Mr. John Hooks reports
PHX ENERGY ANNOUNCES RECORD SECOND QUARTER FINANCIAL AND OPERATING RESULTS, AND INCREASES ITS 2014 CAPITAL EXPENDITURES BUDGET
PHX Energy Services Corp. achieved record levels of revenue, operating days, EBITDA (earnings before interest, taxes, depreciation and amortization) and funds from operations for a second quarter.
For the three-month period ended June 30, 2014, the corporation generated consolidated revenue of $100.5-million as compared with $65.5-million in the 2013 period, a 53-per-cent increase. In addition, despite the usual effects of spring breakup in Canada, the level of the corporation's profitability increased. EBITDA of $7.8-million was achieved in the second quarter of 2014, compared with $400,000 in the 2013 period. As a percentage of revenue, EBITDA was 8 per cent in the 2014 quarter, compared with 1 per cent in the corresponding 2013 quarter. This level of EBITDA was primarily the result of solid activity growth and improved profitability realized in the United States. In addition, margins were positively impacted by the continuing strategy to implement cost reduction initiatives, continuously improve reliability and gain operational efficiencies related to the utilization of PHX Energy's technologies.
All-time record quarterly revenue and operating days were attained in the U.S. and, as a percentage of the 2014 quarter's consolidated revenue, this segment represented 66 per cent as compared with 62 per cent in the 2013 quarter. Albania also achieved the highest level of quarterly revenue and operating days in its history, and the international segment represented 13 per cent of consolidated revenue in the second quarter of 2014 (2013, 20 per cent). The Canadian segment in the second quarter of 2014 achieved new quarterly revenue and operating day milestones.
PHX Energy has increased its 2014 capital expenditure budget from $63.3-million to $76.4-million, in light of strong growth realized and anticipated future activity levels. During the second quarter of 2014, $11.1-million in capital expenditures were incurred, and an additional $26.1-million is currently on order and is expected to be received within the remainder of 2014.
In the 2014 quarter, the corporation paid dividends of $7.3-million or 21 cents per share. As at June 30, 2014, PHX Energy had long-term debt of $90.3-million and working capital of $77.8-million.
During the second quarter of 2014, PHX Energy's job capacity increased by five concurrent jobs to 212 through the addition of five E-360 electromagnetic (EM) measurement while drilling (MWD) systems. As at June 30, 2014, the corporation's MWD fleet consisted of 140 P-360 positive pulse MWD systems and 72 E-360 EM MWD systems. Of these, 100 MWD systems were deployed in Canada, 94 in the United States, nine in Russia, six in Albania, and three in Peru. The process of closing the Peruvian operations is still in progress and assets are being reallocated to other locations. In addition, during the second quarter of 2014, the corporation ceased all activities in Colombia and initiated the closure of its Colombian entity. All assets have been transferred to North America to support the increased drilling activities.
During the remainder of the year, the corporation expects to add 12 P-360 and 2 E-360 MWD systems. As a result, by the end of 2014, the corporation expects to have a fleet of 226 MWD systems, which would comprise 152 P-360 MWD systems and 74 E-360 MWD systems. In addition, the corporation expects to increase its worldwide resistivity while drilling (RWD) job capacity from 17 at the end of the second quarter to 18 by the end of 2014.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three-month periods ended Six-month periods ended
June 30, June 30,
2014 2013 2014 2013
Revenue $100,484,150 $ 65,482,975 $229,614,660 $158,149,790
Direct costs 86,333,058 62,051,464 186,976,870 133,017,023
Gross profit 14,151,092 3,431,511 42,637,790 25,132,767
Expenses
Selling, general
and administrative
expenses 14,523,261 8,443,769 29,127,887 18,928,599
Research and
development
expenses 660,226 456,068 1,497,470 991,981
Finance expense 861,744 1,181,287 1,892,041 2,274,914
Other income (1,360,839) (257,647) (2,136,085) (2,296,483)
14,684,392 9,823,477 30,381,313 19,899,011
Share of loss of
equity-accounted
investee (net of
tax) - 446,514 - 666,568
Earnings (loss)
before income taxes (533,300) (6,838,480) 12,256,477 4,567,188
Provision for
(recovery of)
income taxes
Current 1,926,514 833,711 2,586,179 2,628,702
Deferred (1,397,394) (2,937,048) 1,919,616 (1,632,216)
529,120 (2,103,337) 4,505,795 996,486
Net earnings (loss) (1,062,420) (4,735,143) 7,750,682 3,570,702
Other comprehensive
income
Foreign currency
translation (2,103,649) 830,863 (677,895) 2,295,633
Total comprehensive
income (loss) for
the period $ (3,166,069) $ (3,904,280) $ 7,072,787 $ 5,866,335
Earnings (loss) per
share, basic $ (0.03) $ (0.16) $ 0.22 $ 0.13
Earnings (loss) per
share, diluted $ (0.03) $ (0.16) $ 0.22 $ 0.13
We seek Safe Harbor.
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