Cancoil Integrated Services Inc. Releases Second Quarter 2001 Report.Business Editors CALGARY Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Alberta--(BUSINESS WIRE)--Aug. 2, 2001 (CDNX CDNX See Canadian Venture Exchange (CDNX). :CAN.)
Six Months Ended Three Months Ended
June 30, May 31, June 30, May 31,
2001 2000** 2001 2000**
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Average number of rigs 8.0 1.2 8.0 1.3
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Revenue $9,621,237 $1,191,219 $5,348,603 $702,891
Gross margin $4,371,969 $444,907 $3,077,581 $233,968
Gross margin percent 45% 37% 58% 33%
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Net Income (loss) $1,313,747 $(34,548)$1,065,604 $(69,788)
Net income (loss)
per share* $0.035 $(0.002) $0.029 $(0.003)
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EBITDA $3,458,841 $164,125 $2,633,103 $25,135
EBITDA per share* $0.092 $0.007 $0.071 $0.001
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Cash flow $2,675,393 $70,855 $2,075,906 $(13,527)
Cash flow per share* $0.072 $0.003 $0.056 $(0.001)
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Long-term debt $9,073,754 $2,952,604 $9,073,754 $2,952,604
Long-term debt to equity 65% 41% 65% 41%
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Shares outstanding 27,281,667 27,041,667 27,281,667 27,041,667
Shares outstanding
diluted 42,329,850 34,816,667 42,329,850 34,816,667
Weighted average shares
- diluted, treasury
method 37,395,530 23,061,854 37,276,411 25,061,813
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* Per share figures are on a weighted average diluted basis using the
treasury method
**Cancoil changed its fiscal year-end during 2000 from May 31 to
December 31.
Cancoil Integrated Services In computer networking, IntServ or integrated services is an architecture that specifies the elements to guarantee quality of service (QoS) on networks. IntServ can for example be used to allow video and sound to reach the receiver without interruption. Inc. continues to produce dramatically higher operating and financial results as the company successfully deploys its larger rig fleet. Income for the six months ended June June: see month. 30, 2001 was $1.3 million or $0.035 per share compared to a loss of $(0.003) per share in the six months ended May 31, 2000. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was up 2,300 percent on a per share basis comparing the first half of 2001 with the six months ended May 31, 2000. The improved results were driven by a sevenfold sevenfold Adjective 1. having seven times as many or as much 2. composed of seven parts Adverb by seven times as many or as much Adj. 1. increase in the coil tubing rig fleet combined with higher gross operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. increased in the first six months of 2001 as the Company continued its aggressive fleet expansion program. Total long-term debt is up 24 percent at June 30, 2001 compared to December December: see month. 31, 2000. The overall debt to equity ratio The debt to equity ratio (D/E) is a financial ratio indicating the relative proportion of equity and debt used to finance a company's assets. It is equal to total debt divided by shareholders' equity. has increased 12 percent since December 31, 2000. Comparing the second quarter of 2001 with the first quarter shows a solid revenue increase of 25 percent. However, net income was up 329 percent as gross operating margins almost doubled to 58 percent from 30 percent.
Cancoil Integrated Services Inc.
CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30, December 31,
2001 2000
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ASSETS
Current assets:
Cash $299,073 -
Accounts receivable 5,089,156 $2,469,302
Prepaid expenses and other 165,415 237,948
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5,553,644 2,707,250
Due from shareholder 60,000 60,000
Fixed assets under construction 5,421,889 4,417,337
Capital assets - net 16,041,929 14,533,884
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$27,077,462 $21,718,471
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank operating loan $1,340,422 $160,179
Accounts payable and accrued liabilities 1,725,651 1,539,266
Current portion of long-term debt 1,520,729 1,470,729
Deferred revenue - 100,232
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4,586,802 3,270,406
Long-term debt 6,053,025 4,307,500
Convertible debenture 1,500,000 1,500,000
Future income taxes 679,788 65,341
Non-controlling interest 192,049 40,039
Shareholders' equity
Capital stock 12,257,773 12,040,907
Retained earnings 1,808,025 494,278
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14,065,798 12,535,185
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$27,077,462 $21,718,471
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These interim financial statements follow the same accounting policies and methods of application as the most recent annual financial statements. Not all disclosures required by GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). for annual financial statements are presented. The interim financial statements should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the most recent audited, annual financial statements. Operations Cancoil's financial results reflect major growth in the overall company operations when comparing results for the first half of 2001 with the six months ended May 31, 2000. The growth was delivered by an increase in the coil tubing rig fleet from an average of 1.2 rigs in the six months ended May 31, 2000 to eight rigs for the six-month period ended June 30, 2001. Operations in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. by Cancoil's 75 percent-owned subsidiary, Technicoil Integrated Services Inc. also began in the past year. Three of the eight coil tubing rigs were operating in the United States for Technicoil as at June 30, 2001. Cancoil continues its efforts to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. its revenue stream both on the basis of type of service offered and geographical ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. through its expansion into the United States. In addition to its historical strength in coil tubing well fracturing, revenue is now being generated by conventional vertical drilling and under balanced directional drilling Directional drilling (sometimes known as slant drilling outside the oil industry) is the science of drilling non-vertical wells. Directional drilling can be broken down into three main groups: Oilfield Directional Drilling, Utility Installation Directional Drilling (commonly projects.
Cancoil Integrated Services Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS (DEFICIT)
(unaudited)
Six Months Ended Three Months Ended
June 30, May 31, June 30, May 31,
2001 2000 2001 2000
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Coil tubing drilling and
service revenue $9,621,237 $1,191,219 $5,348,603 $702,891
Expenses:
Operating 5,249,268 746,312 2,271,022 468,923
General and
administrative 1,118,004 320,753 593,834 226,596
Amortization 595,189 117,163 300,885 68,021
Interest on
long-term debt 326,654 83,270 177,582 38,662
(Gain) on sale of
fixed assets (189,749) - (189,749) -
Other expenses (income) (15,127) (29,971) 40,393 (17,763)
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7,084,239 1,237,527 3,193,967 784,439
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Net income before non-
controlling interest 2,536,998 (46,308) 2,154,636 (81,548)
Non-controlling interest
in net (income) loss of
subsidiary (152,010) 11,760 (71,317) 11,760
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Net income before income
tax 2,384,988 (34,548) 2,083,319 (69,788)
Income tax expense
Current 379,615 - 379,615 -
Future 691,626 - 638,100 -
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1,071,241 - 1,017,715 -
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Net income for the period 1,313,747 (34,548) 1,065,604 (69,788)
Retained earnings
(deficit), beginning
of period 494,278 (21,142) 742,421 14,098
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Retained earnings
(deficit), end of
period $1,808,025 $(55,690)$1,808,025 $(55,690)
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Net earnings per share
Basic $0.048 $(0.002) $0.039 $(0.003)
Diluted $0.035 $(0.002) $0.029 $(0.003)
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Revenue Analysis by Six months ended Six months ended
Type of Activity June 30, 2001 May 31, 2000
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Canada
Fracturing $4,193,796 $1,059,549
Re-entry drilling 393,907 131,670
Conventional drilling 1,741,865 -
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Total Canada 6,329,568 1,191,219
United States
Fracturing 2,124,928 -
Re-entry drilling 420,390 -
Conventional drilling 746,351 -
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Total United States 3,291,669 -
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Consolidated revenue $9,621,237 $1,191,219
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Cancoil Integrated Services Inc.
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
Six Months Ended Three Months Ended
June 30, May 31, June 30, May 31,
2001 2000 2001 2000
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Cash provided by (used in):
Operating activities:
Net income $1,313,747 $(34,548) $1,065,604 $(69,788)
Add (deduct) non-cash
items
Amortization 595,189 117,163 300,885 68,021
Future income tax 614,447 - 638,100 -
Non-controlling
interest 152,010 (11,760) 71,317 (11,760)
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Cash flow from
operations 2,675,393 70,855 2,075,906 (13,527)
Change in non-cash
working capital (2,461,168) (152,565) (1,975,323) (218,618)
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214,225 (81,710) 100,583 (232,145)
Financing activities:
Common shares and
warrants issued 216,866 2,832,113 25,000 2,832,113
Increase (decrease)
in long-term debt 1,795,525 (172,697) 1,708,962 (103,438)
Convertible debenture 1,500,000 - 1,500,000
Contributed by non-
controlling
shareholder of
subsidiary - 87,947 - 87,947
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2,012,391 4,247,363 1,733,962 4,316,622
Investing activities:
Acquisition of
capital assets (2,817,958) (2,142,800) (1,114,825) (1,647,683)
Book value of asset
sold 714,724 - 714,724 -
Payments on capital
assets under
Construction (1,004,552) (2,224,906) (900,656) (2,224,906)
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(3,107,786) (4,367,706) (1,300,757) (3,872,589)
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Net decrease in cash
and cash equivalents (881,170) (202,053) 533,788 211,888
Cash and cash
equivalents (bank
operating loan net
of cash), beginning
of period (160,179) 1,895,152 (1,575,137) 1,481,211
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Cash and cash
equivalent (bank
operating loan net
of cash), end of
period $(1,041,349) $1,693,099 $(1,041,349) $1,693,099
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Cash flow from
operations per
share
Basic $0.098 $0.003 $0.076 $(0.001)
Diluted $0.072 $0.003 $0.056 $(0.001)
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After a strong start in January January: see month. 2001, Cancoil's utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be rates dropped in February February: see month. and March due to spring break-up break-up noun 1. separation, split, divorce, breakdown, ending, parting, breaking, splitting, wind-up, rift, disintegration, dissolution, termination noun 2. in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and customer project delays. On April 1st Cancoil began delivering its coil tubing service to Halliburton For other uses, see Haliburton. Halliburton Energy Services (NYSE: HAL) is an United States based multinational corporation with operations in over 120 countries. It has been at the forefront of several media and political controversies in relation to its work for the U. Energy Services under the agreement announced on March 26, 2001. The combination of work for Halliburton and high utilization of the balance of the fleet improved utilization in the April to June period. Overall the fleet utilization rate was 64 percent for the six months and 80 percent for the quarter ended June 30, 2001. Financial Summary Revenue for the six-month period ended June 30, 2001 increased 708 percent compared to the six months ended May 31, 2000. Net income was $1,313,747 for the six months ended June 30, 2001 compared to a loss of $34,548 for the six-month period ended May 31, 2000. Increased revenue is due to the growth in the rig fleet from an average of just over one rig in 2000 to eight working in 2001. Cancoil's gross operating margin improved from 37 percent in the six-month period ended May 31, 2000 to 45 percent for the six-months ended June 30, 2001. The margin improvement combined with higher revenue to produce the large improvement in net income. A one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. gain from the sale of a nitrogen nitrogen (nī`trəjən), gaseous chemical element; symbol N; at. no. 7; at. wt. 14.0067; m.p. −209.86°C;; b.p. −195.8°C;; density 1.25 grams per liter at STP; valence principally −3, +3, or +5. pumping unit in the second quarter of 2001 of $189,749 also contributed to the increased income when comparing the two periods. On a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. per share basis net income was $0.035 for the first six months of 2001 compared to $(0.001) for the six months ended May 31, 2000. Comparing the second quarter of 2001 with the first quarter, revenue was up 25 percent and net income increased 329 percent. The higher revenue was due to higher utilization rates in the second quarter attributed to the initiation initiation, the transition and attendant ceremonies, such as ordeals and rites, involved in passing from one state or status to another, often from childhood to adulthood. It was among the most important social institutions of early humans. of work for Halliburton under the previously announced contract. Gross operating margins in the second quarter improved to 58 percent compared to 30 percent in the first quarter. The first quarter margins were negatively impacted by down time due to spring break-up and one time costs related to opening the new Medicine Hat field office. On an ongoing basis management budgets overall gross operating margins in the 45 to 50 percent range. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were up 603 percent for the first half of 2001 compared to the six months ended May 31, 2000 due to the larger fleet. General and administrative expenses were up 249 percent comparing the six months ended June 30, 2001 to the six months ended May 31, 2000. On a percent of revenue basis, general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. were 12 percent for the six months ended June 30, 2001 compared to 27 percent for the six months ended May 31, 2000. The larger rig fleet and higher revenue base has caused a reduction in administrative costs as a percent of revenue despite the large increase in overall costs. The second quarter general and administrative costs were up 13 percent compared with the first quarter of 2001. As a percent of revenue general and administrative costs improved to 11 percent in the second quarter compared to 12 percent in the first quarter of 2001. Amortization expense increased significantly for the six months ended June 30, 2000 compared to the six months ended May 31, 2000 due to the large amount of capital investment made in the past year to expand the rig fleet from one to eight. Similarly, interest expense increased 292 percent comparing the six months ended June 30, 2001 to the six months ended May 31, 2000 as a portion of the capital program was financed by bank debt. Assets and Liabilities June 30, 2001 balance sheet comparisons are made to the December 31, 2000 balance sheet. Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and accounts payable were up 106 percent and 12 percent respectively comparing June 30, 2001 balances with December 31, 2000. The increases are due to a larger rig fleet working at the end of June 2001 compared to the last quarter of 2000 as the Company took delivery of two rigs late in the last quarter of 2000. Working capital at June 30, 2001 was 1.2:1 compared to a deficit position of .8:1 at the end of last year. Increased revenues and cash flows in the first half of 2001 combined with a term financing of the Medicine Hat field office has enabled the Company to return to a positive working capital position. Total long-term debt increased 24 percent at June 30, 2001 compared to December 31, 2000 as capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. in the first six months was greater than cash flows and was financed by an increase in long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. bank debt. Cancoil's debt/equity was 65 percent at June 30, 2001 compared to 58 percent at December 31, 2000, up 12 percent. Outlook Cancoil will continue with its aggressive growth plans for the balance of 2001 and into 2002. Bank facilities are in place that combined with cash flows are expected to comfortably finance the capital program to increase the fleet to a total of 16 rigs. On July July: see month. 19 the Company announced that it would build a new generation Cancoil rig for the final four rigs of the commitment to reach 16 rigs in 2002. The design process of the new style rigs will delay delivery of these final four rigs by an average of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. one month. The delay is not expected to materially affect financial results for 2002. One drilling mud Noun 1. drilling mud - a mixture of clays and chemicals and water; pumped down the drill pipe to lubricate and cool the drilling bit and to flush out the cuttings and to strengthen the sides of the hole drilling fluid system was completed in the second quarter and immediately went to work on a drilling project for Technicoil. A second mud (MultiUser Dungeon, MultiUser Dimension, MultiUser Dialogue) Interactive games played by several people at a time on the Internet. system was completed in July and will work on Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. drilling projects beginning in August. The first of four new rigs based on the current Cancoil design was delivered late in July 2001. The remaining three are scheduled for delivery by early September September: see month. . Cancoil's agreement with Halliburton is expected to provide a strong base of operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. and reduce the company's risk profile over the next nine months as the company completes the current capital program to expand its fleet. Current debt levels are higher than management's long-term targets. Expected increases in revenue and cash flow as the expanded fleet is put to work is expected to deliver strong growth while enabling Cancoil to reduce its debt load and maintain the Company's financial flexibility. The Canadian Venture Exchange The Canadian Venture Exchange (CDNX) is now a defunct stock exchange having been acquired by the TSX Group in 2001 and renamed the TSX Venture Exchange. History of the Canadian Venture Exchange (CDNX) Inc. has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. |
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