CALGARY, AB, Oct. 25, 2021 /CNW/ - Western Energy Services
Corp. ("Western" or the "Company") (TSX: WRG) announces the release
of its third quarter 2021 financial and operating results.
Additional information relating to the Company, including the
Company's financial statements and management's discussion and
analysis ("MD&A") as at and for the three and nine months ended
September 30, 2021 and 2020 will be
available on SEDAR at www.sedar.com. Non-International
Financial Reporting Standards ("Non-IFRS") measures, such as
Adjusted EBITDA, and abbreviations and definitions for standard
industry terms are defined later in this press release. All
amounts are denominated in Canadian dollars (CDN$) unless otherwise
identified.
Third Quarter 2021 Operating Results:
- Third quarter revenue increased by $19.6
million (or 145%) to $33.0
million in 2021 as compared to $13.4
million in the third quarter of 2020. In the contract
drilling segment, revenue totalled $19.5
million in the third quarter of 2021, an increase of
$14.1 million (or 259%) compared to
$5.4 million in the third quarter of
2020. In the production services segment, revenue totalled
$13.7 million for the three months
ended September 30, 2021, as compared
to $8.1 million in the same period of
the prior year, an increase of $5.6
million (or 69%). While the ongoing COVID-19 pandemic
continues to impact the contract drilling and production services
segments in the third quarter of 2021, demand improved compared to
2020 as described below:
-
- Drilling rig utilization in Canada averaged 18% in the third quarter of
2021, compared to 5% in the third quarter of 2020 due to the
COVID-19 pandemic. The increase in activity in the third quarter of
2021 was mainly attributable to the improved demand resulting from
the ongoing COVID-19 vaccination rollouts and the lifting of
government restrictions which re-opened the economy, compared to
the third quarter of 2020 when the COVID-19 pandemic caused demand
destruction across the industry. The Canadian Association of Energy
Contractors ("CAOEC") industry average utilization of
27%1 for the third quarter of 2021 represented an
increase of 1,800 basis points ("bps") compared to the CAOEC
industry average of 9% in the third quarter of 2020. Western's
market share, represented by the Company's Operating Days as a
percentage of the CAOEC's total Operating Days in the Western
Canadian Sedimentary Basin ("WCSB"), improved to 6.7% for the third
quarter of 2021, as compared to 5.3% in the same period of 2020.
Revenue per Operating Day averaged $20,999 in the third quarter of 2021, a decrease
of 3% compared to the same period of the prior year, mainly due to
a higher proportion of operating days with current market rates
compared to long term contracted rates in the prior quarter;
- In the United States ("US"),
drilling rig utilization averaged 13%, as two rigs worked in the
third quarter of 2021, compared to 1% Drilling Rig Utilization in
the third quarter of 2020, with Operating Days improving from 9
days in 2020 to 98 days in 2021. Revenue per Operating Day for the
third quarter of 2021 was US$17,419,
a 14% decrease compared to US$20,224
in the same period of the prior year, mainly due to changes in
average rig mix; and
- In Canada, service rig
utilization of 29% in the third quarter of 2021 was higher than 19%
in the same period of the prior year, mainly due to improved
commodity prices positively impacting demand for well reactivations
in 2021, as 2020 activity was impacted significantly by the
COVID-19 pandemic when a number of customers shut in wells
entirely. Revenue per Service Hour of $727 in the third quarter of 2021 was 11% higher
than the third quarter of 2020, as a result of increased labour and
fuel charges being passed through to the customer. Higher
utilization led to production services revenue totaling
$13.7 million in the third quarter of
2021, an increase of $5.6 million (or
69%), as compared to the same period in the prior year.
- Administrative expenses increased by $0.7 million (or 35%) to $2.7 million in the third quarter of 2021, as
compared to $2.0 million in the third
quarter of 2020, mainly due to lower amounts received related to
the Canada Emergency Wage Subsidy
("CEWS") from the Government of Canada and higher employee related costs.
- The Company incurred a net loss of $10.4
million in the third quarter of 2021 ($0.11 per basic common share) as compared to a
net loss of $10.5 million in the same
period in 2020 ($0.12 per basic
common share). The change can mainly be attributed to a
$3.2 million decrease in income tax
recovery and a $1.4 million increase
in finance costs, offset partially by a $2.7
million increase in Adjusted EBITDA, a $1.3 million decrease in depreciation expense due
to certain assets being fully depreciated in the period and a
$0.6 million increase in other items
which mainly consisted of foreign exchange gains and the sale of
assets.
- Third quarter Adjusted EBITDA in 2021 was higher than the same
period of the prior year and totalled $5.0
million, compared to $2.3
million in the third quarter of 2020. Adjusted EBITDA was
higher due to improved activity in Canada and the US, offset partially by a
decrease of $1.0 million in CEWS
received.
- Third quarter 2021 additions to property and equipment of
$1.3 million compared to $0.2 million incurred in the third quarter of
2020 and consist of $0.4 million of
expansion capital and $0.9 million of
maintenance capital.
1 Source:
CAOEC, monthly Contractor Summary.
|
Year to Date 2021 Operating Results:
- Revenue for the nine months ended September 30, 2021, increased by $14.3 million (or 19%) to $90.3 million as compared to $76.0 million for the nine months ended
September 30, 2020. Contract drilling
revenue totalled $51.7 million in
2021, an increase of $5.0 million (or
11%) as compared to $46.7 million in
2020. Production services revenue totalled $39.1 million for the nine months ended
September 30, 2021, as compared to
$29.5 million in the same period of
the prior year, an increase of $9.6
million (or 32%). The ongoing COVID-19 pandemic continues to
impact revenue in the contract drilling and production services
segments as described below:
-
- Drilling rig utilization in Canada averaged 16% for the nine months ended
September 30, 2021, compared to 10%
for the nine months ended September 30,
2020, a 600 bps increase. The increase in activity in 2021
was mainly attributable to the improved demand resulting from the
ongoing COVID-19 vaccination rollouts and the lifting of government
restrictions which re-opened the economy, compared to 2020 when the
COVID-19 pandemic caused demand destruction across the industry.
The CAOEC industry average of 23%2 for nine months ended
September 30, 2021, represented an
increase of 700 bps compared to the CAOEC industry average of 16%
for the nine months ended September 30,
2020, mainly due to higher demand. Western's market share,
represented by the Company's Operating Days as a percentage of the
CAOEC's total Operating Days in the WCSB, improved to 7.2% for the
nine months ended September 30, 2021,
as compared to 6.3% in the same period of 2020. Revenue per
Operating Day decreased by 15% for the nine months ended
September 30, 2021, as compared to
the same period of the prior year, as current market rates weakened
in the period;
- In the United States, drilling
rig utilization averaged 13%, as two rigs worked in 2021, compared
to 7% in the same period of 2020, reflecting an 82% increase in
Operating Days. Revenue per Operating Day for the nine months ended
September 30, 2021, decreased by 37%
to US$15,404, as compared to the same
period of the prior year, as current spot market rates weakened in
the period; and
- In Canada, service rig
utilization of 28% for the nine months ended September 30, 2021 was higher than the same
period of the prior year due to improved industry demand. Lower
production and completion activity was offset by increased
abandonment work as a result of government incentives. Revenue per
Service Hour of $717 for the nine
months ended September 30, 2021 was
3% higher than the same period of 2020. Improved utilization led to
production services revenue totaling $39.1
million for the nine months ended September 30, 2021, an increase of $9.6 million (or 32%), as compared to the same
period in the prior year.
- Administrative expenses increased by $0.2 million (or 3%) to $8.1 million for the nine months ended
September 30, 2021, as compared to
$7.9 million in the same period of
the prior year, mainly due to a decrease in the CEWS received
related to administrative costs.
- The Company incurred a net loss of $29.8
million for the nine months ended September 30, 2021 ($0.33 per basic common share) as compared to a
net loss of $33.9 million in the same
period in 2020 ($0.37 per basic
common share). The change can mainly be attributed to the 2020
impairment of $11.5 million and a
$5.2 million decrease in depreciation
expense due to certain assets being fully depreciated in the
period, as well as the impact to depreciation of asset impairments
in previous quarters, which were offset partially by a $9.4 million decrease in income tax recovery, a
$1.4 million decrease in other items,
and a $0.6 million decrease in
Adjusted EBITDA.
- Adjusted EBITDA for the nine months ended September 30, 2021 was lower than the same period
of the prior year and totalled $14.1
million, compared to $14.7
million in the same period of 2020. Adjusted EBITDA in 2021
was lower due to US$5.0 million of
shortfall commitment revenue received in 2020 with none in 2021,
which was partially offset by improved activity in Canada and the US, and an increase in the CEWS
of $3.9 million due to 2021 including
nine months of the CEWS, compared to only five months in 2020.
- Year to date 2021 additions to property and equipment of
$4.8 million compared to $1.0 million incurred in the same period of 2020
and consist of $1.1 million of
expansion capital and $3.7 million of
maintenance capital.
2 Source:
CAOEC, monthly Contractor Summary.
|
Selected Financial
Information
|
|
|
|
|
(stated in
thousands, except share and per share amounts)
|
|
|
|
|
Three months
ended September 30
|
Nine months ended
September 30
|
Financial
Highlights
|
2021
|
2020
|
Change
|
2021
|
2020
|
Change
|
Revenue
|
32,960
|
13,438
|
145%
|
90,315
|
76,005
|
19%
|
Adjusted
EBITDA(1)
|
5,009
|
2,270
|
121%
|
14,097
|
14,668
|
(4%)
|
Adjusted EBITDA as a
percentage of revenue
|
15%
|
17%
|
(12%)
|
16%
|
19%
|
(16%)
|
Cash flow (used in)
from operating activities
|
(2,524)
|
(1,560)
|
62%
|
8,395
|
25,712
|
(67%)
|
Additions to property
and equipment
|
1,331
|
150
|
787%
|
4,759
|
983
|
384%
|
Net loss
|
(10,397)
|
(10,486)
|
(1%)
|
(29,791)
|
(33,858)
|
(12%)
|
– basic
and diluted net loss per share
|
(0.11)
|
(0.12)
|
(8%)
|
(0.33)
|
(0.37)
|
(11%)
|
Weighted average
number of shares
|
|
|
|
|
|
|
– basic
and diluted
|
91,399,672
|
91,040,679
|
-
|
91,262,459
|
91,283,205
|
-
|
Outstanding common
shares as at period end
|
91,680,182
|
91,165,112
|
1%
|
91,680,182
|
91,165,112
|
1%
|
(1) See
"Non-IFRS measures" included in this press release.
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
Operating
Highlights(2)
|
2021
|
2020
|
Change
|
2021
|
2020
|
Change
|
Contract
Drilling
|
|
|
|
|
|
|
Canadian
Operations:
|
|
|
|
|
|
|
Contract drilling rig
fleet:
|
|
|
|
|
|
|
–
Average active rig count
|
9.0
|
2.3
|
291%
|
8.0
|
5.1
|
57%
|
– End of
period
|
49
|
49
|
-
|
49
|
49
|
-
|
Operating
Days
|
824
|
208
|
296%
|
2,185
|
1,389
|
57%
|
Revenue per Operating
Day
|
20,999
|
21,723
|
(3%)
|
21,035
|
24,648
|
(15%)
|
Drilling rig
utilization – Operating Days
|
18%
|
5%
|
260%
|
16%
|
10%
|
60%
|
CAOEC industry
average utilization – Operating Days(3)
|
27%
|
9%
|
200%
|
23%
|
16%
|
44%
|
|
|
|
|
|
|
|
United States
Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling rig
fleet:
|
|
|
|
|
|
|
–
Average active rig count
|
1.1
|
0.1
|
1,000%
|
1.1
|
0.6
|
83%
|
– End of
period
|
8
|
8
|
-
|
8
|
8
|
-
|
Operating
Days
|
98
|
9
|
989%
|
287
|
158
|
82%
|
Revenue per Operating
Day (US$)
|
17,419
|
20,224(4)
|
(14%)
|
15,404
|
24,312(4)
|
(37%)
|
Drilling rig
utilization – Operating Days
|
13%
|
1%
|
1,200%
|
13%
|
7%
|
86%
|
|
|
|
|
|
|
|
Production
Services
|
|
|
|
|
|
|
Canadian
Operations:
Well servicing rig
fleet:
|
|
|
|
|
|
|
–
Average active rig count
|
18.1
|
11.8
|
53%
|
17.7
|
13.7
|
29%
|
– End of
period
|
63
|
63
|
-
|
63
|
63
|
-
|
Service
Hours
|
16,685
|
10,893
|
53%
|
48,277
|
37,427
|
29%
|
Revenue per Service
Hour
|
727
|
656
|
11%
|
717
|
696
|
3%
|
Service rig
utilization
|
29%
|
19%
|
53%
|
28%
|
22%
|
27%
|
(2)
|
See "Defined Terms"
included in this press release.
|
(3)
|
Source: The
Canadian Association of Energy Contractors ("CAOEC") monthly
Contractor Summary. The CAOEC industry average is based on
Operating Days divided by total available drilling days.
|
(4)
|
Excludes shortfall
commitment revenue from take or pay contracts of US$0.3 million and
US$5.0 million for the three and nine months ended September 30,
2020.
|
Financial Position
at (stated in thousands)
|
September
30, 2021
|
|
December 31,
2020
|
September 30,
2020
|
Working
capital
|
607
|
|
15,997
|
5,603
|
Total
assets
|
460,872
|
|
495,625
|
488,470
|
Long term
debt
|
228,263
|
|
237,633
|
226,719
|
Business Overview
Western is an energy services company that provides contract
drilling services and production services in Canada and the
United States through its various divisions, subsidiaries,
and first nations joint venture.
Contract Drilling Services
Western operates a fleet of 57 drilling rigs specifically suited
for drilling complex horizontal wells across Canada and the US. Western is currently
the fourth largest drilling contractor in Canada, based on the CAOEC registered drilling
rigs3.
Production Services
Production Services provides well servicing and oilfield
equipment rentals primarily in Canada. Western operates 66 well servicing
rigs and is the third largest well servicing company in
Canada based on CAOEC registered
well servicing rigs4.
Western's contract drilling and well servicing rig fleets
comprise the following:
September
30
|
Drilling
rigs
|
|
|
|
|
|
Well servicing
rigs
|
|
2021
|
|
2020
|
|
|
2021
|
2020
|
Rig
class(1)
|
Canada
|
US
|
Total
|
|
Canada
|
US
|
Total
|
|
Mast
type
|
Total
|
Total
|
Cardium
|
23
|
2
|
25
|
|
23
|
2
|
25
|
|
Single
|
33
|
33
|
Montney
|
19
|
-
|
19
|
|
19
|
-
|
19
|
|
Double
|
25
|
25
|
Duvernay
|
7
|
6
|
13
|
|
7
|
6
|
13
|
|
Slant
|
8
|
8
|
Total
|
49
|
8
|
57
|
|
49
|
8
|
57
|
|
|
66
|
66
|
(1) See "Defined Terms"
included in this press release.
|
Business Environment
Crude oil and natural gas prices impact the cash flow of
Western's customers, which in turn impacts the demand for Western's
services. The following table summarizes average crude oil
and natural gas prices, as well as average foreign exchange rates,
for the three and nine months ended September 30, 2021 and 2020.
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
2021
|
2020
|
Change
|
2021
|
2020
|
Change
|
Average crude oil
and natural gas prices(1)(2)
|
|
|
|
|
|
|
Crude
Oil
|
|
|
|
|
|
|
West Texas
Intermediate (US$/bbl)
|
70.56
|
40.93
|
72%
|
64.82
|
38.31
|
69%
|
Western Canadian
Select (CDN$/bbl)
|
71.77
|
42.41
|
69%
|
65.40
|
32.98
|
98%
|
|
|
|
|
|
|
|
Natural
Gas
|
|
|
|
|
|
|
30 day Spot AECO
(CDN$/mcf)
|
3.72
|
2.35
|
58%
|
3.39
|
2.18
|
56%
|
|
|
|
|
|
|
|
Average foreign
exchange rates(2)
|
|
|
|
|
|
|
US dollar to Canadian
dollar
|
1.26
|
1.33
|
(5%)
|
1.25
|
1.35
|
(7%)
|
(1) See "Abbreviations"
included in this press release. (2) Source: Sproule
September 30, 2021 Price Forecast, Historical Prices.
|
West Texas Intermediate ("WTI") on average improved by 72% and
69% for the three and nine months ended September 30, 2021 respectively, compared to the
same periods in the prior year. Similarly, pricing on Western
Canadian Select ("WCS") crude oil increased by 69% and 98%
respectively, for the three and nine months ended September 30, 2021, compared to the same periods
in the prior year. Crude oil prices in 2020 for both
Canada and the US were
significantly impacted by the COVID-19 pandemic. However, in
2021 pricing has improved as demand for crude oil recovers and
vaccine rollouts continue worldwide. Natural gas prices in
Canada also strengthened in 2021,
as the 30-day spot AECO price improved by 58% and 56% respectively,
for the three and nine months ended September 30, 2021, compared to the same periods
of the prior year. Offsetting this increase in pricing, the
US dollar to the Canadian dollar foreign exchange rate weakened in
the three and nine months ended September
30, 2021, compared to the same periods of the prior year,
which impacted the cash flows of Western's Canadian customers, when
selling US dollar denominated commodities.
3 Source: CAOEC Contractor Summary as
at October 25, 2021.
4 Source: CAOEC Fleet List as at October 25,
2021.
|
In the United States, industry
activity improved in the third quarter of 2021. As reported
by Baker Hughes Company5, the number of active drilling
rigs in the United States
increased by approximately 98% to 528 rigs at September 30, 2021, as compared to 266 rigs at
September 30, 2020. However,
the ongoing COVID-19 pandemic continues to have an impact on
industry activity in both the US and in Canada in 2021. Prior to the COVID-19
pandemic, there were also continued industry concerns over market
access, increased regulation, and the prevailing customer
preference to return cash to shareholders, or pay down debt, rather
than grow production through the drill bit in Canada and the US. The number of active
rigs in the WCSB improved to 164 active rigs at September 30, 2021, compared to 71 active rigs at
September 30, 2020. The
CAOEC6 reported that for drilling in Canada, the total number of Operating Days in
the WCSB increased by approximately 210% for the three months ended
September 30, 2021, compared to the
same period in the prior year. For the nine months ended
September 30, 2021, the total number
of Operating Days in the WCSB increased by approximately 38%,
compared to the same period of the prior year.
Outlook
Due to increased activity levels in 2021 as a result of a
successful COVID-19 vaccine rollout and the lifting of government
restrictions, coupled with limited maintenance capital spending on
the rig fleet in prior years, as announced previously, Western has
increased its capital budget for 2021 by $2
million to approximately $8
million. The revised capital budget is expected to be
comprised of $7 million of
maintenance capital and $1 million of
expansion capital, with $5 million
allocated to the contract drilling segment and $3 million allocated to the production services
segment. Western believes the revised 2021 capital budget
provides a prudent use of cash resources to manage its balance
sheet. Western will continue to manage its costs in a
disciplined manner and make required adjustments to its capital
program as customer demand changes. Currently, 14 of
Western's drilling rigs and 26 of Western's well servicing rigs are
operating.
While crude oil prices reached historical lows in 2020 due to
the demand destruction caused by the COVID-19 pandemic, in 2021,
crude oil prices began to recover. However, uncertainty now
exists concerning the timing of COVID-19 vaccine distribution and
the potential impact of COVID-19 variants on possible future
government restrictions, both of which have an impact on demand in
the near term. The precise duration and extent of the adverse
impacts of the current macroeconomic environment and the COVID-19
pandemic on Western's customers, operations, business and global
economic activity remains highly uncertain at this time.
Additionally, the January 2021
executive order by the President of the
United States cancelling the permit that had allowed
construction of the Keystone XL pipeline, the uncertain timing of
completion of construction on the Trans Mountain pipeline expansion
and the threatened shutdown of Enbridge Line 5, have all resulted
in continued uncertainty regarding takeaway capacity.
However, activity levels in Canada
and the United States for the
remainder of 2021 are expected to be marginally higher than 2020
levels. Controlling fixed costs, maintaining balance sheet
strength and flexibility and managing through the unprecedented
market downturn are priorities for the Company, as prices and
demand for Western's services remain below historical levels.
Western continues to identify further opportunities to streamline
its support structure and implement additional cost control
measures.
As at September 30, 2021, Western
had $8.4 million drawn on its
$60.0 million credit facilities,
consisting of its $50.0 million
syndicated first lien credit facility (the "Revolving Facility")
and its $10.0 million committed
operating facility (the "Operating Facility" and together the
"Credit Facilities"), which mature on July
1, 2022. Western had drawn $12.5 million on its HSBC Bank Canada ("HSBC")
six-year committed term non-revolving facility with the
participation of Business Development Canada ("BDC" and together
the "HSBC Facility"), which matures on December 31, 2026. Western currently has
$211.3 million outstanding on its
second lien secured term loan facility (the "Second Lien
Facility"), which matures on January
31, 2023.
Oilfield service activity in Canada will be affected by the continued
development of resource plays in Alberta and northeast British Columbia which will be impacted by
pipeline construction, environmental regulations, and the level of
investment in Canada. In the short term, the largest
challenges facing the oilfield service industry are a lack of
qualified field personnel and ongoing liquidity concerns, due to
the prevailing customer preference to return cash to shareholders
through share buybacks, increased dividends or repayment of debt,
rather than grow production. In the medium term, Western's
rig fleet is well positioned to benefit from the LNG Canada
liquefied natural gas project now under construction in British
Columbia. It remains Western's view that its modern drilling
and well servicing rig fleets, reputation, and disciplined cash
management provide Western with a competitive advantage.
5 Source: Baker Hughes Company, 2021
Rig Count monthly press releases.
|
6 Source: CAOEC, monthly Contractor
Summary.
|
Non-IFRS Measures
Western uses certain measures in this press release which do not
have any standardized meaning as prescribed by International
Financial Reporting Standards ("IFRS"). These measures, which
are derived from information reported in the condensed consolidated
financial statements, 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. The Non-IFRS measure used
in this press release is identified and defined as follows:
Adjusted EBITDA
Earnings before interest and finance costs, taxes, depreciation
and amortization, other non-cash items and one-time gains and
losses ("Adjusted EBITDA") is a useful supplemental measure as it
is used by management and other stakeholders, including current and
potential investors, to analyze the Company's principal business
activities. Adjusted EBITDA provides an indication of the
results generated by the Company's principal operating segments,
which assists management in monitoring current and forecasting
future operations, as certain non-core items such as interest and
finance costs, taxes, depreciation and amortization, and other
non-cash items and one-time gains and losses are removed. The
closest IFRS measure would be net loss for consolidated
results.
The following table provides a reconciliation of net loss, as
disclosed in the condensed consolidated statements of operations
and comprehensive income, to Adjusted EBITDA:
|
Three months ended
September 30
|
Nine months ended
September 30
|
(stated in
thousands)
|
2021
|
2020
|
2021
|
2020
|
Net
loss
|
(10,397)
|
(10,486)
|
(29,791)
|
(33,858)
|
Income tax
recovery
|
(357)
|
(3,547)
|
(2,419)
|
(11,781)
|
Loss before income
taxes
|
(10,754)
|
(14,033)
|
(32,210)
|
(45,639)
|
Add
(deduct):
|
|
|
|
|
Depreciation
|
10,475
|
11,811
|
31,761
|
36,954
|
Stock based
compensation
|
39
|
84
|
219
|
319
|
Finance
costs
|
5,851
|
4,430
|
14,944
|
13,582
|
Other
items
|
(602)
|
(22)
|
(617)
|
(2,048)
|
Impairment of
property and equipment
|
-
|
-
|
-
|
11,500
|
Adjusted
EBITDA
|
5,009
|
2,270
|
14,097
|
14,668
|
Defined Terms:
Average active rig count (contract drilling): Calculated
as drilling rig utilization multiplied by the average number of
drilling rigs in the Company's fleet for the period.
Average active rig count (production services):
Calculated as service rig utilization multiplied by the average
number of service rigs in the Company's fleet for the period.
Drilling rig utilization: Calculated based on
Operating Days divided by total available days.
Operating Days: Defined as contract drilling days,
calculated on a spud to rig release basis.
Service Hours: Defined as well servicing hours
completed.
Service rig utilization: Calculated based on
Service Hours divided by available hours, being 10 hours per day,
per well servicing rig, 365 days per year.
Contract Drilling Rig Classifications:
Cardium class rig: Defined as any contract drilling rig
which has a total hookload less than or equal to 399,999 lbs (or
177,999 daN).
Montney class rig:
Defined as any contract drilling rig which has a total hookload
between 400,000 lbs (or 178,000 daN) and 499,999 lbs (or 221,999
daN).
Duvernay class rig:
Defined as any contract drilling rig which has a total hookload
equal to or greater than 500,000 lbs (or 222,000 daN).
Abbreviations:
- Barrel ("bbl");
- Basis point ("bps"): A 1% change equals 100 basis points and a
0.01% change is equal to one basis point;
- Canadian Association of Energy Contractors ("CAOEC");
- DecaNewton ("daN");
- International Financial Reporting Standards ("IFRS");
- Pounds ("lbs");
- Thousand cubic feet ("mcf");
- Western Canadian Sedimentary Basin ("WCSB");
- Western Canadian Select ("WCS"); and
- West Texas Intermediate ("WTI").
Forward-Looking Statements and Information
This press release contains certain statements or disclosures
relating to Western that are based on the expectations of Western
as well as assumptions made by and information currently available
to Western which may constitute forward-looking information under
applicable securities laws. All information and statements
contained herein that are not clearly historical in nature
constitute forward-looking information, and words and phrases such
as "may", "will", "should", "could", "expect", "intend",
"anticipate", "believe", "estimate", "plan", "potential",
"continue", "looking to", or the negative of these terms or
other comparable terminology are generally intended to identify
forward-looking information. Such information represents the
Company's internal projections, estimates or beliefs concerning,
among other things, an outlook on the estimated amounts and timing
of additions to property and equipment, anticipated future debt
levels and revenues or other expectations, beliefs, plans,
objectives, assumptions, intentions or statements about future
events or performance. This information involves known and
unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those
anticipated in such forward-looking information.
In particular, forward-looking information in this press release
includes, but is not limited to, statements relating to: commodity
pricing; the future demand for the Company's services and
equipment, in particular, in light of the low commodity price
environment associated with the COVID-19 pandemic and the related
economic environment; the potential impact of the ongoing COVID-19
pandemic on the oil and gas industry in Canada and the
United States, including the potential impacts of vaccine
rollouts and the lifting of government restrictions; the pricing
for the Company's services and equipment; the terms of
existing and future drilling contracts in Canada and the US and the revenue resulting
therefrom; the Company's maintenance and expansion capital plans
for 2021 and its ability to make changes thereto in response to
customer demands; the Company's liquidity needs including the
ability of current capital resources to cover Western's financial
obligations; expectations as to the changes in crude oil
transportation capacity through pipeline developments and
uncertainties relating thereto; expectations as to the benefits of
the LNG Canada natural gas project in British Columbia on the Company and its rig
fleet; the potential impact of changes to laws, governmental and
environmental regulations; the expectation of continued investment
in the Canadian crude oil and natural gas industry; the development
of Alberta and British Columbia resource plays; expectations
relating to producer spending and activity levels for oilfield
services; the Company's approach to management of its budget and
operations; the Company's ability to maintain a competitive
advantage; and the Company's ability to find and maintain enough
field crew members.
The material assumptions in making the forward-looking
statements in this press release include, but are not limited to:
demand levels and pricing for oilfield services; demand for crude
oil and natural gas and the price and volatility of crude oil and
natural gas; pressures on commodity pricing; the continued business
relationships between the Company and its significant customers;
the Company's competitive advantage; crude oil transport, pipeline
and LNG export facility approval and development; the Company's
ability to finance its operations; the effectiveness of the
Company's cost structure and capital budget; the effects of
seasonal and weather conditions on operations and facilities; the
competitive environment to which the various business segments are,
or may be, exposed in all aspects of their business and the
Company's competitive position therein; the ability of the
Company's various business segments to access equipment (including
spare parts and new technologies); assumptions with respect to
global economic conditions and the accuracy of the Company's market
outlook expectations for 2021 and in the future; the Company's
expectations regarding the impacts, direct and indirect, of the
COVID-19 pandemic on our business, customers, business partners,
employees, supply chain, other stakeholders and the overall
economy; changes in laws or regulations; currency exchange
fluctuations; the ability of the Company to attract and retain
skilled labour and qualified management; the ability to retain and
attract significant customers; the ability to maintain a
satisfactory safety record; and general business, economic and
market conditions.
Although Western believes that the expectations and assumptions
on which such forward-looking statements and information are based
on 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, the risk that
improvements in the commodity price environment arising from the
rollout of vaccines and the lifting of government restrictions will
not continue such that prices will reduce and low prices will be
sustained for an indefinite period, the impact of the COVID-19
pandemic and the resulting effects on economic conditions,
restrictions imposed by public health authorities or governments,
fiscal and monetary responses by governments and financial
institutions, the potential need to issue additional debt or equity
and the potential resulting dilution of shareholders and
disruptions to global supply chains and other general industry,
economic, market and business conditions. Readers are
cautioned that the foregoing list of risks, uncertainties and
assumptions are not exhaustive. Additional information on
these and other risk factors that could affect Western's operations
and financial results are discussed under the heading "Risk
Factors" in Western's annual information form for the year ended
December 31, 2020 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 any
forward-looking statements and information, whether as a result of
new information, future events or otherwise, unless so required by
applicable securities laws.
SOURCE Western Energy Services Corp.