigs at December 31 12 10 20% 12 10 20%
Operating days (5) 765 700 9% 2,841 2,031 40%
Utilization rate (6) 74.5% 84.5% -12% 75.6% 71.8% 5%
Industry average utilization
rate (6) 47.2% 71.8% -34% 55.1% 59.6% -8%


(1) Revenue has been restated to reflect the application of CICA's Emerging
Issues Committee Abstract 123. For additional information please see
Note 2 to the audited consolidated financial statements.
(2) Cash flow from operations is defined as cash flow from operating
activities before change in non-cash working capital relating to
operating activities. Readers are advised that cash flow from operations
does not have a standardized meaning prescribed by GAAP and therefore
may not be comparable to other companies. However, Stoneham does
compute cash flow from operations on a consistent basis for each
reporting period.
(3) EBITDA means earnings before interest, taxes, depreciation and
amortization. Readers are cautioned that EBITDA does not have a
standardized meaning prescribed by GAAP and therefore may not be
comparable to other companies. However, Stoneham does compute EBITDA on
a consistent basis for each reporting period.
(4) Rigs 11 and 14 were deployed in November 2006. In 2005, Rig 7 was
deployed in February, Rig 8 in July, Rig 9 in September and Rig 10 in
December.
(5) Operating days is the sum of the number of days, from spud to rig
release excluding stand-by, moving, rig-up, and rig-out days for rigs
active during the period.
(6) Rig utilization rate is the percentage arrived at by dividing the number
of operating days for a period, by the number of calendar days
multiplied by the number of rigs active during the period, as reported
by the CAODC.


Revenue in the fourth quarter of 2006 increased 17% to $17.8 million as a result of the full quarter inclusion of Rig 10, the deployment of Rigs 11 and 14 in November, and higher prices associated with the new equipment. Net earnings, however, declined 17% to $4.2 million as a result of reduced utilization, slightly lower operating margins and higher amortization, general and administrative costs and interest expense. Cash flow from operations decreased 4% to $6.2 million. Amortization increased due to higher activity and the higher per operating day amortization associated with the new equipment. Staffing increases and other costs related to our growth, such as insurance contributed to the increase in general and administrative expenses.

As a result of the larger fleet, operating days for the fourth quarter of 2006 reached 765, up 9% from the same period in 2005. Lower commodity prices during the last half of 2006 resulted in a reduction in drilling activity during the fourth quarter of the year. As well, wet weather in October caused lease construction delays impeding rig moves. These factors combined to reduce Stoneham's rig utilization by 12% to 74.5% from 84.5%. Year-over-year operating days grew 40% to 2,841 in 2006 reflecting the full year inclusion of Rigs 7, 8, 9 and 10 and improved rig utilization. Stoneham's rig utilization exceeded the industry average by 56% in the fourth quarter and by 37% for the year.

During the quarter capital expenditures totaled $28.2 million mainly related to the rig construction program. Capital expenditures were funded with the cash on hand at the end of the third quarter and through the long-term debt facility.

On November 9, 2006, Stoneham increased its monthly distribution rate from $0.125 to $0.15 per trust unit. As a result November and December distributions rose by 20% to $1.2 million per month and total distributions for the quarter rose by 34% to $3.4 million.

Subsequent to year end on February 9, 2007, Stoneham entered into an agreement to increase the operating loan facilities to $17.0 million and to increase the funds available under the 364-day extendable revolving credit facility to $60.0 million. Proceeds from the 364-day extendable revolving credit facility will be used to partially fund the remainder of the rig construction program. Rig 15 began field operations in February 2007 and Rigs 12 and Rigs 16 through 20 will be deployed throughout the balance of 2007.

Selected financial information relating to the three and twelve month periods ended December 31, 2006 and 2005 is attached to this press release. This information should be read in conjunction with the consolidated financial statements and the notes thereto of Stoneham Drilling Trust for the years ended December 31, 2006 and 2005 and accompanying management's discussion and analysis that are being filed today with securities regulators and will be available on www.sedar.com and on Stoneham's website at www.stonehamdrilling.com.

Stoneham Drilling Trust is an income trust that provides contract drilling services to oil and natural gas exploration and production companies operating in western Canada. With its modern, innovative fleet of drilling rigs, Stoneham is an industry leader in operational performance, safety and rig utilization. Stoneham trades on the TSX under the symbol SDG.UN. The Trust pays monthly cash distributions to unitholders.

This news release may contain forward-looking statements concerning the anticipated performance of Stoneham. Forward-looking statements are based on the estimates and opinions of management at the date the statements are made, and, subject to its obligations under applicable law, Stoneham does not intend, and does not assume any obligation to update these forward-looking statements if conditions or opinions should change.



Consolidated Balance Sheets
($000s)
December 31, December 31,
2006 2005
(audited) (audited)
ASSETS

Current
Cash and cash equivalents $ - $ 35,659
Accounts receivable 15,192 14,595
Prepaid expenses 876 513
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16,068 50,767

Property, plant and equipment 118,331 58,789
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$ 134,399 $ 109,556
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LIABILITIES

Current
Bank indebtedness $ 3,295 $ -
Accounts payable and accrued liabilities 15,441 7,847
Distributions payable 1,203 1,003
Current portion of long-term debt 1,220 -
Current portion of obligations under capital lease - 391
Callable debt - 757
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21,159 9,998

Long-term debt 10,490 -
Obligations under capital lease - 378
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31,649 10,376
UNITHOLDERS' EQUITY

Unitholders' capital 89,198 89,198
Accumulated earnings 35,161 19,155
Accumulated distributions to unitholders (21,609) (9,173)
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102,750 99,180

$ 134,399 $ 109,556
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Consolidated Statements of Earnings and Accumulated Earnings
($000s except for per trust unit amounts)

Three months ended Twelve months ended
December 31, December 31,
2006 2005 2006 2005
(unaudited)(unaudited) (audited) (audited)
Restated(1) Restated(1)

REVENUE $ 17,782 $ 15,239 $ 63,215 $ 40,575
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EXPENSES
Operating 10,230 8,101 37,245 23,414
Amortization 1,977 1,346 6,315 3,699
General and administrative 1,272 725 4,212 2,810
Interest on term and callable debt 69 27 112 212
Other interest (net) (9) (94) (675) (334)
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13,539 10,105 47,209 29,801
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Net earnings 4,243 5,134 16,006 10,774
Accumulated earnings, beginning of
period 30,918 14,021 19,155 8,381
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Accumulated earnings, end of
period $ 35,161 $ 19,155 $ 35,161 $ 19,155
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Earnings per unit
Basic and diluted $ 0.53 $ 0.77 $ 2.00 $ 1.80


(1) Revenue and operating expenses have been restated to reflect the
application of the CICA's Emerging Issues Committee Abstract 123.
For additional information please see Note 2 to the audited consolidated
financial statements.


Consolidated Statements of Cash Flows
($000s)
Three months ended Twelve months ended
December 31, December 31,
2006 2005 2006 2005
(unaudited)(unaudited) (audited) (audited)

OPERATING ACTIVITES
Net earnings for the period $ 4,243 $ 5,134 $ 16,006 $ 10,774
Adjustment for an item not
affecting cash
Amortization 1,977 1,346 6,315 3,699
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6,220 6,480 22,321 14,473
Changes in non-cash working
capital relating to
operating activities 5,850 (4,702) 2,085 (7,020)
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12,070 1,778 24,406 7,453
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INVESTING ACTIVITES
Purchase of property, plant and
equipment (29,016) (14,808) (65,857) (33,874)
Changes in accounts payable
relating to investing
activities 794 2,929 4,549 5,216
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(28,222) (11,879) (61,308) (28,658)
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FINANCING ACTIVITIES
Term and callable debt repayments - (622) (852) (12,249)
Term and callable debt financing 11,000 - 11,035 -
Trust unit issue - 39,755 - 79,024
Proceeds on exercise of Trust unit
options - - - 200
Distributions paid and payable
to Trust unitholders (3,410) (2,542) (12,436) (9,172)
Due to Trust unitholders - - - (23)
Changes in accounts payable
relating to financing
activities 201 233 201 1,003
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7,791 36,824 (2,052) 58,783
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(Decrease) Increase in cash and
cash equivalents (8,361) 26,723 (38,954) 37,578
Cash and cash equivalents (Bank
indebtedness), beginning of
period 5,066 8,936 35,659 (1,919)
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(Bank indebtedness) cash and cash
equivalents, end of period $ (3,295) $ 35,659 $ (3,295) $ 35,659
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