/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/
CALGARY, Aug. 10, 2017 /CNW/ - Cathedral Energy Services
Ltd. (the "Company" or "Cathedral" / TSX: CET) announces its
consolidated financial results for the three and six months ended
June 30, 2017 and 2016. Dollars
in 000's except per share amounts.
This news release contains "forward-looking statements"
within the meaning of applicable Canadian securities laws.
For a full disclosure of forward-looking statements and the risks
to which they are subject, see "Forward-Looking Statements" later
in this news release.
FINANCIAL HIGHLIGHTS
Dollars in 000's except per share
amounts
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2017
|
2016
|
2017
|
2016
|
Revenues
|
$
|
34,355
|
$
|
14,624
|
$
|
72,678
|
$
|
33,368
|
Adjusted gross margin
% (1)
|
15.0%
|
15.0%
|
19%
|
21%
|
Adjusted EBITDAS
(1)
|
$
|
2,363
|
$
|
(1,638)
|
$
|
9,159
|
$
|
(162)
|
|
Diluted per
share
|
$
|
0.05
|
$
|
(0.05)
|
$
|
0.20
|
$
|
-
|
|
As % of
revenues
|
7%
|
-11%
|
13%
|
0%
|
Funds from continuing
operations (1)
|
$
|
1,664
|
$
|
(1,799)
|
$
|
5,653
|
$
|
(1,632)
|
|
Diluted per
share
|
$
|
0.03
|
$
|
(0.05)
|
$
|
0.12
|
$
|
(0.04)
|
Gain on disposal of
foreign subsidiary
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
10,865
|
Earnings before
income taxes
|
$
|
54
|
$
|
(8,581)
|
$
|
4,026
|
$
|
2,429
|
|
Basic and diluted per
share
|
$
|
-
|
$
|
(0.24)
|
$
|
0.09
|
$
|
0.07
|
Net
earnings
|
$
|
186
|
$
|
(6,916)
|
$
|
2,767
|
$
|
2,767
|
|
Basic and diluted per
share
|
$
|
-
|
$
|
(0.19)
|
$
|
0.06
|
$
|
0.08
|
Equipment additions -
cash basis
|
$
|
2,511
|
$
|
70
|
$
|
3,547
|
$
|
338
|
Weighted average
shares outstanding
|
|
|
|
|
|
Basic
(000s)
|
48,916
|
36,295
|
45,779
|
36,295
|
|
Diluted
(000s)
|
49,023
|
36,295
|
45,917
|
36,295
|
|
|
|
|
|
|
|
|
|
|
June 30
|
December
31
|
|
|
|
|
|
2017
|
2016
|
Working
capital
|
|
|
|
|
$
|
29,692
|
$
|
39,324
|
Total
assets
|
|
|
|
|
$
|
122,175
|
$
|
136,017
|
Loans and borrowings
excluding current portion
|
|
|
|
|
$
|
71
|
$
|
26,322
|
Shareholders'
equity
|
|
|
|
|
$
|
105,151
|
$
|
90,772
|
|
|
|
|
|
|
|
(1) Refer to
"NON-GAAP MEASUREMENTS"
|
2017 Q2 KEY TAKEAWAYS
Q2 revenues increased 135% from $14,624 in 2016 Q2 to $34,355 in 2017 Q2 and year-to-date revenues
increased 118% from $33,368 in 2016
to $72,678 in 2017.
Q2 adjusted EBITDAS increased from negative $(1,638) in 2016 Q2 to positive $2,363 in 2017 Q2. Year-to-date adjusted
EBITDAS increased from negative $(162) in 2016 to $9,159 in 2017.
OUTLOOK
The second quarter for oilfield services companies with Canadian
operations is generally challenging due to very low activity levels
resulting from the seasonal spring break-up in Canada.
Relative to second quarter results from continuing operations in
2015 and 2016 we were pleased with our performance in 2017
Q2. Revenues were up significantly compared to the prior
year's comparative quarters and our Adjusted EBITDAS were firmly
positive as compared to negative amounts in the prior
years. These improvements are due to significantly
increased activity levels in 2017 particularly in the United States ("U.S.") along with our
continued focus on operational efficiencies and business
improvements across the entire company.
Of note in 2017 Q2 was that our U.S. drilling activity days was
similar to 2017 Q1 despite the fact that the average U.S. rig count
increased 20% from Q1 to Q2. This resulted in our U.S. market
share dropping in the quarter. There are a number of
reasons for this. The primary reason was equipment
capacity constraints in the quarter which were a result of our
ability to repair, replace and invest in new equipment quickly
enough to meet increased industry demand. Much of this is
related to us, and our supply chain, needing to ramp up our
businesses quickly in the face of a U.S. rig count that more than
doubled from 421 active rigs at the end of June 2016 to 940 active rigs at the end of
June 2017 (source: Baker
Hughes).
A contributing factor impacting our equipment capacity has
been damaged equipment and equipment lost-in-hole.
Directional drilling equipment is getting pushed harder and faster
than in the past as a result of customers drilling faster with
longer laterals. With the higher rates of wellbore penetration
being demanded, equipment is being subjected to a more
severe drilling environment. These increased equipment
demands are necessitating more frequent repairs and upgrades than
in the past and in part is contributing to higher equipment
lost-in-hole frequency. This is certainly not an issue that
is isolated only to Cathedral. However, the good news
is that based on Cathedral having our own equipment and doing our
own repairs we are able to react to these demands faster. Our
Drilling Engineering Services and Sales teams have also been
working with customers to improve drilling practices to help us
better help them. In addition, we have also aggressively
ramped up our capital spending program to alleviate the equipment
constraints and expect our available capacity to start improving in
late Q3. The lag time involved with deploying new equipment
is a consequence of the lead times required to procure and
manufacture equipment. Again we are fortunate that we have
control over much of this process compared to competitors that
procure their equipment from third party providers.
Another issue that impacted U.S. activity days in Q2 was us
being more selective in the work we were undertaking. We
chose to turn down opportunities where we could not achieve an
adequate return on a fully costed basis (which includes
consideration of an imputed capital charge on the equipment
deployed). Customers have generally been very reluctant
to give price increases or reimburse fully for equipment
damages. Although U.S. day rates improved in the quarter,
this was largely due to the mix of work involved. The ability
to push through price increases was very tough in the quarter based
on the negative outlook on oil prices that started in April,
however, we have made progress with some customers who recognize
our value.
The competitive environment in North
America for directional drilling services remains
fierce. From our perspective, some competitors appear willing
to work at low margins in order to generate some cash contribution
or are pricing aggressively in an effort to gain market share
without fully considering the cost implications related to
equipment repairs, upgrades and replacement. We fully
believe that sticking to our drilling performance based strategy
and our strong financial position will eventually carry the
day. Our customer value proposition is delivering "Better
Performance Every Day", supported by our proprietary
equipment, great people, drilling engineering services and size and
scale.
As noted in our 2017 Q1 Outlook, our expectation was for
continued commodity price volatility going forward and we certainly
saw this in Q2. Through the second quarter, WTI pricing
ranged from a high of $53 to a low of
$42 USD/bbl. With pricing
dipping into the low $40 USD/bbl
range we started to see customers indicating they would pare back
their capital spending or defer drilling programs. The result
was a slowing in U.S. rig count growth starting in June. For
Canadian clients the increase in the Canadian Dollar coupled with
WTI price decrease further impairs their cash flow and ultimately
their funds available for drilling. The consequence has been
a challenged outlook for the oilfield services sector in general
with most analysts reducing expectation for 2017 H2 and into
2018. Having said this, WTI prices have recently rebounded
into the $50 bbl range. As goes
the outlook on oil prices, so goes the rig count and directional
drilling industry activity levels.
In the face of the current industry uncertainty, we continue to
focus on managing our costs, securing profitable work and
continuing to improve our business operations. On the sales
side, we have strategies to help us achieve higher pricing for
our services and we are deliberately focused on developing
long-term relationships with key customers where our performance
matters approach resonates. On the operations side, we are looking
at ways to better manage our labor pool, keep our expenses in line
and continue to deliver high quality service. Our technology group
continues to make equipment improvements to our existing equipment
and explore new products aimed at revenue generation and expense
and capital cost reductions. Our investment in new and
replacement equipment will improve our equipment capacity starting
in 2017 H2 and into 2018.
2017 CAPITAL
PROGRAM
During the six months ended June 30,
2017 the Company invested $3,547 (2016 - $338) in equipment. The following table
details the current period's net equipment additions:
|
|
|
Six months
ended
|
|
June 30,
2017
|
Equipment
additions:
|
|
|
Growth capital
(1)
|
$
|
1,369
|
|
Maintenance
capital(1)
|
1,538
|
|
Replacement
capital(1)
|
640
|
Total cash
additions
|
3,547
|
Less: proceeds on
disposal of equipment (excluding capital lease
settlements)
|
(4,103)
|
Net equipment
additions(1)
|
$
|
(556)
|
(1)See "NON-GAAP
MEASUREMENTS"
|
Cathedral's 2017 capital budget ("capex") remains at
$10,000 of net equipment
additions(1) for the year. The $10,000 net capex plan for 2017 is comprised of
$4,900 of replacement and maintenance
capital and $5,100 of growth
capital. The $4,900 amount, is
substantially related for investment to replace items that have
been lost-in-hole over the past two years and for equipment
upgrades and replacements to improve the capacity of Cathedral's
existing Measurement-While-Drilling ("MWD") and motor fleet. Over
the past 2 years, Cathedral deferred replacement and maintenance
capital expenditures in the face of low equipment utilization and
in order to pay down debt. Subject to operating results and
industry outlook, on a go forward basis equipment lost-in-hole will
be replaced funded from the proceeds received. As such,
Cathedral's total capex in any year may exceed the above noted
capex. The 2017 capital budget will be reviewed
quarterly based on anticipated future activity levels and operating
cash flow. Cathedral intends to finance its 2017 capital
budget from cash flow from operations, proceeds from assets
lost-in-hole, working capital (cash) and credit facility
availability.
RESULTS OF OPERATIONS – THREE MONTHS ENDED JUNE 30
|
|
|
Revenues
|
2017
|
2016
|
Canada
|
$
|
4,914
|
$
|
3,286
|
United
States
|
29,441
|
11,338
|
Total
|
$
|
34,355
|
$
|
14,624
|
Revenues 2017 Q2 revenues were
$34,355, which represented an
increase of $19,731 or 135% from 2016
Q2 revenues of $14,624. Both
Canada and U.S. operations had increases due to improvements in
overall drilling activity. In late 2016, due to a limited
supply of the Company's proprietary motors, the Company made the
decision to reduce the number of rental motors available in both
Canada and the U.S. in favor of
redirecting motors on jobs where both equipment and staff are
deployed and the total cash flow contribution is typically
higher. As a consequence motor rental revenue in both
Canada and the U.S. were less in
2017 Q2 compared to 2016 Q2.
Canadian revenues (excluding motor rental revenues) increased to
$4,143 in 2017 Q2 from $1,799 in 2016 Q2; a 130% increase. This
increase was the result of: i) a 97% increase in activity days to
533 in 2017 Q2 from 271 in 2016 Q2; and ii) a 17% increase in the
average day rate to $7,773 in 2017 Q2
from $6,638 in 2016 Q2.
Partially offsetting the revenue increase was a decrease of
$716 in motor rental revenue.
Motor rental revenues for 2017 Q2 were $771 (2016 Q2 - $1,487).
The average active land rig count in Canada was up 141% in 2017 Q2 compared to 2016
Q2. During the spring break-up that occurs in Canada every Q2, it is challenging to
correlate the Company's activity levels and the land rig count due
to the smaller group of producers who are drilling and types of
drilling activity. The increases in day rates was in part due
to the type of work performed in addition to $581 related to
expense recoveries with certain customers that are not expected to
recur. Due to the limited activity levels in Q2, day rates
are not comparable to other quarters as the fewer number of jobs
can impact the day rate more significantly than in other
quarters.
U.S. Directional Drilling revenues (excluding motor rental
revenues) increased to $29,243 in
2017 Q2 from $10,431 in 2016 Q2; a
180% increase. This increase was the result of: i) a 157%
increase in activity days to 2,531 in 2017 Q2 from 984 in 2016 Q2;
and ii) a 9% increase in the average day rate to $11,554 in 2017 Q2 from $10,601 in 2016 Q2 (when converted to Canadian
dollars). All U.S. operating areas saw increases in activity
days.
The average active land rig count for the U.S. was up 121% in
2017 Q2 compared to 2016 Q2. Due to efforts of sales and
marketing staff and performance on client jobs, the Company was
able to increase market share compared to 2016 Q2. Day rates
in USD increased to $8,588 USD in
2017 Q2 from $8,228 USD in 2016 Q2; a
4% increase. U.S. day rates were up due to the mix of work
performed by the U.S. division, including providing footage
drilling services to certain clients, which can result in higher
relative day rates. U.S. motor rental revenues for 2017 Q2
were $198 compared to $907 in 2016 Q2.
Gross margin and adjusted gross
margin Gross margin for 2017 Q2 was 7%
compared to negative (6)% in 2016 Q2. Adjusted gross margin
(see Non-GAAP Measurements) for 2017 Q2 was $5,073 or 15% compared to $2,141 or 15% for 2016 Q2.
Adjusted gross margin, as a percentage of revenue, remained
unchanged, but the composition of cost of sales changed.
Contrasted with the comparable quarter in 2016 there were
increases in field labour rates and higher equipment rentals.
These increases were offset by a reduction in the fixed component
of cost of sales which were 11% lower on a percentage of revenue
basis in 2017 Q2 compared to 2016 Q2. The decrease in the
fixed component of cost of sales as a percentage of revenue was
mostly attributable to increase in revenues, however there were
increases in costs largely related to salaries and other labour
related costs.
Depreciation allocated to cost of sales decreased to
$2,774 in 2017 Q2 from $3,097 in 2016 Q2. Depreciation included in
cost of sales as a percentage of revenue was 8% for 2017 Q2 and 21%
in 2016 Q2.
Selling, general and administrative expenses
("SG&A") SG&A expenses
were $4,110 in 2017 Q2; an increase
of $594 compared with $3,516 in 2016 Q2. As a percentage of
revenue, SG&A was 12% in 2017 Q2 compared to 24% in 2016
Q2.
Excluding the non-cash items of depreciation and share-based
compensation, SG&A was $4,036 in
2017 Q2 compared to $3,453 in 2016
Q2, an increase of $583 or 17%.
SG&A increased primarily due to increases to staff costs
commensurate with increased activity levels and U.S. sales taxes on
intercompany charges. Staff costs included in SG&A
include executive, sales, accounting, human resources, payroll,
safety, technology support and related support staff.
Gain on disposal of equipment
During 2017 Q2, the Company had a gain on disposal of equipment of
$1,277 compared to $141 in 2016 Q2. These gains mainly relate
to equipment lost-in-hole. Proceeds from clients on
lost-in-hole equipment are based on amounts specified in service
agreements and, in most cases; these proceeds exceed the net book
value of the equipment and result in a gain. The timing of
lost-in-hole recoveries is not in the control of the Company and
therefore can fluctuate significantly from quarter-to-quarter.
Finance costs Finance costs which
consist of interest expenses on operating loans, loans and
borrowings and bank charges were $96
for 2017 Q2 versus $407 for 2016
Q2. The decrease in finance costs relate to repayments of
loans in 2017 Q1 and decrease in the interest rates.
Foreign exchange The Company had
a foreign exchange gain of $699 in
2017 Q2 compared to a loss of $(56)
in 2016 Q2 due to the fluctuations of the Canadian dollar relative
to the U.S. dollar. The Company's foreign operations are
denominated in a currency other than the Canadian dollar and
therefore, upon consolidation, gains and losses due to fluctuations
in the foreign currency exchange rates are recorded as other
comprehensive income on the balance sheet as a component of
equity. However, gains and losses in the Canadian entity on
U.S. denominated intercompany balances continue to be recognized in
the statement of comprehensive income (loss). Included in the
2017 Q2 foreign currency gains are unrealized gain of $682 (2016 Q2 – loss of $(24)) related to intercompany balances.
Provision for settlement In 2016
Q2, the Company entered into a Settlement Agreement and Release
(the "Settlement Agreement") in respect of two wage and hour
lawsuits (the "Collective Actions") that were filed against the
Company's wholly owned U.S. subsidiary ("INC"). The
Collective Actions alleged that INC employed or contracted MWD and
Directional Drilling ("DD") operators were entitled to recover
unpaid or incorrectly calculated overtime wages under the Fair
Labor Standards Act ("FLSA").
The Settlement Agreement resolved all claims from INC employed
and contracted MWD and DD operators. Under the terms of the
Settlement Agreement, the parties established an initial settlement
fund of up to $3,400 USD. The
final determination of the settlement fund amount was based on the
number of claimants that participated in the settlement at the end
of December 2016, which under the
terms of the Settlement Agreement is confidential. The settlement
fund payments will be paid quarterly by the Company over a
three-year period with the final payment due on or before September
2019. The quarterly payments may be accelerated in the event
Cathedral meets certain financial targets over the payment period
and can be deferred if a scheduled payment would put Cathedral in
violation of its credit facility covenants subject to not more than
three payments being deferred. Any FLSA settlement fund
payments made by Cathedral exceeding $200
USD are subject to the approval of Cathedral's banking
syndicate.
In 2017 Q1, the Company entered into a confidential settlement
agreement with one of its U.S. clients related to a down-hole
drilling incident, which impacted two of their wells in December
2013. The settlement is payable based on an initial payment
in 2017 Q1 and the remainder in quarterly installments concluding
in 2021.
Any settlement fund payments made by Cathedral are subject to
the approval of Cathedral's banking syndicate. During 2017
Q2, payments on both settlements of $1,156 were made. This amount includes
accelerated FLSA settlement payments described previously.
Income tax For 2017 Q2, the
Company had an income tax recovery of $149 compared to recovery of $2,660 in 2016 Q2. As the provision is
calculated on year-to-date basis the current consolidated effective
tax rate is not meaningful as there is a loss before tax in one
country and income before tax in another. Income tax expense
is booked based upon expected annualized effective rates.
Net loss from discontinued operations
In 2016 Q4, the Company made the decision
to sell its Flowback and Production Testing ("F&PT") assets and
focus its attention and resources fully on the directional drilling
business where it believes it has a strong competitive advantage
and better future growth prospects. The proceeds from this
sale were used to pay down debt. As such, operating results
for the F&PT business have been included in the statements of
comprehensive income and statements of cash flows as discontinued
operations. For 2017 Q2, the net loss from discontinued
operations was $(17) compared to
$(995) net loss for 2016
Q2.
RESULTS OF OPERATIONS – SIX MONTHS ENDED JUNE 30
|
|
|
Revenues
|
2017
|
2016
|
Canada
|
$
|
15,380
|
$
|
8,949
|
United
States
|
57,298
|
24,419
|
Total
|
$
|
72,678
|
$
|
33,368
|
Revenues 2017 revenues were
$72,678, which represented an
increase of $39,310 or 118% from 2016
revenues of $33,368. Both
Canada and U.S. operations had increases due to an improvement in
overall drilling activity. In late 2016, due to a limited
supply of the Company's proprietary motors, the Company made the
decision to reduce the number of rental motors available in both
Canada and the U.S. in favor of
redirecting motors on jobs where both equipment and staff are
deployed and the total cash flow contribution is typically
higher. As a consequence motor rental revenue in both
Canada and the U.S. were less in
2017 compared to 2016.
Canadian revenues (excluding motor rental revenues) increased to
$13,450 in 2017 from $5,153 in 2016; a 161% increase. This
increase was the result of: i) a 153% increase in activity days to
1,956 in 2017 from 772 in 2016; and ii) a 3% increase in the
average day rate to $6,876 in 2017
from $6,675 in 2016. Partially
offsetting the revenue increase was a decrease of $1,866 in motor rental revenue. Motor
rental revenues for 2017 were $1,930
(2016 - $3,796).
The average active land rig count in Canada was up 100% in 2017 compared to
2016. The increase in the Company's activity days relative to
the active rigs drilling was a result of sales and marketing
efforts and the Company demonstrating performance on client
jobs. The slight increases in day rates was due to the mix of
work performed.
U.S. Directional Drilling revenues (excluding motor rental
revenues) increased to $56,821 in
2017 from $22,408 in 2016; a 154%
increase. This increase was the result of: i) a 160% increase
in activity days to 5,096 in 2017 from 1,963 in 2016; net of ii) a
2% decrease in the average day rate to $11,150 in 2017 from $11,415 in 2016 (when converted to Canadian
dollars). All U.S. operating areas saw increases in activity
days.
The average active land rig count for the U.S. was up 72% in
2017 compared to 2016. Again, due to efforts of sales and
marketing staff and performance on client jobs, the Company was
able to increase market share compared to 2016. Day rates in
USD fell to $8,350 USD in 2017 from
$8,566 USD in 2016; a 3%
decline. U.S. day rates decreases were partially offset by
the U.S. division providing footage drilling services to certain
clients, which can result in higher relative day rates. U.S.
motor rental revenues for 2017 were $477 compared to $2,011 in 2016.
Gross margin and adjusted gross
margin Gross margin for 2017 was 11%
compared to 3% in 2016. Adjusted gross margin (see Non-GAAP
Measurements) for 2017 was $13,559 or
19% compared to $7,090 or 21% for
2016.
Adjusted gross margin, as a percentage of revenue, decreased due
to increases in field labour rates and higher equipment rentals on
a percentage of revenue basis. These increases were offset by
a reduction in the fixed component of cost of sales which were 12%
lower on a percentage of revenue basis in 2017 compared to
2016. The decrease in the fixed component of cost of sales as
a percentage of revenue was mostly attributable to increase in
revenues, however there were increases in costs largely related to
salaries and other labour related costs.
Depreciation allocated to cost of sales decreased to
$5,380 in 2017 from $6,208 in 2016. Depreciation included in
cost of sales as a percentage of revenue was 7% for 2017 and 19% in
2016.
Selling, general and administrative expenses
("SG&A") SG&A expenses
were $7,933 in 2017; an increase of
$146 compared with $7,787 in 2016. As a percentage of
revenue, SG&A was 11% in 2017 compared to 23% in 2016.
Excluding the non-cash items of depreciation and share-based
compensation, SG&A was $7,787 in
2017 compared to $7,641 in 2016, an
increase of $146 or 2%.
SG&A increased primarily due to increases to U.S. sales taxes
on intercompany charges.
Gain on disposal of equipment
During 2017, the Company had a gain on disposal of equipment of
$3,291 compared to $1,032 in 2016. These gains mainly relate
to equipment lost-in-hole. Proceeds from clients on
lost-in-hole equipment are based on amounts specified in service
agreements and, in most cases; these proceeds exceed the net book
value of the equipment and result in a gain. The timing of
lost-in-hole recoveries is not in the control of the Company and
therefore can fluctuate significantly from quarter-to-quarter.
Finance costs Finance costs
consist of interest expenses on operating loans, loans and
borrowings and bank charges of $398
for 2017 versus $786 for 2016.
The decrease in finance costs relate to repayments of loans in 2017
Q1 and decrease in the interest rates.
Foreign exchange The Company had
a foreign exchange gain of $917 in
2017 compared to $2,298 in 2016 due
to the fluctuations of the Canadian dollar relative to the U.S.
dollar. The Company's foreign operations are denominated in a
currency other than the Canadian dollar and therefore, upon
consolidation, gains and losses due to fluctuations in the foreign
currency exchange rates are recorded as other comprehensive income
on the balance sheet as a component of equity. However, gains
and losses in the Canadian entity on U.S. denominated intercompany
balances continue to be recognized in the statement of
comprehensive income (loss). Included in the 2017 foreign
currency gains are unrealized gain of $874 (2016 –$2,340) related to intercompany
balances.
Gain on disposal of foreign subsidiary During
2016 Q1, the Company completed the sale of its wholly-owned
Barbados subsidiary for net
proceeds of $nil which resulted in a non-cash gain on sale of
$10,865. The subsidiary held the
Company's investment in Venezuela
and this sale completed Cathedral's exit from carrying on a
business in Venezuela.
Provision for settlement In 2016,
the Company entered into the Settlement Agreement in respect of the
Collective Actions that were filed against the Company's wholly
owned subsidiary, INC. The Collective Actions alleged that
INC employed or contracted MWD and DD operators were entitled to
recover unpaid or incorrectly calculated overtime wages under
FLSA.
The Settlement Agreement resolved all claims from INC employed
and contracted MWD and DD operators. Under the terms of the
Settlement Agreement, the parties established an initial settlement
fund of up to $3,400 USD. The
final determination of the settlement fund amount was based on the
number of claimants that participated in the settlement at the end
of December 2016, which under the
terms of the Settlement Agreement is confidential. The settlement
fund payments will be paid quarterly by the Company over a
three-year period with the final payment due on or before September
2019. The quarterly payments may be accelerated in the event
Cathedral meets certain financial targets over the payment
period ("accelerated FLSA settlement payments") and can be
deferred if a scheduled payment would put Cathedral in violation of
its credit facility covenants subject to not more than three
payments being deferred. Any FLSA settlement fund payments
made by Cathedral exceeding $200 USD
are subject to the approval of Cathedral's banking syndicate.
In 2017 Q1, the Company entered into a confidential settlement
agreement with one of its U.S. clients related to a down-hole
drilling incident, which impacted two of their wells in December
2013. The settlement is payable based on an initial payment
in 2017 Q1 and the remainder in quarterly installments concluding
in 2021.
Any settlement fund payments made by Cathedral are subject to
the approval of Cathedral's banking syndicate. During 2017,
payments on both settlements of $1,824 were made. This amount includes
accelerated FLSA settlement payments described previously.
Income tax For 2017, the Company
had an income tax expense of $1,124
compared to recovery of $(2,753) in
2016. Excluding adjustments to prior years' tax provisions,
the effective tax rate was 29% for 2017. Excluding the
non-cash gain on disposal of foreign subsidiary but including the
loss from discontinued operations, the effective tax rate was 37%
for 2016. Income tax expense is booked based upon expected
annualized effective rates.
Net loss from discontinued operations
In 2016 Q4, the Company made the decision
to sell its F&PT assets and focus its attention and resources
fully on the directional drilling business where it believes it has
a strong competitive advantage and better future growth
prospects. The proceeds from this sale were used to pay down
debt. As such, operating results for the F&PT business
have been included in the statements of comprehensive income and
statements of cash flows as discontinued operations. For
2017, the net loss from discontinued operations was $(135) compared to $(2,415) net loss for 2016.
LIQUIDITY AND CAPITAL RESOURCES
Overview On an annualized basis
the Company's principal source of liquidity is cash generated from
operations. In addition, the Company has the ability to fund
liquidity requirements through its credit facility and the issuance
of debt and/or equity. For the six months ended
June 30, 2017, the Company had funds
from continuing operations (see Non-GAAP Measurements) of
$5,653 (2016 – use of funds
$(1,632)). The increase in
funds related to continuing operations is due to the increase in
activity levels.
During 2017 Q1 the Company completed two major transactions that
had a material impact on its outstanding debt. In January,
the Company completed the sale of its F&PT assets for net
proceeds of $17,241. On February 15, 2017, the Company closed a bought
deal public offering and insider private placement financing for
total gross proceeds of $14,130. As a result of these transactions,
in 2017 Q1 the Company reduced its loans and borrowings by
$26,315 which included a complete
repayment of revolving term loan of $26,250. Cash balances as at June 30, 2017 were $4,138.
Working capital At June 30,
2017 the Company had working capital of $29,692 (December 31,
2016 - $39,324) and a working
capital ratio of 2.8 to 1 (December 31,
2016 – 3.3 to 1). The decrease in working capital level was
primarily due to the sale of F&PT assets held for sale which
had been classified as a current asset at December 31 in the amount of $17,241. Partially offsetting this was an
increase in trade receivables of $3,981 from December 31,
2016. Upon closing of the F&PT sale on January 16, 2017, $17,200 of the revolving term loan was repaid.
Credit facility The Company has a committed
revolving credit facility (the "Facility") that expires in December
2018. The Facility is secured by a general security agreement
over all present and future personal property.
The current Facility has been amended seven times. These
amendments have certain restrictions, including, but not limited
to; paying dividends, utilization of the accordion feature,
enhanced lender financial reporting and a cap on any litigation
settlement payments without lender approval. As well, effective
2016 Q1, the Company includes lost-in-hole equipment proceeds in
the definition of Bank EBITDA (as defined in the credit
agreement).
The financial covenants associated with the amended Facility are
as follows:
Quarter
ending:
|
Maximum Funded Debt
to Bank EBITDA Ratio
|
Minimum Debt Service
Ratio
|
June 30,
2017
|
3.5:1
|
2.5:1
|
September 30,
2017
|
3.5:1
|
3.0:1
|
December 31,
2017
|
3.25:1
|
3.0:1
|
June 30, 2018 and
thereafter
|
3.0:1
|
3.0:1
|
Additionally, there is a minimum working capital ratio of
1.25:1.
The Seventh Amending Agreement, dated January 16, 2017, reduced the aggregate
commitment to $23,000 after
$17,200 was repaid upon the sale of
F&PT assets and the maturity date was extended to December 2018.
After the amendments discussed above, the Facility bears
interest at the bank's prime rate plus 0.50% to 5.00% or bankers'
acceptance rate plus 1.75% to 6.25% with interest payable
monthly. Interest rate spreads for the Facility depend on the
level of funded debt to the 12 month trailing Bank EBITDA.
The Facility provides a means to lock in a portion of the debt at
interest rates through bankers' acceptance ("BA") based on the
interest rate spread on the date the BA was entered into.
Cathedral is currently in compliance with all covenants.
Based on current available information, Cathedral expects to comply
with all covenants for the next twelve months.
At June 30, 2017, the Company had
cash balances in excess of outstanding letters of credit and
capital lease obligations. As such its funded debt to bank
EBITDA ratio ("Funded debt ratio") was negative (i.e. net cash
balance). As such, the Funded debt ratio has been met, but is
not meaningful ("NM") for presentation. For the twelve
months ended June 30, 2017 Bank
EBITDA was $16,869.
The Company's financial ratios at June
30, 2017 were:
Ratio
|
Actual
|
|
Required
|
Funded debt to Bank
EBITDA ratio
|
NM
|
3.5:1
|
Maximum
|
Debt service
ratio
|
7.9:1
|
2.0:1
|
Minimum
|
Working capital
ratio
|
2.8:1
|
1.25:1
|
Minimum
|
Contractual obligations In the normal course of
business, the Company incurs contractual obligations and those
obligations are disclosed in the Company's MD&A for the year
ended December 31, 2016. As at
June 30, 2017, the Company had a
commitment to purchase approximately $1,449 of equipment.
Share capital At August 10, 2017, the Company has 48,916,451
common shares and 2,391,750 options outstanding with a weighted
average exercise price of $1.48.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
June 30, 2017
and December 31, 2016
Dollars
in '000s
(unaudited)
|
|
|
|
June
30
|
December
31
|
|
2017
|
2016
|
Assets
|
|
|
Current
assets:
|
|
|
|
Cash
|
$
|
4,138
|
$
|
1,898
|
|
Trade
receivables
|
30,226
|
26,245
|
|
Current taxes
recoverable
|
331
|
1,336
|
|
Prepaid
expenses
|
1,444
|
1,611
|
|
Inventories
|
9,961
|
8,037
|
|
Assets held for
sale
|
-
|
17,241
|
Total current
assets
|
46,100
|
56,368
|
Equipment
|
65,643
|
68,158
|
Intangible
assets
|
2,032
|
1,978
|
Deferred tax
assets
|
8,400
|
9,513
|
Total non-current
assets
|
76,075
|
79,649
|
Total
assets
|
$
|
122,175
|
$
|
136,017
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
Current
liabilities:
|
|
|
|
Operating
loan
|
$
|
-
|
$
|
2,105
|
|
Trade and other
payables
|
15,010
|
12,837
|
|
Loans and
borrowings
|
306
|
459
|
|
Provision for
settlements, current
|
1,092
|
1,643
|
Total current
liabilities
|
16,408
|
17,044
|
Loans and
borrowings
|
71
|
26,322
|
Provision for
settlements, long-term
|
545
|
1,879
|
Total non-current
liabilities
|
616
|
28,201
|
Total
liabilities
|
17,024
|
45,245
|
|
|
|
Shareholders'
equity:
|
|
|
|
Share
capital
|
87,617
|
74,481
|
|
Contributed
surplus
|
9,743
|
9,620
|
|
Accumulated other
comprehensive income
|
9,724
|
11,371
|
|
Deficit
|
(1,933)
|
(4,700)
|
Total shareholders'
equity
|
105,151
|
90,772
|
Total liabilities and
shareholders' equity
|
$
|
122,175
|
$
|
136,017
|
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME (LOSS)
Three and six months
ended June 30, 2017 and
2016
Dollars in '000s except per share amounts
(unaudited)
|
|
|
|
Three months ended
June 30
|
Six
months ended June 30
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
Revenues
|
$
|
34,355
|
$
|
14,624
|
$
|
72,678
|
$
|
33,368
|
Cost of
sales:
|
|
|
|
|
|
Direct
costs
|
(29,282)
|
(12,483)
|
(59,119)
|
(26,278)
|
|
Depreciation
|
(2,774)
|
(3,097)
|
(5,380)
|
(6,208)
|
|
Share-based
compensation
|
(15)
|
9
|
(30)
|
(2)
|
Total cost of
sales
|
(32,071)
|
(15,571)
|
(64,529)
|
(32,488)
|
Gross
margin
|
2,284
|
(947)
|
8,149
|
880
|
Selling, general and
administrative expenses:
|
|
|
|
|
|
Direct
costs
|
(4,036)
|
(3,453)
|
(7,787)
|
(7,641)
|
|
Depreciation
|
(25)
|
(33)
|
(50)
|
(67)
|
|
Share-based
compensation
|
(49)
|
(30)
|
(96)
|
(79)
|
Total selling,
general and administrative expenses
|
(4,110)
|
(3,516)
|
(7,933)
|
(7,787)
|
|
(1,826)
|
(4,463)
|
216
|
(6,907)
|
Gain on disposal of
equipment
|
1,277
|
141
|
3,291
|
1,032
|
Earnings (loss) from
operating activities
|
(549)
|
(4,322)
|
3,507
|
(5,875)
|
Finance
costs
|
(96)
|
(407)
|
(398)
|
(786)
|
Foreign exchange gain
(loss)
|
699
|
(56)
|
917
|
2,298
|
Provision for
settlement
|
-
|
(3,796)
|
-
|
(3,796)
|
Write-down of
inventory
|
-
|
-
|
-
|
(277)
|
Gain on disposal of
foreign subsidiary
|
-
|
-
|
-
|
10,865
|
Earnings (loss)
before income taxes
|
54
|
(8,581)
|
4,026
|
2,429
|
Income tax recovery
(expense):
|
|
|
|
|
|
Current
|
627
|
134
|
(28)
|
260
|
|
Deferred
|
(478)
|
2,526
|
(1,096)
|
2,493
|
Total income tax
recovery (expense)
|
149
|
2,660
|
(1,124)
|
2,753
|
Net earnings (loss)
from continuing operations
|
203
|
(5,921)
|
2,902
|
5,182
|
Net loss from
discontinued operations
|
(17)
|
(995)
|
(135)
|
(2,415)
|
Net earnings
(loss)
|
186
|
(6,916)
|
2,767
|
2,767
|
Other comprehensive
income (loss):
|
|
|
|
|
|
Foreign currency
translation differences for foreign operations
|
(1,285)
|
123
|
(1,647)
|
(3,082)
|
|
Foreign currency
translation gain on disposal of foreign subsidiary
|
-
|
-
|
-
|
1,348
|
Total comprehensive
income (loss)
|
$
|
(1,099)
|
$
|
(6,793)
|
$
|
1,120
|
$
|
1,033
|
|
|
|
|
|
Net earnings (loss)
from continuing operations per share
|
|
|
|
|
|
Basic and
diluted
|
$
|
0.00
|
$
|
(0.16)
|
$
|
0.06
|
$
|
0.14
|
Net loss from
discontinued operations per share
|
|
|
|
|
|
Basic
|
$
|
(0.00)
|
$
|
(0.03)
|
$
|
(0.00)
|
$
|
(0.07)
|
Net earnings (loss)
per share
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
0.00
|
$
|
(0.19)
|
$
|
0.06
|
$
|
0.08
|
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS
Three and six months ended June 30, 2017 and 2016
Dollars in
'000s
(unaudited)
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2017
|
2016
|
2017
|
2017
|
Cash flow provided
by (used in):
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
Net earnings (loss)
from continuing operations
|
203
|
(5,921)
|
$
|
2,902
|
$
|
5,182
|
|
Items not involving
cash:
|
|
|
|
|
|
|
Depreciation
|
2,800
|
3,130
|
5,431
|
6,275
|
|
Total income tax
(recovery) expense
|
(149)
|
(2,660)
|
1,124
|
(2,753)
|
|
Unrealized foreign
exchange (gain) loss on intercompany balances
|
(682)
|
24
|
(874)
|
(2,340)
|
|
Finance
costs
|
96
|
407
|
398
|
786
|
|
Share-based
compensation
|
64
|
21
|
126
|
81
|
|
Gain on disposal of
equipment
|
(1,277)
|
(141)
|
(3,291)
|
(1,032)
|
|
Provision for
settlement
|
-
|
3,796
|
-
|
3,796
|
|
Write-down of
inventory
|
-
|
-
|
-
|
277
|
|
Gain on disposal of
foreign subsidiary
|
-
|
-
|
-
|
(10,865)
|
|
Cash flow -
continuing operations
|
1,055
|
(1,344)
|
5,816
|
(593)
|
|
Cash flow -
discontinued operations
|
(18)
|
(589)
|
(135)
|
(1,299)
|
|
Changes in non-cash
operating working capital
|
1,051
|
4,616
|
(5,054)
|
8,851
|
|
Income taxes
recovered
|
274
|
259
|
1,167
|
139
|
Cash flow - operating
activities
|
2,362
|
2,942
|
1,794
|
7,098
|
Investing
activities:
|
|
|
|
|
|
Equipment
additions
|
(2,511)
|
(70)
|
(3,547)
|
(338)
|
|
Intangible asset
additions
|
(155)
|
(50)
|
(234)
|
(95)
|
|
Proceeds on disposal
of equipment
|
1,710
|
506
|
4,103
|
1,711
|
|
Proceeds on disposal
of discontinued operations
|
-
|
-
|
17,252
|
-
|
|
Changes in non-cash
investing working capital
|
301
|
(635)
|
497
|
11
|
Cash flow - investing
activities
|
(655)
|
(249)
|
18,071
|
1,289
|
Financing
activities:
|
|
|
|
|
|
Change in operating
loan
|
-
|
380
|
(2,105)
|
(1,708)
|
|
Repayments on loans
and borrowings
|
(45)
|
(2,714)
|
(26,358)
|
(5,317)
|
|
Proceeds on share
issuance from bought deal public offering and insider private
placement
|
-
|
-
|
13,131
|
-
|
|
Proceeds on share
issuance from exercise of share options
|
-
|
-
|
4
|
-
|
|
Payments on
settlement
|
(1,156)
|
-
|
(1,824)
|
-
|
|
Interest
paid
|
(96)
|
(320)
|
(401)
|
(454)
|
Cash flow - financing
activities
|
(1,297)
|
(2,654)
|
(17,553)
|
(7,479)
|
Effect of exchange
rate on changes in cash
|
(55)
|
5
|
(72)
|
(90)
|
Change in
cash
|
355
|
44
|
2,240
|
818
|
Cash, beginning of
period
|
3,783
|
2,200
|
1,898
|
1,426
|
Cash, end of
period
|
$
|
4,138
|
$
|
2,244
|
$
|
4,138
|
$
|
2,244
|
FORWARD LOOKING STATEMENTS
This news release contains certain forward-looking statements
and forward-looking information (collectively referred to herein as
"forward-looking statements") within the meaning of applicable
Canadian securities laws. All statements other than
statements of present or historical fact are forward-looking
statements. Forward-looking statements are often, but not
always, identified by the use of words such as "anticipate",
"achieve", "believe", "plan", "intend", "objective", "continuous",
"ongoing", "estimate", "outlook", "expect", "may", "will",
"project", "should" or similar words suggesting future
outcomes. In particular, this news release contains
forward-looking statements relating to, among other things: expect
our available capacity to start improving in late Q3; strategies to
help us secure higher pricing for our services; are
deliberately focused on developing long term relationships with key
customers where our performance matters approach resonates;
investment in new and replacement equipment will improve our
equipment capacity starting in 2017 H2 and into 2018; looking at
ways to better manage our labor pool, keep our expenses in line and
continue to deliver high quality service; technology group
continues to make equipment improvements to our existing equipment
and explore new products aimed at revenue generation and expense
and capital cost reductions; projected capital expenditures and
commitments and the financing thereof and Cathedral expects
to comply with all covenants during 2017.
Various material factors and assumptions are typically applied
in drawing conclusions or making the forecasts or projections set
out in forward-looking statements. Those material factors and
assumptions are based on information currently available to the
Company, including information obtained from third party industry
analysts and other third party sources. In some instances,
material assumptions and material factors are presented elsewhere
in this news release in connection with the forward-looking
statements. You are cautioned that the following list of
material factors and assumptions is not exhaustive. Specific
material factors and assumptions include, but are not limited
to:
- the performance of Cathedral's businesses, including current
business and economic trends;
- oil and natural gas commodity prices and production
levels;
- capital expenditure programs and other expenditures by
Cathedral and its customers;
- the ability of Cathedral to retain and hire qualified
personnel;
- the ability of Cathedral to obtain parts, consumables,
equipment, technology, and supplies in a timely manner to carry out
its activities;
- the ability of Cathedral to maintain good working relationships
with key suppliers;
- the ability of Cathedral to market its services successfully to
existing and new customers and reliance on major customers;
- risks associated with technology development and intellectual
property rights;
- the ability of Cathedral to maintain safety performance;
- the ability of Cathedral to obtain timely financing on
acceptable terms;
- the ability to obtain sufficient insurance coverage to mitigate
operational risks;
- currency exchange and interest rates;
- risks associated with foreign operations;
- risks associated with acquisitions and business development
efforts;
- environmental risks;
- changes under governmental regulatory regimes and tax,
environmental and other laws in Canada and U.S.; and
- competitive risks.
Forward-looking statements are not a guarantee of future
performance and involve a number of risks and uncertainties some of
which are described herein. Such forward-looking statements
necessarily involve known and unknown risks and uncertainties,
which may cause the Company's actual performance and financial
results in future periods to differ materially from any projections
of future performance or results expressed or implied by such
forward-looking statements. These risks and uncertainties
include, but are not limited to, the risks identified in this news
release and in the Company's Annual Information Form under the
heading "Risk Factors". Any forward-looking statements are
made as of the date hereof and, except as required by law, the
Company assumes no obligation to publicly update or revise such
statements to reflect new information, subsequent or otherwise.
All forward-looking statements contained in this news release
are expressly qualified by this cautionary statement. Further
information about the factors affecting forward-looking statements
is available in the Company's current Annual Information Form and
Annual Report which have been filed with Canadian provincial
securities commissions and are available on www.sedar.com.
NON-GAAP MEASUREMENTS
Cathedral uses certain performance measures throughout this
document that are not defined under GAAP. Management believes that
these measures provide supplemental financial information that is
useful in the evaluation of Cathedral's operations and are commonly
used by other oil and gas service companies. Investors should be
cautioned, however, that these measures should not be construed as
alternatives to measures determined in accordance with GAAP as an
indicator of Cathedral's performance. Cathedral's method of
calculating these measures may differ from that of other
organizations, and accordingly, may not be comparable.
The specific measures being referred to include the
following:
i) "Adjusted gross margin" -
calculated as gross margin plus non-cash items (depreciation and
share-based compensation); is considered a primary indicator of
operating performance (see tabular calculation);
ii) "Adjusted gross margin %" -
calculated as adjusted gross margin divided by revenues; is
considered a primary indicator of operating performance (see
tabular calculation);
iii) "Total Adjusted EBITDAS" - defined as
earnings before share of income/loss from associate,
write-down/recovery on investment in associate finance costs,
unrealized foreign exchange on intercompany balances, unrealized
foreign exchange due to hyper-inflation accounting, taxes,
non-recurring gains and losses on disposal of equipment (see
non-GAAP measurement), depreciation, write-down of goodwill,
write-down of equipment, write-down of inventory and share-based
compensation; is considered an indicator of the Company's ability
to generate funds flow from operations prior to consideration of
how activities are financed, how the results are taxed and measured
and non-cash expenses (see tabular calculation). This measure
includes both discontinued F&PT operations and continuing
Directional Drilling operations;
iv) "Adjusted EBITDAS from discontinued
operations" – Total Adjusted EBITDAS as calculated above from
discontinued F&PT operations only;
v) "Adjusted EBITDAS from continuing
operations" – Total Adjusted EBITDAS as calculated above for
ongoing Directional Drilling as well as corporate administrative
costs;
vi) "Funds from operations" - calculated as
cash provided by operating activities before changes in non-cash
working capital and income taxes paid less current tax expense; is
considered an indicator of the Company's ability to generate funds
flow from operations on an after tax basis but excluding changes in
non-cash working capital which is financed using the Company's
operating loan (see tabular calculation);
vii) "Growth equipment additions" or "Growth
capital" – is capital spending which is intended to result in
incremental revenues or decreased operating costs. Growth
capital is considered to be a key measure as it represents the
total expenditures on equipment expected to add incremental
revenues and funds flow to the Company;
viii) "Maintenance equipment additions" or "Maintenance
capital" – is capital spending incurred in order to refurbish or
replace previously acquired other than "replacement equipment
additions" described below. Such additions do not provide
incremental revenues. Maintenance capital is a key component in
understanding the sustainability of the Company's business as cash
resources retained within Cathedral must be sufficient to meet
maintenance capital needs to replenish the assets for future cash
generation;
ix) "Replacement equipment additions" or
"Replacement capital" – is capital spending incurred in order to
replace equipment that is lost downhole. Cathedral recovers
lost-in-hole costs including previously expensed depreciation on
the related assets from customers. Such additions do not
provide incremental revenues. The identification of
replacement equipment additions is considered important as such
additions are financed by way of proceeds on disposal of equipment
(see discussion within the news release on "gain on disposal of
equipment);
x) "Infrastructure equipment additions"
or "Infrastructure capital" – is capital spending incurred on land,
buildings and leasehold improvements. Infrastructure capital is a
component in understanding the sustainability of the Company's
business as cash resources retained within Cathedral must be
sufficient to meet maintenance capital needs;
xi) "Non-recurring gains and losses on
disposal of equipment" – are disposals of equipment that do not
occur on a regular or periodic basis. Unlike the lost-in-hole
recoveries, the proceeds from these gains are not used on
equivalent replacement property. These are often on non-field
equipment such as land and buildings;
xii) "Net equipment additions" – is equipment
additions expenditures less proceeds on the regular disposal of
equipment (the proceeds on sale of land and buildings have been
excluded). Cathedral uses net equipment additions to assess
net cash flows related to the financing of Cathedral's equipment
additions; and
xiii) "Net debt" – is loans and borrowing less working
capital. Management uses net debt as a metric to shows the
Company's overall debt level.
The following tables provide reconciliations from GAAP
measurements to non-GAAP measurements referred to in this news
release:
Adjusted gross margin
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2017
|
2016
|
2017
|
2016
|
Gross
margin
|
$
|
2,284
|
$
|
(947)
|
$
|
8,149
|
$
|
880
|
Add non-cash items
included in cost of sales:
|
|
|
|
|
|
Depreciation
|
2,774
|
3,097
|
5,380
|
6,208
|
|
Share-based
compensation
|
15
|
(9)
|
30
|
2
|
Adjusted gross
margin
|
$
|
5,073
|
$
|
2,141
|
$
|
13,559
|
$
|
7,090
|
Adjusted gross margin
%
|
15%
|
15%
|
19%
|
21%
|
Total Adjusted EBITDAS
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2017
|
2016
|
2017
|
2016
|
Earnings (loss)
before income taxes
|
$
|
54
|
$
|
(8,581)
|
$
|
4,026
|
$
|
2,429
|
Add:
|
|
|
|
|
|
Depreciation included
in cost of sales
|
2,774
|
3,097
|
5,380
|
6,208
|
|
Depreciation included
in selling, general and administrative expenses
|
25
|
33
|
50
|
67
|
|
Share-based
compensation included in cost of sales
|
15
|
(9)
|
30
|
2
|
|
Share-based
compensation included in selling, general and administrative
expenses
|
49
|
30
|
96
|
79
|
|
Finance
costs
|
96
|
407
|
398
|
786
|
Subtotal
|
3,013
|
(5,023)
|
9,980
|
9,571
|
|
Unrealized foreign
exchange (gain) loss on intercompany balances
|
(682)
|
24
|
(874)
|
(2,340)
|
|
Write-down of
inventory
|
-
|
-
|
-
|
277
|
|
Provision for
settlement
|
-
|
3,796
|
-
|
3,796
|
|
Gain on disposal of
foreign subsidiary
|
-
|
-
|
-
|
(10,865)
|
|
Non-recurring
expenses
|
49
|
33
|
176
|
469
|
Adjusted EBITDAS from
continuing operations
|
2,380
|
(1,170)
|
9,282
|
908
|
Adjusted EBITDAS from
discontinued operations
|
(17)
|
(468)
|
(123)
|
(1,070)
|
Total Adjusted
EBITDAS
|
$
|
2,363
|
$
|
(1,638)
|
$
|
9,159
|
$
|
(162)
|
Funds from operations
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2017
|
2016
|
2017
|
2016
|
Cash flow - operating
activities
|
$
|
2,362
|
$
|
2,942
|
$
|
1,794
|
$
|
7,098
|
Add
(deduct):
|
|
|
|
|
|
Changes in non-cash
operating working capital
|
(1,051)
|
(4,616)
|
5,054
|
(8,851)
|
|
Income taxes paid
(recovered)
|
(274)
|
(259)
|
(1,167)
|
(139)
|
|
Current tax recovery
(expense)
|
627
|
134
|
(28)
|
260
|
Funds from (used in)
operations
|
$
|
1,664
|
$
|
(1,799)
|
$
|
5,653
|
$
|
(1,632)
|
Cathedral Energy Services Ltd. (the "Company" or
"Cathedral"), based in Calgary,
Alberta is incorporated under the Business Corporations Act
(Alberta) and operates in the U.S.
under Cathedral Energy Services Inc. The Company is publicly
traded on the Toronto Stock Exchange under the symbol "CET".
Cathedral, is a trusted partner to North American energy companies
requiring high performance directional drilling services. We
work in partnership with our customers to tailor our equipment and
expertise to meet their specific geographical and technical
needs. Our experience, technologies and responsive personnel
enable our customers to achieve higher efficiencies and lower
project costs. For more information, visit
www.cathedralenergyservices.com.
SOURCE Cathedral Energy Services Ltd.