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Ensign Energy Services Inc. Reports 2022 Second Quarter Results

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CALGARY, AB, Aug. 5, 2022 /CNW/ -

Ensign Energy Services Inc. Logo (CNW Group/Ensign Energy Services Inc.)
Ensign Energy Services Inc. Logo (CNW Group/Ensign Energy Services Inc.)

SECOND QUARTER HIGHLIGHTS

  • Revenue for the second quarter of 2022 was $344.1 million, a 62 percent increase from the second quarter of 2021 revenue of $212.3 million.

  • Revenue by geographic area:

  • Canadian drilling recorded 2,369 operating days in the second quarter of 2022, a 124 percent increase from 1,058 operating days in the second quarter of 2021. Canadian well servicing recorded 12,099 operating hours in the second quarter of 2022, a 51 percent increase from 8,027 operating hours in the second quarter of 2021.

  • United States drilling recorded 4,277 operating days in the second quarter of 2022, a 48 percent increase from 2,899 operating days in the second quarter of 2021. United States well servicing recorded 30,725 operating hours in the second quarter of 2022, a seven percent decrease from 33,080 operating hours in the second quarter of 2021.

  • International drilling recorded 1,030 operating days in the second quarter of 2022, a 22 percent increase from 844 operating days recorded in the second quarter of 2021.

  • Adjusted EBITDA for the second quarter of 2022 was $68.3 million, a 50 percent increase from Adjusted EBITDA of $45.6 million for the second quarter of 2021.

  • Funds flow from operations for the second quarter of 2022 increased 97 percent to $81.5 million from $41.3 million in the second quarter of the prior year.

  • During the second quarter of 2022, the Company did not record any Canada Emergency Wage Subsidy program payments as compared with $5.1 million recognized in the second quarter of 2021.

  • General and administrative expense increased 38 percent and totaled $12.2 million in the second quarter of 2022, compared with $8.9 million in the second quarter of 2021.

  • Net capital purchases for the second quarter of 2022 were $50.1 million, consisting of $28.5 million in upgrade capital, $25.8 million in maintenance capital less proceeds from dispositions of $4.2 million.

  • Capital expenditures for the 2022 year are targeted to be approximately $165.0 million of which $40.0 million relates to growth capital. The increase partially relates to two drilling rigs that will be reactivated in Oman in the fourth quarter of 2022.  As at June 30, 2022, 24 drilling rigs have be reactivated and upgraded.

  • Long-term debt, net of cash, was reduced by $83.0 million since December 31, 2021.

  • On June 7, 2022, the Company settled its Convertible Debentures of $37.0 million through the issuance of 21,142,857 common shares of the Company at a conversion price of $1.75 per share.

OVERVIEW

Revenue for the second quarter of 2022 was $344.1 million, an increase of 62 percent from revenue for the second quarter of 2021 of $212.3 million. Revenue for the six months ended June 30, 2022 was $676.8 million, an increase of 57 percent from revenue for the six months ended June 30, 2021 of $430.9 million.

Adjusted EBITDA totaled $68.3 million ($0.40 per common share) in the second quarter of 2022, 50 percent higher than Adjusted EBITDA of $45.6 million ($0.28 per common share) in the second quarter of 2021. For the first six months ended June 30, 2022, Adjusted EBITDA totaled $138.3 million ($0.83 per common share), 45 percent higher than Adjusted EBITDA of $95.5 million ($0.59 per common share) in the first six months ended June 30, 2021.

Net loss attributable to common shareholders for the second quarter of 2022 was $28.1 million ($0.17 per common share) compared to a net loss attributable to common shareholders of $52.3 million ($0.32 per common share) for the second quarter of 2021. Net loss attributable to common shareholders for the six months ended June 30, 2022 was $21.6 million ($0.13 per common share), compared to a net loss attributable to common shareholders of $95.8 million ($0.59 per common share) for the six months ended June 30, 2021.

Funds flow from operations increased 97 percent to $81.5 million ($0.47 per common share) in the second quarter of 2022 compared to $41.3 million ($0.25 per common share) in the second quarter of the prior year. Funds flow from operations increased 80 percent to $158.2 million ($0.94 per common share) for the six months ended June 30, 2022 compared to $87.9 million ($0.54 per common share) for the six months ended June 30, 2021.

The macro-economic conditions impacting the crude oil and natural gas industry continued to be positive for oilfield services. Strong global commodity prices continued to be supported by strengthening global crude oil demand and structural tightness in crude oil supply. OPEC+ nations continue to incrementally add supply to the market and are expected to eliminate coordinated production cuts in the coming months. In addition, US-based producers remain committed to moderate increases in production. The invasion of Ukraine by the Russian Federation and the resulting hostilities have further challenged global oil and natural gas markets with uncertainty regarding Russian oil and natural gas supply to the global market, putting further upward pressure on commodity prices. These factors and constructive industry fundamentals have resulted in increased demand for oilfield services, driving improved activity and drilling rig rates in the Company's North American segments year-over-year.

Over the near term, there is considerable uncertainty regarding the impacts of the Russian invasion of Ukraine and the resulting ongoing hostilities on the global economy, recession risk in certain operating environments, and other factors that may impact the demand for crude oil and natural gas, commodity prices, and the demand for oilfield services.

The Company's operating days were higher in the three and six months ended June 30, 2022, when compared to the same period in 2021. Operations were positively impacted by improving industry conditions, driving activity improvements year-over-year. Furthermore, the acquisition of 35 land-based drilling rigs in Canada during the third quarter of 2021 helped further improve the Company's financial and operating results.

The average United States dollar exchange rate was $1.27 for the six months ended June 30, 2022 (2021 - $1.25) versus the Canadian dollar, an increase of two percent, compared to the same period of 2021.

Working capital at June 30, 2022 was a surplus of $102.8 million, compared to a surplus of $104.2 million at December 31, 2021. The Company's available liquidity, consisting of cash and available borrowings under its $900.0 million revolving credit facility (the "Credit Facility"), was $67.0 million at June 30, 2022.


This news release contains "forward-looking information and statements" within the meaning of applicable securities legislation. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Advisory Regarding Forward-Looking Statements" later in this news release. This news release contains references to Adjusted EBITDA and Adjusted EBITDA per common share. These measures do not have any standardized meaning prescribed by IFRS and accordingly, may not be comparable to similar measures used by other companies. The non-GAAP measures included in this news release should not be considered as an alternative to, or more meaningful than, the IFRS measure from which they are derived or to which they are compared. See "Non-GAAP Measures" later in this news release.

FINANCIAL AND OPERATING HIGHLIGHTS

(Unaudited, in thousands of Canadian dollars, except per common share data and operating information)


Three months ended June 30


Six months ended June 30

2022


2021


% change


2022


2021


% change

Revenue

$   344,123


$   212,306


62


$   676,799


$   430,850


57

Adjusted EBITDA 1

68,332


45,645


50


138,297


95,543


45

Adjusted EBITDA per common share 1












Basic

$0.40


$0.28


43


$0.83


$0.59


41

Diluted

$0.44


$0.28


57


$0.82


$0.59


39

Net loss attributable to common shareholders

(28,138)


(52,292)


46


(21,551)


(95,842)


78

Net loss attributable to common shareholders per common share












Basic

$(0.17)


$(0.32)


47


$(0.13)


$(0.59)


77

Diluted

$(0.17)


$(0.32)


47


$(0.13)


$(0.59)


77

Cash provided by operating activities 

99,520


53,185


87


154,076


80,022


93

Funds flow from operations

81,497


41,326


97


158,238


87,853


80

Funds flow from operations per common share












Basic

$0.47


$0.25


88


$0.94


$0.54


74

Diluted

$0.52


$0.25


nm


$0.94


$0.54


74

Long-term debt, net of cash

1,357,537


1,313,837


3


1,357,537


1,313,837


3

Weighted average common shares - basic (000s)

171,646


162,295


6


167,456


162,481


3

Weighted average common shares - diluted (000s)

173,157


162,642


6


168,325


162,773


3

Drilling

2022


2021


% change


2022


2021


% change

Number of marketed rigs 2












Canada 3

123


92


34


123


92


34

United States

89


93


(4)


89


93


(4)

International 4

34


42


(19)


34


42


(19)

   Total

246


227


8


246


227


8













Operating days 5












Canada 3

2,369


1,058


nm


6,097


2,904


nm

United States

4,277


2,899


48


7,965


5,480


45

International 4

1,030


844


22


1,903


1,703


12

   Total

7,676


4,801


60


15,965


10,087


58

Well Servicing

2022


2021


% change


2022


2021


% change

Number of rigs












Canada

52


52


—


52


52


—

United States

48


48


—


48


48


—

   Total

100


100


—


100


100


—

Operating hours












Canada

12,099


8,027


51


23,359


17,117


36

United States

30,725


33,080


(7)


60,414


63,045


(4)

   Total

42,824


41,107


4


83,773


80,162


5

nm - calculation not meaningful

1.  Refer to Adjusted EBITDA calculation in Non-GAAP Measures

2.  Total owned rigs: Canada - 137, United States - 126, International - 46 (2021 total owned rigs: Canada - 118, United States - 136, International - 53)

3.  Excludes coring rigs.

4.  Includes workover rigs.

5.  Defined as contract drilling days, between spud to rig release.

FINANCIAL POSITION AND CAPITAL EXPENDITURES HIGHLIGHTS

As at ($ thousands)

June 30 2022


December 31
2021


June 30 2021

Working capital1, 2

102,830


104,228


89,919

Cash

38,994


13,305


19,532

Long-term debt

1,396,531


1,453,884


1,333,369

Long-term debt, net of cash

1,357,537


1,440,579


1,313,837

Total long-term financial liabilities 2

1,408,706


1,465,858


1,344,412

Total assets

3,011,267


2,977,054


2,857,832

Long-term debt to long-term debt plus equity ratio

0.53


0.55


0.52

1 See Non-GAAP Measures section.

2 Comparative working capital and total long-term financial liabilities has been revised to conform with current year's presentation


Three months ended June 30



...

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