Xtreme Drilling and Coil Services Reports Record First Quarter 2015 Financial Results
(firmenpresse) - CALGARY, ALBERTA -- (Marketwired) -- 05/06/15 -- Xtreme Drilling and Coil Services Corp. ("Xtreme", the "Company") (TSX: XDC) announce first quarter 2015 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 as well as Management''s Discussion and Analysis for the three months ended March 31, 2015, by Thursday May 7, 2015.
Q1 2015 Highlights
(amounts in thousands of Canadian dollars, unless otherwise noted)
Selected Quarterly Financial Information
Excerpt from Management''s Discussion and Analysis
for the twelve months ended March 31, 2015
OUTLOOK
The decrease in oil and gas drilling and completion activity has been dramatic over the past six months. The operating rig count in Xtreme''s core market of the United States has decreased by over 50% from 1,881 active rigs on October 1, 2014 to 860 rigs currently operating. In addition, according to industry sources, it is estimated that more than 4,700 wells in the United States have been drilled but not completed. With more than 2,800 of these uncompleted wells estimated to be in the core XSR operating areas in Texas of the Eagle Ford and Permian Basin. This gives the Company confidence that when operators make the decision to resume completion activity that it will be well positioned to take advantage of the increased work. Completion activity should pick up earlier in the cycle than drilling activity as E&P companies work through the backlog of uncompleted wells. Currently the Company has six XSR coiled tubing units which operate in the Eagle Ford and Permian with two additional units to be delivered over the next six months.
To date, the decrease in operating rigs in the United States has been relatively indiscriminate. The majority of operators have now completed the termination and/or re-negotiation of most term drilling contracts. It is estimated that more than 300 tier 1 AC electric drilling rigs have been idled during this downturn. Xtreme''s entire fleet is tier 1 AC electric with depth capacities that range from 10,000 to 20,000+ feet. Over the past four months Xtreme has seen four rigs idled by customers with three of these paying termination payments. Xtreme currently has 10 of 16 AC electric rigs operating in the United States with an additional two rigs operating in India. Management is encouraged that although this is a significant number of idled rigs the Company is actually faring better than many of its larger competitors. Recent information published by RigData indicates that utilization rates from some Canadian contractors operating in the United States are as low as 18%. The large number of idled tier 1 rigs will likely serve as a cap on day rates when operators begin to increase activities.
Xtreme has been proactive in resetting the cost structure of the Company. In 2014 approximately 75% of total expenses were variable and 25% were fixed in nature. In the first quarter the Company reduced fixed cost payroll by 31% and, to date, has reduced the variable drilling payroll at a rate proportionate with the reduction in the overall rig count. In addition, the Company has implemented initiatives aimed at maintaining variable costs at around 70% of the overall cost structure during the slowdown in activity. By keeping variable costs as high as possible, it will allow for scalability should activity levels deteriorate further.
Looking towards the remainder of 2015 the Company is cautiously optimistic that the market is nearing a bottom and while prices will likely remain muted, activity levels may begin to slowly increase. In both the XDR and XSR division the focus is on continued international expansion as well as new service offerings with our leading edge XSR coiled tubing technology. While the activity for traditional completion work has slowed, the interest in re-frac work has increased over the past three months. Currently, the Company is in conversation with several operators to perform stimulation operations on existing wells. This has the potential to significantly increase estimated ultimate oil and gas recoveries for the customer with compelling economics. The Company believes that with its proprietary AC technology along with the ability to deploy in excess of 23,000'' of 2 5/8", 20,000'' of 2 7/8" or 18,000'' of 3 1/4"coiled tubing, it is clearly differentiated and is actively working to build a complimentary service business in the re-stimulation market.
Overall, Xtreme is well positioned during the current industry downturn thanks to the fleet''s technological advantages and the Company''s financial stability. In the first quarter Xtreme continued to focus on strengthening the balance sheet by using free cash flow to pay down $2.5 million (or $2 million USD) in debt during the quarter. In addition, operating cash flow fully funded the $9.7 million capital expense for the first quarter. The Company generated EBITDA of $20.8 million and ended the quarter with $126 million (or $101 million USD) in net debt on $592.2 million in assets. This manageable debt level coupled with ample liquidity between cash, revolver availability and expected free cash flow highlights Xtreme''s financial strength and ability to weather a softer market through 2015.
Conference Call Details
Xtreme has scheduled a conference call to discuss results with investors, analysts, and stakeholders on Thursday, May 07, 2015, beginning promptly at 10:00 am MT (11:00 am CT, 12:00 pm EDT).
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.
+1 800-396-7098 (North America Toll-Free) or 1 416-340-8530 (Alternate)
Webcast link:
An audio replay of the call will be available until Thursday, May 13, 2015. To access the replay, call +1 800-408-3053 or +1 905-694-9451 and enter pass code 9276239.
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. 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 May 6, 2015, 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, Saudi Arabia and India. For more information about the Company, please visit .
Contacts:
Xtreme Drilling and Coil Services Corp.
Matt Porter
Chief Financial Officer
+1 281 994 4600
Xtreme Drilling and Coil Services Corp.
9805 Katy Freeway, Suite 650
Houston, TX 77024
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Datum: 06.05.2015 - 16:10 Uhr
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