CALGARY, AB, July 26, 2021 /CNW/ - Western Energy Services
Corp. ("Western" or the "Company") (TSX: WRG) announces the release
of its second quarter 2021 financial and operating results.
Additional information relating to the Company, including the
Company's financial statements and management's discussion and
analysis ("MD&A") as at and for the three and six months ended
June 30, 2021 and 2020 will be
available on SEDAR at www.sedar.com. Non-International Financial
Reporting Standards ("Non-IFRS") measures, such as Adjusted EBITDA,
and abbreviations and definitions for standard industry terms are
defined later in this press release. All amounts are denominated in
Canadian dollars (CDN$) unless otherwise identified.
Second Quarter 2021 Operating Results:
- Second quarter revenue increased by $9.6
million (or 87%) to $20.4
million in 2021 as compared to $10.8
million in the second quarter of 2020. In the contract
drilling segment, revenue totalled $11.9
million in the second quarter of 2021, an increase of
$4.8 million (or 68%) compared to
$7.1 million in the second quarter of
2020, which included US$4.5 million
of shortfall commitment revenue. In the production services
segment, revenue totalled $8.6
million for the three months ended June 30, 2021, as compared to $3.8 million in the same period of the prior
year, an increase of $4.8 million (or
128%). While the ongoing COVID-19 pandemic continues to impact
revenue in the contract drilling and production services segments
in the second quarter of 2021, demand improved compared to 2020 as
described below:
-
- Drilling rig utilization in Canada averaged 9% in the second quarter of
2021, compared to no rigs working in the second quarter of 2020 due
to the COVID-19 pandemic. The increase in activity in the second
quarter of 2021 was mainly attributable to the improved demand,
compared to the second quarter of 2020 when the COVID-19 pandemic
caused demand destruction across the industry. The Canadian
Association of Energy Contractors ("CAOEC") industry average
utilization of 15%1 for the second quarter of 2021
represented an increase of 1,100 basis points ("bps") compared to
the CAOEC industry average of 4% in the second quarter of 2020,
mainly due to higher demand resulting from the ongoing COVID-19
vaccination rollouts and the lifting of government restrictions.
Western's market share, represented by the Company's Operating Days
as a percentage of the CAOEC's total Operating Days in the Western
Canadian Sedimentary Basin ("WCSB"), improved to 6.2% for the
second quarter of 2021, as compared to limited activity in the same
period of 2020. Revenue per Operating Day averaged $22,218 in the second quarter of 2021, reflecting
current market rates;
- In the United States ("US"),
drilling rig utilization averaged 21%, as two rigs worked in the
second quarter of 2021, compared to 1% Drilling Rig Utilization in
the second quarter of 2020, with Operating Days improving from 7
days in 2020 to 151 days in 2021. Revenue per Operating Day for the
second quarter of 2021 was US$14,312
reflecting current spot market rates; and
- In Canada, service rig
utilization of 19% in the second quarter of 2021 was higher than 9%
in the same period of the prior year, as 2020 demand was impacted
significantly by the COVID-19 pandemic. Revenue per Service Hour of
$683 in the second quarter of 2021
was 4% higher than the second quarter of 2020. Higher utilization
led to production services revenue totalling $8.6 million in the second quarter of 2021, an
increase of $4.8 million (or 128%),
as compared to the same period in the prior year.
- Administrative expenses increased by $0.1 million (or 6%) to $2.3 million in the second quarter of 2021, as
compared to $2.2 million in the
second quarter of 2020, mainly due to lower amounts received
related to the Canada Emergency
Wage Subsidy ("CEWS") from the Government of Canada and higher employee related costs.
- The Company incurred a net loss of $12.9
million in the second quarter of 2021 ($0.14 per basic common share) as compared to a
net loss of $8.0 million in the same
period in 2020 ($0.09 per basic
common share). The change can mainly be attributed to a
$3.1 million decrease in income tax
recovery, a $1.8 million decrease in
Adjusted EBITDA and a $1.7 million
decrease in other items which mainly consisted of foreign exchange
gains in the second quarter of 2020, offset partially by a
$1.8 million decrease in depreciation
expense due to certain assets being fully depreciated in the
period, as well as the impact to depreciation of asset impairments
in previous quarters.
- Second quarter Adjusted EBITDA in 2021 was lower than the same
period of the prior year and totalled $2.2
million, compared to $4.0
million in the second quarter of 2020. Adjusted EBITDA was
lower due to a shortfall commitment received in the United States of US$4.5 million in 2020, which was offset
partially by improved activity in Canada, an increase of $1.6 million in CEWS received and headcount
reductions in 2020.
- Second quarter 2021 additions to property and equipment of
$2.6 million compared to $0.3 million incurred in the second quarter of
2020 and consist of $0.6 million of
expansion capital and $2.0 million of
maintenance capital.
1 Source:
CAOEC, monthly Contractor Summary.
|
Year to Date 2021 Operating Results:
- Revenue for the six months ended June
30, 2021, decreased by $5.3
million (or 8%) to $57.4
million as compared to $62.7
million for the six months ended June
30, 2020. Contract drilling revenue totalled $32.2 million in 2021, a decrease of $9.1 million (or 22%) as compared to $41.3 million in 2020. Production services
revenue totalled $25.4 million for
the six months ended June 30, 2021,
as compared to $21.4 million in the
same period of the prior year, an increase of $4.0 million (or 19%). The ongoing COVID-19
pandemic continues to impact revenue in the contract drilling and
production services segments as described below:
-
- Drilling rig utilization in Canada averaged 15% for the six months ended
June 30, 2021, compared to 13% for
the six months ended June 30, 2020, a
200 bps increase. The increase in activity in 2021 was mainly
attributable to the improved demand, compared to the first half of
2020 when the COVID-19 pandemic caused demand destruction across
the industry. The CAOEC industry average of 21%2 for six
months ended June 30, 2021,
represented an increase of 100 bps compared to the CAOEC industry
average of 20% for the six months ended June
30, 2020, mainly due to higher demand as a result of the
success of the COVID-19 vaccine rollout and the lifting of
government restrictions. Western's market share, represented by the
Company's Operating Days as a percentage of the CAOEC's total
Operating Days in the WCSB, improved to 7.5% for the first half of
2021, as compared to 6.5% in the first half of 2020. Revenue per
Operating Day decreased by 16% for the six months ended
June 30, 2021, as compared to the
same period of the prior year, as current market rates weakened in
the period;
- In the United States, drilling
rig utilization averaged 13%, as two rigs worked in 2021, compared
to 10% in the same period of 2020, reflecting a 27% increase in
Operating Days. Revenue per Operating Day for the six months ended
June 30, 2021, decreased by 41% to
US$14,366, as compared to the same
period of the prior year, as current spot market rates weakened in
the period; and
- In Canada, service rig
utilization of 28% for the six months ended June 30, 2021 was higher than the same period of
the prior year due to improved industry demand. Lower production
and completion activity was offset by increased abandonment work as
a result of government incentives. Revenue per Service Hour of
$712 for the six months ended
June 30, 2021 was consistent with the
same period of 2020. Improved utilization led to production
services revenue totalling $25.4
million for the six months ended June
30, 2021, an increase of $4.0
million (or 19%), as compared to the same period in the
prior year.
- Administrative expenses decreased by $0.5 million (or 9%) to $5.4 million for the six months ended
June 30, 2021, as compared to
$6.0 million in the same period of
the prior year, mainly due to lower employee related costs as a
result of headcount reductions and a focus on cost management.
- The Company incurred a net loss of $19.4
million for the six months ended June
30, 2021 ($0.21 per basic
common share) as compared to a net loss of $23.4 million in the same period in 2020
($0.26 per basic common share). The
change can mainly be attributed to the 2020 impairment of
$11.5 million and a $3.9 million decrease in depreciation expense due
to certain assets being fully depreciated in the period, as well as
the impact to depreciation of asset impairments in previous
quarters, which were offset partially by a $6.2 million decrease in income tax recovery, a
$3.3 million decrease in Adjusted
EBITDA, and a $2.0 million decrease
in other items.
- Adjusted EBITDA for the six months ended June 30, 2021 was lower than the same period of
the prior year and totalled $9.1
million, compared to $12.4
million in the same period of 2020. Adjusted EBITDA in 2021
was lower due to US$4.5 million of
shortfall commitment revenue received in 2020 with none in 2021,
which was partially offset by improved activity in Canada and the US, and an increase in the CEWS
of $5.0 million along with headcount
reductions in 2020.
- Year to date 2021 additions to property and equipment of
$3.4 million compared to $0.8 million incurred in the same period of 2020
and consist of $0.6 million of
expansion capital and $2.8 million of
maintenance capital.
2 Source:
CAOEC, monthly Contractor Summary.
|
Selected Financial
Information
|
(stated in
thousands, except share and per share amounts)
|
|
Three
months ended June 30
|
Six months ended
June 30
|
Financial
Highlights
|
2021
|
2020
|
Change
|
2021
|
2020
|
Change
|
Revenue
|
20,386
|
10,802
|
89%
|
57,355
|
62,567
|
(8%)
|
Adjusted
EBITDA(1)
|
2,197
|
4,036
|
(46%)
|
9,088
|
12,398
|
(27%)
|
Adjusted EBITDA as a
percentage of revenue
|
11%
|
37%
|
(70%)
|
16%
|
20%
|
(20%)
|
Cash flow from
operating activities
|
9,410
|
25,732
|
(63%)
|
10,919
|
27,272
|
(60%)
|
Additions to property
and equipment
|
2,555
|
258
|
890%
|
3,428
|
833
|
312%
|
Net loss
|
(12,940)
|
(8,042)
|
61%
|
(19,394)
|
(23,372)
|
(17%)
|
– basic and diluted
net loss per share
|
(0.14)
|
(0.09)
|
56%
|
(0.21)
|
(0.26)
|
(19%)
|
Weighted average
number of shares
|
|
|
|
|
|
|
– basic and
diluted
|
91,200,629
|
90,918,814
|
-
|
91,192,715
|
91,405,800
|
-
|
Outstanding common
shares as at period end
|
91,201,609
|
90,918,814
|
-
|
91,201,609
|
90,918,814
|
-
|
(1) See
"Non-IFRS measures" included in this press release.
|
|
|
Three months ended
June 30
|
Six months ended
June 30
|
Operating
Highlights (2)
|
2021
|
2020
|
Change
|
2021
|
2020
|
Change
|
Contract
Drilling
|
|
|
|
|
|
|
Canadian
Operations:
|
|
|
|
|
|
|
Contract drilling rig
fleet:
|
|
|
|
|
|
|
– Average active rig
count
|
4.5
|
-
|
100%
|
7.5
|
6.5
|
15%
|
– End of
period
|
49
|
49
|
-
|
49
|
49
|
-
|
Operating
Days
|
407
|
-
|
100%
|
1,360
|
1,181
|
15%
|
Revenue per Operating
Day
|
22,218
|
NM
|
NM
|
21,057
|
25,164
|
(16%)
|
Drilling rig
utilization – Operating Days
|
9%
|
-
|
100%
|
15%
|
13%
|
15%
|
CAOEC industry
average utilization – Operating Days(3)
|
15%
|
4%
|
275%
|
21%
|
20%
|
5%
|
|
|
|
|
|
|
|
United States
Operations:
|
Contract drilling rig
fleet:
|
|
|
|
|
|
|
– Average active rig
count
|
1.7
|
0.1
|
1,600%
|
1.0
|
0.8
|
25%
|
– End of
period
|
8
|
8
|
-
|
8
|
8
|
-
|
Operating
Days
|
151
|
7
|
2,057%
|
189
|
149
|
27%
|
Revenue per Operating
Day (US$)
|
14,312
|
NM
|
NM
|
14,366
|
24,556(4)
|
(41%)
|
Drilling rig
utilization – Operating Days
|
21%
|
1%
|
2,000%
|
13%
|
10%
|
30%
|
|
|
|
|
|
|
|
Production
Services
|
|
|
|
|
|
|
Canadian
Operations:
Well servicing rig
fleet:
|
|
|
|
|
|
|
– Average active rig
count
|
12.0
|
5.5
|
118%
|
17.5
|
14.6
|
20%
|
– End of
period
|
63
|
63
|
-
|
63
|
63
|
-
|
Service
Hours
|
10,891
|
5,043
|
116%
|
31,593
|
26,534
|
19%
|
Revenue per Service
Hour
|
683
|
654
|
4%
|
712
|
713
|
-
|
Service rig
utilization
|
19%
|
9%
|
111%
|
28%
|
23%
|
22%
|
NM:
|
Not meaningful due to
limited activity in the period.
|
(2)
|
See "Defined Terms"
included in this press release.
|
(3)
|
Source: The Canadian
Association of Energy Contractors ("CAOEC") monthly Contractor
Summary. The CAOEC industry average is based on Operating Days
divided by total available drilling days.
|
(4)
|
Excludes shortfall
commitment revenue from take or pay contracts of US$4.7 million for
the six months ended June 30, 2020.
|
Financial Position
at (stated in thousands)
|
June 30,
2021
|
December 31,
2020
|
June 30,
2020
|
Working
capital
|
(504)(5)
|
15,997
|
(4,555)(5)
|
Total
assets
|
460,443
|
495,625
|
494,493
|
Long term
debt
|
225,590
|
237,633
|
214,255
|
(5)
|
The definition of the
current ratio under the Company's Credit Facilities differs from
working capital presented above in this press release, as the
interest accrued on the Second Lien Facility, the current portion
of the Credit Facilities and the current portion of lease
obligations capitalized under IFRS 16, Leases, as at June 30, 2021
and 2020, are excluded from current liabilities in the
ratio.
|
Business Overview
Western is an energy services company that provides contract
drilling services and production services in Canada and the
United States through its various divisions, subsidiaries,
and first nations joint venture.
Contract Drilling Services
Western operates a fleet of 57 drilling rigs specifically suited
for drilling complex horizontal wells across Canada and the US. Western is currently the
fourth largest drilling contractor in Canada, based on the CAOEC registered drilling
rigs3.
Production Services
Production Services provides well servicing and oilfield
equipment rentals primarily in Canada. Western operates 66 well servicing
rigs and is the third largest well servicing company in
Canada based on CAOEC registered
well servicing rigs4.
Western's contract drilling and well servicing rig fleets
comprise the following:
|
June
30
|
Drilling
rigs
|
|
|
|
|
|
|
|
|
Well servicing
rigs
|
|
2021
|
|
2020
|
|
|
2021
|
2020
|
Rig
class(1)
|
Canada
|
US
|
Total
|
|
Canada
|
US
|
Total
|
|
Mast
type
|
Total
|
Total
|
Cardium
|
23
|
2
|
25
|
|
23
|
2
|
25
|
|
Single
|
33
|
33
|
Montney
|
19
|
-
|
19
|
|
19
|
-
|
19
|
|
Double
|
25
|
25
|
Duvernay
|
7
|
6
|
13
|
|
7
|
6
|
13
|
|
Slant
|
8
|
8
|
Total
|
49
|
8
|
57
|
|
49
|
8
|
57
|
|
|
66
|
66
|
(1)
|
See "Defined Terms"
included in this press release.
|
Business Environment
Crude oil and natural gas prices impact the cash flow of
Western's customers, which in turn impacts the demand for Western's
services. The following table summarizes average crude oil and
natural gas prices, as well as average foreign exchange rates, for
the three and six months ended June 30,
2021 and 2020.
|
Three months ended
June 30
|
Six months ended
June 30
|
|
2021
|
2020
|
Change
|
2021
|
2020
|
Change
|
Average crude oil
and natural gas prices(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude
Oil
|
|
|
|
|
|
|
West Texas
Intermediate (US$/bbl)
|
66.03
|
27.84
|
137%
|
61.94
|
37.01
|
67%
|
Western Canadian
Select (CDN$/bbl)
|
66.98
|
22.42
|
199%
|
62.20
|
28.26
|
120%
|
|
|
|
|
|
|
|
Natural
Gas
|
|
|
|
|
|
|
30 day Spot AECO
(CDN$/mcf)
|
3.18
|
2.08
|
53%
|
3.21
|
2.09
|
54%
|
|
|
|
|
|
|
|
Average foreign
exchange rates(2)
|
|
|
|
|
|
|
US dollar to Canadian
dollar
|
1.23
|
1.39
|
(12%)
|
1.25
|
1.36
|
(8%)
|
(1)
|
See "Abbreviations"
included in this press release.
|
(2)
|
Source: Sproule June
30, 2021 Price Forecast, Historical Prices.
|
West Texas Intermediate ("WTI") on average improved
significantly by 137% and 67% for the three and six months ended
June 30, 2021 respectively, compared
to the same periods in the prior year. Similarly, pricing on
Western Canadian Select ("WCS") crude oil increased by 199% and
120% respectively, for the three and six months ended June 30, 2021, compared to the same periods in
the prior year. Crude oil prices in 2020 for both Canada and the US were impacted by the
COVID-19 pandemic. In 2021, pricing has improved as demand for
crude oil recovers, as vaccine rollouts continue worldwide, and
OPEC continues to maintain production cuts. Natural gas prices in
Canada also strengthened in 2021,
as the 30-day spot AECO price improved by 53% and 54% respectively,
for the three and six months ended June 30,
2021, compared to the same periods of the prior year.
Offsetting this increase in pricing, the US dollar to the Canadian
dollar foreign exchange rate weakened in the three and six months
ended June 30, 2021, compared to the
same periods of the prior year, which impacted the cash flows of
Western's Canadian customers, when selling US dollar denominated
commodities.
3 Source:
CAOEC Contractor Summary as at July 26, 2021.
|
4 Source:
CAOEC Fleet List as at July 26, 2021.
|
In the United States, industry
activity improved in the second quarter of 2021. As reported by
Baker Hughes Company5, the number of active drilling
rigs in the United States
increased by approximately 81% to 475 rigs at June 30, 2021, as compared 263 rigs at
June 30, 2020. However, the ongoing
COVID-19 pandemic continues to have an impact on industry activity
in both the US and in Canada in
2021. Prior to the COVID-19 pandemic, there were also continued
industry concerns over market access, increased regulation, and the
prevailing customer preference to return cash to shareholders, or
pay down debt, rather than grow production through the drill bit in
Canada and the US. The number of
active rigs in the Western Canadian Sedimentary Basin ("WCSB")
improved to 139 active rigs at June 30,
2021, compared to 18 active rigs at June 30, 2020. The
CAOEC6 reported that for drilling in Canada, the total number of Operating Days in
the WCSB increased by approximately 276% for the three months ended
June 30, 2021 compared to the same
period in the prior year. For the six months ended June 30, 2021, the total number of Operating Days
in the WCSB were consistent with the same period of the prior
year.
Outlook
Due to increased activity levels in 2021 as a result of a
successful COVID-19 vaccine rollout and the lifting of government
restrictions, coupled with limited maintenance capital spending on
the rig fleet in prior years, Western has increased its capital
budget for 2021 by $2 million to
approximately $8 million. The revised
capital budget is expected to be comprised of $7 million of maintenance capital and
$1 million of expansion capital, with
$5 million allocated to the contract
drilling segment and $3 million
allocated to the production services segment. Western believes the
revised 2021 capital budget provides a prudent use of cash
resources to manage its balance sheet. Western will continue to
manage its operations in a disciplined manner and make required
adjustments to its capital program as customer demand changes.
Currently, 11 of Western's drilling rigs and 20 of Western's well
servicing rigs are operating.
While crude oil prices reached historical lows in 2020 due to
the demand destruction caused by the COVID-19 pandemic, in the
first half of 2021, crude oil prices began to recover. However,
uncertainty now exists concerning the timing of COVID-19 vaccine
distribution and the potential impact of COVID-19 variants on
possible future government restrictions, both of which have an
impact on demand in the near term. The precise duration and extent
of the adverse impacts of the current macroeconomic environment and
the COVID-19 pandemic on Western's customers, operations, business
and global economic activity remains highly uncertain at this time.
Additionally, the January 2021
executive order by the President of the
United States cancelling the permit that had allowed
construction of the Keystone XL pipeline, the uncertain timing of
completion of construction on the Trans Mountain pipeline
expansion, as well as uncertainty regarding the in service date of
the Enbridge Line 3 pipeline replacement and the threatened
shutdown of Enbridge Line 5, have all resulted in continued
uncertainty regarding takeaway capacity. However, activity levels
in Canada and the United States in 2021 are expected to be
marginally higher than 2020 levels. Controlling fixed costs,
maintaining balance sheet strength and flexibility and managing
through the unprecedented market downturn are priorities for the
Company, as prices and demand for Western's services remain below
historical levels. Western continues to identify further
opportunities to streamline its support structure and implement
additional cost control measures. Going forward, Western expects
that its variable cost structure, and prudent capital budget, will
aid in preserving its balance sheet.
As at June 30, 2021, Western had
no amounts drawn on its $60.0 million
credit facilities, consisting of its $50.0
million syndicated first lien credit facility (the
"Revolving Facility") and its $10.0
million committed operating facility (the "Operating
Facility" and together the "Credit Facilities"), which mature on
July 1, 2022. Western had drawn
$12.5 million on its HSBC Bank Canada
("HSBC") six-year committed term non-revolving facility with the
participation of Business Development Canada ("BDC" and together
the "HSBC Facility"), which matures on December 31, 2026. Western currently has
$211.8 million outstanding on its
second lien secured term loan facility (the "Second Lien
Facility"), which matures on January
31, 2023.
Oilfield service activity in Canada will be affected by the development of
resource plays in Alberta and
northeast British Columbia which
will be impacted by pipeline construction, environmental
regulations, and the level of investment in Canada. In the short term, the largest
challenges facing the oilfield service industry are ongoing
liquidity concerns due to reduced customer spending caused by the
demand destruction from the COVID-19 pandemic and limited take away
capacity. In the medium term, Western's rig fleet is well
positioned to benefit from the LNG Canada liquefied natural gas
project now under construction in British
Columbia. It remains Western's view that its modern drilling
and well servicing rig fleets, reputation, and disciplined cash
management provide a competitive advantage which will enable the
Company to manage through the current challenging oilfield service
environment.
5 Source: Baker Hughes Company, 2021
Rig Count monthly press releases.
|
6 Source: CAOEC, monthly Contractor
Summary.
|
Non-IFRS Measures
Western uses certain measures in this press release which do not
have any standardized meaning as prescribed by International
Financial Reporting Standards ("IFRS"). These measures, which are
derived from information reported in the condensed consolidated
financial statements, may not be comparable to similar measures
presented by other reporting issuers. These measures have been
described and presented in this press release in order to provide
shareholders and potential investors with additional information
regarding the Company. The Non-IFRS measure used in this press
release is identified and defined as follows:
Adjusted EBITDA
Earnings before interest and finance costs, taxes, depreciation
and amortization, other non-cash items and one-time gains and
losses ("Adjusted EBITDA") is a useful supplemental measure as it
is used by management and other stakeholders, including current and
potential investors, to analyze the Company's principal business
activities. Adjusted EBITDA provides an indication of the results
generated by the Company's principal operating segments, which
assists management in monitoring current and forecasting future
operations, as certain non-core items such as interest and finance
costs, taxes, depreciation and amortization, and other non-cash
items and one-time gains and losses are removed. The closest IFRS
measure would be net loss for consolidated results.
The following table provides a reconciliation of net loss, as
disclosed in the condensed consolidated statements of operations
and comprehensive income, to Adjusted EBITDA:
|
Three months ended June 30
|
Six months ended
June 30
|
(stated in
thousands)
|
2021
|
2020
|
2021
|
2020
|
Net
loss
|
(12,940)
|
(8,042)
|
(19,394)
|
(23,372)
|
Income tax
recovery
|
-
|
(3,095)
|
(2,062)
|
(8,234)
|
Loss before income
taxes
|
(12,940)
|
(11,137)
|
(21,456)
|
(31,606)
|
Add
(deduct):
|
|
|
|
|
Depreciation
|
10,480
|
12,245
|
21,286
|
25,143
|
Stock based
compensation
|
112
|
135
|
180
|
235
|
Finance
costs
|
4,525
|
4,474
|
9,093
|
9,152
|
Other items
|
20
|
(1,681)
|
(15)
|
(2,026)
|
Impairment of property
and equipment
|
-
|
-
|
-
|
11,500
|
Adjusted
EBITDA
|
2,197
|
4,036
|
9,088
|
12,398
|
Defined Terms:
Average active rig count (contract drilling): Calculated
as drilling rig utilization multiplied by the average number of
drilling rigs in the Company's fleet for the period.
Average active rig count (production services):
Calculated as service rig utilization multiplied by the average
number of service rigs in the Company's fleet for the period.
Drilling rig utilization: Calculated based on Operating
Days divided by total available days.
Operating Days: Defined as contract drilling days,
calculated on a spud to rig release basis.
Service Hours: Defined as well servicing hours
completed.
Service rig utilization: Calculated based on Service
Hours divided by available hours, being 10 hours per day, per well
servicing rig, 365 days per year.
Contract Drilling Rig Classifications:
Cardium class rig: Defined as any contract drilling rig
which has a total hookload less than or equal to 399,999 lbs (or
177,999 daN).
Montney class rig:
Defined as any contract drilling rig which has a total hookload
between 400,000 lbs (or 178,000 daN) and 499,999 lbs (or 221,999
daN).
Duvernay class rig:
Defined as any contract drilling rig which has a total hookload
equal to or greater than 500,000 lbs (or 222,000 daN).
Abbreviations:
- Barrel ("bbl");
- Basis point ("bps"): A 1% change equals 100 basis points and a
0.01% change is equal to one basis point;
- Canadian Association of Energy Contractors ("CAOEC");
- DecaNewton ("daN");
- International Financial Reporting Standards ("IFRS");
- Pounds ("lbs");
- Thousand cubic feet ("mcf");
- Western Canadian Sedimentary Basin ("WCSB");
- Western Canadian Select ("WCS"); and
- West Texas Intermediate ("WTI").
Forward-Looking Statements and Information
This press release contains certain statements or disclosures
relating to Western that are based on the expectations of Western
as well as assumptions made by and information currently available
to Western which may constitute forward-looking information under
applicable securities laws. All information and statements
contained herein that are not clearly historical in nature
constitute forward-looking information, and words and phrases such
as "may", "will", "should", "could", "expect", "intend",
"anticipate", "believe", "estimate", "plan", "potential",
"continue", "looking to", or the negative of these terms or
other comparable terminology are generally intended to identify
forward-looking information. Such information represents the
Company's internal projections, estimates or beliefs concerning,
among other things, an outlook on the estimated amounts and timing
of additions to property and equipment, anticipated future debt
levels and revenues or other expectations, beliefs, plans,
objectives, assumptions, intentions or statements about future
events or performance. This information involves known and unknown
risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in
such forward-looking information.
In particular, forward-looking information in this press release
includes, but is not limited to, statements relating to: commodity
pricing; the future demand for the Company's services and
equipment, in particular, in light of the low commodity price
environment associated with the COVID-19 pandemic and the related
economic environment; the potential impact of the ongoing COVID-19
pandemic on the oil and gas industry in Canada and the
United States; the pricing for the Company's services and
equipment; the terms of existing and future drilling contracts
in Canada and the US and the
revenue resulting therefrom; the Company's maintenance and
expansion capital plans for 2021 and its ability to make changes
thereto in response to customer demands; the Company's liquidity
needs including the ability of current capital resources to cover
Western's financial obligations; expectations as to the changes in
crude oil transportation capacity through pipeline developments and
uncertainties relating thereto; expectations as to the benefits of
the LNG Canada natural gas project in British Columbia on the Company and its rig
fleet; the potential impact of changes to laws, governmental and
environmental regulations; the expectation of continued investment
in the Canadian crude oil and natural gas industry; the development
of Alberta and British Columbia resource plays; expectations
relating to producer spending and activity levels for oilfield
services; the Company's approach to management of its budget and
operations; the Company's ability to maintain a competitive
advantage to enable it to manage the current oilfield service
environment; and the Company's ability to find and maintain enough
field crew members.
The material assumptions in making the forward-looking
statements in this press release include, but are not limited to:
demand levels and pricing for oilfield services; demand for crude
oil and natural gas and the price and volatility of crude oil and
natural gas; pressures on commodity pricing; the continued business
relationships between the Company and its significant customers;
the Company's competitive advantage; crude oil transport, pipeline
and LNG export facility approval and development; the Company's
ability to finance its operations; the effectiveness of the
Company's cost structure and capital budget; the effects of
seasonal and weather conditions on operations and facilities; the
competitive environment to which the various business segments are,
or may be, exposed in all aspects of their business and the
Company's competitive position therein; the ability of the
Company's various business segments to access equipment (including
spare parts and new technologies); assumptions with respect to
global economic conditions and the accuracy of the Company's market
outlook expectations for 2021 and in the future; the Company's
expectations regarding the impacts, direct and indirect, of the
COVID-19 pandemic on our business, customers, business partners,
employees, supply chain, other stakeholders and the overall
economy; changes in laws or regulations; currency exchange
fluctuations; the ability of the Company to attract and retain
skilled labour and qualified management; the ability to retain and
attract significant customers; the ability to maintain a
satisfactory safety record; and general business, economic and
market conditions.
Although Western believes that the expectations and assumptions
on which such forward-looking statements and information are based
on are reasonable, undue reliance should not be placed on the
forward-looking statements and information as Western cannot give
any assurance that they will prove to be correct. Since
forward-looking statements and information address future events
and conditions, by their very nature they involve inherent risks
and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors and risks.
These include, but are not limited to, the risk that the low
commodity price environment will be sustained for an indefinite
period, the impact of the COVID-19 pandemic and the resulting
effects on economic conditions, restrictions imposed by public
health authorities or governments, fiscal and monetary responses by
governments and financial institutions and disruptions to global
supply chains and other general industry, economic, market and
business conditions. Readers are cautioned that the foregoing list
of risks, uncertainties and assumptions are not exhaustive.
Additional information on these and other risk factors that could
affect Western's operations and financial results are discussed
under the heading "Risk Factors" in Western's annual information
form for the year ended December 31,
2020 which may be accessed through the SEDAR website at
www.sedar.com. The forward-looking statements and information
contained in this press release are made as of the date hereof and
Western does not undertake any obligation to update publicly or
revise any forward-looking statements and information, whether as a
result of new information, future events or otherwise, unless so
required by applicable securities laws.
SOURCE Western Energy Services Corp.