FIRST QUARTER 2014 RESULTS
SELECTED FINANCIAL INFORMATION
The tables below provide a summary of Calmena's financial and operating results as at and for the three months ended
Three months March 31, ($ thousands, except per share amounts) 2014 2013 ---------------------------------------------------------------------------- Revenue 18,236 39,510 EBITDAS(i) (502) 4,272 Net loss for the period (2,587) (1,629) Funds flow from operations(i) 996 4,312 ---------------------------------------------------------------------------- Net loss per share - basic and diluted (0.01) (0.01) Funds flow from operations per share - basic and diluted(i) 0.00 0.01 ---------------------------------------------------------------------------- (i) see non-GAAP measures section of this release for a description of this term. March 31, December 31, ($ thousands) 2014 2013 ---------------------------------------------------------------------------- Total assets 133,161 132,578 Borrowings and debt, net of cash 40,028 40,111 Shareholders' equity 71,936 71,878 ----------------------------------------------------------------------------
-- For the three months ended
March 31, 2014, the Company recorded revenue of $18.2 millionand EBITDAS of negative $0.5 millioncompared to revenue of $35.9 millionand EBITDAS of $4.3 millionfor the comparable period in 2013. The main drivers of the decrease are the slowdown in industry drilling in Mexicoinitiated during the second quarter of 2013 which resulted in the termination of our drilling contracts; the closing of contract drilling operations in Braziland Colombia, and the sale of Calmena's Canadian wireline and contract drilling service lines in the second and third quarters of 2013. -- During 2014 we made the decision to close down the directional operations in Colombiaand Mexicoto reduce costs and re-deploy the assets to the more profitable US market. These shut downs will be substantially complete in the second quarter of 2014. -- On March 31, 2014, Calmena and its senior lender ("Senior Lender") entered into an extension agreement (the "Extension") pursuant to which the Senior Lender agreed to continue to forbear from demanding payment or enforcing its security under its credit facilities ("Credit Facilities") until the earlier of June 30, 2014or a default as defined in the Extension. Pursuant to the terms of the Extension, the Company paid $1.0 millionto the Senior Lender as a permanent reduction of the amount owing under the Credit Facilities on signing the Extension. Also pursuant to the Extension, the Company was required, on or before April 30, 2014, to pay $9.0 millionas a permanent reduction of the amount owing under the Credit Facilities or provide evidence satisfactory to the Senior Lender, by such date, that the Company had entered into one or more binding transactions to sell assets that will allow the Company to fund the required $9.0 millionpermanent reduction by May 31, 2014. The forbearance term may be further extended to July 31, 2014if the Company provides evidence satisfactory to the Senior Lender, by June 30, 2014, that the Company has entered into one or more binding transactions to sell assets that will allow the Company to fully repay all amounts owing under the Credit Facilities by July 31, 2014. The April 30, 2014deadline was subsequently extended to May 9, 2014. -- In May we announced two transactions that will complete the divestiture of all of our remaining Canadian service lines. -- On May 8, 2014we announced that we had entered into a definitive agreement (the "Agreement") to sell our Equipment Rentals and FracFluids Management service lines to Great Prairie Energy Services Inc. (TSX Venture: GPE) ("Great Prairie") for cash consideration of $10.0 million. The closing is subject to certain customary closing conditions, including Great Prairie obtaining approval of the transaction from the TSX Venture Exchange. The sale is expected to close on or about May 15, 2014. Proceeds from this sale in the amount of $9.0 millionwill fund a reduction of amounts owing by Calmena under its credit facilities with its senior lender. The remaining $1.0 millionwill fund general working capital requirements. On closing, the $9.0 millionrepayment will meet the initial repayment condition described in the above noted Extension. -- On May 9, 2014we announced that we had sold our Canadian based Drilling Technologies research and manufacturing division and certain related assets to FastCAP Systems Corporation("FastCAP") for consideration comprised of US$1.0 millioncash and US$1.2 millionof in kind consideration, in the form of services and technology products provided to Calmena by FastCAP over the next four years. The US$1.0 millioncash proceeds from this transaction was used to fund a reduction of amounts owing by Calmena under its credit facilities with its senior lender. -- Net debt(i) as at March 31, 2014was $34.6 millioncompared to $46.3 millionas at March 31, 2013. If the above transactions had occurred on March 31, 2014, net debt would have been $23.6 million.
(i) see non-GAAP measures section of this release for a description of this term.
During the first quarter of 2014, our US directional services business experienced higher levels of activity, revenue and profitability than the same quarter in 2013. We anticipate this trend will continue for the remainder of the year, on a year over year basis. We continue to focus on our core midcontinent operating area, are repatriating equipment from
In the first quarter of 2014 we made the decision to close down our operations in
Calmena's Brazilian rigs are not currently contracted. The Company continues to explore strategic opportunities to divest of these rigs.
Late in the first quarter of 2014, Calmena received notice from its customer in
Management continues to focus on opportunities to deploy our
Calmena is a diversified energy services company that provides well construction services to its customers operating in
This press release contains certain forward-looking statements relating to Calmena's plans, strategies, objectives, expectations and intentions. Expressions such as "may", "anticipate", "expect", "project", "believe", "hope", "estimate", "intend", "will", "continue", "foresee", and "forecast" and similar expressions and statements are intended to identify forward looking statements. Such statements represent Calmena's internal projections, estimates or beliefs concerning, among other things, an outlook for the Company's operations and other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions and actual events or results may differ materially. Although Calmena believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Calmena's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Calmena.
In particular, forward-looking statements included in this press release include, but are not limited to, statements with respect to the anticipated timing of completion of the shut down of Calmena's directional operations in
These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Calmena's control, including, but not limited to, the risk that the Company is unable to refinance or extend the deadline for repayment of the Credit Facilities; risk that the lender under the Credit Facilities will take further steps to demand payment under the Credit Facilities or enforce its security thereunder in the immediate future; failure to realize the anticipated benefits of strategic dispositions; failure to successfully negotiate and/or complete further transactions pursuant to the Company's strategic alternatives process; failure to achieve an increase in demand for the Company's drilling rigs and other product offerings; failure to complete the transaction with Great Prairie on the timing anticipated or at all; the impact of general economic conditions; industry conditions and changes in industry conditions; volatility of commodity prices; decreased demand for energy services; competition from other energy services providers; the lack of availability of qualified personnel or management; ability of Calmena to re-finance or extend the maturity date of its senior debt and generate positive cash flow; failure of counter parties to perform on contracts; failure to successfully negotiate new contracts or renew existing contracts; failure to successfully deploy rigs; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; risks associated with international operations, including, but not limited to, effect of civil unrest on the Company's operations in
With respect to forward-looking statements contained in this press release, Calmena has made assumptions regarding, but not limited to: the implementation of the Company's business prospects and strategies; the ability of the Company to continue as a going concern and continue operations; current commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; ability of Calmena to re-finance or extend the deadline for repayment of its senior debt; that the Senior Lender will forbear from taking further steps to demand repayment or enforcing their security under the Credit Facilities; ability of Calmena to renew existing contracts and enter into new contracts; rig utilization and pricing; future exchange rates; the impact of increasing competition; conditions in general economic and financial markets; industry conditions; supply and demand for oilfield services relating to the drilling, completion and maintenance of oil and gas wells as well as services related to oilfield equipment rentals and production and ancillary services; effects of regulation by governmental agencies; trends in Calmena's operations; and future operating costs.
Management has included the above summary of assumptions and risks related to forward-looking statements provided in this press release in order to provide shareholders with a more complete perspective on Calmena's current and future operations and such information may not be appropriate for other purposes. Calmena's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Calmena will derive therefrom. Readers are cautioned that the foregoing lists of factors are not exhaustive.
These forward-looking statements are made as of the date of this press release and Calmena disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
NON GAAP MEASURES
The following measures are used within this release, but not recognized under GAAP. As a result, the method of calculation may not be comparable with other companies. These measures should not be considered alternatives to net (loss) income and net (loss) income per share as calculated in accordance with GAAP:
EBITDAS (Earnings before interest, income taxes, depreciation and amortization, other items of income and expense and share based compensation) - Management believes that EBITDAS as derived from information reported in the unaudited condensed Consolidated Statement of Operations is a useful supplemental measure as it provides an indication of the Company's ability to generate funds by the Company's core business activities prior to consideration of how those activities are financed, the impact of foreign exchange, how the results are taxed, how funds are invested or how non-cash depreciation and amortization charges affect results. See the reconciliation of EBITDAS to net income (loss) in the Company's management's discussion and analysis for the three months ended
March 31, 2014. Funds flow from operations: Management believes that in addition to cash generated from operations, funds flow from operations is a useful supplemental measure because it provides an indication of the funds generated by the Corporation's principal business activities prior to the consideration of working capital, which is primarily made up of highly liquid balances. See the reconciliation of funds flow from operations in the Company's management's discussion and analysis for the three months ended March 31, 2014. Net debt: Management believes that net debt is a useful supplemental measure because it provides an indication of the Company's leverage compared to liquid assets. Net debt is computed by taking current assets less current liabilities and long-term borrowings and debt.
The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.
FOR FURTHER INFORMATION PLEASE CONTACT:
John KingPresident and Chief Executive Officer Peter BalkwillVice President, Finance & CFO Calmena Energy Services Inc.(403) 225-3879 (403) 366-2066 (FAX) www.calmena.com Source: Calmena Energy Services Inc.