CALGARY,
AB, May 12, 2022 /CNW/ - CES Energy
Solutions Corp. ("CES" or the "Company") (TSX: CEU)
(OTC: CESDF) announced today the Company's results for the three
months ended March 31, 2022.
First Quarter Highlights
- Record quarterly revenue of $401.3
million
- Adjusted EBITDAC of $42.5
million
- Funds Flow from Operations of $33.1
million
- Paid quarterly dividend of $0.06
per share on an annualized basis, representing a 16% payout
ratio
- Working Capital Surplus exceeded Total Debt at March 31, 2022 by $19.0
million
- Completed the acquisition of the business assets of Proflow
Solutions LLC
CES is pleased to announce strong Q1 2022 financial results,
demonstrating record quarterly revenue, strong surplus free cash
flow generation, and realization of pricing-related margin
improvement during the latter part of the quarter.
Revenue for the quarter was $401.3
million, representing a sequential increase of $33.5 million or 9% relative to CES' previous
record of $367.8 million in Q4 2021.
Adjusted EBITDAC was $42.5 million,
compared to $47.8 million in Q4 2021
as margins were temporarily impacted by a lag between pricing
increases and product cost inflation, up until the latter part of
the quarter, when established price increases began to offset cost
inflation.
Backed by continued strong energy market fundamentals, CES
realized revenue growth throughout its business lines during the
first quarter as it was able to leverage its established
infrastructure, strong industry positioning, committed employees,
and strategic investments in key raw materials. Focus on strategic
investments in working capital continued into the quarter as supply
chain challenges persisted, albeit at more muted levels toward the
end of the quarter. CES was able to use its strong balance sheet
and liquidity to support the incremental inventory and strong
revenue growth. The continued positive momentum demonstrated in the
quarter has been bolstered by improvements in rig activity, higher
production volumes, the implementation of pricing increases, and
strategic procurement initiatives that are expected to continue
throughout 2022.
As industry activity levels continued to improve during Q1, CES
remained disciplined on capital expenditures during the quarter,
retaining substantial liquidity. The Company made strategic use of
its balance sheet to support higher accounts receivable levels
associated with increasing revenue and financed key surplus raw
materials purchases in a rapidly evolving supply chain environment
to avoid constraints on critical inputs and mitigate product cost
inflation. CES exited the quarter with a net draw on its Senior
Facility of $148.7 million
(December 31, 2021 - $110.1 million) and Total Debt of $487.2 million (December
31, 2021 - $439.4 million), of
which $288.0 million relates to
Senior Notes which don't mature until October 21, 2024. At March
31, 2022, CES' Senior Facility had a maximum available draw
of approximately C$ equivalent $262.5
million, providing ample liquidity to support increasing
business activity levels. The increases realized during the quarter
were primarily driven by strategic investments in working capital
to support strong sequential revenue growth, combined with
dividends paid out during the quarter totaling $4.1 million, and the strategic acquisition of
the business assets of Proflow Solutions LLC for $13.6 million, with $9.6
million paid in cash on close and for other post close
working capital adjustments. Working Capital Surplus of
$506.2 million exceeded Total Debt of
$487.2 million at March 31, 2022 by $19.0
million (December 31, 2021 -
$20.4 million). As at this date, the
Company had a net draw on its Senior Facility of approximately
$162.0 million in support of working
capital levels associated with strong revenue growth and continued
strategic investment in surplus inventory levels.
First Quarter Results
In the first quarter, CES
generated revenue of $401.3 million,
an increase of $140.7 million or 54%
compared to Q1 2021 and a sequential increase of $33.5 million or 9% compared to Q4 2021. As
producers' capital spending increased and production levels
improved, activity and industry rig counts have seen a significant
uptick from the comparative period which was still highly impacted
by the COVID-19 pandemic.
Revenue generated in the US during Q1 2022 was $248.8 million, representing a sequential
increase of 6% compared to Q4 2021 and an increase of 48% compared
to Q1 2021. US revenues were positively impacted by increased
industry activity and the return toward pre-pandemic production
levels and beyond in areas such as the Permian Basin, while also
benefitting from a favourable product mix. US land drilling
activity in Q1 2022 improved by 13% on a sequential quarterly basis
and by 63% from Q1 2021. CES continued its strong industry
positioning, with a US Drilling Fluids Market Share of 18% for Q1
2022.
Revenue generated in Canada
during Q1 2022 was $152.5 million,
representing a sequential increase of 14% compared to Q4 2021 and
an increase of 65% from Q1 2021. Canadian revenues benefited from a
21% increase in rig counts on a sequential quarterly basis and 38%
as compared to Q1 2021, as well as strong production levels.
CES achieved Adjusted EBITDAC of $42.5
million in Q1 2022, representing a decrease of 11.1%
compared to Q4 2021 and an increase of 23.6% compared to Q1 2021.
Adjusted EBITDAC as a percentage of revenue of 10.6% achieved in Q1
2022 was down from the 13.0% recorded in Q4 2021 and the 13.2%
recorded in Q1 2021 as the Company worked to implement price
increases to offset increased product costs throughout the quarter.
Margins for the quarter experienced temporary compression as
product and labour costs increased, the impact of which was
partially offset by higher activity levels, preservation of prudent
G&A levels, and realization of additional price increases
toward the latter part of the quarter.
Net income for the three months ended March 31, 2022 was $10.3
million compared to $5.1
million in Q1 2021. Higher net income for the period was
driven by increased industry activity levels and associated
revenues along with the preservation of a prudent cost structure,
despite rising product costs. CES no longer recognized a benefit
from the Canada Emergency Wage
Subsidy ("CEWS") program in Q1 2022, compared to $1.7 million in Q1 2021.
CES generated $33.1 million in
Funds flow from Operations in Q1 2022, in line with the
$33.5 million generated in Q4 2021
and up from the $25.7 million
generated in Q1 2021. Funds flow from Operations excludes the
impact of working capital investment and is reflective of strong
surplus free cash flow generation amid continued improvements in
market conditions in the quarter relative to the comparative
period.
As at March 31, 2022, CES had a Working Capital Surplus of
$506.2 million, which has increased
from $459.8 million at December 31, 2021 as CES has strategically used
its balance sheet to further finance investments in inventory
beyond normal carrying volumes, in order to meet the increasing
needs of existing and new customers, manage cost inflation, and
mitigate the effects of global supply chain constraints. In
addition, accounts receivable increased by 18% from December 31, 2021, to support significant
increases in revenue and corresponding collection cycles. The
Company continues to focus on working capital optimization and to
benefit from the high quality of its customers and diligent
internal credit monitoring processes.
On February 1, 2022, through a US
subsidiary, CES closed the acquisition of all of the business
assets of Proflow Solutions LLC ("Proflow") for an aggregate
purchase price of $13.6 million,
consisting of $8.3 million in cash
paid on the date of the acquisition, $1.3
million in cash paid for other post close working capital
adjustments during the quarter, and $4.1
million in deferred consideration to be settled on the
first, second, and third anniversaries of the date of acquisition,
subject to meeting certain requirements. Proflow is an oilfield
chemical provider and service company that operates across the
Gulf of Mexico providing
production chemicals for the upstream oil and gas industry along
with account management services. CES believes that the Proflow
acquisition will accelerate expansion of US production and
specialty chemicals operations into the offshore market with a
particular focus in the Gulf of
Mexico.
Outlook
The global supply-demand balance for energy
continues to be very constructive with demand surpassing pre-COVID
levels and tempered supply increases governed by healthy returns,
particularly in CES' North American target markets. As the global
economic recovery has gained momentum, increased activity and
demand have led to improving commodity prices, production levels
and drilling activity. The ongoing military conflict in
Ukraine has further exacerbated
persistent global supply and demand imbalances and is likely to
create continued volatility in global oil prices in the near term.
We expect the strong activity levels to continue through the
balance of 2022, moderated by ongoing challenges with availability
of labour and supply chain constraints. CES is optimistic in its
outlook for 2022 as it expects to benefit from elevated upstream
activity and improved pricing across North America by capitalizing on its
established infrastructure, industry leading positioning,
vertically integrated business model, and strategic procurement
practices. While the challenges surrounding the global supply chain
market are expected to persist throughout 2022, CES remains
confident that a combination of proactive inventory procurement
practices, targeted pricing increases and working capital focus
will help to mitigate the impact of the elevated cost environment.
As industry activity has continued to improve, the Company has made
strategic investments in working capital to manage global supply
chain challenges and will continue to focus on working capital
optimization and balance sheet strength and liquidity as the year
progresses.
CES expects 2022 capital expenditures to be approximately
$40.0 million, of which $20.0 million is maintenance and $20.0 million is earmarked for expansion,
excluding amounts related to business acquisitions. CES plans to
continue its disciplined and prudent approach to capital
expenditures in 2022 and will adjust its plans as required to
support growth throughout divisions.
CES has proactively managed both the duration and the
flexibility of its debt. In September
2021, CES successfully amended and extended its Senior
Facility to September 2024 and in
February 2022, the Company
proactively added $30.0 million of
incremental capacity to the Senior Facility. In October 2017, CES successfully re-financed and
reduced its coupon on its previously outstanding $300.0 million Senior Notes by issuing new 6.375%
Senior Notes, which mature in October
2024.
CES' underlying business model is capex light and asset light,
enabling generation of significant surplus free cash flow. As our
customers endeavor to maintain or grow production in the current
environment, CES will leverage its established infrastructure,
business model, and nimble customer-oriented culture to deliver
superior products and services to the industry. CES sees the
consumable chemical market increasing its share of the oilfield
spend as operators continue to: drill longer reach laterals and
drill them faster; expand and optimize the utilization of pad
drilling; increase the intensity and size of their fracs; and
require increasingly technical and specialized chemical treatments
to effectively maintain existing cash flow generating wells and
treat growing production volumes and water cuts from new wells.
Conference Call Details
With respect to the first
quarter results, CES will host a conference call / webcast at
9:00 am MT (11:00 am ET) on Friday,
May 13, 2022. A recording of the live audio webcast of the
conference call will also be available on our website at
www.cesenergysolutions.com. The webcast will be archived for
approximately 90 days.
North American toll-free:
1-(800)-319-4610
International / Toronto callers: (416)-915-3239
Link
to Webcast: http://www.cesenergysolutions.com/
Financial Highlights
|
|
Three Months Ended
March 31,
|
($000s, except per
share amounts)
|
|
2022
|
2021
|
%Change
|
Revenue
|
|
|
|
|
United
States(2)
|
|
248,796
|
168,047
|
48 %
|
Canada(2)
|
|
152,485
|
92,579
|
65 %
|
Total
Revenue
|
|
401,281
|
260,626
|
54 %
|
Net income
(loss)
|
|
10,250
|
5,122
|
100 %
|
per share –
basic
|
|
0.04
|
0.02
|
101
%
|
per share -
diluted
|
|
0.04
|
0.02
|
102
%
|
Adjusted
EBITDAC(3)
|
|
42,457
|
34,358
|
24 %
|
Adjusted
EBITDAC(3) % of Revenue
|
|
10.6
%
|
13.2
%
|
(2.6)%
|
Cash provided by (used
in) operating activities
|
|
(12,435)
|
(5,782)
|
115 %
|
Funds Flow From
Operations(4)
|
|
33,119
|
25,742
|
29 %
|
Capital
expenditures
|
|
|
|
|
Expansion
Capital(2)
|
|
5,240
|
2,036
|
157 %
|
Maintenance
Capital(2)
|
|
3,275
|
943
|
247 %
|
Total capital
expenditures
|
|
8,515
|
2,979
|
186 %
|
Dividends
declared
|
|
4,078
|
—
|
nmf
|
per
share
|
|
0.0160
|
—
|
nmf
|
Common Shares
Outstanding
|
|
|
|
|
End of
period
|
|
254,863,235
|
254,415,334
|
|
Weighted average -
basic
|
|
254,024,573
|
255,244,854
|
|
Weighted average -
diluted
|
|
260,718,253
|
263,748,333
|
|
|
As at
|
Financial
Position ($000s)
|
March 31,
2022
|
December 31,
2021
|
%Change
|
Total assets
|
1,162,218
|
1,087,598
|
7 %
|
Long-term financial
liabilities(1)
|
467,641
|
423,077
|
11 %
|
Total
Debt(5)
|
487,207
|
439,392
|
11 %
|
Working Capital
Surplus(5)
|
506,227
|
459,754
|
10 %
|
Net
Debt(5)
|
(19,020)
|
(20,362)
|
(7)%
|
Shareholders'
equity
|
484,517
|
486,675
|
(0)%
|
Notes:
|
1Includes the long-term portion
of the Senior Facility, the Senior Notes, lease obligations,
deferred acquisition consideration and cash settled incentive
obligations.
|
2Supplementary financial
measure. Supplementary Financial Measures are provided herein
because Management believes they assist the reader in understanding
CES' results. Refer to "Non-GAAP Measures and Other Financial
Measures" for further detail.
|
3Non-GAAP measure that does not
have any standardized meaning under IFRS and therefore may not be
comparable to similar measures presented by other entities. The
most directly comparable GAAP measure for Adjusted EBITDAC is Net
income. Refer to the section entitled "Non-GAAP Measures and Other
Financial Measures" herein.
|
4Non-GAAP measure that does not
have any standardized meaning under IFRS and therefore may not be
comparable to similar measures presented by other entities. The
most directly comparable GAAP measure for Funds flow from
operations is Cash provided by (used in) operating activities.
Refer to the section entitled "Non-GAAP Measures and Other
Financial Measures" herein.
|
5Non-GAAP measures that do not
have any standardized meaning under IFRS and therefore may not be
comparable to similar measures presented by other entities. The
most directly comparable GAAP measure for Total Debt, net of cash,
Net Debt and Working Capital Surplus is Long-term financial
liabilities. Refer to the section entitled "Non-GAAP Measures and
Other Financial Measures" herein.
|
Business of CES
CES is a leading provider of
technically advanced consumable chemical solutions throughout the
life-cycle of the oilfield. This includes total solutions at the
drill-bit, at the point of completion and stimulation, at the
wellhead and pump-jack, and finally through to the pipeline and
midstream market. Key solutions include corrosion inhibitors,
demulsifiers, H2S scavengers, paraffin control products,
surfactants, scale inhibitors, biocides and other specialty
products. Further, specialty chemicals are used throughout the
pipeline and midstream industry to aid in hydrocarbon movement and
manage transportation and processing challenges including
corrosion, wax build-up and H2S.
CES operates in all major basins throughout the United States ("US"), including the
Permian, Eagleford, Bakken, Marcellus and Scoop/Stack, as well as
in the Western Canadian Sedimentary Basin ("WCSB") with an emphasis
on servicing the ongoing major resource plays: Montney, Duvernay, Deep Basin and SAGD. In the US, CES
operates under the trade names AES Drilling Fluids ("AES"), Jacam
Catalyst LLC ("Jacam Catalyst"), Proflow Solutions ("Proflow"), and
Superior Weighting Products ("Superior Weighting"). In Canada, CES operates under the trade names
Canadian Energy Services, PureChem Services ("PureChem"), StimWrx
Energy Services Ltd. ("StimWrx"), Sialco Materials Ltd. ("Sialco"),
and Clear Environmental Solutions ("Clear").
Non-GAAP Measures and Other Financial Measures
CES
uses certain supplementary information and measures not recognized
under IFRS where management believes they assist the reader in
understanding CES' results. These measures are calculated by CES on
a consistent basis unless otherwise specifically explained. These
measures do not have a standardized meaning under IFRS and may
therefore not be comparable to similar measures used by other
issuers.
Non-GAAP financial measures and non-GAAP ratios have the
definition set out in National Instrument 52-112 "Non-GAAP and
Other Financial Measures Disclosure". The non-GAAP measures,
non-GAAP ratios and supplementary financial measures used in this
news release, with IFRS measures, are the most appropriate measures
for reviewing and understanding the Company's financial results.
The non-GAAP measures and non-GAAP ratios are further defined as
follows:
EBITDAC - is a non-GAAP measure that has been
reconciled to net income (loss) for the financial periods, being
the most directly comparable measure calculated in accordance with
IFRS. EBITDAC is defined as net income before interest, taxes,
depreciation and amortization, finance costs, other income (loss),
stock-based compensation and impairment of goodwill, which are not
reflective of underlying operations. EBITDAC includes government
relief subsidies received to help mitigate the impact of the
COVID-19 pandemic. EBITDAC is a metric used to assess the financial
performance of an entity's operations. Management believes that
this metric provides an indication of the results generated by the
Company's business activities prior to how these activities are
financed, how the Company is taxed in various jurisdictions, and
how the results are impacted by foreign exchange and non-cash
charges. This non-GAAP financial measure is also used by management
as a key performance metric supporting decision making and
assessing divisional results.
Adjusted EBITDAC - is a non-GAAP measure that is
defined as EBITDAC noted above, adjusted for specific items that
are considered to be non-recurring in nature. Management believes
that this metric is relevant when assessing normalized operating
performance.
Adjusted EBITDAC % of Revenue - is a non-GAAP ratio
calculated as Adjusted EBITDAC divided by revenue. Management
believes that this metric is a useful measure of the Company's
normalized operating performance relative to its top line revenue
generation and a key industry performance measure.
Readers are cautioned that EBITDAC and Adjusted EBITDAC should
not be considered to be more meaningful than net income (loss)
determined in accordance with IFRS.
EBITDAC, Adjusted EBITDAC, and Adjusted EBITDAC % of Revenue are
calculated as follows:
|
Three Months Ended
March 31,
|
$000s
|
2022
|
2021
|
Net income
|
10,250
|
5,122
|
Add back
(deduct):
|
|
|
Depreciation on
property and equipment in cost of sales
|
12,052
|
11,847
|
Depreciation on
property and equipment in G&A
|
1,672
|
1,799
|
Amortization on
intangible assets in G&A
|
4,153
|
3,912
|
Current income tax
expense
|
1,259
|
900
|
Deferred income tax
expense
|
4,508
|
1,701
|
Stock-based
compensation
|
4,643
|
3,397
|
Finance
costs
|
3,995
|
5,743
|
Other income
|
(75)
|
(63)
|
EBITDAC & Adjusted
EBITDAC
|
42,457
|
34,358
|
Adjusted EBITDAC % of
Revenue
|
10.6%
|
11.5%
|
Adjusted EBITDAC per
share - basic
|
0.17
|
0.14
|
Adjusted EBITDAC per
share - diluted
|
0.16
|
0.13
|
Funds Flow From Operations - is a non-GAAP measure
that has been reconciled to Cash provided by (used in) operating
activities for the financial periods, being the most directly
comparable measure calculated in accordance with IFRS. Funds flow
from operations is defined as cash flow from operations before
changes in non-cash operating working capital and represents the
Company's after tax operating cash flows. This measure is not
intended to be considered more meaningful than cash provided by
operating activities, comprehensive income (loss), or other
measures of financial performance calculated in accordance with
IFRS. Funds Flow From Operations is used by management to assess
operating performance and leverage, and is calculated as
follows:
|
Three Months Ended
March 31,
|
$000's
|
2022
|
2021
|
Cash used in operating
activities
|
(12,435)
|
(5,782)
|
Adjust for:
|
|
|
Change in non-cash
operating working capital
|
45,554
|
31,524
|
Funds Flow From
Operations
|
33,119
|
25,742
|
Working Capital Surplus - Working Capital
Surplus is a non-GAAP measure that is calculated as current assets
less current liabilities, excluding the current portion of finance
lease obligations. Management believes that this metric is a key
measure to assess operating performance and leverage of the Company
and uses it to monitor its capital structure.
Net Debt and Total Debt - Net Debt and
Total Debt are non-GAAP measures that Management believes are key
metrics to assess liquidity of the Company and uses them to monitor
its capital structure. Net debt represents Total Debt, which
includes the Senior Facility, the Senior Notes, both current and
non-current portions of lease obligations, non-current portion of
cash settled incentive obligations, offset by the Company's cash
position, less Working Capital Surplus.
Readers are cautioned that Total Debt, Working Capital Surplus,
and Net Debt should not be construed as alternative measures to
Long-term financial liabilities determined in accordance with IFRS.
Total Debt, Working Capital Surplus, and Net Debt are calculated as
follows:
|
As at
|
$000's
|
March 31,
2022
|
December 31,
2021
|
Long-term financial
liabilities(1)
|
467,641
|
423,077
|
Current portion of
finance lease obligations
|
18,156
|
16,315
|
Current portion of
deferred acquisition consideration
|
1,410
|
-
|
Total Debt
|
487,207
|
439,392
|
Deduct Working Capital
Surplus:
|
|
|
Current
assets
|
694,699
|
619,201
|
Current
liabilities(2)
|
(188,472)
|
(159,447)
|
Working Capital
Surplus
|
506,227
|
459,754
|
Net Debt
|
(19,020)
|
(20,362)
|
1Includes long-term portion of
the Senior Facility, the Senior Notes, lease obligations, deferred
acquisition consideration and cash settled incentive
obligations.
|
2Excludes current portion of
lease liabilities and deferred acquisition
consideration.
|
Supplementary Financial Measures
A supplementary
financial measure: (a) is, or is intended to be, disclosed on a
periodic basis to depict the historical or expected future
financial performance, financial position or cash flow of the
Company; (b) is not presented in the financial statements of the
Company; (c) is not a non-GAAP financial measure; and (d) is not a
non-GAAP ratio. Supplementary financial measures found within this
news release are as follows:
Revenue - United
States - comprises a component of total revenue, as
determined in accordance with IFRS, and is calculated as revenue
recorded from the Company's US divisions.
Revenue - Canada -
comprises a component of total revenue, as determined in accordance
with IFRS, and is calculated as revenue recorded from the Company's
Canadian divisions.
Expansion Capital - comprises a component of total
investment in property and equipment as determined in accordance
with IFRS, and represents the amount of capital expenditure that
has been or will be incurred to grow or expand the business or
would otherwise improve the productive capacity of the operations
of the business.
Maintenance Capital - comprises a component of total
investment in property and equipment as determined in accordance
with IFRS, and represents the amount of capital expenditure that
has been or will be incurred to sustain the current level of
operations.
Cautionary Statement
Except for the historical and
present factual information contained herein, the matters set forth
in this press release, may constitute forward-looking information
or forward-looking statements (collectively referred to as
"forward-looking information") which involves known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of CES, or industry results,
to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
information. When used in this press release, such
information uses such words as "may", "would", "could", "will",
"intend", "expect", "believe", "plan", "anticipate", "estimate",
and other similar terminology. This information reflects CES'
current expectations regarding future events and operating
performance and speaks only as of the date of the press
release. Forward-looking information involves significant
risks and uncertainties, should not be read as a guarantee of
future performance or results, and will not necessarily be an
accurate indication of whether or not such results will be
achieved. A number of factors could cause actual results to
differ materially from the results discussed in the forward-looking
information, including, but not limited to, the factors discussed
below. The management of CES believes the material factors,
expectations and assumptions reflected in the forward-looking
information are reasonable but no assurance can be given that these
factors, expectations and assumptions will prove to be
correct. The forward-looking information contained in this
document speaks only as of the date of the document, and CES
assumes no obligation to publicly update or revise such information
to reflect new events or circumstances, except as may be required
pursuant to applicable securities laws or regulations. The material
assumptions in making forward-looking statements include, but are
not limited to, assumptions relating to demand levels and pricing
for the oilfield consumable chemical offerings of the Company;
fluctuations in the price and demand for oil and natural gas;
anticipated activity levels of the Company's significant customers;
commodity pricing; general economic and financial market
conditions; the successful integration of recent acquisitions; the
Company's ability to finance its operations; levels of drilling and
other activity in the WCSB, the Permian and other US basins, the
effects of seasonal and weather conditions on operations and
facilities; changes in laws or regulations; currency exchange
fluctuations; the ability of the Company to attract and retain
skilled labour and qualified management; and other unforeseen
conditions which could impact the Company's business of supplying
oilfield consumable chemistry to the Canadian and US markets and
the Company's ability to respond to such conditions.
In particular, this press release contains forward-looking
information pertaining to the following: the certainty and
predictability of future cash flows and earnings; expectations that
EBITDAC will exceed the sum of expenditures on interest, taxes and
capital expenditures; expectations of capital expenditures in 2021;
expectations that EBITDAC will provide sufficient free cash flow to
pay down the Company's Senior Facility and add cash to the balance
sheet; expectations regarding improving industry conditions and the
Company's ability to generate free cash flow to sustain the
quarterly dividend; expectations regarding the impact of the
COVID-19 pandemic on CES' operations and the oil and natural gas
industry generally; CES' ability to execute on
financial goals relating to its balance sheet, liquidity, working
capital and cost structure; expectations regarding the
performance of CES' business model and counter cyclical balance
sheet during downturns; expectations regarding CES' ability to
qualify and participate in various government support programs;
expectations that CES' financial position will provide a
competitive advantage in a recovery; the sufficiency of liquidity
and capital resources to meet long-term payment obligations; CES'
ability to increase or maintain its market share, including
expectations that PureChem and JACAM will increase market share in
the oilfield consumable chemical market, that Catalyst will
increase market-share of production and specialty chemicals in the
Permian Basin, and that AES will increase drilling fluids market
share in the Permian Basin; optimism with respect to future
prospects for CES; impact of CES' vertically integrated business
model on future financial performance; CES' ability to leverage
third party partner relationships to drive innovation in the
consumable fluids and chemicals business; supply and demand for
CES' products and services, including expectations for growth in
CES' production and specialty chemical sales, expected growth in
the consumable chemicals market; industry activity levels;
commodity prices; uncertainty surrounding the duration and severity
of a low oil and natural gas price environment; development of new
technologies; expectations regarding CES' growth opportunities in
Canada the US and overseas;
expectations regarding the performance or expansion of CES'
operations and working capital optimization; expectations
regarding the impact of conflict (including the conflict in
Ukraine) and global unrest on
commodity prices as well as CES' business and operations;
expectations regarding end markets for production chemicals and
drilling fluids in Canada and the
US; expectations regarding the impact of production curtailment
policies; expectations regarding demand for CES' services and
technology; investments in research and development and technology
advancements; access to debt and capital markets and
cost of capital; expectations regarding capital allocation
including the use of surplus free cash flow, the purchase of CES'
common shares by CES pursuant to the NCIB, debt reduction through
the repayment of the Company's Senior Facility or repurchases of
the Company's Senior Notes, investments in current operations,
issuing dividends, or market acquisitions; CES' ability to continue
to comply with covenants in debt facilities; and competitive
conditions.
CES' actual results could differ materially from those
anticipated in the forward-looking information as a result of the
following factors: general economic conditions in the US,
Canada, and internationally;
geopolitical risk; fluctuations in demand for consumable fluids and
chemical oilfield services, oilfield activity in the Permian, the
WCSB, and other basins in which the Company operates; a
decline in frac related chemical sales; a decline in operator usage
of chemicals on wells; an increase in the number of customer well
shut-ins; a shift in types of wells drilled; volatility in market
prices for oil, natural gas, and natural gas liquids and the effect
of this volatility on the demand for oilfield services generally;
declines in prices for natural gas, natural gas liquids, oil, and
pricing differentials between world pricing; pricing in
North America and pricing in
Canada; impacts of production
level decisions among OPEC+ members and the potential demand
impacts of COVID-19; competition, and pricing pressures from
customers in the current commodity environment; the degree and
severity of the COVID-19 pandemic, including government laws and
regulations implemented in response to the pandemic and the
resulting impact on the demand for oil and natural gas; government
support programs implemented in response to the COVID-19 pandemic
and potential changes to the qualification criteria and amount of
available support; political and societal unrest that may impact
CES' operations as well as impact the market for oil and natural
gas generally; currency risk as a result of fluctuations in value
of the US dollar; liabilities and risks, including environmental
liabilities and risks inherent in oil and natural gas operations;
sourcing, pricing and availability of raw materials, consumables,
component parts, equipment, suppliers, facilities, shipping
containers and skilled management, technical and field personnel;
the collectability of accounts receivable, ability to integrate
technological advances and match advances of competitors; ability
to protect the Company's proprietary technologies; availability of
capital; uncertainties in weather and temperature affecting the
duration of the oilfield service periods and the activities that
can be completed; the ability to successfully integrate and achieve
synergies from the Company's acquisitions; changes in legislation
and the regulatory environment, including uncertainties with
respect to oil and gas royalty regimes, programs to reduce
greenhouse gas and other emissions, carbon pricing schemes, and
regulations restricting the use of hydraulic fracturing; pipeline
capacity and other transportation infrastructure constraints;
government mandated production curtailments; reassessment and audit
risk and other tax filing matters; changes and proposed changes to
US policies including tax policies or policies relating to
the oil and gas industry; international and domestic trade
disputes, including restrictions on the transportation of oil and
natural gas and regulations governing the sale and export of oil,
natural gas and refined petroleum products; the impact of climate
change policies in regions which CES operates; the impact and speed
of adoption of low carbon technologies; potential changes to the
crude by rail industry; changes to the fiscal regimes applicable to
entities operating in the US and the WCSB; supply chain disruptions
including those caused by global pandemics or disease or from
geopolitical unrest, conflict and blockades; the impact of the
conflict in Ukraine on supply
chains, commodity prices, and the global economy; access to capital
and the liquidity of debt markets; fluctuations in foreign exchange
and interest rates; CES' ability to maintain adequate insurance at
rates it considers reasonable and commercially justifiable; and the
other factors considered under "Risk Factors" in CES' Annual
Information Form for the year ended December
31, 2021 dated March 10, 2022,
and "Risks and Uncertainties" in CES' MD&A for the three months
ended March 31, 2022, dated
May 12, 2022.
THE TORONTO
STOCK EXCHANGE HAS NOT REVIEWED
AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
SOURCE CES Energy Solutions Corp.