CALGARY, AB, Dec. 31, 2020
/CNW/ - Ensign Energy Services Inc. ("Ensign" or the
"Company") (TSX: ESI) continues to deliver on 2020
priorities of balance sheet and liquidity preservation amidst a
turbulent operating environment.
On December 31, 2020, the Company
amended and extended the existing $900.0
million revolving credit facility agreement (the "Credit
Facility") with its syndicate of lenders. The amendments and
one-year extension provide Ensign with continued access to revolver
capacity and near-term flexibility in a volatile oil price
environment.
The amendments to the Credit Facility include revisions to the
financial covenants as follows:
- The elimination of the Consolidated Total Debt to Consolidated
EBITDA ratio and replacement with a minimum Consolidated EBITDA
requirement of $140.0 million.
- The Consolidated EBITDA to Consolidated Interest Expense ratio
shall not be less than: (i) 1.75:1.00 for the Fiscal Quarter ending
December 31, 2020, (ii) 1.50:1.00 for
the Fiscal Quarters ending March 31,
2021, June 30, 2021, and
September 30, 2021, (iii) 1.75:1.00
for the Fiscal Quarter ending December 31,
2021, (iv) 2.00:1.00 for the Fiscal Quarter ending
March 31, 2022, (v) 2.25:1.00 for the
Fiscal Quarters ending June 30, 2022,
and September 30, 2022, and (vi)
2.50:1.00 at any time thereafter.
- The Consolidated Senior Debt to Consolidated EBITDA ratio shall
not exceed: (i) 3.50:1.00 for the Fiscal Quarter ending
December 31, 2020, (ii) 4.00:1.00 for
the Fiscal Quarters ending March 31,
2021, June 30, 2021,
September 30, 2021, and December 31, 2021, (iii) 3.50:1.00 for the Fiscal
Quarter ending March 31, 2022, (iv)
3.25:1.00 for the Fiscal Quarters ending June 30, 2022, and September 30, 2022, (v) 3.00:1.00 at any time
thereafter.
In addition, the permitted encumbrances have been reduced from
$75.0 million to $25.0 million. The maturity date of the Credit
Facility is November 25, 2022;
provided that if on or before September 30,
2021, the maturity date of the Company's existing
Convertible Debentures is not extended from January 22, 2022, to a date no earlier than
February 26, 2023, then the maturity
date of the Credit Facility shall automatically be amended to
November 29, 2021.
Further, the repurchase or redemption of Senior Notes and
Convertible Debentures may only be completed on the following
basis:
- Senior Notes and Convertible Debentures may be repurchased or
redeemed for a redemption or purchase price up to the aggregate
amount of $25.0 million.
- Senior Notes and Convertible Debentures may be repurchased or
redeemed for a redemption or purchase price in excess of
$25.0 million if:
-
- On a pro forma basis the Borrower demonstrates to the
satisfaction of the Lenders that the aggregate amount of the cash
held by the Company on a consolidated basis and the credit
available to be advanced to the Company under the Credit Facilities
is at least $175.0 million after
completing such repurchase or redemption, and
- The aggregate redemption or repurchase price of all such Senior
Notes and Convertible Debentures repurchased or redeemed does not
exceed:
- One-third of the net proceeds received by the Company from
Permitted Dispositions completed after January 1, 2021; plus
- One-third of the net proceeds received from permitted
dispositions completed between December 10,
2020, and January 1, 2021, to
the extent that such net proceeds received by the Company have not
directly or indirectly been used to repurchase or redeem Senior
Notes between the same period.
- Senior Notes may be repurchased or redeemed for a redemption or
purchase price up to the aggregate amount of the net proceeds
received from the issuance of Subordinated Debt.
The full amended Credit Facility agreement will be made
available on www.sedar.com.
2021 Capital Expenditures
Ensign has budgeted capital expenditures for 2021 of
approximately $50.0 million. The capital plan focuses on
certifications and preventative maintenance for its global
high-spec drilling rig fleet and other service lines. In addition
to the disciplined capital plan, Ensign will continue to focus on
debt reduction throughout 2021 and onward, preserving liquidity and
protecting our balance sheet.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this news release constitute
forward-looking statements or information (collectively referred to
herein as "forward-looking statements") within the meaning of
applicable securities legislation. Forward-looking statements
generally can be identified by the words "believe", "anticipate",
"expect", "plan", "estimate", "target", "continue", "could",
"intend", "may", "potential", "predict", "should", "will",
"objective", "project", "forecast", "goal", "guidance", "outlook",
"effort", "seeks", "schedule" or expressions of a similar nature
suggesting future outcome or statements regarding an outlook.
In particular, forward looking statements include, but are not
limited to, our planned capital expenditures for 2021, the
redemption of the Senior Notes and Convertible Debentures; future
financial results and growth for the business; debt reduction in
2021 and beyond, and increases in liquidity.
The forward-looking statements are based on current
expectations, estimates and projections about us and the industries
in which we operate, which speak only as of the date hereof. They
are subject to certain assumptions and analyses made by Ensign
based upon our experience and our perception of current conditions,
trends, expected future developments, known and unknown risks,
uncertainties and other factors that could cause actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements, and other factors we believe
are appropriate under the circumstances. Such assumptions and risk
factors relate to and include, among others: general economic and
business conditions which will, among other things, impact demand
for and market prices of our services and the ability of our
customers to pay accounts receivable balances; volatility of and
assumptions regarding crude oil and natural gas commodity prices;
fluctuations in currency and interest rates; economic conditions in
the countries and regions in which we conduct business; political
uncertainty and civil unrest; our ability to implement our business
strategy; impact of competition; our defense of lawsuits;
availability and cost of labour and other equipment, supplies and
services; our ability to complete our capital programs; operating
hazards and other difficulties inherent in the operation of our
oilfield services equipment; availability and cost of financing and
insurance; timing and success of integrating the business and
operations of acquired companies; actions by governmental
authorities; government regulations and the expenditures required
to comply with them (including safety and environmental laws and
regulations and the impact of climate change initiatives on capital
and operating costs); the adequacy of our provision for taxes; and
other circumstances affecting our business, revenues and
expenses.
For additional information, refer to Ensign's Annual Information
Form for the year ended December 31, 2019, available on SEDAR
at www.sedar.com. Readers are cautioned that the list of important
factors contained herein are not exhaustive. Unpredictable or
unknown factors could also have material adverse effects on
forward-looking statements. Ensign undertakes no obligation to
update publicly or revise any forward-looking statement whether as
a result of new information, future events or otherwise, except as
required by law.
Ensign is a global leader in oilfield services, headquartered
out of Calgary, Alberta, operating
in Canada, the United States and internationally. We are
one of the world's top land-based drilling and well servicing
contractors serving crude oil, natural gas and geothermal
operators. Our premium services include contract drilling,
directional drilling, underbalanced and managed pressure drilling,
rental equipment, well servicing and production services. Please
visit our website at ensignenergy.com.
Ensign's Common Shares are publicly traded through the
facilities of the Toronto Stock Exchange under the trading symbol
ESI.
SOURCE Ensign Energy Services Inc.