CALGARY, March 24, 2020 /CNW/ - SECURE Energy Services
Inc. ("SECURE" or the "Corporation") (TSX – SES) announced today an
operational and corporate update on the actions SECURE is taking in
response to the COVID-19 pandemic and the rapid decline in global
energy prices.
In response to the COVID-19 pandemic, SECURE's action plan is
focused on protecting the health of its employees, families,
communities and other stakeholders. Safety is the Corporation's
first priority and it continues to take steps to protect the health
of its staff and the public in response to the COVID-19 pandemic.
In line with recommendations from government authorities, SECURE
employees are working from home unless required by
business-critical functions and field operations. In addition,
SECURE has implemented multiple business and operational continuity
plans to ensure uninterrupted service to our customers.
"I want to thank our dedicated employees who are doing their
part to slow down the spread of the virus to protect our health
care system and those most vulnerable within our communities, while
continuing to fulfill their work-place responsibilities from home.
Despite unprecedented circumstances, we are executing well and are
confident that we can meet the expectations of all SECURE
stakeholders," said Mr. Amirault, SECURE's Chairman, President and
Chief Executive Officer.
Global energy prices have experienced a significant and rapid
decline based on over supply concerns and the reduced demand
resulting from COVID-19. The prudent response from SECURE's
customers has been to significantly reduce capital spending in
2020. This decision will impact both drilling and completions
activity in 2020 and will also have an impact on production volumes
that are shut in due to uneconomic crude oil prices or production
that naturally declines due to lower capital spending. Given these
measures are recent, and the full impact of reduced spending will
be continually evaluated, the Corporation is responding to measures
taken by our customers by taking prudent actions to protect its
stakeholders. The following list highlights these actions and other
areas of importance the Corporation has considered:
- SECURE will be reducing its 2020 capital program by
$20 million, or 25%, from the amount
previously announced. The remaining committed capital will be
primarily spent in the second quarter for projects that are near
completion and are expected to provide an immediate cash
contribution. The East Kaybob oil pipeline system is currently 80
percent complete and is expected to be commissioned by the start of
the third quarter. Capital for 2021 has been estimated at
$15 million which will be primarily
sustaining capital ($12
million);
- Maintaining significant financial flexibility while serving our
customers and stakeholders is our priority. The Board of Directors
has approved a dividend reduction from 2.25
cents per month to 0.25 cents
per month effective May 1, 2020. This
reduction of the dividend results in annualized cash savings of
approximately $38 million. SECURE
believes the sharing of excess cash flow with shareholders is a
core business principle and will look for opportunities to increase
the dividend as business conditions warrant;
- SECURE's business remains highly concentrated on production
volumes or related services that represent approximately 75% of the
Corporation's annual cash flows. A portion of these production
volumes are contracted and/or fee for service contracts that are
expected to provide a degree of cashflow stability. The Corporation
continually monitors counterparty risk, and in 2019 no single
customer accounted for greater than 5% of revenue;
- Executive management salaries and annual Board of Directors
cash retainers will be reduced by 15% effective April 2020. In addition, a number of cost
optimization and efficiency measures are being implemented that
will reduce our costs to levels consistent with anticipated
activity levels;
- Balance sheet strength and capital discipline are paramount in
these uncertain times as companies seek to reduce risk in all
areas. SECURE has ample liquidity as we move forward into 2020 and
beyond. Our $600 million first lien
revolving credit facility matures June
2023 and had $270 million of
available capacity at December 31,
2019. Our $130 million second
lien credit facility is fully drawn and matures July 2021. In addition, SECURE has a $75 million letter of credit facility with
$42 million available for use under
this facility as of December 31,
2019
The Corporation will continue to keep its stakeholders top of
mind and supported as it navigates through these events. The
Corporation stands by prepared to adjust its response as needed and
will continue to base its decisions on recommendations from public
health experts, its continuing evaluation of global energy prices,
and the impact on SECURE's and our customers' businesses.
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 but not limited to: management's expectations
with respect to the business, operations and results of the
Corporation, including the impact thereon due to COVID-19 and the
rapid decline in global energy prices; the Corporation's ability to
meet stakeholder expectations; the oil and natural gas industry in
Canada and the U.S., including
2020 activity levels and beyond, spending by producers and the
impact of this on SECURE's activity levels; the Corporation's
proposed 2020 and 2021 capital expenditures, the timing of
completion for projects underway, in particular the East Kaybob oil
pipeline system, and the timing of contributions from new projects;
the benefits of contracted and/or fee for service contracts on
SECURE's cash flow and the expected stability of such sources of
cash flow; the continued availability, and sources of, liquidity;
the expected impacts of the Corporation's cost and capital
expenditure reductions; future dividend payments and expected cash
savings resulting from the reduction of the Corporation's cash
dividend payments; debt service; and the Corporation's ability to
meet obligations and commitments and operate within any credit
facility restrictions, including the financial covenants related to
our debt facilities more fully described in the notes accompanying
our audited 2019 financial statements.
Forward-looking statements are based on certain assumptions that
SECURE has made in respect thereof as at the date of this news
release regarding, among other things: the impact of COVID-19 and
lower global energy pricing on oil and gas industry exploration and
development activity levels and production volumes (including as a
result of demand and supply shifts caused by COVID-19 and the
actions of OPEC and non-OPEC countries); the success of SECURE's
operations and growth projects; the Corporation's competitive
position remaining substantially unchanged; future acquisition and
sustaining costs will not significantly increase from past
acquisition and sustaining costs; that counterparties comply with
contracts in a timely manner; that there are no unforeseen events
preventing the performance of contracts or the completion of the
relevant facilities; that there are no unforeseen material costs
relation to the Corporation's facilities; and that prevailing
regulatory, tax and environmental laws and regulations apply.
Forward-looking statements involve significant known and unknown
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 Annual Information Form for the year
ended December 31, 2019. In addition,
the effects and impacts of the COVID-19 outbreak, the rapid decline
in global energy prices (including as a result of demand and supply
shifts caused by COVID-19 and the actions of OPEC and non-OPEC
countries) and the length of time to significantly reduce the
global threat of COVID-19 on SECURE's business, the global economy
and markets are unknown at this time and could cause SECURE's
actual results to differ materially form the forward-looking
statements contained in this news release.
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.
ABOUT SECURE
SECURE is a publicly traded energy business listed on the
Toronto Stock Exchange providing industry leading customer
solutions to upstream oil and natural gas companies operating in
western Canada and certain regions
in the United States through its
three operating segments: Midstream Infrastructure, Environmental
Solutions and Technical Solutions.
The Corporation owns and operates a network of over fifty
midstream facilities throughout key resource plays in western
Canada, North Dakota and Oklahoma. SECURE's core midstream
infrastructure operations generate cash flows from oil production
processing and disposal, produced water disposal, and crude oil
logistics, marketing and storage.
SOURCE SECURE Energy Services Inc.