CALGARY, Nov. 6, 2019 /CNW/ - Stampede Drilling Inc.
("Stampede" or the "Corporation") (TSX-V: SDI) announces today its
financial and operational results for the three and nine month
periods ended September 30, 2019.
The following should be read in conjunction with the
Corporation's unaudited condensed consolidated financial statements
and the notes thereto for the three and nine month periods ended
September 30, 2019 and related
management's discussion and analysis, 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.
OUTLOOK & 2019 OPERATIONAL OVERVIEW
The Corporation's outlook for Western
Canada continues to remain conservative for the remainder of
2019. Macro-economic factors such as pipeline expansion and
government mandated crude oil production cuts are expected to
continue to adversely impact producer spending.
Despite the negative external factors, the Corporation has been
able to capitalize on opportunities and continue to build positive
momentum since entering the drilling rig business in November 2017. For the nine month period ended
September 30, 2019, continuing
operations revenue was up 70% and adjusted EBITDA was up 87% as
compared to the corresponding 2018 period.
The Corporation continues to work on strengthening its balance
sheet with a focus on controlling costs. Management will continue
its disciplined cash management to help execute on strategic
acquisitions, specific customer related rig upgrades and
opportunities that align with the Corporation's growth plan.
FINANCIAL HIGHLIGHTS
THIRD QUARTER 2019 SUMMARY (Compared with the third
quarter 2018)
- Revenue from continuing operations of $5,910, up 93% from $3,068;
- Gross margin from continuing operations of $1,790, up 106% from $869;
- Adjusted EBITDA from continuing operations of $682, up 352% from an Adjusted EBITDA
$151;
- Net loss from continuing operations of ($705), up 8% from ($653);
- Net loss from combined operations of ($724), down 20% from ($905)
NINE MONTHS ENDED SEPTEMBER 30,
2019 SUMMARY (Compared with the nine months ended
September 30, 2018)
- Revenue from continuing operations of $16,992, up 70% from $10,003;
- Gross margin from continuing operations of $6,081, up 90% from 3,193;
- Adjusted EBITDA from continuing operations of $3,059, up 86% from $1,641;
- Net loss from continuing operations of ($1,143), up 89% from net loss of $($606);
- Net loss from combined operations of ($91), down 96% from a net loss of ($2,125).
|
Three Months
Ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
(000's CAD $
except per share amounts)
|
2019
|
2018
|
%
Change
|
|
2019
|
2018
|
%
Change
|
Continuing
operations
|
|
|
|
|
|
|
|
Revenue
|
5,910
|
3,068
|
93%
|
|
16,992
|
10,003
|
70%
|
Direct operating
expenses
|
4,120
|
2,199
|
87%
|
|
10,911
|
6,810
|
60%
|
Gross margin
(1)
|
1,790
|
869
|
106%
|
|
6,081
|
3,193
|
90%
|
Net income (loss)
from continuing operations
|
(705)
|
(653)
|
8%
|
|
(1,143)
|
(606)
|
89%
|
Basic and diluted per
share
|
(0.01)
|
(0.01)
|
nm
|
|
(0.01)
|
(0.01)
|
nm
|
Adjusted EBITDA
(1)
|
682
|
151
|
352%
|
|
3,059
|
1,641
|
86%
|
Basic and diluted per
share
|
0.01
|
0.00
|
nm
|
|
0.02
|
0.01
|
nm
|
Weighted average
common shares
outstanding
|
131,992
|
131,577
|
nm
|
|
131,786
|
130,184
|
1%
|
Weighted average
diluted common shares
outstanding
|
131,992
|
131,577
|
nm
|
|
131,786
|
130,184
|
1%
|
Combined
operations (2)
|
|
|
|
|
|
|
|
Net income
(loss)
|
(724)
|
(905)
|
(20%)
|
|
(91)
|
(2,125)
|
(96%)
|
Basic and diluted per
share
|
(0.01)
|
(0.01)
|
nm
|
|
(0.00)
|
(0.02)
|
(100%)
|
Adjusted EBITDA
(1)
|
682
|
157
|
334%
|
|
3,533
|
691
|
411%
|
Capital
expenditures
|
3,060
|
2,260
|
35%
|
|
7,285
|
14,540
|
(50%)
|
nm - not
meaningful
|
(1) Refer to "Non-GAAP Measures" for
further information.
|
(2) Combined operations represents
the aggregated results of both continuing and discontinued
operations.
|
RESULTS OF CONTINUING OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2019
|
Nine months
ended
|
|
September
30,
|
(000's CAD $
except operating days)
|
2019
|
2018(1)
|
%
Change
|
|
|
|
|
Revenue
|
16,992
|
10,003
|
70%
|
Direct operating
expenses
|
10,911
|
6,810
|
60%
|
Gross margin
(2)
|
6,081
|
3,193
|
90%
|
Gross margin
%
|
36%
|
32%
|
13%
|
Net income (loss)
from continuing operations
|
(1,143)
|
(606)
|
89%
|
General and
administrative expenses
|
3,689
|
1,592
|
132%
|
General and
administrative expenses as a % of revenue
|
22%
|
16%
|
38%
|
Adjusted EBITDA
(2)
|
3,059
|
1,639
|
87%
|
Adjusted EBITDA as a
% of revenue
|
18%
|
16%
|
13%
|
Average active rig
count at end of period
|
9
|
8
|
19%
|
Drilling rig
operating days
|
854
|
567
|
51%
|
Drilling rig revenue
per day
|
19.9
|
17.6
|
13%
|
(1) The
comparative period has been restated to reflect discontinued
operations as discussed in Note 4.
|
(2) Refer to "Non-GAAP measures" for
further information.
|
- Revenue in the first nine months of 2019 was $16,992, an increase of $6,987 (70%) compared to $10,005 in the first nine months of 2018. The
increase was as a result of an increase in operating days due to
the higher average rig count in 2019, and an increase in revenue
per day of 13% from $17.6 in the
first nine months of 2018 to $19.9 in
the comparable 2019 period. The increase in revenue per day was
related to the higher day rates in Alberta compared to in Saskatchewan, as the Corporation relocated two
rigs from Saskatchewan to
Alberta during the second half of
2018 and the Corporation added one rig in Alberta in July 2019.
- Operating days in the drilling rig division of 854 days in the
first nine months of 2019 was a 51% increase over the 567 operating
days in the first nine months of 2018, as a result of the increase
in rig count during the period. The drilling rig utilization for
the nine months ended September 30,
2019 was 34%, 55% above the CAODC industry average
utilization rate of 22%. The increase in average active rig count
allowed the Corporation to diversify geographically into the
Alberta market and expand its
customer base resulting in increased drilling rig utilization in
the current year.
- For the nine months ended September 30,
2019, gross margin as a percentage of revenue was 36%, up
13% from a gross margin of 32% in the nine months ended
September 30, 2018. The increase in
gross margin as a percentage of revenue was primarily a result of
increased revenue per day of 13% for the nine month period ending
September 30, 2019 as compared to the
corresponding 2018 period.
- General and administrative expenses for the nine months ended
September 30, 2019 were $3,059 up $2,097
(132%) from $1,592 for the comparable
period of 2018, as a result of increased headcount and the higher
allocation of corporate expenses related to salaries, legal, IT,
and rent as part of the Corporation's continuing operations.
- For the nine months ended September 30,
2019, Adjusted EBITDA was $3,059, a $1,420
(87%) increase from $1,639 as
compared to the corresponding 2018 period, as a result of the
increase in active rig count during the period and a higher gross
margin which was partially offset by the increased general and
administrative expenses compared to 2018.
Other Items
|
Nine months
ended
|
|
September
30,
|
(000's CAD
$)
|
2019
|
2018
|
%
Change
|
Gain from disposition
of property and equipment
|
-
|
172
|
(100%)
|
Gain from equipment
lost in hole
|
15
|
-
|
nm
|
Finance
costs
|
(500)
|
(293)
|
71%
|
Other
income
|
104
|
-
|
nm
|
Foreign exchange
loss
|
(6)
|
1
|
nm
|
Transaction
costs
|
(146)
|
(539)
|
(73%)
|
Other
items
|
(533)
|
(659)
|
(19%)
|
For the nine months ended September 30,
2019, finance costs were $500,
a $207 (71%) increase from
$293 as compared to the corresponding
2018 period. The increase was due to higher 2019 debt levels
associated with the Corporation's line of credit. The higher 2019
debt levels were a result of increased capital spend and increased
working capital as a result of increased 2019 activity for the nine
months ended September 30, 2019
compared to the corresponding 2018 period.
For the nine months ended September 30,
2019, other income was $104 as
compared to $0 in the corresponding
2018 period. Other income is comprised of rent collections from the
Corporation's subleases.
For first nine months of 2019, there was a decrease in
transaction costs of $393 (73%) from
$539 as compared to the corresponding
2018 period. Transaction costs for the nine months ended
September 30, 2019 consist of
non-capitalizable amounts related to US start-up costs of
$146. Transaction costs for the nine
months ended September 30, 2018
represent non-capitalizable amounts directly related to drilling
rig acquisitions which consist of due diligence and external legal
fees and US start-up costs.
THIRD QUARTER RESULTS OF CONTINUING OPERATIONS
|
Three Months
Ended
|
|
September
30,
|
(000's CAD $
except per day amounts)
|
2019
|
2018(1)
|
%
Change
|
|
|
|
|
Drilling rig
revenue
|
5,910
|
3,068
|
93%
|
Direct operating
expenses
|
4,120
|
2,199
|
87%
|
Gross margin
(2)
|
1,790
|
869
|
106%
|
Gross margin
%
|
30%
|
28%
|
7%
|
Net income (loss)
from continuing operations
|
(705)
|
(653)
|
8%
|
General and
administrative expenses
|
1,284
|
756
|
70%
|
General and
administrative expenses as a % of revenue
|
22%
|
25%
|
(12%)
|
Adjusted EBITDA
(2)
|
682
|
152
|
349%
|
Adjusted EBITDA as a
% of revenue
|
12%
|
5%
|
140%
|
Average active rig
count at end of period
|
10
|
9
|
11%
|
Drilling rig
operating days
|
295
|
177
|
67%
|
Drilling rig revenue
per day
|
20.0
|
17.4
|
15%
|
(1) The
comparative period has been restated to reflect discontinued
operations as discussed in Note 4.
|
(2) Refer to "Non-GAAP measures" for
further information.
|
- Revenue in the third quarter of 2019 was $5,910, an increase of $2,842 (93%) compared to $3,068 in the third quarter of 2018. The increase
was as a result of an increase in operating days due to the
increased marketable rig count, and an increase in revenue per day
of 15% from $17.4 in the third
quarter of 2018 to $20.0 in the
comparable 2019 period. The increase in revenue per day was
related to the higher day rates in Alberta compared to in Saskatchewan, as the Corporation relocated two
rigs from Saskatchewan to
Alberta during the second half of
2018 and the Corporation added one rig in Alberta in July 2019.
- Operating days in the drilling rig division of 295 days in the
third quarter of 2019 was a 67% increase over the 177 operating
days in the third quarter of 2018, as a result of the Corporation's
increased rig count during the period. The drilling rig utilization
for the quarter ended September 30,
2019 was 32%, 40% above the CAODC industry average
utilization rate of 23%.
- Direct operating expenses are primarily comprised of personnel,
equipment, operating and repair costs, and shop expenses. Direct
operating expenses for the three months ended September 30, 2019 were $4,120, up $1,921
(87%) from $2,199 for the three
months ended September 30, 2018, also
as a result of the increased operating days compared to the third
quarter of 2018.
- For the third quarter ended September
30, 2019, gross margin as a percentage of revenue was 30%,
up 7% from a gross margin of 28% in the third quarter of 2018. The
increase in gross margin as a percentage of revenue was primarily a
result of increased revenue per day of 15% for the three month
period ending September 30, 2019 as
compared to the corresponding 2018 period.
- General and administrative expenses for the three months ended
September 30, 2019 were $1,284, up $528
(70%) from $756 for the three months
ended September 30, 2018, as a result
of the increased headcount and the higher allocation of corporate
expenses related to salaries, legal, IT, and rent as part of the
Corporation's continuing operations.
- For the third quarter ended September
30, 2019, the Adjusted EBITDA was $682, a $530 (349%)
increase from Adjusted EBITDA of $152
in the comparable quarter of 2018, as a result of the increase in
active rig count and higher gross margin which was partially offset
by the increased general and administrative expenses compared to
2018.
RESULTS OF DISCONTINUED OPERATIONS
On April 3, 2019, the Corporation
announced the discontinuation of its directional drilling division.
As part of this process, the Corporation presented the results of
the directional drilling operations using the guidance under "IFRS
5 - Non-Current Assets Held for Sale and Discontinued Operations",
as discontinued operations on the condensed consolidated statements
of comprehensive income (loss) and the condensed consolidated
statements of cash flows for the current and comparative
periods.
During the second quarter, the Corporation disposed of its
directional drilling assets to an independent, third-party
purchaser. In accordance with the disposal, property and equipment
with a net book value of $908 was
sold on May 27, 2019 for gross
proceeds of $1,500 which resulted in
recognition of a gain on disposition of $576, which was classified within discontinued
operations.
The general and administrative expenses for the three
months ended September 30, 2019
represent those costs required to complete the disposal of the
assets. As part of the disposal transaction, right of use assets
previously used by the directional drilling division and their
related lease liabilities were assigned to the purchaser with the
purchaser assuming all rights and obligations under the lease.
The following table sets forth operating results from the
discontinued operations for the three and nine months ended
September 30, 2019 and 2018:
|
Three Months
Ended
|
|
September
30,
|
(000's CAD $
except per day amounts)
|
2019
|
2018
|
%
Change
|
|
|
|
|
Directional drilling
revenue
|
-
|
1,717
|
(100%)
|
Direct operating
expenses
|
-
|
1,340
|
(100%)
|
Gross margin
(1)
|
-
|
377
|
(100%)
|
Gross margin
%
|
-
|
22%
|
nm
|
Directional drilling
net income (loss)
|
(19)
|
(252)
|
(92%)
|
General and
administrative expenses
|
19
|
385
|
(95%)
|
General and
administrative expenses as a % of revenue
|
-
|
22%
|
nm
|
Adjusted EBITDA
(1)
|
-
|
6
|
(100%)
|
Adjusted EBITDA as a
% of revenue
|
nm
|
0%
|
nm
|
Directional drilling
operating days(2)
|
-
|
184
|
(100%)
|
Directional drilling
revenue per day
|
nm
|
9.3
|
nm
|
(1) Refer to "Non-GAAP measures" for
further information.
|
[2] A
stand-by day is calculated as 0.5 day of an operating
day.
|
|
Nine months
ended
|
|
September
30,
|
(000's CAD $
except operating days)
|
2019
|
2018
|
%
Change
|
|
|
|
|
Directional drilling
revenue
|
1,837
|
4,304
|
(57%)
|
Direct operating
expenses
|
963
|
3,538
|
(73%)
|
Gross margin
(1)
|
874
|
766
|
14%
|
Gross margin
%
|
48%
|
18%
|
167%
|
Directional drilling
net income (loss)
|
1,052
|
(1,519)
|
(169%)
|
General and
administrative expenses
|
736
|
2,205
|
(67%)
|
General and
administrative expenses as a % of revenue
|
40%
|
51%
|
(22%)
|
Adjusted EBITDA
(1)
|
474
|
(946)
|
150%
|
Adjusted EBITDA as a
% of revenue
|
26%
|
(22%)
|
218%
|
Directional drilling
operating days(2)
|
209
|
512
|
(59%)
|
Directional drilling
revenue per day
|
8.8
|
8.4
|
5%
|
(1) Refer to "Non-GAAP measures" for
further information.
|
[2] A
stand-by day is calculated as 0.5 day of an operating
day.
|
- Revenue from discontinued operations for the nine month period
ended September 30, 2019 was
$1,837, a decrease of $2,467 (57%) from $4,304 in the prior year comparable period, as a
result of a 59% decrease in operating days due to the suspension of
operations on April 3, 2019.
- Direct operating expenses from discontinued operations for the
nine month period ended September 30,
2019 were $963, a decrease of
$2,575 (73%) from $3,538 in the prior year comparable period. Gross
margin as a percentage of revenue for the nine months ended
September 30, 2019 was 48%, up 167%
from 18% in the first nine months of 2018. The primary reason for
the increase was the rebilling of repairs and maintenance costs of
$285 to customers and the deferral of
all non-essential repairs to the Corporation's owned
equipment.
- General and administrative expenses from discontinued
operations for the nine month period ended September 30, 2019 was $736, a decrease of $1,469 (67%) compared to $2,205 corresponding 2018 period. The overall
decrease was a result of a reduction in headcount in the division
and the reallocation of corporate expenses of salaries, legal, IT,
and rent from the directional drilling division to the drilling rig
division.
- The overall effect of the increase in revenue and the decrease
in direct operating costs and general and administrative expenses
resulted in Adjusted EBITDA of $474
for the nine months ended 2019, an increase of $1,420 (150%) from an Adjusted EBITDA loss of
$946 as compared to the corresponding
2018 period.
- General and administrative expenses from discontinued
operations for the three month period ended September 30, 2019 were related to severance
payments.
NON-GAAP MEASURES
This MD&A contains references to (i) Adjusted EBITDA and
(ii) gross margin. 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 disposal
of property and equipment, impairment expenses, other income,
foreign exchange, non-recurring restructuring charges, finance
costs, accretion of debentures and other income/expenses, 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 and total comprehensive
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
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
(000's CAD
$)
|
2019
|
2018
|
%
Change
|
|
2019
|
2018
|
%
Change
|
Net loss from
continuing operations
|
(705)
|
(653)
|
8%
|
|
(1,143)
|
(606)
|
89%
|
Depreciation
(1)
|
1,131
|
626
|
81%
|
|
3,291
|
1,548
|
113%
|
Finance
costs
|
173
|
96
|
80%
|
|
500
|
293
|
71%
|
Other
income
|
(9)
|
(2)
|
nm
|
|
(104)
|
-
|
nm
|
Gain from disposition
of property and
equipment
|
-
|
-
|
-
|
|
-
|
(172)
|
(100%)
|
Gain from equipment
lost in hole
|
-
|
-
|
-
|
|
(15)
|
-
|
nm
|
Share-based
payments
|
104
|
38
|
nm
|
|
378
|
38
|
nm
|
Transaction
costs
|
-
|
46
|
(100%)
|
|
146
|
539
|
(73%)
|
Foreign exchange
loss
|
(12)
|
-
|
nm
|
|
6
|
1
|
nm
|
Adjusted
EBITDA
|
682
|
151
|
352%
|
|
3,059
|
1,641
|
86%
|
nm - not
meaningful
|
(1) Includes depreciation of property
and equipment and right-of-use assets
|
(ii)
|
Gross margin is
defined as "gross profit from services revenue from continuing
operations before stock-based compensation and depreciation". 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) and comprehensive 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.
|
|
Three Months
Ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
(000's CAD
$)
|
2019
|
2018
|
%
Change
|
|
2019
|
2018
|
%
Change
|
Income from
operations
|
731
|
243
|
201%
|
|
3,079
|
1,645
|
87%
|
Depreciation of
property and equipment
|
1,059
|
626
|
69%
|
|
3,002
|
1,548
|
94%
|
Gross
margin
|
1,790
|
869
|
106%
|
|
6,081
|
3,193
|
90%
|
Gross margin
%
|
30%
|
28%
|
7%
|
|
36%
|
32%
|
13%
|
nm - not
meaningful
|
FORWARD-LOOKING INFORMATION
Certain statements contained in this press 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",
"believe", "predict", and "forecast" are intended to identify
forward-looking information.
This press release contains forward-looking information
pertaining to, among other things: the expectation that the
Corporation's current drilling rig utilization will continue for
the remainder of 2019; the expectation that there will not be a
significant recovery in industry activity in 2019 from 2018 levels
expectations regarding macro-economic factors and their impact on
the industry; the view that the Corporation has a strong balance
sheet and its expectations regarding its cash management and of
having the flexibility to execute on strategic acquisitions,
specific customer related upgrades and all other opportunities that
align with the Corporation's growth plan; the belief that Adjusted
EBITDA is a useful supplemental financial measure; and the
expectation of continued expansion into the drilling rig business
in Western Canada.
Statements, including forward-looking information, are made as
of the date of this press 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 press
release is expressly qualified by this cautionary statement.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Stampede Drilling Inc.