CWC Well Services Corp. Releases Year End 2012 Financial Results
(firmenpresse) - CALGARY, ALBERTA -- (Marketwire) -- 03/05/13 -- CWC Well Services Corp. (TSX VENTURE: CWC)("CWC" or the "Company") is pleased to release its operational and financial results for the year ended December 31, 2012. The annual audited Financial Statements and Management's Discussion and Analysis ("MD&A") for the fiscal year ended December 31, 2012 are filed on SEDAR at .
Highlights for the Year Ended December 31, 2012
Overview
According to Canadian Association of Oilwell Drilling Contractors ("CAODC"), the average number of active Canadian drilling rigs in Q4 2012 was 376 out of 831 (45%); an increase of 5% compared to the average for Q3 2012 of 330 out of 816 (40%), but a drop of 16% compared to the average for Q4 2011 of 488 out of 804 (61%) drilling rigs. CWC proactively anticipated the drop in drilling activity by shifting over 80% of its service rig work to production maintenance, workovers and abandonments primarily focused on oil-related activities which resulted in Q4 2012 financial results that were better than Q3 2012. While U.S. oil prices remain at healthy levels averaging US$88.15 per barrel for West Texas Intermediate ("WTI") in Q4 2012 compared to US$93.90 per barrel in Q4 2011, the discount differential between Western Canadian Select ("WCS"), the price at which most of our exploration and production ("E&P") customers sell their oil at, and WTI increased from an average of US$12.29 per barrel in Q4 2011 to US$16.35 per barrel in Q4 2012. This discount pricing differential resulted in less urgency from our E&P customers to get new wells drilled and completed in Q4 2012. Continued uncertainty throughout Q4 2012 over resolution of the U.S. fiscal cliff combined with the potential results of the U.S. election and the likelihood of Keystone XL and Northern Gateway pipelines being built on a timely basis, if at all, also contributed to the decision by our E&P customers to slowdown or postpone capital expenditures on drilling new wells. The overall result for CWC was a decrease in the service rig utilization rate of 52% in 2012 compared to 2011 of 57%. As for natural gas, both NYMEX and AECO continue to experience depressed prices with NYMEX averaging US$2.75 per MMbtu in 2012 compared to US$3.99 per MMbtu in 2011. These low natural gas prices continue to have a significant effect on the underutilization of our Coil Tubing, Snubbing and Well Testing assets in Q4 2012.
Revenue for 2012 is up 3% due primarily to the addition of 22 service rigs from the Trinidad Well Servicing ("TWS") acquisition in June 2011 coupled with the addition of five more service rigs from build and recertification programs in 2012 which contributed to a 15% increase in revenue in the Well Servicing segment. This overall revenue increase is offset by the sale in December 2011 of our nitrogen assets in our Other Oilfield Services segment that no longer contribute to revenue in 2012. The nitrogen assets in 2011 contributed $7.0 million in revenue. In addition declines in snubbing activity in 2012 contributed to the 53% decrease in 2012 revenue in the Other Oilfield Services segment. While revenue growth has increased marginally by 3%, EBITDAS has decreased 12% due to the lower activity levels in snubbing in 2012 compared to 2011 and the higher margin nitrogen business which did not contribute to EBITDAS in 2012.
Well Servicing
CWC is the 6th largest service rig provider in the WCSB, operating a modern fleet of 68 service rigs and 8 coil tubing units as of the date of this report; four new service rigs were built in 2012 and one recertified service rig came into service in the fourth quarter. Rig services include completions, maintenance, workovers and abandonments with depth ratings from 1,500 to 5,000 metres. Our service rig fleet, with its leading edge technology, continues to stand out in an industry characterized by ageing equipment and infrastructure.
During the second quarter of 2011, CWC acquired 22 service rigs from TWS increasing CWC's market share in service rigs and increasing the fleet size at that time by 54%. In 2012, the Company completed the construction of a new slant service rig, two new double service rigs, one new single service rig, and recertified one single service rig not previously in service. Additional growth opportunities for new geographic areas were identified in 2012 which led to the construction of these additional service rigs that increased the active service rig count to 68 service rigs with three more new service rigs being constructed in 2013.
CWC's Class I, II and III coil tubing units have depth ratings from 1,500 to 4,000 metres and are well positioned for the changing demand of our customers for deeper depth capabilities. CWC converted one coil tubing unit to a Class III, 2 inch unit capable of depths of 4,000 meters and was deployed in the field in October 2011, a second unit was deployed to the field before the end of the first quarter of 2012 and a third unit, committed to in the 2012 capital budget, is scheduled to be available in Q3 2013.
Well Servicing division revenue in 2012 was up 15% at $102.8 million compared to $89.0 million in the 2011. The $13.8 million year over year increase was largely due to the increased fleet from the TWS acquisition and new equipment additions in service rigs and coil tubing. While utilization has decreased year over year this was partially offset by rate increases implemented in Q4 2011 in response to higher operating costs, particularly for labour and fuel. Average hourly rates on service rigs improved approximately 8% to $783 per hour in 2012 as compared to $727 per hour in 2011. Coil tubing average hourly rates improved 39% to $1,053 per hour in 2012 compared to $757 per hour in 2011 driven by our focus on higher margin work and contribution of our higher depth capacity coil tubing units which have a higher price per hour given the demand for these units. CWC continues to monitor its pricing in the competitive landscape and anticipate stable margins in 2013.
Total service rig hours in 2012 have increased 11% over 2011. The increase is primarily attributable to the acquisition of TWS and new equipment additions. Service rig hours decreased 6% for Q4 2012 compared to Q4 2011. The decrease is consistent with the drop in overall industry utilization for service rigs as noted earlier. Utilization of our well service equipment has risen from the lows experienced in 2009 driven by increased spending on exploration and development as a result of generally higher oil prices and an increase in the number of wells now producing oil compared to that of natural gas.
Other Oilfield Services
CWC's Other Oilfield Services division provides a variety of services for the completion and production phases of oil and natural gas wells from its 8 snubbing units and 11 well testing units. The Other Oilfield Services division revenue decreased by 53% to $9.5 million in 2012 from $20.5 million in 2011. During 2011, revenue of $7.0 million was generated from the nitrogen assets which were sold in December 2011. The remaining $4.0 million decrease was impacted by a decrease of $2.6 million from the snubbing units, which continue to be affected by low natural gas prices, and a decrease of $1.4 million from well testing as a result of lower completions activity in the industry, particularly in the second half of 2012.
In response to changing market conditions, the Company completed the conversion of three of its snubbing units from 3,000 psi to 5,000 psi to reflect the need for higher pressure units and added e-gress safety systems that exceed minimum safety requirements in the industry.
Outlook
While there was a delay in spending by our oil focused exploration and production ("E&P") customers in Q4 2012, current utilization levels in Q1 2013 suggest a modest return to higher activity levels as would be expected in the winter months. CWC intends to continue providing best-in-class services to our E&P customers through "Quality People Delivering Quality Service" with the most relevant, youngest and advanced fleet of equipment. In Q4 2012, CWC took delivery of three additional service rigs increasing the total active service rig fleet to 68 as at December 31, 2012. CWC anticipates that an additional three new service rigs currently being built will be operational in Q3 2013. We will continue to evaluate opportunities to grow the Well Servicing business segment through a disciplined approach in 2013, which may include the addition of new slant service rigs to service the growing number of steam assisted gravity drainage ("SAGD") wells.
The Company recently announced that its Board of Directors declared a quarterly dividend of $0.01625 per common share for the first quarter of 2013. The dividend will be paid on April 15, 2013 to shareholders of record on March 29, 2013. The ex-dividend date is March 26, 2013. This dividend is an eligible dividend for Canadian income tax purposes. The declaration of dividends is determined on a quarter-by-quarter basis by the Board of Directors and reflects CWC's positive view on the sustainability of its cash flow and earnings in the future.
Revenue
Revenue for the fourth quarter of 2012 was $29.4 million; a decrease of $6.6 million or 18% from the fourth quarter of 2011 and an increase of $2.5 million from the third quarter of 2012. The increase from the third quarter of 2012 is expected due to the seasonality of the industry, resulting in Q4 and Q1 representing the peak periods for activity.
During the fourth quarter of 2012 activity levels were lower than in the same period of 2011 as E&P customers moderated their spending noting lower commodity price and capital budget constraints for new well drilling brought about by pipeline capacity issues. CWC did see a marginal increase in the Service Rig utilization from Q3 2012 levels, which is consistent with seasonal increases. However, the Coil Tubing, Snubbing and Well Testing divisions were significantly affected by the slowdown in industry activity levels as a result of depressed natural gas prices which continued in Q4 2012. In addition, the sale of the nitrogen assets in December 2011 meant that no revenue contribution came from these assets in Q4 2012 as was the case in Q4 2011.
EBITDAS
EBITDAS for the fourth quarter of 2012 decreased by 34% compared to the fourth quarter of 2011, but increased 11% from the third quarter of 2011. Utilization of equipment across all segments was impacted negatively by the slowdown in customer spending in Q4 2012 noted above leading to lower year-over-year results. This decrease in activity levels were partially offset by equipment additions. Management continues to work towards keeping overhead costs as variable as possible to maintain stable EBITDAS and net income margins.
Net Income
Net income for the fourth quarter of 2012 was $1.7 million compared to $7.1 million in the fourth quarter of 2011. The decrease in net income was a result of lower utilization year-over-year, a gain on sale of the nitrogen assets in 2011 and provision for deferred income tax expense in 2012 compared to a deferred income tax recovery in the prior year.
About CWC Well Services Corp.
CWC Well Services Corp. is a premier well servicing company operating in the Western Canadian Sedimentary Basin with a complementary suite of oilfield services including service rigs, coil tubing, snubbing and well testing. The Company's corporate office is located in Calgary, Alberta, with operational locations in Red Deer, Provost, Lloydminster, Brooks, Slave Lake and Grande Prairie, Alberta and Weyburn, Saskatchewan.
Notes to Financial Highlights
READER ADVISORY
Certain statements contained in this press release, including statements which may contain such words as "could", "should", "believe", "expect", "will", and similar expressions and statements relating to matters that are not historical facts are forward-looking statements, including, but not limited to, statements as to: future capital expenditures, including the amount and nature thereof; revenue growth; equipment additions; business strategy; expansion and growth of the Company's business and operations; service rig utilization rates, outlook for oil and natural gas prices and general market conditions and other matters. Management has made certain assumptions and analyses which reflect their experiences and knowledge in the industry, including, without limitations, assumptions pertaining to well services demand as a result of commodity prices. These assumptions and analyses are believed to be accurate and truthful at the time, but the Company cannot assure readers that actual results will be consistent with these forward-looking statements. However, whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to known and unknown risks and uncertainties which could cause actual results to differ materially from the Company's expectations. All forward-looking statements made in the press release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected outcomes to, or effects on, the Company or its business operations. The Company does not intend and does not assume any obligation to update these forward-looking statements, except as expressly required to do so pursuant to applicable securities laws. Any forward-looking statements made previously may be inaccurate now.
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.
Contacts:
CWC Well Services Corp.
Duncan T. Au, CA, CFA
President & Chief Executive Officer
(403) 264-2177
CWC Well Services Corp.
Kevin Howell, CA
Chief Financial Officer
(403) 264-2177
CWC Well Services Corp.
755, 255 - 5 Avenue SW
Calgary, Alberta
T2P 3G6
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Datum: 06.03.2013 - 00:26 Uhr
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