CALGARY, AB, May 12, 2021 /CNW/ - Stampede Drilling Inc.
("Stampede" or the "Corporation") (TSXV: SDI) announces today its
financial and operational results for the three months ended
March 31, 2021.
The following should be read in conjunction with the
Corporation's consolidated financial statements and the notes
thereto for the year ended December 31,
2020, related management's discussion and analysis and
annual information form, which are 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
March 31,
|
(000's CAD $
except per share amounts)
|
2021
|
2020
|
%
Change
|
Revenue
|
11,861
|
10,890
|
9%
|
Direct operating
expenses
|
7,213
|
7,361
|
(2%)
|
Gross margin
(1)
|
4,648
|
3,529
|
32%
|
Net income
|
2,408
|
1,135
|
112%
|
Basic and diluted per
share
|
0.02
|
0.01
|
nm
|
Adjusted EBITDA
(1)
|
3,917
|
2,584
|
52%
|
Weighted average
common shares outstanding
|
132,091
|
132,046
|
0%
|
Weighted average
diluted common shares outstanding
|
144,529
|
145,528
|
(1%)
|
Capital
expenditures
|
793
|
705
|
12%
|
nm - not
meaningful
|
(1) Refer to "Non-GAAP Measures" for
further information.
|
|
As at March
31,
|
(000's CAD
$)
|
2021
|
2020
|
%
Change
|
Current
assets
|
9,111
|
8,623
|
6%
|
Total
assets
|
52,298
|
53,665
|
(3%)
|
Total current
liabilities
|
12,052
|
15,352
|
(21%)
|
Total non-current
liabilities
|
4,856
|
527
|
821%
|
Shareholders'
equity
|
35,390
|
37,786
|
(6%)
|
FIRST QUARTER 2021 OPERATIONAL OVERVIEW
A record quarter for the Corporation in activity, adjusted
EBITDA and net income.
During the three months ended March 31,
2021, the Corporation recorded net income of $2,408, up 112% from $1,135 and adjusted EBITDA of $3,917, up 52% from $2,584 as compared to the 2020 corresponding
period. The increase in net income and adjusted EBITDA were
directly related to the Corporations strongest ever recorded
quarterly utilization rate. During Q1 2021 the Corporation was able
to put 10 out of its 11 rigs to work achieving a 68% utilization
rate, 152% higher than the CAODC industry average for Q1 2021 of
27%.
The Corporation maintained a strong emphasis on safety during
this very busy quarter 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 of its personnel and the safe and reliable operations
at each of its drilling sites.
The Corporation continued its cost cutting measures from
March 2020 into Q1 2021. For the
three months ended March 31, 2021,
salary and benefit expenses were down 42% as compared to the
corresponding 2020 period. The decrease in employee expenses was
related to the following:
- 18% to 36% reduction to executive cash compensation,
- Employee salary reductions, modified work schedules, job
sharing and temporary layoffs, and
- Elimination of cash compensation for the Board of
Directors
During Q1 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 March 31, 2021, the Corporation
recorded $869 against cost of sales
and $63 against salaries and benefit
expenses.
OUTLOOK
The prospects of a successful vaccine deployment, the
introduction of rapid COVID-19 testing to facilitate early
detection, and continuing strengthening of commodity prices, are
combining to provide a reasonable degree of optimism in the
industry for the remainder of 2021. The optimism is tempered
however by the current COVID-19 lockdowns and COVID-19 variants
which have put pressure on the short term oil demand.
The Corporation's customer base indicates a modest increase in
capital spending in 2021 due to the strengthening of the commodity
prices. The M&A activity on the customer side has resulted in
stronger but fewer participants requiring our services. The
Corporation's performance and safety record bode well for industry
leading activity to continue during the balance of 2021.
RESULTS FROM OPERATIONS FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 2021
|
Three months ended
March 31,
|
(000's CAD $
except per day amounts)
|
2021
|
2020
|
%
Change
|
|
|
|
|
Drilling rig
revenue
|
11,861
|
10,890
|
9%
|
Direct operating
expenses
|
7,213
|
7,361
|
(2%)
|
Gross margin
(1)
|
4,648
|
3,529
|
32%
|
Gross margin
%
|
39%
|
32%
|
22%
|
Net income
|
2,408
|
1,135
|
112%
|
General and
administrative expenses
|
997
|
1,142
|
(13%)
|
Adjusted EBITDA
(1)
|
3,917
|
2,584
|
52%
|
Drilling rig
operating days
|
607
|
531
|
14%
|
Drilling rig revenue
per day
|
19.5
|
20.5
|
(5%)
|
Drilling rig
utilization
|
68%
|
58%
|
16%
|
CAODC industry
average utilization(2)
|
27%
|
35%
|
(23%)
|
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.
|
- Revenue for the three month period ended March 31, 2021 was $11,861, up $971
(9%) compared to $10,890 for the
corresponding 2020 period. The increase was as a result of
increased drilling activity as the Corporation had all 10 of its
marketable rigs working during the 2021 period. The increase in
revenue was partially offset by a lower revenue per day in Q1 2021.
The lower revenue per day was due to increased market pricing
pressures.
- The Corporation had a total of 607 operating days in the first
three month of 2021, an increase of 76 operating days (14%) from
the 531 operating days in the corresponding 2020 period. The
drilling rig utilization for the first three months of 2021 was
68%, which was 41% higher then the first three month CAODC industry
average utilization rate of 27% for 2021.
- Gross margin for the three month period ended March 31, 2021 was 39%, up 22% from 32% as
compared to the corresponding 2020 period. The increase in 2021
gross margin was primarily due to the $869 of CEWS funding the Corporation qualified
for in Q1 2021 which was recorded against cost of sales. The
increase of gross margin was partially offset by the lower revenue
per day.
- For the three month ended March 31,
2021, general and administrative expenses were $997 down $145
(13%) from $1,142 as compared to the
corresponding 2020 period. The 2020 decrease in general and
administrative expenses was as a result of the Corporations cost
cutting initiatives implemented in March
2020. Cost cutting initiatives included reduced headcount,
salary roll backs and elimination of all discretionary spending.
The decrease in general and administrative expenses was partially
offset by higher share based payments during Q1 2021 due to a stock
option grant in March 2021.
- As a result of the increased 2021 operating days, corresponding
revenue and increase in gross margin, Adjusted EBITDA and net
income for the three month ended March 31,
2021 were $3,917 and
$2,408, respectively. Adjusted EBITDA
was up 1,333 (52%) from 2,584, and net income was up $1,273 (112%) from $1,135 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
March 31,
|
(000's CAD
$)
|
2021
|
2020
|
%
Change
|
Net income
|
2,408
|
1,135
|
112%
|
Depreciation
|
1,151
|
1,192
|
(3%)
|
Finance
costs
|
183
|
221
|
(17%)
|
Other
income
|
(6)
|
(24)
|
(75%)
|
Gain from equipment
lost in hole
|
(39)
|
-
|
nm
|
Share-based
payments
|
185
|
95
|
95%
|
Foreign exchange gain
(loss)
|
35
|
(35)
|
(200%)
|
Adjusted
EBITDA
|
3,917
|
2,584
|
52%
|
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
March 31,
|
(000's CAD
$)
|
2021
|
2020
|
%
Change
|
Income from
operations
|
3,578
|
2,439
|
47%
|
Depreciation of
property and equipment
|
1,070
|
1,090
|
(2%)
|
Gross
margin
|
4,648
|
3,529
|
32%
|
Gross margin
%
|
39%
|
32%
|
22%
|
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: expectations associated with the
Corporation's outlook, including among other things, the impacts of
COVID-19 and expectations and responses related thereto,
anticipated commodity pricing and related expectations, demand for
oil, expected capital spending of the Corporation's customers, the
impacts of mergers and acquisitions in the industry, and the
Corporation's performance and safety record and expectations
related thereto, 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 the
stabilization of global crude prices will have on drilling and
completion activities in Western
Canada; the success of the measures implemented by the
Corporation to protect its field and office employees and the
ability to ensure business continuity at the same time; 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 May 12, 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.