CALGARY, March 8, 2012 /CNW/ - Western Energy Services Corp.
("Western" or the "Company") is pleased to release its fourth
quarter and year end 2011 financial and operating results prepared
under International Financial Reporting Standards ("IFRS").
Effective January 1, 2011, Western began reporting its financial
results under IFRS. Prior year comparative amounts have been
changed to reflect results as if Western had always prepared its
financial results using IFRS. Additional information relating
to the Company, including the Company's financial statements and
management's discussion and analysis as at and for the years ended
December 31, 2011 and 2010 will be available on SEDAR at
www.sedar.com. All amounts are denominated in Canadian
dollars ($CDN) unless otherwise identified. Highlights: -- Revenue
in the fourth quarter of 2011 totalled $101.3 million, a $74.7
million increase (or 281%) over the prior year. For the year ended
December 31, 2011, revenue increased by $206.5 million (or 369%) to
$262.5 million as compared to $56.0 million in the prior year; --
EBITDA totalled $41.5 million (41% of revenue) in the fourth
quarter of 2011, a $32.1 million increase (or 343%) over the prior
year. For the year ended December 31, 2011, EBITDA totalled $99.3
million (38% of revenue) an increase of 502% over the prior year.
The increase reflects the growth in the contract drilling segment
which exited 2011 with 43 rigs as compared to 22 rigs in 2010; --
Net income from continuing operations, before considering gains on
business acquisitions, totalled $24.9 million ($0.43 per share) in
the fourth quarter of 2011, an increase of 751%, and $53.9 million
($1.04 per share) for the year ended December 31, 2011, an increase
of 1,362% as compared to the same periods in the prior year; --
During the fourth quarter, utilization in the contract drilling
segment averaged 79% in Canada as compared to the CAODC industry
average of 61%. For the year, utilization in Canada averaged 70% as
compared to the CAODC industry average of 52%. In the United
States, utilization averaged 79% in the fourth quarter and 70% for
the year; -- For the three and twelve months ended December 31,
2011 capital expenditures totalled $34.3 million and $88.9 million,
respectively. The majority of Western's capital spending related to
its drilling rig build program, which incurred $16.7 million in the
fourth quarter and $43.0 million in the year. Additionally, Western
spent $2.6 million and $5.2 million, respectively during the three
and twelve months ended December 31, 2011 on the construction of
five next generation well servicing rigs, the first of which began
operations in the first quarter of 2012. The remaining capital
spending related to ancillary drilling equipment; -- Subsequent to
year end, on January 30, 2012 Western completed a private offering
of $175.0 million aggregate principle amount of 7⅞% senior
unsecured notes due January 30, 2019. Selected Financial
Information (stated in thousands, except share and per share
amounts) Financial Threemonths Three Yearended Year ended
Highlights ended months Dec 31, Dec Dec 31, ended 2011 31,2010 2011
Dec 31, 2010 Revenue 101,300 26,582 262,519 56,009 EBITDA(1) 41,473
9,359 99,324 16,504 EBITDA as a 41% 35% 38% 29% percentage of
revenue Cash flow 25,337 3,716 59,368 10,953 from operating
activities Capital 34,336 13,826 88,869 21,282 expenditures Net
income 24,923 2,766 53,882 23,339 (2) from continuing operations
-basic 0.43 0.10 1.04 1.03 net income per share -diluted 0.41 0.09
1.00 0.96 net income per share Net income 24,314 5,739 64,746 (3)
26,590 (2) -basic 0.42 0.20 1.25 1.17 net income per share -diluted
0.40 0.19 1.21 1.09 net income per share Weighted average number of
shares -basic 58,533,287 28,220,418 51,595,078 22,724,270 -diluted
60,549,515 29,769,783 53,640,617 24,385,704 Outstanding 58,533,287
37,680,944 58,533,287 37,680,944 common shares as at period end (1)
See financial measures reconciliations. (2) Includes a $19.7
million non-recurring gain on acquisitions. (3) Includes a $10.1
million non-recurring gain on the sale of StimSol Canada Inc.
Operating Three Three months Year ended Year ended Highlights
months ended Dec 31, 2011 Dec 31, ended Dec 31, 2010 2010 Dec 31,
2011 Contract Drilling Canadian Operations Contract drilling rig
fleet: -Average 37 16 32 13 (1) -End of 38 22 38 22 period Drilling
33,199 27,487 29,885 25,349 revenue per operating day (CDN$)
Drilling rig operating days(2) 2,706 967 8,074 2,210 Drilling rig
(1) utilization rate(2) 79% 65% 70% 58% CAODC (1) industry average
utilization rate(2) 61% 50% 52% 37% United States Operations
Contract drilling rig fleet: -Average 5 - 4 (3) - -End of 5 - 5 -
period Drilling 30,705 - 33,038 - revenue per operating day (US$)
Drilling rig operating days(2) 365 - 640 - Drilling rig (3) -
utilization rate(2) 79% - 70% Financial Position at Dec 31, Dec
31,2010 Jan 1, 2010 (stated in thousands) 2011 Working 39,874
13,156 809 capital Property and 473,930 188,355 - equipment Total
assets 619,645 264,108 12,269 Long term 108,039 46,054 - debt (1)
Calculated from the date of acquisition of the Contract Drilling
segment (March 18, 2010). (2) Utilization rate calculated on a spud
to rig release basis. (3) Calculated from the date of acquisition
of the United States operations (June 10, 2011). Outlook Western
currently has a drilling rig fleet of 44 rigs, with an additional 3
rigs under construction. Western is the sixth largest
drilling contractor in Canada with a fleet of 39 drilling
rigs. As a result of the acquisition of Stoneham on June 10,
2011, Western has entered the United States market with the
intention of building a strong presence, initially in the Williston
basin of North Dakota. Currently, Western has five drilling
rigs deployed in the United States. Subsequent to year-end,
the Company has established a corporate presence in Denver,
Colorado. Additionally, during 2012 Western commenced
operations of four next generation well servicing rigs in the
Lloydminster, Alberta area with the fifth expected to be delivered
by the end of the first quarter. This moves Western towards
its stated objective of entering the well servicing industry in
Canada. Western's drilling rig fleet is specifically suited for the
current market which is focused on drilling wells of increased
complexity. In total, approximately 95% of Western's fleet
are Efficient Long Reach ("ELR") rigs with depth ratings greater
than 3,000 meters and all of Western's rigs are capable of drilling
horizontal wells. Approximately 66% of Western's fleet is
under long term take-or-pay contracts, which provide a base level
of revenue. These contracts typically generate 250
utilization days per year in Canada, as the annual spring breakup
restricts activity during the second quarter, while in the United
States these contracts typically generate approximately 300
utilization days per year. Western has increased its 2012 capital
budget to include the construction of 3 additional ELR telescopic
double drilling rigs for approximately $32.0 million, all of which
are expected to be contracted prior to going into service.
Additionally, the Board of Directors approved the construction of 5
additional next generation well servicing rigs for approximately
$10.0 million. As such, our revised capital expenditures are
expected to be approximately $125 million for 2012, which includes
approximately $75 million in expansion capital and approximately
$50 million in maintenance capital. Expansion capital in the
contract drilling segment aggregates to approximately $65 million
and mainly relates to Western's drilling rig build program which
includes the completion of seven drilling rigs in 2012, one of
which has already been commissioned. Of the remaining
drilling rigs currently under construction, one is expected to be
completed in each of the first, second and third quarters of
2012. The three new builds discussed above are anticipated to
be completed in the latter part of the fourth quarter of 2012 or
early in the first quarter of 2013. Expansion capital in the
well servicing segment relates to the five service rig builds
discussed above, which are anticipated to be completed in the
latter part of the fourth quarter of 2012 or early in the first
quarter of 2013. Maintenance capital relates to various items
such as rotational equipment, drill pipe, replacement parts and
infrastructure upgrades. Western believes that with continued
strong pricing environments for oil and natural gas liquids,
additional rig build opportunities will be available. Drilling
activity in Canada and the United States was substantially higher
in 2011 as compared to the last number of years. Furthermore,
Western's utilization rates have consistently been above industry
average due to the Company's modern rig fleet, strong customer base
and solid reputation. Western believes that customers
targeting oil and liquids-rich natural gas wells will continue to
drive demand in 2012 and lead to levels of utilization consistent
with 2011. Currently the largest challenges facing the
drilling industry are the growth of the industry's drilling rig
fleet, as contract drillers continue to expand their fleet,
depressed natural gas prices, and the challenge to attract and
retain skilled labour. Despite the weakness in natural gas
prices, which have recently hit 10 year lows, the price for oil and
natural gas liquids remains strong, which to this point has driven
the strong activity levels in 2011 and the first quarter of
2012. Currently Western's fleet is fully crewed with
qualified personnel and three crews on every rig. The Company
believes Western's modern fleet and corporate culture will provide
a distinct advantage in attracting qualified individuals.
Western has a proven track record for delivering high quality
equipment and well trained, highly skilled crews to its customers
who rely on the Company to drill increasingly complex long reach
horizontal wells. As such, Western is well positioned for
future growth. Financial Measures Reconciliations Western uses
certain measures in this press release which do not have any
standardized meaning as prescribed by IFRS. These measures
may not be comparable to similar measures presented by other
reporting issuers. These measures have been described and
presented in this press release in order to provide shareholders
and potential investors with additional information regarding the
Company. EBITDA Management believes that in addition to net income
from continuing operations, earnings from continuing operations
before interest and finance costs, taxes, depreciation, other
non-cash items and one-time gains and losses ("EBITDA") as derived
from information reported in the consolidated statements of
operations and comprehensive income is a useful supplemental
measure as it provides an indication of the results generated by
Western's principal business activities prior to consideration of
how those activities are financed, the impact of foreign exchange,
how the results are taxed, how funds are invested, and how non-cash
charges and one-time gains or losses affect results. Operating
Earnings Management believes that in addition to net income from
continuing operations, operating earnings is a useful supplemental
measure as it provides an indication of the results generated by
the Company's principal operating segments similar to EBITDA but
also factors in the depreciation expense charged in the period. The
following table provides a reconciliation of net income from
continuing operations under IFRS as disclosed in the consolidated
statements of operations and comprehensive income to EBITDA and
Operating Earnings. (stated in thousands Threemonths Threemonths
Year ended Year ended of Canadian dollars) ended ended Dec 31,2011
Dec 31, 2010 Dec 31, 2011 Dec 31, 2010 EBITDA 41,473 9,359 99,324
16,504 Less: Depreciation - 9,012 3,021 24,541 6,942 operating
Depreciation - 165 47 446 124 administrative Operating earnings
32,296 6,291 74,337 9,438 Less: Stock based 125 31 307 81
compensation - operating Stock based 398 125 1,028 375 compensation
- administrative Finance costs 1,246 358 3,650 883 Other items
(1,472) 1,376 677 1,600 Gain on business - 161 - (19,653)
acquisitions Income taxes 7,076 1,474 14,793 2,813 Net income from
24,923 2,766 53,882 23,339 continuing operations 2011 Fourth
Quarter and Year End Results Conference Call and Webcast Western
has scheduled a conference call and webcast to begin promptly at
12:00 p.m. MST (2:00 p.m. EST) on March 8, 2012. The conference
call dial-in number is 1-888-231-8192. A live webcast of the
conference call will be accessible on Western's website at
www.wesc.ca by selecting "Investor Relations", then
"Webcasts". Shortly after the live webcast, an archived
version will be available for approximately 14 days. An archived
recording of the conference call will also be available
approximately one hour after the completion of the call until March
22, 2012 by dialing 1-855-859-2056 or 1-416-849-0833, passcode
56136739. Forward-Looking Statements and Information: This press
release contains forward-looking statements and forward-looking
information within the meaning of applicable securities laws.
All statements other than statements of historical fact contained
in this press release may be forward-looking statements and
forward-looking information. In particular, forward-looking
information and statements in this press release include, but are
not limited to, "capital expenditures are expected to be
approximately $125 million for 2012, which includes approximately
$75 million in expansion capital and approximately $50 million in
maintenance capital. Expansion capital in the contract
drilling segment aggregates to approximately $65 million and mainly
relates to Western's drilling rig build program which includes the
completion of seven drilling rigs in 2012, one of which has already
been commissioned. Of the remaining drilling rigs currently
under construction, one is expected to be completed in each of the
first, second and third quarters of 2012. The three new
builds discussed above are anticipated to be completed in the
latter part of the fourth quarter of 2012 or early in the first
quarter of 2013. Expansion capital in the well servicing
segment relates to the five service rig builds discussed above,
which are anticipated to be completed in the latter part of the
fourth quarter of 2012 or early in the first quarter of 2013." and
"Western believes that customers targeting oil and liquids-rich
natural gas wells will continue to drive demand in 2012 and lead to
levels of utilization consistent with 2011". These
forward-looking statements and information are based on certain key
expectations and assumptions made by Western, including the
assumption that the demand for Western's drilling rigs will remain
strong through 2012 and that such demand and financial performance
will not affect expansion capital. Although Western believes
that the expectations and assumptions on which such forward-looking
statements and information are based are reasonable, undue reliance
should not be placed on the forward-looking statements and
information as Western cannot give any assurance that they will
prove to be correct. Since forward-looking statements and
information address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are
not limited to, general economic, market and business
conditions. Readers are cautioned that the foregoing list of
risks and uncertainties is not exhaustive. Additional
information on these and other risk factors that could affect
Western's operations and financial results are included in
Western's annual information form and the other disclosure
documents filed by Western with securities regulatory authorities
which may be accessed through the SEDAR website at
www.sedar.com. The forward-looking statements and information
contained in this press release are made as of the date hereof and
Western does not undertake any obligation to update publicly or
revise and forward-looking statements and information, whether as a
result of new information, future events or otherwise, unless so
required by applicable securities laws. Western Energy
Services Corp. CONTACT: Dale E. Tremblay Chief Executive
Officer403.984.5929dtremblay@wesc.ca Alex MacAusland President and
COO403.984.5932amacausland@wesc.ca Jeffrey K. BowersVP Finance and
CFO403.984.5933jbowers@wesc.ca
Copyright
Western Energy Services (TSX:WRG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Western Energy Services (TSX:WRG)
Historical Stock Chart
From Jul 2023 to Jul 2024