CALGARY, Alberta, March 10, 2022 (GLOBE NEWSWIRE) — Total Energy Services Inc. (“Total Energy” or the “Company”) (TSX:TOT) announces its consolidated financial results for the three months and year ended December 31, 2021.

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

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

“nm” – calculation not meaningful

Total Energy’s results for the three months ended December 31, 2021 reflect improving industry conditions in North America and Australia as compared to the fourth quarter of 2020. $1.4 million was recognized during the fourth quarter of 2021 under various COVID-19 relief programs, an 85% decrease from the $9.1 million of COVID-19 relief received in the fourth quarter of 2020.

Contract Drilling Services (“CDS”)

⁽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.

Fourth quarter 2021 drilling activity in North America and Australia continued to improve with rising oil and natural gas prices. Continued recovery of Canadian industry activity levels from the historic lows of 2020 and market share gains in the United States drove a significant year over year increase in North American operating days and increased revenue per operating day. In Australia, activity and results improved in the fourth quarter of 2021 compared to the fourth quarter of 2020 as two drilling rigs returned to service following the completion of recertifications and upgrades. Negatively impacting fourth quarter 2021 CDS segment results was $0.3 million of non-recurring equipment reactivation costs as several idle drilling rigs were put back into service. The fourth quarter EBITDA margin was slightly lower on a year over year basis primarily as a result of pricing gains not fully offsetting the impact of a significant decrease in COVID-19 relief funds and operating cost inflation.

Rentals and Transportation Services (“RTS”)

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

Fourth quarter revenue in the RTS segment increased as compared to the same period in 2020 due to higher equipment utilization in both Canada and the United States. Increased equipment utilization offset lower revenue per utilized piece and contributed to an increase in EBITDA during the fourth quarter of 2021 as compared to 2020 despite a year over year decrease in fourth quarter EBITDA margin. The year over year decrease in fourth quarter EBITDA margin was due primarily to the mix of equipment operating and equipment reactivation expenses as well as realized price increases not fully offsetting the significant year over year decrease in COVID-19 relief funds and operating cost inflation.

Compression and Process Services (“CPS”)

⁽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 fourth quarter revenue was due primarily to higher fabrication sales and increased equipment overhaul activity. Compression rental fleet utilization continued to recover in the United States during the fourth quarter of 2021 but remained slightly lower in Canada on a year over year basis. Lower utilization of the rental fleet, a substantial decrease in COVID-19 relief fund receipts, costs incurred to prepare for substantially higher fabrication activity levels in 2022 and general operating cost inflation contributed to a lower EBITDA margin during the fourth quarter of 2021 as compared to 2020. The fabrication sales backlog continued to grow during the fourth quarter of 2021, increasing by another $52.0 million, or 54%, compared to the $95.5 million backlog at September 30, 2021.

Well Servicing (“WS”)

⁽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.

Fourth quarter WS segment revenue increased in 2021 as compared to 2020 due primarily to higher activity levels in North America. Underpinning this increase was higher North American oil production activity and significant well abandonment activity in Canada. The year over year decrease in EBITDA and EBITDA margin for the three months and year ended December 31, 2021 was primarily due to a significant year over year decrease in COVID-19 relief funds, lower pricing in Australia and increased North American operating costs that were not fully offset by price increases.

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 fourth quarter of 2021. Despite the additional health and safety challenges presented by the COVID-19 pandemic, during 2021 Total Energy recorded its lowest annual consolidated total recordable injury frequency rate since the Company began measuring consolidated performance in 2008.

During the fourth quarter of 2021 bank debt was reduced by $5.6 million, or 3%, and 987,634 common shares were repurchased under the Company’s normal course issuer bid at an average price of $5.32 (including commissions). The Company exited 2021 with $137.3 million of positive working capital, including $33.4 million of cash, and $125 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 December 31, 2021 was 2.68%.

Outlook

Total Energy’s diversified geographic and business exposure provided a measure of stability following the outbreak of the COVID-19 pandemic in March of 2020 and contributed to the generation of significant free cash flow during very difficult industry conditions. A substantial portion of the Company’s cash flow generated since the beginning of 2020 has been directed towards debt repayment, with bank debt (net of cash) being reduced from January 1, 2020 to December 31, 2021 by $100.8 million, or 39%. Total Energy also returned $10.0 million to shareholders during 2021 with the repurchase and cancellation of 2.1 million common shares under the Company’s normal course issuer bid.

Total Energy’s diversified business platform and efficient cost structure also provides the Company with significant leverage to recovering global energy industry activity levels, as evidenced by the Company’s return to profitability during the second half of 2021 despite only modest increases in industry activity levels. Demand for Total Energy’s products and services has continued to strengthen thus far in 2022 and at current commodity prices the Company expects activity levels will continue to improve in all business segments on a seasonally adjusted basis.

Total Energy previously announced a preliminary 2022 capital expenditure budget of $26.1 million that will be directed towards the continued expansion of the CPS segment’s parts and service and compression rental business lines as well as the maintenance and upgrade of equipment in all business segments in direct response to increasing customer demand. Total Energy expects to fund its current 2022 capital budget with cash on hand and cash flow.

On January 12, 2022 Total Energy extended the maturity of its primary bank credit facility to November 10, 2024. Given the Company’s strong liquidity position, significant reduction in bank debt since the previous extension and desire to reduce standby charges, Total Energy requested that its primary credit facility be reduced by $30 million to $220.0 million. Following an additional $20.0 million of voluntary debt repayment thus far in 2022, $115.0 million of credit is currently available on the Company’s existing $225.0 million of revolving bank credit facilities.

While commodity prices are strong, oil and gas producers have generally restrained their exploration and development activities as compared to previous periods of similar high oil and natural gas prices. In such environment, Total Energy remains focused on the safe and efficient operation of its business, debt repayment, disciplined capital deployment and improving shareholder returns, including through share repurchases under its normal course issuer bid. Subsequent to December 31, 2021 the Company has repurchased and cancelled an additional 290,000 common shares at a total cost of $1.8 million, resulting in a current outstanding share count of 42.71 million. Total Energy continues to identify and explore opportunities to leverage its equipment, technologies and expertise to pursue new business opportunities, including in the areas of alternative resource extraction, emerging energy technologies and emissions reduction and sequestration.

Conference Call

At 9:00 a.m. (Mountain Time) on March 11, 2022 Total Energy will conduct a conference call and webcast to discuss its fourth 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 April 11, 2022 by dialing (855) 669-9658 (passcode 8481).

Selected Financial Information

Selected financial information relating to the three months and year ended December 31, 2021 and 2020 is included in this news release. This information should be read in conjunction with the 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 reproduced in the Company’s 2021 Annual report.

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

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

Consolidated Statements of Comprehensive Income (Loss)

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

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 December 31, 2021 (unaudited, in thousands of Canadian dollars)

As at and for the three months ended December 31, 2020 (unaudited, in thousands of Canadian dollars)

⁽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 2021 Financial Statements for further details.
⁽³⁾ Includes property, plant and equipment, lease asset (excluding current portion) and goodwill.

As at and for the year ended December 31, 2021 (audited, in thousands of Canadian dollars)

As at and for the year ended December 31, 2020 (audited, in thousands of Canadian dollars)

⁽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 2021 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

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.