CALGARY, ALBERTA — (Marketwired) — 11/07/13 — Secure Energy Services Inc. (“Secure” or the “Corporation”) (TSX: SES) today announced financial and operational results for the three and nine months ended September 30, 2013. The following should be read in conjunction with the management–s discussion and analysis (“MD&A”), the condensed consolidated interim financial statements and notes of Secure which are available on SEDAR at .
Revenue (excluding oil purchase and resale) for the three and nine months ended September 30, 2013 increased 55% and 36% respectively while earnings before interest, taxes, depreciation and amortization (“EBITDA”) improved 67% and 34% respectively compared to the same periods in 2012. Secure continued to experience strong demand for its processing, recovery and disposal services, strong demand for its drilling services with an increase in revenue per operating day of 29% in the third quarter, and strong demand for services offered in the new on site division.
Secure completed the acquisition of Target Rentals Ltd. (“Target”) on July 2, 2013. The acquisition continues to expand the value chain of services the Corporation offers its customers. In addition to the acquisition of Target, growth and expansion capital expenditures incurred during the three and nine months ended September 30, 2013 totaled $52.6 million and $130.3 million respectively. The Corporation continues to seize market opportunities by executing organic growth initiatives and strategic acquisitions to complement its current service offerings.
REVENUE INCREASES
Highlights for the PRD division included:
Highlights for the DS division included:
Highlights for the OS division included:
OUTLOOK
Oil and gas industry pricing fundamentals during the third quarter did not see significant changes from the second quarter however, prices have rebounded significantly since the third quarter of 2012. Commodity prices have increased, heavy oil differentials between world and North American pricing have narrowed and oil transportation bottlenecks have been partially relieved. Expectations are that oil and gas producer capital spending will continue to slowly increase over the next few quarters due to expanded capital budgets, which in turn will improve activity for oil and gas service providers. In addition, several projects that were delayed by the wet spring have started late in the third quarter and will be completed before the year end. Rig count and related drilling services equipment utilization into the last quarter of the year is anticipated to improve, with expectations that prices could weaken in the fourth quarter through the peak drilling season into 2014. Despite the less than optimal field conditions in the second quarter and a slower start to the third quarter due to continued unfavourable weather, meters drilled in Canada increased by 9% in the third quarter of 2013 compared to the third quarter of 2012. The number of WCSB horizontal wells licensed in the nine months ended September 30, 2013 increased to 81.8% of the total wells licensed in 2013; this is an 11 percentage point increase over comparable period of 2012. The increase in the number of meters drilled and continued emphasis on horizontal drilling are positive indicators for the Corporation as it is anticipated these factors create demand for the Corporation–s products and services. Secure is well positioned to take advantage of the expected industry upswing through its expanded geographic and service offerings.
The acquisition of Frontline in the second quarter and Target in the third quarter brings new growth platforms that complement the Corporation–s existing PRD and DS divisions. The management teams of Frontline and Target are experienced with proven capabilities to manage growth. The financial strength of Secure will provide the capital necessary to finance the growth initiatives of both of these new service lines. The Corporation is excited to increase Secure–s environmental expertise to expand the value chain of services provided.
Total capital expenditures for the nine months ended September 30, 2013 of $160.6 million are reflective of the continued execution of the Corporation–s strategy. Capital expenditures on new facilities such as the Kindersley FST, the conversion of the Edson SWD to an FST, Saddle Hills landfill and construction of the Corporation–s first landfill in the US are expected to enhance financial and operational performance once commissioned. The list of organic opportunities contains several other projects that reflect the ability of Secure to take advantage of market potential that exists today. The Corporation increased the 2013 capital expenditure budget in the second quarter from the previously announced total of $155.0 million to $195.0 to take advantage of Secure–s opportunities. The added capital will be deployed in Canada and the US primarily for new growth projects and long lead items for 2014 projects. The Corporation is well positioned to fund its expanded 2013 capital program with its recently expanded debt capacity from its credit facilities and increasing cash flow from operations.
Managing growth in a prudent manner ensures the Corporation–s strong balance sheet is maintained. Secure has a focused strategy of helping the Corporation–s customers with new facilities and services in both under-serviced and capacity constrained markets complemented with strategic acquisitions. A solid balance sheet provides the leverage and flexibility to execute this strategy. With now over 1,000 employees, the Corporation strives to keep its agile and disciplined entrepreneurial culture to ensure that Secure–s abundant opportunities are adequately financed and executed by the right people.
FINANCIAL STATEMENTS AND MD&A
The condensed consolidated financial statements and MD&A of Secure for the three and nine months ended September 30, 2013 are available immediately on Secure–s website at . The condensed consolidated financial statements and MD&A will be available tomorrow on SEDAR at .
FORWARD-LOOKING STATEMENTS
Certain statements contained in this document constitute “forward-looking statements” and/or “forward-looking information” within the meaning of applicable securities laws (collectively referred to as forward-looking statements). When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect”, and similar expressions, as they relate to Secure, or its management, are intended to identify forward-looking statements. Such statements reflect the current views of Secure with respect to future events and operating performance and speak only as of the date of this document. In particular, this document contains forward-looking statements pertaining to: general market conditions; the oil and natural gas industry; activity levels in the oil and gas sector, including drilling levels; commodity prices for oil, natural gas liquids (“NGLs”) and natural gas; the increase in quarter over quarter 2013 operating days; demand for the Corporation–s services; expansion strategy; the amounts of the PRD, DS and OS divisions– expanded 2013 capital budgets and the intended use thereof; debt service; capital expenditures; completion of facilities including the Edson, Kindersley and Keene FSTs and the Saddle Hills and 13 Mile landfills as well as completion of repairs to the Brazeau FST and additional cells at the Fox Creek, South Grande Prairie, Pembina, and Willesden Green landfills; the impact of new facilities on the Corporation–s financial and operational performance; future capital needs; access to capital; acquisition strategy; the Corporation–s capital spending on the Kindersley, Saskatchewan FST; capital spending on the Kaybob, Alberta SWD; expansion of the new Edson, Alberta SWD to a FST; and capital spending on the Keene FST and Stanley SWD in North Dakota; and oil purchase and resale revenue.
Forward-looking statements concerning expected operating and economic conditions are based upon prior year results as well as the assumption that increases in market activity and growth will be consistent with industry activity in Canada, United States, and internationally and growth levels in similar phases of previous economic cycles. Forward-looking statements concerning the availability of funding for future operations are based upon the assumption that the sources of funding which the Corporation has relied upon in the past will continue to be available to the Corporation on terms favorable to the Corporation and that future economic and operating conditions will not limit the Corporation–s access to debt and equity markets. Forward-looking statements concerning the relative future competitive position of the Corporation are based upon the assumption that economic and operating conditions, including commodity prices, crude oil and natural gas storage levels, interest rates, the regulatory framework regarding oil and natural gas royalties, environmental regulatory matters, the ability of the Corporation and its subsidiaries– to successfully market their services and drilling and production activity in North America will lead to sufficient demand for the Corporation–s services and its subsidiaries– services including demand for oilfield services for drilling and completion of oil and natural gas wells, that the current business environment will remain substantially unchanged, and that present and anticipated programs and expansion plans of other organizations operating in the energy service industry will result in increased demand for the Corporation–s services and its subsidiary–s services. Forward-looking statements concerning the nature and timing of growth are based on past factors affecting the growth of the Corporation, past sources of growth and expectations relating to future economic and operating conditions. Forward-looking statements in respect of the costs anticipated to be associated with the acquisition and maintenance of equipment and property are based upon assumptions that future acquisition and maintenance costs will not significantly increase from past acquisition and maintenance costs.
Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether such results will be achieved. Readers are cautioned not to place undue reliance on these statements as a number of factors could cause actual results to differ materially from the results discussed in these forward-looking statements, including but not limited to those factors referred to and under the heading “Business Risks” and under the heading “Risk Factors” in the Corporation–s annual information form (“AIF”) for the year ended December 31, 2012. Although forward-looking statements contained in this Press Release are based upon what the Corporation believes are reasonable assumptions, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements in this Press Release are expressly qualified by this cautionary statement. Unless otherwise required by law, Secure does not intend, or assume any obligation, to update these forward-looking statements.
Non GAAP Measures and Operational Definitions
Contacts:
Secure Energy Services Inc.
Rene Amirault
Chairman, President and Chief Executive Officer
(403) 984-6100
(403) 984-6101 (FAX)
Secure Energy Services Inc.
Allen Gransch
Chief Financial Officer
(403) 984-6100
(403) 984-6101 (FAX)