CALGARY, ALBERTA — (Marketwire) — 03/06/13 — Xtreme Drilling and Coil Services (TSX: XDC) announce fourth quarter 2012 and full year operating results. It is anticipated that filing will take place on SEDAR of audited Consolidated Financial Statements and Notes to the audited Consolidated Financial Statements and Management–s Discussion and Analysis for the twelve months ended December 31, 2012 on Friday, March 8, 2013.
Xtreme has scheduled a conference call to discuss results with investors, analysts, and stakeholders on Thursday, March 7, 2013, beginning promptly at 9:00 am MT (10:00 am CT, 11:00 am ET).
Tom Wood, Chief Executive Officer, will host the conference call with participation from Matt Porter, Chief Financial Officer.
Conference operator dial-in numbers
To participate in the conference call, please dial in as follows approximately ten minutes before the start time in your time zone.
+1 866-225-2055 (North America Toll-Free) or +1 416-340-8410 (Alternate)
An audio replay of the call will be available until Thursday, March 14, 2013. To access the replay, call +1 800-408-3053 or +1 905-694-9451 and enter pass code 9289172.
Highlights
Selected Quarterly Financial Information
Excerpt from Management–s Discussion and Analysis for the twelve months ended December 31, 2012
Outlook
Xtreme Drilling and Coil Services Corp. was founded with the mission of redefining what is possible in oil and gas exploration and production, through a fierce dedication to driving innovation. Since 2005, Xtreme has introduced numerous breakthrough technologies for both drilling and coiled tubing services. These advancements have enabled Xtreme to consistently set new performance benchmarks within the industry.
In 2012, Xtreme put that technology to work on a far greater scale than ever before. With the completion of an aggressive capital expansion program, the company dramatically grew the fleet of XDR drilling rigs and XSR coiled tubing units-nearly doubling its size in a span of 18 months.
At December 31, 2012 Xtreme had 19 of 21 XDR drilling rigs and 4 of 7 XSR coiled tubing units working. As previously announced, the 20th XDR drilling rig went to work during the first week of 2013. The final new-build XDR rig went to work in October of 2012 and thus marked the end of the ambitious capital expansion program. The total capital spend was over $200 million and included eight XDR 500 rigs, three conversions of XDR 400 rigs to XDR 500 rigs and five new large diameter coiled tubing units.
Xtreme now operates one of the youngest high specification fleets in the land drilling industry, with an average age of less than three years old. The company believes the fleet is ideally suited to excel in today–s major North American oil and natural gas liquids resource plays. Accordingly, all of these tier 1 new-build rigs were contracted to operators in the Bakken/Three Forks play in North Dakota and the DJ Basin/Niobrara play in Colorado. The company expects this focus on oil and liquids-rich gas production will increase utilization, day rates, and returns relative to competitors in the years to come.
Xtreme began 2012 with three XSR coiled tubing units-two operating in Saudi Arabia, where they perform deep horizontal re-entry drilling. In 2012 the company grew the XSR coiled tubing service offering with the addition of five new-build units. With the deepest reach in the marketplace and a proprietary AC electric technology, the newest XSR units enable operators in North American resource plays to go deeper with their wells and as such realize higher initial production rates and ultimate recoveries. Two of the XSR units are currently working in the Eagle Ford shale of South Texas. These units are primarily performing post-frac plug mill outs and pre-frac well preps. However, this technology also has exciting potential as the market for new fracing technology grows.
Today, Xtreme is at an important inflection point. As production continues to soar in US resource plays, the substantial investment in fleet expansion and R&D gives Xtreme a strong platform to capitalize upon as the company embarks on the current initiative: optimizing operations to realize the full potential of the expanded fleet. With the bold expansion of the past 18 months complete for now, the company is transitioning to focused execution.
The initial improvement in operating performance was evidenced throughout the second half of 2012. Adjusted EBITDA margins hit a low point in the second quarter of 2012 at 18.5% and increased to 29.2% by the fourth quarter of the year. The company anticipates that continued efforts to improve operations can result in margins that are consistently near the upper end of the industry range. Additionally, the company is working to move additional rigs into the Middle East market where there is a strong performance track record. It is anticipated that the two idle XSR units in the Eagle Ford will begin operations in Q2 and Q3 2013 respectively.
Finally, the company is committed to increasing free cash flow and reducing leverage, which was utilized primarily to finance the aggressive growth of the past 18 months. With planned maintenance capex of $15 million in 2013 the company anticipates being able to significantly decrease debt over the course of the year.
Reader Advisory
This news release, or documents incorporated herein, contains forward-looking statements (“FLS”). More particularly, this news release contains statements that may relate to contracting, marketing, financing, construction, modifications, deployment, operation, utilization of drilling rigs in the Company–s current and future fleet, and any potential outcome relating to claims and litigation. Further, the FLS herein may relate to trade credit insurance carried by the Company to mitigate receivables collection risk. Although Xtreme believes expectations reflected in these FLS are reasonable, readers should not place undue reliance on them because Xtreme can give no assurance they will prove to be correct. There are many factors that could cause FLS not to be correct, including risks and uncertainties inherent in the Company–s business.
These statements are based on certain factors and assumptions including, but not limited to: the assessment of current and projected future operations; ongoing and future strategic business alliances, negotiations and opportunities to enter new, extend or complete existing contracts; the availability and cost of financing; foreign currency exchange rates; timing and magnitude of capital expenditures; expenses and other variables affecting rig operation, modification and construction; the ability and commitment of vendors to provide rig component equipment, services and supplies, including labor, in a cost-effective and timely manner; the issuance of applied-for patents; changes in tax rates; and government regulations. Although Xtreme considers the assumptions used to prepare this news release reasonable, based on information available to management as of March 6, 2013, ultimately the assumptions may prove to be incorrect.
Forward-looking statements are also subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from management–s current expectations. These factors include, but are not limited to: the cyclical nature of drilling market demand, foreign currency exchange rates, and commodity prices; access to credit and to equity markets; the availability of qualified personnel; vendor-provided rig components; and, competition for customers.
Management–s assumptions considered the following: compliance with the terms of the Company–s current and proposed new credit facility; ongoing access to key supplies and components required to continue operating and maintaining equipment, including fuel; continued successful performance of drilling and related equipment; expectations regarding gross margin; recruitment and retention of qualified personnel; continuation or extension of existing long-term or multi-well contracts; revenue expectations related to shorter-term drilling opportunities; willingness and ability of customers to remit amounts owing to Xtreme in accordance with normal industry practices; and management of accounts receivable in direct relation to revenue generation.
In preparing this news release, management considered the following risk factors: fluctuations in crude oil and natural gas prices, supply and demand; fluctuation in foreign currency exchange and interest rates; financial stability of Xtreme–s customers; current and future applications for Xtreme–s proprietary technology; competition from other drilling contractors; regulatory and economic conditions in regions where Xtreme operates; environmental constraints; changes to government legislation; international trade barriers or restrictions; and, where appropriate, global political and military events.
Financial outlook information contained in this news release about prospective results of operations, financial position or cash provided by operating activities is based on assumptions about future events, including economic conditions and proposed courses of action, and on management–s assessment of relevant information currently available. Readers are cautioned such financial outlook information contained in this news release is not appropriate for purposes other than for which it is disclosed here. Readers should not place undue importance on FLS and should not rely on this information as of any other date. Except as required pursuant to applicable securities laws, Xtreme disclaims any intention, and assumes no obligation, to update publicly or revise FLS to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such FLS or otherwise.
About Xtreme
Xtreme Drilling and Coil Services Corp. (“XDC” on the Toronto Stock Exchange) designs, builds, and operates a fleet of high specification drilling rigs and coiled tubing well service units featuring leading-edge proprietary technology including AC high capacity coil injectors, deep re-entry drilling capability, modular transportation systems and continuous integration of in-house advances in methodologies.
Currently Xtreme operates two service lines: Drilling Services (XDR) and Coil Services (XSR) under contracts with oil and natural gas exploration and production companies and integrated oilfield service providers in Canada, the United States and Saudi Arabia. For more information about the Company, please visit .
Contacts:
Xtreme Drilling and Coil Services Corp.
Matt Porter
Chief Financial Officer
+1 281 994 4604
Xtreme Drilling and Coil Services Corp.
16285 Park Ten Place, Suite 650
Houston, TX 77084