/THIS PRESS RELEASE IS NOT FOR DISSEMINATION IN UNITED STATES OR TO ANY UNITED STATES NEWS SERVICES/
CALGARY, Feb. 24 /CNW/ - IROC Energy Services Corp. ("IROC" or the "Corporation") (TSX Venture Exchange: "ISC") announces an operational update describing current conditions, its 2011 capital expenditure budget and revenue guidance for the three month and full year periods ended December 31, 2010 (the "fourth quarter").
IROC does not usually provide operational updates outside of the normal regulatory reporting timelines for quarterly and annual financial results. This update is being provided as a result of the significant increase in activity in our business in the past six months. IROC's annual audited financial statements and management's discussion and analysis ("MD&A") for the year ended December 31, 2010 is scheduled to be released in April, 2011 and IROC's first quarter 2011 unaudited financial statements and MD&A are scheduled for release in June, 2011. Given the length of time until the formal regulatory release of this information, the Corporation is selectively releasing certain operating information relating to the fourth quarter 2010 and the first quarter of 2011 to date. Additionally, IROC is providing guidance with respect to revenues for the fourth quarter of 2010. The reader is cautioned that certain information contained in this release is forward looking and subject to adjustment due to the use of estimates and assumptions and additional information which may come to light prior to the release of the annual financial statements. See "Forward Looking Information".
OPERATIONAL UPDATE
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Eagle Well Servicing
- Eagle Well Servicing rig utilization, as measured by IROC's internal
methodology, was 66% for the fourth quarter, with 21,138 rig hours
being recorded based on 35 service rigs in service during the quarter.
This is compared to 57% in Q3 2010 (based on 35 service rigs) and 49%
in Q4 2009 (based on 36 service rigs).
- Service rig utilization for January and February 2011 to date was 77%
based on 36 service rigs in the fleet.
- Subsequent to quarter end, in January, 2011 the Corporation has placed
one additional rig into service for a total operational service rig
fleet of 36 rigs. In addition, three new service rigs are being built
with delivery expected in the second and third quarters of 2011.
- The trend toward increased oil related activity continues to provide
benefit for our service rig division. Current activity levels are
estimated to be in excess of 80% levered to oil, with completion, work
over and abandonment activity all providing continued strong demand
for our services in the foreseeable future.
- Eagle Well Servicing has been able to fully crew its assets through
the first quarter of 2011, despite a very tight labour market across
the service industry.
- Activity levels are expected to remain strong through the full year
2011 given robust demand driven by oil activity, the expansion of
horizontal drilling technology applications to new areas in Western
Canada, ongoing abandonment work and an increasing base of active
wells requiring ongoing maintenance.
AERO Rental Services
- With the increase in drilling and field service activity over the
past three quarters, IROC's rental services division remains strong
and continues to grow. The main area where internal growth in AERO's
business has been evident is in the increased horizontal and SAGD
drilling activity in Western Canada. Also, through our acquisition of
the rental assets of Trust Energy Services in the third quarter of
2010, AERO's fracturing and coil tubing related business continues to
grow rapidly.
- In the fourth quarter AERO added $1.9 million of rental inventory
assets for a full year 2010 expenditure, including the Trust asset
acquisition, of $4.8 million. AERO currently expects to add an
additional $5 million worth of rental inventory in 2011, the majority
of which will be purchased by the end of the second quarter.
Canada Tech
- The Corporation's downhole tool division continues new product
development to meet both domestic and international demand. The
previous investment into products designed to address SAGD
opportunities in Canada are expected to begin to show returns during
the current year.
>>
2011 CAPITAL EXPENDITURE BUDGET
IROC's 2011 capital expenditure budget is $17.2 million which is comprised as follows:
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- $5.6 million - for construction of three new service rigs in the
Eagle Well Servicing division to be delivered in May, June and July,
2011 which will utilize in excess of $1.4 million of new fixed assets
which are currently held in inventory, for a total build cost of
$7.0 million.
- $5 million - for expansion of rental inventory assets in the Aero
Rental division with the majority of funds to be expended during the
first half of 2011.
- $5.6 million - for construction of three coil tubing units with
2" capacity. This will be our initial entrance into the coil tubing
business. Construction of this equipment is well underway and it is
expected that this equipment will be fully deployed and operational
early in the second quarter of 2011.
- $1 million for maintenance and infrastructure expenditures.
>>
There are numerous growth opportunities for IROC currently and additional capital expenditures may be undertaken later in 2011 should opportunities for accretive additions and/or acquisitions continue to develop.
Capital expenditures incurred during 2010 totalled $8.4 million, including $0.9 million incurred for deposits towards the building of the coiled tubing equipment to be delivered in the first and second quarter of 2011.
2010 REVENUE GUIDANCE
A summary of IROC's forecasted revenue for the three month and full year periods ended December 31, 2010 and actual revenues for the same periods of 2009 is as follows. See "Forward Looking Information":
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-------------------------------------------------------------------------
Year ended Three months ended
December 31, December 31,
$ millions 2010 2010 September June 30, March 31,
(Guidance)(1) (Guidance)(1) 30, 2010 2010 2010
-------------------------------------------------------------------------
Revenue:
Eagle Well
Servicing 46.0 15.4 12.2 6.6 11.7
Aero Rental
Services 7.6 3.1 1.8 0.9 1.8
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Total drilling &
production
services 53.6 18.5 14.0 7.5 13.5
Technology
services 10.7 2.3 2.4 3.3 2.7
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Total revenue 64.4 20.8 16.4 10.8 16.2
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(1) Guidance is forward looking information; see "Forward Looking
Information".
-------------------------------------------------------------------------
Year ended Three months ended
$ millions December 31, December 31, September June 30, March 31,
2009 2009 30, 2009 2009 2009
-------------------------------------------------------------------------
Revenue:
Eagle Well
Servicing 33.5 10.5 7.2 5.3 10.4
Aero Rental
Services 4.8 1.5 1.0 0.9 1.4
-------------------------------------------------------------------------
Total drilling
& production
services 38.3 12.0 8.2 6.2 11.8
Technology
services 10.8 3.4 2.1 3.0 2.2
-------------------------------------------------------------------------
Total revenue 49.0 15.5 10.2 9.3 14.0
-------------------------------------------------------------------------
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A comparison of IROC's forecasted revenue for the three month and full year periods ended December 31, 2010 compared to the actual revenues for the prior year periods is as follows. See "Forward Looking Information":
<<
-------------------------------------------------------------------------
Three months ended
December 31,
$ million 2010 December Change Change
(Guidance)(1) 31, 2009 $ million %
-------------------------------------------------------------------------
Revenue:
Eagle Well Servicing 15.4 10.5 4.9 46%
Aero Rental Services 3.1 1.5 1.6 109%
-------------------------------------------------------------------------
Total drilling & production
services 18.5 12.0 6.5 54%
Technology services (Canada Tech) 2.3 3.4 (1.1) (33%)
-------------------------------------------------------------------------
Total revenue 20.8 15.5 5.4 35%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Years ended
December 31,
$ million 2010 December Change Change
(Guidance)(1) 31, 2009 $ million %
-------------------------------------------------------------------------
Revenue:
Eagle Well Servicing 46.0 33.5 12.5 37%
Aero Rental Services 7.6 4.8 2.8 59%
-------------------------------------------------------------------------
Total drilling & production
services 53.6 38.3 15.3 40%
Technology services (Canada Tech) 10.7 10.8 (0.1) 0%
-------------------------------------------------------------------------
Total revenue 64.4 49.0 15.3 31%
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(1) Guidance is forward looking information; see "Forward Looking
Information".
>>
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 WCSB. IROC Energy Services Partnership operates under the business names of Eagle Well Servicing, Aero Rental Services and Canada Tech. IROC combines cutting-edge technology with depth of experience to deliver a product and services offering in three core areas: Well Servicing & Equipment, Downhole Temperature & Pressure Monitoring Tools, and Rental 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 Corporation's level of service rig utilization, expected revenues, timing of release of 2010 yearend and 2001 first quarter financial results, future capital expenditures, anticipated equipment counts and information or statements that contain words such as "forecasted", "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, and/or are under columns labelled "guidance", 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, and the statements contained in this news release speak only as of the date hereof.
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 actives; fluctuations in the demand for well servicing and ancillary oilfield services; capital market liquidity available to fund oil and gas exploration and development programs; the effects of seasonal and weather conditions on operations and facilities; the highly competitive operating environment inherent in well servicing and ancillary oilfield services; general economic, market or business conditions; changes in laws or regulations; the availability of qualified operational and management personnel; currency exchange and interest rate fluctuations; uncertainties associated with regulatory approvals; uncertainty of government policy changes; uncertainties associated with credit facilities and counterparty credit risk; changes in income tax laws or changes in tax laws, crown royalty rates and incentive programs relating to the oil and gas industry; risks associated with government regulations and environmental health and safety matters; differences between Canadian GAPP and IFRS; and other unforeseen conditions which could impact the use of equipment and services supplied by IROC.
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 will be realized. 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.
Other
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.
Certain amounts and percentages calculated in tables may not add/re-calculate due to rounding.
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.
For further information: IROC Energy Services Corp., Mr. Thomas M. Alford, President and CEO, Telephone: (403) 263-1110, Email: investorrelations@iroccorp.com
