capital expenditureThey purchased some equipment.
Times must be good.
Rising tides and all that.
In the Step Energy Services release , they also bought equipment and
STEP’s operations in Canada and the U.S. continued to benefit from improving market conditions, with net pricing gains driving continued strong financial results in Q3 2022.
Q3 2022 Adjusted EBITDA was $58.1 million, up from $55.3 million in Q2 2022, and $18.0 million in Q3 2021. Consolidated EBITDA %’s have steadily improved, increasing to 24% in Q3 2022, up from 20% in Q2 2022 and 14% in Q3 2021.
Coiled Tubing The fundamentals of the coiled tubing market continue to strengthen, leading to sequentially improved pricing and utilization in both geographic regions.
The market for coiled tubing services in Canada is in balance, which is expected to drive high utilization through the remainder of the fourth quarter 2022.
023 Outlook STEP has a constructive outlook for 2023, with activity expected to increase in Canada and the U.S. relative to 2022. The increase in Canadian activity levels is expected to be more muted than in the U.S., reflecting a market that will return to balance in 2023 from an oversupply position in Q4 2022. Catalysts for activity increases in Canada are the re-opening of the Blueberry River First Nation territorial lands to industrial development, as well as increasing liquified natural gas (LNG) related development. Horsepower demand in the U.S. market is expected to stay strong, with additional fracturing capacity not expected to come to market in a meaningful way until mid to late 2023 due to ongoing supply chain constraints. Demand for coiled tubing services is expected to remain strong in both geographic regions, particularly as the benefits of scale start to build in the U.S.
Pricing increases are expected to pace inflation in Canada, with incremental gains dependent on equipment scarcity. A balanced market is critical to the long-term sustainability of the Canadian pressure pumping sector, significantly outweighing any short-term advantage that can be gained by adding incremental capacity too soon. Pricing power in the U.S. is expected to remain with the oilfield services sector, with gains anticipated through the first half of the year. Pricing improvements continue to be needed in order to produce full cycle returns for the pressure pumping sector, creating value for shareholders and clients alike.
The strong results posted in the first nine months of 2022 accelerated the Company’s goals to reduce its balance sheet leverage, reaching its year end target Funded Debt to Adjusted EBITDA of 1.0x at the close of Q3 2022. STEP’s focus for the balance of 2022 and into 2023 is on continued deleveraging and making disciplined investments that support STEP’s goal of building a resilient company and creating shareholder value.