Ensign Energy Services Inc. Reports 2024 Third Quarter Results
CALGARY, AB, Nov. 1, 2024 /CNW/ -
FINANCIAL HIGHLIGHTS
(Unaudited, in thousands of Canadian dollars, except per common share data)
Three months ended September 30
Nine months ended September 30
2024
2023
% change
2024
2023
% change
Revenue
$ 434,617
$ 444,405
(2)
$ 1,257,716
$ 1,361,227
(8)
Adjusted EBITDA 1
119,049
117,295
1
336,727
361,235
(7)
Adjusted EBITDA per common share 1
Basic
$0.65
$0.63
3
$1.83
$1.96
(7)
Diluted
$0.64
$0.63
2
$1.82
$1.95
(7)
Net income (loss) attributable to common shareholders
5,268
(5,229)
nm
(538)
9,314
nm
Net income (loss) attributable to commonshareholders per common share
Basic
$0.03
$(0.03)
nm
$0.00
$0.05
(99)
Diluted
$0.03
$(0.03)
nm
$0.00
$0.05
(99)
Cash provided by operating activities
103,201
105,566
(2)
323,481
376,911
(14)
Funds flow from operations
116,914
119,596
(2)
323,602
354,651
(9)
Funds flow from operations per common share
Basic
$0.64
$0.65
(2)
$1.76
$1.93
(9)
Diluted
$0.63
$0.65
(3)
$1.75
$1.92
(9)
Total debt, net of cash
1,066,356
1,246,041
(14)
1,066,356
1,246,041
(14)
Weighted average common shares - basic (000s)
183,781
183,786
—
183,969
183,917
—
Weighted average common shares - diluted (000s)
184,467
184,614
—
184,642
185,148
—
nm - calculation not meaningful
1 Please refer to Adjusted EBITDA calculation in Non-GAAP Measures.
Revenue for the third quarter of 2024 was $434.6 million, a two percent decrease from the third quarter of 2023 revenue of $444.4 million.
Revenue by geographic area:
Canada - $131.0 million, 30 percent of total;
United States - $216.2 million, 50 percent of total; and
International - $87.4 million, 20 percent of total.
Adjusted EBITDA for the third quarter of 2024 was $119.0 million, a one percent increase from Adjusted EBITDA of $117.3 million for the third quarter of 2023.
Funds flow from operations for the third quarter of 2024 decreased two percent to $116.9 million from $119.6 million in the third quarter of the prior year.
Net income attributable to common shareholders for the third quarter of 2024 was $5.3 million, up from net loss attributed to common shareholders of $5.2 million for the third quarter of 2023.
During the third quarter of 2024, $44.7 million of debt was repaid and a total of $135.0 million was repaid during the first nine months of 2024. The Company is on track to achieve its' stated debt targets as from January 1, 2023 to September 30, 2024, a total of $352.6 million of debt has been repaid leaving $247.4 million of the $600.0 million debt reduction target expected to be achieved by the end of 2025.
Interest expense decreased by 24 percent to $23.8 million from $31.3 million. The decrease is the result of lower debt levels and reduced effective interest rates.
OPERATING HIGHLIGHTS(Unaudited)
Three months ended September 30
Nine months ended September 30
2024
2023
% change
2024
2023
% change
Drilling
2024
2023
% change
2024
2023
% change
Number of marketed rigs
Canada 1
94
115
(18)
94
115
(18)
United States
77
85
(9)
77
85
(9)
International 2
31
32
(3)
31
32
(3)
Total
202
232
(13)
202
232
(13)
Operating days 3
Canada 1
3,861
3,262
18
10,064
9,193
9
United States
3,065
3,581
(14)
9,111
12,500
(27)
International 2
1,269
1,265
—
3,843
3,616
6
Total
8,195
8,108
1
23,018
25,309
(9)
Well Servicing
2024
2023
% change
2024
2023
% change
Number of rigs
Canada
46
47
(2)
46
47
(2)
United States
47
47
—
47
47
—
Total
93
94
(1)
93
94
(1)
Operating hours
Canada
12,161
10,624
14
36,114
36,204
—
United States
35,518
32,397
10
97,081
90,961
7
Total
47,679
43,021
11
133,195
127,165
5
1
Excludes coring rigs.
2
Includes workover rigs.
3
Defined as contract drilling days, between spud to rig release.
Canadian drilling recorded 3,861 operating days in the third quarter of 2024, an 18 percent increase from 3,262 operating days in the third quarter of 2023. Canadian well servicing recorded 12,161 operating hours in the third quarter of 2024, a 14 percent increase from 10,624 operating hours in the third quarter of 2023.
United States drilling recorded 3,065 operating days in the third quarter of 2024, a 14 percent decrease from 3,581 operating days in the third quarter of 2023. United States well servicing recorded 35,518 operating hours in the third quarter of 2024, a 10 percent increase from 32,397 operating hours in the third quarter of 2023.
International drilling recorded 1,269 operating days in the third quarter of 2024, generally consistent with 1,265 operating days recorded in the third quarter of 2023.
FINANCIAL POSITION HIGHLIGHTS
As at ($ thousands)
September 30 2024
December 31 2023
September 30 2023
Working capital (deficit) 1, 2
(8,128)
15,780
(1,165,149)
Cash
24,517
20,501
47,077
Total debt, net of cash
1,066,356
1,189,848
1,246,041
Total assets
2,883,811
2,947,986
3,073,053
Total debt to total debt plus equity ratio
0.45
0.48
0.50
1
See non-GAAP Measures section.
2
Change in working capital (deficit) from September 30, 2024, to September 30, 2023 was largely due to the Company's revolving credit facility and unsecured Senior notes being classified as current.
Total debt, net of cash, was reduced by $123.5 million since December 31, 2023.
Our debt reduction for 2024 is targeted to be approximately $200.0 million. Our target debt reduction for the period beginning 2023 to the end of 2025 is approximately $600.0 million. If industry conditions change, this target could be increased or decreased.
CAPITAL EXPENDITURE HIGHLIGHTS
Three months ended September 30
Nine months ended September 30
($ thousands)
2024
2023
% change
2024
2023
% change
Capital expenditures
Upgrade/growth
5,033
1,939
nm
9,171
13,967
(34)
Maintenance
32,345
36,020
(10)
131,402
130,316
1
Proceeds from disposals of property and equipment
(3,844)
(8,891)
(57)
(15,231)
(12,345)
23
Net capital expenditures
33,534
29,068
15
125,342
131,938
(5)
nm - calculation not meaningful
Net purchases of property and equipment for the third quarter of 2024 totaled $33.5 million, consisting of $5.0 million in upgrade capital and $32.3 million in maintenance capital, offset by disposition proceeds of $3.8 million. Gross capital expenditures for 2024 are targeted to be approximately $167.0 million, primarily related to maintenance expenditures, opportunistic tubular purchases, and selective growth projects that have been funded by customers. In addition, the Company may consider other upgrade or growth projects in response to customer demand and appropriate contract terms.
This news release contains "forward-looking information and statements" within the meaning of applicable securities legislation. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Advisory Regarding Forward-Looking Statements" later in this news release. This news release contains references to Adjusted EBITDA, Adjusted EBITDA per common share and working capital. These measures do not have any standardized meaning prescribed by IFRS Accounting Standards ("IFRS") and accordingly, may not be comparable to similar measures used by other companies. The non-GAAP measures included in this news release should not be considered as an alternative to, or more meaningful than, the IFRS measures from which they are derived or to which they are compared. See "Non-GAAP Measures" later in this news release.
OVERVIEW
Revenue for the third quarter of 2024 was $434.6 million, a two percent decrease from $444.4 million in revenue for the third quarter of 2023. Revenue for the nine months ended September 30, 2024, was $1,257.7 million, a decrease of eight percent from revenue for the nine months ended September 30, 2023, of $1,361.2 million.
Adjusted EBITDA totaled $119.0 million ($0.65 per common share) in the third quarter of 2024, one percent higher than Adjusted EBITDA of $117.3 million ($0.63 per common share) in the third quarter of 2023. For the nine months ended September 30, 2024, Adjusted EBITDA totaled $336.7 million ($1.83 per common share), seven percent lower than Adjusted EBITDA of $361.2 million ($1.96 per common share) in the nine months ended September 30, 2023.
Net income attributable to common shareholders for the third quarter of 2024 was $5.3 million ($0.03 per common share) compared to a net loss attributable to common shareholders of $5.2 million ($0.03 per common share) for the third quarter of 2023. Net loss attributable to common shareholders for the nine months ended September 30, 2024, was $0.5 million ($0.00 per common share), compared to a net income attributable to common shareholders of $9.3 million ($0.05 per common share) for the nine months ended September 30, 2023.
Funds flow from operations decreased two percent to $116.9 million ($0.64 per common share) in the third quarter of 2024 compared to $119.6 million ($0.65 per common share) in the third quarter of the prior year. Funds flow from operations decreased nine percent to $323.6 million ($1.76 per common share) for the nine months ended September 30, 2024, compared to $354.7 million ($1.93 per common share) for the nine months ended September 30, 2023.
The outlook for oilfield services continues to be generally constructive despite the year-over-year decline in oilfield services activity in certain operating regions. The recent completion of the Trans Mountain Pipeline expansion has resulted in increased Canadian industry activity, while the US rig count continues to be depressed in part because of relatively low natural gas commodity prices. Furthermore, there have been several recent oil and natural gas customer mergers and acquisitions ("M&A") in both the Canadian and the US markets that have impacted drilling programs over the short-term, with customers exercising discipline with their capital programs. However, despite these short-term headwinds, demand for crude oil continues to increase year-over-year. Moreover, OPEC+ nations continue to exercise production and supply discipline in response to market conditions.
Over the near term, geopolitical tensions, hostilities in areas of the Middle East, and the ongoing Russia-Ukraine conflict continue to impact global commodity prices and add uncertainty to the outlook for crude oil supply and commodity prices over the short-term.
The Company's operating days were consistent for the three months ended September 30, 2024 and declined for the nine months ended September 30, 2024, when compared with the same periods in 2023. Operating activity was negatively impacted in the first nine months of 2024 due to customer capital discipline, the above-mentioned customer M&A activity between oil and natural gas producers in the United States markets and depressed natural gas commodity prices. Offsetting the activity decrease in the United States is an activity increase in Canada, largely as a result of the completion of the Trans Mountain Pipeline expansion.
The average United States dollar exchange rate was $1.36 for the first nine months of 2024 (2023 - $1.35), slightly higher than the prior period.
The Company's working capital as at September 30, 2024, was a deficit of $8.1 million, compared to a surplus of $15.8 million as at December 31, 2023. The decrease in working capital is the result of lower net income, despite higher operating activity when compared to the fourth quarter of 2023.
The Company's available liquidity, consisting of cash and available borrowings under its $850.0 million Credit Facility, was $66.3 million as at September 30, 2024.
REVENUE AND OILFIELD SERVICES EXPENSE
Three months ended September 30
Nine months ended September 30
($ thousands)
2024
2023
% change
2024
2023
