(TSX - FES)
CALGARY, Nov. 3, 2011 /CNW/ - Flint Energy Services Ltd. ("Flint", the
"Company") released its third quarter results today after markets
closed. On January 1, 2011, the Company adopted International Financial
Reporting Standards ("IFRS") for financial reporting purposes, using a
transition date of January 1, 2010. The interim financial statements
for the three months ended September 30, 2011, including required
comparative information, summarized in this release, have been prepared
in accordance with International Financial Reporting Standards.
Flint experienced an expected lift from increased customer midstream
activities in the third quarter, with total quarterly revenues,
including Maintenance Services, of $505.3 million and EBITDA of $44.9
million, compared to $406.5 million and $38.4 million in Q3 2010.
Excluding a $1.2 million unrealized loss (net of taxes) related to the
fair value of embedded derivative financial instruments related to the
issue of senior notes, quarterly profit was $18.5 million or $0.40 per
fully diluted share, compared to $9.2 million or $0.20 per fully
diluted share in Q3 last year.
During the three months ended September 30, 2011, the Company realized
profit of $17.3 million for a net increase of $8.1 million, compared to
a profit of $9.2 million in the comparable quarter of 2010. Net
earnings for the third quarter were $0.37 per fully diluted common
share compared to $0.20 per fully diluted common share in 2010.
Under IFRS, revenue for the three month period ending September 30, 2011
was $422.2 million, up $120.3 million or 39.8% higher than the $301.9
million in the comparative quarter of 2010, with increased revenues in
all segments with the exception of Maintenance Services. Oilfield
Services revenues for the quarter were $80.6 million, up $27.4 million.
Facility Infrastructure revenues were $76.7 million, up $13.1 million,
and Production Services revenues were $264.9 million, up $79.8 million
from the comparative quarter in 2010. Canadian operations generated
$297.0 million in revenues, up $73.2 million from the comparative
period in 2010. The United States operations generated $125.2 million
in revenues, up $47.1 million as a result of expansion of the Oilfield
Services segment into the US late in 2010.
While no longer reported in Company revenues under IFRS, the Maintenance
Services segment revenues for the third quarter of 2011 were $83.1
million, down $21.4 million from Q3 2010 as a result of lower activity
levels with turnarounds and shutdowns in the third quarter of this year
compared to last year. Under IFRS, the Company reports the results of
this segment on the Company's Statement of Profit as share of profit of
equity accounted investees, net of taxes. In Q3 2011, the Company's
share of profit of equity accounted investees net of taxes was $5.0
million for the quarter compared to $4.4 million in the comparative
quarter for 2010.
Under IFRS, EBITDA for the three months ended September 30, 2011 was
$37.4 million, up $5.6 million or 17.5%, compared to $31.8 million for
the third quarter of 2010. Oilfield Services reported the largest gain
in EBITDA with $17.9 million, up $8.9 million over last year's $9.0
million. Production Services EBITDA increased $1.3 million to $25.6
million from $24.3 million last year. Facility Infrastructure reported
$6.2 million in EBITDA, down $5.1 million from $11.3 million in the
third quarter of 2010. Maintenance Services EBITDA, not included
above, was $7.6 million, up $1.0 million from $6.6 million in Q3 last
On September 28, 2011, the Company announced that it was selected as the
construction contractor for a major SAGD oil sands project in the Wood
Buffalo Region near Fort McMurray, Alberta. The contract involves field
construction over a three year period commencing in 2012, and is valued
at approximately $430 million.
Effective October 1, 2011, the Company acquired all of the issued and
outstanding shares of Carson Energy Services Ltd. ("Carson"), a
privately held energy services company based in Saskatchewan. The
purchase price was comprised of $112 million in cash and 2,121,212
Flint common shares, plus potential for an additional earn-out of up to
$30 million, spread over the next three years, subject to closing
adjustments. Payment of the earn-out portion of the purchase price is
dependent upon Carson meeting an EBITDA target of $40 million per year
over the next three years.
W. J. (Bill) Lingard, President and Chief Executive Officer of the
Company said, "Third quarter activity was much stronger with increased
revenues in our Production Services segment in both Canada and the
United States, as activity increased throughout the quarter. Oilfield
Services revenues were also up with increased rig moving activity in
both Canada and the United States, as a result of seasonal increases in
Canadian activity and our expansion into the US market last year.
Facility Infrastructure's construction backlog is now $740 million."
Mr. Lingard also stated, "We remain very busy as we enter Q4 and we
expect to make up for much of the delays we experienced in the first
half of 2011, and expect to see continued strength in activity through
the first quarter of 2012."
Canadian drilling activity in Q3 was up 27% while US activity was up 20%
over Q3 2010. Drilling activity in Canada for the first nine months of
the year was up 24% over 2010, while US activity was up 22%. These
higher levels of drilling have resulted in increased midstream pipeline
and facilities work in North America, which will continue to benefit
the Production Services segment in Q4 and the first quarter of 2012.
These higher levels of drilling have also benefitted the Oilfield
Services segment, particularly rig moving, which had a 51% increase in
revenues in the third quarter. This increase was driven by seasonally
higher activity in Canada and the Company's recent expansion into a
number of active basins in the United States.
Current industry forecasts call for continued seasonal increases in
Canadian drilling activity, while US drilling activity is expected to
begin to level off in the fourth quarter. The Production Services and
Oilfield Services segments should continue to see higher levels of
activity and revenues in the next two quarters, as a result of
continued growth in drilling activity in both Canada and the United
Canadian Production Services should also have an additional revenue
increase in Q4 as a result of the recent acquisition of Carson Energy
Services Ltd. Full year 2012 will include the additional revenues from
the Carson operations in Saskatchewan and Manitoba, where Flint
previously had only limited operations.
For 2012, industry forecasts are mixed due to global economic
uncertainty weighing on commodity prices. Canadian drilling activity
is expected to increase 10% while the United States is expected to see
drilling increase by 12% in 2012.
Oil sands capital spending for 2011 is still expected to reach $16
billion, up from an estimated $11 billion in 2010. Industry forecasts
call for total capital spending to increase up to $22 billion annually
by 2014. Oil sands customers have been slower to award contracts as
they spend more time on engineering to reduce cost uncertainty.
A number of the previously delayed projects have proceeded with
construction awards in Q3 and Flint has added $440 million in backlog
since the end of Q2, for a total of $740 million in major projects
backlog as of September 30, 2011. The Company is bidding on additional
projects and expects to see awards made in early 2012.
FT Services, the Company's Maintenance Services operation, has seen
lower levels of plant turnaround work in 2011, compared to last year's
higher activity levels including larger planned turnarounds and
unexpected shutdowns. Activity for full year 2011 is expected to be
down from 2010; however, with increasing bitumen production, the
Company anticipates higher levels of activity in maintenance work and
additional maintenance awards in 2012.
Management's focus continues to be on managing costs and improving
operating margins, integrating the recent acquisition, and continuing
organic growth where opportunities arise in unconventional plays.
Complete copies of the Company's third quarter 2011 interim financial
results are available on www.SEDAR.com and on the Company's website: www.flintenergy.com.
Flint Energy Services Ltd. is a market leader providing an expanding range of integrated products
and services for the oil and gas industry including: production
services; infrastructure construction; oilfield transportation; and
maintenance services. With more than 9,500 employees, Flint provides
this unique breadth of products and services through over 82 strategic
locations in the oil and gas producing areas of Western North America,
from Inuvik in the Northwest Territories to Mission, Texas on the
Mexican border. Flint is a preferred provider of infrastructure
construction management, module fabrication, maintenance services for
upgrading, and production facilities in Alberta's oil sands sector.
FORWARD LOOKING STATEMENTS
Certain statements in this news release are "forward-looking
statements", which reflect current expectations of the management of
Flint regarding future events or Flint's future performance. All
statements other than statements of historical fact contained in this
news release may be forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ materially
from those anticipated in the forward-looking statements. Flint
believes that the expectations reflected in such forward-looking
statements are reasonable, but no assurance can be given that these
expectations will prove to be correct and such forward-looking
statements should not be unduly relied upon. The forward-looking
statements are expressly qualified in their entirety by this cautionary
statement. The forward-looking statements are made as of the date of
this news release and Flint assumes no obligation to update or revise
them to reflect new events or circumstances, except as expressly
required by applicable securities law. Further information regarding
risks and uncertainties relating to Flint and its securities can be
found in the disclosure documents filed by Flint with the securities
regulatory authorities, available at www.sedar.com.
A conference call with management to discuss the Company's third quarter
2011 results and outlook is scheduled for 10:00 AM Eastern Time on
Friday, November 4, 2011. Details on how to participate in or listen
to the call are available on the Company's website: www.flintenergy.com.
SOURCE Flint Energy Services Ltd.
For further information:
Guy Cocquyt, Director of Investor Relations
Telephone: (403) 218-7195, Email: email@example.com