Ensign Energy Services Inc. Reports 2014 First Quarter Results

 CALGARY, May 12, 2014 /CNW/ -  Overview  Revenue for Ensign Energy Services Inc. ("Ensign" or the "Company") for the  first quarter of 2014 was $624.2 million, an increase of seven percent from  first quarter 2013 revenue of $581.1 million.  Operating earnings, expressed  as Adjusted EBITDA (defined as earnings before interest, income taxes,  depreciation, share-based compensation expense (recovery) and foreign exchange  and other), totaled $160.1 million ($1.05 per common share) in the first  quarter of 2014, three percent lower than adjusted EBITDA of $164.4 million  ($1.08 per common share) in the first three months of 2013.  Net income for  the first quarter of 2014 decreased seven percent to $60.4 million ($0.40 per  common share), compared to net income of $65.0 million ($0.43 per common  share) for the first quarter of 2013.  Adjusted net income (defined as net  income before share-based compensation expense (recovery) and foreign exchange  and other, tax-effected using an income tax rate of 35 percent), for the first  quarter of 2014 was $54.0 million ($0.35 per common share), 19 percent lower  than adjusted net income of $66.6 million for the first quarter of 2013 ($0.44  per common share).  Funds from operations decreased two percent to $137.0  million ($0.90 per common share) in the first three months of 2014 from $139.8  million ($0.92 per common share) in the first three months of the prior year.   Operating days in Canadian operations were lower in the first quarter of 2014  when compared to the first quarter of 2013, while results from the United  States and the eastern hemisphere operations were higher due to increased  demand and upgrades in recent years to the Company's equipment fleets in these  areas.  A strengthening of the United States dollar against the Canadian  dollar positively impacted United States and international financial results  on translation to Canadian dollars.  The average United States exchange rate  for the first three months of 2014 increased nine percent, compared to the  first three months of 2013.  Gross margin decreased to $182.2 million (29.2 percent of revenue) for the  first quarter of 2014 compared with gross margin of $183.9 million (31.7  percent of revenue) for the first quarter of 2013.  The decrease in gross  margin in the first quarter of 2014 compared to the first quarter of 2013 was  primarily attributed to weaker Canadian activity levels, higher costs related  to ongoing maintenance and start-up costs of international rigs preparing for  work later in 2014.  Working capital at March 31, 2014 was a deficit of $81.0 million, compared to  a deficit of $71.1 million at December 31, 2013.  Available borrowings at  March 31, 2014 were $36.9 million compared to $70.7 million at December 31,  2013 as additional draws were used to support first quarter activity levels;  the first quarter dividend payment; and the ongoing new build and major  retrofit program that delivered one new ADR(®) drilling rig and completed two  major retrofits to existing drilling rigs during the first three months of  2014.        FINANCIAL AND OPERATING                        HIGHLIGHTS                                                                  ($ thousands, except per share data and                            operating information)                                                                                                  Three months ended March 31                                                   2014      2013   % change     Revenue                                    624,194   581,142          7     Adjusted EBITDA 1                          160,069   164,382        (3)     Adjusted EBITDA per share 1                                                   Basic                                      $1.05     $1.08        (3)       Diluted                                    $1.04     $1.07        (3)     Adjusted net income 2                       53,958    66,617       (19)     Adjusted net income per share 2                                               Basic                                      $0.35     $0.44       (20)       Diluted                                    $0.35     $0.43       (19)     Net income                                  60,411    64,987        (7)     Net income per share                                                          Basic                                      $0.40     $0.43        (7)       Diluted                                    $0.39     $0.42        (7)     Funds from operations 3                    137,011   139,802        (2)     Funds from operations per share                3                                                                             Basic                                      $0.90     $0.92        (2)       Diluted                                    $0.89     $0.91        (2)     Weighted average shares - basic                (000s)                                     152,864   152,708          -     Weighted average shares -                      diluted (000s)                             153,654   153,391          -     Drilling                                                                      Number of marketed rigs                                                       Canada 4                                   104       120       (13)         United States                              111       116        (4)         International 5                             55        53          4         Rigs in transit 6                            2         -          -       Operating days                                                                Canada 4                                 4,792     5,329       (10)         United States                            5,673     5,504          3         International 5                          3,152     2,712         16     Well Servicing                                                                Number of marketed rigs                                                       Canada                                      91        91          -         United States                               45        46        (2)       Operating hours                                                               Canada                                  34,680    35,137        (1)         United States                           28,861    22,777         27        1Adjusted EBITDA is defined as "income before interest expense, income     taxes, depreciation, share-based compensation expense (recovery) and     foreign exchange and other".  Management believes that in addition to     net income, Adjusted EBITDA and Adjusted 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, how the results are impacted by foreign     exchange or how the results are impacted by the accounting standards     associated with the Company's share-based compensation plans.  Adjusted     EBITDA and Adjusted 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) and foreign exchange and other,     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 foreign exchange and 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.     4Excludes coring rigs.     5 Includes workover rigs.     6Drilling rigs being retrofitted and transferred to a new geographic     market.  First Quarter Highlights         --  Revenue for the first three months of 2014 was $624.2 million,             up 16 percent from the fourth quarter of 2013 and seven percent             from the first quarter of 2013.         --  One new ADR® drilling rig was added to the Company's United             States drilling fleet in the first quarter of 2014.  The new             build and major retrofit program also completed two major             retrofits to existing drilling rigs: one transferred from the             United States to Canada and one transferred from Canada to             Australia.         --  First quarter revenue by segment:       o Canada - 36 percent;       o United States - 40 percent; and       o International - 24 percent.         --  Adjusted EBITDA for the first quarter of 2014 was $160.1             million, a three percent decrease from adjusted EBITDA of             $164.4 million for the first quarter of 2013.  Funds from             operations for the first quarter of 2014 decreased two percent             to $137.0 million from $139.8 million in the first quarter of             the prior year.         --  Canadian drilling recorded 4,792 operating days in the first             three months of 2014, a 10 percent decrease from 5,329             operating days in the first three months of 2013.  Canadian             well servicing hours decreased by one percent in the first             quarter of 2014 compared to the first quarter of 2013.         --  United States drilling recorded 5,673 operating days in the             first quarter of 2014, a three percent increase from 5,504             operating days in the first quarter of 2013.  United States             well servicing hours increased by 27 percent in the first three             months of 2014 compared to the first three months of 2013.         --  International drilling recorded 3,152 operating days in the             first quarter of 2014, a 16 percent increase from 2,712             operating days recorded in the first quarter of 2013.         --  The Company declared a quarterly cash dividend on common shares             of $0.1175 per common share payable July 4, 2014.         --  The Company's construction in progress currently includes 11             new ADR® drilling rigs, one new well servicing rig and eight             major retrofits to existing drilling rigs.  In addition, due to             increases in customer demand for the Company's ADR® drilling             rigs, the Company's Board of Directors has approved a             pre-committed new build program that will deliver 1 ADR®             drilling rig a month in the first and second quarters of 2015             and 1.5 ADR® drilling rigs per month in the third and fourth             quarters of 2015.  Revenue and Oilfield Services Expense                                                 Three months ended March 31     ($ thousands)                      2014      2013     Change   % change     Revenue                                                                       Canada                        226,468   255,988   (29,520)       (12)       United States                 248,363   200,470     47,893         24       International                 149,363   124,684     24,679         20                                                                                                                 624,194   581,142     43,052          7     Oilfield services expense       442,020   397,201     44,819         11     Gross margin                    182,174   183,941    (1,767)        (1)     Gross margin percentage             (%)                                29.2      31.7                        Revenue recorded in the first quarter of 2014 totaled $624.2 million, an  increase of seven percent from the first quarter of 2013 and was the second  highest quarterly revenue in the Company's history.  As a percentage of  revenue, gross margin for the first quarter of 2014 decreased to 29.2 percent  from 31.7 percent for the first quarter of 2013.  The Company continued to upgrade and grow its equipment fleet throughout 2013  and the first quarter of 2014 which led to stronger revenue in the current  year first quarter when compared to the first quarter of 2013.  During the  first three months of 2014 the Company added one new build ADR(®) to its  United States drilling fleet and completed two major retrofits to existing  drilling rigs; one in Canada and one in Australia.  In addition, the United  States dollar strengthened by nine percent in the first three months of 2014  compared to the first three months of 2013 and contributed to the higher  revenue levels.  Offsetting these positive impacts to consolidated revenue was  uneven demand levels in certain areas in Canada and continuing challenges in  Venezuela during the first quarter of 2014, as discussed further below under  "International Oilfield Services".  Canadian Oilfield Services  Revenue decreased 12 percent to $226.5 million for the three months ended  March 31, 2014, from $256.0 million for the three months ended March 31, 2013,  but was 43 percent higher than the immediately preceding quarter as the  seasonal winter drilling season peaked in the first quarter.  Canadian revenue  accounted for 36 percent of the Company's total revenue in the first quarter  of 2014, compared with 44 percent in the first quarter of 2013. Demand for the  Company's Canadian oilfield services was mixed as some areas experienced  higher activity levels in the current quarter compared with the prior year  first quarter while others, particularly the oil sands coring division, saw  decreases in the current quarter when compared to the first quarter of 2013.   Through the current new build and major retrofit program the Company is  continuing to transition its Canadian drilling fleet from shallow drilling  rigs to deeper drilling rigs as the industry shifts toward deeper, longer  reach drilling.  The expansion of the Company's Canadian directional drilling  business and oilfield rental business through the 2013 second quarter  acquisitions of substantially all of the assets of Departure Energy Services  Inc. ("Departure") and EGOC Enviro Group of Companies Ltd. ("EGOC") helped to  partially offset the year-over-year reduction in Canadian drilling revenue.  The Company recorded 4,792 drilling days in the first quarter of 2014, a 10  percent decrease from the 5,329 drilling days recorded in the first quarter of  2013, but up 39 percent over the immediately preceding quarter.  Canadian well  servicing hours were mainly consistent with the prior year, decreasing only  one percent in the first quarter of 2014 to 34,680 operating hours, compared  with 35,137 operating hours in the corresponding period of 2013.  During the three months ended March 31, 2014, the Company added one  retrofitted drilling rig transferred from the United States fleet to the  Canadian fleet; decommissioned 13 inactive drilling rigs and four inactive  well servicing rigs; and transferred two drilling rigs to the oil sands coring  fleet and one retrofitted drilling rig to Australia.  In addition two drilling  rigs have been removed from the Canadian fleet and are undergoing major  retrofit for the Australian market.  United States Oilfield Services  The Company's United States operations recorded revenue of $248.4 million in  the first quarter of 2014, a 24 percent increase from the $200.5 million  recorded in the corresponding period of the prior year.  The Company's United  States operations accounted for 40 percent of the Company's revenue in the  first quarter of 2014, compared to 35 percent in the first quarter of 2013.   Drilling rig operating days increased by three percent to 5,673 drilling days  in the first quarter of 2014 from 5,504 drilling days in the first quarter of  2013.  Well servicing activity increased by 27 percent in the first quarter of  2014 to 28,861 operating hours from 22,777 operating hours in the first  quarter of 2013.  Activity levels and revenue rates in United States oilfield services began to  pick up late in 2013 after a slowdown earlier in the year.  This combined with  the positive translational impact of a stronger United States dollar and  upgrades to the United States fleet throughout 2013 and the first quarter of  2014 resulted in higher revenue in the current quarter compared to the first  quarter of the prior year.  In 2013, the Company added three new build ADRs and one new well servicing rig  to the United States fleet.  An additional ADR(®) was added in the first  quarter of 2014.  The Company also decommissioned six inactive drilling rigs  and transferred one retrofitted drilling rig to Canada in the first quarter of  2014.  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 2014 the United States dollar increased by nine percent when compared to  the same period of the prior year.  International Oilfield Services  The Company's international operations recorded revenue of $149.4 million in  the first quarter of 2014, a 20 percent increase from $124.7 million recorded  in the corresponding period of the prior year.  International operations  contributed 24 percent of the Company's revenue in the first quarter of 2014,  compared with 21 percent in the same period of 2013.  International operating  days for the three months ended March 31, 2014 totaled 3,152 drilling days,  compared with 2,712 drilling days in 2013, an increase of 16 percent.  Changes to the Company's international fleet in the latter half of 2013 and in  the first quarter of 2014 helped to drive international revenue up when  compared to the first quarter of the prior year.  Late in 2013, the Company  expanded its operations into Kurdistan with one drilling rig being deployed  there, resumed operations with an additional drilling rig in Libya and  transferred a retrofitted drilling rig to Australia from the Company's United  States fleet.  In the first quarter of 2014 an additional retrofitted drilling  rig was transferred from the Canadian fleet to Australia.  Two additional  retrofitted drilling rigs are currently in transit from Canada to Australia  and are expected to begin working in the second quarter of 2014.  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 2014 compared to the first quarter of the  prior year.  As part of the Company's international operations, it provides oilfield  services in Venezuela pursuant to long-term contracts. Many of these existing  contracts are due to expire in 2014 and as a result of the current political  unrest in Venezuela, there is and there can be no assurance that the Company  will be able to renew all of such contracts on terms acceptable to the Company  or at all. In addition, as at March 31, 2014, the Company had net accounts  receivable of approximately $37.4 million for work performed in Venezuela and,  due to the continuing political unrest in Venezuela, there is and there can be  no assurance that the Company will be successful in collecting all or any of  such outstanding balance.  Depreciation                                 Three months ended March 31     ($ thousands)         2014     2013   Change   % change     Depreciation        73,309   57,190   16,119         28  Depreciation expense increased 28 percent to $73.3 million for the three  months ended March 31, 2014, compared with $57.2 million for the three months  ended March 31, 2013.  Higher depreciation expense in the current quarter when  compared to the first quarter of 2013 was attributable to the utilization of  higher-valued equipment during the current quarter, the additions to the  Company's global fleet throughout the latter half of 2013 and in the first  quarter of 2014, the impact of the 2013 second quarter acquisitions of assets  from EGOC and Departure and the negative translational impact of a stronger  United States dollar on United States and international depreciation in the  current quarter.  General and Administrative Expense                                              Three months ended March 31     ($ thousands)                      2014     2013   Change   % change     General and administrative       22,105   19,559    2,546         13     % of revenue                        3.5      3.4                      General and administrative expense was $22.1 million (3.5 percent of revenue)  for the first quarter of 2014 increasing 13 percent, compared with $19.6  million (3.4 percent of revenue) for the first quarter of 2013.  The increase  in general and administrative expense reflects the negative translational  impact of a stronger United States dollar on United States and international  administrative expenses in the current quarter and increased costs to support  growing international operations.  Share-Based Compensation (Recovery) Expense                                           Three months ended March 31     ($ thousands)                   2014    2013    Change   % change     Share-based compensation       (913)   6,396   (7,309)      (114)  Share-based compensation (recovery) expense 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, 2014, share-based compensation (recovery)  expense was a recovery of $0.9 million, compared with an expense of $6.4  million recorded in the first quarter of 2013.  The decrease in the  share-based compensation expense in the first quarter of 2014 was a result of  the change in the fair value of the share-based compensation liability  primarily resulting from a decrease in the price of the Company's common  shares during the first three months of 2014.  The closing price of the  Company's common shares was $16.34 at March 31, 2014 ($17.32 at March 31,  2013), compared with $16.73 at December 31, 2013 ($15.37 at December 31, 2012).  Interest Expense                                    Three months ended March 31     ($ thousands)             2014    2013   Change   % change     Interest expense         5,426   4,121    1,305         32     Interest income          (336)   (168)    (168)        100                                                                                             5,090   3,953    1,137         29  Interest is incurred on the Company's $10.0 million Canadian-based revolving  credit facility (the "Canadian Facility"), the $400.0 million global revolving  credit facility (the "Global Facility") and the United States dollar $300.0  million senior unsecured notes (the "Notes") issued in February 2012.  The  amortization of deferred financing costs associated with the issuance of the  Notes is included in interest expense in both quarters.  Interest expense in the first quarter of 2014 increased over interest expense  in the first quarter of 2013 due to increased draws on the Global Facility and  the negative translational impact of a stronger United States dollar on United  States and international interest expense in the current quarter.  Foreign Exchange and Other                                                 Three months ended March 31     ($ thousands)                       2014      2013    Change   % change     Foreign exchange and other       (9,015)   (3,888)   (5,127)        132  Included in this amount are foreign currency movements in the Company's  subsidiaries that have functional currencies other than Canadian dollars.   During the three months ended March 31, 2014 the Australian dollar  strengthened by approximately four percent against the United States dollar  causing a foreign currency gain on translation of the Company's United States  dollar denominated debt into Australian dollars.  In general the United States  dollar was stronger in the first three months of 2014, compared to the first  three months of 2013 when compared to other world currencies.  Income Taxes                                                Three months ended March 31     ($ thousands)                       2014     2013    Change   % change     Current income tax                19,476   24,205   (4,729)       (20)     Deferred income tax               11,711   11,539       172          1                                                                                                                  31,187   35,744   (4,557)       (13)     Effective income tax rate                                         (%)                                   34     35.5                       The effective income tax rate for the three months ended March 31, 2014 was  34.0 percent, compared with 35.5 percent for the three months ended March 31,  2013.  The decrease in the effective income tax rate in the current quarter  compared to the first quarter of the prior year was due to the tax impact of  the currency devaluation in Venezuela that occurred in February 2013 being  included in the prior year quarter.  Financial Position  The following chart outlines significant changes in the consolidated statement  of financial position from December 31, 2013 to March 31, 2014:     ($ thousands)                   Change     Explanation                                                      Cash and cash equivalents     (38,365)     See consolidated statements                                                of cash flows.                                                      Accounts receivable            116,987     Increase was due to                                                increased operating activity                                                in the first quarter of 2014                                                when compared to the fourth                                                quarter of 2013. It also                                                includes the impact of                                                foreign exchange                                                fluctuations on the                                                consolidation of the                                                Company's foreign                                                subsidiaries.                                                      Inventories and other          (9,282)     Decrease was due to normal                                                course use of consumables                                                and amortization of prepaid                                                expenses, offset by                                                additional  inventory.                                                      Property and equipment         129,729     Increase was due to                                                additions from the current                                                new build and major retrofit                                                construction program and the                                                impact of an increase in the                                                quarter-end foreign exchange                                                rate on the consolidation of                                                the Company's foreign                                                subsidiaries, offset by                                                depreciation.                                                       Accounts payable and            38,593     Increase was due to     accruals                                   increased operating activity                                                in the first quarter of 2014                                                when compared to the fourth                                                quarter of 2013. It also                                                includes the impact of                                                foreign exchange                                                fluctuations on the                                                consolidation of the                                                Company's foreign                                                subsidiaries and changes in                                                the timing of payments to                                                external vendors during the                                                period.                                                      Operating lines of credit       30,874     Increase was due to                                                additional draws during the                                                period on the Global                                                Facility and the impact of                                                foreign exchange                                                fluctuations on the                                                consolidation of the                                                Company's foreign                                                subsidiaries, offset by                                                repayments during the                                                period.                                                      Share-based compensation       (1,368)     Decrease was due to the                                                decrease in the price of the                                                Company's common shares as                                                at March 31, 2014 compared                                                with December 31, 2013.                                                      Income taxes payable            11,545     Increase was due to the                                                current income tax provision                                                for the period, offset by                                                tax instalments made.                                                      Long-term debt                  12,533     Increase was due to foreign                                                exchange fluctuations on the                                                United States dollar                                                denominated long-term debt.                                                      Deferred income taxes           12,757     Increase was primarily due                                                to accelerated tax                                                depreciation of assets added                                                during the current quarter.                                                      Shareholders' equity            94,200     Increase was due to net                                                income for the current                                                quarter and the impact of                                                foreign exchange rate                                                fluctuations on net assets                                                of foreign subsidiaries,                                                offset by the amount of                                                dividends declared in the                                                first quarter.  Funds from Operations and Working Capital                                               Three months ended March 31     ($ thousands)                    2014       2013    Change   % change     Funds from operations         137,011    139,802   (2,791)        (2)     Funds from operations                                            per share                       $0.90      $0.92   $(0.02)        (2)     Working capital                                                  (deficit) 1                  (80,987)   (71,146)   (9,841)         14     1 Comparative figure as of December 31, 2013.  During the three months ended March 31, 2014, the Company generated funds from  operations of $137.0 million ($0.90 per common share), compared with funds  from operations of $139.8 million ($0.92 per common share) for the three  months ended March 31, 2013, a decrease of two percent.  This decrease was due  to reduced operating and financial results for Canadian oilfield services and  higher first quarter spending on continuing equipment maintenance that the  Company generally expenses as incurred, offset by stronger results in the  United States and the eastern hemisphere in the current quarter.  At March 31, 2014, the Company's working capital totaled a deficit of $81.0  million, compared to a deficit of $71.1 million at December 31, 2013.  The  decrease in working capital in the first three months of 2014 was mainly  related to spending on the ongoing new build and major retrofits construction  program that as at March 31, 2014 is anticipated to deliver an additional 26  new build ADR(®) drilling rigs, one new well servicing rig and eight major  retrofits of existing drilling rigs.  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 borrowings of $410.0 million, of which $36.9  million was available at March 31, 2014.  Investing Activities                                                 Three months ended March 31     ($ thousands)                     2014       2013     Change   % change     Purchase of property                                               and equipment                (120,753)   (62,757)   (57,996)         92     Net change in non-cash                                             working capital                  5,491        485      5,006      1,032                                                                                 Cash used in investing                                             activities                   (115,262)   (62,272)   (52,990)         85  Purchases of property and equipment during the first quarter of 2014 totaled  $120.8 million (2013 - $62.8 million).  The purchase of property and equipment  relates predominantly to expenditures made pursuant to the Company's ongoing  new build and major retrofit program.  Financing Activities                                                 Three months ended March 31     ($ thousands)                     2014       2013     Change   % change     Net increase in     operating lines of                                                 credit                          18,042     72,553   (54,511)       (75)     Issue of capital stock               -      1,238    (1,238)      (100)     Purchase of shares held                                            in trust                         (489)      (510)         21        (4)     Dividends                     (18,019)   (16,863)    (1,156)          7     Net change in non-cash                                             working capital                  3,224      2,957        267          9                                                                                 Cash provided by                                                   financing activities             2,758     59,375   (56,617)       (95)  The Company's available operating lines of credit consist of a $400.0 million  Global Facility and a $10.0 million Canadian Facility. The Global Facility is  available to the Company and certain of its wholly owned subsidiaries, and may  be drawn in Canadian, United States or Australian dollars, up to the  equivalent value of $400.0 million Canadian dollars. The amount available  under the Canadian Facility is $10.0 million or the equivalent in United  States dollars.  Net draws of the operating lines of credit were mainly used to fund the  ongoing new build and major retrofit program that added one new ADR(®)  drilling rig to the Company's United States fleet in the first quarter of  2014; as well as completed two major retrofits to existing drilling rigs, one  in Canada and one in Australia.  As of March 31, 2014, the operating lines of  credit are primarily being used to fund the completion of the most recent new  build and major retrofit program and to support international operations.  During the first quarter of 2014, the Company secured a $20.0 million  uncommitted facility, solely for issuing letters of credit, primarily used for  bidding on contracts in the normal course of business.  The Board of Directors of the Company has declared a second quarter dividend  of $0.1175 per common share to be payable July 4, 2014 to all Common  Shareholders of record as of June 20, 2014.  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 and Major Retrofits  During the three months ended March 31, 2014, the Company commissioned one new  ADR(®) drilling rig in the United States; retrofitted one drilling rig  transferred from the United States to Canada; and retrofitted one drilling rig  transferred from Canada to Australia.  In response to contracts and advanced bid activity for Ensign's higher  technology drilling rigs, the Company has ramped up its new build program and  plans to deliver 26 new ADR(®) drilling rigs through to the end of 2015.  In  Canada the Company is continuing to transition from shallow drilling to deeper  drilling, building new ADRs and upgrading existing drilling rigs for deeper  resource plays in the northwest part of the Western Canada Sedimentary Basin.   In the United States the Company builds new ADRs for specific resource plays  and has been upgrading existing drilling rigs for pad drilling operations.   Internationally, the Company has been increasing its capabilities, through a  combination of new ADRs and major retrofits of existing drilling rigs, to meet  the requirements of specific markets.  In addition, the Company is in  discussions with numerous customers for the possible supply of a number of  additional new drilling rigs that may be constructed and delivered into  operations between now and December 31, 2015, beyond these 26 new ADR(®)  drilling rigs currently set for delivery.  The estimated delivery schedule for new ADRs and major retrofits of existing  drilling rigs currently under construction at March 31, 2014, and as approved  by the Company's Board of Directors, is as follows:                                       Estimated Delivery Date                                      Q2     Q3     Q4     Q1     Q2     Q3     Q4                              2014   2014   2014   2015   2015   2015   2015   Total     New Build ADRs      2      2      5      4      4      4      5      26     Major                                                                 Retrofits           2      4      -      2      -      -      -       8                         4      6      5      6      4      4      5      34  Outlook  The Company continues to believe that the global economy is improving, despite  flattening economic growth in China and uncertainty in some other regions of  the world. Less volatile energy prices are starting to provide support for  increased development activities. Current geopolitical tensions are giving  rise to concerns about global crude oil supply disruptions. Minor supply  issues for natural gas in North America may emerge after a cold winter ended  with unusually low storage levels. Except for delivery infrastructure  development delays, downside factors for energy commodity prices currently  appear limited for the next year or two. In particular, Canada's energy prices  have recently been positively affected by a weaker currency and narrower  transportation differentials.  Canadian exploration and development activities trended upward slightly in the  first quarter of 2014, and capital investment activities may increase further  in the second half of the year, based on increased industry cash flows from  higher commodity prices. The trend is toward only a slightly higher well  count, but with increased depths and longer reaches, particularly in key  resource plays. Ensign's Canadian fleet utilization improved in the first  quarter, with positive prospects for the balance of the year, as the Company  continues with the fleet modernization program to more closely match industry  demand.  Land-based drilling continues to expand in the United States, albeit at a slow  and steady pace, as illustrated by weekly changes to the industry drilling rig  count.  Oil and natural gas liquids projects continue to be preferred, but dry  natural gas prospects are starting to improve, due to planned LNG exports.  Typical with prior years, the Company's United States fleet activities were  fairly flat with those in the immediately preceding quarter. The Company  expects improving operating and financial results for the balance of the year.  The Company's international revenue and operating days were stronger in the  current quarter compared to both the immediately preceding quarter and the  prior year quarter, despite challenges in certain African and Latin American  countries. The Company's activity levels are expected to continue to expand  throughout 2014, particularly as drilling rigs are added or as existing rigs  are repositioned into the international fleet to fulfill contracts.  The demand for higher technology drilling rigs, such as the Company's ADR(®),  remains robust.  Accordingly, current plans for the remainder of 2014 and 2015  include the addition of 26 new ADR(®) drilling rigs and one new well  servicing rig, with eight major drilling rig retrofits planned for 2014 and  2015.  The Company has the ability to ramp up new build activity as future  customer demand dictates.  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, the Company's  defense of lawsuits and the ability of oil and natural gas companies to pay  accounts receivable balances and 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 2014  results at 2:00 p.m. MST (4:00 p.m. EST) on Monday, May 12, 2014.  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 19, 2014 by  dialing 1-416-849-0833 (in Toronto) or 1-855-859-2056 (outside Toronto) and  entering the reservation number 36001986.  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                                                      2014              2013                                                                                 (Unaudited, in thousands of     Canadian dollars)                                                                                                                                       Assets                                                                      Current Assets                                                                Cash and cash equivalents            $       40,493   $        78,858       Accounts receivable                         557,777           440,790       Inventories and other                        57,565            66,847       Income taxes receivable                           -             8,572                                                                                                                               655,835           595,067                                                                                 Property and equipment                      2,918,060         2,788,331     Note receivable                                 4,345             4,280                                                                                                                        $    3,578,240   $     3,387,678                                                                                 Liabilities                                                                 Current Liabilities                                                           Accounts payable and       accruals                             $      345,740   $       307,147       Operating lines of credit                   357,399           326,525       Dividends payable                            18,019            18,019       Share-based compensation                     12,691            14,522       Income taxes payable                          2,973                 -                                                                                                                               736,822           666,213                                                                                 Long-term debt                                329,940           317,407     Share-based compensation                        3,456             2,993     Deferred income taxes                         451,253           438,496                                                                                                                             1,521,471         1,425,109                                                                                 Shareholders' Equity                                                          Share capital                               170,046           168,155       Contributed surplus                           3,589             4,614       Foreign currency translation       reserve                                      76,007            25,065       Retained earnings                         1,807,127         1,764,735                                                                                                                             2,056,769         1,962,569                                                                                                                        $    3,578,240   $     3,387,678                                                                        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                                                        2014           2013                                                                                Revenue                                    $    624,194   $    581,142                                                                                Expenses                                                                     Oilfield services                             442,020        397,201       Depreciation                                   73,309         57,190       General and administrative                     22,105         19,559       Share-based compensation                        (913)          6,396       Foreign exchange and other                    (9,015)        (3,888)                                                                                                                                527,506        476,458                                                                                Income before interest and income              taxes                                            96,688        104,684                                                                                Interest income                                     336            168     Interest expense                                (5,426)        (4,121)                                                                                Income before income taxes                       91,598        100,731                                                                       Income taxes                                                                 Current tax                                    19,476         24,205       Deferred tax                                   11,711         11,539                                                                                                                                 31,187         35,744                                                                                Net income                                 $     60,411   $     64,987                                                                                                                                                           Net income per share                                                         Basic                                    $       0.40   $       0.43       Diluted                                  $       0.39   $       0.42                                                                         Ensign Energy Services Inc.                                                 Consolidated Statements of Cash                Flows                                                                       For the three months ended                                                                                                                              (Unaudited, in thousands of                    Canadian dollars)                                                                                                                                                                                       March 31       March 31                                                         2014           2013     Cash provided by (used in)                                                                                                                              Operating activities                                                        Net income                                 $      60,411   $     64,987     Items not affecting cash                                                      Depreciation                                    73,309         57,190       Share-based compensation, net                of cash paid                                     (182)          6,836       Unrealized foreign exchange                  and other                                      (8,326)          (830)       Accretion on long-term debt                         88             80       Deferred income tax                             11,711         11,539     Net change in non-cash working                 capital                                         (58,867)       (32,958)                                                                                                                                   78,144        106,844                                                                                 Investing activities                                                        Purchase of property and                       equipment                                      (120,753)       (62,757)     Net change in non-cash working                 capital                                            5,491            485                                                                                                                                (115,262)       (62,272)                                                                                 Financing activities                                                        Net increase in operating lines                of credit                                         18,042         72,553     Issue of capital stock                                 -          1,238     Purchase of shares held in trust                   (489)          (510)     Dividends                                       (18,019)       (16,863)     Net change in non-cash working                 capital                                            3,224          2,957                                                                                                                                    2,758         59,375                                                                                 Net (decrease) increase in cash                and cash equivalents                            (34,360)        103,947                                                                                 Effects of foreign exchange on                 cash and cash equivalents                        (4,005)          1,524                                                                                 Cash and cash equivalents -                    beginning of period                               78,858         33,208                                                                                 Cash and cash equivalents - end                of period                                  $      40,493   $    138,679                                                                                                                                                             Supplemental information                                                      Interest paid                            $         899   $        107       Income taxes paid                        $       7,931   $     31,588                                                                         SOURCE  Ensign Energy Services Inc.  Glenn Dagenais, Executive Vice President Finance and Chief Financial  Officer,  (403) 262-1361.  To view this news release in HTML formatting, please use the following URL:  http://www.newswire.ca/en/releases/archive/May2014/12/c7789.html  CO: Ensign Energy Services Inc. ST: Alberta NI: OIL ERN CONF  
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