In the contract drilling segment, significant costs are incurred and passed through to customers with little or no markup. For the quarter and year ended December 31, 2012 these costs aggregated $10.4 million and $35 million respectively. In the same respective periods in 2011 these costs amounted to $11.3 million and $41.6 million. Savanna's accounting policy with respect to cost recoveries billed to customers is to include them as both revenue and operating expenses rather than net them. Although Savanna believes this most appropriately reflects the substance of the underlying transactions, the accounting treatment of cost recoveries varies in the oilfield services industry. There is no effect on overall operating margins whether cost recoveries are netted or not; however, the different treatments do result in different operating margin percentages as the same dollar margin is factored against lower revenue when cost recoveries are netted. As a result, Savanna believes it is useful to provide revenue excluding cost recoveries and the resulting operating margin percentages for comparative purposes.
SUMMARY OF RESULTS - OILFIELD SERVICES
The following is a summary of selected financial and operating information of the Company's oilfield services segment:
--------------------------------------------------------------------------------------------------------------------------------------------------------(Stated in thousands of dollars, except revenue per hour) Three Months Ended Twelve Months Ended----------------------------------------------------------------------------December 31 2012 2011 Change 2012 2011 ChangeRevenue $ 48,769 $ 52,244 (7%) $ 184,920 $ 162,607 14%Operating expenses $ 36,389 $ 37,274 (2%) $ 139,910 $ 114,924 22%Operating margin(1) $ 12,380 $ 14,970 (17%) $ 45,010 $ 47,683 (6%)Operating margin %(1) 25% 29% 24% 29%Operating hours(2) 43,312 52,506 (18%) 173,190 170,936 1%Revenue per hour $ 906 $ 839 8% $ 874 $ 777 12%----------------------------------------------------------------------------
The following summarizes the operating results for the oilfield services segment by geographic area for the quarter and year ended December 31, 2012 and 2011:
-------------------------------------------------------------------------------------------------------------------------------------------------------- U.S. and(Stated in thousands of dollars) Canada International TotalQuarter ended December 31, 2012--------------------------------------------------------------------------------------------------------------------------------------------------------Revenue 34,060 14,709 48,769Operating margin(1) 10,217 2,163 12,380Operating margin %(1) 30% 15% 25%Average number of net rigs deployed 86 14 100Utilization %(2) 43% 59% 47%------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------(Stated in thousands of dollars) U.S. andQuarter ended December 31, 2011 Canada International Total----------------------------------------------------------------------------Revenue 42,593 9,651 52,244Operating margin(1) 12,785 2,185 14,970Operating margin %(1) 30% 23% 29%Average number of net rigs deployed 89 13 102Utilization %(2) 54% 67% 56%----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------(Stated in thousands of dollars) U.S. and Canada International TotalYear ended December 31, 2012--------------------------------------------------------------------------------------------------------------------------------------------------------Revenue 132,383 52,537 184,920Operating margin(1) 34,899 10,111 45,010Operating margin %(1) 26% 19% 24%Average number of net rigs deployed 86 14 100Utilization %(2) 43% 62% 47%----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------(Stated in thousands of dollars) U.S. and Canada International TotalYear ended December 31, 2011--------------------------------------------------------------------------------------------------------------------------------------------------------Revenue 128,686 33,921 162,607Operating margin(1) 39,969 7,714 47,683Operating margin %(1) 31% 23% 29%Average number of net rigs deployed 73 12 85Utilization %(2) 52% 76% 55%--------------------------------------------------------------------------------------------------------------------------------------------------------
