CALGARY, ALBERTA--(Marketwired - Aug. 9, 2013) - Tuscany International Drilling Inc. ("Tuscany" or the "Company") (TSX:TID)(COLOMBIA:TIDC) announces second quarter 2013 results. The unaudited condensed interim consolidated financial statements of the Company for the second quarter ended June 30, 2013 and the related management's discussion and analysis will be filed under the Company's profile on the SEDAR website at www.sedar.com. The financial information described below should be read in conjunction therewith. Unless otherwise stated, the financial information included herein has been presented in thousands of United States dollars.
Q2 2013 Highlights
- The Company recorded revenue of $71,771 during the second quarter compared to $85,197 during the same period last year. This decline in revenue reflects a drop in revenue days from 2,612 in Q2 2012 to 2,343 in Q2 2013.
- Gross margin(1) was $23,062 during the second quarter compared to $26,128 during the same period last year.
- Adjusted EBITDA(1) was $14,140 during the second quarter compared to adjusted EBITDA of $17,037 during the same period in 2012.
- Cash used in operations was $195 during the second quarter of 2013 compared to cash generated by operations of $11,593 during the same period in 2012.
- Net loss was $9,741 during the second quarter compared to net income of $1,269 during the same period in 2012.
- General and administrative expenses were $9,318 (including stock-based compensation of $396), or 13.0% of revenue during the second quarter compared to $10,072 (including stock-based compensation of $981), or 11.8% of revenue during the same period in 2012. Included in the $9,318 is $1,147 in bad debt expense written off during the second quarter of 2013.
- Revenue utilization of the Company's fleet was 69.6% during the second quarter of 2013 as compared to 78.7% during the same period in 2012. The following is a brief table illustrating the status of our fleet as at August 9, 2013.
| Country |
Working/
Mobilizing |
Not
Working |
Total |
| Colombia |
10 |
4* |
14 |
| Brazil |
3 |
6** |
9 |
| Ecuador |
5 |
- |
5 |
| Gabon |
5 |
- |
5 |
| Tanzania |
- |
1 |
1 |
| Uganda |
1 |
- |
1 |
| Republic of Congo |
1 |
1 |
2 |
| |
25 |
12 |
37 |
| * |
2 of the 4 non-working rigs in Colombia have received letters of intent for long term contract commitments to commence in Q3 2013. |
| ** |
1 of the 6 non-working rigs in Brazil has received a letter of intent for long term contract commitment to commence in Q3 of 2013. |
OPERATIONAL HIGHLIGHTS
| |
Three months ended
June 30 |
|
Six months ended
June 30 |
|
| $ thousands, except per share data and operating information |
2013 |
|
2012 |
|
%
change |
|
2013 |
|
2012 |
|
%
change |
|
| Revenue |
|
71,771 |
|
|
85,197 |
|
(16 |
)% |
|
130,862 |
|
|
179,511 |
|
(27 |
)% |
| Gross margin(1) |
|
23,062 |
|
|
26,128 |
|
(12 |
)% |
|
39,417 |
|
|
57,498 |
|
(31 |
)% |
| Gross margin percentage |
|
32.1 |
% |
|
30.7 |
% |
5 |
% |
|
30.1 |
% |
|
32.0 |
% |
(6 |
)% |
| Adjusted EBITDA(2) |
|
14,140 |
|
|
17,037 |
|
(17 |
)% |
|
23,507 |
|
|
37,197 |
|
(37 |
)% |
| Adjusted EBITDA per share (basic and diluted) |
$ |
0.04 |
|
$ |
0.05 |
|
(20 |
)% |
$ |
0.06 |
|
$ |
0.11 |
|
(45 |
)% |
| Net income (loss) for the period |
|
(9,741 |
) |
|
1,269 |
|
(868 |
)% |
|
(16,820 |
) |
|
1,544 |
|
(1,189 |
)% |
| Net income (loss) per share (basic and diluted) |
$ |
(0.03 |
) |
$ |
0.00 |
|
N/A |
|
$ |
(0.05 |
) |
$ |
0.00 |
|
N/A |
|
| Funds from (used in) operations(1) |
|
(195 |
) |
|
11,593 |
|
(102 |
)% |
|
105 |
|
|
25,333 |
|
(100 |
)% |
| Funds from (used in) operations per share (basic and diluted) |
$ |
0.00 |
|
$ |
0.03 |
|
(100 |
)% |
$ |
0.00 |
|
$ |
0.07 |
|
(100 |
)% |
| Cash from (used in) operating activities |
|
(1,292 |
) |
|
2,722 |
|
(147 |
)% |
|
(72 |
) |
|
(2,619 |
) |
97 |
% |
| Cash from (used in) operating activities per share (basic and diluted) |
$ |
(0.00 |
) |
$ |
0.01 |
|
(100 |
)% |
$ |
(0.00 |
) |
$ |
(0.01 |
) |
100 |
% |
| General and administrative expenses |
|
9,318 |
|
|
10,072 |
|
(7 |
)% |
|
16,542 |
|
|
22,395 |
|
(26 |
)% |
| General and administrative expenses as a% of revenue |
|
13.0 |
% |
|
11.8 |
% |
10 |
% |
|
12.6 |
% |
|
12.5 |
% |
1 |
% |
| Total assets |
|
642,925 |
|
|
648,179 |
|
1 |
% |
|
642,925 |
|
|
648,179 |
|
1 |
% |
| Total long-term liabilities |
|
165,588 |
|
|
171,970 |
|
(4 |
)% |
|
165,588 |
|
|
171,970 |
|
(4 |
)% |
| Operating Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Number of available rigs |
|
37 |
|
|
37 |
|
0 |
% |
|
37 |
|
|
37 |
|
0 |
% |
| Revenue days |
|
2,343 |
|
|
2,612 |
|
(10 |
)% |
|
4,538 |
|
|
5,630 |
|
(19 |
)% |
| Utilization |
|
69.6 |
% |
|
78.7 |
% |
(12 |
)% |
|
67.8 |
% |
|
84.2 |
% |
(19 |
)% |
Non-IFRS Measures
This MD&A contains references to adjusted EBITDA, adjusted EBITDA per share, funds from operations, funds from operations per share, and gross margin.
Adjusted EBITDA is defined as "Oilfield services revenue less oilfield services expenses less general and administrative expenses (excluding stock-based compensation expense)". Management believes that in addition to net income, adjusted EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Company's principal business activities prior to the consideration of how these activities are financed, how the results are taxed in various jurisdictions and how the results are impacted by accounting standards associated with the Company's share-based compensation plan and corporate development activities. Per share amounts are calculated using the weighted average number of outstanding shares for the period under review.
| |
Three months ended
June 30 |
|
Six months ended
June 30 |
|
| $ thousands |
2013 |
|
2012 |
|
2013 |
|
2012 |
|
| Oilfield services revenue |
71,771 |
|
85,197 |
|
130,862 |
|
179,511 |
|
| Oilfield services expenses |
(48,709 |
) |
(59,069 |
) |
(91,445 |
) |
(122,013 |
) |
| General and administrative expenses |
(9,318 |
) |
(10,072 |
) |
(16,542 |
) |
(22,395 |
) |
| Stock-based compensation expense |
396 |
|
981 |
|
632 |
|
2,094 |
|
| Adjusted EBITDA |
14,140 |
|
17,037 |
|
23,507 |
|
37,197 |
|
Funds from operations is defined as "cash flow provided by/used in operating activities before the change in non-cash working capital". Funds from operations is a measure that provides shareholders and potential investors additional information regarding the Company's liquidity and its ability to generate funds to finance its operations. Management will use this measure to assess the Company's ability to finance operating activities, capital expenditures and corporate development initiatives. Per share amounts are calculated using the weighted average number of outstanding shares for the period under review.
| |
Three months ended
June 30 |
Six months ended
June 30 |
|
| $ thousands |
2013 |
|
2012 |
2013 |
|
2012 |
|
| Cash flow provided by (used in) operating activities |
(1,292 |
) |
2,722 |
(72 |
) |
(2,619 |
) |
| Changes in non-cash working capital |
1,097 |
|
8,871 |
177 |
|
27,952 |
|
| Funds from (used in) operations |
(195 |
) |
11,593 |
105 |
|
25,333 |
|
Gross margin is defined as "oilfield services revenue less oilfield services expenses". Gross margin is a measure that provides shareholders and potential investors additional information regarding the profitability of the Company's rig operations and is used by management to help assess operational performance.
| |
Three months ended
June 30 |
|
Six months ended
June 30 |
|
| $ thousands |
2013 |
|
2012 |
|
2013 |
|
2012 |
|
| Oilfield services revenue |
71,771 |
|
85,197 |
|
130,862 |
|
179,511 |
|
| Oilfield services expenses |
(48,709 |
) |
(59,069 |
) |
(91,445 |
) |
(122,013 |
) |
| Gross margin |
23,062 |
|
26,128 |
|
39,417 |
|
57,498 |
|
Adjusted EBITDA, adjusted EBITDA per share, funds from operations, funds from operations per share, and gross margin are not measures that have any standard meaning prescribed by IFRS and accordingly, may not be comparable to similar measures used by other companies.
Overview
During the three months ended June 30, 2013, the Company recorded a net loss of $9,741 ($0.03 per common share) compared to net income of $1,269 ($0.00 per common share) for the three months ended June 30, 2012. During the six months ended June 30, 2013, the Company recorded a net loss of $16,820 ($0.05 per common share) compared to net income of $1,544 ($0.00 per common share) for the six months ended June 30, 2012. During the three months ended June 30, 2013, the Company recorded oilfield services revenue of $71,771, adjusted EBITDA(3) of $14,140 and gross margin(1) from rig operations of $23,062 compared to revenue of $85,197, adjusted EBITDA of $17,037 and gross margin from rig operations of $26,128 during the three months ended June 30, 2012. During the six months ended June 30, 2013, the Company recorded oilfield services revenue of $130,862, adjusted EBITDA of $23,507 and gross margin from rig operations of $39,417 compared to revenue of $179,511, adjusted EBITDA of $37,197 and gross margin from rig operations of $57,498 during the six months ended June 30, 2012.
The decreases in revenue, adjusted EBITDA and gross margin for the second quarter of 2013 compared to the second quarter of 2012 reflect a 10% decrease in operating activity and a 6% decrease in average revenue per day during the three months ended June 30, 2013, compared to the three months ended June 30, 2012, as a result of rigs coming off contract in the second half of 2012. For the three months ended June 30, 2013, the Company had 2,343 revenue days from rig operations compared to 2,612 revenue days from rig operations during the three months ended June 30, 2012. Gross margin for the three months ended June 30, 2013, was offset by general and administrative expenses of $9,318 (2012 - $10,072), net finance costs of $6,323 (2012 - $6,515), foreign exchange contract loss of $65 (2012 - gain of $480) and depreciation of $8,179 (2012 - $7,495). For the three months ended June 30, 2013, the Company also recorded current income tax expense of $2,198 (2012 - $1,781), deferred income tax expense of $4,637 (2012 - recovery of $632), foreign exchange losses of $228 (2012 - gain of $239) and equity losses of $257 (2012 - income of $627). The decrease in general and administrative expense from the three months ended June 30, 2013 compared to the three months ended June 30, 2012, reflects management's continued efforts to realize efficiencies associated with its 2011 corporate acquisitions and general cost control initiatives.
The decreases in revenue, adjusted EBITDA and gross margin for the six months ended June 30, 2013, compared to the six months ended June 30, 2012, reflect a 19% decrease in operating activity and a 10% decrease in average revenue per day during the six months ended June 30, 2013, compared to the six months ended June 30, 2012, as a result of rigs coming off contract in the second half of 2012. For the six months ended June 30, 2013, the Company had 4,538 revenue days from rig operations compared to 5,630 revenue days from rig operations during the six months ended June 30, 2012. Gross margin for the six months ended June 30, 2013, was offset by general and administrative expenses of $16,542 (2012 - $22,395), net finance costs of $12,025 (2012 - $13,813), foreign exchange contract expense of $13 (2012 - $502) and depreciation of $13,738 (2012 - $17,263). For the six months ended June 30, 2013, the Company also recorded current income tax expense of $4,138 (2012 - $4,653), deferred income tax expense of $8,005 (2012 - recovery of $1,662), foreign exchange gains of $535 (2012 - losses of $277) and equity losses of $583 (2012 - income of $1,301). The decrease in general and administrative expense in the six months ended June 30, 2013, compared to the six months ended June 30, 2012, reflects management's continued efforts to realize efficiencies associated with the 2011 corporate acquisitions and general cost control initiatives.
During the six months ended June 30, 2013, Tuscany spent $13,426 on investing activities, which includes $13,679 of capital expenditures comprised primarily of rig refurbishment activity, and a $253 decrease in restricted cash. During the six months ended June 30, 2013, Tuscany drew an additional $15,000 on its credit facility, repaid $2,000 of its long term debt and increased its bank indebtedness and operating lines by $4,950.
Review of Interim Condensed Consolidated Statement of Financial Position
($ thousands)
| |
Change ($)(4) |
|
|
Explanation |
| Cash and cash equivalents |
3,939 |
|
|
See consolidated statement of cash flows. |
| Restricted cash |
(253 |
) |
|
Restricted cash results from the requirement to maintain a debt service reserve account pursuant to the Company's credit facility. In June 2013, debt interest was paid from this reserve account, bringing the balance of the account to $Nil. Subsequent to the interest payment, deposits of $20 were made. |
| Accounts receivable |
705 |
|
|
Increase results primarily from a 4% increase in revenue days in Q2, 2013 compared to Q4, 2012. |
| Prepaid expenses and deposits |
(3,293 |
) |
|
Decrease due to amortization of prepaid expenses during the first and second quarters of 2013. |
| Inventory |
4,089 |
|
|
Increase due to purchases partially offset by the usage of inventory on hand at December 31, 2012. |
| Foreign VAT recoverable (current and non-current) |
2,378 |
|
|
Increase due to delays in recovery of VAT from Gabon. |
| Long-term investments |
(774 |
) |
|
Decrease due to losses incurred by Warrior Rig Ltd. ("Warrior") for the period and a foreign exchange loss resulting from the translation of this investment. |
| Property and equipment |
(59 |
) |
|
Decrease is due to depreciation expense partially offset by costs capitalized related to the refurbishment of rigs. |
| Bank indebtedness |
5,072 |
|
|
Increase due to draw on Company's overdraft facilities. |
| Lines of credit |
14,878 |
|
|
Increase due to draw on the Company's revolving line of credit. |
| Accounts payable and accrued liabilities |
(2,928 |
) |
|
Decrease reflects increased payments made to vendors during the first six months of 2013. |
| Income taxes payable |
(1,374 |
) |
|
Decrease due to tax installment payments made in the first six months of 2013 offset by expenses on taxable income for the first six months of 2013. |
| Long-term debt (current and long-term) |
235 |
|
|
Increase is due to amortization of financing costs included in long-term debt partially offset by repayment of debt. |
| |
Change ($)(5) |
|
|
Explanation |
| Derivative contracts |
(776 |
) |
|
Decrease is due to the change in fair value of hedging contracts entered into during the first quarter of 2012. |
| Net deferred taxes |
(8,004 |
) |
|
Decrease is due primarily to revaluation of tax assets due to the change in foreign exchange rates. |
| Share capital |
23,128 |
|
|
Increase is due to the exercise of warrants during the first quarter of 2013. |
| Contributed surplus |
3,208 |
|
|
Increase relates to the expiry of warrants and stock-based compensation expense recorded during the first two quarters of 2013. |
| Warrants |
(25,704 |
) |
|
Decrease is due to the exercise and expiry of warrants during the first and second quarters of 2013. |
Review of Interim Condensed Consolidated Statement of Comprehensive Income and Loss
($ thousands)
| |
Three months ended
June 30 |
|
Six months ended
June 30 |
|
| |
2013 |
|
2012 |
|
%
Change |
|
2013 |
|
2012 |
|
%
Change |
|
| Oilfield services revenue |
71,771 |
|
85,197 |
|
(16 |
)% |
130,862 |
|
179,511 |
|
(27 |
)% |
| Oilfield services expenses |
(48,709 |
) |
(59,069 |
) |
(18 |
)% |
(91,445 |
) |
(122,013 |
) |
(25 |
)% |
| Gross margin(6) |
23,062 |
|
26,128 |
|
(12 |
)% |
39,417 |
|
57,498 |
|
(31 |
)% |
| Gross margin % |
32.1 |
% |
30.7 |
% |
5 |
% |
30.1 |
% |
32.0 |
% |
(6 |
)% |
Oilfield services revenue was $71,771 for the three months ended June 30, 2013, compared to $85,197 for the three months ended June 30, 2012, a decrease of 16%. The decrease in revenue is a result of the decrease in the number of revenue days and average revenue per day in the three months ended June 30, 2013, compared to the three months ended June 30, 2012. During the three months ended June 30, 2013, the Company had 2,343 revenue days (69.6% utilization) compared to 2,612 revenue days (78.7% utilization) in the three months ended June 30, 2012, a decrease of 10%. Revenue days decreased in the three months ended June 30, 2013, primarily as a result of rigs coming off contract during the last six months of 2012. For the three months ended June 30, 2013, average revenue per day decreased to $30.64 from $32.62 for the three months ended June 30, 2012. Average revenue per day decreased in the second quarter of 2013 compared to the second quarter of 2012 due to larger, high day rate rigs coming off contract during the last six months of 2012, and three rigs in Colombia being contracted at lower day rates compared to rigs of similar capacity. These lower day rates are more than offset by contract terms that provide that the majority of the operating costs are borne by the customer. Twenty-nine of the Company's 37 available drilling and heavy-duty workover rigs earned revenue from drilling operations during the three months ended June 30, 2013. During the three months ended June 30, 2012, the Company earned revenues from 35 rigs.
Oilfield services revenue was $130,862 for the six months ended June 30, 2013, compared with $179,511 for the six months ended June 30, 2012, a decrease of 27%. The decrease in revenue is a result of decrease in the number of revenue days and average revenue per day in the six months ended June 30, 2013, compared to the six months ended June 30, 2012. During the six months ended June 30, 2013, the Company had 4,538 revenue days (67.8% utilization) compared to 5,630 revenue days (84.2% utilization) in the six months ended June 30, 2012. Revenue days decreased in the six months ended June 30, 2013, primarily as a result of rigs coming off contract during the second half of 2012. For the six months ended June 30, 2013, average revenue per day decreased to $28.84 from $31.89 for the six months ended June 30, 2012. Average revenue per day decreased in the first half of 2013 compared to the first half of 2012 due to larger, high day rate rigs coming off contract during 2012, and three rigs in Colombia being contracted at lower day rates compared to rigs of similar capacity. These lower day rates are more than offset by contract terms that provide that the majority of the operating costs are borne by the customer. Thirty of the Company's 37 available drilling and heavy-duty workover rigs earned revenue from drilling operations during the six months ended June 30, 2013. During the six months ended June 30, 2012, the Company earned revenues from 35 rigs.
For the three months ended June 30, 2013, gross margin was $23,062, or 32.1%, compared with a gross margin of $26,128, or 30.7%, for the three months ended June 30, 2012. For the six months ended June 30, 2013, gross margin was $39,417, or 30.1%, compared with a gross margin of $57,498 or 32.0%, for the three months ended June 30, 2012. The increase in gross margin percentage for the three months ended June 30, 2013, compared to the gross margin percentage for the three months ended June 30, 2012, is primarily due to three rigs in Colombia being contracted at lower day rates, and these lower day rates being more than offset by contract terms that provide that the majority of the operating costs are borne by the customer, resulting in higher gross margin percentages. The decrease in gross margin percentage for the six months ended June 30, 2013, compared to the gross margin percentage for the six months ended June 30, 2012, is primarily due to costs incurred in the first quarter of 2013 associated with rigs that have come off contract during the latter part of 2012.
| |
Three months ended
June 30 |
|
Six months ended
June 30 |
|
| |
2013 |
2012 |
%
Change |
|
2013 |
2012 |
%
Change |
|
| Depreciation |
8,179 |
7,495 |
9 |
% |
13,738 |
17,263 |
(20 |
)% |
Depreciation expense totaled $8,179 for the three months ended June 30, 2013, compared with $7,495 for the three months ended June 30, 2012. Depreciation expense totaled $13,738 for the six months ended June 30, 2013, compared with $17,263 for the six months ended June 30, 2012. Under the Company's depreciation policy, depreciation of rigs and related equipment is based on the number of days in operation. The increase in depreciation for the three months ended June 30, 2013, compared to the three months ended June 30, 2012, is a result of a $1,803 out of period adjustment for additional depreciation for items which are not in use or impaired in prior periods. The decrease in depreciation expense for the six months ended June 30, 2013, compared to the six months ended June 30, 2012, is a result of a decrease in the operating days in the six months ended June 30, 2013, compared to the corresponding period in 2012. During the six months ended June 30, 2013, the Company recorded depreciation on 28 rigs.
| |
Three months ended
June 30 |
|
Six months ended
June 30 |
|
| |
2013 |
2012 |
%
Change |
|
2013 |
2012 |
%
Change |
|
| General and administrative |
9,318 |
10,072 |
(7 |
)% |
16,542 |
22,395 |
(26 |
)% |
General and administrative expense was $9,318 (13.0% of revenue) for the three months ended June 30, 2013, compared to $10,072 (11.8% of revenue) for the three months ended June 30, 2012. General and administrative expense was $16,542 (12.6% of revenue) for the six months ended June 30, 2013, compared to $22,395 (12.5% of revenue) for the six months ended June 30, 2012. Included in general and administrative expenses for the three and six months ended June 30, 2013, is $1,147 of bad debt expense relating to one customer whose accounts receivable was deemed to be uncollectible. The decrease in general and administrative expense for the three and six months ended June 30, 2013, compared to the three and six months ended June 30, 2012, reflects management's efforts to realize efficiencies associated with its 2011 corporate acquisitions and general cost control initiatives. The increase in general and administrative expense as a percentage of revenue from the three and six months ended June 30, 2013 compared to the three and six months ended June 30, 2012, is due to a 16% and 27% decrease in revenue for the three and six months ended June 30, 2013, respectively, compared to the corresponding periods of 2012.
Included in general and administrative expense for the three and six months ended June 30, 2013, is $396 and $632, respectively, of stock-based compensation compared to $981 and $2,094, respectively, for the three months and six months ended June 30, 2012. Stock-based compensation expense represents the value, calculated using the Black-Scholes option pricing model, related to the granting of stock options.
| |
Three months ended
June 30 |
|
Six months ended
June 30 |
|
| |
2013 |
2012 |
%
Change |
|
2013 |
2012 |
%
Change |
|
| Net finance costs |
6,323 |
6,515 |
(3 |
)% |
12,025 |
13,813 |
(13 |
)% |
For the three and six months ended June 30, 2013, net finance costs includes interest and amortization of costs associated with the Company's credit facility, the change in value on the Company's interest rate hedges and other smaller interest charges in various countries, net of interest income. Net finance costs decreased to $6,323 for the three months ended June 30, 2013, from $6,515 for the three months ended June 30, 2012. Net finance costs decreased to $12,025 for the six months ended June 30, 2013, from $13,813 for the six months ended June 30, 2012.
The Company currently has a $253,000 credit facility comprised of a $208,000 term loan and a $45,000 revolving line of credit. Fees associated with the credit facility have been presented as a direct reduction to the face value of the long-term debt. The effective interest rate method has been applied and results in the amortization of the debt discount over the life of the loan. As a result, amortization of financing fees related to the credit facility of $1,377 and $2,748 have been included in net finance costs for the three months and six months ended June 30, 2013, respectively, compared to $1,087 and $2,168 for the three and six months ended June 30, 2012. In addition to the financing fees associated with this facility, the Company incurs interest expense on the amount drawn under the credit facility at three-month LIBOR plus 7.5% per annum. During the three and six months ended June 30, 2013, the Company recorded $5,261 and $9,406, respectively, of interest related to the credit facility compared to $4,221 and $8,193, respectively, for the three and six months ended June 30, 2012.
During the year ended December 31, 2012, the Company entered into two separate agreements to hedge the interest rate on a total of $100,000 of the $210,000 term loan. The Company has entered into floating for fixed swap agreements on three-month LIBOR to maturity of the term loan under the Company's credit facility. The fair value of these interest rate contract liabilities decreased by $385 for the three months ended June 30, 2013, compared to an increase of $954 for the three months ended June 30, 2012. The fair value of these interest rate contract liabilities decreased by $363 for the six months ended June 30, 2013, compared to an increase of $3,107 for the three months ended June 30, 2012.
Interest of $201 and $453 was incurred in various countries for the three and six months ended June 30, 2013, respectively, compared to $318 and $422 for the three and six months ended June 30, 2012, respectively.
| |
Three months ended
June 30 |
|
Six months ended
June 30 |
|
| |
2013 |
|
2012 |
%
Change |
|
2013 |
2012 |
%
Change |
|
| Foreign exchange contracts |
(65 |
) |
480 |
(114 |
)% |
13 |
502 |
(97 |
)% |
During the six month period ended June 30, 2012, the Company entered into a Euro/United States dollar cross costless collar on a total of 19,200 Euro. The contract consists of 24 contracts with notional amounts of 800 Euro per contract. The contract has a two year term and the fair value of this foreign exchange contract liability decreased $65 (2012 - increased $480) in the three months ended June 30, 2013 and increased $13 in the six months ended June 30, 2013 (2012 - $502).
| |
Three months ended
June 30 |
Six months ended
June 30 |
| |
2013 |
2012 |
%
Change |
2013 |
2012 |
%
Change |
| Change in fair value of contingent refundable consideration |
1,728 |
- |
N/A |
1,728 |
- |
N/A |
These costs relate to the acquisition of Drillfor Perfurações do Brasil Ltda ("Drillfor") in May 2011 which were identified during the quarter. The costs would normally be included in the acquisition costs at the time of acquisition; however under IFRS standards there can be no changes to the purchase price allocation of an acquired company subsequent to the end of the measurement period, which is one year after the date of acquisition. Since the one year period has expired, these costs are recorded as an expense, as prescribed by IFRS standards.
| |
Three months ended
June 30 |
|
Six months ended
June 30 |
|
| |
2013 |
|
2012 |
%
Change |
|
2013 |
2012 |
|
%
Change |
|
| Foreign exchange (loss) gain |
(228 |
) |
239 |
195 |
% |
535 |
(277 |
) |
293 |
% |
In addition to incurring operating expenses and capital expenditures in the Company's functional currency (United States dollars), the Company also incurs operating expenses and capital expenditures in Colombian pesos (COP), Canadian dollars (CDN $), Brazilian real (BRL), African francs (CFA) and Euros. Foreign exchange gains and losses arise primarily on the settlement of accounts payable invoices that are denominated in currencies other than the United States dollar.
| |
Three months ended
June 30 |
|
Six months ended
June 30 |
|
| |
2013 |
|
2012 |
%
Change |
|
2013 |
|
2012 |
%
Change |
|
| Equity income (loss) |
(257 |
) |
627 |
(141 |
)% |
(583 |
) |
1,301 |
(145 |
)% |
The Company has a 33.87% ownership interest in Warrior, a private oilfield services company involved in the development and manufacture of oilfield services equipment. The carrying value of this investment is adjusted to include the pro-rata share of the investee's earnings, less dividends received. Equity losses totaled $257 for the three months ended June 30, 2013, compared with equity income of $627 for the three months ended June 30, 2012. Equity losses totaled $583 for the six months ended June 30, 2013, compared with equity income of $1,301 for the six months ended June 30, 2012. Equity income has decreased as a result of decreased activity in Warrior in the first half of 2013 compared to the first half of 2012.
| |
Three months ended
June 30 |
|
Six months ended
June 30 |
|
| |
2013 |
2012 |
%
Change |
|
2013 |
2012 |
%
Change |
|
| Current income taxes |
2,198 |
1,781 |
23 |
% |
4,138 |
4,653 |
(11 |
)% |
For the three and six months ended June 30, 2013, Tuscany's total current income tax expense is $2,198 and $4,138, respectively. This is comprised primarily of income taxes calculated on equity in Colombia and income taxes calculated on earnings in Gabon.
| |
Three months ended
June 30 |
|
Six months ended
June 30 |
|
| |
2013 |
2012 |
|
%
Change |
|
2013 |
2012 |
|
%
Change |
|
| Deferred income taxes (recovery) |
4,637 |
(632 |
) |
834 |
% |
8,005 |
(1,662 |
) |
582 |
% |
For the three and six months ended June 30, 2013, Tuscany's total deferred income tax expense is $4,637 and $8,005, respectively, as a result of the revaluation of the deferred tax assets in Colombia resulting from a nine percent strengthening of the Colombian peso compared to the United States dollar since December 31, 2012.
| Tuscany International Drilling Inc. |
| Condensed Interim Consolidated Statement of Financial Position (Unaudited) |
| (expressed in thousands of US dollars) |
| |
| |
June 30 |
|
December 31 |
|
| |
2013 |
|
2012 |
|
| Assets |
|
|
|
|
| Current Assets |
|
|
|
|
| Cash and cash equivalents |
10,242 |
|
6,303 |
|
| Restricted cash |
20 |
|
273 |
|
| Accounts receivable |
107,667 |
|
106,962 |
|
| Prepaid expenses and deposits |
2,791 |
|
6,084 |
|
| Inventory |
22,755 |
|
18,666 |
|
| Foreign VAT recoverable |
6,184 |
|
4,219 |
|
| |
149,659 |
|
142,507 |
|
| |
|
|
|
|
| Foreign VAT recoverable |
5,868 |
|
5,455 |
|
| Deferred tax asset |
6,970 |
|
15,772 |
|
| Long-term investment |
5,638 |
|
6,412 |
|
| Property and equipment |
474,790 |
|
474,849 |
|
| |
642,925 |
|
644,995 |
|
| |
|
|
|
|
| Liabilities |
|
|
|
|
| Current Liabilities |
|
|
|
|
| Bank indebtedness |
9,567 |
|
4,495 |
|
| Lines of credit |
46,347 |
|
31,469 |
|
| Accounts payable and accrued liabilities |
60,441 |
|
63,369 |
|
| Current portion of long-term debt |
40,625 |
|
16,875 |
|
| Income taxes payable |
7,473 |
|
8,847 |
|
| |
164,453 |
|
125,055 |
|
| |
|
|
|
|
| Long-term debt |
156,038 |
|
179,553 |
|
| Derivative contracts |
3,161 |
|
3,937 |
|
| Deferred tax liability |
6,389 |
|
7,187 |
|
| |
330,041 |
|
315,732 |
|
| Shareholders' Equity |
|
|
|
|
| Share capital |
389,428 |
|
366,300 |
|
| Contributed surplus |
24,868 |
|
21,660 |
|
| Warrants |
- |
|
25,704 |
|
| Accumulated other comprehensive loss |
(580 |
) |
(389 |
) |
| Deficit |
(100,832 |
) |
(84,012 |
) |
| |
312,884 |
|
329,263 |
|
| |
642,925 |
|
644,995 |
|
| |
|
|
|
|
| Tuscany International Drilling Inc. |
| Condensed Interim Consolidated Statement of Comprehensive Income and Loss (Unaudited) |
| For the three and six months ended June 30, 2013 and 2012 |
| (expressed in thousands of US dollars, except per share data) |
| |
| |
Three months
ended |
|
Six months
ended |
|
| |
June 30 |
|
June 30 |
|
June 30 |
|
June 30 |
|
| |
2013 |
|
2012 |
|
2013 |
|
2012 |
|
| |
|
|
|
|
|
|
|
|
| Revenue |
|
|
|
|
|
|
|
|
| Oilfield services |
71,771 |
|
85,197 |
|
130,862 |
|
179,511 |
|
| |
|
|
|
|
|
|
|
|
| Expenses |
|
|
|
|
|
|
|
|
| Oilfield services |
48,709 |
|
59,069 |
|
91,445 |
|
122,013 |
|
| Depreciation |
8,179 |
|
7,495 |
|
13,738 |
|
17,263 |
|
| General and administrative |
9,318 |
|
10,072 |
|
16,542 |
|
22,395 |
|
| Foreign exchange (gain) loss |
228 |
|
(239 |
) |
(535 |
) |
277 |
|
| Equity (income) loss |
257 |
|
(627 |
) |
583 |
|
(1,301 |
) |
| |
5,080 |
|
9,427 |
|
9,089 |
|
18,864 |
|
| |
|
|
|
|
|
|
|
|
| Net finance costs |
6,323 |
|
6,515 |
|
12,025 |
|
13,813 |
|
| Gain on sale of property & equipment |
- |
|
(44 |
) |
- |
|
(44 |
) |
| Loss on sale of investment |
- |
|
58 |
|
- |
|
58 |
|
| Foreign exchange contract |
(65 |
) |
480 |
|
13 |
|
502 |
|
| Change in fair value of contingent refundable consideration |
1,728 |
|
- |
|
1,728 |
|
- |
|
| Income (loss) before income taxes |
(2,906 |
) |
2,418 |
|
(4,677 |
) |
4,535 |
|
| |
|
|
|
|
|
|
|
|
| Current income taxes |
2,198 |
|
1,781 |
|
4,138 |
|
4,653 |
|
| Deferred income taxes |
4,637 |
|
(632 |
) |
8,005 |
|
(1,662 |
) |
| |
|
|
|
|
|
|
|
|
| Net income (loss) for the period |
(9,741 |
) |
1,269 |
|
(16,820 |
) |
1,544 |
|
| |
|
|
|
|
|
|
|
|
| Other comprehensive loss |
|
|
|
|
|
|
|
|
| Items that may be subsequently reclassified to income and loss: |
|
|
|
|
|
|
|
|
| |
Foreign currency translation |
(72 |
) |
(58 |
) |
(191 |
) |
(215 |
) |
| Total comprehensive income (loss) |
(9,813 |
) |
1,211 |
|
(17,011 |
) |
1,329 |
|
| |
|
|
|
|
|
|
|
|
| Net income (loss) per share, basic and diluted |
(0.03 |
) |
0.00 |
|
(0.05 |
) |
0.00 |
|
| |
|
|
|
|
|
|
|
|
| Tuscany International Drilling Inc. |
| Condensed Interim Consolidated Statement of Changes in Equity (Unaudited) |
| (expressed in thousands of US dollars) |
| |
| |
Attributable to equity owners of the Company |
|
| |
Share
Capital |
Contributed
surplus |
Warrants |
|
Accumulated
other
comprehensive
income (loss) |
|
Deficit |
|
Total
equity |
|
| Balance - January 1, 2013 |
366,300 |
21,660 |
25,704 |
|
(389 |
) |
(84,012 |
) |
329,263 |
|
| Net loss for the period |
- |
- |
- |
|
- |
|
(16,820 |
) |
(16,820 |
) |
| Cumulative foreign currency translation adjustment |
- |
- |
- |
|
(191 |
) |
- |
|
(191 |
) |
| Comprehensive loss for the period |
- |
- |
- |
|
(191 |
) |
(16,820 |
) |
(17,011 |
) |
| Stock-based compensation |
- |
632 |
- |
|
- |
|
- |
|
632 |
|
| Exercise of warrants |
23,128 |
- |
(23,128 |
) |
- |
|
- |
|
- |
|
| Expiration of warrants |
- |
2,576 |
(2,576 |
) |
- |
|
- |
|
- |
|
| Balance - June 30, 2013 |
389,428 |
24,868 |
- |
|
(580 |
) |
(100,832 |
) |
312,884 |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Balance - January 1, 2012 |
366,300 |
18,106 |
25,704 |
|
(251 |
) |
(48,948 |
) |
360,911 |
|
| Net income for the period |
- |
- |
- |
|
- |
|
1,544 |
|
1,544 |
|
| Cumulative foreign currency translation adjustment |
- |
- |
- |
|
(215 |
) |
- |
|
(215 |
) |
| Comprehensive income (loss) for the period |
- |
- |
- |
|
(215 |
) |
1,544 |
|
1,329 |
|
| Stock-based compensation |
- |
2,094 |
- |
|
- |
|
- |
|
2,094 |
|
| Balance - June 30, 2012 |
366,300 |
20,200 |
25,704 |
|
(466 |
) |
(47,404 |
) |
364,334 |
|
| |
|
| Tuscany International Drilling Inc. |
| Condensed Interim Consolidated Statement of Cash Flows (Unaudited) |
| For the three and six months ended June 30, 2013 and 2012 |
| (expressed in thousands of US dollars) |
| |
| |
Three months
ended |
|
Six months
ended |
|
| |
June 30 |
|
June 30 |
|
June 30 |
|
June 30 |
|
| |
2013 |
|
2012 |
|
2013 |
|
2012 |
|
| Cash flow provided by (used in): |
|
|
|
|
|
|
|
|
| Operating Activities |
|
|
|
|
|
|
|
|
| Net income (loss) for the period |
(9,741 |
) |
1,269 |
|
(16,820 |
) |
1,544 |
|
| Items not affecting cash |
|
|
|
|
|
|
|
|
| |
Depreciation |
8,179 |
|
7,495 |
|
13,738 |
|
17,263 |
|
| |
Gain on sale of property and equipment |
- |
|
(44 |
) |
- |
|
(44 |
) |
| |
Equity (income) loss |
257 |
|
(627 |
) |
583 |
|
(1,301 |
) |
| |
Amortization of financing fees |
1,377 |
|
1,087 |
|
2,748 |
|
2,168 |
|
| |
Change in fair value of derivative contracts |
(663 |
) |
1,432 |
|
(776 |
) |
3,609 |
|
| |
Stock based compensation |
396 |
|
981 |
|
632 |
|
2,094 |
|
| Changes in non-cash working capital |
(1,097 |
) |
(8,871 |
) |
(177 |
) |
(27,952 |
) |
| |
(1,292 |
) |
2,722 |
|
(72 |
) |
(2,619 |
) |
| |
|
|
|
|
|
|
|
|
| Investing Activities |
|
|
|
|
|
|
|
|
| Acquisition of property and equipment |
(10,659 |
) |
(7,571 |
) |
(13,679 |
) |
(10,807 |
) |
| Proceeds from sale of property and equipment |
- |
|
588 |
|
- |
|
588 |
|
| Restricted cash |
2,061 |
|
(274 |
) |
253 |
|
1,226 |
|
| |
(8,598 |
) |
(7,257 |
) |
(13,426 |
) |
(8,993 |
) |
| Financing Activities |
|
|
|
|
|
|
|
|
| Proceeds from bank indebtedness |
4,929 |
|
- |
|
4,950 |
|
- |
|
| Proceeds from lines of credit |
5,000 |
|
- |
|
15,000 |
|
- |
|
| Repayment of long term debt |
(2,000 |
) |
- |
|
(2,000 |
) |
- |
|
| Proceeds from long term debt |
- |
|
14,048 |
|
- |
|
14,048 |
|
| Payment of financing fees |
(426 |
) |
- |
|
(513 |
) |
- |
|
| |
7,503 |
|
14,048 |
|
17,437 |
|
14,048 |
|
| |
|
|
|
|
|
|
|
|
| Increase (decrease) in cash and cash equivalents |
(2,387 |
) |
9,513 |
|
3,939 |
|
2,436 |
|
| Cash and cash equivalents, beginning of period |
12,629 |
|
6,079 |
|
6,303 |
|
13,156 |
|
| Cash and cash equivalents, end of period |
10,242 |
|
15,592 |
|
10,242 |
|
15,592 |
|
| |
|
|
|
|
|
|
|
|
| Cash Flow Supplementary Information |
|
|
|
|
|
|
|
|
| Interest received |
131 |
|
65 |
|
219 |
|
77 |
|
| Interest paid |
5,137 |
|
4,071 |
|
9,493 |
|
8,063 |
|
| Income taxes paid |
3,723 |
|
3,789 |
|
5,511 |
|
3,789 |
|
The Toronto Stock Exchange has not reviewed, nor does it accept responsibility for the adequacy or accuracy of this release.
The listing of Tuscany's common shares on the Colombian Stock Exchange does not imply a certification by the BVC of the value or the solvency of Tuscany.
| (1) |
Refer to Non-GAAP Measures. |
| (2) |
Refer to "Non-IFRS Measures." |
| (3) |
Refer to "Non-IFRS Measures." |
| (4) |
Reflects the movement in accounts from December 31, 2012 to June 30, 2013. |
| (5) |
Reflects the movement in accounts from December 31, 2012, to June 30, 2013. |
| (6) |
Refer to "Non-IFRS Measures." |