Press Release
April 23, 2024
CALGARY, ALBERTA – Western Energy Services Corp. (“Western” or the “Company”) (TSX: WRG) announces the release of its first quarter 2024 financial and operating results. Additional information relating to the Company, including the Company’s financial statements and management’s discussion and analysis (“MD&A”) as at March 31, 2024 and for the three months ended March 31, 2024 and 2023 will be available on SEDAR+ at www.sedarplus.ca. Non-International Financial Reporting Standards (“Non-IFRS”) measures and ratios, such as Adjusted EBITDA, Adjusted EBITDA as a percentage of revenue, revenue per Operating Day, revenue per Service Hour and Working Capital, as well as abbreviations and definitions for standard industry terms are defined later in this press release. All amounts are denominated in Canadian dollars (CDN$) unless otherwise identified.
First Quarter 2024 Operating Results:
o In Canada, Operating Days of 952 days in the first quarter of 2024 were 331 days (or 26%) lower compared to 1,283 days in the first quarter of 2023. Drilling rig utilization in Canada was 31% in the first quarter of 2024, compared to 42% in the same period of the prior year mainly due to customers cancelling or deferring their programs into the second half of 2024, as a result of lower natural gas prices in 2023 that continued into 2024. The Canadian Association of Energy Contractors (“CAOEC”) industry Operating Days decreased 1% in the first quarter of 2024, compared to the first quarter of 2023, while the CAOEC industry average utilization increased five percentage points to 50%1 for the first quarter of 2024, compared to the CAOEC industry average utilization of 45% in the first quarter of 2023. The increase in the CAOEC industry average utilization is attributable to a 13% decrease in the average number of drilling rigs registered with the CAOEC in the first quarter of 2024 compared to the first quarter of 2023. If the number of registered drilling rigs with the CAOEC had not decreased, the CAOEC industry average utilization in the first quarter of 2024 would have been 45%, consistent with the first quarter of 2023. Revenue per Operating Day averaged $34,233 in the first quarter of 2024, an increase of 3% compared to the same period of the prior year, mainly due to higher pricing;
o In the United States (“US”), drilling rig utilization averaged 26% in the first quarter of 2024, compared to 45% in the first quarter of 2023, with Operating Days decreasing from 327 days in the first quarter of 2023 to 164 days in the first quarter of 2024 due to lower industry activity. Average active industry rigs of 6232 in the first quarter of 2024 were 18% lower compared to the first quarter of 2023. Revenue per Operating Day for the first quarter of 2024 averaged US$31,858, a 4% decrease compared to US$33,021 in the same period of the prior year, mainly due to higher standby revenue in 2023; and
o In Canada, service rig utilization of 44% in the first quarter of 2024 was consistent with the same period of the prior year. Revenue per Service Hour averaged $1,058 in the first quarter of 2024 and was 3% higher than the first quarter of 2023, due to improved pricing and inflationary pressures on operating costs, including higher wages that are passed through to the customer, which were partially offset by lower fuel surcharges as more customers provided their own fuel.
Selected Financial Information
(stated in thousands, except share and per share amounts)
Three months ended March 31 | |||
Financial Highlights | 2024 | 2023 | Change |
Revenue | 61,982 | 79,239 | (22%) |
Adjusted EBITDA(1) | 15,219 | 19,196 | (21%) |
Adjusted EBITDA as a percentage of revenue(1) | 25% | 24% | 4% |
Cash flow from operating activities | 7,802 | 6,445 | 21% |
Additions to property and equipment | 1,902 | 5,165 | (63%) |
Net income | 1,455 | 4,421 | (67%) |
– basic and diluted net income per share | 0.04 | 0.13 | (69%) |
Weighted average number of shares | |||
– basic | 33,843,015 | 33,841,323 | – |
– diluted | 33,843,015 | 33,843,048 | – |
Outstanding common shares as at period end | 33,843,015 | 33,841,324 | – |
Three months ended March 31 | |||
Operating Highlights(2) | 2024 | 2023 | Change |
Contract Drilling | |||
Canadian Operations: | |||
Contract drilling rig fleet: | |||
– Average active rig count | 10.5 | 14.3 | (27%) |
Operating Days | 952 | 1,283 | (26%) |
Revenue per Operating Day(3) | 34,233 | 33,275 | 3% |
Drilling rig utilization | 31% | 42% | (26%) |
CAOEC industry average utilization – Operating Days(4) | 50% | 45% | 11% |
Average meters drilled per well | 7,897 | 6,261 | 26% |
Average Operating Days per well | 13.5 | 13.2 | 2% |
United States Operations: | |||
Contract drilling rig fleet: | |||
– Average active rig count | 1.8 | 3.6 | (50%) |
Operating Days | 164 | 327 | (50%) |
Revenue per Operating Day (US$)(3) | 31,858 | 33,021 | (4%) |
Drilling rig utilization | 26% | 45% | (42%) |
Average meters drilled per well | 6,048 | 3,516 | 72% |
Average Operating Days per well | 16.2 | 14.4 | 13% |
Production Services | |||
Well servicing rig fleet: | |||
– Average active rig count | 28.3 | 28.0 | 1% |
Service Hours | 18,399 | 18,253 | 1% |
Revenue per Service Hour(3) | 1,058 | 1,032 | 3% |
Service rig utilization | 44% | 44% | – |
IBF4