STAMPEDE DRILLING INC. ANNOUNCES RECORD REVENUE FOR THE FIRST QUARTER OF 2022
CALGARY, AB, May 12, 2022 /CNW/ - Stampede Drilling Inc. ("Stampede" or the "Corporation") (TSXV: SDI) announces today its consolidated financial and operational results for the three month period ended March 31, 2022.
The following should be read in conjunction with the Corporation's consolidated financial statements and the notes thereto for the year ended December 31, 2021, related management's discussion and analysis and annual information form, which are available on SEDAR at www.sedar.com.
All amounts or dollar figures are denominated in thousands of Canadian dollars except for per share amounts, number of drilling rigs, and operating days, or unless otherwise noted.
Estimates and forward-looking information are based on assumptions of future events and actual results may vary from these estimates. See "Forward-Looking Information" in this press release for additional details.
FINANCIAL SUMMARY
Three months ended |
|||||
(000's CAD $ except per share amounts) |
2022 |
2021 |
% |
||
Revenue |
14,568 |
11,861 |
23% |
||
Direct operating expenses |
9,568 |
7,213 |
33% |
||
Gross margin (1) |
5,000 |
4,648 |
8% |
||
Net income |
2,322 |
2,408 |
(4%) |
||
Basic and diluted income per share |
0.02 |
0.02 |
nm |
||
Adjusted EBITDA (1) |
3,757 |
3,917 |
(4%) |
||
Weighted average common shares outstanding |
132,171 |
132,091 |
0% |
||
Weighted average diluted common shares outstanding |
146,559 |
144,529 |
1% |
||
Capital expenditures |
1,653 |
793 |
108% |
||
Average active rig count |
10 |
10 |
nm |
||
Drilling rig utilization |
71% |
68% |
4% |
||
CAOEC industry average utilization(2) |
38% |
27% |
41% |
||
nm - not meaningful |
|||||
As at March 31, |
|||||
(000's CAD $) |
2022 |
2021 |
% |
||
Current assets |
8,358 |
9,111 |
(8%) |
||
Total assets |
63,218 |
52,298 |
21% |
||
Total current liabilities |
12,102 |
12,052 |
0% |
||
Total non-current liabilities |
4,321 |
4,856 |
(11%) |
||
Shareholders' equity |
46,795 |
35,390 |
32% |
||
DESCRIPTION OF STAMPEDE'S BUSINESS
Stampede is an energy services company that currently provides premier contract drilling services in Western Canada. Stampede operates a fleet of 13 telescopic double drilling rigs suited for most formations within the WCSB. The Corporation's head office is located in Calgary, Alberta with operations based out of Nisku, Alberta and Estevan, Saskatchewan. The Corporation's shares trade on the TSX Venture Exchange under the symbol "SDI".
First QUARTER 2021 Operational HIGHLIGHTS
The Corporation recorded it's highest ever quarterly revenue of $14,568 in Q1 2022, up $2,707 (23%) from $11,861 in Q1 2021. This was primarily driven by a drilling rig utilization of 71%, which was a 4% increase from Q1 2021 and 87% higher than the CAOEC industry average utilization rate of 38%.
The Corporation did not record any Canada Emergency Wage Subsidy ("CEWS") during the quarter as compared to $896 for the corresponding 2021 period. In accordance with its accounting policy, the Corporation recorded it's 2021 CEWS subsidy as a reduction of cost of sales. As a result, Adjusted EBITDA of $3,757, was down $160 (4%) from $3,917 from Q1 2021 and net income of $2,322, was down $86 (4%) from $2,408 from Q1 2021.
As previously announced on January 4, 2022, the Corporation has entered into a business arrangement with a well-established private Alberta based company ("AlbertaCo") specializing in the engineering, manufacturing and supply of fully integrated under balanced coil drilling rigs ("UBC Drilling Rigs") and corresponding support equipment for the oil and gas industry worldwide. The business will be carried on through a newly formed subsidiary 2391764 Alberta Ltd. ("UBC Drillco") to be managed and operated by Stampede. UBC Drillco has completed the fabrication of one UBC Drilling Rig. The Corporation believes that this business venture will enhance Stampede's strategy in the provision of industry leading services for ESG extraction of hydrocarbons from bypassed reserves, low pressure reservoirs and extend the reach in underbalanced short radius wells through-tubing re-entry drilling applications in the future. Management is pleased with the initial beta testing of the UBC Drilling Rig and related technology and anticipates completion of beta testing by the end of the second half of 2022.
OUTLOOK
Stampede's strong 2021 results continued into 2022, with all 10 of our marketable rigs being fully crewed and operational during the first quarter. With the addition of the previously announced April 19, 2022 acquisition of three additional telescopic double drilling rigs, Stampede looks to continue to build on its record breaking first quarter revenue growth into the second half of 2022. With crude hitting 8-year highs, producers are seeing increased cash flows from their operations. Stampede's 2022 outlook remains positive as our client's financial positions continue to improve and the increasing forward curve for commodities provides further confidence for capital expenditure increases.
As the Canadian market continues to tighten, Stampede's customers are looking to secure equipment and crews to ensure the success of their 2022 capital programs. Availability of labour continues to be a significant concern for all service providers, and we are strongly focused on retaining existing staff and attracting new talent.
The Corporation will continue to focus on maintaining financial resiliency, in order to best position the Corporation for organic and acquisition growth.
RESULTS FROM OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2022
Three months ended March 31, |
|||||
(000's CAD $ except operating days) |
2022 |
2021 |
% Change |
||
Revenue |
14,568 |
11,861 |
23% |
||
Direct operating expenses |
9,568 |
7,213 |
33% |
||
Gross margin(1) |
5,000 |
4,648 |
8% |
||
Gross margin %(1) |
34% |
39% |
(13%) |
||
Net income |
2,322 |
2,408 |
(4%) |
||
General and administrative expenses |
1,372 |
997 |
38% |
||
Adjusted EBITDA(1) |
3,757 |
3,917 |
(4%) |
||
Drilling rig operating days(2) |
643 |
607 |
6% |
||
Drilling rig revenue per day(3) |
22.7 |
19.5 |
16% |
||
Drilling rig utilization(4) |
71% |
68% |
4% |
||
CAOEC industry average utilization(5) |
38% |
27% |
41% |
||
nm - not meaningful |
|||||
- Revenue for the three month period ended March 31, 2022 was $14,568, up $2,707 (23%) compared to $11,861 for the corresponding 2021 period. The increase was primarily related to increased customer activity levels and increased day rates with the Corporation's customer base.
- The Corporation had a total of 643 operating days for the three month period ended March 31, 2022, an increase of 36 operating days (6%) from the 607 operating days in the corresponding 2021 period.
- The Corporation's drilling rig utilization for the three month period ended March 31, 2022 was 71%, which was a 6% increase from the corresponding 2021 period and 87% higher than the CAODC industry average utilization rate of 38% for 2021.
- Gross margin for the three month period ended March 31, 2022 was 34%, down (13%) from 39% as compared to the corresponding 2021 period. The gross margin decrease was primarily related to higher rig operating expenses partially offset by the increase in revenue per day. The higher operating expenses were primarily related to an industry wide field wage increase. The Corporation also did not record any Canada Emergency Wage Subsidy ("CEWS") during the quarter as compared to $869 for the corresponding 2021 period. In accordance with its accounting policy, the Corporation recorded it's 2021 CEWS subsidy as a reduction of cost of sales.
- For the three month period ended March 31, 2022, general and administrative expenses were $1,372 up $375 (38%) from $997 as compared to the corresponding 2021 period. The increase is primarily related to increased headcount and compensation and corresponding administration expenses due to the increased 2022 activity levels.
- Adjusted EBITDA for the three months ended March 31, 2022 was $3,757, down $160 (4%) from $3,917 from the corresponding 2021 period. The decrease is primarily related to higher operating costs partially offset by the increase in revenue.
- Net income for the three months ended March 31, 2022 was $2,322, down $86 (4%) from $2,408 from the corresponding 2021 period. The decrease is primarily related to the decrease in Adjusted EBITDA for the period.
NON-GAAP AND OTHER FINANCIAL MEASURES
This MD&A contains references to (i) Adjusted EBITDA, (ii) Gross margin (iii) Gross margin percentage and (iv) Working capital (excluding debt). These financial measures are not measures that have any standardized meaning prescribed by IFRS and are therefore referred to as non-GAAP (Generally Accepted Accounting Principles) measures. The non-GAAP measures used by the Corporation may not be comparable to similar measures used by other companies.
(i) Adjusted EBITDA - is defined as "income (loss) from operations before interest income, interest expense, taxes, transaction costs, depreciation and amortization, share-based compensation expense, gains on asset disposals, impairment expenses, other income, foreign exchange, non-recurring restructuring charges, finance costs, accretion of debentures and other income/expenses, foreign exchange gain and any other items that the Corporation considers appropriate to adjust given the irregular nature and relevance to comparable operations." Management believes that in addition to net income (loss), Adjusted EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Corporation's principal business activities prior to consideration of how these activities are financed, how assets are depreciated, amortized and impaired, the impact of foreign exchange, or how the results are affected by the accounting standards associated with the Corporation's stock-based compensation plan. Investors should be cautioned, however, that Adjusted EBITDA should not be construed as an alternative to net income (loss) and comprehensive income (loss) determined in accordance with IFRS as an indicator of the Corporation's performance. The Corporation's method of calculating Adjusted EBITDA may differ from that of other organizations and, accordingly, its Adjusted EBITDA may not be comparable to that of other companies.
Three months ended |
|||
(000's CAD $) |
2022 |
2021 |
% Change |
Net income |
2,322 |
2,408 |
4% |
Depreciation |
1,083 |
1,151 |
(6%) |
Finance costs |
185 |
183 |
1% |
Other income |
(2) |
(6) |
(67%) |
Gain from equipment lost in hole |
- |
(39) |
nm |
Share-based payments |
86 |
185 |
(54%) |
Transaction costs |
45 |
- |
nm |
Foreign exchange gain |
38 |
35 |
9% |
Adjusted EBITDA |
3,757 |
3,917 |
4% |
nm - not meaningful |
|||
(ii) Gross margin - is defined as "gross profit from Income from operations before depreciation of property and equipment". Gross margin is a measure that provides shareholders and potential investors additional information regarding the Corporation's cash generating and operating performance. Management utilizes this measure to assess the Corporation's operating performance. Investors should be cautioned, however, that gross margin should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indicator of the Corporation's performance. The Corporation's method of calculating gross margin may differ from that of other organizations and, accordingly, its gross margin may not be comparable to that of other companies.
(iii) Gross margin percentage - is calculated as gross margin divided by revenue. The Corporation believes gross margin as a percentage of revenue is an important measure to determine how the Corporation is managing its revenues and corresponding cost of sales.
The following table reconciles the Corporation's net income (loss) from operations, being the most directly comparable financial measure disclosed in the Corporation's Annual Financial Statements, to gross margin:
Three months ended |
|||
(000's CAD $) |
2022 |
2021 |
% Change |
Income from operations |
3,960 |
3,578 |
(11%) |
Depreciation of property and equipment |
1,040 |
1,070 |
(3%) |
Gross margin |
5,000 |
4,648 |
8% |
Gross margin % |
34% |
39% |
(13%) |
nm - not meaningful |
|||
(iv) Working capital (excluding debt) - is calculated based on total current assets less total current liabilities excluding current debt. The Corporation monitors working capital and its liquidity position on an ongoing basis and manages liquidity risk by regularly evaluating capital and operating budgets, forecasting cash flows and maintaining a sufficient credit facility to meet financing requirements.
Working Capital (excluding debt) |
March 31, 2022 |
December 31, 2021 |
Total current assets: |
8,358 |
7,651 |
Total current liabilities |
(12,102) |
(10,129) |
Add back current portion of debt |
||
Demand facility |
6,925 |
6,998 |
BDC Loan |
400 |
400 |
Working capital (excluding debt) |
3,581 |
4,920 |
FORWARD-LOOKING INFORMATION
Certain statements contained in this News Release constitute forward-looking statements or forward-looking information (collectively, "forward-looking information"). Forward-looking information relates to future events or the Corporation's future performance. All information other than statements of historical fact is forward-looking information. The use of any of the words "anticipate", "plan", "contemplate", "continue", "estimate", "expect", "intend", "propose", "might", "may", "will", "could", "should", "believe", "predict", and "forecast" are intended to identify forward-looking information.
This News Release contains forward-looking information pertaining to, among other things: the Corporation's performance; expectations associated with the Corporation's outlook, including among other things, anticipated commodity pricing, continued improvements in the financial positions of the Corporation's customers, expectations about industry activities, the forecasted increase in the capital expenditure of the Corporation's customers; the expected benefits of the Corporation's business venture involving UBC Drillco; the anticipated timing for the completion of beta testing of the UBC Drilling Rig and related technology; and the ability of the Corporation to offset costs associated with field wage increases and other inflationary costs through anticipated increases to day rates and the minimization of rig activation costs.
Forward-looking information is based on certain assumptions that Stampede has made in respect thereof as at the date of this News Release regarding, among other things: the success of the measures implemented by the Corporation to ensure the safe, efficient and reliable operations at each of its drilling sites; the creditworthiness of the Corporation's customers and counterparties; the effectiveness of the Corporation's financial risk management policies at ensuring all payables are paid within the pre-agreed credit terms; that the Corporation has adequate access to its credit facility to provide the necessary liquidity needed to manage fluctuations in the timing of receipt and/or disbursement of operating cash flows; the belief that Adjusted EBITDA is a useful supplemental financial measure; the ability of the Corporation to retain qualified staff; the ability of the Corporation to maintain key customers; the ability of the Corporation to obtain financing on acceptable terms; the belief that the Corporation's principal sources of liquidity will be sufficient to service its debt and fund its operations and other strategic opportunities; the ability of the Corporation to obtain financing on acceptable terms; the ability to protect and maintain the Corporation's intellectual property; and the regulatory framework regarding taxes and environmental matters in the jurisdictions in which the Corporation operates.
Forward-looking information is presented in this News Release for the purpose of assisting investors and others in understanding certain key elements of the Corporation's financial results and business plan, as well as the objectives, strategic priorities and business outlook of the Corporation, and in obtaining a better understanding of the Corporation's anticipated operating environment. Readers are cautioned that such forward-looking information may not be appropriate for other purposes.
While Stampede believes the expectations and material factors and assumptions reflected in the forward-looking information is reasonable as of the date hereof, there can be no assurance that these expectations, factors and assumptions will prove to be correct. Forward-looking information is not a guarantee of future performance and actual results or events could differ materially from the expectations of the Corporation expressed in or implied by such forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information is subject to a number of known and unknown risks and uncertainties including, but not limited to: the condition of the global economy, including trade, inflation, the ongoing conflict in Ukraine and other geopolitical risks; the condition of the crude oil and natural gas industry and related commodity prices; other commodity prices and the potential impact on the Corporation and the industry in which the Corporation operates, including levels of exploration and development activities; the impact of increasing competition; fluctuations in operating results; the ongoing significant volatility in world markets and the resulting impact on drilling and completions programs; foreign currency exchange rates; interest rates; labour and material shortages; cyber security risks; natural catastrophes; and certain other risks and uncertainties detailed in the Corporation's annual management's discussion and analysis and annual information form, each dated March 24, 2022 for the year ended December 31, 2021, and from time to time in Stampede's public disclosure documents available at www.sedar.com.
This list of risk factors should not be construed as exhaustive. Readers are cautioned that events or circumstances could cause actual results to differ materially from those predicted, forecasted, or projected. Statements, including forward-looking information, are made as of the date of this News Release and the Corporation does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. The forward-looking information contained in this News Release is expressly qualified by this cautionary statement.
SOURCE Stampede Drilling Inc.
Lyle Whitmarsh, President & Chief Executive Officer, Stampede Drilling Inc., Tel: (403) 984-5042
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