Flint Energy Services Ltd. Announces First Quarter Results
(TSX – FES)
CALGARY, May 3, 2012 /PRNewswire/ - Flint Energy Services Ltd. (“Flint”, the “Company”) released its first
quarter 2012 financial results before markets opened today.
The Pending URS Transaction (Plan of Arrangement)
On February 20, 2012, the Company announced it had entered into an
arrangement with URS Corporation (“URS”), in which URS will acquire all
of the issued and outstanding common shares of Flint by way of a plan
of arrangement for $25.00 per Flint Share or approximately $1.25
billion in aggregate. URS will also assume the outstanding debt of the
Company at closing.
On April 3, 2012, the Company held a special meeting of Securityholders
to approve the transaction. By special resolution passed at the
meeting of Securityholders, the Arrangement was approved by 99.99% of
the votes cast by Securityholders (voting together as a single class),
and by 99.99% of the votes cast by the holders of Common Shares (voting
separately). Following the special meeting, the Alberta Court of
Queen’s Bench granted its final order approving the Arrangement.
Pursuant to the arrangement agreement between the Company and URS, the
closing of the Arrangement is subject to a number of regulatory
approvals. Certain approvals have already been obtained, and the
parties are pursuing the remaining approval under the Investment Canada
review process. Closing of the Arrangement is expected to occur in May
Highlights for the Quarter
Revenues for the three month period ending March 31, 2012, including
Maintenance Services, were $643.5 million, up $251.6 million or 64.2%
compared to Q1 last year, and all operating segments had increased
revenues for the quarter year over year. Under IFRS presentation,
excluding Maintenance Services, revenues for Q1 were $572.4 million, up
75.1% from $326.8 million in Q1 2011.
Including Maintenance Services, EBITDA for the three months ended March
31, 2012 was $55.1 million. Under IFRS presentation, excluding
Maintenance Services, EBITDA was $51.7 million compared to $15.1
million for Q1 2011. Overall, EBITDA margins increased to 9.0% in the
first quarter of 2012 from 4.6% in Q1 2011 due to higher profit margins
resulting from improved asset utilization and more favorable weather
conditions compared to the same period in 2011.
Profit for the three months ended March 31, 2012 was $15.5 million,
compared to a loss of $4.5 million in the same period of 2011 due to
the increased revenues and improved margins during Q1 2012. Excluding
costs relating to the acquisition of the Company by URS Corporation of
$12.7 million and a $9.7 million unrealized gain from the fair value of
embedded derivative financial instruments related to the issue of
senior notes (less tax of $1.9 million), the adjusted profit for Q1
2012 was $16.6 million.
The fully diluted earnings per share for the three months ended March
31, 2012 was $0.32 per common share, compared to loss of $0.10 per
common share for the same period in 2011. Excluding the exceptional
items noted above, the adjusted fully diluted earnings for Q1 2012 were
$0.34 per share.
Selected financial information for each reportable business segment is
(in thousands of Canadian dollars, for the three March months ended March31, 31, Increase % March 31) 2012 2011 (decrease) Change Revenue by reportable segment Production $ $ $ 212,010 Services 398,625 70% 186,615 57% 113.6% Facility 26,963 Infrastructure 81,712 14% 54,749 17% 49.2% Oilfield 6,587 Services 92,048 16% 85,461 26% 7.7% Maintenance 6,001 Services 71,098 12% 65,097 20% 9.2% 643,483 112% 391,922 120% 251,561 64.2% Less: Maintenance (6,001) Services Joint Ventures (71,098) (12%) (65,097) (20%) 9.2% Total $ $ $ 245,560 572,385 100% 326,825 100% 75.1% EBITDA by reportable segment Production $ $ 36,747 Services 46,339 90% $ 9,592 64% 383.1% Facility (921) Infrastructure 4,650 9% 5,571 37% (16.5%) Oilfield 5,947 Services 19,784 38% 13,837 92% 43.0% Maintenance (1,869) Services 3,396 7% 5,265 35% (35.5%) $ 74,169 144% $ 34,265 228% $ 39,904 116.5% Corporate (19,075) (37%) (13,925) (93%) (5,150) 37.0% 55,094 107% 20,340 135% 34,754 170.9% Less: Maintenance 1,869 Services Joint Ventures (3,396) (7%) (5,265) (35%) (35.5%) Total $ 51,698 100% $ 15,075 100% $ 36,623 242.9%
Revenues for the three months ended March 31, 2012 were $572.4 million,
up from $326.8 million for the same period in 2011 as all segments
realized increased revenues. Canadian operations generated $430.3
million in revenues, up $185.3 million from the same period in 2011 due
in part to the acquisition of Carson Energy Services Ltd. in October
2011 and from increased activity levels overall compared to Q1 2011.
The United States operations generated $142.1 million in revenues, up
$60.2 million from the same period in 2011 due to growth in the field
services and oilfield services businesses.
Overall, EBITDA margins increased 4.4% to 9.0% in the three months ended
March 31, 2012 from 4.6% for the same period in 2011. The Production
Services segment EBITDA margin percentage of 11.6% was an increase of
6.5% from 5.1% in Q1 2011. This increase resulted from improved
utilization of equipment and fewer delays caused by poor weather
compared to the same period in 2011. The EBITDA margin in the Facility
Infrastructure segment was 5.7% compared to 10.2% in Q1 2011, a
decrease of 4.5% caused by lower overall margins on the projects during
the period compared to Q1 2011. EBITDA margins in the Oilfield Services
segment increased to 21.5% compared to 16.2% in Q1 2011, due to the
excellent results in the expanded US operations and improved asset
utilization. The EBITDA percentage for the Maintenance Services
segment decreased to 4.8% from 8.1% in Q1 2011 due to a mix of
W. J. (Bill) Lingard, President and Chief Executive Officer said, “Our
first quarter results reflected the strength of the geographic and
service line diversity in our business model, with strong gains from
our Production Services operations in both Canada and the United
States. The addition of Carson Energy Services in Q4, 2011, added
significantly to Canadian results in this division.” Mr. Lingard went
on to say, “Our Facility Infrastructure division, with three large oil
sands fabrication and construction contracts, saw an uptick in activity
in the first quarter. We are ramping up on two field construction
contracts which will improve margins throughout the year. We currently
have about 1,400 trades and craft labour deployed in the field, and we
will be filling another 2,000 construction positions in 2012″.
Strong Q1 2012 well drilling activity in both Canada and the United
States led to higher levels of upstream and midstream work for the
Company’s Oilfield Services and Production Services segments. The
addition of Carson Energy Services in Q4, 2011 added substantially to
Production Services revenues and EBITDA in Q1. United States’
Production Services revenues and EBITDA were also up as a result of
very stronger activity in Texas and North Dakota where liquids rich gas
and shale oil drilling have continued to expand.
While Canadian activity in Q2 has entered the typical seasonal slowdown
between March and June, industry forecasts are calling for drilling and
midstream production related activities to increase in 2012 over last
year driven primarily by Bakken oil drilling in both Saskatchewan and
Manitoba, and other active shale oil drilling in Central and Southern
Alberta. This increased level of activity will continue to keep both
the Oilfield Services and Production Services segments busy in Canada
United States industry forecasts call for drilling and production
related spending to remain higher than 2011 due to continued increased
activity in liquids rich gas fields and in oil directed drilling.
While gas directed drilling is expected to pull back with lower prices,
rig activity has already shifted to oil drilling regions. Both
Oilfield Services and Production Services activities will continue to
benefit from these activity levels in 2012.
Oil sands capital spending in 2012 is expected to increase over 2011
levels with many new projects sanctioned and underway. The Company’s
existing fabrication and construction contracts are ramping up in Q2 on
two oil sands projects near Fort McMurray. The Company’s fabrication
facilities are also busy working on module fabrication for a third oil
sands project. As a result, revenues in this segment are expected to
increase throughout the year.
FT Services, the Company’s Maintenance Services operation, experienced
higher levels of plant turnaround work in Q1. Ongoing maintenance work
on the four existing multiyear oil sands maintenance agreements, as
well as scheduled turnaround work for later in 2012, is expected to
provide stable revenues throughout 2012.
Management’s focus for 2012 will be on executing a smooth integration
within URS’ organization, and with the increased capabilities created
through the merger, capturing many of the opportunities the Company is
seeing across all of its operational areas and service lines.
Flint Energy Services Ltd. is a market leader providing an expanding range of integrated products
and services for the oil and gas industry including: production
services; infrastructure construction; oilfield transportation; and
maintenance services. With more than 10,000 employees, Flint provides
this unique breadth of products and services through over 80 strategic
locations in the oil and gas producing areas of Western North America,
from Inuvik in the Northwest Territories to Mission, Texas on the
Mexican border. Flint is a preferred provider of infrastructure
construction management, module fabrication, maintenance services for
upgrading, and production facilities in Alberta’s oil sands sector.
FORWARD LOOKING STATEMENTS
Certain statements in this news release are “forward-looking
statements”, which reflect current expectations of the management of
Flint regarding future events or Flint’s future performance. All
statements other than statements of historical fact contained in this
news release may be forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ materially
from those anticipated in the forward-looking statements. Flint
believes that the expectations reflected in such forward-looking
statements are reasonable, but no assurance can be given that these
expectations will prove to be correct and such forward-looking
statements should not be unduly relied upon. The forward-looking
statements are expressly qualified in their entirety by this cautionary
statement. The forward-looking statements are made as of the date of
this news release and Flint assumes no obligation to update or revise
them to reflect new events or circumstances, except as expressly
required by applicable securities law. Further information regarding
risks and uncertainties relating to Flint and its securities can be
found in the disclosure documents filed by Flint with the securities
regulatory authorities, available at www.sedar.com.
SOURCE Flint Energy Services Ltd.