CALGARY, AB, Nov. 5, 2020 /CNW/ - Stampede Drilling Inc.
("Stampede" or the "Corporation") (TSXV: SDI) announces today its
financial and operational results for the three and nine month
periods ended September 30, 2020.
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, 2020 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.
THIRD QUARTER 2020 OPERATIONAL OVERVIEW
During the three months ended September
30, 2020, the Corporation recorded an Adjusted EBITDA loss
from continuing operations of $269,
down $951 (132%) from Adjusted EBITDA
of $682 from the prior year
comparative period. Reduced global oil demand driven by the novel
coronavirus ("COVID-19") health pandemic and the associated
economic downturn continued to pressure crude and liquid prices
which negatively impacted the Corporations customer's 2020 drilling
programs.
In March 2020, the Corporation
implemented key cost and discretionary spending plan adjustments.
For the three month period ended September
30, 2020. Administrative expenses were down 46% as compared
to the corresponding 2019 period. The decrease was achieved by the
elimination of all discretionary spending, non-essential travel,
and entertainment.
For the three months ended September
2020, salary and benefit expenses were down 68% as compared
to the corresponding 2019 period. The decrease in employee expenses
was related to the following:
- 18% to 36% reduction to executive cash compensation,
- Employee salary reductions, modified work schedules, job
sharing and temporary layoffs
- Elimination of cash compensation for the Board of
Directors
|
Three months ended
September 30,
|
|
(000's CAD
$)
|
2020
|
2019
|
%
Change
|
|
Administrative
expenses
|
241
|
447
|
(46%)
|
|
Salaries and
benefits
|
212
|
661
|
(68%)
|
|
Share-based
payments
|
34
|
104
|
(67%)
|
|
Depreciation
|
102
|
72
|
42%
|
|
Total
G&A
|
589
|
1,284
|
(54%)
|
|
nm - not
meaningful
|
|
|
|
In addition, the Corporation qualified for the Canadian Federal
Government's wage subsidy program during Q2 2020 which was used to
reduce employee related salary expenses and help minimize reduction
in headcount. For the three and nine month period ended
September 30, 2020, the Corporation
recorded $128 and $323 respectively against salary and benefits
expense.
OUTLOOK
Reduced global oil demand driven by the novel coronavirus
("COVID-19") health pandemic and the associated economic downturn
continues to pressure crude and liquid prices which has created
considerable uncertainty to the short-term outlook on oil and gas
commodity pricing. The Corporation anticipates an increase in
drilling activity for the upcoming winter months. However, the
forecasted activity will still remain below prior year levels as
producers continue to protect their balance sheet in these
uncertain times. The Corporation will continue to actively monitor
and manage risks through periods of lower commodity pricing and
industry activity. As at September 30,
2020, the Corporation was in compliance of all covenants
related to the operating line facility.
FINANCIAL SUMMARY
THIRD QUARTER 2020 SUMMARY (Compared with the third
quarter 2019)
- Revenue from continuing operations of $714, down 88% from $5,910;
- Gross margin from continuing operations of $184, down 90% from $1,790;
- Adjusted EBITDA loss from continuing operations of ($269), decreased 139% from Adjusted EBITDA of
$682;
- Net loss from continuing operations of ($1,633), increased 132% from ($705)
NINE MONTHS ENDED SEPTEMBER 30,
2020 SUMMARY (Compared with the nine months ended
September 30, 2019)
- Revenue from continuing operations of $11,879, down 30% from $16,992;
- Gross margin from continuing operations of $3,846 down 35% from 6,081;
- Adjusted EBITDA from continuing operations of $1,898 down 38% from $3,059;
- Net loss from continuing operations of ($2,376), increased 108% from ($1,143)
|
Three months
ended
September
30,
|
|
Nine months
ended
September 30,
|
|
(000's CAD $
except per share amounts)
|
2020
|
2019
|
%
Change
|
|
2020
|
2019
|
%
Change
|
|
Continuing
operations
|
|
|
|
|
|
|
|
|
Revenue
|
714
|
5,910
|
(88%)
|
|
11,879
|
16,992
|
(30%)
|
|
Direct operating
expenses
|
530
|
4,120
|
(87%)
|
|
8,033
|
10,911
|
(26%)
|
|
Gross margin
(1)
|
184
|
1,790
|
(90%)
|
|
3,846
|
6,081
|
(37%)
|
|
Net income (loss)
from continuing operations
|
(1,633)
|
(705)
|
132%
|
|
(2,376)
|
(1,143)
|
108%
|
|
Basic and diluted per
share
|
(0.01)
|
(0.01)
|
0%
|
|
(0.02)
|
(0.01)
|
(100%)
|
|
Adjusted EBITDA
(loss) (1)
|
(269)
|
682
|
(139%)
|
|
1,898
|
3,059
|
(38%)
|
|
Weighted average
common shares outstanding
|
132,046
|
131,752
|
0%
|
|
132,046
|
131,786
|
0%
|
|
Weighted average
diluted common shares outstanding
|
132,046
|
131,751
|
0%
|
|
132,046
|
131,786
|
0%
|
|
Combined
operations (2)
|
|
|
|
|
|
|
|
|
Net income
|
(1,633)
|
(724)
|
126%
|
|
(2,376)
|
(91)
|
2,511%
|
|
Basic and diluted per
share
|
(0.01)
|
(0.01)
|
0%
|
|
(0.02)
|
(0.01)
|
(100%)
|
|
Adjusted EBITDA
(loss) (1)
|
(269)
|
682
|
(139%)
|
|
1,898
|
3,533
|
(46%)
|
|
Capital
expenditures
|
2,802
|
3,060
|
(8%)
|
|
2,802
|
7,285
|
(62%)
|
|
nm - not
meaningful
|
|
|
|
|
|
(1) Refer to "Non-GAAP Measures" for
further information.
|
|
|
|
|
|
(2) Combined operations represent the
aggregated results of both continuing and discontinued
operations.
|
|
RESULTS OF CONTINUING OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2020
|
Nine months ended
September 30,
|
|
(000's CAD $
except operating days)
|
2020
|
2019(1)
|
%
Change
|
|
|
|
|
|
Revenue
|
11,879
|
16,992
|
(30%)
|
|
Direct operating
expenses
|
8,033
|
10,911
|
(26%)
|
|
Gross margin
(2)
|
3,846
|
6,081
|
(37%)
|
|
Gross margin
%
|
32%
|
36%
|
(11%)
|
|
Net income from
continuing operations
|
(2,376)
|
(1,143)
|
108%
|
|
General and
administrative expenses
|
2,448
|
3,689
|
(34%)
|
|
Adjusted EBITDA
(2)
|
1,898
|
3,059
|
(38%)
|
|
Adjusted EBITDA as a
% of revenue
|
16%
|
18%
|
(11%)
|
|
Drilling rig
operating days
|
567
|
854
|
(34%)
|
|
Drilling rig revenue
per day
|
20.9
|
19.9
|
5%
|
|
Drilling rig
utilization
|
21%
|
36%
|
(42%)
|
|
CAODC industry
average utilization(3)
|
16%
|
22%
|
(27%)
|
|
nm - not
meaningful
|
|
|
|
|
(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 for the nine months ended September 30, 2020 was $11,879, down $5,113 (30%) compared to $16,992 for the corresponding 2019 period. The
decrease was as a result of decreased drilling activity related due
to the continued economic slowdown and the corresponding negative
impact on oil and gas commodity pricing.
- The Corporation had a total of 567 operating days in the first
nine months of 2020, a decrease of 287 operating days (34%) from
the 854 operating days in the corresponding 2019 period. The
drilling rig utilization for the first nine months of 2020 was 21%,
as compared to the first nine months CAODC industry average
utilization rate of 20% for 2020 due to the Corporations strong
first quarter 2020 utilization rate of 58%.
- As a result of the decreased 2020 operating days and
corresponding revenue, Adjusted EBITDA for the nine months ended
September 30, 2020 was $1,898, down $1,161
from the 2019 corresponding period.
- Gross margin for the nine months ended September 30, 2020 was 32%, down 11% from 36% as
compared to the corresponding 2019 period. The 2020 gross margin
were negatively impacted by fixed costs in Q2 and Q3 2020 with
minimal operating activity.
- For the nine months ended September 30,
2020, general and administrative expenses were $2,448 down $1,241
(34%) from $3,689 as compared to the
corresponding 2019 period. The 2020 decrease in general and
administrative expenses was as a result of the Corporations cost
cutting initiatives implemented in March
2020. Cost cutting initiatives included reduced headcount,
salary roll backs and elimination of all discretionary
spending.
- For the nine month period ended September 30, 2020, the net loss from continuing
operations was $2,376 up $1,233 (108%) from $1,143 as compared to the corresponding 2019
period. Net income from continuing operations were negatively
impacted due to the minimal drilling activity since the end of Q1
2020. The loss from continuing operations was partially offset by
the Corporation's cost cutting initiatives.
THIRD QUARTER RESULTS OF CONTINUING OPERATIONS
|
Three months
ended
September 30,
|
|
(000's CAD $
except per day amounts)
|
2020
|
2019(1)
|
%
Change
|
|
|
|
|
|
Drilling rig
revenue
|
714
|
5,910
|
(88%)
|
|
Direct operating
expenses
|
530
|
4,120
|
(87%)
|
|
Gross margin
(2)
|
184
|
1,790
|
(90%)
|
|
Gross margin
%
|
26%
|
30%
|
(13%)
|
|
Net income (loss)
from continuing operations
|
(1,633)
|
(705)
|
132%
|
|
General and
administrative expenses
|
589
|
1,284
|
(54%)
|
|
Adjusted EBITDA
(2)
|
(269)
|
682
|
(139%)
|
|
Adjusted EBITDA as a
% of revenue
|
(38%)
|
12%
|
(417%)
|
|
Drilling rig
operating days
|
36
|
295
|
(88%)
|
|
Drilling rig revenue
per day
|
20.0
|
20.0
|
(0%)
|
|
Drilling rig
utilization
|
4%
|
32%
|
(88%)
|
|
CAODC industry
average utilization(3)
|
9%
|
23%
|
(61%)
|
|
nm - not
meaningful
|
|
|
|
|
(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 for the three months ended September 30, 2020 was $714, down $5,196
(88%) compared to $5,910 for the
corresponding 2019 period. The decrease was as a result of
decreased drilling activity related due to the continued economic
slowdown and the corresponding negative impact on oil and gas
commodity pricing.
- The Corporation had a total of 36 operating days for the three
months ended September 30, 2020, a
decrease of 259 operating days (88%) from the 295 operating days in
the corresponding 2019 period. The drilling rig utilization for the
three months ended September 30, 2020
was 4%, as compared to the CAODC industry average utilization rate
of 9%. Low utilization for the Corporation and the industry was a
result of customers reducing or cancelling 2020 drilling programs
due to commodity price uncertainty.
- As a result of the decreased Q3 2020 operating days and
corresponding revenue, Adjusted EBITDA loss for the three months
ended September 30, 2020 was
$269, down $951 (139%) from Adjusted EBITDA of $682 for the corresponding 2019 period.
- Gross margin for the three months ended September 30, 2020 was 26%, down 13% from 30% as
compared to the corresponding 2019 period. The 2020 gross margin
was negatively impacted by September rig start up costs for
anticipated Q4 2020 work combined with minimal operating activity
during Q3 2020.
- For the three months ended September 30,
2020, general and administrative expenses were $589 down $695
(54%) from $1,284 as compared to the
corresponding 2019 period. The decrease in general and
administrative expenses was as a result of the Corporations cost
cutting initiatives implemented in March
2020. Cost cutting initiatives included reduced headcount,
salary roll backs and elimination of all discretionary
spending.
- For the three month period ended September 30, 2020, the net loss from continuing
operations was $1,633 up $928 (132%) from a net operating loss of
$705 as compared to the corresponding
2019 period. Net income from continuing operations were negatively
impacted due to the continued decrease in drilling activity since
the end of Q1 2020. The loss from continuing operations was
partially off set by the Corporations cost cutting
initiatives.
NON-GAAP MEASURES
This press release 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
September 30,
|
|
Nine months
ended
September 30,
|
|
(000's CAD
$)
|
2020
|
2019
|
%
Change
|
|
2020
|
2019
|
%
Change
|
|
Net loss from
continuing operations
|
(1,633)
|
(705)
|
132%
|
|
(2,376)
|
(1,143)
|
108%
|
|
Depreciation
|
1,211
|
1,131
|
7%
|
|
3,636
|
3,291
|
10%
|
|
Finance
costs
|
166
|
173
|
(4%)
|
|
544
|
500
|
9%
|
|
Other
income
|
(10)
|
(9)
|
11%
|
|
(52)
|
(104)
|
(50%)
|
|
Gain from equipment
lost in hole
|
-
|
-
|
nm
|
|
-
|
(15)
|
(100%)
|
|
Share-based
payments
|
34
|
104
|
(67%)
|
|
195
|
378
|
(48%)
|
|
Transaction
costs
|
35
|
-
|
nm
|
|
35
|
146
|
(76%)
|
|
Foreign exchange
gain
|
12
|
(12)
|
(200%)
|
|
-
|
6
|
(100%)
|
|
Gain on
Extinguishment of Convertible Debenture
|
(84)
|
-
|
nm
|
|
(84)
|
-
|
nm
|
|
Adjusted
EBITDA
|
(269)
|
682
|
(139%)
|
|
1,898
|
3,059
|
(38%)
|
|
nm - not
meaningful
|
|
|
|
|
|
|
|
|
(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
September 30,
|
|
Nine months
ended
September 30,
|
|
(000's CAD
$)
|
2020
|
2019
|
%
Change
|
|
2020
|
2019
|
%
Change
|
|
Income from
operations
|
(925)
|
731
|
(227%)
|
|
515
|
3,079
|
(83%)
|
|
Depreciation of
property and equipment
|
1,109
|
1,059
|
5%
|
|
3,331
|
3,002
|
11%
|
|
Gross
margin
|
184
|
1,790
|
(90%)
|
|
3,846
|
6,081
|
(37%)
|
|
Gross margin
%
|
26%
|
30%
|
(13%)
|
|
32%
|
36%
|
(11%)
|
|
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
"plan", ""continue", "estimate", "expect", "intend", "might",
"may", "will", "should", "believe", "predict", and "forecast" are
intended to identify forward-looking information. This press
release contains forward-looking information pertaining to, among
other things: the Corporation's expectation that the upcoming
winter months will see an increase in drilling activity, which
activity will remain at below historic levels; the Corporation's
expectations regarding the impact on macro-economic factors of the
COVID-19 virus, of instability created by OPEC's inability to
maintain the global oil supply and the resulting impact of both on
commodity prices; the effect of measures implemented by the
Corporation to protect its field and office employees while
ensuring business continuity; the Corporation's capital expenditure
budget for 2020 and expected responses to COVID-19 and commodity
pricing; the Corporation's ability to withstand the impact the
current commodity price cycle will have on its forecasted activity
levels for the remainder of 2020 and into 2021; the belief that the
Corporation's principal sources of liquidity, its operating cash
flows and operating loan, will be sufficient to fund 2020
operations and other strategic opportunities as well as manage its
liquidity risk; the Corporation's anticipation that it will have
the ability to adjust its capital structure by issuing new equity
or debt, disposing of assets and making adjustments to its
operating expenditures and capital expenditure program; the
Corporation's belief that it has adequate access to its demand loan
facility to provide the necessary liquidity needed to manage
fluctuations in the timing of receipt and/or disbursement of
operating cash flows; the Corporation's expectations that its
financial risk management policies will ensure that all payables
are paid within the pre-agreed credit terms; the Corporation's
treatment and categorization of doubtful accounts and expectations
regarding credit loss rates based on its past experiences and
expectations in respect of certain receivables; the Corporation's
assessment of its customers' creditworthiness; and the expected
effects of seasonality and weather on the Corporation's operations
and business, amongst others.
Forward-looking information is presented in this press release
for the purpose of assisting investors and others in understanding
certain key elements of the Corporation's financial results and
business plan, as well as the objectives, strategic priorities and
business outlook of the Corporation, and in obtaining a better
understanding of the Corporation's anticipated operating
environment. Readers are cautioned that such forward-looking
information may not be appropriate for other purposes.
Forward-looking information, by its very nature, is subject to
inherent risks and uncertainties and is based on many assumptions,
both general and specific, which give rise to the possibility that
actual results or events could differ materially from the
expectations of the Corporation expressed in or implied by such
forward-looking information and that the Corporation's business
outlook, objectives, plans and strategic priorities may not be
achieved. Macro-economic conditions, including public health
concerns (including the impact of the COVID-19 pandemic) and other
geopolitical risks, the condition of the global economy and,
specifically, the condition of the crude oil and natural gas
industry including the collapse of global crude oil prices, other
commodity prices and the decrease in global demand for crude oil in
2020, and the ongoing significant volatility in world markets may
adversely impact drilling and completions programs, which could
materially adversely impact the Corporation. In addition to other
factors and assumptions which may be identified in this press
release, assumptions have been made regarding, among other things:
the condition of the global economy, including trade, public health
(including the impact of the COVID-19 pandemic) and other
geopolitical risks; the stability of the economic and political
environment in which the Corporation operates; the effect the
stabilization of global crude prices will have on drilling and
completion activities in Western
Canada; the success of the measures implemented by the
Corporation to protect its field and office employees and the
ability to ensure business continuity at the same time; the
creditworthiness of the Corporation's customers; the effectiveness
of the Corporation's financial risk management policies at ensuring
all payables are paid within the pre-agreed credit terms; the
ability of the Corporation to retain qualified staff; the ability
of the Corporation to obtain financing on acceptable terms; the
impact of increasing competition; the ability to protect and
maintain the Corporation's intellectual property; currency,
exchange and interest rates; the regulatory framework regarding
taxes and environmental matters in the jurisdictions in which the
Corporation operates; and the ability of the Corporation to
successfully implement key cost and discretionary spending plan
adjustments. Actual results and future events could differ
materially from those expected or estimated in such forward-looking
information. As a result, the Corporation cannot guarantee that any
forward-looking information will materialize and we caution you
against relying on any of this forward-looking information.
Accordingly, readers should not place undue reliance on
forward-looking information.
Additional information on these and other factors are disclosed
under the heading "Risks and Uncertainties" herein, in the
Corporation's annual information form dated March 25, 2020, and in other reports filed with
the securities regulatory authorities in Canada from time to time and available on
SEDAR (sedar.com).
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 press release.
SOURCE Stampede Drilling Inc.