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Xtreme Reports Record Quarterly and Full Year 2012 Financial Results and Appointment of CEO

CALGARY, ALBERTA -- (Marketwire) -- 03/06/13 -- Xtreme Drilling and Coil Services (TSX:XDC) announce fourth quarter 2012 and full year operating results. It is anticipated that filing will take place on SEDAR of audited Consolidated Financial Statements and Notes to the audited Consolidated Financial Statements and Management's Discussion and Analysis for the twelve months ended December 31, 2012 on Friday, March 8, 2013.

Xtreme has scheduled a conference call to discuss results with investors, analysts, and stakeholders on Thursday, March 7, 2013, beginning promptly at 9:00 am MT (10:00 am CT, 11:00 am ET).

Tom Wood, Chief Executive Officer, will host the conference call with participation from Matt Porter, Chief Financial Officer.

Conference operator dial-in numbers

To participate in the conference call, please dial in as follows approximately ten minutes before the start time in your time zone.

+1 866-225-2055 (North America Toll-Free) or +1 416-340-8410 (Alternate)

An audio replay of the call will be available until Thursday, March 14, 2013. To access the replay, call +1 800-408-3053 or +1 905-694-9451 and enter pass code 9289172.


--  In light of the dramatic turnaround in financial and operating
    performance, the Board of Directors has removed the interim designation
    and appointed Tom Wood as Chief Executive Officer and suspended the CEO
    search. As a founding shareholder Mr. Wood has been involved in the
    reorganization of the Drilling Segment which has led to significantly
    improved profitability. In addition, Mr. Wood led the restructuring
    effort to turn the Coil Services segment to profitability over the past
    six months. While the financial performance has recovered significantly
    from the second quarter 2012 low, the Company is focused on maintaining
    this momentum to attain a profitability level in the top quartile among
    peers, by year end. The executive team is fully dedicated to achieving
    this target while focusing on strengthening the balance sheet and
    liquidity generation to drive organic growth. 

--  Record adjusted EBITDA of $14.8 million in the fourth quarter of 2012,
    an increase of 44% over the previous quarter and 140% over the fourth
    quarter of 2011. The record quarter was driven by strong performance in
    both the Drilling and Coil Services segments. The US operations for both
    the Drilling and Coil Services segments recognized a significant
    increase in operating margin due to recent cost controls and process
    improvements. For the year ended December 31, 2012, adjusted EBITDA
    increased to $39.7 million as compared to $21.9 million for the prior

--  Record revenue of $50.4 million in the fourth quarter of 2012, an
    increase of 6% over the previous quarter and 61% over the fourth quarter
    of 2011. For the year ended December 31, 2012 the Company recognized
    revenue of $174.2 million, an increase of 67% or $70.2 million from
    2011. In addition, operating days for 2012 increased to 6,550 as
    compared to 4,602 in 2011. The increase in revenue for the year was a
    function of 42% more operating days in 2012 and an increase in average
    revenue per day to $26,588 from $22,594 in 2011. 

--  The Coil Services segment (includes U.S. and Saudi Arabia XSR) increased
    operating profit to $2.6 million in the fourth quarter of 2012 as
    compared to a loss in the previous quarter of $260 thousand. This was
    driven by the US division which generated an operating profit on strong
    cost controls and operational reorganization as well as the Saudi Arabia
    division which increased profitability on stronger utilization for the

--  Completed aggressive capital expansion program in which the Company
    built eight XDR 500 drilling rigs, converted three XDR 400 rigs to XDR
    500 rigs and built five new XSR large diameter coiled tubing units. With
    the subsequent sale of one of the new-build XSR rigs in the first
    quarter of 2013, the Company currently has 21 XDR rigs and 7 XSR units
    available to work. 

--  Renewed the $150 million credit facility with the existing syndicate of
    banks at year end. Finished 2012 with $142 million in net debt (total
    debt less cash) and a funded debt to EBITDA ratio of 3.63. This marks
    significant improvement from the peak funded debt to EBITDA ratio of
    5.73 at June 30, 2012. With the continued focus on improving the balance
    sheet, the Company is committed to aggressively bring down leverage
    ratios over the coming quarters. Free cash flow generation should be
    significant during 2013 with planned maintenance capital expenditures
    currently at $15 million. This is down significantly from total capital
    expenditures of $115 million in 2011 and $112 million in 2012.
    Subsequent to quarter end, the Company paid down $5 million on the $10
    million HSBC demand note issued in 2012. The Company anticipates paying
    down the remaining $5 million by the April 30, 2013 due date. 

--  Xtreme recognized an impairment loss on the prototype XSR unit 111
    during the fourth quarter of $3.1 million. This relates to the sale of
    the unit to a group overseas. The sale closed in February 2013. It was
    required that the Company move the asset to available for sale, as it
    was contracted at year end. Additionally, the Company recognized
    approximately $2 million in additional depreciation expense in the
    fourth quarter related to a change in accounting estimate for
    depreciation of spares. 

Selected Quarterly Financial Information

Three months ended    Dec 31, 2012 Sep 30, 2012  Jun 30, 2012   Mar 31, 2012
Revenue                     50,376       47,658        38,851         37,265
Adjusted EBITDA             14,803       10,259         7,168          7,535
Adjusted EBITDA as a                                                        
 percentage of                                                              
 Revenue                        29           22            18             20
Adjusted EBITDA per                                                         
 share (1) - basic                                                          
 ($)                          0.18         0.16          0.11           0.11
Net income (loss)            4,430       (3,744)       (2,603)           930
Net income (loss)                                                           
 per share - basic                                                          
 ($)                          0.05        (0.06)        (0.04)          0.01
Capital assets             408,573      418,628       418,371        372,834
Total assets               494,142      501,945       502,868        455,505
Cash                         5,177       18,397         6,979          3,481
Debt, including                                                             
 operating line            146,922      138,156       151,018        117,490
Operating days               1,891        1,742         1,494          1,423
Utilization % -                                                             
 Drilling Services              85           86            74             84
Utilization % - Coil                                                        
 Services                       47           36            57             56
Utilization % -                                                             
 Total                          77           74            70             79
Weighted average                                                            
 rigs in service              26.8         26.0          23.4           19.8
Total rigs, end of                                                          
 quarter                        27           26            25             22

Excerpt from Management's Discussion and Analysis for the twelve months ended December 31, 2012


Xtreme Drilling and Coil Services Corp. was founded with the mission of redefining what is possible in oil and gas exploration and production, through a fierce dedication to driving innovation. Since 2005, Xtreme has introduced numerous breakthrough technologies for both drilling and coiled tubing services. These advancements have enabled Xtreme to consistently set new performance benchmarks within the industry.

In 2012, Xtreme put that technology to work on a far greater scale than ever before. With the completion of an aggressive capital expansion program, the company dramatically grew the fleet of XDR drilling rigs and XSR coiled tubing units-nearly doubling its size in a span of 18 months.

At December 31, 2012 Xtreme had 19 of 21 XDR drilling rigs and 4 of 7 XSR coiled tubing units working. As previously announced, the 20th XDR drilling rig went to work during the first week of 2013. The final new-build XDR rig went to work in October of 2012 and thus marked the end of the ambitious capital expansion program. The total capital spend was over $200 million and included eight XDR 500 rigs, three conversions of XDR 400 rigs to XDR 500 rigs and five new large diameter coiled tubing units.

Xtreme now operates one of the youngest high specification fleets in the land drilling industry, with an average age of less than three years old. The company believes the fleet is ideally suited to excel in today's major North American oil and natural gas liquids resource plays. Accordingly, all of these tier 1 new-build rigs were contracted to operators in the Bakken/Three Forks play in North Dakota and the DJ Basin/Niobrara play in Colorado. The company expects this focus on oil and liquids-rich gas production will increase utilization, day rates, and returns relative to competitors in the years to come.

Xtreme began 2012 with three XSR coiled tubing units-two operating in Saudi Arabia, where they perform deep horizontal re-entry drilling. In 2012 the company grew the XSR coiled tubing service offering with the addition of five new-build units. With the deepest reach in the marketplace and a proprietary AC electric technology, the newest XSR units enable operators in North American resource plays to go deeper with their wells and as such realize higher initial production rates and ultimate recoveries. Two of the XSR units are currently working in the Eagle Ford shale of South Texas. These units are primarily performing post-frac plug mill outs and pre-frac well preps. However, this technology also has exciting potential as the market for new fracing technology grows.

Today, Xtreme is at an important inflection point. As production continues to soar in US resource plays, the substantial investment in fleet expansion and R&D gives Xtreme a strong platform to capitalize upon as the company embarks on the current initiative: optimizing operations to realize the full potential of the expanded fleet. With the bold expansion of the past 18 months complete for now, the company is transitioning to focused execution.

The initial improvement in operating performance was evidenced throughout the second half of 2012. Adjusted EBITDA margins hit a low point in the second quarter of 2012 at 18.5% and increased to 29.2% by the fourth quarter of the year. The company anticipates that continued efforts to improve operations can result in margins that are consistently near the upper end of the industry range. Additionally, the company is working to move additional rigs into the Middle East market where there is a strong performance track record. It is anticipated that the two idle XSR units in the Eagle Ford will begin operations in Q2 and Q3 2013 respectively.

Finally, the company is committed to increasing free cash flow and reducing leverage, which was utilized primarily to finance the aggressive growth of the past 18 months. With planned maintenance capex of $15 million in 2013 the company anticipates being able to significantly decrease debt over the course of the year.

Xtreme Drilling and Coil Services Corp.                                     
Formerly known as Xtreme Coil Drilling Corp.                                
Consolidated Statements of Financial Position                               
(in thousands of Canadian dollars)                                          
                                 Dec 31, 2012   Dec 31, 2011    Jan 1, 2011 
Current assets                                                              
 Cash and cash equivalents              5,177          5,892          2,994 
 Accounts receivable                   43,669         45,353         37,083 
 Other receivables                         35          1,906          2,200 
 Assets held for sale                   9,308              -              - 
 Prepaid expenses and other             2,021          2,090          2,551 
 Income tax recoverable                   391            934          1,967 
 Inventory                              5,746          5,863          5,402 
                                       66,347         62,038         52,197 
Non-current assets                                                          
Deferred tax asset                     15,002          7,566          4,265 
Property and equipment                408,573        341,198        233,193 
Intangible assets                       4,220          4,523          4,793 
Total Assets                          494,142        415,325        294,448 
Liabilities and Shareholders'                                               
Current liabilities                                                         
 Bank indebtedness                      7,834              -          8,317 
 Accounts payable and accrued                                               
  liabilities                          26,642         26,175         10,097 
 Current portion of long-term                                               
  debt                                 13,361            500         12,224 
                                       47,837         26,675         30,638 
Long-term liabilities                                                       
Long-term debt                        125,727         80,937         18,952 
Total Liabilities                     173,564        107,612         49,590 
Shareholders' equity                                                        
Share capital                         327,197        310,296        253,765 
Share option reserve                   11,572         10,338          8,585 
Accumulated deficit                    (5,312)        (4,325)        (4,496)
Foreign currency translation                                                
 reserve                              (12,879)        (8,596)       (12,996)
Total Shareholders' Equity            320,578        307,713        244,858 
Total Liabilities and                                                       
 Shareholders' Equity                 494,142        415,325        294,448 
Xtreme Drilling and Coil Services Corp.                                     
Formerly known as Xtreme Coil Drilling Corp.                                
Consolidated Statements of (Loss) Income                                    
For the years ended December 31, 2012 and 2011                              
(in thousands of Canadian dollars, except share and per share data)         
                                                        2012           2011 
Revenue                                              174,150        103,982 
  Operating expenses                                 125,528         74,742 
  General and administrative expenses                  9,147          9,622 
  Depreciation of property and equipment              26,975         11,991 
  Amortization of intangibles                            303            304 
  Stock-based compensation                             1,229          1,826 
  Foreign exchange (gain) loss                        (1,792)         1,790 
  Loss on sale of equipment                              257            159 
  Impairment of accounts receivable                    6,235              - 
  Impairment of assets held for sale                   3,133              - 
  Loss on damage of property and equipment               538              - 
  Other income (expense)                                 175            (43)
  Interest expense                                     7,919          2,532 
(Loss) Income before tax for the year                 (5,497)         1,059 
Tax expense (recovery)                                                      
  Current                                              2,666          2,571 
  Deferred                                            (7,176)        (1,683)
Total tax (recovery) expense                          (4,510)           888 
Net (loss) income for the year                          (987)           171 
Net (loss) income per common share                                          
  - basic                                              (0.01)          0.00 
  - diluted                                            (0.01)          0.00 
Weighted average number of                                                  
common shares                                                               
  - basic                                         69,618,457     60,481,719 
  - diluted                                       69,759,835     61,298,859 
Xtreme Drilling and Coil Services Corp.                                     
Formerly known as Xtreme Coil Drilling Corp.                                
Consolidated Statements of Comprehensive (Loss) Income                      
For the years ended December 31, 2012 and 2011                              
(in thousands of Canadian dollars)                                          
                                                          2012          2011
Net (loss) income for the year                            (987)          171
Other comprehensive (loss) income                                           
  Unrealized (loss) gain on translating financial                           
   statements of foreign operations                     (4,283)        4,400
Comprehensive (loss) income for the year                (5,270)        4,571
Xtreme Drilling and Coil Services Corp                                      
Formerly known as Xtreme Coil Drilling Corp.                                
Consolidated Statements of Changes in Shareholders' Equity                  
For the years ended December 31, 2012 and 2011                              
(in thousands of Canadian dollars)                                          
                                Share                currency         Total 
                        Share  option Accumulated translation shareholders' 
                      capital reserve     deficit     reserve        equity 
Balance at January 1,                                                       
 2011                 253,765   8,585      (4,496)    (12,996)      244,858 
Net income for the                                                          
 year                       -       -         171           -           171 
Other comprehensive                                                         
Currency translation                                                        
 differences                -       -           -       4,400         4,400 
Total comprehensive                                                         
 income                     -       -         171       4,400         4,571 
Employee share option                                                       
Value of employees                                                          
 services                 133   1,867           -           -         2,000 
Proceeds from shares                                                        
 issued                56,398    (114)          -           -        56,284 
Total transactions                                                          
 with owners           56,531   1,753           -           -        58,284 
Balance at December                                                         
 31, 2011             310,296  10,338      (4,325)     (8,596)      307,713 
Balance at January 1,                                                       
 2012                 310,296  10,338      (4,325)     (8,596)      307,713 
Net loss for the year       -       -        (987)          -          (987)
Other comprehensive                                                         
Currency translation                                                        
 differences                -       -           -      (4,283)       (4,283)
Total comprehensive                                                         
 loss                       -       -        (987)     (4,283)       (5,270)
Employee share option                                                       
Value of employee                                                           
 services                 105   1,339           -           -         1,444 
Proceeds from shares                                                        
 Issued, net of share                                                       
 issue costs           16,796    (105)          -           -        16,691 
Total transactions                                                          
 with owners           16,901   1,234           -           -        18,135 
Balance at December                                                         
 31, 2012             327,197  11,572      (5,312)    (12,879)      320,578 
Xtreme Drilling and Coil Services Corp.                                     
Formerly known as Xtreme Coil Drilling Corp.                                
Consolidated Statements of Cash Flows                                       
For the years ended December 31, 2012 and 2011                              
(in thousands of Canadian dollars)                                          
                                                          2012         2011 
Cash flow provided by (used in):                                            
Operating activities                                                        
Net (loss) income for the year                            (987)         171 
Items not affecting cash:                                                   
  Depreciation and amortization                         27,278       12,295 
  Stock-based compensation                               1,229        1,826 
  Loss on sale of equipment                                257          159 
  Interest expense                                       6,963        2,326 
  Amortization of debt issuance costs                      966          206 
  Unrealized foreign exchange (gain) loss               (1,792)       1,790 
  Deferred tax (recovery) expense                       (7,176)       1,683 
  Impairment on accounts receivable                      6,235            - 
  Loss on damage                                           538            - 
  Impairment on assets held for sale                     3,133            - 
  Interest paid                                         (6,491)      (1,534)
  Changes in items of working capital                   (1,692)       8,343 
Net cash generated from operating activities            28,461       27,265 
Financing activities                                                        
Proceeds from shares issued, net of issue costs         16,192       55,304 
Proceeds from exercise of stock options                    255          783 
Proceeds from long-term debt                            66,260      145,490 
Repayment of long-term debt                             (5,466)     (95,963)
Proceeds from (repayment of) operating facility          7,834       (8,317)
Debt issuance cost                                      (1,459)      (1,070)
  Net cash generated from financing activities          83,616       96,227 
Investing activities                                                        
Proceeds from sale of equipment                            681          478 
Capital expenditures                                  (112,260)    (115,340)
Increase in intangibles                                      -          (34)
  Net cash used in investing activities               (111,579)    (114,896)
Effect of exchange rate changes on cash and cash                            
 equivalents                                            (1,213)      (5,698)
(Decrease) Increase in cash and cash equivalents          (715)       2,898 
Cash and cash equivalents - beginning of year            5,892        2,994 
Cash and cash equivalents - end of year                  5,177        5,892 
Adjusted EBITDA                                                             
For the three and twelve months ended December 31, 2011 and 2010            
(in thousands of Canadian dollars)                                          
                             Three months ended         Twelve months ended 
                     Dec 31, 2012  Dec 31, 2011  Dec 31, 2012  Dec 31, 2011 
Net income (loss)           4,430        (1,092)         (987)          171 
Tax (recovery)                                                              
 expense                   (6,699)        1,400        (4,510)          888 
Interest expense            2,305           963         7,919         2,532 
Loss on sale of                                                             
 equipment                    114           212           257           159 
Other expense                                                               
 (income)                     175            (1)          175           (43)
Loss on damage                  -             -           538             - 
Impairment of                                                               
 accounts receivable            -             -         6,235             - 
Impairment on sale                                                          
 of rig                     3,133             -         3,133             - 
Foreign exchange                                                            
 loss (gain)                  935        (1,153)       (1,792)        1,790 
 compensation                  70           278         1,229         1,826 
Amortization of                                                             
 intangibles                   75            76           303           304 
Depreciation of                                                             
 property and                                                               
 equipment                  9,975         3,655        26,975        11,991 
                           14,513         4,338        39,475        19,618 
Non-recurring items:                                                        
   adjustments                291         1,091           291         1,442 
  Other                         -           716             -           829 
Adjusted EBITDA            14,804         6,145        39,766        21,889 
Adjusted EBITDA per                                                         
 share ($)                   0.18          0.09          0.57          0.36 

Reader Advisory

This news release, or documents incorporated herein, contains forward-looking statements ("FLS"). More particularly, this news release contains statements that may relate to contracting, marketing, financing, construction, modifications, deployment, operation, utilization of drilling rigs in the Company's current and future fleet, and any potential outcome relating to claims and litigation. Further, the FLS herein may relate to trade credit insurance carried by the Company to mitigate receivables collection risk. Although Xtreme believes expectations reflected in these FLS are reasonable, readers should not place undue reliance on them because Xtreme can give no assurance they will prove to be correct. There are many factors that could cause FLS not to be correct, including risks and uncertainties inherent in the Company's business.

These statements are based on certain factors and assumptions including, but not limited to: the assessment of current and projected future operations; ongoing and future strategic business alliances, negotiations and opportunities to enter new, extend or complete existing contracts; the availability and cost of financing; foreign currency exchange rates; timing and magnitude of capital expenditures; expenses and other variables affecting rig operation, modification and construction; the ability and commitment of vendors to provide rig component equipment, services and supplies, including labor, in a cost-effective and timely manner; the issuance of applied-for patents; changes in tax rates; and government regulations. Although Xtreme considers the assumptions used to prepare this news release reasonable, based on information available to management as of March 6, 2013, ultimately the assumptions may prove to be incorrect.

Forward-looking statements are also subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from management's current expectations. These factors include, but are not limited to: the cyclical nature of drilling market demand, foreign currency exchange rates, and commodity prices; access to credit and to equity markets; the availability of qualified personnel; vendor-provided rig components; and, competition for customers.

Management's assumptions considered the following: compliance with the terms of the Company's current and proposed new credit facility; ongoing access to key supplies and components required to continue operating and maintaining equipment, including fuel; continued successful performance of drilling and related equipment; expectations regarding gross margin; recruitment and retention of qualified personnel; continuation or extension of existing long-term or multi-well contracts; revenue expectations related to shorter-term drilling opportunities; willingness and ability of customers to remit amounts owing to Xtreme in accordance with normal industry practices; and management of accounts receivable in direct relation to revenue generation.

In preparing this news release, management considered the following risk factors: fluctuations in crude oil and natural gas prices, supply and demand; fluctuation in foreign currency exchange and interest rates; financial stability of Xtreme's customers; current and future applications for Xtreme's proprietary technology; competition from other drilling contractors; regulatory and economic conditions in regions where Xtreme operates; environmental constraints; changes to government legislation; international trade barriers or restrictions; and, where appropriate, global political and military events.

Financial outlook information contained in this news release about prospective results of operations, financial position or cash provided by operating activities is based on assumptions about future events, including economic conditions and proposed courses of action, and on management's assessment of relevant information currently available. Readers are cautioned such financial outlook information contained in this news release is not appropriate for purposes other than for which it is disclosed here. Readers should not place undue importance on FLS and should not rely on this information as of any other date. Except as required pursuant to applicable securities laws, Xtreme disclaims any intention, and assumes no obligation, to update publicly or revise FLS to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such FLS or otherwise.

About Xtreme

Xtreme Drilling and Coil Services Corp. ("XDC" on the Toronto Stock Exchange) designs, builds, and operates a fleet of high specification drilling rigs and coiled tubing well service units featuring leading-edge proprietary technology including AC high capacity coil injectors, deep re-entry drilling capability, modular transportation systems and continuous integration of in-house advances in methodologies.

Currently Xtreme operates two service lines: Drilling Services (XDR) and Coil Services (XSR) under contracts with oil and natural gas exploration and production companies and integrated oilfield service providers in Canada, the United States and Saudi Arabia. For more information about the Company, please visit

Xtreme Drilling and Coil Services Corp.
Matt Porter
Chief Financial Officer
+1 281 994 4604

Xtreme Drilling and Coil Services Corp.
16285 Park Ten Place, Suite 650
Houston, TX 77084

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