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CALGARY, ALBERTA -- (Marketwire) -- 03/04/13 -- Secure Energy Services Inc. ("Secure" or the "Corporation") (TSX: SES) today announced financial and operational results for the three months and year ended December 31, 2012. The following should be read in conjunction with the management's discussion and analysis ("MD&A"), the consolidated financial statements and notes of Secure which are available on SEDAR at www.sedar.com.
2012 FINANCIAL AND OPERATIONAL HIGHLIGHTS Three Months Ended Dec 31, Year Ended Dec 31,($000's except share and per % % share data)(1) 2012 2011 Change 2012 2011 Change--------------------------------------------------------------------------------------------------------------------------------------------------------Revenue (excludes oil purchase and resale) 108,356 101,999 6 392,192 231,051 70Oil purchase and resale 170,501 129,262 32 637,248 320,148 99----------------------------------------------------------------------------Total revenue 278,857 231,261 21 1,029,440 551,199 87----------------------------------------------------------------------------EBITDA (2) 28,360 24,785 14 99,624 61,964 61 Per share ($), basic 0.27 0.28 (4) 1.03 0.79 30 Per share ($), diluted 0.26 0.26 - 1.00 0.75 33----------------------------------------------------------------------------Net earnings 10,634 10,290 3 33,052 22,383 48 Per share ($), basic 0.10 0.12 (17) 0.34 0.28 21 Per share ($), diluted 0.10 0.11 (9) 0.33 0.27 22----------------------------------------------------------------------------Capital Expenditures 67,604 29,330 130 201,587 202,053 -Total assets 767,911 603,083 27 767,911 603,083 27Long term borrowings 122,810 119,070 3 122,810 119,070 3----------------------------------------------------------------------------Common Shares - end of period 104,627,002 90,156,688 16 104,627,002 90,156,688 16Weighted average common shares basic 104,530,375 89,481,219 17 96,388,929 78,540,224 23 diluted 107,456,318 93,718,121 15 99,362,698 82,944,975 20--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Certain amounts were reclassified to conform with current period presentation(2) Refer to "Non GAAP measures and operational definitions"
Secure's financial performance for 2012 increased significantly over 2011 resulting in a record year. For the year ended December 31, 2012, revenue (excluding oil purchase and resale) increased 70% to $392.2 million and net earnings improved 48% to $33.1 million while total assets increased 27% to total $767.9 million when compared to the year ended December 31, 2011. The Corporation executed on its organic growth and expansion initiatives adding $167.8 million of new facilities and equipment, and completing $36.6 million of acquisitions. Secure's results reflect increased demand at existing processing, recovery and disposal ("PRD") facilities and increased market share in the drilling services ("DS") division despite slower oil and natural gas industry activity in the second half of 2012. The PRD division 2012 operating margin of $79.6 million increased 63% from 2011 as a result of new facilities and expansions as well as greater demand for the Corporation's services. The DS division added operating margin of $63.0 million and increased its year over year market share in the Western Canadian Sedimentary Basin ("WCSB") to 29% from 26%.
-- RECORD REVENUE AND EBITDA -- Revenue for the year ended December 31, 2012 (excluding oil purchase and resale) increased 70% compared to the year ended December 31, 2011. The major contributing factors from the PRD division included the new facilities and expansions completed during the year, higher disposal and processing volumes from existing facilities, and a key acquisition in North Dakota. The DS division revenue increased significantly as a result of twelve months of operations in 2012 versus seven months in 2011, completion of two key acquisitions and through increased demand for its services. The Corporation's fourth quarter 2012 revenue (excluding oil purchase and resale) increased to $108.4 million from $102.0 million in the fourth quarter of 2011. The increase relates to higher demand, new facilities and expansions completed in 2012 and acquisitions executed during the year, offset by a reduction in 2012 fourth quarter activity levels compared to the fourth quarter of 2011. Despite quarter over quarter average rig count decline of 28% as reported by the Canadian Association of Oilwell Drilling Contractors ("CAODC"), the DS division fourth quarter 2012 revenue decreased by only 4% when compared to the fourth quarter of the prior year; -- Oil purchase and resale revenue in the PRD division for the three and twelve months ended December 31, 2012 of $170.5 million and $637.2 million increased 32% and 99% respectively from the same periods in 2011. The increase in the fourth quarter of 2012 was a result of the addition of the Dawson FST crude oil treating and terminalling plant in June of 2012. The significant increase in the year resulted from the Drayton Valley FST being operational for a full year, the addition of the crude oil treating and terminalling at the Dawson FST and overall increased demand; and -- EBITDA (earnings before interest, taxes, depreciation and amortization) for the three and twelve months ended December 31, 2012 increased 14% and 61%, respectively, compared to the three and twelve months ended December 31, 2011. Increases in revenue as discussed above and higher operating margins translated into higher EBITDA for the three months and year ended December 31, 2012.-- DIVERSIFICATION INTO NEW MARKETS AND NEW AREAS -- Organic expansion and growth capital totaled $66.4 million and $167.8 million for the three and twelve months ended December 31, 2012. Total assets as of December 31, 2012 were $767.9 million compared to $603.1 million as of December 31, 2011. New facilities completed, expansion of existing facilities and new projects initiated in the year included: -- Drayton Valley FST Oil Based Mud ("OBM") blending facility; -- South Grande Prairie mud storage system; -- Wild River stand alone water disposal facility ("SWD") (permanent facility); -- Obed, Dawson and Fox Creek full service terminal (" FST") expansions including the Phase III (oil treating and terminalling) at Dawson; -- South Grande Prairie and Pembina landfill expansions; -- Fox Creek landfill (completed in December of 2012); -- Crosby North Dakota SWD, (completed in December of 2012), Secure's first organic project in the United States; -- Construction of the new Judy Creek FST (joint venture with Pembina Pipelines Corporation) and the Rocky FST; both expected to be operational in the second quarter of 2013; -- Construction of the new Edson SWD, temporary facility scheduled to open in the first quarter of 2013 with permanent facility forecasted to be operational the beginning of 2014; -- New Kabob SWD, initial development complete with construction commencing in the second quarter; and -- Various long lead equipment purchases for the 2013 capital projects. -- Strategic acquisition capital totaled $36.6 million ($30.8 million cash portion) in 2012, targeting under- serviced and capacity constrained markets: -- Asset purchase of DRD Saltwater Disposal LLC ("DRD" ) in July provided entry into the North Dakota Bakken, expanding PRD operations outside of the WCSB into the United States; -- New West Drilling Fluids Inc. acquisition in January expanded the DS division drilling fluid solutions into the heavy oil and oil sands area of north eastern Alberta; and -- Purchase of the assets of Imperial Drilling Fluids Engineering Inc. ("IDF"). The acquisition provides the Corporation with access to the developing Niobrara area in the U.S. Rockies.-- SOLID BALANCE SHEET -- On November 1, 2012 Secure increased its syndicated credit facility from $200.0 million to $300.0 million through an amended and restated extendible credit facility agreement. The credit agreement includes an accordion provision to increase the credit facility by $50.0 million to $350.0 million; -- In August, a bought deal financing was completed raising total proceeds of $86.3 million. The net proceeds from the financing were used to initially repay the Corporation's credit facility. Funds have been redrawn on the credit facility to fund a portion of the 2012 and 2013 capital projects; -- Funds from operations increased 12% in the fourth quarter of 2012 to $24.8 million from the comparative quarter in 2011 and 57% for the year ended December 31, 2012 compared to the same period in 2011. Increases were used to partially fund the Corporation's 2012 capital projects thereby minimizing draws on the credit facility; and -- Secure's debt to EBITDA ratio was 1.51 as of December 31, 2012 compared to 2.07 as of December 31, 2011.PRD DIVISION OPERATING HIGHLIGHTS Three Months Ended Dec 31, Year Ended Dec 31, % %($000's)(1) 2012 2011 Change 2012 2011 Change----------------------------------------------------------------------------Revenue Processing, recovery and disposal services (a) 36,558 27,324 34 129,893 83,345 56 Oil purchase and resale service 170,502 129,262 32 637,248 320,148 99 -------------------------------------------------- Total PRD division revenue 207,060 156,586 32 767,141 403,493 90 --------------------------------------------------Operating Expenses Processing, recovery and disposal services (b) 13,904 10,756 29 50,246 34,581 45 Oil purchase and resale service 170,502 129,262 32 637,248 320,148 99 Depreciation, depletion, and amortization 9,057 6,193 46 29,356 19,153 53 -------------------------------------------------- Total operating expenses 193,463 146,211 32 716,850 373,882 92General and administrative 4,483 3,305 36 14,281 10,041 42 --------------------------------------------------Total PRD division expenses 197,946 149,516 32 731,131 383,923 90Operating Margin (2) (a-b) 22,654 16,568 37 79,647 48,764 63Operating Margin (2) as a % of revenue (a) 62% 61% 2 61% 59% 3----------------------------------------------------------------------------(1) Certain amounts were reclassified to conform with current period presentation (see note below)(2) Refer to "Non GAAP measures and operational definitions"
