CALGARY, ALBERTA — (Marketwired) — 11/13/13 — Calmena Energy Services Inc. (“Calmena” or the “Company”) (TSX: CEZ) is pleased to announce its financial results for the third quarter ended September 30, 2013. All figures are reported in Canadian dollars unless otherwise stated. Our unaudited condensed consolidated financial statements and related management–s discussion and analysis for the period will be filed separately on SEDAR (), which should be reviewed in conjunction with this press release.
SELECTED FINANCIAL INFORMATION
The tables below provide a summary of Calmena–s financial and operating results as at September 30, 2013 and for the three and nine months ended September 30, 2013 and 2012.
(i) see non-GAAP measures section of this release for a description of this term.
2013 HEADLINES
(i) see non-GAAP measures of this report for description of this term.
OUTLOOK
In Canada, activity in our Frac Fluids Management and Equipment Rentals business improved in September after a slow start to the third quarter. Management is encouraged by this momentum and as we approach the seasonally more active winter period, anticipates this trend will continue.
In the US, the Company–s directional services business did not experience the normal seasonal increase in activity in the third quarter of 2013. Currently, the directional business anticipates improving activity levels in the fourth quarter.
Mexico contract drilling is beginning to show signs of recovery. The curtailment of Mexico drilling operations in the second quarter by Pemex resulted in the termination of all of our drilling contracts which has had a material negative impact on Calmena–s overall financial performance. Calmena–s six Mexican rigs remained idle until early October, when our first rig was re-activated. That curtailment in activity resulted from a budget impasse between Pemex and the Government of Mexico which has since been resolved. Pemex is currently tendering ten large multi-year integrated project management contracts, as part of an aggressive capital program, which we expect will be awarded later in 2013 and should result in increased demand for rigs in the first quarter of 2014. Management expects utilization to improve with these positive market developments. EBITDAS from our Mexican contract drilling business was $12.7 million in 2012.
Calmena–s Brazilian rigs are not currently contracted. The Company continues to explore strategic opportunities to re-contract or divest of these rigs.
In early October, Calmena received notice from its customer in Libya of its intent to renew the drilling contracts for the Company–s two rigs. One rig re-commenced operations in mid-October and we are currently mobilizing the second rig. Negotiations continue to finalize longer term contractual commitments for both rigs.
Management has undertaken cost reduction measures across the Company to reflect current activity levels. In parallel with initiatives to manage costs and rejuvenate Calmena–s businesses, our strategic review process is ongoing. Management continues to explore strategic alternatives to monetize under-utilized assets, and consider business combination opportunities.
ABOUT CALMENA ENERGY SERVICES INC.
Calmena is a diversified energy services company that provides well construction services to its customers operating in Canada, the United States, Latin America and the Middle East and North Africa. The common shares of Calmena trade on the Toronto Stock Exchange under the symbol “CEZ”.
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements relating to Calmena–s plans, strategies, objectives, expectations and intentions. Expressions such as “may”, “anticipate”, “expect”, “project”, “believe”, “hope”, “estimate”, “intend”, “will”, “continue”, “foresee”, and “forecast” and similar expressions and statements are intended to identify forward looking statements. Such statements represent Calmena–s internal projections, estimates or beliefs concerning, among other things, an outlook for Calmena–s operations, and other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions and actual events or results may differ materially. Although Calmena believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Calmena–s actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Calmena.
In particular, forward-looking statements included in this press release include, but are not limited to, statements with respect to management–s expectations regarding future activity levels in the Frac Fluids Management and Equipment Rentals business and the directional business; the timing for Pemex to award drilling contracts in Mexico and anticipated effect of such contracts on demand and utilization for the Company–s Mexican rigs; the intention of the Company–s customer in Libya to renew the drilling contracts for the Company–s two rigs and the status of negotiations for longer term contractual commitments for the rigs; the Company–s plans to explore strategic opportunities to re-contract or divest its rigs in Brazil, to monetize under-utilized assets and consider business combination opportunities; and the outlook for Calmena–s operations, including the statements under the heading “Outlook” in this press release.
These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Calmena–s control, including, but not limited to, the risk that the Company is unable to comply with the terms of the Agreement with its senior lender or refinance or extend the maturity date of the Credit Facilities; failure to realize the anticipated benefits of strategic dispositions; failure to successfully negotiate and/or complete further transactions pursuant to the Company–s strategic alternatives process; failure to achieve an increase in demand for the Company–s drilling rigs and other product offerings; the impact of general economic conditions; industry conditions and changes in industry conditions; volatility of commodity prices; decreased demand for energy services; competition from other energy services providers; the lack of availability of qualified personnel or management; ability of Calmena to re-finance or extend the maturity date of its senior debt and generate positive cash flow; failure of counter parties to perform on contracts; failure to successfully negotiate new contracts or renew existing contracts; failure to successfully deploy rigs; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; risks associated with international operations, including, but not limited to, effect of civil unrest on the Company–s operations in Libya; seasonality; loss of key customers; fluctuations in foreign exchange or interest rates and stock market volatility; supply and demand for oilfield services relating to the drilling, completion and maintenance of oil and gas wells as well as services related to, oilfield equipment rentals and production and ancillary services; liabilities and risks, including environmental liabilities and risks inherent in oil and natural gas operations; uncertainties in weather and temperature affecting the duration of the service periods and the activities that can be completed; ability to access sufficient capital from internal and external sources; and the other risks considered under “Risk Factors” in our annual information form for the year ended December 31, 2012 which is available on .
With respect to forward-looking statements contained in this press release, Calmena has made assumptions regarding, but not limited to: the implementation of the Company–s business strategies; current commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; ability of Calmena to re-finance or extend the maturity date of its senior debt; that the senior lender will comply with the terms of the Agreement and forbear from demanding repayment or enforcing their security under the Credit Facilities; ability of Calmena to renew existing contracts and enter into new contracts; rig utilization and pricing; future exchange rates; the impact of increasing competition; conditions in general economic and financial markets; industry conditions; supply and demand for oilfield services relating to the drilling, completion and maintenance of oil and gas wells as well as services related to oilfield equipment rentals and production and ancillary services; effects of regulation by governmental agencies; trends in Calmena–s operations; and future operating costs.
Management has included the above summary of assumptions and risks related to forward-looking statements provided in this press release in order to provide shareholders with a more complete perspective on Calmena–s current and future operations and such information may not be appropriate for other purposes. Calmena–s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Calmena will derive therefrom. Readers are cautioned that the foregoing lists of factors are not exhaustive.
These forward-looking statements are made as of the date of this press release and Calmena disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
NON GAAP MEASURES
The following measure is used within this release, but not recognized under GAAP. As a result, the method of calculation may not be comparable with other companies. This measure should not be considered alternatives to net loss and net loss per share as calculated in accordance with GAAP:
EBITDAS (Earnings before interest, income taxes, depreciation and amortization, other items of income and expense and share based compensation) – Management believes that EBITDAS as derived from information reported in the unaudited condensed Consolidated Statement of Operations is a useful supplemental measure as it provides an indication of the Company–s ability to generate funds by the Company–s core business activities prior to consideration of how those activities are financed, the impact of foreign exchange, how the results are taxed, how funds are invested or how non-cash depreciation and amortization charges affect results. See the reconciliation of EBITDAS to net loss in the Company–s management–s discussion and analysis for the three and nine months ended September 30, 2013.
Funds flow from continuing operations: Management believes that in addition to cash generated from operations, funds flow from operations is a useful supplemental measure because it provides an indication of the funds generated by the Corporation–s principal business activities prior to the consideration of working capital, which is primarily made up of highly liquid balances. See the reconciliation of funds flow from operations in the Company–s management–s discussion and analysis for the three and nine months ended September 30, 2013.
Net debt: Management believes that net debt is a useful supplemental measure because it provides an indication of the Company–s leverage compared to liquid assets. Net debt is computed by taking current assets less current liabilities and long-term borrowings and debt. See the calculation of net debt in the Company–s management–s discussion and analysis for the three and nine months ended September 30, 2013.
The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.
Contacts:
Calmena Energy Services Inc.
John King
President and Chief Executive Officer
(403) 225-3879
(403) 366-2066 (FAX)
Calmena Energy Services Inc.
Peter Balkwill
Vice President, Finance & CFO
(403) 225-3879
(403) 366-2066 (FAX)