Xtreme Drilling and Coil Services Reports Second Quarter 2015 Financial Results
(firmenpresse) - CALGARY, ALBERTA -- (Marketwired) -- 08/06/15 -- Xtreme Drilling and Coil Services Corp. ("Xtreme", the "Company") (TSX: XDC) announce second quarter 2015 financial and operating results. It is anticipated that filing will take place on SEDAR of unaudited Consolidated Financial Statements and Notes to the unaudited Consolidated Financial Statements as well as Management''s Discussion and Analysis for the three months ended June 30, 2015, by Friday August 7, 2015.
Q2 2015 Highlights
(amounts in thousands of Canadian dollars, unless otherwise noted)
Selected Quarterly Financial Information
OUTLOOK
As commodity prices remained depressed in the second quarter, activity levels continued to deteriorate. The active rig count in the US decreased to 859 rigs from 1,028 at the end of the first quarter per industry sources. In Xtreme''s core US XDR operating areas of the DJ Basin in Colorado and the Williston Basin in North Dakota the active rig count decreased to 36 from 43 active rigs and to 63 from 86 active rigs respectively during the second quarter. US XSR activity levels have historically been highly correlated to the rig count in the Eagle Ford and Permian of South and West Texas. In the Eagle Ford the rig count decreased from 93 to 66 active rigs at the end of the second quarter and remained flat at 178 rigs in the non-vertical Permian market. In addition to the rig count, the XSR business is currently influenced by the growing backlog of drilled but uncompleted wells. It is estimated that the inventory of uncompleted wells is in excess of 2,500 in the core operating areas of the Eagle Ford and Permian. Due to this backlog of work it is anticipated that the Company''s activity levels will increase in the XSR completions segment before the XDR drilling business.
With the speed and severity of the downturn, many of Xtreme''s customers have not been able to provide much visibility for activity levels over the coming quarters. With the level of uncertainty regarding the bottom and eventual improvement in oil and gas prices, many operators are focused on execution and cost containment. In the United States and Canada certain drilling contractors have driven prices to below cash operating costs in order to gain market share. This is not sustainable nor a business tactic that Xtreme will participate in. However, in this challenging environment the Company has had success in winning business by providing a value to customers based on performance. The Company''s technology has enabled oil and gas operators to be more efficient in their operation and ultimately decrease cost per barrel or mcf produced. Performance based contracts have been a positive for the Company as they offer the potential to earn above market rates while delivering a drilled well to the customer faster and within their cost estimates.
Xtreme currently has 11 of 21 XDR drilling rigs earning revenue in the United States, Canada and India with a 12th rig scheduled to commence operations by the end of August. In this difficult operating environment, utilization is lower than prior periods; however, it is certainly better than the broader industry. The combination of Xtreme''s all AC electric fleet and strong operating performance may allow for higher than industry utilization through this downturn. Due to the previously discussed uncertainty many request for quotations today are either single or multi well in duration. Most operators are not willing to commit to term drilling contracts and it will likely stay that way for the remainder of 2015. The Company continues to evaluate opportunities internationally for idled XDR rigs. Currently the Company has active bids to move additional rigs into India. The results of these tenders should be known in the near future. Overall, the fact that Xtreme has some of the only AC electric rigs as well as established infrastructure in India makes it an ideal market to focus on strategic expansion.
Due to the backlog of uncompleted wells in the Eagle Ford and Permian the Company anticipates that demand for the US XSR coiled tubing business will continue to increase through the remainder of 2015. Activity levels were relatively volatile during the second quarter with April being the slowest month of the year as operators adjusted frac schedules. The challenge for management has been to right size the staffing and cost structure for a business that has significant short term fluctuations in demand. Currently Xtreme has staffed and is actively marketing five of the seven available XSR units in the United States. Activity levels will dictate when the two idled units will be placed back into service along with the final new build XSR unit which is expected to be delivered in October.
The US XSR division completed its first coiled tubing frac job in the second quarter of 2015. This job was unique in that it combined an initial frac beginning at the toe of the well through our 2 5/8" coiled tubing and then after reaching a specified point in the horizontal, switched and fraced the remainder of the well down the annulus, or around the coil. This is a unique example of an operator utilizing Xtreme''s patented AC technology and large diameter coiled tubing to optimize the completion and ultimately production from the well. Along with continuing to focus on the growing re-frac market, the Company is leveraging its technology and success of coiled tubing drilling (CTD) developed in Saudi Arabia into the US market. It is anticipated that the Xtreme''s first US CTD job will commence in October. Along with this job the Company has several additional inquiries both domestically and internationally. In an environment where operators will be forced to adapt new technology to optimize drilling and completion processes, Xtreme is ideally positioned to help drive this innovation in the industry.
Conference Call Details
The Company will hold the quarterly conference call on Friday, August 7, 2015 at 10:00 am MDT, 11:00 am CT.
Tom Wood, Chief Executive Officer, will host the conference call with participation from Matt Porter, President and Chief Financial Officer, and will answer questions from analysts and investors.
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 Friday, August 14, 2015. To access the replay, call +1-800-408-3053 or +1-905-694-9451 and enter pass code 7599171.
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 August 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
President and Chief Financial Officer
+1 281 994 4600
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Datum: 06.08.2015 - 16:28 Uhr
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