CALGARY, March 17, 2014 /CNW/ –
Overview
Ensign Energy Services Inc. (“Ensign” or the “Company”) generated the
second highest revenue in its history of $2,098.0 million for the year
ended December 31, 2013, a decrease of five percent over revenue of
$2,197.3 million recorded in the prior year. Operating earnings,
expressed as adjusted EBITDA (defined as earnings before interest,
income taxes, depreciation, share-based compensation expense (recovery)
and foreign exchange and other), for 2013 were $485.7 million ($3.18
per common share), a 13 percent decrease from adjusted EBITDA of $561.0
million ($3.67 per common share) for the year ended December 31, 2012.
Net income for the year ended December 31, 2013 was $128.9 million
($0.84 per common share), a 41 percent decrease from $217.5 million
($1.42 per common share) recorded in 2012. Excluding the tax-effected
impact of share-based compensation expense (recovery) and foreign
exchange and other, adjusted net income for the year ended December 31,
2013 totaled $143.9 million ($0.94 per common share), 34 percent lower
than adjusted net income of $219.5 million ($1.44 per common share)
recorded for the year ended December 31, 2012. Funds from operations
for 2013 decreased 14 percent to $435.6 million ($2.85 per common
share) from $506.4 million ($3.32 per common share) in the prior year.
During the fourth quarter of 2013, the Company generated revenue of
$536.0 million, an increase of one percent from revenue of $530.1
million recorded in the fourth quarter of 2012. Adjusted EBITDA was
$112.5 million ($0.74 per common share) for the fourth quarter of 2013,
a decrease of nine percent from adjusted EBITDA of $123.9 million
($0.81 per common share) recorded in the fourth quarter of 2012. Net
income decreased 45 percent to $26.9 million ($0.18 per common share)
compared to $48.5 million ($0.32 per common share) recorded in 2012.
Adjusted net income for the fourth quarter of 2013 totaled $27.9
million ($0.18 per common share), 42 percent lower than adjusted net
income of $48.4 million ($0.32 per common share) recorded for the
fourth quarter of 2012. Funds from operations were $101.2 million
($0.66 per common share) for the fourth quarter of 2013, a 13 percent
decrease from $116.6 million ($0.76 per common share) recorded in the
fourth quarter of 2012.
North American customers reduced their demand for oilfield services in
late 2012 and into the start of 2013 in reaction to unfavorable global
economic conditions and concerns regarding the economics of oil and
natural gas projects. The reduced demand for North American oilfield
services negatively impacted operating and financial results in 2013
compared to 2012. In addition, Canadian oilfield services were
hindered in 2013 by a particularly wet spring break-up that impeded the
movement of the Company’s equipment. Results from the Company’s
international operations were stronger in 2013 compared to 2012, mainly
due to increased demand in the eastern hemisphere and the strategic
growth of the Company’s fleet to meet rising levels of demand for
oilfield services. International and United States financial results
were positively impacted by the strengthening of the average United
States dollar foreign exchange rate on translation to Canadian
dollars. During 2013, the average United States dollar foreign
exchange rate increased by approximately three percent against the
Canadian dollar when compared to 2012.
Despite a decrease in demand for oilfield services in some of the areas
where the Company operates, growth of the Company’s global equipment
fleet helped to mitigate the overall decrease to activity levels. In
2013 the Company added five new Automated Drill Rigs (“ADR®“) to its drilling rig fleet: two in the Canadian market and three in
the United States market through the new build program. All of the
newly constructed ADRs are subject to long-term contracts. The new
build program also added seven new well servicing rigs: six in Canada
and one in the United States. In addition, the Company expanded its
existing directional drilling business in Canada through the
acquisition of substantially all of the assets of Departure Energy
Services Inc. (“Departure”) and expanded its existing oilfield rental
business in Canada through the acquisition of substantially all of the
assets of EGOC Enviro Group of Companies (“EGOC”), both in the second
quarter of 2013. During 2013, an additional drilling rig was relocated
to the international market from the Company’s United States fleet.
Consistent with prior years, the Company increased its dividend in the
fourth quarter of 2013 to a quarterly dividend rate of $0.1175 per
common share, a 6.8 percent increase from the previous quarterly
dividend rate of $0.1100 per common share. The Company first started
paying a dividend in 1995 and has increased its annual dividend at a 17
percent compound annual growth rate from 1995 to the current year.
The Company exited 2013 with a working capital deficit of $71.1 million
compared to positive working capital of $13.9 million at December 31,
2012. The working capital deficit position was due to existing cash
resources being utilized in 2013 to fund the second quarter
acquisitions of Departure and EGOC mentioned above, as well as funding
the current new build program. The Company’s revolving credit
facilities provide for available borrowings of $70.7 million at
December 31, 2013 compared to $164.3 million at December 31, 2012.
FINANCIAL AND OPERATING HIGHLIGHTS
($ thousands, except per share data and operating information)
| Three months ended December 31 | Year ended December 31 | ||||||||||||
| 2013 | 2012 | % change | 2013 | 2012 | % change | ||||||||
| Revenue | 536,044 | 530,106 | 1 | 2,098,011 | 2,197,321 | (5) | |||||||
| Adjusted EBITDA 1 | 112,461 | 123,915 | (9) | 485,712 | 560,975 | (13) | |||||||
| Adjusted EBITDA per share 1 | |||||||||||||
| Basic | $0.74 | $0.81 | (9) | $3.18 | $3.67 | (13) | |||||||
| Diluted | $0.73 | $0.81 | (10) | $3.16 | $3.67 | (14) | |||||||
| Adjusted net income 2 | 27,947 | 48,367 | (42) | 143,909 | 219,504 | (34) | |||||||
| Adjusted net income per share 2 | |||||||||||||
| Basic | $0.18 | $0.32 | (44) | $0.94 | $1.44 | (35) | |||||||
| Diluted | $0.18 | $0.32 | (44) | $0.94 | $1.43 | (34) | |||||||
| Net income | 26,895 | 48,489 | (45) | 128,865 | 217,522 | (41) | |||||||
| Net income per share | |||||||||||||
| Basic | $0.18 | $0.32 | (44) | $0.84 | $1.42 | (41) | |||||||
| Diluted | $0.18 | $0.32 | (44) | $0.84 | $1.42 | (41) | |||||||
| Funds from operations 3 | 101,209 | 116,555 | (13) | 435,611 | 506,355 | (14) | |||||||
| Funds from operations per share 3 | |||||||||||||
| Basic | $0.66 | $0.76 | (13) | $2.85 | $3.32 | (14) | |||||||
| Diluted | $0.66 | $0.76 | (13) | $2.84 | $3.31 | (14) | |||||||
| Weighted average shares – basic (000s) | 152,809 | 152,617 | – | 152,693 | 152,664 | – | |||||||
| Weighted average shares – diluted (000s) | 153,613 | 152,921 | – | 153,620 | 152,995 | – | |||||||
| Drilling | |||||||||||||
| Number of marketed rigs | |||||||||||||
| Canada4 | 121 | 124 | (2) | 121 | 124 | (2) | |||||||
| United States | 117 | 121 | (3) | 117 | 121 | (3) | |||||||
| International 5 | 54 | 54 | – | 54 | 54 | – | |||||||
| Operating days | |||||||||||||
| Canada 4 | 3,457 | 4,135 | (16) | 14,183 | 18,398 | (23) | |||||||
| United States | 5,778 | 5,555 | 4 | 22,955 | 24,226 | (5) | |||||||
| International 5 | 2,888 | 3,010 | (4) | 11,384 | 11,612 | (2) | |||||||
| Well Servicing | |||||||||||||
| Number of marketed rigs | |||||||||||||
| Canada | 95 | 99 | (4) | 95 | 99 | (4) | |||||||
| United States | 45 | 46 | (2) | 45 | 46 | (2) | |||||||
| Operating hours | |||||||||||||
| Canada | 30,324 | 35,054 | (13) | 121,159 | 140,978 | (14) | |||||||
| United States | 30,057 | 28,097 | 7 | 105,260 | 121,766 | (14) | |||||||
|
1 Adjusted EBITDA is defined as “income before interest expense, income taxes, depreciation, share-based compensation expense (recovery) and foreign exchange and other”. Management believes that in addition to net income, Adjusted EBITDA and Adjusted EBITDA per share are useful supplemental measures as they provide an indication of the results generated by the Company’s principal business activities prior to consideration of how these activities are financed, how the results are taxed in various jurisdictions, how the results are impacted by foreign exchange or how the results are impacted by the accounting standards associated with the Company’s share-based compensation plans. Adjusted EBITDA and Adjusted EBITDA per share as defined above are not recognized measures under International Financial Reporting Standards and accordingly may not be comparable to measures used by other companies. |
|
2 Adjusted net income is defined as “net income before share-based compensation expense (recovery) and foreign exchange and other, tax-effected using an income tax rate of 35 percent”. Adjusted net income and Adjusted net income per share are useful supplemental measures as they provide an indication of the results generated by the Company’s principal business activities prior to consideration of how the results are impacted by foreign exchange and how the results are impacted by the accounting standards associated with the Company’s share-based compensation plans, net of income taxes. Adjusted net income and Adjusted net income per share as defined above are not recognized measures under International Financial Reporting Standards and accordingly may not be comparable to measures used by other companies. |
|
3 Funds from operations is defined as “cash provided by operating activities before the change in non-cash working capital”. Funds from operations and Funds from operations per share are measures that provide additional information regarding the Company’s liquidity and its ability to generate funds to finance its operations. Management utilizes these measures to assess the Company’s ability to finance operating activities and capital expenditures. Funds from operations and Funds from operations per share are not measures that have any standardized meaning prescribed by International Financial Reporting Standards and accordingly may not be comparable to similar measures used by other companies. |
| 4 Excludes coring rigs. |
| 5 Includes workover rigs. |
2013 Highlights
-
Revenue for 2013 was the second highest in the Company’s history at
$2,098.0 million, down five percent from the record level set in 2012.
For the fourth quarter of 2013 revenue was comparable to the fourth
quarter of 2012, increasing one percent. -
Five new ADRs were added to the Company’s drilling fleet: two in the
Canadian market and three in the United States market. The new build
program also added seven new well servicing rigs: six in Canada and
one in the United States. In addition, the Company retrofitted four
drilling rigs in 2013: two in Canada, one in the United States and one
in the international market. -
Revenue by geographic area for the three and twelve months ended
December 31, 2013: - Canada – fourth quarter: 30 percent, 2013: 32 percent;
- United States – fourth quarter: 44 percent, 2013: 42 percent; and
- International – fourth quarter: 26 percent, 2013: 26 percent.
-
Adjusted EBITDA for 2013 was $485.7 million, a 13 percent decrease from
adjusted EBITDA of $561.0 million for the year ended December 31,
2012. For the fourth quarter of 2013, adjusted EBITDA was $112.5
million, down nine percent from adjusted EBITDA of $123.9 million
recorded in the fourth quarter of 2012. Funds from operations for 2013
decreased 14 percent to $435.6 million from $506.4 million in the prior
year and decreased 13 percent in the fourth quarter of 2013 to $101.2
million from $116.6 million recorded in the fourth quarter of the prior
year. -
Canadian drilling recorded 14,183 operating days in 2013, a 23 percent
decrease from 18,398 operating days in the previous year. Canadian
well servicing hours decreased by 14 percent in the year ended December
31, 2013 from the prior year. For the fourth quarter of 2013, Canadian
drilling recorded 3,457 operating days, a 16 percent decrease from
4,135 operating days in the fourth quarter of 2012. Canadian well
servicing hours decreased by 13 percent in the fourth quarter of 2013
compared to the fourth quarter of 2012. -
United States drilling recorded 22,955 operating days in 2013, a five
percent decrease from 24,226 operating days in the previous year.
United States well servicing hours decreased by 14 percent in 2013
compared to 2012. For the fourth quarter of 2013, United States
drilling recorded 5,778 operating days, a four percent increase over
5,555 operating days in the fourth quarter of 2012. United States well
servicing hours increased by seven percent in the fourth quarter of
2013 compared to the fourth quarter of 2012. -
International drilling recorded 11,384 operating days in 2013, a two
percent decrease from 11,612 operating days recorded in 2012. For the
fourth quarter of 2013, international drilling recorded 2,888 operating
days, a four percent decrease from 3,010 operating days in the fourth
quarter of 2012. -
The Company declared a quarterly cash dividend on common shares of
$0.1175 per common share payable April 4, 2014. In 2013 the Company
declared dividends of $0.4475 per common share, an increase of five
percent over dividends of $0.4250 per common share declared in 2012.
The Company has increased its dividend every year since the first
dividend was paid in 1995.
Revenue and Oilfield Services Expense
| Three months ended December 31 | Year ended December 31 | ||||||||||||
| ($ thousands) | 2013 | 2012 | % change | 2013 | 2012 | % change | |||||||
| Revenue | |||||||||||||
| Canada | 158,488 | 176,693 | (10) | 661,008 | 774,444 | (15) | |||||||
| United States | 235,829 | 213,667 | 10 | 890,767 | 944,580 | (6) | |||||||
| International | 141,727 | 139,746 | 1 | 546,236 | 478,297 | 14 | |||||||
| 536,044 | 530,106 | 1 | 2,098,011 | 2,197,321 | (5) | ||||||||
| Oilfield services expense | 399,856 | 384,553 | 4 | 1,524,173 | 1,555,509 | (2) | |||||||
| Gross margin | 136,188 | 145,553 | (6) | 573,838 | 641,812 | (11) | |||||||
| Gross margin percentage % | 25.4 | 27.5 | 27.4 | 29.2 | |||||||||
Revenue for the year ended December 31, 2013 was the second highest in
the Company’s history totaling $2,098.0 million, a decrease of five
percent from the record level set for the year ended December 31, 2012
of $2,197.3 million. The Company recorded revenue of $536.0 million
for the three months ended December 31, 2013, a one percent increase
from the $530.1 million recorded in the three months ended December 31,
2012. Reduced demand for North American oilfield services that began
late in 2012 continued into 2013 weakening financial results in the
current year. Demand in the current year was hampered by continuing
uncertainty in oil and natural gas economics in North America.
However, demand for international oilfield services remained firm in
many of the areas in which the Company operates, producing generally
stronger results in 2013 compared to 2012. Demand for North American
oilfield services began to show signs of recovery late in 2013,
particularly in the United States, with revenue rates returning to
levels more comparable with 2012 however Canada still remained at
slightly reduced demand levels. United States results for the current
year fourth quarter also reflect the additions to the fleet from the
new build program. Throughout 2013, three new ADRs and one new well
servicing rig were added to the United States fleet which helped to
bring operating and financial results up in the fourth quarter of 2013
when compared to the fourth quarter of 2012.
Gross margin as a percentage of revenue decreased in 2013 to 27.4
percent from 29.2 percent in 2012. Gross margin as a percentage of
revenue for the fourth quarter of 2013 decreased to 25.4 percent
compared to 27.5 percent for the fourth quarter of the prior year.
Increased costs for labor and higher major maintenance expenditures,
which are generally expensed as incurred, negatively impacted margins
in the current year. In addition several international rigs, which are
expected to begin work early in 2014, incurred start-up costs towards
the end of 2013. Such expenditures negatively impacted 2013 gross
margins.
Canadian Oilfield Services
|
Three months ended December 31 |
Year ended December 31 | ||||||||||||
| 2013 | 2012 | % change | 2013 | 2012 | % change | ||||||||
| Drilling rigs1 | |||||||||||||
| Opening balance | 121 | 133 | 124 | 131 | |||||||||
| Additions | – | 1 | 2 | 6 | |||||||||
| Transfers2 | – | (10) | – | (10) | |||||||||
| Decommissions / Disposals | – | – | (5) | (3) | |||||||||
| Ending balance | 121 | 124 | (2) | 121 | 124 | (2) | |||||||
| Drilling operating days1 | 3,457 | 4,135 | (16) | 14,183 | 18,398 | (23) | |||||||
| Drilling rig utilization %1 | 31.1 | 36.2 | (14) | 32.3 | 38.8 | (17) | |||||||
| Well servicing rigs | |||||||||||||
| Opening balance | 94 | 99 | 99 | 103 | |||||||||
| Additions | 1 | – | 6 | – | |||||||||
| Decommissions / Disposals | – | – | (10) | (4) | |||||||||
| Ending balance | 95 | 99 | (4) | 95 | 99 | (4) | |||||||
| Well servicing operating hours | 30,324 | 35,054 | (13) | 121,159 | 140,978 | (14) | |||||||
| Well servicing utilization % | 34.7 | 38.5 | (10) | 35.8 | 38.1 | (6) | |||||||
| 1 Excludes coring rigs. |
| 2 Includes transfers to coring rigs. |
The Company recorded revenue of $661.0 million in Canada for the year
ended December 31, 2013, a 15 percent decrease from $774.4 million
recorded in the year ended December 31, 2012. Revenue generated in
Canada decreased 10 percent to $158.5 million for the three months
ended December 31, 2013, from $176.7 million for the three months ended
December 31, 2012. In the fourth quarter of 2013, Canadian revenues
accounted for 30 percent of total revenue (2012 – 33 percent), and
during the year ended December 31, 2013, Canadian revenues were 32
percent of total revenue (2012 – 35 percent).
Unfavorable price differentials for Canadian commodities and continued
industry uncertainty weakened demand for the Company’s Canadian
oilfield services in 2013 compared to 2012. Additionally, the
Company’s Canadian operations were hampered in 2013 as the industry
continued its transition from shallow to deeper and longer reach
drilling. The resulting impact to activity levels, combined with a
particularly wet spring break-up in the current year, reduced operating
and financial results for the year ended December 31, 2013 compared to
the year ended December 31, 2012. These negative impacts were somewhat
offset by the positive impact from the expansion of the Company’s
Canadian oilfield rentals and directional drilling equipment fleets in
the second quarter of 2013.
During the year ended December 31, 2013, operating days recorded by the
Company’s Canadian operations decreased 23 percent compared to the
level of activity in the prior year. Operating days in the fourth
quarter of 2013 decreased 16 percent from the fourth quarter of 2012.
Similarly, Canadian well servicing hours decreased by 14 percent in the
year ended December 31, 2013 and by 13 percent in the fourth quarter of
2013 compared to the corresponding periods in the prior year.
The Company decommissioned or disposed of five inactive drilling rigs
and 10 inactive well servicing rigs during 2013 and added two new build
ADRs and six new well servicing rigs to the Company’s Canadian
equipment fleet in 2013. The Company continues to transition its
Canadian drilling fleet from shallow drilling rigs to deeper drilling
rigs in response to changing market dynamics. In January, 2013, the
Company disposed of its non-rig manufacturing facility located in
Calgary, Alberta.
United States Oilfield Services
|
Three months ended December 31 |
Year ended December 31 | |||||||||||||
| 2013 | 2012 | % change | 2013 | 2012 | % change | |||||||||
| Drilling rigs | ||||||||||||||
| Opening balance | 117 | 116 | 121 | 117 | ||||||||||
| Additions | – | – | 3 | 5 | ||||||||||
| Transfers | – | 5 | (1) | 5 | ||||||||||
| Decommissions / Disposals | – | – | (6) | (6) | ||||||||||
| Ending balance | 117 | 121 | (3) | 117 | 121 | (3) | ||||||||
| Drilling operating days | 5,778 | 5,555 | 4 | 22,955 | 24,226 | (5) | ||||||||
| Drilling rig utilization % | 53.7 | 50.2 | 7 | 54.0 | 57.4 | (6) | ||||||||
| Well servicing rigs | ||||||||||||||
| Opening balance | 45 | 46 | 46 | 36 | ||||||||||
| Additions | – | 1 | 1 | 12 | ||||||||||
| Decommissions / Disposals | – | (1) | (2) | (2) | ||||||||||
| Ending balance | 45 | 46 | (2) | 45 | 46 | (2) | ||||||||
| Well servicing operating hours | 30,057 | 28,097 | 7 | 105,260 | 121,766 | (14) | ||||||||
| Well servicing utilization % | 72.6 | 66.4 | 9 | 64.2 | 78.1 | (18) | ||||||||
The Company’s United States operations recorded revenue of $890.8
million for the year ended December 31, 2013, down six percent from
revenue of $944.6 million for the year ended December 31, 2012.
Revenue recorded in the United States was $235.8 million in the fourth
quarter of 2013, a 10 percent increase from the $213.7 million recorded
in the corresponding period of the prior year. The United States
segment accounted for 44 percent of the Company’s revenue in the fourth
quarter of 2013 (2012 – 40 percent); and 42 percent of the Company’s
revenue in the current year (2012 – 43 percent), making it the largest
contributor to consolidated revenues in 2013, consistent with the prior
year.
The number of operating days recorded by the Company’s United States
operations for the year ended December 31, 2013 decreased by five
percent to 22,955 operating days from 24,226 operating days in 2012.
During the fourth quarter of 2013 the Company recorded 5,778 operating
days in the United States, an increase of four percent over 5,555
operating days recorded during the fourth quarter of the prior year.
United States well servicing hours in the fourth quarter of 2013 were
up seven percent compared to the fourth quarter of the prior year and
well servicing hours for 2013 were down 14 percent compared to 2012.
Activity levels were down in the United States for the majority of 2013
compared to the prior year as the demand for oilfield services by the
Company’s customers continued to be held back in certain regions
through much of the year and did not start to show signs of recovery
until later in the year. As a result, revenue rates were held down for
the start of 2013 but gradually increased throughout the year as demand
began to pick up. Overall, this led to reduced operating and financial
results for the year ended December 31, 2013 compared to the year ended
December 31, 2012. Partially offsetting this decrease was the
strengthening of the United States dollar against the Canadian dollar
in the current year compared to 2012 and additions to the United States
fleet throughout 2013 as described below. The average United States
dollar foreign exchange rate increased approximately three percent
during 2013 compared to 2012.
During 2013, the Company added three new build ADRs and one new well
servicing rig to its United States fleet, transferred one drilling rig
to its international equipment fleet and decommissioned or disposed of
six inactive drilling rigs and two inactive well servicing rigs.
International Oilfield Services
|
Three months ended December 31 |
Year ended December 31 | |||||||||||||
| 2013 | 2012 | % change | 2013 | 2012 | % change | |||||||||
| Drilling and workover rigs | ||||||||||||||
| Opening balance | 54 | 58 | 54 | 59 | ||||||||||
| Additions | – | – | – | 2 | ||||||||||
| Transfers | – | (4) | 1 | (4) | ||||||||||
| Decommissions / Disposals | – | – | (1) | (3) | ||||||||||
| Ending balance | 54 | 54 | 54 | 54 | – | |||||||||
| Drilling operating days | 2,888 | 3,010 | (4) | 11,384 | 11,612 | (2) | ||||||||
| Drilling rig utilization % | 58.1 | 59.9 | (3) | 58.4 | 56.9 | 3 | ||||||||
International revenue totaled $546.2 million for the year ended December
31, 2013, a 14 percent increase from $478.3 million in 2012.
International revenue totaled $141.7 million in the fourth quarter of
2013, a one percent increase from $139.7 million recorded in the
corresponding period of the prior year. International operations
contributed 26 percent of the Company’s revenue in the fourth quarter
of 2013 (2012 – 27 percent) and 26 percent in the year ended December
31, 2013 (2012 – 22 percent).
The Company’s international operations recorded 11,384 operating days in
2013, a two percent decrease from 11,612 operating days recorded in
2012. International operating days for the three months ended December
31, 2013 decreased four percent over the comparable prior year period
to 2,888 operating days compared to 3,010 operating days in the fourth
quarter of 2012.
Strategic investments made in 2012 and 2013 in the Company’s
international operations helped to increase the average revenue rates
per day for international operations in the current year compared to
the prior year. Revenues for international oilfield services were
mainly consistent in the fourth quarter of 2013 compared to the fourth
quarter of 2012. The Company expanded its operations late in 2013 with
the start-up of one drilling rig deployed in Kurdistan. Two new build
ADR’s were added to the Australian equipment fleet late in 2012 and two
existing drilling rigs were relocated to the international market from
North America. An additional drilling rig was relocated during the
current year to Australia from the Company’s United States fleet.
Despite strength in certain international areas, the Company continues
to experience challenges in Latin America.
Consistent with the translation of results from the Company’s United
States operations, the operating results from the Company’s
international operations were improved on translation into Canadian
dollars by the three percent strengthening of the United States dollar
relative to the Canadian dollar in 2013 when compared to the prior
year.
As part of the Company’s international operations it provides oilfield
services in Venezuela pursuant to long-term contracts. These existing
contracts are set to expire in the next 12 months and due to the
current political unrest in Venezuela there is no assurance that the
Company will be able to renew these contracts in Venezuela or on
financial terms acceptable to the Company. In addition, as at December
31, 2013, the Company had net accounts receivable of approximately
$38.5 million for work performed in Venezuela and again, due to the
current political unrest in Venezuela, there is no assurance that the
Company will be successful in collecting all or any of such outstanding
balance.
Depreciation
| Three months ended December 31 | Year ended December 31 | ||||||||||||
| ($ thousands) | 2013 | 2012 | % change | 2013 | 2012 | % change | |||||||
| Depreciation | 69,153 | 54,029 | 28 | 248,026 | 220,227 | 13 | |||||||
Depreciation expense increased 13 percent to $248.0 million for the year
ended December 31, 2013 compared with $220.2 million for the year ended
December 31, 2012. Depreciation expense totaled $69.2 million for the
fourth quarter of 2013 compared with $54.0 million for the fourth
quarter of 2012, an increase of 28 percent. Higher depreciation
expense in 2013 over 2012 was attributable to higher-valued equipment
being added to the Company’s global fleet throughout the latter half of
2012 and 2013 in addition to the impacts of the second quarter
acquisitions of assets from EGOC and Departure.
General and Administrative Expense
| Three months ended December 31 | Year ended December 31 | |||||||||||
| ($ thousands) | 2013 | 2012 | % change | 2013 | 2012 | % change | ||||||
| General and administrative | 23,727 | 21,638 | 10 | 88,126 | 80,837 | 9 | ||||||
| % of revenue | 4.4 | 4.1 | 4.2 | 3.7 | ||||||||
General and administrative expense totaled $88.1 million (4.2 percent of
revenue) for the year ended December 31, 2013 compared with $80.8
million (3.7 percent of revenue) for the year ended December 31, 2012,
an increase of nine percent. General and administrative expense
increased 10 percent to $23.7 million (4.4 percent of revenue) for the
fourth quarter of 2013 compared with $21.6 million (4.1 percent of
revenue) for the fourth quarter of 2012. The increase in general and
administrative expense reflects the negative translational impact of a
stronger United States dollar on United States and international
administrative expenses in the current year and increased costs to
support growing international operations.
Share-Based Compensation Expense (Recovery)
| Three months ended December 31 | Year ended December 31 | |||||||||||
| ($ thousands) | 2013 | 2012 | % change | 2013 | 2012 | % change | ||||||
| Share-based compensation | (4,045) | (840) | 382 | 2,049 | (3,397) | (160) | ||||||
Share-based compensation expense (recovery) arises from the
Black-Scholes valuation accounting associated with the Company’s
share-based compensation plans, whereby the liability associated with
share-based compensation is adjusted for the effect of granting and
vesting of employee stock options and changes in the underlying price
of the Company’s common shares.
For 2013, share-based compensation was an expense of $2.0 million
compared with a recovery of $3.4 million for the year ended December
31, 2012. For the three months ended December 31, 2013, share-based
compensation recovery was $4.0 million compared with a recovery of $0.8
million recorded in the fourth quarter of 2012. The change in
share-based compensation expense for the three and twelve months ended
December 31, 2013 arises from the change in the fair value of
share-based compensation liability primarily due to changes in the
price of the Company’s common shares during the year and the expiry of
options at the end of the year. The closing price of the Company’s
common shares was $16.73 at December 31, 2013, compared with $15.37 at
December 31, 2012 and $17.64 at September 30, 2013.
Interest Expense
| Three months ended December 31 | Year ended December 31 | |||||||||||
| ($ thousands) | 2013 | 2012 | % change | 2013 | 2012 | % change | ||||||
| Interest expense | 5,395 | 3,862 | 40 | 18,795 | 18,666 | 1 | ||||||
| Interest income | (307) | (139) | 121 | (1,320) | (504) | 162 | ||||||
| 5,088 | 3,723 | 37 | 17,475 | 18,162 | (4) | |||||||
Interest is incurred on the Company’s $10.0 million Canadian-based
revolving credit facility (the “Canadian Facility”), the $400.0 million
global revolving credit facility (the “Global Facility”) and the USD
$300.0 million Notes issued in February 2012. The amortization of
deferred financing costs associated with the issuance of the Company’s
long-term debt is included in interest expense for the years ended
December 31, 2013 and 2012.
Interest expense in 2013 compared to 2012 was mainly consistent,
increasing only one percent. For the three months ended December 31,
2013 interest expense increased 40 percent to $5.4 million compared to
$3.9 million for the three months ended December 31, 2012 due to
increased draws on the Global Facility. Interest income was higher in
2013 compared to 2012 as a result of higher average balances of
interest-earning cash and cash equivalents in 2013 compared to 2012.
Foreign Exchange and Other
| Three months ended December 31 | Year ended December 31 | |||||||||||
| ($ thousands) | 2013 | 2012 | % change | 2013 | 2012 | % change | ||||||
| Foreign exchange and other | 5,664 | 653 | 767 | 21,095 | 6,446 | 227 | ||||||
Included in this amount are foreign currency movements in the Company’s
subsidiaries which have functional currencies other than Canadian
dollars and the impact of the conversion of the Australian operations
from Australian dollars to United States dollars. For the three months
ended December 31, 2013 the Australian dollar weakened by approximately
five percent against the United States dollar causing a foreign
currency loss on translation of the Company’s USD denominated debt into
Australian dollars. During the year ended December 31, 2013 the
Australian dollar weakened by approximately 16 percent against the
United States dollar. In general the United States dollar strengthened
in 2013 compared to 2012 when compared to other world currencies.
Income Taxes
| Three months ended December 31 | Year ended December 31 | |||||||||||
| ($ thousands) | 2013 | 2012 | % change | 2013 | 2012 | % change | ||||||
| Current income tax | 6,601 | 4,172 | 58 | 43,171 | 45,189 | (4) | ||||||
| Deferred income tax | 3,105 | 13,689 | (77) | 25,031 | 56,826 | (56) | ||||||
| 9,706 | 17,861 | (46) | 68,202 | 102,015 | (33) | |||||||
| Effective income tax rate % | 26.5 | 26.9 | 34.6 | 31.9 | ||||||||
For the year ended December 31, 2013, the effective income tax rate was
34.6 percent compared with 31.9 percent for the year ended December 31,
2012. The effective income tax rate for the three months ended
December 31, 2013 was 26.5 percent compared with 26.9 percent for the
three months ended December 31, 2012. The increase in the overall
effective rate in 2013, when compared with 2012, is due to the tax
impact of the currency devaluation that occurred in Venezuela in
February 2013, as well as the impact of foreign exchange translation
losses for which the effective tax rate varies from statutory rates.
The decrease in the effective income tax rate for the three months
ended December 31, 2013 as compared to the three months ended December
31, 2012 is due to a higher proportion of income earned in low rate
jurisdictions.
For the three and twelve months ended December 31, 2013, the increased
proportion of the current income tax expense when compared to the total
tax expense is primarily attributable to the phased elimination of the
deferral of income tax related to the Company’s partnerships operating
in Canada. The decreased deferred income tax expense portion for the
three and twelve months ended December 31, 2013 when compared with the
comparable prior year periods is primarily attributable to the decrease
in pre-tax profits.
Financial Position
The following chart outlines significant changes in the consolidated
statement of financial position from December 31, 2012 to December 31,
2013:
| ($ thousands) | Change | Explanation | ||||
| Cash and cash equivalents | 45,650 | See consolidated statements of cash flows. | ||||
| Accounts receivable | 17,630 |
Increase reflects foreign exchange fluctuations on the consolidation of the Company’s foreign subsidiaries and was offset by a decrease in Canadian operating activity in the fourth quarter of 2013 compared to the fourth quarter of 2012. | ||||
| Inventories and other | (9,498) |
Decrease was due to normal course use of consumables offset by additional inventory. | ||||
| Property and equipment | 255,088 |
Increase was due to additions to fixed assets from the current new build construction program; the acquisitions of the EGOC and Departure assets during the second quarter; and a strengthening of the USD year-end foreign exchange rate on the consolidation of the Company’s foreign subsidiaries, offset by depreciation. | ||||
| Note receivable | (741) |
Decrease was due to the reclassification of the current portion to accounts receivable offset by accretion of interest income during 2013. | ||||
| Accounts payable and accruals | 62,535 |
Increase reflects foreign exchange fluctuations on the consolidation of the Company’s foreign subsidiaries and timing of payments to external vendors during the year. | ||||
| Operating lines of credit | 94,535 |
Increase was due to additional draws during the year on the global revolving credit facility and the impact of foreign exchange fluctuations on the consolidation of the USD denominated debt held by the Company’s foreign subsidiaries, offset by repayments during the year. | ||||
| Share-based compensation | (804) |
Decrease was due to options which expired at the end of the current year, offset by an increase in the price of the Company’s common shares as at December 31, 2013 compared with December 31, 2012. | ||||
| Income taxes payable | (19,769) |
Decrease was due to tax instalments net of the current income tax provision for the year. | ||||
| Dividends payable | 1,166 |
Increase was due to a 6.8 percent increase in the quarterly dividend rate in the fourth quarter of 2013 compared to the dividend rate in the fourth quarter of 2012. | ||||
| Long-term debt | 20,818 |
Increase was due to foreign exchange fluctuations on the USD denominated long-term debt. | ||||
| Deferred income taxes | 45,037 |
Increase primarily due to accelerated tax depreciation of assets added during the current year. | ||||
| Shareholders’ equity | 104,611 |
Increase due to net income for the year and the impact of foreign exchange rate fluctuations on net assets of foreign subsidiaries, offset by the amount of dividends declared in the year. |
Funds from Operations and Working Capital
| Three months ended December 31 | Year ended December 31 | |||||||||||
| ($ thousands) | 2013 | 2012 | % change | 2013 | 2012 | % change | ||||||
| Funds from operations | 101,209 | 116,555 | (13) | 435,611 | 506,355 | (14) | ||||||
| Funds from operations per share | $0.66 | $0.76 | (13) | $2.85 | $3.32 | (14) | ||||||
| Working capital | (71,146) | 13,861 | (613) | (71,146) | 13,861 | (613) | ||||||
Funds from operations totaled $435.6 million ($2.85 per common share)
for 2013, a decrease of 14 percent compared to $506.4 million ($3.32
per common share) generated in 2012. During the three months ended
December 31, 2013, the Company generated funds from operations of
$101.2 million ($0.66 per common share) compared with $116.6 million
($0.76 per common share) for the three months ended December 31, 2012,
a decrease of 13 percent. The decrease in funds from operations in
2013 compared to 2012 is mainly due to reduced demand for North
American oilfield services in 2013 when compared to 2012.
At December 31, 2013, the Company’s working capital was a deficit of
$71.1 million compared to positive working capital of $13.9 million at
December 31, 2012. The Company’s working capital was utilized in the
second quarter of the current year for the acquisitions of the assets
of EGOC and Departure, in addition to funding the Company’s current new
build program and dividend payments throughout the year. The Company
expects funds generated by operations, combined with current and future
credit facilities, to fully support current operating and capital
requirements. Existing revolving credit facilities provide for total
borrowings of $410.0 million, of which $70.7 million was available as
at December 31, 2013.
Investing Activities
| Three months ended December 31 | Year ended December 31 | |||||||||||
| ($ thousands) | 2013 | 2012 | % change | 2013 | 2012 | % change | ||||||
| Purchase of property and equipment | (106,912) | (80,329) | 33 | (342,225) | (306,689) | 12 | ||||||
| Acquisitions | – | – | – | (76,408) | – | – | ||||||
| Net change in non-cash working capital | 20,687 | (23,392) | (188) | 17,845 | (15,040) | (219) | ||||||
| Cash used in investing activities | (86,225) | (103,721) | (17) | (400,788) | (321,729) | 25 | ||||||
During the second quarter of 2013 the Company acquired the rental assets
of EGOC and the directional drilling assets of Departure with existing
cash balances and credit facilities. These acquisitions increased the
Company’s presence in the rental and directional drilling markets in
Western Canada. The Company did not complete any significant
acquisitions in 2012.
Purchases of property and equipment for the year ended December 31, 2013
totaled $342.2 million (2012 – $306.7 million) and for the three months
ended December 31, 2013 totaled $106.9 million (2012 – $80.3 million).
The purchases of property and equipment relate primarily to
expenditures made pursuant to the Company’s ongoing new build program.
Significant additions in 2013 as a result of the new build program
include:
-
Completion of two new ADR® drilling rigs in Canada (one in the first quarter and one in the third
quarter); -
Completion of three new ADR® drilling rigs in the United States (one in each of the first, second
and third quarters); -
Construction of six new well servicing rigs in Canada (two in each of
the first and third quarters; and one in each of the second and fourth
quarters); and -
Construction of one new well servicing rig in the United States (third
quarter).
Financing Activities
| Three months ended December 31 | Year ended December 31 | |||||||||||
| ($ thousands) | 2013 | 2012 | % change | 2013 | 2012 | % change | ||||||
| Net (decrease) increase in operating lines of credit | (1,772) | (30,586) | (94) | 76,285 | (1,398) | (5,557) | ||||||
| Issue of senior unsecured notes | – | – | – | – | 300,000 | (100) | ||||||
| Repayment of term loan | – | – | – | – | (403,279) | 100 | ||||||
| Issue of capital stock | – | – | – | 2,002 | 43 | 4,556 | ||||||
| Purchase of shares held in trust | (580) | (535) | 8 | (6,497) | (8,579) | (24) | ||||||
| Deferred financing costs | – | – | – | – | (2,156) | (100) | ||||||
| Dividends | (18,019) | (16,854) | 7 | (68,614) | (65,116) | 5 | ||||||
| Net change in non-cash working capital | (964) | 2,570 | (138) | 1,912 | 3,500 | (45) | ||||||
| Cash (used in) provided by financing activities | (21,335) | (45,405) | (53) | 5,088 | (176,985) | (103) | ||||||
The Company’s available operating lines of credit consist of a $400.0
million Global Facility and a $10.0 million Canadian Facility. The
Global Facility is available to the Company and certain of its
wholly-owned subsidiaries, and may be drawn in Canadian, United States
or Australian dollars, up to the equivalent value of $400.0 million
Canadian dollars. The amount available under the Canadian Facility is
$10.0 million or the equivalent in United States dollars.
The change in the operating lines of credit for the year ended December
31, 2013 reflects funding for the ongoing new build program which is
anticipated to deliver an additional 12 new ADR® drilling rigs, one new well servicing rig and 10 major retrofits of
existing drilling rigs throughout 2014 and early 2015. As of December
31, 2013, the operating lines of credit are primarily being used to
fund the Company’s new build program and to support growth in
international operations.
In February 2012, the Company completed the private placement of USD
$300.0 million of senior unsecured notes, with the proceeds from the
issuance being used to repay a portion of the USD $400.0 million
unsecured term loan with the remaining balance repaid in full in the
second quarter of 2012.
On June 21, 2013 the Company received approval from the Toronto Stock
Exchange to acquire for cancellation up to three percent of the
Company’s issued and outstanding common shares under a Normal Course
Issuer Bid (the “Bid”). The Company may purchase up to 4,599,367
common shares for cancellation. The Bid commenced on June 25, 2013,
and will terminate on June 24, 2014, or such earlier time as the Bid is
completed or terminated at the option of the Company. As at December
31, 2013, no common shares have been purchased and cancelled pursuant
to the Bid.
The Company previously had a Bid that commenced on June 18, 2012, and
terminated on June 17, 2013, under which no common shares were
purchased and cancelled.
The Company increased its dividend in 2013 with a 6.8 percent fourth
quarter increase in the quarterly dividend rate to $0.1175 per common
share from the previous quarterly dividend rate of $0.1100 per common
share. During the year ended December 31, 2013, the Company declared
dividends of $0.4475 per common share, an increase of five percent over
dividends of $0.4250 per common share declared in 2012. The Company
received $2.0 million from the issuance of common shares in connection
with exercises pursuant to the employee stock option program in 2013
compared to nominal receipts for stock option exercises in 2012.
Subsequent to December 31, 2013, the Company declared a dividend for the
first quarter of 2014. A quarterly dividend of $0.1175 per common share
is payable April 4, 2014 to all Common Shareholders of record as of
March 25, 2014. The dividend is pursuant to the quarterly dividend
policy adopted by the Company. Pursuant to subsection 89(1) of the
Canadian Income Tax Act (“ITA”), the dividend being paid is designated
as an eligible dividend, as defined in subsection 89(1) of the ITA.
New Builds and Major Retrofits
During the year ended December 31, 2013, the Company commissioned three
new ADR® drilling rigs, one new well servicing rig and retrofitted one drilling
rig in the United States; two new ADR® drilling rigs, six new well servicing rigs and retrofitted two drilling
rigs in Canada; and retrofitted one drilling rig transferred from the
United States to Australia.
The Company continues to build new ADR® drilling rigs and upgrade existing drilling rigs to meet the increasing
technical demands of its customers. In Canada the Company is
continuing to transition from shallow drilling to deeper drilling,
building new ADRs and upgrading existing drilling rigs for deeper
resource plays in the northwest part of the Western Canada Sedimentary
Basin. In the United States the Company builds new ADRs for specific
resource plays and has been upgrading existing drilling rigs for pad
drilling operations in the southern United States. Internationally,
the Company has been increasing its capabilities, through a combination
of new ADRs and major retrofits of existing drilling rigs, to meet the
requirements of specific markets.
The estimated delivery schedule for new ADRs, major retrofits of
existing drilling rigs and new well servicing rigs, by geographic area
currently under construction at December 31, 2013 is as follows:
| Estimated Delivery Date | |||||||||||||
| Q1-2014 | Q2-2014 | Q3-2014 | Q4-2014 | Q1-2015 | Total | ||||||||
| New Build ADRs: | |||||||||||||
| Canada | – | – | 2 | 2 | – | 4 | |||||||
| United States | 1 | – | – | 3 | 2 | 6 | |||||||
| International | 2 | – | – | – | – | 2 | |||||||
| Major Retrofits to Drilling Rigs: | |||||||||||||
| Canada | 1 | – | 2 | – | – | 3 | |||||||
| United States | – | – | – | 1 | 1 | 2 | |||||||
| International | 2 | 1 | 2 | – | – | 5 | |||||||
| Total | 6 | 1 | 6 | 6 | 3 | 22 | |||||||
| Well Servicing Rigs: | |||||||||||||
| Canada | – | – | – | 1 | – | 1 | |||||||
| United States | – | – | – | – | – | – | |||||||
| International | – | – | – | – | – | – | |||||||
| Total | – | – | – | 1 | – | 1 | |||||||
Outlook
Management believes that the apparent recovery in the global economy
provides reasonable support for crude oil and natural gas prices.
Additionally, recent global political tensions and North American
winter weather conditions have resulted in crude oil trading above
USD$100 per barrel and natural gas in the USD$4.50 per mcf to USD$5.00
per mcf range. Crude oil and natural gas commodity prices at these
levels do not appear to be stimulating a lot of extra demand for
oilfield services as exploration and production companies will
undoubtedly look for sustainability of commodity prices before altering
their investment plans; however, higher commodity prices, even if
temporary in nature, are positive for their corporate cash flows.
Improved cash flows will help fund current planned levels of oilfield
services expenditures and will likely result in increases in
expenditures at some point in the future.
The number of wells drilled in Canada during 2013 was essentially
unchanged from the prior year (2013 – 11,102 wells; 2012 – 11,043
wells). In this environment of flat activity levels and excess
industry capacity, particularly in shallower depth categories, the
Company’s Canadian operations recorded a year-over-year reduction in
utilization rates in 2013. To improve its competitiveness in the
Canadian market the Company is continuing to transition its equipment
fleet to deeper depth categories in recognition of the shift in the
Canadian oilfield services market that has occurred in the last 12 to
15 months. In addition to the two new deeper ADRs and two drilling rig
retrofits completed in 2013, the Company is currently constructing four
new deeper capacity ADRs and three major retrofits to existing drilling
rigs for its Canadian fleet. While a colder winter throughout much of
North America this year has been positive for natural gas consumption
levels and related commodity prices, the price of natural gas does not
appear to be at a level that will generate increased levels of demand
for drilling natural gas wells in Canada in the near term. Recent
improvements in natural gas prices will have a positive effect on the
cash flows of the exploration and production companies and is expected
to help to fund continued oilfield expenditures in crude oil and
natural gas liquids plays. Further development of Canadian resources
and related oilfield service activity levels, other than current
expenditures to delineate certain resource plays, will depend on
favorable infrastructure and regulatory developments.
The United States oilfield services activity levels started out slower
in 2013 compared to the prior year due to rationalization of operations
by some of the Company’s key customers. However, demand for oilfield
services began to modestly recover in the summer and industry
utilization levels (as indicated by the onshore active drilling rig
count) have been relatively stable over the last couple of quarters. As
with Canada, current natural gas prices are not expected to drive a
meaningful increase in natural gas drilling, but the improvements to
the cash flows of exploration and production companies should benefit
crude oil and natural gas liquids rich drilling activity levels.
Initial 2014 spending guidance from United States exploration and
production companies has been encouraging as supported by positive
recent well permitting trends. Accordingly, the Company is optimistic
that its United States operations will record improvements in 2014
compared to the prior year. In support of increased customer demand
the Company added three new ADRs and completed one drilling rig
retrofit to its United States drilling fleet in 2013; and is currently
constructing six new ADRs and two major retrofits to existing drilling
rigs for delivery over the next 12 months.
The Company’s international operations continued to perform well
throughout 2013, particularly in eastern hemisphere regions. Crude oil
and natural gas prices remain attractive in foreign markets, positively
impacting demand for oilfield services in many key regions being served
by the Company. Tempering this optimism in international operations
are regional geopolitical concerns and risks in certain African and
Latin American countries. The Company continues to focus on these areas
in an attempt to manage such heightened risk levels. Overall, the
Company anticipates continued improvements in the operating and
financial results from its international operations in 2014, as
drilling rigs recently added or repositioned into international markets
commence operations during the year. The Company completed one major
drilling rig retrofit in 2013; and is constructing two new ADRs and
five major retrofits to existing drilling rigs for the international
market in 2014.
Risks and Uncertainties
This document contains forward-looking statements based upon current
expectations that involve a number of business risks and
uncertainties. The factors that could cause results to differ
materially include, but are not limited to, political and economic
conditions, crude oil and natural gas prices, foreign currency
fluctuations, weather conditions, the Company’s defense of lawsuits and
the ability of oil and natural gas companies to pay accounts receivable
balances and raise capital or other unforeseen conditions which could
impact on the use of the services supplied by the Company.
Conference Call
A conference call will be held to discuss the Company’s year-end 2013
results at 2:00 p.m. MDT (4:00 p.m. EDT) on Monday, March 17, 2014.
The conference call number is (647) 427-7450 (in Toronto) or
1-888-231-8191 (outside Toronto). A taped recording will be available
until March 24, 2014 by dialing 1-416-849-0833 (in Toronto) or
1-855-859-2056 (outside Toronto) and entering the reservation number
36547763. A live broadcast may be accessed through the Company’s web
site at www.ensignenergy.com.
Ensign Energy Services Inc. is an international oilfield services
contractor and is listed on the Toronto Stock Exchange under the
trading symbol ESI.
| Ensign Energy Services Inc. | ||||||||
| Consolidated Statements of Financial Position | ||||||||
| As at | December 31 | December 31 | ||||||
| 2013 | 2012 | |||||||
| (Unaudited, in thousands of Canadian dollars) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 78,858 | $ | 33,208 | ||||
| Accounts receivable | 440,790 | 423,160 | ||||||
| Income taxes receivable | 8,572 | – | ||||||
| Inventories and other | 66,847 | 76,345 | ||||||
| 595,067 | 532,713 | |||||||
| Property and equipment | 2,788,331 | 2,533,243 | ||||||
| Note receivable | 4,280 | 5,021 | ||||||
| $ | 3,387,678 | $ | 3,070,977 | |||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accruals | $ | 307,147 | $ | 244,612 | ||||
| Operating lines of credit | 326,525 | 231,990 | ||||||
| Income taxes payable | – | 11,197 | ||||||
| Dividends payable | 18,019 | 16,853 | ||||||
| Share-based compensation | 14,522 | 14,200 | ||||||
| 666,213 | 518,852 | |||||||
| Long-term debt | 317,407 | 296,589 | ||||||
| Share-based compensation | 2,993 | 4,119 | ||||||
| Deferred income taxes | 438,496 | 393,459 | ||||||
| 1,425,109 | 1,213,019 | |||||||
| Shareholders’ Equity | ||||||||
| Share capital | 168,155 | 164,670 | ||||||
| Contributed surplus | 4,614 | 4,811 | ||||||
| Foreign currency translation reserve | 25,065 | (16,007) | ||||||
| Retained earnings | 1,764,735 | 1,704,484 | ||||||
| 1,962,569 | 1,857,958 | |||||||
| $ | 3,387,678 | $ | 3,070,977 | |||||
| Ensign Energy Services Inc. | |||||||||||||
| Consolidated Statements of Income | |||||||||||||
| For the three months and year ended December 31 | |||||||||||||
| (Unaudited, in thousands of Canadian dollars, except per share data) | |||||||||||||
| Three months ended | Year ended | ||||||||||||
| December 31 | December 31 | December 31 | December 31 | ||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||
| Revenue | $ | 536,044 | $ | 530,106 | $ | 2,098,011 | $ | 2,197,321 | |||||
| Expenses | |||||||||||||
| Oilfield services | 399,856 | 384,553 | 1,524,173 | 1,555,509 | |||||||||
| Depreciation | 69,153 | 54,029 | 248,026 | 220,227 | |||||||||
| General and administrative | 23,727 | 21,638 | 88,126 | 80,837 | |||||||||
| Share-based compensation | (4,045) | (840) | 2,049 | (3,397) | |||||||||
| Foreign exchange and other | 5,664 | 653 | 21,095 | 6,446 | |||||||||
| 494,355 | 460,033 | 1,883,469 | 1,859,622 | ||||||||||
| Income before interest and income taxes | 41,689 | 70,073 | 214,542 | 337,699 | |||||||||
| Interest income | 307 | 139 | 1,320 | 504 | |||||||||
| Interest expense | (5,395) | (3,862) | (18,795) | (18,666) | |||||||||
| Income before income taxes | 36,601 | 66,350 | 197,067 | 319,537 | |||||||||
| Income taxes | |||||||||||||
| Current tax | 6,601 | 4,172 | 43,171 | 45,189 | |||||||||
| Deferred tax | 3,105 | 13,689 | 25,031 | 56,826 | |||||||||
| 9,706 | 17,861 | 68,202 | 102,015 | ||||||||||
| Net income | $ | 26,895 | $ | 48,489 | $ | 128,865 | $ | 217,522 | |||||
| Net income per share | |||||||||||||
| Basic | $ | 0.18 | $ | 0.32 | $ | 0.84 | $ | 1.42 | |||||
| Diluted | $ | 0.18 | $ | 0.32 | $ | 0.84 | $ | 1.42 | |||||
| Ensign Energy Services Inc. | ||||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||||
| For the three months and year ended December 31 | ||||||||||||||
| (Unaudited, in thousands of Canadian dollars) | ||||||||||||||
| Three months ended | Year ended | |||||||||||||
| December 31 | December 31 | December 31 | December 31 | |||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||
| Cash provided by (used in) | ||||||||||||||
| Operating activities | ||||||||||||||
| Net income | $ | 26,895 | $ | 48,489 | $ | 128,865 | $ | 217,522 | ||||||
| Items not affecting cash | ||||||||||||||
| Depreciation | 69,153 | 54,029 | 248,026 | 220,227 | ||||||||||
| Share-based compensation, net of cash paid | (3,588) | 805 | 6,492 | 4,363 | ||||||||||
| Unrealized foreign exchange and other | 5,560 | (533) | 26,869 | 5,838 | ||||||||||
| Accretion on long-term debt | 84 | 76 | 328 | 1,579 | ||||||||||
| Deferred income tax | 3,105 | 13,689 | 25,031 | 56,826 | ||||||||||
| Net change in non-cash working capital | 13,218 | 18,164 | 17,026 | 20,966 | ||||||||||
| 114,427 | 134,719 | 452,637 | 527,321 | |||||||||||
| Investing activities | ||||||||||||||
| Purchase of property and equipment | (106,912) | (80,329) | (342,225) | (306,689) | ||||||||||
| Acquisitions | – | – | (76,408) | – | ||||||||||
| Net change in non-cash working capital | 20,687 | (23,392) | 17,845 | (15,040) | ||||||||||
| (86,225) | (103,721) | (400,788) | (321,729) | |||||||||||
| Financing activities | ||||||||||||||
| Net (decrease) increase in operating lines of credit | (1,772) | (30,586) | 76,285 | (1,398) | ||||||||||
| Issue of senior unsecured notes | – | – | – | 300,000 | ||||||||||
| Repayment of term loan | – | – | – | (403,279) | ||||||||||
| Issue of capital stock | – | – | 2,002 | 43 | ||||||||||
| Purchase of shares held in trust | (580) | (535) | (6,497) | (8,579) | ||||||||||
| Deferred financing costs | – | – | – | (2,156) | ||||||||||
| Dividends | (18,019) | (16,854) | (68,614) | (65,116) | ||||||||||
| Net change in non-cash working capital | (964) | 2,570 | 1,912 | 3,500 | ||||||||||
| (21,335) | (45,405) | 5,088 | (176,985) | |||||||||||
| Net increase (decrease) in cash and cash equivalents | 6,867 | (14,207) | 56,937 | 28,607 | ||||||||||
| Effects of foreign exchange on cash and cash equivalents | (8,935) | (1,724) | (11,287) | 1,988 | ||||||||||
| Cash and cash equivalents | ||||||||||||||
| Beginning of period | 80,926 | 49,139 | 33,208 | 2,613 | ||||||||||
| End of period | $ | 78,858 | $ | 33,208 | $ | 78,858 | $ | 33,208 | ||||||
| Supplemental information | ||||||||||||||
| Interest paid | $ | 8,364 | $ | 6,840 | $ | 17,452 | $ | 16,162 | ||||||
| Income taxes paid | $ | 9,618 | $ | 8,572 | $ | 62,940 | $ | 45,486 | ||||||
SOURCE Ensign Energy Services Inc.

Glenn Dagenais, Executive Vice President Finance and Chief Financial Officer, (403) 262-1361