CALGARY, AB, July 28, 2021 /CNW/ - Stampede Drilling Inc.
("Stampede" or the "Corporation") (TSXV: SDI) announces today its
financial and operational results for the three and six month
period ended June 30, 2021.
The following press release should be read in conjunction with
the December 31, 2020 audited
consolidated financial statements prepared in accordance with
International Financial Reporting Standards ("IFRS"), and the
annual information form ("AIF") for the year ended December 31, 2020, as well as the condensed
unaudited consolidated interim financial statements and notes for
the three and six month period ended June
30, 2021 and 2020. Additional information regarding
Stampede, including the AIF, is 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.
FINANCIAL SUMMARY
|
Three months ended
June 30,
|
Six months ended
June 30,
|
(000's CAD $
except per share amounts)
|
2021
|
2020
|
%
Change
|
2021
|
2020
|
%
Change
|
Revenue
|
4,640
|
275
|
1,587%
|
16,501
|
11,165
|
48%
|
Direct operating
expenses
|
2,804
|
142
|
1,875%
|
10,017
|
7,503
|
34%
|
Gross margin
(1)
|
1,836
|
133
|
1,280%
|
6,484
|
3,662
|
77%
|
Net income
(loss)
|
(153)
|
(1,878)
|
92%
|
2,255
|
(743)
|
403%
|
Basic and diluted per
share
|
(0.00)
|
(0.01)
|
nm
|
0.02
|
(0.01)
|
nm
|
Adjusted EBITDA
(1)
|
1,226
|
(417)
|
394%
|
5,143
|
2,167
|
137%
|
Weighted average
common shares outstanding
|
132,166
|
132,046
|
0%
|
132,166
|
132,046
|
0%
|
Weighted average
diluted common shares outstanding
|
132,166
|
132,046
|
0%
|
132,166
|
132,046
|
0%
|
Capital
expenditures
|
626
|
4
|
nm
|
1,419
|
709
|
100%
|
Average active rig
count
|
10
|
10
|
0%
|
10
|
10
|
0%
|
Drilling rig
utilization
|
26%
|
0%
|
nm
|
47%
|
29%
|
62%
|
CAODC industry
average utilization(2)
|
15%
|
4%
|
275%
|
21%
|
20%
|
5%
|
nm - not
meaningful
|
|
|
|
(1) Refer to "Non-GAAP Measures" for
further information.
(2) Source: The Canadian Association of Oilwell
Drilling Contractors ("CAODC") monthly Contractor Summary. The
CAODC
industry average is based on Operating Days divided by total
available drilling days.
|
SECOND QUARTER 2021 OPERATIONAL OVERVIEW
For the three month period ended June 30,
2021, the Corporation recorded adjusted EBITDA of
$1,226, up 394% from an adjusted
EBITDA loss of ($417) and a net loss
of ($153), down 91% from a net loss
of ($1,878) and as compared to the
2020 corresponding period. The Corporations quarterly utilization
rate for Q2 2021 was 26%, 73% higher than the CAODC industry
average for Q2 2021 of 15%.
During Q2 2021, the Corporation qualified for the Canadian
Federal Government's Canadian Emergency Wage Subsidy program
("CEWS") which was used to reduce employee related salary expenses
and help minimize reduction in headcount. For the three months
ended June 30, 2021, the Corporation
recorded $727 against cost of sales
and $95 against salaries and benefit
expenses.
The Corporation continues to maintain a strong emphasis and
focus on safety, culture and performance as drilling activity
continues to improve and is very pleased with the results being
achieved. With the increased utilization, the Corporation continued
to proactively respond to the safety challenges associated with the
COVID–19 pandemic and remains committed to ensuring the health and
safety of all its personnel and the safe, efficient and reliable
operations at each of its drilling sites.
OUTLOOK
The 2021 second quarter results exceeded the Corporation's
expectations. Rising commodity pricing and corresponding producer
cash flows increased drilling activity in Western Canada as compared to 2020. Due to a
mild spring break-up and earlier than average seasonal recovery the
Corporation was able to keep rigs going through April into June
which contributed to the positive results. Based on current
macroeconomic conditions and improving commodity prices the
Corporation is anticipating overall industry improvements in the
second half of 2021 as customers slowly increase capital spending
while continuing to focus on controlling costs and improving their
balance sheets.
RESULTS FROM OPERATIONS FOR THE SIX MONTH PERIOD ENDED
JUNE 30, 2021
|
Six months ended
June 30,
|
(000's CAD $
except operating days)
|
2021
|
2020
|
%
Change
|
Revenue
|
16,501
|
11,165
|
48%
|
Direct operating
expenses
|
10,017
|
7,503
|
34%
|
Gross margin
(1)
|
6,484
|
3,662
|
77%
|
Gross margin
%
|
39%
|
33%
|
18%
|
Net income
(loss)
|
2,255
|
(743)
|
403%
|
General and
administrative expenses
|
1,777
|
1,859
|
(4%)
|
Adjusted EBITDA
(1)
|
5,143
|
2,167
|
137%
|
Drilling rig
operating days(2)
|
846
|
531
|
59%
|
Drilling rig revenue
per day
|
19.5
|
21.0
|
(7%)
|
Drilling rig
utilization
|
47%
|
29%
|
62%
|
CAODC industry
average utilization(3)
|
21%
|
20%
|
5%
|
nm - not
meaningful
|
|
|
|
(1) Refer to "Non-GAAP measures" for
further information.
|
|
|
|
(2) Defined as contract drilling
days, between spud to rig release
|
|
|
|
(3)
Source: The Canadian Association of Oilwell Drilling Contractors
("CAODC") monthly Contractor Summary.
The CAODC industry average is based on Operating
Days divided by total available drilling days.
|
- Revenue for the six month period ended June 30, 2021 was $16,501, up $5,336
(48%) compared to $11,165 for the
corresponding 2020 period. Overall, the increase was a result of
higher customer activity levels and related increased drilling
activity. Crude oil and liquids pricing reached historic lows in
the prior year comparative period, which resulted in production
shut-ins and minimal drilling activity. The lower revenue per day
was due to increased market pricing pressures during Q1 2021 as
compared to the corresponding 2020 period.
- The Corporation had a total of 846 operating days in for the
first half of 2021, an increase of 315 operating days (59%) from
the 531 operating days in the corresponding 2020 period. The
drilling rig utilization for the first half of 2021 was 47%, which
was a 62% increase from the corresponding 2020 period and 124%
higher than the CAODC industry average utilization rate of 21% for
2021.
- Gross margin for the six month period ended June 30, 2021 was 39%, up 18% from 33% as
compared to the corresponding 2020 period. The increase in 2021
gross margin was primarily due to the $1,596 of CEWS funding the Corporation qualified
for the six months ended June 30,
2021 which was recorded against cost of sales and partially
offset by the lower revenue per day. The Corporation did not record
any CEWS against cost of sales for the six month period in
2020.
- For the six month ended June 30,
2021, general and administrative expenses were $1,777 down $82
(4%) from $1,859 as compared to the
corresponding 2020 period. The Corporation implemented cost cutting
initiatives in March 2020 due the
decreased drilling activity in Western
Canada which was a result of record low commodity pricing
and COVID-19. In April 2021, the
Corporation reinstated the 2020 salary roll backs for its
employees. The Corporation continues to maintain cost control
measures limiting discretionary spending.
- Due to the above information, Adjusted EBITDA and net income
for the six month period ended June 30,
2021 were $5,143 and
$2,255, respectively. Adjusted EBITDA
was up 2,976 (137%) from $2,167, and
net income was up $2,998 (403%) from
a net loss of $743 from the 2020
corresponding period.
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
June 30,
|
|
Six months ended
June 30,
|
(000's CAD
$)
|
2021
|
2020
|
%
Change
|
|
2021
|
2020
|
%
Change
|
Net income
(loss)
|
(153)
|
(1,878)
|
92%
|
|
2,255
|
(743)
|
403%
|
Depreciation
|
1,121
|
1,233
|
(9%)
|
|
2,272
|
2,425
|
(6%)
|
Finance
costs
|
161
|
157
|
3%
|
|
344
|
378
|
(9%)
|
Other
income
|
(2)
|
(18)
|
(89%)
|
|
(8)
|
(42)
|
(81%)
|
Gain from equipment
lost in hole
|
-
|
-
|
nm
|
|
(39)
|
-
|
nm
|
Share-based
payments
|
91
|
66
|
38%
|
|
276
|
161
|
71%
|
Foreign exchange gain
(loss)
|
8
|
23
|
(65%)
|
|
43
|
(12)
|
(458%)
|
Adjusted
EBITDA
|
1,226
|
(417)
|
394%
|
|
5,143
|
2,167
|
137%
|
nm - not
meaningful
|
|
|
|
|
|
|
|
(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
June 30,
|
|
Six months ended
June 30,
|
(000's CAD
$)
|
2021
|
2020
|
%
Change
|
|
2021
|
2020
|
%
Change
|
Income (loss) from
operations
|
794
|
(999)
|
179%
|
|
4,372
|
1,440
|
204%
|
Depreciation of
property and equipment
|
1,042
|
1,132
|
(8%)
|
|
2,112
|
2,222
|
(5%)
|
Gross
margin
|
1,836
|
133
|
1,280%
|
|
6,484
|
3,662
|
77%
|
Gross margin
%
|
40%
|
48%
|
(17%)
|
|
39%
|
33%
|
18%
|
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 impacts of COVID-19 and
expectations and responses related thereto; the Corporation's
performance and safety record and expectations related
thereto; expectations associated with the
Corporation's outlook, including among other things,
anticipated commodity pricing and expectations related to
industry improvements, and expected capital spending of
the Corporation's customers; and the Corporation's ability to
maintain cost control measures, among others.
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.
Forward-looking information, by its very nature, is subject to
inherent risks and uncertainties and is based on many assumptions,
both general and specific, which give rise to the possibility that
actual results or events could differ materially from the
expectations of the Corporation expressed in or implied by such
forward-looking information and that the Corporation's business
outlook, objectives, plans and strategic priorities may not be
achieved. Macro-economic conditions, including public health
concerns (including the impact of the COVID-19 pandemic) and other
geopolitical risks, the condition of the global economy and,
specifically, the condition of the crude oil and natural gas
industry, and the ongoing significant volatility in world markets
may adversely impact drilling and completions programs, which could
materially adversely impact the Corporation. In addition to other
factors and assumptions which may be identified in this News
Release, assumptions have been made regarding, among other things:
the condition of the global economy, including trade, public health
(including the impact of the COVID-19 pandemic) and other
geopolitical risks; the stability of the economic and political
environment in which the Corporation operates; the effect that
improving commodity prices will have on the industry in which the
Corporation operates and the Corporation; the success of the
measures implemented by the Corporation to ensure the safety
of its field and office employees and safe, efficient and
reliable operations at each of its drilling sites; the
creditworthiness of the Corporation's customers; the effectiveness
of the Corporation's financial risk management policies at ensuring
all payables are paid within the pre-agreed credit terms; the
ability of the Corporation to retain qualified staff; the ability
of the Corporation to obtain financing on acceptable terms; the
impact of increasing competition; the ability to protect and
maintain the Corporation's intellectual property; currency,
exchange and interest rates; the regulatory framework regarding
taxes and environmental matters in the jurisdictions in which the
Corporation operates; and the ability of the Corporation to
successfully implement key cost and discretionary spending plan
adjustments. Actual results and future events could differ
materially from those expected or estimated in such forward-looking
information. As a result, the Corporation cannot guarantee that any
forward-looking information will materialize and we caution you
against relying on any of this forward-looking information.
Accordingly, readers should not place undue reliance on
forward-looking information.
Additional information on these and other factors are disclosed
in the Corporation's management's discussion and analysis and
annual information form each dated March 24,
2021, the Corporation's management's discussion and analysis
dated July 28, 2021, and in other reports filed with the
securities regulatory authorities in Canada from time to time and available on
SEDAR (sedar.com).
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.