Cordy Oilfield Services Inc. Reports Third Quarter 2020 Results

Cordy Oilfield Services Inc.
·7-min read

CALGARY, Alberta, Nov. 26, 2020 (GLOBE NEWSWIRE) -- CORDY OILFIELD SERVICES INC. (the “Corporation” or “Cordy”) (CKK: TSX-V) released today its third quarter 2020 results.

Three months ended September 30,

Nine months ended September 30,

($ 000's)

2020

2019

($) Change

2020

2019

($) Change

Revenue

Environmental Services

3,024

3,881

(857

)

12,557

12,385

172

Heavy Construction

60

122

(62

)

272

414

(142

)

Corporate

-

-

-

15

5

10

3,084

4,003

(919

)

12,844

12,804

40

Direct operating expenses

Environmental Services

2,029

2,855

(826

)

9,146

9,331

(185

)

Heavy Construction

20

80

(60

)

118

231

(113

)

Corporate

-

-

-

-

-

-

2,049

2,935

(886

)

9,264

9,562

(298

)

General and administrative expenses

Environmental Services

269

285

(16

)

511

587

(76

)

Heavy Construction

0

-

0

2

2

(0

)

Corporate

206

233

(27

)

628

724

(96

)

475

518

(43

)

1,141

1,313

(172

)

Operating earnings (loss)

Environmental Services

726

741

(15

)

2,900

2,467

433

Heavy Construction

40

42

(2

)

152

181

(29

)

Corporate

(206

)

(233

)

27

(613

)

(719

)

106

560

550

10

2,439

1,929

510

Depreciation

625

477

148

1,742

1,469

273

Finance costs

261

198

63

727

598

129

Gain (loss) on disposal

-

(86

)

86

-

(483

)

483

Share-based recovery

-

-

-

-

-

-

Earnings (loss) before tax

(326

)

(39

)

(287

)

(31

)

345

(376

)

Income tax expense

-

-

-

-

-

-

Net earnings (loss)

(326

)

(39

)

(287

)

(31

)

345

(376

)

Third Quarter Financial Summary:

  • Revenue for the three and nine months ended September 30, 2020 down 23% for the quarter but even for the year;

    • total revenue of $3.1 million for the quarter, a decrease of $0.9 million, or 23% compared to $4.0 million in 2019;

    • total revenue of $12.8 million year-to-date compared to $12.8 million in 2019.

  • Operating earnings for the three and nine months ended September 30, 2020 up 2% on the quarter and up 26% for the year;

    • total operating earnings of $0.56 million for the quarter, a slight increase compared to $0.55 million in 2019;

    • total operating earnings of $2.4 million, an increase of $0.5 million, or 26% compared to $1.9 million in 2019.

  • Net (loss) earnings for the three and nine months ended September 30, 2020 down on the quarter and down on the year;

    • net loss of $0.3 million for the quarter, a decrease of $0.3 million, compared to a net loss of $0.03 million in 2019;

    • net loss of $0.03 million year to date, a decrease of $0.4 million, compared to net earnings of $0.3 million in 2019.

  • Canadian Emergency Wages Subsidy (“CEWS”) for the three and nine months ended September 30, 2020 was $0.5 million and $1.1 million respectively;

    • $0.4 million recognized as reduction to Direct Operation Expenses (“DOE”) and $0.1 million recognized as a reduction to general and administrative (“G&A”) expense during the quarter;

    • $0.9 million recognized as reduction to Direct Operation Expenses (“DOE”) and $0.2 million recognized as a reduction to general and administrative (“G&A”) expense year-to-date.

OVERALL PERFORMANCE

The third quarter, along with the previous first half of 2020, presented the business with some of its toughest challenges to date. Most notably, the global spread of COVID-19 created unprecedented uncertainty and volatility in the oil and gas industry, particularly in the Western Canadian Sedimentary Basin. The demand for oil significantly deteriorated, as non-essential business around the globe, came to a grinding halt, and swiftly drove pricing into uneconomical territory, impacting the capital programs that drive a significant portion of Cordy’s business. Compounding the crisis, the Company had to quickly redesign its day to day business model, implementing new health and safety protocols, to mitigate the risk of contracting or spreading COVID-19 for our people, our customers, and their families.

Despite the challenges, Cordy was able to manage through, what it believes was, the toughest stretch of 2020. The reopening of the economies around the globe has resulted in a return of oil and gas pricing to economical levels, and general business activity has started to slowly rebound as businesses and customers, adapt to the new rules of doing business in the COVID-19 era.

OUTLOOK

Operating results for the third quarter were encouraging, and management sees this trend continuing for the balance of 2020. In its Q2 outlook, management indicated that it believed the worst of the economic impact on the Company from COVID-19 appeared to have passed, and this continues to be management’s view. The timing of a full rebound in activity remains uncertain; however, the recent announcements of successful Phase 3 results, showing safe, effective coronavirus vaccines, provide optimism for the continuation of gradual recovery over the next six to twelve months.

Despite the near-term market uncertainty resulting from the ongoing COVID-19 pandemic, the Company expects activity in the fourth quarter to continue to improve sequentially over the third quarter. Cordy’s oilfield customers reactivated drilling programs, albeit at a reduced level, early in the fourth quarter. If current market conditions persist, this trend is expected to continue through the end of the first quarter of 2021 based on current work programs.

The company recognizes that any improvement in activity will be impacted by announced reductions in the Canada Emergency Wage Subsidy, which will likely impact overall margin. Furthermore, the uncertainty around the prolonged effects of COVID–19, the timing and availability of the vaccinations, and potential of strict lock-downs due recent surges in the number of active COVID-19 cases, are challenging to predict and any change in the current trends could significantly alter management’s expectations over the medium term.

For the balance of 2020, and the foreseeable future, Cordy will continue to aggressively manage costs, while continuing to focus on the health and safety of its employees, contractors, and customers, ensuring it is doing its part in mitigating the spread, and limiting the impact of COVID-19.

For general and investor relations information, please contact:

Darrick Evong
Chief Executive Officer
IR@cordy.ca
Tel: 403-262-7667

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

READER ADVISORY

This News Release contains certain statements that constitute forward-looking statements. These statements relate to future events or the Corporation’s future performance. All statements, other than statements of historical fact, that address activities, events or developments that the Corporation or a third party expects or anticipates will or may occur in the future, are forward-looking statements. These include the Corporation’s future growth, results of operations, performance and business prospects and opportunities; prevailing economic conditions; commodity prices; sourcing, pricing and availability of raw materials, components and parts, equipment, suppliers, facilities and skilled personnel; dependence on major customers; uncertainties in weather and temperature affecting the duration of the service periods and the activities that can be completed; regional competition; and other factors, many of which are beyond the Corporation’s control. These other factors include future prices of oil and natural gas and oil and natural gas industry activity, including the effect of changes in commodity prices on oil and natural gas exploration and development activity, the ability to complete strategic acquisitions and realize the anticipated benefits of any acquisitions that are completed, the Corporation’s outlook regarding the competitive environment it operates in, and the assumptions underlying any of the foregoing. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors, many of which are beyond the Corporation’s control, including those discussed under “Risks and Uncertainties” and elsewhere in this News Release, that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Corporation believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this News Release should not be unduly relied upon. These statements speak only as of the date of this News Release. The Corporation does not intend, and does not assume any obligation, to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable securities laws. The forward-looking statements contained in this News Release are expressly qualified by this cautionary statement.