Trading Symbol: "EGD: TSX.V"
VANCOUVER, Aug. 25, 2016 /CNW/ - Energold Drilling
Corp. ("Energold" or "the Company") announces second quarter, 2016
revenue of $15.6 million across all
business divisions, compared to revenue of $20.2 million in the same period of 2015. The
Company is experiencing a recovery in the Mineral drilling division
as improved activity levels are taking hold. Meanwhile, offsetting
the increased revenue in the Mineral segment is a decline in the
revenue on a year over year basis in the Energy division as well as
delivery and timing variances in the manufacturing sector compared
to the second quarter of 2015.
Commodity prices are improving which has resulted in more
activity in the Mineral drilling space for the Company. While lower
oil and gas prices have impacted activity levels in the energy
sector, greater stability in the price for oil has improved
management's visibility that there will be more activity in the
winter drilling season at the end of 2016 and leading into 2017.
Green drilling remains substantial while a number of bids in
Manufacturing were deferred and deliveries are expected to be
back-end loaded for the year and into 2017.
In the second quarter of 2016, the Company's overall gross
margin declined to 12% from 17% in the same period of 2015 as
certain fixed costs in the Energy and Manufacturing divisions are
incurred regardless of activity levels and delivery schedules,
respectively. The net loss per share in the period was $0.10 per share which was comparable to the net
loss per share in the same period of 2015.
Energold's balance sheet at the end of the second quarter of
2016 remained well capitalized with $8.7
million in cash and $63.0
million in working capital. Subsequent to quarter-end, the
Company raised an additional $6.5
million in cash.
2016
Quarter-to-Date and Year-to-Date Results
Comparison
|
($CAD '000s except
per-share amounts and meters drilled)
|
|
|
|
|
For three months
ended June 30
|
For the six months
ended June 30
|
|
2016
|
2015
|
2016
|
2015
|
Revenue
|
$
|
$
|
$
|
$
|
|
Mineral
|
9,016
|
7,837
|
17,489
|
12,191
|
|
Energy
|
3,708
|
5,209
|
9,842
|
17,389
|
|
Manufacturing
|
2,837
|
7,203
|
4,842
|
10,282
|
|
15,561
|
20,249
|
32,173
|
39,862
|
Loss
|
|
|
|
|
|
Mineral
|
(699)
|
(1,603)
|
(2,576)
|
(4,196)
|
|
Energy
|
(2,670)
|
(2,304)
|
(4,594)
|
(1,830)
|
|
Manufacturing
|
(866)
|
(102)
|
(2,917)
|
(978)
|
|
Corporate
|
(744)
|
(748)
|
(1,227)
|
(1,161)
|
|
(4,979)
|
(4,757)
|
(11,314)
|
(8,165)
|
Loss
Per Share
|
Basic and
diluted
|
(0.10)
|
(0.10)
|
(0.23)
|
(0.17)
|
|
|
|
|
|
EBITDA*
|
(1,560)
|
(1,531)
|
(4,741)
|
(1,763)
|
|
|
|
|
As of June 30,
2016
|
As of December 31,
2015
|
Cash
|
8,688
|
13,561
|
Working
Capital
|
62,989
|
72,568
|
|
|
|
* EBITDA - Earnings
before interest, taxes, depreciation and amortization (see non-GAAP
(generally accepted accounting principles) financial
measures).
|
MINERAL DRILLING DIVISION
Revenues increased to $9.0 million
in the second quarter of 2016 from $7.8
million in the comparable period of 2015 as a result of a
20% increase in meters drilled. As capacity utilization
rises, pricing will continue to strengthen and margins will expand
as the mineral division will strive to maintain low operating
costs. The gross margin for the three months ended June 30, 2016 in this division was $1.1 million or 12% compared to $0.3 million or 3% in the comparable period in
2015.
Meters
Drilled
|
|
|
|
|
|
|
Q2
2016
|
Q2 2015
|
2016
|
2015
|
Meters
Drilled
|
60,800
|
50,500
|
107,200
|
80,400
|
Drill Rigs
|
138
|
138
|
138
|
138
|
ENERGY DRILLING DIVISION (Oil & Gas, Geothermal,
Geotechnical, Water)
Revenues for the second quarter of 2016 were $3.7 million compared to $5.2 million in the same period for 2015. The
Company incurred several delays in planned work projects during the
quarter due to the fires in Fort
McMurray. These projects are expected to begin in the third
and fourth quarters of this year. Gross margin was $0.4 million or 12% in 2016 compared to
$1.9 million or 37% in the comparable
period of 2015. The decrease in margin is mostly attributable
to certain levels of fixed costs associated with running the
business, regardless of activity levels.
Meters
Drilled
|
|
|
|
|
|
|
Q2
2016
|
Q2 2015
|
2016
|
2015
|
Infrastructure
|
2,900
|
-
|
7,700
|
-
|
Oil sands
coring
|
200
|
900
|
4,600
|
16,100
|
Seismic (Track and
Heli portable)
|
-
|
-
|
-
|
66,300
|
Water
wells
|
200
|
-
|
900
|
-
|
Geothermal &
geotechnical
|
38,600
|
90,400
|
72,400
|
174,000
|
TOTAL
|
41,900
|
91,300
|
85,600
|
256,400
|
Activity in Green drilling and Infrastructure continue to grow
while the second quarter is typically a seasonally slower period in
Canada due to road bans around
Central Canada, where the bulk of
the infrastructure operations take place. Since March 4, 2016, Cros-man drilled 7,700 meters and
2,900 meters in the second quarter of 2016 in the infrastructure
sector in Central Canada.
MANUFACTURING
Revenues for Dando for the three months ended June 30, 2016 were $2.8
million with a gross margin of 14% compared to revenues of
$7.2 million with a gross margin of
17% in the comparable period in 2015. Revenue is typically weak in
the first and second quarters due to the seasonal bidding process
that occurs at that time while deliveries are made in the latter
half of the year. To date a number of tenders have been
deferred and are now expected to be committed in late 2016 and
2017.
INDUSTRY OUTLOOK
The Company continues to benefit from stronger activity levels
in its core Mineral drilling segment. Financings across the mining
landscape have helped increase exploration activity worldwide.
Management believes this trend will continue and strengthen in
2017. This should help pricing as it maintains its recovery while
margins expand with improving capacity utilization worldwide.
Green drilling and Infrastructure activity continues to grow and
the Company is in the process of bidding on several large projects
in North America and elsewhere as
it seeks to deploy unused assets. Meanwhile, activity in the Energy
division will continue to be hampered by lower hydrocarbon pricing.
Notwithstanding, management is anticipating a stronger winter
season beginning late 2016 and into the first quarter of 2017 as it
maintains its long-term relationships with its key customers in the
oil sands region.
Energold remains diversified in terms of service offering and
well capitalized as it recovers from current market conditions.
Management is comfortable in continuing to develop markets where it
sees long-term benefit by using its strong balance sheet in the
pursuit of growth.
A conference call is planned for August
25, 2016 at 4:30pm Eastern.
Dial-in numbers are 719-325-4903 or 877-741-4239.
Energold Drilling Corp. is a leading global specialty drilling
company that services the mining, energy, water, infrastructure and
manufacturing sectors in approximately 25 countries.
Specializing in a socially and environmentally sensitive
approach to drilling, Energold provides a comprehensive range of
drilling services from early stage exploration to mine site
operations for all commodity sectors and has an established drill
rig manufacturer, Dando Drilling International, based in the
United Kingdom.
On behalf of the Directors of Energold Drilling Corp.,
"Frederick W. Davidson"
President, CEO
Neither 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.
Forward-Looking Statements: Some statements in this news
release contain forward-looking information. These statements
include, but are not limited to, statements with respect to
proposed activities, work programs and future expenditures. These
statements address future events and conditions and, as such,
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the statements. Such factors
include, among others, the effects of general economic conditions,
a reduction in the demand for the Company's drilling services, the
price of commodities, changing foreign exchange rates, actions by
government authorities, the failure to find economically viable
acquisition targets, title matters, environmental matters, reliance
on key personnel, the ability for operational and other reasons to
complete proposed activities and work programs, the need for
additional financing and the timing and amount of expenditures.
Energold Drilling Corp. does not assume the obligation to update
any forward-looking statement.
SOURCE Energold Drilling Corp.