CALGARY,
AB, Nov. 10, 2022 /CNW/ - Stampede Drilling
Inc. ("Stampede" or the "Corporation") (TSXV: SDI) announces today
its consolidated financial and operational results for the three
and nine month period ended September 30,
2022.
The following should be read in conjunction with the
Corporation's consolidated financial statements and the notes
thereto for the year ended December 31,
2021, related management's discussion and analysis and
annual information form, 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 2022 Operational
HIGHLIGHTS
For the three months ended September 30,
2022, the Corporation achieved record quarterly revenue,
adjusted EBITDA and net income since its inception in 2011.
- Revenue for the three month period ended September 30, 2022 was $20,722, up $14,240
(220%) compared to $6,482 for the
corresponding 2021 period.
- Adjusted EBITDA for the three months ended September 30, 2022 was $4,983, up $3,714
(293%) from $1,269 in the
corresponding 2021 period.
- Net income for the three months ended September 30, 2022 was $2,865, up $2,640
(1,173%) in a net income of $225 from
the corresponding 2021 period.
The Corporation's record quarterly results primarily resulted
from strong utilization rates. The Corporation's drilling rig
utilization for the third quarter of 2022 was 68%, which was an 84%
increase from the corresponding 2021 period and 70% higher than the
CAOEC industry average utilization rate of 40% for the third
quarter of 2022. The Corporation had a total of 822 operating days
in the third quarter of 2022 an increase of 481 operating days
(141%) from the 341 operating days in the corresponding 2021
period.
As previously announced on August 23,
2022, the Corporation completed an asset acquisition of five
telescopic double drilling rigs and one AC electric triple rig (the
"Asset Acquisition") which increased the Corporation's fleet from
13 to 19. As of the date of this News Release, the Corporation has
fully crewed and contracted two out of the five double rigs
acquired pursuant to the Asset Acquisition and anticipates the
remaining acquired rigs to be crewed and contracted in late Q4 2022
into January 2023. The high spec
triple rig is expected to begin operations in June 2023 once capital upgrades have been
completed. During the third quarter of 2022, the Corporation had
all 13 of its pre-existing rigs operating.
Concurrently with the Asset Acquisition, the Corporation
announced the closing of a public offering of common shares
for aggregate gross proceeds of $26,625 (the "Offering"). Pursuant to the
Offering 83,202 common shares of the Corporation were issued.
The Corporation directed approximately $21,500 of the proceeds of the Offering towards
the purchase price of the Asset Acquisition and a portion of
related upgrades.
The Corporation also entered into an amending agreement with
HSBC Bank of Canada to increate
the aggregate credit capacity under its credit facility (the
"Credit Facility"). Under the Credit Facility, which has an initial
term of three years, the Corporation has an available limit of
$22,500 pursuant to a revolving
facility (the "Demand Facility") and $10,000 under a term loan (the "Term
Loan"). The proceeds of the term loan were used to help
finance the Asset Acquisition in the third quarter and
corresponding portion of the capital expenditures of the newly
acquired rigs.
The Corporation had a total capital spend of $24,933 in the third quarter of 2022 primarily
related to the Asset Acquisition during the quarter and the
remaining upgrades on the three rigs acquired in the second quarter
of 2022.
OUTLOOK
As we head into the last quarter of 2022, the Corporation
anticipates that commodity pricing volatility will continue due to
current global macroeconomic factors such as the war in
Ukraine and worldwide inflationary
pressures. As a result of these macroeconomic factors, the
Corporation anticipates industry activity and corresponding rig
utilization for the remainder of the year and into 2023 to remain
strong. The Corporation anticipates above historical average
utilization and day rates based on its current customer contracts
while managing industry wide inflationary costs due to wage
increases needed to attract and retain field hands and supply chain
constraints in Western Canada and
globally.
The Corporation has a proven track record of purchasing
underutilized drilling rigs and ancillary equipment at favourable
prices, and then successfully crewing them and deploying them under
profitable drilling contracts. The Corporation intends to continue
to use this proven strategy with its six newly acquired rigs, with
a goal of building on its record breaking Q3 2022 results. The
Corporation will continue to assess additional acquisition
opportunities as they arise, as well as making focused capital
expenditures to further enhance customer desirability of its
current fleet.
The Corporation is actively managing the impact of cost
increases due to industry-wide inflation by working with its
customers and vendors to control and fairly allocate such
costs.
FINANCIAL SUMMARY
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
|
|
|
(000's CAD $ except
per share amounts)
|
2022
|
2021
|
%
Change
|
2022
|
2021
|
%
Change
|
|
|
|
Revenue
|
20,722
|
6,482
|
220 %
|
43,642
|
22,983
|
90 %
|
|
|
|
Direct operating
expenses
|
13,932
|
4,107
|
239 %
|
29,497
|
14,124
|
109 %
|
|
|
|
Gross margin
(1)
|
6,790
|
2,375
|
186 %
|
14,145
|
8,859
|
60 %
|
|
|
|
Net income
|
2,865
|
225
|
1,173 %
|
4,727
|
2,480
|
91 %
|
|
|
|
Basic and diluted
earnings per share
|
0.02
|
0.00
|
nm
|
0.03
|
0.02
|
50 %
|
|
|
|
Adjusted EBITDA
(1)
|
4,983
|
1,269
|
293 %
|
9,568
|
6,412
|
49 %
|
|
|
|
Weighted average common
shares outstanding
|
168,187
|
132,166
|
27 %
|
144,313
|
132,138
|
9 %
|
|
|
|
Weighted average
diluted common shares outstanding
|
183,095
|
132,899
|
38 %
|
159,231
|
144,905
|
10 %
|
|
|
|
Capital
expenditures
|
24,933
|
1,362
|
nm
|
36,602
|
2,781
|
nm
|
|
|
|
Number of marketed
rigs
|
19
|
10
|
90 %
|
19
|
10
|
90 %
|
|
|
|
Drilling rig
utilization
|
68 %
|
37 %
|
84 %
|
59 %
|
44 %
|
34 %
|
|
|
|
CAOEC industry average
utilization(2)
|
40 %
|
27 %
|
48 %
|
34 %
|
23 %
|
48 %
|
|
|
|
nm - not meaningful
(1) Refer to "Non-GAAP Measures" for further information.
(2) 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.
|
|
|
|
|
|
|
DESCRIPTION oF STAMPEDE'S BUSINESS
Stampede is an energy services company that provides premier
contract drilling services in Western
Canada. Stampede operates a fleet of 18 telescopic double
drilling rigs and 1 high spec triple drilling rig suited for most
formations within the Western Canadian Sedimentary Basin ("WCSB").
The Corporation's head office is located in Calgary, Alberta with operations based out of
Nisku, Alberta and Estevan, Saskatchewan. The Corporation's
common shares trade on the TSX Venture Exchange under the symbol
"SDI".
RESULTS FROM OPERATIONS FOR THE NINE MONTH PERIOD ENDED
SEPTEMBER 30, 2022
|
Nine months ended
September 30,
|
|
|
|
(000's CAD $ except
operating days)
|
2022
|
2021
|
%
Change
|
|
|
|
Revenue
|
43,642
|
22,983
|
90 %
|
|
|
|
Direct operating
expenses
|
29,497
|
14,124
|
109 %
|
|
|
|
Gross
margin(1)
|
14,145
|
8,859
|
60 %
|
|
|
|
Gross margin
%(1)
|
32 %
|
39 %
|
(18 %)
|
|
|
|
Net income
|
4,727
|
2,480
|
91 %
|
|
|
|
General and
administrative expenses
|
4,874
|
3,015
|
62 %
|
|
|
|
Adjusted
EBITDA(1)
|
9,568
|
6,412
|
49 %
|
|
|
|
Drilling rig operating
days(2)
|
1,807
|
1,187
|
52 %
|
|
|
|
Drilling rig revenue
per day(3)
|
24.2
|
19.4
|
25 %
|
|
|
|
Drilling rig
utilization(4)
|
59 %
|
44 %
|
34 %
|
|
|
|
CAOEC industry average
utilization(5)
|
34 %
|
23 %
|
48 %
|
|
|
|
nm - not meaningful
(1) Refer to "Non-GAAP and Other Financial Measures" for
further information.
(2) Defined as contract drilling days, between spud to
rig release
(3) Drilling rig revenue per day is calculated by
revenue divided by drilling rig operating days
(4) Drilling rig utilization is calculated based on
operating days (spud to rig release)
(5) Source: The Canadian Association of Energy
Contractors ("CAOEC") monthly Contractor Summary.
|
|
|
|
|
|
|
|
|
- Revenue for the nine month period ended September 30, 2022 was $43,642, up $20,659
(90%) compared to $22,983 for the
corresponding 2021 period. The increase was primarily related to
increased customer activity levels due to increased demand and
higher rig count and increased day rates with the Corporation's
customer base.
- The Corporation had a total of 1,807 operating days for the
nine month period ended September 30,
2022, an increase of 620 operating days (52%) from the 1,187
operating days in the corresponding 2021 period. Operating days
increased as a result of higher demand along with the increase in
rig count compared to the prior period.
- The Corporation's drilling rig utilization for the nine month
period ended September 30, 2022 was
59%, which was a 34% increase from the corresponding 2021 period
and 74% higher than the CAOEC industry average utilization rate of
34% for 2022.
- Gross margin percentage for the nine month period ended
September 30, 2022 was 32%, down 18%
from 39% as compared to the corresponding 2021 period. The gross
margin decrease was primarily related to higher rig operating
expenses due to inflationary pressures partially offset by the
increase in revenue per day. The Corporation did not record any
Canadian Emergency Wage Subsidy ("CEWS") during the nine month
period of 2022 as compared to $2,012
for the corresponding 2021 period. In accordance with its
accounting policy, the Corporation recorded a portion of it's 2021
CEWS subsidy as a reduction of direct operating expenses.
- For the nine month period ended September 30, 2022, general and administrative
expenses were $4,874 up $1,859 (62%) from $3,015 compared to the corresponding 2021 period.
The increase is primarily related to increased headcount and
compensation and corresponding administration expenses due to the
increased 2022 activity levels.
- Adjusted EBITDA for the nine months ended September 30, 2022 was $9,568, up $3,156
(49%) from $6,412 from the
corresponding 2021 period. The increase is primarily related to
higher revenue due to increased customer demand and revenue per day
and partially offset by higher operating expenses and general and
administrative expenses. Additionally, in 2021, the Corporation
recorded $254 as a reduction in
salaries and benefits expense for a portion of the CEWS and
$131 as a reduction in administrative
expenses for the Canada Emergency
Rent Subsidy ("CERS"). There were no CEWS or CERS recorded in
2022.
- Net income for the nine months ended September 30, 2022 was $4,727, up $2,247
(91%) from $2,480 from the
corresponding 2021 period. The increase is primarily related to
increased operating days and revenue per day and partially offset
by higher operating expenses.
NON-GAAP AND OTHER FINANCIAL MEASURES
This news release contains references to (i) adjusted EBITDA,
(ii) Gross margin and (iii) Gross margin percentage. 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 asset
disposals, impairment expenses, other income, foreign exchange,
non-recurring restructuring charges, finance costs, accretion of
debentures and other income/expenses, foreign exchange gain 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 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
$)
|
2022
|
2021
|
%
Change
|
|
2022
|
2021
|
%
Change
|
|
Net income
|
2,865
|
225
|
1,173 %
|
|
4,727
|
2,480
|
91 %
|
|
Depreciation
|
1,169
|
1,092
|
7 %
|
|
3,325
|
3,364
|
(1 %)
|
|
Finance
costs
|
387
|
165
|
135 %
|
|
796
|
509
|
56 %
|
|
Other income
|
(2)
|
-
|
nm
|
|
(9)
|
(8)
|
13 %
|
|
Loss (gain) on asset
disposal
|
3
|
(262)
|
(101 %)
|
|
3
|
(301)
|
(101 %)
|
|
Share-based
payments
|
29
|
52
|
(44 %)
|
|
144
|
328
|
(56 %)
|
|
Transaction
costs
|
569
|
-
|
nm
|
|
595
|
-
|
nm
|
|
Foreign exchange (gain)
loss
|
(37)
|
(3)
|
1,133 %
|
|
(13)
|
40
|
(133 %)
|
|
Adjusted
EBITDA
|
4,983
|
1,269
|
293 %
|
|
9,568
|
6,412
|
49 %
|
|
nm - not
meaningful
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Gross margin -
is defined as "Income from operations before depreciation of
property and equipment". 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) 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.
|
|
(ii)
|
Gross margin
percentage - is calculated as gross margin divided by
revenue. The Corporation believes gross margin as a percentage of
revenue is an important measure to determine how the Corporation is
managing its revenues and corresponding cost of sales.
|
|
|
The following table reconciles the Corporation's income from
operations, being the most directly comparable financial measure
disclosed in the Corporation's interim financial statements, to
gross margin:
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
(000's CAD
$)
|
2022
|
2021
|
%
Change
|
|
2022
|
2021
|
%
Change
|
|
Income from
operations
|
5,682
|
1,363
|
317 %
|
|
10,973
|
5,735
|
91 %
|
|
Depreciation of
property and equipment
|
1,108
|
1,012
|
9 %
|
|
3,172
|
3,124
|
2 %
|
|
Gross margin
|
6,790
|
2,375
|
186 %
|
|
14,145
|
8,859
|
60 %
|
|
Gross margin
%
|
33 %
|
37 %
|
(11 %)
|
|
32 %
|
39 %
|
(18 %)
|
FORWARD-LOOKING INFORMATION
Certain statements contained in this News Release constitute
forward-looking statements or forward-looking information
(collectively, "forward-looking information"). Forward-looking
information relates to future events or the Corporation's future
performance. All information other than statements of historical
fact is forward-looking information. The use of any of the words
"anticipate", "plan", "contemplate", "continue", "estimate",
"expect", "intend", "propose", "might", "may", "will", "could",
"should", "believe", "predict", and "forecast" are intended to
identify forward-looking information.
This News Release contains forward-looking information
pertaining to, among other things: the Corporation's performance;
expectations associated with the Corporation's outlook, including
among other things, anticipated commodity pricing and the
volatility thereof, expectations about industry activities, market
conditions and corresponding rig utilization; the crewing and
contracting of the Corporation's recently acquired rigs not in
operation as at the date of this News Release and the timing
thereof; the operation of the Corporation's high spec triple rig
recently acquired and the timing thereof; the assessment of
additional acquisition opportunities by the Corporation; expected
increases in utilization and day rates and the anticipated
profitability of the Corporation resulting therefrom; anticipated
industry wide inflationary costs and supply chain constraints and
the resulting impact on the profitability of the Corporation; and
the continued financial resiliency of the Corporation.
Forward-looking information is based on certain assumptions that
Stampede has made in respect thereof as at the date of this News
Release regarding, among other things: the Corporation's ability to
fully crew and contract its rigs; the success of the measures
implemented by the Corporation to ensure the safe, efficient and
reliable operations at each of its drilling sites; the
creditworthiness of the Corporation's customers and counterparties;
the effectiveness of the Corporation's financial risk management
policies at ensuring all payables are paid within the pre-agreed
credit terms; that the Corporation has adequate access to its
credit facility to provide the necessary liquidity needed to manage
fluctuations in the timing of receipt and/or disbursement of
operating cash flows; the belief that adjusted EBITDA, gross margin
and gross margin percentage are useful supplemental financial
measures; the ability of the Corporation to retain qualified staff;
the ability of the Corporation to maintain key customers; the
ability of the Corporation to obtain financing on acceptable terms;
the belief that the Corporation's principal sources of liquidity
will be sufficient to service its debt and fund its operations and
other strategic opportunities; the ability of the Corporation to
obtain financing on acceptable terms; the ability to protect and
maintain the Corporation's intellectual property; the Corporation's
ability to maintain financial resiliency in light of current
macroeconomic conditions; and the regulatory framework regarding
taxes and environmental matters in the jurisdictions in which the
Corporation operates.
Forward-looking information is presented in this News 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.
While Stampede believes the expectations and material factors
and assumptions reflected in the forward-looking information is
reasonable as of the date hereof, there can be no assurance that
these expectations, factors and assumptions will prove to be
correct. Forward-looking information is not a guarantee of future
performance and actual results or events could differ materially
from the expectations of the Corporation expressed in or implied by
such forward-looking information. Accordingly, readers should not
place undue reliance on forward-looking information. All
forward-looking information is subject to a number of known and
unknown risks and uncertainties including, but not limited to: the
condition of the global economy, including trade, inflation, the
ongoing conflict in Ukraine and
other geopolitical risks; the condition of the crude oil and
natural gas industry and related commodity prices; other commodity
prices and the potential impact on the Corporation and the industry
in which the Corporation operates, including levels of exploration
and development activities; the impact of increasing competition;
fluctuations in operating results; the ongoing significant
volatility in world markets and the resulting impact on drilling
and completions programs; foreign currency exchange rates; interest
rates; labour and material shortages; cyber security risks; natural
catastrophes; and certain other risks and uncertainties detailed in
the Corporation's annual management's discussion and analysis and
annual information form, each dated March
24, 2022 for the year ended December
31, 2021, and from time to time in Stampede's public
disclosure documents available at www.sedar.com.
This list of risk factors should not be construed as exhaustive.
Readers are cautioned that events or circumstances could cause
actual results to differ materially from those predicted,
forecasted, or projected. Statements, including forward-looking
information, are made as of the date of this News 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 News Release is expressly qualified by this
cautionary statement.
SOURCE Stampede Drilling Inc.