Due to strong growth in all operating regions, PHX Energy Services Corp.
(TSX:PHX) ("PHX Energy") achieved all-time quarterly records for revenue,
operating days, EBITDA, and net earnings.
For the three-month period ended September 30, 2013, consolidated revenue of
$107 million was achieved as compared to $84.1 million in the 2012-period; a 27
percent increase. EBITDA increased by 22 percent to $21.6 million in the third
quarter of 2013 from $17.7 million in 2012. Net earnings increased by 37 percent
from $7.8 million in the 2012-quarter to $10.7 million in 2013. Included in the
third quarter's EBITDA and net earnings were a gain of $2.2 million from the
sale of land and an operations centre and $1.2 million that related to the write
off of certain tools as the technology is no longer being utilized. Excluding
these gains and items, EBITDA increased by 16 percent to $20.6 million and net
earnings increased by 25 percent to $9.8 million for the three-month period
ended September 30, 2013.
The Corporation realized strong activity levels in all of its operating segments
in the third quarter of 2013. US revenue, a record for any quarter, as a
percentage of consolidated revenue was 47 percent during the 2013-quarter as
compared to 48 percent in the 2012-quarter. Albania's strong activity levels and
the momentum of Russia's growth continued through the third quarter of 2013. As
a result, for the three-month period ended September 30, 2013, the international
segment, for the second consecutive quarter, realized record revenue and
represented 13 percent of consolidated revenue as compared to 12 percent in the
corresponding 2012-period.
As previously announced, PHX Energy has expanded its 2013 capital expenditure
program from $30.4 million to $45 million, in light of strong equipment
utilization levels. During the third quarter of 2013, $6.9 million in capital
expenditures were incurred, and an additional $12.3 million of equipment is
currently on order and is expected to be received by the end of 2013.
On August 7, 2013, the terms of the Corporation's syndicated loan agreement with
its bank were amended to extend the maturity date of the syndicated facility and
US operating facility from September 6, 2015 to September 5, 2016. In addition,
the previous requirement to repay the current portion of the syndicated facility
of $15 million was removed. Consequently, the aggregate carrying amount of the
syndicated facility of $80 million as at September 30, 2013 was classified as a
non-current liability.
PHX Energy ended the third quarter with total long-term debt of $105.2 million
and working capital of $65.6 million. In the 2013-quarter, the Corporation paid
dividends of $5.2 million or $0.18 per share.
On October 18, 2013, PHX Energy closed a bought deal financing for aggregate
gross proceeds of $31.1 million. An aggregate of 2,990,000 common shares of the
Corporation were issued at a price of $10.40 per common share. Concurrent with
the closing of the public offering, certain directors, officers and employees of
PHX Energy and their associates, purchased a total of 500,000 common shares at a
price of $10.40 per share on a private placement basis. The gross proceeds from
the public offering and concurrent private placement totaled to approximately
$36.3 million. The net proceeds of the offerings will be used to temporarily
reduce indebtedness, which will then be available to be redrawn and applied to
fund the Corporation's ongoing capital expenditure program and for general
corporate purposes.
On September 25, 2013, PHX Energy and RMS Systems Inc. ("RMS") entered into an
Arrangement Agreement whereby the Corporation will acquire all of the issued and
outstanding shares of RMS. Under the terms of the Arrangement, all shareholders
of RMS will receive 0.037209 of a common share of PHX Energy for each RMS share
held based upon a value ascribed to each of the RMS shares and PHX Energy shares
of $0.40 and $10.75, respectively. Following completion of the Arrangement, RMS
will become a wholly-owned subsidiary of the Corporation. The Arrangement is
subject to customary stock exchange, Court and regulatory approvals, including
approval from the shareholders of RMS in a special meeting expected to be held
on November 27, 2013. The Arrangement allows PHX Energy to strategically expand
into a market segment that compliments its current services and presents many
opportunities for growth. The information and data management segment of the
oilfield services industry is attractive as there are only a few competitors and
the technology is required on nearly every rig that operates. RMS recently
completed upgrades to its technology to create a more competitive product and
the Corporation believes it can successfully market this technology with its
proven ability to foster strong client relationships. PHX Energy will leverage
its existing infrastructure and geographical footprint to expand market share
and create cost benefits where possible.
In light of the record financial results and positive company outlook, the Board
of Directors has approved a dividend increase of $0.01 per share per month from
$0.06 to $0.07 per share per month payable on December 13, 2013 to shareholders
of record at the close of business on November 29, 2013.
Financial Highlights
(Stated in thousands of dollars except per share amounts, percentages and
shares outstanding)
Three-month periods ended Nine-month periods ended
September 30, September 30,
% %
2013 2012 Change 2013 2012 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Operating
Results (unaudited) (unaudited) (unaudited) (unaudited)
Revenue 106,971 84,054 27 265,120 222,247 19
Net earnings 10,737 7,836 37 14,308 13,170 9
Earnings per
share -
diluted 0.37 0.28 32 0.50 0.47 6
EBITDA (1) 21,574 17,703 22 40,270 35,263 14
EBITDA per
share -
diluted (1) 0.75 0.63 19 1.41 1.25 13
---------------------------------------------------------------------------
Cash Flow
Cash flows
from (used
in)
operating
activities (7,233) (420) n.m. 18,011 19,322 (7)
Funds from
operations
(1) 20,393 17,996 13 37,999 36,732 3
Funds from
operations
per share -
diluted (1) 0.70 0.64 9 1.33 1.30 2
Dividends
paid 5,169 5,074 2 15,375 13,516 14
Dividends per
share (2) 0.18 0.18 - 0.54 0.48 13
Capital
expenditures 6,918 9,660 (28) 28,547 46,118 (38)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Financial
Position Sept. 30, Dec. 31,
(unaudited) '13 '12
Working
capital 65,575 45,480 44
Long-term
debt 105,242 80,000 32
Shareholders'
equity 121,426 115,095 6
Common shares
outstanding 28,808,766 28,241,371 2
---------------------------------------------------------------------------
---------------------------------------------------------------------------
n.m. - not meaningful
(1) Refer to non-GAAP measures section.
(2) Dividends paid by the Corporation on a per share basis in the period.
Non-GAAP Measures
PHX Energy uses certain performance measures throughout this document that are
not recognizable under Canadian generally accepted accounting principles
("GAAP"). These performance measures include earnings before interest, taxes,
depreciation and amortization ("EBITDA"), EBITDA per share, funds from
operations and funds from operations per share. Management believes that these
measures provide supplemental financial information that is useful in the
evaluation of the Corporation's operations and are commonly used by other oil
and natural gas service companies. Investors should be cautioned, however, that
these measures should not be construed as alternatives to measures determined in
accordance with GAAP as an indicator of PHX Energy's performance. The
Corporation's method of calculating these measures may differ from that of other
organizations, and accordingly, these may not be comparable. Please refer to the
non-GAAP measures section.
Cautionary Statement Regarding Forward-Looking Information and Statements
This document contains certain forward-looking information and statements within
the meaning of applicable securities laws. The use of "expect", "anticipate",
"continue", "estimate", "objective", "ongoing", "may", "will", "project",
"could", "should", "can", "believe", "plans", "intends", "strategy" and similar
expressions are intended to identify forward-looking information or statements.
The forward-looking information and statements included in this document are not
guarantees of future performance and should not be unduly relied upon. These
statements and information involve known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ materially from
those anticipated in such forward-looking statements and information. The
Corporation believes the expectations reflected in such forward-looking
statements and information are reasonable, but no assurance can be given that
these expectations will prove to be correct. Such forward-looking statements and
information included in this document should not be unduly relied upon. These
forward-looking statements and information speak only as of the date of this
document.
In particular, forward-looking information and statements contained in this
document include references to, without limitation, the expected delivery of
equipment that is on order; PHX Energy's ability to market RMS's technology; the
ability to alleviate rental costs; reducing costs and improving profitability;
the expected tax rate in Canada; PHX Energy's future strategy for Peru; future
job capacity; and the projected capital expenditures budget and how this will be
funded.
The above references are stated under the headings: "Operating Costs and
Expenses", "Segmented Information", "Investing Activities" and "Capital
Resources". Furthermore, all information contained within the Outlook section of
this document contains forward-looking statements.
In addition to other material factors, expectations and assumptions which may be
identified in this document and other continuous disclosure documents of the
Corporation referenced herein, assumptions have been made in respect of such
forward-looking statements and information regarding, among other things: the
Corporation will continue to conduct its operations in a manner consistent with
past operations; the general continuance of current industry conditions;
anticipated financial performance, business prospects, impact of competition,
strategies, the general stability of the economic and political environment in
which the Corporation operates; exchange and interest rates; tax laws; the
sufficiency of budgeted capital expenditures in carrying out planned activities;
the availability and cost of labour and services and the adequacy of cash flow;
debt and ability to obtain financing on acceptable terms to fund its planned
expenditures, which are subject to change based on commodity prices; market
conditions and future oil and natural gas prices; and potential timing delays.
Although Management considers these material factors, expectations and
assumptions to be reasonable based on information currently available to it, no
assurance can be given that they will prove to be correct.
Readers are cautioned that the foregoing lists of factors are not exhaustive.
Additional information on these and other factors that could affect the
Corporation's operations and financial results are included in reports on file
with the Canadian Securities Regulatory Authorities and may be accessed through
the SEDAR website (www.sedar.com) or at the Corporation's website. The
forward-looking statements and information contained in this document are
expressly qualified by this cautionary statement. The Corporation does not
undertake any obligation to publicly update or revise any forward-looking
statements or information, whether as a result of new information, future events
or otherwise, except as may be required by applicable securities laws.
Revenue
(Stated in thousands of dollars)
Three-month periods ended Nine-month periods ended
September 30, September 30,
% %
2013 2012 Change 2013 2012 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Revenue 106,971 84,054 27 265,120 222,247 19
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The Corporation realized strong activity levels in all of its operating
segments, resulting in PHX Energy achieving the highest quarterly level of
consolidated revenue in the Corporation's history. For the three-month period
ended September 30, 2013, PHX Energy generated record revenue of $107 million as
compared to $84.1 million in the corresponding 2012-period; an increase of 27
percent. US and international revenue as a percentage of total consolidated
revenue were 47 and 13 percent, respectively, for the 2013-quarter as compared
to 48 and 12 percent in 2012. Consolidated operating days grew by 24 percent to
an all-time record of 8,613 days in 2013 as compared to 6,932 in the
2012-quarter. Average consolidated day rates for the three-month period ended
September 30, 2013, excluding the motor rental division in the US, were $12,187,
which is 3 percent higher than the 2012-quarter day rates of $11,862.
In the third quarter of 2013, the trend of utilizing horizontal and directional
drilling technologies continued to dominate the Canadian and US markets. In
Canada, horizontal and directional drilling represented approximately 94 percent
of total industry drilling days in the third quarter of 2013 (2012 - 94
percent). In the US, horizontal and directional activity levels represented 75
percent of the rigs running per day in the 2013-quarter (2012 - 72 percent).
(Sources: Daily Oil Bulletin and Baker Hughes)
For the nine-month period ended September 30, 2013, consolidated revenue
increased by 19 percent to $265.1 million from
$222.2 million for the comparable 2012-period. Consolidated operating days for
the nine-month period ended September 30, 2013 grew by 18 percent to 21,524 days
from 18,241 days reported in 2012.
Operating Costs and Expenses
(Stated in thousands of dollars except percentages)
Three-month periods Nine-month periods ended
ended September 30, September 30,
% %
2013 2012 Change 2013 2012 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Direct costs 81,370 62,150 31 214,387 175,178 22
Depreciation &
amortization (included
in direct costs) 6,187 5,496 13 18,041 15,536 16
Gross profit as
percentage of revenue
excluding depreciation &
amortization 30 33 26 28
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Direct costs are comprised of field and shop expenses, and include depreciation
and amortization on the Corporation's equipment. Excluding depreciation and
amortization, gross profit as a percentage of revenue was 30 percent for the
three-month period ended September 30, 2013 as compared to 33 percent in the
comparable 2012-period. For the nine-month period ended September 30, 2013,
gross profit as a percentage of revenue, excluding depreciation and
amortization, was 26 percent as compared to 28 percent in 2012.
The following factors contributed to the decrease in the gross profit as a
percentage of revenue in the three and nine-month periods ended September 30,
2013:
-- Greater third party equipment rentals in the US to accommodate for
increased client demands.
-- Increased measurement while drilling ("MWD") repair costs in Canada and
US.
-- Higher down hole performance drilling motor repair costs in the US.
For the three-month period ended September 30, 2013, the Corporation's third
party equipment rentals were 4 percent of consolidated revenue compared to 2
percent of consolidated revenue in the corresponding 2012-quarter. The
Corporation has $5.7 million of performance down hole drilling motors on order
as at September 30, 2013, which will help alleviate rental costs in future
periods. Management also continues to implement strategies and disciplines that
will help reduce costs and improve profitability.
Depreciation and amortization for the three-month period ended September 30,
2013 increased by 13 percent to $6.2 million as compared to $5.5 million in the
2012-quarter. The increase is the result of the Corporation's record level
capital expenditure program in 2012.
(Stated in thousands of dollars except percentages)
Nine-
Three-month periods month periods ended
ended September 30, September 30,
% %
2013 2012 Change 2013 2012 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Selling, general &
administrative ("SG&A")
costs 11,213 9,265 21 30,142 26,011 16
Share-based payments
(included in SG&A costs) 231 444 (48) 761 1,855 (59)
SG&A costs excluding share-
based payments as a
percentage of revenue 10 10 11 11
---------------------------------------------------------------------------
---------------------------------------------------------------------------
SG&A costs for the three-month period ended September 30, 2013 increased by 21
percent to $11.2 million as compared to $9.3 million in 2012. Included in SG&A
costs are share-based payments of $0.2 million for the 2013-quarter and $0.4
million for the 2012-quarter. Excluding these costs, SG&A costs as a percentage
of consolidated revenue were 10 percent for both the 2013 and 2012 quarters.
For the nine-month period ended September 30, 2013, SG&A costs increased by 16
percent to $30.1 million as compared to
$26 million in 2012. Excluding share-based payments of $0.8 million in the 2013
nine-month period and $1.9 million in the corresponding 2012-period, SG&A costs
as a percentage of consolidated revenue for both the nine-month periods ended
September 30, 2013 and 2012 were 11 percent.
The increase in SG&A costs in both 2013 periods was primarily due to higher
payroll and marketing related costs associated with overall increased activity
in all of PHX Energy's operating segments and the development of international
regions.
Share-based payments relate to the amortization of the fair values of issued
options of the Corporation using the Black-Scholes model. Share-based payments
decreased in the three and nine-month periods ending September 30, 2013, as the
Corporation shifted to rewarding employees with retention awards rather than
options. The share-based cash-settled retention awards are measured at fair
value, and in the 2013-quarter, the related expense included in SG&A costs was
$0.5 million (2012 - $0.6 million).
(Stated in thousands of dollars)
Three-month periods Nine-month periods
ended September 30, ended September 30,
% %
2013 2012 Change 2013 2012 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Research & development expense 448 564 (21) 1,440 1,665 (14)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
R&D expenditures charged to net earnings during the three-month periods ended
September 30, 2013 and 2012 were
$0.4 million and $0.6 million, respectively. During both the 2013 and
2012-quarter, no R&D expenditures were capitalized as development costs.
For the nine-month period ended September 30, 2013, R&D expenditures of $1.4
million were incurred, none of which were capitalized as development costs. R&D
expenditures for the nine-month period ended September 30, 2012 were $1.8
million, of which $0.1 million were capitalized.
(Stated in thousands of dollars)
Three-month periods Nine-month periods
ended September 30, ended September 30,
% %
2013 2012 Change 2013 2012 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Finance expense 1,384 875 58 3,659 2,142 71
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Finance expenses relate to interest charges on the Corporation's long-term and
short-term bank facilities. Finance charges increased to $1.4 million in the
third quarter of 2013 from $0.9 million in the 2012-quarter, and in the
nine-month period ended September 30, 2013 increased to $3.7 million from $2.1
million in 2012. In order to fund PHX Energy's extensive capital expenditure
program in 2012 and the construction of the new operations centre that was sold
in September 2013, additional bank borrowings were made.
(Stated in thousands of dollars)
Nine-
Three-month month periods
periods ended ended September
September 30, 30,
2013 2012 2013 2012
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Gain on sale of land and operations
centre (2,196) - (2,196) -
Net gains on disposition of drilling
equipment (1,298) (1,047) (3,931) (2,152)
Provision for (Recovery of) bad debts (28) 115 (28) (93)
Write-down of technological assets 1,245 - 1,245 -
Foreign exchange losses 193 542 529 1,178
Losses from the change in fair value of
investment in equity securities - 120 - 490
---------------------------------------------------------------------------
Other income (2,084) (270) (4,381) (577)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
For the three and nine-month periods ended September 30, 2013, other income is
primarily represented by a gain of $2.2 million from the sale of land and an
operations centre on September 17, 2013. Other income also includes gains on
disposition of drilling equipment of $1.3 million for the three-month period
ended September 30, 2013 (2012 - $1 million) and $3.9 million for the nine-month
period ended September 30, 2013 (2012 - $2.2 million). The dispositions of
drilling equipment relate primarily to equipment lost in well bores that are
uncontrollable in nature. The gain reported is net of any asset retirements that
are made before the end of the equipment's useful life and self-insured down
hole equipment losses, if any. Gains typically result from insurance programs
undertaken whereby proceeds for the lost equipment are at current replacement
values, which are higher than the respective equipment's book value. In the
2013-quarter, the Corporation also recognized a $1.2 million write-down of
certain assets, whereby the technology is no longer being utilized. For the
three and nine-month periods ended September 30, 2013, the gains on disposition
of drilling equipment are higher compared to the 2012-periods mainly due to
higher occurrences of down hole equipment losses earlier in 2013 year.
Offsetting other income for the three and nine-month periods ended September 30,
2013 are foreign exchange losses of $193,000 (2012 - $542,000) and $529,000
(2012 - $1.2 million), respectively. Foreign exchange losses in the 2013-periods
resulted mainly from fluctuations in the US-Canadian exchange rates that caused
revaluation losses on Canadian-denominated receivables in the US. In the
2012-periods, foreign exchange losses resulted mainly from the devaluation of
Albanian LEK against the Canadian currency.
(Stated in thousands of dollars)
Three-month periods Nine-month periods
ended September 30, ended September 30,
% %
2013 2012 Change 2013 2012 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Share of losses of equity-
accounted investees 638 138 362 1,304 243 437
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The Corporation's share in the losses of the equity-accounted investees,
RigManager International Inc. ("RMII") and RMS, for the three-month period ended
September 30, 2013 was $638,000 as compared to a $138,000 share in the loss of
RMII during the 2012-period. The losses incurred by RMII were primarily due to
the slower than expected penetration into the US market.
For the nine-month period ended September 30, 2013, the Corporation's share in
the losses of the equity-accounted investees, RMII and RMS was $1.3 million
(2012 - $243,000 share in the loss of RMII).
(Stated in thousands of dollars)
Nine-
Three-month month periods
periods ended ended September
September 30, 30,
2013 2012 2013 2012
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Provision for income taxes 3,266 3,497 4,262 4,414
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The provision for income taxes for the third quarter of 2013 was $3.3 million as
compared to $3.5 million in the 2012-quarter. For the nine-month period ended
September 30, 2013, the provision for income taxes was $4.3 million as compared
to $4.4 million in 2012. The expected combined Canadian federal and provincial
tax rate for 2013 is 25 percent. The effective tax rates in the 2013 three and
nine-month periods are both 23 percent. These rates are lower than the expected
rate primarily due to the effect of lower tax rates in foreign jurisdictions.
(Stated in thousands of dollars except per share amounts and percentages)
Nine-
Three-month periods month periods ended
ended September 30, September 30,
% %
2013 2012 Change 2013 2012 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net earnings 10,737 7,836 37 14,308 13,170 9
Earnings per share -
diluted 0.37 0.28 32 0.50 0.47 6
EBITDA 21,574 17,703 22 40,270 35,263 14
EBITDA per share - diluted 0.75 0.63 19 1.41 1.25 13
EBITDA as a percentage of
revenue 20 21 15 16
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The Corporation's level of net earnings and EBITDA for the three and nine-month
periods ended September 30, 2013 have increased in part due to the $2.2 million
gain on the sale of land and an operations centre. EBITDA as a percentage of
revenue for the three and nine-month periods ended September 30, 2013 were 20
and 15 percent, respectively (2012 - 21 and 16 percent). Also included in the
third quarter's earnings was $1.2 million that related to the write off of
certain tools as the technology is no longer being utilized.
Excluding the gain on sale of land and operations centre and the write off of
tools, the level of net earnings and EBITDA are as follows:
(Stated in thousands of dollars except per share amounts and percentages)
Nine-
Three-month periods month periods ended
ended September 30, September 30,
% %
2013 2012 Change 2013 2012 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net earnings 9,786 7,836 25 13,357 13,170 1
Earnings per share -
diluted 0.34 0.28 21 0.47 0.47 -
EBITDA 20,623 17,703 16 39,319 35,263 12
EBITDA per share - diluted 0.71 0.63 13 1.37 1.25 10
EBITDA as a percentage of
revenue 19 21 15 16
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The increase in EBITDA for the 2013 three and nine-month periods and the
increase in net earnings for the 2013-quarter are generally due to activity
growth realized in all of the Corporation's operating regions. The decrease in
net earnings for the 2013 nine-month period was partly due to increased finance
expenses and depreciation costs.
Segmented Information:
The Corporation reports three operating segments on a geographical basis
throughout the Canadian provinces of Alberta, Saskatchewan, British Columbia,
and Manitoba; throughout the Gulf Coast, Northeast and Rocky Mountain regions of
the US; and internationally in Albania, Peru, Russia and Colombia.
Canada
(Stated in thousands of dollars)
Nine-
Three-month periods month periods ended
ended September 30, September 30,
% %
2013 2012 Change 2013 2012 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Revenue 42,699 33,756 26 99,374 94,367 5
Reportable segment profit
before tax 7,279 5,484 33 10,049 11,984 (16)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
For the three-month period ended September 30, 2013, the Canadian operations
gained significant market share in the Montney area. This gain primarily
accounted for the 26 percent increase in Canadian revenue to $42.7 million (2012
- $33.8 million) and the 33 percent increase in operating days to 3,774 days
(2012 - 2,841 days). There were competitive forces on client day rates and in
the third quarter of 2013, average day rates decreased by 5 percent to $11,314
from $11,882 in the 2012-quarter.
For the three-month period ended September 30, 2013, PHX Energy maintained a
well-diversified client base and was most active in the Montney, Viking, Swan
Hills, Frobisher, Shaunavon, and Bakken areas. PHX Energy's oil well drilling
activity (as measured by operating days) represented approximately 63 percent of
its overall Canadian activity; a decrease from 87 percent in the 2012-quarter
due to higher drilling activity in the Montney area. In comparison, the Canadian
industry's horizontal and directional drilling activity, as measured by drilling
days, was 8 percent lower in the 2013-quarter, 29,054 days, compared to the
2012-quarter's 31,411 days. (Source: Daily Oil Bulletin)
For the nine-month period ended September 30, 2013, PHX Energy's Canadian
revenue increased by 5 percent to $99.4 million from $94.4 million in the
comparable 2012-period. The overall horizontal and directional drilling days
realized in the Canadian industry decreased by 11 percent to 79,442 days as
compared to 88,802 days in the 2012-period. In comparison, the Corporation's
operating days increased by 13 percent to 8,736 days from 7,738 days in the
comparable 2012-period. Seventy-four percent of PHX Energy's Canadian drilling
activity (as measured by operating days) for the 2013 nine-month period were oil
wells. This compares to 81 percent in the 2012 nine-month period.
Reportable segment profit before tax for the third quarter of 2013 increased to
$7.3 million from $5.5 million in the 2012-quarter. Increased profitability
during the quarter is primarily due to stronger activity levels and lower
operating costs. For the nine-month period ended September 30, 2013, reportable
segment profit before tax decreased by 16 percent to $10 million from $12
million in 2012. Lower profitability in the 2013 nine-month period was mainly
the result of extraordinarily low activity levels in the second quarter of 2013
and reduced day rates in the nine-month period.
United States
(Stated in thousands of dollars)
Three-month periods Nine-month periods ended
ended September 30, September 30,
% %
2013 2012 Change 2013 2012 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Revenue 49,924 40,341 24 129,602 99,888 30
Reportable segment profit
before tax 5,291 7,619 (31) 7,854 10,116 (22)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
In the third quarter of 2013, Phoenix USA reported the highest level of
quarterly revenue in its history. For the three-month period ended September 30,
2013, the segment's revenue was $49.9 million, which is 24 percent higher than
the revenue of $40.3 million in the 2012-period. PHX Energy's US operating days
grew by 14 percent to a record 3,770 days from 3,314 days in the 2012-quarter.
Overall day rates realized, excluding the motor rental division, increased by 9
percent in the 2013-quarter to $12,714 compared to $11,619 in the 2012-quarter.
For the three-month period ended September 30, 2013, US industry rig utilization
levels decreased. The average number of horizontal and directional rigs running
on a daily basis was 3 percent lower at 1,334 rigs compared to 1,375 rigs in the
2012-quarter. (Source: Baker Hughes) Growth in the US market continues to focus
on horizontal oil well drilling. In the 2013-quarter, horizontal and directional
well drilling, as measured by drilling days, represented approximately 75
percent of overall industry activity, compared to 72 percent in the 2012-period.
Phoenix USA continued to benefit from this positive trend and in the third
quarter of 2013, the Corporation successfully increased market share and
continued to attract work from a diversified client base including large
multinational operators.
Phoenix USA also remained active in the Bakken, Niobrara, Permian Basin, Eagle
Ford, Mississippian, Marcellus, and Lower Huron plays. In addition, the
Corporation is gaining more recognition for its quality service level and
continues to penetrate markets in the Woodford and Utica plays.
US revenue for the nine-month period ended September 30, 2013 increased by 30
percent to $129.6 million from $99.9 million in the comparable 2012-period. The
Corporation's US operating days increased by approximately 21 percent in the
2013 nine-month period to 10,134 days from 8,383 days in 2012. For the
nine-month period ended September 30, 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 1,319 rigs as compared to 1,388 rigs in the comparable
2012-period. (Source: Baker Hughes)
Reportable segment profit before tax for the third quarter of 2013 decreased by
31 percent to $5.3 million from $7.6 million in the 2012-quarter. For the
nine-month period ended September 30, 2013, reportable segment profit before tax
decreased by 22 percent to $7.9 million from $10.1 million in 2012. The
Corporation's clients have substantially increased their demand for unique
configurations of down hole performance drilling motors, which has made it
necessary to rent more third party equipment, weakening the US operations'
margins. In addition, profitability continued to be negatively affected by
increased down hole performance drilling motor and MWD system repair costs.
Currently, profitability improvements are being examined in these areas.
International
(Stated in thousands of dollars)
Nine-
Three-month periods month periods ended
ended September 30, September 30,
% %
2013 2012 Change 2013 2012 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Revenue 14,348 9,957 44 36,144 27,992 29
Reportable segment profit
before tax 5,013 2,430 106 10,469 7,318 43
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The Corporation's international operations achieved record third quarter revenue
in 2013, reporting $14.3 million which is 44 percent higher than the $10 million
reported in the 2012-quarter. International operating days increased by 38
percent from 777 days in the 2012-quarter to a record 1,070 days in the
2013-quarter. The Corporation generated 13 percent of its consolidated revenue
from international operations in the 2013-quarter compared to 12 percent in the
2012-quarter. For the nine-month period ended September 30, 2013, revenue
increased by 29 percent to $36.1 million as compared to $28 million in 2012.
Operating days for the same period increased by 25 percent from 2,121 days in
2012 to 2,655 days in 2013.
The momentum of Phoenix Russia's growth continued, and for the second
consecutive quarter, a record level of revenue and activity was achieved.
Operating days grew by 71 percent in the third quarter of 2013 compared to the
2012-quarter. As a result of the Corporation's strong focus on reliability and
service quality and with the addition of a Moscow-based sales manager, Phoenix
Russia successfully expanded its customer base and its presence in the market
continued to improve. The Corporation is now exploring potential work beyond the
western Siberian region. Phoenix Russia currently has a job capacity of 15.
In the 2013-quarter, Phoenix Albania's activity levels remained strong. The
Corporation achieved 16 percent revenue growth which was driven predominantly by
increased utilization of the Corporation's resistivity while drilling ("RWD")
technology. Since commencing operations in 2008, Phoenix Albania has
successfully drilled in excess of 402 wells in the country. PHX Energy's joint
venture, RigManager International Inc., continued to run its electronic drilling
recorder systems on all active rigs. The Corporation presently has a 6 job
capacity in Albania.
Phoenix Colombia's revenues grew in the third quarter of 2013 compared to the
2012-period which is mainly a result of improved pricing. The activity levels
achieved in the second quarter of 2013 were sustained in the third quarter
through the Corporation's effective pricing and sales strategy. PHX Energy
continues to review and evaluate opportunities to improve its presence in the
Colombian market and deploy its services more effectively. Phoenix Colombia
currently has a 5 job capacity.
Phoenix Peru also realized revenue growth in the third quarter of 2013 compared
to the 2012-quarter and this was achieved through increased activity levels.
While the quarterly results were stronger, the operating landscape in the
Peruvian market has not improved from previous periods and as such, the
Corporation will revisit its future strategy for Peru. Phoenix Peru currently
has a job capacity of 4 full service jobs.
For the three-month period ended September 30, 2013, reportable segment profit
before tax was $5 million, an increase of 106 percent compared to $2.4 million
in the corresponding 2012-period. Reportable segment profit for the nine-month
period ended September 30, 2013 was $10.5 million as compared to $7.3 million in
2012; a 43 percent increase. Profitability in both 2013 periods improved
primarily as a result of Russia's strong activity growth and increased
utilization of the Corporation's value-added technologies in Albania.
Investing Activities
Net cash from investing activities for the three-month period ended September
30, 2013 was $16.4 million as compared to $18 million (use of cash) in 2012. PHX
Energy made an additional $1.0 million investment in the joint venture company
RMII in the form of preferred shares (2012 - $0.3 million) and added $3.9
million in capital equipment in the third quarter of 2013 (2012 - $7.3 million).
These capital equipment amounts are net of proceeds from the involuntary
disposal of drilling equipment in well bores of $3 million (2012 - $2.4
million). The quarterly 2013 expenditures included:
-- $2.3 million in other assets including $1.5 million of furniture and
fixtures and leasehold improvements primarily for the new operations
centre and $0.7 million of software;
-- $2.1 million in down hole performance drilling motors;
-- $1.6 million in MWD systems and spare components;
-- $0.8 million in machinery and equipment for global service centres, and;
-- $0.1 million in non-magnetic drill collars and jars.
The capital expenditure program undertaken in the period was financed from a
combination of funds from operations, long-term debt and working capital.
In the third quarter of 2013, the Corporation received proceeds of $23.1 million
from sale of the land and an operations centre. Payments relating to the land
and operations centre amounted to $18.9 million. The change in non-cash working
capital balances of $17 million (source of cash) for the three-month period
ended September 30, 2013, pertains to $15.6 million of costs that relate to the
land and an operations centre and $1.4 million of net change in the
Corporation's trade payables that are associated with the acquisition of capital
assets. This compares to $10.4 million (use of cash) for the three-month period
ended September 30, 2012.
During the third quarter of 2013, PHX Energy's job capacity remained unchanged
at 215 jobs. As at September 30, 2013, the Corporation's MWD fleet consisted of
133 P-360 positive pulse MWD systems, 65 E-360 electromagnetic ("EM") MWD
systems, and 17 RWD systems. Of these, 93 MWD systems were deployed in Canada,
92 in the US, 15 in Russia, 6 in Albania, 4 in Peru, and 5 in Colombia. The
Corporation expects to sustain the current job capacity until the end of the
year.
Financing Activities
The Corporation reported cash used in financing activities of $12.2 million in
the three-month period ended September 30, 2013 as compared to $10.6 million
(source of cash) in the 2012-period. In the 2013-quarter:
-- the Corporation paid dividends of $5.2 million to shareholders, or $0.18
per share;
-- through its option and DRIP program the Corporation received cash
proceeds of $1.6 million from exercised options and reinvested dividends
to acquire 174,593 common shares of the Corporation; and
-- the Corporation made an aggregate repayments of $8.6 million on its
operating facility and syndicated facility.
Capital Resources
As at September 30, 2013, the Corporation has access to a $10 million operating
facility. The facility bears interest based primarily on the Corporation's
senior debt to EBITDA ratio, as defined in the agreement. At the Corporation's
option, interest is at the bank's prime rate plus a margin that ranges from a
minimum of 0.75 percent to a maximum of 2 percent, or the bank's bankers'
acceptance rate plus a margin that ranges from a minimum of 1.75 percent to a
maximum of 3 percent. As of September 30, 2013, the Corporation had $6.1 million
drawn on this facility.
As at September 30, 2013, the Corporation also has access to a $95 million
syndicated facility and a US$25 million operating facility in the US. The
facilities bear interest at the same rates disclosed above. On August 7, 2013,
the terms of the Corporation's syndicated loan agreement with its bank were
amended to extend the maturity date of the syndicated facility and US operating
facility from September 6, 2015 to September 5, 2016. In addition, the previous
requirement to repay the current portion of the syndicated facility of $15
million was removed. The aggregate carrying amounts of the syndicated facility
and the US operating facility of $80 million and $25.2 million, respectively, as
at September 30, 2013, were classified as non-current in the statement of
financial position.
All credit facilities are secured by a general security agreement over all
assets of the Corporation located in Canada and the US. As at September 30,
2013, the Corporation was in compliance with all of its bank debt covenants.
Cash Requirements for Capital Expenditures
Historically, the Corporation has financed its capital expenditures and
acquisitions through cash flows from operating activities, debt and equity. As
previously announced the 2013 capital budget has been expanded to $45 million
and is subject to quarterly review of the Board of Directors. These planned
expenditures are expected to be financed from a combination of one or more of
the following, cash flow from operations, the Corporation's unused credit
facilities or equity, if necessary. However, if a sustained period of market
uncertainty and financial market volatility persists in 2013, the Corporation's
activity levels, cash flows and access to credit may be negatively impacted, and
the expenditure level would be reduced accordingly. Conversely, if future growth
opportunities present themselves, the Corporation would look at expanding this
planned capital expenditure amount.
Outlook
For the third quarter of 2013, PHX Energy is pleased to report record
consolidated activity and financial results, for any given quarter.
The achievements in the quarter confirm the Corporation's strategy is targeting
the right direction and its execution is creating the desired results, despite
industry drilling levels being lower than the prior year. As part of this
effort, PHX Energy continues to focus on improving its field operating margins.
Overall, the Corporation believes it is well positioned and this can be directly
accredited to the experience and motivation of its more than 900 employees.
In Canada, the Corporation's goal is to be the choice provider in key drilling
areas. The wet weather conditions typical of the second quarter persisted into
July, which limited operators' access to build leases and deploy operations;
thus, the expected robust level of horizontal drilling activity anticipated
never materialized. Despite these industry conditions, PHX Energy's client base
and market share in many important basins increased as a result of the
relentless focus on continual improvement in customer satisfaction.
A strategic objective that has persisted over the past few years is growth in
the lucrative and large United States horizontal drilling market. This remains
key to PHX Energy, and in the third quarter progress was made with the addition
of new clients and an increase in operating days. Although, the Corporation had
anticipated a greater level of growth, it believes the performance achieved thus
far by the superior marketing and operating personnel speaks volumes. It is
expected that the US operations' momentum and brand awareness will only increase
in future quarters.
The Corporation's initiatives to diversify its operations internationally also
continued to produce positive results in the third quarter. In Colombia, recent
strides have been made which improved activity levels and profitability and PHX
Energy believes this performance will be sustained. Additionally, Russia
continues to present many opportunities for the Corporation. It is a very large
market and PHX Energy is developing stronger client relationships as it further
establishes its reputation. The Corporation is committed to the international
segments where market share growth can be achieved and positive operating
margins are attainable. As such future growth and profitability are forecasted
for international operations, albeit these gains may come at a slower pace in
certain quarters.
PHX Energy's outlook for the remainder of the year is that overall North
American drilling activity levels will remain stagnant. However, there are many
oil and natural gas basins that are looked upon by the industry as favorable for
horizontal drilling applications as operators continue to embrace this
technology. In addition, in the international areas the Corporation occupies
similar opportunities exist, and as such PHX Energy anticipates growth in
operating days and market share in almost all of its operating segments in the
fourth quarter of 2013.
John Hooks
Chairman of the Board, President and Chief Executive Officer
October 30, 2013
Non-GAAP Measures
1) EBITDA
EBITDA, defined as earnings before interest, taxes, depreciation and
amortization, is not a financial measure that is recognized under GAAP. However,
Management believes that EBITDA provides supplemental information to net
earnings that is useful in evaluating the Corporation's operations before
considering how it was financed or taxed in various countries. Investors should
be cautioned, however, that EBITDA should not be construed as an alternative
measure to net earnings determined in accordance with GAAP. PHX Energy's method
of calculating EBITDA may differ from that of other organizations and,
accordingly, its EBITDA may not be comparable to that of other companies.
The following is a reconciliation of net earnings to EBITDA:
(Stated in thousands of dollars)
Nine-
Three-month month periods
periods ended ended September
September 30, 30,
2013 2012 2013 2012
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net earnings 10,737 7,836 14,308 13,170
Add:
Depreciation and amortization 6,187 5,495 18,041 15,537
Provision for income taxes 3,266 3,497 4,262 4,414
Finance expense 1,384 875 3,659 2,142
---------------------------------------------------------------------------
EBITDA as reported 21,574 17,703 40,270 35,263
---------------------------------------------------------------------------
---------------------------------------------------------------------------
EBITDA per share - diluted is calculated using the treasury stock method whereby
deemed proceeds on the exercise of the share options are used to reacquire
common shares at an average share price. The calculation of EBITDA per share on
a dilutive basis does not include anti-dilutive options.
2) Funds from Operations
Funds from operations is defined as cash flows generated from operating
activities before changes in non-cash working capital. This is not a measure
recognized under GAAP. Management uses funds from operations as an indication of
the Corporation's ability to generate funds from its operations before
considering changes in working capital balances. Investors should be cautioned,
however, that this financial measure should not be construed as an alternative
measure to cash flows from operating activities determined in accordance with
GAAP. PHX Energy's method of calculating funds from operations may differ from
that of other organizations and, accordingly, it may not be comparable to that
of other companies.
The following is a reconciliation of cash flows from operating activities to
funds from operations:
(Stated in thousands of dollars)
Nine-
Three-month month periods
periods ended ended September
September 30, 30,
2013 2012 2013 2012
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Cash flows from (used in) operating
activities (7,233) (420) 18,011 19,322
Add:
Changes in non-cash working capital 26,462 17,639 16,226 14,339
Interest paid 854 582 2,732 1,997
Income taxes paid 310 195 1,030 1,074
---------------------------------------------------------------------------
Funds from operations 20,393 17,996 37,999 36,732
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Funds from operations per share - diluted is calculated using the treasury stock
method whereby deemed proceeds on the exercise of the share options are used to
reacquire common shares at an average share price. The calculation of funds from
operations per share on a dilutive basis does not include anti-dilutive options.
About PHX Energy Services Corp.
The Corporation, through its subsidiary entities, provides horizontal and
directional technology and drilling services to oil and natural gas producing
companies in Canada, the US, Albania, Russia, Peru, and Colombia. PHX Energy
develops and manufactures its E-360 EM and P-360 positive pulse MWD technologies
that are made available for internal operational use.
PHX Energy's Canadian operations are conducted through Phoenix Technology
Services LP. The Corporation maintains its corporate head office, research and
development, Canadian sales, service and operational centres in Calgary,
Alberta. In addition, PHX Energy has a facility in Estevan, Saskatchewan. PHX
Energy's US operations, conducted through the Corporation's wholly-owned
subsidiary, Phoenix Technology Services USA Inc. ("Phoenix USA"), is
headquartered in Houston, Texas. Phoenix USA has sales and service facilities in
Houston, Texas; Traverse City, Michigan; Casper, Wyoming; Denver, Colorado; Fort
Worth, Texas; Midland, Texas; Buckhannon, West Virginia; Pittsburgh,
Pennsylvania; and Oklahoma City, Oklahoma. Internationally, PHX Energy has sales
offices and service facilities in Albania, Peru, Russia, and Colombia, and an
administrative office in Nicosia, Cyprus.
Consolidated Statements of Financial Position
(unaudited)
September 30, December 31,
2013 2012
---------------------------------------------------------------------------
---------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 4,285,648 $ 4,329,969
Trade and other receivables 89,596,945 67,189,884
Inventories 28,751,806 21,833,051
Prepaid expenses 2,533,348 3,476,559
Assets held for sale - 9,436,462
---------------------------------------------------------------------------
Total current assets 125,167,747 106,265,925
Non-current assets:
Drilling and other equipment 151,168,742 144,370,109
Goodwill 8,876,351 8,876,351
Intangible assets 3,759,200 -
Equity-accounted investees 7,905,868 5,010,292
---------------------------------------------------------------------------
Total non-current assets 171,710,161 158,256,752
---------------------------------------------------------------------------
Total assets $ 296,877,908 $ 264,522,677
---------------------------------------------------------------------------
---------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Operating facility $ 6,076,407 $ 5,897,711
Trade and other payables 48,823,581 38,165,118
Dividends payable 1,657,266 1,626,287
Current tax liabilities 3,035,425 97,020
Loans and borrowings - 15,000,000
---------------------------------------------------------------------------
Total current liabilities 59,592,679 60,786,136
Non-current liabilities:
Loans and borrowings 105,242,350 80,000,000
Deferred tax liabilities 8,616,753 8,641,858
Deferred income 2,000,000 -
---------------------------------------------------------------------------
Total non-current liabilities 115,859,103 88,641,858
Equity:
Share capital 106,107,691 99,101,118
Contributed surplus 6,561,069 7,860,658
Retained earnings 8,667,006 9,764,748
Accumulated other comprehensive income 90,360 (1,631,841)
---------------------------------------------------------------------------
Total equity 121,426,126 115,094,683
Total liabilities and equity $ 296,877,908 $ 264,522,677
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Consolidated Statements of Comprehensive Income
(unaudited)
Three-month periods ended Nine-month periods ended
September 30, September 30,
2013 2012 2013 2012
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Revenue $ 106,970,562 $ 84,054,349 $ 265,120,352 $ 222,246,607
Direct costs 81,369,871 62,149,600 214,386,894 175,178,242
---------------------------------------------------------------------------
Gross profit 25,600,691 21,904,749 50,733,458 47,068,365
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Expenses:
Selling,
general and
administrative
expenses 11,213,353 9,265,112 30,141,952 26,010,886
Research and
development
expenses 447,520 563,666 1,439,501 1,664,594
Finance expense 1,383,727 875,277 3,658,641 2,142,342
Other income (2,084,494) (269,794) (4,380,977) (576,601)
---------------------------------------------------------------------------
10,960,106 10,434,261 30,859,117 29,241,221
Share of loss of
equity-
accounted
investee (net
of tax) 637,856 138,133 1,304,424 242,604
Earnings before
income taxes 14,002,729 11,332,355 18,569,917 17,584,540
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Provision for
(Recovery of)
income taxes
Current 1,235,771 (1,818,352) 3,864,473 1,370,421
Deferred 2,029,919 5,315,067 397,703 3,043,870
---------------------------------------------------------------------------
3,265,690 3,496,715 4,262,176 4,414,291
---------------------------------------------------------------------------
Net earnings 10,737,039 7,835,640 14,307,741 13,170,249
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Other
comprehensive
income
Foreign
currency
translation (573,432) (2,496,278) 1,722,201 (2,461,405)
---------------------------------------------------------------------------
Total
comprehensive
income for the
period $ 10,163,607 $ 5,339,362 $ 16,029,942 $ 10,708,844
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Earnings per
share - basic $ 0.37 $ 0.28 $ 0.50 $ 0.47
Earnings per
share - diluted $ 0.37 $ 0.28 $ 0.50 $ 0.47
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Consolidated Statements of Cash Flows
(unaudited)
Three-month periods ended Nine-month periods ended
September 30, September 30,
2013 2012 2013 2012
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Cash flows from
operating
activities:
Net earnings $ 10,737,039 $ 7,835,640 $ 14,307,741 $ 13,170,249
Adjustments for:
Depreciation and
amortization 6,187,406 5,495,619 18,041,225 15,535,925
Provision for
income taxes 3,265,690 3,496,715 4,262,176 4,414,291
Unrealized
foreign
exchange loss 228,144 522,831 574,834 1,126,047
Net gain on
disposition of
drilling
equipment (1,298,348) (1,046,555) (3,931,046) (2,151,864)
Write-down of
technological
assets 1,244,946 - 1,244,946 -
Gain on sale of
land and
operations
centre (2,195,886) - (2,195,886) -
Share-based
payments 230,769 444,008 760,536 1,854,811
Finance expense 1,383,727 875,277 3,658,641 2,142,342
Provision for
(Recovery of)
bad debts (28,456) 114,576 (28,456) (93,138)
Share of loss of
equity-
accounted
investee 637,856 138,133 1,304,424 242,604
Change in fair
value of
investment in
equity
securities - 120,060 - 490,245
Change in non-
cash working
capital (26,462,347) (17,639,167) (16,225,797) (14,338,477)
---------------------------------------------------------------------------
Cash generated
from (used in)
operating
activities (6,069,460) 357,137 21,773,338 22,393,035
Interest paid (854,121) (581,962) (2,731,853) (1,997,257)
Income taxes
paid (309,668) (195,258) (1,030,527) (1,073,302)
---------------------------------------------------------------------------
Net cash from
(used in)
operating
activities (7,233,249) (420,083) 18,010,958 19,322,476
---------------------------------------------------------------------------
Cash flows from
investing
activities:
Proceeds on
disposition of
drilling
equipment 3,048,367 2,356,642 8,331,930 6,994,171
Acquisition of
drilling and
other equipment (6,917,781) (9,660,475) (28,546,653) (46,117,625)
Acquisition of
intangible
assets - - (3,759,200) -
Investment in
equity-
accounted
investee (1,000,000) (330,855) (4,200,000) (4,093,468)
Proceeds from
sale of land
and operations
centre 23,100,000 - 23,100,000 -
Payments
relating to the
land and
operations
centre (18,904,114) - (18,904,114) -
Change in non-
cash working
capital 17,045,321 (10,375,149) 6,119,018 (11,292,973)
---------------------------------------------------------------------------
Net cash from
(used in)
investing
activities 16,371,793 (18,009,837) (17,859,019) (54,509,895)
---------------------------------------------------------------------------
Cash flows from
financing
activities:
Proceeds from
issuance of
share capital 1,614,456 224,154 4,946,448 1,010,054
Dividends paid
to shareholders (5,168,786) (5,073,994) (15,374,504) (13,515,652)
Proceeds on
(Repayment of)
loans and
borrowings (5,154,900) 15,500,000 10,053,100 37,000,000
Proceeds on
(Repayment of)
operating
facility (3,449,008) (71,819) 178,696 6,196,458
---------------------------------------------------------------------------
Net cash from
(used in)
financing
activities (12,158,238) 10,578,341 (196,260) 30,690,860
---------------------------------------------------------------------------
Net increase in
cash and cash
equivalents (3,019,694) (7,851,579) (44,321) (4,496,559)
Cash and cash
equivalents,
beginning of
period 7,305,342 11,731,364 4,329,969 8,376,344
---------------------------------------------------------------------------
Cash and cash
equivalents,
end of period $ 4,285,648 $ 3,879,785 $ 4,285,648 $ 3,879,785
---------------------------------------------------------------------------
---------------------------------------------------------------------------
FOR FURTHER INFORMATION PLEASE CONTACT:
PHX Energy Services Corp.
John Hooks
President and CEO
403-543-4466
PHX Energy Services Corp.
Cameron Ritchie
Senior Vice President Finance and CFO
403-543-4466
PHX Energy Services Corp.
Suite 1400, 250 2nd Street SW
Calgary, Alberta T2P 0C1
403-543-4466
403-543-4485 (FAX)
www.phxtech.com
PHX Energy Services (TSX:PHX)
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