Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,501.65 -12.72 -0.08%
S&P 500 1,875.39 -4.16 -0.22%
NASDAQ 4,126.97 -34.49 -0.83%
Ticker Volume Price Price Delta
STOXX 50 3,175.97 -23.72 -0.74%
FTSE 100 6,674.74 -7.02 -0.11%
DAX 9,544.19 -55.90 -0.58%
Ticker Volume Price Price Delta
NIKKEI 14,521.47 -24.80 -0.17%
TOPIX 1,170.14 -3.67 -0.31%
HANG SENG 22,481.18 -28.46 -0.13%

Ensign Energy Services Inc. Reports 2013 First Quarter Results


CALGARY, May 6, 2013 /CNW/ -

Overview

Revenue for Ensign Energy Services Inc. ("Ensign" or the "Company") for the first quarter of 2013 was $581.1 million, a decrease of 14 percent from first quarter 2012 revenue of $677.7 million. Net income for the first quarter of 2013 decreased 38 percent to $65.0 million ($0.43 per common share) compared to net income of $105.5 million ($0.69 per common share) for the first quarter of 2012.  Excluding the impact of share-based compensation expense (recovery), adjusted net income for the first quarter of 2013 was $69.1 million ($0.45 per common share), 33 percent lower than adjusted net income of $103.6 million for the first quarter of 2012 ($0.68 per common share).  Operating earnings, expressed as EBITDA (defined as earnings before interest, income taxes, depreciation, and share-based compensation expense (recovery)), totaled $168.3 million ($1.10 per common share) in the first quarter of 2013, 20 percent lower than EBITDA of $211.1 million ($1.38 per common share) in the first three months of 2012.  Similarly, funds from operations decreased 21 percent to $140.6 million ($0.92 per common share) in the first three months of 2013 from $177.0 million ($1.16 per common share) in the first three months of the prior year.  Reduced operating activity in North America in the first three months of 2013, when compared to the first three months of 2012, negatively impacted operating and financial results for first quarter of 2013.  Partially offsetting this reduction was the positive impact of increased operating activity in Latin America and the eastern hemisphere and the positive impact on United States and international financial results from the United States dollar strengthening versus the Canadian dollar by approximately one percent during the three months ended March 31, 2013 compared to the three months ended March 31, 2012.

Gross margin decreased to $183.9 million (31.7 percent of revenue) for the first quarter of 2013 compared with gross margin of $234.3 million (34.6 percent of revenue) for the first quarter of 2012.  The year-over-year reduction in operating activity negatively pressured first quarter gross margins compared to the prior year, particularly in North America.

Working capital at March 31, 2013 was $67.6 million compared to $13.9 million at December 31, 2012.  Available borrowings at March 31, 2013 was $86.0 million compared to $164.3 million at December 31, 2012 as additional draws were used to support first quarter activity levels and the ongoing new build program which delivered two new ADR(®) drilling rigs and two new well servicing rigs in the first quarter of 2013.

FINANCIAL AND OPERATING HIGHLIGHTS

($ thousands, except per share data and operating information)


                                       Three months ended March 31
                                        2013       2012   % change
                                                

Revenue                              581,142    677,671       (14)
                                                

EBITDA (1)                           168,270    211,147       (20)

EBITDA per share (1)                                              

  Basic                                $1.10      $1.38       (20)

  Diluted                              $1.10      $1.38       (20)
                                                

Adjusted net income (2)               69,144    103,625       (33)

Adjusted net income per share (2)                                 

  Basic                                $0.45      $0.68       (34)

  Diluted                              $0.45      $0.68       (34)
                                                

Net income                            64,987    105,524       (38)

Net income per share                                              

  Basic                                $0.43      $0.69       (38)

  Diluted                              $0.42      $0.69       (39)
                                                

Funds from operations (3)            140,632    177,036       (21)

Funds from operations per share (3)                               

  Basic                                $0.92      $1.16       (21)

  Diluted                              $0.92      $1.16       (21)
                                                                  

Weighted average shares - basic
(000s)                               152,708    152,893          -

Weighted average shares - diluted
(000s)                               153,391    153,252          -
                                                                  

Drilling                                                          

  Number of marketed rigs                                         
    Canada(4)                            120        131        (8)
    United States                        116        113          3
    International (5)                     53         56        (5)

Operating days                                                    

  Canada (4)                           5,329      7,431       (28)

  United States                        5,504      6,313       (13)

  International(5)                     2,712      2,797        (3)
                                                                  

Well Servicing                                                    

  Number of marketed rigs                                         
    Canada                                91        103       (12)
    United States                         46         39         18

  Operating hours                                                 
    Canada                            35,137     40,135       (12)
    United States                     22,777     30,149       (24)

(1 )EBITDA is defined as "income before interest, income taxes,
depreciation and share-based compensation expense (recovery)". 
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 expense (recovery), 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.

First Quarter Highlights
    --  Revenue for the first three months of 2013 was $581.1 million,
        up 10 percent from the fourth quarter of 2012 and down 14
        percent from the first three months of 2012.  The reduction in
        revenue from the first quarter of 2012 to the first quarter of
        2013 is maintly due to reduced operating activity in North
        America.
    --  Two new ADRs were added to the Company's drilling fleet in the
        first quarter fo 2013: one in the Canadian market and one in
        the United States market.  The new build program also added two
        new well servicing rigs in Canada in the current quarter.

-- First quarter revenue by segment: o Canada - 44 percent; o United States - 35 percent; and o International - 21 percent.


    --  EBITDA for the first quarter of 2013 was $168.3 million, a 20
        percent decrease from EBITDA of $211.1 million for the first
        quarter of 2012.  Funds from Operations for the first quarter
        of 2013 decreased 21 percent to $140.6 million from $177.0
        million in the first quarter of the prior year.
    --  Canadian drilling recorded 5,329 operating days in the first
        three months of 2013, a 28 percent decrease from 7,431
        operating days in the first three months of 2012.  Canadian
        well servicing hours decreased by 12 percent in the first
        quarter of 2013 compared to the first quarter of 2012.
    --  United States drilling recorded 5,504 operating days in the
        first quarter of 2013, a 13 percent decrease from 6,313
        operating days in the first quarter of 2012.  United States
        well servicing hours decreased by 24 percent in the first three
        months of 2013 compared to the first three months of 2012.
    --  International drilling recorded 2,712 operating days in the
        first quarter of 2013, a three percent decrease from 2,797
        operating days recorded in the first quarter of 2012.
    --  The Company declared a quarterly cash dividend on common shares
        of $0.110 per common share payable July 5, 2013.
    --  Subsequent to March 31, 2013, the Company expanded its oilfield
        equipment rental fleet in Canada through the purchase of
        additional Canadian oilfield service rental assets, including
        rig matting and waste management equipment.

Revenue and Oilfield Services Expense
                                      Three months ended March 31

($ thousands)                        2013        2012    % change
                                                       

Revenue                                                          

  Canada                          255,988     324,852        (21)

  United States                   200,470     249,433        (20)

  International                   124,684     103,386          21
                                                       
                                  581,142     677,671        (14)

Oilfield services expense         397,201     443,343        (10)
                                                       
                                  183,941     234,328        (22)

Gross margin (%)                     31.7        34.6

Revenue recorded in the first quarter of 2013 totaled $581.1 million, a 
decrease of 14 percent from the first quarter of 2012.  As a percentage of 
revenue, gross margin for the first quarter of 2013 decreased to 31.7 percent 
from 34.6 percent for the first quarter of 2012.

The continued softening of demand for North American oilfield services reduced 
operating and financial results overall for the Company in the current quarter 
compared to the first quarter of 2012.  Reduced activity levels, combined 
with downward pressure on revenue rates for Canada and United States oilfield 
services, led to decreased revenue in the current quarter compared to the 
first quarter of the prior year.  Increased demand for oilfield services in 
the Company's international operations improved operating and financial 
results for the current quarter for that segment, when compared to the first 
quarter of 2012, partially offsetting some of the weakness experienced in 
North America.

Canadian Oilfield Services

Revenue decreased 21 percent to $256.0 million for the three months ended 
March 31, 2013, from $324.9 million for the three months ended March 31, 
2012.  Canadian revenues accounted for 44 percent of the Company's total 
revenue in the first quarter of 2013, compared with 48 percent in the first 
quarter of 2012. Reduced demand for oilfield services appeared to be 
attributable to unfavorable price differentials for Canadian commodities as 
well as increasing uncertainty in global economic conditions that began in the 
latter half of 2012 and continued into the current year.

The Company recorded 5,329 drilling days in the first quarter of 2013; this 
compares with 7,431 drilling days for the first quarter of 2012, a 28 percent 
decrease due to weaker demand for Canadian oilfield services.  Canadian well 
servicing hours decreased by 12 percent to 35,137 operating hours in the first 
quarter of 2013 compared with 40,135 operating hours in the corresponding 
period of 2012.

During the three months ended March 31, 2013, the Company added one newly 
constructed Automated Drill Rig ("ADR(®)") to its Canadian drilling rig fleet 
and two well servicing rigs.   Five inactive drilling rigs and 10 inactive 
well servicing rigs were decommissioned in the current quarter.  The Company 
also disposed of its non-rig manufacturing facility located in Calgary, 
Alberta.

United States Oilfield Services

The Company's United States operations recorded revenue of $200.5 million in 
the first quarter of 2013, a 20 percent decrease from the $249.4 million 
recorded in the corresponding period of the prior year.  The Company's United 
States operations accounted for 35 percent of the Company's revenue in the 
first quarter of 2013, compared to 37 percent in the first quarter of 2012.  
Drilling rig operating days decreased by 13 percent to 5,504 drilling days in 
the first quarter of 2013 from 6,313 drilling days in the first quarter of 
2012.  Well servicing activity decreased by 24 percent in the first quarter 
of 2013 to 22,777 operating hours from 30,149 operating hours in the first 
quarter of 2012.

The slowdown in North American oilfield services that began in the second half 
of 2012 and continued into the start of 2013 negatively impacted United States 
operating and financial results in the current quarter, resulting in reduced 
operating activity and lower revenue rates.

During the three months ended March 31, 2013 the Company added one new ADR(®) 
drilling rig to its United States fleet and decommissioned six inactive 
drilling rigs.

Current quarter results from the Company's United States operations were 
positively impacted on translation to Canadian dollars by a strengthening 
United States dollar against the Canadian dollar.  In the first three months 
of 2013 the United States dollar increased by approximately one percent when 
compared to the same period of the prior year.

International Oilfield Services

The Company's international operations recorded revenue of $124.7 million in 
the first quarter of 2013, a 21 percent increase from $103.4 million recorded 
in the corresponding period of the prior year.  International operations 
contributed 21 percent of the Company's revenue in the first quarter of 2013 
compared with 15 percent in the same period of 2012.  International operating 
days for the three months ended March 31, 2013 totaled 2,712 drilling days 
compared with 2,797 drilling days in 2012, a decrease of three percent.

The improved start to 2013 in the Company's international operations was 
mainly a result of increased demand for oilfield services in Latin America and 
the eastern hemisphere and the addition of two new ADR's and the relocation of 
an existing rig into the international market late in 2012, offset by the 
transfer of six drilling rigs from Mexico to the United States at the end of 
2012.  Similar to the Company's United States operations, international 
operations were positively impacted from the strengthening United States 
dollar versus the Canadian dollar on translation into Canadian dollars for 
reporting purposes in the first quarter of 2013 compared to the first quarter 
of the prior year.

During the three months ended March 31, 2013 the Company decommissioned one 
inactive drilling rig from its international fleet.

Depreciation                              
                       Three months ended March 31
                                          

($ thousands)           2013      2012    % change
                                          

Depreciation          57,190    58,159         (2)

The Company uses the unit of production method of calculating depreciation for 
the majority of its property and equipment.  Depreciation expense totaled 
$57.2 million for the first quarter of 2013 compared with $58.2 million for 
the first quarter of 2012, a decrease of two percent.  Decreased depreciation 
reflects the reduced activity in North America for the first three months of 
2013 compared to the first three months of 2012.  The impact from the 
decrease in activity levels was offset by higher valued equipment being added 
to the Company's global fleet throughout 2012 through the Company's new build 
program.

General and Administrative Expense  
                                   Three months ended March 31
                                                      

($ thousands)                        2013     2012    % change
                                                      

General and administrative         19,559   19,407           1
                                             

% of revenue                          3.4      2.9

General and administrative expense was consistent for the first quarter of 
2013 compared to the first quarter of 2012 increasing one percent to $19.6 
million (3.4 percent of revenue) compared with $19.4 million (2.9 percent of 
revenue) for the first quarter of 2012.

Share-Based Compensation Expense                       
(Recovery)
                                   Three months ended March 31
                                                       

($ thousands)                       2013       2012   % change
                                                       

Share-based compensation           6,396    (2,922)      (319)

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 March 31, 2013, share-based compensation expense 
(recovery) was an expense of $6.4 million compared with a recovery of $2.9 
million recorded in the first quarter of 2012.  The increase in the 
share-based compensation expense in the first quarter of 2013 is a result of 
the change in the fair value of share-based compensation liability primarily 
resulting from an increase in the price of the Company's common shares during 
the first three months of 2013.  The closing price of the Company's common 
shares was $17.32 at March 31, 2013 ($14.91 at March 31, 2012) compared with 
$15.37 at December 31, 2012 ($16.25 at December 31, 2011).

Interest Expense          
                         Three months ended March 31
                                           

($ thousands)              2013    2012    % change
                                           

Interest expense          4,121   4,254          (3)

Interest income           (168)    (97)           73
                                           
                          3,953   4,157          (5)

Interest is incurred on the Company's $10.0 million Canadian-based revolving 
credit facility, the $400.0 million global revolving credit facility and the 
USD $300.0 million senior unsecured notes issued in February 2012.  The 
amortization of deferred financing costs associated with the issuance of the 
Company's long-term debt are included in interest expense in both quarters.

Interest expense in the first quarter of 2013 was comparable to the first 
quarter of 2012.

Foreign Exchange and Other ((Gain)/Loss)                       
                                           Three months ended March 31
                                                               

($ thousands)                                2013     2012    % change
                                                               

Foreign exchange and other                (3,888)    3,774       (203)

Included in this amount are foreign currency movements in the Company's 
subsidiaries which have functional currencies other than Canadian dollars.  
In general the United States dollar strengthened in the first three months of 
2013 compared to the first three months of 2012 when compared to other 
currencies impacting the Company. 

Income Taxes                                                    
                                     Three months ended March 31
                                                        

($ thousands)                         2013      2012    % change
                                                        

Current income tax                  24,205    31,741        (24)

Deferred income tax                 11,539    14,488        (20)
                                                        
                                    35,744    46,229        (23)
                                              

Effective income tax rate (%)         35.5      30.5

The effective income tax rate for the three months ended March 31, 2013 was 
35.5 percent compared with 30.5 percent for the three months ended March 31, 
2012. The effective income tax rate in the first quarter of 2013 was higher 
than that of the first quarter of 2012 due to a higher proportion of taxable 
income earned in international jurisdictions with higher tax rates, as well as 
the tax impact of the currency devaluation that occurred in Venezuela in 
February 2013.

Financial Position

The following chart outlines significant changes in the consolidated statement 
of financial position from December 31, 2012 to March 31, 2013:

($ thousands)                   Change   Explanation 

Cash and cash equivalents      105,471   See consolidated statements of
                                         cash flows. 

Accounts receivable             56,145   Increase is due to foreign
                                         exchange fluctuations on the
                                         consolidation of the Company's
                                         foreign subsidiaries and
                                         is in line with increased
                                         activity in the first quarter
                                         of 2013
                                         when compared to the fourth
                                         quarter of 2012.

Inventories and other          (9,361)   Decrease is due to normal
                                         course use of consumables and
                                         amortization of prepaid
                                         expenses, offset by additional
                                         inventory.

Property and equipment          40,580   Increase was due to additions
                                         from the current new build
                                         program and an increase in the
                                         year-end foreign exchange
                                         rate on consolidation of the
                                         Company's foreign
                                         subsidiaries,
                                         offset by depreciation and the
                                         disposal of the Company's
                                         non-rig manufacturing facility
                                         located in Calgary, Alberta.

Accounts payable and            25,157   Increase is due to foreign
accruals                                 exchange fluctuations on the
                                         consolidation of the Company's
                                         foreign subsidiaries and
                                         is in line with increased
                                         activity in the first quarter
                                         of 2013
                                         compared to the fourth quarter
                                         of 2012.

Operating lines of credit       77,768   Increase is due to additional
                                         draws during the period on the
                                         global revolving credit
                                         facility and the impact of
                                         foreign
                                         exchange fluctuations on the
                                         consolidation of the Company's
                                         foreign subsidiaries offset by
                                         repayments during the period.

Income taxes payable           (7,383)   Decrease is due to tax
                                         instalments and refunds,
                                         offset by the
                                         current income tax provision
                                         for the period.

Share-based compensation         4,946   Increase is due to the
                                         increase in the price of the
                                         Company's common shares as at
                                         March 31, 2013
                                         compared with December 31,
                                         2012.

Long-term debt                   6,251   Increase is due to foreign
                                         exchange fluctuations on the
                                         USD denominated long-term
                                         debt.

Deferred income taxes           11,878   Increase primarily due to
                                         accelerated tax depreciation
                                         of
                                         assets added during the
                                         current quarter and the
                                         currency
                                         devaluation in Venezuela in
                                         February 2013.

Shareholders' equity            74,273   Increase due to net income for
                                         the period and the impact
                                         of foreign exchange rate
                                         fluctuations on net assets of
                                         foreign
                                         subsidiaries offset by the
                                         amount of dividends declared
                                         in the
                                         period.

Funds from Operations and Working
Capital                                                                
                                            Three months ended March 31
                                                               

($ thousands)                             2013         2012    % change

Funds from operations                  140,632      177,036        (21)

Funds from operations per share          $0.92        $1.16        (21)

Working capital (1)                     67,623       13,861         388

(1) Comparative figure as of December 31, 2012.

During the three months ended March 31, 2013, the Company generated funds from 
operations of $140.6 million ($0.92 per common share) compared with funds from 
operations of $177.0 million ($1.16 per common share) for the three months 
ended March 31, 2012, a decrease of 21 percent.  This decrease is due to 
reduced operating and financial results for the current quarter compared to 
the first quarter of the prior year.

At March 31, 2013, the Company's working capital totaled $67.6 million, 
compared to $13.9 million at December 31, 2012.  Slight improvements in North 
American operating results in the current quarter when compared with the 
immediately preceding quarter, as well as stronger operating results from 
operations in Latin America and the eastern hemisphere helped to improve 
working capital.  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 $86.0 million was available at 
March 31, 2013.

Investing Activities                                               
                                        Three months ended March 31
                                                           

($ thousands)                        2013          2012    % change
                                                           

Purchase of property and                                 
equipment                        (62,757)      (80,554)        (22)

Net change in non-cash working                           
capital                               485      (12,309)       (104)
                                                           

Cash used in investing                                   
activities                       (62,272)     (92,863)         (33)

Purchases of property and equipment during the first quarter of 2013 totaled 
$62.8 million (2012 - $80.6 million).  The purchase of property and equipment 
relates predominantly to expenditures made pursuant to the Company's ongoing 
new build program and is partially offset by the disposal in the current 
quarter of the Company's non-rig manufacturing facility located in Calgary, 
Alberta.

Financing Activities                                                 
                                          Three months ended March 31
                                                              

($ thousands)                           2013          2012   % change
                                                              

Net increase (decrease) in                                  
operating lines of credit             72,553       (5,985)    (1,312)

Issue of senior unsecured                                   
notes                                      -       300,000      (100)

Repayment of term loan                     -     (300,000)      (100)

Issue of capital stock                 1,238            43     2,779 

Purchase of shares held in                                  
trust                                  (510)         (633)       (19)

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

Dividends                           (16,863)      (16,087)          5

Net change in non-cash working                              
capital                                2,957         1,016        191
                                                              

Cash provided by (used in)                                  
financing activities                  59,375      (23,802)      (349)

The Company's available operating lines of credit consist of a $400.0 million 
global revolving credit facility (the "Global Facility") and a $10.0 million 
Canadian based revolving credit facility (the "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 United States dollars.

Net draws of the operating lines of credit were mainly used to fund the 
ongoing new build program, which added two new ADR(®) drilling rigs to the 
Company's fleet in the first quarter of 2013; one in Canada and one in the 
United States as well as two new well servicing rigs, both in Canada.  As of 
March 31, 2013, 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, with the proceeds from the issuance being 
used to repay a portion of the USD $400.0 million unsecured term loan.  The 
remaining balance of the term loan was repaid in full in 2012.   

The Board of Directors of the Company has declared a second quarter dividend 
of $0.11 per common share to be payable July 5, 2013 to all Common 
Shareholders of record as of June 21, 2013.  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 quarter ended March 31, 2013, the Company commissioned one new 
ADR(®) drilling rig in the United States, and one new ADR(®) drilling rig 
and two new well servicing rigs in Canada.

The remaining new build estimated delivery schedule, by geographic area, is as 
follows:
                                        Estimated Delivery Date 
                                                                
                    Q2-2013     Q3-2013    Q4-2013     Q1-2014    Total

ADRs                                                                   
                                                                  

  Canada                  1           -          -           -        1

  United States           1           1          1           -        3

  International           -           -          2           -        2
                                                                       

Total                     2           1          3           -        6
                                                                       

Well Servicing                                                         
                                                                  

  Canada                  4           -          -           -        4

  United States           -           -          -           -        -

  International           -           -          -           -        -
                                                                       

Total                     4           -          -           -        -

Outlook

General economic conditions appear to be improving in North America, pointing 
to positive prospects for crude oil and natural gas prices and demand. 
However, growth in Asia has continued to moderate and persistent unemployment 
and debt issues weigh on Europe. Although the mix of positive and negative 
factors appears balanced overall, high volatility results in continued 
uncertainty. There is optimism regarding infrastructure developments, which 
are expected to reduce North American regional pricing differentials for crude 
oil, and a recent rebalancing of natural gas storage and firming prices are 
expected to have positive effects in the medium term. While we are optimistic 
about energy commodity prices, caution is warranted regarding drilling levels 
in the near term, as there is a relatively high backlog of previously drilled 
wells, and the impact of new technologies such as pad horizontal programs in 
resource plays is changing industry dynamics. We continue to believe it may 
take several quarters to restore stability in market forces.

Activity levels were down in the just completed winter drilling season in 
Canada compared to the prior year as customers reduced demand for oilfield 
services in the face of continued caution for an uncertain future.  Prospects 
for the Company's Canadian operations during the remainder of 2013 mirror 
those of the industry as forecasted by the Canadian Association of Oilwell 
Drilling Contractors which is calling for essentially similar or slightly 
lower operating activity levels for 2013 compared with those of 2012. The 
Company's ability to maintain margins for the remainder of the year will 
depend on prudent cost management.  While there has recently been an 
encouraging increase in inquiries for deeper new build drilling rigs, the 
Company currently plans to add one new ADR(®) drilling rig and four new well 
servicing rigs to the Canadian fleet over the next three months in connection 
with the ongoing new build program.

Activity levels in the Company's United States operations in the first quarter 
of 2013 were similar to those of the fourth quarter of 2012, but lower than 
those of the first quarter of 2012. Despite improving prospects for natural 
gas prices and general economic recovery, the drilling industry in the United 
States continues to face headwinds from regional energy development issues and 
a high backlog of drilled wells. The Company is cautiously optimistic that 
improving natural gas prices and stable prices for crude oil and liquids will 
support activity levels later in the year. The Company is constructing three 
new ADR(®) drilling rigs under term contracts for delivery throughout this 
year.

Prospects for the Company's international operations remain positive for the 
remainder of 2013, with some caution in relation to Latin America, where the 
impact of the recent very close presidential election in Venezuela and ongoing 
regional currency challenges persist. The Company's new build program 
currently includes two new ADR(®) drilling rigs to be added to the 
international fleet in the next nine months.

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 first quarter 2013 
results at 2:00 p.m. MST (4:00 p.m. EST) on Monday, May 6, 2013.  The 
conference call number is (647) 427-7450 (in Toronto) or 1-888-231-8191 
(outside Toronto).  A taped recording will be available until May 13, 2013 by 
dialing 1-416-849-0833 (in Toronto) or 1-855-859-2056 (outside Toronto) and 
entering the reservation number 20530952.  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                                      March 31       December 31
                                               2013              2012
                                                        

(Unaudited, in thousands of Canadian                 
dollars)                                                             
                                                        

Assets                                                               

Current Assets                                                       

  Cash and cash equivalents           $     138,679     $      33,208

  Accounts receivable                       479,305           423,160

  Inventories and other                      66,984            76,345
                                                        
                                            684,968           532,713
                                                        

Property and equipment                    2,573,823         2,533,243

Note receivable                               5,086             5,021
                                                        
                                      $   3,263,877     $   3,070,977

Liabilities                                                          

Current Liabilities                                                  

  Accounts payable and accruals       $     269,769     $     244,612

  Operating lines of credit                 309,758           231,990

  Income taxes payable                        3,814            11,197

  Dividends payable                          16,863            16,853

  Share-based compensation                   17,141            14,200
                                                        
                                            617,345           518,852
                                                        

Long-term debt                              302,840           296,589

Share-based compensation                      6,124             4,119

Deferred income taxes                       405,337           393,459
                                                        
                                          1,331,646         1,213,019

Shareholders' Equity                                                 

  Share capital                             168,355           164,670

  Contributed surplus                         3,713             4,811

  Foreign currency translation                       
  reserve                                     7,555          (16,007)

  Retained earnings                       1,752,608         1,704,484
                                                        
                                          1,932,231         1,857,958
                                                        
                                      $   3,263,877     $   3,070,977
                                                           
    
    

Ensign Energy Services Inc.                                    

Consolidated Statements of Income                              

For the three months ended                                     
                                                     

(Unaudited, in thousands of Canadian                 
dollars, except per share data)                                
                                                     
                                         March 31      March 31
                                             2013          2012
                                                     

Revenue                               $   581,142   $   677,671
                                                     

Expenses                                                       

  Oilfield services                       397,201       443,343

  Depreciation                             57,190        58,159

  General and administrative               19,559        19,407

  Share-based compensation                  6,396       (2,922)

  Foreign exchange and other              (3,888)         3,774
                                                     
                                          476,458       521,761
                                                     

Income before interest and income                    
taxes                                     104,684       155,910
                                                     

Interest income                               168            97

Interest expense                          (4,121)       (4,254)
                                                     

Income before income taxes                100,731       151,753
                                                     

Income taxes                                                   

  Current tax                              24,205        31,741

  Deferred tax                             11,539        14,488
                                                     
                                           35,744        46,229
                                                     

Net income                           $     64,987   $   105,524
                                                       
                                                     

Net income per share                                           
                                                       

  Basic                               $      0.43   $      0.69
                                                       

  Diluted                             $      0.42   $      0.69
                                                       

Ensign Energy Services Inc.

Consolidated Statements of Cash Flows

For the three months ended


                                                           

(Unaudited, in thousands of                            
Canadian dollars)                                                      
                                             March 31          March 31
                                                 2013              2012

Cash provided by (used in)                                             
                                                           

Operating activities                                                   

Net income                           $         64,987      $    105,524

Items not affecting cash                                               

  Depreciation                                 57,190            58,159

  Share-based compensation, net of                     
  cash paid                                     6,836           (1,746)

  Accretion on long-term                               
  debt                                             80               611

  Deferred income tax                          11,539            14,488

Net change in non-cash working                         
capital                                      (29,176)          (41,641)
                                                           
                                              111,456           135,395
                                                           

Investing activities                                                   

Purchase of property and                                 
equipment                                    (62,757)          (80,554)

Net change in non-cash working                         
capital                                           485          (12,309)
                                                           
                                             (62,272)          (92,863)
                                                           

Financing activities                                                   

Net increase (decrease) in                               
operating lines of credit                      72,553           (5,985)

Issue of senior unsecured                              
notes                                               -           300,000

Repayment of unsecured term                            
loan                                                -         (300,000)

Issue of capital stock                          1,238                43

Purchase of shares held in                             
trust                                           (510)             (633)

Deferred financing costs                            -           (2,156)

Dividends                                    (16,863)          (16,087)

Net change in non-cash working                         
capital                                         2,957             1,016
                                                           
                                               59,375          (23,802)
                                                           

Net increase in cash and cash                          
equivalents                                   108,559            18,730
                                                           

Effects of foreign exchange on cash                    
and cash equivalents                          (3,088)             1,525
                                                           

Cash and cash equivalents -                            
beginning of period                            33,208             2,613
                                                           

Cash and cash equivalents - end of                     
period                               $        138,679      $     22,868
                                                              
                                                           

Supplemental information                                               
                                                              

  Interest paid                      $            107      $      2,434
                                                              

  Income taxes paid                  $         31,588      $     10,424
                                                                       
     

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/May2013/06/c3757.html

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

-0- May/06/2013 09:00 GMT

Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement