Trading Symbol: "EGD: TSX.V"
VANCOUVER, Aug. 24, 2017 /CNW/ - Energold Drilling
Corp. ("Energold" or "the Company") announces second quarter 2017
consolidated revenues of $17.8
million, a 15% increase compared to revenue of $15.6 million in the same period of 2016. On a
Company-wide basis, there is ongoing improvement in the mineral
drilling sector which has been partially offset by ongoing
challenging conditions in the energy division and weakness in the
manufacturing division.
Commodity price stability has contributed to improved activity
in the mineral drilling market. On a year over year basis, the
number of metres drilled has increased substantially as customers
have been successful in raising and deploying exploration capital.
The energy drilling market remains hampered by stagnantly low
hydrocarbon prices which have impacted exploration drilling
activity to date, however there appears to be renewed activity for
the second half of the year in geo-thermal programs. The
manufacturing business has been weak for some time and the company
is undergoing a reorganization of the division to improve sales and
profitability.
In the second quarter of 2017, the Company's overall gross
margin declined to 10% from 12% in the same period of 2016. Costs
in the energy and manufacturing sector reduced the Company's gross
profit, notwithstanding a substantial improvement in the mineral
division. Group indirect & administrative expenses were lower
by 14% over the comparative quarter. The net loss per share in the
period improved to $(0.09) per share
compared to $(0.10) in the same
period of 2016.
Energold's balance sheet at the end of the second quarter of
2017 was well-capitalized with $10.4
million in cash and $59.2
million in working capital. On June
15, 2017, the Company completed a $20.0 million private placement of $20.0 million convertible secured notes.
The proceeds of the private placement were used to repay certain
current loans, including the $13.5
million secured convertible debenture which was due in
July 2017, as well as some existing
credit facilities with RBC Royal Bank of Canada and Export Development
Canada.
2017
Quarter-to-Date and Year-to-Date Results Comparison
|
($CAD '000s except
per-share amounts and meters drilled)
|
|
|
|
|
For three months
ended June 30
|
For the six months
ended June 30
|
|
2017
|
2016
|
2017
|
2016
|
Revenue
|
$
|
$
|
$
|
$
|
|
Mineral
|
13,141
|
9,016
|
22,764
|
17,489
|
|
Energy
|
3,511
|
3,708
|
11,263
|
9,842
|
|
Manufacturing
|
1,197
|
2,837
|
2,886
|
4,842
|
|
17,849
|
15,561
|
36,913
|
32,173
|
Loss
|
|
|
|
|
|
Mineral
|
(78)
|
(699)
|
(907)
|
(2,576)
|
|
Energy
|
(2,757)
|
(2,670)
|
(2,615)
|
(4,594)
|
|
Manufacturing
|
(905)
|
(866)
|
(2,004)
|
(2,917)
|
|
Corporate
|
(929)
|
(744)
|
(2,150)
|
(1,227)
|
|
(4,669)
|
(4,979)
|
(7,676)
|
(11,314)
|
Loss Per
Share
|
Basic and
diluted
|
(0.09)
|
(0.10)
|
(0.14)
|
(0.23)
|
EBITDA*
|
(1,662)
|
(1,560)
|
(1,954)
|
(4,741)
|
|
As of June 30,
2017
|
As of December 31,
2016
|
Cash
|
10,442
|
13,715
|
Working
Capital
|
59,213
|
46,859
|
|
|
*
|
EBITDA - Earnings
before interest, taxes, depreciation and amortization (see non-GAAP
(generally accepted accounting principles) financial
measures).
|
MINERAL DRILLING DIVISION
Revenues increased to $13.1
million in Q2-2017 from $9.0
million in the comparable period of 2016. Meters in
the first half of 2017 increased to 88,900 compared to 61,000 in
2016. Average revenue per meter for Q2-2017 and Q2-2016 remained
the same at $148. Pricing remains
competitive and there is still excess rig capacity in the industry
although the Company is operating at increased utilization in
certain key markets in Latin
America. The margin for the three months ended June 30, 2017 in this division was $2.1 million or 16% compared to $1.1 million or 12% in the comparable period in
2016. Drilling programs have started to grow in size as the
recovery continues and margin expansion is expected to continue as
costs remain under control and pricing starts to firm up in several
key markets.
Meters
Drilled
|
|
Q2
2017
|
Q2 2016
|
2017
|
2016
|
Meters
Drilled
|
88,900
|
61,000
|
152,200
|
106,900
|
Drill Rigs
|
140
|
138
|
140
|
138
|
ENERGY DRILLING DIVISION (Oil & Gas, Geothermal,
Geotechnical, Water)
Revenues for the three months ended June
30, 2017 were $3.5 million
compared to $3.7 million in same
period for 2016. There was a negative margin of $0.3 million or 9% in 2017 compared to a gross
margin of $0.4 million or 12% in the
comparable period of 2016. The division still has certain
fixed costs in its operations, although there continues to be a
concerted effort to reduce costs.
|
Meters
Drilled
|
|
|
|
Q2
2017
|
Q2 2016
|
2017
|
2016
|
Infrastructure
|
6,200
|
2,900
|
18,300
|
7,700
|
Oil sands
coring
|
300
|
300
|
11,900
|
4,600
|
Water
wells
|
400
|
200
|
1,000
|
900
|
Geothermal &
geotechnical
|
32,100
|
38,600
|
39,800
|
72,400
|
TOTAL
|
39,000
|
42,000
|
71,000
|
85,600
|
MANUFACTURING
Revenues for Dando for the three months ended June 30, 2017 were $1.2
million with a negative margin of 1% compared to revenues of
$2.8 million with a gross margin of
14% in the comparable period in 2016. Revenue remained weak in this
division as global demand for new drilling rigs of all kinds in the
Spring was subdued. Subsequent to the end of the quarter, Dando
received orders for three large rigs and a moderate recovery is
anticipated during the balance of the year. The Company is
implementing an extensive reorganization of Dando which should be
completed by year-end. This effort should translate into reduced
fixed costs and improved margins. Further the Company will have
completed a focused portfolio of new models of its high-quality
drilling rig.
INDUSTRY OUTLOOK
Management believes the recovery in the mineral drilling sector
should continue into 2018. Capacity utilization is expected to grow
in key markets with pricing remaining stable at current levels.
There is some return to riskier jurisdictions worldwide which bodes
well for activity levels within the Company's core man-portable
drilling rig fleet.
The Energy drilling market, while soft in recent years, should
be more active in the upcoming winter drilling season. Several of
the Company's key customers have plans to implement larger drilling
programs as significant work was deferred in past years. Oil sands
producers, who represent the majority of the Company's winter
drilling business, seek to drill "ahead of the shovel" as
extraction equipment must have considerable resource ahead of it to
maintain production levels. Therefore, larger delineation drilling
is planned for the 2017/2018 winter drilling season. Until such
time that the winter drilling projects begin, green and
infrastructure drilling activity has been increasing in activity
over the first half. The Company is working on and bidding several
large infrastructure projects in Canada as it seeks to deploy unused assets in
seasonally slower periods.
Following the recent convertible debenture financing, the
Company's balance sheet is in a strong position. There are
resources available to the Company to invest in areas of growth and
develop new markets. Management plans to invest in mostly organic
growth over the foreseeable future to improve utilization and
profit levels.
A conference call is planned for August
24, 2017 at 4:15 pm Eastern.
To access the conference call by telephone, dial 647-792-1278 or
1-888-504-7961. Please connect 15 minutes prior to the beginning of
the call.
Energold Drilling Corp. is a leading global specialty drilling
company that services the mining, energy, infrastructure,
geothermal, water and manufacturing sectors in 25 countries.
Specializing in a socially and environmentally sensitive approach
to drilling, Energold provides a comprehensive range of drilling
services from early stage exploration to onsite operations as well
as manufacturing.
On behalf of the Directors of Energold Drilling Corp.,
"Frederick W. Davidson"
President, CEO
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Forward-Looking Statements: Some statements in this news
release contain forward-looking information. These statements
include, but are not limited to, statements with respect to
proposed activities, work programs and future expenditures. These
statements address future events and conditions and, as such,
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the statements. Such factors
include, among others, the effects of general economic conditions,
a reduction in the demand for the Company's drilling services, the
price of commodities, changing foreign exchange rates, actions by
government authorities, the failure to find economically viable
acquisition targets, title matters, environmental matters, reliance
on key personnel, the ability for operational and other reasons to
complete proposed activities and work programs, the need for
additional financing and the timing and amount of expenditures.
Energold Drilling Corp. does not assume the obligation to update
any forward-looking statement.
SOURCE Energold Drilling Corp.