Essential's $45 million capital spending budget is focused on building deep masted coil tubing rigs and double service rigs capable of SAGD operations to meet customer demand. Essential has four deep masted coil tubing rigs under construction, expected to be delivered in 2013. These rigs will have an increased reel capacity for longer and larger diameter coil. Two of these are classified as Generation III and two are Generation IV rigs. While Essential's current masted rigs can reach up to 5,500 meters with 2" coil, the Generation III rigs are designed to reach 5,700 meters with 2 3/8" coil and the Generation IV rigs will reach 6,400 meters with 2 5/8" coil. Essential's deep coil tubing reel trailer is a non-masted prototype of the Generation IV rig and has been successfully operating on deeper wells since the end of 2012. These state-of-the-art rigs are being built to meet the growing demand for oilfield service equipment to complete and produce longer, deeper and more complex wells.
While Essential remains focused on the WCSB, it has recently started exploring prospects to organically expand operations into the United States with downhole tools. The United States offers the opportunity for continued growth with services that Essential has a unique expertise and strong reputation with customers for completing and producing horizontal wells.
Essential has a very strong balance sheet with $36 million of debt outstanding on May 7, 2013 and debt to EBITDA of 0.5x. Management remains focused on the core services of well servicing with coil tubing, service rigs and downhole tools and rentals.
QUARTERLY DIVIDEND
The cash dividend for the period April 1, 2013 to June 30, 2013 has been set at $0.025 per share. The dividend will be paid on July 15, 2013 to shareholders of record on June 28, 2013. The ex-dividend date is June 26, 2013.
The first quarter Management's Discussion and Analysis and Financial Statements are available on Essential's website at www.essentialenergy.ca and on SEDAR at www.sedar.com.
SUMMARY OF QUARTERLY DATA(Thousands of dollars, except Mar 31, Dec 31, Sep 30, Jun 30,per share amounts and percentages) 2013 2012 2012 2012----------------------------------------------------------------------------Well Servicing: Coil Well Service 49,621 41,228 33,857 18,697 Service Rigs 33,556 26,012 20,552 15,564 Other(i) - 786 2,762 1,069----------------------------------------------------------------------------Total well servicing 83,177 68,026 57,171 35,330Downhole Tools & Rentals(ii) 37,342 27,989 26,342 15,540----------------------------------------------------------------------------Total revenue 120,519 96,015 83,513 50,870----------------------------------------------------------------------------Gross margin 37,832 27,039 23,012 3,904 Gross margin % 31% 28% 28% 8%EBITDA(1) 33,426 22,368 19,261 (42) EBITDA %(1) 28% 23% 23% 0%Continuing operations Net income (loss) 19,205 8,050 8,343 (5,453) Per share - basic and diluted $0.15 $0.06 $0.07 $(0.04)Net income (loss) attributable to shareholders of Essential 18,627 678 8,660 (5,923) Per share - basic and diluted $0.15 $0.01 $0.07 $(0.05)Total assets 436,301 406,853 415,653 393,377Total long-term debt 35,603 35,563 50,474 41,198--------------------------------------------------------------------------------------------------------------------------------------------------------Utilization (iii) Coil tubing rigs - deep 110% 95% 79% 32% Coil tubing rigs - other 15% 16% 15% 7% Pumpers 73% 57% 50% 33% Service rigs 69% 54% 45% 34%Operating Hours Coil tubing rigs - deep 24,765 22,777 18,301 7,262 Coil tubing rigs - other 2,511 2,757 2,819 1,596 Pumpers 20,481 15,328 11,919 7,504 Service rigs 34,364 27,310 22,632 16,183Downhole Tools & Rentals - revenue % of total Tryton MSFS 60% 51% 52% 40% Conventional Tools & Rentals 40% 49% 48% 60%--------------------------------------------------------------------------------------------------------------------------------------------------------Equipment fleet (iv)Canada Coil tubing rigs - deep 25 27 26 25 Coil tubing rigs - other 19 19 19 20 Service rigs 56 55 55 53 Nitrogen pumpers 13 13 10 10 Fluid pumpers 18 18 16 16 Rod rigs 14 14 14 14--------------------------------------------------------------------------------------------------------------------------------------------------------SUMMARY OF QUARTERLY DATA(Thousands of dollars, except Mar 31, Dec 31, Sep 30, June 30,per share amounts and percentages) 2012 2011 2011 2011----------------------------------------------------------------------------Well Servicing: Coil Well Service 42,414 43,945 36,349 9,871 Service Rigs 33,311 28,118 23,939 11,835 Other(i) 7,206 4,677 4,178 1,297----------------------------------------------------------------------------Total well servicing 82,931 76,740 64,466 23,003Downhole Tools & Rentals(ii) 35,251 32,115 33,316 17,115----------------------------------------------------------------------------Total revenue 118,182 108,855 97,782 40,118----------------------------------------------------------------------------Gross margin 36,740 35,498 31,203 3,334 Gross margin % 31% 33% 32% 8%EBITDA(1) 32,755 31,733 27,570 449 EBITDA %(1) 28% 29% 28% 1%Continuing operations Net income (loss) 19,823 17,082 14,020 (5,388) Per share - basic and diluted $0.16 $0.14 $0.11 $(0.06)Net income (loss) attributable to shareholders of Essential 18,893 17,559 13,678 (6,364) Per share - basic and diluted $0.15 $0.14 $0.11 $(0.07)Total assets 430,674 421,500 411,204 371,017Total long-term debt 57,238 63,486 79,230 63,459--------------------------------------------------------------------------------------------------------------------------------------------------------Utilization (iii) Coil tubing rigs - deep 102% 111% 104% 37% Coil tubing rigs - other 25% 30% 25% 18% Pumpers 69% 71% 50% 23% Service rigs 68% 59% 54% 27%Operating Hours Coil tubing rigs - deep 23,236 23,524 21,938 3,638 Coil tubing rigs - other 5,494 6,778 5,813 3,805 Pumpers 13,865 13,008 9,594 2,978 Service rigs 35,188 31,005 28,201 13,229Downhole Tools & Rentals - revenue % of total Tryton MSFS 47% 47% 54% 45% Conventional Tools & Rentals 53% 53% 46% 55%--------------------------------------------------------------------------------------------------------------------------------------------------------Equipment fleet (iv)Canada Coil tubing rigs - deep 25 25 23 23 Coil tubing rigs - other 24 24 25 25 Service rigs 58 57 57 58 Nitrogen pumpers 10 10 9 8 Fluid pumpers 15 15 12 6 Rod rigs 14 14 14 14--------------------------------------------------------------------------------------------------------------------------------------------------------(i) Other revenue included revenue from Essential's hybrid drilling operation until it was disposed of in November 2012.(ii) Revenue for Downhole Tools & Rentals included revenue from Essential's wireline business which was disposed of in February 2012.(iii) Utilization is calculated using a 10 hour day.(iv) Fleet data represents the number of units at the end of the period.
