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Crescent Point delivers record production, cash flow
By Amanda Stephenson, Calgary Herald , August 8, 2013 4:03 PM
CALGARY - Crescent Point Energy Corp. set new second quarter records for production and cash flow, thanks in large part to a successful drilling program in Utah and a spring breakup that was less severe than expected.
The Calgary-based oil producer achieved average daily production of 117,700 barrels of oil equivalent per day (91 per cent liquids), a 21 per cent increase from the second quarter of 2012.
It generated record cash flow of more than $500 million, a 31 per cent increase over the second quarter of 2012.
The company said its wells in Utah’s Uinta Basin, a play it acquired in late 2012, have performed at or above expectations. Crescent Point drilled 27 net wells in Utah in the second quarter with a 100 per cent success rate, increasing production in that region to more than 10,000 boe/d.
It also continued to develop and grow its core Bakken and Shaunavon assets. Early in the quarter, the Saskatchewan government approved Crescent Point’s first lower Shaunavon waterflood unit — a technology that uses the injection of water to increase pressure and allow more oil recovery from lagging wells. The company said it has also received technical approval for the first of four proposed Bakken waterflood units.
The strong results led Crescent Point to increase its guidance for the year. President and chief executive Scott Saxberg said in a conference call with analysts that the company has increased its guidance for average daily production for 2013 by 3,500 boe/d to 117,500, and its exit production rate by 2,000 boe/d per day to 119,000. Capital expenditures will be maintained at $1.5 billion.
“We believe we are in a great position so far in 2013 and well on track to meet our new targets,” Saxberg said.
In a note to clients, RBC Capital Markets analyst Michael Harvey said Crescent Point’s second quarter beat his expectations by five per cent on the production side. Cash flow per share was $1.31 versus RBC’s $1.14 estimate.
“While in our view the market had anticipated a quarterly beat, the magnitude is significant and combined with the announced production guidance increased we would expect the stock to outperform peers today,” Harvey wrote.
Crescent Point’s stock closed up 3.1 per cent Thursday at $38.97.
Well it looks like Scott Saxberg is keeping his world not to buy any more oil properties in 2013 and to focus on drilling up Crescent Point's current assets. As the following article in today's Globe & Mail indicates, Paul Colborne's company Surge Energy Inc. today acquired Cenovus' assets in the Shaunavon oil pool in Saskatchewan for $240 million dollars. Way to go Mr. Saxberg!
Cenovus sells Shaunavon tight oil asset
Tuesday, June 11, 2013
Cenovus sells Shaunavon tight oil asset
16:45 EDT Tuesday, June 11, 2013
CALGARY, June 11, 2013 /PRNewswire/ - Cenovus Energy Inc. (TSX, NYSE: CVE) has entered into an agreement to sell its Shaunavon tight oil asset in southern Saskatchewan to Surge Energy Inc. for $240 million cash consideration. The transaction has an effective date of July 1, 2013 and is expected to close by mid-July, subject to normal closing conditions.
The Shaunavon asset consists of 54 sections of land and is currently producing approximately 3,600 barrels of oil per day (as of May 2013).
Cenovus identified its Bakken and Shaunavon assets as candidates for sale after a portfolio review and began marketing both assets in February 2013. The company's Bakken asset remains on the market. CIBC World Markets Inc. is acting as financial advisor to Cenovus with respect to the sale of the Shaunavon asset and continues to assist with the divestiture process related to the Bakken asset.
Cenovus Energy Inc. Cenovus Energy Inc. is a Canadian oil company. It is committed to applying fresh, progressive thinking to safely and responsibly unlock energy resources the world needs. Operations include oil sands projects in northern Alberta, which use specialized methods to drill and pump the oil to the surface, and established natural gas and oil production in Alberta and Saskatchewan. The company also has 50% ownership in two U.S. refineries. Cenovus shares trade under the symbol CVE, and are listed on the Toronto and New York stock exchanges. Its enterprise value is approximately $28 billion. For more information, visit www.cenovus.com.
http://www.theglobeandmail.com/globe-investor/news-sources/?date=+20130611&archive=prnews&slug=TO432
Tuscany Internation Drilling has their May 2013 Presentation available at the following URL:
http://tuscanydrilling.com/html/investor_relations/documents/TuscanyInternationalDrillingCorporatePresentationMay2013Final.pdf
There is also a URL available for the May 2013 Annual General Meeting at:
http://tuscanydrilling.com/html/investor_relations/documents/TuscanyInternationalDrillingCorporatePresentationMay2013AGMFinal.pdf
I have placed the May Presentation under the Link Library tab in the left hand column on this page.
Cheers; Scott
The following information can be gleaned from yesterday's conference call. It is worth listening to in it's entirety:
- Q-1 results will show little change in 2013 in terms of rigs on contract which is currently 66% (from a total of 37 rigs)
- the 4 rigs which were written off 100% were small rigs in disrepair. Nobody wanted to lease these small rigs of which 3 were 550 hp, and 1 was 600 hp. and the refurbishmnent costs would be very high. Advice from a third party was to scrap them and use them for parts or sell salvaged parts if possible
- Tuscany is in the process of downsizing to cut costs everywhere.
a) of the original 41 rigs all the results for 2012 and forward will pertain to 37 new and refurbished, rigs which are for hire. Tuscany got rid of the dead wood
b) 120 workers have been laid off and Q-1 2013 will report their severance packages
c) G & A for Q-4 2012 was 7.5% but going forward management expects that the G & A rate will be around 8% to 9% going forward. This was a huge reduction form 16% last year.
d) Reg Greenslade's position has not and will not be replaced in order to save money
e) the company according to Walter Dawson is looking at every possible way to lower expenditures and save money including a possible merger (sorry those of you who were hoping that there would be a sale of the company sooner than later : my comments not Mr. Dawson's)
-Walter Dawson stated that what happened in 2012 was beyond the company's control: in terms of lower rig rentals in Colombia and Brazil. Also, HRT's rescinding their contracts for rigs 115 and 116 the heli-portable rigs.
- Walter Dawson assured shareholders and analysts that Tuscany's lawyers in Brazil are very confident that Tuscany will win the arbitration against HRT as the contracts were iron clad and HRT broke the contracts to slow their burn rate. When asked how much money is involved here, Tuscany hopes to recover $8 million dollars for rig 115 and an additional $8 million dollars for rig 116.
- Tuscany's lawyers are confident that the company will win the arbitration and we will know a lot more in Q-2
- a question was asked concerning HRT's ability to pay compensation if they lose the arbitration as they may be broke by then. The dates are currently being set for the arbitration and the panel has already been selected. As the process quickly moves forward in Q2 the money in question will be put into escrow pending the outcome of the arbitration, to insure that the money is availble to be awarded if so decided.
- Ecuador is the most successful venue as all rigs are under contract there
- one rig is being moved from Colombia to Gabon
- A number of rigs have Letters of Interest signed and solid contracts coming up in Q-2 and Q-3 of 2013.
- there is interest from companies in 3 different countries to sign rigs 115 and 116 the heli-portable rigs that were constructed for the HRT contract but they are looking at Q-3 dates
- the 2 rigs from Trinidad are under contract and drilling or in the process of being contracted
- the cost of the failed bond issue was $1.5 million dollars, but there was no mention of whether or not the failed bond issue would be repeated or when
- Maurel & Prom are now the largest shareholder with 29% of the shares
- Walter Dawson appeared to be very, very confident that the company is on the right track now cutting costs and downsizing to set the company on the right path to financial success. He stated that the number of rigs in the process of being contracted is continuing to go up and there is a lot of interest in Tuscany's rigs. He reiterated that what happened in 2012 was beyond management's control as it was unforseeable.
This is what I remember from the Conference Call.
Cheers; Scott
Tuscany International Drilling Inc. Announces Fourth Quarter and Year-End 2012 Results With Operational Update
MAR 21, 2013 - 09:00 ET
CALGARY, ALBERTA--(Marketwire - March 21, 2013) - Tuscany International Drilling Inc. ("Tuscany" or the "Company") (TSX:TID) (COLOMBIA:TIDC) announces its fourth quarter and year-end 2012 results. The complete consolidated financial statements of the Company for the year ended December 31, 2012 and the related management's discussion and analysis will be filed under the Company's profile on the SEDAR website at www.sedar.com. The financial information described below should be read in conjunction therewith. The financial information included herein is unaudited and unless otherwise stated, has been presented in United States dollars.
2012 Highlights
- At the end of 2012, our operating rig utilization was 65%, with 24 of 37 rigs under contract. Brazil continued to be a challenging market at the end of 2012 with 4 rigs under contract and Colombia beginning to show improvement with 9 rigs under contract at the end of the year. As we move towards the end of our first quarter of 2013, our rig utilization is improving with 2 idled rigs in Africa currently awarded to LOI's and 4 idled rigs in Colombia either awarded LOI's or in the final stages of contract negotiation. We would expect these new opportunities to be under contract and working no later than end of Q2. Prospects for two additional rigs to be under contract by the beginning of Q4 remain very strong, including the opportunity of at least one of our Brazilian Heli rigs.
- Generated $75.8 million in revenue during the fourth quarter, a decrease of 20% over the same period last year and $329.5 million in revenue during 2012, an increase of 75% over the previous year.
- Gross margin was $15.6 million during the fourth quarter, a decrease of 52% over the same period last year and $95.3 million during 2012, an increase of 50% over the previous year.
- Adjusted EBITDA1 was $11 million during the fourth quarter compared to Adjusted EBITDA of $18.4 million during the same period last year. The 2012 Adjusted EBITDA was $62.9 million compared to an Adjusted EBITDA of $36.7 million the previous year.
- Funds from operations1 were $8.5 million during the fourth quarter vs. funds from operations of $7.4 million during the same period last year. The 2012 funds from operations were $41.2 million vs. funds from operations of $7.7 million the previous year.
- General and administrative expenses were $5.2 million during the fourth quarter, a decrease of 66% over the same period last year and $35.9 million during 2012, an increase of 14% over the previous year. This represents 6.9% of revenue in the fourth quarter and 10.9% of revenue in 2012. General and administrative expenses are expected to decrease marginally as a percentage of revenue in 2013 as revenue increases with higher expected rig utilization.
- At December 2012, Management has decided that Rigs 121, 124 and 129 in Brazil and Rig 103 in Colombia no longer constitute any value to the Company and therefore an impairment charge of $24.8MM has been taken against the net book value of these rigs. An additional $3.7MM impairment charge has been taken against the remaining rigs in Brazil and $4.8 MM impairment charge against the rigs in Africa.
Operational Highlights
Three months ended December 31
Year ended December 31
$ thousands, except per share data and operating information
2012
2011
% change
2012
2011
% change
2010
Revenue
75,844
94,385
(20
)%
329,518
187,940
75
%
20,223
Gross margin(1)
15,621
32,210
(52
)%
95,284
63,631
50
%
4,310
Gross margin percentage
20.6
%
34.1
%
(40
)%
28.9
%
33.9
%
(15
)%
21.3
%
Adjusted EBITDA1
11,005
18,377
(40
)%
62,923
36,707
71
%
(7,476
)
Adjusted EBITDA per share (basic)
$
0.03
$
0.07
(57
)%
$
0.18
$
0.14
29
%
$
(0.05
)
Net loss for the period
(35,928
)
(4,085
)
(780
)%
(35,064
)
(26,117
)
(34
)%
(20,186
)
Net loss per share (basic)
$
(0.10
)
$
(0.02
)
(400
)%
$
(0.10
)
$
(0.10
)
0
%
$
(0.13
)
Funds from operations1
8,500
7,393
15
%
41,167
7,668
437
%
(10,597
)
Funds from operations per share (basic)
$
0.02
$
0.03
(33
)%
$
0.12
$
0.03
300
%
$
(0.07
)
Cash from operating activities
(62
)
11,402
(101
)%
6,010
9,897
(39
)%
(10,696
)
Cash from operating activities per share (basic)
$
0.00
$
0.04
(100
)%
$
0.02
$
0.04
(50
)%
$
(0.07
)
General and administrative expenses
5,236
15,445
(66
)%
35,915
31,533
14
%
12,640
General and administrative expenses as a % of revenue
6.9
%
16.4
%
(58
)%
10.9
%
16.8
%
(35
)%
62.5
%
Total assets
644,995
642,306
0
%
644,995
642,306
0
%
276,967
Total long-term liabilities
190,677
177,658
7
%
190,677
177,658
7
%
70,731
Operating information
Number of available rigs
37
36
3
%
37
36
3
%
10
Revenue days
2,252
2,835
(21
)%
9,989
6,241
60
%
1,251
Utilization
66.2
%
85.6
%
(23
)%
74.5
%
84.1
%
(13
)%
77.9
%
(1) Refer to "Non-IFRS Measures"
Non-IFRS Measures
This MD&A contains references to adjusted EBITDA, adjusted EBITDA per share, funds from operations, funds from operations per share, and gross margin.
Adjusted EBITDA is defined as "Oilfield services revenue less oilfield services expenses less general and administrative expenses (excluding stock-based compensation expense)". 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 the consideration of how these activities are financed, how the results are taxed in various jurisdictions and how the results are impacted by accounting standards associated with the Company's share-based compensation plan and corporate development activities. Per share amounts are calculated using the weighted average number of outstanding shares for the period under review.
$ thousands
2012
2011
Oilfield services revenue
329,518
187,940
Oilfield services expenses
(234,234
)
(124,309
)
General and administrative expenses
(35,915
)
(31,533
)
Stock-based compensation expense
3,554
4,609
Adjusted EBITDA
62,923
36,707
Funds from operations is defined as "cash flow provided by/used in operating activities before the change in non-cash working capital". Funds from operations is a measure that provides shareholders and potential investors additional information regarding the Company's liquidity and its ability to generate funds to finance its operations. Management will use this measure to assess the Company's ability to finance operating activities, capital expenditures and corporate development initiatives. Per share amounts are calculated using the weighted average number of outstanding shares for the period under review.
$ thousands
2012
2011
Cash flow provided by operating activities
6,010
9,897
Changes in non-cash working capital
35,157
(2,229
)
Funds from operations
41,167
7,668
Gross margin is defined as "oilfield services revenue less oilfield services expenses". Gross margin is a measure that provides shareholders and potential investors additional information regarding the profitability of the Company's rigs and is used by management to help assess operational performance.
$ thousands
2012
2011
Oilfield services revenue
329,518
187,940
Oilfield services expenses
(234,234
)
(124,309
)
Gross margin
95,284
63,631
Percentage
28.9
%
33.9
%
Adjusted EBITDA, adjusted EBITDA per share, funds from operations, funds from operations per share, and gross margin are not measures that have any standard meaning prescribed by IFRS and accordingly, may not be comparable to similar measures used by other companies.
Overview
During the year ended December 31, 2012, the Company recorded a net loss of $35,064 ($0.10 per common share) compared to a net loss of $26,117 ($0.10 per common share) for the year ended December 31, 2011. During the year ended December 31, 2012, the Company recorded oilfield services revenue of $329,518, gross margin from rig operations of $95,284 and adjusted EBITDA of $62,923, compared to revenue of $187,940, gross margin from rig operations of $63,631 and adjusted EBITDA of $36,707 during the year ended December 31, 2011.
The increases in revenue, adjusted EBITDA and gross margin for 2012 compared to 2011, reflect the increase in rig count and associated revenue days during 2012 compared to 2011. During the second quarter of 2011 the Company acquired Drillfor, a Brazilian drilling and workover company, together with seven drilling rigs and one workover rig. During the third quarter of 2011, the Company completed the acquisition of Caroil, a Paris based drilling and workover company with operations in Colombia and central Africa, and a fleet of fourteen drilling and workover rigs and one rig which was managed for a third party. These two acquisitions increased the Company's original fleet by 22 rigs in 2011, and is the primary reason for the significant increases in revenue, adjusted EBITDA and gross margin for 2012 compared to 2011. For the year ended December 31, 2012, the Company had 9,989 revenue days from rig operations compared to 6,241 revenue days from rig operations during the year ended December 31, 2011. Gross margin percentage of 28.9% for the year ended December 31, 2012 was five percentage points lower than the gross margin percentage of 33.9% for the year ended December 31, 2011, primarily as a result of continuing labour costs associated with the unexpected early termination of contracts associated with four drilling rigs during the second half of 2012. Gross margin in 2012 was offset by general and administrative expenses of $35,915 (2011: $31,533), net finance costs of $28,824 (2011: 19,294), acquisition costs of $452 (2011: $5,044) and depreciation of $30,237 (2011: $19,901). For the year ended December 31, 2012, the Company also recorded current income tax expense of $8,610 (2011: 5,520), deferred income tax recovery of $8,026 (2011: deferred tax expense of $9,644), foreign exchange losses of $2,747 (2011: $123), equity income of $1,790 (2011: $1,311) and property and equipment impairment of $33,320 (2011: Nil). Compared to the year ended December 31, 2011, the increase in general and administrative expense reflects administrative costs associated with consolidating the Drillfor and Caroil operations for a full year in 2012 compared to a partial year in 2011.
During the year ended December 31, 2012, Tuscany spent $35,248 on investing activities, which includes $37,063 of capital expenditures comprised primarily of rig refurbishment activity, offset by proceeds from sale of property and equipment of $588 and a $1,227 reduction in restricted cash. During the year ended December 31, 2012, Tuscany drew an additional $15,000 on its credit facility, drew an additional $10,000 on its revolving line of credit, drew $1,469 on operating lines of credit and received $4,495 of funds from bank overdrafts and spent $8,579 related to amendments of its existing credit facility and the withdrawal of a senior notes offering.
Review of Consolidated Statement of Financial Position
($ thousands)
Change
($)(2)
Explanation
Cash and cash equivalents
(6,853)
See consolidated statement of cash flows.
Restricted cash
(1,227)
Restricted cash results from the requirement to maintain a debt service reserve account pursuant to the Company's credit facility. In December 2012, debt interest was paid from this reserve account, bringing the balance of the account to $Nil. Subsequent to the interest payment, deposits of $1,227 were made.
Accounts receivable
22,130
Increase is a result of an increase in the aging of accounts receivable balances.
Prepaid expenses
and deposits
4,440
Increase is due to additional advances to suppliers and prepaid expenses, primarily insurance, for the calendar year incurred during 2012.
Inventory
3,358
Increase is due to an increase in purchases partially offset by usage of existing inventories.
Foreign VAT recoverable (current and non-current)
(3,260)
Decrease is due to the recovery of amounts paid on prior importation of rigs into South America during the period offset by VAT applicable to payments to suppliers in Africa.
Long-term investments
592
Increase is due to equity income of Warrior Rig Ltd. ("Warrior") for the period, offset by a foreign exchange loss resulting from the translation of this investment and the sale of 6.13% of this investment.
Property and equipment
(27,038)
Decrease is due to impairment in the value of the assets and depreciation expense, partially offset by costs capitalized related to the refurbishment and enhancement of rigs.
Bank overdraft
4,495
Increase as a result of additional draws on bank overdraft facilities available to the Company.
Lines of credit
11,469
Increase as a result of additional draws on credit lines available to the Company.
Accounts payable and accrued liabilities
(899)
Decrease reflects the decrease in fourth quarter activity compared to the prior year, partially offset by a general increase in the aging of accounts payable balances.
Change ($)(1)
Explanation
Income taxes payable
(623)
Decrease is due to the decrease in taxable income and taxable net asset basis in 2012.
Net deferred tax asset
8,025
Increase due primarily to the recognition of additional deferred tax assets in Colombia.
Long-term debt (current and long-term)
13,435
Increase is due to the Company renegotiating and increasing the amount of its credit facility, as well as the amortization of financing costs included in long-term debt offset by fees incurred during the period.
Contributed surplus
3,554
Increase relates to stock-based compensation expense recorded during the year of 2012.
(1) Reflects the movement in accounts from December 31, 2011 to December 31, 2012.
Review of Annual Consolidated Statement of Comprehensive Loss
($ thousands)
2012
2011
% Change
Oilfield services revenue
329,518
187,940
75
%
Oilfield services expenses
(234,234
)
(124,309
)
88
%
Gross margin(2)
95,284
63,631
50
%
Gross margin %
28.9
%
33.9
%
15
%
(1) Reflects the movement in accounts from December 31, 2011 to December 31, 2012.
(2) Refer to Non-IFRS measures
Oilfield services revenue was $329,518 for the year ended December 31, 2012, compared with $187,940 for the year ended December 31, 2011, an increase of 75%. The increase in revenue is a result of a significantly increased fleet size in 2011 and associated increase in the number of revenue days, and an increase in the average revenue per day in the year ended December 31, 2012, compared to the year ended December 31, 2011. During the year ended December 31, 2012, the Company had 9,989 revenue days compared to 6,241 revenue days in the year ended December 31, 2011. Revenue days increased in the year ended December 31, 2012, as a result of the additional rigs acquired through the Company's 2011 acquisitions of Drillfor and Caroil being available to the Company for a full year in 2012 compared to a partial year in 2011. For the year ended December 31, 2012, average revenue per day increased to $33.0 from $30.1 for the year ended December 31, 2011. Average revenue per day was increased in 2012 primarily as a result of higher rates for the Caroil rigs, which are larger horsepower rigs and therefore command higher day rates. All thirty-seven of the Company's drilling and heavy-duty workover rigs earned revenue from drilling operations during the year ended December 31, 2012. During the year ended December 31, 2011, the Company earned revenues from 34 rigs.
For the year ended December 31, 2012, gross margin was $95,284, or 28.9%, compared with a gross margin of $63,631, or 33.86%, for the year ended December 31, 2011. The decrease in gross margin percentage for the year ended December 31, 2012, compared to the gross margin percentage for the year ended December 31, 2011, reflects costs, primarily rig personnel/termination costs, which continued/were incurred after the unexpected early termination of four drilling rigs during the second half of 2012.
2012
2011
% Change
Depreciation
30,237
19,901
52
%
Depreciation expense totaled $30,237 for the year ended December 31, 2012, compared with $19,901 for the year ended December 31, 2011. Under the Company's depreciation policy, depreciation of rigs and related equipment is based on the number of days in operation. The significant increase in depreciation expense for the year ended December 31, 2012, compared to the year ended December 31, 2011, is a result of a significant increase in the size of the Company's fleet and related operating days in the year ended December 31, 2012, compared to the corresponding period of 2011. During 2012, the Company recorded depreciation on thirty-seven rigs compared to thirty-four rigs during the year ended December 31, 2011.
2012
2011
% Change
General and administrative
35,915
31,533
14
%
General and administrative expense increased to $35,915 (10.9% of revenue) for the year ended December 31, 2012, from $31,533 (16.8% of revenue) for the year ended December 31, 2011. During the second quarter of 2011 the Company acquired Drillfor, and during the third quarter of 2011 the Company acquired Caroil, which added to the Company's general and administrative expenses for the year ended December 311, 2012, compared to the year ended December 31, 2011. As a percentage of revenue, general and administrative expense decreased from the year ended December 31, 2011, to the year ended December 31, 2012, which reflects the critical mass and larger revenue base associated with increasing the Company's operations in Brazil and Colombia subsequent to the first three quarters of 2011, and management's efforts to realize efficiencies associated with these acquisitions.
Included in general and administrative expense for the year ended December 31, 2012, is $3,554 of stock-based compensation compared to $4,609 for the year ended December 31, 2011. Stock-based compensation expense represents the value, calculated using the Black-Scholes option pricing model, related to the granting of stock options.
2012
2011
% Change
Net finance costs
28,824
19,294
49
%
Net finance costs increased to $28,313 for the year ended December 31, 2012, from $19,294 for the year ended December 31, 2011. For the year ended December 31, 2012, net finance costs includes interest and amortization of costs associated with the Company's credit facility, the change in value on the Company's interest rate hedges, costs incurred associated with the Company's withdrawn senior notes offering, interest on payable amounts to Brazilian tax authorities and other smaller interest charges in various countries, net of interest income.
In August 2010, the Company entered into a $125,000 credit facility. During the third quarter of 2011 this credit facility was amended. The amendment consisted primarily of an increase in the credit facility to $220,000, including a $25,000 revolving line of credit, and was negotiated in conjunction with the Company's acquisition of Caroil. Fees associated with the credit facility have been presented as a direct reduction to the face value of the long-term debt. The effective interest rate method has been applied and results in the amortization of the debt discount over the life of the loan. Amortization of financing fees related to the credit facility of $5,044 has been included in net finance costs for the year ended December 31, 2012, compared to $10,865 (which includes the write-off of previously unamortized financing fees of $8,291 which existed at the time the facility was amended and expanded in September 2011) for the year ended December 31, 2011. In addition to the financing fees associated with this facility, the Company incurs interest expense on the amount drawn under the credit facility at three-month LIBOR plus 6.5% per annum. During the year ended December 31, 2012, the Company recorded $16,605 of interest related to the credit facility compared to $8,438 for the year ended December 31, 2011.
During 2010, the Company received $5,875 of short-term advances from Perfco Investments Ltd, a corporation owned by the Company's Executive Chairman. The short-term advances incurred interest at 10% per annum and were settled in April 2011. During the year ended December 31, 2012, the Company recorded $Nil interest expense related to these advances compared to $197 in the year ended December 31, 2011.
During the year ended December 31, 2012, the Company entered into two separate agreements to hedge the interest rate on a total of $100,000 of the $195,000 term loan. The Company has entered into floating for fixed swap agreements on three-month LIBOR to maturity of the term loan under the Company's credit facility. The fair value of these interest rate contract liabilities increased by $3,892 for the year ended December 31, 2012 (2011 - $Nil).
The Company is being charged interest on amounts owing to the Brazilian tax authority. Interest on amounts owing to the Brazilian tax authority was $1,041 for the year ended December 31, 2012 (2011 - $Nil). The Company also incurred costs of $1,939 related to an unsuccessful bond offering (2011: Nil).
The above finance costs incurred are partially offset by interest earned of $10 and in the year ended December 31, 2012 and $206 in the year ended December 31, 2011. Interest of $351 was incurred in other countries in the year ended December 31, 2012 (2011: Nil)
2012
2011
% Change
Impairment of property and equipment
33,320
-
N/A
For the year ended December 31, 2012, the Company determined that the carrying value of certain assets held for sale exceeded their recoverable amounts, based on the higher of value in use and fair value, and recorded an impairment expense of $33,320. Tuscany recorded impairment on assets of $22,959 in Brazil, $5,561 in Colombia and $4,800 in Africa.
2012
2011
% Change
Foreign exchange contracts
45
-
N/A
During the year ended December 31, 2012, the Company entered into a Euro/United States dollar cross costless collar on a total of 19,200 Euro. The contract consists of 24 contracts with notional amounts of 800 Euro per contract. The contract has a two year term and the fair value of this foreign exchange contract liability increased $45 in the year ended December 31, 2012 (2011 - Nil).
2012
2011
% Change
Foreign exchange loss
2,747
123
2,133
%
In addition to incurring operating expenses and capital expenditures in the Company's functional currency (United States dollars), the Company also incurs operating expenses and capital expenditures in Colombian pesos (COP), Canadian dollars (CDN $), Brazilian real (BRL), African francs (CFA), Trinidad and Tobago dollars (TTD), Euro (EUR) and Guyanese Dollars (GYD). Foreign exchange gains and losses arise primarily on the settlement of accounts payable invoices that are denominated in currencies other than the United States dollar.
2012
2011
% Change
Equity income
1,790
1,311
37
%
The Company has a 33.87% ownership interest in Warrior Rig Ltd., a private oilfield services company involved in the development and manufacture of oilfield services equipment. The carrying value of this investment is adjusted to include the pro-rata share of the investee's earnings, less dividends received. Equity income totaled $1,790 for the year ended December 31, 2012, compared with equity income of $1,311 for the year ended December 31, 2011. Equity income has increased as a result of increased activity in Warrior in 2012.
2012
2011
% Change
Acquisition costs
452
5,044
(91
)%
In the second quarter of 2011, the Company acquired Drillfor, and in the third quarter of 2011 the Company acquired Caroil. The acquisition costs for the year ended December 31, 2011, represent the costs associated with the acquisition of these two entities. In 2012, additional costs relating to these acquisitions were recorded by the Company.
2012
2011
% Change
Current income taxes
8,610
5,520
56
%
For the year ended December 31, 2012, Tuscany's current income tax expense of $8,610 is primarily comprised of taxes payable in Colombia ($3,467), Gabon ($3,268) and Ecuador ($670). The Company also has $1,205 of current tax expense from Canada, Brazil, Trinidad, Congo, Peru and Luxembourg.
2012
2011
% Change
Deferred income taxes (recovery)
(8,026
)
9,644
(177
)%
For the year ended December 31, 2012, Tuscany recorded a net deferred income tax recovery of $8,026. For the year ended December 31, 2012, deferred income tax expense of $857 in Ecuador and $1,580 in Tanzania was offset by a deferred income tax recovery of $10,204 in Colombia, $151 in Brazil and $108 in Trinidad. The deferred income tax recoveries relate primarily to the recognition of previously unrecognized tax losses.
Review of Fourth Quarter Consolidated Statement of Comprehensive Loss
($ thousands)
Three months ended
Dec 31, 2012
Dec 31, 2011
% Change
Oilfield services revenue
75,844
94,385
(20
)%
Oilfield services expenses
(60,223
)
(62,175
)
(3
)%
Gross margin(1)
15,621
32,210
(52
)%
Gross margin %
20.6
%
34.1
%
(40
)%
(1) Refer to Non-IFRS measures
Oilfield services revenue was $75,844 for the three months ended December 31, 2012, compared with $94,385 for the three months ended December 31, 2011, a decrease of 20%. The decrease in revenue is a result of a decrease in the number of revenue days and revenue per day during the three months ended December 31, 2012, compared to the three months ended December 31, 2011. During the three months ended December 31, 2012, the Company had 2,252 revenue days (66.2% utilization) compared to 2,835 revenue days (85.6% utilization) in the fourth quarter of 2011. Revenue days decreased in the three months ended December 31, 2012, primarily as a result of rigs coming off contract during 2012. For the three months ended December 31, 2012, average revenue per day increased to $33.68 from $33.29 for the three months ended December 31, 2011. Twenty-eight of the Company's 37 drilling and heavy-duty workover rigs earned revenue from drilling operations during the fourth quarter of 2011. During the fourth quarter of 2011 the Company earned revenues from 33 rigs.
For the three months ended December 31, 2012, gross margin was $15,621, or 20.6%, compared with a gross margin of $32,210, or 34.1%, for the three months ended December 31, 2011. The decrease in gross margin percentage for the three months ended December 31, 2012, compared to the gross margin percentage for the three months ended December 31, 2011, primarily reflects lower than expected operating results from the Company's rigs in Africa, and continuing rig personnel and employee termination costs associated with the early termination of the HRT contracts in Brazil and other operating costs associated with rigs coming off contract during the year ended December 31, 2012.
Three months ended
Dec 31, 2012
Dec 31, 2011
% Change
Depreciation
7,342
9,914
(26
)%
Depreciation expense totaled $7,342 for the fourth quarter of 2012 compared with $9,914 for the fourth quarter of 2011. Under the Company's depreciation policy, depreciation of rigs and related equipment is based on the number of days in operation. The significant decrease in depreciation expense for the three months ended December 31, 2012, compared to the three months ended December 31, 2011, is a result of decreased operating days in the three month period ended December 31, 2012, compared to the corresponding period of 2011. During the fourth quarter of 2012, the Company recorded depreciation on 28 rigs compared to 32 rigs during the fourth quarter of 2011.
Three months ended
Dec 31, 2012
Dec 31, 2011
% Change
General and administrative
5,236
15,445
(66
)%
General and administrative expense decreased to $5,236 (6.9% of revenue) for the fourth quarter of 2012 from $15,445 (16.4% of revenue) for the fourth quarter of 2011. As a percentage of revenue, general and administrative expense decreased from the three months ended December 31, 2011, to the three months ended December 31, 2012, which reflects management's efforts to realize efficiencies associated with these 2011 acquisitions.
Included in general and administrative expense for the three months ended December 31, 2012, is $620 of stock-based compensation compared to $755 for the three months ended December 31, 2011. Stock-based compensation expense represents the value, calculated using the Black-Scholes option pricing model, related to the granting of stock options.
Three months ended
Dec 31, 2012
Dec 31, 2011
% Change
Net finance costs
$
8,729
5,234
67
%
For the three months ended December 31, 2012, net finance costs includes interest and amortization of costs associated with the Company's credit facility, the change in value on the Company's interest rate hedges, costs associated with the withdrawn senior notes offering, interest on payable amounts to Brazilian tax authorities and other smaller interest charges in various countries, net of interest income. Net finance costs increased to $8,729 for the three months ended December 31, 2012, from $5,234 for the three months ended December 31, 2011.
In August 2010, the Company entered into a $125,000 credit facility. During the third quarter of 2011 this credit facility was amended. The amendment consisted primarily of an increase in the credit facility to $220,000, including a $25,000 revolving line of credit, and was negotiated in conjunction with the Company's acquisition of Caroil. Fees associated with the credit facility have been presented as a direct reduction to the face value of the long-term debt. The effective interest rate method has been applied and results in the amortization of the debt discount over the life of the loan. As a result, amortization of financing fees related to the credit facility of $1,764 have been included in net finance costs for the three months ended December 31, 2012, compared to $1,273. In addition to the financing fees associated with this facility, the Company incurs interest expense on the amount drawn under the credit facility at three-month LIBOR plus 6.5% per annum. During the three months ended December 31, 2012, the Company recorded $4,219 of interest related to the credit facility compared to $3,966 for the year ended December 31, 2011.
During the year ended December 31, 2012, the Company entered into two separate agreements to hedge the interest rate on a total of $100,000 of the $195,000 term loan. The Company has entered into floating for fixed swap agreements on three-month LIBOR to maturity of the term loan under the Company's credit facility. The fair value of these interest rate contract liabilities increased by $111 for the three months ended December 31, 2012 (2011 - $Nil). The Company also incurred costs of $1,939 related to a failed bond offering (2011: Nil).
The Company is being charged interest on amounts owing to the Brazilian tax authority. Interest on amounts owing to the Brazilian tax authority was $354 for the year ended December 31, 2012 (2011 - $Nil). Interest of $342 was incurred in various countries in the year ended December 31, 2012 (2011 - Nil).
Three months ended
Dec 31, 2012
Dec 31, 2011
% Change
Impairment of property and equipment
33,320
-
N/A
For the three months ended December 31, 2012, the Company determined that the carrying value of certain assets held for sale exceeded their recoverable amounts, based on the higher of value in use and fair value, and recorded an impairment expense of $33,320. Tuscany recorded impairment on assets of $22,959 in Brazil, $5,561 in Colombia, and $4,800 in Africa.
Three months ended
Dec 31, 2012
Dec 31, 2011
% Change
Foreign exchange contracts
(158
)
-
N/A
During the year ended December 31, 2012, the Company entered into a Euro/United States dollar cross costless collar on a total of 19,200 Euro. The contract consists of 24 contracts with notional amounts of 800 Euro per contract. The contract has a two year term and the fair value of this foreign exchange contract liability decreased $158 in the three months ended December 31, 2012 (2011 - Nil)
Three months ended
Dec 31, 2012
Dec 31, 2011
% Change
Foreign exchange loss (gain)
1,745
(1,063
)
(264
)%
In addition to incurring operating expenses and capital expenditures in the Company's functional currency (United States dollars), the Company also incurs operating expenses and capital expenditures in Colombian pesos (COP), Canadian dollars (CDN $), Brazilian real (BRL), African francs (CFA), Trinidad and Tobago dollars (TTD), Euro (EUR) and Guyanese Dollars (GYD). Foreign exchange gains and losses arise primarily on the settlement of accounts payable invoices that are denominated in currencies other than the United States dollar.
Three months ended
Dec 31, 2012
Dec 31, 2011
% Change
Equity income
522
748
(30
)%
The Company has a 33.87% ownership interest in Warrior Rig Ltd., a private oilfield services company involved in the development and manufacture of oilfield services equipment. The carrying value of this investment is adjusted to include the pro-rata share of the investee's earnings, less dividends received. Equity income totaled $522 for the fourth quarter of 2012 compared with an equity income of $748 for the fourth quarter of 2011. Equity income has increased as a result of increased activity in Warrior in 2012.
2012
2011
% Change
Acquisition costs
452
-
(91
)%
In the second quarter of 2011, the Company acquired Drillfor, and in the third quarter of 2011 the Company acquired Caroil. The acquisition costs for the year ended December 31, 2011, represent the costs associated with the acquisition of these two entities. In 2012, additional costs relating to these acquisitions were recorded by the Company.
Three months ended
Dec 31, 2012
Dec 31, 2011
% Change
Current income taxes
466
(714
)
165
%
For the three months ended December 31, 2012, Tuscany's total current income tax expense of $466 is comprised of current income tax expenses of $2,194 (primarily in Colombia and Gabon) offset by current income tax recoveries of $866 in Ecuador and $862 in Trinidad.
Three months ended
Dec 31, 2012
Dec 31, 2011
% Change
Deferred income taxes
(5,061
)
9,644
152
For the three months ended December 31, 2012, Tuscany recorded a deferred income tax recovery of $5,061. For the three months ended December 31, 2012, deferred income tax expenses of $788 in Ecuador and $1,008 in Tanzania were offset by deferred income tax recoveries of $4,609 in Colombia, $1,790 in Brazil and $458 in Uganda.
Tuscany International Drilling Inc.
Consolidated Statement of Financial Position (unaudited)
(expressed in thousands of US dollars)
December 31
December 31
2012
2011
Assets
Current Assets
Cash and cash equivalents
6,303
13,156
Restricted cash
273
1,500
Accounts receivable
106,962
84,832
Prepaid expenses and deposits
6,084
1,644
Inventory
18,666
15,308
Foreign VAT recoverable
4,219
2,994
142,507
119,434
Foreign VAT recoverable
5,455
9,940
Deferred tax asset
15,772
5,225
Long-term investment
6,412
5,820
Property and equipment
474,849
501,887
644,995
642,306
Liabilities
Current Liabilities
Bank overdraft
4,495
-
Lines of credit
31,469
20,000
Accounts payable and accrued liabilities
63,369
64,267
Current portion of long-term debt
16,875
10,000
Income taxes payable
8,847
9,470
125,055
103,737
Long-term debt
179,553
172,993
Derivative financial instruments
3,937
-
Deferred tax liability
7,187
4,665
315,732
281,395
Shareholders' Equity
Share capital
366,300
366,300
Contributed surplus
21,660
18,106
Warrants
25,704
25,704
Accumulated other comprehensive loss
(389
)
(251
)
Deficit
(84,012
)
(48,948
)
329,263
360,911
644,995
642,306
Tuscany International Drilling Inc.
Consolidated Statement of Comprehensive Loss (unaudited)
For the years ended December 31, 2012 and 2011
(expressed in thousands of US dollars, except per share data)
December 31
December 31
2012
2011
Revenue
Oilfield services
329,518
187,940
Expenses
Oilfield services
234,234
124,309
Depreciation
30,237
19,901
General and administrative
35,915
31,533
Foreign exchange loss
2,747
123
Equity income
(1,790
)
(1,311
)
Acquisition costs
452
5,044
301,795
179,599
Net finance costs
28,824
19,294
Gain on sale of property and equipment
(44
)
-
Impairment of property and equipment
33,320
Loss on sale of investment
58
-
Foreign exchange contract
45
-
Loss before income taxes
(34,480
)
(10,953
)
Current income taxes
8,610
5,520
Deferred income taxes
(8,026
)
9,644
Net loss for the year
(35,064
)
(26,117
)
Other comprehensive loss
Foreign currency translation
(138
)
(545
)
Total comprehensive loss
(35,202
)
(26,662
)
Net loss per share, basic and diluted
(0.10
)
(0.10
)
Tuscany International Drilling Inc.
Consolidated Statement of Changes in Equity (unaudited)
(expressed in thousands of US dollars)
Attributable to equity owners of the Company
Share capital
Contributed surplus
Warrants
Accumulated other comprehensive income (loss)
Deficit
Total equity
Balance - January 1, 2012
366,300
18,106
25,704
(251
)
(48,948
)
360,911
Net loss for the year
-
-
-
-
(35,064
)
(35,064
)
Cumulative foreign currency translation adjustment
-
-
-
(138
)
-
(138
)
Comprehensive loss for the year
-
-
-
(138
)
(35,064
)
(35,202
)
Stock-based compensation
-
3,554
-
-
-
3,554
Balance - December 31, 2012
366,300
21,660
25,704
(389
)
(84,012
)
329,263
Balance - January 1, 2011
190,701
2,707
14,392
294
(22,831
)
185,263
Net loss for the year
-
-
-
-
(26,117
)
(26,117
)
Cumulative foreign currency translation adjustment
-
-
-
(545
)
-
(545
)
Comprehensive loss for the year
-
-
-
(545
)
(26,117
)
(26,662
)
Stock-based compensation
-
4,609
-
-
-
4,609
Loan conversion
6,168
-
-
-
-
6,168
Subscription receipt issuance
102,321
-
-
-
-
102,321
Issuance of shares
71,844
-
-
-
-
71,844
Share issuance costs
(5,760
)
-
-
-
-
(5,760
)
Issuance of warrants
-
-
23,128
-
-
23,128
Exercise of warrants
1,026
-
(1,026
)
-
-
-
Expiration of warrants
-
10,790
(10,790
)
-
-
-
Balance - December 31, 2011
366,300
18,106
25,704
(251
)
(48,948
)
360,911
Tuscany International Drilling Inc.
Consolidated Statement of Cash Flows (unaudited)
For the year ended December 31, 2012 and 2011
(expressed in thousands of US dollars)
December 31
December 31
2012
2011
Cash flow provided by (used in):
Operating Activities
Net loss for the year
(35,064
)
(26,117
)
Items not affecting cash
Depreciation
30,237
19,901
Unrealized foreign exchange loss
3
-
Gain on sale of property and equipment
(44
)
-
Property & equipment impairment
33,320
-
Equity income
(1,790
)
(1,311
)
Amortization of financing fees
7,014
10,586
Change in fair value of derivative contracts
3,937
-
Stock based compensation
3,554
4,609
Changes in non-cash working capital
(35,157
)
2,229
6,010
9,897
Investing Activities
Acquisition of property and equipment
(37,063
)
(80,169
)
Proceeds from sale of property and equipment
588
-
Acquisition of Drillfor
-
(55,945
)
Acquisition of Caroil
-
(112,249
)
Restricted cash
1,227
1,828
(35,248
)
(246,535
)
Financing Activities
Proceeds from issuance of share capital, net
-
99,497
Proceeds from long term debt
15,000
101,908
Costs of issuance of long term debt
-
(232
)
Payment of financing fees
(8,579
)
-
Proceeds from bank overdraft
4,495
-
Proceeds from lines of credit
11,469
-
Proceeds of issuance of warrants, net
-
656
22,385
201,829
Decrease in cash and cash equivalents
(6,853
)
(34,809
)
Cash and cash equivalents, beginning of year
13,156
47,965
Cash and cash equivalents, end of year
6,303
13,156
Cash Flow Supplementary Information
Interest received
10
206
Interest paid
17,804
6,605
Income taxes paid
9,233
1,036
http://www.thepressreleasewire.com/client/tuscany_drilling/release.jsp?actionFor=1743805&releaseSeq=0&year=2007
- overall I think that this is a poor result by Tuscany Internation Drilling as it now has 37 rigs instead of the original 41 as management has decided to "write off " 3 rigs in Brazil and 1 in Columbia as they "no longer constitute any value to the Company ". This means the Drillfor deal in Brazil was a bust as Tuscany could only refurbish 4 out of the total 8 rigs that they bought in the deal. However, at the rate Tuscany is finding contracts, on the positive side this is 4 less rigs that they have to worry about finding employment for. On another note Tuscany management has failed to sell off the 2 heli-portable rigs in Brazil that cost them $50 million to construct for the failed HRT contract and all that management offers is a vague promise that "Prospects for two additional rigs to be under contract by the beginning of Q4 remain very strong, including the opportunity of at least one of our Brazilian Heli rigs." So shareholders are expected to wait until Q-4 to see if one of the hel-rigs is rented out. How realisitic is this? This shows that management either has no interest in selling the 2 heli-rigs, or there is no interest in the market place for purchasing either of these rigs.
There is no mention in the 2012 annual report about management initiating a new bond issue at all. There is no statement in the report concerning Future Outlook for 2013. The only thing keeping Tuscany going now is Maurel & Prom. Walter Dawson's cachet in the marketplace in terms of his previous successes with Saxon Energy appear to be long gone now and the stuff of legends past. Tuscany International Drilling will continue to exist as long as Maurel & Prom decide that Tuscany should continue to exist. With 65% of the rig fleet under contract in 2012 , and a Gross margin of "$15.6 million during the fourth quarter, a decrease of 52% over the same period last year and $95.3 million during 2012, an increase of 50% over the previous year" it appears to me that Tuscany is going to have a very difficult time paying off their renegotiated debt when it comes due unless they float a new bond issue..........and there was no mention of that in the report. Tuscany's management ..ie.. Walter Dawson runs this company like a feudal fiefdom when it comes to keeping the retail investor's informed about the health and future plans for their company. In Water's mind it's Walter's company and the retail shareholder's are just loaning him money to run his company. Well I've got new for you Walter, without the retail investors "your" company's share price will continue to drop. Overall a pitiful report.
Cheers; Scott
ownership and control of 27,500,000 common shares (the “Issued Shares”) of
Tuscany International Drilling Inc. (the “Company”) by way of exercise of
27,500,000 previously issued warrants (the “Warrants”), which represents
(the “Shares”) (based on the Company’s most recent Management’s Discussion and
Analysis for the period ended September 30, 2012 and calculated assuming the
“Prior Report”), M&P erroneously stated that it had acquired beneficial ownership