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Leading Edge Technology Plus Operational Efficiencies Result in Record Quarterly Revenue and EBITDA for Xtreme Drilling and Coil Services

CALGARY, ALBERTA -- (Marketwired) -- 05/07/13 -- Xtreme Drilling and Coil Services (TSX:XDC) ("Xtreme" or the "Company") announces summary results for the three months ended March 31, 2013. It is anticipated that filing will take place on SEDAR of the interim Condensed Consolidated Financial Statements and Management's Discussion and Analysis by Friday, May 10, 2013.

Xtreme has scheduled a conference call on Wednesday, May 8, 2013, beginning promptly at 9:00 am MDT (10:00 am CDT; 11:00 am EDT) to discuss the 2013 first quarter financial and operating results. 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.

+1 800-769-8320 (North America Toll-Free) or +1 416-695-6616 (Alternate)

An audio replay of the call will be available until Friday, May 17, 2013. To access the replay, call +1 905-694-9451 or +1 800-408-3053 and enter pass code 8732293.

Highlights - Q1 2013

--  Record adjusted EBITDA of $19.2 million, less the amount attributable to
    non-controlling interest of $0.6 million, resulted in adjusted EBITDA
    attributable to Xtreme of $18.6 million. This is an increase of 25% over
    the previous quarter and 147% over the first quarter of 2012. The 35.4%
    adjusted EBITDA margin is the highest quarterly margin the Company has
    ever achieved. The record quarter was driven by improved margins in the
    US Drilling and Coil Services segments. Both recognized an increase in
    operating margin due to slightly higher utilization and increased
    operational efficiencies. 

--  Record revenue of $54.2 million in the first quarter of 2013, an
    increase of 4% over the previous quarter and 41% over the first quarter
    of 2012. The increase in revenue for the quarter was a function of 3%
    more operating days and an increase in average revenue per day to
    $27,800 from $27,400 in the fourth quarter of 2012. 

--  The Company had 1,949 operating days or 58 more days in the first
    quarter of 2013 than the fourth quarter of 2012. This resulted in a
    utilization rate of 80% for the fleet of 21 XDR drilling rigs and 7 XSR
    coiled tubing units.  

--  The Drilling Segment achieved utilization of 89% on 1,683 operating
    days. This is comprised of a 93% utilization rate in the US XDR fleet
    and 68% for the Canadian XDR rigs. For the quarter, the coil services
    segment achieved utilization of 49% on 265 operating days. This is
    comprised of a 99% utilization rate on the two XSR units in Saudi Arabia
    and a 24% utilization rate on the four available XSR units in the US.
    During the quarter the Company actively marketed only two of the four
    available XSR units. The two operating XSR units in the US continue to
    increase activity as March represented the highest ever utilization of
    73%. Due to the increased activity levels, additional crews are
    currently being trained and it is anticipated that a third XSR unit will
    begin work within the next 30 days in South Texas. 

--  Net Income of $4.3 million, less amount attributable to non-controlling
    interest of $0.4 milion, for net income attributable to Xtreme of $3.9
    million for the first quarter of 2013, or $.05 per fully diluted share.
    This is net of a foreign exchange loss of $1.9 million during the
    quarter. Excluding this charge net income would have been approximately
    $6.2 million or $.08 per share. 

--  The Company paid down $5 million on the $10 million HSBC demand note
    issued in 2012. Net debt at quarter end was $130 million compared to
    $142 million the previous quarter. Subsequent to quarter end, the
    Company paid the remaining $5 million on the HSBC demand note. Xtreme
    exited the quarter with a funded debt to EBITDA ratio of 2.76, which is
    well under the bank covenant level of 3.25. Capital expenditures totaled
    $3.5 million for the first quarter. Currently, the Company anticipates
    full year 2013 maintenance capital expenditures to be between $15 and
    $17 million. 

--  Based on the criteria outlined in IFRS 10, the Company has concluded
    that it has control over Xtreme Equipment Group S.A. and Xtreme Coil
    Drilling Saudi Arabia Ltd. and these entities should be fully
    consolidated. The Company's 80% ownership interest in each of these two
    entities was previously accounted for as joint ventures using the
    proportionate consolidation method of accounting.  

Xtreme Drilling and Coil Services Corp.                                     
Selected Quarterly Financial Information (unaudited)                        
                                 Mar 31,    Dec 31,     Sep 30,     Jun 30, 
Three months ended                  2013       2012        2012        2012 
Revenue                           54,182     51,852      48,910      40,180 
Adjusted EBITDA (1)               18,627     14,876      10,259       7,168 
Adjusted EBITDA as a                                                        
 percentage of Revenue                34         29          21          18 
Adjusted EBITDA per share (1)                                               
 - basic ($)                        0.23       0.18        0.16        0.11 
Net income (loss)                  4,343      4,888      (3,457)     (2,192)
Net income (loss) per share -                                               
 basic ($)                          0.05       0.06       (0.06)      (0.04)
Capital assets                   417,431    415,354     425,364     425,397 
Total assets                     508,756    506,485     511,214     512,186 
Net debt (2)                     130,014    141,841     119,759     144,039 
Operating days (1)                 1,949      1,891       1,742       1,494 
Utilization (percentage) -                                                  
 XDR                                  89         85          86          74 
Utilization (percentage)- XSR         49         47          36          57 
Utilization (percentage) -                                                  
 Total                                80         77          74          70 
Weighted average rigs in                                                    
 service                            28.0       26.8        26.0        23.4 
Total rigs, end of quarter            28         28          28          27 
                                 Mar 31,    Dec 31,     Sep 30,     Jun 30, 
                                    2012       2011        2011        2011 
Revenue                           38,446     32,552      26,659      25,500 
Adjusted EBITDA (1)                7,536      6,144       5,515       6,039 
Adjusted EBITDA as a                                                        
 percentage of Revenue                20         20          22          25 
Adjusted EBITDA per share (1)                                               
 - basic ($)                        0.11       0.09        0.08        0.10 
Net (loss) income                  1,207     (1,025)       (305)      1,714 
Net (loss) income per share -                                               
 basic ($)                          0.02      (0.02)      (0.00)       0.03 
Capital assets                   379,710    348,148     308,465     261,357 
Total assets                     464,386    424,853     385,335     330,332 
Net debt (2)                     109,546     75,563      35,102       3,590 
Operating days (1)                 1,423      1,246       1,137       1,165 
Utilization (percentage) -                                                  
 XDR                                  84         73          69          77 
Utilization (percentage)- XSR         56         97         100          98 
Utilization (percentage) -                                                  
 Total                                79         75          73          80 
Weighted average rigs in                                                    
 service                            19.8       18.0        17.0        16.0 
Total rigs, end of quarter            18         18          17          16 
(1) Adjusted EBITDA attributable to the owners of the parent. See Non-GAAP  
(2) Total debt less cash                                                    

Excerpt from Management's Discussion and Analysis

For the three months ended March 31, 2013


The focus on execution and optimization continued at Xtreme during the first quarter of 2013. The Company improved financial performance to maintain the momentum of the previous three quarters. Both revenue and adjusted EBITDA reached all-time quarterly highs. Management is confident that the foundation has been laid over the past nine months that will allow the Company to produce consistent financial and operating results well into the future.

While the US rig count has recently moderated or even slightly decreased, Xtreme has not felt the effects. At quarter end the Company had six rigs operating in the Williston Basin, ten rigs operating in the greater DJ Basin, and one rig operating in Utah. The two primary US plays of the Bakken and the Niobrara have remained strong. The successful drilling programs of several operators in the Wattenberg/Niobrara field of Colorado have led to increased demand for drilling. This has shown up in the rig count, which has increased from 30 operating rigs at the end of the first quarter 2012 to 51 operating rigs at the end of the first quarter 2013. Xtreme has participated in this growth as four additional XDR 500 rigs were contracted in the Niobrara over the past year. These new contracts increased Xtreme's market share to 20% in this growing play.

In South Texas, Xtreme operates two XSR coiled tubing units in the Eagle Ford play. Drilling activity has remained robust with approximately 200 drilling rigs operating. Although the Company does not drill in the Eagle Ford the rig count is typically a good proxy for completion demand. Since the XSR division was reorganized in the third quarter of 2012, Xtreme has been able to consistently improve operating performance. Utilization levels and operating margins have increased in each of the past three quarters. This business continues to deliver excellent operational results for customers and has built a reputation as the long reach coil provider of choice in the Eagle Ford.

Drilling Segment - XDR

Xtreme ended the quarter with 21 XDR rigs available to work. Of these rigs 17 of 18 were under long term contracts in the United States and 1 of 3 rigs was working well-to-well in Canada. At quarter end the Company had approximately 4,650 days on term contract for the remainder of 2013 and an additional 3,900 days contracted beyond 2013. The average remaining duration on the contracted rig fleet was approximately 1.25 years at quarter end. Two XDR 500 rigs and one XDR 400 rig are up for renewal in the second half of the year in the Bakken. Discussions with existing customers are currently taking place and it is anticipated at this time that each of these rigs will remain in the Williston Basin.

Drilling services continued to be the largest revenue segment in the Company. Canadian and US drilling operations represented 82%, or $43.3 million, of revenue for the first quarter. Margin improvement continued as operating margin increased to 41.7% of revenue or $18.1 million. This was driven by new processes that were implemented over the previous nine months with the objective of improving the overall cost structure of the drilling division.

Canada continues to be slow evidenced by the fact that horizontal well permits were down 10% year-over-year, as was the rig count. In the quarter, the Company had 179 operating days in Canada compared to 174 in the fourth quarter of 2012. The Company had one rig work into break up. It is anticipated that the three XDR rigs located in Canada will begin work when road bans come off in June.

Coil Service Segment - XSR

The US XSR division began to hit its stride during the latter half of the first quarter. March was a record month both on revenue and operating margin. The current work backlog has given management the confidence to begin the process of deploying the third unit to the Eagle Ford. It is anticipated that the unit will be operating by mid-June.

For the first quarter, operating days were 86 which was up from 84 in the previous period. During the quarter the XSR division completed 39 jobs and since inception has performed 164 jobs. Over the course of these wells Xtreme has never left any coiled tubing in the well. This is an unprecedented operational record. In addition, the Company has now completed wells to 20,344 feet of total measured depth and 10,240 feet of total lateral length with 2 5/8 inch coiled tubing.

In Saudi Arabia the strong performance continued in the first quarter. Operating margins improved on very strong utilization of 99%. The Company is still waiting to hear the final results on the extension of the two units in Saudi. They will complete the existing contract in July and August respectively. The new contract has been bid and it is expected that an announcement is imminent.

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 May 7, 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 Drilling and Coil Services

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 and Coil Services 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.                                     
Condensed Consolidated Statements of Financial Position                     
(in thousands of Canadian dollars)                                          
                                   Mar 31, 2013  Dec 31, 2012   Jan 1, 2012 
Current assets                                                              
  Cash and cash equivalents              13,887         5,921         6,873 
  Accounts receivable                    47,544        44,878        46,653 
  Other receivables                       2,972         2,909         1,568 
  Prepaid expenses and other              1,423         2,047         2,114 
  Assets held for sale                        -         9,308             - 
  Income tax recoverable                    324           368           928 
  Inventory                               7,202         6,474         6,470 
                                         73,352        71,905        64,606 
Non-current assets                                                          
Deferred tax asset                       13,829        15,006         7,576 
Property and equipment                  417,431       415,354       348,148 
Intangible assets                         4,144         4,220         4,523 
Total Assets                            508,756       506,485       424,853 
Liabilities and Equity                                                      
Current liabilities                                                         
  Bank indebtedness                       6,441         7,834             - 
  Accounts payable and accrued                                              
   liabilities                           21,779        27,905        26,901 
  Current portion of long-term                                              
   debt                                  15,473        14,201           500 
                                         43,693        49,940        27,401 
Long-term liabilities                                                       
Long-term debt                          121,987       125,727        81,936 
Total Liabilities                       165,680       175,667       109,337 
Equity attributable to owners of                                            
 the parent                                                                 
Share capital                           327,184       327,197       310,296 
Share option reserve                     11,792        11,572        10,338 
Accumulated deficit                      (1,394)       (5,299)       (4,316)
Foreign currency translation                                                
 reserve                                 (5,427)      (12,879)       (8,596)
                                        332,155       320,591       307,722 
Non-controlling interest                 10,921        10,227         7,794 
                                        343,076       330,818       315,516 
Total Liabilities and Equity            508,756       506,485       424,853 
Xtreme Drilling and Coil Services Corp.                                     
Condensed Consolidated Statements of Income                                 
For the three months ended March 31, 2013 and 2012                          
(in thousands of Canadian dollars, except share and per share data)         
                                                         2013          2012 
Revenue                                                54,182        38,446 
  Operating expenses                                   32,397        27,334 
  General and administrative expenses                   2,551         3,203 
  Depreciation of property and equipment                8,543         4,967 
  Amortization of intangibles                              76            76 
  Stock-based compensation                                220           509 
  Foreign exchange loss (gain)                          1,873        (1,608)
  Loss on sale of equipment                               148            12 
  Other expense                                            36            42 
  Interest expense                                      2,119         1,481 
Income before tax for the period                        6,219         2,430 
Tax expense                                                                 
  Current                                                 656           490 
  Deferred                                              1,220           733 
Total tax expense                                       1,876         1,223 
Net income for the period                               4,343         1,207 
Net income attributable to:                                                 
  Owners of the parent                                  3,905           932 
  Non-controlling interest                                438           275 
                                                        4,343         1,207 
Net income per common share attributable to                                 
 equity owners of the parent                                                
  - basic                                                0.05          0.01 
  - diluted                                              0.05          0.01 
Weighted average number of common shares                                    
  - basic                                          80,790,315    65,702,914 
  - diluted                                        80,981,993    66,057,529 
Xtreme Drilling and Coil Services Corp.                                     
Reconciliation of Adjusted EBITDA                                           
For the three months ended March 31, 2013 and 2012                          
(in thousands of Canadian dollars, except per share data)                   
                                                 Mar 31, 2013  Mar 31, 2012 
Net income                                              4,343         1,207 
Tax expense                                             1,876         1,223 
Interest expense                                        2,119         1,481 
Other expense                                              36            42 
Loss on sale of equipment                                 148            12 
Foreign exchange loss (gain)                            1,873        (1,608)
Stock-based compensation                                  220           509 
Amortization of intangibles                                76            76 
Depreciation of property and equipment                  8,543         4,967 
Adjusted EBITDA                                        19,234         7,909 
Adjusted EBITDA per share ($)                            0.24          0.12 
Adjusted EBITDA attributable to:                                            
  Owners of the parent                                 18,627         7,536 
  Non-controlling interest                                607           373 
                                                       19,234         7,909 

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
[email protected]

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