CALGARY, AB


,


Aug. 5, 2022


/CNW/ –

• Revenue for the second quarter of 2022 was
  
  $344.1 million
  
  , a 62 percent increase from the second quarter of 2021 revenue of
  
  $212.3 million
  
  .
• Revenue by geographic area:
  • 
    Canada
    
    –
    
    $78.7 million
    
    , 23 percent of total;
  • 
    United States
    
    –
    
    $203.5 million
    
    , 59 percent of total; and
  • International –
    
    $61.9 million
    
    , 18 percent of total.
• Canadian drilling recorded 2,369 operating days in the second quarter of 2022, a 124 percent increase from 1,058 operating days in the second quarter of 2021. Canadian well servicing recorded 12,099 operating hours in the second quarter of 2022, a 51 percent increase from 8,027 operating hours in the second quarter of 2021.
• 
  United States
  
  drilling recorded 4,277 operating days in the second quarter of 2022, a 48 percent increase from 2,899 operating days in the second quarter of 2021.
  
  United States
  
  well servicing recorded 30,725 operating hours in the second quarter of 2022, a seven percent decrease from 33,080 operating hours in the second quarter of 2021.
• International drilling recorded 1,030 operating days in the second quarter of 2022, a 22 percent increase from 844 operating days recorded in the second quarter of 2021.
• Adjusted EBITDA for the second quarter of 2022 was
  
  $68.3 million
  
  , a 50 percent increase from Adjusted EBITDA of
  
  $45.6 million
  
  for the second quarter of 2021.
• Funds flow from operations for the second quarter of 2022 increased 97 percent to
  
  $81.5 million
  
  from
  
  $41.3 million
  
  in the second quarter of the prior year.
• During the second quarter of 2022, the Company did not record any
  
  Canada
  
  Emergency Wage Subsidy program payments as compared with
  
  $5.1 million
  
  recognized in the second quarter of 2021.
• General and administrative expense increased 38 percent and totaled
  
  $12.2 million
  
  in the second quarter of 2022, compared with
  
  $8.9 million
  
  in the second quarter of 2021.
• Net capital purchases for the second quarter of 2022 were
  
  $50.1 million
  
  , consisting of
  
  $28.5 million
  
  in upgrade capital,
  
  $25.8 million
  
  in maintenance capital less proceeds from dispositions of
  
  $4.2 million
  
  .
• Capital expenditures for the 2022 year are targeted to be approximately
  
  $165.0 million
  
  of which
  
  $40.0 million
  
  relates to growth capital. The increase partially relates to two drilling rigs that will be reactivated in
  
  Oman
  
  in the fourth quarter of 2022.  As at
  
  June 30, 2022
  
  , 24 drilling rigs have be reactivated and upgraded.
• Long-term debt, net of cash, was reduced by
  
  $83.0 million
  
  since
  
  December 31, 2021
  
  .
• On
  
  June 7, 2022
  
  , the Company settled its Convertible Debentures of
  
  $37.0 million
  
  through the issuance of 21,142,857 common shares of the Company at a conversion price of
  
  $1.75
  
  per share.

Revenue for the second quarter of 2022 was

$344.1 million

, an increase of 62 percent from revenue for the second quarter of 2021 of

$212.3 million

. Revenue for the six months ended

June 30, 2022

was

$676.8 million

, an increase of 57 percent from revenue for the six months ended

June 30, 2021

of

$430.9 million

.

Adjusted EBITDA totaled

$68.3 million

(

$0.40

per common share) in the second quarter of 2022, 50 percent higher than Adjusted EBITDA of

$45.6 million

(

$0.28

per common share) in the second quarter of 2021. For the first six months ended

June 30, 2022

, Adjusted EBITDA totaled

$138.3 million

(

$0.83

per common share), 45 percent higher than Adjusted EBITDA of

$95.5 million

(

$0.59

per common share) in the first six months ended

June 30, 2021

.

Net loss attributable to common shareholders for the second quarter of 2022 was

$28.1 million

(

$0.17

per common share) compared to a net loss attributable to common shareholders of

$52.3 million

(

$0.32

per common share) for the second quarter of 2021. Net loss attributable to common shareholders for the six months ended

June 30, 2022

was

$21.6 million

(

$0.13

per common share), compared to a net loss attributable to common shareholders of

$95.8 million

(

$0.59

per common share) for the six months ended

June 30, 2021

.

Funds flow from operations increased 97 percent to

$81.5 million

(

$0.47

per common share) in the second quarter of 2022 compared to

$41.3 million

(

$0.25

per common share) in the second quarter of the prior year. Funds flow from operations increased 80 percent to

$158.2 million

(

$0.94

per common share) for the six months ended

June 30, 2022

compared to

$87.9 million

(

$0.54

per common share) for the six months ended

June 30, 2021

.

The macro-economic conditions impacting the crude oil and natural gas industry continued to be positive for oilfield services. Strong global commodity prices continued to be supported by strengthening global crude oil demand and structural tightness in crude oil supply. OPEC+ nations continue to incrementally add supply to the market and are expected to eliminate coordinated production cuts in the coming months. In addition, US-based producers remain committed to moderate increases in production. The invasion of

Ukraine

by the

Russian Federation

and the resulting hostilities have further challenged global oil and natural gas markets with uncertainty regarding Russian oil and natural gas supply to the global market, putting further upward pressure on commodity prices. These factors and constructive industry fundamentals have resulted in increased demand for oilfield services, driving improved activity and drilling rig rates in the Company’s North American segments year-over-year.

Over the near term, there is considerable uncertainty regarding the impacts of the Russian invasion of

Ukraine

and the resulting ongoing hostilities on the global economy, recession risk in certain operating environments, and other factors that may impact the demand for crude oil and natural gas, commodity prices, and the demand for oilfield services.

The Company’s operating days were higher in the three and six months ended

June 30, 2022

, when compared to the same period in 2021. Operations were positively impacted by improving industry conditions, driving activity improvements year-over-year. Furthermore, the acquisition of 35 land-based drilling rigs in

Canada

during the third quarter of 2021 helped further improve the Company’s financial and operating results.

The average

United States

dollar exchange rate was

$1.27

for the six months ended

June 30, 2022

(2021 –

$1.25

) versus the Canadian dollar, an increase of two percent, compared to the same period of 2021.

Working capital at June 30, 2022 was a surplus of

$102.8 million

, compared to a surplus of

$104.2 million

at

December 31, 2021

. The Company’s available liquidity, consisting of cash and available borrowings under its

$900.0 million

revolving credit facility (the ”

Credit Facility

“), was

$67.0 million

at

June 30

, 2022.

Revenue for the three months ended June 30, 2022 totaled

$344.1 million

, an increase of 62 percent from the second quarter of 2021

$212.3 million

. Revenue for the six months ended June 30, 2022 totaled

$676.8 million

, a 57 percent increase from the six months ended June 30, 2021.

The increase in total revenue during the second quarter of 2022 was primarily due to the global economic recovery and more favourable industry conditions due to increasing oil and natural gas commodity prices. Increased demand for oilfield services and the acquisition of 35 land-based drilling rigs in

Canada

during the third quarter of 2021, also contributed to the increase in revenue. The positive foreign exchange translation impact further contributed to the increase in revenue reported in Canadian currency.

Revenue increased by

$47.3 million

to

$78.7 million

for the three months ended June 30, 2022 from

$31.4 million

for the three months ended June 30, 2021. The Company recorded revenue of

$190.0 million

in

Canada

for the six months ended

June 30, 2021

, an increase of

$105.0 million

from

$85.0 million

recorded for the six months ended

June 30, 2021

.

Canadian revenue accounted for 23 percent of the Company’s total revenue in the second quarter of 2022 (2021 – 15 percent) and 28 percent (2021 – 20 percent) for the first half of 2022.

The Company’s Canadian drilling operations recorded 2,369 operating days in the second quarter of 2022, compared to 1,058 operating days for the second quarter of 2021, an increase of 1,311 operating days. For the six months ended June 30, 2022, the Company recorded 6,097 operating days compared to 2,904 drilling days for the six months ended June 30, 2021, an increase of 3,193 operating days. Canadian well servicing hours increased by 51 percent to 12,099 operating hours in the second quarter of 2022 compared to 8,027 operating hours in the corresponding period of 2021. For the six months ended June 30, 2022, well servicing hours increased by 36 percent to 23,359 operating hours compared with 17,117 operating hours for the six months ended June 30, 2021.

The operating and financial results for the Company’s Canadian operations in the first half year of 2022 were positively impacted by improved industry conditions that increased both drilling and well servicing activity. In addition, operational activity increased as a result of the Company’s acquisition of 35 land-based drilling rigs during the third quarter of 2021. Offsetting the increase was the elimination of the

Canada

Emergency Wage Subsidy (”

CEWS

“) program in 2021 by the Government of

Canada

, of which

$5.1 million

and

$9.8 million

were received by the Company in the second quarter and the first half of 2021 respectively.

During the first half of 2022, the Company transferred four under-utilized drilling rigs into its Canadian operations reserve fleet.

The Company’s

United States

operations recorded revenue of $203.5 million in the second quarter of 2022, an increase of 56 percent from the

$130.8 million

recorded in the corresponding period of the prior year. During the six months ended June 30, 2022, revenue of

$370.3 million

was recorded, an increase of 50 percent from the

$246.2 million

recorded in the corresponding period of the prior year.

The Company’s

United States

operations accounted for 59 percent of the Company’s revenue in the second quarter of 2022 (2021 – 62 percent) and 55 percent of the Company’s revenue in the first six months of 2022 (2021 – 57 percent).

Drilling rig operating days increased by 48 percent to 4,277 operating days in the second quarter of 2022 from 2,899 operating days in the second quarter of 2021, and increased by 45 percent  to 7,965  operating days in the first six months of 2022 from 5,480 operating days in the first six months of 2021.

United States

well servicing hours decreased by seven percent in the second quarter of 2022 to 30,725 operating hours from 33,080 operating hours in the second quarter of 2021. For the first half of 2022, well servicing activity decreased four percent to 60,414 operating hours from 63,045 operating hours in the first half of 2021.

Overall operating and financial results for the Company’s

United States

operations reflect improving industry conditions, increasing drilling activity and rig revenue rates in addition to steady well servicing rig utilization. The financial results from the Company’s

United States

operations were further positively impacted on the currency translation, as

the United States

dollar strengthened relative to the Canadian dollar for the first six months of 2022.

During the first six months of 2022, the Company sold one cold stacked drilling rig from its

United States

operations and transferred three under-utilized drilling rigs into its

United States

reserve fleet.

The Company’s international operations recorded revenue of

$61.9 million

in the second quarter of 2022, a 24 percent increase from the

$50.1 million

recorded in the corresponding period of the prior year. International revenues for the six months ended June 30, 2022, increased 17 percent to

$116.5 million

from

$99.7 million

recorded in the six months ended June 30, 2021.

The Company’s international operations contributed 18 percent of the total revenue in the second quarter of 2022 (2021 – 23 percent) and 17 percent of the Company’s revenue in the first six months of 2022 (2021 – 23 percent).

International operating days for the three months ended

June 30, 2022

totaled 1,030 operating days compared to 844 operating days in the same period of 2021, an increase of 22 percent. For the six months ended

June 30, 2022

, international operating days totaled 1,903 operating days compared to 1,703 operating days for the six months ended

June 30, 2021

, an increase of 12 percent.

Operating and financial results from the international operations reflect a steady and incrementally positive operating environment as COVID-19 related disruptions continued to dissipate.

During the first six months of 2022, the Company sold two cold-stacked drilling rigs located in

Mexico

for US

$34.0 million

and transferred six under-utilized drilling rigs into its international operations reserve fleet.

Depreciation expense totaled

$68.7 million

for the second quarter of 2022 compared with

$69.8 million

for the second quarter of 2021, a decrease of two percent. Depreciation expense for the first six months of 2022 decreased by one percent, to

$138.7 million

compared with

$140.7 million

in the first six months of 2021. The decrease in depreciation is due to certain operating assets having become fully depreciated in which case no further depreciation expense will be incurred on such assets. Offsetting the decrease to the depreciation expense is the negative foreign exchange translation on converting USD denominated depreciation expense.

General and administrative expense increased 38 percent to

$12.2 million

(3.5 percent of revenue) for the second quarter of 2022 compared to

$8.9 million

(4.2 percent of revenue) for the second quarter of 2021. For the six months ended June 30, 2022, general and administrative expense totaled

$23.1 million

(3.4 percent of revenue) compared to

$18.1 million

(4.2 percent of revenue) for the six months ended

June 30, 2021

. General and administrative expenses increased in support of increased operational activity, the end of the CEWS program (

$0.9 million

and

$1.5 million

received during the second quarter and the first half of 2021 respectively), and the full reinstatement of salary roll-backs and annual wage increases. Further increasing the general and administrative expense is the negative foreign exchange translation on converting USD denominated general and administrative expense.

Included in this amount is the impact of foreign currency fluctuations in the Company’s subsidiaries that have functional currencies other than the Canadian dollar.

During the first half of 2022, the Company finalized the sale of two drilling rigs that were cold-stacked in

Mexico

and other unrelated equipment. The net cash proceeds received for two drilling rigs were US

$33.1 million

, resulting in a gain of US

$23.9 million

or Canadian

$29.9 million

.

Interest expense was incurred on the Company’s

$900.0 million

Credit Facility, US

$417.5 million

Senior Notes,

$37.0 million

subordinate convertible debentures (the ”

Convertible


Debentures

“) prior to conversion, and capital lease obligations.

Interest expense increased by 17 percent for the second quarter of 2022 compared to the second quarter of 2021. Interest expense increased by 12 percent for the first six months of 2022 compared to the same period of 2021. The increase for the three and six months of 2022 is the result of higher overall borrowing and higher interest rates. The negative translational impact on

United States

dollar-denominated debt further increased interest expense for the quarter.

The Company’s blended interest rate on its outstanding debt for the 2022 year will be approximately eight percent. The current capital structure primarily consisting of the Credit Facility and the Senior Notes allows the Company to utilize funds flow generated to reduce debt in the near term with greater flexibility than a more non-callable weighted capital structure.

The effective income tax rate for the three months ended

June 30, 2022

was 22.6 percent compared to 18.1 percent for the three months ended

June 30, 2021

. The effective income tax rate for the six months ended

June 30, 2022

was 49.9 percent compared to 17.9 percent for the six months ended

June 30, 2021

. The effective income tax rate in the first six months of the current year was higher than the effective income tax rate in the same period of 2021 due to activity levels, gains on disposal of assets and tax recoveries in foreign tax jurisdictions.

During the three months ended June 30, 2022, the Company generated funds flow from operations of

$81.5 million

(

$0.47

per common share) compared to funds flow from operations of

$41.3 million

(

$0.25

per common share) for the three months ended June 30, 2021, an increase of 97 percent. For the six months ended June 30, 2022, the Company generated funds flow from operations of

$158.2 million

(

$0.94

per common share) an increase of 80 percent from

$87.9 million

(

$0.54

per common share) for the six months ended June 30, 2021. The increase in funds flow from operations for six months ended

June 30, 2022

compared to the same period of 2021 is largely due to the increase in activity compared to the prior period as a result of the oil and natural gas industry’s improving operating environment.

At June 30, 2022, the Company’s working capital was a surplus of

$102.8 million

, compared to a working capital surplus of

$104.2 million

at December 31, 2021. The Company currently expects funds generated by operations, combined with current and future credit facilities, to fully support the Company’s current operating and capital requirements. The Company’s Credit Facility provides for total borrowings of

$900.0 million

, of which

$28.1 million

was undrawn and available at June 30, 2022.

Net purchases of property and equipment for the second quarter of 2022 totaled

$50.1 million

(2021  –

$11.8 million

). Net purchases of property and equipment during the first six months of 2022 totaled

$39.3 million

(2021 –

$21.4 million

). The purchase of property and equipment for the first six months of 2022 consists of

$36.6 million

in upgrade capital and

$49.6 million

in maintenance capital.