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News

March 24, 2022

STAMPEDE DRILLING INC. ANNOUNCES RECORD 2021 FOURTH QUARTER AND YEAREND RESULTS

ALGARY, AB March 24, 2022 /CNW/ – Stampede Drilling Inc. (“Stampede” or the “Corporation”) (TSXV: SDI) announces today its financial and operational results for the three months and year ended December 31, 2021 .

The following should be read in conjunction with the Corporation’s consolidated financial statements and the notes thereto for the year ended December 31, 2021 , related management’s discussion and analysis and annual information form, which are available on SEDAR at www.sedar.com .

All amounts or dollar figures are denominated in thousands of Canadian dollars except for per share amounts, number of drilling rigs, and operating days, or unless otherwise noted.

Estimates and forward-looking information are based on assumptions of future events and actual results may vary from these estimates. See “Forward-Looking Information” in this press release for additional details.

FINANCIAL SUMMARY

Three months ended
December 31,

Twelve months ended
December 31,

(000’s CAD $ except per share amounts)

2021

2020

% Change

2021

2020

% Change

2019

Revenue

9,180

2,515

265%

32,163

14,394

123%

23,697

Direct operating expenses

6,011

1,496

302%

20,135

9,529

111%

15,500

Gross margin (1)

3,169

1,019

211%

12,028

4,865

147%

8,197

Net income (loss)

372

(2,386)

116%

2,852

(4,042)

171%

(1,247)

Basic income (loss) per share

0.00

(0.01)

nm

0.02

(0.03)

nm

(0.01)

Diluted income (loss) per share

0.00

(0.01)

nm

0.02

(0.03)

nm

(0.01)

Adjusted EBITDA (1)

1,949

479

(307%)

8,361

2,377

252%

4,126

Weighted average common shares outstanding

132,171

132,046

0%

132,171

132,046

0%

131,851

Weighted average diluted common shares outstanding

144,972

132,046

10%

144,972

132,046

10%

131,851

Capital expenditures

2,667

4

nm

4,086

709

476%

9,580

Average active rig count

10

10

nm

10

10

nm

10

Drilling rig utilization (2)

47%

12%

292%

44%

19%

132%

34%

CAOEC industry average utilization (3)

29%

16%

81%

25%

16%

56%

22%

nm – not meaningful
(1) Refer to “Non-GAAP Measures” for further information.
(2) Drilling rig utilization is calculated based on operating days (spud to rig release)
(3) Source: The Canadian Association of Energy Contractors (“CAOEC”) monthly Contractor Summary. The CAOEC industry average is based on Operating Days divided by total available drilling days.

As at December 31,

(000’s CAD $)

2021

2020

% Change

Current assets

7,651

4,197

82%

Total assets

50,755

47,784

6%

Total current liabilities

10,129

10,008

1%

Total non-current liabilities

4,447

5,005

(11%)

Shareholders’ equity

36,179

32,771

10%

DESCRIPTION OF STAMPEDE’S BUSINESS

Stampede is an energy services company that provides premier contract drilling services in Western Canada . Stampede operates a fleet of 10 telescopic double drilling rigs suited for most formations within the WCSB. The Corporation’s head office is located in Calgary, Alberta with operations based out of Nisku, Alberta and Estevan, Saskatchewan . The Corporation’s shares trade on the TSX Venture Exchange under the symbol “SDI”.

In 2021, Stampede operated in the provinces of Alberta Saskatchewan and Manitoba .

2021 OPERATIONAL OVERVIEW

In 2021, Stampede recorded its highest ever annual adjusted EBITDA of $8,361 and net income of $2,852 . These record numbers were driven by revenue of $32,163 , which was an increase of 123% over 2020.

The turnaround in commodity prices that began in Q4 2020, and continued through 2021, was driven by short–term production cuts by Saudi Arabia and OPEC+ combined with lower producer capital expenditures and a renewed optimism for rising energy demand due to the successful roll-out of worldwide COVID–19 vaccination programs.

While industry demand did recover slightly in 2021, Stampede’s utilization rate of 44% was 81% higher than the CAOEC industry average utilization rate of 25% for the same corresponding period. Stampede’s superior utilization rates were a direct result of continued successful expansion of its customer base.

The Corporation continued to maintain a strong focus on safety, culture and performance.  In addition to the usual industry safety programs, Stampede proactively advanced new programs to tackle the safety challenges associated with the COVID–19 pandemic to ensure the health and safety of all its personnel.  The focus of the Corporation is safe, efficient and reliable operations at each of its drilling sites and management is very pleased with the results achieved to date.

OUTLOOK

Stampede’s strong 2021 results continued into 2022, with all 10 of our marketable rigs being fully crewed and operational during the first quarter, Stampede is anticipating that minimal reactivation costs will offset expected inflationary increases in operational costs.  With crude hitting 7-year highs, producers are seeing increased cash flows from their operations.  Stampede’s 2022 outlook remains positive as our client’s financial positions continue to improve and the increasing forward curve for commodities provides further confidence for capital expenditure increases.

The Canadian market is tightening, and Stampede’s customers are looking to secure equipment and crews to ensure the success of their 2022 capital programs.  Availability of labour continues to be a significant concern for all service providers, and we are strongly focused on retaining existing staff and attracting new talent.

As previously announced on January 4, 2022 , Stampede entered into an agreement with a well-established private Alberta based company (“AlbertaCo”) to combine Stampede’s extensive drilling operations experience with AlbertaCo’s technology of E-line coil tubing directional tools, tool deployment system, integrated drilling control systems, pumping systems, automated live wellbore modeling system, coil tubing injectors and reels.

Stampede believes the agreement will enhance the Corporation’s strategy in the provision of industry leading services for ESG extraction of hydrocarbons from bypassed reserves, low pressure reservoirs, and extend the reach of underbalanced short radius wells using through-tubing re-entry drilling applications in the future. Beta testing on the new underbalanced coil drilling rig and related technology is expected to be completed by the end of the second quarter in 2022.

The Corporation will continue to focus on maintaining financial resiliency, in order to best position the Corporation for organic and acquisition growth.

RESULTS FROM OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2021

Twelve months ended
December 31,

(000’s CAD $ except operating days)

2021

2020

% Change

Revenue

32,163

14,394

123%

Direct operating expenses

20,135

9,529

111%

Gross margin (1)

12,028

4,865

147%

Gross margin % (1)

37%

34%

9%

Net income (loss)

2,852

(4,042)

171%

General and administrative expenses

4,503

3,101

45%

Adjusted EBITDA (1)

8,361

2,377

252%

Drilling rig operating days (2)

1,620

681

138%

Drilling rig revenue per day (3)

19.8

21.1

(6%)

Drilling rig utilization (4)

44%

19%

132%

CAOEC industry average utilization (5)

25%

16%

56%

nm – not meaningful
(1) Refer to “Non-GAAP and Other Financial Measures” for further information.
(2) Defined as contract drilling days, between spud to rig release
(3) Drilling rig revenue per day is calculated by revenue divided by drilling rig operating days
(4) Drilling rig utilization is calculated based on operating days (spud to rig release)
(5) Source: The Canadian Association of Energy Contractors (“CAOEC”) monthly Contractor Summary.

  • Revenue of $32,163 – an increase of $17,769 (123%) as compared to the corresponding 2020 period. The increase was primarily due to increased customer activity levels, expansion of the Corporation’s customer base and related increased drilling activity. Crude oil and liquids pricing reached historic lows in the prior year comparative period, which resulted in production shut-ins and minimal drilling activity. The Corporation had a total of 1,620 operating days in 2021, an increase of 939 (138%) from 681 operating days in 2020. The Corporation’s drilling rig utilization for 2021 was 44%, which was a 132% increase from the corresponding 2020 period and 81% higher than the CAOEC industry average utilization rate for 2021 of 25%. Revenue for the period was partially offset due to lower revenue per day which was primarily due to increased market pricing pressures earlier in the year as compared to the corresponding 2020 period.
  • Net income attributable to shareholders of $2,852 – an increase of $6,894 (171%) as compared to a net loss of $4,042 in 2020. The higher net income was primarily related to higher adjusted EBITDA for the year described below and no further write down of assets in 2021.
  • Adjusted EBITDA of $8,361 – an increase of $5,984 (252%) as compared to $2,377 for the corresponding 2020 period. The increase is primarily due to the increase in drilling activity in 2021 as compared to 2020.
  • Gross margin percentage of 37% – an increase of 11% as compared to 34% for the corresponding 2020 period. The increase is primarily due to the $2,056 (2020: $451 ) of the Canada Emergency Wage Subsidy (“CEWS”) funding the Corporation qualified for during 2021 which was recorded against cost of sales and partially offset by lower revenue per day.
  • General and administrative expenses of $4,503 – an increase of $1,402 (45%) compared to $3,101 for the corresponding 2020 period. The increase is primarily related to the elimination of the Corporation’s 2020 salary roll backs for its employees and its board of directors on April 1, 2021 . The Corporation also incurred increased overall administration expenses due to the increased 2021 activity as compared to prior year which included an increase in headcount. For the year ended December 31, 2021 , the Corporation recorded $114 (2020 – $64 ) as a reduction of general and administrative expenses related to the Canada Emergency Rent Subsidy program.

RESULTS FROM OPERATIONS FOR THE THREE MONTH PERIOD ENDED DECEMBER 31, 2021

Three months ended
December 31,

(000’s CAD $ except per day amounts)

2021

2020

% Change

Drilling rig revenue

9,180

2,515

265%

Direct operating expenses

6,011

1,496

302%

Gross margin (1)

3,169

1,019

211%

Gross margin % (1)

35%

41%

(15%)

Net income (loss)

372

(2,386)

116%

General and administrative expenses

1,488

653

128%

Adjusted EBITDA (1)

1,949

479

(307%)

Drilling rig operating days (2)

434

114

281%

Drilling rig revenue per day (3)

21.2

22.0

(4%)

Drilling rig utilization (4)

47%

12%

292%

CAOEC industry average utilization (5)

29%

16%

81%

nm – not meaningful
(1) Refer to “Non-GAAP and Other Financial Measures” for further information.
(2) Defined as contract drilling days, between spud to rig release
(3) Drilling rig revenue per day is calculated by revenue divided by drilling rig operating days
(4) Drilling rig utilization is calculated based on operating days (spud to rig release)
(5) Source: The Canadian Association of Energy Contractors (“CAOEC”) monthly Contractor Summary.

  • Revenue of $9,180 – an increase of $6,665 (265%) as compared to corresponding 2020 period. The increase was primarily due to increased operating days and more customers drilling late December in Q4 2021. The Corporation had a total of 434 operating days for the three months ended December 31, 2021 , an increase of 320 (281%) from 114 as compared to the corresponding 2020 period. The Corporation’s drilling rig utilization for Q4 2021 was 47%, which was a 292% increase from the corresponding 2020 period and 60% higher than the Q4 2021 CAOEC industry average utilization rate of 29%.
  • Net Income attributable to shareholders of $372 – an increase of $2,758 (116%) as compared to a net loss of $2,386 for the corresponding 2020 period. The higher net income was primarily related to higher adjusted EBITDA for the year described below and no further write down of assets in 2021. The Corporation recorded a $720 write down of assets in Q4 2020.
  • Adjusted EBITDA of $1,949 – an increase of $1,470 (307%) as compared to $479 for the corresponding 2020 period. The increase is primarily due to the increase in drilling activity and corresponding operating days in Q4 2021 as compared to 2020.
  • Gross margin of 35% – a decrease of 6% as compared to 41% for the corresponding 2020 period. The increase is primarily due to the cancellation of the CEWS program early in Q4 2021. The Corporation recorded $55 as a reduction in operating costs for the three months ended December 2021 as compared to $336 for the corresponding 2020 period.
  • General and administrative expenses of $1,488 – an increase of $835 (128%) compared to $653 for the corresponding 2020 period. The increase is primarily related to the elimination of the Corporation’s 2020 salary roll backs for its employees and its board of directors on April 1, 2021 , and increased headcount. For the year ended December 31, 2021 , the Corporation recorded $9 (2020 – $129 ) as a reduction of general and administrative expenses related to the Canada Emergency Rent Subsidy program.
  • Revenue of $9,180 – an increase of $6,665 (265%) as compared to corresponding 2020 period. The increase was primarily due to increased operating days and more customers drilling late December in Q4 2021. The Corporation had a total of 434 operating days for the three months ended December 31, 2021 , an increase of 320 (281%) from 114 as compared to the corresponding 2020 period. The Corporation’s drilling rig utilization for Q4 2021 was 47%, which was a 292% increase from the corresponding 2020 period and 60% higher than the Q4 2021 CAOEC industry average utilization rate of 29%.
  • Net Income attributable to shareholders of $372 – an increase of $2,758 (116%) as compared to a net loss of $2,386 for the corresponding 2020 period. The higher net income was primarily related to higher adjusted EBITDA for the year described below and no further write down of assets in 2021. The Corporation recorded a $720 write down of assets in Q4 2020.
  • Adjusted EBITDA of $1,949 – an increase of $1,470 (307%) as compared to $479 for the corresponding 2020 period. The increase is primarily due to the increase in drilling activity and corresponding operating days in Q4 2021 as compared to 2020.
  • Gross margin of 35% – a decrease of 6% as compared to 41% for the corresponding 2020 period. The increase is primarily due to the cancellation of the CEWS program early in Q4 2021. The Corporation recorded $55 as a reduction in operating costs for the three months ended December 2021 as compared to $336 for the corresponding 2020 period.
  • General and administrative expenses of $1,488 – an increase of $835 (128%) compared to $653 for the corresponding 2020 period. The increase is primarily related to the elimination of the Corporation’s 2020 salary roll backs for its employees and its board of directors on April 1, 2021 , and increased headcount . For the year ended December 31, 2021 , the Corporation recorded $9 (2020 – $129 ) as a reduction of general and administrative expenses related to the Canada Emergency Rent Subsidy program.

NON-GAAP AND OTHER FINANCIAL MEASURES

This MD&A contains references to (i) Adjusted EBITDA, (ii) Gross margin (iii) Gross margin percentage and Working capital (excluding debt). These financial measures are not measures that have any standardized meaning prescribed by IFRS and are therefore referred to as non-GAAP (Generally Accepted Accounting Principles) measures. The non-GAAP measures used by the Corporation may not be comparable to similar measures used by other companies.

(i)

Adjusted EBITDA –  is defined as “income (loss) from operations before interest income, interest expense, taxes, transaction costs, depreciation and amortization, share-based compensation expense, gains on asset disposals, impairment expenses, other income, foreign exchange, non-recurring restructuring charges, finance costs, accretion of debentures and other income/expenses, and any other items that the Corporation considers appropriate to adjust given the irregular nature and relevance to comparable operations.” Management believes that in addition to net income (loss), Adjusted EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Corporation’s principal business activities prior to consideration of how these activities are financed, how assets are depreciated, amortized and impaired, the impact of foreign exchange, or how the results are affected by the accounting standards associated with the Corporation’s stock-based compensation plan. Investors should be cautioned, however, that Adjusted EBITDA should not be construed as an alternative to net income (loss) and comprehensive income (loss) determined in accordance with IFRS as an indicator of the Corporation’s performance. The Corporation’s method of calculating Adjusted EBITDA may differ from that of other organizations and, accordingly, its Adjusted EBITDA may not be comparable to that of other companies.

The following table reconciles the Corporation’s net income (loss), being the most directly comparable financial measure disclosed in the Corporation’s Annual Financial Statements, to adjusted EBITDA:

Three months ended
December 31,

Twelve months ended
December 31,

(000’s CAD $)

2021

2020

% Change

2021

2020

% Change

2019

Net income (loss)

372

(2,386)

116%

2,852

(4,042)

171%

(1,247)

Depreciation

1,122

1,922

(42%)

4,486

4,838

(7%)

4,274

Write-down of property and equipment

720

(100%)

720

(100%)

Finance costs

161

143

13%

670

687

(2%)

684

Other income

(93)

(4)

2,225%

(101)

(56)

80%

(123)

Gain on asset disposals

nm

(301)

nm

(27)

Share-based payments

187

19

884%

515

214

141%

428

Transaction costs

210

41

nm

210

76

176%

156

Foreign exchange gain (loss)

(10)

24

(142%)

30

24

nm

(19)

Gain on extinguishment of convertible debenture

nm

(84)

nm

Adjusted EBITDA

1,949

479

(307%)

8,361

2,377

252%

4,126

nm – not meaningful

 

(ii)

Gross margin – is defined as “gross profit from services revenue from operations before depreciation”. Gross margin is a measure that provides shareholders and potential investors additional information regarding the Corporation’s cash generating and operating performance. Management utilizes this measure to assess the Corporation’s operating performance. Investors should be cautioned, however, that gross margin should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indicator of the Corporation’s performance. The Corporation’s method of calculating gross margin may differ from that of other organizations and, accordingly, its gross margin may not be comparable to that of other companies.

(iii)

Gross margin percentage – is calculated as gross margin divided by revenue. The Corporation believes gross margin as a percentage of revenue is an important measure to determine how the Corporation is managing its revenues and corresponding cost of sales.

 

The following table reconciles the Corporation’s net income (loss) from operations, being the most directly comparable financial measure disclosed in the Corporation’s Annual Financial Statements, to gross margin:

Three months ended
December 31,

Twelve months ended
December 31,

(000’s CAD $)

2021

2020

% Change

2021

2020

% Change

2019

Income (loss) from operations

2,128

(89)

nm

7,863

426

1,746%

4,206

Depreciation of property and equipment

1,041

1,108

(6%)

4,165

4,439

(6%)

3,991

Gross margin

3,169

1,019

211%

12,028

4,865

147%

8,197

Gross margin %

35%

41%

(15%)

37%

34%

9%

35%

nm – not meaningful

 

(iv)

Working capital (excluding debt) – is calculated based on total current assets less total current liabilities excluding current debt. The Corporation monitors working capital and its liquidity position on an ongoing basis and manages liquidity risk by regularly evaluating capital and operating budgets, forecasting cash flows and maintaining a sufficient credit facility to meet financing requirements.

 

Three months ended
December 31,

Twelve months ended
December 31,

(000’s CAD $)

2021

2020

% Change

2021

2020

% Change

2019

Income (loss) from operations

2,128

(89)

nm

7,863

426

1,746%

4,206

Depreciation of property and equipment

1,041

1,108

(6%)

4,165

4,439

(6%)

3,991

Gross margin

3,169

1,019

211%

12,028

4,865

147%

8,197

Gross margin %

35%

41%

(15%)

37%

34%

9%

35%

nm – not meaningful

 

FORWARD-LOOKING INFORMATION

Certain statements contained in this New Release constitute forward-looking statements or forward-looking information (collectively, “forward-looking information”). Forward-looking information relates to future events or the Corporation’s future performance. All information other than statements of historical fact is forward-looking information. The use of any of the words “anticipate”, “plan”, “contemplate”, “continue”, “estimate”, “expect”, “intend”, “propose”, “might”, “may”, “will”, “could”, “believe”, “predict”, and “forecast” are intended to identify forward-looking information.

This News Release contains forward-looking information pertaining to, among other things: expectations associated with the Corporation’s outlook, including among other things, anticipated reactivation costs, improvements in the financial positions of the Corporation’s customers, expectations about industry activities, the forecasted increase in the capital expenditure of the Corporation’s customers, the anticipated benefits of the Corporation’s agreement with AlbertaCo and the expected timing for the completion of beta testing of equipment connected therewith; and the Corporation’s continued evaluation of ESG opportunities.

Forward-looking information is based on certain assumptions that Stampede has made in respect thereof as at the date of this News Release regarding, among other things: the Corporation’s anticipation that it will have the ability to adjust its capital structure by issuing new equity or debt, disposing of assets and making adjustments to its operating expenditures and capital expenditure program; that the Corporation’s principal sources of liquidity will be sufficient to fund its operations and other strategic opportunities; that the Corporation has adequate access to its demand loan facility to provide the necessary liquidity needed to manage fluctuations in the timing of receipt and/or disbursement of operating cash flows; that the Corporation’s financial risk management policies will ensure that all payables are paid within the pre-agreed credit terms; the belief that Adjusted EBITDA is a useful supplemental financial measure; the condition of the global economy, including trade, public health (including the impact of the COVID-19 pandemic) and other geopolitical risks; the stability of the economic and political environment in which the Corporation operates; the effect the stabilization of global crude prices will have on drilling and completion activities in Western Canada ; the creditworthiness of the Corporation’s customers; the ability of the Corporation to retain qualified staff; the ability of the Corporation to obtain financing on acceptable terms; the ability to protect and maintain the Corporation’s intellectual property; and the regulatory framework regarding taxes and environmental matters in the jurisdictions in which the Corporation operates.

Forward-looking information is presented in this News Release for the purpose of assisting investors and others in understanding certain key elements of the Corporation’s financial results and business plan, as well as the objectives, strategic priorities and business outlook of the Corporation, and in obtaining a better understanding of the Corporation’s anticipated operating environment. Readers are cautioned that such forward-looking information may not be appropriate for other purposes.

While Stampede believes the expectations and material factors and assumptions reflected in the forward-looking information is reasonable as of the date hereof, there can be no assurance that these expectations, factors and assumptions will prove to be correct. Forward-looking information is not a guarantee of future performance and actual results or events could differ materially from the expectations of the Corporation expressed in or implied by such forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information is subject to a number of known and unknown risks and uncertainties including, but not limited to: public health concerns (including the impact of the COVID-19 pandemic) and other geopolitical risks; the condition of the global economy and, specifically, the condition of the crude oil and natural gas industry and related commodity prices; other commodity prices; the ongoing significant volatility in world markets and the resulting impact on drilling and completions programs; the impact of increasing competition; fluctuations in operating results; currency, exchange and interest rates; labour and material shortages; cyber security risks; natural catastrophes; and certain other risks and uncertainties detailed in Stampede’s Annual Information Form and Management Discussion and Analysis, each dated March 24, 2022 , for the year ended December 31, 2021 and from time to time in Stampede’s public disclosure documents available at www.sedar.com .

This list of risk factors should not be construed as exhaustive. Readers are cautioned that events or circumstances could cause actual results to differ materially from those predicted, forecasted, or projected. Statements, including forward-looking information, are made as of the date of this News Release and the Corporation does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. The forward-looking information contained in this News Release is expressly qualified by this cautionary statement.

SOURCE Stampede Drilling Inc.

 

Cision View original content: http://www.newswire.ca/en/releases/archive/March2022/24/c2388.html

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