November 9, 2016 - 6:39 PM EST
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Trican Well Service Ltd. Reports Third Quarter Results for 2016

CALGARY, ALBERTA--(Marketwired - Nov. 9, 2016) - Trican Well Service ("Trican" or the "Company") (TSX:TCW) announced its third quarter 2016 results earlier today. The following press release should be read in conjunction with the Management's Discussion and Analysis, the consolidated interim financial statements and subsequent notes of Trican for the three and nine months ended September 30, 2016, as well as the Annual Information Form for the year ended December 31, 2015. All of the above documents are available on Trican's website at and on SEDAR at

  Three months ended   Nine months ended  
  Sept. 30,   Sept. 30, June 30,   Sept. 30,   Sept. 30,  
($ millions, except per share amounts; unaudited) 2016   2015 2016   2016   2015  
Revenue 78.0   192.5 32.5   210.4   492.0  
Operating income / (loss)(1) (6.8 ) 29.4 (29.2 ) (62.4 ) 1.4  
Adjusted operating income / (loss)(1) (3.2 ) 32.2 (19.1 ) (38.5 ) 15.5  
Gross profit / (loss) (13.7 ) 18.1 (28.5 ) (73.5 ) (19.5 )
Net income / (loss) (14.7 ) 10.1 (40.4 ) (97.7 ) (46.3 )
  Per share - basic and diluted (0.08 ) 0.07 (0.26 ) (0.59 ) (0.31 )
Funds provided by / (used in) operations(1) (8.2 ) 29.9 (34.6 ) (79.3 ) (14.5 )
(1) Trican makes reference to operating income / (loss), adjusted operating income / (loss) and funds provided by / (used in) operations. These measures are not recognized under International Financial Reporting Standards (IFRS) and are considered non-GAAP measures. Management believes that, in addition to gross profit / (loss) and profit / (loss), operating income / (loss), adjusted operating income / (loss)and funds provided by / (used in) operations are useful supplemental measures. Operating income / (loss) provides investors with an indication of profit / (loss) before depreciation and amortization, foreign exchange gains and losses, asset impairment, other (income) / loss, finance costs and income tax expense / (recovery). Adjusted operating income / (loss) provides investors with an indication of comparable operating income / (loss), which exclude items that are significant but not reflective of our underlying operations for the period. Funds provided by / (used in) operations provide investors with an indication of cash available for capital commitments, debt repayments and other expenditures. Investors should be cautioned that operating income / (loss), adjusted operating income / (loss) and funds provided by / (used in) operations should not be construed as an alternative to gross profit / (loss) or profit / (loss) determined in accordance with IFRS as an indicator of Trican's performance. Trican's method of calculating operating income / (loss), adjusted operating income / (loss) and funds provided by / (used in) operations may differ from that of other companies and accordingly may not be comparable to measures used by other companies. See also "Non-GAAP Disclosure" section of this report.


Consolidated revenue from continuing operations for the third quarter of 2016 was $78.0 million, a decrease of 59% compared to the third quarter of 2015. The adjusted operating loss for the quarter was $3.2 million which is $35.4 million less than the operating income experienced in Q3 2015. The large revenue drop experienced was partially mitigated by ongoing cost control initiatives that were implemented in the last few quarters. Trican's Canadian operations' fixed cost structure has been significantly reduced as a combination of workforce reductions, discretionary spending reductions, lower compensation programs and the transition to a day rate field compensation system at the beginning of June. These reductions have resulted in a fixed cost reduction of 46% when compared to Q1 levels and 7% when compared to Q2 levels. If Trican had not implemented temporary salary rollbacks during Q2 2016, the Q2 fixed cost structure would have been higher by $5.3 million, which means that the Q3 2016 cost structure effectively reduced 24% from Q2 levels.

Revenue was down significantly compared to last year due to adverse weather, customer delays and significantly lower pricing. The Company continued to have 50% of its equipment parked during the quarter. Utilization on the active equipment was high in our cementing, coiled tubing, and acidizing service lines and lower than planned in our fracturing and nitrogen service lines as scheduling gaps occurred due to weather and customer delays . Our fracturing equipment was fully booked through the quarter and most work that was delayed was pushed into the fourth quarter. The Company estimates that it had the potential to generate an additional $12.0 to $18.0 million in fracturing revenue if wet weather and customer delays were not encountered during the quarter.

Pricing has been negatively affected by market conditions, and as a result, Q3 2016 pricing did not recover as much as originally anticipated. Pricing improved sequentially and exited the quarter near Q1 2016 levels, but on a quarterly average is still down 3% when compared to Q1 2016. Low pricing for our services remains one of the key issues for Trican and as a result, the Company has been focused on improving pricing since August. There was a 9.3% improvement compared to Q2 and we are seeing some additional improvements in Q4 and anticipate further progress in 2017.

The operating loss for the quarter was $6.8 million, and $3.2 million on an adjusted basis. As the Company continued to reduce its fixed cost structure between Q2 and Q3, it incurred severance and reorganization costs of $2.2 million over the period which have been removed in calculating adjusted operating income. Other items removed in calculating adjusted operating income include amortization of debt costs, and equity-settled share-based compensation. Funds used in operations were $8.2 million compared to funds provided by operations of $29.9 million in the third quarter of 2015.

As Trican remains focused on the Canadian pressure pumping market and controlling its cost structure, total overhead expenses (adjusted corporate expenses combined with adjusted general and administrative costs) decreased year over year by $1.3 million and decreased sequentially by $4.6 million.

The company also successfully closed the sale of its Kazakhstan pressure pumping business to Petro Welt Technologies during the quarter. This sale agreement includes the purchasing company acquiring the complete business in Kazakhstan and all associated equipment, facilities, products, and employees.


Canadian Operations

Trican has experienced a meaningful increase in demand for its services during the third quarter with most service lines running at full utilization on the 50% of the equipment we have active except for fracturing services. Trican believes we are in an environment where oil and gas prices are stabilizing at a sustainable level and as a result, we expect demand for the Company's services will continue to gradually rise during the fourth quarter and first quarter of 2017. All service lines with the exception of nitrogen are fully booked during the fourth quarter based upon available equipment and crews. We are still seeing some weather and road ban delays in October but less than we saw in September and we anticipate that once the ground freezes we should be able to get back to normal scheduling in November. As usual, we anticipate a slowing at the end of December for the holiday season but at this time, cannot predict whether that slowing will occur in the middle or late December. As commodity prices steady and activity levels continue to rise, we expect our customers to increase capital budgets for 2017. The combination of increasing activity levels and strong customer relationships leads us to believe that our active equipment fleet will be near full utilization throughout the fourth quarter and carrying into 2017. That being said, pricing increases for our services, minimizing equipment non-productive time, focusing on job efficiencies and effective cost management are critical to Trican's profitability in the current industry environment. 

Service intensity remains strong as sand per well and sand per stage have both increased significantly year over year. Activity in liquids rich gas plays in areas such as the Montney, Deep Basin, and Duvernay remains strong and is expected to continue to trend positively. As the price of oil continues to improve, we anticipate a meaningful increase in Cardium, Viking and other oil related plays throughout the remainder of 2016 and into 2017. 

We are not currently anticipating activating any additional equipment. However, management will consider activating parked equipment if service prices increase to a sustainable level and we are confident that long-term demand exists. Staffing challenges and labour constraints are beginning to emerge and may become a significant risk to activating parked equipment in the future.

The Company experienced some improvement in prices near the end of the third quarter, which brought prices to near Q1 levels. We believe that with the expected increase in demand on the active fleet, further price improvements will be realized throughout Q4 and continue into 2017. Customers have been more likely to commit to work programs throughout the fourth quarter and though meaningful improvements in prices have yet to be realized, we are confident that we have seen the bottom in pressure pumping prices and are in an environment where we expect them to gradually improve. 

With higher activity levels and an improved pricing environment, management believes Trican is in a position to realize improved margins and cash flow in the coming quarters. The Company has committed to strengthening its balance sheet throughout this downturn and we believe that we are well positioned to remain a segment leader in the Canadian market and take advantage of the recent and further expected improvements in the industry.

Keane Investment

As conditions in the oilfield services industry continue to improve Keane is evaluating strategic alternatives. The implementation of any strategic alternative is subject to market conditions and other considerations and there can be no assurances that any strategic alternative would be implemented.


Please see the discussion in non-GAAP Disclosure section of the MD&A for the reconciliation of non-GAAP items to IFRS measures.


This document contains certain forward-looking information and financial outlook based on Trican's current expectations, estimates, projections and assumptions that were made by the Company in light of information available at the time the statement was made. Forward-looking information and financial outlook that address expectations or projections about the future, and other statements and information about the Company's strategy for growth, expected and future expenditures, costs, operating and financial results, future financing and capital activities are forward-looking statements. Some forward-looking information and financial outlook are identified by the use of terms and phrases such as "anticipate", "achieve", "estimate", "expect", "intend", "plan", "planned", and other similar terms and phrases. This forward-looking information and financial outlook speak only as of the date of this document and we do not undertake to publicly update this forward-looking information and financial outlook except in accordance with applicable securities laws. This forward-looking information and financial outlook include, among others:

  • Anticipated adjustments to our active equipment fleet, and related adjustments to cost structure;
  • Anticipated industry activity levels in jurisdictions of the Company's operations for the remainder of 2016 and entering 2017, as well as customer work programs and equipment utilization levels;
  • Anticipated commodity price levels and rig count information;
  • Expectations regarding the success of its cost control measures and further cost reductions;
  • Expectations regarding capital spending during 2016 and 2017;
  • Expectations regarding the Company's financial results, working capital levels, liquidity and profits;
  • Expectations regarding activity levels in certain areas, formations, and plays;
  • Expectations regarding service intensity;
  • Expectations regarding pricing of the Company's services;
  • Expectations surrounding weather and seasonal slowdowns.

Forward-looking information and financial outlook is based on current expectations, estimates, projections and assumptions, which we believe are reasonable but which may prove to be incorrect. Trican's actual results may differ materially from those expressed or implied and therefore such forward-looking information and financial outlook should not be unduly relied upon. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things; Trican's ability to continue its operations for the foreseeable future and to realize its assets and discharge its liabilities and commitments in the normal course of business; Trican being compliant with debt and other covenants; industry activity levels, including its effect of reducing the Company's capital and maintenance expenditures; the completion of currently planned work activities by our customers; the general stability of the economic and political environment; effect of market conditions on demand for the Company's products and services and prices that can be obtained for those products and services; the ability to achieve planned cost reductions; the ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability to operate its business in a safe, efficient and effective manner; the performance and characteristics of various business segments; the effect of current plans; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters; changes in competition and pricing in the oilfield service business; and unanticipated costs and liabilities.

Forward-looking information and financial outlook is subject to a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks and uncertainties include: failure to meet the agreed upon covenants with the Company's lenders; fluctuating prices for crude oil and natural gas; changes in drilling activity; general global economic, political and business conditions; changes in interest rates; competitive and business conditions in the markets where the Company operates; weather conditions; regulatory changes; the successful exploitation and integration of technology; customer acceptance of technology; success in obtaining and defending issued patents; the potential development of competing technologies by market competitors; and availability of products, qualified personnel, manufacturing capacity and raw materials. The foregoing important factors are not exhaustive. In addition, actual results could differ materially from those anticipated in forward-looking information provided herein as a result of the risk factors set forth under the section entitled "Risks Factors" in our Annual Information Form dated March 29, 2016, and under the section entitled "Business Risks" in our management's discussion and analysis for the year ended December 31, 2015. Readers are also referred to the risk factors and assumptions described in other documents filed by the Company from time to time with securities regulatory authorities.

Trican undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward looking information.

Additional information regarding Trican including Trican's most recent annual information form is available under Trican's profile on SEDAR (


The Company will host a conference call on Thursday, November 10, 2016 at 9:30 a.m. MT (11:30 a.m. ET) to discuss the Company's results for the 2016 Third Quarter.

To listen to the webcast of the conference call, please enter: in your web browser or visit the Investors section of our website at and click on "Reports".

To participate in the Q&A session, please call the conference call operator at 1-866-225-9256 (North America) or 416-340-8010 (outside North America) 15 minutes prior to the call's start time and ask for the "Trican Well Service Ltd. Third Quarter 2016 Earnings Results Conference Call".

A replay of the conference call will be available until November 17, 2016 by dialing 1-800-408-3053 (North America) or 905-694-9451 (outside North America). Playback passcode: 2018746. The conference call will be archived on Trican's website at

Headquartered in Calgary, Alberta, Trican provides a comprehensive array of specialized products, equipment and services that are used during the exploration and development of oil and gas reserves.

Please visit our website at

Requests for further information should be directed to:
Trican Well Service
Dale Dusterhoft
President & Chief Executive Officer
[email protected]

Trican Well Service
Michael Baldwin
Senior Vice President, Finance & CFO
[email protected]

Trican Well Service
(403) 266-0202
(403) 237-7716 (FAX)
2900, 645 - 7th Avenue S.W.
Calgary, Alberta T2P 4G8

Source: Marketwired (November 9, 2016 - 6:39 PM EST)

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