CWC Well Services Corp. Announces Record First Quarter 2013 Cash Flow and Declares June 2013 Dividend
(firmenpresse) - CALGARY, ALBERTA -- (Marketwired) -- 05/09/13 -- CWC Well Services Corp. ("CWC" or the "Company") (TSX VENTURE: CWC) is pleased to release its operational and financial results for the three months ended March 31, 2013. The Interim Financial Statements and Management's Discussion and Analysis ("MD&A") for the period ended March 31, 2013 are filed on SEDAR at .
CWC achieved record first quarter 2013 EBITDAS of $11.3 million despite a slower drilling and completions environment in the first quarter of 2013 compared to 2012. "CWC's focus on oil-related production maintenance, workover and abandonment work in our well servicing segment produced record cash flows this winter under a less urgent drilling environment," said Duncan Au, President and Chief Executive Officer. "Further, approximately 90% of our work today is on oil wells as opposed to natural gas wells - enhancing the stability of CWC's cash flows, thus enabling us to continue growing the company, pay a sustainable dividend to our shareholders, and maintain a strong balance sheet."
First Quarter 2013 Summary (compared with a year earlier)
Quarterly Dividend
The Company is pleased to announce that its Board of Directors has declared a quarterly dividend of $0.01625 per common share. The dividend will be paid on July 15, 2013 to shareholders of record on June 28, 2013. The ex-dividend date is June 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.
Financial and Operational Highlights
Overview
According to Canadian Association of Oilwell Drilling Contractors ("CAODC"), the average number of active Canadian drilling rigs in Q1 2013 was 493 out of 815 (61%) an increase of 16% compared to the average for Q4 2012 of 376 out of 831 (45%), but a drop of 5% compared to the average for Q1 2012 of 537 out of 797 (67%) drilling rigs. CWC over the past few quarters has continued shifting well servicing work towards production maintenance, workovers and abandonments and nearly 80% of activity was primarily focused on oil-related activities which helped to offset declines in completion related activities that were lower due to the drops in drilling activity year over year and fundamentals that continued to be a challenge for natural gas related drilling.
While U.S. oil prices remain at healthy levels averaging US$94.35 per barrel for West Texas Intermediate ("WTI") in Q1 2013 compared to US$102.84 per barrel in Q1 2012, 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 remained high; primarily brought about by oil transportation bottlenecks. This discount pricing differential resulted in less urgency from E&P customers to get new wells drilled and completed in Q1 2013 compared to Q1 2012. The overall result for CWC was a slight decrease in the service rig utilization rate to 62% in Q1 2013 compared to Q1 2012 of 65%.
As for natural gas prices, there was an improvement of approximately 19% in Q1 2013 compared to in Q1 2012. While prices have seen some improvement, they continue to face pressure from the lag between planned reduction of drilling programs and the decline in storage levels. The fundamentals of price and storage levels have had a negative impact on activity and particularly on our snubbing division.
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. Three additional service rigs are under construction and anticipated to be delivered in the second and third quarter of 2013. These new rig builds will continue our expansion into North Central Alberta as we continue to have success penetrating this new geographic region for CWC which began late in 2012, whereby the company now has 4 active rigs in this area and will increase to 7 rigs by the end of Q3 2013. Customer acceptance of our new and high quality equipment continues to gain momentum. 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.
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. Increasing the fleet size helped in offsetting revenue declines as utilization was down year over year.
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 segment revenue in Q1 2013 was up 2% at $35.2 million compared to $34.5 million in Q1 2012. The $0.7 million year-over-year increase was largely due to higher rates being achieved in the Coil division. Average hourly rates on service rigs remained consistent year-over-year at $823 per hour for the Q1 2013 versus $821 for the Q1 2012. Service rig rates are highest during the first quarter as a result of the need for additional winter related equipment that increases average hourly pricing. Coil tubing average hourly rates improved 36% in the Q1 2013 compared to Q1 2012 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.
Service rig hours were consistent year-over-year despite an additional five units in the service rig fleet Q1 2013 from Q1 2012. This is consistent with the drop in overall industry utilization for service rigs Utilization for the service rig industry as reported by the CAODC has remained relatively flat.
Other Oilfield Services
CWC's Other Oilfield Services segment provides a variety of services for the completion and production phases of oil and natural gas wells from its 6 snubbing units and 10 well testing units. The Other Oilfield Services division revenue decreased by 28% to $3.2 million in Q1 2013 from $4.4 million in Q1 2012. The snubbing division continues to be negatively affected by low activity on natural gas projects that suit our equipment and a decrease from well testing as a result of lower completions activity in the industry.
In response to continued challenging market conditions for activity on snubbing, the Company sold one of its 5,000 psi snubbing units, resulting in a gain on the sale of this unit. This unit was one of our oldest units and was not active in our fleet at the time. The sale of this unit was to a U.S. based company and will not be competing with our current snubbing units in Canada.
Outlook
With Q1 2013 behind us and WTI oil prices in the $90 to $100 range with WCS differentials narrowing, 2013 is shaping up to be as good or a better year than 2012 for CWC. The Petroleum Services Association of Canada ("PSAC") is forecasting 12,000 wells to be drilled in 2013; an increase of 9% compared to the 11,025 wells drilled in 2012. While we still have some unanswered questions such as whether the northern leg of the Keystone XL pipeline carrying Canadian crude oil to U.S. refineries will be built (in our view, the main reason for the current pause in activity levels by our E&P customers), CWC is optimistic that such approvals will eventually be obtained. As for NYMEX natural gas prices, it started January 2013 at the bottom around $3.25 and has increased above $4.25 in late April 2013, suggesting that North America has finally resolved its oversupply situation in natural gas. Should natural gas prices remain at these levels, CWC's Other Oilfield Service assets of snubbing and well testing, which have a greater exposure to natural gas activities, should see an increase in its utilization levels compared to 2012. Our cautious optimism for 2013 has not dampened our resolve to continue growing the Well Servicing division. In December 2012, the Board of Directors approved a 2013 capital expenditure program to build 3 new service rigs to continue supporting our growth into Slave Lake/Wabasca and the completion of 1 new Class III, 2 inch coil tubing unit. These 3 new service rig builds, which are expected to be operational in Q3 2013, will increase CWC's service rig fleet to 71 units; an increase of 30 units or 73% over a 2 year period (more than any other Canadian service rig company over this same period of time).
Financial Measures Reconciliations
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
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.
STATEMENT OF FINANCIAL POSITION
CWC Well Services Corp.
As at March 31, 2013 and December 31, 2012
(unaudited)
STATEMENT OF COMPREHENSIVE INCOME
CWC Well Services Corp.
For the three months ended March 31, 2013 and 2012
(unaudited)
STATEMENT OF CHANGES IN EQUITY
CWC Well Services Corp.
For the three months ended March 31, 2013 and 2012
(unaudited)
STATEMENT OF CASH FLOWS
CWC Well Services Corp.
For the three months ended March 31, 2013 and 2012
(unaudited)
READER ADVISORY - 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: 09.05.2013 - 23:16 Uhr
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