TSX - FRC
CALGARY,
July 31, 2014 /CNW/ - Canyon
Services Group Inc. ("Canyon" or the "Company") is pleased to
announce its second quarter 2014 results. The following
results should be read in conjunction with the Management's
Discussion and Analysis, the interim consolidated financial
statements and notes of Canyon Services Group Inc. for the six
months ended June 30, 2014 and should
also be read in conjunction with the audited consolidated financial
statements and Annual Information Form for the year ended
December 31, 2013, which are available on SEDAR at
www.sedar.com.
HIGHLIGHTS SUMMARY
The operating and financial highlights for the three and six
months ended June 30, 2014 are
summarized as follows:
- Q2 2014 experienced increased activity levels from the prior
year comparable quarter as a long cold winter delayed the seasonal
spring break-up into early April and June experienced drier than
normal field conditions especially in the northern portions of the
WCSB compared to the same month last year when operations were
impacted by extremely wet weather.
- Jobs completed in the current quarter increased by 130% to 347
from 151 in Q2 2013, while consolidated revenues increased by 120%
to $60.3 million in Q2 2014 from
$27.4 million in Q2 2013. For
the six months ended June 30, 2014,
jobs completed increased by 99% to 1,237 from 621 in the prior year
comparable period, while consolidated revenues increased by 74% to
$198.5 million from $114.3 over the same periods.
- Canyon's increased activity and revenues in Q2 2014 were offset
by an increase in fixed costs due to staff additions in the quarter
and significant seasonal price discounts which are traditionally
offered to customers during spring break up. As a result,
Canyon recorded negative EBITDA before share based payments of
$9.2 million, a 30% improvement over
the negative $13.1 million recorded
in Q2 2013. Canyon exited Q2 2014 with just under 1,100
people compared to about 800 at the same time last year.
- For the six months ended June 30,
2014, EBITDA before share based payments more than doubled
to $18.2 million from $7.2 million recorded in the prior year
comparable period.
- In the six months ended June 30,
2014, loss and comprehensive loss was $3.4 million, down from the loss and
comprehensive loss of $8.7 million in
the six months ended June 30, 2013.
- Effective July 1, 2014 Canyon
closed the previously announced acquisition of Fraction Energy
Services Ltd. ("Fraction"), a leading water and fracturing fluid
logistics, containment, transfer and storage management business
for total consideration of approximately $106.1 million which consisted of 5.4 million
common shares of Canyon issued at $18.81 per share and cash consideration of
$4.5 million to settle outstanding
options to acquire Fraction common shares.
- Effective July 14, 2014, Canyon
acquired four deep coiled tubing packages which included twin fluid
pumpers, BOPs, injectors and three cranes (the "Assets") from a
Canadian oilfield services company for approximately $19.7 million. This acquisition will increase
Canyon's deep coiled tubing fleet to 11 packages. Canyon expects to
deploy the Assets in NW Alberta
and NE British Columbia.
- Including the purchase of the Assets, Canyon's 2014 capital
budget has increased to $94.5
million. This amount also includes the previously
announced $62.9 million, $3.2 million recently allocated to expand
Canyon's Grande Prairie operating
base and approximately $8.7 million
that will be spent over the remainder of 2014 in the Fraction
business.
- On July 2, 2014 Canyon amended
its bank credit facilities to extend the term by one year.
The facilities consist of a $20
million Operating Facility and an $80
million Revolving Facility which includes a $30 million accordion feature. Canyon
remains in a very strong financial position. As at
June 30, 2014, Canyon had available
credit facilities combined with positive working capital totaling
$112 million.
- On June 26, 2014, Canyon declared
a quarterly dividend of $0.15 per
common share, or $10.3 million, which
was paid to shareholders on July 25,
2014.
OVERVIEW OF SECOND QUARTER 2014
000's except per
share, job amounts and
hydraulic pumping
capacity
(Unaudited)
|
Three Months
Ended
June 30
|
|
Six Months Ended
June 30
|
|
2014
|
2013
|
2012
|
|
2014
|
2013
|
2012
|
Consolidated
revenues
|
$60,279
|
$27,431
|
$37,974
|
|
$198,464
|
$114,318
|
$173,909
|
Profit (loss) and
comprehensive
income (loss)
|
$(15,263)
|
$(17,186)
|
$(6,940)
|
|
$(3,413)
|
$(8,659)
|
$30,227
|
Per
share-basic
|
$(0.24)
|
$(0.28)
|
$(0.11)
|
|
$(0.05)
|
$(0.14)
|
$0.49
|
Per
share-diluted
|
$(0.24)
|
$(0.28)
|
$(0.11)
|
|
$(0.05)
|
$(0.14)
|
$0.48
|
EBITDA before share-
based
payments(1)
|
$(9,186)
|
$(13,134)
|
$(1,552)
|
|
$18,246
|
$7,230
|
$56,462
|
Funds from (used
in)
operations(1)
|
$(4,071)
|
$(11,822)
|
$2,723
|
|
$19,795
|
$6,826
|
$49,306
|
Total jobs completed
(2)
|
347
|
151
|
251
|
|
1,237
|
621
|
1,185
|
Consolidated average
revenue
per job (2)
|
$178,028
|
$181,979
|
$155,545
|
|
$161,333
|
$184,389
|
$147,343
|
Average fracturing
revenue per
job
|
$275,423
|
$320,769
|
$203,759
|
|
$214,580
|
$261,204
|
$222,404
|
Hydraulic Pumping
Capacity
|
|
|
|
|
|
|
|
Average
HHP
|
245,500
|
225,500
|
194,000
|
|
238,000
|
225,500
|
185,000
|
Exit HHP
|
245,500
|
225,500
|
218,000
|
|
245,500
|
225,500
|
218,000
|
Capital
expenditures
|
$18,589
|
$2,310
|
$20,653
|
|
$31,871
|
$5,811
|
$54,779
|
000's except per
share amounts
(Unaudited)
|
As at
June 30,
2014
|
As at
December
31,
2013
|
As at
December
31,
2012
|
|
Cash and cash
equivalents
|
$6,372
|
$21,308
|
$22,584
|
|
Working
capital
|
$27,391
|
$41,730
|
$56,245
|
|
Total long-term
financial liabilities
|
$17,517
|
$3,096
|
$3,475
|
|
Total
assets
|
$391,245
|
$402,707
|
$406,113
|
|
Cash dividends
declared per share
|
$0.30
|
$0.60
|
$0.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
(1):
|
See Non-GAAP
Measures
|
Note
(2):
|
Includes all jobs
from each service line, specifically hydraulic fracturing; coiled
tubing; nitrogen fracturing; acidizing and remedial
cementing
|
In Q2 2014, jobs completed and consolidated
revenues increased by 130% and 120% respectively compared to Q2
2013. The quarter got off to a strong start as a long cold
winter delayed the seasonal spring break-up into early April, while
June experienced drier field conditions especially in the northern
portions of the Western Canadian Sedimentary Basin ("WCSB")
compared to the same month last year when operations were impacted
by extremely wet weather. In addition, Canyon's ongoing sales
initiatives resulted in further market share growth with companies
operating in the deep basin as well as market share expansion in
southeast Saskatchewan and
southwest Manitoba. As a result, jobs completed in the
current quarter increased by 130% to 347 from 151 in Q2 2013, while
consolidated revenues increased by 120% to $60.3 million in Q2 2014 from $27.4 million in Q2 2013. For the six
months ended June 30, 2014, jobs
completed increased by 99% to 1,237 from 621 in the prior year
comparable period, while consolidated revenues increased by 74% to
$198.5 million from $114.3 million over the same periods.
We estimate that overall industry activity in the
WCSB as measured by total meters drilled increased by over 30%
percent in Q2 2014 year over year. This increasing trend in
industry activity has been evident since late 2013 and is driven by
several factors including strong natural gas prices in the first
half of 2014, stable oil prices and oil price differentials, more
favourable Canadian/US exchange rates and E&P companies'
improved access to capital markets to fund capital programs.
The AECO spot natural gas price averaged CAD$4.70 per mcf in Q2 2014, up 32% from
CAD$3.55 per mcf in Q2 2013.
Crude oil prices for Edmonton Light increased by 12% to
CAD$104.54 per barrel in Q2 2014 from
CAD$93.08 per barrel in Q2
2013. Also evident of the increased industry-wide activity
are the key industry indicators such as well licensing, drilling
rig utilization and well completions which all point to a positive
outlook for the remainder of 2014 and into 2015. Well
licensing for service-intensive deep wells in the WCSB increased by
about 40% in Q2 2014 compared to Q2 2013, and by 43% for the six
months ended June 30, 2014.
Drilling rig utilization increased by about 33% in Q2 2014 compared
to Q2 2013, and by about 12% on a year to date basis.
Although well completions were relatively flat in Q2 2014 for
the year to date compared to the prior year comparable period,
total meters completed increased by 15% compared to Q2 2013.
Natural gas well completions have increased by about 51% for the
year to date mainly due to LNG related delineation drilling in the
deeper, more service intensive parts of the WCSB requiring
increasing fracturing stages per well and greater proppant
tonnages.
Canyon's increased activity and revenues in Q2
2014 were offset by an increase in fixed costs due to staff
additions in the quarter and significant seasonal price discounts
which are traditionally offered to customers during spring break
up. As a result, in Q2 2014, Canyon recorded negative EBITDA
before share based payments of $9.2
million, a 30% improvement over the negative $13.1 million recorded in Q2 2013. For the
six months ended June 30, 2014,
EBITDA before share based payments more than doubled to
$18.2 million from $7.2 million recorded in the prior year
comparable period. In Q2 2014, Canyon's fixed costs increased
by approximately 30% compared to Q2 2013, as Canyon continuously
added field and support staff throughout 2013 and 2014 to prepare
for a busier industry as discussed above. In Q2 2014 Canyon
added approximately 140 field staff and exited Q2 2014 with just
under 1,100 people compared to about 800 at the same time last
year. In Q2 2014, Canyon recorded a loss and comprehensive
loss of $15.3 million, compared to a
loss and comprehensive loss of $17.2
million in Q2 2013. In the six months ended
June 30, 2014, loss and comprehensive
loss was $3.4 million, down from the
loss and comprehensive loss of $8.7
million in the six months ended June
30, 2013.
Subsequent Events
Fraction Acquisition
Effective July 1,
2014 Canyon closed the previously announced acquisition of
Fraction Energy Services Ltd. ("Fraction"), a privately held
company based in Calgary, Alberta
(the "Acquisition") for total consideration of approximately
$106.1 million which consisted of 5.4
million common shares of Canyon issued at a then market value of
$18.81 per share and cash
consideration of $4.5 million to
settle outstanding options to acquire Fraction common shares.
Fraction was founded in 2012 and has grown into a
leading provider of water and fracturing fluid logistics,
containment, transfer and storage management services. It
provides services to customers focused in northeast British Columbia and northwest Alberta, with field offices in Fort St. John, British Columbia and
Grande Prairie, Alberta.
Fraction currently employs approximately 150 people and in the
three and six months ending June 30,
2014, generated approximately $6
million and $14 million of
EBITDA respectively. This business has a variable cost
structure where field salaries and wages fluctuate with
activity. Thus, although Fraction's second quarter was
impacted by the seasonal spring break up it was able to generate
positive EBITDA in a period of lower activity. This will
benefit Canyon's future consolidated results. Canyon's
results will incorporate Fraction's results of operations
commencing with Q3 2014.
In connection with the acquisition, Fraction
management and employee shareholders have agreed to enter into a
three year escrow agreement whereby 25% of the Canyon common shares
received became freely tradable upon closing of the Acquisition
with the remaining 75% of the Canyon Shares being released equally
on the first, second and third anniversaries of the closing
date.
Coiled Tubing Assets Acquisition
Effective July 14,
2014, Canyon acquired four deep coiled tubing packages which
include twin fluid pumpers, BOPs, injectors and three cranes (the
"Assets") from a Canadian oilfield services company for
approximately $19.7 million. All of
the Assets are less than 12 months old and the coiled tubing units
have depth capacities of approximately 6,000 meters with 2 3/8 inch
diameter coil. This acquisition will increase Canyon's deep coiled
tubing fleet to 11 packages. Canyon expects to deploy the Assets in
northwest Alberta and northeast
British Columbia.
Including the purchase of the Assets, Canyon's
2014 capital budget has increased to approximately $94.5 million. This amount includes the
previously announced budget of $62.9
million, $3.2 million recently
allocated to expand Canyon's Grande
Prairie operating base and approximately $8.7 million that will be spent over the
remainder of 2014 in the Fraction business.
NON-GAAP MEASURES
The Company's Consolidated Financial Statements
have been prepared in accordance with International Financial
Reporting Standards ("IFRS"). Certain measures in this document do
not have any standardized meaning as prescribed by IFRS and are
considered NON-GAAP measures.
EBITDA before share-based payments and funds from
operations are not recognized measures under IFRS. Management
believes that in addition to profit and comprehensive income,
EBITDA before share-based payments and funds from operations are
useful supplemental measures as they provide an indication of the
results generated by the Company's business activities prior to
consideration of how those activities are financed, amortized or
taxed, as well as the cash generated by the Company's business
activities without consideration of the timing of the monetization
of non-cash working capital items. Readers should be
cautioned, however, that EBITDA before share-based payments and
funds from operations should not be construed as an alternative to
profit and comprehensive income determined in accordance with IFRS
as an indicator of the Company's performance. Canyon's method
of calculating EBITDA before share-based payments and funds from
operations may differ from other companies and accordingly, EBITDA
before share-based payments and funds from operations may not be
comparable to measures used by other companies. Canyon
calculates EBITDA before share-based payments as profit and
comprehensive income for the year adjusted for depreciation and
amortization, equity settled share-based payment transactions, gain
or loss on sale of property and equipment, finance costs, foreign
exchange (gain) loss and income tax expense. Reconciliations
of these NON-GAAP measures to the most directly comparable IFRS
measures are outlined below.
The Company describes revenue less cost of
services as gross profit.
EBITDA before share-based payments
000's
(Unaudited)
|
Three Months
Ended
June 30
|
Six Months Ended
June 30
|
|
2014
|
2013
|
2014
|
2013
|
Loss and
comprehensive loss
|
$(15,263)
|
$(17,186)
|
$(3,413)
|
$(8,659)
|
Add
(Deduct):
|
|
|
|
|
Depreciation and
amortization
|
9,892
|
7,792
|
19,706
|
15,496
|
Finance
costs
|
70
|
162
|
251
|
318
|
Foreign exchange
(gain) loss
|
(100)
|
12
|
268
|
(50)
|
Share-based payment
transactions
|
1,006
|
1,241
|
1,886
|
2,151
|
Gain on sale of
property and equipment
|
(26)
|
(12)
|
(16)
|
(44)
|
Income tax
recovery
|
(4,765)
|
(5,143)
|
(436)
|
(1,982)
|
EBITDA before
share-based payments
|
$(9,186)
|
$(13,134)
|
$18,246
|
$7,230
|
Funds from Operations
000's
(Unaudited)
|
Three Months
Ended
June 30
|
Six Months Ended
June 30
|
|
2014
|
2013
|
2014
|
2013
|
Net cash from
operating activities
|
$8,934
|
$10,140
|
$10,989
|
$29,472
|
Add
(Deduct):
|
|
|
|
|
Income Tax
paid
|
-
|
2,512
|
-
|
3,667
|
Change in working
capital
|
(18,090)
|
(25,960)
|
6,738
|
(26,177)
|
Current tax recovery
(expense)
|
5,085
|
1,486
|
2,068
|
(136)
|
Funds from
operations
|
$(4,071)
|
$(11,822)
|
$19,795
|
$6,826
|
QUARTERLY COMPARATIVE STATEMENTS OF OPERATIONS
000's except per
share amounts
(Unaudited)
|
Three Months
Ended
June 30
|
|
2014
|
|
2013
|
Revenues
|
$60,279
|
|
$27,431
|
Cost of
services
|
(73,313)
|
|
(44,035)
|
Gross
loss
|
(13,034)
|
|
(16,604)
|
Administrative
expenses
|
(7,024)
|
|
(5,551)
|
Results from
operating activities
|
(20,058)
|
|
(22,155)
|
Finance
costs
|
(70)
|
|
(162)
|
Foreign exchange gain
(loss)
|
100
|
|
(12)
|
Loss before income
tax
|
(20,028)
|
|
(22,329)
|
Income tax
recovery
|
4,765
|
|
5,143
|
Loss and
comprehensive loss
|
$(15,263)
|
|
$(17,186)
|
EBITDA before
share-based payments(1)
|
$(9,186)
|
|
$(13,134)
|
Earnings (loss)
per share:
|
|
|
|
Basic
|
$(0.24)
|
|
$(0.28)
|
Diluted
|
$(0.24)
|
|
$(0.28)
|
Note (1): See Non-GAAP Measures
Revenues
In Q2 2014, jobs completed increased by 130% to
347 from 151 in Q2 2013, while consolidated revenues increased by
120% to $60.3 million from
$27.4 million in the prior year
quarter. WCSB industry total meters drilled increased by over
30% in the current quarter over Q2 2013 in response to not only
favourable field conditions especially in the northern parts of the
WCSB but also due to several factors including strong natural gas
prices in the quarter, stable oil prices and E&P companies'
improved access to capital markets to fund capital programs.
Over 90% of Q2 2014 consolidated revenues were provided by
hydraulic fracturing services with average fracturing revenue per
job decreasing by 14% to $275,423
from $320,769 in Q2 2013. The
decrease in average fracturing revenue per job is due to industry
pricing pressure and job mix.
Cost of services
Cost of services for the three months ended
June 30, 2014 totaled $73,313 (2013: $44,035) and includes materials, products,
transportation and repair costs of $45,413 (2013: $23,558), employee benefits expense of
$18,473 (2013: $13,053), and depreciation of property and
equipment of $9,427 (2013:
$7,424).
Materials, products, transportation and repair
costs increased by 93% to $45,413 in
the current quarter from $23,558 in
Q2 2013 due to the increased job count in the quarter. The
increase in employee benefits expense is mainly due to field staff
additions to support higher activity levels in 2014 and inflation
in labour rates experienced in 2013. The increase in
depreciation of property and equipment is due to additional
depreciation pertaining to equipment introduced into service in the
second half of 2013 and accelerated depreciation relating to the
replacement of a number of pump components.
Administrative expenses
Administrative expenses for the three months
ended June 30, 2014 totaled
$7,024 compared to $5,551 in Q2 2013 and include employee benefits
expense of $3,300 (2013: $2,182) and share-based payments expense of
$1,006 (2013: $1,241). Administrative expenses also
include depreciation of buildings and office equipment and
amortization of intangibles of $464
(2013: $367). In addition,
other administrative expenses totaled $2,254 in Q2 2014 compared to $1,760 in Q2 2013. The increase in employee
benefits expense was mainly attributable to staff additions and the
implementation of a cost of living increase effective Q4
2013. Other administrative expenses include $612 of transaction costs pertaining to the
acquisition of Fraction as discussed above.
Share-based payments expense represents the value
assigned to the granting of options and incentive-based units under
the Company's Share Purchase Option Plan and Stock Based
Compensation Plan respectively, using the Black-Scholes
model. For Q2 2014, $1,006 (Q2
2013 - $922) was charged to expenses
and included in contributed surplus in respect of these two
plans. In addition, obligations for payments under the
Company's Deferred Share Unit Plan are accrued as share-based
payments expense over the vesting period. The accrued
liability increases or decreases with fluctuations in the price of
the Company's common shares, with a corresponding increase or
decrease in the share-based payments expense. In Q2 2014,
share-based payments expense was nil (2013: $319) for the Company's Deferred Share Unit Plan
to reflect changes in the price of the common shares of the
Company.
EBITDA before share-based payments (See
Non-GAAP Measures)
In Q2 2014, Canyon's increased activity which was
offset by an increase in fixed costs due to staff additions and
significant seasonal price discounts which are traditionally
offered to customers during spring break up resulted in EBITDA
before share-based payments (see NON-GAAP MEASURES) of negative
$9,186, a 30% improvement over the
negative $13,134 recorded in the
comparable 2013 quarter.
Finance costs
Finance costs include interest on finance lease
obligations and automobile loans and totaled $70 in Q2 2014 (2013: $162).
Income Tax Expense
At the expected combined income tax rate of 25%,
the loss before income tax for Q2 2014 of $20,028 would have resulted in an expected
recovery of $5,007, compared to the
actual income tax recovery of $4,765. The actual income tax recovery was
reduced by non-deductible expenses.
Loss and comprehensive loss and loss per
share
Loss and comprehensive loss totaled $15,263 in Q2 2014 compared to $17,186 in Q2 2013.
Basic and diluted loss per share were
$0.24 for the three months ended
June 30, 2014 compared to basic and
diluted loss per share of $0.28 for
the comparable 2013 quarter.
SIX MONTHS TO JUNE 30, 2014
COMPARATIVE STATEMENTS OF OPERATIONS
000's except per
share amounts
(Unaudited)
|
Six Months Ended
June 30
|
|
2014
|
|
2013
|
Revenues
|
$198,464
|
|
$114,318
|
Cost of
services
|
(187,892)
|
|
(113,617)
|
Gross
profit
|
10,572
|
|
701
|
Administrative
expenses
|
(13,902)
|
|
(11,074)
|
Results from
operating activities
|
(3,330)
|
|
(10,373)
|
Finance
costs
|
(251)
|
|
(318)
|
Foreign exchange
(loss) gain
|
(268)
|
|
50
|
Loss before income
tax
|
(3,849)
|
|
(10,641)
|
Income tax
recovery
|
436
|
|
1,982
|
Loss and
comprehensive loss
|
$(3,413)
|
|
$(8,659)
|
EBITDA before
share-based payments(1)
|
$18,246
|
|
$7,230
|
Earnings (loss)
per share:
|
|
|
|
Basic
|
$(0.05)
|
|
$(0.14)
|
Diluted
|
$(0.05)
|
|
$(0.14)
|
Note (1): See Non-GAAP Measures
Revenues
The increased job count resulting from improved
industry activity resulted in consolidated revenues increasing by
74% to $198,464 in the six months
ended June 30, 2014 from $114,318 in the 2013 comparable period.
Jobs completed increased by 99% to 1,237 in the six months ended
June 30, 2014 from 621 in the 2013
comparable period. The improved industry-wide activity is
supported by several factors including strong natural gas prices in
the first half of 2014, stable oil prices and oil price
differentials, more favourable Canadian/US exchange rates and
E&P companies' improved access to capital markets to fund
capital. Over 90% of consolidated revenues in the six months
ended June 30, 2014 were provided by
hydraulic fracturing services with average fracturing revenue per
job decreasing by 18% to $214,580
from $261,204 in the 2013 comparable
period. The decrease in average fracturing revenue per job is
due to industry pricing pressure compared to last year and job
mix.
Cost of services
Cost of services for the six months ended
June 30, 2014 totaled $187,892 (2013: $113,617) and includes materials, products,
transportation and repair costs of $123,137 (2013: $66,433), employee benefits expense of
$45,954 (2013: $32,412), and depreciation of property and
equipment of $18,801 (2013:
$14,772).
Materials, products, transportation and repair
costs increased by 85% to $123,137 in
the current quarter from $66,433 as
the job count increased by 99% in the current period compared to
the comparable six month period in 2013. The increase in
employee benefits expense is mainly due to field staff additions to
support higher activity levels in 2014 and inflation in labour
rates experienced in 2013. Canyon had approximately 1,100
employees as at June 30, 2014
compared to about 800 at the same time last year. The
increase in depreciation of property and equipment is due to
additional depreciation pertaining to equipment introduced into
service in the second half of 2013 and accelerated depreciation
relating to the replacement of a number of pump
components
Administrative expenses
Administrative expenses for the six months ended
June 30, 2014 totaled $13,902 compared to $11,074 in the 2013 comparable period and include
employee benefits expense of $7,134
(2013: $4,899) and share-based
payments expense of $1,886 (2013:
$2,152). Administrative
expenses also include depreciation of buildings and office
equipment and amortization of intangibles of $905 (2013: $724). In addition, other administrative
expenses totaled $3,977 in the six
months ended June 30, 2014 compared
to $3,299 in the 2013 comparable
period. The increase in employee benefits expense was mainly
attributable to staff additions and the implementation of a cost of
living increase effective Q4 2013. Other administrative
expenses include $612 of transaction
costs pertaining to the acquisition of Fraction as discussed
above.
Share-based payments expense represents the value
assigned to the granting of options and incentive-based units under
the Company's Share Purchase Option Plan and Stock Based
Compensation Plan respectively, using the Black-Scholes
model. For the six months ended June
30, 2014, $2,022 (Q2 2013 -
$1,921) was charged to expenses and
included in contributed surplus in respect of these two
plans. In addition, obligations for payments under the
Company's Deferred Share Unit Plan are accrued as share-based
payments expense over the vesting period. The accrued
liability increases or decreases with fluctuations in the price of
the Company's common shares, with a corresponding increase or
decrease in the share-based payments expense. For the six
months ended June 30, 2014,
share-based payments expense decreased by $136 (2013: an increase of $230) for the Company's Deferred Share Unit Plan
to reflect changes in the price of the common shares of the
Company.
EBITDA before share-based payments (See
Non-GAAP Measures)
For the six months ended June 30, 2014, improved industry-wide conditions
as previously discussed, resulted in EBITDA before share-based
payments (see NON-GAAP MEASURES) more than doubling to $18,246 from $7,230
recorded in the comparable 2013 period.
Finance costs
Finance costs include interest on finance lease
obligations and automobile loans and totaled $251 for the six months ended June 30, 2014 (2013: $318).
Income Tax Expense
At the expected combined income tax rate of 25%,
the loss before income tax for the six months ended June 30, 2014 of $3,849 would have resulted in an expected
recovery of $962, compared to the
actual income tax recovery of $436. The actual income tax recovery was
reduced by non-deductible expenses.
Profit (Loss) and comprehensive income (loss)
and earnings (loss) per share
Loss and comprehensive loss totaled $3,413 for the six months ended June 30, 2014 compared to loss and comprehensive
loss of $8,659 in the 2013 comparable
period.
Basic and diluted loss per share were
$0.05 for the six months ended
June 30, 2014 compared to basic and
diluted earnings per share of $0.14
for the comparable 2013 period.
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking
information and statements within the meaning of applicable
securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "objective", "ongoing",
"may", "will", "should", "believe", "plans" and similar expressions
are intended to identify forward-looking information or
statements. In particular, but without limiting the
foregoing, this document contains forward-looking information and
statements pertaining to the following: future oil and natural gas
prices; future results from operations; future liquidity and
financial capacity and financial resources; future costs, expenses
and royalty rates; future interest costs; future capital
expenditures; future capital structure and expansion; the making
and timing of future regulatory filings; and the Company's ongoing
relationship with major customers.
The forward-looking information and statements
contained in this document reflect several material factors and
expectations and assumptions of the Company including, without
limitation: that the Company will continue to conduct its
operations in a manner consistent with past operations; the general
continuance of current or, where applicable, assumed industry
conditions; the continuance of existing (and in certain
circumstances, the implementation of proposed) tax, royalty and
regulatory regimes; certain commodity price and other cost
assumptions; the continued availability of adequate debt and/or
equity financing and cash flow to funds its capital and operating
requirements as needed; and the extent of its liabilities.
The Company believes the material factors, expectations and
assumptions reflected in the forward-looking information and
statements are reasonable but no assurance can be given that these
factors, expectations and assumptions will prove to be correct.
The forward-looking information and statements
included in this document are not guarantees of future performance
and should not be unduly relied upon. Such information and
statements involve 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
information or statements including, without limitation: changes in
commodity prices; changes in the demand for or supply of the
Company's services; unanticipated operating results; changes in tax
or environmental laws, royalty rates or other regulatory matters;
changes in the development plans of third parties; increased debt
levels or debt service requirements; limited, unfavourable or a
lack of access to capital markets; increased costs; a lack of
adequate insurance coverage; the impact of competitors; reliance on
industry partners; attracting and retaining skilled personnel and
certain other risks detailed from time to time in the Company's
public disclosure documents (including, without limitation, those
risks identified in this document and the Company's Annual
Information Form).
The forward-looking information and statements
contained in this document speak only as of the date of the
document, and none of the Company or its subsidiaries assumes any
obligation to publicly update or revise them to reflect new events
or circumstances, except as may be required pursuant to applicable
laws.
SOURCE Canyon Services Group Inc.