(TSX - FES)
CALGARY, Aug. 8, 2011 /PRNewswire/ - Flint Energy Services Ltd. (Flint, the Company) released its second quarter results today after markets closed. On January 1, 2011, the Company adopted International Financial Reporting Standards ("IFRS") for financial reporting purposes, using a transition date of January 1, 2010. The interim financial statements for the three and six months ended June 30, 2011, including required comparative information, summarized in this release, have been prepared in accordance with International Financial Reporting Standards.
Highlights
- Revenues for the three month period ending June 30, 2011 were $339.1
million, consistent with $339.8 million in the comparative quarter of
2010, with decreased revenues in the Facilities Infrastructure segment
offset by increased revenues in the Oilfield Services segment. Oilfield
Services revenues for the quarter were $65.5 million, up $30.6 millionfrom the comparative quarter in 2010. For the six month period ended
June 30, 2011, revenues were $665.9 million, down $97.1 million or
12.7% from the comparative period in 2010 as a result of weather delays
and the extended bidding period for oil sands projects for the
Facilities Infrastructure segment after the recent economic slowdown.
- EBITDA for the three months ended June 30, 2011 was $23.6 millioncompared to $30.1 million for the second quarter of 2010. Overall,
EBITDA margins declined to 7.0% in the second quarter of 2011 from 8.9%
in 2010 due to increased non-reimbursable bidding costs, as well as
approximately $0.8 million of non-recurring severance costs relating to
an internal reorganization, partially offset by a $2.2 million gain
relating to the sale of a business. For the six month period ended June
30, 2011, EBITDA was $38.7 million, down $36.7 million from the
comparative period of 2010 due to lower revenues in first quarter of
2011.
- Including the non-recurring items noted above and financing costs of
approximately $7.8 million of prepayment costs relating to the
repayment of the outstanding term loans and the amendment of the credit
facility, the loss for the three months ended June 30, 2011 was $0.9
million, compared to profit of $8.8 million in the same period of 2010.
Excluding these non-recurring costs (net of taxes), earnings for the
quarter were $4.5 million.
- The fully diluted loss per share for the quarter ended June 30, 2011 was
$0.02 per common share, compared to profit of $0.19 per common share
for the same period in 2010. Excluding the non-recurring costs,
adjusted net profit was $0.09 per fully diluted share for the quarter
ended June 30, 2011.
- For the six months ended June 30, 2011, the loss was $5.4 millioncompared to a profit of $26.8 million in 2010. For the six month period ended June 30, 2011, diluted loss per share was $0.12 compared to diluted profit per share of $0.58 in 2010. Excluding the non-recurring costs, adjusted net profit was $0.00 per fully diluted share for the six months ended June 30, 2011.
| Selected financial information for each reportable business segment is as follows: | ||||
| (in thousands of Canadian dollars, for the three months ended June 30) | 2011 | 2010 | ||
| Revenue by reportable segment | ||||
| Production Services | 193,203 | 57% | 195,205 | 57% |
| Facility Infrastructure | 80,385 | 24% | 109,715 | 32% |
| Oilfield Services | 65,514 | 19% | 34,903 | 10% |
| Maintenance Services | 97,288 | 29% | 119,348 | 35% |
| 436,390 | 129% | 459,171 | 135% | |
| Less: Maintenance Services Joint Ventures | (97,288) | (29%) | (119,348) | (35%) |
| Total | 339,102 | 100% | 339,823 | 100% |
| EBITDA by reportable segment | ||||
| Production Services | 19,687 | 83% | 26,581 | 88% |
| Facility Infrastructure | 3,988 | 17% | 12,818 | 43% |
| Oilfield Services | 9,706 | 41% | (240) | (1%) |
| Maintenance Services | 7,862 | 33% | 10,545 | 35% |
| 41,243 | 174% | 49,704 | 165% | |
| Less: Corporate | (9,784) | (41%) | (9,071) | (30%) |
| Less: Maintenance Services Joint Ventures | (7,862) | (33%) | (10,545) | (35%) |
| Total | 23,597 | 100% | 30,088 | 100% |
| (in thousands of Canadian dollars, for the six months ended June 30) | 2011 | 2010 | ||
| Revenue by reportable segment | ||||
| Production Services | 379,818 | 57% | 410,181 | 54% |
| Facility Infrastructure | 135,134 | 20% | 250,786 | 33% |
| Oilfield Services | 150,975 | 23% | 102,061 | 13% |
| Maintenance Services | 162,385 | 24% | 217,512 | 29% |
| 828,312 | 124% | 980,540 | 129% | |
| Less: Maintenance Services Joint Ventures | (162,385) | (24%) | (217,512) | (29%) |
| Total | 665,927 | 100% | 763,028 | 100% |
| EBITDA by reportable segment | ||||
| Production Services | 29,279 | 75% | 52,001 | 69% |
| Facility Infrastructure | 9,559 | 25% | 35,745 | 47% |
| Oilfield Services | 23,543 | 61% | 8,504 | 11% |
| Maintenance Services | 13,127 | 34% | 15,230 | 20% |
| 75,508 | 195% | 111,480 | 147% | |
| Less Corporate | (23,709) | (61%) | (20,927) | (27%) |
| Less: Maintenance Services Joint Ventures | (13,127) | (34%) | (15,230) | (20%) |
| Total | 38,672 | 100% | 75,323 | 100% |
- On May 25, 2011, the Company issued $175 million of 7.5% senior
unsecured notes maturing in 2019. The notes were issued at 99.0% of
their face value ($173.2 million) resulting in a discount of $1.8
million. Net of the discount and transaction costs, the Company
received total net proceeds of $168.3 million.
- As of June 30, 2011, all term loans under the previous credit agreement
were repaid.$71.7 million Canadian and $43.1 million US was repaid
including prepayment costs of $7.0 million and $0.8 million of other
fees relating to the amendment of the credit facility.
- The Company renewed its revolver credit facility with its lenders in conjunction with the issuance of the senior unsecured notes. The revolver credit facility totaling $175 million has a four year term to 2015. Operating loans remained undrawn in the second quarter of 2011, and Flint's cash holdings as of June 30, 2011 were $65.5 million.
W. J. (Bill) Lingard, President and Chief Executive Officer of the Company said, "Our second quarter results, while hurt by one time fees, reflect the beginning of a recovery as our business segments continued to improve execution, lift margins and increase backlogs. We are pleased with the results of our Oilfield Services division, where revenues have nearly doubled that of last year due to increased drilling activity in both Canada and the United States. Although our Facility Infrastructure revenues were down from Q2 last year, they were up from the first quarter, and with $300 million in additional contract backlog secured in the second quarter, we have very good revenue visibility for this segment for the balance of the year and into 2012." Mr. Lingard also stated, "Our Production Services segment revenues while flat with last year, were below expectations due to fire and weather related delays in Q2 but operating margins continued to improve over Q1. Our expectations are for much stronger activity in this segment in both Canada and the United States for the second half of the year."
While no longer reported in Company revenues under IFRS, the Maintenance Services segment revenues were $97.3 million, down $22.1 million from Q2 2010 as a result of lower turnaround and shutdown revenues in the second quarter of this year. As a result, EBITDA was $7.9 million, down $2.7 million from $10.6 million last year. Under IFRS, the Company now reports the results of this segment on the Company's Statement of Profit, as share of profit of equity accounted investees, net of taxes. In Q2 2011, the Company's share of profit of equity accounted investees, net of taxes, was $5.3 million for the quarter, compared to $6.0 million in the comparative quarter for 2010.
Outlook
The second half of 2011 is poised to be very busy in all of Flint's operating segments as a result of strong drilling activity in the first half of the year, and increasing drilling in the second half of the year. This stronger drilling activity benefits the Company's Oilfield Services division, particularly in the US, and the Company also expects to see increasing activity for the mid-stream Production Services segment in the second half of the year.
Canadian drilling activity in the first half of 2011 was up 12% to 5,400 wells, and second half drilling is forecast to increase 17% to 8,800 wells over 2010. Drilling activity in the US in the first half was up 36% over the first half of 2010, with an estimated 31,500 wells drilled. Land-based rig activity averaged 1,753 in the first half with early July seeing 1,854 active rigs. Forecasts for the second half see US drilling complete a further 33,888 wells, up 18% over the second half 2010.
Oilfield Services' rig moving will see increased activity in both Canadaand the United States through the balance of 2011 due to increased drilling, and fluid hauling revenues will continue to benefit as a result of expanding crude oil production in both Canada and the United States. The Company was recently awarded a rig moving contract with a major producer covering its Canadian and US operations, with significant activity to take place in northeast BC.
Production Services activities, which lag drilling activity, are expected to improve in the second half of the year with well tie-ins from drilling in the first half, and facilities and pipeline projects, which typically occur in the second half of the year. The Company has been awarded a number of pipeline construction contracts in northeast BC, as well as the Marcellus basin in the eastern United States. In some areas, present commitments are at capacity, and the Company has had to turn away or decline to bid on some jobs which do not meet the Company's expected risk and return expectations.
Oil sands capital project awards have been secured, providing the Company with visibility for second half revenues, and while the maintenance services segment was awarded a maintenance contract with a new major oil sands producer, maintenance revenues for 2011 will be lower than 2010 as a result of lower levels of turnaround and shutdown work expected in 2011.
Oil sands capital spending for 2011 is expected to reach $16 billion, up from an estimated $11 billion in expenditures in 2010. A number of the previously delayed projects should see contract awards in the second half of 2011.
Facility Infrastructure contract backlog is approximately $300 millionand includes additional work releases on Suncor's Firebag SAGD projects, and the recently awarded MEG Energy Christina Lake Phase 2 SAGD project near Fort McMurray. The Company is also bidding on additional contract work with several oil sands producers and expects further announcements on contract awards during the second half of this year.
FT Services, the Company's 50% owned subsidiary, was recently awarded a new multi-year maintenance contract with a major oil sands producer. The contract, while modest in size, represents an opportunity to expand its scope with the new customer over time.
Ongoing cost management and the re-allocation of assets to areas with higher activity continues to be a focus to improve margins.
Management continues to review acquisition opportunities to fill in the geographic reach of the Company's existing business lines in both Canada and the United States. The outlook for the balance of 2011 is positive for all divisions.
Complete copies of the Company's second quarter 2011 interim financial results are available on www.SEDAR.com and on the Company's website: www.flintenergy.com.
Flint Energy Services Ltd. is a market leader providing an expanding range of integrated products and services for the oil and gas industry including: production services; infrastructure construction; oilfield transportation; and maintenance services. With more than 9,000 employees, Flint provides this unique breadth of products and services through over 65 strategic locations in the oil and gas producing areas of Western North America, from Inuvik in the Northwest Territories to Mission, Texas on the Mexican border. Flint is a preferred provider of infrastructure construction management, module fabrication, maintenance services for upgrading, and production facilities in Alberta's oil sands sector.
FORWARD LOOKING STATEMENTS
Certain statements in this news release are "forward-looking
statements", which reflect current expectations of the management of
Flint regarding future events or Flint's future performance. All
statements other than statements of historical fact contained in this
news release may be forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ materially
from those anticipated in the forward-looking statements. Flint
believes that the expectations reflected in such forward-looking
statements are reasonable, but no assurance can be given that these
expectations will prove to be correct and such forward-looking
statements should not be unduly relied upon. The forward-looking
statements are expressly qualified in their entirety by this cautionary
statement. The forward-looking statements are made as of the date of
this news release and Flint assumes no obligation to update or revise
them to reflect new events or circumstances, except as expressly
required by applicable securities law. Further information regarding
risks and uncertainties relating to Flint and its securities can be
found in the disclosure documents filed by Flint with the securities
regulatory authorities, available at www.sedar.com.
A conference call with management to discuss the Company's second quarter 2011 results and outlook is scheduled for 10:00 AM Eastern Timeon Tuesday, August 9, 2011. Details on how to participate in or listen to the call are available on the Company's website: www.flintenergy.com.
SOURCE Flint Energy Services Ltd.
