CALGARY, ALBERTA — (Marketwired) — 11/04/13 — Total Energy Services Inc. (“Total Energy” or the “Company”) (TSX: TOT) announces its consolidated financial results for the three and nine months ending September 30, 2013.
Notes 1 through 5 please refer to the Notes to the Financial Highlights set forth at the end of this release.
Total Energy–s results for the three and nine months ended September 30, 2013 reflect continued momentum in the Company–s Compression and Process Services division offset by lower completion and well servicing activity in Western Canada as compared to the first nine months of 2012 that negatively impacted the Rentals and Transportation Services division. While activity levels in the Company–s Contract Drilling Services division increased during the third quarter of 2013 as compared to the third quarter of 2012, pricing in this division did not increase to the extent necessary to offset a 7% increase in cost of services, resulting in reduced gross margins and divisional profitability.
Total Energy–s Contract Drilling Services division achieved 54% utilization during the third quarter of 2013, recording 798 operating days (spud to release) with a fleet of 16 rigs, compared to 677 operating days, or 49% utilization, during the third quarter of 2012 with a fleet of 15 rigs. Revenue per operating day decreased 2% for the third quarter of 2013 relative to the prior year comparable period due to reduced pricing and the mix of equipment operating. The Rentals and Transportation Services division achieved a utilization rate on major rental equipment of 40% during the third quarter of 2013 as compared to a 44% utilization rate during the third quarter of 2012. Revenue per utilized rental piece decreased 14% for the third quarter of 2013 compared to the same period in 2012, due primarily to lower pricing given the current competitive landscape. The Compression and Process Services division generated revenues of $48.8 million for the three months ended September 30, 2013 compared to $30.2 million for the same period in 2012, an increase of 62%. The 2013 third quarter financial results from this division include results from the process equipment fabrication business that was acquired on January 1, 2013. This division exited the third quarter of 2013 with a $57.6 million backlog of fabrication sales orders as compared to $35.2 million at September 30, 2012. Included in the September 30, 2013 fabrication sales order backlog is $46.2 million of compression sales backlog and $11.4 million of process equipment sales backlog. At September 30, 2013, approximately 35,700 horsepower of compression equipment was on rent compared to 28,300 horsepower on rent at September 30, 2012. The gas compression rental fleet operated at an average utilization rate of 85% for the third quarter of 2013 as compared to 84% during the same period in 2012.
Negatively impacting cash flow for the first nine months of 2013 was the payment of $15.3 million of income taxes during the first quarter that related to 2012, as income tax installment payments were not required in 2012. Total Energy is required to make monthly income tax installment payments that amounted to approximately $9.5 million for the first nine months of 2013.
During the third quarter, Total Energy declared a quarterly dividend of $0.05 per share to shareholders of record on September 30, 2013. This dividend was paid on October 31, 2013. 89,200 common shares were purchased under the Company–s normal course issuer bid during the three months ended September 30, 2013 at an average price of $16.14 per share (including commissions).
Outlook
While drilling activity levels in Western Canada during the third quarter of 2013 were modestly higher than the third quarter of 2012, well completion and well servicing activity continued to lag behind 2012 activity levels, due in part to extended wet weather conditions during July and the first part of August. Current demand for the Company–s drilling rigs is strong and suggests the upcoming winter drilling season will be active. While increased drilling activity in Western Canada is positive for the Rentals and Transportation Services division, increased completion and well service activity will be required to substantially improve rental equipment utilization. The substantial fabrication sales backlog enjoyed by the Compression and Process Services division reflects continued solid demand for the Company–s compression and process equipment.
Total Energy–s financial condition remains solid with a long-term debt (including convertible debentures) to long-term debt plus equity ratio of 0.17 to 1.0, $90.4 million of positive working capital and no net debt as at September 30, 2013. Total Energy–s $35 million operating facility is currently fully available and undrawn. Total Energy continues to evaluate several investment opportunities and the Company–s financial position provides significant capacity and flexibility to pursue further growth opportunities that meet the Company–s investment expectations.
Conference Call
At 2:30 p.m. MST today, Total Energy will conduct a conference call and webcast to discuss its third quarter financial results. Daniel Halyk, President & Chief Executive Officer, will host the conference call. The call is open to Shareholders and all other interested persons. A live webcast of the conference call will be accessible on Total–s website at by selecting “Webcasts”. Persons wishing to join the conference call live may do so by calling (866) 226-1792 or (416) 340-2216. Those who are unable to listen to the call live may listen to a recording of it on Total Energy–s website. A recording of the conference call will also be available until November 19, 2013 by dialing (800) 408-3053 (passcode 4497761).
Selected Financial Information
Selected financial information relating to the three and nine month periods ended September 30, 2013 and 2012 is attached to this news release. This information should be read in conjunction with the condensed unaudited interim consolidated financial statements of Total Energy and the attached notes to the consolidated financial statements and management–s discussion and analysis to be issued in due course and reproduced in the Company–s third quarter report.
Segmented Information
The Company operates in three main industry segments, which are substantially in one geographic segment. These segments are Contract Drilling Services, which includes the contracting of drilling equipment and the provision of labour required to operate the equipment, Rentals and Transportation Services, which includes the rental and transportation of equipment used in drilling, completion and production operations and Compression and Process Services, which includes the fabrication, sale, rental and servicing of natural gas compression and process equipment.
Total Energy Services Inc. is a growth oriented energy services corporation involved in contract drilling services, rentals and transportation services and the fabrication, sale, rental and servicing of natural gas compression and process equipment. The common shares of Total Energy are listed and trade on the TSX under the symbol TOT.
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Notes to Financial Highlights
Certain statements contained in this press release, including statements which may contain words such as “could”, “should”, “expect”, “believe”, “will” and similar expressions and statements relating to matters that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of Total Energy to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such factors include fluctuations in the market for oil and natural gas and related products and services, political and economic conditions, the demand for products and services provided by Total Energy, Total Energy–s ability to attract and retain key personnel and other factors. Reference should be made to Total Energy–s most recently filed Annual Information Form and other public disclosures (available at ) for a discussion of such risks and uncertainties.
The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.
Contacts:
Total Energy Services Inc.
Daniel Halyk
President & Chief Executive Officer
(403) 216-3921
Total Energy Services Inc.
Mark Kearl
Vice-President Finance and Chief Financial Officer
(403) 216-3920