Ensign Energy Services Inc. Reports 2015 First Quarter Results

2015-05-04
5:00am

CALGARY, May 4, 2015 /CNW/ -

Overview

Revenue for the first quarter of 2015 was $449.3 million, a decrease of 28% from revenue for the first quarter of 2014 of $624.2 million.  Adjusted EBITDA totaled $112.3 million ($0.74 per common share) in the first quarter of 2015, 30% lower than adjusted EBITDA of $160.1 million ($1.05 per common share) in the first three months of 2014.  Net income for the first quarter of 2015 decreased 74% to $15.4 million ($0.10 per common share), compared to net income of $60.4 million ($0.40 per common share) for the first quarter of 2014.  Adjusted net income for the first quarter of 2015 was $27.7 million ($0.18 per common share), 49% lower than adjusted net income of $54.0 million for the first quarter of 2014 ($0.35 per common share).  Funds from operations decreased 20% to $109.8 million ($0.72 per common share) in the first three months of 2015 as compared to $137.0 million ($0.90 per common share) in the first three months of the prior year.  Operating days across the Company's fleet were lower in the first quarter of 2015 when compared to the first quarter of 2014 due to weaker demand for oilfield services caused by low oil and natural gas commodity prices.  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 versus the Canadian dollar for the first three months of 2015 increased 12.5%, compared to the first three months of 2014.

Gross margin decreased to $133.8 million (30% of revenue) for the first quarter of 2015 compared to a gross margin of $182.2 million (29% of revenue) for the first quarter of 2014.  The decrease in gross margin in the first quarter of 2015 compared to the first quarter of 2014 was primarily attributed to weaker activity levels and revenue rates across the oilfield service equipment fleet, costs related to field office restructuring and costs associated with moving idle equipment to storage facilities.

Working capital at March 31, 2015 was $183.8 million, compared to $189.7 million at December 31, 2014.  The Company's bank credit facilities provide available borrowings of $156.4 million at March 31, 2015, compared to $161.5 million at December 31, 2014 as additional draws were used to support the Company's rig build program, first quarter activity levels and the first quarter dividend payment.

FINANCIAL AND OPERATING HIGHLIGHTS
(Unaudited, in thousands of Canadian dollars, except per share data and operating information)



Three months ended March 31


2015


2014


% change

Revenue  

449,289


624,194


(28)

Adjusted EBITDA 1  

112,333


160,069


(30)

Adjusted EBITDA per share 1







Basic

$0.74


$1.05


(30)


Diluted

$0.74


$1.04


(29)







Adjusted net income 2 

27,713


53,958


(49)

Adjusted net income per share 2







Basic

$0.18


$0.35


(49)


Diluted

$0.18


$0.35


(49)







Net income

15,427


60,411


(74)

Net income per share







Basic

$0.10


$0.40


(75)


Diluted

$0.10


$0.39


(74)







Funds from operations 3 

109,761


137,011


(20)

Funds from operations per share 3







Basic

$0.72


$0.90


(20)


Diluted

$0.72


$0.89


(19)







Weighted average shares – basic(000s)

152,525


152,864


-

Weighted average shares – diluted (000s) 

152,805


153,654


(1)







Drilling







Number of marketed rigs








Canada 4

90


104


(13)



United States

97


111


(13)



International 5

56


55


2



Rigs in transit 6

-


2


(100)


Operating days








Canada 4

2,759


4,792


(42)



United States

3,723


5,673


(34)



International 5

2,540


3,152


(19)







Well Servicing







Number of marketed rigs








Canada

72


91


(21)



United States

47


45


4


Operating hours








Canada

18,746


34,680


(46)



United States

19,754


28,861


(32)

1Adjusted EBITDA is defined as "income before interest, income taxes, depreciation, asset decommissioning and write-downs, share-based compensation and foreign exchange and other".  Management believes that in addition to net income, Adjusted EBITDA is a useful supplemental measure as it provides 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 are not recognized measures under International Financial Reporting Standards and accordingly may not be comparable to measures used by other companies.

2Adjusted net income is defined as "net income before asset decommissioning and write-downs, share-based compensation and foreign exchange and other, tax-effected using the expected income tax rate for each item or an estimate of 35 percent". Adjusted net income is a useful supplemental measure as it provides an indication of the results generated by the Company's principal business activities prior to consideration of how the results are impacted by non-cash charges for equipment write-downs, 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 are not recognized measures under International Financial Reporting Standards and accordingly may not be comparable to measures used by other companies.

3Funds from operations is defined as "cash provided by operating activities before the change in non-cash working capital". Funds from operations is a measure that provides 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.

5Includes workover rigs.

6Drilling rigs being retrofitted and transferred to a new geographic market.

 

First Quarter Highlights

  • Revenue for the first three months of 2015 was $449.3 million, down 28% from the first quarter of 2014. 
  • First quarter revenue by segment:
    • Canada - 26%;
    • United States - 42%; and
    • International - 32%.
  • Canadian drilling recorded 2,759 operating days in the first quarter of 2015, a 42% decrease from 4,792 operating days in the first quarter of 2014. 
  • United States drilling recorded 3,723 operating days in the first quarter of 2015, a 34% decrease from 5,673 operating days in the first quarter of 2014. 
  • International drilling recorded 2,540 operating days in the first quarter of 2015, a 19% decrease from 3,152 operating days recorded in the first quarter of 2014.
  • One-time restructuring costs of approximately $5 million negatively impacted gross margin and general and administrative expense in the quarter.
  • Adjusted EBITDA for the first quarter of 2015 was $112.3 million, a 30% decrease from adjusted EBITDA of $160.1 million for the first quarter of 2014.  Funds from operations for the first quarter of 2015 decreased 20% to $109.8 million from $137.0 million in the first quarter of the prior year.
  • Four new Automated Drill Rigs ("ADR®") were added to the Company's drilling fleet in the first quarter of 2015; two in the Canadian market and two in the United States market. One new Automated Service Rig ("ASRTM") was deployed in the Canadian market and two new well servicing rigs were added to the United States fleet in the first quarter of 2015.
  • The Company's construction in progress at March 31, 2015, includes four new ADR® drilling rigs and two major retrofits to existing drilling rigs. 
  • The Company declared its second quarter dividend of $0.12 per common share payable July 3, 2015.

Revenue and Oilfield Services Expense


Three months ended March 31

($ thousands)  

2015


2014


Change


% change

Revenue






Canada

117,990

226,468

(108,478)

(48)


United States

186,400

248,363

(61,963)

(25)


International

144,899


149,363


(4,464)

(3)







449,289

624,142

(174,905)

(28)

Oilfield services expense 

315,442


442,020


(126,578)

(29)

Gross margin 

133,847


182,174


(48,327)

(27)

Gross margin percentage (%)               

29.8


29.2



 

Revenue recorded in the first quarter of 2015 totaled $449.3 million, a decrease of 28% from the first quarter of 2014.  As a percentage of revenue, gross margin for the first quarter of 2015 increased to 30% from 29% for the first quarter of 2014.

The oil and natural gas commodity price decline that commenced in the second half of 2014 and continued through the first quarter of 2015 reduced the demand for oilfield services and caused the Company to achieve lower equipment utilization and revenue rates compared to the first quarter of 2014.  The United States dollar strengthened by 12.5% relative to the Canadian dollar in the first three months of 2015 compared to the first three months of 2014, which served to reduce the impact of some of the revenue rate declines during the quarter.

Canadian Oilfield Services

Revenue decreased 48% to $118.0 million for the three months ended March 31, 2015, from $226.5 million for the three months ended March 31, 2014.  Canadian revenue accounted for 26% of the Company's total revenue in the first quarter of 2015, compared with 36% in the first quarter of 2014.  Demand for the Company's Canadian oilfield services was lower compared to prior quarters due to the decrease in oil and natural gas commodity prices. 

The Company recorded 2,759 drilling days in the first quarter of 2015, a 42% decrease from the 4,792 drilling days recorded in the first quarter of 2014.  Canadian well servicing hours were also lower than the prior year, decreasing 46% in the first quarter of 2015 to 18,746 operating hours, compared with 34,680 operating hours in the corresponding period of 2014.  During the three months ended March 31, 2015 two new build ADR® drilling rigs and one new ASRTM well servicing rig were completed and added to the Company's Canadian fleet.

United States Oilfield Services

The Company's United States operations recorded revenue of $186.4 million in the first quarter of 2015, a 25% decrease from the $248.4 million recorded in the corresponding period of the prior year.  The Company's United States operations accounted for 42% of the Company's revenue in the first quarter of 2015, compared to 40% in the first quarter of 2014.  Drilling rig operating days decreased by 34% to 3,723 drilling days in the first quarter of 2015 as compared to 5,673 drilling days in the first quarter of 2014.  Well servicing activity decreased by 32% in the first quarter of 2015 to 19,754 operating hours from 28,861 operating hours in the first quarter of 2014.

Activity levels and revenue rates in the United States oilfield service operations began to decline in the fourth quarter of 2014.  The decline continued into the first quarter of 2015, resulting in lower activity levels compared to the first quarter of the prior year.  The activity and pricing declines have been offset somewhat by the positive translational impact of a stronger United States dollar, which increased 12.5% versus the Canadian dollar when compared to the first quarter of 2014. The new builds and the upgrades that the Company made to its United States equipment fleet throughout the previous years have allowed the Company to maintain revenue rates in some operating jurisdictions.  The Company added two new ADR® drilling rigs and two new well servicing rigs to the United States fleet in the first quarter of 2015.

International Oilfield Services

The Company's international operations recorded revenue of $144.9 million in the first quarter of 2015, a 3% decrease from $149.4 million recorded in the corresponding period of the prior year.  International operations contributed 32% of the Company's revenue in the first quarter of 2015, compared with 24% in the same period of 2014.  International operating days for the three months ended March 31, 2015 totaled 2,540 drilling days, a decrease of 19% compared to 3,152 drilling days for the three months ended March 31, 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 2015 as compared to the first quarter of the prior year.

Depreciation


Three months ended March 31

($ thousands) 

2015


2014


Change


% change

Depreciation 

63,827


73,309


(9,482)


(13)

 

Depreciation expense decreased 13% to $63.8 million for the three months ended March 31, 2015, compared with $73.3 million for the three months ended March 31, 2014.  Depreciation expense in the current quarter when compared to the first quarter of 2014 was lower due to the decrease in operating activity, which was partially offset by the impact of the reduction in the residual value of certain equipment from 20% to 10% implemented during the quarter and from the negative translational impact of a stronger United States dollar compared to the Canadian dollar on United States and international depreciation in the current quarter.

General and Administrative Expense



Three months ended March 31

($ thousands) 

2015


2014


Change


% change

General and administrative  

21,514


22,105


(591)


(3)

% of revenue

4.8


3.5





 

General and administrative expense was $21.5 million (4.8% of revenue) for Q1, 2015 compared with $22.1 million (3.5% of revenue) for the first quarter of 2014, a decrease of 2.1%.  The decrease in general and administrative expense reflects the Company's initiatives to reduce fixed costs in reaction to lower oil and natural gas commodity prices.  The decrease was partially offset by restructuring costs incurred during the quarter and the negative translational impact on United States and international administrative expenses of a stronger United States dollar versus the Canadian dollar in the current quarter.

Share-Based Compensation


Three months ended March 31

($ thousands)  

2015


2014


Change


% change

Share-based compensation expense (recovery)  

792


(913)


1,705


(187)

 

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 market price of the Company's common shares.

For the three months ended March 31, 2015, share-based compensation was an expense of $0.8 million, compared with a recovery of $0.9 million recorded in the first quarter of 2014.  The increase in the share-based compensation expense in the first quarter of 2015 was a result of the amortization of stock options offset by the change in the fair value of the share-based compensation liability primarily due to a decrease in the price of the Company's common shares during the first three months of 2015.  The closing price of the Company's common shares was $9.93 at March 31, 2015 ($16.34 at March 31, 2014), compared with $10.20 at December 31, 2013 ($16.73 at December 31, 2013).

Interest Expense


Three months ended March 31

($ thousands) 

2015


2014


Change


% change

Interest expense 

6,077


5,426


651


12

Interest income 

(98)


(336)


238


(71)


5,979


5,090


889


17

 

Interest expense is incurred on the Company's $10.0 million Canadian-based revolving credit facility (the "Canadian Facility"), the $600.0 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.

Interest expense in the first quarter of 2015 increased over interest expense in the first quarter of 2014 primarily due the negative translational impact of a stronger United States dollar versus the Canadian dollar on United States and international interest expense in the current quarter.

Foreign Exchange and Other


Three months ended March 31

($ thousands)  

2015


2014


Change


% change

Foreign exchange and other  

18,110


(9,015)


27,125


(301)

 

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, 2015, the Australian dollar weakened by approximately 6% against the United States dollar causing a foreign currency loss on translation of the Company's United States dollar denominated debt into Australian dollars.  In general, when compared to other world currencies, the United States dollar was stronger in the first three months of 2015, compared to the first three months of 2014.   

Income Taxes



Three months ended March 31

($ thousands)

2015


2014


Change


% change

Current income tax 

(2,729)


19,476


(22,205)


(114)

Deferred income tax 

10,927


11,711


(784)


(7)










8,198


31,187


(22,989)


(74)

Effective income tax rate (%)

34.7


34.0



 

The effective income tax rate for the three months ended March 31, 2015 was 34.7%, compared with 34.0% for the three months ended March 31, 2014. The current income tax recovery of $2.7 million in the three months ended March 31, 2015, was primarily due to a loss for income tax purposes in the Company's Canadian operations as operating activity decreased significantly from the first quarter of the prior year.

Financial Position

The following chart outlines significant changes in the consolidated statement of financial position from December 31, 2014 to March 31, 2015:

($ thousands)                                                           


Change


Explanation

Cash and cash equivalents 


(628)


See consolidated statements of cash flows.

Accounts receivable


(75,248)


Decrease is due to an increase in collecitons and a decline in activity in the first
quarter of 2015 compared to the fourth quarter of 2014.

Inventories and other


4,275


Increase is due to additional inventory and prepaid expenses offset by normal
course use of consumables and amortization of prepaid expenses and foreign
exchange fluctuations on the United States dollar-denominated balances.

Property and equipment


173,757


Increase is 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 accruals 


(60,568)


Decrease is due to the reduction in operating activity in the current quarter as well
as the reduction in the size of the Company's new build and major retrofit construction program.

Share-based compensation


836


Increase is due to the amortization of stock options, offset by a decline in the price
of the Company's common shares as at March 31, 2015 compared with
December 31, 2014.

Long-term debt 


37,350


Increase is primarily due to foreign exchange fluctuations on the United States
dollar-denominated long-term debt.

Deferred income taxes


3,076


Increase is primarily due to accelerated tax depreciation of assets added during
the quarter and utilization of non-capital losses.

Shareholders' equity


127,110


Increase is 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)     

2015


2014


Change


% change

Funds from operations 

109,761


137,011


(27,250)


(20)

Funds from operations per share 

$0.72


$0.90


$(0.18)


(20)

Working capital1  

183,752


189,698


(5,946)


(3)

1 Comparative figure as of December 31, 2014.

 

During the three months ended March 31, 2015, the Company generated funds from operations of $109.8 million ($0.72 per common share), compared with funds from operations of $137.0 million ($0.90 per common share) for the three months ended March 31, 2014, a decrease of 20%.  This decrease was due to reduced operating and financial results for the Company in the first quarter of 2015 compared to the first quarter of the prior year. 

At March 31, 2015, the Company's working capital totaled $183.8 million, compared to $189.7 million at December 31, 2014.  The decrease in working capital in the first three months of 2015 was mainly related to reduced financial results in the first quarter of 2015 and the residual spend on the new build and major retrofit construction program.  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 $610.0 million, of which $156.4 million was available at March 31, 2015.

Investing Activities


Three months ended March 31

($ thousands)    

2015


2014


Change


% change

Purchase of property and equipment 

(78,685)


(120,753)


42,068


(35)

Net change in non-cash working capital 

(40,851)


5,491


(46,342)


NM









Cash used in investing activities

(119,536)


(115,262)


(4,274)


4

NM is "not meaningful"





 

Purchases of property and equipment during the first quarter of 2015 totaled $78.7 million (2014 - $120.8 million).  The purchase of property and equipment relates to the expenditures made pursuant to the Company's current new build and major retrofit program, and for capital maintenance costs incurred in the quarter.

Financing Activities


Three months ended March 31

($ thousands)                      

2015


2014


Change


% change

Net (decrease) increase in bank credit facilites                           

(29,995)


18,042


(48,037)


(266)

Purchase of shares held in trust                                   

(554)


(489)


(65)


13

Dividends                              

(18,367)


(18,019)


(348)


2

Net change in non-cash working capital                                  

3,640


3,224


416


13









Cash provided by financing activities                        

(45,276)


2,758


(48,034)


NM

NM is "not meaningful"





 

The Company's available bank credit facilties consist of a $600.0 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 $600.0 million Canadian dollars.  The Global Facility has a three-year term that expires in June, 2017.  The amount available under the Canadian Facility is $10.0 million or the equivalent in United States dollars.

In addition, the Company has a $20.0 million uncommitted facility, solely for issuing letters of credit, primarily used for bidding on contracts in the normal course of business.

Net draws of the bank credit facilities were mainly used to fund the current new build and major retrofit program.  As of March 31, 2015, the bank credit faciliites are primarily being used to fund capital expenditures and to support international operations.

The Board of Directors of the Company has declared a second quarter dividend of $0.12 per common share to be payable July 3, 2015 to all Common Shareholders of record as of June 19, 2015.  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, 2015, the Company commissioned two new ADR® drilling rigs in Canada and two new ADR® drilling rigs in the United States. In addition, one new ASRTM well servicing rig was added to the Canadian well servicing fleet and two new well servicing rigs were added to the United States fleet. 

The Company continues to build new ADR® drilling rigs and upgrade existing rigs to meet the increasing technical demands of its customers.  However, the recent decline in oil and natural gas commodity prices has resulted in the Company proactively and aggressively reducing the rig build program.  The Company's new build program currently consists of plans to complete the construction of four new build ADRs that will be added to its fleet by the third quarter of 2015.  A total of two major retrofits are currently planned for the United States market in 2015. 

Outlook

The Company believes that the recovery in the global economy has not yet gained sufficient momentum to result in the increases in demand for energy required to offset recent supply increases and rebalance the energy market.  Further, it appears that the lower energy commodity prices that have taken hold, since last year's strategic shift by Saudi Arabia to gain market share,  have not meaningfully stimulated demand  for additional energy. In this challenging environment, energy producers have quickly adjusted to dramatically reduced revenue streams by curtailing capital expenditures and reducing fixed costs in their operations. The current uncertainty in oil and natural gas commodity prices has resulted in reduced demand for oilfield services, particularly in North America. The lower energy commodity price environment has placed downward pressure on equipment utilization and revenue rates across the Company's fleet.

During the first three months of 2015, historically the busiest seasonal period of the year in Canada, the Canadian drilling industry has seen overall activity reduced by approximately 45% compared to the first quarter of the prior year. The Canadian Association of Oilwell Drilling Contractors has forecast that total industry operating days for 2015 will be reduced by 41% over the prior year. The Company's Canadian operations recorded a 42% reduction in days compared with the first quarter of 2014, and the Company expects operating levels for the balance of the year to track the industry average.  During this period of industry malaise, Canadian activity levels will be subdued and there will be downward pressure on revenue rates due to the over-supply of oilfield service equipment in the market.

The number of active land-based drilling rigs in the United States has reduced every week since the start of the year.  The Baker Hughes count of land-based drilling rigs operating in the United States was at 868 rigs as of May 1, 2015, down approximately 51% from a count of 1,786 rigs operating in the United States one year ago. Any sustained future recovery in the active drilling rig count will ultimately depend on increases in oil and natural gas commodity prices, the timing of which is dependent on energy commodity supply and demand fundamentals. Despite the large drop in operating drilling rigs in the United States, the Company's active rig count has remained somewhat resilient everywhere except in California, where operators reacted very quickly to a lower oil price environment. In the first three months of 2015, the Company's United States fleet recorded a 34% decrease in operating days compared to the same period in 2014. While the Company's utilization currently compares favorably with industry utilization in the United States, an over-supply of oilfield service equipment means that there will be continued pressures on demand and pricing for oilfield services such that the Company's utilization may soon begin to fall in line with United States onshore industry activity levels.

International drilling markets are more diverse and tend to be characterized by longer term contracts, consequently the Company's international activity levels in the first quarter of 2015 did not decrease as much as activity levels in North America compared to the prior year.  The Company's international operations recorded a first quarter activity level that was 19% lower than the first quarter of 2014. Challenges in some of the Company's international operations persist due to geopolitical issues, civil unrest, economic constraints and other factors inherent in international operations; however, several of the Company's drilling rigs that were either newly built or significantly refurbished and transferred from other markets into the international fleet have commenced operations and this has partially mitigated such challenges. For the remainder of 2015, the Company expects to operate at similar utilization levels to those of the first quarter, due to a relatively high proportion of long-term contracts in its international operations.

Throughout the current industry downturn, the Company's priorities are balance sheet preservation, securing and retaining high-quality customer relationships, and effective cost management in its operations. Although the Company has addressed its administrative and supervisory structure to enable the Company to be cost effective in the oil and natural gas commodity price environment that is expected going forward, further action may be taken if industry conditions do not improve over the coming quarters. The Company believes that a proactive approach in meeting the challenges of these uncertain times is not only prudent, it is imperative.

Acknowledgement

Glenn Dagenais will be retiring as Ensign's Executive Vice President Finance and Chief Financial Officer ("CFO") in the third quarter of 2015.  Glenn joined Ensign as CFO in 1991 and has played a pivotal role in guiding the Company to become the global oilfield services company that it is today. The Company and the Board of Directors would like to thank Glenn for the outstanding leadership he has provided Ensign over the years. Pursuant to our established succession plan, Tim Lemke will be replacing Glenn as the Company's CFO.  Tim joined Ensign five years ago as Vice President Finance and has the background and skills necessary to ensure a seamless transition.

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, economic and market conditions, crude oil and natural gas prices, foreign currency fluctuations, weather conditions, the Company's defense of lawsuits and the ability of oil and 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 2015 results at 2:00 p.m. MDT (4:00 p.m. EDT) on Monday, May 4, 2015.  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 11, 2015 by dialing 1-416-849-0833 (in Toronto) or 1-855-859-2056 (outside Toronto) and entering the reservation number 35117875.  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
2015


December 31
2014






(Unaudited, in thousands of Canadian dollars)










Assets





Current Assets






Cash and cash equivalents

$

53,369

$

53,997


Accounts receivable


388,570


463,818


Inventories and other


69,137


64,862


Income taxes receivable


21,489


15,841








532,565


598,518






Property and equipment                 


3,298,684


3,124,927







$

3,831,249

$

3,723,445






Liabilities





Current Liabilities






Accounts payable and accruals

$

327,990

$

388,558


Dividends payable


18,367


18,367


Share-based compensation


2,456


1,895








348,813


408,820






Long-term debt                  


823,677


786,327

Share-based compensation                     


952


677

Deferred income taxes                  


485,460


482,384








1,658,902


1,678,208






Shareholders' Equity






Share capital


170,714


169,215


Contributed surplus


1,048


1,967


Foreign currency translation reserve


243,350


113,880


Retained earnings


1,757,235


1,760,175








2,172,347


2,05,237







$

3,831,249

$

3,723,445






 


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
2015


March 31
2014




Revenue

$

449,289

$

624,194







Expenses




Oilfield services


315,442


442,020


Depreciation


63,827


73,309


General and administrative


21,514


22,105


Share-based compensation


792


(913)


Foreign exchange and other


18,110


(9,015)






419,685


527,506




Income before interest and income taxes                      


29,604


96,688






Interest income                            


98


336

Interest expense                         


(6,077)


(5,426)




Income before income taxes


23,625


91,598




Income taxes




Current tax


(2,729)


19,476


Deferred tax


10,927


11,711






8,198


31,187




Net income

$

15,427

$

60,411










Net income per share




Basic

$

0.10

$

0.40


Diluted

$

0.10

$

0.39







 

Ensign Energy Services Inc.
Consolidated Statements of Cash Flows
For the three months ended  


(Unaudited, in thousands of Canadian dollars)







March 31
2015


March 31
2014




Cash provided by (used in)






Operating activities



Net income       

$

15,427

$

60,411

Items not affecting cash




Depreciation


63,827


73,309


Share-based compensation, net of cash paid


1,944


(182)


Unrealized foreign exchange and other


17,537


(8,326)


Accretion on long-term debt


99


88


Deferred income tax


10,927


11,711












109,761


137,011

Net change in non-cash working capital                   


47,420


(58,867)






157,181


78,144







Investing activities



Purchase of property and equipment                  


(78,685)


(120,753)

Net change in non-cash working capital                       


(40,851)


5,491









(119,536)


(115,262)







Financing activities



Net (decrease) increase in bank credit facilites                      


(29,995)


18,042

Purchase of shares held in trust                       


(554)


(489)

Dividends                   


(18,367)


(18,019)

Net change in non-cash working capital                       


3,640


3,224






(45,276)


2,758







Net decrease in cash and cash equivalents                  


(7,631)


(34,360)




Effects of foreign exchange on cash and cash equivalents                    


7,003


(4,005)




Cash and cash equivalents – beginning of period                      


53,997


78,858




Cash and cash equivalents – end of period

$

53,369

$

40,493













Supplemental information







Interest paid

$

2,213

$

899


Income taxes paid

$

2,919

$

7,931









 

SOURCE Ensign Energy Services Inc.

For further information: Glenn Dagenais, Executive Vice President Finance and Chief Financial Officer, (403) 262-1361.