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Zedcor Energy Inc. Announces 2017 Second Quarter Results

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Zedcor Energy Inc. Announces 2017 Second Quarter Results

Zedcor Energy Inc. Announces 2017 Second Quarter Results

CALGARY, ALBERTA--(Marketwired - Aug 14, 2017) - Zedcor Energy Inc. (the "Company") (TSX:ZDC) today announced its financial and operating results for the three and six months ended June 30, 2017.

"We are pleased to report that revenue in the second quarter of 2017 increased 60% compared to the prior year," stated Brad Munro, Zedcor Energy Inc., Interim CEO. "This is the strongest second quarter ever for Zedcor and its previous energy services business. This improvement resulted from a combination of increases in both equipment utilization and pricing. Demand for certain wellsite accommodation units was strong throughout the quarter and continues through the third quarter in support of drilling and completions activities in Western Canada. The growth in second quarter revenue, coupled with the new cost structure, has resulted in positive adjusted EBITDA for the second quarter which is traditionally the slowest quarter of the year."

Highlights

Amounts in the following tables are presented in thousands of dollars, except for per share amounts and percentages.

Three months ended June 30 Six months ended June 30
(in $000s) 2017 2016 2017 2016
Revenue 2,348 1,469 6,791 4,780
Adjusted EBITDA1,2 36 295 1,407 1,425
Adjusted EBIT1,2 (1,493 ) (5,010 ) (1,672 ) (6,926 )
Net (loss) income from continuing operations (3,529 ) (4,684 ) (4,497 ) (7,832 )
Net (loss) income per share from continuing operations
Basic (0.07 ) (0.12 ) (0.10 ) (0.20 )
Diluted (0.07 ) (0.12 ) (0.10 ) (0.20 )
Amounts in table represents continuing operations, which are comprised of the Energy Services segment and Corporate
1 Adjusted for severances, business acquisition costs and refinancing costs
2 See Financial Measures Reconciliations below

SELECT FINANCIAL RESULTS

  • Revenues for the quarter ended June 30, 2017 increased by $0.9 million or 60% from $1.5 million to $2.3 million compared to the same quarter in 2016. Commodity prices increased slightly in the second quarter of 2017 compared to the same quarter 2016, resulting in increased demand for drilling services and ancillary support equipment. Day rates in the second quarter have improved when compared to the second quarter of 2016, which is due to increased drilling activity in Western Canada.


  • Net loss for the quarter ended June 30, 2017 was $3.5 million, an improvement of $1.2 million or 25% from a loss of $4.7 million for the quarter end June 30, 2016. Operating margin increased by $3.2 million due to the increase in revenue and a $2.4 million decrease in depreciation. The quarter over quarter decrease in depreciation is as a result of divesting under-utilized assets in 2016. General and administrative expenses were $0.2 million higher in the second quarter of 2017 compared to the same prior year period, due to the costs associated with refinancing. Higher interest rates as a result of refinancing has contributed to an increase of $0.8 million in finance costs compared to prior year's quarter ended June 30, 2016.


  • Adjusted EBITDA for the quarter ended June 30, 2017 was $36 thousand, a decrease of $259 thousand from the quarter ended June 30, 2016. For the quarter ended June 30, 2016 corporate costs were allocated amongst three operating segments. For the quarter ended June 30, 2017 many of these corporate costs have been eliminated through cost saving measures, however the remaining costs are now fully allocated to the energy services operating segment in 2017 suggesting higher quarter over quarter general and administrative expenses when in fact total general and administrative costs for continuing operations has decreased 14% year over year.


  • On April 27, 2017, the Company entered into a Loan and Security Agreement with a new lender for a term of 12 months. See Liquidity and Capital Resources section.


  • Over the past eight months, the Company restructured its operations and divested of both its General Rentals operating segment and Waste Management operating segment. Net proceeds from both transactions were used to pay down debt.


SELECT OPERATING RESULTS

  • The Energy Services segment includes the operations of Zedcor Energy Services Corp. and represents 100% of the Company's continuing operations.


  • The second quarter of 2017 saw a slight improvement to commodity prices and an increase in drilling activity in the oil and gas sector in Western Canada compared to the second quarter of 2016. As a result there was an increase in utilization and an increase in rental rates. Despite the improvement to commodity prices, there is still high competition from other service providers with idle assets which leads to aggressive pricing measures.


SELECTED QUARTERLY FINANCIAL INFORMATION

(Unaudited - in $000s) Jun

30

2017
Mar

31

2017
Dec

31

2016
Sept

30

2016
June

30

2016
Mar

31

2016
Dec

31

2015
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