Flint Reports Third Quarter Financial Results
(TSX - FES)
CALGARY, Nov. 4 /CNW/ - Flint Energy Services Ltd. (Flint, the Company) reported its third quarter and nine month financial results after markets closed today.
Highlights:
Revenues for the three month period ending September 30, 2010 were $406.5 million compared to $459.7 million for the same period in 2009. Revenues for the nine month period ending September 30, 2010 were $1,387.0 million compared to $1,414.1 million for the nine month period ending September 30, 2009.
Net earnings for the third quarter 2010 were $6.2 million or $0.14 per diluted common share for the quarter compared to $9.7 million or $0.21 per diluted common share for the same period in 2009. For the nine month period ending September 30, 2010, net earnings were $32.1 million or $0.70 per diluted common share compared to $32.0 million or $0.70 per diluted common share for the nine month period ending September 30, 2009.
EBITDA for the three month period ending September 30, 2010 was $30.7 million and EBITDA margin was 7.6%. During the same period in 2009, EBITDA was $35.5 million and EBITDA margin was 7.7%. EBITDA for the nine month period ending September 30, 2010 was $106.4 million and EBITDA margin was 7.7% as compared to $105.8 million and 7.5% for the same period in 2009.
Interest expense (net of interest income) for the third quarter 2010 was $3.3 million, down $0.7 million from the third quarter 2009, and year-to-date interest expense was $10.2 million, down $2.6 million from the comparable period in 2009.
Cash holdings as of September 30, 2010 were $158.5 million and operating loans remained undrawn in the third quarter of 2010.
Both during and subsequent to the end of the third quarter, the Company and its affiliates announced four contract awards:
- August 26, 2010, Flint Transfield Services Limited, a 50% owned
subsidiary of Flint, announced it was awarded a three-year,
$95 million contract by Nexen Inc. for maintenance work at its Long
Lake SAGD project near Fort McMurray, Alberta.
- October 14, 2010, the Company announced a contract extension of
$78 million for site-wide construction and commissioning work on
Suncor Energy's Firebag SAGD project near Fort McMurray, Alberta.
- October 18, 2010, the Company announced it was awarded a six-year
field construction contract by Imperial Oil Canada Limited, with the
option for an additional four-year extension to the contract. The
work will be done on Imperial's oil and gas field facilities across
Western Canada.
- November 2, 2010, the Company announced it was awarded an
$18.9 million module fabrication contract by Suncor Energy for work
on its Firebag SAGD project in Fort McMurray, Alberta.
W. J. (Bill) Lingard, President and Chief Executive Officer of the Company, stated, "As anticipated, our third quarter revenues and EBITDA were down compared to last year as we completed work on two major oil sands projects before the start of the third quarter. In spite of an anticipated decrease in our Facility Infrastructure's major projects revenues in the quarter, we saw strong gains in Oilfield Services revenues, up $10.3 million or 24%, and a gain of $28.9 million in our Maintenance Services revenues, up 38%, while our Production Services operations in the United States and Canada were up $1.8 million compared to last year. As we look forward to the fourth quarter, we should expect to see our Facility Infrastructure revenues continue to contract due to lower levels of major project work. On the other hand, our Oilfield Services and Production Services activities should continue to expand as a result of both higher industry spending in both Canada and the United States, and seasonally higher activity in Canada."
Third Quarter
Revenue for the three months ended September 30, 2010 was $406.5 million, a decrease of $53.2 million or 11.6% compared to $459.7 million for the same period in 2009. Increased revenues from the Oilfield Services and Maintenance Services segments were offset by the decrease from the Facility Infrastructure segment. Canadian operations generated $328.3 million in revenues, down $58.5 million as a result of the decrease in the Facility Infrastructure segment. The United States operations generated $78.1 million in revenues, an increase of $5.2 million or 7.2% compared to $72.9 million for the same period in 2009. United States revenues in the quarter were negatively impacted by $3.5 million as a result of the foreign exchange translation on consolidation.
Direct costs in the quarter were $341.4 million compared to $392.1 million in the third quarter of last year. Gross margins for the third quarter were 16.0% compared to 14.7% last year as a result of improved pricing and asset utilization in the Company's Production Services segment. Oilfield Services saw improved rig moving revenues and better equipment utilization, however, this was offset by lower Fluid Hauling revenues and margins compared to the third quarter of 2009, due primarily to wet weather experienced early in the quarter.
EBITDA of $30.7 million was down $4.8 million from Q3 2009 as a result of an $11.9 million decrease in Facility Infrastructure EBITDA. This was offset by stronger EBITDA in Production Services, up $5.4 million, and Maintenance Services, up $1.2 million. Oilfield Services EBITDA of $4.8 million was up $0.5 million from last year.
Overall EBITDA margins of 7.6% were essentially flat with the third quarter margins of 7.7% last year.
General and administrative expenses were $34.6 million, 8.5% of revenue for the quarter, up from $32.4 million or 7.0% of revenue last year, and up sequentially from $32.7 million, or 7.1% in the second quarter. The increase was the result of additional costs incurred for the Company's IFRS conversion, and for setting up new operational centres in the United States including Williamsport, Pennsylvania, and Williston and Minot, North Dakota.
Earnings before income tax for the quarter were $10.7 million compared to $15.0 million in Q3 last year. Taxable earnings were lower primarily due to increased general and administrative costs described above ($2.2 million) and higher stock based compensation expenses ($1.9 million), offset by lower depreciation and amortization expenses ($1.7 million) and lower interest expenses ($0.6 million).
Net earnings were $6.2 million or $0.14 per fully diluted share, compared to $9.7 million or $0.21 per fully diluted share last year.
Outlook
Year-to-date Canadian drilling for oil and gas increased 47% over last year. Industry forecasts are calling for further increases in drilling to 13,000 wells in 2011, with a continued focus on shale gas in northeast British Columbia and crude oil production from both conventional and unconventional sources.
Quarter three rig activity in the United States was 67% higher than the same period last year. The number of wells drilled year-to-date was 50% higher than in the same period last year. United States forecasts are projecting a 16% increase in drilling in 2011.
Management expects Production Services activities in both Canada and the United States will improve both in Q4 and Q1 2011 from seasonally stronger winter drilling in northeast British Columbia and northwest Alberta, and stronger drilling activity in a number of United States shale gas basins. Well tie-ins, construction of field facilities and related services, will continue to follow stronger drilling activity with a one to two quarter lag. In October, the Company announced that it had secured a six-year contract with Imperial Oil Canada Limited for field construction activity in Canada, demonstrating this segment's strong base of predictable and repeating revenues.
Oilfield Services activities in both Canada and the United States will benefit immediately from increased rig activity in both countries, with Q4 and Q1 being typically the busiest periods for rig moving activity. Fluid Hauling activity has remained steady in 2010 and should see some expansion in 2011. United States rig moving and fluid hauling activities continued to improve in Q3, with new customers and new commitments for rig moves into 2011. As a result of increased United States activities, the company is pursuing opportunities to expand its presence in these markets.
Facility Infrastructure activities were reduced in the third quarter as work on the Shell Albian and the StatOil Hydro bitumen projects near Fort McMurrray, Alberta were completed. Work continues on both module fabrication and site-wide construction and service work for Suncor Energy's Firebag SAGD bitumen production projects. The Company recently announced the extension of their current site-wide services contract from an original $33 million to $110 million and the recent award of an $18.9 million module fabrication contract. This work will run through Q1 2011. The Company is bidding on a number of major construction projects in oil sands bitumen production on which decisions are expected in the next three to four months.
Maintenance Services revenues for the fourth quarter and 2011 will trend down slightly from 2010 due to less scheduled shutdown and turnaround work on customer projects. In August 2010, the Company announced that it was successful in securing a three-year contract for maintenance work worth an estimated $95 million at Nexen's Long Lake facilities.
A summary of financial information follows. Complete copies of the Company's third quarter and nine month 2010 interim financial results are available on www.SEDAR.com and on the Company's website: www.flintenergy.com.
The following table summarizes key financial data to be read in conjunction with the audited financial statements of the Company as at and for the third quarter and nine month period ended September 30, 2010. Such financial statements are prepared in accordance with GAAP and are reported in Canadian dollars.
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(For the three months % of % of Increase %
ended September 30) 2010 Revenue 2009 Revenue (decrease) Change
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Revenue $ 406.5 100.0% $ 459.7 100.0% $ (53.2) (11.6%)
EBITDA 30.7 7.6% 35.5 7.7% (4.8) (13.5%)
Net earnings 6.2 1.5% 9.7 2.1% (3.5) (36.1%)
per common share
- basic $ 0.14 $ 0.21 $ (0.07)
per common share
- diluted $ 0.14 $ 0.21 $ (0.07)
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(For the nine months % of % of Increase %
ended September 30) 2010 Revenue 2009 Revenue (decrease) Change
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Revenue $1,387.0 100.0% $1,414.1 100.0% $ (27.1) (1.9%)
EBITDA 106.4 7.7% 105.8 7.5% 0.6 0.6%
Net earnings 32.1 2.3% 32.2 2.3% (0.1) (0.3%)
per common share
- basic $ 0.70 $ 0.70 $ -
per common share
- diluted $ 0.70 $ 0.70 $ -
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Three months ended Nine months ended
September 30 September 30
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Reconciliation of EBITDA 2010 2009 2010 2009
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Net earnings $ 6.2 $ 9.7 $ 32.1 $ 32.0
Amortization 14.0 15.7 43.1 44.4
Share based compensation
expense 2.7 0.8 5.7 2.5
Interest expense, net of
interest income 3.3 4.0 10.2 12.8
Income tax expense 4.5 5.3 15.3 14.0
EBITDA $ 30.7 $ 35.5 $ 106.4 $ 105.8
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Selected financial information for each reportable business segment for the third quarter and nine month period ending September 30, 2010 is as follows:
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(in thousands of
Canadian dollars,
for the three
months ended Increase %
September 30) 2010 2009 (decrease) Change
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Revenue by
reportable
segment
Production
Services $ 185,143 46% $ 183,274 40% $ 1,869 1.0%
Facility
Infrastructure 63,546 16% 157,803 34% (94,257) (59.7%)
Oilfield
Services 53,195 13% 42,927 9% 10,268 23.9%
Maintenance
Services 104,569 25% 75,689 17% 28,880 38.2%
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Total $ 406,453 100% $ 459,693 100% $ (53,240) (11.6%)
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EBITDA by
reportable
segment
Production
Services $ 13,787 45% $ 8,391 24% $ 5,396 64.3%
Facility
Infrastructure 8,770 29% 20,693 58% (11,923) (57.6%)
Oilfield
Services 4,795 16% 4,269 12% 526 12.3%
Maintenance
Services 3,358 10% 2,130 6% 1,228 57.7%
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Total $ 30,710 100% $ 35,483 100% $ (4,773) (13.5%)
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(in thousands of
Canadian dollars,
for the nine
months ended Increase %
September 30) 2010 2009 (decrease) Change
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Revenue by
reportable
segment
Production
Services $ 595,137 43% $ 625,946 44% $ (30,809) (4.9%)
Facility
Infrastructure 314,267 23% 433,891 31% (119,624) (27.6%)
Oilfield
Services 155,509 11% 150,692 11% 4,817 3.2%
Maintenance
Services 322,081 23% 203,552 14% 118,529 58.2%
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Total $ 1,386,994 100% $ 1,414,081 100% $ (27,087) (1.9%)
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EBITDA by
reportable
segment
Production
Services $ 48,070 45% $ 34,566 33% $ 13,504 39.1%
Facility
Infrastructure 37,693 35% 46,716 44% (9,023) (19.3%)
Oilfield
Services 7,719 7% 13,473 13% (5,754) (42.7%)
Maintenance
Services 12,956 13% 11,044 10% 1,912 17.3%
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Total $ 106,438 100% $ 105,799 100% $ 639 0.6%
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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. Flint, with more than 10,000 employees, provides this unique breadth of products and services through over 60 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. www.flintenergy.com
FORWARD LOOKING STATEMENTS
All statements other than statements of historical fact contained in this news release may be "forward-looking statements". Such forward looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in the forward-looking statements, and as such, they should not be unduly relied upon. The forward looking statements are made as of the date of this news release and Flint assumes no obligation to update or revise them, 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 third quarter 2010 results and outlook is scheduled for 10:00 AM Eastern Time on Friday, November 5, 2010. Details on how to participate in or listen to the call are available on the Company's website: www.flintenergy.com.
%SEDAR: 00017156E
For further information: Guy Cocquyt, Director of Investor Relations, Telephone: (403) 218-7195, Email: [email protected]
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