CALGARY, ALBERTA--(Marketwired - March 5, 2014) - Xtreme Drilling and Coil Services Corp. (TSX:XDC) ("Xtreme", the "Company") announce fourth quarter and full year 2013 financial and operating results. It is anticipated that filing will take place on SEDAR of audited Consolidated Financial Statements and Notes to the audited Consolidated Financial Statements and Management's Discussion and Analysis for the twelve months ended December 31, 2013, by Monday, March 10, 2014.
Highlights
- Record adjusted EBITDA of $19.7 million in the fourth quarter of 2013, an increase of 11% over the previous quarter and 31% over the fourth quarter of 2012. The record quarter was driven by better operating margins in both the Drilling and Coil Services segments. For the year ended December 31, 2013, adjusted EBITDA increased 110% to $73.7 million as compared to $35.1 million for the prior year.
- Record revenue of $62.7 million in the fourth quarter of 2013, an increase of 5% over the previous quarter and 21% over the fourth quarter of 2012. For the year ended December 31, 2013, the Company recognized revenue of $229.8 million, an increase of 28%, or $50.4 million from 2012. In addition, total operating days for 2013 increased to 8,063 as compared to 6,550 in 2012. The increase in revenue for the year was a function of 23%, or 1,513, more operating days in 2013 and an increase in average revenue per day to $29,277 from $27,387 in 2012.
- For the fourth quarter, the Drilling Segment achieved utilization of 93% on 1,801 operating days. This was comprised of a 96% utilization rate for the 18 rig US XDR fleet and 75% for the three rig Canadian XDR fleet. For the year ended 2013, the Drilling Segment achieved utilization of 89% on 6,829 days. This was comprised of a 93% utilization rate for the 18 rig US XDR fleet and 66% for the three rig Canadian XDR fleet.
- For the fourth quarter, the Coil Services Segment achieved utilization of 76% on 340 operating days. This was comprised of a 98% utilization rate for the two XSR units in Saudi Arabia and an 81% utilization rate for the three actively marketed XSR units in the US. Included in the Coil Services utilization is one additional unit that is currently idle in the US, but is actively being marketed both in the US and internationally. The US XSR units for the quarter averaged 18 operating days per month on each unit. For the year ended 2013, the Coil Services Segment achieved utilization of 65% on 1,234 operating days. This was comprised of a 98% utilization rate in for the two XSR units in Saudi Arabia and a 64% utilization rate for the three actively marketed XSR units in the US. As a reminder, the Company now uses 22 days as total available operating days for the US XSR units when calculating utilization.
- The Drilling Segment (which includes US and Canada) increased operating profit to $64.4 million in 2013 as compared to $45.5 million in the previous year. This was driven by the US division which generated higher operating profits on higher utilization and increased operating efficiency, which resulted in an operating margin of 37.2% as compared to 32.1% in 2012.
- The Coil Services segment (which includes US and Saudi Arabia) increased operating profit to $20.6 million in 2013 as compared to $6.0 million in the previous year. This was driven by the US division which had higher demand and pricing coupled with strong cost control and the Saudi Arabia division which increased profitability on higher pricing in 2013; primarily a result of the new contract signed in the third quarter of 2013. Overall operating margin as a percent of revenue increased to 36.3% in 2013 from 15.8% in 2012.
- The Company completed a new $150 million credit facility in in the fourth quarter and finished 2013 with $117 million in net debt (total debt less cash) and a funded debt to EBITDA ratio of 1.7. This represents significant improvement from the peak funded debt to EBITDA ratio of 5.7 at June 30, 2012, and 3.6 at year end 2012.
- Total capital expenditures were approximately $23 million, $22.5 million net of dispositions, during 2013. This is down significantly from total capital expenditures of $115 million in 2011 and $112 million in 2012. In 2014 capital expenditures are budgeted to be between $55 million and $60 million with approximately $25 million of this budgeted for existing fleet maintenance, spares and upgrades. The remaining capital will be spent on two new XSR deep coiled tubing units, the preparation and deployment of two XDR 300 drilling rigs to India, and the purchase of the 20% interest from the partner in the Company's Saudi Arabian joint venture. At year end, the Company had significant liquidity with approximately $28 million available on the credit facility and $42.1 million in working capital which includes $12.2 million of cash. Xtreme anticipates that 2014 capital expenditures will be funded through operating cash flow.
- During the fourth quarter Xtreme recognized several one-time non-cash charges that impacted earnings. Absent these one-time charges and an additional $6.5 million in non-cash unrealized foreign exchange losses for 2013, pre-tax income would have been approximately $21.5 million as compared to the $4.9 million as reported for the year. In addition, earnings per share would have been approximately $0.16 as compared to $0.00 as reported. The fourth quarter non-recurring charges are detailed as follows:
- As part of the normal review of fixed asset carrying values, it was determined that the Company would write off the value of certain spare, surplus and rig equipment. The total charge recognized during the quarter was $4.5 million which is equivalent to roughly 0.8% of total asset value. In addition, the Company re-evaluated the remaining useful lives of certain spare, surplus and rig equipment. This had the effect of increasing depreciation by approximately $2.9 million for the fourth quarter. Both of these are reflected in the depreciation expense of $20.8 million for the quarter. In 2014 the Company anticipates that depreciation expenses will average $11 to $12 million per quarter.
- The Company also recognized a $1.5 million charge as part of the requirement under IFRS 13 to adjust to fair value the liability on the balance sheet relating to the 20% non-controlling interest in the Company's Saudi Arabian joint venture. This adjustment will not be necessary in 2014 as the Company closed the transaction to purchase the 20% interest in February.
- Finally, Xtreme wrote-off $1.2 million of unamortized deferred loan costs related to the extinguishment of the previous debt facility. These expenses were being amortized over the life of the previous facility and are included in interest expense in the fourth quarter.
- As part of the normal review of fixed asset carrying values, it was determined that the Company would write off the value of certain spare, surplus and rig equipment. The total charge recognized during the quarter was $4.5 million which is equivalent to roughly 0.8% of total asset value. In addition, the Company re-evaluated the remaining useful lives of certain spare, surplus and rig equipment. This had the effect of increasing depreciation by approximately $2.9 million for the fourth quarter. Both of these are reflected in the depreciation expense of $20.8 million for the quarter. In 2014 the Company anticipates that depreciation expenses will average $11 to $12 million per quarter.
- The Board is pleased to announce the appointment of J. William Franklin, Jr. as an independent director of Xtreme. Mr. Franklin is replacing Mr. Saad Bargach on the Board of Directors as representative for Lime Rock Partners. Mr. Franklin joined Lime Rock Partners in 2003 and was named a Managing Director in 2008. Currently based in Houston, Mr. Franklin has worked in the firm's Houston, Calgary, and Westport, Connecticut locations and has played a leadership role in the firm's investment efforts in the energy service and exploration and production sectors in North America and internationally.
| Before joining Lime Rock Partners, he had experience in private equity, energy company operations, and energy finance at Riverstone Holdings from 2000 to 2003, Simmons & Company from 1996 to 1998, and Parker & Parsley Petroleum Company from 1995 to 1996. Mr. Franklin currently serves on the board of directors of Acoustic Zoom, GEODynamics, IDM Group, PDC Mountaineer, Shelf Drilling and UTEC International. He previously served on the board of directors of Hercules Offshore, Marauder Resources, PanGeo Subsea and Slate River Resources. He is a graduate of the University of Texas at Austin (B.A., B.B.A.) and Harvard Business School (M.B.A.). |
Conference Call Details
Xtreme has scheduled a conference call to discuss results with investors, analysts, and stakeholders on Wednesday, March 5, 2014, beginning promptly at 10:00 am MT (11:00 am CT, 12:00 pm ET).
Tom Wood, Chief Executive Officer, will host the conference call with participation from Matt Porter, 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.
+1 866-226-1798 (North America Toll‐Free) or +1 416‐340-2220 (Alternate)
Webcast link: http://www.gowebcasting.com/5239
An audio replay of the call will be available until Tuesday, March 12, 2014. To access the replay, call +1 800‐408‐3053 or +1 905‐694‐9451 and enter pass code 4828220.
Selected Quarterly Financial Information
| Three months ended | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 |
| Restated | Restated | Restated | ||
| Revenue | 62,681 | 59,692 | 53,268 | 54,182 |
| Adjusted EBITDA | 19,734 | 17,783 | 16,847 | 19,234 |
| Adjusted EBITDA as a percentage of revenue | 31 | 30 | 32 | 35 |
| Adjusted EBITDA per share - basic ($) | 0.24 | 0.22 | 0.21 | 0.24 |
| Net (loss) income | (7,441) | 3,281 | 240 | 4,487 |
| Net (loss) income per share - basic ($) | (0.09) | 0.04 | 0.00 | 0.06 |
| Capital assets | 412,523 | 416,887 | 431,294 | 417,431 |
| Total assets | 515,720 | 504,728 | 520,326 | 508,823 |
| Operating days | 2,141 | 2,062 | 1,911 | 1,949 |
| Utilization (percentage) - XDR | 93 | 90 | 85 | 89 |
| Utilization (percentage) - XSR | 76 | 76 | 65 | 60 |
| Utilization (percentage) - Total | 90 | 87 | 81 | 83 |
| Weighted average rigs in service | 28.0 | 28.0 | 28.0 | 28.0 |
| Total rigs, end of quarter | 28 | 28 | 28 | 28 |
| Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |
| Restated | Restated | Restated | Restated | |
| Revenue | 51,813 | 48,948 | 40,180 | 38,446 |
| Adjusted EBITDA | 15,029 | 4,459 | 7,695 | 7,909 |
| Adjusted EBITDA as a percentage of Revenue | 29 | 9 | 19 | 21 |
| Adjusted EBITDA per share - basic ($) | 0.19 | 0.07 | 0.12 | 0.12 |
| Net (loss) income | 3,827 | (2,935) | (2,059) | 1,689 |
| Net (loss) income per share - basic ($) | 0.05 | (0.04) | (0.03) | 0.03 |
| Capital assets | 415,354 | 425,364 | 425,397 | 379,710 |
| Total assets | 506,551 | 511,318 | 512,254 | 464,453 |
| Operating days | 1,891 | 1,742 | 1,494 | 1,423 |
| Utilization (percentage) - XDR | 85 | 86 | 74 | 84 |
| Utilization (percentage) - XSR | 58 | 45 | 69 | 63 |
| Utilization (percentage) - Total | 80 | 77 | 73 | 81 |
| Weighted average rigs in service | 26.8 | 26.0 | 23.4 | 19.8 |
| Total rigs, end of quarter | 28 | 28 | 27 | 18 |
Excerpt from Management's Discussion and Analysis for the twelve months ended December 31, 2013
OUTLOOK
As a company founded to break through traditional barriers in our industry, Xtreme Drilling and Coil Services has been setting records almost since inception. However, nothing in our history quite compares to 2013. It was an exceptional year on many fronts as we established new industry benchmarks with our field performance and surged past previous high-water marks for the company, both operationally and financially.
Our primary goal for 2013 was optimizing our operations and maximizing efficiency to capitalize on the aggressive fleet expansion we undertook in 2011 and 2012. We are proud to report we accomplished that mission. Last year was our busiest and most productive ever for both the Drilling (XDR) and Coil Service (XSR) segments of our company. Our operating days topped 8,000 for the first time ever, pushing our revenue to a record $229.8 million even as we maintained a similar rig count to 2012. Other key financial metrics hit historic levels as well, including operating profit margins and EBITDA.
Xtreme also made great strides in strengthening the balance sheet, using our growing free cash flows to substantially reduce leverage incurred during our $200+ million capital expansion program. We are pleased that the marketplace recognized this progress, as our share price increased by 118% in 2013.
Also of note, our business came full circle in an important sense in 2013. Xtreme's history is deeply rooted in driving innovation in coiled tubing drilling technology, and we have numerous patents to show for it. However, in recent years we shifted our focus almost entirely to traditional jointed pipe drilling in response to the rapid proliferation of horizontal wells in North American resource plays. Now we are excited to be putting that breakthrough coiled tubing technology to work again; this time for ultra-deep completions in those same long-lateral wells.
DRILLING SERVICES (XDR)
After growing our XDR drilling fleet dramatically in prior years, we maximized utilization levels on an unprecedented scale in 2013. At year-end, all 21 of these Tier 1 rigs were working, mostly on long-term contracts. Total operating days for the XDR division reached an all-time high of 6,834 days and utilization was 89% for 2013 as compared to 82% in the prior year.
Geographically, we continued to focus on two of North America's most prolific resource plays. Our largest presence is in the Niobrara Shale in Colorado and Wyoming, where 12 XDR rigs were working at year-end. There, our high-specification rigs continued to set the performance standard with superior mobility that accelerates drilling and reduces move times between well pads. We also further grew our presence in the Bakken Shale in North Dakota, where we had six rigs working at year-end. The other three XDR rigs were working in Canada.
"Our leading-edge technology and outstanding service quality truly set us apart in the XDR division's core operating areas of Colorado and North Dakota," Chief Executive Officer Tom Wood noted. "The market remains strong for Xtreme's drilling services in the Bakken and Niobrara, as our operational efficiency and best-in-class mobilization times continue to drive down costs for our customers."
The XDR division's high utilization levels are expected to continue into the future, as our large backlog of contracted days was in excess of 5,800 at the beginning of 2014.
COIL SERVICES (XSR)
Last year was full of accomplishment for our XSR coiled tubing division. After launching our extended-reach completion services in 2012, we have rapidly established ourselves as a market leader in the Eagle Ford Shale in South Texas. We are also the longest-reach provider in this basin, which ranks second in production volume among shale oil plays in the US. In fact, we set an Eagle Ford record in 2013 by reaching a total measured depth of 20,344 feet with coiled tubing-including a lateral length over 10,000 feet. These distinctions allowed us to increase both our service rates and utilization levels, as total operating days for the XSR division reached a new high of 1,234.
In addition to superior reach, Xtreme has established a reputation for outstanding performance with our proprietary large-diameter coil. XSR units are substantially accelerating completion plug millouts and reducing stuck-in-hole incidents. The XSR division had in excess of 16.8 million round trip run in feet with coiled tubing in 2013 without ever leaving pipe down hole. We are especially proud of that last accomplishment, as it highlights the unmatched reliability of our coiled tubing services. With that stellar track record, Xtreme is not only completing ultra-deep wells, but also gaining traction in the 14,000-16,000 foot market, as operators seek to mitigate risk.
Xtreme is achieving these successes by leveraging innovations we originally developed for coiled tubing drilling. For example, our XSR units utilize electric injectors and PLC-based controls for greater power and precision, and 2-5/8" coiled tubing for extended lateral reach. Recognizing the advantages, the market is increasingly favoring these technologies over traditional features such as hydraulic power and smaller-diameter coil. We believe this clearly differentiates Xtreme in the marketplace and offers our customers a value proposition no other company can match.
Additionally, two XSR units continue to perform re-entry drilling in Saudi Arabia, where we signed new three-year contracts with the operators we have worked there with since 2010. This project has been a tremendous technical and financial success for Xtreme.
After keeping the rig count unchanged and concentrating on our core markets last year, Xtreme's focus will return to growth in 2014-for both our fleet and geographical footprint.
Our XSR division will add new coiled tubing units as it seeks to meet demand in the Eagle Ford of South Texas, and looks at potential expansion into the Permian Basin in West Texas. We anticipate funding this initiative entirely with free cash, given the strength of our operating margins.
"As our reputation for excellence in coiled tubing services continued to build in 2013, customer demand in the Eagle Ford began to consistently outstrip our capacity," Chief Executive Officer Tom Wood commented. "Xtreme is moving quickly to meet that demand-and pursue expansion into other markets-by making new-build XSR units the focus of our 2014 capital investment program."
Also in 2014, the XDR division will look for opportunities to optimize the existing fleet and potentially move shallower depth capacity drilling rigs into new markets as the push toward deeper wells and larger equipment continues in the US. These efforts were already yielding results early in the year, when we signed a multi-year contract to relocate two XDR 300 rigs to India. We anticipate that these rigs will commence operations in the third quarter of 2014.
Finally, even with all that we accomplished last year, we see opportunities to further optimize our operations and drive profit margins. These efforts will continue in 2014, as we focus on pushing to greater depths and new heights while emphasizing capital discipline and ultimately working to maximizing value to our shareholders.
Xtreme Drilling and Coil Services Corp.
Consolidated Statements of Financial Position
At December 31, 2013, December 31, 2012 and January 1, 2012
| (in thousands of Canadian dollars) | ||||
| Dec 31, 2013 | Dec 31, 2012 | Jan 1, 2012 | ||
| (Restated - Note 3) | (Restated - Note 3) | |||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | 12,220 | 5,921 | 6,873 | |
| Accounts receivable | 60,084 | 44,878 | 46,653 | |
| Other receivables | 1,306 | 2,975 | 1,636 | |
| Prepaid expenses and other | 2,491 | 2,047 | 2,114 | |
| Assets held for sale | - | 9,308 | - | |
| Income tax recoverable | 462 | 368 | 928 | |
| Inventory | 8,181 | 6,474 | 6,470 | |
| 84,744 | 71,971 | 64,674 | ||
| Non-current assets | ||||
| Deferred tax asset | 14,536 | 15,006 | 7,576 | |
| Property and equipment | 412,523 | 415,354 | 348,148 | |
| Intangible assets | 3,917 | 4,220 | 4,523 | |
| Total Assets | 515,720 | 506,551 | 424,921 | |
| Liabilities and Shareholders' Equity | ||||
| Current liabilities | ||||
| Bank indebtedness | - | 7,834 | - | |
| Accounts payable and accrued liabilities | 28,051 | 27,904 | 26,902 | |
| Fair value of non-controlling interest liability | 12,763 | - | - | |
| Current portion of long-term debt | 669 | 14,201 | 500 | |
| 41,483 | 49,939 | 27,402 | ||
| Long-term liabilities | ||||
| Fair value of non-controlling interest liability | 1,596 | 12,878 | 13,707 | |
| Long-term debt | 128,407 | 125,727 | 81,936 | |
| Total Liabilities | 171,486 | 188,544 | 123,045 | |
| Shareholders' equity | ||||
| Share capital | 328,416 | 327,197 | 310,296 | |
| Share option reserve | 12,419 | 11,572 | 10,338 | |
| Accumulated deficit | (12,697) | (12,370) | (12,212) | |
| Foreign currency translation reserve | 15,143 | (11,314) | (8,209) | |
| Total Shareholders' Equity | 343,281 | 315,085 | 300,213 | |
| Non-controlling interest | 953 | 2,922 | 1,663 | |
| Total Liabilities and Shareholders' Equity | 515,720 | 506,551 | 424,921 | |
Xtreme Drilling and Coil Services Corp.
Consolidated Statements of Income
For the years ended December 31, 2013 and 2012
| (in thousands of Canadian dollars, except share and per share data) | |||
| 2013 | 2012 | ||
| (Restated - Note 3) | |||
| Revenue | 229,823 | 179,387 | |
| Expenses | |||
| Operating expenses | 144,873 | 127,835 | |
| General and administrative expenses | 11,280 | 10,226 | |
| Depreciation of property and equipment | 51,192 | 27,266 | |
| Amortization of intangibles | 303 | 303 | |
| Stock-based compensation | 1,321 | 1,245 | |
| Foreign exchange loss (gain) | 6,494 | (1,790) | |
| (Gain) loss on sale of equipment | (132) | 257 | |
| Change in value of non-controlling interest liability | 1,481 | (829) | |
| Impairment of accounts receivable | 72 | 6,235 | |
| Impairment of assets held for sale | - | 3,133 | |
| Loss on damage of property and equipment | - | 538 | |
| Other expense | 153 | 175 | |
| Interest expense | 7,866 | 7,919 | |
| Income (loss) before tax for the year | 4,920 | (3,126) | |
| Tax expense (recovery) | |||
| Current | 3,870 | 2,775 | |
| Deferred | 483 | (7,175) | |
| Total tax expense (recovery) | 4,353 | (4,400) | |
| Net income for the year | 567 | 1,274 | |
| Net (loss) income for the year attributable to: | |||
| Owners of the parent | (327) | (155) | |
| Non-controlling interest | 894 | 1,429 | |
| 567 | 1,274 | ||
| Net (loss) per common share attributable to equity owners of the parent | |||
| - basic | (0.00) | (0.00) | |
| - diluted | (0.00) | (0.00) | |
| Weighted average number of common shares | |||
| - basic | 80,881,799 | 69,618,457 | |
| - diluted | 81,351,825 | 69,759,835 | |
Xtreme Drilling and Coil Services Corp.
Consolidated Statements of Comprehensive Income (Loss)
For the years ended December 31, 2013 and 2012
| (in thousands of Canadian dollars) | ||||
| 2013 | 2012 | |||
| (Restated - Note 3) | ||||
| Net income for the year | 567 | 1,274 | ||
| Other comprehensive income (loss) | ||||
| Items may be subsequently reclassified to profit or loss | ||||
| Unrealized gain (loss) on translating | ||||
| financial statements of foreign operations | 26,751 | (3,278) | ||
| Comprehensive income (loss) for the year | 27,318 | (2,004) | ||
Xtreme Drilling and Coil Services Corp.
Consolidated Statements of Changes in Equity
For the years ended December 31, 2013 and 2012
| (in thousands of Canadian dollars) | ||||||||||||||
| Equity attributable to the owners of the parent | ||||||||||||||
| Share capital | Share option reserve | Accumulated deficit | Foreign currency translation reserve | Total | Non-controlling interest | Total shareholders' equity | ||||||||
| Balance at Jan 1, 2012 (Previously reported) | 310,296 | 10,338 | (4,325) | (8,596) | 307,713 | - | 307,713 | |||||||
| Effect of change in accounting policies | - | - | - | 387 | 387 | 7,483 | 7,870 | |||||||
| Balance at Jan 1, 2012 (Restated) | 310,296 | 10,338 | (4,325) | (8,209) | 308,100 | 7,483 | 315,583 | |||||||
| Impact of fair value of non-controlling interest liability | - | - | (7,887) | (7,887) | (5,820) | (13,707) | ||||||||
| 310,296 | 10,338 | (12,212) | (8,209) | 300,213 | 1,663 | 301,876 | ||||||||
| Net (loss) income for the year | - | - | (158) | - | (158) | 1,432 | 1,274 | |||||||
| Other comprehensive loss | ||||||||||||||
| Currency translation differences | - | - | - | (3,105) | (3,105) | (173) | (3,278) | |||||||
| Total comprehensive (loss) income | - | - | (158) | (3,105) | (3,263) | 1,259 | (2,004) | |||||||
| Employee share option scheme: | ||||||||||||||
| Value of employees services | 105 | 1,339 | - | - | 1,444 | - | 1,444 | |||||||
| Proceeds from shares issued | 16,796 | -105 | - | - | 16,691 | - | 16,691 | |||||||
| Total transactions with owners | 16,901 | 1,234 | - | - | 18,135 | - | 18,135 | |||||||
| Balance at Dec 31, 2012 (Restated) | 327,197 | 11,572 | (12,370) | (11,314) | 315,085 | 2,922 | 318,007 | |||||||
| Balance at Jan 1, 2013 (Restated) | 327,197 | 11,572 | (5,312) | (11,314) | 322,143 | 8,742 | 330,885 | |||||||
| Impact of fair value of non-controlling interest liability | - | - | (7,058) | (7,058) | (5,820) | (12,878) | ||||||||
| 327,197 | 11,572 | (12,370) | (11,314) | 315,085 | 2,922 | 318,007 | ||||||||
| Net (loss) income for the year | - | - | (327) | - | (327) | 894 | 567 | |||||||
| Other comprehensive income | ||||||||||||||
| Currency translation differences | - | - | - | 26,457 | 26,457 | 294 | 26,751 | |||||||
| Total comprehensive income | - | - | (327) | 26,457 | 26,130 | 1,188 | 27,318 | |||||||
| Dividends | (3,157) | (3,157) | ||||||||||||
| Employee share option scheme: | ||||||||||||||
| Value of employee services | 478 | 1,325 | - | - | 1,803 | - | 1,803 | |||||||
| Proceeds from shares Issued, net of issue costs | 741 | (478) | - | - | 263 | - | 263 | |||||||
| Total transactions with owners | 1,219 | 847 | - | - | 2,066 | (3,157) | (1,091) | |||||||
| Balance at Dec 31, 2013 | 328,416 | 12,419 | (12,697) | 15,143 | 343,281 | 953 | 344,234 | |||||||
Xtreme Drilling and Coil Services Corp.
Consolidated Statements of Cash Flows
For the years ended December 31, 2013 and 2012
| (in thousands of Canadian dollars) | |||
| 2013 | 2012 | ||
| (Restated - Note 3) | |||
| Cash flow provided by: | |||
| Operating activities | |||
| Net income for the year | 567 | 1,274 | |
| Items not affecting cash: | |||
| Depreciation and amortization | 51,495 | 27,569 | |
| Stock-based compensation | 1,321 | 1,245 | |
| Unrealized foreign exchange loss (gain) | 6,494 | (1,659) | |
| (Gain) loss on sale of equipment | (132) | 257 | |
| Change in fair value of non-controlling interest liability | 1,481 | (829) | |
| Impairment on accounts receivable | 72 | 6,235 | |
| Impairment on assets held for sale | - | 3,133 | |
| Loss on damage of property and equipment | - | 538 | |
| Interest expense | 7,866 | 6,963 | |
| Interest paid | (7,656) | (6,491) | |
| Amortization of debt issuance costs | 1,380 | 966 | |
| Current tax expense | 3,870 | 2,775 | |
| Deferred tax expense (recovery) | 483 | (7,175) | |
| Taxes paid | (217) | - | |
| Changes in items of working capital | (5,122) | (4,519) | |
| Net cash generated from operating activities | 61,902 | 30,282 | |
| Financing activities | |||
| Proceeds from shares issued, net of issue costs | - | 16,192 | |
| Proceeds from exercise of stock options | 741 | 255 | |
| Proceeds from long-term debt | 12,512 | 66,260 | |
| Proceeds from long-term debt | 129,632 | - | |
| Repayment of long-term debt | (158,609) | (5,605) | |
| Repayment of (proceeds from) operating facility | (7,834) | 7,834 | |
| Dividends paid to joint venture partner | (1,276) | - | |
| Debt issuance cost | (1,247) | (1,459) | |
| Net cash (used in) generated from financing activities | (26,081) | 83,477 | |
| Investing activities | |||
| Proceeds from sale of equipment | 569 | 681 | |
| Capital expenditures | (23,059) | (112,357) | |
| Net cash used in investing activities | (22,490) | (111,676) | |
| Effect of exchange rate changes on cash and cash equivalents | (7,032) | (3,035) | |
| Increase (decrease) in cash and cash equivalents | 6,299 | (952) | |
| Cash and cash equivalents - beginning of year | 5,921 | 6,873 | |
| Cash and cash equivalents - end of year | 12,220 | 5,921 | |
Xtreme Drilling and Coil Services Corp.
EBITDA and Adjusted EBITDA
For the years ended December 31, 2013 and 2012
| (in thousands of Canadian dollars) | |||
| 2013 | 2012 | ||
| Net income | 567 | 1,274 | |
| Tax expense | 4,353 | (4,400) | |
| Interest expense | 7,866 | 7,919 | |
| Amortization of intangibles | 303 | 303 | |
| Depreciation of property and equipment | 51,192 | 27,266 | |
| EBITDA | 64,281 | 32,362 | |
| 2013 | 2012 | ||
| EBITDA | 64,281 | 32,362 | |
| Adjustments for non-cash and one-time gains and losses | 9,317 | (404) | |
| Adjusted EBITDA | 73,598 | 31,958 | |
| Adjusted EBITDA per share ($) | 0.91 | 0.46 | |
| Net (loss) income per share ($) | (0.09) | 0.02 | |
| Adjusted EBITDA attributable to: | |||
| Owners of the parent | 72,704 | 30,107 | |
| Non-controlling interest | 894 | 1,851 | |
| 73,598 | 31,958 | ||
| 2013 | 2012 | ||
| Stock-based compensation | 1,321 | 1,245 | |
| (Gain) loss on sale of equipment | (132) | 257 | |
| Foreign exchange (gain) loss | 6,494 | (1,790) | |
| Change in fair value of non-controlling interest liability | 1,481 | (829) | |
| Loss on damage of property and equipment | - | 538 | |
| Other expense | 153 | 175 | |
| 9,317 | (404) | ||
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. Further, the FLS herein may relate to trade credit insurance carried by the Company to mitigate receivables collection risk. 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 March 4, 2014, 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 and Saudi Arabia. For more information about the Company, please visit www.xtremecoil.com.
Contact Information:
Matt Porter
Chief Financial Officer
+1 281 994 4600
ir@xtremecoil.com
www.xtremecoil.com