CALGARY, Alberta, Nov. 07, 2019 (GLOBE NEWSWIRE) — Total Energy Services Inc. (“Total Energy” or the “Company”) (TSX:TOT) announces its consolidated financial results for the three and nine months ended September 30, 2019.Notes 1 through 4 please refer to the Notes to the Financial Highlights set forth at the end of this release.“nm” – calculation not meaningfulTotal Energy’s financial results for the three months ended September 30, 2019 reflect continued difficult industry conditions in Canada and reduced production activity in the Company’s Compression and Process Services segment offset by relatively stable industry conditions in the United States and Australia. Included in 2019 third quarter cost of services was $8.9 million of incremental depreciation expense resulting from a change in depreciation estimates in the Rentals and Transportation Services (“RTS”) segment effective July 1, 2019, of which $7.9 million is non-recurring. Also included in third quarter cost of services was $0.5 million of equipment relocation expenses as the RTS segment continued to relocate underutilized equipment from Canada to the United States. Excluding the $8.4 million of non-recurring expenses, net income for the third quarter of 2019 was $0.3 million.
Total Energy’s Contract Drilling Services (“CDS”) segment achieved 22% utilization during the third quarter of 2019, recording 2,163 operating days (spud to rig release) with a fleet of 107 drilling rigs, compared to 2,836 operating days, or 27% utilization, during the third quarter of 2018 with a fleet of 116 drilling rigs. Revenue per operating day for the third quarter of 2019 was $22,124, a 9% increase from the prior year comparable period due to increased pricing in the United States and Australia. During the third quarter of 2019, the CDS segment had 1,136 operating days in Canada with a fleet of 82 rigs (15% utilization), 671 days in the United States with a fleet of 20 rigs (34% utilization) and 356 days in Australia with a fleet of 5 rigs (76% utilization).The RTS segment achieved a utilization rate on major rental equipment of 14% during the third quarter of 2019 compared to 24% utilization during the third quarter of 2018. Segment revenue per utilized rental piece in the third quarter of 2019 was 10% higher than revenue per utilized piece in the third quarter of 2018 due primarily to improved pricing for assets relocated to the United States and the mix of equipment operating. This segment exited the third quarter of 2019 with approximately 10,590 pieces of major rental equipment (excluding access matting) and 95 heavy trucks as compared to 11,000 rental pieces and 112 heavy trucks at September 30, 2018. The RTS segment continued to expand its presence in the United States with the acquisition of certain oilfield transportation assets in August 2019 on a going concern basis for $2.3 million (US$1.7 million).Revenue in the Compression and Process Services segment (“CPS”) decreased 37% to $72.1 million for the three months ended September 30, 2019 compared to $114.8 million for the same period in 2018. This decrease was primarily due to lower fabrication sales activity. This segment exited the third quarter of 2019 with a $39.8 million backlog of fabrication sales orders as compared to $236.7 million at September 30, 2018 and $77.2 million at June 30, 2019. At September 30, 2019, there was 47,000 horsepower in the compression rental fleet, of which approximately 34,000 horsepower was on rent as compared to 31,500 horsepower on rent at September 30, 2018. The gas compression rental fleet operated at an average utilization rate of 70% during the third quarter of 2019 as compared to 69% during the third quarter of 2018.Total Energy’s Well Servicing segment (“WS”) generated $35.8 million of revenue during the third quarter of 2019 on 42,210 service hours, or $848 per service hour, with a fleet of 83 service rigs that were located in Canada (57 rigs), the United States (14 rigs) and Australia (12 rigs). This compares to $41.0 million of revenue during the third quarter of 2018 on 44,447 service hours, or $922 per service hour. Service rig utilization for the three months ended September 30, 2019 was 35% in Canada, 35% in the United States and 73% in Australia. During the third quarter of 2019 Total Energy repurchased 160,000 common shares at an average price (including commissions) of $6.47 per share pursuant to its normal course issuer bid and declared a quarterly dividend of $0.06 per share to shareholders of record on September 30, 2019. This dividend was paid on October 31, 2019. For Canadian income tax purposes, all dividends paid by Total Energy on its common shares are designated as “eligible dividends” unless otherwise indicated.OUTLOOKChallenging industry conditions and poor field conditions due to wet weather contributed to a continued and significant year over year decrease in Canadian oil and natural gas drilling and completion activity during the third quarter. Despite limited visibility in Canada going into the upcoming winter drilling season, recent improvements in Canadian natural gas prices are encouraging. While industry activity levels have moderated in the United States over the past few quarters, the Company continues to gain market share, particularly in the RTS segment through the relocation of underutilized equipment from Canada and targeted investment in new equipment. Industry conditions remain stable in Australia.Total Energy’s capital budget for 2019 remains at $40.5 million. $40.3 million of capital expenditures have been made to September 30, 2019, including $4.8 million of carry forward from 2018, leaving approximately $5.0 million of capital expenditures projected for the remainder of 2019. Net proceeds of $6.8 million have been realized from the sale of capital assets during the first nine months of 2019, resulting in a $1.9 million gain on sale being realized.In October 2019, the CDS segment received $17.6 million (US $13.5 million) as compensation for the early termination in 2017 of contracts for three drilling rigs that were operating in the United States. As no accrual had previously been made, this payment will be recognized as revenue in the fourth quarter of 2019. Total Energy continues to generate significant free cash flow despite operating its asset base at historically low utilization levels. The Company’s liquidity position remains strong, with $85.8 million of working capital at September 30, 2019 (after reclassifying $41.4 million of mortgage debt maturing in April 2020 as current). Total Energy expects to renew its maturing mortgage debt in the second quarter of 2020 for a minimum five-year term. At September 30, 2019, $225.1 million was drawn on Total Energy’s $295.0 million of revolving bank credit facilities that mature in June 2022 unless extended. The Company remains in compliance with all debt covenants and is able to fully draw on the remaining amounts available under its credit facilities. Total Energy’s primary credit facility provides the Company with the option to increase such facility by $75 million subject to certain terms and conditions including the agreement of the lenders to increase their commitments.Despite near term challenges and uncertainties, particularly in Canada, Total Energy believes that medium to long-term fundamentals require continued exploration and development in the markets in which it competes in order to meet increasing global demand for oil and natural gas.CONFERENCE CALLAt 9:00 a.m. (Mountain Time) on November 8, 2019 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. A live webcast of the conference call will be accessible on Total Energy’s website at www.totalenergy.ca by selecting “Webcasts”. Persons wishing to participate in the conference call may do so by calling (800) 319-4610 or (416) 915-3239. 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 December 8, 2019 by dialing (855) 669-9658 (passcode 3708).SELECTED FINANCIAL INFORMATIONSelected financial information relating to the three and nine months ended September 30, 2019 and 2018 is attached to this news release. This information should be read in conjunction with the consolidated financial statements of Total Energy and the notes thereto as well as management’s discussion and analysis to be issued in due course and reproduced in the Company’s 2019 third quarter report.
SEGMENTED INFORMATIONThe Company provides a variety of products and services in the oil and natural gas industry through five reporting segments, which operate substantially in three geographic segments. These reporting 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, Compression and Process Services, which includes the fabrication, sale, rental and servicing of natural gas compression and oil and natural gas process equipment and Well Servicing, which includes the contracting of service rigs and the provision of labour required to operate the equipment. Corporate includes activities related to the Company’s corporate and public issuer affairs.As at and for the three months ended September 30, 2019 (unaudited, in thousands of Canadian dollars)As at and for the three months ended September 30, 2018 (unaudited, in thousands of Canadian dollars)
As at and for the nine months ended September 30, 2019 (unaudited, in thousands of Canadian dollars)
As at and for the nine months ended September 30, 2018 (unaudited, in thousands of Canadian dollars)
Total Energy Services Inc. is a growth oriented energy services corporation involved in contract drilling services, rentals and transportation services, the fabrication, sale, rental and servicing of natural gas compression and oil and natural gas process equipment and well servicing. The common shares of Total Energy are listed and trade on the TSX under the symbol TOT.
For further information, please contact Daniel Halyk, President & Chief Executive Officer at (403) 216-3921 or Yuliya Gorbach, Vice-President Finance and Chief Financial Officer at (403) 216-3920 or by e-mail at: [email protected] or visit our website at www.totalenergy.caCertain 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. Forward-looking statements are based upon the opinions and expectations of management of Total Energy as at the effective date of such statements and, in some cases, information supplied by third parties. Although Total Energy believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions and that information received from third parties is reliable, it can give no assurance that those expectations will prove to have been correct.
In particular, this press release contains forward-looking statements concerning industry activity levels, including expectations regarding Total Energy’s future activity levels, market share and compression and process production activity. Such forward-looking statements are based on a number of assumptions and factors including fluctuations in the market for oil and natural gas and related products and services, political and economic conditions, central bank interest rate policy, the demand for products and services provided by Total Energy, Total Energy’s ability to attract and retain key personnel and other factors. 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. Reference should be made to Total Energy’s most recently filed Annual Information Form and other public disclosures (available at www.sedar.com) for a discussion of such risks and uncertainties.The TSX has neither approved nor disapproved of the information contained herein.
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