ENP Newswire -
Release date- 31072014 -
Additional information relating to the Company, including the Company's financial statements and management's discussion and analysis as at and for the three and six months ended
All amounts are denominated in Canadian dollars (CDN$) unless otherwise identified.
Second Quarter 2014 Highlights:
Operating Revenue totalled
Utilization per operating day in the Canadian contract drilling segment improved to 34% as compared to 28% in the second quarter of 2013 and the CAODC industry average of 25%. In
Total well servicing hours in Western's production services segment increased significantly in the second quarter of 2014 to 23,433 hours as compared to 13,718 hours in the second quarter of 2013, a 71% increase, due to increased activity. As a result, well servicing utilization improved to 40% as compared to 30% in the second quarter of 2013;
During the second quarter of 2014, capital expenditures totalled
Additionally, Western is pleased to announce a
Year to Date Highlights:
Operating Revenue totalled
On a year to date basis, contract drilling utilization per operating day in
For the six month period ended
During the first six months of 2014, capital expenditures totalled
Additionally, two 1,500 hp AC pad conversions were completed in
Western provides contract drilling services through its division, Horizon Drilling ('Horizon') in
Western also provides oilfield rental services in
Western currently has a drilling rig fleet of 54 rigs, with an average age of approximately six years. Western is the sixth largest drilling contractor in
Western's well servicing fleet is one of the newest in the
During the first six months of 2014 commodity prices have improved as compared to the same period in the prior year. The price for light crude oil, such as Edmonton Par, increased on average by 15% and 14% for the three and six month periods ended
Natural gas prices have also improved significantly in the three and six months ended
Horizontal wells in the WCSB, as a percentage of all wells drilled, increased in the first six months of 2014 to 76% compared to 69% in the first six months of 2013. This has resulted in continued demand in the WCSB for Western's ELR drilling rigs, as industry utilization rates for the second quarter of 2014 averaged 25%, which is an increase over the five year average of 22% and an improvement over the prior year when industry utilization averaged 18%.
Similarly, industry utilization rates for the first six months of 2014 averaged 42%, which is consistent with the five year average of 42% and an improvement over the prior year when industry utilization averaged 38%.
Western's drilling rig fleet is specifically suited for drilling horizontal wells of increased complexity. In total, 94% of Western's fleet are ELR drilling rigs with depth ratings greater than 3,000 meters and all of Western's rigs are capable of drilling resource based horizontal wells. Currently, 21 of Western's 54 drilling rigs (or 39%) are operating under long term take-or-pay contracts, with 15 of these contracts expiring between 2015 and 2017, providing a base level of future revenue.
These contracts typically generate 250 operating days per year in
Western's approved capital spending for 2014 totals approximately
In total, budgeted capital spending has increased by
The majority of Western's expansion capital budget relates to the drilling rig build program, which in addition to the three newly announced drilling rig builds, also includes the construction of one 6,000m ELR AC triple pad drilling rig and one 5,000m telescopic ELR double drilling rig in
Western believes the 2014 capital budget provides a prudent use of cash resources and ensures that it has the flexibility to execute on strategic opportunities as they arise. This budget demonstrates the Company's commitment to maintaining and increasing Western's premier drilling and well servicing rig fleet and expanding Western's strategic presence in the oilfield rental equipment market.
Western will continue to evaluate and expand its operations in a prudent manner and make any required adjustments to its capital program as these opportunities unfold during the remainder of 2014. Currently, Western expects approximately
The increased commodity price environment and improving economic conditions in
Activity is expected to remain strong as liquefied natural gas projects gain approval, crude oil transportation capacity increases through rail and pipeline development, drilling activity increases in various resource plays in
The Company believes Western's modern drilling and well servicing rig fleet, strong utilization, and corporate culture will provide a distinct advantage in retaining and attracting qualified individuals. Western's view is that its modern fleet, strong customer base and solid reputation provide a competitive advantage which will enable the Company to continue its growth strategy and higher than industry average utilization.
Financial Measures Reconciliations
Western uses certain measures in this press release which do not have any standardized meaning as prescribed by International Financial Reporting Standards ('IFRS'). These measures which are derived from information reported in the condensed consolidated statements of operations and comprehensive income may not be comparable to similar measures presented by other reporting issuers. These measures have been described and presented in this press release in order to provide shareholders and potential investors with additional information regarding the Company.
Management believes that in addition to revenue, Operating Revenue is a useful supplemental measure as it provides an indication of the revenue generated by Western's principal operating activities, excluding flow through third party charges.
Management believes that in addition to net income, Gross Margin is a useful supplemental measure as it provides an indication of the results generated by Western's principal operating activities prior to considering administrative expenses, depreciation and amortization, how those activities are financed, the impact of foreign exchange, how the results are taxed, how funds are invested, and how non-cash items and one-time gains and losses affect results.
Management believes that in addition to net income, earnings before interest and finance costs, taxes, depreciation and amortization, other non cash items and one-time gains and losses ('EBITDA') is a useful supplemental measure as it provides an indication of the results generated by the Company's principal operating segments similar to Gross Margin but also factors in the cash administrative expenses incurred in the period.
Management believes that in addition to net income, Operating Earnings is a useful supplemental measure as it provides an indication of the results generated by the Company's principal operating segments similar to EBITDA but also factors in the depreciation expense charged in the period.
Forward-Looking Statements and Information
This press release contains certain statements or disclosures relating to Western that are based on the expectations of Western as well as assumptions made by and information currently available to Western which may constitute forward-looking information under applicable securities laws. All such statements and disclosures, other than those of historical fact, which address activities, events, outcomes, results or developments that Western anticipates or expects may, or will occur in the future (in whole or part) should be considered forward-looking information.
In some cases forward-looking information can be identified by terms such as 'forecast', 'future,' 'may', 'will', 'expect', 'anticipate,', 'believe', 'potential', 'enable', 'plan', 'continue', 'contemplate', 'pro forma', or other comparable terminology.
In particular, forward-looking information in this press release includes, but is not limited to, statements relating to future declaration of dividends; the future demand for the Company's services and equipment; the terms of existing and future drilling contracts in
The material assumptions in making the forward-looking statements in this press release include, but are not limited to, assumptions relating to, demand levels and pricing for oilfield services; fluctuations in the price and demand for oil and natural gas; commodity pricing; general economic and financial market conditions; the Company's ability to finance its operations; the effects of seasonal and weather conditions on operations and facilities; the competitive environment to which the various business segments are, or may be, exposed in all aspects of their business; the ability of the Company's various business segments to access equipment (including spare parts and new technologies); changes in laws or regulations; currency exchange fluctuations and the ability of the Company to attract and retain skilled labour and qualified management; the ability to retain and attract significant customers and other unforeseen conditions which could impact the use of services supplied by Western and Western's ability to response to such conditions.
Although Western believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information as Western cannot give any assurance that they will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks.
These include, but are not limited to, the risk that the demand for oilfield services will not continue to improve for the remainder of 2014, and other general industry, economic, market and business conditions. Readers are cautioned that the foregoing list of risks, uncertainties and assumptions are not exhaustive. Additional information on these and other risk factors that could affect Western's operations and financial results are included in Western's annual information from which may be accessed through the SEDAR website at www.sedar.com.
The forward-looking statements and information contained in this press release are made as of the date hereof and Western does not undertake any obligation to update publicly or revise any forward-looking statements and information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
President and CEO
Senior VP Finance and CFO
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