STAMPEDE DRILLING INC. ANNOUNCES 2023 FIRST QUARTER RESULTS
CALGARY, AB, May 11, 2023 /CNW/ - Stampede Drilling Inc. ("Stampede" or the "Corporation") (TSXV: SDI) announces today its consolidated financial and operational results for the three month period ended March 31, 2023.
The following should be read in conjunction with the Corporation's consolidated financial statements and the notes thereto for the year ended December 31, 2022, related management's discussion and analysis and annual information form, each of which are 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.
FIRST QUARTER 2023 OPERATIONAL HIGHLIGHTS
For the three months ended March 31, 2023, the Corporation recorded its highest ever quarterly revenue, adjusted EBITDA, and net income.
- Revenue for the three month period ended March 31, 2023 was $25,697, up $11,129 (76%) compared to $14,658 for the corresponding 2022 period.
- Adjusted EBITDA(1) for the three month period ended March 31, 2023 was $5,990, up $2,233 (59%) compared to $3,757 for the corresponding 2022 period.
- Net Income for the three month period ended March 31, 2023 was $3,765, up $1,443 (62%) compared to $2,322 for the corresponding 2022 period.
The Corporation's results were driven by higher operating days and higher revenue per day partially offset by higher operating expenses and general and administrative expenses. Total operating days in the quarter were 918, up 275 (43%) from the 643 operating days in the corresponding period of 2022. The increase in operating days was the result of an increase in the number of marketed rigs in the first quarter of 2023 compared to the first quarter of 2022.
Total revenue per day of $28.0 was up $5.3 (23%) from the revenue per day of $22.7 in the corresponding period of 2022. Revenue per day increased as a result of improved customer demand and higher prices.
OUTLOOK
Throughout the first quarter of 2023, Stampede's customers have continued to strengthen their balance sheets and remain disciplined on spending while growing production within their operating cash flows. While macroeconomic factors such as the war in Ukraine, worldwide inflationary pressures, possible near-term recession and overall demand globally will continue to create ongoing uncertainty for energy markets, Stampede anticipates the current commodity price environment will continue to drive producer cash flows and increased drilling activity in Western Canada throughout 2023.
The Corporation is on pace with another strong start to the year with 17 out of its 19 rig fleet operational and fully crewed in the first quarter of 2023. Access to qualified field labour will continue to be an industry wide challenge in 2023, however management has proven their ability to crew underutilized assets since Stampede's inception. The Corporation will continue to assess additional acquisition opportunities as they arise, as well as making focused capital expenditures to further enhance customer desirability of its current fleet in 2023 while maintaining a strong balance sheet and debt facility.
(1) Refer to "Non-GAAP Measures" for further information. |
FINANCIAL SUMMARY
Three months ended March 31, |
|||||
(000's CAD $ except per share amounts) |
2023 |
2022 |
% Change |
||
Revenue |
25,697 |
14,568 |
76 % |
||
Direct operating expenses |
17,383 |
9,568 |
82 % |
||
Gross margin (1) |
8,314 |
5,000 |
66 % |
||
Net income |
3,765 |
2,322 |
62 % |
||
Basic and diluted income per share |
0.02 |
0.02 |
- |
||
Adjusted EBITDA (1) |
5,990 |
3,757 |
59 % |
||
Funds from operating activities |
5,966 |
3,703 |
61 % |
||
Free cash flow(1) |
4,247 |
3,451 |
23 % |
||
Weighted average common shares outstanding |
224,771 |
132,171 |
70 % |
||
Weighted average diluted common shares outstanding |
230,624 |
146,559 |
57 % |
||
Capital expenditures |
2,241 |
1,653 |
36 % |
||
Number of marketed rigs |
19 |
10 |
90 % |
||
Drilling rig utilization(2) |
60 % |
71 % |
(15 %) |
||
CAOEC industry average utilization(3) |
45 % |
38 % |
18 % |
||
(1) Refer to "Non-GAAP an Other Financial Measures" for further information. |
|||||
DESCRIPTION OF STAMPEDE'S BUSINESS
Stampede is an energy services company that provides premier contract drilling services in Western Canada. Stampede operates a fleet of 18 telescopic double drilling rigs and 1 high spec triple drilling rig suited for most formations within the Western Canadian Sedimentary Basin ("WCSB"). The Corporation's head office is located in Calgary, Alberta with operations based out of Nisku, Alberta and Estevan, Saskatchewan. The Corporation's common shares trade on the TSX Venture Exchange under the symbol "SDI".
RESULTS FROM OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2023
Three months ended March 31, |
|||||
(000's CAD $ except per day amounts) |
2023 |
2022 |
% Change |
||
Revenue |
25,697 |
14,568 |
76 % |
||
Direct operating expenses |
17,383 |
9,568 |
82 % |
||
Gross margin(1) |
8,314 |
5,000 |
66 % |
||
Gross margin %(1) |
32 % |
34 % |
(6 %) |
||
Net income |
3,765 |
2,322 |
62 % |
||
General and administrative expenses |
2,650 |
1,372 |
93 % |
||
Adjusted EBITDA(1) |
5,990 |
3,757 |
59 % |
||
Drilling rig operating days(2) |
918 |
643 |
43 % |
||
Drilling rig revenue per day(3) |
28.0 |
22.7 |
23 % |
||
Drilling rig utilization(4) |
60 % |
71 % |
(15 %) |
||
CAOEC industry average utilization(5) |
45 % |
38 % |
18 % |
||
|
|||||
- Revenue of $25,697 – an increase of $11,129 (76%) compared to $14,568 for the corresponding 2022 period. The increase was primarily related to the addition of 9 drilling rigs to the Corporation's fleet throughout 2022, combined with increased revenue per day.
- Operating days of 918 – an increase of 275 operating days (43%) from the 643 operating days in the corresponding 2022 period. Operating days increased as a result of higher demand along with the increase in rig count compared to the prior period. Drilling rig utilization for the three month period ended March 31, 2023 was 60%, which was a 15% decrease from the corresponding 2022 period and 33% higher than the CAOEC industry average utilization rate of 45% for the first quarter of 2023.
- Gross margin percentage of 32% – a decrease of 6% from 34% as compared to the corresponding 2022 period. The gross margin decrease was primarily related to higher rig operating expenses due to inflationary pressures partially offset by the increase in revenue per day.
- Adjusted EBITDA of $5,990 – an increase of $2,233 (59%) from $3,757 from the corresponding 2022 period. The increase is primarily related to higher revenue due to increased revenue per day and partially offset by higher operating expenses and general and administrative expenses.
- Net income of $3,765 – an increase of $1,443 (62%) from $2,322 from the corresponding 2022 period. The increase is primarily related to increased operating days and revenue per day and partially offset by higher operating expenses, general and administrative expenses, and finance costs.
- General and administrative expenses of $2,650 – an increase of $1,278 (93%) from $1,372 compared to the corresponding 2022 period. The increase is primarily related to increased headcount and administration expenses due to the increased activity levels.
NON-GAAP AND OTHER FINANCIAL MEASURES
This news release contains references to: (i) adjusted EBITDA; (ii) gross margin; (iii) gross margin percentage; and (iv) free cash flow. These financial measures are not measures that have any standardized meaning prescribed by IFRS and are therefore referred to as non-GAAP (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 from operations before interest income, interest expense, taxes, transaction costs, depreciation and amortization, share-based compensation expense, gains on asset disposals, impairment expenses, other income, foreign exchange, non-recurring restructuring charges, finance costs, accretion of debentures and other income/expenses, foreign exchange gain 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 income, 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 and comprehensive income 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 March 31, |
|||
(000's CAD $) |
2023 |
2022 |
% Change |
Net income |
3,765 |
2,322 |
62 % |
Depreciation |
1,625 |
1,083 |
50 % |
Finance costs |
429 |
185 |
132 % |
Other income |
- |
(2) |
nm |
Gain on asset disposal |
(48) |
- |
nm |
Share-based payments |
216 |
86 |
151 % |
Transaction costs |
13 |
45 |
(71 %) |
Foreign exchange (gain) loss |
(10) |
38 |
126 % |
Adjusted EBITDA |
5,990 |
3,757 |
59 % |
nm - not meaningful |
|||
(ii) Gross margin - is defined as "Income from operations before depreciation of property and equipment". 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) 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.
(iii) Gross margin percentage - is calculated as gross margin divided by revenue. The Corporation believes gross margin as a percentage of revenue is an important measure to determine how the Corporation is managing its revenues and corresponding cost of sales.
The following table reconciles the Corporation's income from operations, being the most directly comparable financial measure disclosed in the Corporation's interim financial statements, to gross margin:
Three months ended March 31, |
|||
(000's CAD $) |
2023 |
2022 |
% Change |
Income from operations |
6,799 |
3,960 |
72 % |
Depreciation of property and equipment |
1,515 |
1,040 |
46 % |
Gross margin |
8,314 |
5,000 |
66 % |
Gross margin % |
32 % |
34 % |
(6 %) |
(iv) Free cash flow - is calculated based on funds flow from operating activities less maintenance and sustaining capital, and interest and principal debt repayments. The Corporation uses this measure to assess the discretionary cash that management has to invest in growth capital, asset acquisitions, or return capital to shareholders. The Corporation's method of calculating free cash flow may differ from that of other organizations and, accordingly, its free cash flow may not be comparable to that of other companies. The following table reconciles the Corporation's funds from operating activities to free cash flow.
Three months ended March 31, |
|||
(000's CAD $) |
2023 |
2022 |
% Change |
Free cash flow |
|||
Funds from operating activities |
5,966 |
3,703 |
61 % |
Maintenance and sustaining capital |
(1,156) |
(130) |
789 % |
BDC principal payments |
(100) |
(100) |
0 % |
Interest on BDC loan |
(32) |
(22) |
45 % |
Term Loan principal payments |
(250) |
- |
nm |
Interest on Term Loan |
(181) |
- |
nm |
Total free cash flow |
4,247 |
3,451 |
23 % |
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 Corporation's performance; expectations associated with the Corporation's outlook, including among other things, anticipated commodity pricing and the volatility thereof, expectations about producer cash flows and resulting industry activities, market conditions and corresponding rig utilization; the assessment of additional acquisition opportunities by the Corporation; anticipated industry wide inflationary costs and supply chain constraints and the resulting impact on the profitability of the Corporation; and the Corporation's expectations relating to market risk.
Forward-looking information is based on certain assumptions that Stampede has made in respect thereof as at the date of this news release regarding, among other things: the Corporation's ability to attract and retain sufficient qualified field labourers to fully crew and contract its rigs; that the current commodity price environment will have a positive effect on producer cash flows, resulting in increased drilling activity in Western Canada; the success of the measures implemented by the Corporation to ensure the 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; that the Corporation has adequate access to its credit facility to provide the necessary liquidity needed to manage fluctuations in the timing of receipt and/or disbursement of operating cash flows; the belief that adjusted EBITDA, gross margin and gross margin percentage are useful supplemental financial measures; the ability of the Corporation to retain qualified staff; the ability of the Corporation to maintain key customers; the ability of the Corporation to obtain financing on acceptable terms; the belief that the Corporation's principal sources of liquidity will be sufficient to service its debt and fund its operations and other strategic opportunities; the ability of the Corporation to obtain financing on acceptable terms; the ability to protect and maintain the Corporation's intellectual property; the Corporation's ability to maintain financial resiliency in light of current macroeconomic conditions; and the regulatory framework regarding taxes and environmental matters in the jurisdictions in which the Corporation operates.
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.
While Stampede believes the expectations and material factors and assumptions reflected in the forward-looking information is reasonable as of the date hereof, there can be no assurance that these expectations, factors and assumptions will prove to be correct. Forward-looking information is not a guarantee of future performance and actual results or events could differ materially from the expectations of the Corporation expressed in or implied by such forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information is subject to a number of known and unknown risks and uncertainties including, but not limited to: the condition of the global economy, including trade, inflation, the ongoing conflict in Ukraine and other geopolitical risks; the condition of the crude oil and natural gas industry and related commodity prices; other 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 impact of increasing competition; fluctuations in operating results; the ongoing significant volatility in world markets and the resulting impact on drilling and completions programs; fluctuations in worldwide demand for energy and the global advancement of alternative sources of energy and the impact thereof on the demand for the Corporation's services; foreign currency exchange rates; interest rates; labour and material shortages; cyber security risks; natural catastrophes; and certain other risks and uncertainties detailed under the heading "Risks and Uncertainties" in the Corporation's management's discussion and analysis for the three months ended March 31, 2023, and in the Corporation's annual management's discussion and analysis and annual information form, each dated March 16, 2023 for the year ended December 31, 2022, and from time to time in Stampede's public disclosure documents available at www.sedar.com.
This list of risk factors should not be construed as exhaustive. Readers are cautioned that events or circumstances could cause actual results to differ materially from those predicted, forecasted, or projected. 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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