CALGARY,
AB, May 13, 2024 /CNW/ - Stampede Drilling
Inc. ("Stampede" or the "Corporation") (TSXV: SDI) announces today
its consolidated financial and operational results for the three
month period ended March 31,
2024.
The following press release should be read in conjunction with
the December 31, 2023, audited
consolidated financial statements prepared in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board ("IFRS Accounting
Standards"), the related management's discussion and analysis
("MD&A") and the annual information form ("AIF") for the year
ended December 31, 2023, as well as
the condensed unaudited consolidated interim financial statements
and notes for the three month periods ended March 31, 2024 and 2023. Additional information
regarding Stampede, including the AIF, is available on SEDAR+ at
www.sedarplus.ca.
All amounts or dollar figures are denominated in thousands of
Canadian dollars except for per share amounts, number of drilling
rigs, and operating days, or unless otherwise noted.
Estimates and forward-looking information are based on
assumptions of future events and actual results may vary from these
estimates. See "Forward-Looking Information" in this press release
for additional details.
FIRST QUARTER 2024 OPERATIONAL
HIGHLIGHTS
- Achieved record Net Income of $4,941
– an increase of $1,176 or 31% from the first
quarter of 2023. The increase was primarily
related to increased operating days and revenue per day, reduction
in general and administrative expenses and increase in gross
margin percentage.
- Achieved record Q1 Adjusted EBITDA(1)
of $7,665 – an increase of
$1,675 or 28% from the first quarter
of 2023. The increase was primarily related to higher revenue due
to increased revenue per day, and the reduction in general and
administrative expenses and increase in gross
margin percentage.
- Achieved record Revenue of $27,499 – an increase of $1,802 or 7% from the first quarter of 2023, driven
by increased number of operating days and increased
day rate.
- Free Cash
Flow(1) of $5,151
– an increase of $1,059 or 26% primarily related to the increase from funds from operating
activities.
- Gross Margin(1) of 36% – an
increase of 4% from 32% in the corresponding 2023 period. The
increase was primarily related to an increase in revenue per day
combined with the decrease in operating costs.
- Repurchase of 1,255 common shares – In the first
quarter of 2024 the Corporation repurchased and cancelled 1,255
common shares under its normal course issuer bid ("NCIB") at a
weighted average price per common share of $0.23, for a total consideration of $292. The total amount of common shares
repurchased and cancelled during the first quarter of 2024
represents 0.59% of the total issued and outstanding common shares
of the Corporation.
OUTLOOK
Posting our strongest financial
quarter to date, Stampede achieved
record-breaking results in revenue, adjusted
EBITDA, and net income during the first
quarter of 2024. With 17 out of its 19 rig fleet
operational during this period, the Corporation anticipates
maintaining this positive momentum
post spring break-up and into
the back half of the year. The optimistic outlook for Western
Canada, driven by rising global demand and increased tidewater
access for Canadian produces from the startup of the Trans Mountain
pipeline expansion in 2024 and LNG Canada planned for 2025, thereby
supporting increased forecasted drilling activity amid ongoing
geopolitical challenges affecting global energy supply and
commodity prices.
Benefiting from a solid industry backdrop, growth potential, and
financial stability, Stampede is strategically positioned for
success, focusing on executing strategic initiatives and maximizing
shareholder returns. The Corporation's emphasis on safety and
strategic priorities is upheld by a dedicated team of employees
committed to operational excellence and value creation for
shareholders. With a strong balance sheet, Stampede stands well
positioned for further expansion and sustained growth in the energy
services landscape.
|
(1)
|
– Refer to "Non-GAAP
and Other Financial Measures" for further information.
|
FINANCIAL SUMMARY
|
Three months ended,
March 31
|
|
(000's CAD $ except
per share amounts)
|
2024
|
2023
|
%
Change
|
|
Revenue
|
27,499
|
25,697
|
7 %
|
|
Direct operating
expenses
|
17,586
|
17,383
|
1 %
|
|
Gross
margin(1)
|
9,913
|
8,314
|
19 %
|
|
Net income
|
4,941
|
3,765
|
31 %
|
|
Basic and diluted
income per share
|
0.02
|
0.02
|
0 %
|
|
Adjusted
EBITDA(1)
|
7,665
|
5,990
|
28 %
|
|
Funds from operating
activities
|
7,614
|
5,966
|
28 %
|
|
Free cash
flow(1)
|
5,151
|
4,092
|
26 %
|
|
Weighted average common
shares outstanding (000's)
|
211,276
|
224,771
|
(6 %)
|
|
Weighted average
diluted common shares outstanding (000's)
|
212,029
|
230,624
|
(8 %)
|
|
Capital
expenditures
|
6,180
|
2,241
|
176 %
|
|
Number of marketed
rigs
|
19
|
19
|
0 %
|
|
Drilling rig
utilization(2)
|
55 %
|
54 %
|
1 %
|
|
CAOEC industry average
utilization(3)
|
50 %
|
45 %
|
5 %
|
|
(1)
|
Refer to "Non-GAAP and
Other Financial Measures" for further information.
|
|
(2)
|
Drilling rig
utilization is calculated based on operating days (spud to rig
release).
|
|
(3)
|
Source: The Canadian
Association of Energy Contractors ("CAOEC") monthly Contractor
Summary. The CAOEC industry average is based on operating days
divided by total available drilling days.
|
DESCRIPTION OF STAMPEDE'S
BUSINESS
Stampede is an energy services company
that provides premier
contract drilling services in Western Canada.
Stampede operates a fleet of 18 telescopic double drilling
rigs and 1 high spec triple drilling rig suited for most formations
within the Western Canadian Sedimentary Basin ("WCSB"). The
Corporation's head office is located in Calgary, Alberta with operations based out of
Nisku, Alberta and Estevan, Saskatchewan. The Corporation's
common shares trade on the TSX Venture Exchange under the
symbol "SDI".
RESULTS FROM OPERATIONS FOR THE
THREE MONTH PERIOD ENDED MARCH 31,
2024
|
Three months ended,
March 31
|
|
(000's CAD
$)
|
2024
|
2023
|
%
Change
|
|
Revenue
|
27,499
|
25,697
|
7 %
|
|
Direct operating
expenses
|
17,586
|
17,383
|
1 %
|
|
Gross
margin(1)
|
9,913
|
8,314
|
19 %
|
|
Gross margin
%(1)
|
36 %
|
32 %
|
4 %
|
|
Net income
|
4,941
|
3,765
|
31 %
|
|
General and
administrative expenses
|
2,524
|
2,650
|
(5 %)
|
|
Adjusted
EBITDA(1)
|
7,665
|
5,990
|
28 %
|
|
Drilling rig operating
days(2)
|
956
|
918
|
4 %
|
|
Drilling rig revenue
per day(3)
|
28.8
|
28.0
|
3 %
|
|
Drilling rig
utilization(4)
|
55 %
|
54 %
|
1 %
|
|
CAOEC industry average
utilization(5)
|
50 %
|
45 %
|
5 %
|
|
(1)
|
Refer to "Non-GAAP and
Other Financial Measures" for further information.
|
|
(2)
|
Defined as contract
drilling days, between spud to rig release.
|
|
(3)
|
Drilling rig revenue
per day is calculated by revenue divided by drilling rig operating
days.
|
|
(4)
|
Drilling rig
utilization is calculated based on operating days (spud to rig
release).
|
|
(5)
|
Source: The Canadian
Association of Energy Contractors ("CAOEC") monthly Contractor
Summary. The CAOEC industry average is based on Operating Days
divided by total available drilling days.
|
- Revenue of $27,499
– an increase of $1,802 (7%)
from $25,697 in the corresponding
2023 period. The increase was primarily related to increased number
of operating days, combined with increased revenue
per day.
- Operating days of 956 – an increase of 38 operating days
(4%) from 918 operating days in the corresponding 2023 period.
Operating days increased as a result of higher drilling rig
utilization compared to the corresponding period of 2023.
- Gross margin percentage of 36% – an increase of 4%
from 32% in the corresponding 2023 period. The increase was
primarily related to an increase in revenue per day combined with
the decrease in operating costs.
- Net income of $4,941
– an increase of $1,176
(31%) from $3,765 in the
corresponding 2023 period. The increase was primarily related to
increased operating days and revenue per day, reduction in general
and administrative expenses and increase in gross
margin percentage.
- Adjusted EBITDA of $7,665
– an increase of $1,675
(28%) from $5,990 in the
corresponding 2023 period. The increase was primarily related to
higher revenue due to increased revenue per day, reduction in
general and administrative expenses and increase in gross
margin percentage.
- General and administrative expenses of $2,524 – a decrease of $126 (5%) from $2,650 in the corresponding 2023 period. The
decrease was primarily related to the WCB credits received,
reduction in share-based compensation expense, and one time
recruiting costs in the corresponding 2023 period.
NON-GAAP AND OTHER FINANCIAL
MEASURES
This news release contains references to (i) adjusted EBITDA,
(ii) Gross margin (iii) Gross margin percentage, and (iv) free cash
flow. These financial measures are not measures that have any
standardized meaning prescribed by IFRS Accounting Standards and
are therefore referred to as non-generally accepted accounting
principles ("non-GAAP") measures. The non-GAAP measures used by the
Corporation may not be comparable to similar measures used by other
companies.
|
(i)
|
Adjusted EBITDA
- is defined as "income from operations before interest income,
interest expense, taxes, transaction costs, depreciation and
amortization, share-based compensation expense, gains on asset
disposals, impairment expenses, other income, foreign exchange,
non-recurring restructuring charges, finance costs, accretion of
debentures and other income/expenses, foreign exchange gain and any
other items that the Corporation considers appropriate to adjust
given the irregular nature and relevance to comparable operations."
Management believes that in addition to net income, adjusted EBITDA
is a useful supplemental measure as it provides an indication of
the results generated by the Corporation's principal business
activities prior to consideration of how these activities are
financed, how assets are depreciated, amortized and impaired, the
impact of foreign exchange, or how the results are affected by the
accounting standards associated with the Corporation's stock-based
compensation plan. Investors should be cautioned, however, that
adjusted EBITDA should not be construed as an alternative to net
income and comprehensive income determined in accordance with IFRS
Accounting Standards as an indicator of the Corporation's
performance. The Corporation's method of
calculating adjusted EBITDA
may differ from that of other organizations and, accordingly, its adjusted EBITDA
may not be comparable to that of other companies.
|
|
Three months ended,
March 31
|
|
(000's CAD
$)
|
2024
|
2023
|
%
Change
|
|
Net income
|
4,941
|
3,765
|
31 %
|
|
Depreciation
|
2,068
|
1,625
|
27 %
|
|
Finance
costs
|
517
|
429
|
21 %
|
|
Gain on asset
disposal
|
(19)
|
(48)
|
(60 %)
|
|
Share-based
payments
|
170
|
216
|
(21 %)
|
|
Transaction
costs
|
1
|
13
|
(92 %)
|
|
Foreign exchange
(gain)
|
(13)
|
(10)
|
30 %
|
|
Adjusted
EBITDA
|
7,665
|
5,990
|
28 %
|
|
(ii)
|
Gross margin -
is defined as "Income from operations before depreciation of
property and equipment". Gross margin is a measure that provides
shareholders and potential investors additional information
regarding the Corporation's cash generating and operating
performance. Management utilizes this measure to assess the
Corporation's operating performance. Investors should be cautioned,
however, that gross margin should not be construed as an
alternative to net income (loss) determined in accordance with IFRS
Accounting Standards as an
indicator of the Corporation's performance. The Corporation's method of calculating gross margin may differ from
that
of other organizations and, accordingly, its gross margin
may not be comparable to that of other companies.
|
|
|
|
(iii)
|
Gross margin percentage - is
calculated as gross margin divided by revenue. The Corporation
believes gross margin as a percentage of revenue is an important
measure to determine how the Corporation is managing its revenues
and corresponding cost of sales. The Corporation's method of
calculating gross margin percentage may differ from that of other
organizations and, accordingly, its gross margin percentage may not
be comparable to that of other companies.
|
|
|
|
The following table
reconciles the Corporation's income from operations, being the most
directly comparable financial measure disclosed in the
Corporation's interim financial statements, to gross margin and
gross margin percentage:
|
|
Three months ended,
March 31
|
|
(000's CAD
$)
|
2024
|
2023
|
%
Change
|
|
Income from
operations
|
7,951
|
6,799
|
17 %
|
|
Depreciation of
property and equipment
|
1,962
|
1,515
|
30 %
|
|
Gross
margin
|
9,913
|
8,314
|
19 %
|
|
Gross margin
%
|
36 %
|
32 %
|
4 %
|
|
(iv)
|
Free cash flow -
is calculated based on funds from operating activities less
maintenance and sustaining capital, and interest and principal debt
repayments. The Corporation uses this measure to assess the
discretionary cash that management has to invest in growth capital,
asset acquisitions, or return capital to shareholders. The
Corporation's method of calculating free cash flow may differ from
that of other organizations and, accordingly, its free cash flow
may not be comparable to that of other companies. The following
table reconciles the Corporation's funds from operating activities
to free cash flow.
|
|
Three months ended,
March 31
|
|
(000's CAD
$)
|
2024
|
2023
|
%
Change
|
|
Funds from operating
activities
|
7,614
|
5,966
|
28 %
|
|
Maintenance and
sustaining capital
|
(1,012)
|
(1,156)
|
(12 %)
|
|
Interest paid on
Demand Facility
|
(63)
|
(155)
|
(59 %)
|
|
BDC principal
payments
|
-
|
(100)
|
nm
|
|
Interest on BDC
loan
|
-
|
(32)
|
nm
|
|
Term Loan principal
payments
|
(987)
|
(250)
|
295 %
|
|
Interest on Term
Loan
|
(401)
|
(181)
|
122 %
|
|
Total free cash
flow
|
5,151
|
4,092
|
26 %
|
FORWARD-LOOKING
INFORMATION
Certain statements contained in this new release constitute
forward-looking statements or forward-looking information
(collectively, "forward-looking information"). Forward-looking
information relates to future events or the Corporation's future
performance. All information other than statements of historical
fact is forward-looking information. The use of any of the words
"anticipate", "plan", "contemplate", "continue", "estimate",
"expect", "intend", "propose", "might", "may", "will", "could",
"should", "believe", "predict", and "forecast" are intended to
identify forward-looking information.
This new release contains forward-looking information pertaining
to, among other things: the Corporation's performance; expectations
associated with the Corporation's outlook, including among other
things, anticipated commodity pricing and the volatility thereof,
expectations about industry activities, market conditions and
corresponding rig utilization; future projects and the anticipated
benefits thereof to the Corporation, including potential increased
drilling activity; and expectations regarding future expansion and
sustained growth in the energy services landscape.
Forward-looking information is based on certain assumptions that
Stampede has made in respect thereof as at the date of this new
release regarding, among other things: the Corporation's ability to
fully crew and contract its rigs; the success of the measures
implemented by the Corporation to ensure the safe, efficient and
reliable operations at each of its drilling sites; the
creditworthiness of the Corporation's customers and counterparties;
the effectiveness of the Corporation's financial risk management
policies at ensuring all payables are paid within the pre-agreed
credit terms; that the Corporation has adequate access to its
credit facility to provide the necessary liquidity needed to manage
fluctuations in the timing of receipt and/or disbursement of
operating cash flows; expectations regarding Stampede's share
price; the impact of inflation, weather conditions, and
expectations regarding the duration and overall impact of the
continued conflicts in Ukraine and
the Middle East; the ability of
the Corporation to retain qualified staff; the ability of the
Corporation to maintain key customers; the ability of the
Corporation to obtain financing on acceptable terms; the belief
that the Corporation's principal sources of liquidity will be
sufficient to service its debt and fund its operations and other
strategic opportunities; the ability to protect and maintain the
Corporation's intellectual property; and the regulatory framework
regarding taxes and environmental matters in the jurisdictions in
which the Corporation operates.
Forward-looking information is presented in this new release for
the purpose of assisting investors and others in understanding
certain key elements of the Corporation's financial results and
business plan, as well as the objectives, strategic priorities and
business outlook of the Corporation, and in obtaining a better
understanding of the Corporation's anticipated operating
environment. Readers are cautioned that such forward-looking
information may not be appropriate for other purposes.
While Stampede believes the expectations and material factors
and assumptions reflected in the forward-looking information is
reasonable as of the date hereof, there can be no assurance that
these expectations, factors and assumptions will prove to be
correct. Forward-looking information is not a guarantee of future
performance and actual results or events could differ materially
from the expectations of the Corporation expressed in or implied by
such forward-looking information. Accordingly, readers should not
place undue reliance on forward-looking information. All
forward-looking information is subject to a number of known and
unknown risks and uncertainties including, but not limited to: the
condition of the global economy, including trade, inflation, the
ongoing conflict in Ukraine, the
Middle East and other geopolitical
risks; the condition of the crude oil and natural gas industry and
related commodity prices; other commodity prices and the potential
impact on the Corporation and the industry in which the Corporation
operates, including levels of exploration and development
activities; the impact of increasing competition; fluctuations in
operating results; the ongoing significant volatility in world
markets and the resulting impact on drilling and completions
programs; foreign currency exchange rates; interest rates; labour
and material shortages; cyber security risks; natural catastrophes;
and certain other risks and uncertainties detailed under the
heading "Risks and Uncertainties" in the Corporation's annual
MD&A and under the heading "Risk Factors" in the
Corporation's AIF, each dated March 14,
2024 for the year ended December 31,
2022, and from time to time in Stampede's public disclosure
documents available at www.sedarplus.ca.
This list of risk factors should not be construed as exhaustive.
Readers are cautioned that events or circumstances could cause
actual results to differ materially from those predicted,
forecasted, or projected. Statements, including forward-looking
information, are made as of the date of this new release and the
Corporation does not undertake any obligation to update or revise
any forward-looking information, whether as a result of new
information, future events or otherwise, except as may be required
by applicable securities laws. The forward-looking information
contained in this new release is expressly qualified by this
cautionary statement.
SOURCE Stampede Drilling Inc.