All credit facilities are secured by a general security agreement over all assets of the Corporation located in Canada and the US. As at December 31, 2012, the Corporation was in compliance with all of its bank debt covenants.
Cash Requirements for Capital Expenditures
Historically, the Corporation has financed its capital expenditures and acquisitions through cash flows from operating activities, debt and equity. The 2013 capital budget has been set at $30.4 million subject to quarterly review of the Board of Directors. These planned expenditures are expected to be financed from a combination of one or more of the following, cash flow from operations, the Corporation's unused credit facilities or equity, if necessary. However, if a sustained period of market uncertainty and financial market volatility persists in 2013, the Corporation's activity levels, cash flows and access to credit may be negatively impacted, and the expenditure level would be reduced accordingly. Conversely, if future growth opportunities present themselves, the Corporation would look at expanding this planned capital expenditure amount.
During the year, PHX Energy invested in shares of and entered a Joint Venture with RMS, who has developed an EDR technology that offers drilling operators the ability to remotely view down hole data, monitor drilling progress in real-time and create meaningful data analysis. There are many synergies between the EDR services offered by RMS and the Corporation's current service offering that can be realized. PHX Energy believes that these investments present a positive opportunity to participate in an attractive segment of the oil and natural gas industry that has few competitors and will strategically assist the Corporation in achieving its long-term goals to expand its international and US operating segments. The Joint Venture couples PHX Energy's marketing expertise and relationships in the US and internationally with RMS's technical expertise related to their EDR products and services.
On January 25, 2012, the Corporation invested in publicly traded equity securities of RMS, which have been designated as financial assets through profit or loss.
On May 18, 2012, the Corporation entered into a joint venture agreement with RMS, pursuant to which, the parties have incorporated RigManager International Inc. ("RMII") which is equally owned by the two parties. Pursuant to the joint venture, RMS transferred all of its interest in its wholly-owned US subsidiary, RigManager Inc., to RMII and granted RMII an exclusive perpetual license to market and distribute RMS' EDR technology worldwide outside Canada. During the year, RMII continued operations in the US and started operations in Albania and Mexico. It is expected operations in Russia in will commence in 2013.
On October 22, 2012, the Corporation completed a private placement purchase of additional RMS shares thereby increasing its interest in RMS to 19.5 percent. As part of this transaction, a second representative of PHX Energy was appointed to the Board of Directors of RMS. As at October 22, 2012, RMS became an equity-accounted investee of PHX Energy.
In 2012, PHX Energy navigated through various challenges and through all this is proud of its people and the accomplishments achieved. Amongst a year of mixed opportunities and challenges, PHX Energy again executed operationally and reported record revenue, operating days and EBITDA.
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