Cancoil Integrated Services Inc. Releases Third 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)--Nov. 5, 2001 Cancoil (CDNX CDNX See Canadian Venture Exchange (CDNX). :CAN.)
Nine Months Ten Months Three Months Four Months
Ended Ended Ended Ended
September September September September
30, 2001 30, 2000(2) 30, 2001 30, 2000(2)
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Average number of
rigs 8.3 2.2 8.8 3.8
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Revenue $17,373,173 $3,966,251 $7,751,936 $2,775,032
Gross margin $8,437,430 $2,097,257 $4,065,461 $1,652,350
Gross margin
percent 49% 53% 52% 59%
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Net income $3,221,227 $788,584 $1,907,480 $823,132
Net income per
share(1) $0.088 $0.030 $0.053 $0.026
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EBITDA $6,958,080 $1,222,931 $3,514,366 $1,098,777
EBITDA per share(1) $0.190 $0.046 $0.970 $0.035
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Cash flow $5,333,737 $1,055,909 $2,848,093 $985,054
Cash flow per
share(1) $0.146 $0.040 $0.079 $0.031
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Long-term debt vs.
Dec. 31 2000 $9,535,516 $7,278,229 $9,535,516 $7,278,229
Long-term debt to
equity 60% 58% 60% 58%
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Shares outstanding 27,281,667 27,121,667 27,281,667 27,121,667
Shares outstanding
diluted 42,337,850 34,971,667 42,337,850 34,971,667
Weighted average
shares - diluted,
treasury stock
method 36,582,053 26,438,209 36,217,454 31,395,967
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(1)Per share figures are on a weighted average 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. basis using the treasury stock method (2)Cancoil changed its fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. during 2000 from May 31 to December December: see month. 31. To align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. reporting periods the September September: see month. 2001 quarter end is compared to the four month period ended September 30, 2000 and the nine-month period is compared to ten months ended September 30, 2000. 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. produced record financial and operating results in the third quarter of 2001. Net income for the nine months ended September 30, 2001 was up 308 percent to $3.2 million or $0.088 per share compared to $0.03 per share for the ten months ended September 30, 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 265 percent on a per share basis comparing the first three quarters 2001 with the ten months ended September 30, 2000. The improved results were driven by a fourfold fourfold Adjective 1. having four times as many or as much 2. composed of four parts Adverb by four times as many or as much Adj. 1. increase in the coil tubing rig fleet while strong gross operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: held. With an aggressive fleet expansion program, 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 by 30 percent or $2.2 million in the first nine months of 2001. However the overall long-debt to equity ratio increased only two percent to 60 percent at the end of September 2001 compared to December 31, 2000. Comparing the third quarter of 2001 with the second quarter shows a solid revenue increase of 45 percent. Net income was up 79 percent as gross operating margins remained strong and general and administrative and interest costs as a percent of revenue declined significantly compared to the second quarter. Operations Cancoil's financial results reflect continued growth in the company rig fleet and operations when comparing results for the first nine months of 2001 with the ten months ended September 30, 2000. The rig fleet grew from an average of 2.2 rigs in the ten months ended September 30, 2000 to 8.3 rigs for the nine-month period ended September 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. also began in the past year under Technicoil, a 75 percent owned subsidiary. Overall at the end of September 2001 the company was operating ten coil tubing rigs three of which were working in the United States. Cancoil moves rigs between Canada and the United States The United States and Canada share a unique legal relationship. U.S. law looks northward with a mixture of optimism and cooperation, viewing Canada as an integral part of U.S. economic and environmental policy. as customer needs require. 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 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. The third quarter of 2001 was Cancoil's strongest to date. 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. An average of seven rigs were dedicated to work for Halliburton under the alliance agreement between Halliburton and Cancoil during the third quarter resulting in high fleet 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 . Overall the utilization rate was 94 percent for the three months ended and 75 percent for the nine months ended September 30, 2001.
Revenue Analysis by Nine months ended Ten months ended
Type of Activity September 30, 2001 September 30, 2000
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Canada
Fracturing $8,258,582 $3,604,353
Re-entry drilling 386,157 272,529
Conventional drilling 2,502,211 -
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Total Canada 11,146,950 3,876,882
United States
Fracturing 3,887,345 89,639
Re-entry drilling 412,109 -
Conventional drilling 1,926,769 -
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Total United States 6,226,223 89,639
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Consolidated revenue $17,373,173 $3,966,251
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Management Discussion and Analysis Financial Summary Revenue for the nine-month period ended September 30, 2001 increased 338 percent compared to the ten months ended September 30, 2000. Net income of $3,221,227 was up 308 percent comparing the nine months ended September 30, 2001 to the ten months ended September 30, 2000. The increased revenue was due to growth in the rig fleet from an average of just over two rigs in 2000 to more than eight rigs working in the 2001 period. Cancoil's gross operating margin was 49 percent for the nine-month period ended September 31, 2001 compared to 53 percent for the ten-months ended September 30, 2000. These operating margins remain near the high end of management's planning assumption of 45 to 50 percent as the majority of revenue in both periods was from higher margin coil fracturing work. General and administrative expenses as a percent of revenue declined to 10 percent in the nine month period ended September 30, 2001 compared to 11 percent for the ten month period ended September 30, 2000 as the higher revenue base in 2001 provided greater economies of scale for Cancoil's administrative support. A one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. gain of $189,749 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 also contributed to 2001 income when comparing the two periods. On a diluted per share basis net income was $0.088 for the first nine months of 2001 compared to $0.030 for the ten months ended September 30, 2000 up 193 percent as additional shares were issued in the past year offsetting some of the income increase when measured on a per share basis. Comparing the third quarter of 2001 with the second quarter, revenue was up 45 percent and net income increased 79 percent. The higher revenue was due to a higher number of rigs in the third quarter and more rigs working under the Halliburton agreement resulting in high utilization rates for the growing fleet. Gross operating margins in the third quarter remained high at 52 percent compared to 58 percent in the second quarter. The higher percent increase in net income compared to the revenue increase was due to lower general and administrative expenses in the third quarter at 7 percent of revenue compared to 11 percent in the second quarter due to economies of scale. In addition, third quarter percent increases in amortization and interest expense were both much lower than the revenue increase contributing to the higher increase in net income. Cash flow offset much of the capital additions during the third quarter resulting in a small increase in long-term debt and interest expense during the third quarter. Amortization expense increased 207 percent for the nine months ended September 30, 2001 compared to the ten months ended September 30, 2000 due to the large amount of capital investment made in the past year to expand the rig fleet from one to ten. Similarly, interest expense increased 117 percent comparing the nine-month period ended September 30, 2001 to the ten months ended September 30, 2000 as a portion of the capital program was financed by an increase in bank debt. Assets and Liabilities 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 164 percent and 182 percent respectively comparing September 30, 2001 balances with December 31, 2000. The increases are due to a larger rig fleet and higher work volume at the end of September 2001 compared to the last quarter of 2000. The company exited 2000 with eight rigs and had 10 rigs at the end of the third quarter of 2001. Working capital at September 30, 2001 was in a deficit position of 0.8:1 the same level as at the end of last year. Deposits of $2.3 million on two new rigs for delivery in 2002 were made in the third quarter that stretched working capital through the quarter end. During October October: see month. $900,000 of the deposits were financed under the term bank debt facility. In addition, Cancoil's major shareholder exercised the outstanding class "A" warrants for cash consideration of $1.5 million on October 22, 2001. The term financing and warrant payment combined with ongoing cash receipts returned the company to a positive working capital position by the end of October. The remaining payments on the new rigs will be financed under the term bank debt facility. Total long-term debt increased 30 percent at September 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 nine 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 60 percent at September 30, 2001 compared to 58 percent at December 31, 2000, up only 3 percent. Outlook In August of 2001 Cancoil announced that it would reduce its 2002 capital plan to build two additional new generation rigs rather than the originally planned four rigs. The two rigs will bring Cancoil's total to 14 rigs by mid- mid- pref. Middle: midbrain. 2002. Cancoil has opted to conduct a more conservative capital plan in light of lower prices for oil and natural gas and uncertainty in customer spending plans. Bank facilities are in place that combined with cash flows are expected to comfortably finance the reduced capital program in a slower business scenario A scenario (from Italian, that which is pinned to the scenery) is a synthetic description of an event or series of actions and events. In the Commedia dell'arte . Management is committed to maintaining maximum financial flexibility in the event our customers scale back their spending. In addition to the two additional rigs to be delivered in the second quarter of 2002 Cancoil is building a third integrated 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 for delivery before the end of 2001 to support drilling contracts in place for early 2002. Three quarters of Cancoil's fleet is currently working under the Halliburton agreement providing 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. over the next six months. The remaining rigs in the fleet are expected to see lower utilization rates for the balance of the year as customers have scaled back their plans for drilling shallow This article or section may contain original research or unverified claims. Please help Wikipedia by adding references. See the for details. This article has been tagged since October 2007. Shallow means not very deep. gas wells in the fourth quarter. The 2002 winter drilling season still appears to be an active one. Looking ahead to the first quarter of 2002 we have drilling contracts in place that will deliver solid utilization rates through to break-up break-up noun 1. separation, split, divorce, breakdown, ending, parting, breaking, splitting, wind-up, rift, disintegration, dissolution, termination noun 2. for the portion of the rig fleet not dedicated to working with Halliburton.
Cancoil Integrated Services Inc.
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2001 2000
(unaudited)
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ASSETS
Current assets:
Cash $726,690 -
Accounts receivable 6,519,894 $2,469,302
Prepaid expenses and other 475,592 237,948
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7,722,176 2,707,250
Due from shareholder 60,000 60,000
Fixed assets under construction 5,784,882 4,417,337
Capital assets - net 20,741,971 14,533,884
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$34,309,029 $21,718,471
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank operating loan $3,000,000 $160,179
Accounts payable and accrued liabilities 4,339,913 1,539,266
Current portion of long-term debt 2,337,979 1,470,729
Deferred revenue - 100,232
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9,677,892 3,270,406
Long-term debt 5,697,537 4,307,500
Convertible debenture 1,500,000 1,500,000
Future income taxes 1,171,710 65,341
Non-controlling interest 290,713 40,039
Shareholders' equity
Capital stock 12,255,672 12,040,907
Retained earnings 3,715,505 494,278
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15,971,177 12,535,185
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$34,309,029 $21,718,471
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Cancoil Integrated Services Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
(unaudited)
Nine Months Ten Months Three Months Four Months
Ended Ended Ended Ended
September September September September
30, 2001 30, 2000 30, 2001 30, 2000
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Coil tubing
drilling and
service revenue $17,373,173 $3,966,251 $7,751,936 $2,775,032
Expenses:
Operating 8,935,743 1,868,994 3,686,475 1,122,682
General and
administrative 1,669,099 874,326 551,095 553,573
Amortization 945,216 308,875 350,027 191,712
Interest on
long-term debt 511,351 235,992 184,697 152,722
(Gain) on sale
of fixed assets (189,749) - - -
Other income (19,461) (68,970) (4,334) (38,999)
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11,852,199 3,219,217 4,767,960 1,981,690
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Net income before
income tax 5,520,974 747,034 2,983,976 793,342
Income tax expense
Current 865,525 - 485,910 -
Future 1,183,548 - 491,922 -
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2,049,073 - 977,832 -
Net income before
non-controlling
interest 3,471,901 747,034 2,006,144 793,342
Non-controlling
interest in net
(income) loss of
subsidiary (250,674) 41,550 (98,664) 29,790
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Net income for
the period 3,221,227 788,584 1,907,480 823,132
Retained earnings
(deficit),
beginning of
period 494,278 (21,142) 1,808,025 (55,690)
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Retained earnings,
end of period $3,715,505 $767,442 $3,715,505 $767,442
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Net earnings per share
Basic $0.118 $0.033 $0.070 $0.030
Diluted $0.088 $0.030 $0.053 $0.026
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Cancoil Integrated Services Inc.
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
Nine Months Ten Months Three Months Four Months
Ended Ended Ended Ended
September September September September
30, 2001 30, 2000 30, 2001 30, 2000
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Cash provided by (used in):
Operating
activities:
Net income $3,221,227 $788,584 $1,907,480 $823,132
Add (deduct)
non-cash items
Amortization 945,216 308,875 350,027 191,712
Future income
tax 1,106,369 - 491,922 -
Gain on sale
of asset (189,749) - - -
Non-controlling
interest 250,674 (41,550) 98,664 (29,790)
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Funds flow from
operations 5,333,737 1,055,909 2,848,093 985,054
Change in non-cash
working capital (1,587,821) 1,226,575 873,347 1,379,140
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3,745,916 2,282,484 3,721,440 2,364,194
Financing activities:
Common shares
and warrants
issued 214,765 2,872,113 (2,101) 40,000
Increase in
long-term debt 2,257,287 901,415 461,762 1,074,112
Convertible
debenture - 1,500,000 - -
Contribution by
non-controlling
shareholder of
subsidiary - 87,947 - -
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2,472,052 5,361,475 459,661 1,114,112
Investing
activities:
Acquisition of
capital assets (7,868,027) (6,215,445) (5,050,069) (4,072,645)
Proceeds from
asset sold 904,473 - - -
Capital assets
under
construction (1,367,545) (1,331,180) (362,993) 893,726
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(8,331,099) (7,546,625) (5,413,062) (3,178,919)
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Net increase
(decrease) in
cash and cash
equivalents (2,113,131) 97,334 (1,231,961) 299,387
Cash and cash
equivalents
(bank operating
loan net of
cash), beginning
of period (160,179) 1,895,152 (1,041,349) 1,693,099
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Cash and cash
equivalent (bank
operating loan
net of cash),
end of period $(2,273,310) $1,992,486 $(2,273,310) $1,992,486
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Funds flow from
operations per
share
Basic $0.196 $0.044 $0.104 $0.036
Diluted $0.146 $0.040 $0.079 $0.031
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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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