Xtreme Drilling Corp. (Formerly, Xtreme Drilling and Coil Services Corp.) Announces Management Changes and Reports 2nd Quarter 2016 Financial and Operating Results
(firmenpresse) - CALGARY, ALBERTA -- (Marketwired) -- 08/04/16 -- Xtreme Drilling Corp. (TSX: XDC) ("Xtreme", the "Company") announces second quarter 2016 financial and operating results. It is anticipated that filing will take place on SEDAR of interim Consolidated Financial Statements as well as Management''s Discussion and Analysis for the three and six months ended June 30, 2016, by August 5, 2016.
The Company announces the following management changes to take place effective immediately. Tom Wood will be replaced as Chief Executive Officer by Matt Porter in the position of President and Chief Executive Officer, effective August 4, 2016. Mr. Wood will also be replaced by Mr. Porter on the Board of Directors of the Company. Mr. Porter will step down from his role as Chief Financial Officer.
The Company would further like to announce the promotion of Martin Ramirez to Vice President, Finance and Corporate Development and the promotion of John Wray to Vice President, Drilling Operations. Mr. Ramirez will assume the responsibilities of principal financial officer of the Company.
Xtreme''s Board of Directors would like to express their sincere appreciation and gratitude to Mr. Wood for his predominant role in founding and growing the Company since its inception. The technology behind the XSR coiled tubing segment that was recently sold to Schlumberger was created and developed into a successful North American and Middle East business under Mr. Wood''s leadership. Mr. Wood was also involved in the design and development of Xtreme''s tier 1 drilling fleet.
Following the sale of the XSR division and the repositioning of Xtreme as a pure contract drilling company, Mr. Wood and the Board of Directors had differing perspectives on the strategic vision for the Company and mutually agreed to part ways.
Doug Dafoe, Chairman of the Board of Directors, stated, "The Board believes the Company is extremely well situated financially to weather the current market downturn and prosper in the eventual recovery. The Board has chosen Matt to take the helm based upon his experience and leadership as well as our experience of working with him for the past five years. We are extremely confident in his ability to lead Xtreme and are excited to work with Mr. Porter and his team to create further shareholder value as a tier 1 AC drilling rig contractor." Mr. Porter commented, "It is an honor that the Board has this level of confidence in me. As we transition into a stand-alone drilling contractor we have all of the components to be successful, in no small part due to our strong, execution oriented management team which has consistently delivered over the past several years. We will continue to work with existing customers as well as pursue opportunities where our assets are fit for purpose as we strive to deliver the highest level of efficiency and service quality. Thanks to Tom and his leadership we have a best in class balance sheet, particularly relative to our size, and plan to maximize our financial flexibility and look forward to being opportunistic at the appropriate time."
Q2 2016 Highlights
(amounts in thousands of Canadian dollars, unless otherwise noted)
Excerpt from Management''s Discussion and Analysis for the three months ended June 30, 2016
In the second quarter, Xtreme closed on the sale of all the XSR coiled tubing assets to Schlumberger for $205 million. As previously discussed, this was an exciting transaction as it provides the Company significant optionality in a very challenging environment. The Company is committed to a strong balance sheet and ultimate flexibility in determining the next steps.
We believe, that although the rig count appears to have bottomed in North America, the peak of distress for many oilfield service companies has not been reached as of yet. As the cycle drags on it is likely that there will be opportunities to build shareholder value as stakeholders determine the path for distressed companies and assets. Xtreme intends to be opportunistic in reviewing all strategic options.
The rig count has bounced off of the bottom in the United States from a trough of 380 active rigs in May of 2016. Currently, there are 440 drilling rigs operating as compared to 672 and 1,744 at the beginning of 2016 and 2015 respectively. Xtreme continues to focus on basins where we believe the Company has a competitive advantage and allow for the highest probability to return to work. Specifically these are the Greater DJ Basin in Colorado and the Anadarko Basin in central and western Oklahoma. Both of these markets in our analysis have fewer tier one rigs available than other US basins. In our estimation there are in excess of 500 idle 1,500 horsepower AC rigs in the United States. This significant excess supply will require a sustained period of higher commodity prices in order to be absorbed. Xtreme is well positioned in our current operating regions as roughly 75% of these idled AC rigs are located in the Permian, Eagle Ford and Bakken.
Customer inquiries have increased in the past several months. However, these inquiries have consistently come with higher specification rig requirements. Most operators are utilizing this downturn to improve overall rig quality and capacity. In order to improve their own economics E&P operators have chosen to not only drill in the sweet spots of the respective plays but also to increase well design to maximize production results. This means that on average most wells are now drilled with longer horizontals and increased fluid volume. As such, in the past nine months we have increased our fluid operating system on five of our rigs from 5,000 psi to 7,500 psi as this trend will continue. Our goal is to have our fleet as well positioned as possible to return to work in the eventual recovery.
Based on current market conditions it appears that the second quarter represents the trough in terms of Xtreme''s activity levels. As mentioned, customer inquiries have increased for the second half of the year. While we anticipate utilization increasing through 2016 and in to 2017 it is unlikely that pricing will follow. Pricing has likely bottomed with the rig count but will remain challenged due to the significant number of idle AC rigs. Xtreme will continue to focus on cost management in order to offset lower utilization and pricing and maximize EBITDA margins.
We continue to explore international opportunities with the Middle East being the primary focus. Activity levels should remain robust in these markets as many NOC''s in the region look to add capacity. We maintain a presence in Saudi Arabia through our entity that housed our XSR assets in country. We hope to use this entity along with our strong operating history as a path to this market. We maintain a sales group in the region that is actively pursuing opportunities.
Based on the current market conditions, Xtreme has aggressively right sized the organization after the close of the XSR sale. Our focus is on continued cost control, maintaining our best in class balance sheet and being opportunistic when attractive strategic options are presented.
Conference Call Details
Xtreme has scheduled a conference call to discuss results with investors, analysts, and stakeholders on Friday, August 5, 2016, beginning promptly at 9:00 am MT (10:00 am CT, 11:00 am ET).
Matt Porter, President and Chief Executive Officer, will host the conference call with participation from Doug Dafoe, Chairman of the Board of Directors.
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.
+1 866-223-7781 (North America Toll-Free) or +1 416-340-2216 (Alternate)
An audio replay of the call will be available until Wednesday, August 10, 2016. To access the replay, call +1 800-408-3053 or +1 905-694-9451 and enter pass code 9602661.
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 4, 2016, 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.
Contacts:
Xtreme Drilling Corp.
Matt Porter
President and CEO
+1 281 994 4600
Xtreme Drilling Corp.
9805 Katy Freeway
Suite 650
Houston, TX 77024
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Datum: 04.08.2016 - 21:55 Uhr
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News-ID 1451016
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