CALGARY, AB, March 2, 2022 /CNW/ - (TSXV: CWC) CWC Energy
Services Corp. ("CWC" or the "Company") announces the release of
its operational and financial results for the three months and year
ended December 31, 2021. The
Financial Statements and Management Discussion and Analysis
("MD&A") for the three months and year ended December 31, 2021 are filed on SEDAR at
www.sedar.com.
Financial Highlights
|
|
Three months
ended
|
|
Year
ended
|
$ thousands,
except shares, per share amounts, and margins
|
|
December
31,
|
|
December
31,
|
|
2021
|
|
2020
|
Change
%
|
|
2021
|
|
2020
|
|
2019
|
FINANCIAL
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Contract
Drilling
|
|
12,533
|
|
5,327
|
135%
|
|
31,712
|
|
19,859
|
|
28,497
|
Production
Services
|
|
21,160
|
|
14,738
|
44%
|
|
70,923
|
|
48,034
|
|
79,949
|
|
|
33,693
|
|
20,065
|
68%
|
|
102,635
|
|
67,893
|
|
108,446
|
Other income
(expense)
|
|
(927)
|
|
2,363
|
(139%)
|
|
3.835
|
|
6,786
|
|
-
|
Adjusted
EBITDA(1)
|
|
6.135
|
|
5,034
|
22%
|
|
18,872
|
|
11,098
|
|
12,166
|
Adjusted EBITDA
margin (%)(1)
|
|
18%
|
|
25%
|
|
|
18%
|
|
16%
|
|
11%
|
Impairment of
assets
|
|
-
|
|
-
|
n/m(3)
|
|
(1,296)
|
|
(25,451)
|
|
-
|
Net income
(loss)
|
|
2,866
|
|
(769)
|
n/m(3)
|
|
4,573
|
|
(24,490)
|
|
(1,700)
|
Net income (loss)
margin (%)(2)
|
|
18%
|
|
(4%)
|
14%
|
|
4%
|
|
(36%)
|
|
(2%)
|
Capital
expenditures
|
|
25,039
|
|
591
|
n/m(3)
|
|
29,278
|
|
5,138
|
|
5,349
|
Per share
information:
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares
outstanding –
basic
|
506,011,580
|
504,081,811
|
|
505,337,978
|
507,104,004
|
511,106,531
|
Weighted average
number of shares outstanding -
diluted
|
514,870,615
|
504,081,811
|
|
513,203,787
|
507,104,004
|
511,106,531
|
Adjusted
EBITDA(1) per share - basic and diluted
|
$
|
0.01
|
$
|
0.01
|
|
$
|
0.04
|
$
|
0.02
|
$
|
0.02
|
Net income (loss) per
share - basic and diluted
|
$
|
0.01
|
$
|
(0.01)
|
|
$
|
0.01
|
$
|
(0.05)
|
$
|
(0.00)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December
31,
|
$ thousands,
except ratios
|
|
|
|
|
|
|
2021
|
|
2020
|
|
2019
|
FINANCIAL POSITION
AND LIQUIDITY
|
|
|
|
|
|
|
|
|
|
|
|
Working capital
(excluding debt)(1)
|
|
|
|
|
|
|
18,96
|
|
12,069
|
|
18,534
|
Working capital
(excluding debt) ratio(1)
|
|
|
|
|
|
|
3.1:1
|
|
2.9:1
|
|
3.3:1
|
Total
assets
|
|
|
|
|
|
|
226,645
|
|
202,223
|
|
243,398
|
Total long-term debt
(including current portion)
|
|
|
|
|
|
45,847
|
|
30,231
|
|
40,552
|
Shareholders'
equity
|
|
|
|
|
|
|
163,269
|
|
157,977
|
|
182,032
|
(1) Please
refer to the "Non-GAAP and Other Financial Measures" section for
further information.
|
(2) Net income (loss) margin is a
Non-GAAP Measure which is calculated as net income (loss) divided
by total revenue.
|
(3) Not
meaningful.
|
Working capital (excluding debt) for December 31, 2021 has increased $6.9 million (57%) since December 31, 2020 driven by increases in accounts
receivable ($10.0 million (62%))
offset by decreases in prepaid expenses and deposits ($0.3 million (17%)) and increases in accounts
payable ($2.7 million (43%)).
Long-term debt (including current portion) of $45.8 million has increased $15.6 million (52%) from December 31, 2020 primarily due to the purchase
of ten (10) triple drilling rigs in Q4 2021 partially offset by the
payment of long-term debt from operating cash flows throughout
2021.
Highlights for the Three Months Ended December 31, 2021
- Average Q4 2021 crude oil price, as measured by West Texas
Intermediate ("WTI"), of US$73.51/bbl
was 4% higher than the Q3 2021 average price of US$70.64/bbl (Q4 2020: US$42.63/bbl) and the price differential between
Canadian heavy crude oil, as represented by Western Canadian Select
("WCS"), and WTI maintained a differential in the range of
US$14.30/bbl to US$19.30/bbl during the fourth quarter of 2021.
Natural gas prices, as measured by AECO of $4.44/GJ was 30% higher than the Q3 2021 average
of $3.42/GJ (Q4 2020: $2.52/GJ).
- On November 9, 2021, CWC
announced the acquisition of ten (10) high-spec triple drilling
rigs and related ancillary equipment from a privately held contract
drilling company based in Casper,
Wyoming for total cash consideration including transaction
costs of US$18.5 million
(approximately C$23.5 million). The
purchase further expands CWC's presence in the U.S. and more than
doubles the size of the Company's active drilling fleet to nineteen
(19) drilling rigs comprised of seven (7) conventional heavy double
drilling rigs in Canada and five
(5) AC triple, five (5) DC triple and two (2) conventional heavy
double drilling rigs in the U.S.
- CWC's Canadian drilling rig utilization in Q4 2021 of 60% (Q4
2020: 39%) was more than double the Canadian Association of Energy
Contractors ("CAOEC") industry average of 29% (Q4 2020: 16%).
Canadian activity levels were higher in Q4 2021 with 387 drilling
rig operating days (Q4 2020: 248 drilling rig operating days) from
seven (7) Canadian drilling rigs as global demand for crude oil and
natural gas returned when public health measures to slow the spread
of COVID-19 were relaxed as a result of vaccinations becoming
readily available. Average revenue per operating day of
$25,103 resulted in revenue of
$9.7 million (Q4 2020: $5.3 million) from the Canadian drilling
operations. Due to the acquisition of the ten (10) triple drilling
rigs on November 9, 2021, CWC had a
quarterly weighted average(2) of eight (8) U.S. drilling
rigs and 79 operating days in Q4 2021 (Q4 2020: nil operating days
from two (2) U.S. drilling rigs) resulting in U.S. Contract
Drilling revenue of $2.8 million with
an average revenue per operating day of US$28,425, as travel restrictions implemented
between Canada and the U.S. eased
and our Canadian rig crews were able to return to the U.S.
- Service rig utilization in Q4 2021 of 68% (Q4 2020: 42%) was
driven by 29,737 operating hours which were 34% higher than the
22,273 operating hours in Q4 2020 with a Q4 2021 average revenue
per hour of $712 (Q4 2020:
$645) resulting in Production
Services revenue of $21.2 million (Q4
2020: $14.7 million). During Q4 2021,
the Company earned $1.3 million in
revenue on 87 oil and gas sites requiring well decommissioning
under the Alberta Site Rehabilitation Program ("SRP") and two (2)
oil and gas sites under the Saskatchewan Accelerated Site Closure
Program ("ASCP"). The $1.0 billion
Alberta SRP, the $400 million ASCP
and the $100 million B.C. Dormant
Sites Reclamation Program ("DSRP") provide grants to eligible
oilfield service contractors to perform well, pipeline, and oil and
gas site closure and reclamation work, creating jobs and supporting
the environment until December 31,
2022. CWC's Production Services segment is well positioned
to continue to provide well decommissioning work on these inactive
wells.
- Revenue of $33.7 million, an
increase of $13.6 million (68%)
compared to $20.1 million in Q4
2020.
- Adjusted EBITDA(1) of $6.1
million, an increase of $1.1
million (22%) compared to $5.0
million in Q4 2020. Adjusted EBITDA net of Canada Emergency Wage Subsidy ("CEWS") and
Canada Emergency Rent Subsidy
("CERS") of $7.1 million, an increase
of $4.4 million (164%) compared to
$2.7 million in Q4 2020.
- Net income of $2.9 million, an
increase of $3.7 million compared to
a net loss of $0.8 million in Q4
2020.
Highlights for the Year Ended December
31, 2021
- CWC's Canadian drilling rig utilization for 2021 of 41% (2020:
27%) significantly exceeded the CAOEC industry average of 25%
(2020: 16%). Canadian activity levels for 2021 increased by 53% to
1,054 drilling rig operating days from seven (7) Canadian drilling
rigs (2020: 689 drilling rig operating days). Average revenue per
operating day of $23,433 resulted in
revenue of $24.7 million from the
Canadian drilling operations. U.S. drilling rig activity levels for
2021 were 198 drilling rig operating days (2020: 144 drilling rig
operating days) from an annual weighted average(3) of
three (3) U.S. drilling rigs for a utilization of 16% (2020: 20%
from two (2) U.S. drilling rigs). U.S. Contract Drilling revenue of
$7.0 million represented 22% of CWC's
total Contract Drilling revenue in 2021 with an average revenue per
operating day of US$28,198.
- CWC's service rig utilization for 2021 of 60% (2020: 34%) was
driven by 105,570 operating hours, which were 45% higher than the
72,610 operating hours in 2020 with an average revenue per hour of
$663 (2020: $644) resulted in Production Services revenue of
$70.9 million (2020: $48.0 million).
- Revenue of $102.6 million, an
increase of $34.7 million (51%)
compared to $67.9 million in
2020.
- Adjusted EBITDA(1) of $18.9
million, an increase of $7.8
million (70%) compared to $11.1
million in 2020. 2021 Adjusted EBITDA(1) is the
highest level of Adjusted EBITDA(1) that the Company has
achieved since 2014 when the downturn in the global oil and gas
industry first started.
- Net income of $4.6 million, an
increase of $29.0 million compared to
a net loss of $24.5 million in 2020.
The increase is primarily due to a charge for impairment of assets
of $25.5 million taken in Q1
2020.
- On August 27, 2021, CWC announced
the sale of its swabbing rig assets and business for gross proceeds
of $0.7 million, thereby further
focusing the Company on its core assets and services of drilling
rigs and service rigs.
- For the year ended December 31,
2021, the Company purchased 2,249,500 (2020: 8,994,000)
common shares under the Normal Course Issuer Bid ("NCIB") which
were cancelled and returned to treasury (2020: 9,113,500 common
shares were cancelled and returned to treasury).
(1) Please refer to the "Non-GAAP and
Other Financial Measures" section for further
information.
|
(2)
Quarterly weighted average number of rigs is calculated as (2 rigs
x 40 days) + (12 rigs x 52 days) / 92 days
|
(3) Annual
weighted average number of rigs is calculated as (2 rigs x 313
days) + (12 rigs x 52 days) / 365 days
|
Operational Overview
Contract Drilling
The Contract Drilling division operates under the trade name CWC
Ironhand Drilling and is comprised of ten (10) electric triple
drilling rigs with depth ratings from 3,600 to 7,600 metres and
nine (9) telescopic double drilling rigs with depth ratings from
3,200 to 5,000 metres. 18 of 19 rigs have top drives and eight (8)
have pad rig walking systems. All of the drilling rigs are ideally
suited for the most active depths for horizontal drilling in the
Western Canadian Sedimentary Basin ("WCSB"), including the
Montney, Cardium, Duvernay and other deep basin horizons. The
Company has expanded its drilling rig services into select
United States basins including the
Permian, Eagle Ford, Niobrara,
Denver-Julesburg ("DJ"), Powder River and Bakken.
|
Three months
ended
|
|
OPERATING
HIGHLIGHTS
|
Dec. 31
2021
|
Sep. 30,
2021
|
Jun. 30,
2021
|
Mar. 31,
2021
|
Dec. 31,
2020
|
Sep. 30,
2020
|
Jun. 30,
2020
|
Mar. 31,
2020
|
Drilling Rigs –
Canada
|
|
|
|
|
|
|
|
|
Total drilling rigs,
end of period
|
7
|
7
|
7
|
7
|
7
|
7
|
7
|
7
|
|
|
|
|
|
|
|
|
|
Revenue per operating
day(1)
|
$25,103
|
$22,061
|
$24,392
|
$22,497
|
$21,452
|
$19,214
|
$19,382
|
$22,849
|
Drilling rig operating
days
|
387
|
296
|
54
|
317
|
248
|
28
|
68
|
344
|
Drilling rig
utilization %(2)
|
60%
|
46%
|
9%
|
50%
|
39%
|
4%
|
11%
|
54%
|
CAOEC industry average
utilization %
|
29%
|
27%
|
15%
|
27%
|
16%
|
9%
|
4%
|
35%
|
|
|
|
|
|
|
|
|
|
Wells
drilled
|
30
|
25
|
7
|
28
|
23
|
4
|
4
|
26
|
Average days per
well
|
12.9
|
11.9
|
9.0
|
11.3
|
10.8
|
7.1
|
17.1
|
13.2
|
Meters drilled
(thousands)
|
129.2
|
101.2
|
22.0
|
112.4
|
88.5
|
13.7
|
20.2
|
99.6
|
Meters drilled per
day
|
334
|
341
|
405
|
354
|
356
|
483
|
295
|
290
|
Average meters per
well
|
4,305
|
4,048
|
3,664
|
4,014
|
3,848
|
3,412
|
5,053
|
3,831
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
OPERATING
HIGHLIGHTS
|
Dec. 31
2021
|
Sep. 30,
2021
|
Jun. 30,
2021
|
Mar. 31,
2021
|
Dec. 31,
2020
|
Sep. 30,
2020
|
Jun. 30,
2020
|
Mar. 31,
2020
|
Drilling Rigs –
United States
|
|
|
|
|
|
|
|
|
Total drilling rigs,
end of period
|
12
|
2
|
2
|
2
|
2
|
2
|
2
|
2
|
|
|
|
|
|
|
|
|
|
Revenue per operating
day (US$)(1)
|
$28,425
|
$26,806
|
$28,196
|
$80,000(3)
|
-
|
-
|
-
|
$25,139
|
Drilling rig operating
days
|
79
|
58
|
61
|
2
|
-
|
-
|
-
|
144
|
Drilling rig
utilization %(2)
|
11%
|
31%
|
33%
|
1%
|
-
|
-
|
-
|
79%
|
|
|
|
|
|
|
|
|
|
Wells
drilled
|
5
|
6
|
5
|
-
|
-
|
-
|
-
|
10
|
Average days per
well
|
15.7
|
9.6
|
12.1
|
-
|
-
|
-
|
-
|
14.4
|
Meters drilled
(thousands)
|
15.1
|
11.8
|
19.3
|
-
|
-
|
-
|
-
|
40.5
|
Meters drilled per
day
|
193
|
205
|
319
|
-
|
-
|
-
|
-
|
282
|
Average meters per
well
|
3,015
|
1,969
|
3,867
|
-
|
-
|
-
|
-
|
4,053
|
(1)
|
Revenue per operating
day is calculated based on operating days (i.e. spud to rig release
basis). New or inactive drilling rigs are added based on the first
day of field service.
|
(2)
|
Drilling rig
utilization is calculated based on operating days (i.e. spud to rig
release basis).
|
(3)
|
Revenue is
enhanced by one-time recovery of mobilization costs.
|
Canadian Contract Drilling revenue of $9.7 million for Q4 2021 (Q4 2020: $5.3 million) was achieved with a utilization
rate of 60% (Q4 2020: 39%), compared to the CAOEC industry average
of 29% (Q4 2020: 16%). CWC completed 387 Canadian drilling rig
operating days in Q4 2021, compared to 248 Canadian drilling rig
operating days in Q4 2020 as global demand for crude oil and
natural gas returned when public health measures to slow the spread
of COVID-19 were relaxed as a result of vaccinations becoming
readily available.
U.S. Contract Drilling revenue of $2.8
million for Q4 2021 (Q4 2020: $nil) was achieved with a
utilization rate of 11% with 79 U.S. drilling rig operating days
(Q4 2020: nil) as travel restrictions implemented between
Canada and the U.S. eased and our
Canadian rig crews were able to return to the U.S. The lower
utilization rate in Q4 2021 was a result of the purchase of ten
(10) triple drilling rigs on November 9,
2021 and starting up operations with no previous base of
assets, employees or customers.
Production Services
With a fleet of 144 service rigs, CWC is one of the largest well
servicing companies in Canada as
measured by active fleet and operating hours. CWC's service rig
fleet consists of 75 single, 55 double and 14 slant rigs providing
services which include completions, maintenance, workovers and well
decommissioning with depth ratings from 1,500 to 5,000 metres. In
2021, CWC chose to park 77 of its service rigs and focus its sales
and operational efforts on the remaining 67 active service rigs due
to the reduction in the number of service rigs currently required
to service the WCSB and the tight labour market experienced in the
industry for service rig crews.
|
Three months
ended
|
OPERATING
HIGHLIGHTS
|
Dec.
31,
2021
|
Sep. 30,
2021
|
Jun.
30,
2021
|
Mar.
31,
2021
|
Dec.
31,
2020
|
Sep.
30,
2020
|
Jun.
30,
2020
|
Mar.
31,
2020
|
Service
Rigs
|
|
|
|
|
|
|
|
|
Active service rigs,
end of period
|
67
|
67
|
68
|
66
|
81
|
82
|
82
|
83
|
Inactive service rigs,
end of period
|
77
|
77
|
77
|
79
|
64
|
63
|
63
|
62
|
Total service rigs,
end of period
|
144
|
144
|
145
|
145
|
145
|
145
|
145
|
145
|
|
|
|
|
|
|
|
|
|
Operating
hours
|
29,737
|
28,293
|
20,463
|
27,087
|
22,273
|
15,859
|
4,037
|
30,442
|
Revenue per
hour
|
$712
|
$675
|
$623
|
$630
|
$645
|
$605
|
$619
|
$666
|
Service rig
utilization %(1)
|
68%
|
64%
|
47%
|
64%
|
42%
|
29%
|
8%
|
56%
|
(1)
|
In accordance with
CAOEC methodology, service rig utilization is calculated based on
10 operating hours a day x number of days per quarter x 5 days a
week divided by 7 days in a week to reflect maximum utilization
available due to hours of service restrictions on rig crews.
Service rigs requiring their 24,000 hour recertification,
refurbishment or have been otherwise removed from service for
greater than 90 days are excluded from the utilization calculation
until their first day back in field service.
|
Production Services revenue of $21.2
million in Q4 2021, up $6.4
million (44%) compared to $14.7
million in Q4 2020. The revenue increase in Q4 2021 was a
result of the global demand for crude oil and natural gas returning
when public health measures to slow the spread of COVID-19 were
relaxed as a result of vaccinations becoming readily available.
CWC's service rig utilization in Q4 2021 of 68% (Q4 2020: 42%)
with 29,737 operating hours was 34% higher than the 22,273
operating hours in Q4 2020. Average revenue per hour of
$712 in Q4 2021 was $67 per hour (10%) higher than the $645 per hour in Q4 2020 as the Company
implemented pricing adjustments to partially offset increased
labour costs in response to continuing industry labour shortages
and higher inflation from our suppliers.
On September 10, 2021, the Company
sold its non-core swabbing rig assets and business for gross
proceeds of $0.7 million. Prior to
the sale, the swabbing rig business contributed revenue of
$0.8 million and Adjusted EBITDA of
$0.1 million for the year ended
December 31, 2021.
Capital Expenditures
|
Three months
ended
|
|
|
Year
ended
|
|
|
|
December
31,
|
Change
|
Change
|
December
31,
|
Change
|
Change
|
$
thousands
|
2021
|
2020
|
$
|
%
|
2021
|
2020
|
$
|
%
|
Capital
expenditures
|
|
|
|
|
|
|
|
|
Contract
drilling
|
24,778
|
309
|
24,469
|
n/m(1)
|
27,793
|
2,023
|
25,770
|
n/m(1)
|
Production
services
|
250
|
282
|
(32)
|
(11%)
|
1,470
|
3,089
|
(1,619)
|
(52%)
|
Other
equipment
|
11
|
-
|
11
|
n/m(1)
|
15
|
26
|
(11)
|
(42%)
|
|
25,039
|
591
|
24,448
|
n/m(1)
|
29,278
|
5,138
|
24,140
|
n/m(1)
|
|
|
|
|
|
|
|
|
|
Growth
capital
|
23,664
|
252
|
23,412
|
n/m(1)
|
25,393
|
1,741
|
23,652
|
n/m(1)
|
Maintenance and
infrastructure capital
|
1,375
|
339
|
1,036
|
306%
|
3,885
|
3,397
|
488
|
14%
|
Total capital
expenditures
|
25,039
|
591
|
24,448
|
n/m(1)
|
29,278
|
5,138
|
24,140
|
470%
|
Capital expenditures of $25.0
million in Q4 2021, an increase of $24.4 million compared to $0.6 million in Q4 2020.
Capital expenditures of $29.3
million for the year ended December
31, 2021, an increase of $24.1
million compared to $5.1
million in the same period of 2020. The increased capital
expenditures for the quarter and year ended December 31, 2021 were primarily due to the
purchase of ten (10) triple drilling rigs.
Outlook
The outlook for contract drilling and well servicing in
Canada and the U.S. continues to
improve as the removal of economic restrictions due to the COVID-19
health pandemic has supported a continuing increase in crude oil
and natural gas prices. To support the cautious re-opening of the
global economy, in July 2021 OPEC+
agreed to add back 4 million barrels per day of curtailed
production in increments of 400,000 barrels per day each month into
2022. This moderate and gradual add back of oil production was
reconfirmed in OPEC's meeting on February 2,
2022, thus supporting the continuation of higher crude oil
prices, as measured by WTI, currently over US$95/bbl. With a strong crude oil price and
global demand for crude oil continuing to rise in 2022, CWC
believes North American oilfield service activity will continue to
increase in 2022. Such optimism is reflected in the Canadian
Association of Petroleum Producers ("CAPP") January 20, 2022 forecast that capital spending
in the Canadian oil and natural gas industry will increase 22% to
$32.8 billion in 2022 as oilfield
activity levels have now recovered to their pre COVID-19 health
pandemic levels.
CWC is currently experiencing a strong Q1 2022 with both
activity and pricing increasing for both the drilling rig and
service rig segments. However, as demand for our services increases
for the remainder of 2022, CWC believes the labour market for rig
crews will continue to be extremely tight, resulting in
inflationary pressure on field labour costs, which will warrant
further rate increases to our E&P customers.
In June 2021, CWC released its
inaugural Environmental, Social and Governance ("ESG") Report. Our
commitment to ESG and sustainability has shown improvement over the
last three years as outlined in our report. We will continue to
work towards advancing these efforts further in future years,
especially in the area of emission reductions and establishing
goals and targets. One of the initial steps CWC has taken towards
meeting its ESG targets has been to convert some of our field
equipment to have carbon reduction bi-fuel capabilities. In
addition, CWC is proud to say that 2% of its revenue in 2021 came
from work on carbon capture, helium and salt water disposal wells
using our current equipment, thereby reflecting the diversity and
versatility of the nature of work for CWC's drilling rigs.
Management is confident that CWC will continue to be regarded as a
leader on ESG and sustainability matters in the oilfield services
industry as the nature of the work for our equipment evolves.
About CWC Energy Services Corp.
CWC Energy Services Corp. is a premier contract drilling and
well servicing company operating in Canada and the
United States with a complementary suite of oilfield
services including drilling rigs and service rigs. The Company's
corporate office is located in Calgary,
Alberta, with operational locations in Nisku, Grande
Prairie, Slave Lake,
Sylvan Lake, Drayton Valley, Lloydminster, Provost and Brooks,
Alberta and U.S. offices in Denver, Colorado and Casper, Wyoming. The Company's shares trade on
the TSX Venture Exchange under the symbol "CWC".
Forward-Looking Information
This News Release contains certain forward-looking
information and statements within the meaning of applicable
Canadian securities legislation. Certain statements contained in
this News Release, including most of those contained in the section
titled "Outlook" and including statements which may contain such
words as "anticipate", "could", "continue", "should", "seek",
"may", "intend", "likely", "plan", "estimate", "believe", "expect",
"will", "objective", "ongoing", "project" and similar expressions
are intended to identify forward-looking information or statements.
In particular, this News Release contains forward-looking
statements including management's assessment of future plans and
operations, planned levels of capital expenditures, expectations as
to activity levels, expectations on the sustainability of future
cash flow and earnings, expectations with respect to crude oil and
natural gas prices, activity levels in various areas, expectations
regarding the level and type of drilling and production and related
drilling and well services activity in the WCSB and U.S. basins,
expectations regarding entering into long term drilling contracts
and expanding its customer base, and expectations regarding the
business, operations, revenue and debt levels of the Company in
addition to general economic conditions. Although the Company
believes that the expectations and assumptions on which such
forward-looking information and statements are based are
reasonable, undue reliance should not be placed on the
forward-looking information and statements because the Company can
give no assurances that they will prove to be correct. Since
forward-looking information and statements address future events
and conditions, by their very nature they involve inherent risks
and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors and risks
including the implications of the COVID-19 health pandemic on the
Company's business, operations and personnel. These factors and
risks include, but are not limited to, the risks associated with
the COVID-19 health pandemic and their implications on the demand
and supply in the drilling and oilfield services sector (i.e.
demand, pricing and terms for oilfield drilling and services;
current and expected oil and gas prices; exploration and
development costs and delays; reserves discovery and decline rates;
pipeline and transportation capacity; weather, health, safety and
environmental risks), significant expansion measures to stop the
spread of COVID-19 further restricting or prohibiting the
operations of the Company's facilities and operations, actions to
ensure social distancing due to COVID-19, integration of
acquisitions, competition, and uncertainties resulting from
potential delays or changes in plans with respect to acquisitions,
development projects or capital expenditures and changes in
legislation, including but not limited to tax laws, royalties and
environmental regulations, stock market volatility and the
inability to access sufficient capital from external and internal
sources. Accordingly, readers should not place undue reliance on
the forward-looking statements. Readers are cautioned that the
foregoing list of factors is not exhaustive. Additional information
on these and other factors that could affect the Company's
financial results are included in reports on file with applicable
securities regulatory authorities and may be accessed through SEDAR
at www.sedar.com. The forward-looking information and statements
contained in this News Release are made as of the date hereof and
the Company undertakes no obligation to update publicly or revise
any forward-looking information or statements, whether as a result
of new information, future events or otherwise, unless so required
by applicable securities laws. Any forward-looking statements made
previously may be inaccurate now.
Non-GAAP and Other Financial Measures
|
Three months
ended
|
Year
Ended
|
$ thousands,
except shares, per share amounts and margins
|
December
31,
|
December
31,
|
2021
|
2020
|
2021
|
2020
|
2019
|
NON-GAAP
MEASURES
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
Net income
(loss)
|
2,866
|
(769)
|
4,573
|
(24,490)
|
(1,700)
|
Add:
|
|
|
|
|
|
Stock based
compensation
|
263
|
685
|
782
|
1,094
|
921
|
Finance
costs
|
294
|
309
|
1,086
|
2,135
|
2,431
|
Depreciation and
amortization
|
2,774
|
2,652
|
10,563
|
11,001
|
13,168
|
Impairment of
assets
|
-
|
-
|
1,296
|
25,451
|
-
|
(Gain) loss on sale of
equipment
|
(208)
|
(16)
|
(251)
|
844
|
290
|
Income tax expense
(recovery)
|
146
|
2,173
|
823
|
(4,937)
|
(2,944)
|
Adjusted
EBITDA(1)
|
6,135
|
5,034
|
18,872
|
11,098
|
12,166
|
Adjusted EBITDA
per share – basic and diluted(1)
|
$
|
0.01
|
$
|
0.01
|
$
|
0.04
|
$
|
0.02
|
$
|
0.02
|
Adjusted EBITDA
margin (Adjusted EBITDA/Revenue)(1)
|
18%
|
25%
|
18%
|
16%
|
11%
|
Weighted average
number of shares outstanding - basic
|
506,011,580
|
504,081,811
|
505,337,978
|
507,104,004
|
511,106,531
|
Weighted average
number of shares outstanding - diluted
|
514,870,615
|
504,081,811
|
513,203,787
|
507,104,004
|
511,106,531
|
Gross
margin:
|
|
|
|
|
|
Revenue
|
33,693
|
20,065
|
102,635
|
67,893
|
108,446
|
Less: Direct operating
expenses
|
22,168
|
14,078
|
72,288
|
49,149
|
79,609
|
Gross
margin(2)
|
11,525
|
5,987
|
30,347
|
18,744
|
28,837
|
Gross margin
percentage(2)
|
34%
|
30%
|
30%
|
28%
|
27%
|
$
thousands
|
December 31,
2021
|
December 31,
2020
|
December 31,
2019
|
Working capital
(excluding debt):
|
|
|
|
Current
assets
|
27,911
|
18,323
|
26,642
|
Less: Current
liabilities
|
(9,709)
|
(7,004)
|
(9,249)
|
Add: Current
portion of long-term debt
|
764
|
750
|
1,141
|
Working capital
(excluding debt) (3)
|
18,966
|
12,069
|
18,534
|
Working capital
(excluding debt) ratio(3)
|
3.1:1
|
2.9:1
|
3.3:1
|
Net debt:
|
|
|
|
Long-term
debt
|
45,083
|
29,481
|
39,411
|
Less: Current
assets
|
(27,911)
|
(18,323)
|
(26,642)
|
Add: Current
liabilities
|
9,709
|
7,004
|
9,249
|
Net debt
(4)
|
26,881
|
18,162
|
22,018
|
(1)
|
Adjusted EBITDA
(earnings before interest and finance costs, income tax expense,
depreciation, amortization, gain or loss on disposal of asset,
impairment of assets, goodwill impairment, transaction costs, stock
based compensation and other one-time non-cash gains and losses) is
not a recognized measure under IFRS. Management believes that in
addition to net income, Adjusted EBITDA is a useful supplemental
measure as it provides an indication of the Company's ability to
generate cash flow in order to fund working capital, service debt,
pay current income taxes, repurchase common shares under the Normal
Course Issuer Bid, and fund capital programs. Investors should be
cautioned, however, that Adjusted EBITDA should not be construed as
an alternative to net income (loss) determined in accordance with
IFRS as an indicator of the Company's performance. CWC's method of
calculating Adjusted EBITDA may differ from other entities and
accordingly, Adjusted EBITDA may not be comparable to measures used
by other entities. Adjusted EBITDA margin is calculated as Adjusted
EBITDA divided by revenue and provides a measure of the percentage
of Adjusted EBITDA per dollar of revenue. Adjusted EBITDA per share
is calculated by dividing Adjusted EBITDA by the weighted average
number of shares outstanding as used for calculation of earnings
per share.
|
(2)
|
Gross margin is
calculated from the statement of comprehensive income (loss) as
revenue less direct operating costs and is used to assist
management and investors in assessing the Company's financial
results from operations excluding fixed overhead costs. Gross
margin percentage is calculated as gross margin divided by revenue.
The Company believes the relationship between revenue and costs
expressed by the gross margin percentage is a useful measure when
compared over different financial periods as it demonstrates the
trending relationship between revenue, costs and margins. Gross
margin and gross margin percentage are non-GAAP measures and do not
have any standardized meaning prescribed by IFRS and may not be
comparable to similar measures provided by other
companies.
|
(3)
|
Working capital
(excluding debt) is calculated based on current assets less current
liabilities excluding the current portion of long-term debt.
Working capital (excluding debt) is used to assist management and
investors in assessing the Company's liquidity. Working capital
(excluding debt) does not have any meaning prescribed under IFRS
and may not be comparable to similar measures provided by other
companies. Working capital (excluding debt) ratio is calculated as
current assets divided by the difference of current liabilities
less the current portion of long-term debt.
|
(4)
|
Net debt is
calculated based on long-term debt less current assets plus current
liabilities. Net debt is not a recognized measure under IFRS and
does not have any standardized meaning prescribed by IFRS and may
not be comparable to similar measures provided by other companies.
Management believes net debt is a useful indicator of a company's
debt position.
|
SOURCE CWC Energy Services Corp.