CALGARY, ALBERTA--(Marketwired - Aug. 11, 2016) - Trican Well Service Ltd. (TSX:TCW) -
| |
Three months ended |
|
Six months ended |
|
| ($ millions, except per share amounts; unaudited) |
June 30,
2016 |
|
June 30,
2015 |
|
Mar. 31,
2016 |
|
June 30,
2016 |
|
June 30,
2015 |
|
| Revenue |
$32.5 |
|
$80.3 |
|
$99.8 |
|
$132.4 |
|
$299.5 |
|
| Operating loss(1) |
(29.2 |
) |
(23.6 |
) |
(26.4 |
) |
(55.6 |
) |
(28.1 |
) |
| Adjusted operating loss(1) |
(19.1 |
) |
(21.1 |
) |
(16.2 |
) |
(35.3 |
) |
(16.7 |
) |
| Gross loss |
(28.5 |
) |
(28.1 |
) |
(31.3 |
) |
(59.8 |
) |
(37.6 |
) |
| Net loss |
(40.4 |
) |
(37.7 |
) |
(42.5 |
) |
(82.9 |
) |
(56.4 |
) |
| |
Per share - basic and diluted |
($0.26 |
) |
($0.25 |
) |
($0.29 |
) |
($0.55 |
) |
($0.37 |
) |
| Funds used in operations(1) |
(30.0 |
) |
(30.9 |
) |
(36.8 |
) |
(65.7 |
) |
(44.3 |
) |
| Notes: |
| (1) |
Trican makes reference to operating income / (loss), adjusted operating income / (loss) and funds
provided by / (used in) operations. These measures are not recognized under International Financial Reporting Standards
(IFRS) and are considered non-GAAP measures. Management believes that, in addition to gross profit / (loss) and profit /
(loss), operating income / (loss), adjusted operating income / (loss) and funds provided by / (used in) operations are
useful supplemental measures. Operating income / (loss) provides investors with an indication of profit / (loss)
before depreciation and amortization, foreign exchange gains and losses, asset impairment, other (income) / loss, finance
costs and income tax expense / (recovery). Adjusted operating income / (loss) provides investors with an indication of
comparable operating income / (loss), which exclude items that are significant but not reflective of our underlying
operations for the period. Funds provided by / (used in) operations provide investors with an indication of cash available
for capital commitments, debt repayments and other expenditures. Investors should be cautioned that operating income /
(loss), adjusted operating income / (loss) and funds provided by / (used in) operations should not be construed as an
alternative to gross profit / (loss) or profit / (loss) determined in accordance with IFRS as an indicator of Trican's
performance. Trican's method of calculating operating income / (loss), adjusted operating income / (loss) and funds
provided by / (used in) operations may differ from that of other companies and accordingly may not be comparable to
measures used by other companies. See also "Non-GAAP Disclosure" section of this report. |
SECOND QUARTER HIGHLIGHTS
Consolidated revenue from continuing operations for the second quarter of 2016 was $32.5 million, a decrease of 59% compared
to the second quarter of 2015. The adjusted operating loss for the quarter was $19.1 million which is an improvement of $2.0
million over the loss experienced in Q2 of 2015. The large revenue drop experienced was mitigated by cost control initiatives
that were implemented in the quarter. Trican's Canadian operations' fixed cost structure in Q2 2016 has been reduced by 43% when
compared to Q2 2015 as a result of workforce reductions, discretionary spending reductions, lower compensation programs and the
transition to a day rate field compensation system at the beginning of June.
Revenue was down significantly in the quarter due to reduced drilling and completion activity caused by low commodity prices,
lower pricing, and a longer than usual spring breakup. In addition, a number of customer work programs that were scheduled in
June were delayed into the third quarter. In response to the lower activity levels, the company parked additional equipment
during the quarter. We are currently operating 50% of our equipment fleet and continue to monitor activity and pricing levels and
will adjust our active equipment fleet and cost structure accordingly as activity and pricing changes.
Pricing has been negatively affected by market conditions, and as a result, Q2 2016 pricing is down approximately 7%
sequentially and 22% when compared to Q2 2015. Trican chose not to submit bids on certain jobs due to pricing falling to a level
that would have generated negative field margins on these jobs.
The operating loss without adjustments for the quarter was $29.2 million. The Company incurred significant costs related to
severance payments of $8.4 million associated with workforce reductions which largely contributed to this operating loss
variance. Funds used in operations were $30.0 million compared to funds used in operations of $30.9 million in the second quarter
of 2015.
Trican closed the sale of its completions tools business on July 13, 2016 to National Oilwell Varco, Inc. ("NOV"). The
transaction involves the sale of all material assets of Trican Completion Solutions Ltd. and Trican Completion Solutions, LLC and
the sale of all of Trican's direct and indirect equity interest in each of Petro Tools Holding AS and Trican Completion Solutions
LLC, as well as certain assets related to the completions tools business held by Trican and certain affiliates for a total gross
proceeds of $53.5 million. The gross proceeds consist of $30 million in cash consideration and share consideration totaling
$23.5 million. All shares of NOV common stock received in connection with the sale will be subject to a six month holding period
from the date of issuance.
During the second quarter, Trican also successfully closed a public offering of an aggregate of 43,125,000 common shares at a
price of $1.60 per common share for aggregate gross proceeds of $69 million including overallotments (the "Equity
Offering"). The net proceeds were used to reduce outstanding debt.
In conjunction with the above Equity Offering, Trican's previously announced amendment to its agreement with its bank lenders
under its revolving credit facility ("RCF") and the holders of its senior notes ("Senior Notes") came into effect on receipt of
funds from the Equity Offering on June 21, 2016 ("Second 2016 Amended Credit Agreements"). The Second 2016 Amended Credit
Agreements includes the removal of covenants for the remainder of 2016 and a 5.0 times leverage ratio and 2.0 times interest
coverage ratio commencing in Q1 2017. An equity cure of $20 million is also available to the Company as a result of the closing
of the Equity Offering. Please refer to the "Covenant" section of this press release for further covenant
details.
CONTINUING OPERATIONS COMPARATIVE QUARTERLY INCOME STATEMENTS
($ thousands, unaudited) |
|
| |
|
June 30, |
|
% of |
|
June 30, |
|
% of |
|
March 31, |
|
% of |
|
| Three months ended |
2016 |
|
Revenue |
|
2015 |
|
Revenue |
|
2016 |
|
Revenue |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
32,518 |
|
100.0 |
% |
80,329 |
|
100.0 |
% |
99,848 |
|
100.0 |
% |
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Materials and operating |
44,709 |
|
137.5 |
% |
87,445 |
|
108.9 |
% |
110,724 |
|
110.9 |
% |
| |
General and administrative |
3,211 |
|
9.9 |
% |
3,878 |
|
4.8 |
% |
3,458 |
|
3.5 |
% |
| Operating loss - Canadian Operations(1) |
(15,402 |
) |
(47.4 |
%) |
(10,994 |
) |
(13.7 |
%) |
(14,334 |
) |
(14.4 |
%) |
| Corporate Expenses |
13,802 |
|
42.4 |
% |
12,595 |
|
15.7 |
% |
12,065 |
|
12.1 |
% |
| Operating loss - Continuing Operations |
(29,204 |
) |
(89.9 |
%) |
(23,589 |
) |
(29.4 |
%) |
(26,399 |
) |
(26.4 |
%) |
| |
Finance costs |
8,016 |
|
24.7 |
% |
8,384 |
|
10.4 |
% |
9,010 |
|
9.0 |
% |
| |
Depreciation and amortization |
17,615 |
|
54.2 |
% |
18,598 |
|
23.2 |
% |
20,120 |
|
20.2 |
% |
| |
Foreign exchange (gain) / loss |
59 |
|
0.2 |
% |
(3,031 |
) |
(3.8 |
%) |
2,936 |
|
2.9 |
% |
| |
Finance and other income |
(559 |
) |
(1.7 |
%) |
(1,398 |
) |
(1.7 |
%) |
(468 |
) |
(0.5 |
%) |
| Loss before income taxes |
(54,335 |
) |
(167.2 |
%) |
(46,142 |
) |
(57.4 |
%) |
(57,997 |
) |
(58.1 |
%) |
| Income tax recovery |
(13,913 |
) |
(42.8 |
%) |
(8,414 |
) |
(10.5 |
%) |
(15,506 |
) |
(15.5 |
%) |
| Net loss |
(40,422 |
) |
(124.4 |
%) |
(37,728 |
) |
(46.9 |
%) |
(42,491 |
) |
(42.6 |
%) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted operating loss - Canadian Operations(1) |
(10,739 |
) |
(33.0 |
%) |
(9,614 |
) |
(12.0 |
%) |
(7,874 |
) |
(7.9 |
%) |
| Adjusted operating loss - Continuing Operations(1) |
(19,092 |
) |
(58.7 |
%) |
(21,148 |
) |
(26.3 |
%) |
(16,176 |
) |
(16.2 |
%) |
| Gross loss(1) |
(28,532 |
) |
(87.7 |
%) |
(28,064 |
) |
(34.9 |
%) |
(31,286 |
) |
(31.3 |
%) |
| Job count |
1,310 |
|
|
|
1,914 |
|
|
|
2,466 |
|
|
|
| Revenue per job |
24,411 |
|
|
|
41,729 |
|
|
|
40,348 |
|
|
|
| (1) |
See the first page of this report for a description of operating income / (loss) and adjusted operating
income / (loss). Gross profit / (loss) has been presented in this table as it is the most directly comparable measure
calculated in accordance with IFRS to operating income / (loss). |
Sales Mix
| Three months ended, (unaudited) |
June 30, |
|
June 30, |
|
March 31, |
|
| |
2016 |
|
2015 |
|
2016 |
|
| % of Total Revenue |
|
|
|
|
|
|
| Fracturing |
44 |
% |
61 |
% |
63 |
% |
| Cementing |
24 |
% |
13 |
% |
26 |
% |
| Nitrogen |
14 |
% |
10 |
% |
2 |
% |
| Coil Tubing |
7 |
% |
4 |
% |
2 |
% |
| Acidizing |
4 |
% |
3 |
% |
3 |
% |
| Industrial services |
3 |
% |
6 |
% |
3 |
% |
| Other |
4 |
% |
3 |
% |
1 |
% |
| Total |
100 |
% |
100 |
% |
100 |
% |
Operations Review
Low commodity prices continued to have a significant impact on the demand for Trican's pressure pumping services in the second
quarter of 2016, as revenue decreased by 59% on a year-over-year basis. Canadian rig count decreased approximately 50% as
customers continued to reduce capital spending. As demand remains low, Canadian pricing levels continued to be negatively
impacted. During the second quarter of 2016 pricing decreased on average by 22% compared to the same period in 2015.
The Canadian operations' revenue decreased year-over-year by $47.8 million and adjusted operating loss increased $1.1 million
due to pricing reductions and a lower level of activity largely due to reduced demand for services as a result of low oil and gas
prices. The financial impact of the pricing reductions and lower activity levels was largely mitigated by further headcount
reductions and temporary salary rollbacks implemented during the second quarter.
Q2 2016 versus Q2 2015
Canadian operations revenue for the second quarter of 2016 decreased by 59% compared to the second quarter of 2015. Low demand
for our services as a result of low commodity prices led to a significant decrease in demand for our services as reflected in the
32% year-over-year decline in the job count. Revenue per job decreased by 42% due to a 22% year-over-year drop in overall
Canadian pricing and a decrease in fracturing job size which was largely due to customer mix in the second quarter. A shift in
sales mix also contributed to the decrease in revenue per job as the number of cementing jobs increased year over year while the
number of fracturing jobs significantly decreased.
Materials and operating expenses increased to 138% of revenue compared to 109% for the same period in 2015. This increase is
largely a result of the reduction in fixed costs such as personnel and base expenses only partially offsetting the significant
decline in revenue. The operating loss for the second quarter of 2016 was 47% of revenue compared to the operating loss of 14%
for the same period in 2015. These results include expenses related to workforce reductions of $4.4 million during Q2 2016 and
$0.9 million for the same period last year.
General and administrative costs were down 17% or by $0.7 million. This reduction includes a meaningful reduction in employee
and other G&A expenses partially offset by severance related to workforce reductions.
Corporate expenses for the second quarter were $13.8 million; and included $5.4 million of costs associated
with severance and non-cash expenses during the quarter. Non-cash expenses include equity-settled share based
compensation expenses and the amortization of debt issuance costs. Once these expenses are excluded, adjusted corporate
expenses totaled $8.4 million which is lower than Q2 2015 corporate expenses of approximately $11.5 million adjusted
for the same amounts. This $3.1 million reduction is largely the result of lower personnel expenses, lower professional and
legal expenses partially offset by an increase in cash-settled share based compensation, which includes restricted share
units expenses, deferred share units expenses and performance share unit expenses. Cash-settled share based compensation
largely increased due to the increase in Trican's share price during the quarter.
Q2 2016 versus Q1 2016
Canadian operations revenue in the second quarter decreased 67% compared to the first quarter of 2016. Q2 activity levels
were affected by early spring break up conditions in combination with continued reductions to capital spending that led our
customers to request further price concessions. As a result, job count decreased by 47%. Revenue per job also decreased by
39% due to a higher ratio of smaller cement jobs as compared to fracturing jobs and an average decline in pricing of 7%
from Q1 2016 levels.
As a percentage of revenue, second quarter materials and operating expenses increased to 138% compared to 111% during the
first quarter of 2016. This decrease was largely due to lower activity levels and lower pricing resulting in a decrease of
operating leverage on our fixed cost structure.
Q1 2016 corporate expenses of $12.1 million included $3.6 million of severance and non-cash expenses. As noted above, Q2 2016
corporate expenses adjusted for severance and non-cash expenses totaled $8.4 million, which is similar to Q1 2016 corporate
expenses of approximately $8.4 million when adjusted for the same expenses. Personnel expenses and professional and legal
expenses in Q2 2016 reduced by approximately $1.8 million, which was offset by an increase in cash-settled share based
expenses of $1.8 million. Cash-settled share based expenses largely increased due to the increase in Trican's share
price during the quarter.
Operating loss as a percentage of revenue was 47% during the second quarter compared to an operating loss as a percentage of
revenue of 14% in the first quarter of 2016.
Discontinued Operations
Discontinued operations include the results of regional operations in the United States, Russia, Algeria, Australia, Colombia,
Kazakhstan, and Saudi Arabia, which were suspended throughout 2015 and the first half of 2016. Additionally, discontinued
operations include the completions tools business which was sold in July, subsequent to the end of the second quarter. The
completions tools business had operations in Canada, the United States, Norway and Russia. The decisions to discontinue pressure
pumping operations in the United States, Russia, other international regions, and the completions tools business are not
anticipated to have a significant effect on the continuing operations of the Company.
Discontinued operations for the second quarter of 2016 include revenues from discontinued operations of $13.0 million compared
to $150.3 million for the same period of 2015. The operating loss from discontinued operations was $4.1 million in the second
quarter of 2016, compared to an operating loss of $16.4 million for the three months ended June 30, 2015.
During the first half of 2016, management committed to a plan to sell its international operating assets in Saudi Arabia,
Kazakhstan, and Colombia, and continued its sales efforts in Australia, resulting in assets being classified as held for sale. At
June 30, 2016, the carrying value of these assets was $69.9 million. The Company also had liabilities held for sale of $10.6
million.
Results from discontinued operations have not been included in the tables above. For information related to Trican's
discontinued operations, please see the quarterly consolidated financial statements, as at and for the three and six months ended
June 30, 2016.
| COMPARATIVE YEAR-TO-DATE INCOME STATEMENTS ($ thousands, unaudited) |
|
| |
|
|
|
|
|
|
|
|
Year- |
|
|
|
| |
|
|
|
|
|
|
|
|
Over- |
|
|
|
| |
June 30, |
|
% of |
|
June 30, |
|
% of |
|
Year |
|
% |
|
| Six months ended |
2016 |
|
Revenue |
|
2015 |
|
Revenue |
|
Change |
|
Change |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
132,366 |
|
100 |
% |
299,467 |
|
100 |
% |
(167,101 |
) |
(56 |
%) |
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Materials and operating |
155,433 |
|
117.4 |
% |
293,466 |
|
98.0 |
% |
(138,032 |
) |
(47 |
%) |
| |
General and administrative |
6,670 |
|
5.0 |
% |
8,134 |
|
2.7 |
% |
(1,464 |
) |
(18 |
%) |
| Operating loss - Canadian Operations(1) |
(29,737 |
) |
(22.4 |
%) |
(2,133 |
) |
(0.7 |
%) |
(27,604 |
) |
(1,294 |
%) |
| Corporate Expenses |
25,865 |
|
19.5 |
% |
25,945 |
|
8.7 |
% |
(79 |
) |
(0 |
%) |
| Operating loss - Continuing Operations |
(55,602 |
) |
(41.9 |
%) |
(28,078 |
) |
(9.4 |
%) |
(27,525 |
) |
(98 |
%) |
| |
Finance costs |
17,026 |
|
12.9 |
% |
18,685 |
|
6.2 |
% |
(1,659 |
) |
(9 |
%) |
| |
Depreciation and amortization |
37,735 |
|
28.5 |
% |
37,025 |
|
12.4 |
% |
710 |
|
2 |
% |
| |
Foreign exchange (gain) / loss |
2,995 |
|
2.3 |
% |
(13,716 |
) |
(4.6 |
%) |
(16,711 |
) |
(122 |
%) |
| |
Finance and other income |
(1,027 |
) |
(0.8 |
%) |
(2,230 |
) |
(0.7 |
%) |
(1,203 |
) |
(54 |
%) |
| Loss before income taxes |
(112,331 |
) |
(84.8 |
%) |
(67,842 |
) |
(22.7 |
%) |
(44,490 |
) |
(66 |
%) |
| Income tax expense/(recovery) |
(29,419 |
) |
(22.2 |
%) |
(11,408 |
) |
(3.8 |
%) |
(18,011 |
) |
(158 |
%) |
| Net loss |
(82,912 |
) |
(62.6 |
%) |
(56,434 |
) |
(18.9 |
%) |
(26,479 |
) |
(47 |
%) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted operating income / (loss) - Canadian Operations(1) |
(18,614 |
) |
(14.1 |
%) |
5,301 |
|
1.8 |
% |
(23,915 |
) |
(451 |
%) |
| Adjusted operating loss - Continuing Operations(1) |
(35,268 |
) |
(26.6 |
%) |
(16,697 |
) |
(5.6 |
%) |
(18,758 |
) |
(112 |
%) |
| Gross profit / (loss) (1) |
(59,818 |
) |
(45.2 |
%) |
(37,649 |
) |
(12.6 |
%) |
(22,169 |
) |
(59 |
%) |
| Job count |
3,776 |
|
|
|
5,525 |
|
|
|
|
|
|
|
| Revenue per job |
34,819 |
|
|
|
54,210 |
|
|
|
|
|
|
|
(1) see first page of this report
Canadian revenue for the six months ended June 30, 2016, was 56% lower than the same period in 2015. Low commodity prices over
the first half of 2016 has led to substantial declines in activity for the majority of our Canadian service lines. Average rig
count in Canada has decreased approximately 50% over the first half of 2016 compared to the first half of 2015, which compares to
the 32% decline in our job count. Revenue per job decreased by 36% as a result of changes in the sales mix towards lower
revenue per job service lines and a 8.8% reduction in pricing.
As a percentage of revenue, materials and operating expenses increased to 117% from 98% compared to the same period in 2015,
which led to an increase in the operating loss. In addition, the gross loss as a percentage of revenue was 45% compared to
gross loss as a percentage of revenue of 13% in 2015. Operating and gross loss increased due largely to the 56% decrease in
revenue that led to lower operational leverage on our fixed structure. This decline was partially offset by further pricing
concessions from our vendors and strict cost control measures carried throughout the first half of 2016.
Corporate expenses for the six months ended June 30, 2016 were $25.9 million, and included severance costs and non-cash
expenses of $9.0 million during the period. Non-cash expenses are equity-settled share based compensation expense and the
amortization of debt issuance costs. 2016 year-to-date corporate expenses adjusted for severance costs and non-cash expenses
equal $16.9 million and was $5.1 million lower than 2015 year-to-date adjusted corporate expenses of approximately $22.0 million.
This decrease is largely due to lower personnel expenses and lower professional and legal expenses partially offset by an
increase in cash-settled share based compensation expense.
LIQUIDITY, CAPITAL RESOURCES AND FUTURE OPERATIONS
Operating Activities
Funds used in continuing operations were $30.0 million during Q2 2016, compared to funds used in continuing operations of
$30.9 million for the three month period ending on June 30, 2015. The decrease in funds used in continuing operations was largely
due lower interest and taxes paid, partially offset by an increase in the cash loss generated by operations caused by low
activity levels in Q2 2016 when compared to the same period in 2015.
At June 30, 2016, Trican had working capital of $118.8 million compared to $203.1 million at the end of 2015. The decrease is
largely due to the sale of the U.S. pressure pumping operations in combination with lower levels of activity in Canada, which has
led to a significant decrease in trade accounts receivable and inventory, offset partially by a decrease in trade payables. Cash
flow generated by the reduction in working capital from continuing operations was $13.9 million during the 2016 second quarter
and was a significant source of cash flow for the Company during this period.
On June 21, 2016 Trican closed the Equity Offering. Concurrently, Trican became subject to amended terms of the Second 2016
Amended Credit Agreements with its bank lenders under its RCF and the holders of its Senior Notes whereby prior financial
covenants were waived until Q1 2017.
On July 13, 2016, Trican closed its previously announced agreement with certain subsidiaries of NOV for the sale of its
completions tools business with operations in Russia, Norway, the United States and Canada for aggregate gross proceeds of $53.5
million. The cash consideration received on closing by Trican consists of cash consideration of $30 million and working capital,
net debt and other adjustments of $2.1 million with the final working capital amounts to be determined. The share consideration
received on closing totaled $23.5 million, consisting of 558,221 NOV shares. Trican used the net cash proceeds from the
transaction to reduce its debt.
Investing Activities
Trican closed the sale of its United States pressure pumping business on March 16, 2016 to Keane Group, a privately-held
U.S.-based well completion services company ("Keane"). The transaction involved the sale of all of the pressure pumping and
select related assets, and the assumption of certain liabilities, of Trican Well Service, L.P., Trican's wholly-owned subsidiary,
for a purchase price of U.S. $200 million, or approximately $267 million, with working capital adjustments to be finalized.
Trican applied the net cash proceeds from this transaction to reduce its outstanding debt.
Capital expenditures from continuing operations for the first six months of 2016 totaled $0.2 million, compared with $8.5
million for the same period in 2015. Proceeds from the sale of Property and Equipment totaled $4.7 million during the first half
of 2016, compared with proceeds of $2.6 million for the same period in 2015. With the decline in commodity prices and North
American demand, capital expenditures will be kept to a minimum until operating conditions improve. A substantial amount of
equipment has been parked in Canada, which will reduce the amount of maintenance capital needed throughout the current downturn.
In addition, capital expansion initiatives will not be considered during the current economic environment in order to preserve
current liquidity levels. Based on existing capital budget commitments, we expect to continue to minimize capital spending during
2016 with this spending expected to be funded primarily through cash flow from operations and our Revolving Credit Facility.
Trican regularly reviews its capital equipment requirements and will continue to follow its policy of adjusting the capital
budget on a quarterly basis to reflect changing operating conditions and capital equipment needs.
Financing Activities
On June 21, 2016 Trican closed the Equity Offering of an aggregate of 43,125,000 common shares for aggregate gross proceeds of
$69 million. Concurrently, Trican became subject to amended terms of the Second 2016 Amended Credit Agreements with its bank
lenders under its revolving credit facility and the holders of its senior notes whereby prior financial covenants were waived
until Q1 2017.
Key terms under the Second 2016 Amended Credit Agreements include:
- a reduction in the availability of the RCF from $303 million to $250 million;
- a temporary cap of $175 million on the RCF until Trican has achieved EBITDA (excluding the application of the equity cure)
of at least $25 million in any quarter ended on or after September 30, 2016;
- a removal of all prior financial covenants until the first quarter of 2017;
- new leverage and interest covenant calculations as described below - the covenant thresholds remain unchanged.
Senior Notes
On July 6, 2016, Trican repaid U.S. $21.1 million, retiring in advance portions of its Series A, F, and G Senior Notes from
funds of the Equity Offering. Trican also repaid a further U.S. $1.6 million and CAD $3.7 million on August 5, 2016 to Senior
Noteholders who deferred their portion of the payout, retiring in advance portions of its Series D, G, and H Senior
Notes.
Trican will repay U.S. $8.5 million and CAD $1.9 million during the third quarter to the Senior Notes as their portion of the
proceeds from the completions tools business sale.
Revolving Credit Facility
As at June 30, 2016, Trican has a $250 million four-year extendible RCF with a syndicate of banks, in place until October 31,
2018. The RCF is secured and bears interest at the applicable Canadian prime rate, U.S. prime rate, Banker's Acceptance rate, or
at LIBOR, plus 350 to 625 basis points, dependent on certain financial ratios of the Company.
Trican made payments to the RCF on June 30th, 2016 and July 6th, 2016 as proceeds from the Equity
Offering of CAD $27 million and CAD $6 million respectively. On July 20, 2016, the Company repaid CAD $18 million to the RCF
from the proceeds of the completions tools business sale.
As at June 30, 2016, Trican had U.S. $3.8 million in letters of credit outstanding.
In the second quarter of 2016, the Company incurred $0.2 million in transaction costs related to the Second 2016 Amended
Credit Agreements and $3.0 million in transaction costs related to the Equity Offering.
Covenants
The Company is required to comply with certain covenants under the terms of the Second 2016 Amended Credit Agreements. These
covenants are applicable to the RCF and to the Senior Notes:
- no financial covenants are applicable until the first quarter of 2017;
- Trican is required to comply with the following leverage and interest coverage ratio covenants:
| |
|
|
|
|
|
|
| For the quarter ended |
|
Leverage Ratio |
|
Interest Coverage Ratio |
|
Calculation Basis |
| June 30, 2016 |
|
Not applicable |
|
Not applicable |
|
Not applicable |
| September 30, 2016 |
|
Not applicable |
|
Not applicable |
|
Not applicable |
| December 31, 2016 |
|
Not applicable |
|
Not applicable |
|
Not applicable |
| March 31, 2017 |
|
5.0x |
|
2.0x |
|
Q1 annualized |
| June 30, 2017 |
|
5.0x |
|
2.0x |
|
(Q1 X 3 + Q2) |
| September 30, 2017 |
|
5.0x |
|
2.0x |
|
((Q1 + Q3) x 3/2) + Q2 |
| December 31, 2017 |
|
4.0x |
|
2.5x |
|
Last twelve months |
| Thereafter |
|
3.0x |
|
3.0x |
|
Last twelve months |
The leverage ratio is defined as long-term debt excluding Make Whole Notes (net of the mark to market value of the cross
currency swaps) minus cash divided by adjusted EBITDA. The interest coverage ratio is defined as adjusted EBITDA divided by
interest expense minus payable in-kind interest. Certain expenses such as severance and equity-settled share-based
compensation expenses are permitted to be added back to EBITDA to arrive at adjusted EBITDA for covenant calculation
purposes. As noted above, no financial covenants are applicable to the Company for the remainder of 2016. However, for
illustrative purposes, adjusted EBITDA for covenant calculation purposes for the second quarter of 2016 would have been a loss of
$13.0 million. This amount is calculated by taking the adjusted consolidated operating loss of $19.1 million adjusted for
realized foreign exchange gain of $5.6 million and finance and other income of $0.6 million. These amounts do not include
the $20 million equity cure that may be applied to this calculation.
OUTLOOK
The rig count and well completion activity have started to trend upwards in the third quarter and we are now running at full
utilization on the 50% of our fleet that is active with only weather related delays. Visibility is limited to a few months and
although our customers are becoming more optimistic in their views on a recovery this has not yet translated into firm programs
and uncertainty still remains around what activity levels will be during the second half of the year. Despite this
uncertainty, management believes the steps taken by the Company have prepared Trican for the remainder of the
downturn. Further cost reductions have been implemented, including base closures, temporary layoffs, salary rollbacks,
reductions in our workforce and the implementation of a variable pay structure. The salary rollbacks reduced quarterly employee
costs by approximately $5.3 million, and remained in place until the end of Q2 2016. We parked additional equipment late in the
first quarter, increasing our parked equipment to approximately 50% of the Canadian fleet and do not plan to re-activate
equipment until operating margins improve. We realized a reduction of approximately $16.5 million in quarterly fixed costs
during the second quarter relative to the first quarter fixed cost structure and expect to continue to realize these savings for
the remainder of the year. In addition, we are expecting a reduction in variable costs of approximately 4 to 6 percentage points
during the second half of the year relative to the first quarter variable cost structure.
Service intensity continues to increase as our sand per well is up 79% and stages per well are up 19% year over
year. Activity remains strong in the Montney, Deep Basin, Duvernay and other liquids rich gas plays. As the price of
oil improves we anticipate an increase in Cardium, Viking and other oil related plays.
The Company experienced pricing degradation during the second quarter and we expect pricing to slowly improve from the Q2
bottom during the 2016 third quarter. We believe that we have seen the bottom of pricing levels and do not anticipate any further
degradation in pressure pumping pricing. We believe that pressure pumping pricing is at an unsustainable level and we will
work to slightly increase prices in the second half of the year if utilization remains high. We expect that improvements in
utilization from further right-sizing our fleet combined with reductions in our cost structure will lead to improved margins and
cash flow in the second half of 2016. Management will continue to be vigilant in monitoring customer activity levels and
profitability and will continue to quickly adjust as operating conditions change throughout the remainder of 2016.
We expect equipment utilization to increase during Q3 2016 due to additional equipment being parked at the end of the first
quarter combined with an expected increase in well completion activity, but still anticipate that Q3 activity will be down 30-35%
from Q1 2016 levels as the rig count is expected to remain low. Our customer base has remained strong and still has relatively
active programs planned for the remainder of 2016 and into 2017. We believe that our customers are becoming increasingly more
comfortable with current commodity price expectations and may gradually increase completion programs during the remainder of 2016
and into 2017; however, they are cautious on ramping up their plans at this point in time. As a result, Trican will remain
focused on efficiencies and costs to ensure that the Company optimizes its cost structure to the revenue generated in order to
optimize profitability and cash flow for the remainder of the year.
We will continue to reduce our costs in all areas and we are committed to taking the steps necessary to generate positive cash
flow going forward despite this difficult operating environment. Trican has committed to strengthening its balance sheet
throughout this downturn and we believe that we are well positioned to remain a segment leader in the Canadian market and thrive
when the commodities return to a more stable position.
Amendment to Debt Agreements
The closing of the Equity Offering occurred on June 21, 2016. Details of the event can be found in the "Financing
Activities" section of this document.
The funds, after transaction costs, from the Equity Offering were allocated to the RCF lenders and holders of the Senior Notes
on a 50-50 basis as required by the terms of the Second 2016 Amended Credit Agreements. As a result, Trican's net debt
(long-term debt, net of cash, restricted cash, and cross-currency swaps) totals $168.4 million as at June 30, 2016. An
additional $30 million reduction will occur during the third quarter once the proceeds from the completions tools sale are
applied to the outstanding long-term debt balances.
Trican has committed to reducing its debt levels throughout the industry downturn and after the latest application of the
Equity Offering and completions tool sale proceeds, its outstanding debt balance will have decreased by approximately $620
million since December 31, 2014. As detailed in the Covenants section, no financial covenants are applicable to the Company
for the remainder of 2016. Beginning in the first quarter of 2017 an interest coverage and leverage ratio covenant will be
applicable. Trican expects that its debt reduction efforts, combined with the equity cure provision of the Second 2016
Amended Credit Agreements and the Company's continuing focus on cost controls will allow Trican to meet its revised financial
covenants during 2017.
NON-GAAP DISCLOSURE
Operating income / (loss), adjusted operating income / (loss) and funds provided by / (used in) operations do not have any
standardized meaning as prescribed by IFRS and, therefore, are considered non-GAAP measures.
Funds provided by / (used in) operations has been reconciled to profit / (loss). Operating income / (loss) and adjusted
operating income / (loss) have been reconciled to gross profit / (loss), being the most directly comparable measures calculated
in accordance with IFRS. The reconciling items have been presented net of tax, where applicable.
| (thousands; unaudited) |
Three months ended |
|
Six months ended |
|
| |
June 30, 2016 |
|
June 30, 2015 |
|
March 31, 2016 |
|
June 30, 2016 |
|
June 30, 2015 |
|
| Funds used in operations |
($29,960 |
) |
($30,882 |
) |
($36,831 |
) |
($65,677 |
) |
($44,342 |
) |
| Charges to income not involving cash |
|
|
|
|
|
|
|
|
|
|
| |
Depreciation and amortization |
(17,615 |
) |
(18,598 |
) |
(20,120 |
) |
(37,735 |
) |
(37,025 |
) |
| |
Amortization of debt issuance costs |
(978 |
) |
(218 |
) |
(1,489 |
) |
(2,467 |
) |
(436 |
) |
| |
Equity-settled share-based compensation |
(675 |
) |
(1,294 |
) |
(639 |
) |
(1,463 |
) |
(2,819 |
) |
| |
Gain on disposal of property and equipment |
341 |
|
686 |
|
106 |
|
446 |
|
677 |
|
| |
Net finance costs |
(7,767 |
) |
(8,056 |
) |
(8,800 |
) |
(16,567 |
) |
(17,978 |
) |
| |
Unrealized foreign exchange gain / (loss) |
(5,613 |
) |
(3,214 |
) |
(779 |
) |
(6,392 |
) |
8,630 |
|
| |
Income tax recovery |
13,913 |
|
8,414 |
|
15,506 |
|
29,419 |
|
11,408 |
|
| Adjust for interest and tax outflows/(inflows) |
|
|
|
|
|
|
|
|
|
|
| |
Interest paid |
7,530 |
|
13,140 |
|
9,735 |
|
16,185 |
|
18,224 |
|
| |
Income tax (refund)/paid |
403 |
|
2,291 |
|
820 |
|
1,339 |
|
7,227 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Loss for the period (IFRS financial measure) attributed to owners of the Company |
($40,422 |
) |
($37,728 |
) |
($42,491 |
) |
($82,912 |
) |
($56,434 |
) |
| (thousands; unaudited) |
Three months ended |
|
Six months ended |
|
| |
June 30, 2016 |
|
June 30, 2015 |
|
March 31, 2016 |
|
June 30, 2016 |
|
June 30. 2015 |
|
| Consolidated gross loss (IFRS financial measure) |
($28,532 |
) |
($28,064 |
) |
($31,286 |
) |
($59,818 |
) |
($37,649 |
) |
| Add: |
|
|
|
|
|
|
|
|
|
|
| |
Administrative expenses |
(4,122 |
) |
(4,721 |
) |
(4,762 |
) |
(8,884 |
) |
(9,945 |
) |
| |
Corporate expenses |
(14,164 |
) |
(9,402 |
) |
(10,471 |
) |
(24,635 |
) |
(17,509 |
) |
| Deduct: |
|
|
|
|
|
|
|
|
|
|
| |
Corporate depreciation and amortization - administrative |
1,168 |
|
971 |
|
1,553 |
|
2,721 |
|
1,881 |
|
| |
Depreciation expense - administrative |
911 |
|
843 |
|
1,303 |
|
2,215 |
|
1,811 |
|
| |
Depreciation expense - cost of sales |
15,535 |
|
16,784 |
|
17,264 |
|
32,799 |
|
33,334 |
|
| Consolidated operating loss |
($29,204 |
) |
($23,589 |
) |
($26,399 |
) |
($55,602 |
) |
($28,078 |
) |
| Deduct: |
|
|
|
|
|
|
|
|
|
|
| |
Severance costs |
8,382 |
|
929 |
|
7,899 |
|
16,282 |
|
7,424 |
|
| |
Professional fees related to restructuring |
77 |
|
- |
|
45 |
|
122 |
|
700 |
|
| |
Amortization of debt issuance costs |
978 |
|
218 |
|
1,489 |
|
2,467 |
|
436 |
|
| |
Equity-settled share-based compensation |
675 |
|
1,294 |
|
789 |
|
1,463 |
|
2,819 |
|
| Adjusted consolidated operating loss |
($19,092 |
) |
($21,148 |
) |
($16,176 |
) |
($35,268 |
) |
($16,697 |
) |
| |
|
|
|
|
|
|
|
|
|
|
| (thousands; unaudited) |
Three months ended |
|
Six months ended |
|
| |
June 30, 2016 |
|
June 30, 2015 |
|
March 31, 2016 |
|
June 30, 2016 |
|
June 30. 2015 |
|
| Consolidated gross loss (IFRS financial measure) |
($28,532 |
) |
($28,064 |
) |
($31,286 |
) |
($59,818 |
) |
($37,649 |
) |
| Deduct: |
|
|
|
|
|
|
|
|
|
|
| |
Corporate expense - cost of sales |
893 |
|
4,257 |
|
3,234 |
|
4,127 |
|
10,503 |
|
| Canadian gross loss (IFRS financial measure) |
($27,639 |
) |
($23,807 |
) |
($28,052 |
) |
($55,691 |
) |
($27,146 |
) |
| |
|
|
|
|
|
|
|
|
|
|
| Add: |
|
|
|
|
|
|
|
|
|
|
| |
Administrative expenses |
(4,122 |
) |
(4,721 |
) |
(4,762 |
) |
(8,884 |
) |
(9,945 |
) |
| |
Corporate depreciation expense - cost of sales |
(88 |
) |
(92 |
) |
(88 |
) |
(176 |
) |
(187 |
) |
| Deduct: |
|
|
|
|
|
|
|
|
|
|
| |
Depreciation expense - administrative |
911 |
|
843 |
|
1,303 |
|
2,215 |
|
1,811 |
|
| |
Depreciation expense - cost of sales |
15,535 |
|
16,784 |
|
17,264 |
|
32,799 |
|
33,334 |
|
| Canadian operating loss |
($15,402 |
) |
($10,994 |
) |
($14,334 |
) |
($29,737 |
) |
($2,133 |
) |
| |
|
|
|
|
|
|
|
|
|
|
| Deduct: |
|
|
|
|
|
|
|
|
|
|
| |
Severance costs (3) |
4,444 |
|
929 |
|
6,186 |
|
10,630 |
|
6,452 |
|
| |
Equity-settled share-based compensation(3) |
219 |
|
451 |
|
274 |
|
493 |
|
982 |
|
| Adjusted Canadian operating loss |
($10,739 |
) |
($9,614 |
) |
($7,874 |
) |
($18,614 |
) |
$5,301 |
|
(3) Exclusive of corporate expenses
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking information and financial outlook based on Trican's current expectations,
estimates, projections and assumptions that were made by the Company in light of information available at the time the statement
was made. Forward-looking information and financial outlook that address expectations or projections about the future, and other
statements and information about the Company's strategy for growth, expected and future expenditures, costs, operating and
financial results, future financing and capital activities are forward-looking statements. Some forward-looking information and
financial outlook are identified by the use of terms and phrases such as "anticipate", "achieve", "estimate", "expect",
"intend", "plan", "planned", and other similar terms and phrases. This forward-looking information and financial outlook speak
only as of the date of this document and we do not undertake to publicly update this forward-looking information and financial
outlook except in accordance with applicable securities laws. This forward-looking information and financial outlook include,
among others:
- Anticipated adjustments to our active equipment fleet, and related adjustments to cost structure;
- Anticipated industry activity levels in jurisdictions of the Company's operations for the remainder of 2016,
as well as customer work programs and equipment utilization levels;
- Anticipated commodity price levels and rig count information;
- Anticipated compliance with debt and other covenants under the Second 2016 Amended Credit Agreements;
- Expectations regarding reduction of the Company's debt, and success of its cost control measures and further
cost reductions;
- Expectations regarding capital spending during 2016;
- Expectations regarding the Company's financial results, working capital levels, liquidity and profits;
- Expectations regarding the seasonal uptick in activity following spring breakup;
- Expectations regarding pricing of the Company's services;
- Expectations regarding the impact of discontinued operations in various international regions on the
Company going forward;
- Anticipated ability of the Company to meet foreseeable funding requirements.
Forward-looking information and financial outlook is based on current expectations, estimates, projections and assumptions,
which we believe are reasonable but which may prove to be incorrect. Trican's actual results may differ materially from those
expressed or implied and therefore such forward-looking information and financial outlook should not be unduly relied upon. In
addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among
other things; Trican's ability to continue its operations for the foreseeable future and to realize its assets and discharge its
liabilities and commitments in the normal course of business; Trican being compliant with debt and other covenants; industry
activity levels, including its effect of reducing the Company's capital and maintenance expenditures; the completion of currently
planned work activities by our customers; the general stability of the economic and political environment; effect of market
conditions on demand for the Company's products and services and pricing that can be obtained for those products and services;
the ability to achieve planned cost reductions; the ability to obtain qualified staff, equipment and services in a timely and
cost efficient manner; the ability to operate its business in a safe, efficient and effective manner; the performance and
characteristics of various business segments; the effect of current plans; future oil and natural gas prices; currency, exchange
and interest rates; the regulatory framework regarding royalties, taxes and environmental matters; changes in competition and
pricing in the oilfield service business; and unanticipated costs and liabilities.
Forward-looking information and financial outlook is subject to a number of risks and uncertainties, which could cause actual
results to differ materially from those anticipated. These risks and uncertainties include: failure to meet the agreed upon
covenants with the Company's lenders; fluctuating prices for crude oil and natural gas; changes in drilling activity; general
global economic, political and business conditions; changes in interest rates; competitive and business conditions in the markets
where the Company operates; weather conditions; regulatory changes; the successful exploitation and integration of technology;
customer acceptance of technology; success in obtaining and defending issued patents; the potential development of competing
technologies by market competitors; and availability of products, qualified personnel, manufacturing capacity and raw materials.
The foregoing important factors are not exhaustive. In addition, actual results could differ materially from those anticipated in
forward-looking information provided herein as a result of the risk factors set forth under the section entitled "Risks Factors"
in our Annual Information Form dated March 29, 2016, and under the section entitled "Business Risks" in our management's
discussion and analysis for the year ended December 31, 2015. Readers are also referred to the risk factors and assumptions
described in other documents filed by the Company from time to time with securities regulatory authorities.
Trican undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions
should change except as required by law. The reader is cautioned not to place undue reliance on forward looking information.
Additional information regarding Trican including Trican's most recent annual information form is available under Trican's
profile on SEDAR (www.sedar.com).
| CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION |
|
|
| (Stated in thousands $C; unaudited) |
June 30, 2016 |
|
December 31, 2015 |
| ASSETS |
|
|
|
| Current assets |
|
|
|
| |
Cash and cash equivalents |
$22,159 |
|
$49,117 |
| |
Restricted cash and cash equivalents |
38,740 |
|
- |
| |
Trade and other receivables |
54,863 |
|
203,214 |
| |
Current tax assets |
16,051 |
|
1,088 |
| |
Inventory |
34,567 |
|
153,786 |
| |
Prepaid expenses |
8,172 |
|
19,072 |
| |
Currency derivatives |
- |
|
17,890 |
| |
Assets held for sale |
69,853 |
|
7,092 |
| |
|
244,405 |
|
451,259 |
| Property and equipment |
472,754 |
|
826,300 |
| Intangible assets |
637 |
|
29,100 |
| Investments in Keane |
84,331 |
|
- |
| Currency derivatives |
15,409 |
|
19,298 |
| Deferred tax assets |
- |
|
289 |
| Other assets |
3,142 |
|
3,573 |
| Goodwill |
19,251 |
|
19,251 |
| |
|
$839,929 |
|
$1,349,070 |
| |
|
|
|
|
| LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
| Current liabilities |
|
|
|
| |
Trade and other payables |
$46,312 |
|
$147,851 |
| |
Current tax liabilities |
- |
|
24 |
| |
Current portion of loans and borrowings |
68,740 |
|
100,306 |
| |
Liabilities held for sale |
10,595 |
|
- |
| |
|
125,647 |
|
248,181 |
| |
|
|
|
|
| Loans and borrowings |
175,995 |
|
469,295 |
| Deferred tax liabilities |
28,807 |
|
79,593 |
| |
|
|
|
|
| Shareholders' equity |
|
|
|
| |
Share capital |
636,806 |
|
570,337 |
| |
Contributed surplus |
73,416 |
|
72,082 |
| |
Accumulated other comprehensive (loss) / income |
(376) |
|
65,985 |
| |
Deficit |
(198,926) |
|
(154,709) |
| Total equity attributable to equity holders of the Company |
510,920 |
|
553,695 |
| Non-controlling interest |
(1,440) |
|
(1,694) |
| |
|
$839,929 |
|
$1,349,070 |
| |
| |
|
|
|
| CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
|
| |
Three Months
Ended June 30, |
|
Six Months
Ended June 30, |
|
| (Stated in thousands $C, except per share amounts; unaudited) |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
| Continuing operations |
|
|
|
|
|
|
|
|
| Revenue |
$32,518 |
|
$80,329 |
|
$132,366 |
|
$299,467 |
|
| Cost of sales |
61,050 |
|
108,393 |
|
192,184 |
|
337,116 |
|
| Gross loss |
(28,532 |
) |
(28,064 |
) |
(59,818 |
) |
(37,649 |
) |
| Administrative expenses |
18,287 |
|
14,123 |
|
33,519 |
|
27,454 |
|
| Other income |
(310 |
) |
(1,069 |
) |
(568 |
) |
(1,523 |
) |
| Results from operating activities |
(46,509 |
) |
(41,118 |
) |
(92,769 |
) |
(63,580 |
) |
| Finance income |
(249 |
) |
(329 |
) |
(459 |
) |
(707 |
) |
| Finance costs |
8,016 |
|
8,384 |
|
17,026 |
|
18,685 |
|
| Foreign exchange loss / (gain) |
59 |
|
(3,031 |
) |
2,995 |
|
(13,716 |
) |
| Loss before income tax |
(54,335 |
) |
(46,142 |
) |
(112,331 |
) |
(67,842 |
) |
| Income tax recovery |
(13,913 |
) |
(8,414 |
) |
(29,419 |
) |
(11,408 |
) |
| Loss from continuing operations |
($40,422 |
) |
($37,728 |
) |
($82,912 |
) |
($56,434 |
) |
| |
|
|
|
|
|
|
|
|
| Discontinued operations |
|
|
|
|
|
|
|
|
| Net (loss) / profit from discontinued operations, net of taxes |
(24,508 |
) |
(245,841 |
) |
38,744 |
|
(263,372 |
) |
| Loss for the period |
($64,930 |
) |
($283,569 |
) |
($44,168 |
) |
($319,806 |
) |
| |
|
|
|
|
|
|
|
|
| (Loss) / earnings per share - basic and diluted |
|
|
|
|
|
|
|
|
| |
Continuing operations |
($0.26 |
) |
($0.25 |
) |
($0.55 |
) |
($0.38 |
) |
| |
Discontinued operations |
($0.16 |
) |
($1.65 |
) |
$0.26 |
|
($1.76 |
) |
| |
Net loss |
($0.42 |
) |
($1.90 |
) |
($0.29 |
) |
($2.14 |
) |
| Weighted average shares outstanding - basic and diluted |
153,843 |
|
148,918 |
|
151,381 |
|
148,936 |
|
| |
|
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS |
|
| |
Three Months
Ended June 30, |
|
Six Months
Ended June 30, |
|
| (Stated in thousands $C; unaudited) |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
| Cash flow from / (used in): |
|
|
|
|
|
|
|
|
| Operations |
|
|
|
|
|
|
|
|
| |
Loss from continuing operations |
($40,422 |
) |
($37,728 |
) |
($82,912 |
) |
($56,434 |
) |
| |
Charges to income not involving cash: |
|
|
|
|
|
|
|
|
| |
|
Depreciation and amortization |
17,615 |
|
18,598 |
|
37,735 |
|
37,025 |
|
| |
|
Amortization of debt issuance costs |
978 |
|
218 |
|
2,467 |
|
436 |
|
| |
|
Share-based compensation expense |
675 |
|
1,294 |
|
1,463 |
|
2,819 |
|
| |
|
Gain on disposal of property and equipment |
(341 |
) |
(686 |
) |
(446 |
) |
(677 |
) |
| |
|
Net finance costs |
7,767 |
|
8,056 |
|
16,567 |
|
17,978 |
|
| |
|
Unrealized foreign exchange loss / (gain) |
5,613 |
|
3,214 |
|
6,392 |
|
(8,630 |
) |
| |
|
Income tax recovery |
(13,913 |
) |
(8,414 |
) |
(29,419 |
) |
(11,408 |
) |
| |
Change in inventories |
1,423 |
|
(2,717 |
) |
5,973 |
|
9,799 |
|
| |
Change in trade and other receivables |
20,441 |
|
65,611 |
|
117,451 |
|
177,453 |
|
| |
Change in prepaid expenses |
(1,175 |
) |
(3,293 |
) |
314 |
|
(2,840 |
) |
| |
Change in trade and other payables |
(6,514 |
) |
(32,616 |
) |
(29,598 |
) |
(94,267 |
) |
| |
Interest paid |
(7,530 |
) |
(13,140 |
) |
(16,185 |
) |
(18,224 |
) |
| |
Income taxes paid |
(403 |
) |
(2,291 |
) |
(1,339 |
) |
(7,227 |
) |
| |
Continuing operations |
(15,786 |
) |
(3,894 |
) |
28,463 |
|
45,803 |
|
| |
Discontinued operations |
14,748 |
|
17,918 |
|
(78,681 |
) |
69,075 |
|
| |
Cash flow (used in) / from operating activities |
(1,038 |
) |
14,024 |
|
(50,218 |
) |
114,878 |
|
| |
|
|
|
|
|
|
|
|
| Investing |
|
|
|
|
|
|
|
|
| |
Proceeds from a loan to unrelated third-party |
406 |
|
1,169 |
|
884 |
|
2,622 |
|
| |
Purchase of property and equipment |
(180 |
) |
(5,903 |
) |
(243 |
) |
(8,531 |
) |
| |
Proceeds from the sale of property and equipment |
4,269 |
|
1,926 |
|
4,749 |
|
2,567 |
|
| |
Continuing operations |
4,495 |
|
(2,808 |
) |
5,390 |
|
(3,342 |
) |
| |
Consideration on sale of discontinued operations |
- |
|
- |
|
264,520 |
|
- |
|
| |
Discontinued operations |
(434 |
) |
(7,016 |
) |
2,605 |
|
(10,959 |
) |
| |
Cash flow from / (used in) investing activities |
4,061 |
|
(9,824 |
) |
272,515 |
|
(14,301 |
) |
| |
|
|
|
|
|
|
|
|
| Financing |
|
|
|
|
|
|
|
|
| |
Net proceeds from issuance of share capital |
66,315 |
|
- |
|
66,340 |
|
- |
|
| |
Repurchase and cancellation of shares under NCIB |
- |
|
- |
|
- |
|
(1,008 |
) |
| |
Draw from / (Repayment of) Revolving Credit Facility |
(16,082 |
) |
(27,566 |
) |
(80,014 |
) |
(125,082 |
) |
| |
Proceeds from currency derivatives |
14,066 |
|
- |
|
14,066 |
|
- |
|
| |
Repayment of senior notes |
(64,041 |
) |
- |
|
(209,970 |
) |
- |
|
| |
Restricted cash on equity issuance |
(38,740 |
) |
- |
|
(38,740 |
) |
- |
|
| |
Dividend paid |
- |
|
- |
|
- |
|
(22,366 |
) |
| |
Continuing operations |
(38,482 |
) |
(27,566 |
) |
(248,318 |
) |
(148,456 |
) |
| |
Discontinued operations |
- |
|
- |
|
- |
|
- |
|
| |
Cash flow (used in) / from financing activities |
(38,482 |
) |
(27,566 |
) |
(248,318 |
) |
(148,456 |
) |
| |
|
|
|
|
|
|
|
|
| Effect of exchange rate changes on cash |
(47 |
) |
(143 |
) |
(937 |
) |
3,010 |
|
| (Decrease) / increase of cash and cash equivalents: |
|
|
|
|
|
|
|
|
| |
Continuing operations |
(49,773 |
) |
(37,641 |
) |
(214,465 |
) |
(85,934 |
) |
| |
Discontinued operations |
14,267 |
|
14,132 |
|
187,507 |
|
41,065 |
|
| Cash and cash equivalents, beginning of period |
57,665 |
|
61,063 |
|
49,117 |
|
82,423 |
|
| Cash and cash equivalents, end of period |
$22,159 |
|
$37,554 |
|
$22,159 |
|
$37,554 |
|
INCOME TAXES
| Six months ended June 30, |
2016 |
|
2015 |
|
| Current income tax expense / (recovery) |
$1,110 |
|
($10,838 |
) |
| Deferred income tax recovery |
($30,529 |
) |
(570 |
) |
| |
($29,419 |
) |
($11,408 |
) |
The net income tax provision differs from that expected by applying the combined federal and provincial income tax rate of
26.90% (2015 - 26.09%) to income before income taxes for the following reasons:
| Six months ended June 30, |
2016 |
|
2015 |
|
| Expected combined federal and provincial income tax |
($30,217 |
) |
($17,700 |
) |
| Non-deductible expenses |
366 |
|
211 |
|
| Statutory and other rate differences |
(3,832 |
) |
(1,910 |
) |
| Stock-based compensation |
354 |
|
736 |
|
| Unrecognized current year losses |
3,979 |
|
2,746 |
|
| Changes to deferred income tax rates |
- |
|
4,465 |
|
| Other |
(69 |
) |
44 |
|
| |
($29,419 |
) |
($11,408 |
) |
Headquartered in Calgary, Alberta, Trican provides a comprehensive array of specialized products, equipment and services
that are used during the exploration and development of oil and gas reserves.
Please visit our website at www.tricanwellservice.com