IROC Energy Services Corp. announces third quarter 2008 results
/THIS PRESS RELEASE IS NOT FOR DISSEMINATION IN UNITED STATES OR TO ANY
UNITED STATES NEWS SERVICES/
CALGARY, Nov. 10 /CNW/ - IROC Energy Services Corp. ("IROC" or the
"Company") (TSX: "ISC") announces the Company's financial results for the
three and nine months ended September 30, 2008.
FINANCIAL HIGHLIGHTS
---------------------
For the 3 months For the 9 months
ended Sept. 30, ended Sept. 30,
---------------- ----------------
(Unaudited) (Unaudited)
% %
2008 2007 Change 2008 2007 Change
-------------------------------------------------------------------------
Revenue
- continuing
operations $22,488 $17,773 27% $56,612 $51,497 10%
-------------------------------------------------------------------------
Operating
costs 13,827 10,818 28% 36,369 31,349 16%
-------------------------------------------------------------------------
Gross margin 8,661 6,955 25% 20,243 20,148 0%
Gross margin % 39% 39% 0% 36% 39% -8%
-------------------------------------------------------------------------
General and
administrative
expenses 2,529 2,457 3% 7,231 7,629 -5%
-------------------------------------------------------------------------
EBITDAS
- continuing
operations(1) 6,132 4,498 36% 13,012 12,519 4%
Per share
diluted 0.14 0.10 40% 0.29 0.29 0%
-------------------------------------------------------------------------
Net earnings
- continuing
operations 2,673 468 471% 2,389 909 163%
Per share
diluted 0.06 0.01 500% 0.05 0.02 156%
-------------------------------------------------------------------------
Net earnings 286 369 -22% 826 1,945 -58%
Per share
diluted 0.01 0.01 0% 0.02 0.04 -59%
-------------------------------------------------------------------------
Number of
shares
outstanding
Basic 44,304,504 44,251,080 0% 44,285,624 43,164,377 3%
Diluted 44,324,122 44,336,011 0% 44,446,091 43,273,275 3%
-------------------------------------------------------------------------
(1) EBITDAS and EBITDAS per share are "NON-GAAP MEASURES". EBITDAS is
defined as "earnings before interest, taxes, depreciation and
amortization, stock-based compensation expense, foreign exchange
gains and losses and gains or losses on disposal of property and
equipment." EBITDAS and EBITDAS per share are not recognized measures
under GAAP.
IROC reports strong revenue and EBITDAS from continuing operations for
the third quarter of 2008 led by strong performance in our Canada Tech and
Eagle Well Servicing divisions, each exceeding expectations during the
quarter. Higher customer demand from significant improvements in natural gas
and oil commodity pricing through the first nine months of the year
strengthened fundamentals for producers in terms of cash flows and as such
many producers accelerated programs providing for a strong third quarter of
activity.
Highlights for the Quarter:
----------------------------
- Revenue from continuing operations for the three months ended
September 30, 2008 increased 27%, from $17.8 million to $22.5 million
compared to the same period in 2007. Revenue growth was higher as a
result of improved year over year utilization and higher pricing,
coupled with a record quarter for revenues in Canada Tech from
product sales.
- EBITDAS from continuing operations for the three months ended
September 30, 2008 was $6.1 million or $0.14 per share compared to
$4.5 million, or $0.10 per share, in the same three month period of
2007, an increase of 36%. Pricing increases in Canada Tech and
pricing adjustments in other divisions helped to improve margins and
profitability overall.
- Net earnings from continuing operations of $2.7 million or $0.06 per
share compared to $0.5 million or $0.01 per share in the comparable
period of 2007. Net earnings improved from lower interest costs for
debt servicing due to significant repayments of debt, coupled with
improved utilization, pricing and product sales volumes.
- Revenue generated from Eagle Well Servicing during the third quarter
was $12.3 million compared to $9.3 million in the same period of
2007, an increase of 31%. EBITDAS in the third quarter from Eagle was
$4.8 million compared to $3.7 million in the same period of 2007, an
increase of 28%. Utilization for the quarter was amongst the highest
in our peer competitor group and revenue per hour increased over the
same period of 2007.
- The first of the six new service rigs being constructed was delivered
and deployed to the field during September 2008. It is anticipated
that delivery of the remaining five service rigs will be complete
prior to the end of the fourth quarter of 2008 to allow for full
deployment of these rigs during the traditionally busy first quarter.
- Revenue in the Canada Tech division increased by 34% to $5 million in
the third quarter, a record quarter for this division on the back of
higher product sales into international markets and improved pricing.
- Significantly strengthened the balance sheet by reducing debt levels
with cash proceeds of $33.7 million from the sale of its drilling rig
assets and discontinued the operations of the contract drilling
services division, Mission Drilling. IROC exited Q3 2008 with net
debt of $11.8 million.
- Management and the Board of Directors undertook a full strategic
review of IROC's operations during the quarter to investigate any and
all options that may be available to the Corporation to provide the
best return possible for our shareholders. The first action taken was
to sell our drilling assets after considering the deteriorating
drilling environment in the WCSB which had resulted in the inability
of the division to provide an adequate return on capital invested,
which is noted above. While the strategic review continues, further
action has not been determined.
Our core business, Eagle Well Servicing, has shown that it is very
competitive in the market place with industry leading utilization, new
equipment and competent personnel across its fleet of 31 service rigs, with an
additional 5 rigs to be deployed to the field before year-end. The impact of
reduced exploration programs is obvious but we believe that our segment of the
oilfield services industry has historically been more stable and is expected
to be affected less by the reductions than other segments as a result of
production related work. More importantly, we have financial and operational
capability that will allow us to not only survive the next few quarters but in
fact thrive in this environment.
Further, IROC was able to substantially strengthen its balance sheet
through the disposition of the Mission Drilling division assets, thereby
providing greater flexibility in a time of uncertainty in our business. The
benefits to IROC of this disposition will be seen over coming quarters as the
capital that was made available as a result of the transaction is invested
into the divisions of our business that provide greater potential returns for
our shareholders.
The industry in general has benefited from the recent strength of the US
Dollar, effectively providing a cushion for commodity prices in Canada. In our
business, Canada Tech has been a significant benefactor of the rising US
dollar. With our Canadian based operation and costs, the benefits of having
65% of our revenues in the division denominated in US Dollars are obvious.
While the remainder of fiscal 2008 looks solid, there has been a
significant amount of uncertainty appear as we enter 2009. The global
financial crisis is affecting all industries and has led to a significant fall
in oil and gas commodity pricing from the highs seen in the third quarter of
2008. The effects of this, while difficult to predict with any high degree of
certainty, appear to have hindered the ability for oil and gas producers to
access debt or equity markets to finance their operations. Additionally, with
the impending changes to the royalty rates in Alberta in January 2009,
producers have already stated their plans to move capital from Alberta and
into jurisdictions that provide greater potential returns. Producers have
recently begun reducing their capital spending plans for fiscal 2009 with a
focus on balance sheet preservation and matching spending with realistic cash
flows.
Publicly reported information for IROC Energy Services Corp. is available
at www.sedar.com.
About IROC Energy Services Corp.
IROC Energy Services Corp. is an Alberta oilfield services company that,
through the IROC Energy Services Partnership, provides a comprehensive and
diverse range of products, services and equipment to the oil and gas industry.
IROC combines cutting-edge technology with depth of experience to deliver a
product and services offering in five core areas: Well Servicing & Equipment,
Downhole Temperature & Pressure Monitoring Tools, Rental Services, Lease
Building, and Safety, Monitoring & Communications Services. For more
information on IROC Energy Services Corp. visit our website at
www.iroccorp.com.
Cautionary Statements
Certain statements contained in this press release may constitute forward
looking statements concerning, among other things, expected revenues, expected
expenses, profits, developments and strategies for IROC's operations all of
which are subject to certain risks, uncertainties and assumptions. These
forward looking statements are identified by their use of terms and phrases
such as "anticipate", "continue", "estimate", "expect", "may", "will",
"projected", "should", "believe" and other similar terms and phrases. By its
nature, such forward looking 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 statements.
These risks include, but are not limited, to the risks associated with the oil
and gas industry generally, fluctuating prices in crude oil and natural gas,
changes in drilling activity, general global economic, political and business
conditions, weather conditions, regulatory changes and availability of
products, qualified personnel and manufacturing capacity and raw materials. If
any of these uncertainties materialize, or if assumptions are incorrect actual
results may vary materially from those expected. IROC relies on litigation
protection for any forward looking statements.
This press release is not for dissemination in United States or to any
United States news services. The Common Shares of IROC have not and will not
be registered on the United States Securities Act of 1933, as amended (the
"United States Securities Act") or any state securities laws and are not
offered or sold in the United States or to any US person except in certain
transactions exempt from the registration requirements of the United States
Securities Act and applicable state securities laws.
Consolidated Balance Sheets
Expressed in thousands of dollars
(Unaudited)
-------------------------------------------------------------------------
September 30, December 31,
2008 2007
-------------------------------------------------------------------------
Assets
Current assets:
Cash $ 1 $ 1
Accounts receivable 17,767 15,423
Inventory 4,504 5,442
Prepaid expenses and deposits 450 359
Assets of discontinued operations (note 9) 10,502 2,960
-----------------------------------------------------------------------
33,224 24,185
Property and equipment (note 3) 64,258 64,893
Intangible assets (note 4) 4,793 5,376
Goodwill 8,621 8,621
Assets of discontinued operations (note 9) - 34,578
-------------------------------------------------------------------------
$ 110,896 $ 137,653
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Operating line of credit $ 7,314 $ 3,421
Accounts payable and accrued liabilities 7,018 5,627
Income taxes payable 46 190
Current portion of long-term debt (note 5) 3,384 6,831
Liabilities of discontinued operations
(note 9) 607 383
-----------------------------------------------------------------------
18,369 16,452
Long-term debt (note 5) 26,737 56,457
Future income taxes 3,450 3,481
Shareholders' equity:
Share capital (note 6) 51,579 51,547
Warrants (note 6) - 828
Contributed surplus (note 6) 3,456 2,409
Retained earnings 7,305 6,479
-----------------------------------------------------------------------
62,340 61,263
-------------------------------------------------------------------------
$ 110,896 $ 137,653
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consolidated Statements of Earnings and Retained Earnings
Expressed in thousands of dollars except share and per share amounts
(Unaudited)
-------------------------------------------------------------------------
Three months ended Nine months ended
----------------------- -----------------------
September 30, September 30,
2008 2007 2008 2007
-------------------------------------------------------------------------
Revenue $ 22,488 $ 17,773 $ 56,612 $ 51,497
Expenses:
Operating 13,827 10,818 36,369 31,349
General and
administrative 2,529 2,457 7,231 7,629
Stock-based
compensation 62 109 220 474
Depreciation and
amortization 2,282 2,262 6,748 6,461
Interest and accretion
on debentures 152 236 624 707
Interest on long-term
debt 756 850 2,558 2,327
Other interest 68 211 227 369
Gain on disposal of
equipment (28) (99) (34) (250)
Foreign exchange (gain)
loss (24) 132 (82) 224
-----------------------------------------------------------------------
19,624 16,976 53,861 49,290
-------------------------------------------------------------------------
Earnings before income
taxes from continuing
operations 2,864 797 2,751 2,207
Income taxes (recovery):
Current - 16 - 52
Future 191 313 362 1,246
-------------------------------------------------------------------------
Net earnings from
continuing operations 2,673 468 2,389 909
Net earnings (loss)
from discontinued
operations (note 9) (2,387) (99) (1,563) 1,036
-----------------------------------------------------------------------
Net earnings 286 369 826 1,945
Retained earnings,
beginning of period 7,019 5,916 6,479 4,340
-------------------------------------------------------------------------
Retained earnings,
end of period $ 7,305 $ 6,285 $ 7,305 $ 6,285
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per share from
continuing operations:
Basic $ 0.06 $ 0.01 $ 0.05 $ 0.03
Diluted $ 0.06 $ 0.01 $ 0.05 $ 0.02
-----------------------------------------------------------------------
Earnings (loss) per share
from discontinued
operations:
Basic $ (0.05) $ 0.00 $ (0.03) $ 0.02
Diluted $ (0.05) $ 0.00 $ (0.03) $ 0.02
-----------------------------------------------------------------------
Earnings per share:
Basic $ 0.01 $ 0.01 $ 0.02 $ 0.05
Diluted $ 0.01 $ 0.01 $ 0.02 $ 0.04
-----------------------------------------------------------------------
Weighted average number
of shares outstanding:
Basic 44,304,504 44,251,080 44,285,624 43,164,377
Diluted 44,324,122 44,336,011 44,446,091 43,273,275
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consolidated Statements of Cash Flows
Expressed in thousands of dollars
(Unaudited)
-------------------------------------------------------------------------
Three months ended Nine months ended
-------------------- -------------------
September 30, September 30,
2008 2007 2008 2007
-------------------------------------------------------------------------
Cash provided by (used in):
Operations:
Net earnings from continuing
operations $ 2,673 $ 468 $ 2,389 $ 909
Items not affecting cash:
Depreciation and amortization 2,282 2,262 6,748 6,461
Future income taxes 191 313 362 1,246
Stock-based compensation 62 109 220 474
Non-cash accretion on
debentures 64 96 256 288
Gain on disposal of property
and equipment (28) (99) (34) (250)
---------------------------------------------------------------------
5,244 3,149 9,941 9,128
Changes in non-cash working
capital balances (note 7) (4,185) (1,504) (249) (787)
---------------------------------------------------------------------
1,059 1,645 9,692 8,341
Discontinued operations (note 9):
Funds provided by discontinued
operations 144 68 1,491 1,540
Changes in non-cash working
capital balances of
discontinued operations (285) 845 782 426
918 2,558 11,965 10,307
Investing:
Purchase of property and
equipment of continuing
operations (3,153) (5,977) (5,807) (17,552)
Purchase of property and
equipment of discontinued
operations (473) (408) (906) (2,117)
Proceeds on disposal of
property and equipment from
continuing operations 87 469 648 1,816
Proceeds on disposal of
equipment from discontinued
operations 23,935 333 23,935 1,235
Business acquisitions - - - (1,000)
Change in non-cash working
capital balances (note 7) - 1,228 - (139)
---------------------------------------------------------------------
20,396 (4,355) 17,870 (17,757)
Financing:
Repayment of long-term debt (21,619) (214) (26,421) (634)
Operating loan advances
(repayments) 7,290 (2,341) 3,893 (1,388)
Repayment of debentures (7,000) - (7,000) -
Issue of long-term debt - 4,352 - 9,660
Issue of common shares 15 - 33 12
Loan commitment fees - - (340) (200)
---------------------------------------------------------------------
(21,314) 1,797 (29,835) 7,450
-------------------------------------------------------------------------
Increase in cash - - - -
Cash at beginning of period 1 1 1 1
-------------------------------------------------------------------------
Cash at end of period $ 1 $ 1 $ 1 $ 1
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For further information: IROC Energy Services Corp., Mr. Thomas M.
Alford, President and CEO, Telephone: (403) 263-1110, email:
investorrelations@iroccorp.com
RSS
Share
Tell a friend
Printer friendly
Subscribe to Portfolio e-mail
