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Jun 15, 2011
CALGARY, June 15, 2011 /CNW/ - IROC Energy Services Corp. ("IROC" or the
"Corporation") (TSXV: "ISC") is pleased to present a summary of its
operating and financial results for the three months ended March 31,
2011. For a complete copy of IROC's interim financial statements and
management's discussion and analysis ("MD&A") please visit www.sedar.com.
Highlights for the three months ended March 31, 2011:
-
Total revenue from continuing operations increased 65% to $26.7 million
for the three months ended March 31, 2011 as compared to $16.2 million
in the comparable period of the prior year.
-
Gross margin from continuing operations increased 91% to $11.0 million
for the three months ended March 31, 2011 as compared to $5.7 million
in the comparable period of the prior year.
-
EBITDAS from continuing operations increased 138% to $8.4 million for
the three months ended March 31, 2011 as compared to $3.5 million in
the comparable period of the prior year.
-
Net income from continuing operations increased 481% to $4.4 million for
the three months ended March 31, 2011 as compared $0.8 million in the
comparable period of the prior year.
Operations
IROC's continuing operations are reported in three segments; the Drilling and Production Services segment, the Technology Services segment and Corporate Services. The following is a discussion of the reporting segments in which IROC
operates.
Drilling and Production Services
The Drilling and Production Services segment provides services and
rental equipment to oil and gas exploration, development and production
companies with most of our customers and operations being located in
western Canada, in the provinces of Alberta and Saskatchewan.
The Drilling and Production Services segment consists of two divisions:
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Eagle Well Servicing ("Eagle") contracts service rigs to oil and gas
companies to perform various completion, work-over and maintenance
services on oil and natural gas wells. Eagle has offices and equipment
in Red Deer, Grande Prairie and Lloydminster in Alberta and an office
and equipment in Estevan, Saskatchewan with equipment being used in
those geographic areas.
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Aero Rental Services ("Aero") provides rental equipment for surface
pressure control in drilling and work-over operations and tubular
handling equipment used for the work over, re-entry and completion
operations. Aero has an office in Red Deer, Alberta with equipment
being rented for use primarily in Alberta.
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Three months ended
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March 31,
2011
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December 31,
2010
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September 30,
2010
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June 30,
2010
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Eagle Well Servicing:
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|
|
|
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Number of service rigs
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36
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35
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35
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35
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Service rig utilization
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78%
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66%
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57%
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33%
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Aero Rental Services:
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Gross margin $000's
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2,704
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1,715
|
762
|
250
|
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Book value of rental equipment $000's
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11,249
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10,121
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8,802
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7,122
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Commodity prices:
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NYMEX crude oil $US/bbl
|
94.07
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85.17
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76.20
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78.03
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AECO Monthly index natural gas $CAD/GJ
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3.58
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3.39
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3.52
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3.66
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Three months ended
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March 31,
2010
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December 31,
2009
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September 30,
2009
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June 30,
2009
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Eagle Well Servicing:
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Number of service rigs
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36
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36
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36
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36
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Service rig utilization
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55%
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49%
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34%
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27%
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Aero Rental Services:
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|
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Gross margin $000's
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505
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455 (1)
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311 (1)
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60 (1)
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Book value of rental equipment $000's
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7,122
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6,977
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6,743
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6,873
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Commodity prices:
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NYMEX crude oil $US/bbl
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78.72
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76.19
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68.30
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59.62
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AECO Monthly index natural gas $CAD/GJ
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5.08
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4.01
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2.87
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3.47
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At March 31, 2011, Eagle had a fleet of 36 service rigs with our
equipment amongst the newest in the industry. All Eagle's service rigs
are internally guyed with no requirement for external anchors. This
reduces set up time and corresponding costs when compared to anchored
rigs. Subsequent to quarter end, in May, 2011 the Corporation has
placed one additional rig into service for a total operational service
rig fleet of 37 rigs currently. In addition, five new service rigs are
being built with one rig expecting to be delivered in each of June,
July, September October and November, 2011.
Commodity prices are the main activity driver as the Corporation's
customers' exploration and development programs are directly impacted
by oil and natural gas prices. Oil and gas producers spend capital on
new wells and service operations when they are economic within the
context of current and forecasted commodity prices. Year over year,
crude oil prices are stronger now than in the prior year and have been
on an increasing trend for over two years since they bottomed in the
first quarter of 2009 during the financial crisis. For the past four
quarters, natural gas prices have remained within a $3.00 to $4.00
range which continues to be relatively weak in comparison to historic
price levels over the previous five years. At recent price levels,
natural gas development has been focused on resource type development
projects and liquids rich reservoirs as much conventional shallow gas
has not been economic. Should there be a return to higher natural gas
prices, as is starting to be predicted by some industry participants,
the level of activity and demand for the Corporation's services is
expected to increases across all business lines.
Service rig utilization, as measured by IROC's internal methodology,
increased in the quarter to 78%, as compared to 55% in the comparative
period of last year. Our utilization percentage increased by 12% as
compared to the fourth quarter 2010 as activity levels increased due to
high oil prices and a longer than normal winter. We are starting to
see increases in the average length of a service rig job as horizontal
wells which have been drilled in the past few years start to require
servicing operations. The complexity of horizontal wells typically
makes service operations more difficult and time consuming and is
starting to impact utilization percentages. Certain areas are only
accessible by service rigs and other heavy equipment during winter when
the ground is frozen and this season saw colder weather than normal
through to the end of the first quarter and into the second quarter.
Aero Rental Services continues to have strong margin growth in the
current year quarter as compared to the prior year quarter and the
immediately prior quarter. This increasing gross margin is driven by
three primary factors. Firstly, the same industry activity drivers
impacting Eagle's utilization; secondly, the increase in the rental
asset base; and thirdly, the decreasing percentage of fixed costs to
total costs in the business as we start to more fully utilize the
excess capacity which was available in our shop location's yard and
buildings.
Technology Services
The Technology Services segment is comprised solely of our Canada Tech
division. Canada Tech designs, develops, manufactures and sells or
rents a wide line of tools and systems that measure pressures,
temperatures and other attributes in the downhole and surface
environment of oil and gas wells.
Canada Tech differs from our other divisions in that the capital
requirement is smaller and the value of the division is contained in
its patents and proprietary technology. A significant portion of
Canada Tech's costs are fixed and as such increased sales volumes have
a magnified effect on the EBITDAS of IROC.
Corporate Services
IROC's non-operating segment, Corporate Services, captures general and
administrative expenses associated with supporting each of the
reporting segments operations noted above, plus costs associated with
being a public company. Also, included in Corporate Services is
interest expense for debt servicing and income tax expense.
Financial results and selected financial information
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Three months ended
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$ 000's except number of shares and per share amounts
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March 31,
2011
IFRS(2)
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December 31,
2010
IFRS(2)
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September 30,
2010
IFRS(2)
|
June 30,
2010
IFRS(2)
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Revenue:
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Eagle Well Servicing
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19,678
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15,400
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12,241
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6,642
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Aero Rental Services
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4,730
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3,131
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1,801
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894
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Total drilling & production services
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24,408
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18,531
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14,042
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7,536
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Technology services
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2,341
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2,306
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2,402
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3,289
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Total revenue
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|
26,749
|
20,837
|
16,444
|
10,825
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Operating costs:
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Eagle Well Servicing
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11,893
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10,048
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8,148
|
5,025
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Aero Rental Services
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2,026
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1,416
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1,039
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644
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Total drilling & production services
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13,919
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11,464
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9,187
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5,669
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Technology services
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1,871
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1,717
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2,105
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1,894
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Total operating costs
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15,790
|
13,181
|
11,292
|
7,563
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Gross margin(1)
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Eagle Well Servicing
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7,785
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5,352
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4,093
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1,617
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Aero Rental Services
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2,704
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1,715
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762
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250
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Total drilling & production services
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10,489
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7,067
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4,855
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1,867
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Technology services
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470
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589
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297
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1,395
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Total gross margin
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10,959
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7,656
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5,152
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3,262
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Gross margin %(1):
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Eagle Well Servicing
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40%
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35%
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33%
|
24%
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Aero Rental Services
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57%
|
55%
|
42%
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28%
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Total drilling & production services
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|
43%
|
38%
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35%
|
25%
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Technology services
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20%
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26%
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12%
|
42%
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Total gross margin %
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|
41%
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37%
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31%
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30%
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EBITDAS(1):
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Eagle Well Servicing
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6,893
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4,623
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3,492
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1,166
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Aero Rental Services
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2,386
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1,491
|
552
|
122
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|
Total drilling & production services
|
|
9,279
|
6,114
|
4,044
|
1,288
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Technology services
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(21)
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20
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(195)
|
774
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Corporate
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(882)
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(795)
|
(749)
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(958)
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Total EBITDAS
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8,376
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5,339
|
3,100
|
1,104
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General and administrative
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2,583
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2,316
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2,052
|
2,158
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Depreciation and amortization
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|
1,936
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2,158
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2,055
|
1,849
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Interest and financing costs
|
|
286
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305
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304
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275
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|
Stock based compensation
|
|
164
|
113
|
92
|
140
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|
Other expense (income)
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|
(15)
|
-
|
(326)
|
(87)
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|
Provision for current and future income taxes
|
|
1,642
|
330
|
273
|
(205)
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|
|
|
|
|
|
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|
Net income (loss) from continuing operations
|
|
4,363
|
2,433
|
702
|
(868)
|
|
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per common share - Basic
|
|
$0.10
|
$0.06
|
$0.02
|
$(0.02)
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|
|
per common share - Diluted
|
|
$0.10
|
$0.06
|
$0.02
|
$(0.02)
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|
|
|
|
|
|
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Net income (loss)
|
|
4,363
|
2,433
|
702
|
(868)
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|
per common share - Basic
|
|
$0.10
|
$0.06
|
$0.02
|
$(0.02)
|
|
|
per common share - Diluted
|
|
$0.10
|
$0.06
|
$0.02
|
$(0.02)
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
42,618,325
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43,026,730
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43,502,346
|
43,604,911
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|
|
|
43,425,879
|
43,446,534
|
43,632,200
|
43,604,911
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|
|
(1) See Non-GAAP Measures
(2) See Accounting policy changes
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Financial results and selected financial information (continued)
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Three months ended
|
|
$ 000's except number of shares and per share amounts
|
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March 31,
2010
IFRS(2)
|
December 31,
2009
GAAP(2)
|
September 30,
2009
GAAP(2)
|
June 30,
2009
GAAP(2)
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|
Revenue:
|
|
|
|
|
|
|
|
Eagle Well Servicing
|
|
11,731
|
10,537
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7,166
|
5,349
|
|
|
Aero Rental Services
|
|
1,776
|
1,501
|
1,013
|
900
|
|
|
Total drilling & production services
|
|
13,507
|
12,038
|
8,179
|
6,249
|
|
|
Technology services
|
|
2,741
|
3,445
|
2,052
|
3,053
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|
Total revenue
|
|
16,248
|
15,483
|
10,231
|
9,302
|
|
|
|
|
|
|
|
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Operating costs:
|
|
|
|
|
|
|
|
Eagle Well Servicing
|
|
7,497
|
6,982
|
4,652
|
3,919
|
|
|
Aero Rental Services
|
|
1,271
|
1,047
|
702
|
840
|
|
|
Total drilling & production services
|
|
8,768
|
8,029
|
5,354
|
4,759
|
|
|
Technology services
|
|
1,747
|
2,356
|
1,554
|
1,808
|
|
Total operating costs
|
|
10,515
|
10,385
|
6,908
|
6,567
|
|
|
|
|
|
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Gross margin(1)
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|
|
|
|
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|
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Eagle Well Servicing
|
|
4,234
|
3,555
|
2,514
|
1,430
|
|
|
Aero Rental Services
|
|
505
|
454
|
311
|
60
|
|
|
Total drilling & production services
|
|
4,739
|
4,009
|
2,825
|
1,490
|
|
|
Technology services
|
|
994
|
1,089
|
498
|
1,245
|
|
Total gross margin
|
|
5,733
|
5,098
|
3,323
|
2,735
|
|
|
|
|
|
|
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Gross margin %(1):
|
|
|
|
|
|
|
|
Eagle Well Servicing
|
|
36%
|
34%
|
35%
|
27%
|
|
|
Aero Rental Services
|
|
28%
|
30%
|
31%
|
7%
|
|
|
Total drilling & production services
|
|
35%
|
33%
|
34%
|
24%
|
|
|
Technology services
|
|
36%
|
32%
|
24%
|
41%
|
|
Total gross margin %
|
|
35%
|
33%
|
32%
|
29%
|
|
|
|
|
|
|
|
|
EBITDAS(1):
|
|
|
|
|
|
|
|
Eagle Well Servicing
|
|
3,646
|
3,057
|
2,129
|
997
|
|
|
Aero Rental Services
|
|
358
|
331
|
206
|
(53)
|
|
|
Total drilling & production services
|
|
4,004
|
3,388
|
2,335
|
944
|
|
|
Technology services
|
|
484
|
512
|
29
|
556
|
|
|
Corporate
|
|
(967)
|
(927)
|
(985)
|
(917)
|
|
Total EBITDAS
|
|
3,521
|
2,973
|
1,379
|
583
|
|
|
|
|
|
|
|
|
General and administrative
|
|
2,212
|
2,125
|
1,944
|
2,152
|
|
Depreciation and amortization
|
|
1,837
|
2,392
|
2,073
|
1,978
|
|
Interest expense net of interest income
|
|
372
|
446
|
308
|
205
|
|
Stock based compensation
|
|
165
|
74
|
64
|
92
|
|
Other expense
|
|
89
|
76
|
8,516
|
353
|
|
Provision for current and future income taxes
|
|
307
|
380
|
(268)
|
(785)
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
751
|
(395)
|
(9,314)
|
(1,260)
|
|
|
per common share - Basic
|
|
$0.01
|
$(0.01)
|
$(0.21)
|
$(0.03)
|
|
|
per common share - Diluted
|
|
$0.01
|
$(0.01)
|
$(0.21)
|
$(0.03)
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
751
|
(481)
|
(9,324)
|
(1,260)
|
|
|
per common share - Basic
|
|
$0.01
|
$(0.01)
|
$(0.21)
|
$(0.03)
|
|
|
per common share - Diluted
|
|
$0.01
|
$(0.01)
|
$(0.21)
|
$(0.03)
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
43,576,971
|
43,565,754
|
43,947,852
|
44,200,651
|
|
|
|
43,631,043
|
43,565,754
|
43,947,852
|
44,200,651
|
|
|
(1) See Non-GAAP Measures
(2) See Accounting policy changes
|
|
|
|
|
|
Comparison of results from the three month period ended March 31, 2011
to the same period last year
Revenue
| |
|
|
|
Three months ended
|
|
$ 000's
|
March 31,
2011
|
March 31,
2010
|
Change
$
|
Change
%
|
|
Revenue:
|
|
|
|
|
|
|
Eagle Well Servicing
|
19,678
|
11,731
|
7,947
|
68%
|
|
|
Aero Rental Services
|
4,730
|
1,776
|
2,954
|
166%
|
|
|
Total drilling & production services
|
24,408
|
13,507
|
10,901
|
81%
|
|
|
Technology services (Canada Tech)
|
2,341
|
2,741
|
(400)
|
(15%)
|
|
Total revenue
|
26,749
|
16,248
|
10,501
|
65%
|
Operating Costs and Gross Margin
| |
|
|
|
Three months ended
|
|
$ 000's
|
March 31,
2011
|
March 31,
2010
|
Change
$
|
Change
%
|
|
Operating costs:
|
|
|
|
|
|
|
Eagle Well Servicing
|
11,893
|
7,497
|
4,396
|
59%
|
|
|
Aero Rental Services
|
2,026
|
1,271
|
755
|
59%
|
|
|
Total drilling & production services
|
13,919
|
8,768
|
5,151
|
59%
|
|
|
Technology services (Canada Tech)
|
1,871
|
1,747
|
124
|
7%
|
|
Total operating costs
|
15,790
|
10,515
|
5,275
|
50%
|
|
|
|
|
|
|
|
Gross margin:(1)
|
|
|
|
|
|
|
Eagle Well Servicing
|
7,785
|
4,234
|
3,551
|
84%
|
|
|
Aero Rental Services
|
2,704
|
505
|
2,199
|
435%
|
|
|
Total drilling & production services
|
10,489
|
4,739
|
5,750
|
121%
|
|
|
Technology services (Canada Tech)
|
470
|
994
|
(524)
|
(53%)
|
|
Total gross margin
|
10,959
|
5,733
|
5,226
|
91%
|
|
|
|
|
|
|
|
Gross margin %(1):
|
|
|
|
|
|
|
Eagle Well Servicing
|
40%
|
36%
|
|
4%
|
|
|
Aero Rental Services
|
57%
|
28%
|
|
29%
|
|
|
Total drilling & production services
|
43%
|
35%
|
|
8%
|
|
|
Technology services (Canada Tech)
|
20%
|
36%
|
|
(16%)
|
|
Total gross margin %
|
41%
|
35%
|
|
6%
|
|
(1)See Non-GAAP Measures
|
|
|
|
|
EBITDAS
| |
|
|
|
|
Three months ended
|
|
|
$ 000's except per share amounts
|
March 31,
2011
|
March 31,
2010
|
Change
$
|
Change
%
|
|
EBITDAS(1):
|
|
|
|
|
|
Eagle Well Servicing
|
6,893
|
3,646
|
3,247
|
89%
|
|
Aero Rental Services
|
2,386
|
358
|
2,028
|
566%
|
|
Total drilling & production services
|
9,279
|
4,004
|
5,275
|
132%
|
|
Technology services (Canada Tech)
|
(21)
|
484
|
(505)
|
(104%)
|
|
Corporate
|
(882)
|
(967)
|
85
|
(9%)
|
|
Total EBITDAS
|
8,376
|
3,521
|
4,855
|
138%
|
|
|
|
|
|
|
|
EBITDAS per common share(1)
|
|
|
|
|
|
|
$ 0.20
|
$ 0.08
|
$ 0.12
|
157%
|
|
|
$ 0.19
|
$ 0.08
|
$ 0.11
|
154%
|
(1) See Non-GAAP Measures
Outlook
The first quarter of 2011 has provided an excellent start to the year
with increased revenues, margins, net income, and EBITDAS as compared
to the prior year. Eagle Well Servicing, our largest operating
division, had record utilization of its service rigs and Aero Rental
Services had record revenues and gross margins. As we look forward to
the future, we have many reasons to be optimistic about the continued
prospects for our businesses. Oil prices continue to follow a
strengthening trend and there is clearly an increase in oil related
drilling and completion activity. The latest forecasted activity
levels by the Canadian Association of Oilwell Drilling Contractors has
the numbers of wells expected to be drilled in 2011 at 13,128 as
compared to 11,587 in 2010 and 8,278 in 2009 and reflects a 24%
increase in the activity projected for the last three quarters of 2011
since their previous forecast in October 2010.
While the operating environment has changed substantially, the increased
levels of business activity for IROC are also indicative of how we have
positioned our assets to benefit our shareholders, employees and
customers in both the short and longer term. Eagle Well Servicing has
developed solid relationships with active oil and gas operators across
Western Canada by providing the newest equipment available, trained
personnel and a skilled group of managers that combine to provide value
to our customers both in superior customer service and efficient
operations. IROC continues to be able to effectively crew our rigs, a
tribute to the efforts of our managers at the field level, and a
reflection of workers preference to work on relatively new and well
maintained equipment.
Our optimism is reflected in our commitment to grow the business. To
that end we have recently taken delivery of the first of six new
service rigs planned for deployment during 2011. The remaining five
rigs are scheduled to be delivered in each of June, July, September,
October and November, 2011. We remain enthusiastic about the growth
potential for Aero Rental Services and have earmarked $5.5 million for
new capital additions to Aero's rental inventory during the remainder
of 2011. We are building our new coiled tubing business, Helix Coil
Services, with $5.6 million budgeted for construction of three coil
tubing units with up to two-inch capacity and the first unit already
delivered and ready for deployment once spring road bans are removed.
Management expects that revenues will be positively affected by these
capital additions in the coming quarters, but more so during 2012, when
the full year effect of the additional equipment will be achieved.
Our capital program will make the newest fleet of service rig equipment
in Western Canada newer, and management expects to be able to continue
to work this aspect of our fleet to our advantage in attracting
experienced, competent personnel to operate the equipment.
Canada Tech continues to focus on increasing revenue streams by
penetrating both domestic and international markets. Management has
continued to work on efficiencies to reduce our fixed costs while at
the same time pushing hard to extend our penetration into select
markets around the world. A number of new products introduced over the
past two years will allow for increased diversification with some of
the oilsands applications for our technology beginning to contribute.
From a financial perspective, we have used the recent interest in the
Corporation by the investment community to both reduce bank debt and
enhance shareholder liquidity. On April 11, 2011, the Corporation
completed a short form prospectus offering of 7,200,361 common shares
at a price of $1.40 per common share, for estimated net proceeds after
costs of approximately $9.3 million. Along with this offering, Key
Energy Services, Inc. sold the 8,734,469 common shares which it had
held since 2005. Key's ownership amounted to 20.47% of the total
outstanding common shares and we believed the distribution of this
block of shares to a wider number of shareholders along with the new
shares issued would enhance liquidity in the trading of the
Corporation's shares. Since the completion of this offering, trading
in the Corporation's common shares has in fact seen increased volumes.
As we move further into 2011, IROC has a strong balance sheet, the
newest in equipment and technologies, and a competent group of
employees that will allow us to both create opportunities for growth
and capitalize on opportunities as they present themselves.
Accounting policy changes
IROC prepares its financial statements in accordance with Canadian
generally accepted accounting principles as set out in the Handbook of
the Canadian Institute of Chartered Accountants ("CICA" and "CICA
Handbook"). In 2010, the CICA Handbook was revised to incorporate
International Financial Reporting Standards ("IFRS") and require public
companies to apply such standards effective for years beginning on or
after January 1, 2011.
On January 1, 2011, IROC adopted International Financial Reporting
Standards ("IFRS") for purposes of financial reporting, using a
transition date of January 1, 2010. Accordingly, the interim condensed
consolidated financial statements for the three months ended March 31,
2011 and the comparative information for the three months ended March
31, 2010, have been prepared in accordance with International Financial
Reporting Standard 1, "First-time Adoption of International Financial
Reporting Standards", and with International Accounting Standard 34,
"Interim Financial Reporting", as issued by the International
Accounting Standards Board ("IASB").
In this news release, the term "GAAP" or "Canadian GAAP" refers to
Canadian generally accepted accounting principles before the adoption
of IFRS. Certain tables which incorporate a combination of GAAP and
IFRS amounts have column headings which indicate which set of
accounting principles were used in the preparation of the amounts in
such column. In the absence of any such designation, amounts included
in this news release are prepared in accordance with IFRS.
The adoption of IFRS has not had an impact on the Company's operations
or strategic decisions. Further information on the effect of adopting
IFRS is outlined in the Changes in Accounting Pronouncements including
Initial Adoption section of the interim MD&A for the three months ended
March 31, 2011.
About IROC Energy Services Corporation
IROC Energy Services Corp. is an Alberta oilfield services company that,
through the IROC Energy Services Partnership, provides a diverse range
of products, services and equipment to the oil and gas industry that
are among the newest and most innovative in the Western Canadian
Sedimentary Basin and international markets. IROC combines
cutting-edge technology with depth of experience to deliver a product
and services offering in the following core areas: Well Servicing &
Equipment, Downhole Temperature & Pressure Monitoring Tools, Rental
Services and Coiled Tubing Services. For more information on IROC
Energy Services Corp. visit our website at www.iroccorp.com.
Cautionary Statement Regarding Forward Looking Information and
Statements
Certain information contained in this news release, including
information related to the completion and timing of the construction of
IROC's six new service rigs and three new coiled tubing units, the
Corporation's planned capital expenditures and growth opportunities,
outlook for future oil and gas prices, cyclical industry fundamentals,
drilling, completion, work over and abandonment activity levels, the
Corporation's ability to fund future obligations and capital
expenditures, and information or statements that contain words such as
"could", "should", "can", "anticipate", "expect", "believe", "will",
"may", "likely", "estimate", "predict", "potential", "continue",
"maintain", "retain", "grow", and similar expressions and statements
relating to matters that are not historical facts, constitute
"forward-looking information" within the meaning of applicable Canadian
securities legislation. This information or these statements are based
on certain assumptions and analysis made by the Corporation in light of
its experience and its perception of historical trends, current
conditions and expected future developments as well as other factors it
believes are appropriate in the circumstances. In particular, the
Corporation's expectation of uncertain demand and prices for oil and
natural gas and the resulting future industry activity, is premised on
the Corporation's understanding of customers' capital budgets and their
ability to access capital, the focus of its customers on deeper and
horizontal drilling opportunities in the current natural gas pricing
environment, and the continuing impact of the recent global financial
crisis and the current economic recovery all of which affects the
demand for oil and gas. Whether actual results, performance or
achievements will conform to the Corporation's expectations and
predictions is subject to a number of known and unknown risks and
uncertainties which could cause actual results to differ materially
from the Corporation's expectations. Such risks and uncertainties
include, but are not limited to: fluctuations in the price and demand
for oil and natural gas; fluctuations in the level of oil and natural
gas exploration and development activities; fluctuations in the demand
for well servicing; the effects of weather conditions on operations and
facilities; the existence of competitive operating risks inherent in
well servicing; general economic, market or business conditions;
changes in laws or regulations, including taxation, environmental and
currency regulations; the lack of availability of qualified personnel
or management; the other risk factors set forth under the heading
"Risks" in the annual MD&A for the year ended December 31, 2010 and
other unforeseen conditions which could impact on the use of services
supplied by the Corporation.
Consequently, all of the forward-looking information and statements made
in this news release are qualified by this cautionary statement and
there can be no assurance that the actual results or developments
anticipated by the Corporation will be realized or, even if
substantially realized, that they will have the expected consequences
to or effects on the Corporation or its business or operations. Except
as may be required by law, the Corporation assumes no obligation to
update publicly any such forward-looking information and statements,
whether as a result of new information, future events, or otherwise.
This press release is not for dissemination in United States or to any
United States news services. The Common Shares of IROC have not and
will not be registered on the United States Securities Act of 1933, as amended (the "United States Securities Act") or any state securities laws and are not offered or sold in the
United States or to any US person except in certain transactions exempt
from the registration requirements of the United States Securities Act and applicable state securities laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
Non-GAAP Measures
The financial statements have been prepared in accordance with IFRS.
Certain supplementary information and measures not recognized under
IFRS are provided where Management believes they assist the reader in
understanding IROC's results. These measures include:
-
EBITDAS and EBITDAS per share- EBITDAS is defined as earnings before
interest, taxes, depreciation and amortization, stock-based
compensation expense, foreign exchange gains and losses, goodwill
impairment, note receivable impairment, and gains or losses on disposal
of property and equipment. EBITDAS and EBITDAS per share are not
recognized measures under GAAP or IFRS. The Corporation believes that
EBITDAS is provided as a measure of operating performance without
reference to financing decisions, income tax impacts and non-cash
expenses, which are not controlled at the operating management level.
Accordingly, the Corporation believes EBITDAS is a useful measure for
prospective investors in evaluating the financial performance of the
Corporation, and specifically, the ability of the Corporation to
service the interest on its indebtedness. Investors should be
cautioned that EBITDAS should not be construed as an alternative to net
income determined in accordance with GAAP or IFRS as an indicator of
the Corporation's performance. IROC's method of calculating EBITDAS
may differ from those of other companies, and accordingly, EBITDAS may
not be directly comparable to measures used by other companies. EBITDAS
% is calculated as EBITDAS divided by revenue.
-
Gross margin is defined as revenue less operating expenses. Gross
margin % is defined as gross margin divided by revenue. The Company
believes that gross margin and gross margin % are useful measures which
provide an indicator of the Corporation's fundamental ability to make
money on the products and services it sells. The Corporation believes
the relationship between revenues and costs expressed by the gross
margin % is a useful measure when compared between different financial
periods as it demonstrates the trending relationship between revenues,
costs and margins. Gross margin and gross margin % are not recognized
measures of GAAP or IFRS and do not have any standardized meaning
prescribed by GAAP or IFRS. IROC's method of calculating gross margin
and gross margin % may differ from those of other companies, and
accordingly, may not be directly comparable to measures used by other
companies. Gross margin is reconciled to revenue - continuing
operations in the Financial results and selected financial information table.
Non-GAAP Measures (continued)
The following is a reconciliation of EBITDAS and EBITDAS per share to
net income from continuing operations:
| |
|
|
|
|
|
Three months ended
|
|
$ 000's except number of shares and per share amounts
|
|
March 31,
2011
IFRS(1)
|
December 31,
2010
IFRS(1)
|
September 30,
2010
IFRS(1)
|
June 30,
2010
IFRS(1)
|
|
Net income (loss) from continuing operations
|
|
4,363
|
2,433
|
702
|
(868)
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
1,936
|
2,158
|
2,055
|
1,849
|
|
Loss (gain) on foreign exchange
|
|
10
|
17
|
(2)
|
(88)
|
|
Stock based compensation expense
|
|
164
|
113
|
92
|
140
|
|
Loss (gain) on disposal of equipment
|
|
(25)
|
(17)
|
(24)
|
1
|
|
Interest and financing costs
|
|
286
|
305
|
304
|
275
|
|
Note receivable recovery
|
|
-
|
-
|
(300)
|
-
|
|
Income taxes:
|
|
|
|
|
|
|
|
Current
|
|
|
-
|
-
|
-
|
|
|
Future
|
|
1,642
|
330
|
273
|
(205)
|
|
|
|
|
|
|
|
|
EBITDAS - continuing operations
|
|
8,376
|
5,339
|
3,100
|
1,104
|
|
|
|
|
|
|
|
|
EBITDAS per share
|
|
|
|
|
|
|
|
Basic
|
|
$0.20
|
$0.12
|
$0.07
|
$0.02
|
|
|
Diluted
|
|
$0.19
|
$0.12
|
$0.07
|
$0.02
|
| |
|
|
|
|
|
Three months ended
|
|
$ 000's except number of shares and per share amounts
|
|
March 31,
2010
IFRS(1)
|
December 31,
2009
GAAP(1)
|
September
30, 2009
GAAP(1)
|
June 30,
2009
GAAP(1)
|
|
Net income (loss) from continuing operations
|
|
751
|
(395)
|
(9,314)
|
(1,260)
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
1,837
|
2,392
|
2,073
|
1,978
|
|
Loss on foreign exchange
|
|
97
|
43
|
168
|
354
|
|
Stock based compensation expense
|
|
165
|
74
|
64
|
92
|
|
Loss (gain) on disposal of equipment
|
|
(8)
|
33
|
(2)
|
(1)
|
|
Interest and financing costs
|
|
372
|
446
|
308
|
205
|
|
Goodwill impairment
|
|
-
|
-
|
6,850
|
-
|
|
Note receivable impairment
|
|
-
|
-
|
1,500
|
-
|
|
Income taxes:
|
|
-
|
|
|
|
|
|
Current
|
|
|
-
|
-
|
-
|
|
|
Future
|
|
307
|
380
|
(268)
|
(785)
|
|
|
|
|
|
|
|
|
EBITDAS - continuing operations
|
|
3,521
|
2,973
|
1,379
|
583
|
|
|
|
|
|
|
|
|
EBITDAS per share
|
|
|
|
|
|
|
|
Basic
|
|
$0.08
|
$0.07
|
$0.03
|
$0.01
|
|
|
Diluted
|
|
$0.08
|
$0.07
|
$0.03
|
$0.01
|
(1) See Accounting policy changes
For further information: IROC Energy Services Corp.
Mr. Thomas M. Alford, President and CEO, or
Mr. Ryan A. Michaluk, Chief Financial Officer
Telephone: (403) 263-1110
Email: investorrelations@iroccorp.com
|
|
