CALGARY, May 2, 2017 /CNW/ - Secure Energy Services
Inc. ("Secure" or the "Corporation") (TSX – SES) announced today
operational and financial results for the three months ended
March 31, 2017. The following should
be read in conjunction with the management's discussion and
analysis ("MD&A") and the interim consolidated financial
statements and notes thereto of Secure which are available on SEDAR
at www.sedar.com.
Secure's Board of Directors also approved a 6.25% increase to
its monthly dividend rate from $.02
to $.02125 per common share
commencing with the June 15, 2017
dividend payment date for shareholders of record on June 1, 2017.
"Secure has maintained a strong balance sheet throughout a
period of oil and gas price volatility," said Rene Amirault, Secure's Chairman and Chief
Executive Officer. "The increase to our monthly dividend reflects
our confidence in the ability of our business model to generate
meaningful cash flow while continuing to fund our organic capital
and acquisition programs while maintaining a standard of excellence
for our customers through our three integrated divisions."
Q1 2017 OPERATIONAL AND FINANCIAL HIGHLIGHTS
ADJUSTED EBITDA INCREASE OF 68%
A more stable
commodity price environment during the first quarter of 2017
resulted in increased oil and gas producer activity across the
Western Canadian Sedimentary Basin ("WCSB") which had a positive
impact on all three of the Corporation's divisions. Industry rig
counts and metres drilled in the WCSB increased by 86% and 116%
respectively over the first quarter of 2016, driven primarily by a
49% increase in average crude oil prices, as well as improved
weather conditions compared to the first quarter of 2016 which saw
an early spring break-up. Higher drilling activity levels, along
with the addition of new facilities and expansions in underserviced
markets subsequent to March 2016, and
ongoing production related volumes from existing facilities in the
PRD division, resulted in Adjusted EBITDA of $42.2 million during the three months ended
March 31, 2017, a 68% increase over
the comparative period.
OPERATING MARGIN IMPROVEMENTS
During the
quarter, Secure continued to exercise caution by maintaining its
current cost structures which have enabled the Corporation to
achieve strong operating margins of 59% in PRD, 23% in DPS and 25%
in OS in part by minimizing overhead costs and streamlining
operations to enhance customer service through the integrated
services provided.
STRONG BALANCE SHEET MAINTAINED
The Corporation
continues its disciplined approach to maintaining a strong balance
sheet to effectively manage the business through this period of
volatile commodity prices and industry activity. The Corporation's
balance sheet provides significant financial flexibility to pursue
accretive acquisitions and continue to invest in organic capital
projects in capacity constrained regions. At March 31, 2017, Secure's net debt was
$54.2 million, and debt to
EBITDA ratio, as defined by the Corporation's credit facility, was
1.7 to 1.
CONTINUING TO ADD PRODUCTION RELATED
SERVICES
Subsequent to quarter end, Secure completed an
asset acquisition in the DPS division for cash consideration of
$29.8 million, subject to any
post-closing adjustments (the "Production Chemicals Acquisition").
The acquired assets will provide Secure with a complete suite of
over 100 fully formulated proprietary production chemical products,
along with key infrastructure across the WCSB. The addition of
advanced chemical products is expected to bolster the Corporation's
ability to help customers optimize production, provide flow
assurance and maintain the integrity of their production assets.
The research lab facility acquired demonstrates the Corporation's
commitment to innovation for customers and is intended to design
customized chemical solutions for customers. The Corporation
expects the Production Chemicals Acquisition to be accretive to
funds from operations, Adjusted EBITDA and net income.
The operating and financial highlights for the three month
periods ending March 31, 2017 and
2016 can be summarized as follows:
|
Three months ended
Mar 31,
|
($000's except
share and per share data)
|
2017
|
2016
|
%
change
|
Revenue (excludes oil
purchase and resale)
|
140,713
|
102,267
|
38
|
Oil purchase and
resale
|
309,876
|
106,865
|
190
|
Total
revenue
|
450,589
|
209,132
|
115
|
Adjusted EBITDA
(1)
|
42,170
|
25,083
|
68
|
|
Per share ($),
basic
|
0.26
|
0.18
|
44
|
|
Per share ($),
diluted
|
0.25
|
0.18
|
39
|
Net earnings
(loss)
|
3,440
|
(10,066)
|
134
|
|
Per share ($), basic
and diluted
|
0.02
|
(0.07)
|
129
|
Adjusted net earnings
(loss)(1)
|
3,502
|
(8,598)
|
141
|
|
Per share ($), basic
and diluted
|
0.02
|
(0.06)
|
133
|
Funds from operations
(1)
|
40,052
|
18,700
|
114
|
|
Per share ($),
basic
|
0.25
|
0.13
|
92
|
|
Per share ($),
diluted
|
0.24
|
0.13
|
85
|
Dividends per common
share
|
0.06
|
0.06
|
-
|
Capital expenditures
(1)
|
12,096
|
21,489
|
(44)
|
Total
assets
|
1,403,328
|
1,267,835
|
11
|
Net debt
(1)
|
54,237
|
16,723
|
224
|
Common shares - end
of period
|
162,580,599
|
157,932,560
|
3
|
Weighted average
common shares
|
|
|
|
|
basic
|
162,049,821
|
140,015,143
|
16
|
|
diluted
|
165,944,906
|
140,015,143
|
19
|
(1)
Refer to "Non-GAAP measures, operational definitions and
additional subtotals" for further information
|
- REVENUE OF $450.6 MILLION FOR THE THREE MONTHS ENDED
MARCH 31, 2017
-
- Total processing, recovery and disposal volumes at PRD
facilities for the three months ended March 31, 2017
increased from the 2016 comparative period due to increased
drilling activity levels across the WCSB, ongoing production
related volumes and the addition of facilities in 2016, which
included the acquisition of the Alida crude oil terminalling
facility in June 2016, the increased ownership in the
La Glace and Judy Creek FSTs from
50% to 100% in July 2016, and the commissioning of the Kakwa
FST in August 2016. Overall, this resulted in the PRD division
achieving revenue (excluding oil purchase and resale) of
$67.5 million in the three
months ended March 31, 2017, up 39% from the comparative
period in 2016;
- Oil purchase and resale revenue in the PRD division for the
three months ended March 31, 2017 increased by 190% from
the 2016 comparative period to $309.9 million due primarily to additional
oil purchase and resale volumes from new facilities in 2016, which
included the Alida crude oil terminalling facility, the increased
ownership in the La Glace and Judy
Creek FSTs, and the Kakwa FST;
- Activity in the DPS division is strongly correlated with oil
and gas drilling activity in the WCSB, which experienced an 86%
increase in active rig count in the three months ended March 31, 2017 from the 2016 comparable period.
As a result of these improved activity levels, DPS division revenue
increased by 43% to $50.5 million in the three months ended
March 31, 2017;
- OS division revenue increased 24% to $22.8 million in the three months ended
March 31, 2017 primarily due to
revenue from new service lines and increased activity related to
increased oil prices and industry activity compared to the three
months ended March 31, 2016.
- ADJUSTED EBITDA OF $42.2 MILLION FOR THE THREE MONTHS ENDED
MARCH 31, 2017
-
- Adjusted EBITDA of $42.2 million, a 68% increase from the 2016
comparative period, resulted from increased average crude oil
prices of 49% in the first quarter of 2017 which positively
impacted all three of the Corporations divisions. Increased
drilling and completion activity positively impacted the DPS and OS
divisions while ongoing production related volumes and increased
volumes from acquisitions and facility expansions in the second and
third quarters of 2016 drove both PRD revenues and operating
margins.
- NET EARNINGS OF $3.4 MILLION FOR THE THREE MONTHS ENDED
MARCH 31, 2017
-
- For the three months ended March 31,
2017, Secure generated net earnings of $3.4 million, a $13.5
million increase from the three months ended March 31, 2016. This positive impact to net
earnings is a result of increased activity, new facilities and
expansions and the Corporation's continued focus on managing
costs.
- ADJUSTED NET EARNINGS OF $3.5
MILLION FOR THE THREE MONTHS ENDED MARCH 31, 2017
-
- For the three months ended March 31, 2017, Secure's
adjusted net earnings of $3.5 million increased by $12.1 million from an adjusted net loss of
$8.6 million in the three months
ended March 31, 2016. The positive
variance is primarily a result of the factors discussed above
impacting Adjusted EBITDA offset by increased total income tax
expense in the three months ended March 31,
2017.
- CAPITAL EXPENDITURES OF $12.1
MILLION FOR THE THREE MONTHS ENDED MARCH 31, 2017
-
- Total capital expenditures for the three months ended
March 31, 2017 of $12.1 million include:
-
- Equipment upgrades at various PRD facilities to increase
capacity including additional tanks and pumps;
- Long lead items for various projects expected to commence in
the 2nd and 3rd quarters of 2017; and
- Sustaining capital expenditures at existing facilities required
to maintain ongoing business operations.
- FINANCIAL FLEXIBILITY
-
- The total amount drawn on Secure's credit facility as at
March 31, 2017 decreased by 10% to
$188.0 million compared to
$209.0 million at
December 31, 2016. The reduction in the amount drawn on
Secure's credit facility is a result of funds flow from operations
exceeding capital expenditures and dividend payments. The
Corporation continues to strengthen its balance sheet and increase
its financial flexibility to take advantage of accretive
opportunities that may arise.
- Secure is in compliance with all covenants related to its
credit facility at March 31, 2017.
Secure's debt to trailing twelve month EBITDA ratio, where EBITDA
is defined in the lending agreement as earnings before interest,
taxes, depreciation, depletion and amortization, and is adjusted
for non-recurring losses, any non-cash impairment charges and any
other non-cash charges, and acquisitions on a pro-forma basis,
improved to 1.7 to 1 at March 31,
2017 compared to 2.2 to 1.0 at December 31, 2016.
PRD DIVISION OPERATING HIGHLIGHTS
|
Three months ended
Mar 31,
|
($000's)
|
2017
|
2016
|
%
Change
|
Revenue
|
|
|
|
|
PRD services
(a)
|
67,470
|
48,706
|
39
|
|
Oil purchase and
resale service
|
309,876
|
106,865
|
190
|
Total PRD division
revenue
|
377,346
|
155,571
|
143
|
|
|
|
|
Direct
expenses
|
|
|
|
|
PRD services
(b)
|
27,653
|
22,823
|
21
|
|
Oil purchase and
resale service
|
309,876
|
106,865
|
190
|
Total PRD division
direct expenses
|
337,529
|
129,688
|
160
|
|
|
|
|
Operating
Margin (1) (a-b)
|
39,817
|
25,883
|
54
|
|
|
|
|
Operating Margin
(1) as a % of revenue (a)
|
59%
|
53%
|
|
(1)
Refer to "Non-GAAP measures, operational definitions and
additional subtotals" for further information.
|
Highlights for the PRD division for the months ended
March 31, 2017 included:
- Processing, recovery and disposal services revenue of
$67.5 million for the three months
ended March 31, 2017 increased by 39%
from the 2016 comparative period, driven by higher facility
volumes, largely contributed from the new facilities added in 2016
and expansions at certain of the Corporation's existing facilities
in 2016 and the first quarter of 2017, and higher drilling and
completion related volumes resulting from the increase in average
crude oil prices by 49% from the 2016 comparative period, which
also directly improved recovered oil revenues;
- Processing volumes increased 22% in the three months ended
March 31, 2017 from the comparative
period due to higher waste processing and emulsion, offset
partially by fewer completions processing volumes;
- Recovery revenues increased 58% in the three months ended
March 31, 2017 from the comparative
period which is consistent with a 58% increase in recovery and
terminalling volumes. The increase was driven by the average crude
oil price increase of 49% from the comparative period and crude oil
marketing activities at the Corporation's pipeline connected FSTs
and the Alida crude oil terminalling facility;
- Disposal volumes increased in the three months ended
March 31, 2017 from the comparative
period due primarily to increased disposal of waste at Secure's
landfills resulting from higher drilling activity levels. Further
driving the increase in disposal volumes is increased produced and
waste water volumes across Secure's facilities from the comparative
period.;
- Oil purchase and resale revenue in the PRD division for the
three months ended March 31, 2017
increased by 190% from the 2016 comparative period to $309.9 million due primarily to additional oil
purchase and resale volumes from new facilities in 2016, which
included the Alida crude oil terminalling facility, the increased
ownership in the La Glace and Judy
Creek FSTs, and the Kakwa FST. The new facilities added in 2016
accounted for 39% of oil purchase and resale revenue in the three
months ended March 31, 2017, or 112%
of the increase;
- Direct expenses from PRD services increased by 21% in the three
months ended March 31, 2017 from the
comparative period of 2016. The increase in direct expenses relates
primarily to the increased revenue as the Corporation maintains its
ability to respond to higher activity levels while managing its
fixed and variable costs;
- Operating margin as a percentage of PRD services revenue for
the three months ended March 31, 2017
increased to 59% from 53% in the comparative period of 2016. The
increase in operating margin as a percentage of revenue over 2016
is due to increased revenues while minimizing fixed costs. The
Corporation's revised cost management structure has resulted in
improved operating margins realized across various facilities
including FSTs, SWDs and landfills;
- General and administrative ("G&A") expenses of $4.0 million for the three months ended
March 31, 2017 increased by 22% from
the comparative period. Although the Corporation continues to
minimize G&A costs by streamlining operations, PRD G&A
expenses have increased primarily due to the acquisitions completed
in 2016 and the overhead requirements to support new facilities and
expansions. As a percentage of PRD revenue, G&A costs have
decreased from 7% to 6%.
DPS DIVISION OPERATING HIGHLIGHTS
|
Three months ended
Mar 31,
|
($000's)
|
2017
|
2016
|
%
Change
|
Revenue
|
|
|
|
|
Drilling and
production services (a)
|
50,468
|
35,207
|
43
|
|
|
|
|
Direct
expenses
|
|
|
|
|
Drilling and
production services (b)
|
38,867
|
29,727
|
31
|
Operating Margin
(1) (a-b)
|
11,601
|
5,480
|
112
|
|
|
|
|
Operating Margin
(1) as a % of revenue (a)
|
23%
|
16%
|
|
(1)
Refer to "Non-GAAP measures, operational definitions and
additional subtotals" for further information.
|
Highlights for the DPS division for the three months ended
March 31, 2017 included:
- Revenue in the DPS division correlates with oil and gas
drilling activity in the WCSB, most notably active rig counts and
metres drilled. Commodity pricing, weather conditions and the
activity levels from oil and gas producers has a significant impact
on the DPS division. For the three months ended March 31, 2017, industry rig counts in the WCSB
increased 86% and metres drilled increased 116% from the 2016
comparative period. Revenue from the DPS division for the three
months ended March 31, 2017 increased
43% to $50.5 million from the
comparative period of 2016. Average crude oil price increases and
improved weather conditions during the three months ended
March 31, 2017 compared to the 2016
comparative period drove increased industry activity strengthening
the DPS division's revenue in the first quarter of 2017;
- Revenue per operating day decreased 23% to $5,803 during the three months ended March 31, 2017 compared to the same period in
2016 which generated revenue of $7,507 per operating day. The variance is a
result of the geographic location and depth of wells which impacts
the type of fluid used;
- The DPS division's market share decreased slightly to 29% in
the three months ended March 31, 2017
from 31% in the 2016 comparative period. The timing, type and
location of one customer's drilling activities can create
fluctuations in the market share from period to period;
- Secure continues diversification efforts in the DPS division
through expansion of the production chemicals and chemical EOR
service lines which will benefit the Corporation in the medium to
long-term. Strategic relationships with key suppliers and ongoing
product development has resulted in a significant expansion to
Secure's product offering resulting in multiple commercial projects
in 2017. The Production Chemicals Acquisition completed on
April 13, 2017 is expected to
strengthen Secure's position in the market by adding over 100 fully
formulated proprietary products, as well as key infrastructure
related to the product offering and an experienced and dedicated
employee base;
- The DPS division's direct expenses for the three months ended
March 31, 2017 increased by 31% to
$38.9 million from the 2016
comparative period. Overall, the increase in direct expenses from
the 2016 period was primarily due to increased activity
levels;
- The DPS division's operating margin for the three months ended
March 31, 2017 increased 112% from
the 2016 comparative period to $11.6
million from $5.5
million;
- Operating margin as a percentage of revenue increased to 23% in
the three months ended March 31, 2017
from 16% in the comparative period. Operating margins as a
percentage of revenue were positively impacted by the increased
revenues while minimizing fixed costs resulting in improved
drilling fluids product margins and achieving economies of scale as
activity increases;
- G&A expense for the three months ended March 31, 2017 increased by 4% from the
comparative period of 2016. The Corporation continues to manage
costs efficiently and proactively while still responding to
customer demands and activity levels while expanding the production
chemicals and chemical EOR service lines.
OS DIVISION OPERATING HIGHLIGHTS
|
Three months ended
Mar 31,
|
($000's)
|
2017
|
2016
|
%
Change
|
Revenue
|
|
|
|
|
OnSite services
(a)
|
22,775
|
18,354
|
24
|
|
|
|
|
Direct
expenses
|
|
|
|
|
OnSite services
(b)
|
17,186
|
13,767
|
25
|
Operating
Margin (1) (a-b)
|
5,589
|
4,587
|
22
|
|
|
|
|
Operating Margin
(1) as a % of revenue (a)
|
25%
|
25%
|
|
(1)Refer to "Non-GAAP measures,
operational definitions and additional subtotals" for further
information.
|
Highlights for the OS division for the three months ended
March 31, 2017 included:
- Diversified service lines and integrated service offerings,
complemented by increased average oil prices and producer activity
in the three months ended March 31,
2017 drove a 24% increase in OS division revenue to
$22.8 million from $18.4 million in the three months ended
March 31, 2016;
- Projects revenue during the three months ended March 31, 2017 increased 33% from the 2016
comparative period. Projects revenue is dependent on the type and
size of jobs which can vary quarter to quarter. In the three months
ended March 31, 2017, Projects
revenue increased primarily as a result of jobs with new customers,
new service offerings and geographic expansion. The Projects
service line continues to bid on larger scale work as producers
increase their capital spending due to stabilizing commodity
prices;
- Integrated fluids solutions revenue for the three months ended
March 31, 2017 increased
approximately 26% from the 2016 comparative period. Revenue
increased due to a slight increase in customer field activity that
was delayed in late 2016 due to producer budgets and wet weather
and increased equipment utilization compared to three months ended
March 31, 2016;
- Environmental services revenue for the three months ended
March 31, 2017 remained consistent
with the 2016 comparative period. Reclamation and remediation
revenue decreased resulting from deferred customer spending created
by relatively low commodity prices. The decrease in reclamation and
remediation was offset by increased drilling waste revenue as oil
and gas activity increased in the first quarter of 2017. Improving
industry activity also resulted in increased bin revenue in the
three months ended March 31, 2017
compared to the same period in 2016 resulting from geographic
expansion and growth in NORM related solution services;
- Direct expenses for the three months ended March 31, 2017 increased 25% to $17.2 million from the 2016 comparative period.
Overall, the variance in direct expenses was a direct result of the
change in activity levels from the 2016 comparative period.
Additionally, operating overhead expenses have been reduced in
order to match activity levels. These reductions were partially
offset by operating expenses associated with new service lines
offered by the OS division this year;
- The three months ended March 31,
2017 operating margin in the OS division of $5.6 million improved by 22% over the prior year
comparative period due primarily to increased revenue. The
operating margin as a percentage of revenue for the OS division in
the three months ended March 31, 2017
was 25%, consistent with the comparative 2016 period. The OS
division's operating margin as a percentage of revenue can
fluctuate depending on the volume and type of projects undertaken
and the blend of business between remediation and reclamation
projects, demolition projects, pipeline integrity projects, site
clean-up, and other services in any given period. As a percentage
of revenue, the operating margin in the three months ended
March 31, 2017 remained consistent
primarily due to similar types of customers and work in the
Projects service line with the comparative period;
- G&A expenses for the three months ended March 31, 2017 increased by $0.8 million or 58% from the 2016 comparative
period to $2.1 million due primarily
to increased costs to support geographic expansion of Environmental
services including bins and NORM management in the U.S.
OUTLOOK
The first quarter of 2017 has demonstrated that activity levels
in western Canada and North Dakota are continuing to trend higher as
oil and gas producers gain confidence in commodity prices which
facilitates an increase in capital spending. Secure anticipates an
increase in oil and gas producers' capital budgets for the
remainder of 2017 over 2016, which will continue to drive higher
activity levels in the WCSB in subsequent quarters and benefit all
three of the Corporation's divisions.
During the second quarter, results are typically impacted by
seasonality as wet weather and road bans can significantly affect
activity in certain areas. In the prior year, the second
quarter was severely impacted by weather and the instability of
commodity prices as oil and gas producers were unwilling to incur
additional costs due to weather related issues if the oil and gas
activity could be delayed into the third quarter where weather is
more predictable. However, following a more robust first quarter
2017, Secure expects activity levels in the second quarter to
outpace that of 2016, which is currently supported by a higher year
over year rig count.
In April, Secure announced the completion of a Production
Chemicals Acquisition. Over the next few months, Secure will
complete the integration into the existing production chemicals
business and begin to assess new areas for growth and new
opportunities to help customers. Secure has added a highly
qualified group of experienced and dedicated employees to the
business with a complete suite of over 100 fully formulated
proprietary production chemical products. In addition,
a first class blending facility will provide opportunities to
vertically integrate existing operations and provide additional
capacity to grow Secure's market share.
As activity levels ramp up, Secure continues to respond to
customer demand by evaluating multiple opportunities relating to
new infrastructure and expansion of existing facilities. In
previous guidance Secure had anticipated spending organic growth
and expansion capital of $50 million in 2017, however
depending on the timing of obtaining regulatory approvals,
development permits, and other operating agreements, the
Corporation may increase organic spending within PRD up to
$100 million. The Corporation will also spend
approximately $15 million on
sustaining and maintenance expenditures for the year.
Secure's strong balance sheet gives the Corporation flexibility
to continue growing organically and to execute on strategic
acquisition opportunities. Secure's focus remains on increasing
production related services with a diverse asset base that lessens
dependence on drilling related revenue streams. This
diversification provides Secure with greater certainty on
re-occurring cash flows and ensures the Corporation can optimize
its capital structure to be well positioned for future growth.
FINANCIAL STATEMENTS AND MD&A
The Corporation's unaudited condensed consolidated financial
statements and notes thereto for the three months ended
March 31, 2017 and 2016 and MD&A
for the three months ended March 31, 2017 and 2016 are
available immediately on Secure's website at www.secure-energy.com.
The unaudited condensed consolidated financial statements and
MD&A will be available tomorrow on SEDAR at www.sedar.com.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this document constitute
"forward-looking statements" and/or "forward-looking information"
within the meaning of applicable securities laws (collectively
referred to as forward-looking statements). When used in this
document, the words "may", "would", "could", "will", "intend",
"plan", "anticipate", "believe", "estimate", "expect", and similar
expressions, as they relate to Secure, or its management, are
intended to identify forward-looking statements. Such statements
reflect the current views of Secure with respect to future events
and operating performance and speak only as of the date of this
document. In particular, this document contains or implies
forward-looking statements pertaining to: key priorities for the
Corporation's success; the oil and natural gas industry; activity
levels in the oil and gas sector, drilling levels, commodity prices
for oil, natural gas liquids and natural gas; industry fundamentals
for 2017; capital forecasts and spending by producers; demand for
the Corporation's services and products; expansion strategy; the
impact of oil and gas activity on 2017 activity levels; the
Corporation's proposed 2017 capital expenditure program including
growth, sustaining and maintenance capital expenditures; debt
service; acquisition strategy and timing of potential acquisitions;
the impact of new facilities, potential acquisitions, and the
Production Chemicals Acquisition on the Corporation's financial and
operational performance and growth opportunities; future capital
needs and how the Corporation intends to fund its operations,
working capital requirements, dividends and capital program; access
to capital; and the Corporation's ability to meet obligations and
commitments and operate within any credit facility
restrictions.
Forward-looking statements concerning expected operating and
economic conditions, including the Production Chemicals
Acquisition, are based upon prior year results as well as the
assumption that levels of market activity and growth will be
consistent with industry activity in Canada and the U.S. and similar phases of
previous economic cycles. Forward-looking statements concerning the
availability of funding for future operations are based upon the
assumption that the sources of funding which the Corporation has
relied upon in the past will continue to be available to the
Corporation on terms favorable to the Corporation and that future
economic and operating conditions will not limit the Corporation's
access to debt and equity markets. Forward-looking statements
concerning the relative future competitive position of the
Corporation are based upon the assumption that economic and
operating conditions, including commodity prices, crude oil and
natural gas storage levels, interest and foreign exchange rates,
the regulatory framework regarding oil and natural gas royalties,
environmental regulatory matters, the ability of the Corporation
and its subsidiaries to successfully market their services and
drilling and production activity in North
America will lead to sufficient demand for the Corporation's
services and its subsidiaries' services including demand for
oilfield services for drilling and completion of oil and natural
gas wells, that the current business environment will remain
substantially unchanged, and that present and anticipated programs
and expansion plans of other organizations operating in the energy
industry may change the demand for the Corporation's services and
its subsidiaries' services. Forward-looking statements concerning
the nature and timing of growth are based on past factors affecting
the growth of the Corporation, past sources of growth and
expectations relating to future economic and operating conditions.
Forward-looking statements in respect of the costs anticipated to
be associated with the acquisition and maintenance of equipment and
property are based upon assumptions that future acquisition and
maintenance costs will not significantly increase from past
acquisition and maintenance costs.
Forward-looking statements involve significant risks and
uncertainties, should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indications of whether such results will be achieved. Readers are
cautioned not to place undue reliance on these statements as a
number of factors could cause actual results to differ materially
from the results discussed in these forward-looking statements,
including but not limited to those factors referred to and under
the heading "Business Risks" and under the heading "Risk
Factors" in the AIF for the year ended
December 31, 2016 and also includes the risks associated
with the possible failure to realize the anticipated synergies in
integrating the assets acquired in the Production Chemicals
Acquisition with the operations of Secure. Although forward-looking
statements contained in this document are based upon what the
Corporation believes are reasonable assumptions, the Corporation
cannot assure investors that actual results will be consistent with
these forward-looking statements. The forward-looking statements in
this document are expressly qualified by this cautionary statement.
Unless otherwise required by law, Secure does not intend, or assume
any obligation, to update these forward-looking statements.
NON-GAAP MEASURES, OPERATIONAL DEFINITIONS AND ADDITIONAL
SUBTOTALS
The Corporation uses accounting principles that are generally
accepted in Canada (the issuer's
"GAAP"), which includes International Financial Reporting Standards
("IFRS"). Certain supplementary measures in this document do
not have any standardized meaning as prescribed by IFRS. These
non-GAAP measures, operational definitions and additional subtotals
used by the Corporation may not be comparable to similar measures
presented by other reporting issuers. These non-GAAP financial
measures, operational definitions and additional subtotals are
included because management uses the information to analyze
operating performance, leverage and liquidity. Therefore, these
non-GAAP financial measures, operational definitions and additional
subtotals should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with GAAP. See
the management's discussion and analysis available at
www.sedar.com for a reconciliation of the Non-GAAP financial
measures, operational definitions and additional subtotals.
ABOUT SECURE ENERGY SERVICES INC.
Secure is a TSX publicly traded energy services company that
provides safe, innovative, efficient and environmentally
responsible fluids and solids solutions to the oil and gas
industry. The Corporation owns and operates midstream
infrastructure and provides environmental services and innovative
products to upstream oil and natural gas companies operating in
western Canada and certain regions
in the United States
("U.S.").
The Corporation operates three divisions:
Processing, Recovery and Disposal Division ("PRD"): The PRD
division owns and operates midstream infrastructure that provides
processing, storing, shipping and marketing of crude oil, oilfield
waste disposal and recycling. More specifically these services are
clean oil terminalling and rail transloading, custom treating of
crude oil, crude oil marketing, produced and waste water disposal,
oilfield waste processing, landfill disposal, and oil
purchase/resale service. Secure currently operates a network
of facilities throughout Western
Canada and in North Dakota,
providing these services at its full service terminals ("FST"),
landfills, stand-alone water disposal facilities ("SWD") and full
service rail facilities ("FSR").
Drilling and Production Services Division ("DPS"): The DPS
division provides equipment and product solutions for drilling,
completion and production operations for oil and gas producers in
western Canada. The drilling
service line comprises the majority of the revenue for the division
which includes the design and implementation of drilling fluid
systems for producers drilling for oil, bitumen and natural gas.
The drilling service line focuses on providing products and systems
that are designed for more complex wells, such as medium to deep
wells, horizontal wells and horizontal wells drilled into the oil
sands. The production services line focuses on providing equipment
and chemical solutions that optimize production, provide flow
assurance and maintain the integrity of production
assets.
Onsite Services Division ("OS"): The operations of the OS
division include Projects which include pipeline integrity
(inspection, excavation, repair, replacement and rehabilitation),
demolition and decommissioning, and reclamation and remediation of
former wellsites, facilities, commercial and industrial properties,
and environmental construction projects (landfills, containment
ponds, subsurface containment walls, etc.); Environmental services
which provide pre-drilling assessment planning, drilling waste
management, remediation and reclamation assessment services,
Naturally Occurring Radioactive Material ("NORM") management, waste
container services, and emergency response services; and Integrated
Fluid Solutions ("IFS") which include water management, recycling,
pumping and storage solutions.
SOURCE SECURE Energy Services Inc.