CALGARY, Alberta, March 08, 2018 (GLOBE NEWSWIRE) -- Xtreme Drilling Corp. (TSX:XDC) (“Xtreme” or the “Company”) announces its fourth quarter 2017 financial and operating results. It is anticipated that filing will take place on SEDAR of Consolidated Financial Statements as well as Management's Discussion and Analysis for the three and twelve months ended December 31, 2017, by March 9, 2018. All reported amounts are in Canadian dollars ("CAD"), unless otherwise noted.
The recent trend of strong utilization for Xtreme’s XDR 500 rig fleet continued in the fourth quarter of 2017. All nine of the available XDR 500 rigs worked during the quarter. Two of these rigs were released from well to well contracts in November and commenced operations with a new customer in January 2018 on one-year term contracts. Along with strong utilization in the fourth quarter, the average revenue per operating day increased by approximately 12 percent from the prior quarter. Xtreme increased contract backlog days to nearly 3,900 at the end of 2017 as compared to approximately 300 at the end of 2016. The current contract backlog represents approximately $77 million US dollars ("USD") in revenue.
In 2017 the Company re-activated four XDR 500 rigs which had been idled in prior years. As a reference point, the bottom of the US market was in the second quarter of 2016 when less than 375 drilling rigs were operating. During this period Xtreme’s activity decreased to four active XDR 500 rigs. Today approximately 965 drilling rigs are operating in the United States. The majority of rigs that have returned to work are the most efficient and technologically advanced. The increased requirement on efficiency and depth capacity will continue to reward drilling contractors with innovative technology and the highest quality fleets.
The development and build of the first generation of Xtreme’s Evolution Series 850XE rig represents a significant competitive leap forward for the Company. The 850XE was designed to meet all of the leading-edge requirements from US resource play operators. The goal of the initial design and engineering of the 850XE was to optimize the mechanization of the drilling rig, all while increasing drilling depth capability and pad efficiency. It is Xtreme’s belief that the 850XE represents the highest capacity and most technologically advanced rig in today’s US land market.
The first 850XE commenced operations in January 2018 on a two-year term contract. The second 850XE is currently in transit to the Utica play in Southwestern Ohio and the final 850 XE should begin mobilization to the same customer in Ohio by the end of March. The Company took more time than was initially estimated to commission the 850XE rigs in order to make certain that the cutting-edge technology and rig componentry were optimized. While the additional time had the effect of increasing overall project cost to near $19 million USD per rig, the end result is a rig with proprietary technology and limited rivals in today’s market. In addition, the 850 XE design gives Xtreme a very strong platform to meet the future demands of ever increasing well depths and operator requirements.
Upon completion of the final 850XE, Xtreme will have executed on the announced strategy of transforming the Company into a pure play, high specification US drilling contractor. The entire 12 rig marketed fleet will consist of tier 1 AC electric rigs with 1,500hp or greater capacity. As part of the strategic transition to a high spec drilling contractor, the Company continues to actively hold for sale four XDR 300 rigs. These are heavy single AC rigs with 600 hp draw works that have historically worked in Canada, Mexico, India and the United States.
Xtreme president and CEO Matt Porter commented on the progress, “Our transformation to a high spec US driller is nearing completion. We are excited to develop additional opportunities around our industry leading technology and 850XE rig design in 2018 and beyond. Our belief is the winners in the next cycle will be drilling contractors that can deliver the highest level of capacity, efficiency and technology to their customer. We believe Xtreme is well positioned to compete with anyone.”
Q4 2017 Highlights
Selected Quarterly Financial Information from Continuing Operations
Three months ended | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||
Revenue | 16,323 | 18,172 | 15,141 | 12,379 | ||||
Adjusted EBITDA | 818 | 1,008 | (1,630 | ) | (78 | ) | ||
Adjusted EBITDA as a percentage of revenue | 5 | % | 6 | % | (11 | )% | (1 | )% |
Net loss | (9,564 | ) | (8,673 | ) | (48,366 | ) | (12,168 | ) |
Net loss per share - basic ($) | (0.13 | ) | (0.12 | ) | (0.61 | ) | (0.14 | ) |
Operating cash flows from continuing operations | (3,403 | ) | (3,096 | ) | (4,957 | ) | 101 | |
Capital assets | 205,456 | 203,316 | 196,704 | 245,267 | ||||
Total assets | 251,573 | 253,171 | 272,798 | 348,083 | ||||
Net debt | (2,389 | ) | (19,144 | ) | (41,682 | ) | (88,152 | ) |
Operating days | 707 | 851 | 683 | 583 | ||||
Utilization (percentage) | 77 | % | 93 | % | 75 | % | 36 | % |
Weighted average number of rigs in service | 10 | 10 | 10 | 18 | ||||
Total number of available rigs, end of quarter | 10 | 10 | 10 | 18 | ||||
Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | |||||
Revenue | 9,929 | 8,468 | 7,369 | 16,266 | ||||
Adjusted EBITDA | (148 | ) | (1,423 | ) | (5,449 | ) | 784 | |
Adjusted EBITDA as a percentage of revenue | (1 | )% | (17 | )% | (74 | )% | 5 | % |
Net loss | (11,122 | ) | (29,542 | ) | (28,699 | ) | (7,350 | ) |
Net loss per share - basic ($) | (0.13 | ) | (0.35 | ) | (0.34 | ) | (0.09 | ) |
Operating cash flows from continuing operations | (1,032 | ) | (1,168 | ) | (10,849 | ) | (615 | ) |
Capital assets | 240,656 | 243,564 | 266,188 | 276,521 | ||||
Total assets | 366,762 | 373,104 | 409,794 | 316,270 | ||||
Net debt | (113,882 | ) | (118,863 | ) | (110,794 | ) | 90,242 | |
Operating days | 479 | 433 | 355 | 564 | ||||
Utilization (percentage) | 25 | % | 22 | % | 19 | % | 30 | % |
Weighted average number of rigs in service | 21 | 21 | 21 | 21 | ||||
Total number of rigs, end of quarter | 21 | 21 | 21 | 21 | ||||
Conference Call Details
Xtreme has scheduled a conference call to discuss results with investors, analysts, and stakeholders on Friday, March 9, 2018, beginning promptly at 10:00 am MT (11:00 am CT, 12:00 am ET).
Matt Porter, President and Chief Executive Officer, will host the conference call.
Conference operator dial in numbers
To participate in the conference call, please dial in as follows approximately ten minutes before the start time in your time zone.
+1 844-889-6858 (North America Toll Free) or +1 661-378-9711 (International) Webcast: https://edge.media-server.com/m6/p/38vw9vuo Conference ID: 1087317
An audio replay of the call will be available until 4:00, March 14, 2018. To access the replay, call +1 (855) 859-2056 or +1 (404) 537-3406 and enter Conference ID 1087317.
Xtreme Drilling Corp.
Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
(unaudited)
Dec 31, 2017 | Dec 31, 2016 | |||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | 15,450 | 113,829 | ||
Accounts receivable | 12,081 | 6,716 | ||
Other receivables | 1,782 | 1,830 | ||
Inventory | 1,703 | 2,810 | ||
Prepaid expenses | 1,140 | 921 | ||
32,156 | 126,106 | |||
Tax recoverable | 789 | — | ||
Assets held for sale | 13,172 | — | ||
Property and equipment | 205,456 | 240,656 | ||
Total Assets | 251,573 | 366,762 | ||
Liabilities and Equity | ||||
Current liabilities | ||||
Accounts payable and accrued liabilities | 12,214 | 14,827 | ||
Current tax payable | 219 | 6,464 | ||
Secured borrowings | 4,419 | — | ||
Current portion of finance leases | 118 | — | ||
Current portion of long-term debt | 1,569 | — | ||
18,539 | 21,291 | |||
Finance leases | 514 | — | ||
Long-term debt | 5,755 | — | ||
Total Liabilities | 24,808 | 21,291 | ||
Shareholders’ equity | ||||
Share capital | 298,262 | 339,448 | ||
Contributed surplus | 30,156 | 13,387 | ||
Accumulated deficit | (180,439 | ) | (101,670 | ) |
Foreign currency translation reserve | 78,786 | 94,306 | ||
Total Shareholders’ Equity | 226,765 | 345,471 | ||
Total Liabilities and Shareholders’ Equity | 251,573 | 366,762 | ||
Xtreme Drilling Corp.
Consolidated Statements of Loss
For the year ended December 31, 2017 and 2016
(in thousands of Canadian dollars, except share and per share data)
(unaudited)
2017 | 2016 | |||
Revenue (Note 19) | 62,015 | 42,032 | ||
Expenses | ||||
Operating expenses | 51,368 | 34,183 | ||
General and administrative expenses | 10,528 | 18,596 | ||
Depreciation expense | 27,488 | 44,920 | ||
Impairment of property and equipment and assets held for sale | 30,195 | 11,895 | ||
Stock-based compensation | 716 | 3,285 | ||
Foreign exchange loss (gain) | 256 | (1,171 | ) | |
Loss on disposal of equipment and assets held for sale | 23,775 | 4,344 | ||
Other income | (74 | ) | (19 | ) |
Interest expense | 337 | 4,114 | ||
Loss | (82,574 | ) | (78,115 | ) |
Tax recovery Current recovery | (3,805 | ) | (1,402 | ) |
Total tax recovery | (3,805 | ) | (1,402 | ) |
Net loss from continuing operations | (78,769 | ) | (76,713 | ) |
Net income from discontinued operations, net of tax | — | 55,874 | ||
Net loss | (78,769 | ) | (20,839 | ) |
Net loss per common share from continuing operations | ||||
– basic | (0.99 | ) | (0.91 | ) |
– diluted | (0.99 | ) | (0.91 | ) |
Net income per common share from discontinued operations | ||||
– basic | 0.00 | 0.66 | ||
– diluted | 0.00 | 0.66 | ||
Net loss per common share | ||||
– basic | (0.99 | ) | (0.25 | ) |
– diluted | (0.99 | ) | (0.25 | ) |
Weighted average number of common shares | ||||
– basic | 79,173,515 | 84,115,077 | ||
– diluted | 79,173,515 | 84,115,077 | ||
Xtreme Drilling Corp.
Consolidated Statements of Comprehensive Loss
For the year ended December 31, 2017 and 2016
(in thousands of Canadian dollars)
(unaudited)
2017 | 2016 | |||
Net loss | (78,769 | ) | (20,839 | ) |
Other comprehensive loss | ||||
Items that may be subsequently reclassified to profit or loss: | ||||
Unrealized loss on translating financial statements of foreign operations | (14,811 | ) | (8,765 | ) |
Currency translation adjustment on disposal of foreign operation | (709 | ) | — | |
Comprehensive loss | (94,289 | ) | (29,604 | ) |
Total comprehensive (loss) income arising from: | ||||
Continuing operations | (94,289 | ) | (76,420 | ) |
Discontinued operations | — | 46,816 | ||
Comprehensive loss | (94,289 | ) | (29,604 | ) |
Xtreme Drilling Corp.
Consolidated Statements of Changes in Equity
For the year ended December 31, 2017 and 2016
(in thousands of Canadian dollars)
(unaudited)
Share capital | Contributed surplus | ccumulated deficit | Foreign currency translation reserve | Total shareholders' equity | |||||||
Balance at January 1, 2016 | 333,515 | 15,478 | (80,831 | ) | 103,071 | 371,233 | |||||
Other comprehensive loss: | |||||||||||
Currency translation differences | - | - | - | (8,765 | ) | (8,765 | ) | ||||
Total comprehensive loss | - | - | (20,839 | ) | (8,765 | ) | (29,604 | ) | |||
Value of employee services | - | 3,769 | - | - | 3,769 | ||||||
Transfer from share option | 5,860 | (5,860 | ) | - | - | - | |||||
Proceeds from shares issued | 73 | - | - | - | 73 | ||||||
Total transactions with owners | 5,933 | (2,091 | ) | - | - | 3,842 | |||||
Balance at December 31, 2016 | 339,448 | 13,387 | (101,670 | ) | 94,306 | 345,471 | |||||
Balance at January 1, 2017 | 339,448 | 13,387 | (101,670 | ) | 94,306 | 345,471 | |||||
Net loss | - | - | (78,769 | ) | - | (78,769 | ) | ||||
Other comprehensive loss: | |||||||||||
Currency translation differences | - | - | - | (15,520 | ) | (15,520 | ) | ||||
Total comprehensive loss | - | - | (78,769 | ) | (15,520 | ) | (94,289 | ) | |||
Employee share option scheme: | |||||||||||
Value of employee services | - | 716 | - | - | 716 | ||||||
Transfer from share option | 505 | (505 | ) | - | - | - | |||||
Proceeds from shares issued | 112 | - | - | - | 112 | ||||||
Repurchase of shares | (41,803 | ) | 16,558 | - | - | (25,245 | ) | ||||
Total transactions with owners | (41,186 | ) | 16,769 | - | - | (24,417 | ) | ||||
Balance at December 31, 2017 | 298,262 | 30,156 | (180,439 | ) | 78,786 | 226,765 |
Xtreme Drilling Corp.
Consolidated Statements of Cash Flows
For the year ended December 31, 2017 and 2016
(in thousands of Canadian dollars)
(unaudited)
2017 | 2016 | |||
Cash flow provided by: | ||||
Operating activities | ||||
Net loss | (78,769 | ) | (76,713 | ) |
Items not affecting cash: | ||||
Depreciation expense | 27,488 | 44,920 | ||
Impairment of property and equipment and assets held for sale | 30,195 | 11,895 | ||
Stock-based compensation | 716 | 3,285 | ||
Loss on disposal of equipment and assets held for sale | 23,775 | 4,344 | ||
Provision for doubtful accounts | — | 892 | ||
Interest expense | 322 | 2,142 | ||
Interest paid | (132 | ) | (2,142 | ) |
Amortization of debt issuance costs | 15 | 1,972 | ||
Unrealized foreign exchange loss (gain) | 4 | (2,119 | ) | |
Current tax recovery | (3,805 | ) | (1,402 | ) |
Taxes paid | (2,939 | ) | (738 | ) |
Operating cash flows from continuing operations | (3,130 | ) | (13,664 | ) |
Operating cash flows from discontinued operations | (446 | ) | 9,247 | |
Changes in items of non-cash working capital | (10,658 | ) | 27,004 | |
Net cash (used) generated from operating activities | (14,234 | ) | 22,587 | |
Financing activities | ||||
Drawdowns (repayments) of secured borrowings | 4,436 | — | ||
Proceeds from long-term debt | 7,641 | — | ||
Repayment of long-term debt | — | (100,774 | ) | |
Debt issuance cost | (207 | ) | (1,409 | ) |
Purchase of common shares | (25,245 | ) | — | |
Proceeds from exercise of stock options | 112 | 73 | ||
Net cash used in financing activities | (13,293 | ) | (102,110 | ) |
Investing activities | ||||
Proceeds from sale of equipment and assets held for sale, net | 8,722 | 137 | ||
Disposition of Mexico subsidiary | (883 | ) | — | |
Capital expenditures | (75,656 | ) | (11,091 | ) |
Investing activities of discontinued operations | — | 195,597 | ||
Changes in items of non-cash working related to capital items | 1,773 | (1,566 | ) | |
Net cash (used in) provided by investing activities | (66,044 | ) | 183,077 | |
Effect of exchange rate changes on cash and cash equivalents | (4,808 | ) | (948 | ) |
(Decrease) increase in cash and cash equivalents | (98,379 | ) | 102,606 | |
Cash and cash equivalents - beginning of period | 113,829 | 11,223 | ||
Cash and cash equivalents - end of period | 15,450 | 113,829 | ||
Adjusted EBITDA from Continuing Operations
(unaudited)
Three months ended | Twelve months ended | |||||||
Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2017 | Dec 31, 2016 | |||||
Net loss | (9,564 | ) | (11,122 | ) | (78,769 | ) | (76,713 | ) |
Interest expense | 337 | — | 337 | 4,114 | ||||
Depreciation | 6,038 | 10,599 | 27,488 | 44,920 | ||||
Tax benefit | (907 | ) | (2,614 | ) | (3,805 | ) | (1,402 | ) |
Total | (4,096 | ) | (3,137 | ) | (54,749 | ) | (29,081 | ) |
Non-cash items: | ||||||||
Impairment of property and equipment | — | — | 30,195 | 11,895 | ||||
Stock-based compensation | 106 | 191 | 716 | 3,285 | ||||
Foreign exchange loss (gain) | 169 | 35 | 256 | (1,171 | ) | |||
Loss (gain) on disposal of equipment | 4,645 | 2,784 | 23,775 | 4,344 | ||||
Total non-cash items | 4,920 | 3,010 | 54,942 | 18,353 | ||||
Non-recurring items: | ||||||||
Other income | (6 | ) | (21 | ) | (74 | ) | (19 | ) |
Termination revenue | — | — | — | (459 | ) | |||
Other management compensation related to XSR sale | — | — | — | 4,970 | ||||
Total non-recurring items | (6 | ) | (21 | ) | (74 | ) | 4,492 | |
Adjusted EBITDA | 818 | (148 | ) | 119 | (6,236 | ) | ||
Adjusted EBITDA from Discontinued Operations
(unaudited)
Three months ended | Twelve months ended | |||||
Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2017 | Dec 31, 2016 | |||
Net (loss) income | — | (2,535) | — | 55,874 | ||
Depreciation and amortization | — | — | — | 3,965 | ||
Tax expense | — | 1,651 | — | 6,156 | ||
Total | — | (884 | ) | — | 65,995 | |
Non-cash items: | ||||||
Gain on sale of equipment and assets held for sale | — | — | — | (51,668 | ) | |
Total non-cash items | — | — | — | (51,668 | ) | |
Adjusted EBITDA | — | (884 | ) | — | 14,327 | |
Adjusted EBITDA from Continuing and Discontinued Operations
(unaudited)
Three months ended | Twelve months ended | |||||||
Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2017 | Dec 31, 2016 | |||||
Adjusted EBITDA | 818 | (1,032 | ) | 119 | 8,091 | |||
Adjusted EBITDA as a percentage of revenue | 5 | % | (10 | )% | 0 | % | 10 | % |
Net (loss) income per share ($) | (0.13 | ) | (0.37 | ) | (0.99 | ) | (0.25 | ) |
Reader Advisory
This news release, or documents incorporated herein, contains forward-looking information (“FLI”). FLI is typically contained in statements with words such as “anticipate”, “believe”, “estimate”, “expect”, “plan”, “schedule”, “intend”, “propose” or similar words suggesting future outcomes or an outlook. More particularly, this news release contains FLI that may relate to contracting, marketing, financing, construction, modifications, deployment, operation, and utilization of drilling rigs in the Company’s current and future fleet. Although Xtreme believes expectations reflected in such FLI are reasonable, readers should not place undue reliance on them because Xtreme can give no assurance they will prove to be correct. There are many factors that could cause FLI not to be correct, including risks and uncertainties inherent in the Company's business.
FLI is based on certain factors and assumptions including, but not limited to:
Although Xtreme considers the assumptions used to prepare this news release reasonable, based on information available to management as of this press release, ultimately the assumptions may prove to be incorrect.
FLI is also subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from management's current expectations. These factors include, but are not limited to:
Management’s assumptions considered the following:
In preparing this news release, the following risk factors were considered:
FLI contained in this news release about prospective results of operations, financial position or cash provided by operating activities is based on assumptions about future events, including economic conditions and proposed courses of action, and on management’s assessment of relevant information currently available. Readers are cautioned such financial outlook information contained in this news release is not appropriate for purposes other than for which it is disclosed here. Readers should not place undue importance on FLI and should not rely on this information as of any other date. Except as required pursuant to applicable securities laws, Xtreme disclaims any intention, and assumes no obligation, to update publicly or revise FLI to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such FLI or otherwise.
About Xtreme
Xtreme Drilling Corp. ("XDC" on the Toronto Stock Exchange) designs, builds, and operates a fleet of high specification AC drilling rigs featuring leading-edge proprietary technology. Currently Xtreme operates one service line - Drilling Services (XDR) - under contracts with oil and natural gas exploration and production companies and integrated oilfield service providers in Canada and the United States. For more information about the Company, please visit http://www.xtremedrillingcorp.com.
CONTACT INFORMATION
Xtreme Drilling Corp.
Matt Porter
President and Chief Executive Officer
+1 281 994 4600
ir@xdccorp.com
http://www.xtremedrillingcorp.com