NOTES:
(1) Operating margin, operating margin percentage, EBITDAS, and operating cash flows are not recognized measures under IFRS, and are unlikely to be comparable to similar measures presented by other companies. Management believes that, in addition to net earnings, the measures described above are useful as they provide an indication of the results generated by the Company's principal business activities both prior to and after consideration of how those activities are financed, the effect of foreign exchange and how the results are taxed in various jurisdictions. Similarly, capital assets, working capital, and net debt are not recognized measures under IFRS; however, management believes that these measures are useful as they provide an indication of the Company's investment in operating assets, liquidity and leverage.
-- Operating margin is defined as revenue less operating expenses.-- Operating margin percentage is defined as revenue less operating expenses divided by revenue.-- EBITDAS is defined as earnings before finance expenses, income taxes, depreciation, amortization and share-based compensation and excludes other expenses (income).-- Operating cash flows are defined as cash flows from operating activities before changes in non-cash working capital.-- Capital assets are defined as property, equipment and intangible assets.-- The acquisition of capital assets includes the purchase of property, equipment and intangible assets, capital assets acquired through business acquisitions and non-cash capital asset additions.-- Working capital is defined as total current assets less total current liabilities excluding the current portions of long-term debt.-- Net debt is defined as long-term debt, including the current portions thereof and excluding unamortized debt issue costs, less working capital as defined above.
(2) Certain industry related terms used in this press release are defined or clarified as follows:
-- The number of operating days, spud to release days and operating hours are all on a net basis which means only Savanna's proportionate share of any rigs held in 50/50 limited partnerships have been included.-- Savanna reports its drilling rig utilization based on spud to release time for its operational drilling rigs and excludes moving, rig up and tear down time, even though revenue may be earned during this time. Source of Canadian industry average utilization figures: Canadian Association of Oilwell Drilling Contractors. Industry utilization figures are calculated in the same manner as the Company.-- Savanna reports its service rig utilization for its operational service rigs based on standard hours of 3,650 per rig per year. Reliable industry average utilization figures, specific to well servicing, are not available.
In Q4 2012, relatively lower industry demand levels resulted in an overall decrease in revenue compared to Q4 2011 and reduced Savanna's Q4 2012 EBITDAS(1) by $13.8 million to $29.3 million from $43.1 million in Q4 2011. Savanna's net earnings also decreased compared to Q4 2011 to $3.1 million, $13.6 million lower than the comparative quarter. Net earnings for Q4 2012 include non-routine expenses related to crew retention ($2.5 million) and non-cash impairment losses ($1 million); crew retention costs were $1.5 million in Q4 2011. Q4 2012 net earnings also decreased due to higher depreciation and amortization expenses based on an increased capital asset cost base, higher finance expenses, and asset disposal and foreign exchange losses compared to gains in Q4 2011. The Company incurred $0.2 million in losses on asset disposals and foreign exchange in Q4 2012 compared to $1.3 million in gains in Q4 2011, reducing net earnings by $1.5 million, comparatively.
