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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Stampede Drilling Inc | TSXV:SDI | TSX Venture | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.23 | 0.23 | 0.24 | 0.23 | 0.23 | 0.23 | 2,864 | 14:30:00 |
CALGARY, Nov. 6, 2019 /CNW/ - Stampede Drilling Inc. ("Stampede" or the "Corporation") (TSX-V: SDI) announces today its financial and operational results for the three and nine month periods ended September 30, 2019.
The following should be read in conjunction with the Corporation's unaudited condensed consolidated financial statements and the notes thereto for the three and nine month periods ended September 30, 2019 and related management's discussion and analysis, 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.
OUTLOOK & 2019 OPERATIONAL OVERVIEW
The Corporation's outlook for Western Canada continues to remain conservative for the remainder of 2019. Macro-economic factors such as pipeline expansion and government mandated crude oil production cuts are expected to continue to adversely impact producer spending.
Despite the negative external factors, the Corporation has been able to capitalize on opportunities and continue to build positive momentum since entering the drilling rig business in November 2017. For the nine month period ended September 30, 2019, continuing operations revenue was up 70% and adjusted EBITDA was up 87% as compared to the corresponding 2018 period.
The Corporation continues to work on strengthening its balance sheet with a focus on controlling costs. Management will continue its disciplined cash management to help execute on strategic acquisitions, specific customer related rig upgrades and opportunities that align with the Corporation's growth plan.
FINANCIAL HIGHLIGHTS
THIRD QUARTER 2019 SUMMARY (Compared with the third quarter 2018)
NINE MONTHS ENDED SEPTEMBER 30, 2019 SUMMARY (Compared with the nine months ended September 30, 2018)
Three Months Ended | Nine months ended | ||||||
September 30, | September 30, | ||||||
(000's CAD $ except per share amounts) | 2019 | 2018 | % Change | 2019 | 2018 | % Change | |
Continuing operations | |||||||
Revenue | 5,910 | 3,068 | 93% | 16,992 | 10,003 | 70% | |
Direct operating expenses | 4,120 | 2,199 | 87% | 10,911 | 6,810 | 60% | |
Gross margin (1) | 1,790 | 869 | 106% | 6,081 | 3,193 | 90% | |
Net income (loss) from continuing operations | (705) | (653) | 8% | (1,143) | (606) | 89% | |
Basic and diluted per share | (0.01) | (0.01) | nm | (0.01) | (0.01) | nm | |
Adjusted EBITDA (1) | 682 | 151 | 352% | 3,059 | 1,641 | 86% | |
Basic and diluted per share | 0.01 | 0.00 | nm | 0.02 | 0.01 | nm | |
Weighted average common shares outstanding | 131,992 | 131,577 | nm | 131,786 | 130,184 | 1% | |
Weighted average diluted common shares outstanding | 131,992 | 131,577 | nm | 131,786 | 130,184 | 1% | |
Combined operations (2) | |||||||
Net income (loss) | (724) | (905) | (20%) | (91) | (2,125) | (96%) | |
Basic and diluted per share | (0.01) | (0.01) | nm | (0.00) | (0.02) | (100%) | |
Adjusted EBITDA (1) | 682 | 157 | 334% | 3,533 | 691 | 411% | |
Capital expenditures | 3,060 | 2,260 | 35% | 7,285 | 14,540 | (50%) | |
nm - not meaningful | |||||||
(1) Refer to "Non-GAAP Measures" for further information. | |||||||
(2) Combined operations represents the aggregated results of both continuing and discontinued operations. |
RESULTS OF CONTINUING OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019
Nine months ended | |||
September 30, | |||
(000's CAD $ except operating days) | 2019 | 2018(1) | % Change |
Revenue | 16,992 | 10,003 | 70% |
Direct operating expenses | 10,911 | 6,810 | 60% |
Gross margin (2) | 6,081 | 3,193 | 90% |
Gross margin % | 36% | 32% | 13% |
Net income (loss) from continuing operations | (1,143) | (606) | 89% |
General and administrative expenses | 3,689 | 1,592 | 132% |
General and administrative expenses as a % of revenue | 22% | 16% | 38% |
Adjusted EBITDA (2) | 3,059 | 1,639 | 87% |
Adjusted EBITDA as a % of revenue | 18% | 16% | 13% |
Average active rig count at end of period | 9 | 8 | 19% |
Drilling rig operating days | 854 | 567 | 51% |
Drilling rig revenue per day | 19.9 | 17.6 | 13% |
(1) The comparative period has been restated to reflect discontinued operations as discussed in Note 4. | |||
(2) Refer to "Non-GAAP measures" for further information. |
Other Items
Nine months ended | |||
September 30, | |||
(000's CAD $) | 2019 | 2018 | % Change |
Gain from disposition of property and equipment | - | 172 | (100%) |
Gain from equipment lost in hole | 15 | - | nm |
Finance costs | (500) | (293) | 71% |
Other income | 104 | - | nm |
Foreign exchange loss | (6) | 1 | nm |
Transaction costs | (146) | (539) | (73%) |
Other items | (533) | (659) | (19%) |
For the nine months ended September 30, 2019, finance costs were $500, a $207 (71%) increase from $293 as compared to the corresponding 2018 period. The increase was due to higher 2019 debt levels associated with the Corporation's line of credit. The higher 2019 debt levels were a result of increased capital spend and increased working capital as a result of increased 2019 activity for the nine months ended September 30, 2019 compared to the corresponding 2018 period.
For the nine months ended September 30, 2019, other income was $104 as compared to $0 in the corresponding 2018 period. Other income is comprised of rent collections from the Corporation's subleases.
For first nine months of 2019, there was a decrease in transaction costs of $393 (73%) from $539 as compared to the corresponding 2018 period. Transaction costs for the nine months ended September 30, 2019 consist of non-capitalizable amounts related to US start-up costs of $146. Transaction costs for the nine months ended September 30, 2018 represent non-capitalizable amounts directly related to drilling rig acquisitions which consist of due diligence and external legal fees and US start-up costs.
THIRD QUARTER RESULTS OF CONTINUING OPERATIONS
Three Months Ended | |||
September 30, | |||
(000's CAD $ except per day amounts) | 2019 | 2018(1) | % Change |
Drilling rig revenue | 5,910 | 3,068 | 93% |
Direct operating expenses | 4,120 | 2,199 | 87% |
Gross margin (2) | 1,790 | 869 | 106% |
Gross margin % | 30% | 28% | 7% |
Net income (loss) from continuing operations | (705) | (653) | 8% |
General and administrative expenses | 1,284 | 756 | 70% |
General and administrative expenses as a % of revenue | 22% | 25% | (12%) |
Adjusted EBITDA (2) | 682 | 152 | 349% |
Adjusted EBITDA as a % of revenue | 12% | 5% | 140% |
Average active rig count at end of period | 10 | 9 | 11% |
Drilling rig operating days | 295 | 177 | 67% |
Drilling rig revenue per day | 20.0 | 17.4 | 15% |
(1) The comparative period has been restated to reflect discontinued operations as discussed in Note 4. | |||
(2) Refer to "Non-GAAP measures" for further information. |
RESULTS OF DISCONTINUED OPERATIONS
On April 3, 2019, the Corporation announced the discontinuation of its directional drilling division. As part of this process, the Corporation presented the results of the directional drilling operations using the guidance under "IFRS 5 - Non-Current Assets Held for Sale and Discontinued Operations", as discontinued operations on the condensed consolidated statements of comprehensive income (loss) and the condensed consolidated statements of cash flows for the current and comparative periods.
During the second quarter, the Corporation disposed of its directional drilling assets to an independent, third-party purchaser. In accordance with the disposal, property and equipment with a net book value of $908 was sold on May 27, 2019 for gross proceeds of $1,500 which resulted in recognition of a gain on disposition of $576, which was classified within discontinued operations.
The general and administrative expenses for the three months ended September 30, 2019 represent those costs required to complete the disposal of the assets. As part of the disposal transaction, right of use assets previously used by the directional drilling division and their related lease liabilities were assigned to the purchaser with the purchaser assuming all rights and obligations under the lease.
The following table sets forth operating results from the discontinued operations for the three and nine months ended September 30, 2019 and 2018:
Three Months Ended | |||
September 30, | |||
(000's CAD $ except per day amounts) | 2019 | 2018 | % Change |
Directional drilling revenue | - | 1,717 | (100%) |
Direct operating expenses | - | 1,340 | (100%) |
Gross margin (1) | - | 377 | (100%) |
Gross margin % | - | 22% | nm |
Directional drilling net income (loss) | (19) | (252) | (92%) |
General and administrative expenses | 19 | 385 | (95%) |
General and administrative expenses as a % of revenue | - | 22% | nm |
Adjusted EBITDA (1) | - | 6 | (100%) |
Adjusted EBITDA as a % of revenue | nm | 0% | nm |
Directional drilling operating days(2) | - | 184 | (100%) |
Directional drilling revenue per day | nm | 9.3 | nm |
(1) Refer to "Non-GAAP measures" for further information. | |||
[2] A stand-by day is calculated as 0.5 day of an operating day. |
Nine months ended | |||
September 30, | |||
(000's CAD $ except operating days) | 2019 | 2018 | % Change |
Directional drilling revenue | 1,837 | 4,304 | (57%) |
Direct operating expenses | 963 | 3,538 | (73%) |
Gross margin (1) | 874 | 766 | 14% |
Gross margin % | 48% | 18% | 167% |
Directional drilling net income (loss) | 1,052 | (1,519) | (169%) |
General and administrative expenses | 736 | 2,205 | (67%) |
General and administrative expenses as a % of revenue | 40% | 51% | (22%) |
Adjusted EBITDA (1) | 474 | (946) | 150% |
Adjusted EBITDA as a % of revenue | 26% | (22%) | 218% |
Directional drilling operating days(2) | 209 | 512 | (59%) |
Directional drilling revenue per day | 8.8 | 8.4 | 5% |
(1) Refer to "Non-GAAP measures" for further information. | |||
[2] A stand-by day is calculated as 0.5 day of an operating day. |
NON-GAAP MEASURES
This MD&A contains references to (i) Adjusted EBITDA and (ii) gross margin. 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 (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 | ||||||
September 30, | September 30, | ||||||
(000's CAD $) | 2019 | 2018 | % Change | 2019 | 2018 | % Change | |
Net loss from continuing operations | (705) | (653) | 8% | (1,143) | (606) | 89% | |
Depreciation (1) | 1,131 | 626 | 81% | 3,291 | 1,548 | 113% | |
Finance costs | 173 | 96 | 80% | 500 | 293 | 71% | |
Other income | (9) | (2) | nm | (104) | - | nm | |
Gain from disposition of property and equipment | - | - | - | - | (172) | (100%) | |
Gain from equipment lost in hole | - | - | - | (15) | - | nm | |
Share-based payments | 104 | 38 | nm | 378 | 38 | nm | |
Transaction costs | - | 46 | (100%) | 146 | 539 | (73%) | |
Foreign exchange loss | (12) | - | nm | 6 | 1 | nm | |
Adjusted EBITDA | 682 | 151 | 352% | 3,059 | 1,641 | 86% | |
nm - not meaningful | |||||||
(1) Includes depreciation of property and equipment and right-of-use assets |
(ii) | Gross margin is defined as "gross profit from services revenue from continuing operations before stock-based compensation and 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 | ||||||
September 30, | September 30, | ||||||
(000's CAD $) | 2019 | 2018 | % Change | 2019 | 2018 | % Change | |
Income from operations | 731 | 243 | 201% | 3,079 | 1,645 | 87% | |
Depreciation of property and equipment | 1,059 | 626 | 69% | 3,002 | 1,548 | 94% | |
Gross margin | 1,790 | 869 | 106% | 6,081 | 3,193 | 90% | |
Gross margin % | 30% | 28% | 7% | 36% | 32% | 13% | |
nm - not meaningful |
FORWARD-LOOKING INFORMATION
Certain statements contained in this press 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", "believe", "predict", and "forecast" are intended to identify forward-looking information.
This press release contains forward-looking information pertaining to, among other things: the expectation that the Corporation's current drilling rig utilization will continue for the remainder of 2019; the expectation that there will not be a significant recovery in industry activity in 2019 from 2018 levels expectations regarding macro-economic factors and their impact on the industry; the view that the Corporation has a strong balance sheet and its expectations regarding its cash management and of having the flexibility to execute on strategic acquisitions, specific customer related upgrades and all other opportunities that align with the Corporation's growth plan; the belief that Adjusted EBITDA is a useful supplemental financial measure; and the expectation of continued expansion into the drilling rig business in Western Canada.
Statements, including forward-looking information, are made as of the date of this press 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 press release is expressly qualified by this cautionary statement.
Neither the 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.
SOURCE Stampede Drilling Inc.
Copyright 2019 Canada NewsWire
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