Stampede Drilling Inc. Announces 2021 Third Quarter Results
CALGARY, AB, Nov. 3, 2021 /CNW/ - Stampede Drilling Inc. ("Stampede" or the "Corporation") (TSXV: SDI) announces today its financial and operational results for the three and nine month period ended September 30, 2021.
The following press release should be read in conjunction with the December 31, 2020 audited consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS"), and the annual information form ("AIF") for the year ended December 31, 2020, as well as the condensed unaudited consolidated interim financial statements and notes for the three and nine month period ended September 30, 2021 and 2020. Additional information regarding Stampede, including the AIF, is available on SEDAR at www.sedar.com.
All amounts or dollar figures are denominated in thousands of Canadian dollars except for per share amounts, number of drilling rigs, and operating days, or unless otherwise noted.
Estimates and forward-looking information are based on assumptions of future events and actual results may vary from these estimates. See "Forward-Looking Information" in this press release for additional details.
FINANCIAL SUMMARY
Three months ended |
Nine months ended |
|||||
(000's CAD $ except per share amounts) |
2021 |
2020 |
% Change |
2021 |
2020 |
% Change |
Revenue |
6,482 |
714 |
808% |
22,983 |
11,879 |
93% |
Direct operating expenses |
4,107 |
530 |
675% |
14,124 |
8,033 |
76% |
Gross margin (1) |
2,375 |
184 |
1,191% |
8,859 |
3,846 |
130% |
Net income (loss) |
225 |
(1,633) |
114% |
2,480 |
(2,376) |
204% |
Basic and diluted per share |
0.00 |
(0.01) |
nm |
0.02 |
(0.02) |
nm |
Adjusted EBITDA (1) |
1,269 |
(269) |
572% |
6,412 |
1,898 |
238% |
Weighted average common shares outstanding |
132,166 |
132,046 |
0% |
132,166 |
132,046 |
0% |
Weighted average diluted common shares outstanding |
133,200 |
132,046 |
1% |
132,496 |
132,046 |
0% |
Capital expenditures |
1,362 |
4 |
nm |
2,781 |
709 |
292% |
Average active rig count |
10 |
10 |
nm |
10 |
10 |
nm |
Drilling rig utilization |
37% |
4% |
nm |
44% |
21% |
110% |
CAODC industry average utilization(2) |
27% |
9% |
200% |
23% |
16% |
44% |
nm - not meaningful |
(1) Refer to "Non-GAAP Measures" for further information. |
(2) Source: The Canadian Association of Oilwell Drilling Contractors ("CAODC") monthly Contractor Summary. The CAODC industry average is based on Operating Days divided by total available drilling days. |
THIRD QUARTER 2021 OPERATIONAL OVERVIEW
For the three month period ended September 30, 2021, the Corporation recorded adjusted EBITDA of $1,269, up 572% from an adjusted EBITDA loss of ($269) and net income of $225, up 114% from a net loss of ($1,633) and as compared to the 2020 corresponding period. The Corporation's quarterly utilization rate for Q3 2021 was 37%, 35% higher than the CAODC industry average for Q2 2021 of 27%.
During Q3 2021, the Corporation qualified for the Canadian Federal Government's Canadian Emergency Wage Subsidy program ("CEWS") which was used to reduce employee related salary expenses and help minimize reduction in headcount. For the three months ended September 30, 2021, the Corporation recorded $471 against cost of sales and $59 against salaries and benefit expenses.
OUTLOOK
The Corporation continued to build off its strong first half off 2021 with another strong quarter operationally and financially with net income of $225 and Adjusted EBITDA of $1,269. Rising commodity pricing and corresponding producer cash flows continue to increase drilling activity in Western Canada as compared to 2020. As producers are expected to increase spending in response to higher prices and increased discretionary cash flow growth. The Corporation continues to maintain a strong emphasis and focus on safety, culture and performance as drilling activity continues to improve. With the increased utilization, the Corporation will continue to proactively respond to the safety challenges associated with the COVID–19 pandemic and remains committed to ensuring the health and safety of all its personnel and the safe, efficient and reliable operations at each of its drilling sites.
RESULTS FROM OPERATIONS FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021
Nine months ended September 30, |
|||
(000's CAD $ except operating days) |
2021 |
2020 |
% Change |
Revenue |
22,983 |
11,879 |
93% |
Direct operating expenses |
14,124 |
8,033 |
76% |
Gross margin (1) |
8,859 |
3,846 |
130% |
Gross margin %(1) |
39% |
32% |
22% |
Net income (loss) |
2,480 |
(2,376) |
204% |
General and administrative expenses |
3,015 |
2,448 |
23% |
Adjusted EBITDA (1) |
6,412 |
1,898 |
238% |
Drilling rig operating days(2) |
1187 |
567 |
109% |
Drilling rig revenue per day |
19.4 |
20.9 |
(7%) |
Drilling rig utilization |
44% |
21% |
110% |
CAODC industry average utilization(3) |
23% |
16% |
44% |
nm - not meaningful |
(1) Refer to "Non-GAAP measures" for further information. |
(2) Defined as contract drilling days, between spud to rig release |
(3) Source: The Canadian Association of Oilwell Drilling Contractors ("CAODC") monthly Contractor Summary. |
The CAODC industry average is based on Operating Days divided by total available drilling days. |
- Revenue for the nine month period ended September 30, 2021 was $22,983, up $11,104 (93%) compared to $11,879 for the corresponding 2020 period. Overall, the increase was a result of higher customer activity levels and related increased drilling activity. Crude oil and liquids pricing reached historic lows in the prior year comparative period, which resulted in production shut-ins and minimal drilling activity. The lower revenue per day was due to increased market pricing pressures as compared to the corresponding 2020 period.
- The Corporation had a total of 1,187 operating days for the nine months ended September 30, 2020, an increase of 620 operating days (109%) from the 567 operating days in the corresponding 2020 period. The Corporation's drilling rig utilization for the nine months ended September 30, 2020 was 44%, which was a 110% increase from the corresponding 2020 period and 89% higher than the CAODC industry average utilization rate of 23% for 2021.
- Gross margin for the nine month period ended September 30, 2021 was 39%, up 22% from 32% as compared to the corresponding 2020 period. The increase in 2021 gross margin was primarily due to the $2,012 of CEWS funding the Corporation qualified for during the nine months ended September 30, 2021 which was recorded against cost of sales and partially offset by the lower revenue per day. The Corporation recorded $116 in CEWS against cost of sales for the nine month period in 2020.
- For the nine month ended September 30, 2021, general and administrative expenses were $3,015 up $649 (23%) from $2,448 as compared to the corresponding 2020 period. The increase is primarily related to the elimination of the Corporation's 2020 salary roll backs for its employees and its board of directors on April 1, 2021. The Corporation also incurred increased overall administration expenses due to the increased 2021 activity as compared to prior year.
- Due to the above information, Adjusted EBITDA and net income for the nine month period ended September 30, 2021 were $6,412 and $2,480, respectively. Adjusted EBITDA was up $4,514 (238%) from $1,898, and net income was up $4,514 (204%) from a net loss of ($2,376) from the 2020 corresponding period.
RESULTS FROM OPERATIONS FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2021
Three months ended |
|||
(000's CAD $ except per day amounts) |
2021 |
2020 |
% Change |
Drilling rig revenue |
6,482 |
714 |
808% |
Direct operating expenses |
4,107 |
530 |
675% |
Gross margin (1) |
2,375 |
184 |
1,191% |
Gross margin %(1) |
37% |
26% |
42% |
Net income (loss) |
225 |
(1,633) |
114% |
General and administrative expenses |
1,238 |
589 |
110% |
Adjusted EBITDA (1) |
1,269 |
(269) |
572% |
Drilling rig operating days(2) |
341 |
36 |
855% |
Drilling rig revenue per day |
19.0 |
20.0 |
(5%) |
Drilling rig utilization |
37% |
4% |
855% |
CAODC industry average utilization(3) |
27% |
9% |
200% |
nm - not meaningful |
- Revenue for the three month period ended September 30, 2021 was $6,482, up $5,768 (808%) compared to $714 for the corresponding 2020 period. Overall, the increase was as a result of higher customer activity levels resulting in increased drilling activity. Crude oil and liquids pricing reached historic lows in the prior year comparative period, which resulted in production shut-ins and minimal drilling activity.
- The Corporation had a total of 239 operating days in Q3 2021, as compared to 36 days in 2020. The operating days in 2020 were severely impacted by the record low commodity pricing in 2020 and corresponding drop in customer drilling activity. The drilling rig utilization for Q3 2021 was 37%, which was 35% higher than the CAODC industry average utilization rate of 27%.
- Gross margin for the three month period ended September 30, 2021 was 37%, which was positively impacted by the $417 (2020 - $116) reduction of field hand wages related to the CEWS. This was partially offset by a lower revenue per day.
- For the three months ended September 30, 2021, general and administrative expenses were $1,238 up $649 (110%) from $589 as compared to the corresponding 2020 period. The increase is related to increased operating activity, and the elimination of salary roll backs for the Corporations employees and Directors partially offset by CEWS in 2021 as compared to 2020.
- Due to the above information, Adjusted EBITDA and net income for the three month period ended September 30, 2021 were $1,238 and $225, respectively. Adjusted EBITDA was up $1,538 from a loss of ($269), and net income was up $1,858 (114%) from a net loss of $1,633 from the 2020 corresponding period.
NON-GAAP MEASURES
This MD&A contains references to (i) Adjusted EBITDA and (ii) Gross margin and Gross margin percentage. These financial measures are not measures that have any standardized meaning prescribed by IFRS and are therefore referred to as non-GAAP (non - Generally Accepted Accounting Principles) measures. The non-GAAP measures used by the Corporation may not be comparable to similar measures used by other companies.
(i) Adjusted EBITDA is defined as "income (loss) from operations before interest income, interest expense, taxes, transaction costs, depreciation and amortization, share-based compensation expense, gains on disposal of property and equipment, impairment expenses, other income, foreign exchange, non-recurring restructuring charges, finance costs, accretion of debentures and other income/expenses, and any other items that the Corporation considers appropriate to adjust given the irregular nature and relevance to comparable operations." Management believes that in addition to net and total comprehensive income (loss), Adjusted EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Corporation's principal business activities prior to consideration of how these activities are financed, how assets are depreciated, amortized and impaired, the impact of foreign exchange, or how the results are affected by the accounting standards associated with the Corporation's stock-based compensation plan. Investors should be cautioned, however, that Adjusted EBITDA should not be construed as an alternative to net income (loss) and comprehensive income (loss) determined in accordance with IFRS as an indicator of the Corporation's performance. The Corporation's method of calculating Adjusted EBITDA may differ from that of other organizations and, accordingly, its Adjusted EBITDA may not be comparable to that of other companies.
Three months ended |
Nine months ended |
||||||
(000's CAD $) |
2021 |
2020 |
% Change |
2021 |
2020 |
% Change |
|
Net income (loss) |
225 |
(1,633) |
114% |
2,480 |
(2,376) |
204% |
|
Depreciation |
1,092 |
1,211 |
(10%) |
3,364 |
3,636 |
(7%) |
|
Finance costs |
165 |
166 |
(1%) |
509 |
544 |
(6%) |
|
Other income |
- |
(10) |
(100%) |
(8) |
(52) |
(85%) |
|
Gain from disposition of property and equipment |
(59) |
- |
nm |
(59) |
- |
nm |
|
Gain from equipment lost in hole |
(203) |
- |
nm |
(242) |
- |
nm |
|
Share-based payments |
52 |
34 |
53% |
328 |
195 |
68% |
|
Transaction costs |
- |
35 |
nm |
- |
35 |
(100%) |
|
Foreign exchange gain (loss) |
(3) |
12 |
(125%) |
40 |
- |
nm |
|
Gain on Extinguishment of Convertible Debenture |
- |
(84) |
nm |
- |
(84) |
nm |
|
Adjusted EBITDA |
1,269 |
(269) |
572% |
6,412 |
1,898 |
238% |
|
nm - not meaningful |
|||||||
(ii) Gross margin and Gross margin percentage is defined as "gross profit from services revenue from continuing operations before depreciation". Gross margin is a measure that provides shareholders and potential investors additional information regarding the Corporation's cash generating and operating performance. Management utilizes this measure to assess the Corporation's operating performance. Investors should be cautioned, however, that gross margin should not be construed as an alternative to net income (loss) and comprehensive income (loss) determined in accordance with IFRS as an indicator of the Corporation's performance. The Corporation's method of calculating gross margin may differ from that of other organizations and, accordingly, its gross margin may not be comparable to that of other companies.
Three months ended |
Nine months ended |
||||||
(000's CAD $) |
2021 |
2020 |
% Change |
2021 |
2020 |
% Change |
|
Income (loss) from operations |
1,363 |
(925) |
247% |
5,735 |
515 |
1,014% |
|
Depreciation of property and equipment |
1,012 |
1,109 |
(9%) |
3,124 |
3,331 |
(6%) |
|
Gross margin |
2,375 |
184 |
1,191% |
8,859 |
3,846 |
130% |
|
Gross margin % |
37% |
26% |
42% |
39% |
32% |
22% |
|
nm - not meaningful |
|||||||
FORWARD-LOOKING INFORMATION
Certain statements contained in this News Release constitute forward-looking statements or forward-looking information (collectively, "forward-looking information"). Forward-looking information relates to future events or the Corporation's future performance. All information other than statements of historical fact is forward-looking information. The use of any of the words "anticipate", "plan", "contemplate", "continue", "estimate", "expect", "intend", "propose", "might", "may", "will", "could", "should", "believe", "predict", and "forecast" are intended to identify forward-looking information.
This News Release contains forward-looking information pertaining to, among other things: the impacts of COVID-19 and expectations and responses related thereto; the Corporation's performance and safety record and expectations related thereto; and expectations associated with the Corporation's outlook, including among other things, anticipated commodity pricing and expectations related to industry activity, improvements, and expected capital spending of the Corporation's customers, among others.
Forward-looking information is presented in this News Release for the purpose of assisting investors and others in understanding certain key elements of the Corporation's financial results and business plan, as well as the objectives, strategic priorities and business outlook of the Corporation, and in obtaining a better understanding of the Corporation's anticipated operating environment. Readers are cautioned that such forward-looking information may not be appropriate for other purposes.
Forward-looking information, by its very nature, is subject to inherent risks and uncertainties and is based on many assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from the expectations of the Corporation expressed in or implied by such forward-looking information and that the Corporation's business outlook, objectives, plans and strategic priorities may not be achieved. Macro-economic conditions, including public health concerns (including the impact of the COVID-19 pandemic) and other geopolitical risks, the condition of the global economy and, specifically, the condition of the crude oil and natural gas industry, and the ongoing significant volatility in world markets may adversely impact drilling and completions programs, which could materially adversely impact the Corporation.
In addition to other factors which may be identified in this News Release, such forward-looking information is subject to various risks, uncertainties and assumptions, including, but not limited to: the condition of the global economy, including trade, public health (including the impact of the COVID-19 pandemic) and other geopolitical risks; the stability of the economic and political environment in which the Corporation operates; future commodity prices and the potential impact on the Corporation and the industry in which the Corporation operates, including levels of exploration and development activities; the success of the measures implemented by the Corporation to ensure the safety of its field and office employees and safe, efficient and reliable operations at each of its drilling sites; the creditworthiness of the Corporation's customers and counterparties; the effectiveness of the Corporation's financial risk management policies at ensuring all payables are paid within the pre-agreed credit terms; the ability of the Corporation to retain qualified staff; the ability of the Corporation to obtain financing on acceptable terms; the impact of increasing competition; the belief that the Corporation's principal sources of liquidity, its operating cash flows, operating loan and debt and equity financings will be sufficient to service its debt and fund its operations and other strategic opportunities; the timing and impacts of lost-in-hole recoveries; the expected effects of seasonality and weather on the Corporation's operations and business; the ability to protect and maintain the Corporation's intellectual property; the ability of the Corporation to maintain key customers; foreign currency exchange rates; interest rates; the regulatory framework regarding taxes and environmental matters in the jurisdictions in which the Corporation operates; and the ability of the Corporation to successfully implement key cost and discretionary spending plan adjustments. Actual results and future events could differ materially from those expected or estimated in such forward-looking information. As a result, the Corporation cannot guarantee that any forward-looking information will materialize and we caution you against relying on any of this forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information.
Additional information on these and other factors that the Corporation's forward-looking information is subject to are disclosed in the Corporation's management's discussion and analysis and annual information form each dated March 24, 2021, the Corporation's management's discussion and analysis dated November 3, 2021, and in other reports filed with the securities regulatory authorities in Canada from time to time and available on SEDAR (sedar.com).
Statements, including forward-looking information, are made as of the date of this News Release and the Corporation does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. The forward-looking information contained in this News Release is expressly qualified by this cautionary statement.
SOURCE Stampede Drilling Inc.
Lyle Whitmarsh, President & Chief Executive Officer, Stampede Drilling Inc., Tel: (403) 984-5042
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