Xtreme Coil Drilling Corp. (TSX:XDC) ("Xtreme Coil", the "Company") announces
financial and operating results for the three ("2009 3Q") and nine months ended
September 30, 2009, with comparative data for the same periods in 2008 and for
the year ended December 31, 2008 and provides an operations update.
Highlights
- record EBITDA of $7.6 million in 2009 3Q, up 28 percent from 2008 3Q
- record gross margin of $11.7 million in 2009 3Q, up 44 percent from 2008 3Q
- record operating days at 1,022 in 2009 3Q, up 8 percent from 2008 3Q
- at September 30, 2009 13 rigs operating
- completed XTC 200 DTRPLUS rig for re-entry drilling
In 2009 3Q, Xtreme Coil reported record EBITDA of $7.6 million, record gross
margin of $11.7 million and a record 1,022 operating days. The improvement in
EBITDA and gross margin over the previous quarter was primarily a result of
increased operating days in Mexico, where the two rigs that commenced operations
late in 2009 2Q enjoyed a full quarter of operations during 2009 3Q and two
additional rigs, recently mobilized to Mexico under previously announced
contracts, commenced operations late in 2009 3Q. Net income of $2.7 million for
2009 3Q was also improved over the previous quarter as rig operating results and
gains on foreign exchange were only partially offset by higher income taxes and
SG&A.
Xtreme Coil uses both GAAP and non-GAAP measures to assess performance and
provides non-GAAP measures such as EBITDA and gross margin as supplemental
information to investors. EBITDA and gross margin do not have standardized
meanings prescribed by GAAP. Xtreme Coil's method of defining these measures is
provided in the Non-GAAP Measures section of Management's Discussion and
Analysis filed annually and quarterly on SEDAR.
Operations Update
Following the end of 2009 3Q, three rigs continue to drill in the Rocky Mountain
region of the United States and ten rigs are drilling in Mexico, all under
long-term contracts.
In October, Xtreme Coil completed customization work on a Coil Over Top Drive(R)
("COTD(TM)") rig in south Texas to prepare it for re-entry drilling
opportunities in ithe Middle East. On completion of the XTC 200DTRPLUS, Xtreme
Coil hosted on-site tours and rig demonstrations for industry customers and
colleagues to familiarize them with this rig's design and operational
attributes. The rig features an alternating current ("AC") electrically-powered
200,000 lb. Xtreme Coil injector and new functionality to allow manipulation of
the injector hydraulically for connection to a live well pressure lubricator.
Modifications to the rig's mast make it capable of handling lubricator
assemblies of up to 120 feet for pressure deployment of downhole tools. Also
during 2009 3Q, we constructed an Xtreme Coil-designed substructure to elevate
the XTC 200DTRPLUS rig above wellheads that are typical for Middle East and
North Africa work scopes.
Subject to approval by Xtreme Coil's lenders, and in connection with a
previously executed pre-bid agreement and letter of understanding between Xtreme
Coil and a major diversified oilfield services company (the "Service Company"),
Xtreme Coil intends to enter into a definitive agreement pursuant to which the
Service Company will fund up to US$5.7 million in customization costs for an XTC
200DTRPLUS drilling rig and pay for certain significant mobilization and
start-up costs of deploying the rig to the Middle East upon project award. Under
the terms of the proposed agreement, which is expected to be executed upon
approval of Xtreme Coil's lenders and at Xtreme Coil's sole discretion, the
Service Company would fund a three-year loan for up to US$5.7 million of the
customization work mentioned above, repayable exclusively out of day rate
revenues generated by the XTC 200DTRPLUS drilling rig during the term of the
loan, with a balloon payment due at maturity for any unpaid balance. The Service
Company would have preferential access to the rig for a period of three years.
Recently, an Xtreme Coil COTD(TM) rig working in the Wattenberg field of the
Denver-Julesburg basin surpassed its previous record drilling time by achieving
"spud-to-spud" times of just over 50 hours in 8,000 foot directional wells.
("Spud-to-spud" describes the time from commencement of drilling the subject
well through to positioning the rig on the next well location so that drilling
can begin again.) Our customer commented recently on "technological advances"
being fundamental to achieving these time and depth improvements that were not
previously possible. Throughout Xtreme Coil's operations in the United States
and Mexico, our day-to-day emphasis remains on operating our rigs efficiently
and safely for our employees, our customers and our vendors.
During the remainder of 2009, we are committed to continuing activities that
advance identified potential projects. At the same time, we are actively
pursuing new business opportunities. Our objective is to introduce and deploy
Xtreme Coil's innovative drilling rigs and expertise internationally, including
oil and natural gas producing regions in the Middle East, North Africa,
Australia and Asia.
Tom Wood Rod Uchytil
Executive Chairman President and Chief Executive Officer
2009 Third Quarter Highlights
($ thousand, except where indicated)
2009 Sep 30 2008 Sep 30 % Change
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Revenue 26,153 26,328 (1)
Gross Margin (1) 11,736 8,150 44
EBITDA (1) 7,569 5,899 28
EBITDA per share (1) ($) 0.14 0.15 (7)
Net income 2,734 1,278 114
Net income per common share -
basic ($) 0.05 0.03 67
Weighted average common shares -
basic (thousand) 52,845 40,560 30
Capital assets 244,928 231,392 6
Total assets 318,948 279,457 14
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Operating days (2) 1,022 947 8
Rig utilization (percentage) 69 83 (17)
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(1) see Non-GAAP measures in MD&A
Management's Discussion and Analysis ("MD&A")
For the three and nine months ended September 30, 2009
($ thousand except where indicated)
Management for Xtreme Coil Drilling Corp. ("Xtreme Coil", the "Company") based
this MD&A on operating and financial results for the three and nine months ended
September 30, 2009 and provides comparative information for the three and nine
months ended September 30, 2008. Management recommends reading this discussion
and analysis of Xtreme Coil's financial condition and results of operations in
conjunction with the audited consolidated financial statements and MD&A for the
year ended December 31, 2008. Management prepares the consolidated financial
statements in accordance with Canadian generally accepted accounting principles
("GAAP") and expresses all amounts in Canadian dollars ("CAD") unless otherwise
stated. This MD&A is based on information available as at November 10, 2009.
Forward-Looking Statements
This MD&A, or documents incorporated herein, may include certain information,
statements and assumptions (collectively, "forward-looking statements")
regarding management's view of future events, expectations, plans, initiatives
or prospects constituting forward-looking statements within the meaning of
securities laws. Forward-looking statements may relate to Xtreme Coil's future
outlook and anticipated events or results and may include statements related to
current and anticipated future contracts; commodity pricing; rates of currency
exchange; operating expenses; rig building, completion or deployment; capital
expenditures and other guidance provided throughout this MD&A.
These statements are based on certain factors and assumptions including, but not
limited to: assessment of current and projected future operations; ongoing and
future business negotiations and opportunities to enter new, continue or extend
existing contracts; the availability and cost of financing; foreign currency
exchange rates; timing and magnitude of capital expenditures; expenses and other
variables affecting rig operating, modification and construction expenses; the
ability of vendors to provide rig component equipment, services and supplies,
including labor, in a cost-effective and timely manner; the issuance of
applied-for patents; changes in tax rates; and government regulations. Although
Xtreme Coil considers the assumptions reasonable, based on information available
to management as at November 10, 2009, the assumptions may ultimately prove
incorrect.
Forward looking-statements are also subject to certain factors, including risks
and uncertainties, which could cause actual results to differ materially from
management's current expectations. These factors include, but are not limited
to: the cyclical nature of drilling market demand, currency exchange rates, and
commodity prices; access to credit and to equity markets; the availability of
qualified personnel; competition for customers from other drilling contractors,
labour and vendor-provided rig components.
Management's assumptions included the following: continued operation of the
existing fleet of drilling equipment without significant additional capital
expenditures; meeting the terms of the Company's credit facility; ongoing access
to key supplies required to continue operating equipment, including fuel;
continued successful performance of drilling and related equipment; expectations
regarding gross margin; recruitment and retention of qualified personnel;
continuation or extension of existing long-term contracts; revenue expectations
related to shorter-term drilling activity; willingness and ability of customers
to remit amounts owing to Xtreme Coil in accordance with normal industry
practices; and management of accounts receivable in direct relation to revenue
generation.
Management considered the following risk factors when preparing the MD&A:
fluctuations in crude oil and natural gas commodity prices, supply and demand;
fluctuation in currency exchange and interest rates; financial stability of
Xtreme Coil's customers; current and future applications for Xtreme Coil's
proprietary technology; competition from other drilling contractors; regulatory
and economic conditions; environmental constraints; changes to government
legislation; international trade barriers or restrictions; global political and
military events.
Financial outlook information contained in this MD&A about prospective results
of operations, financial position or cash flow from operating activities is
based on assumptions about future events, including economic conditions and
proposed courses of action, and on management's assessment of relevant
information currently available. Readers are cautioned such financial outlook
information contained in this MD&A is not appropriate for purposes other than
for which it is disclosed herein. Readers should not place undue importance on
forward-looking information and should not rely on this information as of any
other date. Except as required pursuant to applicable securities laws, Xtreme
Coil disclaims any intention, and assumes no obligation, to update or revise any
forward-looking statements to reflect actual results, whether as a result of new
information, future events, changes in assumptions, changes in factors affecting
such forward-looking statements or otherwise.
Description of the Business
Xtreme Coil is a drilling contractor that designs, builds and operates
proprietary Coil Over Top Drive(R) ("COTD(TM)") drilling rigs. These drilling
rigs employ Xtreme Coil's patented and patent-pending coil designs and
technologies. In addition to their coil drilling capabilities, these drilling
rigs also have the ability to drill with conventional jointed drill pipe. The
Company has historically built these dual-purpose COTDTM drilling rigs in Canada
under contracts with several third parties and operates them internationally
under contracts with oil and natural gas exploration and production ("E&P")
companies and global integrated oilfield service providers. Xtreme Coil
currently conducts land drilling operations in the United States and Mexico and
is actively pursuing opportunities to expand its contract drilling services
within and beyond these current core regions of operation.
Xtreme Coil's head office is in Houston, Texas. Xtreme Coil also has a corporate
office in Calgary, Alberta, Canada and an operations office near Poza Rica, in
the state of Veracruz, Mexico.
As at September 30, 2009, Xtreme Coil held nine patents related to new
technologies for drilling with coiled tubing and conventional drill pipe as well
as certain rig transportation methods. The United States Patent and Trademark
office has issued six patents, the Canadian Intellectual Property Office has
issued two patents and jurisdictions in Eurasia have issued one patent to Xtreme
Coil. In addition, Xtreme Coil has more than 60 patent-related applications in
the United States, Canada and other jurisdictions. The Company's issued and
applied-for patents collectively cover coiled tubing drilling and transportation
technology including equipment and methods for coiled tubing drilling to depths
of 3,000 meters (10,000 feet) or more with large diameter pipe and up to 9,000
meters (30,000 feet) for re-entry applications with smaller diameter pipe.
As at September 30, 2009, Xtreme Coil had ten drilling rigs working under
long-term contracts with a global integrated oilfield services provider in the
Chicontepec development project in the state of Veracruz, Mexico. The ten rigs
working in Mexico reflect new long-term contracts executed in September 2009.
Six of the rigs had been working in this project since 2008 and four additional
rigs commenced operations in 2009. Two of those four rigs commenced operations
in late 2009 2Q and the other two rigs commenced operations in late 2009 3Q.
In addition, the Company had another three drilling rigs working in the United
States under long-term contracts with a large independent E&P company. Xtreme
Coil has designed seven models of COTD(TM) drilling rigs with five designs
completed and deployed and one ready to deploy to field operations.
At September 30, 2009, of the 16 COTDTM drilling rigs the Company had in service:
- ten rigs operating under long-term contracts in Mexico,
- three rigs operating under long-term contracts in the United States,
- two rigs stacked in the United States, and
- one rig undergoing customization in preparation for possible deployment from
the United States to the Middle East.
Xtreme Coil's early capital plans called for the construction of 18 drilling
rigs. The Company made the decision to temporarily suspend construction on the
last two of these rigs in 2008 3Q when economic uncertainty significantly
decreased demand in the United States drilling market. As such, in addition to
the 16 drilling rigs that were completed, the Company purchased, and retains in
stock, a limited number of components for the two additional drilling rigs for
which construction was suspended.
Xtreme Coil's common shares trade on the Toronto Stock Exchange under the symbol
"XDC".
Selected Quarterly Financial Information (unaudited)
Three months ended
2009 Sep 30 2009 Jun 30 2009 Mar 31 2008 Dec 31
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Revenue 26,153 23,052 22,914 28,924
EBITDA (1) 7,569 5,379 6,187 6,539
EBITDA per share (1) ($) 0.14 0.13 0.15 0.16
Net income 2,734 1,926 2,379 2,508
Net income per share ($) 0.05 0.05 0.06 0.06
Capital assets 244,928 254,070 271,366 238,345
Total assets 318,948 346,090 326,098 289,394
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Operating days (2) 1,022 878 803 949
Rig utilization
(percentage) 69 60 56 68
Weighted average rigs in
service 16.0 16.0 16.0 15.2
Completed rigs, end of
quarter 16 16 16 16
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2008 Sep 30 2008 Jun 30 2008 Mar 31 2007 Dec 31
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Revenue 26,328 10,527 12,335 12,416
EBITDA (1) 5,899 715 2,253 2,237
EBITDA per share (1) ($) 0.15 0.02 0.07 0.07
Net income (loss) 1,278 (1,541) 496 (204)
Net income (loss) per
share ( $ ) 0.03 (0.04) 0.01 (0.01)
Capital assets 231,392 211,948 192,855 188,913
Total assets 279,457 249,043 219,049 213,464
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Operating days (2) 947 473 579 579
Rig utilization
(percentage) 83 52 74 77
Weighted average rigs in
service 12.4 10.0 9.0 8.1
Completed rigs, end of
quarter 15 12 11 11
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(1) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization, stock-based compensation, foreign exchange gains or losses
and gains or losses on sale of equipment. EBITDA per share is defined as
EBITDA divided by the Company's basic number of common shares.
Management believes EBITDA and EBITDA per share are useful supplemental
measures of the financial performance of Xtreme Coil's principal
business activities before considering how activities are financed or
taxed, and before the impact of stock-based compensation, foreign
exchange rate fluctuations or sales of equipment. A reconciliation of
EBITDA to net income is presented in the Non- GAAP measures section of
this MD&A.
(2) see Non- GAAP measures
During the preceding eight quarters, Xtreme Coil's revenue, EBITDA, net income,
assets and operating days have shown general improvement as the Company
increased the size of its drilling rig fleet and secured long-term contracts for
its rigs, though favourable trends have been partially offset by the
deterioration in the value of the United States dollar ("USD") relative to the
CAD in the current year. In the near term, we expect the primary source of
revenue will be from the 13 rigs operating under long-term contracts at the end
of 2009 3Q.
For the three months ended September 30, 2009, the Company's utilization rate of
69 percent (with 13 rigs working at the end of the period out of 16 total rigs)
was 14 percent lower than the utilization rate of 83 percent recorded in the
comparative period in 2008 (with 13 rigs working at the end of the period out of
15 total rigs).
Xtreme Coil reported increased operating days during the three and nine months
ended September 30, 2009, compared to 2008. This reflected the increased number
of rigs in the operating fleet and the additional number of rigs operating under
long-term contracts. The achievement of 1,022 operating days in 2009 3Q
represents an all-time record since Xtreme Coil's commencement of operations in
2006.
Results of Operations
Revenue
Three months ended Nine months ended
2009 2008 2009 2008
Sep 30 Sep 30 % Change Sep 30 Sep 30 % Change
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Total revenue 26,153 26,328 (1) 72,119 49,190 47
Operating days 1,022 947 8 2,703 1,999 35
Revenue per operating
day 25.6 27.8 (8) 26.7 24.6 9
Rig utilization
(percentage) 69 83 (17) 62 70 (11)
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At September 30, 2009, Xtreme Coil's fleet consisted of 16 rigs (2008 - 15
rigs). As we ramped up construction, commissioning and deployment of new
drilling rigs during 2008, operating days, revenues and revenue per operating
day all increased. During the three and the nine months ended September 30,
2009, we had a greater proportion of our larger rigs operating than in the
comparable 2008 periods. The higher dayrates commanded by these larger rigs,
combined with the effect of a stronger USD relative to the CAD, resulted in
increased revenue per operating day for the nine months ended September 30, 2009
compared to the same period in 2008. In contrast, higher average mobilization
revenue and higher average third party revenues related to reimbursable expenses
in 2008 overshadowed the effect of having a greater percentage of larger rigs
working and a slightly stronger USD for the three months ended September 30,
2009 compared to the same period in 2008.
Historically, all drilling contracts under which the Company operates its
equipment have been denominated primarily in USD. We anticipate the continued
operation under long-term contracts of our ten rigs in Mexico and three rigs in
the United States will contribute to revenue stability during the remainder of
2009. Recently, there have been news reports suggesting PEMEX will be reviewing
their development plans for Chicontepec; however, management continues to
believe this will not adversely affect the utilization of our ten rigs currently
under long-term contract in that area. Furthermore, management believes demand
for drilling equipment in Mexico during 2009 will remain strong as the country
continues to focus on developing existing hydrocarbon reserves to replace
historic declines in production rates.
In response to continuing weakness in drilling market conditions in the United
States and Canada, management intends to continue efforts to market
internationally what we believe are the advantages of our newer and efficient
fleet of COTDTM drilling rigs. We continue aggressive efforts to market to
existing customers and secure business from a broader range of potential
customers. We are actively pursuing energy projects in the Middle East, North
Africa, Australia and Asia. Management believes there is potential to secure
contracts in these markets which could utilize several of Xtreme Coil's rigs and
potentially increase utilization, revenue and market diversification.
Operating Expenses
Three months ended Nine months ended
2009 2008 2009 2008
Sep 30 Sep 30 % Change Sep 30 Sep 30 % Change
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Operating expenses 14,417 18,178 (21) 43,204 35,705 21
Operating expenses
(percentage of revenue) 55 69 (20) 60 73 (18)
Operating expenses per
operating day 14.1 19.2 (27) 16.0 17.9 (11)
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The increase in operating expenses year-over-year primarily reflects the higher
number of operating days and stronger value of the USD relative to CAD on our
USD denominated expenses. Operating expenses as a percentage of revenue,
continued to decline in 2009 when compared to the prior year periods as fixed
infrastructure and other non-rig specific operational expenses did not increase
proportionally over these periods. Operating expenses per day also showed
improvement for 2009 3Q compared to the same period in 2008 due to lower
downtime and higher costs incurred during the rollout of the XTC 400 series
rigs.
Gross Margin(1)
Three months ended Nine months ended
2009 2008 2009 2008
Sep 30 Sep 30 % Change Sep 30 Sep 30 % Change
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Gross margin 11,736 8,150 44 28,915 13,485 114
Gross margin
(percentage of revenue) 45 31 45 40 27 48
Gross margin per
operating day 11.5 8.6 34 10.7 6.7 60
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(1) see Non-GAAP measures
The increase in total gross margin, gross margin per operating day and gross
margin percentage for the three and nine months ended September 30, 2009
improved primarily due to increased operating days and the resulting increase in
revenues. Certain operational expenses are fixed in nature and any increase in
operating days produces significant improvement in these metrics. In addition,
increasing operating days allow Xtreme Coil to achieve certain efficiencies and
economies of scale which improves gross margins and gross margin percentages.
Selling, General and Administration Expense ("SG&A")
Three months ended Nine months ended
2009 2008 2009 2008
Sep 30 Sep 30 % Change Sep 30 Sep 30 % Change
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SG&A 4,167 2,251 85 9,780 4,617 112
SG&A (percentage of
revenue) 16 9 78 14 9 56
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SG&A for the three and nine months ended September 30, 2009 was higher primarily
due to development of administrative infrastructure to support expanded
international operations, higher professional fees and increased bonus expense.
As the Company continues to expand its business and SG&A has increased, focus
has been directed to finding ways to control the growth of these costs as a
percentage of revenues, including progressively moving certain outsourced
services to in-house permanent personnel.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")(1)
Three months ended Nine months ended
2009 2008 2009 2008
Sep 30 Sep 30 % Change Sep 30 Sep 30 % Change
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EBITDA 7,569 5,899 28 19,135 8,868 116
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(1) see Non-GAAP measures
For the three and nine months ended September 30, 2009, the increase in EBITDA
was a result of increased operating days, higher average dayrates, and a
decrease in direct operating expenses as a percentage of revenue.
Depreciation and Amortization
Three months ended Nine months ended
2009 2008 2009 2008
Sep 30 Sep 30 % Change Sep 30 Sep 30 % Change
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Depreciation and
amortization 3,083 2,361 31 8,803 5,612 57
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Depreciation charges for Xtreme Coil's drilling equipment are based on the
units-of-production method. Depreciation for drilling equipment comprises the
majority of depreciation charges. This method generally increases depreciation
charges in direct proportion to increased operating days. For the three and nine
months ended September 30, 2009, the increase in depreciation and amortization
is proportionate to the increase in operating days and is primarily due to the
increase in equipment engaged in active field operations.
Stock-based Compensation
Three months ended Nine months ended
2009 2008 2009 2008
Sep 30 Sep 30 % Change Sep 30 Sep 30 % Change
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Stock-based compensation 350 420 (17) 943 720 31
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For the three months ended September 30, 2009, stock-based compensation
decreased as fewer options were granted compared to the same period in 2008.
However, for the nine months ended September 30, 2009, stock-based compensation
increased overall as our operations in the United States and Mexico grew. The
board of directors responded to this growth by granting additional options to
purchase common shares to employees.
Foreign Exchange
Three months ended Nine months ended
2009 2008 2009 2008
Sep 30 Sep 30 % Change Sep 30 Sep 30 % Change
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Foreign exchange (gain)
loss (1,969) 309 n/a (2,744) 231 n/a
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Foreign exchange gain or loss results from translation of the portion of
revolving debt denominated in USD as well as operational revenues and expenses
denominated in USD and Mexico pesos ("MXN"). Foreign exchange gains and losses
result directly from the fluctuation in values of the CAD relative to the USD
and the MXN. Drilling operations in the United States and Mexico were
denominated primarily in USD.
For the three and nine months ended September 30, 2009, the foreign exchange
gain increased primarily due to the effect of the decreased value of the USD in
relation to the CAD on the debt denominated in USD, offset by increasing
revenues denominated in USD.
Net Interest Expense
Three months ended Nine months ended
2009 2008 2009 2008
Sep 30 Sep 30 % Change Sep 30 Sep 30 % Change
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Net Interest expense 680 898 (24) 2,559 1,981 29
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During 2008, Xtreme Coil drew on its credit facilities primarily to complete
construction of drilling rigs which totalled 16 at December 31, 2008, as well as
to provide cash for ongoing operating requirements and to establish operations
in Mexico. These activities caused the Company's debt balances to peak in early
2009 and subsequently decline, as cash generated from operating activities and
proceeds from equity issuance in 2009 allowed the Company to reduce debt by
$19,565 (including the effect of foreign exchange gains and losses) and fund
$15,488 in capital expenditures (including the effect of foreign exchange gains
and losses) to upgrade rigs for anticipated work.
Net interest expense for the three months ended September 30, 2009 decreased
compared to the same period in 2008 due to lower average debt balances as a
result of debt repayments during 2009 3Q, in addition to lower average interest
rates for the same period.
Net interest expense for the nine months ended September 30, 2009, increased
compared to the same period in 2008, due to higher average debt balances
partially offset by lower average interest rates on the Company's variable rate
debt facilities.
Income (Loss) Before Tax
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Three months ended Nine months ended
2009 2008 2009 2008
Sep 30 Sep 30 % Change Sep 30 Sep 30 % Change
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Income (loss) before tax 5,463 1,873 192 9,612 286 3,261
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For the three and nine months ended September 30, 2009, income before tax
increased over prior periods primarily as a result of Xtreme Coil's expanding
operations and transition from a construction phase to an operational phase. As
the Company secured long-term drilling contracts and increased revenues,
operating days and income before tax increased.
Income Taxes
Three months ended Nine months ended
2009 2008 2009 2008
Sep 30 Sep 30 % Change Sep 30 Sep 30 % Change
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Income tax recovery
(expense) (2,729) (595) 359 (2,573) (53) 4,755
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For the three months ended September 30, 2009 versus the same period in the
prior year, tax expense increased primarily due to an accrual for certain
withholding taxes relating to the Company's international tax structure and the
impact of the intercompany sale of two drilling rigs. For the nine months ended
September 30, 2009, the increased tax expense over the prior year period
reflects the 2009 3Q accrual of certain withholding taxes relating to the
Company's international tax structure and the impact of the intercompany sale of
four drilling rigs, partially offset by the recovery recorded in 2009 1Q to
reflect a lower effective tax rate applicable to the Company's tax structure.
Net Income (Loss)
Three months ended Nine months ended
2009 2008 2009 2008
Sep 30 Sep 30 % Change Sep 30 Sep 30 % Change
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Net income (loss) 2,734 1,278 114 7,039 233 2,921
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The increase in net income in for the three and nine months ended September 30,
2009 primarily reflects increased operating profit from expanded operations,
partially offset by higher taxes (as discussed above).
Financial Condition, Liquidity and Capital Resources
($ million) 2009 Sep 30 2008 Dec 31 % Change
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Long-term liabilities 35.4 49.1 (28)
Less: working capital 36.5 6.2 489
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Net debt (1) (1.1) 42.9 n/a
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(1) see Non-GAAP measures
The decrease in net debt and the corresponding increase in working capital at
September 30, 2009, as compared to December 31, 2008, are primarily related to
the two equity offerings which closed in 2009 2Q. Net proceeds from these
offerings totalled $44,446.
Year-to-date through September 30, 2009, proceeds from the issuance of equity
and cash generated from operating activities enabled the Company to reduce debt
by $19,565 (including foreign exchange gains and losses), fund capital
expenditures of $15,488 and increase cash and cash equivalents by $18,499.
Capital Expenditures and Commitments
Three months ended Nine months ended
2009 2008 2009 2008
($ million) Sep 30 Sep 30 % Change Sep 30 Sep 30 % Change
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Capital expenditures 11.0 21.8 (50) 15.5 47.9 (68)
Commitments 2.2 4.5 (51) 5.9 4.5 31
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Capital expenditures and commitments decreased in the three and nine months
ended September 30, 2009, compared to 2008. At September 30, 2008, six rigs were
under construction. By year-end 2008, the Company had completed construction of
the 16 rigs and suspended the construction of an additional two rigs due to
market conditions discussed in "Description of the Business". Capital spending
in the nine months ended September 30, 2009, was primarily related to
modifications conducted in the first half of the year on the four rigs
subsequently moved to commence operations in Mexico and modifications conducted
in the third quarter on an idle rig to make it suitable for re-entry work in the
Middle East.
In May 2008, Xtreme Coil entered into an agreement for credit facilities with
its existing lender and another lender on a syndicated basis. The credit
facilities included a $15,000 operating loan facility and a revolving extendible
facility, initially set at $70,000 which reduced as scheduled to $60,000 at
December 31, 2008. The credit facilities required Xtreme Coil to maintain
certain financial covenants. At December 31, 2008, and at March 31, 2009, Xtreme
Coil was not in compliance with two of these covenants related to funded debt to
EBITDA and interest coverage. The syndicate provided waivers with regard to
covenant non-compliance for twelve months following the respective balance sheet
dates of non-compliance.
On May 29, 2009, Xtreme Coil executed the second amendment to the credit
agreement. The amendment extends the existing credit facilities, continuing the
$15 million operating loan facility ("Tranche A") and converting the $60 million
revolving credit facility into an extendible term loan ("Tranche B"). Terms of
Tranche A remain essentially unchanged. The amended Tranche B facility requires
minimum principal payments based on a five-year amortization of the outstanding
balance at May 29, 2009. Quarterly installments in arrears began June 30, 2009,
and continue until the stated maturity date of January 4, 2011, at which time
the remaining facility balance becomes due and payable unless extended. Under
the terms of the amended agreement, Xtreme Coil may request extension of the
facility at any time 90 days before the stated maturity date. A debt service
coverage ratio covenant replaces the EBIT interest coverage and funded debt to
EBITDA covenants that previously applied to quarterly financial reporting
periods. Xtreme Coil was in compliance with all covenants at September 30, 2009.
At September 30, 2009, Xtreme Coil had no outstanding balance on the operating
loan facility ("Tranche A") (at December 31, 2008, $7,878) and $47,243 on the
extendible term loan, of which $11,838 was classified as current ("Tranche B")
(at December 31, 2008, $58,930, of which $9,825 was classified as current).
Xtreme Coil maintains ongoing communication with its banking syndicate and
believes its relationship with the syndicate is good and the syndicate is in
sound financial condition.
This table summarizes Xtreme Coil's contractual obligations at September 30, 2009.
Total Less than 1 1 - 3 4 - 5
Contractual Obligations year years years
----------------------------------------------------------------------------
Accounts payable and accrued
liabilities 12,544 12,544 - -
Income tax payable 1,792 1,792 - -
Operating leases 1,573 707 642 224
Extendible term loan 47,243 11,838 35,405 -
Commitments 2,200 2,200 - -
----------------------------------------------------------------------------
Total contractual obligations 65,352 29,081 36,047 224
----------------------------------------------------------------------------
The table above assumes the Company's credit facility is not extended and
payments are made as required under the existing credit agreement. Interest
payments are not included in the table. Management believes cash on hand, cash
flow from operating activities and amounts available under Xtreme Coil's credit
facilities will be sufficient to fund payments due in less than one year.
Segmented Information
This table summarizes results of operations for Xtreme Coil's three geographic
operating segments of Canada, Mexico and the United States.
Three months ended Nine months ended
2009 2008 2009 2008
Revenue Sep 30 Sep 30 %Change Sep 30 Sep 30 %Change
----------------------------------------------------------------------------
Canada - 1,306 (100) - 3,783 (100)
United States 5,688 18,465 (69) 18,896 38,850 (51)
Mexico 20,465 6,557 212 53,223 6,557 712
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total 26,153 26,328 (1) 72,119 49,190 47
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Outstanding Common Shares
As at September 30, 2009, Xtreme Coil had outstanding options to purchase
3,817,000 common shares (2008 3Q - 2,504,000) at a weighted average exercise
price of $4.68 per share (2008 3Q - $5.89).
Share capital on November 10, 2009 was $252,846 and 52,871,669 common shares
were issued and outstanding. Additionally, Xtreme Coil has outstanding purchase
warrants entitling the holder to purchase a total of 1,000,000 common shares and
options outstanding entitling the holders to purchase 3,791,666 common shares.
Disclosure Controls and Procedures and Internal Controls over Financial Reporting
The Chief Executive Officer and Chief Financial Officer (the "certifying
officers") are responsible for establishing and maintaining disclosure controls
and procedures ("DC&P") and internal control over financial reporting ("ICFR")
for the Company, in accordance with the requirements of Multilateral Instrument
52-109 Certification of Disclosure in Issuers' Annual and Interim Filings.
Xtreme Coil's certifying officers cannot guarantee the Company's DC&P and ICFR
will prevent all errors and all fraud. A control system, no matter how
well-designed and implemented, can provide only reasonable assurance of meeting
the control system's objectives. Consideration must also be given to the
benefits of controls in relation to the cost of such controls. Due to the
inherent limitations in any control system, no evaluation of controls can
absolutely assure detection of all control issues within a company. Inherent
limitations include the potential for faulty judgments in decision-making and
the occurrence of breakdowns resulting from simple errors and mistakes.
Individual acts by some persons, or collusion by two or more people, can
circumvent controls and management can override the controls. Due to the
inherent limitations in a cost-effective control system, misstatements due to
error or fraud may occur and may not be detected.
DC&P are intended to provide reasonable assurance the Company will disclose
required information, in accordance with regulatory reporting requirements,
within the time periods specified. As at September 30, 2009, the certifying
officers have evaluated the design and effectiveness of the Company's DC&P.
Based on their evaluation, they have concluded DC&P for Xtreme Coil are designed
and operating effectively to provide reasonable assurance that material
information relating to the Company, including its consolidated subsidiaries, is
made known to them by others within those entities in a timely manner.
ICFR are intended to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of the consolidated financial statements
for external purposes in accordance with Canadian GAAP. As at September 30,
2009, the certifying officers have evaluated the design and effectiveness of the
Company's ICFR. Based on their evaluation, they have concluded ICFR for Xtreme
Coil are effective, but there are control deficiencies discussed below.
Xtreme Coil had a limited number of staff distributed among several
geographically-dispersed locations. This has created situations where it was not
feasible to achieve complete segregation of duties. Also, due to the limited
number of staff in different locations, Xtreme Coil has not had a sufficient
number of finance personnel with all of the technical accounting knowledge to
address all non-routine accounting transactions that may arise, particularly
where expertise is required in specific country regulations, including taxation.
During 2009, management has worked to mitigate the risk resulting from these
deficiencies by emphasizing the oversight and diligence of the certifying
officers. The Company has hired qualified financial reporting and accounting
personnel, and engaged the services of qualified taxation consultants to assist
with certain complex and non-routine accounting and tax issues that may arise.
In addition, Xtreme Coil has centralized the corporate accounting function in
the Houston, Texas office.
Furthermore, during 2009 3Q United States-based general accounting activities
were moved from Casper, Wyoming to the Company's Houston, Texas headquarters in
an effort to reduce costs and enhance coordination and efficiency.
Non-GAAP Measures
Xtreme Coil uses both GAAP and non-GAAP measures to assess performance and
provides non-GAAP measures as supplemental information to investors. 'Operating
days', 'utilization', 'gross margin', 'EBITDA' and 'net debt' do not have
standardized meanings prescribed by GAAP. Xtreme Coil's method of calculating
operating days, rig utilization, gross margin, EBITDA and net debt may differ
from methods used by other companies and may not be comparable to measures used
by others.
Operating Days
Operating days represent the total of all drilling, moving, standby and other
revenue days for each drilling rig in the fleet during the period. Management
uses operating days to measure rig utilization which quantifies the
revenue-generating activity of the fleet of drilling rigs.
Rig Utilization
Xtreme Coil calculates rig utilization as total operating days of each rig
divided by total days in service for each rig.
Gross Margin
Gross margin represents the revenue minus operating expenses. Management
believes gross margin is a useful supplemental measure of the financial
performance of Xtreme Coil's principal business activities before considering
how activities are financed or taxed, as well as other expenses not closely
associated with activity levels. The following is a reconciliation of gross
margin to net income as calculated in accordance with GAAP.
Three months ended Nine months ended
2009 Sep 30 2008 Sep 30 2009 Sep 30 2008 Sep 30
----------------------------------------------------------------------------
Net income (loss) 2,734 1,278 7,039 233
Tax expense (recovery) 2,729 595 2,573 53
Net interest expense 680 898 2,559 1,981
Loss (gain) on sale /
repurchase of equipment (38) 38 (38) 38
Foreign exchange loss
(gain) (1,969) 309 (2,744) 231
Stock-based compensation 350 420 943 720
Amortization of
intangibles 71 68 212 202
Depreciation of capital
assets 3,012 2,293 8,591 5,410
Selling, general and
administrative 4,167 2,251 9,780 4,617
----------------------------------------------------------------------------
Gross margin 11,736 8,150 28,915 13,485
----------------------------------------------------------------------------
EBITDA
EBITDA is defined as earnings before interest, taxes, depreciation and
amortization, stock-based compensation, foreign exchange gains or losses and
gains or losses on sale of equipment. EBITDA per share is defined as EBITDA
divided by the Company's basic number of common shares. Management believes
EBITDA and EBITDA per share are useful supplemental measures of the financial
performance of Xtreme Coil's principal business activities before considering
how activities are financed or taxed, and before the impact of stock-based
compensation, foreign exchange rate fluctuations or sales of equipment.
Following is a reconciliation of EBITDA and EBITDA per share to net income and
net income per share as calculated in accordance with GAAP.
Three months ended Nine months ended
2009 Sep 30 2008 Sep 30 2009 Sep 30 2008 Sep 30
----------------------------------------------------------------------------
Net income (loss) 2,734 1,278 7,039 233
Tax expense (recovery) 2,729 595 2,573 53
Net interest expense 680 898 2,559 1,981
Loss (gain) on sale /
repurchase of equipment (38) 38 (38) 38
Foreign exchange loss
(gain) (1,969) 309 (2,744) 231
Stock-based compensation 350 420 943 720
Amortization of
intangibles 71 68 212 202
Depreciation of capital
assets 3,012 2,293 8,591 5,410
----------------------------------------------------------------------------
EBITDA 7,569 5,899 19,135 8,868
----------------------------------------------------------------------------
EBITDA per share ($) 0.14 0.15 0.43 0.23
----------------------------------------------------------------------------
Net Debt
Net debt is a measurement used by management and the investment community which
is composed of the amount of debt minus working capital.
Outlook
The general economic uncertainty of the recession which began in late 2008
continued through 2009 3Q with rig counts remaining well below historical
averages in North America. While Xtreme Coil was successful in raising equity
during 2009 2Q, credit and equity markets continue to exhibit historically high
levels of volatility and access to these markets remains somewhat constrained.
Early in 2009 3Q, Xtreme Coil's wholly-owned subsidiary, Xtreme Coil Drilling
Mexico, S.A. de C.V., executed long-term contracts with a global integrated
oilfield services customer for two XTC 200DTPlus rigs which commenced operations
in Mexico late in 2009 3Q. Subsequent to those contracts, we entered into eight
new long-term day rate contracts for COTD(TM) drilling rigs with the same
customer. These long-term contracts cover a term of 18 months of 100 percent
utilization at day rates substantially similar to expiring contracts and include
options for three six-month extension periods.
Xtreme Coil now has all ten rigs in Mexico contracted into 2011. Under these
contracts, the ten drilling rigs in Mexico will continue to operate in the
Chicontepec oil development project near Poza Rica in the state of Veracruz.
Xtreme Coil has thirteen of its sixteen rigs operating under long-term contracts
in Mexico and the United States. We expect this will improve 2009 4Q operating
days compared to 2009 3Q. We did not win any contracts on the spot drilling
market in 2009 3Q. The increase in rig utilization and operating days in 2009 3Q
compared to 2009 2Q related to the commencement of operations under long-term
contracts for two rigs in late 2009 2Q and an additional two rigs in late 2009
3Q. We anticipate that this increase in rig utilization should contribute
favourably to cash flow from operating activities during the remainder of 2009.
We continue to pursue and evaluate opportunities for drilling projects inside
and outside North America. Additionally, we believe there are opportunities in
the Middle East, North Africa, Australia and Asia. Generally, these regions have
relatively stable drilling demand compared to the United States and Canada where
drilling markets have only recently showed early signs of increased rig counts.
Xtreme Coil believes the drilling market in Mexico will remain stable during the
remainder of 2009. Although certain media coverage several weeks ago suggested
uncertainties with regard to development in the Chicontepec project, Xtreme Coil
continues to operate at full utilization in that region. We understand the
operator is preparing 2010 budgets and operational plans for 2010. We are
prepared to pursue any additional tenders made available to companies who are
potential customers for Xtreme Coil rigs. Management believes Xtreme Coil offers
the newest drilling rigs and differentiating technology which may position us to
respond to any potential changes in development plans.
Throughout 2009 3Q and in early 2009 4Q, Xtreme Coil customized an existing XTC
200 series drilling rig to prepare it for potential re-entry work in the Middle
East. We recently invited potential customers and service providers to tour the
rig on-site in south Texas and technical feedback was positive.
For the remainder of 2009, Xtreme Coil will continue to advance strategic
opportunities for contracts within and outside of North America. In response to
interest generated from discussions initiated throughout 2009 in several
international drilling regions we are discussing a range of projects which could
utilize the advanced capabilities of our COTD(TM) drilling rigs.
Additional Information
Information relating to Xtreme Coil is available on SEDAR at www.sedar.com. To
obtain copies of published corporate information, contact investor relations at
Xtreme Coil Drilling Corp., 1402, 500 Fourth Avenue SW, Calgary, AB T2P 2V6
(telephone +1 403.262 9500), visit Xtreme Coil's website
www.xtremecoildrilling.com or e-mail ir@xtremecoil.com.
Xtreme Coil Drilling Corp.
Consolidated Balance Sheets
(in thousands)
(unaudited)
2009 Sep 30 2008 Dec 31
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 20,509 $ 2,010
Accounts receivable (Notes 4 and 12) 29,091 27,291
Other receivables (Note 5) 8,135 7,966
Prepaid expenses 2,442 1,218
Inventory (Note 6) 2,515 1,045
----------------------------------------------------------------------------
62,692 39,530
Future income tax 4,819 4,966
Equipment (Note 7) 244,928 238,345
Intangible assets (Note 8) 4,879 4,923
Goodwill (Notes 2 and 9) 1,630 1,630
----------------------------------------------------------------------------
$ 318,948 $ 289,394
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities
Bank indebtedness (Note 10) - 7,878
Accounts payable and accrued liabilities
(Note 12) 12,544 14,215
Income tax payable 1,792 1,354
Current portion of obligations under capital
leases (Note 12) - 75
Current portion of long-term debt (Note 10) 11,838 9,825
----------------------------------------------------------------------------
26,174 33,347
Long-term liabilities
Obligations under capital leases (Note 12) - 35
Long-term debt (Note 10) 35,405 49,105
----------------------------------------------------------------------------
35,405 49,140
Shareholders' equity
Share capital (Note 11) 252,777 207,462
Warrants (Note 11b) 1,630 1,630
Contributed surplus (Note 11c) 4,437 3,453
Retained earnings (deficit) 1,401 (5,638)
Accumulated other comprehensive loss (2,876) -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
257,369 206,907
----------------------------------------------------------------------------
$ 318,948 $ 289,394
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Commitments and contingencies (Note 14)
See accompanying notes to the consolidated financial statements.
Xtreme Coil Drilling Corp.
Consolidated Statement of Income (Loss) and Retained Earnings (Deficit)
(in thousands, except share and per share data)
(unaudited)
Three Months Three Months Nine Months Nine Months
ended ended ended ended
2009 Sep 30 2008 Sep 30 2009 Sep 30 2008 Sep 30
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue $ 26,153 $ 26,328 $ 72,119 $ 49,190
Expenses
Operating expenses 14,417 18,178 43,204 35,705
Selling, general and
administrative 4,167 2,251 9,780 4,617
Depreciation of
capital assets 3,012 2,293 8,591 5,410
Amortization of
intangibles 71 68 212 202
Stock-based compensation 350 420 943 720
Foreign exchange loss
(gain) (1,969) 309 (2,744) 231
Loss (gain) on sale/
repurchase of equipment (38) 38 (38) 38
Net Interest expense 680 898 2,559 1,981
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income before tax for
the period 5,463 1,873 9,612 286
Tax recovery (expense)
Current (2,828) - (1,732) -
Future 99 (595) (841) (53)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income for the period 2,734 1,278 7,039 233
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Deficit, beginning of
period (1,333) (9,424) (5,638) (8,379)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Retained earnings (deficit),
end of period 1,401 (8,146) 1,401 (8,146)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income per common share
- basic $ 0.05 $ 0.03 $ 0.16 $ 0.01
- diluted $ 0.05 $ 0.03 $ 0.16 $ 0.01
Weighted average number of
common shares (Note 11e)
- basic 52,844,789 40,559,647 44,854,435 37,859,072
- diluted 53,593,863 41,491,684 44,935,321 38,875,260
See accompanying notes to the consolidated financial statements.
Xtreme Coil Drilling Corp.
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
Three Months Three Months Nine Months Nine Months
ended ended ended ended
2009 Sep 30 2008 Sep 30 2009 Sep 30 2008 Sep 30
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income $ 2,734 $ 1,278 $ 7,039 $ 233
Other comprehensive
income (loss)
Unrealized loss on
translating financial
statements of self-
sustaining
foreign operations (18,671) - (29,364) -
----------------------------------------------------------------------------
Comprehensive income
(loss) $ (15,937) $ 1,278 $ (22,325) $ 233
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
Xtreme Coil Drilling Corp.
Consolidated Statements of Accumulated Other Comprehensive Loss
(in thousands)
(unaudited)
Three Months Three Months Nine Months Nine Months
ended ended ended ended
2009 Sep 30 2008 Sep 30 2009 Sep 30 2008 Sep 30
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated other
comprehensive income
- beginning of period $ - $ - $ - $ -
Impact of translating
financial statements
of self-sustaining
foreign operations
beginning of period
(Note 3) 15,795 - 26,488 -
Unrealized loss on
translation of
foreign operations
during the current
period (Note 3) (18,671) - (29,364) -
----------------------------------------------------------------------------
Accumulated other
comprehensive loss
- end of period $ (2,876) $ - $ (2,876) $ -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
Xtreme Coil Drilling Corp.
Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
Three Months Three Months Nine Months Nine Months
ended ended ended ended
2009 Sep 30 2008 Sep 30 2009 Sep 30 2008 Sep 30
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash provided by
(used in) operating
activities
Net income for the
period $ 2,734 $ 1,278 $ 7,039 $ 233
Items not affecting
cash:
Depreciation and
amortization 3,083 2,361 8,803 5,612
Stock-based
compensation 350 420 943 720
Loss (gain) on sale
of equipment (38) 38 (38) 38
Amortization of
financing cost - 153 276 206
Unrealized foreign
exchange loss (gain) (1,947) 294 (3,048) 294
Future income tax
expense (recovery) (99) 595 841 53
----------------------------------------------------------------------------
4,083 5,139 14,816 7,156
Changes in non-cash
operating working-capital
(Note 16) (1,334) (21,952) (1,855) (22,023)
----------------------------------------------------------------------------
2,749 (16,813) 12,961 (14,867)
----------------------------------------------------------------------------
Financing activities
Proceeds from shares
issued - - 47,203 35,030
Share issue costs - (42) (2,757) (890)
Proceeds from exercise
of stock options 96 300 96 300
Proceeds from other
long-term liabilities
(Note 9) - - - 4,080
Proceeds from (reduction
of) long-term debt (12,231) 24,337 (11,687) 22,757
Repayment of operating
facility (4,787) - (7,878) -
Capital lease payments (66) (21) (110) (61)
----------------------------------------------------------------------------
(16,988) 24,574 24,867 61,216
----------------------------------------------------------------------------
Investing activities
Proceeds from sale of
equipment 102 - 368 -
Proceeds from sale of
equipment to joint
venture (Note 9) - - - 5,873
Capital expenditures (10,983) (21,786) (15,488) (47,889)
Increase in intangibles (34) (64) (168) (120)
Changes in non-cash
working capital
relating to
capital items (Note 16) 2,028 3,525 (4,041) (5,544)
----------------------------------------------------------------------------
(8,887) (18,325) (19,329) (47,680)
----------------------------------------------------------------------------
Increase (decrease) in
cash and cash equivalents (23,126) (10,564) 18,499 (1,331)
during the period
Cash and cash equivalents,
beginning of period 43,635 9,616 2,010 383
----------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 20,509 $ (948) $ 20,509 $ (948)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Supplemental disclosure
of cash flow information
Interest received $ 15 $ 5 $ 15 $ 22
Interest paid 693 434 2,295 1,481
Income tax paid 1,014 - 1,152 -
Non-cash transactions
purchase; repayment of
joint venture loan - - - 8,000
See accompanying notes to the consolidated financial statements.
Reader Advisory
This news release contains forwarding looking statements. More particularly,
this news release contains statements relating to assumptions regarding
management's view of future events, expectations, plans, initiatives or
prospects constituting forward-looking statements within the meaning of
securities laws. Forward-looking statements may relate to Xtreme Coil's future
outlook and anticipated events or results related to existing and anticipated
future contracts; commodity pricing; rates of currency exchange; operating
expenses; rig construction, completion or deployment; capital expenditures and
other guidance provided throughout this news release. Risks and uncertainties
result from a variety of factors and actual results, expectations, achievements
or performance may differ materially from those anticipated or indicated in this
news release. Although Xtreme Coil believes the expectations reflected in these
forward-looking statements are reasonable, undue reliance should not be placed
on them because Xtreme Coil can give no assurance that they will prove to be
correct. Since forward-looking statements address future events and conditions,
by their very nature, they involve inherent risks and uncertainties. The
forward-looking statements contained in this news release are made as of the
date hereof and Xtreme Coil undertakes no obligation to update publicly or
revise any forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable
securities laws.
Corporate Profile
Xtreme Coil develops and applies leading edge patented and patent-related
technology and designs to build, transport, and operate new Coil Over Top
Drive(R) COTD(TM) drilling rigs. Currently contracted in the United States and
Mexico and marketed to other international regions, Xtreme Coil's innovative,
dual-purpose and efficient rigs drill with larger coil to reach hydrocarbons in
deeper horizons. Other features of Xtreme Coil's proprietary technology include:
larger coil injectors, re-entry drilling capability, modular transportation
systems and new methods for achieving deeper, faster and safer drilling. Xtreme
Coil's common shares trade on the TSX under the symbol "XDC".
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