Energold Drilling Announces Third Quarter 2013 Financial Results

Energold Drilling Announces Third Quarter 2013 Financial Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 11/28/13 -- Energold
Drilling Corp. ("Energold" or "the Company") (TSX VENTURE:EGD)
reported the following financial results for the third quarter of
2013. Company-wide revenue during the third quarter of 2013 was $16.6
million, compared to $29.9 million in the third quarter of 2012. The
decline in revenue was mostly related to the year-over-year decrease
in mineral exploration activity. Gross margin fell to negative 5% in
the third quarter of 2013 from 21% in the comparable period of 2012.
The Company had a net loss in the third quarter of ($0.15) per share,
compared to a net loss of ($0.05) per share in the same period of
2012.  
A conference call is planned for tomorrow, November 29, 2013 at 8:30
am Eastern Standard Time. Dial-in numbers are 647-426-1845 or
1-866-782-8903. Please call in 15 minutes before to ensure
participation.  
The Company continues to have one of the strongest balance sheets in
the industry with cash and cash equivalents of $26.9 million.
Management remains committed to using its financial resources to grow
its revenue base and profitability of the Company, both on an organic
basis and via acquisition.  
Quarter-to-date and year-to-date Sept 30, 2013 results comparison 


 
----------------------------------------------------------------------------
                                       For Three Months     For the Nine    
($CAD ,000s except per-share amounts        Ended           Months Ended    
 and meters drilled)                     September 30       September 30    
----------------------------------------------------------------------------
                                           2013     2012      2013     2012 
----------------------------------------------------------------------------
Revenue                                                                     
----------------------------------------------------------------------------
                       Mineral            8,027   17,250    42,536   65,468 
----------------------------------------------------------------------------
                       Energy             5,581    9,037    39,418   38,928 
----------------------------------------------------------------------------
                       Manufacturing      2,974    3,603    11,738   11,414 
----------------------------------------------------------------------------
Total Revenue                            16,555   29,890    93,692  115,810 
----------------------------------------------------------------------------
(Loss) Earnings                                                             
----------------------------------------------------------------------------
                       Mineral           (2,033)     628     1,364    4,102 
----------------------------------------------------------------------------
                       Energy            (3,848)  (2,848)   (3,797)  (7,463)
----------------------------------------------------------------------------
                       Manufacturing     (1,409)    (288)   (2,695)    (294)
----------------------------------------------------------------------------
Total Loss                               (7,290)  (2,508)   (5,128)  (3,655)
----------------------------------------------------------------------------
Loss Per Share         Basic              (0.15)   (0.05)    (0.10)   (0.08)
----------------------------------------------------------------------------
                       Diluted            (0.15)   (0.05)    (0.10)   (0.08)
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
EBITDA(i)                                (5,044)   1,619     4,395    8,990 
----------------------------------------------------------------------------
Adjusted (Loss) Earnings(ii)             (6,806)  (1,537)   (2,900)   6,731 
----------------------------------------------------------------------------
Adjusted Earnings Per                                                       
 Share                 Basic              (0.14)   (0.03)    (0.06)    0.15 
----------------------------------------------------------------------------
                       Diluted            (0.14)   (0.03)    (0.06)    0.15 
----------------------------------------------------------------------------
                                         As of September    As of September 
                                                30, 2013           30, 2012 
----------------------------------------------------------------------------
Cash                                  $           26,852 $           27,800 
----------------------------------------------------------------------------
Working Capital                       $           75,694 $           96,549 
----------------------------------------------------------------------------
(i) EBITDA - Earnings before interest, taxes, depreciation and amortization 
(see non-GAAP (generally accepted accounting principles) financial          
measures).                                                                  
(ii) Adjusted Earnings - Excludes earnout payment and non-cash items, which 
include accretion expense on debenture, finance cost related to sales-      
leaseback finance lease, share-based payments, foreign exchange, dilution   
and equity gain/loss on IMPACT, impairment/write-down of assets, gain on    
acquisition.                                                                

 
MINERAL DRILLING DIVISION  
During the third quarter of 2013, Energold's mineral division drilled
53,700 meters compared to 92,300 meters in the same period of 2012, a
decrease of 42%. Revenues for the third quarter of 2013 were $8.0
million compared to $17.3 million for the same period in 2012.
Average revenue per meter for the third quarter of 2013 decreased to
$149 from $187 in the third quarter of 2012 due to the depressed
market and pricing pressures emanating from some geographic regions.
Revenue in the third quarter of 2013 compared to the third quarter of
2012 was negatively impacted due to ongoing reduced exploration
spending in the junior mining segment as challenging capital market
conditions continued to weigh on their ability to raise money for
exploration activity. The majority of the decline in junior
exploration activity has likely already occurred and while
intermediate and senior players continue to focus its reserve
replacement through exploration, those companies appear to remain
cautious about the size of their programs and prudent in their
commitments to drilling activity. As discussed in previous quarters,
there appears to be no significant indication that the junior market
will return to previous levels of activity for some time. 
Gross margin percentage from mineral drilling for the third quarter
of 2013 was 12%, compared to 28% in the third quarter of 2012. The
decrease is due to pricing pressure and a shift by some clients to
lower margin drilling methods. Some stabilization took place earlier
this year and has translated into a new environment of lower rates
and utilization levels. Notwithstanding, the Company maintains a
strong infrastructure network in all regions that it operates which
allows for a relatively lean operation. The Company continues to
reduce its inventory and its working capital remains strong. As the
majority of the Company's costs are variable, it can adapt quickly
and respond accordingly to changing market conditions. 
Quarter-to-date and year-to-date September 30, 2013 meters drilled 


 
----------------------------------------------------------------------------
                              Q3 2013      Q3 2012     YTD 2013     YTD 2012
----------------------------------------------------------------------------
Meters Drilled                 53,700       92,300      252,200      341,700
----------------------------------------------------------------------------

 
As at September 30, 2013, the Company had 136 rigs in its mineral
drilling fleet. The Company added two new S-1 rigs to be deployed to
the Asian market as it considers ways to establish a footprint in the
region. As well, the Company is adding deeper capability S-3.5 rigs
manufactured by Dando to the African and Middle Eastern markets. 
ENERGY DRILLING DIVISION - BERTRAM DRILLING CORP. ("Bertram")  
The majority of revenues and activity are typically generated in the
first quarter, primarily due to weather factors. Year-to-date and
third quarter of 2013 were $39.4 million and $5.6 million,
respectively, compared to $38.9 million and $9.0 million in the same
periods of 2012. For the nine months ended September 30, 2013, 92% of
revenues were generated in Canada with the remainder from the U.S.
Meters were drilled in the following areas: 


 
----------------------------------------------------------------------------
                                      For Three Months   For the Nine Months
                                     Ended September 30  Ended September 30 
----------------------------------------------------------------------------
Meters Drilled                            2013      2012      2013      2012
----------------------------------------------------------------------------
Oil sands                                1,000    14,000    55,400    50,200
----------------------------------------------------------------------------
Seismic (Track and Heli-portable)       28,100         -   174,200   335,500
----------------------------------------------------------------------------
Geothermal and Geotechnical             42,100    47,700    65,400   205,500
----------------------------------------------------------------------------
                                        71,200    61,700   295,000   591,200
----------------------------------------------------------------------------

 
The gross margin for the first nine months of the year and the third
quarter of 2013 was 17% and (31)%, respectively, compared to 26% and
8% in the first nine months and third quarter of 2012. The negative
gross margin during the period relates to generally higher than
expected logistical costs with helicopter expenses being higher than
anticipated for one project in particular. In the first nine months
of 2013, Bertram drilled approximately 234,400 meters in Canada and
approximately 60,600 in the U.S. In the first nine months of 2012,
Bertram drilled approximately 363,900 meters in Canada and
approximately 227,300 in the U.S.  
Oil sands operations accounted for approximately $1.3 million of
third quarter revenues and $31.9 million of year-to-date revenues in
2013 compared to $7.0 million and $23.9 million of third quarter and
year-to-date revenues, respectively in 2012. Revenue was generated
from programs conducted on behalf of major operators. Geothermal and
geotechnical drilling activity accounted for $2.3 million of third
quarter revenues and $4.2 million of year-to-date revenues in 2013
compared to $2.0 million in the third quarter and $8.2 million of
year-to-date revenue in 2012. Track seismic represents the remainder
of the revenues. 
Going forward, the Company anticipates continued strong activity
levels in the Canadian oil sands. The bulk of growth in the energy
division will be dependent on weather in the latter part of the year
as an early freeze could positively impact work levels and financial
performance. Most of Bertram's oil sands rigs are fully committed for
the 2013/2014 season including new equipment capable of reaching
greater depths and potentially translate into a rapid payback with
immediate financial benefit. Management also forecasts an increasing
pipeline of seismic opportunities in North America and Latin America
as evidenced recently by the Company's new Colombian joint venture,
EESI. Finally, the geothermal and geotechnical markets are showing
signs of increased activity and tender opportunities in the coming
year, some of which the Company has already won and is currently
working on 12 month programs in the U.S. 
MANUFACTURING DIVISION - DANDO DRILLING INTERNATIONAL LTD ("Dando") 
The manufacturing division performance includes results from our
manufacturing companies and Hydrofor Togo, which is the Company's
water drilling operation. Year-to-date revenues for manufacturing for
2013 were $11.2 million with an operating margin of 6% compared to
revenues of $11.4 million with an operating margin of 23% in the
first nine months of 2012. Revenues for manufacturing in the third
quarter of 2013 were $2.8 million with one percent gross margin
compared to revenues of $3.6 million with an operating margin of 20%
in the third quarter of 2012. Year-to-date revenues for 2013 for
Hydrofor Togo were $0.5 million with an operating margin of 25%.
Revenues for Hydrofor Togo in the third quarter of 2013 were $0.1
million with three percent gross margin. Approximately $0.8 million
of the $2.7 million year-to-date loss in the manufacturing segment
relates to Hydrofor Togo. A portion of these expenses were related to
start-up costs for Hydrofor Togo. In the third quarter of 2013, the
Company delivered 12 rigs which comprised of a Geotec 6 rig, seven
Terrier mini rigs, four cable percussion site investigations rigs and
a large tooling package for a Mintec 12.8. 
Demand for rigs and equipment is strengthening outside mineral
exploration and the Company is actively participating in multiple
tender processes. Currently, Dando has a confirmed order book in
excess of $7.1 million and continues to have strong enquiries for its
products. As part of its plans to service future growth Dando is
continuing to build additional small rigs for stock which accelerates
delivery times although this strategy also tends to increase costs
and working capital requirements in the short run with revenue
following in latter periods. The Company continues to be on target to
achieve a substantial increase in revenues and profit in the coming
years driven by a faster delivery schedule and increased momentum in
certain key markets where larger numbers of rigs are being ordered at
a time from a growing and more diverse client base. 
GROWTH PLAN  
Energold remains committed to expanding its business across all
drilling platforms depending on market conditions. While the Company
was founded on the basis of mineral drilling, management continues to
evaluate new ways to expand its global drilling solutions platform.
The entrance into the energy drilling and manufacturing markets in
recent years has started to provide value to shareholders. New
markets including water, a geographical expansion of the seismic
business into Latin America, as well as new opportunities for
technical and diversified commodity drilling are considered on an
ongoing basis as the Company seeks the most efficient use of its
strong balance sheet and low debt levels. 
About Energold Drilling Corp.  
Energold Drilling Corp. is a leading global specialty drilling
solutions company that services the mining, energy, water and
manufacturing sectors in 24 countries. Specializing in a socially and
environmentally sensitive approach to drilling, Energold provides a
comprehensive range of drilling services from early stage exploration
to onsite operations for the metals, energy and water sectors,
including an established drill rig manufacturer, Dando Drilling
International Ltd. Energold also holds 6.98 million shares of IMPACT
Silver Corp., a silver producer in Mexico. 
On behalf of the Directors of Energold Drilling Corp., 
Frederick W. Davidson, President, CEO 
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release. 
Cautionary Note Regarding Non-IFRS measures:  
The Company uses both IFRS and non-IFRS measures to assess
performance and believes the non-IFRS measures provide useful
information to investors to help in evaluating the Company's
performance. The Company's method of calculating these non-IFRS
measures may differ from other entities and, accordingly, may not be
comparable to measures used by other entities. Investors are
cautioned, however, that these measures should not be construed as an
alternative to measures determined in accordance with IFRS as an
indicator of the Company's performance.  
Cautionary Note Regarding Forward-Looking Statements:  
Except for historical information, this earnings release may contain
forward-looking statements. These statements involve known and
unknown risks, uncertainties, and other factors that may cause the
Company's actual results, levels of activity, performance or
achievements to be materially different from any future results,
levels of activity, performance or achievement expressed or implied
by these forward-looking statements. In certain cases,
forward-looking statements can be identified by the use of words such
as "may", "will", "would", "could", "should", "believes",
"estimates", "projects", "potential", "expects", "estimates",
"plans", "intends", "anticipates", or the negative of those words or
other similar or comparable words. Forward-looking statements may
relate to future financial conditions, results of operations, plans,
objectives, performance or business developments.  
The factors that could cause actual results to differ materially
include, but are not limited to, the following: general economic
conditions; changes in financial markets; the impact of exchange
rates; political conditions and developments in countries in which
the Company operates; changes in regulatory requirements impacting
the Company's operations; the ability to properly and efficiently
staff the Company's operations; the sufficiency of current working
capital; and demand for the Company's drill rigs.  
The estimates and assumptions of the Company contained or
incorporated by reference in this earnings release, which may prove
to be incorrect, include but are not limited to, the various
assumptions set forth herein and in the earnings release, or as
otherwise expressly incorporated herein by reference as well as (1)
there being no significant disruptions or adverse conditions; (2)
fluctuations in the price and demand for commodities; (3)
fluctuations in the level of mineral and oil and gas exploration and
development activities; (4) fluctuations in the demand for contract
drilling; (5) the exchange rate between the Canadian dollar, U.S.
Dollar, Mexican Peso and various currencies the Company operations in
being approximately consistent with current levels; (6) capital
market liquidity available to fund customer drilling programs; (7)
prices for and availability of equipment, labour, fuel, oil,
electricity and other key supplies remaining consistent with current
levels; (8) labour and materials costs increasing on a basis
consistent with the Company's current expectations; (9) other
unforeseen conditions which could impact the use of services supplied
by the Company.  
This list is not exhaustive and these and other factors should be
considered carefully, and readers should not place undue reliance on
the Company's forward-looking statements. As a result of the
foregoing and other factors, no assurance can be given as to any such
future results, levels of activity or achievements and neither the
Company nor any other person assumes responsibility for the accuracy
and completeness of these forward-looking statements. The Company
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, or to explain any material difference
between subsequent actual events and such forward-looking statements,
except to the extent required by applicable law.
Contacts:
Energold Drilling Corp.
Steven Gold
Chief Financial Officer
(416) 275-4070
sgold@energold.com 
Energold Drilling Corp.
Jerry Huang
Investor Relations Manager
(604) 681-9501
jhuang@energold.com 
Energold Drilling Corp.
1100 - 543 Granville St.
Vancouver, BC V6C 1X8
604 681 9501
604 681 6813 (FAX)
info@energold.com
www.energold.com