Ensign Energy Services Inc. Reports 2012 Third Quarter Results

CALGARY, Nov. 12, 2012 /CNW/ - 
Overview 
Ensign Energy Services Inc. ("Ensign" or the "Company") recorded revenue for 
the third quarter of 2012 of $525.7 million, 10 percent higher than revenue of 
$475.7 million recorded in the third quarter of 2011. Revenue for the nine 
months ended September 30, 2012 was $1,667.2 million, 27 percent higher than 
revenue of $1,312.4 million for the nine months ended September 30, 2011. 
Net income for the third quarter of 2012 decreased 30 percent to $44.8 million 
($0.29 per common share) compared to net income of $64.0 million ($0.42 per 
common share) for the third quarter of 2011. Removing the large quarterly 
year-over-year swing in share-based compensation, adjusted net income for the 
third quarter was $47.2 million, a decrease of nine percent from adjusted net 
income of $52.1 million recorded in the third quarter of 2011. Net income 
for the nine months ended September 30, 2012 increased six percent to $169.0 
million ($1.11 per common share) compared to net income of $159.8 million 
($1.05 per common share) for the first nine months of 2011. EBITDA, 
defined as "income before interest, income taxes, depreciation, and 
share-based compensation expense (recovery)", totaled $135.6 million ($0.89 
per common share) in the third quarter of 2012, 22 percent higher than EBITDA 
of $111.5 million ($0.73 per common share) in the third quarter of 2011. For 
the first nine months of 2012, EBITDA was $431.3 million ($2.82 per common 
share), 24 percent higher than EBITDA of $346.9 million ($2.27 per common 
share) for the first nine months of 2011. Funds from operations increased 
nine percent to $123.9 million ($0.81 per common share) in the third quarter 
of 2012 from $114.2 million ($0.75 per common share) in the third quarter of 
the prior year. For the nine months ended September 30, 2012, funds from 
operations increased 14 percent to $383.4 million compared to $335.1 million 
for the nine months ended September 30, 2011. 
Increases to the Company's credit facilities in 2012 resulted in an increase 
in available borrowings to $137.3 million as of September 30, 2012 compared 
with $10.1 million at December 31, 2011. Long-term debt at September 30, 
2012 was reduced to $293.2 million compared to $406.0 million at December 31, 
2011 and consists of USD $300.0 million of senior unsecured notes, issued in 
February 2012. The senior unsecured notes consist of: USD $100.0 million in 
five year notes with an interest rate of 3.43 percent; USD $100.0 million in 
seven year notes with an interest rate of 3.97 percent; and USD $100.0 million 
in ten year notes with an interest rate of 4.54 percent. Proceeds from the 
issuance of the senior unsecured notes, along with the Company's credit 
facilities and funds generated from operations, were used to fully repay the 
USD $400.0 million term loan, incurred to finance the September 2011 
acquisition of the land drilling division of Rowan Companies, Inc. ("Rowan 
Land Drilling", subsequently referred to as "Ensign US Southern"), in the 
first half of 2012. 
FINANCIAL AND OPERATING HIGHLIGHTS 
($ thousands, except per share data and operating information) 


                                                Nine months ended September
                                                                         30
                        Three months ended  
                              September 30  
                             2011        %        2012        2011        %
                   2012             Change                           Change

Revenue         525,666   475,749       10   1,667,215   1,312,405       27

EBITDA (1)      135,595   111,458       22     431,267     346,864       24

EBITDA per                                                                 
share (1)              

  Basic           $0.89     $0.73       22       $2.82       $2.27       24

  Diluted         $0.89     $0.73       22       $2.82       $2.26       25

Adjusted net               52,087      (9)     167,371     158,728        5
income (2)       47,210

Adjusted net                                                               
income per                                                          
share (2)              

  Basic           $0.31     $0.34      (9)       $1.10       $1.04        6

  Diluted         $0.31     $0.34      (9)       $1.09       $1.04        5

Net income       44,832    63,989     (30)     169,033     159,753        6

Net income                                                                 
per share              

  Basic           $0.29     $0.42     (31)       $1.11       $1.05        6

  Diluted         $0.29     $0.42     (31)       $1.11       $1.04        7

Funds from                114,186        9     383,429     335,122       14
operations                                                          
(3)             123,934

Funds from                                                                 
operations                                                          
per share (3)          

  Basic           $0.81     $0.75        8       $2.51       $2.19       15

  Diluted         $0.81     $0.74        9       $2.51       $2.19       15

Weighted                  152,778        -     152,680     152,872        -
average                                                             
shares -
basic (000s)    152,480

Weighted                  153,603        -     152,923     153,322        -
average
shares -                                                            
diluted
(000s)          152,838

Drilling                                                                   

  Number of                                                                
marketed rigs          


Canada                    130        2         133         130        2
(4)                 133 
United                    116        -         116         116        -
States              116 
                           59      (2)          58          59      (2)
International                                                       
(5)                  58 
Operating                                                                
days                    
Canada                  6,443     (29)      14,263      16,750     (15)
(4)               4,551 
United                  5,478       13      18,671      14,156       32
States            6,170 
                        2,781        6       8,602       8,050        7
International                                                       
(5)               2,960 
Well                                                                       
Servicing               
Number of                                                                
marketed rigs           
Canada           99       103      (4)          99         103      (4) 
United                     34       35          46          34       35
States               46 
Operating                                                                
hours                   
Canada       35,098    38,076      (8)     105,924     106,557      (1) 
United                 20,537       61      93,669      56,894       65
States           33,029 
(1 )EBITDA is defined as "income before interest, income taxes, depreciation 
and share-based compensation (recovery) expense". Management believes that 
in addition to net income, EBITDA and EBITDA per share are useful supplemental 
measures as they provide an indication of the results generated by the 
Company's principal business activities prior to consideration of how these 
activities are financed, how the results are taxed in various jurisdictions or 
how the results are impacted by the accounting standards associated with the 
Company's share-based compensation plans. EBITDA and EBITDA per share as 
defined above are not recognized measures under International Financial 
Reporting Standards and accordingly may not be comparable to measures used by 
other companies.
(2) Adjusted net income is defined as "net income before share-based 
compensation (recovery)/expense, tax-effected using an income tax rate of 35 
percent". Adjusted net income and Adjusted net income per share are useful 
supplemental measures as they provide an indication of the results generated 
by the Company's principal business activities prior to consideration of how 
the results are impacted by the accounting standards associated with the 
Company's share-based compensation plans, net of income taxes. Adjusted net 
income and Adjusted net income per share as defined above are not recognized 
measures under International Financial Reporting Standards and accordingly may 
not be comparable to measures used by other companies.
(3) Funds from operations is defined as "cash provided by operating activities 
before the change in non-cash working capital". Funds from operations and 
Funds from operations per share are measures that provide additional 
information regarding the Company's liquidity and its ability to generate 
funds to finance its operations. Management utilizes these measures to 
assess the Company's ability to finance operating activities and capital 
expenditures. Funds from operations and Funds from operations per share are 
not measures that have any standardized meaning prescribed by International 
Financial Reporting Standards and accordingly may not be comparable to similar 
measures used by other companies.
(4 )Excludes coring rigs.
(5) Includes workover rigs. 
Revenue and Oilfield Services Expense 
                    Three months ended   Nine months ended September 30 
                          September 30 
 ($                2012      2011        %        2012        2011        %
thousands)                          Change                           Change 
Revenue                                                                     
Canada        164,081   192,699      -15     597,751     561,005        7 
United        237,114   189,204       25     730,913     490,857       49
States 
            124,471    93,846       33     338,551     260,543       30
International 
                                                                        


                525,666   475,749       10   1,667,215   1,312,405       27

Oilfield        373,982   327,006       14   1,170,956     911,886       28
services                                                            
expense
                                                                           
                151,684   148,743        2     496,259     400,519       24

Gross margin       28.9      31.3                 29.8        30.5         
(%)



Revenue for the three months ended September 30, 2012 increased 10 percent to 
$525.7 million compared to $475.7 million for the comparable period in 2011. 
Revenue for the nine months ended September 30, 2012 increased 27 percent to 
$1,667.2 million over revenue of $1,312.4 million recorded for the nine months 
ended September 30, 2011. As a percentage of revenue, gross margin for the 
three and nine months ended September 30, 2012 decreased to 28.9 percent (2011 
- 31.3 percent) and 29.8 percent (2011 - 30.5 percent) respectively. Pricing 
pressures inherent in reduced demand for oilfield services negatively impacted 
gross margins for the current quarter for the Company's North American 
operations.

Despite downward pressure on the demand for North American oilfield services, 
revenue continued to grow in the three and nine months ended September 30, 
2012 over the comparable periods of the prior year as a result of the Company 
expanding and upgrading its rig fleet. The acquisition of Rowan Land 
Drilling in the third quarter of 2011 added 30 drilling rigs to the Company's 
United States fleet, with an additional 10 ADR(®) drilling rigs and 16 well 
servicing rigs added to the Company's consolidated fleet in 2011, all through 
the new build program. As at September 30, 2012, the new build program 
delivered an additional 12 ADR(®) drilling rigs and 11 well servicing rigs to 
the Company's consolidated fleet in the current year.

Canadian Oilfield Services

Revenue decreased 15 percent to $164.1 million for the three months ended 
September 30, 2012, from $192.7 million for the three months ended September 
30, 2011. For the nine months ended September 30, 2012, revenue increased 
seven percent to $597.8 million compared to $561.0 million for the same period 
in 2011. Canadian revenues accounted for 31 percent of the Company's total 
revenue in the third quarter of 2012, compared with 40 percent in the third 
quarter of 2011, and during the nine months ended September 30, 2012, Canadian 
revenues were 36 percent of total revenue (2011 - 43 percent). Demand for 
Canadian oilfield services decreased in the current quarter when compared to 
the prior year which weakened operating and financial results. Stronger 
pricing in the earlier months of 2012 compared to 2011 generally offset this 
decrease for the nine months ended September 30, 2012.

The Company recorded 4,551 drilling days in the third quarter of 2012, 
compared to 6,443 drilling days for the third quarter of 2011, a 29 percent 
decrease. For the nine months ended September 30, 2012 drilling days were 
14,263 compared to 16,750 for the nine months ended September 30, 2011, a 15 
percent decrease. The reduced operating activity in 2012 was due to reduced 
demand for oilfield service equipment when compared to the stronger levels 
seen in 2011. Canadian well servicing hours decreased by eight percent to 
35,098 operating hours in the third quarter of 2012 compared with 38,076 
operating hours in the corresponding period of 2011. For the nine months 
ended September 30, 2012 well servicing hours were similar to those of the 
prior year, decreasing one percent to 105,924 operating hours compared with 
106,557 operating hours for the nine months ended September 30, 2011.

During the nine months ended September 30, 2012, the Company added five newly 
constructed ADR(®) drilling rigs to its Canadian fleet, including one added 
in the third quarter of 2012. An additional three new ADRs and six new well 
servicing rigs are scheduled to be added to the Company's Canadian equipment 
fleet over the next three quarters.

United States Oilfield Services

The Company's United States operations recorded revenue of $237.1 million in 
the third quarter of 2012, a 25 percent increase from the $189.2 million 
recorded in the corresponding period of the prior year. During the nine months 
ended September 30, 2012, revenue of $730.9 million was recorded, an increase 
of 49 percent from the $490.9 million recorded for the nine months ended 
September 30, 2011. The Company's United States operations accounted for 45 
percent of the Company's revenue in the third quarter of 2012 (2011 - 40 
percent) and 44 percent of total revenue in the nine months ended September 
30, 2012 (2011 - 37 percent). Drilling rig operating days increased by 13 
percent to 6,170 drilling days in the third quarter of 2012 from 5,478 
drilling days in the third quarter of 2011. For the nine months ended 
September 30, 2012 drilling days increased by 32 percent to 18,671 drilling 
days from 14,156 drilling days in the nine months ended September 30, 2011. 
Well servicing activity increased by 61 percent in the third quarter of 2012 
to 33,029 operating hours from 20,537 operating hours in the third quarter of 
2011. For the nine months ended September 30, 2012 well servicing activity 
increased 65 percent to 93,669 operating hours from 56,894 operating hours in 
the first nine months of 2011.

The upgrading of the Company's United States drilling and well servicing rig 
fleets resulted in improved operating results for the three and nine months 
ended September 30, 2012 compared to similar periods in the prior year despite 
a softening in the demand for United States oilfield services in the current 
quarter. The 2011 third quarter acquisition of Rowan Land Drilling added 30 
drilling rigs to the fleet while the Company's new build program added a 
further eight ADR(®) drilling rigs and 12 well servicing rigs throughout 
2011; and five ADR(®) drilling rigs and 11 well servicing rigs during the 
first nine months of 2012. An additional four new ADRs are scheduled to be 
delivered over the next 12 months pursuant to the Company's new build program.

Despite the United States dollar weakening against the Canadian dollar at the 
end of the current quarter it strengthened during the three and nine month 
periods ended September 30, 2012 compared to the same periods in 2011, 
positively impacting the operating results of the Company's United States 
operations on translation to Canadian dollars. In the first nine months of 
2012 the average United States dollar exchange rate increased by two percent 
to 1.002, when compared to the same period of the prior year.

International Oilfield Services

The Company's international operations recorded revenue of $124.5 million in 
the third quarter of 2012, a 33 percent increase from $93.8 million recorded 
in the corresponding period of the prior year. International revenues for the 
nine months ended September 30, 2012 increased by 30 percent to $338.6 million 
from $260.5 million recorded for the nine months ended September 30, 2011. 
International operations contributed 24 percent of the Company's revenue in 
the third quarter of 2012 (2011 - 20 percent) and 20 percent of the Company's 
revenue in the first nine months of 2012 (2011 - 20 percent). International 
operating days for the three months ended September 30, 2012 totaled 2,960 
drilling days compared with 2,781 drilling days in 2011, an increase of six 
percent. For the nine months ended September 30, 2012 international 
operating days totaled 8,602 drilling days compared with 8,050 drilling days 
for the nine months ended September 30, 2011, an increase of seven percent.

Higher revenue rates across the Company's Latin America and Eastern Hemisphere 
operations, combined with higher activity levels in both regions, led to 
improved operating results for the three and nine months ended September 30, 
2012 compared to the three and nine months ended September 30, 2011. Prior 
year results from the Company's Australian operations were also weakened due 
to flooding in certain regions during the first half of 2011. The Company 
delivered two new ADR(®) drilling rigs into the international market during 
the nine months ended September 30, 2012. Similar to the Company's United 
States operations, international operations benefited from the strengthening 
of the United States dollar over the Canadian dollar on translation into 
Canadian dollars for reporting purposes in 2012 compared to the prior year.

Depreciation
                   Three months ended Nine months ended September 30
                         September 30

($               2012   2011 % Change    2012    2011       % Change
thousands)  

Depreciation   57,599 44,528       29 166,198 120,387             38

The Company uses the unit of production method of calculating depreciation for 
the majority of its property and equipment. Depreciation expense totalled 
$57.6 million for the third quarter of 2012 compared with $44.5 million for 
the third quarter of 2011, an increase of 29 percent. Depreciation expense 
for the first nine months of 2012 was $166.2 million, an increase of 38 
percent over the $120.4 million recorded for the first nine months of 2011. 
Increased depreciation reflects the impact from the growth of the Company's 
fleet through the addition of Ensign US Southern in the third quarter of 2011 
and recent additions from the Company's new build program.

General and Administrative Expense  
                    Three months ended Nine months ended September
                          September 30                          30

($ thousands)     2012   2011 % Change   2012   2011      % Change

General and     19,107 21,174     (10) 59,199 49,380            20
administrative 

% of revenue       3.6    4.5             3.6    3.8

General and administrative expense decreased 10 percent to $19.1 million (3.6 
percent of revenue) for the third quarter of 2012 compared with $21.2 million 
(4.5 percent of revenue) for the third quarter of 2011. For the nine months 
ended September 30, 2012, general and administrative expense totaled $59.2 
million (3.6 percent of revenue) compared with $49.4 million (3.8 percent of 
revenue) recorded for the nine months ended September 30, 2011, an increase of 
20 percent. The overall increase in general and administrative expense for 
the nine months ended September 30, 2012 compared to the prior year was to 
support the increased operating activity during the first nine months of 2012, 
including the impact from the addition of Ensign US Southern in September 
2011, and also includes the negative translational impact of a stronger United 
States dollar on United States and international administrative expenses in 
the current periods.

Share-Based Compensation Expense (Recovery)
               Three months ended September Nine months ended September
                                         30                          30

($              2012     2011      % Change    2012    2011    % Change
thousands)  

Share-based    3,659 (18,311)         (120) (2,557) (1,577)          62
compensation  

Share-based compensation expense (recovery) arises from the Black-Scholes 
valuation accounting associated with the Company's share-based compensation 
plans, whereby the liability associated with share-based compensation is 
adjusted for the effect of granting and vesting of employee stock options and 
changes in the underlying price of the Company's common shares.

For the three months ended September 30, 2012, share-based compensation 
expense (recovery) was an expense of $3.7 million compared with a recovery of 
$18.3 million recorded in the third quarter of 2011. For the nine months ended 
September 30, 2012, share-based compensation was a recovery of $2.6 million 
compared with a recovery of $1.6 million for the nine months ended September 
30, 2011. The change in share-based compensation expense (recovery) in the 
three and nine months ended September 30, 2012 compared to the same periods of 
the prior year reflects the change in the fair value of the share-based 
compensation liability primarily resulting from fluctuations in the Company's 
share price. The closing price of the Company's common shares was $15.10 at 
September 30, 2012 ($13.75 at September 30, 2011), compared with $14.00 at 
June 30, 2012 ($19.12 at June 30, 2011), $14.91 at March 31, 2012 ($18.26 at 
March 31, 2011) and $16.25 at December 31, 2011 ($15.03 at December 31, 2010).

Interest Expense
             Three months ended September Nine months ended September
                                     30                            30

($             2012  2011        % Change   2012  2011       % Change
thousands)  

Interest      4,926 1,755             181 14,804 2,515            489
expense 

Interest      (145) (216)            (33)  (365) (511)           (29)
income 
              4,781 1,539             211 14,439 2,004            621

The Company increased its global revolving credit facility (the "Global 
Facility") by $150.0 million to $400.0 million in the second quarter of 2012 
and repaid the USD $100.0 million remaining balance of the term loan during 
the first half of 2012. Interest is incurred on the Company's $10.0 million 
Canadian-based revolving credit facility (the "Canadian Facility"), the $400.0 
million Global Facility, the USD $300.0 million senior unsecured notes issued 
in February 2012 and the USD $100.0 million term loan outstanding during the 
first half of 2012. The amortization of deferred financing costs associated 
with the issuance of the Company's long-term debt are included in interest 
expense in the three and nine months ended September 30, 2012.

The increase in interest expense in the first nine months of 2012 reflects the 
additional debt incurred by the Company in connection with the Rowan Land 
Drilling acquisition, completed in September 2011.

Foreign Exchange and Other ((Gain)/Loss)  
             Three months ended September Nine months ended September
                                       30                          30

($              2012   2011      % Change  2012  2011        % Change
thousands)  

Foreign
exchange and (3,018) 16,111         (119) 5,793 4,275              36
other 

Included in this amount is the impact of the conversion of the Australian 
operations from Australian dollars to United States dollars. The Australian 
currency strengthened in the current quarter but weakened in the three and 
nine months ended September 30, 2011 with the movement much greater in 2011 
compared to 2012.

Income Taxes
               Three months ended September Nine months ended September
                                         30                          30

($               2012   2011       % Change   2012   2011      % Change
thousands)  

Current income  9,795 (2,258)         (534) 41,017 13,897           195
tax  

Deferred       14,929  21,971          (32) 43,137 52,400          (18)
income tax  
               24,724  19,713            25 84,154 66,297            27

Effective        35.5    23.6                 33.2   29.3
income tax
rate (%)  

The effective income tax rate for the three months ended September 30, 2012 
was 35.5 percent compared with 23.6 percent for the three months ended 
September 30, 2011. The effective income tax rate for the nine months ended 
September 30, 2012 was 33.2 percent compared with 29.3 percent for the nine 
months ended September 30, 2011. The effective income tax rate was higher in 
the current quarter and for the nine months ended September 30, 2012 due to a 
smaller proportion of income earned in Canada, in combination with higher 
proportions of income earned in higher tax rate jurisdictions.

Financial Position

The following chart outlines significant changes in the consolidated statement 
of financial position from December 31, 2011 to September 30, 2012:

($ thousands)                    Change Explanation

Cash and cash equivalents        46,526 See consolidated statements of
                                        cash flows.

Accounts receivable            (50,335) Decrease was mainly due to
                                        reduced operating activity in
                                        Canada in the third quarter of
                                        2012 compared to the fourth
                                        quarter of 2011 as a result of
                                        reduced demand for oilfield
                                        services.

Inventories and other           (9,390) Decrease due to normal course
                                        use of consumables and
                                        amortization of prepaid
                                        expenses offset by additional
                                        inventory.

Property and equipment            8,713 Increase was due to additions
                                        from the current new build
                                        construction program offset by
                                        depreciation and a decrease in
                                        the quarter end foreign
                                        exchange rate on the
                                        consolidation of the Company's
                                        foreign subsidiaries.

Note receivable                   (930) Decrease was due to the
                                        reclassification of the current
                                        portion of the note receivable
                                        to accounts receivable offset
                                        by accretion of interest income
                                        during the first nine months of
                                        2012.

Accounts payable and accruals  (42,723) Decrease was due to reduced
                                        operating activity in Canada in
                                        the third quarter of 2012
                                        compared to the fourth quarter
                                        of 2011 as a result of reduced
                                        demand for oilfield services.

Operating lines of credit        20,961 Increase was due to additional
                                        draws during the period on the
                                        expanded Global Facility offset
                                        by repayments during the period
                                        and the impact of foreign
                                        exchange fluctuations on the
                                        consolidation of the Company's
                                        foreign subsidiaries.

Income taxes payable              4,103 Increase was due to the current
                                        income tax provision for the
                                        period, net of tax instalments
                                        and refunds.

Share-based compensation        (2,526) Decrease was due to the
                                        decrease in the price of the
                                        Company's common shares as at
                                        September 30, 2012 compared
                                        with December 31, 2011.

Long-term debt                (112,781) Decrease reflects the repayment
                                        of the term loan and accounting
                                        for financing costs associated
                                        with long-term debt and the
                                        impact of foreign exchange
                                        fluctuations on the United
                                        States dollar denominated debt
                                        offset by the issuance of
                                        senior unsecured notes in
                                        February 2012.

Deferred income taxes            42,567 Increase primarily due to
                                        accelerated tax depreciation of
                                        assets added during the first
                                        nine months of 2012.

Shareholders' equity             84,983 Increase was due to net income
                                        for the period offset by the
                                        amount of dividends declared in
                                        the period and the impact of
                                        foreign exchange rate
                                        fluctuations on net assets of
                                        foreign subsidiaries.

Funds from Operations and Working Capital  
             Three months ended September Nine months ended September
                                       30                          30

($               2012     2011   % Change     2012     2011  % Change
thousands)  

Funds from    123,934  114,186          9  383,429  335,122        14
operations  

Funds from     $ 0.81   $ 0.75          8   $ 2.51   $ 2.19        15
operations
per share

Working      (3,751)  (10,233)       (63)  (3,751) (10,233)      (63)
capital
(1)  

(1) Comparative figure as of December 31, 2011.

During the three months ended September 30, 2012, the Company generated funds 
from operations of $123.9 million ($0.81 per common share) compared with funds 
from operations of $114.2 million ($0.75 per common share) for the three 
months ended September 30, 2011, an increase of nine percent. For the nine 
months ended September 30, 2012, the Company generated funds from operations 
of $383.4 million ($2.51 per common share), an increase of 14 percent over 
funds from operations of $335.1 million ($2.19 per common share) generated in 
the first nine months of 2011. Increased funds from operations in 2012 
compared to 2011 is mainly due to growth of the Company's operations across 
all regions through the addition of Ensign US Southern in the United States in 
September 2011 and additions from the new build program to the Company's North 
American and Australian equipment fleet throughout 2011 and 2012.

At September 30, 2012, the Company's working capital totaled negative $3.8 
million, compared to negative $10.2 million at December 31, 2011. The 
improvement in the Company's working capital position in the current year 
reflects the expanded operations of the Company, offset by use of internally 
generated cash flows and the recently expanded credit facilities to repay the 
remaining balance of the USD $100.0 million term loan; paid off in full in the 
first half of 2012. The Company expects funds generated by operations, 
combined with current and future credit facilities, to fully support current 
operating and capital requirements. Existing revolving credit facilities 
provide for total borrowing of $410.0 million, of which $137.3 million was 
available at September 30, 2012.

Investing Activities  
              Three months ended September  Nine months ended September
                                        30                           30

($                2012      2011  % Change      2012      2011 % Change
thousands)  

Purchase of   (69,751)  (71,615)       (3) (226,360) (252,624)     (10)
property and
equipment 

Acquisition          - (497,352)     (100)         - (497,352)    (100)

Net change in   21,801    42,704      (49)     8,352    46,402     (82)
non-cash
working
capital  

Cash used in  (47,950) (526,263)      (91) (218,008) (703,574)     (69)
investing
activities  

Purchases of property and equipment during the third quarter of 2012 totaled 
$69.8 million (2011 - $71.6 million). Purchases of property and equipment 
during the first three quarters of 2012 totaled $226.4 million (2011 - $252.6 
million). The purchase of property and equipment for the three and nine 
months ended September 30, 2012 relate predominantly to expenditures made 
pursuant to the Company's ongoing new build program.

In September 2011, the Company completed the acquisition of Rowan Land 
Drilling, comprised of 30 drilling rigs in the southern United States, for USD 
$510.0 million. The purchase was funded with existing cash balances and 
expanded credit facilities.

Financing Activities
             Three months ended September Nine months ended September
                                       30                          30

($                2012     2011  % Change      2012     2011 % Change
thousands)  

Net           (40,493)   70,877     (157)    29,188   66,997     (56)
(decrease)
increase in
operating
lines of
credit  

Issue of             -  390,080     (100)         -  390,080    (100)
unsecured
term loan  

Issue of             -        -         -   300,000        -        -
senior
unsecured
notes  

Repayment of         -        -         - (403,279)        -        -
term loan  

Issue of             -        -         -        43        -        -
capital
stock  

Purchase of      (524)    (617)      (15)   (8,044)  (5,528)       46
shares held
in trust  

Deferred             -  (2,078)     (100)   (2,156)  (2,078)        4
financing
costs  

Dividends    (16,087)  (14,555)        11  (48,262) (43,665)       11

Net change        (65)     (65)         -       930     (97)  (1,059)
in non-cash
working
capital 

Cash (used    (57,169)  443,642     (113) (131,580)  405,709    (132)
in) provided
by financing
activities  

The Company's Global Facility was increased by $150.0 million during the 
second quarter of 2012 to a new limit of $400.0 million. Additionally, the 
Company has available a $10.0 million Canadian Facility. The Global Facility 
is available to the Company and certain of its wholly-owned subsidiaries, and 
may be drawn in Canadian, United States or Australian dollars, up to the 
equivalent value of $400.0 million Canadian dollars. The amount available 
under the Canadian Facility is $10.0 million or the equivalent in United 
States dollars.

The change in the operating lines of credit for the three and nine months 
ended September 30, 2012 reflects operating cash flows generated by the 
Company's operations in excess of capital expenditure requirements in the 
current quarter and the repayment of the USD $100.0 million remaining balance 
of the term loan during the first half of 2012. As of September 30, 2012, 
the operating lines of credit are primarily being used to fund the completion 
of the most recent new build program and to support international operations.

In February 2012, the Company completed the private placement of USD $300.0 
million of senior unsecured notes (the "Notes"), with the proceeds from the 
issuance being used to repay a portion of the term loan. The Notes consist 
of: USD $100.0 million in five year notes with an interest rate of 3.43 
percent and a maturity date of February 22, 2017; USD $100.0 million in seven 
year notes with an interest rate of 3.97 percent and a maturity date of 
February 22, 2019; and USD $100.0 million in ten year notes with an interest 
rate of 4.54 percent and a maturity date of February 22, 2022. The Notes 
rank equally with the Company's Global Facility.

On June 14, 2012 the Company received approval from the Toronto Stock Exchange 
to acquire for cancellation up to three percent of the Company's issued and 
outstanding common shares under a Normal Course Issuer Bid (the "Bid"). The 
Company may purchase up to 4,596,397 common shares for cancellation. The Bid 
commenced on June 18, 2012 and will terminate on June 17, 2013 or such earlier 
time as the Bid is completed or terminated at the option of the Company. As 
at September 30, 2012, no common shares have been purchased and cancelled 
pursuant to the Bid.

The Company previously had a Bid that commenced on June 7, 2011 and terminated 
on June 6, 2012, under which no common shares were purchased and cancelled.

The Board of Directors of the Company has declared a fourth quarter dividend 
of $0.110 per common share, a 4.8 percent increase over the previous quarterly 
dividend rate of $0.105 per common share. The Company has increased its 
dividend by a compound annual growth rate of 17 percent since it first started 
to pay a dividend in 1995, with the dividend rate increasing every year. The 
fourth quarter dividend is payable January 4, 2013 to all Common Shareholders 
of record as of December 21, 2012. The dividend is pursuant to the quarterly 
dividend policy adopted by the Company. Pursuant to subsection 89(1) of the 
Canadian Income Tax Act ("ITA"), the dividend being paid is designated as an 
eligible dividend, as defined in subsection 89(1) of the ITA.

New Builds

During the nine months ended September 30, 2012, the Company commissioned five 
new ADR(®) drilling rigs and 11 new well servicing rigs in the United States; 
five new ADR(®) drilling rigs in Canada; and two new ADR(®) drilling rigs in 
Australia.

The remaining new build estimated delivery schedule, by geographic area, is as 
follows:  
                                  Estimated Delivery Date
                  Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Total

ADRs                                                           

  Canada                1       1       1       -       -     3

  United States         -       1       1       1       1     4

  International         -       -       -       -       -     -

Total                   1       2       2       1       1     7

Well Servicing                                                 

  Canada                2       3       1       -       -     6

  United States         -       -       -       -       -     -

  International         -       -       -       -       -     -

Total                   2       3       1       -       -     6

Outlook

As expected, third quarter activity levels in Canada fell below the activity 
levels of the comparable quarter of the prior year. Operators delayed or 
reduced programs due to decreased levels of cash flows and continuing 
uncertainty with respect to global economic conditions and the resulting 
impact on the supply and demand fundamentals for crude oil and natural gas. 
The fourth quarter has continued this softening trend but the Company expects 
that fourth quarter oilfield service activity levels will improve, subject to 
weather conditions, over activity levels in the recently completed third 
quarter. The general weakness in the Canadian market has resulted in a 
softening of rates for certain equipment classes resulting in reduced margins 
compared to the prior year. Current expectations for strong, seasonal levels 
of demand for the upcoming winter drilling season should enable the Company to 
improve pricing from current levels and approach margins similar to those 
experienced in last year's winter drilling season. Future Canadian 
operations will be further bolstered by the delivery of three new ADRs and six 
new well servicing rigs over the next several quarters.

The United States market continued to soften in the third quarter as various 
regions saw a slight decrease in the level of oilfield services activity as 
measured by the operating drilling rig fleet. While there are still just 
under 1,800 drilling rigs operating in the United States land-drilling market, 
oil and natural gas fundamentals continue to put downward pressure on the 
demand and revenue rates for oilfield services. The Company has experienced 
a reduction in activity levels and pricing, particularly for conventional 
drilling rigs. That said, the four new ADR(®) drilling rigs that are being 
delivered under term contracts into the United States market pursuant to the 
Company's current new build program will have a positive impact on activity 
levels and margins going forward.

The Company's international operations continue to improve as two new ADRs 
were delivered into Australia in the third quarter and operations resumed in 
Libya with the start-up of one drilling rig in September. The Company 
anticipates that operating activity and financial contributions from the 
international segment will continue to moderately improve in future quarters.

Risks and Uncertainties

This document contains forward-looking statements based upon current 
expectations that involve a number of business risks and uncertainties. The 
factors that could cause results to differ materially include, but are not 
limited to, political and economic conditions, crude oil and natural gas 
prices, foreign currency fluctuations, weather conditions and the ability of 
oil and natural gas companies to raise capital or other unforeseen conditions 
which could impact on the use of the services supplied by the Company.

Conference Call

A conference call will be held to discuss the Company's third quarter 2012 
results at 2:00 p.m. MST (4:00 p.m. EST) on Monday, November 12, 2012. The 
conference call number is (647) 427-7450 (in Toronto) or 1-888-231-8191 
(outside Toronto). A taped recording will be available until November 19, 
2012 by dialing 1-416-849-0833 (in Toronto) or 1-855-859-2056 (outside 
Toronto) and entering the reservation number 43355202. A live broadcast may 
be accessed through the Company's web site at www.ensignenergy.com.

Ensign Energy Services Inc. is an international oilfield services contractor 
and is listed on the Toronto Stock Exchange under the trading symbol ESI.  

Ensign Energy Services Inc.                                            

Consolidated Statements of Financial                                   
Position 

As at                                      September 30     December 31
                                                   2012            2011

(Unaudited, in thousands of Canadian                                   
dollars)
                                                                       

Assets                                                                 

Current Assets                                                         

  Cash and cash equivalents              $       49,139   $       2,613

  Accounts receivable                           426,808         477,143

  Inventories and other                          72,588          81,978
                                                                       
                                                548,535         561,734
                                                                       

Property and equipment                        2,488,331       2,479,618

Note receivable                                   5,831           6,761
                                                                       
                                         $    3,042,697   $   3,048,113
                                                                       
                                                                       
                                                                       

Liabilities                                                            

Current Liabilities                                                    

  Accounts payable and accruals          $      246,818   $     289,541

  Operating lines of credit                     259,401         238,440

  Income taxes payable                           15,597          11,494

  Dividends payable                              16,087          16,087

  Share-based compensation                       14,383          16,405
                                                                       
                                                552,286         571,967
                                                                       

Long-term debt                                  293,172         405,953

Share-based compensation                          4,800           5,304

Deferred income taxes                           384,034         341,467
                                                                       
                                              1,234,292       1,324,691
                                                                       

Shareholders' Equity                                                   
                                                                       

  Share capital                                 165,205         166,864

  Contributed surplus                             3,137           3,448

  Foreign currency translation                 (32,786)           1,032
reserve

  Retained earnings                           1,672,849       1,552,078
                                                                       
                                              1,808,405      1,723,422 
                                                                       
                                         $    3,042,697   $   3,048,113
                                                             
                                                             



Ensign Energy                                                             
Services Inc.

Consolidated                                                              
Statements of                                                   
Income 

For the three and nine                                                    
months ended September                                        
30
                                                                          

(Unaudited, in thousands                                                  
of Canadian dollars,                                            
except per share data)
                                                                          
                              Three months ended         Nine months ended
                         September     September   September     September
                                30            30          30            30
                              2012          2011        2012          2011
                                                                          

Revenue                $   525,666   $   475,749 $ 1,667,215   $ 1,312,405
                                                                          

Expenses                                                                  

  Oilfield                 373,982       327,006   1,170,956       911,886
services

  Depreciation              57,599        44,528     166,198       120,387

  General and               19,107        21,174      59,199        49,380
administrative

  Share-based                3,659      (18,311)     (2,557)       (1,577)
compensation

  Foreign                  (3,018)        16,111       5,793         4,275
exchange and                                                    
other
                                                                          
                           451,329       390,508   1,399,589     1,084,351
                                                                          

Income before               74,337        85,241     267,626       228,054
interest and                                                    
income taxes
                                                                          

Interest                       145           216         365           511
income

Interest                   (4,926)       (1,755)    (14,804)       (2,515)
expense
                                                                          

Income before               69,556        83,702     253,187      226,050 
income taxes
                                                                          

Income taxes                                                              

  Current tax                9,795       (2,258)      41,017        13,897

  Deferred tax              14,929        21,971      43,137        52,400
                                                                          
                            24,724        19,713      84,154        66,297
                                                                          

Net income             $    44,832   $    63,989 $   169,033   $   159,753
                                                                          

Net income per                                                            
share 

  Basic                $      0.29   $      0.42 $      1.11   $      1.05

  Diluted              $      0.29   $      0.42 $      1.11   $      1.04
                                                                  
                                                                  



Ensign Energy                                                        
Services Inc.

Consolidated                                                         
Statements of Cash                               
Flows

For the three and                                                    
nine months ended                                          
September 30
                                                                     

(Unaudited,                                                          
in thousands                                               
of Canadian
dollars)
                           Three months ended       Nine months ended
                        September   September   September   September
                               30          30          30          30
                             2012        2011        2012        2011

Cash provided                                                        
by (used in)

Operating                                                            
activities

Net income            $    44,832 $    63,989 $   169,033 $   159,753

Items not                                                            
affecting                                                  
cash


                       57,599      44,528     166,198     120,387
Depreciation 
Share-based               6,499    (16,605)       3,558       2,279
compensation,                                              
net of cash
paid 
Accretion                    75         303       1,503         303
on long-term                                               
debt 
Deferred                 14,929      21,971      43,137      52,400
income tax 
Net change in            (26,307)   (112,758)       6,874    (97,460)
non-cash                                                   
working
capital 
                       97,627       1,428     390,303    237,662  


                                                                     

Investing                                                            
activities

Purchase of              (69,751)    (71,615)   (226,360)   (252,624)
property and                                               
equipment

Acquisition                     -   (497,352)           -   (497,352)

Net change in              21,801      42,704       8,352      46,402
non-cash                                                   
working
capital
                         (47,950)   (526,263)   (218,008)   (703,574)
                                                                     

Financing                                                            
activities

Net                      (40,493)      70,877      29,188      66,997
(decrease)
increase in                                                
operating
lines of
credit

Issue of                        -     390,080           -     390,080
unsecured                                                  
term loan

Issue of                        -           -     300,000           -
senior                                                     
unsecured
notes

Repayment of                    -           -   (403,279)           -
term loan

Issue of                        -           -          43           -
capital stock

Purchase of                 (524)       (617)     (8,044)     (5,528)
shares held                                                
in trust

Deferred                        -     (2,078)     (2,156)     (2,078)
financing                                                  
costs

Dividends                (16,087)    (14,555)    (48,262)    (43,665)

Net change in                (65)        (65)         930        (97)
non-cash                                                   
working
capital
                         (57,169)     443,642   (131,580)     405,709
                                                                     

Net                       (7,492)    (81,193)      40,715    (60,203)
(decrease)
increase in                                                
cash and cash
equivalents

  Effects of                                                         
foreign                                                    
exchange on
cash and 


cash                    3,054    (22,560)       5,811    (22,863)
equivalents 
Cash and cash                                                        
equivalents 
Beginning                53,577     110,207       2,613      89,520
of period 
                                                                  
End of              $    49,139 $     6,454 $    49,139 $     6,454
period 


                                                                     

Supplemental                                                         
information

  Interest            $     1,827 $     1,337 $     9,322 $     2,130
paid

  Income              $     9,949 $     8,279 $    36,914 $    23,504
taxes paid
                                                             
                                                             











Glenn Dagenais, Executive Vice President Finance and Chief Financial  Officer, 
(403) 262-1361

SOURCE: Ensign Energy Services Inc.

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/November2012/12/c6914.html

CO: Ensign Energy Services Inc.
ST: Alberta
NI: OIL ERN CONF 

-0- Nov/12/2012 10:00 GMT


 
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