| Total Energy Services Inc. Announces Q3 2009 Results |
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Total Energy Services Inc. (TSX:TOT) ("Total Energy" or the "Company"), announces its consolidated financial results for the three and nine-month periods ending September 30, 2009.
Total Energy's results for the third quarter of 2009 represent continued challenging industry conditions in Western Canada. While activity levels improved somewhat from the seasonally weak second quarter, industry drilling activity remained weak by historical standards. Competitive industry conditions also resulted in continued pressure on pricing. Total Energy's Contract Drilling Services division achieved 14% utilization during the third quarter of 2009, recording 172 operating days (spud to release) with a fleet of 14 rigs, compared to 772 operating days, or 65% utilization, during the third quarter of 2008 with a fleet of 13 rigs. Included in 2009 third quarter revenues was a $0.9 million payment received in consideration of the termination of a one year contract on the Company's newly constructed fourteenth rig. Competitive pricing resulted in lower rig utilization for the third quarter of 2009 as the Company determined not to reduce rates to the extent required to secure work. Excluding the one time contract termination fee, revenue per operating day decreased 4.5% in the third quarter of 2009 compared to the third quarter of 2008. The Drilling and Production Rentals division achieved a utilization rate on major rental equipment of 27% during the third quarter of 2009 as compared to a 55% utilization rate during the third quarter of 2008. The Gas Compression Services division generated revenues of $7.5 million for the three months ended September 30, 2009 compared to $9.4 million for the same period in 2008, a decrease of 21%. 2009 third quarter operating earnings margins in this division increased 35% from the second quarter of 2009 and 13% from the third quarter of 2008 due primarily to increased compression rental revenues. At September 30, 2009 the Gas Compression Services division had a fabrication backlog of approximately $8.4 million, compared to a backlog of $24.8 million at September 30, 2008 and $8.9 million at June 30, 2009. At September 30, 2009, approximately 16,800 horsepower of compression equipment was on rent compared to 10,800 horsepower on rent at September 30, 2008. The gas compression rental fleet operated at an average utilization rate of 84% for the first nine months of 2009 as compared to 73% for the same period in 2008. During the third quarter, Total Energy declared a quarterly dividend of $0.03 per share to shareholders of record on September 30, 2009. This dividend was paid on October 30, 2009. OUTLOOK Industry conditions remain challenging with Western Canadian drilling activity levels currently well below prior years. However, a continued focus on unconventional resource plays, particularly in northeast British Columbia, is expected to benefit the Company as Total Energy is well established in these areas, many of which are winter access only. While industry overcapacity remains an issue in Western Canada, prolonged difficult industry conditions have resulted in capacity reduction through equipment relocation, industry consolidation and attrition. Within the Contract Drilling Services division, Western Canadian spot market rig day rates have recently increased since bottoming earlier this year and have generally stabilized at a level where the Company is willing to work its equipment. Total Energy's focus on the heavy double market is expected to positively impact winter rig utilization relative to the third quarter. The Drilling and Production Rentals division's quality asset base and extensive infrastructure in northeast British Columbia and southeast Saskatchewan is expected to benefit from increased winter activity in these areas. The Gas Compression Services division is focused on increasing its share of the Canadian natural gas compression market and increasing its exposure to foreign markets. Increasing market awareness of the NOMADTM line of large horsepower natural gas compression and the substantial cost savings arising from the deployment of this proprietary technology is also expected to benefit this division despite a challenging natural gas market. Total Energy's balance sheet remains strong with a long-term debt (including current portion) to long-term debt plus equity ratio of 0.15 to 1.0, $10.2 million of working capital and $6.4 million of net debt as at September 30, 2009. As at September 30, 2009, $22.5 million was available under the Company's existing credit facilities subject to normal margining requirements. CONFERENCE CALL At 2:30 p.m. MST today, Total Energy will conduct a conference call to discuss its third quarter financial results. Daniel Halyk, President & Chief Executive Officer, will host the conference call. The call is open to Shareholders and all other interested persons. If you wish to participate, call (866) 223-7781. Those who are unable to listen to the call live may listen to a recording of it by calling (800) 408-3053 (passcode 3205300). The recording will be available until November 12, 2009. SELECTED FINANCIAL INFORMATION Selected financial information relating to the three and nine-month periods ended September 30, 2009 and 2008 is attached to this press release. This information should be read in conjunction with the unaudited consolidated financial statements of Total Energy and the attached notes to the consolidated financial statements and management's discussion and analysis to be issued in due course and reproduced in the Corporation's third quarter report.
SEGMENTED INFORMATION The Corporation operates in three main industry segments, which are substantially in one geographic segment. These segments are Contract Drilling Services, which includes the contracting of drilling equipment and the provision of labour required to operate the equipment, Drilling and Production Rentals, which includes the rental and transportation of equipment used in drilling and production operations and Gas Compression Services, which includes the fabrication, sale, rental and servicing of natural gas compression equipment.
Total Energy Services Inc. is a growth oriented energy services corporation involved in contract drilling services, drilling and production rentals and natural gas compression equipment fabrication, sales, rental and service. The shares of Total Energy are listed and trade on the TSX under the symbol TOT. Notes to Financial Highlights (1) Operating earnings are earnings before reorganization costs, gain (loss) on disposal of equipment and income taxes. EBITDA means earnings before interest, taxes, depreciation and amortization and is equal to earnings before income taxes plus interest on long-term debt plus other interest plus depreciation. Cashflow means cash provided by operations before changes in non-cash working capital items. Operating earnings, EBITDA and cashflow are not recognized measures under Canadian generally accepted accounting principles ("GAAP"). Management believes in addition to net earnings, operating earnings, EBITDA and cashflow are useful supplemental measures as they provide an indication of the results generated by the Corporation'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 Corporation's primary business activities without consideration of the timing of the monetization of non-cash working capital items. Investors should be cautioned, however, that operating earnings, EBITDA and cashflow should not be construed as an alternative to net earnings determined in accordance with GAAP as an indicator of Total Energy's performance. Total Energy's method of calculating operating earnings, EBITDA and cashflow may differ from other organizations and, accordingly, operating earnings, EBITDA and cashflow 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 obligations under capital leases plus current liabilities minus current assets. 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. Such forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of Total Energy to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such factors include fluctuations in the market for oil and natural gas and related products and services, political and economic conditions, the demand for products and services provided by Total Energy, Total Energy's ability to attract and retain key personnel and other factors. 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 Toronto Stock Exchange has neither approved nor disapproved of the information contained herein. |
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