Total Energy Services Inc. (“Total Energy” or the “Company”)
(TSX:TOT) announces its consolidated financial results for the
three and six months ended June 30, 2023.
Financial Highlights ($000’s
except per share data)
|
Three months endedJune 30 |
|
Six months endedJune 30 |
|
|
2023 |
|
2022 |
Change |
|
|
2023 |
|
2022 |
Change |
Revenue |
$ |
208,845 |
$ |
179,204 |
17 |
% |
|
$ |
446,622 |
$ |
340,656 |
31 |
% |
Operating income |
|
9,401 |
|
8,426 |
12 |
% |
|
|
37,421 |
|
12,116 |
209 |
% |
EBITDA (1) |
|
30,255 |
|
28,799 |
5 |
% |
|
|
78,730 |
|
53,113 |
48 |
% |
Cashflow |
|
29,408 |
|
28,576 |
3 |
% |
|
|
78,080 |
|
51,127 |
53 |
% |
Net income |
|
6,180 |
|
6,105 |
1 |
% |
|
|
30,218 |
|
8,572 |
253 |
% |
Attributable to shareholders |
|
6,201 |
|
6,113 |
1 |
% |
|
|
30,241 |
|
8,585 |
252 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data (Diluted) |
|
|
|
|
|
|
|
|
|
|
|
EBITDA (1) |
$ |
0.74 |
$ |
0.67 |
10 |
% |
|
$ |
1.89 |
$ |
1.23 |
54 |
% |
Cashflow |
$ |
0.72 |
$ |
0.66 |
9 |
% |
|
$ |
1.88 |
$ |
1.18 |
59 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to
shareholders: |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
0.15 |
$ |
0.14 |
7 |
% |
|
$ |
0.73 |
$ |
0.20 |
265 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
(000’s)(4) |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
40,325 |
|
42,307 |
(5 |
%) |
|
|
40,821 |
|
42,509 |
(4 |
%) |
Diluted |
|
41,048 |
|
43,203 |
(5 |
%) |
|
|
41,568 |
|
43,319 |
(4 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30 |
|
December 31 |
|
Financial Position at |
|
|
|
|
|
|
|
2023 |
|
2022 |
Change |
Total Assets |
|
|
|
|
|
|
$ |
888,117 |
$ |
878,615 |
1 |
% |
Long-Term Debt and Lease
Liabilities (excluding current portion) |
|
|
|
|
|
|
|
|
111,244 |
|
127,628 |
(13 |
%) |
Working Capital (2) |
|
|
|
|
|
|
|
108,577 |
|
112,154 |
(3 |
%) |
Net Debt (3) |
|
|
|
|
|
|
|
2,667 |
|
15,474 |
(83 |
%) |
Shareholders’ Equity |
|
|
|
|
|
|
|
529,954 |
|
522,023 |
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Notes 1 through 4 please refer to the Notes to
the Financial Highlights set forth at the end of this release.
Total Energy’s results for the second quarter
ended June 30, 2023 represent record second quarter financial
results that were underpinned by stable industry conditions and the
deployment of equipment upgraded pursuant to the Company’s 2022
capital expenditure program.
Contract Drilling Services
(“CDS”)
|
|
Three months endedJune 30 |
|
Six months endedJune 30 |
|
|
2023 |
|
|
2022 |
|
Change |
|
2023 |
|
|
2022 |
|
Change |
Revenue |
$ |
54,282 |
|
$ |
49,440 |
|
10 |
% |
$ |
136,818 |
|
$ |
109,502 |
|
25 |
% |
EBITDA (1) |
$ |
9,891 |
|
$ |
8,808 |
|
12 |
% |
$ |
30,160 |
|
$ |
20,249 |
|
49 |
% |
EBITDA (1) as a % of revenue |
|
18 |
% |
|
18 |
% |
- |
|
|
22 |
% |
|
18 |
% |
22 |
% |
Operating days(2) |
|
1,974 |
|
|
2,105 |
|
(6 |
%) |
|
4,843 |
|
|
4,788 |
|
1 |
% |
Canada |
|
1,094 |
|
|
1,009 |
|
8 |
% |
|
3,014 |
|
|
2,634 |
|
14 |
% |
United States |
|
571 |
|
|
696 |
|
(18 |
%) |
|
1,161 |
|
|
1,397 |
|
(17 |
%) |
Australia |
|
309 |
|
|
400 |
|
(23 |
%) |
|
668 |
|
|
757 |
|
(12 |
%) |
Revenue per operating day(2),
dollars |
$ |
27,498 |
|
$ |
23,487 |
|
17 |
% |
$ |
28,251 |
|
$ |
22,870 |
|
24 |
% |
Canada |
|
25,396 |
|
|
21,304 |
|
19 |
% |
|
26,431 |
|
|
20,711 |
|
28 |
% |
United States |
|
27,319 |
|
|
24,165 |
|
13 |
% |
|
28,227 |
|
|
22,998 |
|
23 |
% |
Australia |
|
35,275 |
|
|
27,813 |
|
27 |
% |
|
36,500 |
|
|
30,145 |
|
21 |
% |
Utilization |
|
23 |
% |
|
24 |
% |
(4 |
%) |
|
29 |
% |
|
28 |
% |
4 |
% |
Canada |
|
16 |
% |
|
14 |
% |
14 |
% |
|
22 |
% |
|
19 |
% |
16 |
% |
United States |
|
52 |
% |
|
59 |
% |
(12 |
%) |
|
51 |
% |
|
59 |
% |
(14 |
%) |
Australia |
|
68 |
% |
|
88 |
% |
(23 |
%) |
|
74 |
% |
|
84 |
% |
(12 |
%) |
Rigs, average for period |
|
94 |
|
|
95 |
|
(1 |
%) |
|
94 |
|
|
95 |
|
(1 |
%) |
Canada |
|
77 |
|
|
77 |
|
- |
|
|
76 |
|
|
77 |
|
(1 |
%) |
United States |
|
12 |
|
|
13 |
|
(8 |
%) |
|
13 |
|
|
13 |
|
- |
|
Australia |
|
5 |
|
|
5 |
|
- |
|
|
5 |
|
|
5 |
|
- |
|
(1) See Note 1 of the Notes to the
Financial Highlights set forth at the end of this
release.(2) Operating days includes drilling and paid stand-by
days.
CDS segment revenue during the second quarter of
2023 was higher compared with the previous year quarter as lower
consolidated operating days were more than offset by increased
pricing. The deployment of upgraded equipment in response to
improving customer demand contributed to increased year over year
second quarter revenue per operating day and utilization in Canada.
Negatively impacting utilization in the United States (the “United
States” or the “U.S.”) was the transfer of a drilling rig to Canada
during the second quarter of 2023 and a general slowdown in
industry activity, which was offset by higher pricing. The removal
of a drilling rig from service during the second quarter of 2023
for recertification and upgrades resulted in lower year over year
utilization in Australia. Lower Australian utilization was
partially offset by higher revenue per operating day as compared to
the second quarter of 2022 due to rate increases arising from
previous rig upgrades and fewer standby days due to wet weather in
2023 compared to 2022.
Rentals and Transportation Services
(“RTS”)
|
|
Three months endedJune 30 |
|
Six months endedJune 30 |
|
|
2023 |
|
|
2022 |
|
Change |
|
2023 |
|
|
2022 |
|
Change |
Revenue |
$ |
19,812 |
|
$ |
13,441 |
|
47 |
% |
$ |
44,225 |
|
$ |
28,841 |
|
53 |
% |
EBITDA (1) |
$ |
7,064 |
|
$ |
3,500 |
|
102 |
% |
$ |
16,714 |
|
$ |
9,093 |
|
84 |
% |
EBITDA (1) as a % of
revenue |
|
36 |
% |
|
26 |
% |
38 |
% |
|
38 |
% |
|
32 |
% |
19 |
% |
Revenue per utilized piece of
equipment, dollars |
$ |
15,105 |
|
$ |
10,219 |
|
48 |
% |
$ |
25,154 |
|
$ |
20,444 |
|
23 |
% |
Pieces of rental
equipment |
|
7,667 |
|
|
9,390 |
|
(18 |
%) |
|
7,667 |
|
|
9,390 |
|
(18 |
%) |
Canada |
|
6,779 |
|
|
8,510 |
|
(20 |
%) |
|
6,779 |
|
|
8,510 |
|
(20 |
%) |
United States |
|
888 |
|
|
880 |
|
1 |
% |
|
888 |
|
|
880 |
|
1 |
% |
Rental equipment
utilization |
|
15 |
% |
|
14 |
% |
7 |
% |
|
21 |
% |
|
15 |
% |
40 |
% |
Canada |
|
14 |
% |
|
13 |
% |
8 |
% |
|
18 |
% |
|
14 |
% |
29 |
% |
United States |
|
34 |
% |
|
25 |
% |
36 |
% |
|
40 |
% |
|
28 |
% |
43 |
% |
Heavy trucks |
|
69 |
|
|
71 |
|
(3 |
%) |
|
69 |
|
|
71 |
|
(3 |
%) |
Canada |
|
48 |
|
|
48 |
|
- |
|
|
48 |
|
|
48 |
|
- |
|
United States |
|
21 |
|
|
23 |
|
(9 |
%) |
|
21 |
|
|
23 |
|
(9 |
%) |
(1) See Note 1 of the Notes to the Financial
Highlights set forth at the end of this release.
Second quarter revenue in the RTS segment
increased as compared to the same period in 2022 due to higher
equipment utilization and improved pricing. Increased equipment
utilization, improved pricing and this segment’s significant
leverage to higher equipment utilization given its relatively high
fixed cost structure contributed to a year over year increase in
second quarter segment EBITDA and EBITDA margin. A significant
number of underutilized rental pieces were disposed of in Canada
during the second quarter of 2023.
Compression and Process Services
(“CPS”)
|
|
Three months endedJune 30 |
|
Six months endedJune 30 |
|
|
2023 |
|
|
2022 |
|
Change |
|
2023 |
|
|
2022 |
|
Change |
Revenue |
$ |
113,130 |
|
$ |
92,782 |
|
22 |
% |
$ |
211,248 |
|
$ |
151,347 |
|
40 |
% |
EBITDA (1) |
$ |
12,399 |
|
$ |
14,948 |
|
(17 |
%) |
$ |
24,998 |
|
$ |
18,206 |
|
37 |
% |
EBITDA (1) as a % of revenue |
|
11 |
% |
|
16 |
% |
(31 |
%) |
|
12 |
% |
|
12 |
% |
- |
|
Horsepower of equipment on rent at period end |
|
41,842 |
|
|
30,970 |
|
35 |
% |
|
41,842 |
|
|
30,970 |
|
35 |
% |
Canada |
|
19,202 |
|
|
13,975 |
|
37 |
% |
|
19,202 |
|
|
13,975 |
|
37 |
% |
United States |
|
22,640 |
|
|
16,995 |
|
33 |
% |
|
22,640 |
|
|
16,995 |
|
33 |
% |
Rental equipment utilization during the period (HP)(2) |
|
78 |
% |
|
54 |
% |
44 |
% |
|
78 |
% |
|
53 |
% |
47 |
% |
Canada |
|
84 |
% |
|
39 |
% |
115 |
% |
|
78 |
% |
|
38 |
% |
105 |
% |
United States |
|
73 |
% |
|
75 |
% |
(3 |
%) |
|
77 |
% |
|
74 |
% |
4 |
% |
Sales backlog at period end, $ million |
$ |
185.6 |
|
$ |
181.7 |
|
2 |
% |
$ |
185.6 |
|
$ |
181.7 |
|
2 |
% |
(1) See Note 1 of the Notes to the Financial
Highlights set forth at the end of this release.(2) Rental
equipment utilization is measured on a horsepower basis.
The year over year increase in the CPS segment’s
second quarter revenue was due primarily to higher U.S. fabrication
sales, increased equipment overhaul activity and increased
utilization of the compression rental fleet. Excluding $7.4 million
of contract cancellation revenue included in the second quarter of
2022, improved pricing on fabrication sales, increased overhead
absorption due to higher production levels and higher rental fleet
utilization all contributed to a year-over-year improvement in
second quarter segment adjusted EBITDA and EBITDA margin, with
second quarter adjusted EBITDA and EBITDA margin increasing 64% and
22%, respectively, for 2023 as compared to 2022. The
fabrication sales backlog increased to $185.6 million, compared to
the $181.7 million backlog at June 30, 2022.
Sequentially, the quarter end backlog decreased $41.8 million as
the conversion of quoting activity to sales moderated somewhat
during the second quarter with no corresponding decrease in
production activity.
Well Servicing (“WS”)
|
|
Three months endedJune 30 |
|
Six months endedJune 30 |
|
|
2023 |
|
|
2022 |
|
Change |
|
2023 |
|
|
2022 |
|
Change |
Revenue |
$ |
21,621 |
|
$ |
23,541 |
|
(8 |
%) |
$ |
54,331 |
|
$ |
50,966 |
|
7 |
% |
EBITDA (1) |
$ |
2,854 |
|
$ |
3,729 |
|
(23 |
%) |
$ |
11,133 |
|
$ |
10,277 |
|
8 |
% |
EBITDA (1) as a % of
revenue |
|
13 |
% |
|
16 |
% |
(19 |
%) |
|
20 |
% |
|
20 |
% |
- |
|
Service hours(2) |
|
22,630 |
|
|
26,007 |
|
(13 |
%) |
|
55,876 |
|
|
56,846 |
|
(2 |
%) |
Canada |
|
9,357 |
|
|
10,707 |
|
(13 |
%) |
|
26,848 |
|
|
27,157 |
|
(1 |
%) |
United States |
|
5,767 |
|
|
4,556 |
|
27 |
% |
|
12,411 |
|
|
8,710 |
|
42 |
% |
Australia |
|
7,506 |
|
|
10,744 |
|
(30 |
%) |
|
16,617 |
|
|
20,979 |
|
(21 |
%) |
Revenue per service hour(2),
dollars |
$ |
955 |
|
$ |
905 |
|
6 |
% |
$ |
972 |
|
$ |
897 |
|
8 |
% |
Canada |
|
941 |
|
|
925 |
|
2 |
% |
|
969 |
|
|
866 |
|
12 |
% |
United States |
|
993 |
|
|
892 |
|
11 |
% |
|
998 |
|
|
856 |
|
17 |
% |
Australia |
|
945 |
|
|
891 |
|
6 |
% |
|
959 |
|
|
953 |
|
1 |
% |
Utilization(3) |
|
25 |
% |
|
27 |
% |
(7 |
%) |
|
32 |
% |
|
31 |
% |
3 |
% |
Canada |
|
18 |
% |
|
21 |
% |
(14 |
%) |
|
26 |
% |
|
26 |
% |
- |
|
United States |
|
58 |
% |
|
46 |
% |
26 |
% |
|
62 |
% |
|
44 |
% |
41 |
% |
Australia |
|
29 |
% |
|
41 |
% |
(29 |
%) |
|
32 |
% |
|
40 |
% |
(20 |
%) |
Rigs, average for period |
|
79 |
|
|
80 |
|
(1 |
%) |
|
79 |
|
|
80 |
|
(1 |
%) |
Canada |
|
56 |
|
|
57 |
|
(2 |
%) |
|
56 |
|
|
57 |
|
(2 |
%) |
United States |
|
11 |
|
|
11 |
|
- |
|
|
11 |
|
|
11 |
|
- |
|
Australia |
|
12 |
|
|
12 |
|
- |
|
|
12 |
|
|
12 |
|
- |
|
(1) See Note 1 of the Notes to the Financial
Highlights set forth at the end of this release.(2) Service
hours is defined as well servicing hours of service provided to
customers and includes paid rig move and standby.(3) The Company
reports its service rig utilization for its operational service
rigs in North America based on service hours of 3,650 per rig per
year to reflect standard 10 hour operations per day. Utilization
for the Company’s service rigs in Australia is calculated based on
service hours of 8,760 per rig per year to reflect standard 24 hour
operations.
Second quarter activity in the Canadian WS
segment was negatively impacted by reduced well abandonment
activity following the conclusion of government incentive programs.
Negatively impacting second quarter activity in Australia was the
removal of a service rig from operation for recertification and
upgrades. Partially offsetting lower activity in Canada
and Australia was higher year over year activity in the U.S. Year
over year increases in second quarter revenue per service hour in
all jurisdictions also partially offset lower consolidated activity
levels.
Corporate
During the second quarter of 2023, Total Energy
remained focused on the safe and efficient operation of its
business and the execution of its 2023 capital expenditure program.
After funding working capital requirements, $12.7 million of
capital expenditures and $3.6 million of required debt, lease and
interest payments, Total Energy generated $18.1 million of free
cash flow during the quarter that was directed towards $10.0
million of additional debt reduction, $3.3 million of share
repurchases and $3.2 million of dividends.
Total Energy exited the second quarter of 2023
with $108.6 million of positive working capital, including $29.9
million of cash, and $115 million of available credit under its
$175 million of revolving bank credit facilities. The
weighted average interest rate on the Company’s outstanding debt at
June 30, 2023 was 5.09%.
Outlook
Despite a decline in commodity prices during the
second quarter of 2023, industry conditions remained relatively
stable. While oil prices have increased thus far during the third
quarter of 2023, producers continue to be disciplined in their
capital investment programs. In this environment, Total
Energy remains focused on the safe and efficient operation of its
business, the disciplined deployment of capital and opportunities
to enhance shareholder value.
In Australia, the drilling rig removed from
service during the second quarter of 2023 for recertification and
upgrades returned to service in July 2023. The Australian service
rig removed from service in the second quarter is currently
undergoing recertification and upgrades and is expected to return
to service later this year. In Canada, the triple drilling rig
moved from the United States to Canada during the second quarter
commenced drilling in early July following recertification and
retrofitting.
Total Energy’s Board of Directors has approved a
$6.0 million increase to the Company’s 2023 capital expenditure
budget to $72.1 million, of which $42.5 million has been expended
to June 30, 2023. This increase is directed towards continued
equipment upgrades and recertifications in the CDS, RTS and WS
segments in direct response to customer demand. Total Energy
intends to fund the remaining $29.6 million of its remaining 2023
capital expenditure program with cash on hand, cash flow and
proceeds from the disposition of underutilized equipment.
Conference Call
At 9:00 a.m. (Mountain Time) on August 11, 2023
Total Energy will conduct a conference call and webcast to discuss
its second 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 September 11, 2023 by dialing (855) 669-9658 (passcode
0318).
Selected Financial
Information
Selected financial information relating to the
three and six months ended June 30, 2023 and 2022 is included in
this news release. This information should be read in conjunction
with the condensed interim 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 in the
Company’s 2022 Annual report.
Consolidated Statements of Financial
Position(in thousands of Canadian dollars)
|
|
|
June 30 |
|
December 31 |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
(unaudited) |
|
(audited) |
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
|
|
$ |
29,866 |
|
|
$ |
34,061 |
|
Accounts receivable |
|
|
|
149,396 |
|
|
|
154,581 |
|
Inventory |
|
|
|
111,658 |
|
|
|
91,614 |
|
Prepaid expenses and deposits |
|
|
|
18,701 |
|
|
|
18,847 |
|
Income taxes receivable |
|
|
|
169 |
|
|
|
496 |
|
Current portion of lease asset |
|
|
|
220 |
|
|
|
378 |
|
|
|
|
|
310,010 |
|
|
|
299,977 |
|
|
|
|
|
|
|
Property, plant and
equipment |
|
|
|
566,984 |
|
|
|
567,515 |
|
Income taxes receivable |
|
|
|
7,070 |
|
|
|
7,070 |
|
Goodwill |
|
|
|
4,053 |
|
|
|
4,053 |
|
|
|
|
$ |
888,117 |
|
|
$ |
878,615 |
|
|
|
|
|
|
|
Liabilities &
Shareholders' Equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
$ |
135,355 |
|
|
$ |
114,274 |
|
Deferred revenue |
|
|
|
55,690 |
|
|
|
63,895 |
|
Dividends payable |
|
|
|
3,212 |
|
|
|
2,490 |
|
Current portion of lease liabilities |
|
|
|
5,157 |
|
|
|
5,173 |
|
Current portion of long-term debt |
|
|
|
2,019 |
|
|
|
1,991 |
|
|
|
|
|
201,433 |
|
|
|
187,823 |
|
|
|
|
|
|
|
Long-term debt |
|
|
|
101,976 |
|
|
|
117,997 |
|
|
|
|
|
|
|
Lease liabilities |
|
|
|
9,268 |
|
|
|
9,631 |
|
|
|
|
|
|
|
Deferred income tax
liability |
|
|
|
45,486 |
|
|
|
41,141 |
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
Share capital |
|
|
|
252,611 |
|
|
|
261,109 |
|
Contributed surplus |
|
|
|
3,492 |
|
|
|
3,590 |
|
Accumulated other comprehensive loss |
|
|
|
(22,332 |
) |
|
|
(17,032 |
) |
Non-controlling interest |
|
|
|
529 |
|
|
|
552 |
|
Retained earnings |
|
|
|
295,654 |
|
|
|
273,804 |
|
|
|
|
|
529,954 |
|
|
|
522,023 |
|
|
|
|
|
|
|
|
|
|
$ |
888,117 |
|
|
$ |
878,615 |
|
Consolidated Statements of Comprehensive
Income(in thousands of Canadian dollars except per share
amounts)(unaudited)
|
|
Three months endedJune 30 |
Six months endedJune 30 |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
Revenue |
|
$ |
208,845 |
|
$ |
179,204 |
|
$ |
446,622 |
|
$ |
340,656 |
|
|
|
|
|
|
|
Cost of services |
|
|
169,049 |
|
|
140,917 |
|
|
347,035 |
|
|
270,715 |
|
Selling, general and
administration |
|
|
10,126 |
|
|
10,108 |
|
|
21,559 |
|
|
18,894 |
|
Other income |
|
|
(440 |
) |
|
(485 |
) |
|
(446 |
) |
|
(675 |
) |
Share-based compensation |
|
|
367 |
|
|
259 |
|
|
756 |
|
|
479 |
|
Depreciation |
|
|
20,342 |
|
|
19,979 |
|
|
40,297 |
|
|
39,127 |
|
Operating income |
|
|
9,401 |
|
|
8,426 |
|
|
37,421 |
|
|
12,116 |
|
|
|
|
|
|
|
Gain on sale of property,
plant and equipment |
|
|
512 |
|
|
394 |
|
|
1,012 |
|
|
1,870 |
|
Finance
costs, net |
|
|
(1,796 |
) |
|
(1,563 |
) |
|
(3,499 |
) |
|
(3,369 |
) |
Net income before income
taxes |
|
|
8,117 |
|
|
7,257 |
|
|
34,934 |
|
|
10,617 |
|
|
|
|
|
|
|
Current income tax expense
(recovery) |
|
|
47 |
|
|
21 |
|
|
371 |
|
|
(442 |
) |
Deferred income tax expense |
|
|
1,890 |
|
|
1,131 |
|
|
4,345 |
|
|
2,487 |
|
Total income tax expense |
|
|
1,937 |
|
|
1,152 |
|
|
4,716 |
|
|
2,045 |
|
|
|
|
|
|
|
Net income |
|
$ |
6,180 |
|
$ |
6,105 |
|
$ |
30,218 |
|
$ |
8,572 |
|
|
|
|
|
|
|
Net income (loss)
attributable to: |
|
|
|
|
|
Shareholders of the Company |
|
$ |
6,201 |
|
$ |
6,113 |
|
$ |
30,241 |
|
$ |
8,585 |
|
Non-controlling interest |
|
|
(21 |
) |
|
(8 |
) |
|
(23 |
) |
|
(13 |
) |
|
|
|
|
|
|
Income per
share |
|
|
|
|
|
Basic |
|
$ |
0.15 |
|
$ |
0.14 |
|
$ |
0.74 |
|
$ |
0.20 |
|
Diluted |
|
$ |
0.15 |
|
$ |
0.14 |
|
$ |
0.73 |
|
$ |
0.20 |
|
|
|
|
|
|
|
Condensed Interim Consolidated Statements of
Comprehensive Income
|
|
Three months endedJune 30 |
Six months endedJune 30 |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
Net
income |
|
$ |
6,180 |
|
$ |
6,105 |
|
$ |
30,218 |
|
$ |
8,572 |
|
Unrealized foreign currency
translation |
|
|
(4,682 |
) |
|
114 |
|
|
(5,300 |
) |
|
211 |
|
Total other comprehensive income (loss) for the period |
|
|
(4,682 |
) |
|
114 |
|
|
(5,300 |
) |
|
211 |
|
Total comprehensive income |
|
$ |
1,498 |
|
$ |
6,219 |
|
$ |
24,918 |
|
$ |
8,783 |
|
Total comprehensive
income (loss) attributable to: |
|
|
|
|
|
Shareholders of the Company |
|
$ |
1,519 |
|
$ |
6,227 |
|
$ |
24,941 |
|
$ |
8,796 |
|
Non-controlling interest |
|
|
(21 |
) |
|
(8 |
) |
|
(23 |
) |
|
(13 |
) |
Consolidated Statements of Cash
Flows(in thousands of Canadian dollars)(unaudited)
|
|
Three months endedJune 30 |
Six months endedJune 30 |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
Cash provided by (used
in): |
|
|
|
|
|
Operations: |
|
|
|
|
|
|
|
|
|
|
|
Net income for the period |
|
$ |
6,180 |
|
$ |
6,105 |
|
$ |
30,218 |
|
$ |
8,572 |
|
Add (deduct) items not affecting cash: |
|
|
|
|
|
Depreciation |
|
|
20,342 |
|
|
19,979 |
|
|
40,297 |
|
|
39,127 |
|
Share-based compensation |
|
|
367 |
|
|
259 |
|
|
756 |
|
|
479 |
|
Gain on sale of property, plant and equipment |
|
|
(512 |
) |
|
(394 |
) |
|
(1,012 |
) |
|
(1,870 |
) |
Finance costs, net |
|
|
1,796 |
|
|
1,563 |
|
|
3,499 |
|
|
3,369 |
|
Unrealized gain on foreign currencies translation |
|
|
(702 |
) |
|
(485 |
) |
|
(350 |
) |
|
(675 |
) |
Current income tax expense (recovery) |
|
|
47 |
|
|
21 |
|
|
371 |
|
|
(442 |
) |
Deferred income tax expense |
|
|
1,890 |
|
|
1,131 |
|
|
4,345 |
|
|
2,487 |
|
Income taxes paid (recovered) |
|
|
- |
|
|
397 |
|
|
(44 |
) |
|
80 |
|
Cashflow |
|
|
29,408 |
|
|
28,576 |
|
|
78,080 |
|
|
51,127 |
|
|
|
|
|
|
|
Changes in non-cash working capital items: |
|
|
|
|
|
Accounts receivable |
|
|
22,124 |
|
|
(15,130 |
) |
|
5,120 |
|
|
(39,978 |
) |
Inventory |
|
|
(9,241 |
) |
|
2,937 |
|
|
(20,044 |
) |
|
(3,590 |
) |
Prepaid expenses and deposits |
|
|
(491 |
) |
|
(6,307 |
) |
|
146 |
|
|
(6,249 |
) |
Accounts payable and accrued liabilities |
|
|
14,534 |
|
|
12,170 |
|
|
18,546 |
|
|
28,839 |
|
Deferred revenue |
|
|
(12,432 |
) |
|
2,747 |
|
|
(8,205 |
) |
|
39,799 |
|
Cash provided by operating activities |
|
|
43,902 |
|
|
24,993 |
|
|
73,643 |
|
|
69,948 |
|
Investing: |
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(12,665 |
) |
|
(13,406 |
) |
|
(42,454 |
) |
|
(24,959 |
) |
Proceeds on disposal of property, plant and equipment |
|
|
741 |
|
|
838 |
|
|
1,504 |
|
|
3,877 |
|
Changes in non-cash working capital items |
|
|
(10,229 |
) |
|
1,608 |
|
|
2,504 |
|
|
2,951 |
|
Cash used in investing activities |
|
|
(22,153 |
) |
|
(10,960 |
) |
|
(38,446 |
) |
|
(18,131 |
) |
|
|
|
|
|
|
Financing: |
|
|
|
|
|
Repayment of long-term debt |
|
|
(10,496 |
) |
|
(10,651 |
) |
|
(15,993 |
) |
|
(31,304 |
) |
Repayment of lease liabilities |
|
|
(1,539 |
) |
|
(1,219 |
) |
|
(3,156 |
) |
|
(2,281 |
) |
Dividends to shareholders |
|
|
(3,242 |
) |
|
- |
|
|
(5,732 |
) |
|
- |
|
Repurchase of common shares |
|
|
(3,275 |
) |
|
(2,371 |
) |
|
(11,289 |
) |
|
(5,899 |
) |
Shares issued on exercise of share options |
|
|
- |
|
|
31 |
|
|
- |
|
|
31 |
|
Interest paid |
|
|
(1,559 |
) |
|
(1,639 |
) |
|
(3,222 |
) |
|
(3,384 |
) |
Cash used in financing activities |
|
|
(20,111 |
) |
|
(15,849 |
) |
|
(39,392 |
) |
|
(42,837 |
) |
Change in cash and cash equivalents |
|
|
1,638 |
|
|
(1,816 |
) |
|
(4,195 |
) |
|
8,980 |
|
Cash
and cash equivalents, beginning of period |
|
|
28,228 |
|
|
44,161 |
|
|
34,061 |
|
|
33,365 |
|
Cash
and cash equivalents, end of period |
|
$ |
29,866 |
|
$ |
42,345 |
|
$ |
29,866 |
|
$ |
42,345 |
|
|
|
|
|
|
|
Segmented Information
The Company provides a variety of products and
services to the energy and other resource industries through five
reporting segments, which operate substantially in three geographic
regions. 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 energy and other industrial
operations, Compression and Process Services, which includes the
fabrication, sale, rental and servicing of gas compression and
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 June 30,
2023 (unaudited, in thousands of Canadian dollars)
|
Contract |
Rentals and |
Compression |
Well |
Corporate(1) |
Total |
|
Drilling |
Transportation |
and Process |
Servicing |
|
|
|
Services |
Services |
Services |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
54,282 |
|
$ |
19,812 |
|
$ |
113,130 |
|
$ |
21,621 |
|
$ |
- |
|
$ |
208,845 |
|
|
|
|
|
|
|
|
Cost of
services |
|
42,783 |
|
|
10,994 |
|
|
97,513 |
|
|
17,759 |
|
|
- |
|
|
169,049 |
|
Selling, general and
administration |
|
1,986 |
|
|
2,076 |
|
|
3,218 |
|
|
1,072 |
|
|
1,774 |
|
|
10,126 |
|
Other income
(loss) |
|
(288 |
) |
|
(7 |
) |
|
43 |
|
|
- |
|
|
(188 |
) |
|
(440 |
) |
Share-based
compensation |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
367 |
|
|
367 |
|
Depreciation |
|
9,479 |
|
|
4,845 |
|
|
2,614 |
|
|
3,142 |
|
|
262 |
|
|
20,342 |
|
Operating income (loss) |
|
322 |
|
|
1,904 |
|
|
9,742 |
|
|
(352 |
) |
|
(2,215 |
) |
|
9,401 |
|
|
|
|
|
|
|
|
Gain on sale of
property, plant and equipment |
|
90 |
|
|
315 |
|
|
43 |
|
|
64 |
|
|
- |
|
|
512 |
|
Finance costs, net |
|
(15 |
) |
|
(17 |
) |
|
(111 |
) |
|
(17 |
) |
|
(1,636 |
) |
|
(1,796 |
) |
|
|
|
|
|
|
|
Net income (loss) before income taxes |
|
397 |
|
|
2,202 |
|
|
9,674 |
|
|
(305 |
) |
|
(3,851 |
) |
|
8,117 |
|
|
|
|
|
|
|
|
Goodwill |
|
- |
|
|
2,514 |
|
|
1,539 |
|
|
- |
|
|
- |
|
|
4,053 |
|
Total
assets |
|
354,433 |
|
|
177,972 |
|
|
278,289 |
|
|
75,584 |
|
|
1,839 |
|
|
888,117 |
|
Total
liabilities |
|
65,250 |
|
|
27,464 |
|
|
132,616 |
|
|
6,196 |
|
|
126,637 |
|
|
358,163 |
|
Capital expenditures |
|
7,614 |
|
|
2,596 |
|
|
542 |
|
|
1,913 |
|
|
- |
|
|
12,665 |
|
|
Canada |
United States |
Australia |
Total |
|
|
|
|
|
Revenue |
$ |
83,257 |
$ |
98,820 |
$ |
26,768 |
$ |
208,845 |
Non-current assets (2) |
|
395,421 |
|
128,222 |
|
47,394 |
|
571,037 |
As at and for the three months ended June 30, 2022 (unaudited,
in thousands of Canadian dollars)
|
Contract |
Rentals and |
Compression |
Well |
Corporate(1) |
Total |
|
Drilling |
Transportation |
and Process |
Servicing |
|
|
|
Services |
Services |
Services |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
49,440 |
|
$ |
13,441 |
|
$ |
92,782 |
|
$ |
23,541 |
|
$ |
- |
|
$ |
179,204 |
|
|
|
|
|
|
|
|
Cost of services |
|
39,171 |
|
|
8,213 |
|
|
74,989 |
|
|
18,544 |
|
|
- |
|
|
140,917 |
|
Selling, general and
administration |
|
1,754 |
|
|
1,702 |
|
|
2,930 |
|
|
1,310 |
|
|
2,412 |
|
|
10,108 |
|
Other income |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(485 |
) |
|
(485 |
) |
Share-based compensation |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
259 |
|
|
259 |
|
Depreciation |
|
8,882 |
|
|
4,886 |
|
|
2,779 |
|
|
3,218 |
|
|
214 |
|
|
19,979 |
|
Operating income (loss) |
|
(367 |
) |
|
(1,360 |
) |
|
12,084 |
|
|
469 |
|
|
(2,400 |
) |
|
8,426 |
|
|
|
|
|
|
|
|
Gain on sale of property,
plant and equipment |
|
293 |
|
|
(26 |
) |
|
85 |
|
|
42 |
|
|
- |
|
|
394 |
|
Finance
costs, net |
|
(4 |
) |
|
(23 |
) |
|
(102 |
) |
|
(4 |
) |
|
(1,430 |
) |
|
(1,563 |
) |
|
|
|
|
|
|
|
Net
income (loss) before income taxes |
|
(78 |
) |
|
(1,409 |
) |
|
12,067 |
|
|
507 |
|
|
(3,830 |
) |
|
7,257 |
|
|
|
|
|
|
|
|
Goodwill |
|
- |
|
|
2,514 |
|
|
1,539 |
|
|
- |
|
|
- |
|
|
4,053 |
|
Total assets |
|
339,585 |
|
|
181,049 |
|
|
247,172 |
|
|
87,703 |
|
|
5,474 |
|
|
860,983 |
|
Total liabilities |
|
71,626 |
|
|
13,936 |
|
|
103,052 |
|
|
6,756 |
|
|
171,314 |
|
|
366,684 |
|
Capital
expenditures |
|
7,282 |
|
|
2,524 |
|
|
1,691 |
|
|
1,909 |
|
|
- |
|
|
13,406 |
|
|
Canada |
United States |
Australia |
Total |
|
|
|
|
|
Revenue |
$ |
96,074 |
$ |
45,714 |
$ |
37,416 |
$ |
179,204 |
Non-current assets (2) |
|
374,963 |
|
140,254 |
|
53,480 |
|
568,697 |
(1) Corporate includes the Company’s corporate activities
and obligations pursuant to long-term credit
facilities.(2) Includes property, plant and equipment, lease
asset (excluding current portion) and goodwill.
As at and for the six months ended June 30,
2023 (unaudited, in thousands of Canadian dollars)
|
Contract |
Rentals and |
Compression |
Well |
Corporate(1) |
Total |
|
Drilling |
Transportation |
and Process |
Servicing |
|
|
|
Services |
Services |
Services |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
136,818 |
|
$ |
44,225 |
|
$ |
211,248 |
|
$ |
54,331 |
|
$ |
- |
|
$ |
446,622 |
|
|
|
|
|
|
|
|
Cost of
services |
|
102,201 |
|
|
23,897 |
|
|
179,485 |
|
|
41,452 |
|
|
- |
|
|
347,035 |
|
Selling, general and
administration |
|
4,971 |
|
|
4,134 |
|
|
6,795 |
|
|
1,916 |
|
|
3,743 |
|
|
21,559 |
|
Other
income |
|
(288 |
) |
|
(7 |
) |
|
43 |
|
|
- |
|
|
(194 |
) |
|
(446 |
) |
Share-based
compensation |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
756 |
|
|
756 |
|
Depreciation |
|
18,527 |
|
|
9,717 |
|
|
5,237 |
|
|
6,289 |
|
|
527 |
|
|
40,297 |
|
Operating income (loss) |
|
11,407 |
|
|
6,484 |
|
|
19,688 |
|
|
4,674 |
|
|
(4,832 |
) |
|
37,421 |
|
|
|
|
|
|
|
|
Gain on sale of
property, plant and equipment |
|
226 |
|
|
513 |
|
|
73 |
|
|
170 |
|
|
30 |
|
|
1,012 |
|
Finance costs, net |
|
(30 |
) |
|
(35 |
) |
|
(232 |
) |
|
(33 |
) |
|
(3,169 |
) |
|
(3,499 |
) |
|
|
|
|
|
|
|
Net income (loss) before income taxes |
|
11,603 |
|
|
6,962 |
|
|
19,529 |
|
|
4,811 |
|
|
(7,971 |
) |
|
34,934 |
|
|
|
|
|
|
|
|
Goodwill |
|
- |
|
|
2,514 |
|
|
1,539 |
|
|
- |
|
|
- |
|
|
4,053 |
|
Total
assets |
|
354,433 |
|
|
177,972 |
|
|
278,289 |
|
|
75,584 |
|
|
1,839 |
|
|
888,117 |
|
Total
liabilities |
|
65,250 |
|
|
27,464 |
|
|
132,616 |
|
|
6,196 |
|
|
126,637 |
|
|
358,163 |
|
Capital expenditures |
|
31,434 |
|
|
4,134 |
|
|
2,515 |
|
|
4,371 |
|
|
- |
|
|
42,454 |
|
|
Canada |
United States |
Australia |
Total |
|
|
|
|
|
Revenue |
$ |
191,384 |
$ |
203,827 |
$ |
51,411 |
$ |
446,622 |
Non-current assets (2) |
|
395,421 |
|
128,222 |
|
47,394 |
|
571,037 |
As at and for the six months ended June 30, 2022 (unaudited, in
thousands of Canadian dollars)
|
Contract |
Rentals and |
Compression |
Well |
Corporate(1) |
Total |
|
Drilling |
Transportation |
and Process |
Servicing |
|
|
|
Services |
Services |
Services |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
109,502 |
|
$ |
28,841 |
|
$ |
151,347 |
|
$ |
50,966 |
|
$ |
- |
|
$ |
340,656 |
|
|
|
|
|
|
|
|
Cost of services |
|
86,165 |
|
|
17,060 |
|
|
129,322 |
|
|
38,168 |
|
|
- |
|
|
270,715 |
|
Selling, general and
administration |
|
3,356 |
|
|
3,328 |
|
|
4,724 |
|
|
2,578 |
|
|
4,908 |
|
|
18,894 |
|
Other income |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(675 |
) |
|
(675 |
) |
Share-based compensation |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
479 |
|
|
479 |
|
Depreciation |
|
17,759 |
|
|
9,795 |
|
|
4,692 |
|
|
6,420 |
|
|
461 |
|
|
39,127 |
|
Operating income (loss) |
|
2,222 |
|
|
(1,342 |
) |
|
12,609 |
|
|
3,800 |
|
|
(5,173 |
) |
|
12,116 |
|
Gain (loss) on sale of
property, plant and equipment |
|
268 |
|
|
640 |
|
|
905 |
|
|
57 |
|
|
- |
|
|
1,870 |
|
Finance
costs, net |
|
(6 |
) |
|
(39 |
) |
|
(174 |
) |
|
(9 |
) |
|
(3,141 |
) |
|
(3,369 |
) |
Net
income (loss) before income taxes |
|
2,484 |
|
|
(741 |
) |
|
13,340 |
|
|
3,848 |
|
|
(8,314 |
) |
|
10,617 |
|
|
|
|
|
|
|
|
Goodwill |
|
- |
|
|
2,514 |
|
|
1,539 |
|
|
- |
|
|
- |
|
|
4,053 |
|
Total assets |
|
339,585 |
|
|
181,049 |
|
|
247,172 |
|
|
87,703 |
|
|
5,474 |
|
|
860,983 |
|
Total liabilities |
|
71,626 |
|
|
13,936 |
|
|
103,052 |
|
|
6,756 |
|
|
171,314 |
|
|
366,684 |
|
Capital
expenditures |
|
17,464 |
|
|
2,758 |
|
|
2,761 |
|
|
1,965 |
|
|
11 |
|
|
24,959 |
|
|
Canada |
United States |
Australia |
Total |
|
|
|
|
|
Revenue |
$ |
184,267 |
$ |
89,358 |
$ |
67,031 |
$ |
340,656 |
Non-current assets (2) |
|
374,963 |
|
140,254 |
|
53,480 |
|
568,697 |
(1) Corporate includes the Company’s corporate activities
and obligations pursuant to long-term credit
facilities.(2) Includes property, plant and equipment, lease
asset (excluding current portion) and goodwill.
Total Energy provides contract drilling
services, equipment rentals and transportation services, well
servicing and compression and process equipment and service to the
energy and other resource industries from operation centers in
North America and Australia. 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: investorrelations@totalenergy.ca
or visit our website at www.totalenergy.ca
Notes to the Financial
Highlights
(1) EBITDA means earnings before interest,
taxes, depreciation and amortization and is equal to net income
(loss) before income taxes plus finance costs plus depreciation.
EBITDA is not a recognized measure under IFRS. Management believes
that in addition to net income (loss), EBITDA is a useful
supplemental measure as it provides an indication of the results
generated by the Company’s primary business activities prior to
consideration of how those activities are financed, amortized or
how the results are taxed in various jurisdictions as well as the
cash generated by the Company’s primary business activities without
consideration of the timing of the monetization of non-cash working
capital items. Readers should be cautioned, however, that EBITDA
should not be construed as an alternative to net income determined
in accordance with IFRS as an indicator of Total Energy’s
performance. Total Energy’s method of calculating EBITDA may differ
from other organizations and, accordingly, EBITDA may not be
comparable to measures used by other organizations.
(2) Working capital equals current assets minus
current liabilities.
(3) Net Debt equals long-term debt plus lease
liabilities plus current liabilities minus current assets.
Management believes this measure provides a useful indication of
the Company’s liquidity.
(4) Basic and diluted shares outstanding reflect
the weighted average number of common shares outstanding for the
periods. See note 5 to the Company’s Condensed Interim Consolidated
Financial Statements.Certain 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,
performance 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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