CALGARY, AB, Feb. 25, 2021 /CNW/ - SECURE ENERGY Services Inc.
("SECURE") (TSX: SES) reported today its operational and financial
results for the three and twelve months ended
December 31, 2020, highlighted by 2020 discretionary free
cash flowi of $95.8 million.
The following press release should be read in conjunction with
the Corporation's management's discussion and analysis ("MD&A")
for the three and twelve months ended December 31, 2020,
and the audited consolidated financial statements and notes thereto
for the years ended December 31, 2020
and 2019 which are available on SEDAR at www.sedar.com.
SECURE is also pleased to announce the publication of our second
comprehensive sustainability report, which can be found on the
Corporation's website. The 2020 Sustainability Report features the
Corporation's performance in 2020 related to critical
environmental, social and governance issues and highlights our
commitments to sustainability, the positive impacts made by our
ongoing initiatives, and information on how we continue to refine
our sustainability strategies and processes.
2020 REVIEW
Financial and operational highlights
- Completed organizational restructuring resulting in an expected
$40 million reduction to cost of
sales and general and administrative expenses on an annualized
basis;
- Increased segment profit margini as a percentage of
revenue in both the Midstream Infrastructure and Environmental and
Fluid Management segments from prior year;
- Generated discretionary free cash flow of $95.8 million;
- Reduced debt outstanding on the Corporation's credit facilities
by $54.9 million;
- Completed construction of the East Kaybob oil pipeline, the
Corporation's second oil gathering system, providing SECURE with
long-term fees-for-service from pipeline tariffs, and reliable
volumes at the Fox Creek
facility;
- Reduced scope 1 greenhouse gas emissions for the fourth
consecutive year, both on an absolute and intensity basis;
- Extended the existing $130
million second lien credit facility by one year to
July 31, 2022.
2020 was a year marked by unprecedented challenges for the oil
and gas industry. The impact of the COVID–19 pandemic on the demand
for oil was exacerbated by over supply concerns stemming from
failed negotiations between OPEC+ countries on production
curtailments. The result of these factors was a dramatic drop in
crude oil and liquids pricing beginning in March 2020 which had deep negative consequences
on producer cash flows. SECURE's customers responded by reducing
capital investment, temporarily shutting in production and
employing the highest degree of vigilance on operating costs. In
May 2020, crude oil and liquids
pricing started to recover, with steady improvements throughout the
remainder of the year. However, on average, benchmark crude oil
prices in 2020 remained 31% lower than the prior year.
Resilient financial results
The strategies employed by SECURE over the past several years to
increase the stability of the Corporation's cash flows, including
the addition of oil and water pipelines underpinned by long-term
contracts, crude oil storage, production chemicals and recurring
environmental project work, helped reduce the impact of low
drilling and completion activity on the Corporation's results in
2020. The Corporation recorded Adjusted EBITDAi of
$136.2 million for the year
ended December 31, 2020, a decrease of 24% compared to 2019.
This reflects the level of SECURE's production and contracted
volumes and the significant measures taken during the year to
reduce operating and general and administrative ("G&A")
expenses to adjust the Corporation's cost structure to levels
consistent with activity levels, including:
- Reduced personnel costs by approximately 25%. Measures taken to
reduce personnel costs included modified work schedules, job
sharing, salary reductions and layoffs. SECURE expects annualized
savings in excess of $40 million as a
result of the Corporation's leaner organizational structure, the
majority of which is expected to endure even as activity levels
increase.
- Utilized the Canadian Federal Government's wage subsidy program
to reduce the impact of the downturn on our staff. In total in
2020, the Corporation recorded a $23.9
million recovery in cost of sales and G&A expenses,
primarily associated with the wage subsidy program.
- Restricted discretionary spending and suspended all
non-essential travel for SECURE employees.
Also as a result of these cost containment measures, the
following results were achieved during 2020:
- Reduced overall G&A expenses (excluding depreciation,
depletion and amortization and share-based compensation) by
$28.2 million, or 37%, from the prior
year. As a percentage of revenue (excluding oil purchase and
resale), G&A expenses were 10% for the year ended December 31, 2020, down from 12% in the prior
year.
- Increased Adjusted EBITDA margini to 30%, up from
29% in the prior year.
- Increased the Midstream Infrastructure segment's profit margin
as a percentage of revenue (excluding oil purchase and resale) to
62%, up from 61% in the prior year.
- Increased the Environmental and Fluid Management segment's
profit margin as a percentage of revenue to 23%, up from 20% in the
prior year.
With these results, the Corporation demonstrated that SECURE's
Midstream Infrastructure and production-based service offerings
deliver strong cash flows that are sustainable at the low commodity
prices and activity levels faced in 2020.
Solid balance sheet
Maintaining a strong balance sheet has always been a key
priority for the Corporation. SECURE took additional steps in 2020
to maximize discretionary free cash flow and direct these funds
towards debt reduction to best position the Corporation for
long-term success:
- Reduced total capital expenditures by 47% from 2019, to
$71.3 million. $53.0 million of the total spend related to
growth and expansion capital, incurred primarily to construct the
East Kaybob oil pipeline, a light oil and condensate gathering
system underpinned by 15-year commitments from multiple producers,
aligning with our underlying strategy to increase the stability of
our cash flows through long-term fee for service contracts. The
Corporation also incurred $9.1
million of sustaining capital.
- Reduced the monthly dividend from $0.0225 (2.25
cents) to $0.0025
(0.25 cents) effective May 1, 2020. This reduction of the dividend
results in annualized cash savings of approximately $38 million. Following the June 2020 monthly dividend, the Corporation moved
to a quarterly dividend, with the first payment of $0.0075 (0.75
cents) per common share made in October 2020.
- Minimized counterparty risk and optimized working capital. The
Corporation has a robust credit review process and worked closely
with customers this year to ensure timely collection of
receivables. As a result of these diligent procedures, the
Corporation's credit losses in 2020 were in line with low historic
averages. At December 31, 2020, the
Corporation's working capital (current assets less accounts payable
and accrued liabilities) was $63.8
million, down from $125.3
million at December 31,
2019.
During the year ended December 31, 2020, the
Corporation extended the existing $130 million second
lien credit facility ("Second Lien Facility") by one year to
July 31, 2022. There have been no changes to the
remaining terms, conditions and covenants of the Second Lien
Facility. The Corporation also entered into interest rate swaps to
fix the interest rate for the Second Lien Facility at 5.5%. The
extended term reduces near-term liquidity risk and provides the
Corporation with increased financial flexibility.
The following table outlines SECURE's Senior and Total Debt to
trailing twelve-month EBITDA ratiosii at
December 31, 2020, compared to the covenant thresholds
outlined in our credit facility agreements.
|
Dec 31,
2020
|
Threshold
|
Senior Debt to
EBITDA
|
2.2
|
3.5
|
Total Debt to
EBITDA
|
3.2
|
5.0
|
SECURE will continue to focus on managing the Corporation's
financial position throughout 2021. Strong line of sight for
significant discretionary free cash flow in 2021 will provide
increased flexibility for continued debt repayment, opportunistic
share repurchases, and midstream infrastructure growth in a manner
consistent with SECURE's business strategy.
Discretionary Free Cash Flow
During the year ended December 31, 2020, SECURE
generated discretionary free cash flow of $95.8 million, a decrease of 17% from 2019,
as lower Adjusted EBITDA resulting from reduced activity levels was
partially mitigated by additional cash saving initiatives employed
in 2020, as described above. The Corporation utilized discretionary
free cash flow to fund the capital program, with the remainder
directed against outstanding debt. In total, the Corporation
reduced the amount drawn on the Corporation's $600 million
first lien credit facility ("First Lien Facility") by $54.9 million, or 17%, during 2020. At
December 31, 2020, the First Lien Facility had $269.5 million drawn, resulting in available
capacity of $330.5 million,
subject to covenant restrictions.
Environmental, Social and Governance ("ESG")
SECURE recognizes that the long-term success of the Corporation
goes beyond the financial results generated by the Corporation.
SECURE is focused on connecting our strong employee culture with
our corporate strategies to drive improved ESG performance. We are
continually refining our strategies and processes to further
enhance the sustainability of our business by incorporating ESG
factors into our overall business strategy, risk management and
business development. Our commitments to sustainability, including
putting safety first, minimizing the environmental impacts of our
operations, and creating positive relationships with stakeholders
in the communities where we live and work, guide
these strategies.
Over the past year, the Corporation has taken the following
actions to advance our ESG framework and address key issues:
Environmental
|
Social
|
Governance
|
- Progressed a road
map for achieving long-term emissions performance
targets.
- Introduced an
environmental performance improvement initiative to reduce our
power requirements, energy usage and emissions.
- Registered for the
Alberta Technology Innovation and Emissions Reduction
regulation.
- Continued
improvement efforts for spill awareness and prevention.
|
- Formalized an
Indigenous Relations policy and advanced community engagement
practices.
- Introduced a
Supplier Code of Conduct extending our shared values and
sustainability commitments to all vendors, contractors and
consultants employed by the Corporation.
- Formalized a
long-term partnership with STARS Air Ambulance to further enhance
our safety culture and commitment to communities in which we
operate.
|
- Established an
internal sustainability governance structure, with employees
leading initiatives for improved ESG performance.
- Increased the
amount of women on the Board of Directors to 25%.
- Linked executive
compensation targets to key corporate sustainability
goals.
|
Please refer to SECURE's 2020 Sustainability Report available on
the Corporation's website for more information on the progress
we've made this year with respect to our commitments to
sustainability.
SECURE also acknowledges the larger role we are able to play in
reducing the overall environmental impact associated with
delivering energy to the world. This is core to our overall
business strategy, and the Corporation is dedicated to working with
customers to provide innovative midstream and environmental
solutions that not only reduce costs, but also lower emissions,
improve safety, manage water, recycle by-products, and protect the
land.
ANNUAL HIGHLIGHTS
The operating and financial highlights for the years ended
December 31, 2020, 2019 and 2018 can
be summarized as follows:
|
|
Twelve months
ended Dec 31,
|
($000's except
share and per share data)
|
|
2020
|
2019
|
2018
|
Revenue (excludes oil
purchase and resale)
|
|
459,674
|
613,205
|
694,135
|
Oil purchase and
resale
|
|
1,363,982
|
2,440,071
|
2,239,281
|
Total
revenue
|
|
1,823,656
|
3,053,276
|
2,933,416
|
Adjusted EBITDA
(1)
|
|
136,205
|
180,172
|
190,521
|
|
Per share ($),
basic
|
|
0.86
|
1.13
|
1.17
|
Net (loss) income
attributable to shareholders of SECURE
|
|
(85,209)
|
1,600
|
19,929
|
|
Per share ($), basic
and diluted
|
|
(0.54)
|
0.01
|
0.12
|
Cash flows from
operating activities
|
|
148,723
|
196,604
|
186,515
|
|
Per share ($),
basic
|
|
0.94
|
1.24
|
1.14
|
Discretionary free
cash flow(1)
|
|
95,819
|
115,870
|
145,988
|
|
Per share ($),
basic
|
|
0.60
|
0.73
|
0.90
|
Dividends per common
share
|
|
0.11
|
0.27
|
0.27
|
Capital expenditures
(1)
|
|
71,339
|
134,725
|
178,646
|
Total
assets
|
|
1,424,579
|
1,647,651
|
1,583,501
|
Long-term
liabilities
|
|
553,673
|
624,739
|
560,863
|
Common shares - end
of period
|
|
158,700,373
|
156,460,158
|
159,274,147
|
Weighted average
common shares
|
|
|
|
|
|
basic
|
|
158,561,369
|
158,984,770
|
163,008,356
|
|
diluted
|
|
158,561,369
|
161,817,532
|
165,425,609
|
(1) Refer
to "Non-GAAP measures" for further information.
|
- REVENUE OF $1.8 BILLION FOR
THE YEAR ENDED DECEMBER 31, 2020
-
- Midstream Infrastructure segment revenue (excluding oil
purchase and resale) in 2020 decreased by 35% over 2019 to
$200.7 million. The decrease in
revenue is attributable to lower processing and disposal volumes at
the Corporation's midstream infrastructure facilities due to lower
period over period production volumes resulting from short-term
shut-ins primarily impacting the second quarter of 2020, reduced
drilling and completion activity across the Western Canadian
Sedimentary Basin ("WCSB") and North
Dakota since March 2020, and
natural declines due to limited capital investment. Reduced overall
volumes, compounded by lower crude and liquids pricing in the
twelve months ended December 31,
2020, also negatively impacted recovered oil and crude oil
marketing revenue compared to the prior year.
- Partially offsetting these negative factors on the Midstream
Infrastructure segment's revenue was increased stability provided
by contracted volumes associated with SECURE's oil and water feeder
pipelines, including full period contributions of contracted
infrastructure added in 2019.
- Oil purchase and resale revenue in 2020 decreased 44% over 2019
to $1.4 billion. The decrease in
revenues is a result of a 34% decrease in Canadian light oil
benchmark pricing during 2020 from 2019, combined with reduced
marketing activity as a result of lower production volumes and more
limited opportunities to work with our customers to optimize
pricing by utilizing multiple crude oil and condensate streams at
SECURE's midstream facilities.
- Environmental and Fluid Management segment revenue in 2020
decreased 15% over 2019 to $258.9
million. Reduced drilling and completion activity in the
WCSB decreased revenue generated from service lines supporting
these activities. Revenue from these service lines, which includes
drilling and completion fluid services, solids control equipment
rentals, drilling waste management, water management, and
industrial landfill disposal, was down approximately 30% for the
twelve months ended December 31,
2020, from the prior year, consistent with the decline in
the average active rig count. Higher production chemical revenue
generated from greater bid awards and growing market share, stable
environmental consulting and project work resulting from further
customer diversification outside of the oil and gas industry and
contracts in the Fort McMurray
region partially offset the extent of the decrease in revenue.
- ADJUSTED EBITDA OF $136.2
MILLION FOR THE YEAR ENDED DECEMBER
31, 2020
-
- Adjusted EBITDA in 2020 decreased 24% over 2019 to $136.2 million primarily as a result of reduced
period over period revenue as described above. The impact of
reduced revenue was partially offset by a $23.9 million recovery recorded in cost of sales
and G&A expenses for wage subsidies, primarily related to the
Canada Emergency Wage Subsidy
("CEWS"), a program provided by the Canadian Federal Government
which reduced the impact of the downturn, the COVID-19 pandemic and
related restrictions on the Corporation's staffing levels. The
impact of reduced activity on the Corporation's Adjusted EBITDA was
also mitigated by aggressive cost reduction measures started in
April 2020 to align the Corporation's
fixed cost structure with current industry activity levels, which
included organizational restructuring and associated personnel and
salary reductions.
- NET LOSS ATTRIBUTABLE TO SHAREHOLDERS OF SECURE OF
$85.2 MILLION FOR THE YEAR ENDED
DECEMBER 31, 2020
-
- For the year ended December 31,
2020, net loss attributable to shareholders of SECURE was
$85.2 million, compared to income of
$1.6 million in 2019. In addition to
the lower Adjusted EBITDA described above, the variance is
primarily a result of impairment and restructuring charges incurred
during the year.
-
- Impairment of non-current assets: The impact of
macroeconomic conditions, including the COVID–19 pandemic, on crude
oil and liquids demand and supply fundamentals and commodity
pricing outlook resulted in a significant pullback in customer
activity levels in 2020 as producers prudently managed cash flows.
Near-term crude oil and liquids pricing remains below recent year
averages and considerable uncertainty exists with respect to short
and medium-term activity levels. As such, SECURE determined that
indicators of impairment existed in 2020 for several assets and
cash generating units ("CGUs"). As a result of the ensuing
impairment testing performed, non-cash impairment of $34.4 million was recognized against the carrying
value of property, plant and equipment, and $15.7 million was recognized against the carrying
value of intangible assets.
- Restructuring costs: SECURE recorded expenses of
$16.4 million during 2020 related
primarily to employee termination benefits resulting from
restructuring plans undertaken by the Corporation to right-size the
Corporation's workforce to anticipated activity levels and
streamline business processes which resulted in the suspension or
termination of certain functions.
- These negative variances were partially offset by a higher
income tax recovery for 2020 resulting primarily from a higher
pre-tax loss.
- CASH FLOWS FROM OPERATING ACTIVITIES OF $148.7 MILLION FOR THE YEAR ENDED DECEMBER 31, 2020
-
- The Corporation generated cash flows from operating activities
of $148.7 million in 2020, a decrease
of 24% from 2019, primarily as a result of lower Adjusted EBITDA in
the current year and restructuring costs incurred, partially offset
by lower interest paid as a result of reduced debt outstanding and
a lower weighted average interest rate.
- CAPITAL EXPENDITURES OF $71.3
MILLION FOR THE YEAR ENDED DECEMBER
31, 2020
-
- SECURE's organic growth and expansion capital during 2020 of
$53.0 million was primarily related
to the East Kaybob oil pipeline, the Corporation's second oil
gathering system. This project aligns with our underlying strategy
of increasing the stability of our cash flows through long-term
contracts and fixed fee for service cash flows. In the prior year,
SECURE directed $103.4 million
towards midstream infrastructure growth and expansion projects,
including water pipelines, crude oil storage, and incremental
processing and disposal capacity at various existing
facilities.
- Sustaining capital of $9.1
million for the year ended December
31, 2020, decreased by $8.4
million from the prior year. SECURE is committed to
maintaining capital discipline as we navigate this downturn, while
continuing to ensure the integrity and safety of our assets for
long-term sustainability.
- FINANCIAL FLEXIBILITY
-
- During the year ended December 31,
2020, the Corporation paid down its credit facilities by
$54.9 million. The 12% decrease in
total amount drawn was primarily a result of SECURE's efforts to
direct discretionary free cash flow, net of the 2020 capital
program, against outstanding debt during the year. As at
December 31, 2020, the Corporation
had drawn $399.5 million on its
credit facilities, resulting in availability of $330.5 million, subject to covenant restrictions,
up from $275.7 million at
December 31, 2019.
- In September 2020, SECURE closed
an amendment to its $130 million
Second Lien Facility to extend the term by one year to July 31, 2022. All other terms, conditions and
covenants are unchanged.
- The following table outlines SECURE's Senior and Total Debt to
trailing twelve-month EBITDA ratio at December 31, 2020, and December 31, 2019. SECURE remains well within
compliance of all covenants related to its credit facilities at
December 31, 2020.
|
Dec 31,
2020
|
Dec 31,
2019
|
Covenant
|
Senior Debt to
EBITDA
|
2.2
|
2.0
|
3.5
|
Total Debt to
EBITDA
|
3.2
|
2.8
|
5.0
|
- DIVIDENDS OF $17.3 MILLION FOR
THE YEAR ENDED DECEMBER 31, 2020
-
- During the year ended December 31,
2020, the Corporation declared dividends in the aggregate
amount of $17.3 million to holders of
common shares. In total, $14.2
million, representing a monthly dividend of $0.0225 (2.25
cents) per share, was paid out prior to the May 1, 2020 reduction. Subsequently, the
Corporation has declared dividends in the aggregate amount of
$3.2 million, representing a
quarterly dividend of $0.0075
(0.75 cents) per share.
- SECURE believes the sharing of excess cash flows with
shareholders is a core business principle; as a result, management
and the Board of Directors of the Corporation will continue to
monitor the Corporation's dividend policy with respect to
forecasted Adjusted EBITDA, debt, capital expenditures and other
investment opportunities, as well as expected interest, lease and
tax payments, and will look for opportunities to increase the
dividend as business conditions warrant.
- RENEWAL OF THE NORMAL COURSE ISSUER BID
-
- The Corporation repurchased and cancelled 0.3 million common
shares during the year ended December 31,
2020, compared to 5.4 million in the prior year.
- During the second quarter of 2020, SECURE renewed the normal
course issuer bid ("NCIB") first initiated in May 2018 and renewed in 2019. Pursuant to the
renewed NCIB, the Corporation may repurchase, from time to time, up
to a maximum of 10,796,069 common shares of the Corporation. Any
common shares purchased under the NCIB will be cancelled. The
renewed NCIB period commenced on May 28,
2020, and will end on May 27,
2021, or such earlier date as the NCIB is completed or is
terminated at the Corporation's election.
- The renewed NCIB provides the Corporation with an additional
capital allocation alternative to acquire common shares under
appropriate circumstances. The Board of Directors and senior
management believe that, from time to time, the prevailing market
price of the common shares may not fully reflect the underlying
value of SECURE's business and future business prospects. In such
circumstances, the repurchase of common shares under the NCIB
represents an attractive investment for the Corporation and an
opportunity to enhance shareholder value.
FOURTH QUARTER HIGHLIGHTS
The Corporation's operating and financial highlights for the three-month
periods ended December 31, 2020 and 2019 can be
summarized as follows:
|
Three months ended
Dec 31,
|
($000's except
share and per share data)
|
2020
|
2019
|
%
change
|
Revenue (excludes oil
purchase and resale)
|
118,606
|
156,998
|
(24)
|
Oil purchase and
resale
|
356,109
|
596,073
|
(40)
|
Total
revenue
|
474,715
|
753,071
|
(37)
|
Adjusted EBITDA
(1)
|
36,640
|
46,894
|
(22)
|
|
Per share ($),
basic
|
0.23
|
0.30
|
(23)
|
Net (loss)
income attributable to shareholders of SECURE
|
(37,794)
|
2,658
|
(1,522)
|
|
Per share ($), basic
and diluted
|
(0.24)
|
0.02
|
(1,300)
|
Cash flows from
operating activities
|
42,305
|
49,401
|
(14)
|
|
Per share ($),
basic
|
0.27
|
0.31
|
(13)
|
Discretionary free
cash flow (1)
|
26,259
|
30,310
|
(13)
|
|
Per share ($),
basic
|
0.17
|
0.19
|
(11)
|
Capital expenditures
(1)
|
8,944
|
31,769
|
(72)
|
Dividends per common
share
|
0.0075
|
0.0675
|
(89)
|
Total
assets
|
1,424,579
|
1,647,651
|
(14)
|
Long-term
liabilities
|
553,673
|
624,739
|
(11)
|
Common shares - end
of period
|
158,700,373
|
156,460,158
|
1
|
Weighted average
common shares
|
|
|
|
|
Basic
|
158,664,323
|
157,097,902
|
1
|
|
Diluted
|
158,664,323
|
159,430,711
|
-
|
(1) Refer
to "Non-GAAP Measures" for further information.
|
|
- REVENUE OF $474.7 MILLION FOR
THE THREE MONTHS ENDED DECEMBER 31,
2020
-
- Midstream Infrastructure segment revenue (excluding oil
purchase and resale) decreased 40% to $47.2
million during the three months ended December 31, 2020 from the 2019 comparative
period. Reduced drilling, completion and production volumes at the
Corporation's facilities negatively impacted treating and disposal
revenues. Reduced overall volumes, compounded by lower crude and
liquids pricing in the three months ended December 31, 2020, also negatively impacted
recovered oil and crude oil marketing revenue compared to the prior
year period.
- Oil purchase and resale revenue for the three months ended
December 31, 2020, decreased 40% from
the 2019 comparative period to $356.1
million. The decrease in revenues is a result of a 26%
decrease in Canadian light oil benchmark pricing during the
three-month period ended December 31,
2020 over the 2019 comparative period, combined with reduced
marketing activity as a result of lower production volumes and more
limited opportunities to work with our customers to optimize
pricing by utilizing multiple crude oil and condensate streams at
SECURE's midstream facilities.
- Environmental and Fluid Management segment revenue decreased 8%
during the three months ended December 31,
2020 from the 2019 comparative to $71.4 million. Reduced drilling and completion
activity in the WCSB decreased revenue generated from service lines
supporting these activities. Higher production chemical revenue
generated from greater bid awards and growing market share, more
reclamation and demolition jobs underway quarter over quarter and
further customer diversification outside of the oil and gas
industry partially offset the impact of the decrease in
revenue.
- ADJUSTED EBITDA OF $36.6
MILLION FOR THE THREE MONTHS ENDED DECEMBER 31, 2020
-
- Adjusted EBITDA decreased 22% to $36.6
million during the three months ended December 31, 2020 from the 2019 comparative
period primarily as a result of lower revenues as described above,
partially offset by cost reductions and a $3.9 million recovery recorded in cost of sales
and G&A expenses related to CEWS recorded in the current year
quarter.
- NET LOSS ATTRIBUTABLE TO SHAREHOLDERS OF SECURE OF
$37.8 MILLION FOR THE THREE MONTHS
ENDED DECEMBER 31, 2020
-
- Net loss attributable to shareholders of SECURE was
$37.8 million during the three months
ended December 31, 2020, compared to
income of $2.7 million for the 2019
comparative period. The variance is due primarily to $34.4 million of non-cash impairment charges
recorded against property, plant and equipment, as described above,
net of the associated tax impact. The Corporation also recorded
$5.1 million of restructuring charges
during the three months ended December 31,
2020.
- CASH FLOWS FROM OPERATING ACTIVITIES OF $42.3 MILLION FOR THE THREE MONTHS ENDED
DECEMBER 31, 2020
-
- The Corporation generated cash flows from operating activities
of $42.3 million during the three
months ended December 31, 2020, a
decrease of 14% from the prior year comparative period. The impact
of lower Adjusted EBITDA was partially offset by changes in
non-cash working capital during the period corresponding to lower
activity levels. SECURE carried total net working capital at
December 31, 2020, of $63.8 million, down from $125.3 million at December
31, 2019.
- CAPITAL EXPENDITURES OF $8.9
MILLION FOR THE THREE MONTHS ENDED DECEMBER 31, 2020
-
- Total capital expenditures for the three months ended
December 31, 2020 included
$6.1 million of organic growth and
expansion capital related primarily to construction costs for the
final segment of the East Kaybob oil pipeline.
- Sustaining capital incurred in the three months ended
December 31, 2020 of $2.6 million relates primarily to well and
facility maintenance.
MIDSTREAM INFRASTRUCTURE SEGMENT HIGHLIGHTS
|
Three months ended
Dec 31,
|
Twelve months
ended Dec 31,
|
($000's)
|
2020
|
2019
|
%
Change
|
2020
|
2019
|
%
Change
|
|
|
|
|
|
|
|
Midstream
Infrastructure services revenue (a)
|
47,203
|
79,150
|
(40)
|
200,724
|
307,431
|
(35)
|
Oil purchase and
resale
|
356,109
|
596,073
|
(40)
|
1,363,982
|
2,440,071
|
(44)
|
Midstream
Infrastructure Revenue
|
403,312
|
675,223
|
(40)
|
1,564,706
|
2,747,502
|
(43)
|
|
|
|
|
|
|
|
Cost of sales
excluding items noted below
|
19,166
|
30,261
|
(37)
|
76,353
|
118,623
|
(36)
|
Depreciation and
amortization
|
25,429
|
19,392
|
31
|
94,487
|
74,132
|
27
|
Impairment
|
34,401
|
-
|
100
|
34,401
|
-
|
100
|
Oil purchase and
resale
|
356,109
|
596,073
|
(40)
|
1,363,982
|
2,440,071
|
(44)
|
Midstream
Infrastructure Cost of Sales
|
435,105
|
645,726
|
(33)
|
1,569,223
|
2,632,826
|
(40)
|
|
|
|
|
|
|
|
Segment Profit
Margin (1)
|
28,037
|
48,889
|
(43)
|
124,371
|
188,808
|
(34)
|
|
|
|
|
|
|
|
Segment Profit
Margin (1) as a % of revenue (a)
|
59%
|
62%
|
|
62%
|
61%
|
|
|
|
|
|
|
|
|
(1)
Calculated as revenue less cost of sales excluding depreciation and
amortization. Refer to "Non-GAAP Measures" for further
information.
|
- Revenue generated from Midstream Infrastructure services of
$47.2 million decreased 40% for the
three months ended December 31, 2020,
from the 2019 comparative period. The decrease was due to lower
processing and disposal volumes tied to drilling and completion
activity. Produced water, emulsion treating and terminalling
volumes at the Corporation's midstream processing facilities also
decreased primarily as a result of natural production declines in
the WCSB, continued production shut-ins in North Dakota, and limited overflow volumes
from producers with capacity to handle their own product. The
factors above also negatively impacted recovered oil revenue,
compounded by lower realized pricing on recovered oil. Lower crude
and liquids pricing and less volatile differentials also limited
the upside for price optimization at the Corporation's pipeline
connected FSTs compared to the three months ended December 31, 2019, resulting in reduced crude oil
marketing revenue.
- Midstream Infrastructure services revenue for the twelve months
ended December 31, 2020, of
$200.7 million decreased 35% from the
prior year comparative period. The impact of the drop in oil prices
and corresponding decrease in activity levels and crude oil
marketing opportunities since the second quarter of 2020 was
partially offset by higher processing and disposal volumes during
the first two months of the year resulting primarily from
infrastructure additions during 2019, including produced water
pipelines added at Gold Creek and Tony
Creek, crude oil storage at Kerrobert and Cushing and the Pipestone facility, along with various
expansions at existing facilities.
- Disposal volumes decreased 46% and 34% during the three and
twelve months ended December 31,
2020, from the respective 2019 comparative periods as a
result of production shut-ins, storage of production water for
completions anticipated for 2021 and lower waste water volumes
corresponding to limited producer completion activity. Production
shut-ins across the Corporation's operating regions during the
second quarter of 2020, carried into the back half of the year in
North Dakota. Higher stability
from the Corporation's pipeline connected water disposal facilities
with contracted volumes helped to partially reduce the overall
decrease to disposal volumes. During the twelve months ended
December 31, 2020, the impact of the
reductions to drilling, completion and production on disposal
volumes beginning in March 2020 was
partially offset by higher year over year activity levels during
the first two months of the year.
- Processing volumes decreased 42% and 23% during the three and
twelve months ended December 31,
2020, from the respective 2019 comparative periods due
primarily to lower waste processing volumes corresponding to the
decrease in drilling and completion activity beginning in
March 2020. Emulsion treating volumes
were also down due to lower overall production levels, particularly
in North Dakota where second
quarter production shut-ins were slower to come back online.
- Oil volumes recovered through our processing operations
decreased 48% and 31% during the three and twelve months ended
December 31, 2020, from the
respective 2019 comparative periods, consistent with lower overall
volumes received at the Corporation's midstream processing
facilities. The impact of lower volumes on recovered oil revenue
was compounded by lower benchmark oil pricing in the current year
periods.
- Crude oil terminalling and pipeline volumes remained relatively
stable during the twelve months ended December 31, 2020 from 2019 despite production
shut-ins earlier in the year. The marginal decline of 7% was
primarily a result of reduced terminalling at certain facilities
due to lower production, partially offset by the addition of the
East Kaybob oil pipeline in June
2020, and stability of volumes associated with the
contracted Kerrobert crude oil
pipeline. For the three months ended December 31, 2020, crude oil terminalling and
pipeline volumes declined 21% as lower terminalling volumes more
than offset relative stability from the Corporation's oil
pipelines.
- Oil purchase and resale revenue in the Midstream Infrastructure
segment decreased 40% and 44% to $356.1
million and $1.4 billion for
the three and twelve months ended December
31, 2020, from the respective 2019 comparative periods. The
decrease in the three and twelve months ended December 31, 2020, corresponds to the decrease in
benchmark oil prices, compounded by reduced marketing activities
compared to the prior year comparative periods.
- The Midstream Infrastructure segment's profit margin decreased
43% and 34% to $28.0 million and
$124.4 million for the three and
twelve months ended December 31,
2020, from the respective 2019 comparative periods. As a
percentage of Midstream Infrastructure services revenue, segment
profit margin was 59% for the three months ended December 31, 2020, down from 62% for the three
months ended December 31, 2019. The
variance is primarily a result of lower revenue and service mix
factors, partially offset by fixed cost structure reductions and
wage subsidies.
- For the twelve months ended December 31,
2020, segment profit margin as a percentage of revenue
(excluding oil purchase and resale) was 62%, up from 61% in the
prior year. The positive variance is primarily a result of the cost
reductions which began to take effect in April 2020, partially offset by service mix,
including reduced marketing revenue and associated blending margins
due to fewer optimization opportunities compared to the prior
year.
- G&A expense decreased by 56% and 35% to $2.8 million and $17.9
million for the three and twelve months ended December 31, 2020, from the respective 2019
comparative periods. The decrease is mainly due to lower personnel
costs, including the benefit of wage subsidies primarily related to
CEWS, and strict cost control measures restricting discretionary
spending. Excluding depreciation and amortization, G&A expense
as a percentage of the segment's services revenue was 4% and 7%,
respectively, for the three and twelve months ended December 31, 2020, compared to 7% for both the
three and twelve months ended December 31,
2019.
- Loss before tax of $34.9 million
and $27.2 million for the three and
twelve months ended December 31, 2020
was primarily a result of non-cash impairment charges of
$34.4 million recorded against
property, plant and equipment in the three months ended
December 31, 2020, combined with
lower segment profit margin and increased depreciation and
amortization expense in the 2020 periods. Additionally, the
Midstream Infrastructure segment incurred restructuring costs of
$0.2 million and $4.1 million for the three and twelve months
ended December 31, 2020,
respectively, related to right sizing the Corporation's workforce
to anticipated activity levels and streamlining business processes
resulting in the suspension or termination of certain
functions.
ENVIRONMENTAL AND FLUID MANAGEMENT SEGMENT
|
Three months ended
Dec 31,
|
Twelve months
ended Dec 31,
|
($000's)
|
2020
|
2019
|
%
Change
|
2020
|
2019
|
%
Change
|
|
|
|
|
|
|
|
Environmental and
Fluid Management Revenue
|
71,403
|
77,848
|
(8)
|
258,950
|
305,774
|
(15)
|
|
|
|
|
|
|
|
Cost of sales
excluding items noted below
|
53,185
|
59,804
|
(11)
|
200,145
|
243,379
|
(18)
|
Depreciation,
depletion and amortization
|
10,941
|
12,526
|
(13)
|
37,647
|
45,706
|
(18)
|
Impairment
|
-
|
-
|
-
|
15,723
|
-
|
100
|
Environmental and
Fluid Management Cost of Sales
|
64,126
|
72,330
|
(11)
|
253,515
|
289,085
|
(12)
|
|
|
|
|
|
|
|
Segment Profit
Margin (1)
|
18,218
|
18,044
|
1
|
58,805
|
62,395
|
(6)
|
|
|
|
|
|
|
|
Segment Profit
Margin (1) as a % of revenue
|
26%
|
23%
|
|
23%
|
20%
|
|
|
|
|
|
|
|
|
(1)
Calculated as revenue less cost of sales excluding depreciation,
depletion and amortization. Refer to "Non-GAAP Measures" for
further information.
|
- The Environmental and Fluid Management segment revenue
decreased 8% and 15% to $71.4 million
and $258.9 million for the three and
twelve months ended December 31,
2020, from the respective 2019 comparative periods. Reduced
producer spending in the 2020 periods decreased drilling and
completion activity, lowering drilling waste volumes at the
Corporation's landfills and demand for fluid management associated
with drilling and completions. Site rehabilitation revenue has been
minimal in 2020 as slower deployment of government stimulus
programs has delayed work into 2021.
- The extent of the revenue decrease in the Environmental and
Fluid Management segment was partially mitigated by higher revenue
from production chemicals as the Corporation continues to win new
bids and gain market share. SECURE has experience and expertise in
key production fields where producers have been the most active in
WCSB. As a result, the Corporation can provide tailored solutions
and improved product formulations that optimize production, provide
flow assurance and maintain the integrity of production assets.
Additionally, stability from contracted operations in the
Fort McMurray area, increased
environmental project job volumes for customers outside of the oil
and gas industry, and continued demand for environmental consulting
services helped offset the impact of reduced drilling and
completion activity on the segment.
- Segment profit margin increased 1% and decreased 6% to
$18.2 million and $58.8 million for the three and twelve months
ended December 31, 2020 from the
respective 2019 comparative periods. For the three months ended
December 31, 2020, segment profit
margin as a percentage of revenue of 26% increased from 23% in the
prior year comparative period. The profit margin increase was
primarily a result of service mix, the impact of wage subsidies and
fixed cost reductions that began to take effect in the second
quarter.
- For the twelve months ended December 31,
2020, segment profit margin as a percentage of revenue
increased to 23%, up from 20% in the prior year comparative period
due to a greater proportion of higher margin work which included
increased volumes of environmental project work and higher
production chemical stimulation work in the second half of 2020.
Wage subsidies and fixed cost reductions that began to take effect
in the second quarter also contributed to improvements in segment
profit margin.
- G&A expenses decreased 31% and 34% to $5.0 million and $19.3
million for the three and twelve months ended December 31, 2020, from the respective 2019
comparative periods. The decrease is primarily due to lower
personnel related costs and reduced discretionary spending as the
Corporation manages costs to correspond to current industry
activity levels. Excluding depreciation and amortization, G&A
expenses as a percentage of the segment's revenue was 6% for both
the three and twelve months ended December
31, 2020, compared to 9% in each of the prior comparative
periods.
- The Environmental and Fluid Management segment had a loss
before tax of $1.0 million for the
three months ended December 31, 2020,
an improvement of $0.9 million
compared to the three months ended December
31, 2019. The increase was a result of higher segment profit
margin, lower G&A expenses and lower operational DD&A
expense, partially offset by restructuring charges of $3.3 million. For the twelve months ended
December 31, 2020, the segment's loss
before tax of $23.7 million increased
$10.6 million primarily as a result
of a non-cash impairment charge of $15.7
million recorded in the first quarter of 2020, as well as
restructuring costs of $9.5 million
incurred related to organizational restructuring.
OUTLOOK
Crude oil prices have started the year off higher, reaching a
trailing 12-month high in February
2021 following the announcement of short-term production
cuts by Saudi Arabia, and renewed
optimism for rising energy demand with the deployment of COVID-19
vaccines underway. However, continuing near-term COVID-19
lockdowns, COVID-19 variants and longer-term over supply concerns
create considerable uncertainty with regards to the outlook on oil
and liquids prices. Nonetheless, with our 2020 results, the
Corporation has demonstrated that SECURE's Midstream Infrastructure
and production–based service offerings deliver strong cash flows
that are sustainable at low commodity prices and activity levels,
positioning the Corporation for success in the event of a
longer–term economic downturn.
Based on current macroeconomic conditions and commodity prices,
SECURE expects:
- Continued stability from our core Midstream Infrastructure
business, of which approximately 35% is underpinned by contracted
volumes associated with the Corporation's oil and water pipelines,
which provides a base level of cash flows. Additionally, SECURE's
business remains highly concentrated on production volumes and
related services that historically represent approximately 75% of
the Corporation's Adjusted EBITDA.
- Higher producer cash flows resulting from improved commodity
prices. As a result, the Corporation expects an increase in
drilling and completion activity from 2020 levels as producers seek
to add production to offset natural declines occurring in 2020 in
order to maintain flat production levels. SECURE anticipates that
producers will remain focused on controlling costs and improving
balance sheet strength in favor of production growth in the
short-term. Over the medium-term, optimism on incremental pipeline
egress with the expansion and/or optimization of Line 3 and
Trans Mountain, which are set to
provide additional capacity in excess of 1 million barrels of crude
oil per day over the next few years, is expected to continue to
drive increased activity levels in the WCSB. Furthermore, proposed
Canadian liquefied natural gas export terminals are expected to
increase exports of natural gas produced with world-class ESG
standards over the next five years.
- Increased utilization at our Midstream Infrastructure
facilities and landfills as higher drilling, completion and
production volumes from increased activity levels require treating,
processing and disposal. The majority of our network of long-life
assets are located in high impact light oil and liquids rich
resource plays where producers are expected to be the most active
in the WCSB in 2021. The Corporation has capacity to increase
facility throughput and disposal with minimal additional fixed
costs, which should result in improved cost absorption.
- Increased abandonment, remediation and reclamation activity,
primarily in the second half of 2021 and into 2022, as a
result of the Canadian Federal Government's $1.7 billion stimulus package to help fund
the closure and reclamation of orphan and inactive wells in the
WCSB. SECURE expects increased abandonment, remediation and
reclamation activity to positively impact all Canadian operations
over the term of the program, particularly within our
Environmental Management group as a result of higher demand for
environmental site assessments, onsite abandonment, remediation and
reclamation management and decommissioning work. Waste volumes
resulting from these activities will also require disposal; SECURE
owns and operates six industrial landfills in Alberta capable of handling this waste.
- Progression of ESG initiatives within the Canadian oil and gas
industry as demand for responsibly produced energy sources
increases. Canada has best in
class safety, environmental and social practices, and the natural
resources to make it a reliable provider of sustainably produced
energy. In addition to working with our customers to challenge
what's possible and develop innovative solutions that are both cost
effective and minimize the environmental impacts associated with
the development of our shared resources, SECURE will continue to
take proactive measures to reduce the environmental impact of our
own operations, and positively contribute to the health, safety,
and economic wellbeing of our employees and communities where we
live and work.
- Ongoing consolidation within the oil and gas industry as
producers strive to remain competitive. Consolidation provides an
avenue for producers to eliminate redundant cost and achieve
operational efficiencies, strengthen their balance sheets, and
access new capital, allowing for growth that may otherwise not be
possible. This is expected to benefit SECURE in many ways,
including:
-
- Reduced counterparty risk;
- Higher volumes and utilization at existing facilities;
- Improved economies of scale to support the economics for
building and connecting oil and water pipelines and increases
volumes using pipelines or incremental third party
infrastructure;
- Long-term partnerships to support the construction and
operation of new midstream infrastructure; and
- Accelerated clean up of the industry's environmental
liabilities.
- To continue its prudent approach to capital spending. The
Corporation has established a 2021 capital program of
$15 million, which includes $12
million of sustaining capital. The capital budget will be
reviewed quarterly in 2021 and may be revised in accordance with
opportunities to connect producers to existing midstream
infrastructure to further increase volumes and utilization on a
long-term basis.
- To take advantage of the Corporation's specific service lines
that do not have recurring or production-related revenue streams.
With improved commodity prices and increased producer spending
expected this year, these service lines are expected to increase
the Corporation's discretionary free cash flow, which can be
allocated against debt to strengthen SECURE's balance sheet, or
provide incremental capital for continued midstream infrastructure
growth, and/or to support opportunistic share repurchases.
The factors above are expected to drive higher year over year
discretionary free cash flow. Throughout 2021, SECURE will continue
to focus on maintaining financial resiliency and prioritize the
repayment of debt and opportunistic share repurchases based on
market conditions. The Corporation remains well positioned to
respond to the market's needs as activity levels increase. SECURE's
business is uniquely positioned to deliver economic and
environmental benefits that make the oil and gas industry more
efficient and sustainable. We are committed to helping our
customers by working transparently with them to identify
opportunities where we can provide innovative solutions that help
their objectives of responsible development, while reducing costs.
We believe that remaining focused on this strategy will ultimately
contribute to our success in the long-term, despite market
challenges faced along the way.
FINANCIAL STATEMENTS AND MD&A
The Corporation's audited consolidated financial statements and
notes thereto for the year ended December 31, 2020 and
2019 and MD&A for the three and twelve months ended
December 31, 2020 and 2019 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 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 duration of the COVID-19 pandemic and related
restrictions and the related effect on demand for oil, supply and
demand balance, and our operations generally; the outlook for oil
and liquids prices; spending by producers and the impact of this on
SECURE's activity levels;
the oil and natural gas industry in Canada
and the U.S., including drilling, completion and production
activity levels for 2021 and beyond in the Corporation's operating
areas, and the related impact on SECURE's business, operations and
financial results; increased year over year discretionary cash
flow; the effect of the current economic conditions on the future
demand for SECURE's services and the impact on SECURE's cash flows
and impairment charges on long-term assets; SECURE's financial
resiliency and corporate priorities, including of debt repayment
and share repurchases, and strategies to achieve such priorities;
increased restructuring costs; the benefits of contracted and/or
fee-for-service contracts on SECURE's cash flow and the expected
stability of such sources; the benefit of production concentrated
volumes on SECURE's cash flow and the expected stability of such
sources of cash flow; the timing and stability of contributions
from new projects; incremental pipeline egress in the WCSB over the
next few years, LNG projects, and the impact on oil and gas
drilling, completion, production and export activity and the timing
thereof; the expansion or optimization of pipelines and other
infrastructure and the related impact on pipeline capacity;
capacity at the Corporation's existing facilities; increases to the
Corporation's throughput at existing facilities and costs thereof;
Canada's ESG standards ; the
impact consolidation of oil and gas production companies may have
to the business, operations and results of the Corporation; the
impact the Canadian Federal Government's orphan and inactive well
fund may have to the business, operations and results of the
Corporation; increased abandonment and reclamation activity in the
oil and gas industry and the related effect on SECURE's results of
operations and the timing thereof; the Corporation's ability to
control costs and align the Corporation's cost structure with
expected industry activity levels; the expected impacts and amounts
of the Corporation's cost and capital expenditure reductions; the
Corporation's proposed 2021 capital expenditure programs, including
growth and expansion and sustaining capital expenditures; future
dividend payments and expected cash savings resulting from the
reduction of the Corporation's cash dividend payments; future
opportunities to increase dividend payments; the amount and timing
of government stimulus programs and the related effect on the
Corporation's operations; 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; the sufficiency of the
Corporation's liquidity and expectations that our capital
investment, working capital, debt repayment, share repurchases and
cash dividends will be funded from internally generated cash
flows; the Corporation's credit risk levels; expected benefits
customers will receive from our midstream and environmental
solutions;
key factors driving the Corporation's success;
demand for the Corporation's services and products; industry fundamentals driving the success of
SECURE's core operations;
future capital needs and how the
Corporation intends to fund its operations, working capital requirements, dividends and capital program.
Forward-looking statements are based on certain assumptions that
SECURE has made in respect thereof as at the date of this document
regarding, among other things: the impact of COVID-19, including
related government responses related thereto 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 and operation of the
relevant facilities; that there are no unforeseen material costs in
relation to the Corporation's facilities and operations; 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 AIF. In addition, the effects and
impacts of the COVID–19 outbreak, the rapid decline in global
energy prices 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 from the forward-looking
statements contained in this document.
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 applicable securities laws, SECURE
does not intend, or assume any obligation, to update these
forward-looking statements.
NON-GAAP MEASURES
The Corporation uses accounting principles that are generally
accepted in Canada (the issuer's
"GAAP"), which includes International Financial Reporting Standards
("IFRS"). This news release contains certain supplementary
measures, such as discretionary free cash flow, segment profit
margin, Adjusted EBITDA and Adjusted EBITDA margin, which 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 MD&A 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
SECURE is a publicly traded energy business listed on the
Toronto Stock Exchange ("TSX") 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.")
through its network of midstream processing and
storage facilities, crude oil and water pipelines, and crude by
rail terminals
located 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
storage, logistics, and marketing. SECURE also provides
comprehensive environmental and fluid management for landfill
disposal, onsite abandonment, remediation and reclamation,
drilling, completion and production operations for oil and gas
producers in western Canada.
________________________
|
i
|
Discretionary free
cash flow, segment profit margin, Adjusted EBITDA, and Adjusted
EBITDA margin are non-GAAP measures. Refer to the "Non-GAAP
Measures" section herein.
|
ii
|
Refer to the
"Liquidity and Capital Resources" section in the MD&A for
details on the Corporation's covenant calculations.
|
SOURCE SECURE Energy Services Inc.