Tuscany International Drilling Inc. Announces First Quarter 2013 Financial Results
(firmenpresse) - CALGARY, ALBERTA -- (Marketwired) -- 05/13/13 -- Tuscany International Drilling Inc. ("Tuscany" or the "Company") (TSX: TID) (COLOMBIA: TIDC) is pleased to announce first quarter 2013 results. The condensed interim consolidated financial statements of the Company for the first quarter ended March 31, 2013 and the related management's discussion and analysis will be filed under the Company's profile on the SEDAR website at . The financial information described below should be read in conjunction therewith. Unless otherwise stated, the financial information included herein has been presented in thousands of United States dollars.
Q1 2013 Highlights
(1) Refer to Non-GAAP Measures
Non-IFRS Measures
This MD&A contains references to adjusted EBITDA, adjusted EBITDA per share, funds from operations, funds from operations per share, and gross margin.
Adjusted EBITDA is defined as "Oilfield services revenue less oilfield services expenses less general and administrative expenses (excluding stock-based compensation expense)". Management believes that in addition to net income, adjusted EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Company's principal business activities prior to the consideration of how these activities are financed, how the results are taxed in various jurisdictions and how the results are impacted by accounting standards associated with the Company's share-based compensation plan and corporate development activities. Per share amounts are calculated using the weighted average number of outstanding shares for the period under review.
Funds from operations is defined as "cash flow provided by/used in operating activities before the change in non-cash working capital". Funds from operations is a measure that provides shareholders and potential investors additional information regarding the Company's liquidity and its ability to generate funds to finance its operations. Management will use this measure to assess the Company's ability to finance operating activities, capital expenditures and corporate development initiatives. Per share amounts are calculated using the weighted average number of outstanding shares for the period under review.
Gross margin is defined as "oilfield services revenue less oilfield services expenses". Gross margin is a measure that provides shareholders and potential investors additional information regarding the profitability of the Company's rigs and is used by management to help assess operational performance.
Adjusted EBITDA, adjusted EBITDA per share, funds from operations, funds from operations per share, and gross margin are not measures that have any standard meaning prescribed by IFRS and accordingly, may not be comparable to similar measures used by other companies.
Overview
During the three months ended March 31, 2013, the Company recorded a net loss of $7,079 ($0.02 per common share) compared to a net income of $275 ($0.00 per common share) for the three months ended March 31, 2012. During the three months ended March 31, 2013, the Company recorded oilfield services revenue of $59,091, adjusted EBITDA(1) of $9,367 and gross margin(3) from rig operations of $16,355 compared to revenue of $94,314, adjusted EBITDA of $20,160 and gross margin from rig operations of $31,370 during the three months ended March 31, 2012.
The decreases in revenue, adjusted EBITDA and gross margin for the first quarter of 2013 compared to the first quarter of 2012 reflect a decrease in operating activity during the three months ended March 31, 2013, compared to the three months ended March 31, 2012, as a result of rigs coming off contract in 2012. For the three months ended March 31, 2013, the Company had 2,195 revenue days from rig operations compared to 3,018 revenue days from rig operations during the three months ended March 31, 2012. Gross margin for the three months ended March 31, 2013, was offset by general and administrative expenses of $7,224, net finance costs of $5,702, foreign exchange contract expense of $78 and depreciation of $5,559. For the three months ended March 31, 2013, the Company also recorded current income tax expense of $1,940, deferred income tax expense of $3,368, foreign exchange gains of $763 and equity losses of $326. The large decrease in depreciation expense reflects the decrease in revenue days during the three months ended March 31, 2013 compared to the three months ended March 31, 2012. The decrease in general and administrative expense from the three months ended March 31, 2013 compared to the three months ended March 31, 2012, reflects management's efforts to realize efficiencies associated with the 2011 corporate acquisitions.
During the three months ended March 31, 2013, Tuscany spent $4,829 on investing activities, which includes $3,020 of capital expenditures comprised primarily of rig refurbishment activity, and a $1,809 increase in restricted cash. During the three months ended March 31, 2013, Tuscany drew an additional $5,000 on its credit facility and increased its bank indebtedness and operating lines by 5,021.
Oilfield services revenue was $59,091 for the three months ended March 31, 2013, compared with $94,314 for the three months ended March 31, 2012, a decrease of 37%. The decrease in revenue is a result of decreases in the number of revenue days and average revenue per day in the three months ended March 31, 2013, compared to the three months ended March 31, 2012. During the three months ended March 31, 2013, the Company had 2,195 revenue days (65.9% utilization) compared to 3,018 revenue days (89.6% utilization) in the three months ended March 31, 2012, a decrease of 27%. Revenue days decreased in the three months ended March 31, 2013, primarily as a result of rigs coming off contract during 2012. For the three months ended March 31, 2013, average revenue per day decreased to $26.9 from $31.2 for the three months ended March 31, 2012. Average revenue per day decreased in the first quarter of 2013 compared to the first quarter of 2012 due to larger rigs coming off contract during 2012 and three rigs in Colombia being contracted at lower day rates compared to rigs of similar capacity. These lower day rates are more than offset by the fact that the majority of the operating costs are borne by the customer. Twenty-six of the Company's 37 available drilling and heavy-duty workover rigs earned revenue from drilling operations during the three months ended March 31, 2012. During the three months ended March 31, 2012, the Company earned revenues from 34 rigs.
For the three months ended March 31, 2013, gross margin was $16,355, or 27.7%, compared with a gross margin of $31,370, or 33.3%, for the three months ended March 31, 2012. The decrease in gross margin percentage for the three months ended March 31, 2013, compared to the gross margin percentage for the three months ended March 31, 2012, is primarily due to continuing costs associated with rigs that have come off contract.
(1) Reflects the movement in accounts from December 31, 2012 to March 31, 2013.
(2) Refer to "Non-IFRS Measures"
Depreciation expense totaled $5,559 for the three months ended March 31, 2013, compared with $9,768 for the three months ended March 31, 2012. Under the Company's depreciation policy, depreciation of rigs and related equipment is based on the number of days in operation. The significant decrease in depreciation expense for the three months ended March 31, 2013, compared to the three months ended March 31, 2012, is a result of a decrease in the operating days in the three months ended March 31, 2013, compared to the corresponding period of 2012. During the three months ended March 31, 2013, the Company recorded depreciation on twenty-six rigs compared to thirty-four rigs during the three months ended March 31, 2012.
General and administrative expense was $7,224 (12.23% of revenue) for the three months ended March 31, 2013, compared to $12,323 (13.07% of revenue) for the three months ended March 31, 2012. The decrease in general and administrative expense and the decrease in general and administrative expense as a percentage of revenue (even after the impact of a 37% decrease in revenue compared to the corresponding period of 2012) from the three months ended March 31, 2013 compared to the three months ended March 31, 2012, reflects management's efforts to realize efficiencies associated with the 2011 acquisitions.
Included in general and administrative expense for the three months ended March 31, 2013, is $236 of stock-based compensation compared to $1,113 for three months ended March 31, 2012. Stock-based compensation expense represents the value, calculated using the Black-Scholes option pricing model, related to the granting of stock options.
For the three months ended March 31, 2013, net finance costs includes interest and amortization of costs associated with the Company's credit facility, the change in value on the Company's interest rate hedges and interest on amounts payable to Brazilian tax authorities and other smaller interest charges in various countries, net of interest income. Net finance costs decreased to $5,702 for the three months ended March 31, 2013, from $7,298 for the three months ended March 31, 2012.
The Company currently has a $255,000 credit facility comprised of a $210,000 term loan and a $45,000 revolving line of credit. Fees associated with the credit facility have been presented as a direct reduction to the face value of the long-term debt. The effective interest rate method has been applied and results in the amortization of the debt discount over the life of the loan. As a result, amortization of financing fees related to the credit facility of $1,370 have been included in net finance costs for the three months ended March 31, 2013, compared to $1,081 for the three months ended March 31, 2012. In addition to the financing fees associated with this facility, the Company incurs interest expense on the amount drawn under the credit facility at three-month LIBOR plus 6.5% per annum. During the three months ended March 31, 2013, the Company recorded $4,145 of interest related to the credit facility compared to $3,972 for the three months ended March 31, 2012.
During the year ended December 31, 2012, the Company entered into two separate agreements to hedge the interest rate on a total of $100,000 of the $210,000 term loan. The Company has entered into floating for fixed swap agreements on three-month LIBOR to maturity of the term loan under the Company's credit facility. The fair value of these interest rate contract liabilities increased by $22 for the three months ended March 31, 2013, compared to an increase of $2,153 for the three months ended March 31, 2012.
The Company is being charged interest on amounts owing to the Brazilian tax authority. Interest on amounts owing to the Brazilian tax authority was $94 for the three months ended March 31, 2013 (2012 - $92). Interest of $70 was incurred in various countries for the three months ended March 31, 2013 (2012 - $Nil).
During the period ended March 31, 2012, the Company entered into a Euro/United States dollar cross costless collar on a total of 19,200 Euro. The contract consists of 24 contracts with notional amounts of 800 Euro per contract. The contract has a two year term and the fair value of this foreign exchange contract liability increased $78 in the three months ended March 31, 2013 (2012 - $22).
In addition to incurring operating expenses and capital expenditures in the Company's functional currency (United States dollars), the Company also incurs operating expenses and capital expenditures in Colombian pesos (COP), Canadian dollars (CDN $), Brazilian real (BRL), African francs (CFA) and Euros. Foreign exchange gains and losses arise primarily on the settlement of accounts payable invoices that are denominated in currencies other than the United States dollar.
The Company has a 33.87% ownership interest in Warrior, a private oilfield services company involved in the development and manufacture of oilfield services equipment. The carrying value of this investment is adjusted to include the pro-rata share of the investee's earnings, less dividends received. Equity losses totaled $326 for the three months ended March 31, 2013, compared with equity income of $674 for the three months ended March 31, 2012. Equity income has decreased as a result of decreased activity in Warrior in the first quarter of 2013 compared to the first quarter of 2012.
For the three months ended March 31, 2013, Tuscany's total current income tax expense of $1,940 is comprised of current income primarily of income tax expenses in Colombia and Gabon.
For the three months ended March 31, 2013, Tuscany's total deferred income tax expense is $3,368. For the three months ended March 31, 2013, deferred income tax expenses of $4,276 in Colombia, $331 in Uganda and $42 in Ecuador were offset by deferred income tax recoveries of $864 in Brazil and $417 in Tanzania.
Contacts:
Tuscany International Drilling Inc.
Walter Dawson
President and CEO
(403) 265-8258
(403) 265-8793 (FAX)
Tuscany International Drilling Inc.
Matt Moorman
CFO
(403) 265-8258
(403) 265-8793 (FAX)
Tuscany International Drilling Inc.
1950, 140-4th Avenue S.W.
Calgary, Alberta
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Datum: 13.05.2013 - 13:00 Uhr
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News-ID 259159
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