Revenue and adjusted EBITDA from Completion and Production Services were both down compared to the first quarter of 2012: revenue was $104 million or 7% lower than the first quarter of 2012; adjusted EBITDA was $30 million or 23% lower than the first quarter of 2012. These declines are mainly because customers reduced spending in response to greater economic uncertainty, which reduced activity across all our service lines.
Well servicing activity in the first quarter was 5% lower than the first quarter of 2012 due to lower industry activity. Approximately 85% of the first quarter service rig activity was oil related. Our rental division activity in the first quarter was lower than the first quarter of 2012 mainly due to the amount of surface storage capacity in the Western Canada Sedimentary Basin.
Average service rig revenue per operating hour in the first quarter was $813, or $6 lower than the first quarter of 2012. Increased coil tubing operations in the current quarter, which operate at higher rates, was offset by a reduction in the service rig rate due to geographic mix.
Operating costs as a percentage of revenue increased to 67% in the first quarter of 2013, from 61% in the first quarter of 2012. Operating costs per service rig operating hour were higher than in the first quarter of 2012 mainly because of the higher cost associated with the new coil tubing operations.
Depreciation in the first quarter of 2013 was 15% higher than the first quarter of 2012 because of the depreciation expense associated with new equipment. We use the straight-line method of calculating depreciation for our completion and production business lines, except for the well servicing division, where we use the unit of production method.
SEGMENT REVIEW OF CORPORATE AND OTHER
Our corporate segment is viewed as support functions that provide assistance to more than one segment. The Corporate and other segment had an adjusted EBITDA loss of $22 million for the first quarter of 2013, in line with the prior year comparative period.
Net financial charges for the quarter were $23 million, an increase of $1 million from the first quarter of 2012.
We had a foreign exchange gain of $3 million during the first quarter of 2013 due to the weakening of the Canadian dollar versus the U.S. dollar and the impact thereof on the net U.S. dollar denominated monetary position in the Canadian dollar-based companies.
Income taxes for the quarter were $18 million, a decrease of $15 million compared to the prior year primarily as a result of reduced operating results and income taxed at lower rates.
LIQUIDITY AND CAPITAL RESOURCES
The oilfield services business is inherently cyclical in nature. To manage this, we focus on maintaining a strong balance sheet so we have the financial flexibility we need to continue to manage our growth and cash flow, no matter where we are in the business cycle.
We apply a disciplined approach to managing and tracking results of our operations to keep costs down. We maintain a variable cost structure so we can be responsive to changing competition and demand.
Our maintenance capital expenditures are tightly governed by and highly responsive to activity levels with additional cost savings leverage provided through our internal manufacturing and supply divisions. Term contracts on expansion capital for new build rig programs provide more certainty of future revenues and return on our capital investments.
Most Popular Stories
- Updates on Everglades' Stranded Pilot Whales
- Stolen Cobalt-60 Recovered in Mexico
- Hezbollah Chief's Assassination Claimed by Sunni Group
- Wind Power and Wildlife Can Coexist
- Sarmiento to Handle Greeley Latin Ops
- Ford Mustang Still Packs Power
- Allstate Seeks to Invest in Minority Firms
- First-time Jobless Claims Drop Below 300,000
- White House Pushes to Extend Unemployment Benefits
- Elizabeth Warren Ends 2016 Presidential Rumors