Pantera Drilling Income Trust Announces Results for the Second Quarter Ended
June 30, 2010 And Declares August Distribution
/NOT FOR DISSEMINATION INTO THE UNITED STATES/
(TSX: RIG.UN)
CALGARY, Aug. 11 /CNW/ - Pantera Drilling Income Trust ("Pantera" or the "Trust") is pleased to release its second quarter 2010 financial and operating results. Additional information relating to the Trust, including the Trust's financial statements and management's discussion and analysis for the six months ended June 30, 2010 is available under the Trust's profile on SEDAR at www.sedar.com or the Trust's website at www.panteradrilling.com.
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HIGHLIGHTS
Three months ended June 30,
FINANCIAL 2010 2009 Change
(%)
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($000s, except for units and per unit
amounts)
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Revenue 3,276 920 256
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Gross margin(1) 732 (719) 202
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Net earnings (loss) (252) (1,672) 85
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Per unit - basic and diluted (.03) (.19) 84
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Cash flow from operating activities 1,727 3,077 (44)
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Per unit - basic .18 .34 (47)
- diluted .18 .34 (47)
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Cash distributions declared per unit .09 .09 -
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EBITDA(2) 213 (1,351) 116
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Total assets (end of period) 56,646 57,151 (1)
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Total long-term financial liabilities
(end of period) 16,200 18,000 (10)
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Units outstanding (weighted average)
- basic 9,744,375 9,005,522 8
- diluted 9,744,375 9,005,522 8
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Units outstanding (end of period) 9,834,030 9,114,876 8
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OPERATING
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Number of rigs (end of period) 7 7 -
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Operating days (3) 137 49 180
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Industry utilization average (4) 20% 7% 185
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Pantera utilization rate 22% 4% 450
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HIGHLIGHTS
Six months ended June 30,
FINANCIAL 2010 2009 Change
(%)
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($000s, except for units and per unit
amounts)
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Revenue 10,878 10,148 7
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Gross margin(1) 3,655 3,133 17
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Net earnings (loss) 813 360 126
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Per unit - basic and diluted .08 .04 100
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Cash flow from operating activities 4,031 5,848 (31)
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Per unit - basic .42 .66 (36)
- diluted .42 .64 (34)
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Cash distributions declared per unit .18 .18 -
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EBITDA(2) 2,410 1,824 32
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Total assets (end of period) 56,646 57,151 (1)
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Total long-term financial liabilities
(end of period) 16,200 18,000 (10)
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Units outstanding (weighted average)
- basic 9,661,095 8,888,915 9
- diluted 9,953,059 9,202,998 8
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Units outstanding (end of period) 9,834,030 9,114,876 8
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OPERATING
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Number of rigs (end of period) 7 7 -
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Operating days (3) 481 357 35
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Industry utilization average (4) 36% 21% 71
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Pantera utilization rate 38% 26% 46
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Notes:
(1) Gross margin represents revenue less operating expenses. Readers
are cautioned that gross margin does not have a standardized meaning
prescribed by GAAP and therefore may not be comparable to similar
measures presented by other issuers. However, Pantera does compute
gross margin on a consistent basis for each reporting period.
Management believes gross margin is a useful supplemental measure of
operating performance and is particularly relevant to readers within
the investment community.
(2) EBITDA means net earnings before interest, taxes, depreciation,
amortization, and gain or loss on disposal of property and
equipment. Readers are cautioned that EBITDA does not have a
standardized meaning prescribed by GAAP and therefore may not be
comparable to similar measures presented by other issuers. However,
Pantera does compute EBITDA on a consistent basis for each reporting
period. Management believes that, in addition to net earnings,
EBITDA is a significant indication of success for Pantera and is
particularly relevant to readers within the investment community.
(3) Operating days is the total of all drilling days from spud to
release and excludes stand-by, moving, rig-up and rig-out days.
(4) Source: Canadian Association of Oilwell Drilling Contractors
(CAODC).
Pantera's utilization rate was significantly higher in the second quarter of 2010 at 22% as compared to 4% in 2009, which resulted in an increase in revenue of 256% to $3.3 million for the three months ended June 30, 2010 from $920,200 for the prior year. Pantera recorded a net loss of $251,800 for the quarter ended June 30, 2010, as compared to a net loss of $1.7 million in 2009, an improvement of 85%.
Revenue for the six months ended June 30, 2010 was $10.9 million as compared to $10.1 million in 2009, an increase of 7% primarily due to higher utilization. And on a year to date basis Pantera recorded net earnings of $812,800 in 2010 as compared to $359,700 in 2009, an increase of 126%.
Rig activity in the second quarter is typically the lowest in the year. 2010 was no exception, with Pantera recording 137 operating days for the quarter. Load weight restrictions placed on secondary roads in the spring restrict rig movement from about the end of March to at least May.
Activity continues to improve and as at August 11, 2010, Pantera's fleet of seven rigs is fully utilized. Six of the seven rigs are located in Western Canada and are currently working with commitments to at least spring break-up 2011. The seventh rig, located in Ontario, continues to operate under short term contracts.
In the second quarter of 2010, Pantera purchased its' third top drive and an additional string of 4 inch hevi-wate drill pipe. Contracts with existing clients have been amended to include these capital items which are expected to deliver a favorable return to the Trust. Pantera intends to finance these capital expenditures through a combination of funds from operations and debt financing. Discussions are ongoing with certain clients regarding the provision of additional rigs or other equipment in order to meet their needs.
On May 28, 2010, the Canadian Association of Oilwell Drilling Contractors (CAODC) released a forecast update for 2010. The CAODC now expects 11,587 wells to be drilled in 2010, 3,064 higher than the October projection of 8,523. The CAODC is now expecting an average industry drilling utilization rate of 42% in 2010, up from the 24% experienced in 2009. The forecast update is predicated, in part, on the results of second phase of the Alberta Government's 'Energizing Investments' announcement, coupled with the higher levels of activity that were observed in the winter drilling season of 2010. The forecast is in line with an earlier forecast revision by the Petroleum Services Association of Canada which is projecting that operators will drill 11.250 wells in Canada this year, a 35% increase over 2009.
The Canadian federal government in 2007 enacted legislation such that distributions to unitholders will be taxable for publicly traded income trusts and income retained in these trusts will be taxed similar to corporations. The new tax will not apply to the Trust until January 1, 2011. Based on existing legislation, the SIFT tax rate applicable to the Trust in 2011 is expected to be 26.5% and 25% in 2012 and subsequent years. The payment of this tax would reduce the amount of cash available for distribution to unitholders. Pantera has available tax pool deductions of approximately $55.7 million at June 30, 2010, which will be used to reduce any future corporate taxable income. The Trust is currently not taxable. Trusts will only be able to convert on a tax-deferred basis until December 31, 2012. Pantera is currently reviewing alternative legal structures for post December 31, 2010. Although we believe a conversion to a corporate structure is the most likely scenario when the SIFT tax rules come into effect, we have not finalized this decision at this time. In examining the various alternatives, a number of factors are being taken into account, some of which include: Pantera's strategic objectives; its desire to maximize the favourable tax treatment of the Trust, while identifying the most appropriate structure for long-term viability, sustainability and growth; and its goal of continuing to build unitholder value before and after conversion.
The Trust provides a distribution reinvestment plan (the "Plan") to unitholders of the Trust. The Plan provides eligible unitholders with the opportunity to reinvest their cash distributions payable toward the purchase of additional trust units from treasury at a price equal to 95% of the average market price on the applicable distribution payment date. Participation in the Plan in the first six months of 2010 averaged 63%, and resulted in the issuance of 340,455 units for net proceeds of $1.1 million. Funds reinvested in the Trust through the Plan will be available to fund capital expenditures and reduce debt.
In accordance with the policy adopted by the Trustees, the Trust continues to make regular monthly cash distributions. Monthly distributions of $.03 per trust unit were paid during the second quarter of 2010.
The Trust today declared a cash distribution relating to the period August 1, 2010 to August 31, 2010, in the amount of $0.03 per trust unit payable on September 15, 2010 to unitholders of record on August 31, 2010.
Certain statements included in this release constitute forward-looking statements including, without limitation, such things as revenue expectations, capital expenditures, legislative changes, changes in industry conditions, the impact of weather and other seasonal factors that affect business operations, fluctuations in prevailing commodity prices, the competitive environment to which Pantera is, or may be, exposed in all aspects of its business and expected future availability and utilization of Pantera's rigs. Such forward-looking statements that involve unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Pantera, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, general economic and business conditions, the ability of Pantera to implement its business strategy, and changes in, or failure to comply with government regulations, especially health, safety and environment laws, regulations and guidelines. Additional information on these and other factors that could affect Pantera's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) under Pantera's profile. Forward-looking statements in this release may include, but are not limited to, revenue, commodity prices, rig utilization and availability, capital expenditures and legislative changes. For this purpose, any statements that are contained in this discussion that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements often contain terms such as "may", "will", "should", "anticipate", "expects", "intends", and similar expressions. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Furthermore, the forward-looking statements contained herein are made as at the date hereof and Pantera does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
The Trust is an open-ended, investment trust governed by the laws of the Province of Alberta pursuant to the Deed of Trust. The Trust was established for the purpose of investing in property, including the securities of Pantera Drilling Limited Partnership and Pantera Drilling Inc. The beneficiaries of the Trust are the holders of the trust units. The business of Pantera involves the provision of contract drilling services to oil and natural gas exploration and production companies operating in Canada.
%SEDAR: 00023106E
For further information: Terry Rosentreter, President and Chief Executive Officer, or Lorna Pollock, Chief Financial Officer at: Ph: (403) 515-8400, Fax: (403) 515-8405, E-mail: [email protected], [email protected]
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