By November 16, 2015 Read More →

Fracker Trican lowers US costs, adjusts operations to slower market

Management has meaningfully reduced the U.S. operations’ cost structure and continues to adjust it to current industry activity and operating conditions

Trican

Texas hasn’t been kind to Trican Well Service in the past year. The Calgary-based company idled the last of its two fracking crews in Oct., with only six of its 16 U.S. units still operating.

Last week Trican reported Q3 results, which included significantly reducing the US operations’ cost structure and continuing to adjust it to current industry activity and operating conditions. Management reported that US operational results benefitted from price reductions in the 15 to 25 per cent range for proppant, cement, chemicals, third party hauling, fuel and parts.

U.S. operations generated $120.6 million of revenue and an adjusted operating loss of $13.7 million during Q3 2015 compared to Q3 2014 revenue of $314.6 million and adjusted operating income of $19.6 million.

Despite continued low demand combined with excess pressure pumping supply, U.S. operations increased revenue 52 per cent sequentially from Q2 2015 to Q3 2015. During the third quarter Trican operated eight of our 16 crews in the U.S.

Trican

Photo: Trican Well Service.

Canadian operations generated $193.4 million of revenue and adjusted operating income of $37.4 million during Q3 2015 compared to revenue of $360.9 million and adjusted operating income of $97.3 million during Q3 2014. Canadian results were negatively impacted by reduced drilling and completions activity caused by low commodity prices.

International operations generated $11.5 million in revenue and adjusted operating income of $1.6 million during Q3 2015 compared to Q3 2014 revenue of $13.0 million and adjusted operating income of $1.3 million. Weak market conditions in Kazakhstan and the suspension of operations in Colombia and Saudi Arabia negatively impacted revenue.

Consolidated revenue from continuing operations for the third quarter of 2015 was $325.5 million, a decrease of 53 per cent compared to Q3 2014. The adjusted loss was $53.6 million and adjusted diluted loss per share was $0.36 compared to an adjusted profit of $36.2 million and adjusted diluted profit per share of $0.24 in the same period of 2014. Funds used in operations were $16.3 million compared to funds provided by operations of $102.1 million in Q3 2014.

During Q3 2015, Trican closed the sale of its Russian pressure pumping business to RN Assets LLC, an indirect subsidiary of Rosneft Oil Company, for a purchase price of USD$140 million and an initial working capital adjustment of USD$10 million or approximately CAD$197.2 million.

Trican says it intends to apply the net proceeds from this sale to reduce its outstanding debt.

Trican and Rosneft are also continuing to negotiate for the sale of Trican’s Kazakhstan pressure pumping business. If the parties reach agreement on the terms of the sale of the Kazakhstan business, Trican expects that such sale would close in Q4 2015. There is no guarantee that the parties will be able to agree on terms regarding the sale of the Kazakhstan business or complete the transaction on the terms agreed.

On Sept. 25 Trican, its lenders and senior noteholders reached an agreement in principle amending the terms of the current credit agreements. Trican, its lenders and the senior noteholders expect to finalize the amending agreement on the same terms and conditions as the agreement in principle on Nov. 13. As at Sept. 30, Trican says it is in compliance with the terms of the amending agreement.

 

Posted in: Energy Financial

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