Le Lézard
Classified in: Oil industry, Business
Subjects: ERN, PER

SECURE Energy Services Announces Second Quarter Adjusted EBITDA of $31.2 Million, Repurchase of 2.8 Million Shares and Director Appointment


CALGARY, Aug. 1, 2018 /CNW/ - Secure Energy Services Inc. ("Secure" or the "Corporation") (TSX ? SES) announced today its operational and financial results for the three and six months ended June 30, 2018, highlighted by second quarter Adjusted EBITDA1 of $31.2 million. Secure is also pleased to announce the appointment of Michele Harradence to the Corporation's Board of Directors ("the Board").

Presently Senior Vice President, Gas Transmission and Midstream Operations of Enbridge Inc., Ms. Harradence brings over 20 years of industry and senior management experience to the Board. Ms. Harradence holds a Bachelor of Science in Mechanical Engineering from Queen's University and a Bachelor of Laws from the University of New Brunswick. Throughout her career, Ms. Harradence has held executive and senior management roles in engineering, project management, construction, manufacturing, transmission and midstream operations.

Prior to her experience in the oil and gas industry, Ms. Harradence practiced law for five years with a full service national law firm in Canada.

"Ms. Harradence will be a valuable addition to Secure, providing insights and direction to the Board and Executive team through her extensive industry experience" said Rene Amirault, Chairman of the Board, President and CEO.

The following operational and financial highlights should be read in conjunction with the management's discussion and analysis ("MD&A") and the interim consolidated financial statements and notes thereto for the three and six months ended June 30, 2018 of Secure which are available on SEDAR at www.sedar.com.

2018 SECOND QUARTER OPERATIONAL AND FINANCIAL HIGHLIGHTS
During the second quarter, Secure added two SWD facilities in the capacity constrained Montney and Duvernay regions of Alberta, executing on the Corporation's strategy to identify and develop infrastructure in underserved markets and provide solutions to customers that increase their operating netbacks and capital efficiency. Two disposal wells at Gold Creek and one disposal well at Tony Creek are operational and are expected to contribute to the Corporation's results starting in the third quarter. Secure continues to evaluate additional opportunities relating to new infrastructure in these regions based on customer demand. In total, the Corporation invested growth and expansion capital of $32.0 million during the three months ended June 30, 2018. In addition to the SWDs discussed above, Secure substantially completed construction of the Corporation's first ever light oil feeder pipeline, and advanced construction of the pipeline receipt terminal in the Kindersley-Kerrobert region of Saskatchewan. This project remains on time and on budget, and is scheduled to commence operations in the fourth quarter of 2018. Additionally, the Corporation commenced construction of additional landfill cells at the Saddle Hills and Tulliby Lake landfills and increased capacity through various other expansion projects at the Corporation's existing facilities.

The Corporation achieved Adjusted EBITDA of $31.2 million during the second quarter of 2018, a 55% increase from the three months ended June 30, 2017. The increase is primarily attributable to higher PRD facility volumes and revenues driven by growth initiatives over the past several years to increase capacity and expand service offerings; increased overall industry activity levels, particularly in the U.S., in response to higher average crude oil prices, which also generated higher recovered oil revenues; and the Corporation's ability to capitalize on certain crude oil marketing opportunities at its pipeline connected FSTs during the quarter.

Secure's focus in recent years on increasing production related services with a diverse asset base that lessens dependence on drilling related revenue streams has provided the Corporation with greater certainty on recurring cash flows. This diversification lessened the impact of seasonality of the oil and gas industry in Canada on the Corporation's second quarter results, which are typically the lowest of the year as weather conditions and resulting road bans hamper drilling and completion activity. Stable cash flows generated on the back of production-related volumes in the PRD division, growth of the DPS division's production services line, and ongoing Projects work and integrated service offerings in the OS division mitigated some of the impact spring break-up has had on the Corporation in previous years.

Following the approval of the normal course issuer bid ("NCIB") at the end of May 2018, Secure purchased and cancelled 1,193,173 common shares of the Corporation at a weighted average price per share of $7.33 for a total of $8.7 million to June 30, 2018 Subsequent to quarter end, the Corporation has purchased 1,613,400 additional shares, for a total repurchase of 2,806,573 shares to date. The Corporation believes that, at times, the prevailing market price for Secure's shares does not reflect their underlying value.

The operating and financial highlights for the three and six month periods ending June 30, 2018 and 2017 can be summarized as follows:


Three months ended June 30,

Six months ended June 30,

($000's except share and per share data)

2018

2017

% change

2018

2017

% change

Revenue (excludes oil purchase and resale) 

141,249

115,372

22

322,947

256,085

26

Oil purchase and resale 

578,674

468,952

23

1,102,421

778,828

42

Total revenue

719,923

584,324

23

1,425,368

1,034,913

38

Adjusted EBITDA (1)

31,158

20,044

55

78,965

62,214

27


Per share ($), basic

0.19

0.12

58

0.48

0.38

26

Net loss

(6,901)

(13,529)

(49)

(824)

(10,089)

(92)


Per share ($), basic and diluted                     

(0.04)

(0.08)

(50)

(0.01)

(0.06)

(83)

Cash flows from operating activities

74,572

40,055

86

107,326

83,083

29


Per share ($), basic 

0.45

0.25

80

0.65

0.51

27

Funds flow (1)

27,087

17,376

56

69,130

57,428

20


Per share ($), basic 

0.16

0.11

45

0.42

0.35

20

Dividends per common share

0.06750

0.06125

10

0.13500

0.12125

11

Capital expenditures (1)

36,263

49,688

(27)

92,844

61,784

50

Total assets

1,538,001

1,417,372

9

1,538,001

1,417,372

9

Net debt (1)

228,046

88,926

156

228,046

88,926

156

Common shares - end of period 

163,431,134

162,949,160

-

163,431,134

162,949,160

-

Weighted average common shares - basic and diluted

164,524,360

162,776,950

1

164,268,516

162,421,437

1

(1) Refer to "Non-GAAP measures and operational definitions" for further information.

 


June 30, 2018

Dec. 31, 2017

Threshold

Senior debt to EBITDA

1.2

1.1

3.5

Total debt to EBITDA

2.0

1.9

5.0

 

PRD DIVISION OPERATING HIGHLIGHTS


Three months ended June 30,

Six months ended June 30,

($000's)

2018

2017

% Change

2018

2017

% Change

Revenue 








PRD services (a)                         

80,496

60,278

34

161,351

127,748

26


Oil purchase and resale service

578,674

468,952

23

1,102,421

778,828

42

Total PRD division revenue

659,170

529,230

25

1,263,772

906,576

39








Direct expenses 








PRD services (b)

37,796

28,709

32

71,247

56,362

26


Oil purchase and resale service 

578,674

468,952

23

1,102,421

778,828

42

Total PRD division direct expenses

616,470

497,661

24

1,173,668

835,190

41








Operating Margin (1) (a-b)

42,700

31,569

35

90,104

71,386

26








Operating Margin (1) as a % of revenue (a)

53%

52%


56%

56%


(1) Refer to "Non-GAAP measures and operational definitions" for further information.

 

Highlights for the PRD division for the three and six months ended June 30, 2018 included:

DPS DIVISION OPERATING HIGHLIGHTS


Three months ended June 30,

Six months ended June 30,

($000's)

2018

2017

% Change

2018

2017

% Change

Revenue 








Drilling and production services (a)

34,710

33,921

2

103,389

84,389

23








Direct expenses








Drilling and production services (b)

31,988

31,878

-

87,304

70,745

23

Operating Margin (1) (a-b)

2,722

2,043

33

16,085

13,644

18








Operating Margin (1) as a % of revenue (a)

8%

6%


16%

16%


(1) Refer to "Non-GAAP measures and operational definitions" for further information.

 

Highlights for the DPS division for the three and six months ended June 30, 2018 included:

OS DIVISION OPERATING HIGHLIGHTS


Three months ended June 30,

Six months ended June 30,

($000's)

2018

2017

% Change

2018

2017

% Change

Revenue 








OnSite services (a)                         

26,043

21,173

23

58,207

43,948

32








Direct expenses








OnSite services (b)                      

21,100

16,953

24

46,629

34,139

37

Operating Margin (1) (a-b)

4,943

4,220

17

11,578

9,809

18








Operating Margin (1) as a % of revenue (a)

19%

20%


20%

22%


(1)Refer to "Non-GAAP measures and operational definitions" for further information.

 

Highlights for the OS division for the three and six months ended June 30, 2018 included:

OUTLOOK

The second quarter of 2018 results exceeded the Corporation's expectations as rising crude oil and liquids prices drove industry activity which led to higher facility volumes, increased recovered oil pricing, and crude oil marketing opportunities, all of which increased both revenues and operating margins for the PRD division. Additionally, higher demand for oilfield services in the Onsite division resulted in increased water transfer jobs and Projects work throughout spring break-up. Following spring break-up, the Corporation has seen increased drilling and completion activity, which will benefit all three of the Corporation's divisions.

Overall, Secure expects Adjusted EBITDA in the second half of 2018 to improve from the 2017 comparative period as a result of additional revenue contributions from PRD facility expansions and additions, including the Gold Creek and Tony Creek SWD facilities, and expanded service offerings, such as the Kindersley-Kerrobert pipeline system which is expected to be commissioned in September 2018 and operational in October 2018. Secure's focus on production related services and products, the location of PRD facilities in high impact resource plays where producers remain the most active in the WCSB, and the trend toward drilling deeper and more complex wells are all expected to drive increased results throughout the remainder of 2018.

Secure's strategy remains focused on working with customers to identify opportunities and integrated solutions where the Corporation can add value and lower customers' costs. By combining multiple services and focusing on new and innovative ways to offer solutions, Secure's customers will be able to gain capital efficiencies for drilling, completing and producing their reserves.

The fundamental drivers of Secure's business are expected to continue to provide meaningful avenues of growth during the remainder of 2018 and beyond:

All of these growth trends and prospects provide Secure with significant opportunities to grow and expand its business throughout the remainder of 2018 and well into the future. Secure has made significant capital investments over the past few years to ensure the business is well positioned to capture new customer demand, and based on customer feedback there are more opportunities to continue to deploy capital in western Canada. The Corporation expects to incur approximately $65 million of growth and expansion capital in the second half of 2018, for a total 2018 spend of approximately $150 million. The remaining capital will be incurred to complete the Kerrobert-Kindersley receipt terminal and storage tanks, construct a permanent SWD facility at Tony Creek, increase disposal capacity at various facilities (additional wells, additional landfill cells), and purchase equipment to support existing services.

Secure's strong balance sheet provides the Corporation the flexibility to grow organically and execute on strategic acquisition opportunities that align with the profitable growth strategy of Secure. Helping Secure's customers grow and being their trusted energy solutions partner will ensure that the Corporation continues to create long-term shareholder value.

FINANCIAL STATEMENTS AND MD&A

The Corporation's unaudited condensed consolidated financial statements and notes thereto for the three and six months ended June 30, 2018 and 2017 and MD&A for the three and six months ended June 30, 2018 and 2017 are available immediately on Secure's website at www.secure-energy.com. The unaudited condensed consolidated financial statements and MD&A will be available tomorrow on SEDAR at www.sedar.com.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this document constitute "forward-looking statements" and/or "forward-looking information" within the meaning of applicable securities laws (collectively referred to as forward-looking statements). When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", and similar expressions, as they relate to Secure, or its management, are intended to identify forward-looking statements. Such statements reflect the current views of Secure with respect to future events and operating performance and speak only as of the date of this document. In particular, this document contains or implies forward-looking statements pertaining to: key priorities for the Corporation's success; the oil and natural gas industry, including drilling and production trends; activity levels in the oil and gas sector, drilling levels, commodity prices for oil, natural gas liquids and natural gas; industry fundamentals for 2018; capital forecasts and spending by producers; a positive final investment decision for LNG Canada; demand for the Corporation's services and products; expansion strategy; the impact of oil and gas activity on 2018 activity levels; the Corporation's proposed 2018 capital expenditure program including expansion, growth and sustaining capital expenditures, and the timing of completion for projects, in particular the Kindersley-Kerrobert light oil feeder pipeline system; debt service; acquisition strategy and timing of potential acquisitions; the impact of new facilities, new service offerings, potential acquisitions, and prior year acquisitions on the Corporation's financial and operational performance and growth opportunities; 2018 Adjusted EBITDA; growth opportunities; future capital needs and how the Corporation intends to fund its operations, working capital requirements, dividends and capital program; access to capital; the impact of the NCIB on shareholder value; and the Corporation's ability to meet obligations and commitments and operate within any credit facility restrictions.

Forward-looking statements concerning expected operating and economic conditions are based upon prior year results as well as the assumption that levels of market activity and growth will be consistent with industry activity in Canada and the U.S. and similar phases of previous economic cycles. Forward-looking statements concerning the availability of funding for future operations are based upon the assumption that the sources of funding which the Corporation has relied upon in the past will continue to be available to the Corporation on terms favorable to the Corporation and that future economic and operating conditions will not limit the Corporation's access to debt and equity markets. Forward-looking statements concerning the relative future competitive position of the Corporation are based upon the assumption that economic and operating conditions, including commodity prices, crude oil and natural gas storage levels, interest and foreign exchange rates, the regulatory framework regarding oil and natural gas royalties, environmental regulatory matters, the ability of the Corporation and its subsidiaries to successfully market their services and drilling and production activity in North America will lead to sufficient demand for the Corporation's services and its subsidiaries' services including demand for oilfield services for drilling and completion of oil and natural gas wells, that the current business environment will remain substantially unchanged, and that present and anticipated programs and expansion plans of other organizations operating in the energy industry may change the demand for the Corporation's services and its subsidiaries' services. Forward-looking statements concerning the nature and timing of growth are based on past factors affecting the growth of the Corporation, past sources of growth and expectations relating to future economic and operating conditions. Forward-looking statements in respect of the costs anticipated to be associated with the acquisition and maintenance of equipment and property are based upon assumptions that future acquisition and maintenance costs will not significantly increase from past acquisition and maintenance costs. 

Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether such results will be achieved. Readers are cautioned not to place undue reliance on these statements as a number of factors could cause actual results to differ materially from the results discussed in these forward-looking statements, including but not limited to those factors referred to under the heading "Risk Factors" in the AIF for the year ended December 31, 2017 and also includes the risks associated with the possible failure to realize the anticipated synergies in integrating the assets acquired in prior year acquisitions with the operations of Secure. Although forward-looking statements contained in this document are based upon what the Corporation believes are reasonable assumptions, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements in this document are expressly qualified by this cautionary statement. Unless otherwise required by law, Secure does not intend, or assume any obligation, to update these forward-looking statements.

NON-GAAP MEASURES AND OPERATIONAL DEFINITIONS

The Corporation uses accounting principles that are generally accepted in Canada (the issuer's "GAAP"), which includes International Financial Reporting Standards ("IFRS"). Certain supplementary measures in this document do not have any standardized meaning as prescribed by IFRS. These non-GAAP measures and operational definitions used by the Corporation may not be comparable to similar measures presented by other reporting issuers. These non-GAAP financial measures and operational definitions are included because management uses the information to analyze operating performance, leverage and liquidity. Therefore, these non-GAAP financial measures and operational definitions should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. See the management's discussion and analysis available at www.sedar.com for a reconciliation of the Non-GAAP financial measures and operational definitions.

ABOUT SECURE ENERGY SERVICES INC.

Secure is a TSX publicly traded energy services company that provides safe, innovative, efficient and environmentally responsible fluids and solids solutions to the oil and gas industry. The Corporation owns and operates midstream infrastructure and provides environmental solutions and innovative products to upstream oil and natural gas companies operating in western Canada and certain regions in the United States ("U.S."). 

The Corporation operates three divisions:

Processing, Recovery and Disposal Division ("PRD"): The PRD division owns and operates midstream infrastructure that provides processing, storing, pipelines, shipping and marketing of crude oil, oilfield waste disposal and recycling. The PRD division services include clean oil terminalling, rail transloading, pipelines, crude oil marketing, custom treating of crude oil, produced and waste water disposal, oilfield waste processing, landfill disposal, and oil purchase/resale service. Secure currently operates a network of facilities throughout western Canada and in North Dakota, providing these services at its full service terminals ("FST"), landfills, stand-alone water disposal facilities ("SWD"), full service rail facilities ("FSR") and crude oil terminalling facilities.

Drilling and Production Services Division ("DPS"): The DPS division provides equipment, product solutions and chemicals for drilling, completion and production operations for oil and gas producers in western Canada. The drilling service line includes the design and implementation of drilling fluid systems for producers drilling for oil, bitumen and natural gas. The drilling service line focuses on providing products and systems that are designed for more complex wells, such as medium to deep wells, horizontal wells and horizontal wells drilled into the oil sands. The production services line focuses on providing equipment and chemical solutions that optimize production, provide flow assurance and maintain the integrity of production assets. 

Onsite Services Division ("OS"): The operations of the OS division include Projects which include pipeline integrity (inspection, excavation, repair, replacement and rehabilitation), demolition and decommissioning, and reclamation and remediation of former wellsites, facilities, commercial and industrial properties, and environmental construction projects (landfills, containment ponds, subsurface containment walls, etc.); Integrated Fluid Solutions ("IFS") which include water management, recycling, pumping and storage solutions; and Environmental services which provide pre-drilling assessment planning, drilling waste management, remediation and reclamation assessment services, Naturally Occurring Radioactive Material ("NORM") management, waste container services and emergency response services.

1    Refer to the "Non-GAAP Measures" section herein.

 

SOURCE SECURE Energy Services Inc.


These press releases may also interest you

at 21:00
OKX Ventures, the investment arm of leading crypto exchange and Web3 technology company OKX, today published a report titled 'Unlocking the Infinite Potential of Crypto and AI.' The report explores the convergence of AI and crypto, a major trend in...

at 20:50
Pharma (1167.HK), a clinical-stage oncology company drugging the undruggable targets, today announced its 2023 annual results. The revenue was RMB63.5 million, the R&D investment was RMB372 million, the cash and cash equivalent at the end of 2023 was...

at 20:45
The "Austria Social Commerce Market Intelligence and Future Growth Dynamics Databook - 50+ KPIs on Social Commerce Trends by End-Use Sectors, Operational KPIs, Retail Product Dynamics, and Consumer Demographics - Q1 2024 Update" report has been added...

at 20:40
Osisko Development Corp. ("Osisko Development" or the "Company") reports its financial and operating results for the three and twelve months ended December 31, 2023 ("Q4 2023"). Q4 2023 HIGHLIGHTS Operating, Financial and Corporate Updates: 2,090...

at 20:39
TSX VENTURE COMPANIES BULLETIN V2024-0926 VALLEYVIEW RESOURCES LTD. ("VVR")BULLETIN TYPE:  Resume TradingBULLETIN DATE: March 28, 2024TSX Venture Tier 2 Company Reference is made to our bulletin dated March 26, 2024 with respect to the listing of the...

at 20:30
WHY: Rosen Law Firm, a global investor rights law firm, announces an investigation of potential securities claims on behalf of shareholders of Sonder Holdings Inc. resulting from allegations that Sonder may have issued materially misleading business...



News published on and distributed by: