Tesla Reports 2012 Annual and Fourth Quarter Results
CALGARY, ALBERTA -- (Marketwire) -- 03/19/13 -- Tesla Exploration
Ltd. (TSX:TXL) ("Tesla" or the "Company") today announces its 2012
annual and fourth quarter operating and financial results.
(000s, except per
share data) Three months ended Year Ended
(unaudited) December 31 December 31
2012 2011 Change 2012 2011 Change
$ $ % $ $ %
Revenue 41,750 62,319 (33) 191,686 225,450 (15)
reimbursables 36,479 48,559 (25) 163,218 162,107 1
Gross margin (1) 11,806 11,691 1 51,866 39,761 30
As a % of revenue
reimbursables 32% 24% 32% 25%
Net earnings (loss) (566) 719 n/m 5,535 576 861
Per share - basic (0.02) 0.03 n/m 0.24 0.03 863
EBITDA (2) 6,125 7,486 (18) 31,745 23,923 33
Per share - basic 0.27 0.33 (18) 1.40 1.05 33
Cash flow from
operations (3) 5,672 5,933 (4) 30,802 22,277 38
Per share - basic 0.25 0.26 (4) 1.36 0.98 39
for the year -
basic 22,739 22,793 n/m 22,728 22,794 n/m
expenditures 5,190 4,642 12 28,857 12,877 124
As at December December
2012 2011 Change
$ $ %
Working capital 3,330 10,411 (68)
Total assets 129,443 141,088 (8)
borrowings (4) 22,185 29,073 (24)
Equity 63,374 57,993 9
(1) Gross margin is defined as gross profit before depreciation and
amortization. Gross margin is a measure that does not have a meaning
prescribed under IFRS in Canada and accordingly, may not be comparable
to similar measures used by other companies.
(2) EBITDA is defined as income before interest, taxes, depreciation,
amortization and impairments, gains or losses on foreign exchange, gains
or losses on sales of capital assets, bad debt provisions and stock-
based compensation. EBITDA and EBITDA per share are presented because
they are frequently used by securities analysts and others for
evaluating companies and their ability to service debt. EBITDA is a
measure that does not have any standardized meaning prescribed under
IFRS in Canada and accordingly, may not be comparable to similar
measures used by other companies. The Company is consistent with its
calculation of EBITDA year over year.
(3) Cash flow from operations is defined as "Cash provided by operating
activities before changes in non-cash working capital." Cash flow from
operations and cash flow from operations per share are measures that
provide shareholders and potential investors with 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. Cash flow from operations and cash flow from operations
per share are not measures that have any standardized meaning prescribed
by IFRS in Canada, and accordingly, may not be comparable to similar
measures used by other companies. The Company is consistent with its
calculation of cash flow from operations year over year.
(4) Includes capital lease obligations and long-term debt, including current
-- Tesla generated $31.7 million of EBITDA(2) and $5.5 million of net
income on $191.7 million of revenues in 2012, a marked improvement over
$23.9 million of EBITDA(2) and $0.6 million of net income on $225.4
million of revenues in 2011.
-- Tesla's gross margin (1) of $51.9 million (32% of revenues excluding
reimbursables) in 2012 was a significant improvement compared to $39.8
million (25%) in 2011.
-- Tesla Canada peaked at nine crews and operated over 100,000 channels
during the seasonally strong first quarter of 2012 almost all of which
was on three-dimensional ("3D") and three-component ("3C") programs.
Canadian operations utilized 23,000 stations (69,000 channels) of 3C
recording equipment, including 13,000 stations (39,000 channels) owned
by the Company.
-- The Company entered into an extended seismic services agreement (the
"Agreement") with a multi-client geophysical company for an initial 24
month period. In connection with the Agreement, the Company purchased
10,000 stations of a wireless multi-component seismic acquisition system
("Hawk") and auxiliary equipment at a cost of approximately $18.0
-- Tesla USA successfully utilized the Hawk system throughout the second
half of 2012 under the Agreement before mobilizing the system to Canada
for a project during the first quarter of 2013.
-- Tesla Trinidad successfully completed the year-long Guayaguayare project
in Trinidad in the second quarter of 2012. Additionally, Tesla
incorporated a new subsidiary, Tesla Exploration Colombia S.A.S. ("Tesla
Colombia") in early 2013 further expanding the Company's geographical
footprint in the region.
-- Tesla Offshore significantly improved revenues from the comparative year
benefitting from work on up to four geophysical vessels, most of which
was on lar
ge scale day rate projects during the second half of the year.
This supplemented the historically strong summer construction season
supporting client operations on up to 12 vessels.
-- Tesla Offshore expanded its operations outside of the Gulf of Mexico,
its historical operating area, with special projects in Alaska,
Trinidad, Israel, Argentina and other international locations.
-- The Company approved a $6 million capital expenditure to acquire a
Bluefin Autonomous Underwater Vehicle ("AUV") which is expected to be
operational by September 2013. Tesla Offshore hired several experienced
personnel to manage the AUV service line and develop international
-- Tesla International operated a crew in the UK and Europe throughout 2012
on hydrocarbon and mineral projects.
-- Tesla International secured land and marine projects in Tanzania and the
Democratic Republic of the Congo ("DRC") that will operate into May
2013.Tesla International also strengthened its backlog with a contract
to provide two crews on a day rate basis in Somaliland for a minimum of
200 operating days beginning in April of 2013.
-- The Company hired and appointed Rob Kendall to lead Tesla's Research and
Special Projects group focusing on micro-seismic and fibre optic
Fourth Quarter Financial Results:
Despite a decline in revenues, gross margin grew slightly in the
fourth quarter of 2012 compared to the fourth quarter of 2011. The
Company's consolidated revenues including reimbursables decreased 33%
in the fourth quarter of 2012 compared to the fourth quarter of 2011
while the Company's revenue excluding reimbursables decreased 25%.
Improvements in activity levels for Tesla Canada and Tesla Offshore
were more than offset by declines in activity levels for Tesla USA,
Tesla International and Tesla Trinidad. The Company had improvements
in gross margin from Tesla Canada, Tesla USA and Tesla Offshore which
more than offset the decline in Tesla International's gross margin.
Gross margin as a percentage of total revenue (including
reimbursables) increased to 28% in the fourth quarter of 2012 from
19% in the fourth quarter of 2011 due mainly to the improvement in
Tesla USA's operations including the significant decrease in
flow-through reimbursables associated with Tesla USA's revenues.
Gross margin as a percentage of revenue (excluding reimbursables)
improved to 32% in the fourth quarter of 2012 compared to 24% in the
fourth quarter of 2011 as improvements in Tesla USA's operations and
a reduced weighting of Tesla Trinidad's low margin front-end
operations more than offset slight declines for Tesla Canada, Tesla
Offshore and Tesla International.
Tesla Canada's revenues improved with an earlier start to winter than
the prior year. There were seven crews operating in November 2012,
whereas in 2011, Tesla Canada didn't have seven crews operating until
December. There was growth in both two-dimensional ("2D") and 3D
activity days and similar utilization of Tesla's 3C equipment. Tesla
Canada's gross margin benefitted from the increased operating
Tesla USA's activity declined significantly operating two crews early
in the fourth quarter of 2012 including one crew utilizing the
Company's Hawk system for a 2D project compared to the operation of
three crews continuously throughout the fourth quarter of 2011 on
large 3D programs requiring increased levels of equipment and
personnel. The Hawk system was put on retainer for part of the
quarter under an extended seismic services agreement with a
multi-client geophysical company before being moved to Canada for the
peak winter season. This decreased activity also led to a
corresponding decrease in third-party contractor revenues. Tesla
USA's margins improved despite the slight drop in revenues. Margins
benefitted from the utilization of the Hawk system, related retainer
payments and a significant reduction in rental costs.
Tesla Trinidad completed the Guayaguayare program in April of 2012.
As such, no revenues were generated in the fourth quarter of 2012.
Significant revenues were generated from this project in the fourth
quarter of 2011 relating to front-end operations. Trinidad had
limited gross margin during the fourth quarter of 2011 due to the
delay in recording start up and ultimate weather shut down during
Tesla International's revenues decreased from the comparative quarter
due mainly to reduced revenues from operations in Africa. Operating
activity for the fourth quarter of 2012 was driven by continuous
projects in the UK and Europe for one crew and the startup of a
project in Tanzania for one of the African crews. The fourth quarter
of 2011 included a full workload for the UK crew along with a full
quarter of operating activity, standby and demobilization charges on
a program in northern Ethiopia and the startup of a lake project in
the Democratic Republic of Congo ("DRC"). Tesla International's gross
margin declined from the comparative quarter due to the reduced level
of revenues in Africa and limited margins recognized on the extended
mobilization and early phase of the Tanzania project in late 2012.
The fourth quarter of 2011 had benefitted from a full quarter of
operating activities in northern Ethiopia.
Tesla Offshore's activity levels improved dramatically during the
fourth quarter of 2012 as compared to the fourth quarter of 2011
driven by a significant increase in geophysical activity with
multiple vessels working on lump sum, day rate and deep tow projects.
Tesla Offshore's gross margins improved in line with increased
The Company's EBITDA decreased in the fourth quarter of 2012 compared
to the fourth quarter of 2011 due to the growth in absolute gross
margin being more than offset by increased general and administrative
costs relating to additional bonus accruals and growth in business
development costs. The Company incurred a small consolidated net loss
in the fourth quarter of 2012 compared to consolidated net income in
the fourth quarter of 2011 due to the reduced EBITDA and increased
depreciation related to the Hawk system. This was partially offset by
a reduction in tax expense.
The Company's working capital increased $2.6 million during the
quarter to $3.3 million including a net cash deficit of $5.7 million.
Operating lines and a $3.0 million draw on long-term debt were
required to fund working capital requirements in certain
jurisdictions, repay $1.1 million of regular finance leases and
related interest and fund $5.1 million of capital expenditures during
the fourth quarter of 2012.
Total long-term borrowings grew by $1.9 million during the quarter to
$22.2 million. Draws on long-term debt of $3.0 million were partially
offset by regular payments made on outstanding finance leases.
Shareholders' equity increased $0.2 million to $63.4 million during
the quarter as the loss incurred during the quarter was more than
offset by an increase in accumulated other comprehensive income due
to the weakening of the Canadian dollar against the functional
currency of the Company's foreign subsidiaries along with an increase
in contributed surplus relating to share-based payment charges.
2012 Financial Results:
Gross margin improved in 2012 compared to 2011, despite a drop in
revenues. The Company's consolidated revenues including reimbursables
decreased 15% in 2012 compared to 2011 while the Company's revenue
excluding reimbursables increased 1%. Additional revenues for Tesla
Offshore and Tesla Trinidad were more than offset by declines in
revenues for Tesla Canada, Tesla USA and Tesla International. The
Company had improvements in gross margin across all entities except
for Tesla International with the biggest growth coming from North
American land operations. Gross margin as a percentage of total
revenue (including reimbursables) increased to 27% in 2012 from 18%
in 2011 due to improvements from Tesla Canada and Tesla USA,
including a significant decrease in flow-through reimbursables
associated with these operations. Further, 2011 was negatively
impacted by the low margin nature of the front-end phase of the
Trinidad operations being conducted mainly by a third-party
contractor. Gross margin as a percentage of revenue (excluding
roved to 32% in 2012 compared to 25% in 2011 as
improvements from Tesla Canada, Tesla USA and Tesla Trinidad more
than offset the decline of Tesla International. Tesla Offshore's
gross margin as a percentage of revenue (excluding reimbursables)
remained consistent with the prior year.
Tesla Canada's revenues remained strong with the decline in total
revenue driven entirely by a significant drop in reimbursables. Tesla
Canada's gross margin benefitted from improved rates during the peak
winter season compared to 2011 driven by continued demand for 3C
services, better productivity due to the mild winter and a reduced
level of rental equipment.
Tesla USA's revenues decreased with a decline in activity levels and
a significant drop in associated reimbursables. Tesla USA's gross
margin improved due to the term nature of a large portion of the work
performed, the benefits of utilizing the Hawk system and a
significant reduction in rental costs.
Tesla Trinidad's operations generated slightly higher revenues from
recording activities during the first four months of 2012 exceeding
revenues generated from front-end operations completed in 2011. Tesla
Trinidad contributed margin during 2012 with almost all of the
recording on the Guayaguayare program completed during 2012 allowing
for the recognition of turnkey revenues that had been deferred at the
end of 2011.
Tesla International's revenues decreased against the comparative
period with reduced utilization of crews in eastern Africa. Tesla
International's gross margins were negatively impacted by the reduced
utilization of crews in east Africa during the year.
Tesla Offshore saw significant growth in both geophysical and
construction revenues compared to 2011 when the impact of the Macondo
oil spill and resulting lease sale cancelations had limited Tesla
Offshore's activity levels in the Gulf of Mexico. Tesla Offshore's
gross margin benefitted from increased activity levels in the Gulf of
The Company's EBITDA in 2012 was well ahead of 2011 due to the growth
in absolute gross margin partially offset by an increase in general
and administrative costs. The Company's consolidated net income in
2012 was also a significant improvement over 2011 due to the
increased EBITDA partially offset by increased depreciation related
to the Hawk system and additional tax expense.
The Company's working capital decreased $7.1 million during the year
to $3.3 million including a net cash deficit of $5.7 million.
Operating cash flows generated during the year were used to repay
$15.3 million of long-term debt and $5.7 million on outstanding
finance leases as well as funding $14.6 million of capital
expenditures (net of $14.1 million of lease financed expenditures)
during 2012. Operating lines were utilized towards the end of 2012 to
fund operations in Canada and International.
Total long-term borrowings were reduced by $6.9 million during the
year to $22.2 million. Long-term debt was reduced by $15.3 million
with cash flow generated mainly from Canada's winter season. Finance
lease obligations increased by $8.4 million during the year as
regular payments on outstanding finance leases totalling $5.7 million
were more than offset by additional lease financing for a portion of
the acquisition of the Hawk system and certain vehicles during the
year. At December 31, 2012, the Company had $34.7 million of unused
committed bank credit and lease facilities.
Shareholders' equity increased $5.4 million to $63.4 million during
the year due to the net income generated during the year along with
the exercise of options and an increase in contributed surplus
relating to share-based payment charges. This was partially offset by
a decrease in accumulated other comprehensive income with the
strengthening of the Canadian dollar against the US dollar functional
currency of the Company's US subsidiaries.
North America Land Operations
Tesla Canada saw an early start to the current winter season but has
seen reduced activity levels during the first quarter of 2013
compared to the past two winters. Tesla Canada is operating seven
crews and approximately 80,000 channels for a substantial portion of
the quarter at comparable rates to the previous winter. Limited
winter work will extend into April. Activity levels in Canada
continue to be driven by the large number of operators in the oil
sands and shale plays, however, the industry has seen several
significant projects cancelled or deferred in the first quarter of
2013 due to issues surrounding foreign investment along with
challenges obtaining government approvals. The Company has been able
to ensure high utilization of its 13,000 3C stations along with
additional 3C rental stations. Tesla Canada also utilized the
Company's Hawk system on the first phase of a significant program
during the first quarter of 2013 with completion of the project
expected in the fourth quarter of 2013. Low natural gas prices will
continue to limit exploration activity during the summer months. The
Company expects to operate one crew periodically during May and June
with a second crew operational during the third quarter with activity
in both western and eastern Canada.
The 10,000 station Hawk system has recently returned to the US from
Canada to continue work on 3D programs under an agreement with a
multi-client geophysical company. The Hawk crew should begin work in
mid-March with backlog for the remainder of 2013 and should continue
to generate improved margins from those realized under current
industry metrics. The slow increase in natural gas pricing continues
to be reflected within the industry by increased activity levels
focused on oil and liquids rich shale plays such as the Bakken, Utica
(eastern Ohio) and Marcellus (western Pennsylvania and West
Virginia). This has led to additional contract awards and an
additional multi-component 3D recording crew in the second half of
2013. The Company is investigating long-term rental and purchase
options to service this demand. Activity in the Denver-Julesburg
("DJ") Basin has been slower than projected but is also expected to
increase in the second half of 2013. Pricing of services continues to
be the driving factor in this competitive market with requirements
for higher channel counts, wireless recording systems and third party
multi-client programs driving the demand for services.
South America Operations
Tesla Colombia was formed in February 2013 to provide seismic
acquisition services to companies in Colombia. An experienced
management team has spent the better part of a year researching the
South American market. In recent years, there has been increased
foreign investment in Colombian natural resources, growing
exploration activity and a strong demand for experienced and reliable
seismic acquisition companies with modern equipment and experience in
comparable terrains and environments. Meetings have been held and
relationships have been built with both oil and gas and mining
companies operating in Colombia. Many of these companies are
Canadian-based or international operators that Tesla has done work
for in other regions of the world. Management has also focused on
developing relationships with local companies that can provide
support to Tesla's operations in Colombia and provide access to
potential clients. While no projects have been awarded at this time,
the management team continues to pursue a number of opportunities
that have been identified during Tesla's presence in the country.
Tesla continues to investigate other opportunities in South America,
specifically in Trinidad, Ecuador and Suriname.
Tesla International's UK and European crew has seen a sustained
demand for acquisition services in both the hydrocarbon and minerals
sectors. Indicators suggest that this demand will be maintained.
Additional applications of seismic data in the areas of gas storage
and CO2 sequestration have been active indicating a possible
opportunity for growth in previously non-perspective areas of Europe.
This crew should be fully utilized for a good portion of 2013 after
securing commitments for a number of projects throughout the year.
Management is pursuing opportunities to fill remaining gaps in the
current 2013 work schedule.
Tesla International is currently completing a land and marine project
in Tanzania. This project operated during most of the first quarter
of 2013 before mobilizing for a land and marine project in the DRC.
This project is a continuation of work performed in late 2011 and
early 2012. The land portion of this program is expected to begin in
late March with the larger marine portion to follow in the second
quarter of 2013. There remains significant interest in the lake zones
of the Rift Valley with Tesla International well placed to exploit
the transition zone ("TZ") acquisition opportunities in the area. As
such the TZ crew is expected to remain busy during a significant
portion of 2013.
Tesla International is also mobilizing equipm
ent from Djibouti and
vibroseis units from Oman to Somaliland after securing work for two
crews on a long-term day-rate project beginning in April. The project
is expected to last through the end of the year with bonus incentives
for early completion.
Two key areas of East Africa are expected to see a return to greater
activity following political stabilisation and the interest of some
of the Major operators in developing their activities in the area.
The first key area involves interests along the Great Lakes Trend
from Tanzania into Ethiopia. This interest is in chasing analog plays
based on the recent discoveries in Uganda and successes in Northern
Kenya. The second area of increased exploration activity is near
coastal blocks from Mozambique northward to Somalia which are hinged
on recent major gas discoveries offshore East Africa. Tesla
International expects to be successful in obtaining additional work
from both these opportunities and from exploiting some potential new
areas of activity to extend its current backlog. Tesla
International's branch office in Islamabad continues to explore
opportunities in the region.
The UK technical services office remains steady with a number of
processing and interpretation projects recently awarded and underway
with high utilization of capacity expected to continue.
The Jakarta processing office has recently been awarded some sizable
projects that will keep the office fully utilized through early 2013.
Additional opportunities continue to be pursued to maintain backlog.
Tesla Offshore is benefitting from increased activity levels in the
Gulf of Mexico. The central and eastern Gulf of Mexico lease sale was
held on June 20, 2012, the first since the Macondo oil spill in early
2010. The return of lease sales was positive news for Tesla Offshore,
as lease sales generally lead to an increase in geophysical
operations as operators require geophysical surveys for the purpose
of securing drilling permits and evaluating new lease properties.
With 2013's Central Gulf lease sale returning to the standard March
schedule, a significant increase in opportunities during the fair
weather season are expected. In addition, hurricane Isaac's path
through the Gulf of Mexico has resulted in government mandated survey
requirements for operators in that impact corridor of the Gulf of
Mexico. Tesla Offshore has a healthy backlog of both turnkey and day
rate work as a direct result of the lease sale and hurricane Isaac
that is keeping multiple vessels occupied throughout the first
quarter of 2013. In April 2013, Tesla Offshore will remobilize two
geophysical vessels to continue the large scale day rate exploration
projects that were put on hold for the winter months.
Construction activity has slowed down considerably as is common
during the winter months and will stay that way until spring when
improved weather allows these types of projects to resume.
Tesla Offshore continues to pursue opportunities outside the Gulf of
Mexico and is entering the second year of a multi-year project in
Alaska. As long-term clients expand into international areas, Tesla
Offshore is configuring systems and staff to profitably provide
services to support their operations.
Focusing on this growth plan, Tesla Offshore committed to the
purchase of a $6 million Bluefin AUV which has the ability to acquire
high resolution ocean bottom data. Tesla Offshore expects the AUV to
be delivered and operational in September 2013. In addition to
addressing a much needed service to our existing customer base, this
will open new markets for Tesla Offshore related to deep water oil
and gas field development, along with governmental, environmental and
academic applications. Tesla Offshore plans to operate the AUV not
only in the Gulf of Mexico, where the US Government now requires data
across most of the deep water Gulf of Mexico blocks to be acquired by
an AUV, but on a global basis. Tesla Offshore hired several
experienced personnel to manage and optimize use of state of the art
technology in geophysical survey operations, including the AUV
service line, and to further the development of geo-hazards
interpretation services for clients worldwide. The AUV team is also
in the process of identifying other AUV specialists, to support field
Certain information set forth in this press release, including
management's assessment of the Company's future plans and operations,
contains forward-looking statements, which are based on the Company's
current internal expectations, estimates, projections, assumptions
and beliefs, which may prove to be incorrect. Some of the
forward-looking statements may be identified by words such as
"expects", "anticipates", "believes", "projects", "intends",
"continues", "estimates", "objective", "ongoing", "may", "will",
"should", "might", "plans" and similar expressions. These statements
are not guarantees of future performance and undue reliance should
not be placed on them. Such forward-looking statements are based on
current expectations, estimates and projections that involve a number
of known and unknown risks and uncertainties, which may cause the
Company's actual performance and financial results in future periods
to differ materially from any projections of future performance or
results expressed or implied by such forward-looking statements.
These include, but are not limited to, the risks outlined in the
"Business Risks" section of the Company's MD&A for the three and
twelve months ended December 31, 2012.
The information contained in this press release should not be
considered all-inclusive as it excludes changes that may occur in
general economic, political and environmental conditions. The Company
cautions that actual performance will be affected by a number of
factors, many of which are beyond its control. Investors are
cautioned against attributing undue certainty to forward-looking
statements. The forward-looking information and statements
in this press release speak only as of the date hereof and, subject
to its obligations under applicable law, the Company does not intend,
and does not assume any obligation, to update these forward-looking
statements if conditions or opinions should change.
Tesla provides geophysical and related services in Canada,
internationally through its wholly owned subsidiaries Tesla
Exploration International Ltd. and Tesla Exploration Trinidad Ltd.,
and in the United States through Tesla Exploration Inc. and Tesla
Offshore LLC. Since the Company's inception in 2000, Tesla has grown
both organically and through acquisitions funded by retained earnings
and prudent levels of borrowing, from a Canadian focused land seismic
business to a global provider of a broad suite of geophysical and
related services. Tesla trades on the TSX under the symbol "TXL".
Tesla Exploration Inc.
Mr. Richard Habiak
President and CEO
Tesla Exploration Inc.
Mr. Stuart Craven
Vice President and CFO
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