CALGARY, Feb. 26, 2019 /CNW/ - Secure Energy Services Inc.
("Secure" or the "Corporation") (TSX – SES) announced today its
operational and financial results for the three and twelve months
ended December 31, 2018, highlighted
by Adjusted EBITDA1 of $57.8 million and $190.5 million, an increase of 16% and 21%
per basic share over the respective comparative periods of 2017.
Secure is also pleased to announce the appointment of Richard (Rick) Wise to the Corporation's Board
of Directors ("the Board"). Secure is also announcing the recent
retirement of Daniel Steinke from
his role as Executive Vice President of New Ventures and Government
Affairs.
Director Appointment
Mr. Wise brings to the Board a wealth of midstream experience from
his career of over 30 years in leadership, technical and commercial
roles. Over the past ten years, Mr. Wise held various senior and
executive leadership positions with Gibson Energy Inc., including
Chief Operating Officer and Chief Commercial Officer (interim),
where he provided leadership to the company's terminal, pipeline,
wholesale and refinery operations. Mr. Wise obtained a Bachelor of
Science degree in Chemical & Petroleum Engineering from the
University of Calgary. He currently serves as a director for
the Canadian Mental Health Association, Calgary.
"As we look ahead, Rick is an outstanding addition to our Board.
His midstream experience will help guide Secure as it continues to
execute the Corporation's growth strategy through expanded
midstream offerings," said Rene
Amirault, Chairman of the Board, President and CEO.
Officer Retirement
Dan
Steinke was one of the founding members of Secure in 2007
and has been instrumental in growing and defining Secure into the
company it is today. In his most recent role of Executive Vice
President of New Ventures and Government Affairs, Dan's
responsibilities included directing the Corporation's safety,
regulatory, and Government relations teams, and evaluating industry
trends and customer requirements to continue to grow Secure's core
business and find new and better ways to help our customers. Dan's
previous roles with Secure included executive positions in sales,
business development and operations.
"Dan has been an invaluable asset to Secure over the past twelve
years, providing vision and insight across all aspects of our
business," said Rene Amirault.
"Dan's mission to help the customer not only shaped our company,
but the treatment and disposal industry as we know it. The honesty
and integrity that Dan instilled in Secure's culture built the
trust with our customers and partners that we enjoy today. We
congratulate Dan on his retirement and welcome his continued
counsel and knowledge as a director on Secure's Board."
Dan's retirement was effective December 31, 2018. His
responsibilities have been transitioned to Corey Higham, Executive Vice President
Processing, Recovery and Disposal, and Dave
Engel, Executive Vice President, Technical Services.
Fourth Quarter and Year End 2018 Operational and Financial
Highlights
The following operational and financial
highlights should be read in conjunction with the Corporation's
management's discussion and analysis ("MD&A") and the audited
consolidated financial statements and notes thereto which are
available on SEDAR at www.sedar.com.
2018 was another volatile year for the oil and gas industry in
Canada. Four years following the
global oil price collapse, the industry appeared to be in a
cautious state of recovery, with stable commodity prices, increased
drilling activity and rising production levels. However, Canadian
oil and gas producers continue to face the challenge of exporting
their products due to a lack of pipeline infrastructure. As a
result of a significant oversupply of Canadian crude caused by
these export constraints, crude price differentials in Canada relative to U.S. and global benchmarks
reached unprecedented highs during the fourth quarter. The steep
deterioration in realized crude pricing across the Western Canadian
Sedimentary Basin ("WCSB") from these wide differentials impacted
industry cash flows, resulting in decreased producer confidence and
a slowdown of drilling and completion activity.
Amidst these extraordinary industry conditions, Secure remained
focused on executing the Corporation's strategy for enhanced fluid
management, providing customers with solutions to increase
operating netbacks and improve capital efficiency. In the
Corporation's core Midstream Infrastructure division, Secure
achieved record revenue and Adjusted EBITDA resulting from
infrastructure additions and expansions during the year, and stable
production-driven activity at existing facilities. Additionally,
the Corporation's pipeline connected FSTs and rail terminals
located near customer operations enabled Secure to help our
customers move product with lower transportation costs and realize
higher pricing during the quarter, which favourably impacted
revenue. Overall, Secure achieved Adjusted EBITDA of $57.8 million and $190.5 million in the three and twelve
months ended December 31, 2018, an increase of 13% and
21%, respectively, from the comparative periods of 2017. Secure's
net income of $13.9 million and
$19.9 million in the three and
twelve months ended December 31, 2018 resulted in net
income per weighted average common share of $0.09 and $0.12 in
the respective periods.
Secure's dedication to helping the customer has proven to be a
competitive advantage to the Corporation, and continued to drive
Secure's growth and success in the three and twelve months ended
2018, highlighted by the following achievements:
Strategic Growth Secure continues to identify
and develop midstream infrastructure to expand capacity and
optimize capabilities at existing facilities. During 2018, Secure
completed construction and commissioning of the light oil feeder
pipeline system and receipt terminal in the Kindersley-Kerrobert region of Saskatchewan ("Kerrobert Light Pipeline
System"), the Corporation's first owned and operated crude oil
pipeline system. Secure also commenced operations at two new water
disposal facilities during year, expanding the Corporation's
footprint in the liquids-rich Montney region in Alberta where activity levels, production
growth and water disposal requirements are higher than the rest of
the WCSB. These capital investments are supported by long-term
commitments, providing Secure with recurring volumes and
fee-for-service cash flows.
In total, the Corporation incurred $32.3 million and $156.7 million of growth and expansion capital
during the three and twelve months ended
December 31, 2018, comprised primarily of the growth
projects noted above and expansions at several facilities to
increase throughput, emulsion treating and storage and disposal
capacity. These investments are expected to position the
Corporation to capture new demand and drive more volumes to
Secure's facilities.
Resilient Cash Flows Secure's focus in recent
years on growing the Midstream Infrastructure division has lessened
the Corporation's dependence on drilling-related revenue
streams and provides the Corporation with greater certainty on
recurring cash flows. 84% of the Corporation's Adjusted EBITDA
(before Corporate costs) during 2018 was generated from the
Midstream Infrastructure division, where facility volumes are
driven primarily from production-related activities. Stable cash
flows generated from these production volumes, along with the
growth of the production chemicals business in the Technical
Solutions division, and recurring work in the Environmental
Solutions division, including new long-term contracts in the oil
sands for large scale waste management and recycling programs,
mitigated the impact of periods of decreased drilling activity
during the year. Additionally, Secure has made investments in the
U.S. market that continued to show significant signs of growth
specifically noted in the performance of the Corporation's
facilities located in North
Dakota. Production in North
Dakota was at record levels during 2018 and producers in the
region do not face the egress challenges producers are experiencing
in Canada. With Secure's core
business, the Corporation is well positioned to succeed in periods
of industry uncertainty, with significant upside potential
resulting from increased activity levels.
Solid Financial Performance Successful
project execution and strategic acquisitions over the past several
years, along with recurring cash flows generated from
production-related activities resulted in revenue (excluding oil
purchase and resale) of $192.8 million and $698.2 million in the three and twelve
months ended December 31, 2018, a 4% and 16% increase
over the comparative periods of 2017 despite lower oil and gas
drilling and completion activity in the WCSB. The Midstream
Infrastructure division's segment profit margin1 as a
percentage of revenue (excluding oil purchase and resale) was 62%
and 59% in the three and twelve months ended
December 31, 2018 as a result of higher revenue and an
ongoing commitment to cost control and efficiency. Overall,
Secure's Adjusted EBITDA increased by greater than 10% each quarter
of 2018 over 2017. As a result of higher Adjusted EBITDA, net
income also saw substantial quarter over quarter increases in 2018
over 2017.
Financial Strength Secure
continues to take a disciplined approach to maintaining a strong
balance sheet. At December 31, 2018, the Corporation's
total debt to EBITDA, as defined in the lending agreements, was 2.2
to 1. This provides the Corporation with considerable flexibility
to continue to grow the business organically and execute on
strategic acquisition opportunities that align with the profitable
growth strategy of Secure.
Shareholder Value Creation During the three
and twelve months ended December 31, 2018, the
Corporation returned $10.9 million and $44.0 million, respectively, of cash flow to
shareholders through the monthly dividend of $0.0225 per share. Secure was also active
during the year on the normal course issuer bid ("NCIB") approved
by the TSX in May 2018. The
Corporation repurchased and cancelled
5,546,681 common shares for $41.1 million during the year at an average
price of $7.42 per common share,
representing over 3% of the Corporation's outstanding shares.
During the three months ended December 31, 2018, Secure
repurchased and cancelled 2,740,108 common shares for $20.3 million at an average price of
$7.40 per common share.
FOURTH QUARTER HIGHLIGHTS
The operating and financial highlights for the three month
periods ending December 31, 2018 and
2017 can be summarized as follows:
|
Three months ended
December 31,
|
($000's except
share and per share data)
|
2018
|
2017
|
%
change
|
Revenue (excludes oil
purchase and resale)
|
192,756
|
184,740
|
4
|
Oil purchase and
resale
|
490,295
|
494,816
|
(1)
|
Total
revenue
|
683,051
|
679,556
|
1
|
Adjusted EBITDA
(1)
|
57,810
|
51,177
|
13
|
|
Per share ($),
basic
|
0.36
|
0.31
|
16
|
Net income
(loss)
|
13,944
|
(23,934)
|
158
|
|
Per share ($), basic
and diluted
|
0.09
|
(0.15)
|
160
|
Cash flows from
operating activities
|
59,310
|
22,925
|
159
|
|
Per share ($),
basic
|
0.37
|
0.14
|
164
|
Dividends per common
share
|
0.06750
|
0.06375
|
6
|
Capital expenditures
(1)
|
40,754
|
51,815
|
(21)
|
Total
assets
|
1,583,501
|
1,562,746
|
1
|
Long-term
liabilities
|
560,863
|
422,251
|
33
|
Net debt
(1)
|
268,692
|
166,647
|
61
|
Common shares - end
of period
|
159,274,147
|
163,352,572
|
(2)
|
Weighted average
common shares
|
|
|
|
|
basic
|
161,251,096
|
163,325,590
|
(1)
|
|
diluted
|
164,374,324
|
163,325,590
|
1
|
(1)Refer to "Non-GAAP Measures and
Operational Definitions" for further
information.
|
- REVENUE OF $683.1 MILLION FOR THE THREE MONTHS ENDED
DECEMBER 31, 2018
-
- The Midstream Infrastructure division's revenue (excluding oil
purchase and resale) increased to $105.4
million during the three months ended December 31, 2018, up 31% from the comparative
period in 2017. The increase was driven by the addition of new
infrastructure in 2018, including the Kerrobert Light Pipeline
System and two new water disposal facilities, expansion initiatives
over the past several years to increase capacity and offer
additional services at Secure's existing facilities, Secure's
utilization of multiple crude oil and condensate streams at the
Corporation's pipeline connected FSTs to optimize realized pricing
which benefited both the Corporation and our customers, and
increased rail activity due to wide crude oil differentials. The
increases to revenue were partially offset by lower recovered oil
revenue due to lower realized pricing quarter over quarter;
- Oil purchase and resale revenue in the Midstream Infrastructure
division for the three months ended December
31, 2018 decreased by 1% from the 2017 comparative period to
$490.3 million due to a 27% decrease
in Canadian Light Sweet crude oil prices in the three months ended
December 31, 2018 over the 2017
comparative period, partially offset by higher volumes at certain
of the Corporation's pipeline connected full service
terminals;
- Environmental Solutions division revenue of $29.2 million in the fourth quarter of 2018
decreased 32% from the three months ended December 31, 2017 primarily due to lower
completion activity in the WCSB which resulted in lower revenue
from onsite integrated fluids solutions business;
- Technical Solutions division revenue decreased 5% to
$58.1 million in the three months
ended December 31, 2018 as a result
of a slowdown in drilling activity driven by deteriorating
commodity prices in Canada. A
significant portion of the Technical Solutions division's revenue
comes from drilling fluids and equipment, which strongly correlates
with oil and gas drilling activity in the WCSB. However, the impact
of reduced drilling activity was partially mitigated by the
Corporation's growing production chemicals business. Since the
acquisition of a production chemicals business in April 2017, revenue from production-related
business in the Technical Solutions division has been increasing at
a steady rate as the Corporation wins bids for new jobs and expands
its customer base.
- ADJUSTED EBITDA OF $57.8
MILLION FOR THE THREE MONTHS ENDED DECEMBER 31, 2018
-
- Adjusted EBITDA of $57.8 million
increased 13% from the three months ended December 31, 2017, primarily from higher revenues
achieved by the Midstream Infrastructure division and a continued
focus on cost controls. Increased revenues were driven by higher
facility volumes from the addition of new facilities through
organic growth and several facility expansions to increase waste
handling capacity. Additionally, Secure's utilization of multiple
crude oil and condensate streams to optimize pricing at the
Corporation's pipeline connected FSTs during the three months ended
December 31, 2018, which benefited
both the Corporation and our customers, and increased rail activity
resulting from pipeline constraints helped drive revenue and
segment profit margin in the Midstream Infrastructure division,
which was up 41% over the three months ended December 31, 2017;
- Adjusted EBITDA generated from the Environmental Solutions
division decreased 26% in the three months ended December 31, 2018 over the comparative period in
2017, primarily as a result of the variance in revenue, as
described above. The majority of the Environmental Solutions
division's cost of sales are variable, and fluctuations will
correspond to change in revenue and project mix;
- The Technical Solutions division's Adjusted EBITDA decreased
55% in the three months ended December 31,
2018 over the 2017 comparative period primarily due to lower
revenue driven by reduced drilling activity, rising product costs
resulting from higher U.S. sourced base products and a
strengthening U.S. dollar and severance costs associated with a
reduction in the division's workforce to align with activity
levels.
- NET INCOME OF $13.9 MILLION
FOR THE THREE MONTHS ENDED DECEMBER 31,
2018
-
- For the three months ended December 31,
2018, Secure's net income of $13.9
million improved from a net loss of $23.9 million in the three months ended
December 31, 2017. Excluding the
impact of a non-cash impairment charge of $29.2 million in the fourth quarter of 2017, the
variance is primarily due to a $6.6
million increase to Adjusted EBITDA resulting from the
factors described above and a $4.3
million unrealized gain on crude oil derivatives, partially
offset by higher interest expense resulting from higher debt levels
to fund organic development and acquisitions in the past year, as
well as increased tax expense resulting from higher pre-tax
earnings.
- CAPITAL EXPENDITURES OF $40.8
MILLION FOR THE THREE MONTHS ENDED DECEMBER 31, 2018
-
- Total capital expenditures for the three months ended
December 31, 2018 of $40.8 million were comprised of $32.3 million related to growth and expansion
projects, and $8.5 million of
sustaining capital. There were no acquisitions completed during the
quarter. Growth and expansion capital in the fourth quarter relates
primarily to advancing construction of 260,000 barrels of
additional crude oil storage at the receipt terminal in
Kerrobert; completing the
permanent water disposal facility at Tony Creek; the addition of a
third disposal well at Gold Creek; completing construction of a new
landfill cell at Williston;
increasing processing and disposal capacity at various other
facilities; purchasing equipment to support existing services; and
long lead items and upfront costs for future projects. Sustaining
capital incurred in the three months ended December 31, 2018 relates primarily to well and
facility maintenance.
- FINANCIAL FLEXIBILITY
-
- The total amount drawn on Secure's credit facilities as at
December 31, 2018 increased by 38% to
$413.5 million compared to
$300.0 million at December 31, 2017. The amount drawn increased in
order to fund the Corporation's organic capital program, monthly
dividend payments and share repurchases, partially offset by cash
flows from operating activities;
- As at December 31, 2018, the
Corporation had $148.8 million
available under its credit facilities, subject to covenant
restrictions. The Corporation is well positioned, based on this
availability and expected cash flows from operating activities, to
pursue further accretive acquisition opportunities and execute on
the expected 2019 capital program;
- Secure is in compliance with all covenants related to its
credit facilities at December 31,
2018. The following table outlines Secure's senior and total
debt to trailing twelve month EBITDA ratios at December 31, 2018 and December 31, 2017:
|
Dec 31,
2018
|
Dec. 31,
2017
|
Threshold
|
Senior debt to
EBITDA
|
1.6
|
1.1
|
3.5
|
Total debt to
EBITDA
|
2.2
|
1.9
|
5.0
|
- Senior debt is equal to amounts drawn on the Corporation's
first lien facility plus financial leases less any cash balances
exceeding $5 million. Total debt includes senior debt plus the
$130 million borrowed under the Corporation's second lien
facility. 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.
ANNUAL HIGHLIGHTS
The operating and financial highlights for the years ended
December 31, 2018, 2017 and 2016 can be summarized as
follows:
|
Twelve months
ended Dec 31,
|
($000's except
share and per share data)
|
2018
|
2017
|
2016
|
Revenue (excludes oil
purchase and resale)
|
698,172
|
603,421
|
393,159
|
Oil purchase and
resale
|
2,239,281
|
1,724,787
|
1,016,904
|
Total
revenue
|
2,937,453
|
2,328,208
|
1,410,063
|
Adjusted EBITDA
(1)
|
190,521
|
157,211
|
94,100
|
|
Per share ($),
basic
|
1.17
|
0.97
|
0.61
|
Net income
(loss)
|
19,929
|
(34,202)
|
(48,943)
|
|
Per share ($), basic
and diluted
|
0.12
|
(0.21)
|
(0.32)
|
Cash flows from
operating activities
|
186,515
|
108,872
|
96,682
|
|
Per share ($),
basic
|
1.14
|
0.67
|
0.63
|
Dividends per common
share
|
0.27000
|
0.25000
|
0.24000
|
Capital expenditures
(1)
|
177,076
|
191,837
|
150,877
|
Total
assets
|
1,583,501
|
1,562,746
|
1,425,250
|
Long-term
liabilities
|
560,863
|
422,251
|
336,830
|
Net debt
(1)
|
268,692
|
166,647
|
73,176
|
Common shares - end
of period
|
159,274,147
|
163,352,572
|
160,652,221
|
Weighted average
common shares
|
|
|
|
|
basic
|
163,008,356
|
162,827,541
|
154,625,869
|
|
diluted
|
165,425,609
|
162,827,541
|
154,625,869
|
(1)Refer to "Non-GAAP Measures and
Operational Definitions" for further
information.
|
- REVENUE OF $2.9 BILLION
FOR THE YEAR ENDED DECEMBER 31,
2018
-
- The Midstream Infrastructure division's revenue from services
increased to $356.3 million during
2018, up 30% from 2017. The increase was driven by growth
initiatives over the past several years to increase capacity and
expand service offerings; higher activity levels in the U.S. in
response to higher U.S. benchmark crude oil prices, which also
generated higher recovered oil revenues; increased produced water
and condensate production in the Corporation's key service areas
which resulted in incremental processing and disposal volumes at
Secure's facilities; Secure's utilization of multiple crude oil and
condensate streams at the Corporation's pipeline connected FSTs to
improve realized pricing, which benefited both Secure and our
customers; and wide crude oil differentials driving increased rail
activity in the latter part of the year;
- Oil purchase and resale revenue in 2018 increased by 30% over
2017 to $2.2 billion due to higher
volumes and a 12% increase in average Canadian Light Sweet crude
oil prices in 2018 over 2017;
- Environmental Solutions division revenue of $117.1 million decreased 5% in 2018 from 2017.
Increased projects work resulting from higher activity levels in
the oil and gas sector in the first half of the year, new customers
and new service offerings, was more than offset by decreased water
pumping revenue year over year as a result of lower completions
activity in the second half of 2018;
- Technical Solutions division revenue increased 9% to
$224.8 million in 2018 over 2017. In
April 2017, the Corporation acquired
a production chemicals business that significantly increased
revenue generated from production services beginning in the second
quarter of 2017. Revenue from drilling fluids and equipment was
relatively flat in 2018 over 2017 as the impact of a slight decline
in active rigs year over year was mitigated as revenue per
operating day increased as a result of deeper and more complex
wells.
- ADJUSTED EBITDA OF $190.5
MILLION FOR THE YEAR ENDED DECEMBER
31, 2018
-
- Adjusted EBITDA of $190.5 million
increased 21% from the year ended December
31, 2017, primarily from higher revenues achieved by the
Midstream Infrastructure division and a continued focus on cost
controls. Increased revenues were driven by higher facility volumes
from the addition of new facilities through organic growth, several
facility expansions to increase waste handling capacity, the
acquisition of Ceiba Energy Services Inc. ("Ceiba") in August 2017, higher produced water and condensate
production volumes in the Corporation's key service areas, and
improved oil and gas sector activity in the U.S. Additionally,
increased recovered oil revenues generated from higher average
crude oil prices, Secure's utilization of multiple crude oil and
condensate streams the Corporation's pipeline connected FSTs to
optimize realized pricing, which benefited both Secure and our
customers, and increased rail activity helped drive revenue and
segment profit margin in the Midstream Infrastructure division,
which was up 34% in 2018 over the year ended December 31, 2017;
- Adjusted EBITDA generated from the Environmental Solutions
division decreased 8% in the year ended December 31, 2018 over 2017, primarily as a
result of the variance in revenue, as described above. The majority
of the Environmental Solutions division's cost of sales are
variable, and fluctuations will correspond to change in revenue and
project mix. In 2018, margins were also negatively impacted by
competitive pricing which decreased equipment and labour rates
charged to customers for certain project work;
- The Technical Solutions division's Adjusted EBITDA decreased
23% in the year ended December 31,
2018 over 2017 as the impact of higher revenue was more than
offset by increased costs resulting from the expanded production
chemicals business, cost pressures on chemicals, and severance
costs incurred the fourth quarter.
- NET INCOME OF $19.9 MILLION
FOR THE YEAR ENDED DECEMBER 31,
2018
-
- For the year ended December 31,
2018, Secure's net income of $19.9
million improved from a net loss of $34.2 million in the year ended December 31, 2017. Excluding the impact of a
non-cash impairment charge of $29.2
million in 2017, the variance is primarily due to a
$33.3 million increase to Adjusted
EBITDA resulting from the factors described, partially offset by
higher interest expense resulting from higher debt levels to fund
organic development in the past year, as well as increased tax
expense resulting from higher pre-tax earnings.
- CAPITAL EXPENDITURES OF $177.1
MILLION FOR THE YEAR ENDED DECEMBER
31, 2018
-
- Total capital expenditures for the year ended December 31, 2018 of $177.1 million were comprised of $156.7 million related to growth and expansion
projects, and $20.4 million of
sustaining capital. There were no acquisitions completed during
2018. Growth and expansion capital in 2018 relates primarily to
completing construction of the Kerrobert Light Pipeline System; the
addition of five water disposal wells, including three at Gold
Creek, and one each at Tony Creek and Big Mountain; expansion
projects at various existing facilities to increase throughput,
emulsion treating and disposal capacity; construction of three new
landfill cells; and long lead items and upfront costs for future
projects, including additional crude oil storage at the receipt
terminal in Kerrobert. Sustaining
capital incurred in 2018 relates primarily to well and facility
maintenance.
MIDSTREAM INFRASTRUCTURE DIVISION HIGHLIGHTS
|
Three months ended
Dec 31,
|
Year ended Dec
31,
|
($000's)
|
2018
|
2017
|
%
Change
|
2018
|
2017
|
%
Change
|
Revenue
|
|
|
|
|
|
|
Midstream
Infrastructure (a)
|
105,420
|
80,611
|
31
|
356,350
|
274,372
|
30
|
Oil purchase and
resale
|
490,295
|
494,816
|
(1)
|
2,239,281
|
1,724,787
|
30
|
Total Midstream
Infrastructure division revenue
|
595,715
|
575,427
|
4
|
2,595,631
|
1,999,159
|
30
|
|
|
|
|
|
|
|
Cost of
Sales
|
|
|
|
|
|
|
Midstream
Infrastructure excluding items noted below
|
39,607
|
33,877
|
17
|
146,767
|
117,655
|
25
|
Depreciation,
depletion and amortization
|
20,175
|
22,564
|
(11)
|
81,094
|
81,674
|
(1)
|
Oil purchase and
resale
|
490,295
|
494,816
|
(1)
|
2,239,281
|
1,724,787
|
30
|
Total Midstream
Infrastructure division cost of sales
|
550,077
|
551,257
|
-
|
2,467,142
|
1,924,116
|
28
|
|
|
|
|
|
|
|
Segment Profit
Margin(1)
|
65,813
|
46,734
|
41
|
209,583
|
156,717
|
34
|
|
|
|
|
|
|
|
Segment Profit
Margin (1) as a % of revenue (a)
|
62%
|
58%
|
|
59%
|
57%
|
|
(1)
Calculated as revenue less cost of sales excluding depreciation and
amortization. Refer to "Non-GAAP Measures and Operational
Definitions" for further information.
|
- Revenue generated from Midstream Infrastructure services of
$105.4 million for the three months
ended December 31, 2018 and
$356.4 million for the 2018 year
increased 31% and 30%, respectively, from the 2017 comparative
periods. The increase in revenue during the fourth quarter was
primarily driven by higher volumes associated with new
infrastructure and expansions at certain of the Corporation's
existing facilities during 2017 and 2018, Secure's utilization of
multiple crude oil and condensate streams at the Corporation's
pipeline connected FSTs to optimize realized pricing, which
benefited both the Corporation and our customers, and increased
rail activity. In the last four months of 2018, a shortage of
pipeline takeaway capacity and refinery outages resulted in an over
supply of crude oil and unprecedented crude oil price differentials
in the WCSB. These large differentials and the volatility in
pricing provided Secure with an opportunity to work with customers
at the Corporation's pipeline connected FSTs, crude oil terminals
and rail terminals to improve their operating netbacks through
higher realized pricing and lower transportation costs which also
lead to higher revenue for the Corporation;
- In addition to the factors described above, the increase in
Midstream Infrastructure services revenue in 2018 over 2017 was due
to higher activity levels in North
Dakota which accounted for 7% of the year over year
increase. Furthermore, higher realized crude oil prices in
Canada during the first half of
2018 resulted in increased activity levels driving incremental
volumes to the Corporation's facilities and generated higher
recovered oil revenues;
- The majority of the Corporation's facilities are located in
high impact resource plays, such as the Montney and Duvernay regions, where producers were most
active in the WCSB in 2018. Fluids pumped from wells in these
regions are also significantly higher than other regions of the
WCSB, driving incremental volumes at Secure's facilities. In the
past year, Secure has strategically added new facilities, including
the Gold Creek and Tony Creek water disposal facilities in
July 2018, and increased capacity for
water disposal at various other facilities in these regions,
including at the Dawson Creek and
Fox Creek FSTs, Rycroft FSR and Big Mountain water disposal
facility, in response to customer demand. Additionally, Secure
completed the acquisition of Ceiba Energy Services Inc. ("Ceiba")
on August 1, 2017 which added ten
facilities to Secure's footprint in the WCSB. These additions and
expansions were the driving force behind a 24% and 32% increase in
water disposal volumes in Canada
during the three and twelve months ended December 31, 2018 over the comparative periods of
2017;
- The Kerrobert Light Pipeline System commenced commercial
operations on October 1, 2018,
resulting in a new revenue source for the Corporation in the fourth
quarter through pipeline tariffs. The feeder pipeline project
includes area dedication and contracted volume on both an annual
and cumulative term basis over 10 years. In total, revenue from new
infrastructure, including the pipeline system and two new water
disposal facilities, added $7.5
million in the fourth quarter, accounting for 9% of the
increase in revenue over the same period in 2017. In 2018, revenue
from new infrastructure contributed $16.5
million of revenue, accounting for 6% of the increase in
revenue over 2017;
- Waste processing and solids disposal volumes at the
Corporation's facilities in North
Dakota increased significantly in the year ended
December 31, 2018 contributing to a
37% increase in revenue generated from the U.S. compared to 2017.
Higher volumes at Secure's North
Dakota facilities were a result of improved activity levels,
including new drilling and frac completions as customers remain
active in the Bakken, evidenced by a 16% increase in the
North Dakota average rig count
year over year, and rising production levels. Higher activity
levels were driven by an increase in the WTI oil price over 2017
and the commissioning of the Dakota Access Pipeline in June 2017 which has improved economics for
delivering producers' product to market. Secure's revenue from the
U.S. increased marginally in the three months ended December 31, 2018 over 2017;
- Recovered oil revenues decreased 39% in the three months ended
December 31, 2018 from the
comparative period of 2017 primarily due to a 27% decrease in
Canadian Light Sweet oil prices in the same period. In 2018,
recovered oil revenues increased 14% over 2017 primarily due to a
12% increase in Canadian Light Sweet oil prices in the year.
- Overall, disposal volumes increased by 9% and 18% in the three
and twelve months ended December 31,
2018 from the comparative periods in 2017 due primarily to
increased produced and flowback water resulting from new facilities
and increased capacity at existing facilities, as well as
increasing water production as wells mature;
- Overall, processing volumes decreased 5% in the three months
ended December 31, 2018 from the 2017
comparative period due to the slowdown in drilling and completion
activity in Canada resulting from
volatile pricing and challenging industry fundamentals. During the
year ended December 31, 2018,
processing volumes increased 6% from 2017 largely as a result of a
50% increase in waste processing volumes at the Corporation's
North Dakota facilities year over
year. Drilling and completion activity in Canada, and resulting processing volumes, was
relatively flat in the year as producers took a cautious approach
to capital spending in light of volatile crude oil pricing, low gas
prices and uncertainty with respect to the addition of pipeline
capacity out of the WCSB;
- Oil purchase and resale revenue in the Midstream Infrastructure
division for the three months ended December
31, 2018 decreased by 1% from the 2017 comparative period to
$490.3 million due to a 27% decrease
in Canadian Light Sweet crude oil prices in the three months ended
December 31, 2018 over the 2017
comparative period, partially offset by higher volumes resulting
from higher takeaway capacity at certain of the Corporation's
pipeline connected full service terminals. In the year, oil
purchase and resale revenue increased by 30% over 2017 to
$2.2 billion due to higher volumes
resulting from increased industry activity during the first half of
the year and higher takeaway capacity at certain of the
Corporation's pipeline connected full service terminals, and a 12%
increase in Canadian Light Sweet crude oil prices in 2018 over
2017;
- The Midstream Infrastructure's segment profit margin as a
percentage of revenue from Midstream Infrastructure services
increased 4% and 2% in the three and twelve months ended
December 31, 2018 from the
comparative periods of 2017 to 62% and 59%, respectively. As a
percentage of Midstream Infrastructure services revenue, segment
profit margin increased over 2017 as a result of overall increased
revenues while minimizing fixed and related costs and a greater
proportion of revenue generated from higher margin services;
- General and administrative ("G&A") expenses of $5.4 million and $25.1
million for the three and twelve months ended December 31, 2018 increased from the comparative
period balances of $5.0 million and
$19.7 million. Although the
Corporation continues to minimize G&A costs by streamlining
operations where possible, Midstream Infrastructure G&A
expenses have increased primarily due to overhead requirements to
support new service lines, facilities and expansions. As a
percentage of revenue from Midstream Infrastructure services,
G&A expenses decreased slightly to 5% for the three months
ended December 31, 2018 from 6% in
the comparative period of 2017, and were flat at 7% for the years
ended December 31, 2018 and
2017;
- Earnings before tax of $39.7
million and $101.6 million
during the three and twelve months ended December 31, 2018 increased from a loss before
tax of $10.5 million in the fourth
quarter of 2017, and earnings before tax of $24.6 million in the 2017 year. Excluding the
impact of a $29.2 million non-cash
impairment charge related to goodwill and intangible assets at the
Corporation's Alida crude oil terminalling facility in 2017, the
increase is primarily a result of a $19.1
million and $52.9 million
increase in segment profit margin in the three and twelve months
ended December 31, 2018 over the 2017
comparative periods, and lower depreciation, depletion and
amortization due to losses on disposal of property, plant and
equipment in 2017. This increase was partially offset by higher
G&A expenses incurred to support higher activity levels.
ENVIRONMENTAL SOLUTIONS DIVISION HIGHLIGHTS
|
Three months ended
Dec 31,
|
Year ended Dec
31,
|
($000's)
|
2018
|
2017
|
%
Change
|
2018
|
2017
|
%
Change
|
Revenue
|
|
|
|
|
|
|
Environmental
Solutions
|
29,236
|
42,726
|
(32)
|
117,060
|
123,216
|
(5)
|
|
|
|
|
|
|
|
Cost of
Sales
|
|
|
|
|
|
|
Environmental
Solutions excluding depreciation and amortization
|
22,464
|
33,192
|
(32)
|
92,242
|
95,482
|
(3)
|
Depreciation and
amortization
|
2,093
|
2,204
|
(5)
|
8,525
|
9,302
|
(8)
|
Total
Environmental Solutions division cost of sales
|
24,557
|
35,396
|
(31)
|
100,767
|
104,784
|
(4)
|
|
|
|
|
|
|
|
Segment Profit
Margin(1)
|
6,772
|
9,534
|
(29)
|
24,818
|
27,734
|
(11)
|
|
|
|
|
|
|
|
Segment Profit
Margin(1) as a % of revenue
|
23%
|
22%
|
|
21%
|
23%
|
|
(1)
Calculated as revenue less cost of sales excluding depreciation and
amortization. Refer to "Non-GAAP Measures and Operational
Definitions" for further information.
|
- Environmental Solutions division revenue of $29.2 million for the three months ended
December 31, 2018 decreased by 32%
from the comparative period of 2017 primarily due to lower revenue
generated from onsite water management and pumping services as a
result of poor industry conditions that reduced completion
activity. During the year ended December 31,
2018, Environmental Solutions division revenue of
$117.1 million decreased 5% from 2017
due primarily to the transfer of the division's U.S. operations to
the Midstream Infrastructure division at the start of 2018.
Excluding this impact, revenue was relatively flat year over year.
Higher revenue from projects generated from new customers and new
services offerings in the past year, including the management of
scrap metal recycling programs for two major oil sands producers,
were offset by lower activity levels negatively impacting onsite
water management and pumping services in the fourth quarter, and
from lower environmental remediation revenue as major customers
deferred this spending;
- Segment profit margin for the three and twelve months ended
December 31, 2018 of $6.8 million and $24.8
million decreased by 29% and 11% from the prior year
comparative periods. As a percentage of revenue, segment profit
margin was 23% and 21% for the three and twelve months ended
December 31, 2018 compared to 22% and
23% in the three and twelve months ended December 31, 2017. The Environmental Solutions
division's segment profit 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 segment profit margin in the three months ended
December 31, 2018 increased primarily
due to the nature of project work in the quarter and the
realization of initiatives undertaken throughout the year to
minimize overhead expenses, which were partially offset by a
smaller proportion of revenue generated from higher margin onsite
integrated fluids solutions activity. In the year ended
December 31, 2018, the decrease in
segment profit margin as a percentage of revenue was a result of
project mix, as well as increased competition on project bids which
resulted in lower rates charged for labour and equipment;
- G&A expenses for the three and twelve months ended
December 31, 2018 decreased 46% and
24% from the 2017 comparative periods to $1.4 million and $7.9
million as a result of ongoing initiatives to minimize
costs, and from the transfer of certain personnel and office costs
included in the comparative figure to the Midstream Infrastructure
division at the start of 2018. Additionally, depreciation and
amortization expense was lower in the 2018 periods as intangible
assets recorded for two previous acquisitions were fully amortized
in the second quarter of 2018. The impact of these changes was
partially offset by additional business development expenses
resulting from the Environmental Solutions division's growth
initiatives;
- Earnings before tax of $3.2
million and $8.3 million
during the three and twelve months ended December 31, 2018 has decreased 30% and increased
5% over the 2017 comparative periods. The variances correspond
primarily to changes in segment profit margin in the three and
twelve months ended December 31, 2018
over the 2017 comparative periods, combined with the positive
impact of a $1.2 million and
$2.6 million decrease in G&A
expense in the quarter and year to date.
TECHNICAL SOLUTIONS DIVISION HIGHLIGHTS
|
Three months ended
Dec 31,
|
Year ended Dec
31,
|
($000's)
|
2018
|
2017
|
%
Change
|
2018
|
2017
|
%
Change
|
Revenue
|
|
|
|
|
|
|
Technical
Solutions
|
58,100
|
61,403
|
(5)
|
224,762
|
205,833
|
9
|
|
|
|
|
|
|
|
Cost of
Sales
|
|
|
|
|
|
|
Technical Solutions
excluding depreciation and amortization
|
48,737
|
48,928
|
-
|
186,232
|
166,568
|
12
|
Depreciation and
amortization
|
5,670
|
5,450
|
4
|
21,252
|
20,879
|
2
|
Total Technical
Solutions division cost of sales
|
54,407
|
54,378
|
-
|
207,484
|
187,447
|
11
|
|
|
|
|
|
|
|
Segment Profit
Margin(1)
|
9,363
|
12,475
|
(25)
|
38,530
|
39,265
|
(2)
|
|
|
|
|
|
|
|
Segment Profit
Margin (1) as a % of revenue
|
16%
|
20%
|
|
17%
|
19%
|
|
(1)
Calculated as revenue less cost of sales excluding depreciation and
amortization. Refer to "Non-GAAP Measures and Operational
Definitions" for further information.
|
- Falling benchmark crude prices and historically wide
differentials in Canada during the
three months ended December 31, 2018
resulted in a 10% decrease in WCSB rig activity compared to the
three months ended December 31, 2017.
The Technical Solutions division's drilling fluids and equipment
revenue correlates with oil and gas drilling activity in the WCSB.
As a result, revenue generated from this line was negatively
impacted by fewer operating days and rigs serviced quarter over
quarter. In the year ended December 31,
2018, Secure was able to partially mitigate the impact of
reduced activity levels and market share declines by continuing to
focus on more complex wells which require specialized fluids,
equipment and expertise. As a result, revenue from drilling
services was relatively flat during the year ended December 31, 2018 from 2017;
- Secure continues diversification efforts in the Technical
Solutions division to become less dependent on drilling activity
through expansion of production services. Strategic relationships
with key suppliers and ongoing product development has resulted in
a significant expansion to Secure's product offering, leading to
multiple commercial projects in 2018. The acquisition of a
production chemicals business completed in April 2017 has strengthened 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
production chemicals service line now has over 350 commercialized
products and continues to win new bids and customers and gain
market share. As a result of increased contributions from
production related services, the decrease to total revenue from the
Technical Solutions division resulting from the slowdown of
drilling activity in the fourth quarter was partially mitigated.
Overall, revenue from the Technical Solutions division of
$58.1 million decreased 5% in the
quarter from the three months ended December
31, 2017. In the year, Technical Solutions division revenue
increased 9% to $224.8 million as a
result of contributions from the production chemicals
business;
- The Technical Solutions division's segment profit margin for
the three months ended December 31,
2018 decreased 25% from the comparative period to
$9.4 million as a result of lower
revenue with flat expenses. The continued cost inflation associated
with drilling and production chemicals have outpaced the Technical
Solutions division's ability to realize meaningful price increases
during the period. As a result, segment profit margin as a
percentage of revenue was 16%, down from 20% in the three months
ended December 31, 2017;
- In year ended December 31, 2018,
the Technical Solutions division's segment profit margin decreased
slightly to $38.5 million from
$39.3 million. As a percentage of
revenue, segment profit margin was 17% in 2018, down from 19% in
2017. Segment profit margin as a percentage of revenue were
positively impacted by the increased revenues while minimizing
fixed costs resulting in achieving economies of scale from
increased activity. However, increasing product supply costs
without realizing any meaningful price increases during the year
resulted in a 2% margin compression;
- The Corporation continues to proactively manage costs in
response to customer demands and activity levels. During the fourth
quarter, this included a reduction in the division's workforce. As
a result, higher G&A expense during the three months ended
December 31, 2018 over 2017 was
largely due to severance payments made to terminated employees.
During 2018, G&A expenses increased 24% to $23.1 million as a result of expanding the
production chemicals service line. Additionally, all research and
development costs associated with the Corporation's research lab
have been included in Technical Solutions G&A expense since the
third quarter of 2017. Previous to that, they were reported within
the Corporation's business development expense included in
Corporate G&A expense. Secure continues to focus on research
and development projects to expand the value chain of services
offered to customers, and to provide innovative and cost-effective
solutions to reduce waste in the drilling and production
processes;
- During the three months ended December
31, 2018, the Technical Solutions division had a loss before
tax of $2.6 million compared to
income of $1.7 million in the 2017
comparative period. The variance of $4.3
million was a result of a 25% decrease in segment profit
margin and a 19% increase in G&A expense, with flat operating
DD&A expense. During the twelve months ended December 31, 2018, the Technical Solutions
division had a net loss of $5.8
million compared to a net loss of $0.2 million in 2017. The impact of higher
revenues was more than offset by increased product costs and higher
G&A resulting primarily from costs associated with the expanded
production chemicals business, and the reclassification of research
and development expenses from Corporate business development to the
Technical Solutions division effective July
2017.
OUTLOOK
In response to the historic differentials during the fourth
quarter, the Alberta Government implemented a temporary 8.7%
production cut of raw crude oil and bitumen effective January 2019 to reduce excess oil storage in
western Canada. In addition to the
mandated production curtailment, uncertainty resulting from
volatile commodity prices and ongoing egress constraints has
resulted in producers continuing to delay drilling and completion
activity. As a result, oil price differentials in the WCSB have
tightened since the announcement. As the year progresses, Secure
anticipates higher producer cash flows in Canada resulting from narrowing differentials.
This, along with greater visibility toward pipeline development for
improved market access, including the completion of the Enbridge
Inc. Line 3 pipeline, will help restore confidence and may result
in a rebound in activity levels in the second half of 2019 and into
2020.
Production-related volumes represent the majority of the volumes
processed and disposed at Secure's midstream facilities, providing
the Corporation with recurring cash flows that are more resilient
during periods of reduced drilling and completion activity. This,
combined with the addition of new infrastructure and expansions
during 2018, is expected to mitigate the impact reduced activity
levels, particularly in the drilling fluids and onsite integrated
fluids management businesses, will have on the Corporation's
financial results in 2019.
Secure's strategy remains focused on what is in the
Corporation's control: working with customers to identify
opportunities and integrated solutions where the Corporation can
add value and lower customers' costs. By focusing on new and
innovative ways to offer solutions, Secure's customers will be able
to gain efficiencies for drilling, completing and producing their
hydrocarbon reserves. Helping Secure's customers grow and being
their trusted energy solutions partner will ensure that the
Corporation continues to create long-term shareholder value.
The industry fundamentals driving the success of Secure's core
operations remain unchanged:
- Trend towards increased outsourcing of midstream work by
producers;
- Produced water increasing at a disproportionate rate relative
to aggregate production as a result of larger fracs, aging wells
and maturing basins in both Canada
and the U.S.;
- Increasing opportunities relating to crude oil logistics as
volatile differentials allow for opportunities on both crude by
rail and via pipeline;
- Well density improving economics to pipeline connect production
volumes to midstream facilities;
- Forecast global oil and gas demand driving production growth in
the WCSB;
- Highly regulated and best in the world environmental
standards.
These factors are expected to result in the need for additional
facilities to meet incremental requirements for treating,
processing and disposal capacity. Secure has made significant
capital investments to ensure the business is well positioned to
capture new demand. By offering exceptional customer service and
owning and operating midstream facilities near customer production,
Secure expects these trends will drive more volumes to the
Corporation's midstream facilities. Additionally, customers
continue seek cost effective transportation solutions for water,
oil and condensate volumes; Secure's successful execution of the
Kerrobert Light Pipeline System will help the Corporation to take
advantage of similar opportunities creating value for both the
customer and Secure.
Secure has a solid balance sheet and is well positioned to
respond with solutions and the right people to the market's needs.
Secure continues to work with its customers to support their needs
relating to new facilities and expansions. The Corporation expects
to incur approximately $100 million of growth and
expansion capital in 2019 depending on the outcome of various
opportunities in development, such as regulatory approvals,
development permits and other operating agreements. The initial
capital plan includes completing construction of two crude oil
storage tanks at the receipt terminal in Kerrobert, expected to be commissioned in
May 2019; construction of two produced water transfer and
injection pipelines from customer processing plants; optimizing
capabilities and increasing processing and disposal capacity at
various other facilities, including additional
disposalwells; and purchasing equipment to
support existing services. Providing value-adding solutions to
increase customer operating netbacks and improve capital efficiency
remains Secure's primary objective.
FINANCIAL STATEMENTS AND MD&A
The Corporation's
audited consolidated financial statements and notes thereto for the
year ended December 31, 2018 and 2017 and MD&A for
the three and twelve months ended December 31, 2018 and
2017 are available immediately on Secure's website at
www.secure-energy.com. The audited 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 factors driving the Corporation's
success; the impact of new facilities, new service offerings,
potential acquisitions, and prior year acquisitions on the
Corporation's future financial results; demand for the
Corporation's services and products; growth and expansion strategy;
the Corporation's ability to continue to grow the business
organically and execute on strategic growth opportunities based on
current financial position; the oil and natural gas industry in
Canada and the U.S., including
2019 and 2020 activity levels, spending by producers and the impact
of this on Secure's activity levels; future pipeline development in
Canada, specifically related to
timing of the completion of Enbridge Inc.'s Line 3 replacement;
industry fundamentals driving the success of Secure's core
operations, including increased outsourcing of midstream work by
producers, drilling, completion and production trends,
opportunities relating to crude oil logistics, well density and
economics for pipeline connecting production volumes to midstream
facilities, and global oil and gas demand; the Corporation's
proposed 2019 capital expenditure program including growth and
expansion and sustaining capital expenditures, and the timing of
completion for projects, in particular the additional storage at
the Kerrobert terminal; debt
service; 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 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 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 under the
heading "Risk Factors" in the AIF for the year ended
December 31, 2018 and also includes the risks associated
with the possible failure to realize the anticipated synergies in
integrating the assets acquired in prior year acquisitions 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 AND OPERATIONAL DEFINITIONS
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
measures are intended as a complement to results provided in
accordance with IFRS. The Corporation believes these measures
provide additional useful information to analysts, shareholders and
other users to understand the Corporation's financial results,
profitability, cost management, liquidity and ability to generate
funds to finance its operations. However, they should not be used
as an alternative to IFRS measures because they do not have a
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other companies. See the
management's discussion and analysis available at
www.sedar.com for further details, including reconciliations
of the Non-GAAP measures and additional GAAP measures to the most
directly comparable measures calculated in accordance with
IFRS.
ABOUT SECURE ENERGY SERVICES INC.
Secure is a TSX
publicly traded integrated energy business with midstream
infrastructure, environmental and technical solutions divisions
providing industry leading customer solutions to upstream oil and
natural gas companies operating in western Canada and certain regions in the United States ("U.S.").
1 Refer to
the "Non-GAAP Measures and Operational Definitions" section
herein.
|
SOURCE SECURE Energy Services Inc.