Despite challenges in the Canadian market, PHX Energy's operations achieved revenues of $44.3 million for the three-month period ended March 31, 2013, which is the same level of revenue generated in the corresponding 2012-period (2012 - $44.5 million). The level of revenue achieved was the third highest quarterly result in the Corporation's history. During the 2013-quarter, Canadian operations increased market share through new customers gained, greater demand from existing customers, and by the introduction of PHX Energy's RWD technology in Canada. In the first quarter of 2013, operating days increased by 8 percent to 3,963 days (2012 - 3,678 days). In comparison, total industry horizontal and directional drilling activity, as measured by drilling days, was 3 percent lower in the 2013-quarter, 38,432 days, compared to the 2012-quarter's 39,784 days. (Source: Daily Oil Bulletin)
The positive impact of activity levels on revenues was offset by lower average day rates which decreased by 7 percent to $11,190 in the 2013-quarter from $12,096 in the 2012-quarter. The factors that negatively impacted 2013 day rates included day rate pressures from 2012 continuing through the first quarter of 2013 and PHX Energy experiencing a 10 percent increase in drilling days associated with directional wells, which require fewer personnel than horizontal wells.
In the 2013-quarter, PHX Energy's oil well drilling activity (as measured by operating days) continued to increase representing approximately 82 percent of its overall Canadian activity as compared to 78 percent in the 2012-quarter. During the first quarter of 2013, PHX Energy was most active in Montney, Viking, Cardium, Shaunavon, Bakken, and Frobisher areas.
Reportable segment profit before tax for the first quarter of 2013 decreased to $9.6 million from $11.0 million in the 2012-quarter. Decreased profitability realized during the 2013-quarter was due to lower day rates and higher infrastructure costs.
United States(Stated in thousands of dollars) Three-month periods ended March 31, 2013 2012 % Change--------------------------------------------------------------------------------------------------------------------------------------------------------Revenue 39,383 27,165 45Reportable segment profit before tax 2,780 31 n.m.--------------------------------------------------------------------------------------------------------------------------------------------------------
n.m. - not meaningful
Phoenix's USA's operations remained strong and continued to grow in the first quarter of 2013. Segment revenue was $39.4 million, 45 percent higher than the $27.2 million in the 2012-quarter, and the second highest quarterly result in the Corporation's history. Phoenix's USA operating days grew by 30 percent to 3,131 days from 2,403 days in the 2012-quarter. Overall day rates realized, excluding the motor rental division in Midland, Texas, also increased by 8 percent in the 2013-quarter to $11,967 compared to $11,051 in the 2012-quarter. Improved day rates resulted primarily from the greater demand for PHX Energy's value added technologies.
In the three-month period ended March 31, 2013, US industry activity, as measured by the average number of horizontal and directional rigs running on a daily basis, decreased by 5 percent to 1,317 rigs compared to 1,389 rigs in the 2012-period. (Source: Baker Hughes) Despite lower levels of rig utilization, the US continues to be a viable and attractive region for horizontal and directional drilling service companies as oil-focused horizontal drilling continues to dominate the industry. In the first quarter of 2013, oil well drilling, as measured by drilling days, represented approximately 62 percent of Phoenix USA's overall activity compared to 55 percent in the 2012-period.
