Xtreme Drilling Corp. Announces Full Year 2016 Financial and Operating Results, 2017 Outlook and a Long Term Contract for the First 850XE Rig
(firmenpresse) - CALGARY, ALBERTA -- (Marketwired) -- 03/09/17 -- Xtreme Drilling Corp. (TSX: XDC), formerly Xtreme Drilling and Coil Services Corp., ("Xtreme", the "Company") announces its fourth quarter and full year 2016 financial and operating results. It is anticipated that filing will take place on SEDAR of Consolidated Financial Statements as well as Management''s Discussion and Analysis for the year ended December 31, 2016, by March 10, 2017.
Xtreme is pleased to announce that it has signed a two-year term contract on the first 850XE upgrade which is scheduled for delivery to Oklahoma in the third quarter of 2017. This level of commitment in the current rig market is validation of the 850XE rig design and value to the customer. The second and third 850XE upgrades are scheduled for delivery in October and December of 2017, respectively. Extensive conversations with potential customers are currently in process and Xtreme anticipates having both additional 850XE rigs contracted in the coming months. In addition, the Company recently contracted it''s seventh optimized XDR 500 rig and anticipates it going to work in mid-April.
The 850XE design is Xtreme''s next step in drilling innovation and technology. The proprietary design was developed specifically for today''s major resource plays and is expected to be the most efficient and fastest moving "super spec" rig in the North American land market. The 850XE will be equipped with an 1,800hp AC electric drawworks, 850,000 pound capacity mast, proprietary X-pad optimizer walking system, a 7,500psi mud system with three pumps, integrated equipment monitoring and other proprietary design features. It will have a rated depth capacity in excess of 27,500 feet with 5 inch drill pipe and the ability to stand all of the drill pipe in the mast.
2016 Highlights
(amounts in Canadian dollars, unless otherwise noted)
Selected Quarterly Information from Continuing Operations
(unaudited)
OUTLOOK
In many respects, 2016 was a year of transition at Xtreme. Most significantly, the XSR coiled tubing service division was sold to Schlumberger in June for $205.0 million. Due to this asset transaction Xtreme is once again a pure drilling-focused company and stronger than ever before. Xtreme is debt-free, with the cash reserves to implement the Company''s fleet optimization program as well as other strategic opportunities. This financial flexibility comes as commodity prices-and, in turn, the US and Canadian land drilling market-are showing signs of improvement. Our management team has not only navigated the downturn, but maintained the foresight through the current fleet optimization program to position Xtreme for success moving forward.
The recent US land rig count approached 750, after bottoming out at fewer than 400 in May of 2016. The majority of rigs that have gone back to work in the US are high spec AC electric rigs. The market share of AC rigs in the U.S. has increased from 40% in the third quarter of 2014 to 66% currently. Xtreme''s 18 rig US fleet and three rig Canadian fleet are 100% AC electric. The Company currently has seven of 10 XDR 500 rigs contracted in the United States with six currently operating and the seventh contracted to begin work in April. In Canada Xtreme has one of three XDR 200 rigs working until the last week of March.
As the optimization of the Xtreme fleet continues in 2017 the Company is optimistic that the three idle XDR 500 rigs will have the opportunity to go back to work in the coming months. The Company has received a significant increase of customer inquiries in Xtreme''s core U.S. shale markets of the DJ, Williston and Anadarko Basins.
Two of the three idle XDR 500 rigs are currently in various stages of optimization which includes the installation of a 7,500psi mud system as well as other upgrades of key components. It is anticipated that the rigs will finish these upgrades in April and May respectively. The Company anticipates gaining market share as the rig count increases and certain competitors lack the financial strength to invest in fleet optimization programs demanded by most E&P customers.
A second component of the 2017 fleet optimization program has been Xtreme''s development of a new rig design, the 850XE. The Company will use this design as the basis for the announced upgrade of three rigs to 850XE specs. As operators seek to drill deeper in the majority of US basins they are increasingly demanding rigs that meet a new standard known as "super spec." (Unofficially, the term refers to AC rigs with at least 750,000 lb. hookload capacity, 7,500 psi mud pumps, integrated walking systems and a minimum of 1,500hp AC drawworks.)
In response to the market''s need for these higher spec rigs, and building upon our legacy of continuous innovation to improve performance and meet customer needs, Xtreme designed and engineered the 850 XE in Q3 and Q4 of 2016. This proprietary design not only meets the criteria for a super spec rig, but exceeds operators'' requirements in anticipation that oil and gas well depths will continue to increase. It is important to note these three initial 850XE rigs are not new builds; rather upgrades of existing rigs-two XDR 400s (rigs 6 & 8) and the original XDR 500 (rig 7) built in 2007-to this design. When the first one is deployed in Q3 2017, it will be the fastest-moving, most efficient super spec rig in the US marketplace-outfitted with various patented and industry-first componentry. From a capacity standpoint the 850XE will have an 850,000 pound mast and a 1,800 horsepower AC drawworks total measured drilling depth capacity in excess of 27,500 ft. (8,350m) with 5 inch drill pipe.
Xtreme recently finalized the first contract on the initial 850XE. It is a two year term contract at a competitive rate. The marketing process has confirmed the value that the 850XE will bring to Xtreme''s customers. Not only does the 850XE sustain Xtreme''s position as a top tier drilling contractor, but it also will produce impressive financial returns at current market rates. In addition, the Company anticipates that long term utilization and cash flow for the 850XE rig design will be significantly greater than had these rigs remained in their original XDR configuration.
The three 850XE rig upgrades will cost approximately $11-$11.5 million USD per rig, accounting for the majority of our $45-$50 million USD capital budget for 2017. The remainder will be used to complete the remaining XDR 500 optimization program and other sustaining capital purchases. Both the XDR 500 and the 850XE optimization programs will greatly enhance the Company''s presence, marketability and ultimate utilization levels in the major U.S. shale plays that it targets.
As US operators require more and more powerful equipment, we are actively working to deploy our smaller AC electric rigs in international markets. Although we sold our coil drilling operations in Saudi Arabia as part of the XSR coil services divestiture, we retained our business entity there. We began the prequalification process in September of 2016 to be able to drill in that country and Kuwait. These are ideal potential markets for our four XDR 300s. The projects targeted have significant demand for fast-moving, advanced-technology AC rigs in a shallow well application. The Company anticipates having greater clarity on these opportunities in the coming months and remains cautiously optimistic.
Xtreme will exit 2017 with a fully optimized fleet of larger rigs, three 850XE rigs and 10 XDR 500 rigs, which should maintain high utilization levels in the current industry environment. In addition, the opportunity presented for our eight XDR 200 and XDR 300 rigs in Canada and the Middle East provides for upside on fleet utilization and operating margins. This increased utilization and expected cash flow coupled with ample liquidity, of approximately $53 million to $56 million CAD, at the end of 2017 positions Xtreme very well to take advantage of future strategic opportunities.
Conference Call Details
Xtreme has scheduled a conference call to discuss results with investors, analysts, and stakeholders on Thursday, March 9, 2016, beginning promptly at 10:00 am MT (11:00 am CT, 12:00 am ET).
Matt Porter, President and Chief Executive Officer, will host the conference call.
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.
+1 844-889-6858 (North America Toll-Free) or +1 661-378-9711 (International)
Webcast: Conference ID: 55256811
An audio replay of the call will be available until 4:00 pm Thursday, March 15, 2017. To access the replay, call +1 (855) 859-2056 or +1 (800) 585-8367 and enter Conference ID 55256811 Web PIN 6452
Reader Advisory
This news release, or documents incorporated herein, contains forward-looking information ("FLI"). FLI is typically contained in statements with words such as "anticipate", "believe", "estimate", "expect", "plan", "schedule", "intend", "propose" or similar words suggesting future outcomes or an outlook. More particularly, this NEWS RELEASE contains FLI that may relate to contracting, marketing, financing, construction, modifications, deployment, operation, and utilization of drilling rigs in the Company''s current and future fleet. Although Xtreme believes expectations reflected in such FLI 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 FLI not to be correct, including risks and uncertainties inherent in the Company''s business.
FLI is based on certain factors and assumptions including, but not limited to:
Although Xtreme considers the assumptions used to prepare this news release reasonable, based on information available to management as of March 8, 2017, ultimately the assumptions may prove to be incorrect.
FLI is 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:
Management''s assumptions considered the following:
In preparing this news release, the following risk factors were considered:
FLI 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 FLI 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 FLI to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such FLI or otherwise.
About Xtreme
Xtreme Drilling Corp. ("XDC" on the Toronto Stock Exchange) designs, builds, and operates a fleet of high specification AC drilling rigs featuring leading-edge proprietary technology. Currently Xtreme operates one service line - Drilling Services (XDR) under contracts with oil and natural gas exploration and production companies and integrated oilfield service providers in Canada and the United States. For more information about the Company, please visit .
Contacts:
Xtreme Drilling Corp.
Matt Porter
President and Chief Executive Officer
+1 281 994 4600
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Datum: 08.03.2017 - 23:14 Uhr
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News-ID 1491555
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