STAMPEDE DRILLING INC. ANNOUNCES 2023 RECORD BREAKING ANNUAL AND FOURTH QUARTER RESULTS
The following press release should be read in conjunction with the
All amounts or dollar figures are denominated in thousands of Canadian dollars except for per share amounts, number of drilling rigs, and operating days, or unless otherwise noted.
Estimates and forward-looking information are based on assumptions of future events and actual results may vary from these estimates. See "Forward-Looking Information" in this press release for additional details.
FOURTH QUARTER 2023 Operational Highlights
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Revenue of
$21,494 – This represents a decrease of$1,744 or 8% from the fourth quarter of 2022 driven by lower rig utilization as a result of commodity price volatility and unseasonably warmer weather. This was partially offset by a 10% increase in revenue per day. -
Achieved record Q4 Adjusted EBITDA(1) of
$6,287 – This represents a 10% increase from the fourth quarter of 2022. The increase was due to an increase in gross margin driven by higher day rates and decreased operational costs. -
Net Income of
$3,237 - This represents a decrease of$246 or 7% from the fourth quarter 2022. The decrease was primarily related to increased depreciation costs due to an increased asset base and a one-time loss on the disposition of assets partially offset by increased Adjusted EBITDA and a lower share-based payments expense. - Gross Margin(1) of 40% - This represents an increase of 5% from 35% in the corresponding 2022 period. The increase was primarily related to an increase in revenue per day combined with a slight decrease in operating costs.
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Repurchase of 12,171 common shares - In the fourth quarter of 2023 the Corporation repurchased and cancelled 12,761 common shares under its normal course issuer bid ("NCIB") at a weighted average price per common share of
$0.24 for total consideration of$3,079 . The total amount of common shares repurchased and cancelled during the fourth quarter of 2023 represents 5.58% of the total issued and outstanding shares of the Corporation. -
Free Cash Flow(1) of
$5,409 – This represents an increase of$4,971 primarily related to a$4,270 decrease in maintenance and sustaining capital spending for the corresponding 2022 period. - Decreased Total Net Funded Debt to Adjusted EBITDA covenant ratio to 0.80x – the 0.32x decrease from 1.12x was a result of the increased Adjusted EBITDA while keeping the Corporations total net funded debt flat with prior year.
2023 ANNUAL OPERATIONAL HIGHLIGHTS
-
Achieved record Revenue of
$85,956 – This represents a 29% increase as compared to 2022. The increase was primarily driven by a 17% increase in operating days for 2023 as a result of the addition of 9 drilling rigs to the Corporation's fleet throughout the second half of 2022. The Corporation also experienced a 10% increase in revenue per day primarily related to higher field wages charged back to our customers. -
Achieved record Net Income of
$10,504 - This represents a 28% increase from 2022. The increase was primarily related to increased Adjusted EBITDA partially offset by increased depreciation and finance costs. -
Achieved record Adjusted EBITDA(1) of
$20,479 – This represents a 34% increase as compared to 2022. The increase was primarily due to increased revenue, partially offset by higher rig operating expenses due to inflationary pressures and an increase in general and administrative expenses. -
Repurchase of 16,585 common shares _ In 2023, the Corporation repurchased and cancelled 16,585 common shares under its NCIB at a weighted average price per common share of
$0.24 , for total consideration of$4,047 . The total amount of common shares repurchased and cancelled during the financial year endedDecember 31, 2023 , represents 7.3% of the total issued and outstanding common shares of the Corporation. -
Capital Expenditures of
$14,455 – Capital expenditures for 2023 were comprised of$9,271 of growth capital and$5,184 of maintenance and sustaining capital. -
New syndicated debt agreement _ During the year ended
December 31, 2023 , the Corporation entered into a new$50,000 credit agreement (the "Credit Agreement"), which has an initial term of three years. Under the Credit Agreement, Stampede has an available limit of$20,000 under a non-revolving term loan (the "Term Loan Facility"),$15,000 under a revolving credit facility (the "Syndicated Facility") and$15,000 under an additional revolving credit facility (the "Operating Facility", and collectively with the Term Loan Facility and the Syndicated Facility, the "Credit Facilities").
OUTLOOK
Stampede is on pace for another strong start to the year, as it has consistently run 16 out of its 19 rig fleet throughout the first few months of 2024. Stampede believes commodity volatility will continue throughout the remainder of 2024 due to current macroeconomic influences, including the impact of the Russian invasion of
On
FINANCIAL SUMMARY
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Three months ended, |
Year ended,
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(000's CAD $ except per share amounts) |
2023 |
2022 |
% |
2023 |
2022 |
% |
|
||||
Revenue |
21,494 |
23,238 |
(8 %) |
85,956 |
66,879 |
29 % |
|
||||
Direct operating expenses |
12,891 |
15,068 |
(14 %) |
56,825 |
44,564 |
28 % |
|
||||
Gross margin (1) |
8,603 |
8,170 |
5 % |
29,131 |
22,315 |
31 % |
|
||||
Net income |
3,237 |
3,483 |
(7 %) |
10,504 |
8,210 |
28 % |
|
||||
Basic and diluted income per share |
0.01 |
0.02 |
(50 %) |
0.05 |
0.05 |
0 % |
|
||||
Adjusted EBITDA (1) |
6,287 |
5,737 |
10 % |
20,479 |
15,305 |
34 % |
|
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Funds from operating activities |
6,287 |
5,713 |
10 % |
20,431 |
14,659 |
39 % |
|
||||
Free cash flow(1) |
5,409 |
438 |
1,135 % |
11,375 |
10,748 |
6 % |
|
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Weighted average common shares outstanding (000's) |
221,158 |
192,297 |
15 % |
224,807 |
162,505 |
38 % |
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Weighted average diluted common shares outstanding (000's) |
222,453 |
207,205 |
7 % |
227,206 |
176,899 |
28 % |
|
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Capital expenditures |
4,818 |
4,520 |
7 % |
14,455 |
41,122 |
(65 %) |
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Number of marketed rigs |
19 |
19 |
0 % |
19 |
19 |
0 % |
|
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Drilling rig utilization(2) |
42 % |
61 % |
(19 %) |
45 % |
60 % |
(15 %) |
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CAOEC industry average utilization(3) |
36 % |
39 % |
(3 %) |
35 % |
35 % |
0 % |
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(1)
Refer to "Non-GAAP and Other Financial Measures" for further information. |
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DESCRIPTION OF STAMPEDE'S BUSINESS
Stampede is an energy services company that provides premier contract drilling services in
RESULTS FROM OPERATIONS FOR THE YEAR ENDED
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Year ended, |
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(000's CAD $ ) |
2023 |
2022 |
% Change |
|
|
Revenue |
85,956 |
66,879 |
29 % |
|
|
Direct operating expenses |
56,825 |
44,564 |
28 % |
|
|
Gross margin(1) |
29,131 |
22,315 |
31 % |
|
|
Gross margin %(1) |
34 % |
33 % |
1 % |
|
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Net income |
10,504 |
8,210 |
28 % |
|
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General and administrative expenses |
10,088 |
8,302 |
22 % |
|
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Adjusted EBITDA(1) |
20,479 |
15,305 |
34 % |
|
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Drilling rig operating days(2) |
3,131 |
2,674 |
17 % |
|
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Drilling rig revenue per day(3) |
27.5 |
25.0 |
10 % |
|
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Drilling rig utilization(4) |
45 % |
60 % |
(15 %) |
|
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CAOEC industry average utilization(5) |
35 % |
35 % |
(0 %) |
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(1)
Refer to "Non-GAAP and Other Financial Measures" for further information. |
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-
Revenue of
$85,956 – an increase of$19,077 (29%) from$66,879 in the corresponding 2022 period. The increase was primarily related to the addition of 9 drilling rigs to the Corporation's fleet throughout the second half of 2022, which increased the number of operating days for 2023. Revenue also increased due to a 10% increase in revenue per day, which was primarily due to wage field increases charged back to our customers. - Operating days of 3,131 – an increase of 457 operating days (17%) from 2,674 operating days in the corresponding 2022 period. Operating days increased primarily as a result of the increase in rig count compared to the prior period.
- Gross margin percentage of 34% – an increase of 1% from 33% in the corresponding 2022 period. The gross margin increase was primarily related to the increase in revenue per day, partially offset by the higher rig operating expenses due to inflationary pressures.
-
Net income of
$10,504 – an increase of$2,294 (28%) from$8,210 in the corresponding 2022 period. The increase was primarily related to increased operating days and revenue per day, partially offset by higher operating expenses, general and administrative expenses, and finance costs. -
General and administrative expenses of
$10,088 – an increase of$1,786 (22%) from$8,302 in the corresponding 2022 period. The increase in general and administrative expense was primarily related to the increase in headcount compensation and corresponding administration expenses due to increased 2023 activity levels. -
Adjusted EBITDA of
$20,479 – an increase of$5,174 (34%) from$15,305 in the corresponding 2022 period. The increase was primarily related to the increase in operating days and gross margin.
RESULTS FROM OPERATIONS FOR THE THREE MONTH PERIOD ENDED
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Three months ended, |
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(000's CAD $) |
2023 |
2022 |
% Change |
|
|
Revenue |
21,494 |
23,238 |
(8 %) |
|
|
Direct operating expenses |
12,891 |
15,068 |
(14 %) |
|
|
Gross margin(1) |
8,603 |
8,170 |
5 % |
|
|
Gross margin %(1) |
40 % |
35 % |
5 % |
|
|
Net income |
3,237 |
3,483 |
(7 %) |
|
|
General and administrative expenses |
2,514 |
3,429 |
(27 %) |
|
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Adjusted EBITDA(1) |
6,287 |
5,737 |
10 % |
|
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Drilling rig operating days(2) |
727 |
867 |
(16 %) |
|
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Drilling rig revenue per day(3) |
29.6 |
26.8 |
10 % |
|
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Drilling rig utilization(4) |
42 % |
61 % |
(19 %) |
|
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CAOEC industry average utilization(5) |
36 % |
39 % |
(3 %) |
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(1)
Refer to "Non-GAAP and Other Financial Measures" for further information. |
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-
Revenue of
$21,494 – a decrease of$1,744 (8%) from$23,238 in the corresponding 2022 period. The decrease was due to a reduction in operating days. This was partially offset by a 10% increase in revenue per day during the three month period endedDecember 31, 2023 . -
Operating days of 727 – a decrease of 140 operating days (16%) from 867 operating days in the corresponding 2022 period. Operating days decreased due to a reduction in operating activities as a result of customer capital discipline, commodity price volatility and unseasonably warmer weather during the three month period ended
December 31, 2023 . Drilling rig utilization for the three month period endedDecember 31, 2023 was 42%, which was a 19% decrease from 61% in the corresponding 2022 period, but 6% higher than the CAOEC industry average utilization rate of 36% for the three months endedDecember 31, 2023 . - Gross margin percentage of 40% – an increase of 5% from 35% in the corresponding 2022 period. The change was related to an increase in revenue per day combined with a slight decrease in operating costs.
-
Net income of
$3,237 – a decrease of$246 (7%) from$3,483 in the corresponding 2022 period. The decrease was primarily related to increased depreciation costs due to an increased asset base and a one-time loss on the disposition of assets partially offset by increased Adjusted EBITDA and a lower share based payments expense. -
General and administrative expenses of
$2,514 – a decrease of$915 (27%) from$3,429 in the corresponding 2022 period. The decrease was primarily due to a reduction in stock based compensation in the last quarter of 2023 compared to the corresponding 2022 period. -
Adjusted EBITDA of
$6,287 – an increase of$550 (10%) from$5,737 in the corresponding 2022 period. The increase was primarily related to the increase in gross margin, partially offset by a reduction in administrative expenses.
NON-GAAP AND OTHER FINANCIAL MEASURES
This MD&A contains references to (i) adjusted EBITDA, (ii) Gross margin (iii) Gross margin percentage and (iv) free cash flow. These financial measures are not measures that have any standardized meaning prescribed by IFRS Accounting Standards and are therefore referred to as non-generally accepted accounting principles ("non-GAAP") measures. The non-GAAP measures used by the Corporation may not be comparable to similar measures used by other companies.
(i) |
Adjusted EBITDA - is defined as "income from operations before interest income, interest expense, taxes, transaction costs, depreciation and amortization, share-based compensation expense, gains on asset disposals, impairment expenses, other income, foreign exchange, non-recurring restructuring charges, finance costs, accretion of debentures and other income/expenses, foreign exchange gain and any other items that the Corporation considers appropriate to adjust given the irregular nature and relevance to comparable operations." Management believes that in addition to net income, adjusted EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Corporation's principal business activities prior to consideration of how these activities are financed, how assets are depreciated, amortized and impaired, the impact of foreign exchange, or how the results are affected by the accounting standards associated with the Corporation's stock-based compensation plan. Investors should be cautioned, however, that adjusted EBITDA should not be construed as an alternative to net income determined in accordance with IFRS Accounting Standards as an indicator of the Corporation's performance. The Corporation's method of calculating adjusted EBITDA may differ from that of other organizations and, accordingly, its adjusted EBITDA may not be comparable to that of other companies. |
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Three months ended, |
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Year ended, |
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(000's CAD $) |
2023 |
2022 |
% Change |
|
2023 |
2022 |
% Change |
Net income |
3,237 |
3,483 |
(7 %) |
|
10,504 |
8,210 |
28 % |
Depreciation |
1,898 |
1,421 |
34 % |
|
7,076 |
4,747 |
49 % |
Finance costs |
504 |
450 |
12 % |
|
1,974 |
1,246 |
58 % |
Other income |
(16) |
- |
nm |
|
(31) |
(9) |
244 % |
(Gain) loss on asset disposal |
555 |
(533) |
(204 %) |
|
(91) |
(530) |
(83 %) |
Share-based payments |
92 |
886 |
(90 %) |
|
1,009 |
1,029 |
(2 %) |
Transaction costs |
2 |
14 |
(86 %) |
|
31 |
609 |
(95 %) |
Foreign exchange (gain) |
15 |
16 |
(6 %) |
|
7 |
3 |
133 % |
Adjusted EBITDA |
6,287 |
5,737 |
10 % |
|
20,479 |
15,305 |
34 % |
nm - not meaningful |
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(ii) |
Gross margin - is defined as "Income from operations before depreciation of property and equipment". Gross margin is a measure that provides shareholders and potential investors additional information regarding the Corporation's cash generating and operating performance. Management utilizes this measure to assess the Corporation's operating performance. Investors should be cautioned, however, that gross margin should not be construed as an alternative to net income (loss) determined in accordance with IFRS Accounting Standards as an indicator of the Corporation's performance. The Corporation's method of calculating gross margin may differ from that of other organizations and, accordingly, its gross margin may not be comparable to that of other companies. |
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(iii) |
Gross margin percentage - is calculated as gross margin divided by revenue. The Corporation believes gross margin as a percentage of revenue is an important measure to determine how the Corporation is managing its revenues and corresponding cost of sales. The Corporation's method of calculating gross margin percentage may differ from that of other organizations and, accordingly, its gross margin percentage may not be comparable to that of other companies. |
The following table reconciles the Corporation's income from operations, being the most directly comparable financial measure disclosed in the Corporation's interim financial statements, to gross margin and gross margin percentage:
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Three months ended, |
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Year ended, |
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(000's CAD $) |
2023 |
2022 |
% Change |
|
2023 |
2022 |
% Change |
Income from operations |
6,811 |
6,859 |
(1 %) |
|
22,482 |
17,831 |
26 % |
Depreciation of property and equipment |
1,792 |
1,311 |
37 % |
|
6,649 |
4,484 |
48 % |
Gross margin |
8,603 |
8,170 |
5 % |
|
29,131 |
22,315 |
31 % |
Gross margin % |
40 % |
35 % |
5 % |
|
34 % |
33 % |
1 % |
(iv) |
Free cash flow - is calculated based on funds from operating activities less maintenance and sustaining capital, and interest and principal debt repayments. The Corporation uses this measure to assess the discretionary cash that management has to invest in growth capital, asset acquisitions, or return capital to shareholders. The Corporation's method of calculating free cash flow may differ from that of other organizations and, accordingly, its free cash flow may not be comparable to that of other companies. The following table reconciles the Corporation's funds from operating activities to free cash flow. |
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Three months ended, |
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Year ended, |
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(000's CAD $) |
2023 |
2022 |
% Change |
|
2023 |
2022 |
% Change |
Funds from operating activities |
6,287 |
5,706 |
10 % |
|
20,431 |
14,659 |
39 % |
Maintenance and sustaining capital |
(230) |
(4,500) |
(95 %) |
|
(5,184) |
(2,078) |
149 % |
Interest paid on Demand Facility |
(23) |
(136) |
(83 %) |
|
(588) |
(412) |
43 % |
BDC principal payments |
- |
(100) |
nm |
|
(1,500) |
(400) |
275 % |
Interest on BDC loan |
- |
(30) |
nm |
|
(91) |
(101) |
(10 %) |
Term Loan principal payments |
(199) |
(333) |
(40 %) |
|
(699) |
(567) |
23 % |
Interest on Term Loan |
(426) |
(169) |
152 % |
|
(994) |
(353) |
182 % |
Total free cash flow |
5,409 |
438 |
1,135 % |
|
11,375 |
10,748 |
6 % |
nm – not meaningful |
The free cash flow table above does not include the one-time principal repayment (
SUPPLEMENTARY FINANCIAL MEASURES
The Corporation uses supplementary financial measures that are not defined terms under IFRS Accounting Standards to provide useful supplemental financial information to investors.
(i) Capital Expenditures – management of the Corporation uses a breakdown of capital expenditures to assess the capital invested related to capital expenditures at a more detailed level. Capital expenditures have been split into three categories, asset acquisition, growth capital, and maintenance and sustaining capital. Asset acquisitions are the purchase of complete drilling rigs and related equipment from a third party. Growth capital are expenditures incurred for the purposes of upgrading existing equipment to improve operating efficiency and marketability of the asset. Maintenance and sustaining capital are expenditures related to maintaining the current operational efficiency of the asset. The following table shows the split of the three different types of capital expenditures. The Corporation's method of calculating capital expenditures may differ from that of other organizations and, accordingly, its capital expenditures may not be comparable to that of other companies. The following table reconciles the Corporation's total capital expenditures.
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Year ended, |
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(000's CAD $) |
2023 |
2022 |
% Change |
Capital expenditures: |
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Asset acquisitions |
- |
26,741 |
nm |
Growth capital(1) |
9,271 |
12,303 |
(25 %) |
Maintenance and sustaining capital(1) |
5,184 |
2,078 |
149 % |
Total capital expenditures |
14,455 |
41,122 |
(65 %) |
FORWARD-LOOKING INFORMATION
Certain statements contained in this news release constitute forward-looking statements or forward-looking information (collectively, "forward-looking information"). Forward-looking information relates to future events or the Corporation's future performance. All information other than statements of historical fact is forward-looking information. The use of any of the words "anticipate", "plan", "contemplate", "continue", "estimate", "expect", "intend", "propose", "might", "may", "will", "could", "should", "believe", "predict", and "forecast" are intended to identify forward-looking information.
This news release contains forward-looking information pertaining to, among other things: the Corporation's performance; expectations associated with the Corporation's outlook, including among other things, anticipated commodity pricing and the volatility thereof, expectations about industry activities, market conditions and corresponding rig utilization; forecasts regarding utilization and day rates for the remainder of 2024; capital allocations of the Corporation for 2024; the crewing and contracting of the Corporation's rigs; the assessment of additional acquisition opportunities by the Corporation; and anticipated industry wide inflationary costs and supply chain constraints and the resulting impact on the profitability of the Corporation.
Forward-looking information is based on certain assumptions that Stampede has made in respect thereof as at the date of this news release regarding, among other things: the Corporation's ability to fully crew and contract its rigs; the success of the measures implemented by the Corporation to ensure the safe, efficient and reliable operations at each of its drilling sites; the creditworthiness of the Corporation's customers and counterparties; the effectiveness of the Corporation's financial risk management policies at ensuring all payables are paid within the pre-agreed credit terms; that the Corporation's critical accounting estimates and judgments are reasonable; that the Corporation has adequate access to its Credit Facilities to provide the necessary liquidity needed to manage fluctuations in the timing of receipt and/or disbursement of operating cash flows; the belief that adjusted EBITDA, gross margin and gross margin percentage are useful supplemental financial measures; the condition of the global economy, including certain geopolitical risks; the stability of the economic and political environment in which the Corporation operates; the ability of the Corporation to retain qualified staff; management's ability to crew underutilized assets; the ability of the Corporation to maintain key customers; the ability of the Corporation to obtain financing on acceptable terms; the belief that the Corporation's principal sources of liquidity will be sufficient to service its debt and fund its operations and other strategic opportunities; the ability of the Corporation to obtain financing on acceptable terms; the ability to protect and maintain the Corporation's intellectual property; the Corporation's ability to maintain financial resiliency in light of current macroeconomic conditions; and the regulatory framework regarding taxes and environmental matters in the jurisdictions in which the Corporation operates.
Forward-looking information is presented in this news release for the purpose of assisting investors and others in understanding certain key elements of the Corporation's financial results and business plan, as well as the objectives, strategic priorities and business outlook of the Corporation, and in obtaining a better understanding of the Corporation's anticipated operating environment. Readers are cautioned that such forward-looking information may not be appropriate for other purposes.
While Stampede believes the expectations and material factors and assumptions reflected in the forward-looking information is reasonable as of the date hereof, there can be no assurance that these expectations, factors and assumptions will prove to be correct. Forward-looking information is not a guarantee of future performance and actual results or events could differ materially from the expectations of the Corporation expressed in or implied by such forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information is subject to a number of known and unknown risks and uncertainties including, but not limited to: the condition of the global economy, including trade, inflation, interest rates, the ongoing conflict in
This list of risk factors should not be construed as exhaustive. Readers are cautioned that events or circumstances could cause actual results to differ materially from those predicted, forecasted, or projected. Statements, including forward-looking information, are made as of the date of this news release and the Corporation does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. The forward-looking information contained in this news release is expressly qualified by this cautionary statement.
SOURCE