Total Energy Services Inc. Announces Q2 2021 Results

CALGARY, Alberta, Aug. 11, 2021 (GLOBE NEWSWIRE) — Total Energy Services Inc. (“Total Energy” or the “Company”) (TSX:TOT) announces its consolidated financial results for the three and six months ended June 30, 2021.

Financial Highlights
($000’s except per share data)

Three months ended June 30 Six months ended June 30
2021 2020 Change 2021 2020 Change
Revenue $ 84,876 $ 70,770 20 % $ 178,066 $ 205,038 (13 %)
Operating loss (4,089 ) (37,161 ) (89 %) (9,508 ) (26,632 ) (64 %)
EBITDA (1) 19,716 12,886 53 % 36,433 43,789 (17 %)
Cashflow 16,462 13,793 19 % 31,794 35,704 (11 %)
Net loss (2,136 ) (28,845 ) (93 %) (5,743 ) (24,121 ) (76 %)
Attributable to shareholders (2,108 ) (28,765 ) (93 %) (5,687 ) (24,093 ) (76 %)
Per Share Data (Diluted)
EBITDA (1) $ 0.44 $ 0.29 52 % $ 0.81 $ 0.97 (16 %)
Cashflow $ 0.37 $ 0.31 19 % $ 0.70 $ 0.79 (11 %)
Attributable to shareholders:
Net loss $ (0.05 ) $ (0.64 ) (92 %) $ (0.13 ) $ (0.53 ) (75 %)
Common shares (000’s)(4)
Basic 44,830 45,081 (1 %) 44,950 45,084
Diluted 45,066 45,081 45,158 45,084
 
  June 30 December 31
Financial Position at 2021 2020 Change
Total Assets $ 811,615 $ 849,579 (4 %)
Long-Term Debt and Lease Liabilities (excluding current portion) 210,132 238,937 (12 %)
Working Capital (2) 127,201 138,940 (8 %)
Net Debt (3) 82,931 99,997 (17 %)
Shareholders’ Equity 492,259 510,987 (4 %)

Notes 1 through 4 please refer to the Notes to the Financial Highlights set forth at the end of this release.

Total Energy’s results for the three months ended June 30, 2021 reflect challenging but improving industry conditions in North America and lower Australian activity levels as compared to the second quarter of 2020. Included in the financial results for the three months ended June 30, 2021 was $0.6 million of non-recurring equipment reactivation costs. $8.1 million was recorded during the second quarter of 2021 under various COVID-19 relief programs, including the forgiveness of $2.5 million of loans received in 2020 under the United States Paycheck Protection Program.

Contract Drilling Services (“CDS”)

Three months ended June 30 Six months ended June 30
2021 2020 Change 2021 2020 Change
Revenue $ 25,740 $ 14,170 82 % $ 54,311 $ 57,195 (5 %)
EBITDA (1) $ 4,708 $ 1,864 153 % $ 10,976 $ 10,082 9 %
EBITDA (1) as a % of revenue 18 % 13 % 38 % 20 % 18 % 11 %
Operating days(2) 1,235 440 181 % 2,773 2,606 6 %
Canada 563 72 682 % 1,647 1,529 8 %
United States 467 41 1,039 % 768 368 109 %
Australia 205 327 (37 %) 358 709 (50 %)
Revenue per operating day(2), dollars $ 20,842 $ 32,205 (35 %) $ 19,586 $ 21,947 (11 %)
Canada 15,625 14,417 8 % 16,175 16,833 (4 %)
United States 19,340 25,537 (24 %) 19,046 21,239 (10 %)
Australia 38,590 36,957 4 % 36,433 33,346 9 %
Utilization 14 % 5 % 180 % 16 % 14 % 14 %
Canada 8 % 1 % 700 % 11 % 10 % 10 %
United States 39 % 3 % 1,200 % 33 % 11 % 200 %
Australia 45 % 72 % (38 %) 40 % 78 % (49 %)
Rigs, average for period 97 98 (1 %) 98 106 (8 %)
Canada 79 80 (1 %) 80 82 (2 %)
United States 13 13 13 19 (32 %)
Australia 5 5 5 5

(1)  See Note 1 of the Notes to the Financial Highlights set forth at the end of this release.
(2)  Operating days includes drilling and paid stand-by days.

Drilling activity in North America for the second quarter of 2021 was higher compared to the same period in 2020. Second quarter Canadian industry activity levels improved from the historic lows experienced in 2020 and market share gains in the United States drove a significant year over year increase in operating days despite a more muted increase in United States industry activity relative to Canada. Australian industry activity was lower on a year over year basis due to reduced drilling programs and prolonged wet weather conditions that restricted field activity. The first of two Australian drilling rigs removed from service in the third quarter of 2020 for recertification and upgrades was completed during the second quarter and commenced operations in late April 2021. Second quarter CDS segment revenue increased by 82% in 2021 compared to 2020 despite a decrease in revenue per operating day arising from changes in the geographic revenue mix and the mix of equipment operating.   Despite incurring $0.6 million of non-recurring equipment reactivation costs during the second quarter of 2021 as several idle drilling rigs were put back into service in the United States and one rig was returned to service in Australia, ongoing cost management, efficiencies of scale and the receipt of COVID-19 relief funds contributed to the significant year over year second quarter improvement in segment EBITDA. Three mechanical double drilling rigs were decommissioned in Canada during the second quarter of 2021, bringing the current Canadian drilling rig fleet to 77 rigs.

Rentals and Transportation Services (“RTS”)

Three months ended June 30 Six months ended June 30
2021 2020 Change 2021 2020 Change
Revenue $ 6,053 $ 4,782 27 % $ 13,788 $ 21,615 (36 %)
EBITDA (1) $ 3,324 $ 865 284 % $ 5,290 $ 4,731 12 %
EBITDA (1) as a % of revenue 55 % 18 % 206 % 38 % 22 % 73 %
Revenue per utilized piece of equipment, dollars $ 7,111 $ 9,001 (21 %) $ 16,198 $ 22,265 27 %
Pieces of rental equipment 10,630 10,640 10,630 10,640
Canada 9,670 9,710 9,670 9,710
United States 960 930 3 % 960 930 3 %
Rental equipment utilization 8 % 5 % 60 % 8 % 9 % (11 %)
Canada 7 % 5 % 40 % 8 % 8 %
United States 12 % 11 % 9 % 12 % 28 % (57 %)
Heavy trucks 80 87 (8 %) 80 87 (8 %)
Canada 56 63 (11 %) 56 63 (11 %)
United States 24 24 24 24

(1)  See Note 1 of the Notes to the Financial Highlights set forth at the end of this release.

Second quarter revenue in the RTS segment increased as compared to 2020 due to higher Canadian industry activity levels and the commencement of several major Canadian projects that were delayed in the first quarter of 2021 due to COVID-19 and other health and safety concerns unrelated to the Company’s operations or personnel. During the quarter the RTS segment realized a $1.6 million gain on the sale of access matting, underutilized rental equipment and older heavy trucks.   While second quarter revenue increased 27% on a year over year basis, excluding the gain on sale of equipment, segment EBITDA increased 102% as a result of ongoing efforts to right-size this segment’s Canadian operating infrastructure and the receipt of COVID-19 funds.

Compression and Process Services (“CPS”)

Three months ended June 30 Six months ended June 30
2021 2020 Change 2021   2020 Change
Revenue $ 33,657 $ 30,212 11 % $ 67,813 $ 70,956 (4 %)
EBITDA (1) $ 7,682 $ 5,886 31 % $ 11,257 $ 11,116 1 %
EBITDA (1) as a % of revenue 23 % 19 % 21 % 17 % 16 % 6 %
Horsepower of equipment on rent at period end 27,420 33,200 (17 %) 27,420 33,200 (17 %)
Canada 11,840 18,440 (36 %) 11,840 18,440 (36 %)
United States 15,580 14,760 6 % 15,580 14,760 6 %
Rental equipment utilization during the period (HP)(2) 47 % 65 % (28 %) 45 % 67 % (33 %)
Canada 31 % 52 % (40 %) 31 % 53 % (42 %)
United States 74 % 97 % (24 %) 67 % 99 % (32 %)
Sales backlog at period end, $ million $ 57.5 $ 43.8 31 % $ 57.5 $ 43.8 31 %

(1)  See Note 1 of the Notes to the Financial Highlights set forth at the end of this release.
(2)  Rental equipment utilization is measured on a horsepower basis.

The year over year increase in the CPS segment’s second quarter revenue was due primarily to higher fabrication sales and increased equipment overhaul activity. Quarterly rental fleet utilization began to recover following the return of 6,500 horsepower of rental compression in late 2020 due to the bankruptcy of a United States customer, with a 20% increase in horsepower on rent at June 30, 2021 compared to March 31, 2021.   Ongoing cost management, increased overhead absorption as a result of higher fabrication activity and the receipt of COVID-19 relief funds contributed to a significant year over year improvement in second quarter EBITDA margin.   The fabrication sales backlog continued to recover during the second quarter of 2021, with a $9.8 million, or 21% increase from March 31, 2021 and a 55% increase from the low of $37.0 million recorded at September 30, 2020.

Well Servicing (“WS”)

Three month ended June 30 Six months ended June 30
2021 2020 Change 2021   2020 Change
Revenue $ 19,426 $ 21,606 (10 %) $ 42,154 $ 55,272 (24 %)
EBITDA (1) $ 4,667 $ 5,739 (19 %) $ 9,819 $ 13,490 (27 %)
EBITDA (1) as a % of revenue 24 % 27 % (11 %) 23 % 24 % (4 %)
Service hours(2) 22,201 21,497 3 % 51,134 63,027 (19 %)
Canada 8,303 3,191 160 % 25,425 19,743 29 %
United States 3,449 1,430 141 % 6,060 7,001 (13 %)
Australia 10,449 16,876 (38 %) 19,649 36,283 (46 %)
Revenue per service hour(2), dollars $ 875 $ 1,005 (13 %) $ 824 $ 877 (6 %)
Canada 686 599 15 % 659 656
United States 664 803 (17 %) 674 746 (10 %)
Australia 1,095 1,099 1,084 1,023 6 %
Utilization(3) 21 % 15 % 40 % 27 % 28 % (4 %)
Canada 16 % 6 % 167 % 25 % 19 % 32 %
United States 27 % 11 % 145 % 24 % 27 % (11 %)
Australia 40 % 64 % (38 %) 38 % 69 % (45 %)
Rigs, average for period 83 83 83 83
Canada 57 57 57 57
United States 14 14 14 14
Australia 12 12 12 12

(1)  See Note 1 of the Notes to the Financial Highlights set forth at the end of this release.
(2)  Service hours is defined as well servicing hours of service provided to customers and includes paid rig move and standby.
(3)  The Company reports its service rig utilization for its operational service rigs in North America based on service hours of 3,650 per rig per year to reflect standard 10 hour operations per day. Utilization for the Company’s service rigs in Australia is calculated based on service hours of 8,760 per rig per year to reflect standard 24 hour operations.

WS segment revenue decreased in the second quarter of 2021 as compared to 2020 as a result of lower activity levels in Australia that was due in part to prolonged wet weather conditions that restricted field activity.   The increase in North American activity from the severely depressed levels experienced during the second quarter of 2020 was driven by the substantial improvement in oil prices over the past year and increased well abandonment activity in Canada.

Corporate

Total Energy continued to focus on the safe and efficient operation of its business and the preservation of its balance sheet strength and financial liquidity during the second quarter of 2021. Bank debt was reduced by $18.6 million, or 8%, during the quarter. The Company also resumed share buybacks under its normal course issuer bid with the purchase of 529,100 shares at an average price of $4.26 (including commissions). There were 44,600,000 common shares outstanding at June 30, 2021.

The Company exited the second quarter of 2021 with $127.2 million of positive working capital (including $29.2 million of cash) and $113 million of available credit under its $255 million of revolving bank credit facilities.   The weighted average interest rate on the Company’s outstanding debt at June 30, 2021 was 2.75%.

Outlook

While oil and natural gas prices remained relatively strong during the second quarter of 2021 and North American activity levels began to improve from the historic lows experienced following the COVID-19 outbreak and collapse in oil prices, producers generally remained disciplined with their capital expenditure budgets. Wet weather and the removal of two drilling rigs in Australia from service for recertification and upgrades negatively impacted second quarter Australian activity compared to 2020.

North American activity levels continue to modestly improve and in late-July the second Australian drilling rig returned to service. The CDS segment currently has 16 rigs operating in Canada, eight in the United States and four in Australia. Drilling activity is usually a leading indicator for industry activity levels and current activity levels in Total Energy’s other business segments have improved in concert with increased drilling activity. Current indications are that North American industry activity levels will continue to improve during the remainder of 2021 provided oil and natural gas prices remain relatively stable.

In response to increasing activity levels and longer lead times for certain equipment due to global supply chain issues, the Board of Directors of Total Energy has approved an increase to the Company’s 2021 capital expenditure budget to $26.7 million. Included in this $13.1 million increase is $8.0 million for upgrades to several drilling rigs and new drill pipe and $5.1 million of light duty vehicles for use in all business segments. The rig upgrades are in response to specific customer requests and include pressure upgrades and the addition of walking systems and bi-fuel capacity as Total Energy continues to collaborate with its customers to minimize the environmental impact of drilling operations and increase the capabilities of the Company’s drilling rig fleet. The light duty vehicle capital expenditure relates to 2022 fleet requirements for all business segments but a significant increase in production lead times dictates that such requirements be addressed at this time. Total Energy intends to finance its 2021 capital expenditure budget with cash on hand, proceeds from the disposal of older and underutilized equipment and, in respect of the light duty vehicles, $5.1 million of capital leases.

Director Appointment

Total Energy is pleased to announce the appointment of Jessica Kirstine to the Company’s Board of Directors. Ms. Kirstine currently serves as Vice-President of System Operations and Engineering, Liquid Pipelines for TC Energy. Based in Calgary, Ms. Kirstine is responsible for Liquid Pipelines Operation Control Centre, Pipe and Facility Integrity and overall engineering support of TC Energy’s liquid pipelines operating assets across North America. Prior to joining TC Energy in 2019, Ms. Kirstine spent 17 years in the Canadian upstream oil and gas industry in operations, engineering and exploration roles, serving in both technical and management capacities.

Ms. Kirstine has her Professional Engineering designation from the Association of Professional Engineers and Geoscientists of Alberta (APEGA) and earned her Chemical Engineering degree from the University of Saskatchewan in 2002.

Conference Call

At 9:00 a.m. (Mountain Time) on August 12, 2021 Total Energy will conduct a conference call and webcast to discuss its second quarter financial results. Daniel Halyk, President & Chief Executive Officer, will host the conference call. A live webcast of the conference call will be accessible on Total Energy’s website at www.totalenergy.ca by selecting “Webcasts”. Persons wishing to participate in the conference call may do so by calling (800) 319-4610 or (416) 915-3239. Those who are unable to listen to the call live may listen to a recording of it on Total Energy’s website. A recording of the conference call will also be available until September 12, 2021 by dialing (855) 669-9658 (passcode 7340).

Selected Financial Information

Selected financial information relating to the three and six months ended June 30, 2021 and 2020 is enclosed to this news release. This information should be read in conjunction with the condensed interim consolidated financial statements of Total Energy and the notes thereto as well as management’s discussion and analysis to be issued in due course and the Company’s 2020 Annual report.

Consolidated Statements of Financial Position
(in thousands of Canadian dollars)

  June 30 December 31
2021 2020
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 29,231 $ 22,996
Accounts receivable 72,763 73,373
Inventory 92,786 95,586
Prepaid expenses and deposits 4,835 6,876
Income taxes receivable 1,226 1,287
Current portion of lease asset 462 566
201,303 200,684
Property, plant and equipment 597,799 636,996
Income taxes receivable 7,070 7,070
Deferred income tax asset 792 57
Lease asset 598 719
Goodwill 4,053 4,053
  $ 811,615 $ 849,579
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities $ 56,297 $ 46,410
Deferred revenue 11,057 6,365
Current portion of lease liabilities 4,172 6,417
Current portion of long-term debt 2,576 2,552
74,102 61,744
Long-term debt 201,218 230,517
Lease liabilities 8,914 8,420
Deferred tax liability 35,122 37,911
Shareholders’ equity:
Share capital 280,829 284,077
Contributed surplus 5,356 4,966
Accumulated other comprehensive loss (29,858 ) (18,736 )
Non-controlling interest 573 629
Retained earnings 235,359 240,051
492,259 510,987
$ 811,615 $ 849,579

Consolidated Statements of Comprehensive Loss
(in thousands of Canadian dollars except per share amounts)
(unaudited)

  Three months ended
June 30
Six months ended
June 30
2021 2020 2021 2020
Revenue $ 84,876 $ 70,770 $ 178,066 $ 205,038
Cost of services 63,092 52,483 134,180 153,166
Selling, general and administration 6,069 5,756 12,608 16,341
Other (income) expense (1,114 ) 536 (2,180 ) (7,392 )
Share-based compensation 189 264 390 669
Depreciation 20,729 48,892 42,576 68,886
Operating loss (4,089 ) (37,161 ) (9,508 ) (26,632 )
Gain on sale of property, plant and equipment 3,076 1,155 3,365 1,535
Finance costs, net (1,772 ) (2,518 ) (3,579 ) (5,957 )
Net loss before income taxes (2,785 ) (38,524 ) (9,722 ) (31,054 )
Current income tax expense (recovery) 16 957 (455 ) 2,293
Deferred income tax recovery (665 ) (10,636 ) (3,524 ) (9,226 )
Total income tax recovery (649 ) (9,679 ) (3,979 ) (6,933 )
Net loss $ (2,136 ) $ (28,845 ) $ (5,743 ) $ (24,121 )
Net loss attributable to:
Shareholders of the Company $ (2,108 ) $ (28,765 ) $ (5,687 ) $ (24,093 )
Non-controlling interest (28 ) (80 ) (56 ) (28 )
Loss per share
Basic and diluted $ (0.05 ) $ (0.64 ) $ (0.13 ) $ (0.53 )

Consolidated Statements of Comprehensive Loss
(unaudited)

  Three months ended
June 30
Six months ended
June 30
2021 2020 2021 2020
Net loss for the period $ (2,136 ) $ (28,845 ) $ (5,743 ) $ (24,121 )
Foreign currency translation (5,820 ) (5 ) (11,122 ) 4,842
Deferred tax effect (305 ) (1 )
Total other comprehensive (loss) income for the period (5,820 ) (310 ) (11,122 ) 4,841
Total comprehensive loss $ (7,956 ) $ (29,155 ) $ (16,865 ) $ (19,280 )
Total comprehensive loss attributable to:
Shareholders of the Company $ (7,928 ) $ (29,075 ) $ (16,809 ) $ (19,252 )
Non-controlling interest (28 ) (80 ) (56 ) (28 )

Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)
(unaudited)

Three months ended
June 30
Six months ended
June 30
2021 2020 2021 2020
Cash provided by (used in):
Operations:
Net loss for the period $ (2,136 ) $ (28,845 ) $ (5,743 ) $ (24,121 )
Add (deduct) items not affecting cash:
Depreciation 20,729 48,892 42,576 68,886
Share-based compensation 189 264 390 669
Gain on sale of property, plant and equipment (3,076 ) (1,155 ) (3,365 ) (1,535 )
Finance costs 1,772 2,518 3,579 5,957
Unrealized (gain) loss on foreign currencies translation (1,114 ) 748 (2,180 ) (7,828 )
Current income tax expense (recovery) 16 957 (455 ) 2,293
Deferred income tax recovery (665 ) (10,636 ) (3,524 ) (9,226 )
Income taxes recovered 747 1,050 516 609
Cashflow 16,462 13,793 31,794 35,704
Changes in non-cash working capital items:
Accounts receivable 3,738 37,486 (159 ) 43,099
Inventory 972 6,727 2,129 (672 )
Prepaid expenses and deposits 1,068 2,825 2,041 6,327
Accounts payable and accrued liabilities 7,123 (27,955 ) 7,991 (38,192 )
Deferred revenue 2,259 3,286 4,692 6,239
Cash provided by operating activities 31,622 36,162 48,488 52,505
Investing:
Purchase of property, plant and equipment (8,079 ) (7,944 ) (13,153 ) (10,190 )
Proceeds on disposal of property, plant and equipment 8,005 1,638 8,445 3,343
Changes in non-cash working capital items 79 (690 ) 1,051 (1,998 )
Cash provided by (used in) investing activities 5 (6,996 ) (3,657 ) (8,845 )
Financing:
Advances on long-term debt 9,796 29,796
Repayment of long-term debt (18,637 ) (42,647 ) (29,275 ) (58,342 )
Repayment of lease liabilities (1,802 ) (2,205 ) (3,622 ) (4,264 )
Dividends to shareholders (2,710 )
Repurchase of common shares (1,924 ) (2,253 ) (427 )
Partnership distributions (125 ) (125 )
Interest paid (738 ) (2,834 ) (3,446 ) (6,364 )
Cash used in financing activities (23,101 ) (38,015 ) (38,596 ) (42,436 )
Change in cash and cash equivalents 8,526 (8,849 ) 6,235 1,224
Cash and cash equivalents, beginning of period 20,705 29,946 22,996 19,873
Cash and cash equivalents, end of period $ 29,231 $ 21,097 $ 29,231 $ 21,097

Segmented Information

The Company provides a variety of products and services to the energy and other resource industries through five reporting segments, which operate substantially in three geographic regions. These reporting segments are Contract Drilling Services, which includes the contracting of drilling equipment and the provision of labour required to operate the equipment, Rentals and Transportation Services, which includes the rental and transportation of equipment used in energy and other industrial operations, Compression and Process Services, which includes the fabrication, sale, rental and servicing of gas compression and process equipment and Well Servicing, which includes the contracting of service rigs and the provision of labour required to operate the equipment. Corporate includes activities related to the Company’s corporate and public issuer affairs.

As at and for the three months ended June 30, 2021 (unaudited, in thousands of Canadian dollars)

Contract Rentals and Compression Well Corporate(1) Total
Drilling Transportation and Process Servicing
Services Services Services
Revenue $ 25,740 $ 6,053 $ 33,657 $ 19,426 $ $ 84,876
Cost of services 20,355 3,029 25,932 13,776 63,092
Selling, general and administration 949 1,276 1,180 1,061 1,603 6,069
Other income (1,114 ) (1,114 )
Share-based compensation 189 189
Depreciation (2) 9,461 5,042 2,265 3,749 212 20,729
Operating income (loss) (5,025 ) (3,294 ) 4,280 840 (890 ) (4,089 )
Gain on sale of property, plant and equipment 272 1,576 1,137 78 13 3,076
Finance costs (8 ) (30 ) (74 ) (5 ) (1,655 ) (1,772 )
Net income (loss) before income taxes (4,761 ) (1,748 ) 5,343 913 (2,532 ) (2,785 )
Goodwill 2,514 1,539 4,053
Total assets 313,553 186,423 212,647 95,469 3,523 811,615
Total liabilities 55,394 8,253 38,462 4,887 212,360 319,356
Capital expenditures 5,482 61 2,413 123 8,079
Three months ended June 30, 2021 Canada United States Australia Other Total
Revenue $ 42,548 $ 22,894 $ 19,434 $ $ 84,876
Non-current assets (3) 395,471 142,563 64,416 602,450

As at and for the three months ended June 30, 2020 (unaudited, in thousands of Canadian dollars)

Contract Rentals and Compression Well Corporate(1) Total
Drilling Transportation and Process Servicing
Services Services Services
Revenue $ 14,170 $ 4,782 $ 30,212 $ 21,606 $ $ 70,770
Cost of services 11,674 3,159 22,910 14,740 52,483
Selling, general and administration 1,297 1,141 1,413 1,121 784 5,756
Other expense 536 536
Share-based compensation 264 264
Depreciation (2) 36,689 5,882 2,378 3,760 183 48,892
Operating income (loss) (35,490 ) (5,400 ) 3,511 1,985 (1,767 ) (37,161 )
Gain (loss) on sale of property, plant and equipment 665 383 (3 ) (6 ) 116 1,155
Finance costs (36 ) (19 ) (99 ) (9 ) (2,355 ) (2,518 )
Net income (loss) before income taxes (34,861 ) (5,036 ) 3,409 1,970 (4,006 ) (38,524 )
Goodwill 2,514 1,539 4,053
Total assets 334,273 215,558 227,113 107,687 14,309 898,940
Total liabilities 59,669 15,474 35,754 5,210 258,854 374,961
Capital expenditures 1,158 319 6,023 436 8 7,944
Three months ended June 30, 2020 Canada United States Australia Other Total
Revenue $ 24,765 $ 14,542 $ 31,412 $ 51 $ 70,770
Non-current assets (3) 448,723 170,282 66,630 685,635

As at and for the six months ended June 30, 2021 (unaudited, in thousands of Canadian dollars)

Contract Rentals and Compression Well Corporate(1) Total
Drilling Transportation and Process Servicing
Services Services Services
Revenue $ 54,311 $ 13,788 $ 67,813 $ 42,154 $ $ 178,066
Cost of services 41,270 7,701 55,156 30,053 134,180
Selling, general and administration 2,345 2,528 2,624 2,329 2,782 12,608
Other income (2,180 ) (2,180 )
Share-based compensation 390 390
Depreciation (2) 19,326 10,560 4,672 7,601 417 42,576
Operating income (loss) (8,630 ) (7,001 ) 5,361 2,171 (1,409 ) (9,508 )
Gain on sale of property, plant and equipment 280 1,731 1,224 47 83 3,365
Finance costs (9 ) (46 ) (152 ) (11 ) (3,361 ) (3,579 )
Net income (loss) before income taxes (8,359 ) (5,316 ) 6,433 2,207 (4,687 ) (9,722 )
Goodwill 2,514 1,539 4,053
Total assets 313,553 186,423 212,647 95,469 3,523 811,615
Total liabilities 55,394 8,253 38,462 4,887 212,360 319,356
Capital expenditures 9,739 280 2,581 553 13,153
Six months ended June 30, 2021 Canada United States Australia Other Total
Revenue $ 102,293 $ 41,203 $ 34,568 $ 2 $ 178,066
Non-current assets (3) 395,471 142,563 64,416 602,450

As at and for the six months ended June 30, 2020 (unaudited, in thousands of Canadian dollars)

Contract Rentals and Compression Well Corporate(1) Total
Drilling Transportation and Process Servicing
Services Services Services
Revenue $ 57,195 $ 21,615 $ 70,956 $ 55,272 $ $ 205,038
Cost of services 44,131 13,776 56,321 38,938 153,166
Selling, general and administration 3,738 3,644 3,629 2,848 2,482 16,341
Other income (7,392 ) (7,392 )
Share-based compensation 669 669
Depreciation(2) 44,525 12,033 4,671 7,290 367 68,886
Operating income (loss) (35,199 ) (7,838 ) 6,335 6,196 3,874 (26,632 )
Gain on sale of property, plant and equipment 756 536 110 4 129 1,535
Finance costs (78 ) (42 ) (197 ) (18 ) (5,622 ) (5,957 )
Net income (loss) before income taxes (34,521 ) (7,344 ) 6,248 6,182 (1,619 ) (31,054 )
Goodwill 2,514 1,539 4,053
Total assets 334,273 215,558 227,113 107,687 14,309 898,940
Total liabilities 59,669 15,474 35,754 5,210 258,854 374,961
Capital expenditures 2,019 842 6,079 1,238 12 10,190
Six months ended June 30, 2020 Canada United States Australia Other Total
Revenue $ 96,205 $ 47,161 $ 61,619 $ 53 $ 205,038
Non-current assets (3) 448,723 170,282 66,630 685,635

(1)  Corporate includes the Company’s corporate activities and obligations pursuant to long-term credit facilities.
(2)  Effective April 1, 2020 the Company changed certain estimates relating to the useful life and residual value of equipment in the Contract Drilling Services segment. See note 10 to the 2020 Financial Statements for further details.
(3)  Includes property, plant and equipment, lease asset (excluding current portion) and goodwill.

Total Energy provides contract drilling services, equipment rentals and transportation services, well servicing and compression and process equipment and service to the energy and other resource industries from operation centers in North America and Australia. The common shares of Total Energy are listed and trade on the TSX under the symbol TOT.

For further information, please contact Daniel Halyk, President & Chief Executive Officer at (403) 216-3921 or Yuliya Gorbach, Vice-President Finance and Chief Financial Officer at (403) 216-3920 or by e-mail at: investorrelations@totalenergy.ca or visit our website at www.totalenergy.ca

Notes to the Financial Highlights

(1)  EBITDA means earnings before interest, taxes, depreciation and amortization and is equal to net income before income taxes plus finance costs plus depreciation. EBITDA is not a recognized measure under IFRS. Management believes that in addition to net income, EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Company’s primary business activities prior to consideration of how those activities are financed, amortized or how the results are taxed in various jurisdictions as well as the cash generated by the Company’s primary business activities without consideration of the timing of the monetization of non-cash working capital items. Readers should be cautioned, however, that EBITDA should not be construed as an alternative to net income determined in accordance with IFRS as an indicator of Total Energy’s performance. Total Energy’s method of calculating EBITDA may differ from other organizations and, accordingly, EBITDA may not be comparable to measures used by other organizations.

(2)  Working capital equals current assets minus current liabilities.

(3)  Net Debt equals long-term debt plus lease liabilities plus current liabilities minus current assets.

(4)  Basic and diluted shares outstanding reflect the weighted average number of common shares outstanding for the periods. See note 5 to the Company’s condensed interim consolidated financial statements.

Certain statements contained in this press release, including statements which may contain words such as “could”, “should”, “expect”, “believe”, “will” and similar expressions and statements relating to matters that are not historical facts are forward-looking statements. Forward-looking statements are based upon the opinions and expectations of management of Total Energy as at the effective date of such statements and, in some cases, information supplied by third parties. Although Total Energy believes 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.

In particular, this press release contains forward-looking statements concerning industry activity levels, including expectations regarding Total Energy’s future activity levels, market share and compression and process production activity. Such forward-looking statements are based on a number of assumptions and factors including fluctuations in the market for oil and natural gas and related products and services, political and economic conditions, central bank interest rate policy, the demand for products and services provided by Total Energy, Total Energy’s ability to attract and retain key personnel and other factors. Such forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of Total Energy to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Reference should be made to Total Energy’s most recently filed Annual Information Form and other public disclosures (available at www.sedar.com) for a discussion of such risks and uncertainties.

The TSX has neither approved nor disapproved of the information contained herein.

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Date Dec 31, 1969