NOT FOR DISTRIBUTION INTO THE UNITED STATES OR TO UNITED STATES WIRE SERVICES
Technicoil Corporation ("Technicoil" or the "Corporation") (TSX:TEC) is pleased
to announce record quarterly results for the three month period ended March 31,
2011. The Corporation reported revenue and EBITDA(1) of $34.8 million and $11.5
million, respectively. Robust activity levels in both the Well Servicing and the
Drilling segment contributed to the Corporation realizing record net income of
$4.3 million, or $0.06 per share, for the quarter.
Technicoil is an oilfield services company operating in the Western Canadian
Sedimentary Basin ("WCSB"). The Corporation's business is conducted through two
segments: Well Servicing and Drilling.
SELECT FINANCIAL & OPERATING INFORMATION
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($ thousands, except per share data) Three months ended March 31
(unaudited) 2011 2010 % Change
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Revenue $ 34,760 $ 24,521 42%
Gross margin $ 12,483 $ 8,288 51%
Gross margin % 36% 34% 6%
General and administrative expenses $ 1,035 $ 871 19%
EBITDA(1) $ 11,456 $ 7,423 54%
Net income $ 4,314 $ 3,433 26%
Per share - basic $ 0.06 $ 0.05 20%
Per share - diluted $ 0.06 $ 0.05 20%
Funds flow from operations(1) $ 11,448 $ 7,422 54%
Well servicing operating hours 25,634 17,902 43%
Drilling operating days 341 312 9%
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(1) See 'FINANCIAL MEASURES RECONCILIATIONS" for the Corporation's
definitions of these measures.
OVERVIEW OF RESULTS
Technicoil achieved record quarterly results in the first quarter of 2011, with
both operating segments contributing to the improvement in comparison with the
same period of the prior year. The ability to leverage the diversity of the
Corporation's service offering across the WCSB contributed to the strong
results. Technicoil's achievements during the first quarter included:
-- Achieved record quarterly revenue and EBITDA of $34.8 million and $11.5
million, respectively, on 25,634 well servicing operating hours and 341
drilling operating days;
-- Improved gross margin by 51% in comparison with the first quarter of the
prior year. Gross margin for the first quarter of 2011 was $12.5 million
or 36% of revenue in comparison with $8.3 million or 34% of revenue in
the first quarter of the prior year;
-- Increased utilization in the Well Servicing Segment, achieving record
quarterly operating hours for this segment of 25,634 as a result of
rigless completions and drilling support for steam assisted gravity
drainage ("SAGD") operations by the coiled tubing rig fleet, and
conventional well services performed by the Storm Service Rigs fleet;
-- Adapted to the shifting focus of exploration and development companies
towards oil resulting in the hybrid drilling rig fleet exclusively
servicing oil opportunities during the period;
-- Reported record quarterly net earnings of $4.3 million or $0.06 per
share;
-- Remained debt-free with no drawings against either the operating or
long-term debt facilities, exiting the quarter with positive working
capital of $12.3 million, including $0.4 million of cash, providing
financial flexibility to facilitate the Corporation's capital program;
-- Commenced operations of the Corporation's pumping division within the
Well Servicing Segment; and
-- Announced a $20.4 million capital program for 2011, including $12.4
million for further expansion of the Corporation's pumping division.
Effective January 1, 2011, Technicoil began reporting its financial results in
accordance with International Financial Reporting Standards ("IFRS"). The
Corporation's accounting policies have changed and the presentation, financial
statement captions and terminology used in this MD&A and the accompanying
unaudited financial statements differ from those used in previously issued
financial statements and quarterly and annual reports. The new policies have
been consistently applied to all years presented in this MD&A and all prior
period information has been restated or reclassified for comparative purposes
unless otherwise noted. Further details on the conversion to IFRS are provided
in this MD&A and in the notes to the unaudited consolidated financial statements
as at and for the quarter ended March 31, 2011.
Activity in the oil and gas services industry remained robust in the first
quarter of 2011 as a result of strong crude oil commodity prices and access to
capital. Drilling utilization in the WCSB averaged 67% as reported by the
Canadian Association of Oilwell Drilling Contractors ("CAODC"), resulting in
3,889 wells being drilled in the WCSB. In comparison with the first quarter of
the prior year, the number of wells drilled increased by 7%, however on a
"meters-drilled" basis, activity increased by 15%. Exploration and development
companies continue to invest in oil prospects due to high commodity prices and
exploitable formations using horizontal drilling and multi-stage fracturing. The
continued shift in the typical well profile towards horizontal wells with
multi-stage fracs will benefit service companies, such as Technicoil, with rig
fleets that are capable of servicing these longer reach wells.
Subsequent to the end of the quarter, the Corporation and Essential Energy
Services Ltd. ("Essential") announced that they have entered into a definitive
arrangement agreement providing for the combination of their businesses. The
combination will be effected by way of a plan of arrangement (the "Arrangement")
under the Business Corporation Act (Alberta) whereby Technicoil shareholders
will receive 0.7111 of a common share of Essential and $0.80 cash for each
Technicoil common share held. The transaction is an ideal opportunity to combine
Technicoil's business with a significant industry service provider, creating a
company that will be a leader in the growing coiled tubing well services sector.
The combined entity will represent the largest independent provider of coiled
tubing and nitrogen well services in Canada, including the most versatile masted
coiled tubing rig fleet available. Together with Essential's multi-stage
fracturing system, the combined entity will be a leader in the market for
completions and work-overs on horizontal wells. The combined entity will operate
the sixth largest conventional well service rig fleet in Western Canada.
OUTLOOK
Activity levels in the WCSB remained robust in the first quarter of 2011.
Industry groups are forecasting approximately 13,000 wells to be drilled in the
WCSB in 2011, up from 12,112 in 2010. The type of wells being drilled has
resulted in an increase in the average number of days to drill a well. Oil
development is anticipated to dominate activity as a result of the relative
strength of crude oil prices in comparison with natural gas prices.
Technicoil continues to seize market opportunities. The Corporation's versatile
masted coil tubing rigs are well suited to provide rigless completion services
to the growing trend of horizontal wells with multi-stage fracturing techniques.
These rigs actively service the key resource plays, both oil and natural gas,
across the entire WCSB. Complementing these rigs is the continued expansion of
the Corporation's pumping services. In March 2011, Technicoil announced a
capital budget of $20 million, including $12.4 million pertaining to additional
pumping equipment to complement the rigless completion activities of the coil
tubing rig fleet. The conventional service rig fleet is also capitalizing on the
changing trends in the market, which encompasses providing 24 hour operations in
the oil sands. Technicoil's drilling rigs were active first quarter of 2011,
providing coring in the oil sands and heavy oil drilling programs. While the oil
sands coring activity is generally winter-access only, continued strength in
crude oil prices and growing demand for the development and exploitation of
heavy oil prospects provides a positive indicator that activity for the
Technicoil's drilling rigs will be more active post spring break-up than in
recent years.
FINANCIAL AND OPERATING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
REVENUE
The Corporation reported revenue of $34.8 million for the three month period
ended March 31, 2011, surpassing its highest quarter ever reported in the fourth
quarter of 2010. In comparison with the first quarter of the prior year, revenue
increased by 42%. Both the Well Servicing Segment and the Drilling Segment
contributed to the improvement, recording revenue increases of 46% and 27%,
respectively. Revenue rates during the quarter averaged $1,097 per operating
hour for the Well Servicing Segment and $19,449 per operating day for the
Drilling Segment.
The Well Servicing Segment achieved record quarterly operating hours of 25,634,
representing an increase of 43% in comparison with the first quarter of 2010.
The significant increase in operating hours is primarily a result of a greater
proportion of the coiled tubing service rig fleet operating 24 hours per day
resulting in higher utilization. The Corporation had 15 coiled tubing service
rigs staffed and capable of operating 24 hours per day during the first quarter
of 2011 in comparison with approximately nine in the first quarter of the prior
year. The majority of operations performed by the coil tubing service rig fleet
include rigless completions of multi-stage horizontal wells, both oil and gas,
and support for steam assisted gravity drainage ("SAGD") drilling operations. A
significant shift in the operational focus of the coiled tubing rigs occurred in
comparison with the same period of the prior year, with the majority of
equipment operating in oil plays as exploration and development companies shift
their resources to oil developments. Utilization of the Corporation's
conventional service rig fleet was consistent with the prior year, exceeding
industry average. This fleet has also shifted towards oil opportunities,
including the oil sands, with certain rigs operating 24 hours per day. Activity
levels improved for the Drilling Segment, which recorded 341 operating days in
the first quarter of 2011 in comparison with 312 operating days for the same
period of the prior year. Activity for the drilling fleet was focused on heavy
oil developments and coring in the oil sands during the quarter.
GROSS MARGIN
Technicoil realized a record gross margin of $12.5 million in the first quarter
of 2011, an increase of 51% in comparison with the same period of the prior
year. The improvement in gross margin is a result of higher utilization across
both the Well Servicing and Drilling segments and an improvement in pricing
fundamentals. As a percentage of revenue, gross margin improved to 36% from 34%
in the same period of the prior year.
GENERAL AND ADMINISTRATIVE EXPENSE AND SHARE BASED PAYMENTS EXPENSE
General and administrative ("G&A") expense was $1.0 million for the three months
ended March 31, 2011 in comparison with $0.9 million for the comparable period
of the prior year. The increase is primarily attributable to costs incurred
pertaining to the proposed Arrangement to combine the businesses of Technicoil
and Essential, and an increase in office and related overhead costs. As a
percentage of revenue, G&A expense decreased from 3.6% of revenue in the first
quarter of 2010 to 3.0% in the current quarter.
The Corporation recorded a share based payments expense of $2.5 million in the
first quarter of 2011 as a result of revaluing the liability pertaining to
outstanding options as at March 31, 2011. As at March 31, 2011, the Corporation
had 3,869,999 options outstanding.
EBITDA
The impact of the above items resulted in the Corporation achieving record
quarterly EBITDA of $11.5 million in the first quarter of 2011, or 33% of
revenue, an increase from $7.4 million, or 30% of revenue, for the same period
of the prior year. The primary driver of the improvement in EBITDA is the
continued geographic expansion of rigless completions by the coil tubing service
rigs, operating 24 hours per day, resulting in higher operating hours. Improved
results of both the conventional service rigs and drilling rig fleets also
contributed to the improvement.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense was $2.2 million in the first quarter of
2011, a decrease from $2.5 million for the same period of the prior year. The
decrease is a result of intangible assets becoming fully amortized in the third
quarter of 2010, and lower depreciation expense on older equipment more than
offsetting the impact on depreciation of the net capital expenditure programs.
OTHER ITEMS
Net financing costs were less than $0.1 million in the first quarter of 2011, a
decrease from $0.2 million in comparison with the same period of the prior year.
The reduction is primarily a result of the Corporation having fully repaid its
long-term debt facility in May 2010. The net financing costs relate primarily to
standby fees on the unutilized portion of the banking facilities and
amortization of the annual facility renewal costs.
The Corporation recorded income tax expense of $2.4 million in the first quarter
of 2011 in comparison with $1.2 million in the comparable period of the prior
year. The effective tax rate for the quarter of 36% is higher than the statutory
rate primarily as a result of non-deductible permanent differences, including
the share based payments expense.
Technicoil reported record quarterly net income of $4.3 million, or $0.06 per
share, for the three months ended March 31, 2011, an increase from $3.4 million,
or $0.05 per share, for the same period of the prior year. The significant
improvement in comparison with the same period of the prior year is primarily a
result of the record quarterly operating hours achieved by the Well Servicing
Segment, improved pricing fundamentals and cost efficiencies.
SEGMENTED RESULTS
WELL SERVICING SEGMENT
The Well Servicing Segment provides coiled tubing and conventional service rigs
to the WCSB. Well Servicing is the largest segment of the Corporation. The key
performance indicators for this segment include rig utilization, revenue and
gross margin percentage. At March 31, 2011, the Corporation had a modern rig
fleet comprised of 17 coil tubing service rigs and nine conventional service
rigs, with an average age of approximately five years. In addition, the
Corporation has two TMX Xcelerator units. The Xcelerator units are used to pull
and replace continuous rod strings in wells. The operational footprint of the
Well Servicing Segment spans the key resource plays in the WCSB from
northeastern British Columbia to southwestern Manitoba.
The Corporation commenced its pumping operations in the first quarter of 2011.
The pumping equipment will initially complement the Corporation's rigless
completion activities performed by the coiled tubing service rigs in the
resource plays. One pumping unit began operations during the quarter, while four
additional units will be field ready after spring break-up. The Corporation
intends to invest an additional $12.4 million in the pumping operation in 2011
enabling the majority of its coiled tubing service rig fleet to provide a more
comprehensive service offering.
The Corporation's coil tubing service rigs are capable of servicing the
horizontal wells that dominate activity in the WCSB. This equipment provides
services such as rigless completions and various other well services performed
on new oil and gas wells, such as the setting of plugs, perforations and drill
outs. The Corporation also deploys its coil tubing service rigs in SAGD drilling
operations in addition to offering the traditional fracturing through coil
applications. The Corporation's modern fleet of conventional service rigs
provides services such as completions, production work, work overs and
abandonments.
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Three months ended March 31
($ thousands except for revenue %
per operating hour)(unaudited) 2011 2010 Variance Change
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Well servicing revenue $ 28,128 $ 19,314 $ 8,814 46%
Operating expenses 17,959 12,503 5,456 44%
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Gross margin $ 10,169 $ 6,811 $ 3,358 49%
Gross margin % 36% 35% 1% 3%
Operating hours 25,634 17,902 7,732 43%
Revenue per operating hour $ 1,097 $ 1,079 $ 18 2%
Number of wells serviced during
the period 612 510 102 20%
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The Well Servicing segment generated record quarterly revenue of $28.1 million
for the three months ended March 31, 2011, an increase of 46% in comparison with
the same period of the prior year. On a per hour basis, revenue increased
marginally to $1,097.
The significant improvement in revenue is largely attributable to a 43% increase
in operating hours. The Corporation's coiled tubing service rigs remain industry
leaders in providing completion services for multi-stage horizontal wells. With
continued robust crude oil prices, exploration and production companies continue
to shift their capital programs towards oil developments using horizontal
drilling and multistage fracturing. Technicoil responded by redeploying the
coiled tubing rigs to service primarily oil opportunities including the Bakken,
Shaunavon, and Cardium, while continuing to service, albeit at a lesser pace,
shale gas opportunities in northeastern British Columbia. Technicoil's fleet of
coiled tubing service rigs generally operate 24 hours per day. During the first
quarter of 2011, the Corporation commenced its complementary pumping operation,
displacing third party service providers Technicoil was previously reliant upon.
While only one of the initial five units was operational in the quarter, an
additional four units will be operational post spring break-up. Utilization of
the Corporation's conventional service rig fleet remained robust, with an
increased focus on oil opportunities including the oil sands where the
Corporation has one rig operating 24 hours per day. Technicoil's diversity
enabled the Corporation to service activity across the entire WCSB, resulting in
revenue generated from outside Alberta accounting for 62% of activity for the
Well Servicing segment, including 17% in British Columbia and 45% from the
combined Saskatchewan and Manitoba region.
Gross margin for the Well Servicing segment increased by 49% to $10.2 million or
36% of revenue in the first quarter of 2011 in comparison with $6.8 million or
35% for the same period of the prior year. The improvement in gross margin is a
result of increased utilization.
DRILLING SEGMENT
The Drilling Segment provides hybrid drilling rigs to the WCSB. Results of the
Drilling Segment tend to be more volatile than the Well Servicing Segment due in
part to seasonal restrictions on moving equipment and fluctuations in drilling
programs of exploration and production companies. The key performance indicators
for this segment include rig utilization, revenue and gross margin percentage.
At March 31, 2011, the Corporation had five drilling rigs available with an
average age of approximately five years. The Corporation's hybrid drilling rigs
are capable of drilling with both jointed pipe or coiled tubing. The majority of
activity for these rigs includes drilling shallow natural gas wells, heavy oil
wells, oil sands coring and shallow directional drilling.
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Three months ended March 31
($ thousands except for
revenue per operating
day)(unaudited) 2011 2010 Variance % Change
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Drilling revenue $ 6,632 $ 5,207 $ 1,425 27%
Operating expenses 4,318 3,730 588 16%
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Gross margin $ 2,314 $ 1,477 $ 837 57%
Gross margin % 35% 28% 7% 25%
Utilization %(1) 76% 58% 18% 31%
Operating days 341 312 29 9%
Revenue per operating day $ 19,449 $ 16,689 $ 2,760 17%
Number of wells drilled
during the period 86 149 (63) (42%)
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(1) Utilization % for the Corporation's drilling rigs is defined as the
number of spud to rig release days for the period divided by the number
of rig days for the period calculated from the date of possession.
Drilling rig utilization for the industry as reported by the CAODC averaged 67%
in first quarter of 2011, an increase from 52% in comparison with the same
period of 2010, resulting in 3,889 wells drilled (source: Nickle's Daily Oil
Bulletin) in the WCSB. The majority of drilling activity in the WCSB continues
to be directed towards deeper horizontal wells that the Corporation's rigs are
not capable of performing. Over the past five years, the average depth of a well
drilled in the WCSB has increased by 48% to 1,760 meters. Development activity
directed towards oil, including heavy oil and oil sands coring programs, are
increasing as a result of more sustainable oil commodity prices. These markets
are serviced by the Corporation's drilling rigs.
Technicoil recorded $6.6 million in revenue for the Drilling Segment in the
first quarter of 2011, an increase of 27% in comparison with the same period of
the prior year. The improvement in revenue is attributable to an increase in
operating days and improved pricing fundamentals. Revenue per operating day
increased from $16,689 to $19,449. The Corporation's revenue per operating day
includes revenues from supporting services, many of which are pass-through cost
items charged to the customer such as fuel and crew subsistence. The Corporation
recorded a gross margin of $2.3 million or 35% of revenue in comparison with
$1.5 million or 28% of revenue for the same period of the prior year. The
improvement in gross margin was a result of increased activity and improved
pricing fundamentals more than offsetting a marginal increase in per hour
operating costs. The Corporation had all five drilling rigs operating during the
quarter, with activity focused exclusively on oil plays including coring in the
oil sands.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's primary sources of liquidity and capital resources are funds
generated from continuing operations and banking facilities. The Corporation
expects to generate sufficient cash from operations to fund liabilities as they
become due and finance planned investing activity throughout 2011. Additional
liquidity, if necessary, is available under the Corporation's credit facilities.
The Corporation's credit facilities are comprised of a $4 million revolving
operating facility and a $21 million revolving term facility. The credit
facilities mature on May 27, 2011 and are extendable at the banks' option in May
of each year. To the extent the revolving term facility is not renewed, the
outstanding balance becomes repayable over a two year period, based on a two
year amortization schedule. The financial terms of the facilities enable the
Corporation to borrow by either floating prime rate based advances or through
Bankers' Acceptances in Canadian dollars. Depending on certain financial ratios,
the facilities bear interest at the bankers' prime rate plus 1.00% to 3.00% or
the bankers' acceptance rate plus a stamping fee of 2.50% to 4.25%. The credit
facilities require the Corporation to maintain certain covenants. The
Corporation was in compliance with the covenants at March 31, 2011 and as at May
9, 2011.
Technicoil's financial position is strong. The Corporation had no drawings
against either its operating facility or revolving term facility as at March 31,
2011 or December 31, 2010. As at May 9, 2011, Technicoil had 72,755,515 common
shares issued and outstanding.
Operating Activities
The Corporation generated cash flow from operating activities of $8.6 million in
the first quarter of 2011 compared with $4.9 million for the same period of the
prior year. Adjusting for changes in non-cash working capital, the Corporation
generated $11.4 million in funds flow during the period, an increase from $7.4
million in the comparable period of the prior year. Record operating hours by
the Well Servicing Segment, improved pricing fundamentals and cost efficiencies
contributed to the improvement.
Financing Activities
The Corporation issued 10,000 shares upon the exercise of stock options during
the first quarter of 2011 for nominal proceeds. Other financing transactions
during the period related to the amortization of transaction costs for loans and
borrowings and the payment of finance lease obligations, totaling $0.1 million
in aggregate.
Investing Activities
The Corporation invested $4.8 million in property, plant and equipment during
the first three months of 2011. The capital expenditures included $3.4 million
related to the pumping services capital program and other capital initiatives of
$1.4 million. During the quarter the Corporation disposed of underutilized and
redundant assets, generating proceeds of $40,000.
INTERNATIONAL FINANCIAL REPORTING STANDARDS
Effective January 1, 2011, the Corporation adopted International Financial
Reporting Standards. Although IFRS uses a conceptual framework similar to
Canadian GAAP, there are significant differences on recognition, measurement and
disclosures. The adoption of IFRS required the restatement, for comparative
purposes, of amounts reported by Technicoil for the year ended December 31,
2010, including the opening balance sheet as at January 1, 2010.
As a result of the policy choices selected by Technicoil, the Corporation
recorded a reduction in retained earnings of $6.6 million as at January 1, 2010.
The table below outlines the adjustment to retained earnings upon adoption of
IFRS on January 1, 2010, March 31, 2010 and December 31, 2010 for comparative
purposes.
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As at As at As at
January March 31, December
($ thousands)(unaudited) 1, 2010 2010 31, 2010
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Retained earnings under Canadian GAAP $ 12,025 $ 15,633 $ 22,117
Retained earnings adjustments:
Property, plant & equipment (11,675) (11,880) (12,126)
Finance leases (10) (9) (2)
Share based payments 2,196 2,181 2,385
Taxes arising from IFRS policy
decisions 2,928 2,972 3,032
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Total IFRS adjustments to retained
earnings (6,561) (6,736) (6,711)
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Retained earnings under IFRS $ 5,464 $ 8,897 $ 15,406
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As a result of the policy choices selected by Technicoil and changes that were
required under IFRS, the Corporation recorded a decrease in net earnings of $0.2
million and $0.2 million for the three months ended March 31, 2010 and the year
end December 31, 2010, respectively. The following is a summary of the
adjustment to the consolidated statement of comprehensive income for the three
months ended March 31, 2010 and the year ended December 31, 2010.
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Three months Year ended
ended, March December 31,
($ thousands)(unaudited) 31, 2010 2010
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Comprehensive income under Canadian GAAP $ 3,608 $ 10,092
Adjustments:
Property, plant & equipment (205) (451)
Finance leases 1 8
Share based payments (15) 189
Taxes arising from IFRS policy decisions 44 104
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Total IFRS adjustments (175) (150)
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Comprehensive income under IFRS $ 3,433 $ 9,942
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FINANCIAL MEASURES RECONCILIATIONS
This news release contains references to certain financial measures that do not
have any standardized meaning prescribed by IFRS and therefore may not be
comparable to similar measures presented by other issuers. These measures are
computed on a consistent basis for each reporting period and include EBITDA and
funds flow from operations. These financial measures are identified and defined
as follows:
"EBITDA" is a measure of the Corporation's operating profitability. EBITDA
provides an indication of the results generated by the Corporation's principal
business activities prior to how these activities are financed including the
impact of share based payments, how assets are depreciated, amortized or
impaired, or how the results are taxed. The Corporation calculates EBITDA as
follows:
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Three months ended
March 31
($ thousands)(unaudited) 2011 2010
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Net profit before income tax $ 6,752 $ 4,616
Add: Depreciation and amortization 2,170 2,540
Net finance costs 51 225
Share based payments expense 2,483 42
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EBITDA $ 11,456 $ 7,423
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"Funds flow from operations" is defined as cash from operating activities before
changes in non-cash working capital from operating activities. Management
believes funds flow from operations is a measure that provides investors
additional information regarding the Corporation's liquidity and its ability to
generate funds to finance its operations. The Corporation calculates funds flow
from operations as follows:
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Three months ended
March 31
($ thousands)(unaudited) 2011 2010
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Cash generated from operating activities $ 8,617 $ 4,858
Add:
Net change in non-cash working capital from
operations 2,831 2,564
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Funds flow from operations $ 11,448 $ 7,422
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FORWARD-LOOKING STATEMENTS
This news release contains certain forward-looking information (referred to
herein as "forward-looking statements") within the meaning of applicable
Canadian securities laws. Forward-looking statements are often, but not always,
identified by the use of words such as "anticipate", "plan", "intend",
"estimate", "expect", "may", "will", "should", or similar words suggesting
future activities or outcomes. In particular, this news release refers to
forward-looking statements: (i) by analysts relating to forecast natural gas
prices and drilling activity in the WCSB; and (ii) relating to the Corporation's
business plan and operational outlook.
Forward-looking statements respecting analysts' forecasts of natural gas prices
and drilling activity in the WCSB are based on assumptions made by such analysts
that are unknown to the Corporation.
Forward-looking statements respecting the Corporation's business plan and
operational outlook are based on various assumptions and factors, including: (i)
that the sources of funding which Technicoil has relied upon in the past will
continue to be available to it on acceptable terms, (ii) the absence of material
changes in economic and operating conditions, including, but not limited to,
commodity prices, (iii) the availability and cost of labour, and (iv) no
material changes in currency exchange rates, interest rates, the regulatory
framework regarding oil and natural gas royalties, environmental legislation and
weather conditions.
Management of the Corporation believes that such forward-looking statements are
subject to certain risks, including unanticipated changes to geopolitical
conditions, economic conditions, fluctuations in currency exchange and interest
rates, weather conditions, the production and storage levels of natural gas, the
level of consumer demand, the price and availability of alternative fuels, the
effect of energy conservation measures and government regulations.
The forward-looking statements contained in this news release are made as of the
date hereof and the Corporation does not undertake any obligation to publicly
update or revise any of the included forward-looking statements, except as
required by applicable Canadian securities law. Forward-looking statements are
based upon the opinions and expectations of management of the Corporation as at
the effective date of such statements and, in some cases, information supplied
by third parties. Although the Corporation believes that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions and that information received from third parties is reliable, it can
give no assurance that those expectations will prove to have been correct.
Forward-looking statements are subject to certain risks and uncertainties that
could cause actual events or outcomes to differ materially from those
anticipated or implied by such forward-looking statements. Accordingly, readers
should not place undue reliance upon the forward-looking statements contained in
this news release and such forward-looking statements should not be interpreted
or regarded as guarantees of future outcomes.
TECHNICOIL CORPORATION
Condensed Consolidated Statement of Financial Position
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March 31, December 31, January 1,
(Thousands) (unaudited) 2011 2010 2010
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Assets
Current assets:
Cash $ 390 $ 837 $ -
Trade and other receivables 28,322 26,011 11,562
Income taxes receivable - - 134
Inventories 2,148 1,593 2,231
Prepayments 344 536 579
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31,204 28,977 14,506
Non-current assets:
Intangible assets - - 369
Property, plant and equipment 66,079 63,444 65,135
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66,079 63,444 65,504
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Total Assets $ 97,283 $ 92,421 $ 80,010
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Liabilities
Current liabilities:
Bank operating loan $ - $ - $ 740
Trade and other payables 11,955 12,594 6,730
Income taxes payable 1,978 3,131 -
Current portion of loans and 257 278 2,878
borrowings
Share based payments liability 4,715 2,252 523
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18,905 18,255 10,871
Non-current liabilities:
Loans and borrowings 31 79 6,381
Deferred tax liability 7,439 7,518 6,227
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7,470 7,597 12,608
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Total Liabilities 26,375 25,852 23,479
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Subsequent event
Equity
Share capital 51,188 51,163 51,067
Retained earnings 19,720 15,406 5,464
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Total Equity 70,908 66,569 56,531
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Total Liabilities and Equity $ 97,283 $ 92,421 $ 80,010
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TECHNICOIL CORPORATION
Condensed Consolidated Statement of Comprehensive Income
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For the three month period ended
(Thousands) (unaudited) March 31, 2011 March 31, 2010
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Revenue $ 34,760 $ 24,521
Operating expenses 22,277 16,233
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Gross margin 12,483 8,288
General and administrative expenses 1,035 871
Bad debt recovery - (5)
Share based payment expense 2,483 42
Depreciation and amortization 2,170 2,540
Gain on sale of assets (8) (1)
Net finance costs 51 225
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Profit before income tax 6,752 4,616
Income tax expense 2,438 1,183
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Profit and total comprehensive income for
the period $ 4,314 $ 3,433
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Earnings per share
Basic $ 0.06 $ 0.05
Diluted $ 0.06 $ 0.05
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TECHNICOIL CORPORATION
Condensed Consolidated Statements of Cash Flows
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For the three month
period ended
March 31, March 31,
(Thousands) (unaudited) 2011 2010
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Cash provided by (used in):
Operating activities
Profit for the period $ 4,314 $ 3,433
Adjustments for:
Depreciation and amortization 2,170 2,540
Gain on sale of property, plant and equipment (8) (1)
Share based payment expense 2,483 42
Net finance costs 51 225
Income tax expense 2,438 1,183
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11,448 7,422
Change in:
Trade and other receivables (2,311) (3,283)
Inventories (555) 186
Prepayments 192 205
Trade and other payables (157) 328
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Cash generated from operating activities 8,617 4,858
Interest paid (11) (119)
Income taxes paid (3,670) -
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Cash flow from operating activities 4,936 4,739
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Investing activities
Interest received 9 1
Acquisition of property, plant and equipment (4,837) (587)
Proceeds from sale of property, plant and equipment 40 22
Net change in trade and other payables from the (482) (238)
purchase of property, plant and equipment
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Cash flow from investing activities (5,270) (802)
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Financing activities
Proceeds from exercise of share options 5 -
Payment of transaction costs related to loans and (49) (107)
borrowings
Payment of finance lease liabilities (69) (92)
Repayment of revolving term loans - (3,255)
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Cash flow from financing activities (113) (3,454)
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Net (decrease) increase in cash (447) 483
Cash (bank indebtedness), beginning of period 837 (740)
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Cash (bank indebtedness), end of period $ 390 $ (257)
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