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Independence Contract Drilling, Inc. Reports Financial Results For The Third Quarter Ended September 30, 2019

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HOUSTON, Oct. 31, 2019 /PRNewswire/ -- Independence Contract Drilling, Inc. (the "Company") (NYSE:ICD) today reported financial results for the three months ended September 30, 2019.

Third Quarter 2019 Highlights

  • Net loss of $10.5 million, or $0.14 per share.
  • Adjusted net loss, as defined below, of $7.9 million, or $0.10 per share.
  • Adjusted EBITDA, as defined below, of $7.7 million.
  • Net debt, excluding finance leases and net of deferred financing costs, of $118.2 million.
  • Fleet utilization of 76%.
  • Fully burdened margin of $5,645 per day.

In the third quarter of 2019, the Company reported revenues of $45.1 million, a net loss of $10.5 million, or $0.14 per share, adjusted net loss (defined below) of $7.9 million, or $0.10 per share, and adjusted EBITDA (defined below) of $7.7 million.  These results compare to revenues of $28.4 million, a net loss of $3.9 million, or $0.10 per share, adjusted net loss of $1.8 million, or $0.05 per share, and adjusted EBITDA of $6.8 million in the third quarter of 2018, revenues of $52.9 million, a net loss of $12.9 million, or $0.17 per share, an adjusted net loss of $5.5 million, or $0.07 per share, and adjusted EBITDA of $12.8 million in the second quarter of 2019. 

Chief Executive Officer Anthony Gallegos commented, "Our reported results came in line with our preliminary release from two weeks ago.  As mentioned in that press release, although market headwinds persist, we believe ICD is well positioned and currently expect to increase our contracted rig count with two rigs scheduled to re-enter our marketed fleet this quarter as well as contract discussions regarding our other idle rigs.  In this regard, just this week we signed a contract to reactivate an idle rig to commence operations in November in the Permian basin."

Quarterly Operational Results

In the third quarter of 2019, the Company's fleet operated at 76% utilization and recorded 1,943 revenue days, compared to 99% utilization and 1,345 revenue days in the third quarter of 2018, and 84% utilization and 2,330 revenue days in the second quarter of 2019. During the third quarter, the Company removed three SCR rigs from its marketed fleet.  These rigs will not re-enter the marketed fleet until their conversion to pad-optimal AC status is complete.  The first conversion is scheduled for completion during the fourth quarter of 2019 and the remaining two conversions have been put on hold until market conditions improve.

Operating revenues in the third quarter of 2019 totaled $45.1 million, compared to $28.4 million in the third quarter of 2018 and $52.9 million in the second quarter of 2019.  Revenues in the third quarter 2019 and second quarter of 2019 included early termination revenues of $0.3 million and $0.5 million, respectively.  Excluding this early termination revenue, revenue per day in the third quarter of 2019 was $20,559, compared to $20,538 in the third quarter of 2018 and $20,868 in the second quarter of 2019. Sequential revenue per day declines were driven by lower dayrates on contract renewals.

Operating costs in the third quarter of 2019 totaled $34.2 million, compared to $18.4 million in the third quarter of 2018 and $37.5 million in the second quarter of 2019.  Fully burdened operating costs were $14,914 per day in the third quarter of 2019, compared to $12,986 in the third quarter of 2018 and $14,155 in the second quarter of 2019. Sequential increases in per day operating cost were due to reduced operating days during the quarter and transitory personnel costs between rig contracts.

Fully burdened rig operating margins in the third quarter of 2019 were $5,645 per day, compared to $7,552 per day in the third quarter of 2018 and $6,713 per day in the second quarter of 2019.

Selling, general and administrative expenses in the third quarter of 2019 were $3.8 million (including $0.6 million of non-cash stock-based compensation), compared to $3.9 million (including $0.7 million of non-cash stock-based compensation) in the third quarter of 2018 and $3.0 million (including $0.4 million of non-cash stock-based compensation) in the second quarter of 2019.  Sequential increases in selling general and administrative expenses were associated with minimal incentive compensation accruals during the second quarter of 2019 compared to the current quarter.

Drilling Operations Update

The Company exited the third quarter with 23 rigs earning revenues under drilling contracts.  The Company's backlog of drilling contracts with original terms of six months or longer was $57.8 million as of September 30, 2019, representing 7.4 rig years of activity.  Approximately 48% of this backlog is expected to be realized during the remainder of 2019.  The Company also has seven rigs currently operating under short-term contracts not included in this reported backlog. 

Capital Expenditures and Liquidity Update

The Company's capital expenditure budget for 2019, net of asset sales and recoveries, remains $29 million.  During the third quarter of 2019, cash outlays for capital expenditures, net of asset sales and recoveries, were $7.7 million

As of September 30, 2019, the Company had cash on hand of $9.1 million, no amounts drawn on its $40 million revolving credit facility, and $130 million principal amount outstanding under its term loan.  The term loan includes a fully committed $15 million accordion that remains undrawn and fully available to the Company.

Conference Call Details

A conference call for investors will be held today, October 31, 2019, at 11:00 a.m. Central Time (12:00 p.m. Eastern Time) to discuss the Company's third quarter 2019 results. 

The call can be accessed live over the telephone by dialing (855) 239-3115 or for international callers, (412) 542-4125.  A replay will be available shortly after the call and can be accessed by dialing (877) 344-7529 or for international callers, (412) 317-0088.  The passcode for the replay is 10135676.  The replay will be available until November 7, 2019.

Interested parties may also listen to a simultaneous webcast of the conference call by logging onto the Company's website at www.icdrilling.com in the Investor Relations section.  A replay of the webcast will also be available for approximately 30 days following the call.

About Independence Contract Drilling, Inc.

Independence Contract Drilling provides land-based contract drilling services for oil and natural gas producers in the United States. The Company constructs, owns and operates a fleet of pad-optimal ShaleDriller rigs that are specifically engineered and designed to accelerate its clients' production profiles and cash flows from their most technically demanding and economically impactful oil and gas properties. For more information, visit www.icdrilling.com.

Forward-Looking Statements

This news release contains certain forward-looking statements within the meaning of the federal securities laws. Words such as "anticipated," "estimated," "expected," "planned," "scheduled," "targeted," "believes," "intends," "objectives," "projects," "strategies" and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to Independence Contract Drilling's operations are based on a number of expectations or assumptions which have been used to develop such information and statements but which may prove to be incorrect. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, and there can be no assurance that actual outcomes and results will not differ materially from those expected by management of Independence Contract Drilling. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, please refer to the "Risk Factors" section of the Company's Annual Report on Form 10-K, filed with the SEC and the information included in subsequent amendments and other filings. These forward-looking statements are based on and include our expectations as of the date hereof. Independence Contract Drilling does not undertake any obligation to update or revise such forward-looking statements to reflect events or circumstances that occur, or which Independence Contract Drilling becomes aware of, after the date hereof.

 

INDEPENDENCE CONTRACT DRILLING, INC.

Unaudited

(in thousands, except par value and share data)

 

CONSOLIDATED BALANCE SHEETS






September 30, 2019


December 31, 2018

Assets





Cash and cash equivalents


$                       9,146


$                    12,247

Accounts receivable, net


32,765


41,987

Inventories


2,618


2,693

Assets held for sale


3,153


19,711

Prepaid expenses and other current assets


2,469


8,930



Total current assets


50,151


85,568

Property, plant and equipment, net


485,869


496,197

Goodwill


-


1,627

Other long-term assets, net


2,525


1,470



Total assets


$                   538,545


$                   584,862

Liabilities and Stockholders' Equity





Liabilities






Current portion of long-term debt (1)


$                       1,012


$                         587


Accounts payable


19,313


16,312


Accrued liabilities


14,199


29,219

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