Savanna Energy Services Corp. Announces Second Quarter 2015 Results

Savanna generated revenue of $92.7 million, EBITDAS of $24.1 million and a net loss, attributable to shareholders of the Company, of $10.5 million or $0.12 per share in the second quarter of 2015, compared to revenue of $148.9 million, EBITDAS of $14.4 million and a net loss, attributable to shareholders of the Company, of $12.0 million or 13 cents per share in Q2 2014. The $9.7 million increase in EBITDAS, despite a 38% decline in revenue, was attributable to $5.6 million of Q1 2015 stand-by that was the subject of a negotiation concluded in Q2 2015, operating margins generated from the twelve contracted new-builds added in late 2014 and early 2015, restructuring efforts and cost control initiatives. Severance costs, which were $8.5 million in Q1 2015, declined to $0.8 million in Q2 2015. While lower than in Q2 2014, Savanna’s Q2 2015 net loss was impacted by higher depreciation, which was the result of changing the company’s accounting method from operating days or hours to years, and higher income tax expenses. The company’s long-term debt balance declined by $27.2 million in the quarter to $319.9 million. Of the decrease, $11.2 million was related to the realization working capital, with the remainder realized through operating cash flow and proceeds on asset sales.

Compared to the prior year, each of the countries in which the company operates benefited from new rigs on long-term contracts and lower operating expenses, which largely mitigated the significant declines in revenue due to lower activity levels. In Canada, revenues declined by $39.7 million and operating margins declined by only $4.1 million. In the U.S., revenues declined by $25.1 million and operating margins declined by only $1.8 million. In Australia, excluding the $5.6 million of stand-by attributable to Q1 2015, revenues were $3 million higher and operating margins were $6.5 million higher. Savanna’s overall operating margin in Q2 2015 was $6.2 million higher relative to Q2 2014, of which $5.6 million was related to the Q1 2015 stand-by. General and administrative expenses declined from $13.4 million in Q2 2014 to $9.9 million in Q2 2015, which included $0.5 million of general and administrative related severance costs. As a result, EBITDAS was $9.7 higher than Q2 2014.

In Canada, long-reach drilling, well servicing and rentals all experienced significant activity declines, which resulted in lower revenue and operating margins compared to Q2 2014. However, the significant restructuring and cost control efforts undertaken by Savanna in the first half of 2015 led to improved operating margin percentages in each of the divisions above, relative to Q2 2014. Savanna generated $5.8 million in operating margins on $24.6 million of revenue in Canada in Q2 2015, compared to $9.9 million in operating margins on $64.3 million of revenue in Q2 2014. Sequentially, operating margins decreased from the $23.6 million generated on $83.8 million of revenue in Canada in Q1 2015. The decrease sequentially was based on seasonal decreases in activity in Canadian long-reach drilling, shallow drilling, and oilfield services, which were magnified in 2015 by the prevailing low industry activity levels.

Read More: http://www.savannaenergy.com/docs/press%20release.svy.q2.2015.aug.4.2015.pdf

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