mansfredinnovation

mansfredinnovation Services Inc. Reports 2022 Results

ugom — Fri, 03 Mar 2023 10:10:02 +0000

CALGARY, AB, March 3, 2023 /CNW/ –

2022 HIGHLIGHTS

Revenue for 2022 was $1,577.3 million, a 58 percent increase from 2021 revenue of $995.6 million.
Revenue amounts and percentage of total by geographic area:

Canada – $435.0 million, 28 percent;
United States – $892.1 million, 56 percent; and
International – $250.3 million, 16 percent.

Canadian drilling recorded 13,589 operating days in 2022, a 51 percent increase from 8,979 operating days in 2021. Canadian well servicing recorded 47,269 operating hours in 2022, a 30 percent increase from 36,254 operating hours in 2021.
United States drilling recorded 17,928 operating days in 2022, a 46 percent increase from 12,242 operating days in 2021. United States well servicing recorded 124,035 operating hours in 2022, a one percent decrease from the 124,916 operating hours in 2021.
International drilling recorded 3,973 operating days in 2022, an 11 percent increase from 3,574 operating days recorded in 2021.
Adjusted EBITDA for 2022 was $373.6 million, a 75 percent increase from Adjusted EBITDA of $213.2 million for 2021.
Funds flow from operations for 2022 increased 95 percent to $372.0 million from $190.7 million in the prior year.
During 2022, the Company did not recognize any Canada Emergency Wage Subsidy program payments as compared with $16.0 million recognized in 2021.
Net capital expenditures for the calendar year 2022 totaled $126.8 million, consisting of $68.8 million in upgrade capital, $105.6 million in maintenance capital, offset by proceeds of $47.5 million from equipment disposals. Within the upgrade and growth capital, two drilling rigs were reactivated in Oman in the fourth quarter of 2022, and a third rig in Oman will be reactivated in the first half of 2023. In addition, as at December 31, 2022, 31 drilling rigs have been reactivated and upgraded during 2022. Capital expenditures for the calendar year 2023 are targeted to be approximately $157.0 million, primarily related to maintenance expenditures and selective growth projects. In addition, the Company may consider additional upgrade or growth projects in response to customer demand and appropriate contract terms.
Long-term debt, net of cash, was reduced by $50.9 million since December 31, 2021. Our debt reduction for 2023 is targeted to be approximately $200.0 million. Our target debt reduction for the period beginning 2023 to the end of 2025 is approximately $600.0 million. If industry conditions change, this target could be increased or decreased.
General and administrative expense increased 27 percent to $48.6 million (3.1 percent of revenue) for year-ended 2022 from $38.2 million (3.8 percent of revenue) for year-ended 2021.
On June 7, 2022, the Company settled its Convertible Debentures of $37.0 million through the issuance of 21,142,857 common shares of the Company at conversion price of $1.75.
During the fourth quarter of 2022, the Company sold its Canadian directional drilling business, including all operating assets and personnel for a purchase price of $5.0 million to Cathedral Energy Services Ltd. ("Cathedral"). The purchase price was satisfied through the issuance of 7,017,988 common shares of Cathedral to the Company. As part of the transaction, Cathedral and the Company have entered into a marketing and technology alliance which will further help support and expand the customer base of both companies in the Canadian market.
Due to the strong financial performance of the Company in 2022, the annual bonus and performance share unit payments to employees and management of the Company was capped at 5% of 2022 EBITDA, in accordance with the Company’s compensation plan. The Company believes that this level of payments provides incentive to employees and management to achieve strong financial performance while at the same time providing shareholders with returns on their investment.

OVERVIEW

Revenue for the year ended December 31, 2022 was $1,577.3 million, an increase of 58 percent from 2021 revenue of $995.6 million. Adjusted EBITDA for 2022 totaled $373.6 million ($2.13 per common share), 75 percent higher than Adjusted EBITDA of $213.2 million ($1.31 per common share) for the year ended 2021.

Net income attributed to common shareholders for the year ended December 31, 2022 was $8.1 million ($0.05 per common share) compared with a net loss attributed to common shareholders of $159.5 million ($0.98 per common share) for the year ended December 31, 2021.

During 2022, the Company did not recognize any Canada Emergency Wage Subsidy program payments as compared with $16.0 million recognized in 2021.

During the fourth quarter of 2022, the Company sold its Canadian directional drilling business, including all operating assets and personnel for a purchase price of $5.0 million to Cathedral Energy Services Ltd. ("Cathedral"). The purchase price was satisfied through the issuance of 7,017,988 common shares of Cathedral. As part of the transaction, Cathedral and the Company have entered into a marketing and technology alliance which will further help support and expand the customer base of both companies in the Canadian market.

The Company’s operating days were higher in 2022, as compared with 2021, as a result of supportive industry conditions driving activity improvements year-over-year.

The outlook for oilfield services continues to be positive reflecting year-over-year increases in oilfield services demand and activity. Global inflationary concerns have continued to prompt central banks to tighten monetary policies. Increasing interest rates, largely resulting from efforts to quell rising inflation, have subsequently led to uncertainty for global economies regarding recession risk and contracting economic growth. These factors continue to impact global energy commodity prices and add uncertainty to the macro-economic outlook over the short-term.

However, despite a potential economic slowdown in select major economies, demand for crude oil continues to improve year-over-year. Furthermore, OPEC+ nations continue to moderate supply and respond to market conditions. Moderate crude oil supply, coupled with positive commodity prices, have resulted in increased demand for oilfield services, driving both improved activity and drilling rig rates in the Company’s North American segments year-over-year.

Over the near term, there remains uncertainty regarding the impacts of ongoing hostilities in Ukraine on the global economy and overall economic health and recessionary pressures in certain operating environments. Furthermore, there are several other factors that may impact the demand for crude oil and natural gas, commodity prices, and the demand for oilfield services.

The Company exited 2022 with a working capital deficit of $707.8 million, compared with a working capital surplus of $104.2 million as of December 31, 2021. The change in working capital year-over-year was largely due to its $900.0 million revolving credit facility (the "Credit Facility") being classified as current. The Company has a history with successfully negotiating contractual terms and extending the maturity of the Credit Facility. The Company’s available liquidity consisting of cash and available borrowings under its Credit Facility totaled $67.2 million as of December 31, 2022, compared to $15.8 million at December 31, 2021. The available liquidity increased by $51.4 million primarily due to the increase in operating activity and increasing funds flow from operations.

This news release contains "forward-looking information and statements" within the meaning of applicable securities legislation. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Advisory Regarding Forward-Looking Statements" later in this news release. This news release contains references to Adjusted EBITDA and Adjusted EBITDA per common share. These measures do not have any standardized meaning prescribed by IFRS and accordingly, may not be comparable to similar measures used by other companies. The non-GAAP measures included in this news release should not be considered as an alternative to, or more meaningful than, the IFRS measure from which they are derived or to which they are compared. See "Non-GAAP Measures" later in this news release.

FINANCIAL AND OPERATING HIGHLIGHTS

(Unaudited, in thousands of Canadian dollars, except per share data and operating information)

	Three months ended December 31			Twelve months ended December 31
	2022	2021	% change	2022	2021	% change
Revenue	467,980	296,166	58	1,577,329	995,594	58
Adjusted EBITDA ¹	129,963	57,861	nm	373,618	213,173	75
Adjusted EBITDA per common share ¹
Basic	$ 0.76	$ 0.35	nm	$ 2.13	$ 1.31	63
Diluted	$ 0.76	$ 0.36	nm	$ 2.12	$ 1.31	62
Net (loss) income attributable to common shareholders	11,897	(29,235)	nm	8,128	(159,475)	nm
Net (loss) income attributable to common shareholders per common share
Basic	$ 0.07	$ (0.18)	nm	$ 0.05	$ (0.98)	nm
Diluted	$ 0.07	$ (0.18)	nm	$ 0.05	$ (0.98)	nm
Cash provided by operating activities	121,497	39,221	nm	319,962	178,642	79
Funds flow from operations	110,361	46,644	nm	371,956	190,695	95
Funds flow from operations per common share
Basic	$ 0.65	$ 0.28	nm	$ 2.12	$ 1.17	81
Diluted	$ 0.65	$ 0.29	nm	$ 2.11	$ 1.17	80
Long-term debt, net of cash ²	507,009	1,440,579	(65)	507,009	1,440,579	(65)
Weighted average common shares – basic (000s)	183,574	162,385	13	175,578	162,541	8
Weighted average common shares – diluted (000s)	184,652	163,454	13	176,430	163,195	8
Drilling	2022	2021	% change	2022	2021	% change
Number of marketed rigs ³
Canada ⁴	123	127	(3)	123	127	(3)
United States	89	93	(4)	89	93	(4)
International ⁵	34	42	(19)	34	42	(19)
Total	246	262	(6)	246	262	(6)

Operating days ⁶
Canada ⁴	3,483	3,229	8	13,589	8,979	51
United States	5,026	3,688	36	17,928	12,242	46
International ⁵	1,074	942	14	3,973	3,574	11
Total	9,583	7,859	22	35,490	24,795	43

Well Servicing	2022	2021	% change	2022	2021	% change
Number of rigs
Canada	47	52	(10)	47	52	(10)
United States	47	48	(2)	47	48	(2)
Total	94	100	(6)	94	100	(6)

Operating hours
Canada	11,053	9,821	13	47,269	36,254	30
United States	30,744	29,419	5	124,035	124,916	(1)
Total	41,797	39,240	7	171,304	161,170	6

nm – calculation not meaningful

1. Refer to Adjusted EBITDA calculation in Non-GAAP Measures.

2. Change in long-term debt, net of cash was largely due to its $900.0 million revolving credit facility being classified as current.

3. Total rigs: Canada – 131, United States – 117, International – 43 (2021: Canada – 137, United States – 127, International – 48).

4. Excludes coring rigs.

5. Includes workover rigs

6. Defined as contract drilling days, between spud to rig release.

FINANCIAL POSITION AND CAPITAL EXPENDITURES HIGHLIGHTS

As at ($ thousands)	2022	2021	2020
Working capital (deficit)^{1, 2}	(707,800)	104,228	103,036
Cash	49,880	13,305	44,198
Long-term debt	556,889	1,453,884	1,384,605
Long-term debt, net of cash	507,009	1,440,579	1,340,407
Total long-term financial liabilities	562,837	1,458,211	1,390,647
Total assets	3,183,904	2,977,054	3,054,493
Long-term debt to long term-debt plus shareholder’s equity ratio	0.30	0.55	0.50

¹ See Non-GAAP Measures section.

²Change in working capital (deficit), was largely due to its $900.0 million revolving credit facility being classified as current.

Three months ended December 31

Twelve months ended December 31

($ thousands)

2022

2021

% change

2022

2021

% change

Capital expenditures

Upgrade/growth

13,748

3,395

68,763

20,492

Maintenance

27,491

19,518

105,630

44,760

Proceeds from disposals of property and equipment

(608)

(2,581)

(76)

(47,544)

(7,228)

Net capital expenditures before acquisitions

40,631

20,332

126,849

58,024

Acquisition of 35 drilling rigs, related equipment, land and buildings

—

117,928

Net capital expenditures

40,631

20,332

126,849

175,952

(28)

nm – calculation not meaningful

REVENUE AND OILFIELD SERVICES EXPENSE

	Three months ended December 31			Twelve months ended December 31
($ thousands)	2022	2021	% change	2022	2021	% change
Revenue
Canada	121,668	90,243	35	434,982	249,679	74
United States	274,324	152,361	80	892,086	538,896	66
International	71,988	53,562	34	250,261	207,019	21
Total revenue	467,980	296,166	58	1,577,329	995,594	58

Oilfield services expense	325,247	228,146	43	1,155,083	744,195	55

Revenue for the year ended December 31, 2022 totaled $1,577.3 million, a 58 percent increase from the year ended December 31, 2021 revenue of $995.6 million. The increase in total revenue during the year ended December 31, 2022 was primarily due to favourable industry conditions and supportive oil and natural gas commodity prices, increasing demand for oilfield services. A positive foreign exchange translation impact further contributed to the increase in revenue reported in Canadian currency. In addition, operational activity increased as a result of the Company’s timing of the acquisition of 35 land-based drilling rigs in Canada during the third quarter of 2021. The Company recorded revenue of $468.0 million for the three months ended December 31, 2022, a 58 percent increase from the $296.2 million recorded in the three months ended December 31, 2021.

CANADIAN OILFIELD SERVICES

	Three months ended December 31			Twelve months ended December 31
	2022	2021	% change	2022	2021	% change
Marketed drilling rigs^1,2
Opening balance	123	127		127	101
Acquisition	—	—		—	35
Placed into reserve	—	—		(4)	(9)
Ending balance	123	127	(3)	123	127	(3)
Drilling operating days³	3,483	3,229	8	13,589	8,979	51
Drilling rig utilization (%)¹	27.6	22.9	21	27.1	18.5	46
Well servicing rigs
Opening balance	52	52		52	52
Decommissions	(5)	—		(5)	—
Ending balance	47	52	(10)	47	52	(10)
Well servicing operating hours	11,053	9,821	13	47,269	36,254	30
Well servicing utilization (%)	23.1	20.5	13	24.9	19.1	30

¹Excludes coring rig fleet.

²Total rigs: 131, (2021 – 137).

³Defined as contract drilling days, between spud to rig release.

The Company recorded revenue of $435.0 million in Canada for the year ended December 31, 2022, an increase of 74 percent from $249.7 million recorded for the year ended December 31, 2021. Revenue generated in Canada increased by 35 percent to $121.7 million for the three months ended December 31, 2022, from $90.2 million for the three months ended December 31, 2021. For the year ended December 31, 2022, total revenue generated from the Company’s Canadian operations was 28 percent of the Company’s total revenue compared with 25 percent in the prior year. In the fourth quarter of 2022, Canadian revenues accounted for 26 percent of the total revenue compared with 31 percent in 2021.

For the year ended December 31, 2022, the Company recorded 13,589 drilling operating days in Canada, an increase of 51 percent as compared with 8,979 drilling operating days for the year ended December 31, 2021. During the fourth quarter of 2022 the Company recorded 3,483 operating days in Canada, an increase of eight percent from 3,229 operating days recorded during the fourth quarter of the prior year. Well servicing hours increased by 30 percent to 47,269 operating hours compared with 36,254 operating hours for the year ended December 31, 2021. Well servicing hours in the fourth quarter of 2022 were up 13 percent to 11,053 compared to the 9,821 hours in the fourth quarter of the prior year.

The operating and financial results for the Company’s Canadian operations during 2022 were positively impacted by improved industry conditions that increased both drilling and well servicing activity. In addition, operational activity increased as a result of the Company’s timing of the acquisition of 35 land-based drilling rigs in the third quarter of 2021. Offsetting the increase in financial results was the elimination of the Canada Emergency Wage Subsidy ("CEWS") program in 2021 by the Government of Canada, from which $16.0 million were received by the Company during 2021.

During 2022, the Company moved four under-utilized drilling rigs into its Canadian reserve fleet and decommissioned six non-marketed drilling rigs and five well servicing rigs.

UNITED STATES OILFIELD SERVICES

	Three months ended December 31			Twelve months ended December 31
	2022	2021	% change	2022	2021	% change
Marketed drilling rigs¹
Opening balance	89	93		93	122
Disposal	—	—		(1)	—
Placed into reserve	—	—		(3)	(29)
Ending balance	89	93	(4)	89	93	(4)
Drilling operating days²	5,026	3,688	36	17,928	12,242	46
Drilling rig utilization (%)	43.0	29.4	46	38.7	24.7	57
Well servicing rigs
Opening balance	48	48		48	47
Additions	—	—		—	1
Decommissions	(1)	—		(1)	—
Ending balance	47	48	(2)	47	48	(2)
Well servicing operating hours	30,744	29,419	5	124,035	124,916	(1)
Well servicing utilization (%)	69.6	66.6	5	70.8	71.7	(1)

¹Total rigs: 117, (2021 – 127).

²Defined as contract drilling days, between spud to rig release.

For the year ended December 31, 2022, revenue of $892.1 million was recorded in the United States, an increase of 66 percent from the $538.9 million recorded in the prior year. Revenues recorded in the United States were $274.3 million in the fourth quarter of 2022, an 80 percent increase from the $152.4 million recorded in the corresponding period of the prior year. The Company’s United States operations accounted for 56 percent of the Company’s total revenue in the 2022 fiscal year (2021 – 54 percent) and was the largest contributor to the Company’s total revenue in 2022, consistent with the prior year. During the fourth quarter of 2022, United States operations accounted for 59 percent of the Company’s revenue (2021 – 51 percent), the largest contributor to the Company’s consolidated fourth quarter revenues and consistent with the prior year.

In the United States, drilling operating days increased by 46 percent from 12,242 drilling operating days in 2021 to 17,928 operating days in 2022. For the year ended December 31, 2022, well servicing activity decreased one percent from 124,916 operating hours in 2021 to 124,035 operating hours in 2022. During the fourth quarter drilling operating days increased by 36 percent from 3,688 operating days in 2021 to 5,026 operating days in 2022. For the fourth quarter ended December 31, 2022, well servicing activity increased five percent from 29,419 operating hours in 2021 to 30,744 operating hours.

Overall operating and financial results for the Company’s United States operations reflected improved industry conditions, increased drilling activity and rig revenue rates, in addition to steady well servicing rig utilization. The financial results from the Company’s United States operations were further positively impacted on the currency translation, as the United States dollar strengthened relative to the Canadian dollar for the year ended December 31, 2022.

During 2022, the Company sold one cold stacked drilling rig from its United States operations, transferred three under-utilized drilling rigs into its United States reserve fleet and decommissioned nine non-marketed drilling rigs and one well servicing rig.

INTERNATIONAL OILFIELD SERVICES

	Three months ended December 31			Twelve months ended December 31
	2022	2021	% change	2022	2021	% change
Marketed drilling and workover rigs¹
Opening balance	34	42		42	48
Disposal	—	—		(2)	—
Placed into reserve	—	—		(6)	(6)
Ending balance	34	42	(19)	34	42	(19)
Drilling operating days²	1,074	942	14	3,973	3,574	11
Drilling rig utilization (%)	25.4	20.1	26	23.7	19.3	23

¹Total rigs: 43, (2021 – 48).

² Defined as contract drilling days, between spud to rig release.

The Company’s international revenues for the year ended December 31, 2022 increased 21 percent to $250.3 million from $207.0 million recorded in the year ended December 31, 2021. International revenue totaled $72.0 million in the fourth quarter of 2022, a 34 percent increase from $53.6 million recorded in the corresponding period of the prior year. The Company’s international operations accounted for 16 percent of the Company’s total revenue in 2022 (2021 – 21 percent). The Company’s international operations contributed 15 percent of the Company’s fourth quarter revenue in 2022 (2021 – 18 percent).

International drilling operating days totaled 3,973 in 2022 compared with 3,574 drilling operating days for the prior year, an increase of 11 percent. International operating days for the three months ended December 31, 2022 increased 14 percent to 1,074 compared to 942 operating days in the fourth quarter of 2021.

Operating and financial results from the international operations reflected a steady and incrementally positive operating environment as COVID-19 related disruptions continued to dissipate. The financial results from the Company’s international operations were further positively impacted on the currency translation, as the United States dollar strengthened relative to the Canadian dollar for the year ended December 31, 2022.

During 2022, the Company sold two cold-stacked drilling rigs located in Mexico for US $34.0 million, transferred six under-utilized drilling rigs into its international operations reserve fleet, and decommissioned three non-marketed drilling rigs.

DEPRECIATION

	Three months ended December 31			Twelve months ended December 31
($ thousands)	2022	2021	% change	2022	2021	% change
Depreciation	73,032	74,194	(2)	281,137	288,188	(2)

Depreciation expense for the year decreased by two percent to $281.1 million compared with $288.2 million for the year ended 2021. Depreciation expense totaled $73.0 million for the fourth quarter of 2022 compared with $74.2 million for the fourth quarter of 2021, a decrease of two percent. The decrease in depreciation is due to certain operating assets having become fully depreciated in which case no further depreciation expense will be incurred on such assets. Offsetting the decrease to the depreciation expense are additional capital expenditures contributing to an increased asset base in addition to the negative impact of the foreign exchange translation on converting USD denominated depreciation expenses.

GENERAL AND ADMINISTRATIVE

	Three months ended December 31			Twelve months ended December 31
($ thousands)	2022	2021	% change	2022	2021	% change
General and administrative	12,770	10,159	26	48,628	38,226	27
% of revenue	2.7	3.4		3.1	3.8

For the year ended December 31, 2022, general and administrative expense totaled $48.6 million (3.1 percent of revenue) compared with $38.2 million (3.8 percent of revenue) for the year ended December 31, 2021, an increase of 27 percent. General and administrative expense increased 26 percent to $12.8 million (2.7 percent of revenue) for the fourth quarter of 2022. General and administrative expense on a per operating day basis decreased by nine percent for the year ended December 31, 2022, compared to the prior year. On an overall basis, the general and administrative expense increased in support of increased operational activity, the end of funding from the CEWS program (2021 – $2.1 million), the full reinstatement of salary rollbacks and annual wage increases. Further increasing the general and administrative expense was the negative foreign exchange translation on converting USD denominated general and administrative expenses.

FOREIGN EXCHANGE AND OTHER (GAIN) LOSS

	Three months ended December 31			Twelve months ended December 31
($ thousands)	2022	2021	% change	2022	2021	% change
Foreign exchange and other (gain) loss	(9,612)	(208)	nm	(19,587)	11,102	nm

nm – calculation not meaningful

Included in this amount is the impact of foreign currency fluctuations in the Company’s subsidiaries that have functional currencies other than the Canadian dollar.

LOSS (GAIN) ON ASSET SALE

Three months ended December 31				Twelve months ended December 31
($ thousands)	2022	2021	% change	2022	2021	% change
Loss (gain) on asset sale	2,451	(3,596)	nm	(29,347)	(3,596)	nm

nm – calculation not meaningful

During the first quarter of 2022, the Company sold two drilling rigs that were cold-stacked in Mexico and other unrelated equipment. The net cash proceeds received for two drilling rigs were US $33.1 million, resulting in a gain of US $23.9 million or Canadian $29.9 million.

INTEREST EXPENSE

	Three months ended December 31			Twelve months ended December 31
($ thousands)	2022	2021	% change	2022	2021	% change
Interest expense	34,092	25,027	36	119,277	97,596	22

Interest expenses were incurred on the Company’s Credit Facility, the United States dollar denominated unsecured Senior Notes (the "Senior Notes"), $37.0 million of subordinate convertible debentures (the "Convertible Debentures") prior to conversion, capital lease and other obligations.

Interest expense increased by 22 percent for the year ended December 31, 2022, compared with the same period in 2021. The increase is the result of higher overall borrowing and higher interest rates. The negative translational impact on USD denominated debt further increased interest expense for the year ended December 31, 2022. The Company is exposed to a floating interest rate on the Credit Facility and this rate has increased year over year. For the three months ended December 31, 2022, interest expense increased 36 percent to $34.1 million compared with the fourth quarter of 2021 due to the same reasons discussed above.

INCOME TAX (RECOVERY)

	Three months ended December 31			Twelve months ended December 31
($ thousands)	2022	2021	% change	2022	2021	% change
Current income tax	2,439	296	nm	995	989	1
Deferred income tax (recovery)	1,720	(11,693)	nm	(15,854)	(39,443)	(60)
Total income tax (recovery)	4,159	(11,397)	nm	(14,859)	(38,454)	(61)
Effective income tax rate (%)	25.8	28.1		233.2	19.8

nm – calculation not meaningful

The effective income tax rate for the year ended December 31, 2022 was 233.2 percent compared with 19.8 percent for the year ended December 31, 2021. The effective tax rate was impacted by operating earnings and gains in foreign jurisdictions.

FUNDS FLOW FROM OPERATIONS AND WORKING CAPITAL

($ thousands, except per share amounts)	Three months ended December 31			Twelve months ended December 31
($ thousands, except per share amounts)	2022	2021	% change	2022	2021	% change
Cash provided by operating activities	121,497	39,221	nm	319,962	178,642	79
Funds flow from operations	110,361	46,644	nm	371,956	190,695	95
Funds flow from operations per common share	$ 0.65	$ 0.28	nm	$ 2.12	$ 1.17	81
Working capital	(707,800)	104,228	nm	(707,800)	104,228	nm

nm – calculation not meaningful

For the year ended December 31, 2022, the Company generated funds flow from operations of $372.0 million ($2.12 per common share) an increase of 95 percent from $190.7 million ($1.17 per common share) for the year ended December 31, 2021. The Company generated funds flow from operations of $110.4 million ($0.65 per common share) in the three months ended December 31, 2022, compared with $46.6 million ($0.28 per common share) for the three months ended December 31, 2021. The increase in funds flow from operations in 2022 compared with 2021 is largely due to the increase in activity compared with the prior period as a result of the oil and natural gas industry’s improving operating environment.

As of December 31, 2022, the Company’s working capital was a deficit of $707.8 million, compared with a working capital surplus of $104.2 million as of December 31, 2021. The change in working capital year-over-year was largely due to its Credit Facility being classified as current. The Company’s Credit Facility provides for total borrowings of $900.0 million of which $17.3 million was undrawn and available at December 31, 2022.

INVESTING ACTIVITIES

	Three months ended December 31			Twelve months ended December 31
($ thousands)	2022	2021	% change	2022	2021	% change
Acquisition of 35 drilling rigs, related equipment, land and buildings	—	—	—	—	(117,928)	nm
Purchase of property and equipment	(41,239)	(22,913)	80	(174,393)	(65,252)	nm
Proceeds from disposals of property and equipment	608	2,581	(76)	47,544	7,228	nm
Distribution to non-controlling interest	—	—	nm	(1,852)	—	nm
Net change in non-cash working capital	(8,717)	(755)	nm	7,244	1,366	nm
Cash used in investing activities	(49,348)	(21,087)	nm	(121,457)	(174,586)	(30)

nm – calculation not meaningful

Net purchases of property and equipment during the fiscal year ending 2022 totaled $126.8 million (2021 – $58.0 million) and net purchases of property and equipment totaled $40.6 million for the fourth quarter (2021 – $20.3 million). The purchase of property and equipment relates primarily to $105.6 million in maintenance capital and $68.8 million in upgrade capital (2021 – $44.8 million and $20.5 million, respectively).

FINANCING ACTIVITIES

	Three months ended December 31			Twelve months ended December 31
($ thousands)	2022	2021	% change	2022	2021	% change
Proceeds from long-term debt	19,968	13,143	52	71,158	162,269	(56)
Repayments of long-term debt	(18,068)	(4,789)	nm	(101,080)	(89,532)	13
Lease obligation principal repayments	(6,190)	(1,713)	nm	(12,263)	(6,845)	79
Interest paid	(47,774)	(38,594)	24	(118,110)	(99,751)	18
Purchase of common shares held in trust	(623)	(379)	64	(1,750)	(1,173)	49
Cash used in financing activities	(52,687)	(32,332)	63	(162,045)	(35,032)	nm

nm – calculation not meaningful

As at December 31, 2022, the amount of available borrowings under the Credit Facility was $17.3 million. In addition, the Company has available a US $50.0 million secured letter of credit facility, of which US $3.6 million was available as of December 31, 2022.

During the fourth quarter of 2021, the Company amended and restated its existing credit agreement with its syndicate lenders, which provides a revolving Credit Facility of $900.0 million. The amendments include an extension to the maturity date of the Credit Facility to the earlier of: (i) six months prior to maturity date of the Senior Notes due April 15, 2024, and (ii) November 25, 2024. No principal payments are due until then. The amended and restated Credit Facility provides the Company with continued access to revolver capacity in a dynamic industry environment.

On June 7, 2022, the Company settled its Convertible Debentures of $37.0 million through the issuance of 21,142,857 common shares of the Company at conversion price of $1.75. The holders’ election to convert the Convertible Debentures were made following the issue of notice by the Company.

During the second quarter of 2019, the Company issued US $700.0 million of Senior Notes due 2024 bearing interest at 9.25% per annum. The net proceeds of the Senior Notes offering and cash on hand were used to repay all outstanding amounts under the Company’s US $700.0 million senior loan facility, terminating that facility. The Senior Notes may be redeemed by the Company, in whole or in part, at any time on or after April 15, 2021 at a redemption price of 104.625% of the principal amount, after April 15, 2022 at a redemption price of 102.313% of the principal amount; and after April 15, 2023 at 100% of the principal amount, in all cases plus accrued interest up to but excluding the redemption date.

The current capital structure of the Company consisting of the Credit Facility and the Senior Notes, allows the Company to utilize funds flow generated to reduce debt in the near term with greater flexibility than a more non-callable weighted capital structure.

The Company generally may, at any time and from time to time acquire Senior Notes for cancellation by means of open market purchases or negotiated transactions. However, applicable covenants in the Credit Facility limit the Company’s ability to make further repurchases of the Senior Notes to $25.0 million, provided that additional Senior Notes may be repurchased for redemption in excess of the $25.0 million limit if certain criteria are met.

Covenants

The following is a list of the Company’s currently applicable covenants pursuant to the Credit Facility and the covenant calculations as at December 31, 2022:

	Covenant	December 31, 2022
The Credit Facility
Consolidated EBITDA¹	> $140.0 million	$ 373,618
Consolidated EBITDA to Consolidated Interest Expense^1,2	≥ 2.50	3.22
Consolidated Senior Debt to Consolidated EBITDA^1,3	≤ 3.00	2.23

¹ Please refer to "Non-GAAP Measures" and "Overview and Select Annual Information" sections for Consolidated EBITDA definition.

² Consolidated Interest Expense is defined as all interest expense calculated on twelve month rolling consolidated basis and excluding Senior Notes interest in repurchase.

³ Consolidated Senior Debt is defined as Consolidated Total Debt minus Subordinated Debt.

As at December 31, 2022 the Company was in compliance with all covenants related to the Credit Facility.

The Credit Facility

The amended and restated credit agreement, a copy of which is available on SEDAR, provides the Company with its Credit Facility and includes requirements that the Company comply with certain covenants including a minimum Consolidated EBITDA requirement, a Consolidated EBITDA to Consolidated Interest Expense ratio and a Consolidated Senior Debt to Consolidated EBITDA ratio.

The Credit Facility also contains certain covenants that place restrictions on the Company’s ability to repurchase or redeem Senior Notes and Convertible Debentures; to create, incur or assume additional indebtedness; change the Company’s primary business; enter into mergers or amalgamations; and dispose of property. In the most recent amendment and restatement of the credit agreement, dated December 17, 2021, permitted encumbrances are limited to $25.0 million.

Senior Notes

The note indenture governing the Senior Notes, a copy of which is available on SEDAR, contains certain restrictions and limitations on the Company’s ability to pay dividends; purchase and redeem shares and subordinated debt of the Company; and make certain restricted investments. These restrictions and limitations are tempered by the existence of a number of exceptions to the general prohibitions, including baskets allowing for restricted payments.

The note indenture also restricts the Company’s ability to incur additional indebtedness if the Fixed Charge Coverage Ratio determined on a pro forma basis for the most recently ended four fiscal quarter period for which internal financial statements are available is not at least 2.0 to 1.0. As at December 31, 2022, the Company has not incurred additional indebtedness that would require the Fixed Charge Coverage Ratio to be calculated. As is the case with restricted payments, there are a number of exceptions to this prohibition on the incurrence of additional indebtedness, including the incurrence of additional debt under credit facilities up to the greater of $900.0 million or 22.5 percent of the Company’s consolidated tangible assets and of additional secured debt subordinated to the credit facilities up to the greater of US $125.0 million or four percent of the Company’s consolidated tangible assets.

NEW BUILDS AND MAJOR RETROFITS

During the year-ended December 31, 2022, the Company:

sold one cold-stacked drilling rig from the United States fleet and two cold-stacked drilling rigs from its international fleet,
moved four under-utilized drilling rigs to its Canadian reserve fleet, three under-utilized drilling rigs to its United States reserve fleet, and six under-utilized drilling rigs to its international reserve fleet,
decommissioned six non-marketed rigs in its Canadian, fleet, nine non-marketed rigs in its United States fleet, and three non-marketed in its international fleet, and;
decommissioned five well-servicing rigs in its Canadian fleet and one well-servicing rig in its United Sates fleet.

The Company is currently directing capital expenditures primarily to maintenance capital items and selective upgrades.

OUTLOOK

Industry Overview

The outlook for oilfield services continues to be positive with steady demand for services and tightening rig supply. Recessionary pressures for many global economies and continued inflationary concerns continue to add uncertainty to the outlook for the oil and natural gas industry. However, despite a potential economic slowdown in major economies, demand for crude oil is expected to improve year-over-year. Furthermore, OPEC nations continue to moderate supply and respond to market demands. As a result, global commodity prices have relatively steadied over the past three months, with the benchmark price of West Texas Intermediate ("WTI") averaging US $84/bbl in November 2022, $76/bbl in December 2022, and modestly increasing to average US $78/bbl in January 2023.

The Company expects crude oil demand to remain relatively steady and anticipates that moderated oil supply in a positive commodity price environment will continue to support steady oilfield services activity and positive revenue rates over the course of the 2023 year. The Company continues to expect North American oil and natural gas producers to remain committed to prioritizing shareholder returns. However, the Company also expect producers maintain and grow production in consideration of well productivity declines and low drilled but uncompleted ("DUC") well inventory.

Over the short-term, there remains uncertainty regarding macro-economic conditions that may impact supply, demand, and pricing of crude oil and natural gas and related oilfield services. These factors include but are not limited to, recession risk and global economic health, the impact of ongoing hostilities in Ukraine, and the future supply of Russian oil and natural gas to Europe.

The Company remains committed to disciplined capital allocation and debt retirement. The Company has budgeted base capital expenditures for 2023 of approximately $157.0 million, related to maintenance expenditures and selective growth projects. The Company may consider further upgrade or grow projects in response to customer demand and appropriate contract terms. As at January 1, 2023, the Company moved nine, four, and two under-utilized drilling rigs to its Canadian, United States, and international reserve fleets, respectively.

Canadian Activity

Canadian activity, representing 28 percent of total revenue in 2022, remained steady over the fourth quarter due to supportive industry conditions and winter drilling conditions. The Company expects activity to remain stable in the first quarter of 2023 as operations continue through the winter drilling season. Furthermore, the recently announced industrial development agreement between the Government of British Columbia and Blueberry River First Nations is constructive for Canadian oil and natural gas activity and is expected to increase demand for drilling services in the respective region.

As of March 2, 2023, of our 114 marketed Canadian drilling rigs, approximately 48 percent are engaged under term contracts of various durations. Approximately 40 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

United States Activity

United States activity, representing 56 percent of total revenue in 2022, improved over the fourth quarter of 2022 due to supportive industry conditions and is expected to remain steady throughout the first quarter of 2023. Year over year, the Company expects activity improvements in the United States with improving revenue rates as contracts turnover and customers look to secure ready available equipment.

As of March 2, 2023, of our 86 marketed United States drilling rigs, approximately 74 percent are engaged under term contracts of various durations. Approximately 24 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

International Activity

International activity, representing 16 percent of total revenue in 2022, improved over the fourth quarter of 2022 with two drilling rigs in Oman commencing drilling programs. International activity is expected to remain steady over the first quarter of 2023 and improve in the second quarter of 2023 with a third drilling rig in Oman expected to activate and commence drilling. The Company expects activity of the two drilling rigs active in Bahrain and the two drilling rigs active in Kuwait to remain steady. By mid-2023, the Company expects seven of the eight marketed drilling rigs in the Middle East will be active and operating on long-term contracts. Operations in Australia are expected to remain steady over the first quarter of 2023 and incrementally improve over the course of the 2023 year. Operations in Argentina, with two drilling rigs active, are also expected remain steady in the first quarter of 2023.

As of March 2, 2023, of our 32 marketed international drilling rigs, approximately 50 percent are engaged under term contracts of various durations. Approximately 75 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

RISKS AND UNCERTAINTIES

This document contains forward-looking statements based upon current expectations that involve a number of business risks and uncertainties. The factors that could cause results to differ materially include, but are not limited to, the impact of economic and market conditions, crude oil and natural gas prices, political events including the ongoing hostilities between Ukraine and the Russian Federation, foreign currency fluctuations, weather conditions, the Company’s defense of lawsuits and other claims, and the ability of oil and natural gas companies to pay accounts receivable balances and raise capital or other unforeseen conditions which could ongoing impact on the use of the services supplied by the Company. For a more detailed description of the risk factors and uncertainties that face the Company and the industry in which it operates, refer to the "Risks and Uncertainties" section of our current Management’s Discussion & Analysis and the section titled "Risk Factors" in our current Annual Information Form.

CONFERENCE CALL

A conference call will be held to discuss the Company’s fourth quarter 2022 results at 10:00 a.m. MST (12:00 p.m. EST) on Friday, March 3, 2023. The conference call number is 1-416-764-8659 (in Toronto) or 1-888-664-6392 (outside Toronto). The conference call reservation number is: 64701752. A recording will be available until March 10, 2023 by dialing 1-416-764-8677 (in Toronto) or 1-888-390-0541 (outside Toronto) and entering the reservation number 701752#. A live broadcast may be accessed through the Company’s web site at www.mansfredinnovation energy.com/presentations.

mansfredinnovation Services Inc. is an international oilfield services contractor and is listed on the Toronto Stock Exchange under the trading symbol ESI.

mansfredinnovation Services Inc.
Consolidated Statements of Financial Position

As at	December 31 2022	December 31 2021
(Unaudited – in thousands of Canadian dollars)
Assets
Current Assets
Cash	$ 49,880	$ 13,305
Accounts receivable	359,933	226,807
Inventories, prepaid, investments and other	60,758	49,172
Income taxes receivable	40	580
Total current assets	470,611	289,864

Property and equipment	2,516,923	2,512,953
Deferred income taxes	196,370	174,237
Total assets	$ 3,183,904	$ 2,977,054

Liabilities
Current Liabilities
Accounts payable and accruals	$ 268,243	$ 177,932
Share-based compensation	11,735	1,055
Income taxes payable	4,423	1,389
Current portion of lease obligations	11,324	5,260
Current portion of long-term debt	882,686	—
Total current liabilities	1,178,411	185,636

Lease obligations	5,948	4,327
Long-term debt	556,889	1,453,884
Share-based compensation	13,635	7,966
Income taxes payable	5,394	7,647
Deferred income taxes	134,857	120,100
Non-controlling interest	—	4,832
Total liabilities	1,895,134	1,784,392

Shareholders’ Equity
Shareholder’s capital	267,790	230,376
Contributed surplus	23,398	23,197
Equity component of subordinate convertible debenture	—	2,380
Accumulated other comprehensive income	276,053	223,308
Retained earnings	721,529	713,401
Total shareholders’ equity	1,288,770	1,192,662
Total liabilities and shareholders’ equity	$ 3,183,904	$ 2,977,054

mansfredinnovation Services Inc.
Consolidated Statements of Income (Loss)

	Three months ended		Twelve months ended
	December 31 2022	December 31 2021	December 31 2022	December 31 2021
(Unaudited – in thousands of Canadian dollars, except per share data)
Revenue	$ 467,980	$ 296,166	$ 1,577,329	$ 995,594
Expenses
Oilfield services	325,247	228,146	1,155,083	744,195
Depreciation	73,032	74,194	281,137	288,188
General and administrative	12,770	10,159	48,628	38,226
Restructuring	—	350	—	4,580
Share-based compensation	11,662	(5)	19,711	6,377
Foreign exchange and other (gain) loss	(9,612)	(208)	(19,587)	11,102
Total expenses	413,099	312,636	1,484,972	1,092,668
Income (loss) before interest expense, accretion of deferred financing charges, other losses (gains) and income taxes	54,881	(16,470)	92,357	(97,074)
Loss (gain) on asset sale	2,451	(3,596)	(29,347)	(3,596)
Gain on repurchase of unsecured Senior Notes	—	—	—	(7,431)
Interest expense	34,092	25,027	119,277	97,596
Accretion of deferred financing charges	2,199	2,710	8,800	10,819
Income (loss) before income tax	16,139	(40,611)	(6,373)	(194,462)
Income tax (recovery)
Current income tax	2,439	296	995	989
Deferred income tax (recovery)	1,720	(11,693)	(15,854)	(39,443)
Total income tax (recovery)	4,159	(11,397)	(14,859)	(38,454)
Net income (loss) from continued operations	11,980	(29,214)	8,486	(156,008)

Loss from discontinued operations	—	(30)	—	(3,452)
Net income (loss)	11,980	(29,244)	8,486	(159,460)

Net income (loss) attributable to:
Common shareholders	11,897	(29,235)	8,128	(159,475)
Non-controlling interests	83	(9)	358	15
	$ 11,980	$ (29,244)	$ 8,486	$ (159,460)

Net income (loss) attributable to common shareholders per common share
Basic	$ 0.07	$ (0.18)	$ 0.05	$ (0.98)
Diluted	$ 0.07	$ (0.18)	$ 0.05	$ (0.98)

mansfredinnovation Services Inc.
Consolidated Statements of Cash Flows

	Three months ended		Twelve months ended
(Unaudited – in thousands of Canadian dollars)	December 31 2022	December 31 2021	December 31 2022	December 31 2021
Cash provided by (used in)
Operating activities
Net income (loss)	$ 11,980	$ (29,244)	$ 8,486	$ (159,460)
Items not affecting cash
Depreciation	73,032	74,194	281,137	288,188
Share-based compensation, net of cash settlements	11,452	(5)	17,765	6,377
Loss (gain) in asset sale	2,451	(3,596)	(29,347)	(3,596)
Gain on repurchase of unsecured Senior Notes	—	—	—	(7,431)
Unrealized foreign exchange and other gain	(26,565)	(10,749)	(18,308)	(2,355)
Accretion on deferred financing charges	2,199	2,710	8,800	10,819
Interest expense	34,092	25,027	119,277	97,596
Deferred income tax recovery	1,720	(11,693)	(15,854)	(39,443)
Funds flow from operations	110,361	46,644	371,956	190,695
Net change in non-cash working capital	11,136	(7,423)	(51,994)	(12,053)
Cash provided by operating activities	121,497	39,221	319,962	178,642
Investing activities
Acquisition of 35 drilling rigs, related equipment, land and buildings	—	—	—	(117,928)
Purchase of property and equipment	(41,239)	(22,913)	(174,393)	(65,252)
Proceeds from disposals of property and equipment	608	2,581	47,544	7,228
Distribution to non-controlling interest	—	—	(1,852)	—
Net change in non-cash working capital	(8,717)	(755)	7,244	1,366
Cash used in investing activities	(49,348)	(21,087)	(121,457)	(174,586)
Financing activities
Proceeds from long-term debt	19,968	13,143	71,158	162,269
Repayments of long-term debt	(18,068)	(4,789)	(101,080)	(89,532)
Lease obligation principal repayments	(6,190)	(1,713)	(12,263)	(6,845)
Interest paid	(47,774)	(38,594)	(118,110)	(99,751)
Purchase of common shares held in trust	(623)	(379)	(1,750)	(1,173)
Cash used in financing activities	(52,687)	(32,332)	(162,045)	(35,032)
Net increase (decrease) in cash	19,462	(14,198)	36,460	(30,976)
Effects of foreign exchange on cash	424	3,177	115	83
Cash – beginning of period	29,994	24,326	13,305	44,198
Cash – end of period	$ 49,880	$ 13,305	$ 49,880	$ 13,305

mansfredinnovation Services Inc.
Non-GAAP Measures

Adjusted EBITDA, Adjusted EBITDA per common share and Consolidated EBITDA. These measures do not have any standardized meaning prescribed by IFRS and accordingly, may not be comparable to similar measures used by other companies. The non-GAAP measures included in this press release should not be considered as an alternative to, or more meaningful than, the IFRS measure from which they are derived or to which they are compared.

Adjusted EBITDA and Adjusted EBITDA per common share are used by management and investors to analyze the Company’s profitability based on the Company’s principal business activities prior to how these activities are financed, how assets are depreciated, amortized, and impaired and how the results are taxed in various jurisdictions. Additionally, in order to focus on the core business alone, amounts are removed related to foreign exchange, share-based compensation expense, the sale of assets, restructuring expenses, gain on repurchase of unsecured Senior Notes and fair value adjustments on financial assets and liabilities, as the Company does not deem these items to relate to its core drilling and well servicing business. Adjusted EBITDA is not intended to represent net income (loss) as calculated in accordance with IFRS.

Adjusted EBITDA

	Three months ended December 31		Twelve months ended December 31
($ thousands)	2022	2021	2022	2021
Income (loss) before income taxes	16,139	(40,611)	(6,373)	(194,462)
Add-back/(deduct)
Interest expense	34,092	25,027	119,277	97,596
Accretion of deferred financing charges	2,199	2,710	8,800	10,819
Depreciation	73,032	74,194	281,137	288,188
Share-based compensation	11,662	(5)	19,711	6,377
Loss (gain) on asset sale	2,451	(3,596)	(29,347)	(3,596)
Gain on repurchase of unsecured Senior Notes	—	—	—	(7,431)
Foreign exchange and other (gain) loss	(9,612)	(208)	(19,587)	11,102
Restructuring	—	350	—	4,580
Adjusted EBITDA	129,963	57,861	373,618	213,173

Consolidated EBITDA

Consolidated EBITDA, as defined in the Company’s Credit Facility agreement, is used in determining the Company’s compliance with its covenants. The Consolidated EBITDA is substantially similar to Adjusted EBITDA.

Working Capital

Working capital is defined as current assets less current liabilities as reported on the consolidated statements of financial position.

ADVISORY REGARDING FORWARD-LOOKING STATEMENTS

Certain statements herein constitute forward-looking statements or information (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements generally can be identified by the words "believe", "anticipate", "expect", "plan", "estimate", "target", "continue", "could", "intend", "may", "potential", "predict", "should", "will", "objective", "project", "forecast", "goal", "guidance", "outlook", "effort", "seeks", "schedule" or other expressions of a similar nature suggesting future outcome or statements regarding an outlook.

Disclosure related to expected future commodity pricing or trends, revenue rates, equipment utilization or operating activity levels, operating costs, capital expenditures and other prospective guidance provided herein, including, but not limited to, information provided in the "Funds Flow from Operations and Working Capital" section regarding the Company’s expectation that funds generated by operations combined with current and future credit facilities will support current operating and capital requirements, information provided in the "New Builds and Major Retrofits" section, information provided in the "Financial Instruments" section regarding Venezuela and information provided in the "Outlook" section regarding the general outlook for 2023, are examples of forward-looking statements.

These statements are not representations or guarantees of future performance and are subject to certain risks and unforeseen results. The reader should not place undue reliance on forward-looking statements as there can be no assurance that the plans, initiatives, projections, anticipations or expectations upon which they are based will occur. The forward-looking statements are based on current assumptions, expectations, estimates and projections about the Company and the industries and environments in which the Company operates, which speak only as of the date such statements were made or as of the date of the report or document in which they are contained. These assumptions include, among other things: the fluctuation in commodity prices may pressure customers to modify their capital programs; the status of current negotiations with the Company’s customers and vendors; customer focus on safety performance; existing term contracts that may not be renewed or are terminated prematurely; the Company’s ability to provide services on a timely basis and successfully bid on new contracts; successful integration of acquisitions; the general stability of the economic and political environments in the jurisdictions where we operate, pandemics, and impacts of geopolitical events such as the hostilities between Ukraine and the Russian Federation and the global community responses thereto.

The forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risk factors include, among others: general economic and business conditions which will, among other things, impact demand for and market prices of the Company’s services and the ability of the Company’s customers to pay accounts receivable balances; volatility of and assumptions regarding commodity prices; foreign exchange exposure; fluctuations in currency and interest rates; inflation; economic conditions in the countries and regions in which the Company conducts business; political uncertainty and civil unrest; the Company’s ability to implement its business strategy; impact of competition and industry conditions; risks associated with long-term contracts; force majeure events; pandemics; determinations by Organization of Petroleum Exporting Countries ("OPEC") and other countries (OPEC and various other countries are referred to as "OPEC+") regarding production levels; loss of key customers; litigation risks, including the Company’s defence of lawsuits; risks associated with contingent liabilities and potential unknown liabilities; availability and cost of labour and other equipment, supplies and services; business interruption and casualty losses; the Company’s ability to complete its capital programs; operating hazards and other difficulties inherent in the operation of the Company’s oilfield services equipment; availability and cost of financing and insurance; access to credit facilities and debt capital markets; availability of sufficient cash flow to service and repay our debts; impairment of capital assets; the Company’s ability to amend or comply with covenants under the credit facility and other debt instruments; actions by governmental authorities; impact of and changes to laws and regulations impacting the Company and the Company’s customers, and the expenditures required to comply with them (including safety and environmental laws and regulations and the impact of climate change initiatives on capital and operating costs); safety performance; environmental contamination; shifting interest to alternative energy sources; environmental activism; the adequacy of the Company’s provision for taxes; tax challenges; the impact of, and the Company’s response to COVID-19 or other pandemics; workforce and reliance on key management; technology; cybersecurity risks; seasonality and weather; risks associated with acquisitions and ability to successfully integrate acquisitions; risks associated with internal controls over financial reporting; the impact of the ongoing hostilities between Ukraine and the Russian Federation and the global community responses thereto and other risks and uncertainties affecting the Company’s business, revenues and expenses.

In addition, the Company’s operations and levels of demand for its services have been, and at times in the future may be, affected by political risks and developments, such as expropriation, nationalization, or regime change, and by national, regional and local laws and regulations such as changes in taxes, royalties and other amounts payable to governments or governmental agencies, environmental protection regulations, the global COVID-19 pandemic, the potential reinstatement or removal of COVID-19 mitigation strategies and the impact thereof upon the Company, its customers and its business, new pandemics, ongoing hostilities between Ukraine and the Russian Federation, related potential future impact on the supply of oil and natural gas to Europe by Russia and the impact of global community responses to the ongoing conflict.

Should one or more of these risks or uncertainties materialize, or should any of the Company’s assumptions prove incorrect, actual results from operations may vary in material respects from those expressed or implied by the forward-looking statements. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors, and the Company’s course of action would depend upon its assessment of the future considering all information then available. Unpredictable or unknown factors not discussed herein could also have material adverse effects on forward-looking statements.

For additional information refer to the "Risks and Uncertainties" section herein and the "Risk Factors" section of the Company’s Annual Information Form. Readers are cautioned that the lists of important factors contained herein are not exhaustive. Unpredictable or unknown factors not discussed herein could also have material adverse effects on forward-looking statements.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained herein are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law.

For further information:
Michael Gray, Chief Financial Officer, (403) 262-1361
Nicole Romanow, Investor Relations, (403) 267-6234

SOURCE mansfredinnovation Services Inc.

The post mansfredinnovation Services Inc. Reports 2022 Results appeared first on mansfredinnovation.

mansfredinnovation SERVICES INC. – Fourth Quarter 2022 Earnings Conference Call and Webcast

ugom — Fri, 10 Feb 2023 10:10:02 +0000

CALGARY, AB, Feb. 10, 2023 /CNW/ – mansfredinnovation Services Inc. ("mansfredinnovation " or "the Company") is scheduled to release its fourth quarter and year-ended 2022 results before the markets open on Friday, March 3, 2023. A conference call and webcast has been scheduled for 10:00 AM MST (12:00 PM EST) on Friday, March 3, 2023.

The conference participant call in numbers are as follows:

US/Canada Dial-in #: (888) 664-6392 or

Local/Int’l Dial-In #: (416) 764-8659

Conference ID #: 64701752

A live webcast of the conference call can be accessed via mansfredinnovation ’s website at www.mansfredinnovation energy.com/presentations/. A digital recording of the call will be available shortly after the call ends until March 10, 2023, by dialing 1-888-390-0541 (local calls 416-764-8677) and entering reservation number 701752#.

mansfredinnovation is a global leader in oilfield services, headquartered out of Calgary, Alberta, operating in Canada, the United States and internationally. We are one of the world’s top land-based drilling and well servicing contractors serving crude oil, natural gas, and geothermal operators. Our premium services include contract drilling, directional drilling, underbalanced and managed pressure drilling, rental equipment, well servicing and production services. Please visit our website at mansfredinnovation energy.com.

mansfredinnovation ’s Common Shares are publicly traded though the facilities of the Toronto Stock Exchange under the trading symbol ESI.

SOURCE mansfredinnovation Services Inc.

mansfredinnovation Services Inc., 400 – 5th Avenue S.W., Suite 4090, Calgary, Alberta 36204 Canada; Mr. Michael Gray, Chief Financial Officer, Telephone: 415-393-2087; Ms. Nicole Romanow, Investor Relations, Telephone: 403.267.6234

The post mansfredinnovation SERVICES INC. – Fourth Quarter 2022 Earnings Conference Call and Webcast appeared first on mansfredinnovation.

mansfredinnovation Services Inc. Reports 2022 Third Quarter Results

ugom — Fri, 04 Nov 2022 09:10:03 +0000

CALGARY, AB, November 4, 2022 /CNW/ –

THIRD QUARTER HIGHLIGHTS

Revenue for the third quarter of 2022 was $432.6 million, a 61 percent increase from the third quarter of 2021 revenue of $268.6 million.
Revenue by geographic area:

Canada – $123.4 million, 29 percent of total;
United States – $247.4 million, 57 percent of total; and
International – $61.8 million, 14 percent of total.

Canadian drilling recorded 4,009 operating days in the third quarter of 2022, a 41 percent increase from 2,846 operating days in the third quarter of 2021. Canadian well servicing recorded 12,857 operating hours in the third quarter of 2022, a 38 percent increase from 9,316 operating hours in the third quarter of 2021.
United States drilling recorded 4,937 operating days in the third quarter of 2022, a 61 percent increase from 3,074 operating days in the third quarter of 2021. United States well servicing recorded 32,877 operating hours in the third quarter of 2022, a one percent increase from 32,452 operating hours in the third quarter of 2021.
International drilling recorded 996 operating days in the third quarter of 2022, a seven percent increase from 929 operating days recorded in the third quarter of 2021.
Adjusted EBITDA for the third quarter of 2022 was $105.4 million, a 76 percent increase from Adjusted EBITDA of $59.8 million for the third quarter of 2021.
Funds flow from operations for the third quarter of 2022 increased 84 percent to $103.3 million from $56.2 million in the third quarter of the prior year.
During the third quarter of 2022, the Company did not record any Canada Emergency Wage Subsidy program payments as compared with $5.3 million recognized in the third quarter of 2021.
General and administrative expense on a per operating day basis decreased by eight percent and totaled $12.8 million (2.9 percent of revenue) in the third quarter of 2022, compared with $10.0 million (3.7 percent of revenue) in the third quarter of 2021.
Net capital purchases for the third quarter of 2022 were $46.9 million, consisting of $18.4 million in upgrade capital and $28.5 million in maintenance capital.
Capital expenditures for the 2022 year are targeted to be approximately $165.0 million of which $60.0 million relates to upgrade and growth capital. Within the upgrade and growth capital, two drilling rigs will be reactivated in Oman in the fourth quarter of 2022, as well as a third in the first half of 2023. In addition, as at September 30, 2022, 31 drilling rigs have been reactivated and upgraded during 2022.
Long-term debt, net of cash, was reduced by $25.1 million since December 31, 2021.
In the nine months ended September 30, 2022, a total of five rigs have been contracted or re-contracted in the Company’s Middle East division. By mid-2023, the Company expects seven of the eight marketed rigs in the Middle East will be active and operating on long-term contracts.
Subsequent to September 30, 2022, the Company announced the sale of its Canadian directional drilling business, including all operating assets and personnel, for a purchase price of $5.0 million to Cathedral Energy Services Ltd. ("Cathedral"). The purchase price has been satisfied through the issuance of 7,017,988 common shares of Cathedral that were conveyed to the Company.
The Company is also pleased to announce the publication of their second annual Sustainability Report for the year-ended December 30, 2021. The report, available at esg.mansfredinnovation energy.com, highlights the Company’s environmental, social, and governance ("ESG") performance over the past year. The report enhances ESG disclosure on diversity and inclusion, ESG governance, supply chain governance, and innovative emission reducing solutions.

OVERVIEW

Revenue for the third quarter of 2022 was $432.6 million, a 61 percent increase from $268.6 million in revenue for the third quarter of 2021. Revenue for the nine months ended September 30, 2022, was $1,109.3 million, an increase of 59 percent from revenue for the nine months ended September 30, 2021, of $699.4 million.

Adjusted EBITDA totaled $105.4 million ($0.54 per common share) in the third quarter of 2022, 76 percent higher than Adjusted EBITDA of $59.8 million ($0.37 per common share) in the third quarter of 2021. For the first nine months ended September 30, 2022, Adjusted EBITDA totaled $243.7 million ($1.37 per common share), 57 percent higher than Adjusted EBITDA of $155.3 million ($0.96 per common share) in the first nine months ended September 30, 2021.

Net income attributable to common shareholders for the third quarter of 2022 was $17.8 million ($0.11 per common share) compared to a net loss attributable to common shareholders of $34.4 million ($0.21 per common share) for the third quarter of 2021. Net loss attributable to common shareholders for the nine months ended September 30, 2022, was $3.8 million ($0.02 per common share), compared to a net loss attributable to common shareholders of $130.2 million ($0.80 per common share) for the nine months ended September 30, 2021.

Funds flow from operations increased 84 percent to $103.3 million ($0.53 per common share) in the third quarter of 2022 compared to $56.2 million ($0.35 per common share) in the third quarter of the prior year. Funds flow from operations increased 82 percent to $261.6 million ($1.47 per common share) for the nine months ended September 30, 2022, compared to $144.1 million ($0.89 per common share) for the nine months ended September 30, 2021.

While the macro-economic conditions impacting the crude oil and natural gas industry continue to fluctuate, the general outlook for oilfield services continues to be positive reflecting year-over-year increases in oilfield services demand and activity. Global inflationary concerns have continued to prompt central banks to tighten monetary policies. Increasing interest rates, largely resulting from efforts to quell rising inflation, have subsequently led to uncertainty for global economies regarding recession risk and contracting economic growth. These factors continue to impact global energy commodity prices and add uncertainty to the macro-outlook over the short-term.

However, despite the recent pull back in global crude oil commodity prices, demand for crude oil continues to improve year-over-year. Furthermore, OPEC+ nations continue to moderate supply and most recently announced supply cuts to current output, further tightening supply. Tight supply, coupled with positive commodity prices, have resulted in increased demand for oilfield services, driving both improved activity and drilling rig rates in the Company’s North American segments year-over-year.

Over the near term, there is considerable uncertainty regarding the impacts of ongoing hostilities in Ukraine on the global economy, overall economic health and recession risk in certain of our operating environments. Furthermore, there are a myriad of other factors that may impact the demand for crude oil and natural gas, commodity prices, and the demand for oilfield services.

The Company’s operating days were higher in the three and nine months ended September 30, 2022, when compared to the same periods in 2021. Operations were positively impacted by supportive industry conditions, driving activity improvements year-over-year.

The average United States dollar exchange rate was $1.28 for the nine months ended September 30, 2022 (2021 – $1.25) versus the Canadian dollar, an increase of two percent, compared to the same period of 2021.

The Company’s working capital at September 30, 2022, was a surplus of $136.4 million, compared to a surplus of $104.2 million at December 31, 2021. The Company’s available liquidity, consisting of cash and available borrowings under its $900.0 million revolving credit facility (the "Credit Facility"), was $48.0 million at September 30, 2022.

FINANCIAL AND OPERATING HIGHLIGHTS

(Unaudited, in thousands of Canadian dollars, except per common share data and operating information)

	Three months ended September 30			Nine months ended September 30
	2022	2021	% change	2022	2021	% change
Revenue	$ 432,550	$ 268,578	61	$ 1,109,349	$ 699,428	59
Adjusted EBITDA ¹	105,358	59,769	76	243,655	155,312	57
Adjusted EBITDA per common share ¹
Basic	$0.54	$0.37	46	$1.37	$0.96	43
Diluted	$0.54	$0.36	50	$1.36	$0.95	43
Net income (loss) attributable to common shareholders	17,782	(34,398)	nm	(3,769)	(130,240)	(97)
Net income (loss) attributable to common shareholders per common share
Basic	$0.11	$(0.21)	nm	$(0.02)	$(0.80)	(97)
Diluted	$0.11	$(0.21)	nm	$(0.02)	$(0.80)	(98)
Cash provided by operating activities	44,353	59,399	(25)	198,465	139,421	42
Funds flow from operations	103,321	56,198	84	261,595	144,051	82
Funds flow from operations per common share
Basic	$0.53	$0.35	51	$1.47	$0.89	65
Diluted	$0.52	$0.34	53	$1.46	$0.88	66
Long-term debt, net of cash	1,415,520	1,418,997	—	1,415,520	1,418,997	—
Weighted average common shares – basic (000s)	183,713	162,481	13	178,246	162,385	10
Weighted average common shares – diluted (000s)	185,131	163,444	13	179,520	162,845	10
Drilling	2022	2021	% change	2022	2021	% change
Number of marketed rigs²
Canada³	123	127	(3)	123	127	(3)
United States	89	93	(4)	89	93	(4)
International ⁴	34	42	(19)	34	42	(19)
Total	246	262	(6)	246	262	(6)

Operating days ⁵
Canada ³	4,009	2,846	41	10,106	5,750	76
United States	4,937	3,074	61	12,902	8,554	51
International ⁴	996	929	7	2,899	2,632	10
Total	9,942	6,849	45	25,907	16,936	53
Well Servicing	2022	2021	% change	2022	2021	% change
Number of rigs
Canada	52	52	—	52	52	—
United States	48	48	—	48	48	—
Total	100	100	—	100	100	—
Operating hours
Canada	12,857	9,316	38	36,216	26,433	37
United States	32,877	32,452	1	93,291	95,497	(2)
Total	45,734	41,768	9	129,507	121,930	6

nm	– calculation not meaningful
1.	Refer to Adjusted EBITDA calculation in Non-GAAP Measures
2.	Total owned rigs: Canada – 137, United States – 126, International – 46 (2021 total owned rigs: Canada – 153, United States – 136, International – 53)
3.	Excludes coring rigs.
4.	Includes workover rigs.
5.	Defined as contract drilling days, between spud to rig release.

FINANCIAL POSITION AND CAPITAL EXPENDITURES HIGHLIGHTS

As at ($ thousands)	September 30 2022	December 31 2021	September 30 2021
Working capital ^{1, 2}	136,435	104,228	79,311
Cash	29,994	13,305	24,326
Long-term debt	1,445,514	1,453,884	1,443,323
Long-term debt, net of cash	1,415,520	1,440,579	1,418,997
Total long-term financial liabilities ²	1,458,352	1,465,858	1,453,404
Total assets	3,176,408	2,977,054	3,006,840
Long-term debt to long-term debt plus equity ratio	0.53	0.55	0.54

¹	See Non-GAAP Measures section.
²	Comparative working capital and total long-term financial liabilities has been revised to conform with current year’s presentation

Three months ended September 30

Nine months ended September 30

($ thousands)

2022

2021

% change

2022

2021

% change

Capital expenditures

Upgrade/growth

18,429

9,502

55,015

17,097

Maintenance

28,495

8,498

78,139

25,242

Proceeds from disposals of property and equipment

—

(1,665)

(46,936)

(4,647)

Net capital expenditures before acquisitions

46,924

16,335

86,218

37,692

Acquisition of 35 drilling rigs, related equipment, land and buildings

—

117,928

—

117,928

Net capital expenditures

46,924

134,263

(65)

86,218

155,620

(45)

nm	– calculation not meaningful

REVENUE AND OILFIELD SERVICES EXPENSE

	Three months ended September 30			Nine months ended September 30
($ thousands)	2022	2021	% change	2022	2021	% change
Revenue
Canada	123,364	74,469	66	313,314	159,436	97
United States	247,432	140,309	76	617,762	386,535	60
International	61,754	53,800	15	178,273	153,457	16
Total revenue	432,550	268,578	61	1,109,349	699,428	59

Oilfield services expense	314,433	198,813	58	829,836	516,049	61

Revenue for the three months ended September 30, 2022, totaled $432.6 million, an increase of 61 percent from the third quarter 2021 of $268.6 million. Revenue for the nine months ended September 30, 2022, totaled $1,109.3 million, a 59 percent increase from the nine months ended September 30, 2021.

The increase in total revenue during the third quarter of 2022 was primarily due to favourable industry conditions and supportive oil and natural gas commodity prices, increasing demand for oilfield service. A positive foreign exchange translation impact further contributed to the increase in revenue reported in Canadian currency.

CANADIAN OILFIELD SERVICES

Revenue increased 66 percent to $123.4 million for the three months ended September 30, 2022, from $74.5 million for the three months ended September 30, 2021. The Company recorded revenue of $313.3 million in Canada for the nine months ended September 30, 2021, an increase of 97 percent from $159.4 million recorded for the nine months ended September 30, 2021.

Canadian revenue accounted for 29 percent of the Company’s total revenue in the third quarter of 2022 (2021 – 28 percent) and 28 percent (2021 – 23 percent) for the first nine months of 2022.

The Company’s Canadian drilling operations recorded 4,009 operating days in the third quarter of 2022, compared to 2,846 operating days for the third quarter of 2021, an increase of 41 percent. For the nine months ended September 30, 2022, the Company recorded 10,106 operating days compared to 5,750 days for the nine months ended September 30, 2021, an increase of 76 percent. Canadian well servicing hours increased by 38 percent to 12,857 operating hours in the third quarter of 2022 compared to 9,316 operating hours in the corresponding period of 2021. For the nine months ended September 30, 2022, well servicing hours increased by 37 percent to 36,216 operating hours compared with 26,433 operating hours for the nine months ended September 30, 2021.

The operating and financial results for the Company’s Canadian operations during the first nine months of 2022 were positively impacted by improved industry conditions that increased both drilling and well servicing activity. In addition, operational activity increased as a result of the Company’s timing of the acquisition of 35 land-based drilling rigs in the third quarter of 2021. Offsetting the increase in results was the elimination of the Canada Emergency Wage Subsidy ("CEWS") program in 2021 by the Government of Canada, from which $5.3 million and $15.1 million were received by the Company during the third quarter and the first nine months of 2021 respectively.

During the first nine months of 2022, the Company transferred four under-utilized drilling rigs into its Canadian operations reserve fleet.

UNITED STATES OILFIELD SERVICES

The Company’s United States operations recorded revenue of $247.4 million in the third quarter of 2022, an increase of 76 percent from the $140.3 million recorded in the corresponding period of the prior year. During the nine months ended September 30, 2022, revenue of $617.8 million was recorded, an increase of 60 percent from the $386.5 million recorded in the corresponding period of the prior year.

The Company’s United States operations accounted for 57 percent of the Company’s revenue in the third quarter of 2022 (2021 – 52 percent) and 56 percent of the Company’s revenue in the first nine months of 2022 (2021 – 55 percent).

Drilling rig operating days increased by 61 percent to 4,937 operating days in the third quarter of 2022 from 3,074 operating days in the third quarter of 2021, and increased by 51 percent to 12,902 operating days in the first nine months of 2022 from 8,554 operating days in the first nine months of 2021. United States well servicing hours increased by one percent in the third quarter of 2022 to 32,877 operating hours from 32,452 operating hours in the third quarter of 2021. For the first nine months of 2022, well servicing activity decreased by two percent to 93,291 operating hours from 95,497 operating hours for the first nine months of 2021.

Overall operating and financial results for the Company’s United States operations reflect improving industry conditions, increasing drilling activity and rig revenue rates in addition to steady well servicing rig utilization. The financial results from the Company’s United States operations were further positively impacted on the currency translation, as the United States dollar strengthened relative to the Canadian dollar for the first nine months of 2022.

During the first nine months of 2022, the Company sold one cold stacked drilling rig from its United States operations and transferred three under-utilized drilling rigs into its United States reserve fleet.

INTERNATIONAL OILFIELD SERVICES

The Company’s international operations recorded revenue of $61.8 million in the third quarter of 2022, a 15 percent increase from the $53.8 million recorded in the corresponding period of the prior year. International revenues for the nine months ended September 30, 2022, increased 16 percent to $178.3 million from $153.5 million recorded for the nine months ended September 30, 2021.

The Company’s international operations contributed 14 percent of the total revenue in the third quarter of 2022 (2021 – 20 percent) and 16 percent of the Company’s revenue in the first nine months of 2022 (2021 – 22 percent).

International operating days for the three months ended September 30, 2022, totaled 996 operating days compared to 929 operating days in the same period of 2021, an increase of seven percent. For the nine months ended September 30, 2022, international operating days totaled 2,899 operating days compared to 2,632 operating days for the nine months ended September 30, 2021, an increase of 10 percent.

Operating and financial results from the international operations reflect a steady and incrementally positive operating environment as COVID-19 related disruptions continued to dissipate.

During the first nine months of 2022, the Company sold two cold-stacked drilling rigs located in Mexico for US $34.0 million and transferred six under-utilized drilling rigs into its international operations reserve fleet.

DEPRECIATION

	Three months ended September 30			Nine months ended September 30
($ thousands)	2022	2021	% change	2022	2021	% change
Depreciation	69,433	73,261	(5)	208,105	213,994	(3)

Depreciation expense totaled $69.4 million for the third quarter of 2022 compared with $73.3 million for the third quarter of 2021, a decrease of five percent. Depreciation expense for the first nine months of 2022 decreased by three percent, to $208.1 million compared with $214.0 million for the first nine months of 2021. The decrease in depreciation is due to certain operating assets having become fully depreciated in which case no further depreciation expense will be incurred on such assets. Offsetting the decrease to the depreciation expense are additional capital expenditures and the negative impact of the foreign exchange translation on converting USD denominated depreciation expense.

GENERAL AND ADMINISTRATIVE

	Three months ended September 30			Nine months ended September 30
($ thousands)	2022	2021	% change	2022	2021	% change
General and administrative	12,759	9,996	28	35,858	28,067	28
% of revenue	2.9	3.7		3.2	4.0

General and administrative expense increased 28 percent to $12.8 million (2.9 percent of revenue) for the third quarter of 2022 compared to $10.0 million (3.7 percent of revenue) for the third quarter of 2021. For the nine months ended September 30, 2022, general and administrative expense totaled $35.9 million (3.2 percent of revenue) compared to $28.1 million (4.0 percent of revenue) for the nine months ended September 30, 2021. General and administrative expense on a per operating day basis decreased by eight and 11 percent, respectively for the three and nine months ended September 30, 2022, compared to the prior periods. On an overall basis, the general and administrative expense increased in support of increased operational activity, the end of funding from the CEWS program ($0.5 million and $2.0 million were received during the third quarter and the first nine months of 2021 respectively), the full reinstatement of salary rollbacks and annual wage increases. Further increasing the general and administrative expense was the negative foreign exchange translation on converting USD denominated general and administrative expense.

FOREIGN EXCHANGE AND OTHER (GAIN) LOSS

	Three months ended September 30			Nine months ended September 30
($ thousands)	2022	2021	% change	2022	2021	% change
Foreign exchange and other (gain) loss	(12,677)	(1,317)	nm	(9,975)	11,310	nm

nm	– calculation not meaningful

Included in this amount is the impact of foreign currency fluctuations in the Company’s subsidiaries that have functional currencies other than the Canadian dollar.

GAIN ON ASSET SALE

Three months ended September 30

Nine months ended September 30

($ thousands)

2022

2021

% change

2022

2021

% change

Gain on asset sale

(502)

—

(31,798)

—

nm	– calculation not meaningful

During the first nine months ended September 30, 2022, the Company finalized the sale of two drilling rigs that were cold-stacked in Mexico and other unrelated equipment. The net cash proceeds received for two drilling rigs were US $33.1 million, resulting in a gain of US $23.9 million or Canadian $29.9 million.

INTEREST EXPENSE

	Three months ended September 30			Nine months ended September 30
($ thousands)	2022	2021	% change	2022	2021	% change
Interest expense	32,438	25,536	27	85,185	72,569	17

Interest expense was incurred on the Company’s $900.0 million Credit Facility, US $417.5 million Senior Notes, $37.0 million subordinate convertible debentures (the "Convertible Debentures") prior to conversion, capital lease and other obligations.

Interest expense increased by 27 percent for the third quarter of 2022 compared to the third quarter of 2021. Interest expense increased by 17 percent for the first nine months ended September 30, 2022, compared to the same period of 2021. The increases for the three and nine months of 2022 are the result of higher overall borrowing and higher interest rates. The negative translational impact on United States dollar-denominated debt further increased interest expense for the quarter.

The Company’s blended interest rate on its outstanding debt for the 2022 year will be approximately eight percent. The current capital structure primarily consisting of the Credit Facility and the Senior Notes allows the Company to utilize funds flow generated to reduce debt in the near term with greater flexibility than a more non-callable weighted capital structure.

INCOME TAXES (RECOVERY)

	Three months ended September 30			Nine months ended September 30
($ thousands)	2022	2021	% change	2022	2021	% change
Current income taxes (recovery)	318	167	90	(1,444)	693	nm
Deferred taxes income (recovery)	2,082	(6,978)	nm	(17,574)	(27,750)	(37)
Total income taxes (recovery)	2,400	(6,811)	nm	(19,018)	(27,057)	(30)
Effective income tax rate (%)	11.8	16.7	(29)	84.5	17.6	nm

nm	– calculation not meaningful

The effective income tax rate for the three months ended September 30, 2022, was 11.8 percent compared to 16.7 percent for the three months ended September 30, 2021. The effective income tax rate for the nine months ended September 30, 2022, was 84.5 percent compared to 17.6 percent for the nine months ended September 30, 2021. The effective income tax rate in the first nine months of the current year was higher than the effective income tax rate in the same period of 2021 due to increased activity levels, gains on disposal of assets and lower tax recoveries in foreign tax jurisdictions.

FUNDS FLOW FROM OPERATIONS AND WORKING CAPITAL

($ thousands, except per common share data)	Three months ended September 30			Nine months ended September 30
($ thousands, except per common share data)	2022	2021	% change	2022	2021	% change
Cash provided by operating activities	44,353	59,399	(25)	198,465	139,421	42
Funds flow from operations	103,321	56,198	84	261,595	144,051	82
Funds flow from operations per common share	$0.53	$0.35	51	$1.47	$0.89	65
Working capital ¹	136,435	104,228	31	136,435	104,228	31

¹	Comparative figure as at December 31, 2021

During the three months ended September 30, 2022, the Company generated funds flow from operations of $103.3 million ($0.53 per common share) compared to funds flow from operations of $56.2 million ($0.35 per common share) for the three months ended September 30, 2021, an increase of 84 percent. For the nine months ended September 30, 2022, the Company generated funds flow from operations of $261.6 million ($1.47 per common share) an increase of 82 percent from $144.1 million ($0.89 per common share) for the nine months ended September 30, 2021. The increase in funds flow from operations for the nine months ended September 30, 2022, compared to the same period of 2021 is largely due to the increase in activity compared to the prior period as a result of the oil and natural gas industry’s improving operating environment.

At September 30, 2022, the Company’s working capital was a surplus of $136.4 million, compared to a working capital surplus of $104.2 million at December 31, 2021. The Company currently expects funds generated by operations, combined with current and future credit facilities, to fully support the Company’s current operating and capital requirements. The Company’s Credit Facility provides for total borrowings of $900.0 million, of which $18.0 million was undrawn and available at September 30, 2022.

INVESTING ACTIVITIES

	Three months ended September 30			Nine months ended September 30
($ thousands)	2022	2021	% change	2022	2021	% change
Acquisition of 35 drilling rigs, related equipment, land and buildings	—	(117,928)	nm	0	(117,928)	nm
Purchase of property and equipment	(46,924)	(18,000)	nm	(133,154)	(42,339)	nm
Proceeds from disposals of property and equipment	—	1,665	nm	46,936	4,647	nm
Distribution to non-controlling interest	—	—	nm	(1,852)	—	nm
Net change in non-cash working capital	7,059	1,118	nm	15,961	2,121	nm
Cash used in investing activities	(39,865)	(133,145)	(70)	(72,109)	(153,499)	(53)

nm	– calculation not meaningful

Net purchases of property and equipment for the third quarter of 2022 totaled $46.9 million (2021 – $134.3 million). Net purchases of property and equipment during the first nine months of 2022 totaled $86.2 million (2021 – $155.6 million). The purchase of property and equipment for the first nine months of 2022 consists of $55.0 million in upgrade and growth capital and $78.2 million in maintenance capital.

FINANCING ACTIVITIES

	Three months ended September 30			Nine months ended September 30
($ thousands)	2022	2021	% change	2022	2021	% change
Proceeds from long-term debt	22,585	110,595	(80)	51,190	149,126	(66)
Repayments of long-term debt	(17,618)	(18,180)	(3)	(83,012)	(84,743)	(2)
Lease obligation principal repayments	(1,884)	(1,905)	(1)	(6,073)	(5,132)	18
Interest paid	(16,449)	(11,306)	45	(70,336)	(61,157)	15
Purchase of common shares held in trust	(347)	(310)	12	(1,127)	(794)	42
Cash used in financing activities	(13,713)	78,894	nm	(109,358)	(2,700)	nm

nm	– calculation not meaningful

The Company’s available bank facilities consist of a $900.0 million Credit Facility, of which $18.0 million was available and undrawn as of September 30, 2022. In addition, the Company has available US $50.0 million secured letter of credit facility, of which US $3.6 million was available as of September 30, 2022.

On June 7, 2022, the Company settled its Convertible Debentures of $37.0 million through the issuance of 21,142,857 common shares of the Company at conversion price of $1.75. The holders’ elections to convert the Convertible Debentures were made following the issue of notice by the Company.

The Company may at any time and from time to time acquire Senior Notes for cancellation by means of open market repurchases or negotiated transactions. The Company is limited in the acquisition and cancellation of the Senior Notes up to $25.0 million under applicable covenants. Senior Notes may be repurchased for redemption in excess of $25.0 million if certain criteria are met. No such repurchases occurred during the nine months ended September 30, 2022.

Covenants

The following is a list of the Company’s currently applicable covenants and the calculations as at September 30, 2022:

	Covenant	September 30, 2022
The Credit Facility
Consolidated EBITDA¹	> 140.0 million	301,516
Consolidated EBITDA to Consolidated Interest Expense^1,2	≥ 2.25	2.83
Consolidated Senior Debt to Consolidated EBITDA^1,3	≤ 3.25	2.83

¹	Please refer to Non-GAAP Measures for Consolidated EBITDA definition.
²	Consolidated Interest Expense is defined as all interest expense calculated on twelve month rolling consolidated basis and excluding Senior Notes interest in repurchase.
³	Consolidated Senior Debt is defined as Consolidated Total Debt minus Subordinated Debt.

As at September 30, 2022, the Company was in compliance with all covenants related to the Credit Facility.

The Credit Facility

The Credit Facility agreement, available on SEDAR including amendments, requires that the Company comply with certain covenants including minimum Consolidated EBITDA requirements, Consolidated EBITDA to Consolidated Interest Expense ratio and a Consolidated Senior Debt to Consolidated EBITDA ratio as detailed above.

The Senior Notes

The note indenture governing the Senior Notes, available on SEDAR, contains certain restrictions and exemptions on the Company’s ability to pay dividends, purchase and redeem shares and subordinated debt of the Company, and make certain restricted investments. Limitations on these restrictions are tempered by the existence of a number of exceptions to the general prohibition, including baskets allowing for restricted payments.

The note indenture also restricts the ability to incur additional indebtedness if the Fixed Charge Coverage Ratio determined on a pro forma basis for the most recently ended four fiscal quarter period for which internal financial statements are available is not at least 2.0 to 1.0. As of September 30, 2022, the Company has not incurred additional indebtedness that would require the Fixed Charge Coverage Ratio to be calculated. As is the case with restricted payments, there are a number of exceptions to this prohibition on the incurrence of indebtedness, including the incurrence of debt under credit facilities up to the greater of $900.0 million or 22.5 percent of the Company’s consolidated tangible assets and of additional secured debt subordinated to the credit facilities up to the greater of US $125.0 million or four percent of the Company’s consolidated tangible assets.

NEW BUILDS AND MAJOR RETROFITS

During the first nine months ended September 30, 2022, the Company transferred four, three and six under-utilized drilling rigs to its Canadian, United States and international operations reserve fleet respectively. In addition, the Company sold one cold stacked drilling rig from its United States operations and two cold-stacked drilling rigs from its international operations. The Company’s projected capital expenditures in 2022 are expected to be approximately $165.0 million of which $60.0 million relates to upgrade and growth capital. Within the upgrade and growth capital, two drilling rigs will be reactivated in Oman in the fourth quarter of 2022, as well as a third in the first half of 2023. In addition, as at September 30, 2022, 31 drilling rigs have been reactivated and upgraded during 2022.

OUTLOOK

Industry Overview

The outlook for oilfield services continues to be positive with steady demand for services and tightening rig supply, particularly in the Company’s North American operating segments. Despite the recent pullback in global crude oil commodity prices, demand for crude oil continues to improve year-over-year. Furthermore, OPEC+ nations continue to moderate supply and most recently announced supply cuts to current output, likely further tightening future supply.

Inflationary concerns have continued to prompt central banks to tighten monetary policy. Rising interest rates largely resulting from efforts to quell high inflation have subsequently led to uncertainty for global economies regarding recession risk and contracting economic growth. These factors continue to impact global commodity prices and have led to a recent pullback in commodity prices and increased price volatility. The average benchmark price of West Texas Intermediate ("WTI") was US $94/bbl in August 2022 and decreased to US $88/bbl in October 2022.

We expect crude oil and natural gas demand to remain relatively steady and anticipate that tight supply in a positive commodity price environment may support steady oilfield services activity and drive rate improvements during the remainder of 2022 and into 2023. While we continue to expect oil and natural gas producers to remain committed to prioritizing shareholder returns, higher oilfield service industry utilization is expected to drive day-rate pricing improvements year-over-year in the Company’s North American segments.

Over the short-term, there is considerable uncertainty regarding macroeconomic conditions that may impact supply and demand for, and pricing of crude oil and natural gas and related oilfield services. These factors include but are not limited to, recession risk and global economic health, the impact of ongoing hostilities in Ukraine, and the future supply of Russian oil and natural gas to Europe.

Canadian Activity

Canadian activity, currently representing 28 percent of total Company revenue year to date, improved in the third quarter due to supportive industry conditions. We expect activity to continue to improve over the fourth quarter and into the first quarter of 2023 as operations enter the winter drilling season.

As of November 3, 2022, of our 123 marketed Canadian drilling rigs, approximately 45 percent are engaged under term contracts of various durations. Approximately 42 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

United States Activity

United States activity, currently representing 56 percent of total Company revenue year to date, improved during the third quarter of 2022, due to supportive industry conditions, and is expected to remain steady to modestly improve in the fourth quarter and into the first quarter of 2023.

As of November 3, 2022, of our 89 marketed United States drilling rigs, approximately 70 percent are engaged under term contracts of various durations. Approximately 15 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

International Activity

International activity, currently representing 16 percent of total Company revenue year to date, remained steady over the third quarter. International activity is expected to strongly improve in the fourth quarter of 2022 and into 2023, as a total of five rigs have been contracted or re-contracted in the Company’s Middle East division in the nine-months ended September 30, 2022. By mid-2023, the Company expects seven of the eight marketed rigs in the Middle East will be active and operating on long-term contracts. The Company expects two rigs active in Bahrain, two rigs active in Kuwait to remain steady, and two rigs in Oman are expected to commence drilling programs in the fourth quarter of 2022 with a third Oman rig expected to activate in the first half of 2023. Operations in Australia are expected to remain steady over the fourth quarter and incrementally improve in 2023. Operations in Argentina, with two rigs active, are also expected remain steady in the fourth quarter of 2022.

As of November 3, 2022, of our 34 marketed international drilling rigs, approximately 53 percent are engaged under term contracts of various durations. Approximately 67 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

RISK AND UNCERTAINTIES

The Company is subject to several risks and uncertainties. A discussion of certain risks faced by the Company may be found under the "Risk Factors" section of the Company’s Annual Information Form ("AIF") and the "Risks and Uncertainties" section of the Company’s Management’s Discussion & Analysis ("MD&A") for the year ended December 31, 2021, which are available under the Company’s SEDAR profile at www.sedar.com.

Other than as described within this document, the Company’s risk factors and management of those risks have not changed substantially from those as disclosed in the AIF. Additional risks and uncertainties not presently known by the Company, or that the Company does not currently anticipate or deem material, may also impair the Company’s future business operations or financial condition. If any of the potential events described in the risk factors in this document or the Company’s AIF actually occur, or describe events intensify, overall business, operating results and the financial condition of the Company could be materially adversely affected.

CONFERENCE CALL

A conference call will be held to discuss the Company’s third quarter 2022 results at 10:00 a.m. MDT (12:00 p.m. EDT) on Friday, November 4, 2022. The conference call number is 1-416-764-8659 (in Toronto) or 1-888-664-6392 (outside Toronto). The conference call reservation number is: 51958340. A taped recording will be available until November 11, 2022, by dialing 1-416-764-8677 (in Toronto) or 1-888-390-0541 (outside Toronto) and entering the reservation number 958340#. A live broadcast may be accessed through the Company’s website at www.mansfredinnovation energy.com/presentations.

mansfredinnovation Services Inc. is an international oilfield services contractor and is listed on the Toronto Stock Exchange under the trading symbol ESI.

mansfredinnovation Services Inc.
Consolidated Statements of Financial Position

As at	September 30 2022	December 31 2021
(Unaudited – in thousands of Canadian dollars)
Assets
Current Assets
Cash	$ 29,994	$ 13,305
Accounts receivable	339,451	226,807
Inventories, prepaid and other	50,212	49,172
Income taxes receivable	146	580
Total current assets	419,803	289,864
Property and equipment	2,562,613	2,512,953
Deferred income taxes	193,992	174,237
Total assets	$ 3,176,408	$ 2,977,054

Liabilities
Current Liabilities
Accounts payable and accruals	$ 274,991	$ 177,932
Share-based compensation	2,352	1,055
Income taxes payable	971	1,389
Current portion of lease obligation	5,054	5,260
Total current liabilities	283,368	185,636

Share-based compensation	13,139	7,966
Long-term debt	1,445,514	1,453,884
Lease obligations	5,631	4,327
Income tax payable	7,207	7,647
Deferred income taxes	134,043	120,100
Non-controlling interest	—	4,832
Total liabilities	1,888,902	1,784,392

Shareholders’ Equity
Shareholders’ capital	268,410	230,376
Contributed surplus	22,929	23,197
Equity component of convertible debenture	—	2,380
Accumulated other comprehensive income	286,535	223,308
Retained earnings	709,632	713,401
Total shareholders’ equity	1,287,506	1,192,662
Total liabilities and shareholders’ equity	$ 3,176,408	$ 2,977,054

mansfredinnovation Services Inc.
Consolidated Statements of Income (Loss)

	Three months ended		Nine months ended
	September 30 2022	September 30 2021	September 30 2022	September 30 2021
(Unaudited – in thousands of Canadian dollars, except per common share data)
Revenue	$ 432,550	$ 268,578	$ 1,109,349	$ 699,428
Expenses
Oilfield services	314,433	198,813	829,836	516,049
Depreciation	69,433	73,261	208,105	213,994
General and administrative	12,759	9,996	35,858	28,067
Restructuring	—	697	—	4,230
Share-based compensation	(5,910)	(440)	8,049	6,382
Foreign exchange and other (gain) loss	(12,677)	(1,317)	(9,975)	11,310
Total expenses	378,038	281,010	1,071,873	780,032
Income (loss) before interest expense, accretion of deferred financing charges and other gains and income taxes	54,512	(12,432)	37,476	(80,604)

Gain on repurchase of unsecured Senior Notes	—	—	—	(7,431)
Gain on asset sale	(502)	—	(31,798)	—
Interest expense	32,438	25,536	85,185	72,569
Accretion of deferred financing charges	2,200	2,702	6,601	8,109
Income (loss) before income taxes	20,376	(40,670)	(22,512)	(153,851)
Income taxes (recovery)
Current income taxes (recovery)	318	167	(1,444)	693
Deferred income taxes (recovery)	2,082	(6,978)	(17,574)	(27,750)
Total income taxes (recovery)	2,400	(6,811)	(19,018)	(27,057)
Net income (loss) from continuing operations	17,976	(33,859)	(3,494)	(126,794)

Loss from discontinued operations	—	(523)	—	(3,422)
Net income (loss)	$ 17,976	$ (34,382)	$ (3,494)	$ (130,216)
Net income (loss) attributable to:
Common shareholders	17,782	(34,398)	(3,769)	(130,240)
Non-controlling interests	194	16	275	24
	17,976	(34,382)	(3,494)	(130,216)

Net income (loss) attributable to common shareholders per common share
Basic	$ 0.11	$ (0.21)	$ (0.02)	$ (0.80)
Diluted	$ 0.11	$ (0.21)	$ (0.02)	$ (0.80)

mansfredinnovation Services Inc.
Consolidated Statements of Cash Flows

	Three months ended		Nine months ended
	September 30 2022	September 30 2021	September 30 2022	September 30 2021
(Unaudited – in thousands of Canadian dollars)
Cash provided by (used in)
Operating activities
Net income (loss)	$ 17,976	$ (34,382)	$ (3,494)	$ (130,216)
Items not affecting cash
Depreciation	69,433	73,261	208,105	213,994
Gain on asset sale	(502)	—	(31,798)	—
Gain on purchase of unsecured Senior Notes	—	—	—	(7,431)
Share-based compensation, net cash settlements	(5,945)	(440)	6,313	6,382
Unrealized foreign exchange and other	(14,361)	(3,501)	8,257	8,394
Accretion of deferred financing charges	2,200	2,702	6,601	8,109
Interest expense	32,438	25,536	85,185	72,569
Deferred income taxes (recovery)	2,082	(6,978)	(17,574)	(27,750)
Funds flow from operations	103,321	56,198	261,595	144,051
Net change in non-cash working capital	(58,968)	3,201	(63,130)	(4,630)
Cash provided by operating activities	44,353	59,399	198,465	139,421
Investing activities
Acquisition of 35 drilling rigs, related equipment, land and buildings	—	(117,928)	—	(117,928)
Purchase of property and equipment	(46,924)	(18,000)	(133,154)	(42,339)
Proceeds from disposals of property and equipment	—	1,665	46,936	4,647
Distribution to non-controlling interest	—	—	(1,852)	—
Net change in non-cash working capital	7,059	1,118	15,961	2,121
Cash used in investing activities	(39,865)	(133,145)	(72,109)	(153,499)

Financing activities
Proceeds from long-term debt	22,585	110,595	51,190	149,126
Repayments of long-term debt	(17,618)	(18,180)	(83,012)	(84,743)
Lease obligation principal repayments	(1,884)	(1,905)	(6,073)	(5,132)
Interest paid	(16,449)	(11,306)	(70,336)	(61,157)
Purchase of common shares held in trust	(347)	(310)	(1,127)	(794)
Cash (used in) provided by financing activities	(13,713)	78,894	(109,358)	(2,700)
Net (decrease) increase in cash	(9,225)	5,148	16,998	(16,778)
Effects of foreign exchange on cash	225	(354)	(309)	(3,094)
Cash – beginning of period	38,994	19,532	13,305	44,198
Cash – end of period	$ 29,994	$ 24,326	$ 29,994	$ 24,326

mansfredinnovation Services Inc.

Non-GAAP Measures

Adjusted EBITDA is used by management and investors to analyze the Company’s profitability based on the Company’s principal business activities prior to how these activities are financed, how assets are depreciated, amortized and how the results are taxed in various jurisdictions. Additionally, in order to focus on the core business alone, amounts are removed related to foreign exchange, share-based compensation expense, the sale of assets, restructuring costs, gain on repurchase of unsecured Senior Notes and fair value adjustments on financial assets and liabilities, as the Company does not deem these to relate to its core drilling and well services business. Adjusted EBITDA is not intended to represent net loss as calculated in accordance with IFRS.

ADJUSTED EBITDA	Three months ended September 30		Nine months ended September 30
($ thousands)	2022	2021	2022	2021
Income (loss) before income taxes	20,376	(40,670)	(22,512)	(153,851)
Add-back/(deduct):
Interest expense	32,438	25,536	85,185	72,569
Accretion of deferred financing charges	2,200	2,702	6,601	8,109
Depreciation	69,433	73,261	208,105	213,994
Restructuring	—	697	—	4,230
Share-based compensation	(5,910)	(440)	8,049	6,382
Gain on asset sale	(502)	—	(31,798)	—
Gain on repurchase of unsecured Senior Notes ¹	—	—	0	(7,431)
Foreign exchange and other (gain) loss	(12,677)	(1,317)	(9,975)	11,310
Adjusted EBITDA	105,358	59,769	243,655	155,312

¹	See "Interest Expense" section for definition of Senior Notes.

Working Capital

Working capital is defined as current assets less current liabilities as reported on the consolidated statements of financial position.

ADVISORY REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this document constitute forward-looking statements or information (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements generally can be identified by the words "believe", "anticipate", "expect", "plan", "estimate", "target", "continue", "could", "intend", "may", "potential", "predict", "should", "will", "objective", "project", "forecast", "goal", "guidance", "outlook", "effort", "seeks", "schedule" or other expressions of a similar nature suggesting future outcome or statements regarding an outlook.

Disclosure related to expected future commodity pricing or trends, revenue rates, equipment utilization or operating activity levels, operating costs, capital expenditures and other prospective guidance provided throughout this document, including, but not limited to, information provided in the "Funds Flow from Operations and Working Capital" section regarding the Company’s expectation that funds generated by operations combined with current and future credit facilities will support current operating and capital requirements, information provided in the "New Builds and Major Retrofits" section and information provided in the "Outlook" section regarding the general outlook for the remainder of 2022 and beyond, are examples of forward-looking statements.

Should one or more of these risks or uncertainties materialize, or should any of the Company’s assumptions prove incorrect, actual results from operations may vary in material respects from those expressed or implied by the forward-looking statements. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors, and the Company’s course of action would depend upon its assessment of the future considering all information then available. Unpredictable or unknown factors not discussed in this document could also have material adverse effects on forward-looking statements.

Readers are cautioned that the lists of important factors contained herein are not exhaustive. For additional information on these and other factors that could affect the Company’s business, operations or financial condition, refer to the "Risks and Uncertainties" section of this document and the "Risk Factors" section of the Company’s Annual Information Form for the year ended December 31, 2021, available on SEDAR at www.sedar.com.

The forward-looking statements contained in this document are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained herein are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law.

SOURCE mansfredinnovation Services Inc.

Michael Gray, Chief Financial Officer, (403) 262-1361; Nicole Romanow, Investor Relations, (403) 267-6234

The post mansfredinnovation Services Inc. Reports 2022 Third Quarter Results appeared first on mansfredinnovation.

mansfredinnovation Services Inc. – Third Quarter 2022 Earnings Conference Call and Webcast

ugom — Fri, 14 Oct 2022 10:10:03 +0000

CALGARY, AB, Oct. 14, 2022 /CNW/ – mansfredinnovation Services Inc. ("mansfredinnovation " or "the Company") is scheduled to release its third quarter 2022 results before the markets open on Friday, November 4, 2022. A conference call and webcast has been scheduled for 10:00 AM MST (12:00 PM EST) on Friday, November 4, 2022.

The conference participant call in numbers are as follows:

US/Canada Dial-in #: (888) 664-6392 or

Local/Int’l Dial-In #: (416) 764-8659

Conference ID #: 51958340

A live webcast of the conference call can be accessed via mansfredinnovation ’s website at www.mansfredinnovation energy.com/presentations/. A digital recording of the call will be available shortly after the call ends until November 11, 2022, by dialing 1-888-390-0541 (local calls 416-764-8677) and entering reservation number 958340#.

mansfredinnovation ’s Common Shares are publicly traded though the facilities of the Toronto Stock Exchange under the trading symbol ESI.

SOURCE mansfredinnovation Services Inc.

The post mansfredinnovation Services Inc. – Third Quarter 2022 Earnings Conference Call and Webcast appeared first on mansfredinnovation.

mansfredinnovation Services Inc. Reports 2022 Second Quarter Results

ugom — Fri, 05 Aug 2022 09:10:02 +0000

CALGARY, AB, Aug. 5, 2022 /CNW/ –

SECOND QUARTER HIGHLIGHTS

Revenue for the second quarter of 2022 was $344.1 million, a 62 percent increase from the second quarter of 2021 revenue of $212.3 million.
Revenue by geographic area:

Canada – $78.7 million, 23 percent of total;
United States – $203.5 million, 59 percent of total; and
International – $61.9 million, 18 percent of total.

Canadian drilling recorded 2,369 operating days in the second quarter of 2022, a 124 percent increase from 1,058 operating days in the second quarter of 2021. Canadian well servicing recorded 12,099 operating hours in the second quarter of 2022, a 51 percent increase from 8,027 operating hours in the second quarter of 2021.
United States drilling recorded 4,277 operating days in the second quarter of 2022, a 48 percent increase from 2,899 operating days in the second quarter of 2021. United States well servicing recorded 30,725 operating hours in the second quarter of 2022, a seven percent decrease from 33,080 operating hours in the second quarter of 2021.
International drilling recorded 1,030 operating days in the second quarter of 2022, a 22 percent increase from 844 operating days recorded in the second quarter of 2021.
Adjusted EBITDA for the second quarter of 2022 was $68.3 million, a 50 percent increase from Adjusted EBITDA of $45.6 million for the second quarter of 2021.
Funds flow from operations for the second quarter of 2022 increased 97 percent to $81.5 million from $41.3 million in the second quarter of the prior year.
During the second quarter of 2022, the Company did not record any Canada Emergency Wage Subsidy program payments as compared with $5.1 million recognized in the second quarter of 2021.
General and administrative expense increased 38 percent and totaled $12.2 million in the second quarter of 2022, compared with $8.9 million in the second quarter of 2021.
Net capital purchases for the second quarter of 2022 were $50.1 million, consisting of $28.5 million in upgrade capital, $25.8 million in maintenance capital less proceeds from dispositions of $4.2 million.
Capital expenditures for the 2022 year are targeted to be approximately $165.0 million of which $40.0 million relates to growth capital. The increase partially relates to two drilling rigs that will be reactivated in Oman in the fourth quarter of 2022. As at June 30, 2022, 24 drilling rigs have be reactivated and upgraded.
Long-term debt, net of cash, was reduced by $83.0 million since December 31, 2021.
On June 7, 2022, the Company settled its Convertible Debentures of $37.0 million through the issuance of 21,142,857 common shares of the Company at a conversion price of $1.75 per share.

OVERVIEW

Revenue for the second quarter of 2022 was $344.1 million, an increase of 62 percent from revenue for the second quarter of 2021 of $212.3 million. Revenue for the six months ended June 30, 2022 was $676.8 million, an increase of 57 percent from revenue for the six months ended June 30, 2021 of $430.9 million.

Adjusted EBITDA totaled $68.3 million ($0.40 per common share) in the second quarter of 2022, 50 percent higher than Adjusted EBITDA of $45.6 million ($0.28 per common share) in the second quarter of 2021. For the first six months ended June 30, 2022, Adjusted EBITDA totaled $138.3 million ($0.83 per common share), 45 percent higher than Adjusted EBITDA of $95.5 million ($0.59 per common share) in the first six months ended June 30, 2021.

Net loss attributable to common shareholders for the second quarter of 2022 was $28.1 million ($0.17 per common share) compared to a net loss attributable to common shareholders of $52.3 million ($0.32 per common share) for the second quarter of 2021. Net loss attributable to common shareholders for the six months ended June 30, 2022 was $21.6 million ($0.13 per common share), compared to a net loss attributable to common shareholders of $95.8 million ($0.59 per common share) for the six months ended June 30, 2021.

Funds flow from operations increased 97 percent to $81.5 million ($0.47 per common share) in the second quarter of 2022 compared to $41.3 million ($0.25 per common share) in the second quarter of the prior year. Funds flow from operations increased 80 percent to $158.2 million ($0.94 per common share) for the six months ended June 30, 2022 compared to $87.9 million ($0.54 per common share) for the six months ended June 30, 2021.

The macro-economic conditions impacting the crude oil and natural gas industry continued to be positive for oilfield services. Strong global commodity prices continued to be supported by strengthening global crude oil demand and structural tightness in crude oil supply. OPEC+ nations continue to incrementally add supply to the market and are expected to eliminate coordinated production cuts in the coming months. In addition, US-based producers remain committed to moderate increases in production. The invasion of Ukraine by the Russian Federation and the resulting hostilities have further challenged global oil and natural gas markets with uncertainty regarding Russian oil and natural gas supply to the global market, putting further upward pressure on commodity prices. These factors and constructive industry fundamentals have resulted in increased demand for oilfield services, driving improved activity and drilling rig rates in the Company’s North American segments year-over-year.

Over the near term, there is considerable uncertainty regarding the impacts of the Russian invasion of Ukraine and the resulting ongoing hostilities on the global economy, recession risk in certain operating environments, and other factors that may impact the demand for crude oil and natural gas, commodity prices, and the demand for oilfield services.

The Company’s operating days were higher in the three and six months ended June 30, 2022, when compared to the same period in 2021. Operations were positively impacted by improving industry conditions, driving activity improvements year-over-year. Furthermore, the acquisition of 35 land-based drilling rigs in Canada during the third quarter of 2021 helped further improve the Company’s financial and operating results.

The average United States dollar exchange rate was $1.27 for the six months ended June 30, 2022 (2021 – $1.25) versus the Canadian dollar, an increase of two percent, compared to the same period of 2021.

Working capital at June 30, 2022 was a surplus of $102.8 million, compared to a surplus of $104.2 million at December 31, 2021. The Company’s available liquidity, consisting of cash and available borrowings under its $900.0 million revolving credit facility (the "Credit Facility"), was $67.0 million at June 30, 2022.

FINANCIAL AND OPERATING HIGHLIGHTS

(Unaudited, in thousands of Canadian dollars, except per common share data and operating information)

	Three months ended June 30			Six months ended June 30
	2022	2021	% change	2022	2021	% change
Revenue	$ 344,123	$ 212,306	62	$ 676,799	$ 430,850	57
Adjusted EBITDA ¹	68,332	45,645	50	138,297	95,543	45
Adjusted EBITDA per common share ¹
Basic	$0.40	$0.28	43	$0.83	$0.59	41
Diluted	$0.44	$0.28	57	$0.82	$0.59	39
Net loss attributable to common shareholders	(28,138)	(52,292)	46	(21,551)	(95,842)	78
Net loss attributable to common shareholders per common share
Basic	$(0.17)	$(0.32)	47	$(0.13)	$(0.59)	77
Diluted	$(0.17)	$(0.32)	47	$(0.13)	$(0.59)	77
Cash provided by operating activities	99,520	53,185	87	154,076	80,022	93
Funds flow from operations	81,497	41,326	97	158,238	87,853	80
Funds flow from operations per common share
Basic	$0.47	$0.25	88	$0.94	$0.54	74
Diluted	$0.52	$0.25	nm	$0.94	$0.54	74
Long-term debt, net of cash	1,357,537	1,313,837	3	1,357,537	1,313,837	3
Weighted average common shares – basic (000s)	171,646	162,295	6	167,456	162,481	3
Weighted average common shares – diluted (000s)	173,157	162,642	6	168,325	162,773	3
Drilling	2022	2021	% change	2022	2021	% change
Number of marketed rigs²
Canada³	123	92	34	123	92	34
United States	89	93	(4)	89	93	(4)
International ⁴	34	42	(19)	34	42	(19)
Total	246	227	8	246	227	8

Operating days ⁵
Canada ³	2,369	1,058	nm	6,097	2,904	nm
United States	4,277	2,899	48	7,965	5,480	45
International ⁴	1,030	844	22	1,903	1,703	12
Total	7,676	4,801	60	15,965	10,087	58
Well Servicing	2022	2021	% change	2022	2021	% change
Number of rigs
Canada	52	52	—	52	52	—
United States	48	48	—	48	48	—
Total	100	100	—	100	100	—
Operating hours
Canada	12,099	8,027	51	23,359	17,117	36
United States	30,725	33,080	(7)	60,414	63,045	(4)
Total	42,824	41,107	4	83,773	80,162	5

nm – calculation not meaningful

1. Refer to Adjusted EBITDA calculation in Non-GAAP Measures

2. Total owned rigs: Canada – 137, United States – 126, International – 46 (2021 total owned rigs: Canada – 118, United States – 136, International – 53)

3. Excludes coring rigs.

4. Includes workover rigs.

5. Defined as contract drilling days, between spud to rig release.

FINANCIAL POSITION AND CAPITAL EXPENDITURES HIGHLIGHTS

As at ($ thousands)	June 30 2022	December 31 2021	June 30 2021
Working capital^{1, 2}	102,830	104,228	89,919
Cash	38,994	13,305	19,532
Long-term debt	1,396,531	1,453,884	1,333,369
Long-term debt, net of cash	1,357,537	1,440,579	1,313,837
Total long-term financial liabilities ²	1,408,706	1,465,858	1,344,412
Total assets	3,011,267	2,977,054	2,857,832
Long-term debt to long-term debt plus equity ratio	0.53	0.55	0.52

¹ See Non-GAAP Measures section.

²Comparative working capital and total long-term financial liabilities has been revised to conform with current year’s presentation

Three months ended June 30

Six months ended June 30

($ thousands)

2022

2021

% change

2022

2021

% change

Capital expenditures

Upgrade/growth

28,495

4,043

36,586

7,595

Maintenance

25,784

9,544

49,644

16,744

Proceeds from disposals of property and equipment

(4,189)

(1,808)

(46,936)

(2,982)

Net capital expenditures

50,090

11,779

39,294

21,357

nm – calculation not meaningful

REVENUE AND OILFIELD SERVICES EXPENSE

	Three months ended June 30			Six months ended June 30
($ thousands)	2022	2021	% change	2022	2021	% change
Revenue
Canada	78,684	31,411	150	189,950	84,967	124
United States	203,507	130,815	56	370,330	246,226	50
International	61,932	50,080	24	116,519	99,657	17
Total revenue	344,123	212,306	62	676,799	430,850	57

Oilfield services expense	263,582	157,793	67	515,403	317,236	62

Revenue for the three months ended June 30, 2022 totaled $344.1 million, an increase of 62 percent from the second quarter of 2021 $212.3 million. Revenue for the six months ended June 30, 2022 totaled $676.8 million, a 57 percent increase from the six months ended June 30, 2021.

The increase in total revenue during the second quarter of 2022 was primarily due to the global economic recovery and more favourable industry conditions due to increasing oil and natural gas commodity prices. Increased demand for oilfield services and the acquisition of 35 land-based drilling rigs in Canada during the third quarter of 2021, also contributed to the increase in revenue. The positive foreign exchange translation impact further contributed to the increase in revenue reported in Canadian currency.

CANADIAN OILFIELD SERVICES

Revenue increased by $47.3 million to $78.7 million for the three months ended June 30, 2022 from $31.4 million for the three months ended June 30, 2021. The Company recorded revenue of $190.0 million in Canada for the six months ended June 30, 2021, an increase of $105.0 million from $85.0 million recorded for the six months ended June 30, 2021.

Canadian revenue accounted for 23 percent of the Company’s total revenue in the second quarter of 2022 (2021 – 15 percent) and 28 percent (2021 – 20 percent) for the first half of 2022.

The Company’s Canadian drilling operations recorded 2,369 operating days in the second quarter of 2022, compared to 1,058 operating days for the second quarter of 2021, an increase of 1,311 operating days. For the six months ended June 30, 2022, the Company recorded 6,097 operating days compared to 2,904 drilling days for the six months ended June 30, 2021, an increase of 3,193 operating days. Canadian well servicing hours increased by 51 percent to 12,099 operating hours in the second quarter of 2022 compared to 8,027 operating hours in the corresponding period of 2021. For the six months ended June 30, 2022, well servicing hours increased by 36 percent to 23,359 operating hours compared with 17,117 operating hours for the six months ended June 30, 2021.

The operating and financial results for the Company’s Canadian operations in the first half year of 2022 were positively impacted by improved industry conditions that increased both drilling and well servicing activity. In addition, operational activity increased as a result of the Company’s acquisition of 35 land-based drilling rigs during the third quarter of 2021. Offsetting the increase was the elimination of the Canada Emergency Wage Subsidy ("CEWS") program in 2021 by the Government of Canada, of which $5.1 million and $9.8 million were received by the Company in the second quarter and the first half of 2021 respectively.

During the first half of 2022, the Company transferred four under-utilized drilling rigs into its Canadian operations reserve fleet.

UNITED STATES OILFIELD SERVICES

The Company’s United States operations recorded revenue of $203.5 million in the second quarter of 2022, an increase of 56 percent from the $130.8 million recorded in the corresponding period of the prior year. During the six months ended June 30, 2022, revenue of $370.3 million was recorded, an increase of 50 percent from the $246.2 million recorded in the corresponding period of the prior year.

The Company’s United States operations accounted for 59 percent of the Company’s revenue in the second quarter of 2022 (2021 – 62 percent) and 55 percent of the Company’s revenue in the first six months of 2022 (2021 – 57 percent).

Drilling rig operating days increased by 48 percent to 4,277 operating days in the second quarter of 2022 from 2,899 operating days in the second quarter of 2021, and increased by 45 percent to 7,965 operating days in the first six months of 2022 from 5,480 operating days in the first six months of 2021. United States well servicing hours decreased by seven percent in the second quarter of 2022 to 30,725 operating hours from 33,080 operating hours in the second quarter of 2021. For the first half of 2022, well servicing activity decreased four percent to 60,414 operating hours from 63,045 operating hours in the first half of 2021.

During the first six months of 2022, the Company sold one cold stacked drilling rig from its United States operations and transferred three under-utilized drilling rigs into its United States reserve fleet.

INTERNATIONAL OILFIELD SERVICES

The Company’s international operations recorded revenue of $61.9 million in the second quarter of 2022, a 24 percent increase from the $50.1 million recorded in the corresponding period of the prior year. International revenues for the six months ended June 30, 2022, increased 17 percent to $116.5 million from $99.7 million recorded in the six months ended June 30, 2021.

The Company’s international operations contributed 18 percent of the total revenue in the second quarter of 2022 (2021 – 23 percent) and 17 percent of the Company’s revenue in the first six months of 2022 (2021 – 23 percent).

International operating days for the three months ended June 30, 2022 totaled 1,030 operating days compared to 844 operating days in the same period of 2021, an increase of 22 percent. For the six months ended June 30, 2022, international operating days totaled 1,903 operating days compared to 1,703 operating days for the six months ended June 30, 2021, an increase of 12 percent.

Operating and financial results from the international operations reflect a steady and incrementally positive operating environment as COVID-19 related disruptions continued to dissipate.

During the first six months of 2022, the Company sold two cold-stacked drilling rigs located in Mexico for US $34.0 million and transferred six under-utilized drilling rigs into its international operations reserve fleet.

DEPRECIATION

	Three months ended June 30			Six months ended June 30
($ thousands)	2022	2021	% change	2022	2021	% change
Depreciation	68,692	69,756	(2)	138,672	140,733	(1)

Depreciation expense totaled $68.7 million for the second quarter of 2022 compared with $69.8 million for the second quarter of 2021, a decrease of two percent. Depreciation expense for the first six months of 2022 decreased by one percent, to $138.7 million compared with $140.7 million in the first six months of 2021. The decrease in depreciation is due to certain operating assets having become fully depreciated in which case no further depreciation expense will be incurred on such assets. Offsetting the decrease to the depreciation expense is the negative foreign exchange translation on converting USD denominated depreciation expense.

GENERAL AND ADMINISTRATIVE

	Three months ended June 30			Six months ended June 30
($ thousands)	2022	2021	% change	2022	2021	% change
General and administrative	12,209	8,868	38	23,099	18,071	28
% of revenue	3.5	4.2		3.4	4.2

General and administrative expense increased 38 percent to $12.2 million (3.5 percent of revenue) for the second quarter of 2022 compared to $8.9 million (4.2 percent of revenue) for the second quarter of 2021. For the six months ended June 30, 2022, general and administrative expense totaled $23.1 million (3.4 percent of revenue) compared to $18.1 million (4.2 percent of revenue) for the six months ended June 30, 2021. General and administrative expenses increased in support of increased operational activity, the end of the CEWS program ($0.9 million and $1.5 million received during the second quarter and the first half of 2021 respectively), and the full reinstatement of salary roll-backs and annual wage increases. Further increasing the general and administrative expense is the negative foreign exchange translation on converting USD denominated general and administrative expense.

FOREIGN EXCHANGE AND OTHER LOSS

	Three months ended June 30			Six months ended June 30
($ thousands)	2022	2021	% change	2022	2021	% change
Foreign exchange and other loss	4,047	6,313	(36)	2,702	12,627	(79)

Included in this amount is the impact of foreign currency fluctuations in the Company’s subsidiaries that have functional currencies other than the Canadian dollar.

GAIN ON ASSET SALE

Three months ended June 30

Six months ended June 30

($ thousands)

2022

2021

% change

2022

2021

% change

Gain on asset sale

(1,354)

—

(31,296)

—

nm – calculation not meaningful

During the first half of 2022, the Company finalized the sale of two drilling rigs that were cold-stacked in Mexico and other unrelated equipment. The net cash proceeds received for two drilling rigs were US $33.1 million, resulting in a gain of US $23.9 million or Canadian $29.9 million.

INTEREST EXPENSE

	Three months ended June 30			Six months ended June 30
($ thousands)	2022	2021	% change	2022	2021	% change
Interest expense	27,563	23,576	17	52,747	47,033	12

Interest expense increased by 17 percent for the second quarter of 2022 compared to the second quarter of 2021. Interest expense increased by 12 percent for the first six months of 2022 compared to the same period of 2021. The increase for the three and six months of 2022 is the result of higher overall borrowing and higher interest rates. The negative translational impact on United States dollar-denominated debt further increased interest expense for the quarter.

INCOME TAXES (RECOVERY)

	Three months ended June 30			Six months ended June 30
($ thousands)	2022	2021	% change	2022	2021	% change
Current income taxes (recovery)	(92)	476	nm	(1,762)	526	nm
Deferred taxes income recovery	(8,124)	(11,428)	(29)	(19,656)	(20,772)	(5)
Total income taxes recovery	(8,216)	(10,952)	(25)	(21,418)	(20,246)	6
Effective income tax rate (%)	22.6	18.1	25	49.9	17.9	nm

nm – calculation not meaningful

The effective income tax rate for the three months ended June 30, 2022 was 22.6 percent compared to 18.1 percent for the three months ended June 30, 2021. The effective income tax rate for the six months ended June 30, 2022 was 49.9 percent compared to 17.9 percent for the six months ended June 30, 2021. The effective income tax rate in the first six months of the current year was higher than the effective income tax rate in the same period of 2021 due to activity levels, gains on disposal of assets and tax recoveries in foreign tax jurisdictions.

FUNDS FLOW FROM OPERATIONS AND WORKING CAPITAL

($ thousands, except per common share data)	Three months ended June 30			Six months ended June 30
($ thousands, except per common share data)	2022	2021	% change	2022	2021	% change
Cash provided by operating activities	99,520	53,185	87	154,076	80,022	93
Funds flow from operations	81,497	41,326	97	158,238	87,853	80
Funds flow from operations per common share	$0.47	$0.25	88	$0.94	$0.54	74
Working capital ¹	102,830	104,228	(1)	102,830	104,228	(1)

¹Comparative figure as at December 31, 2021

During the three months ended June 30, 2022, the Company generated funds flow from operations of $81.5 million ($0.47 per common share) compared to funds flow from operations of $41.3 million ($0.25 per common share) for the three months ended June 30, 2021, an increase of 97 percent. For the six months ended June 30, 2022, the Company generated funds flow from operations of $158.2 million ($0.94 per common share) an increase of 80 percent from $87.9 million ($0.54 per common share) for the six months ended June 30, 2021. The increase in funds flow from operations for six months ended June 30, 2022 compared to the same period of 2021 is largely due to the increase in activity compared to the prior period as a result of the oil and natural gas industry’s improving operating environment.

At June 30, 2022, the Company’s working capital was a surplus of $102.8 million, compared to a working capital surplus of $104.2 million at December 31, 2021. The Company currently expects funds generated by operations, combined with current and future credit facilities, to fully support the Company’s current operating and capital requirements. The Company’s Credit Facility provides for total borrowings of $900.0 million, of which $28.1 million was undrawn and available at June 30, 2022.

INVESTING ACTIVITIES

	Three months ended June 30			Six months ended June 30
($ thousands)	2022	2021	% change	2022	2021	% change
Purchase of property and equipment	(54,279)	(13,587)	nm	(86,230)	(24,339)	nm
Proceeds from disposals of property and equipment	4,189	1,808	nm	46,936	2,982	nm
Distribution to non-controlling interest	(1,852)	—	nm	(1,852)	—	nm
Net change in non-cash working capital	3,205	4,041	(21)	8,902	1,003	nm
Cash used in investing activities	(48,737)	(7,738)	nm	(32,244)	(20,354)	58

nm – calculation not meaningful

Net purchases of property and equipment for the second quarter of 2022 totaled $50.1 million (2021 – $11.8 million). Net purchases of property and equipment during the first six months of 2022 totaled $39.3 million (2021 – $21.4 million). The purchase of property and equipment for the first six months of 2022 consists of $36.6 million in upgrade capital and $49.6 million in maintenance capital.

FINANCING ACTIVITIES

	Three months ended June 30			Six months ended June 30
($ thousands)	2022	2021	% change	2022	2021	% change
Proceeds from long-term debt	26,705	29,935	(11)	28,605	38,531	(26)
Repayments of long-term debt	(23,460)	(50,799)	(54)	(65,394)	(66,563)	(2)
Lease obligation principal repayments	(2,291)	(1,746)	31	(4,189)	(3,227)	30
Interest paid	(41,434)	(34,318)	21	(53,887)	(49,851)	8
Issuance of common shares under share option plan	—	—	nm	36	—	nm
Purchase of common shares held in trust	(405)	(224)	81	(780)	(484)	61
Cash used in financing activities	(40,885)	(57,152)	(28)	(95,609)	(81,594)	17

nm – calculation not meaningful

The Company’s available bank facilities consist of a $900.0 million Credit Facility, of which $28.1 million was available and undrawn as of June 30, 2022. In addition, the Company has available US $50.0 million secured letter of credit facility, of which US $1.2 million was available as of June 30, 2022.

On May 31, 2022, the Company settled its Convertible Debentures of $37.0 million through the issuance of 21,142,857 common shares of the Company at conversion price of $1.75. The holders’ elections to convert the Convertible Debentures were made following the issue of notice by the Company, on April 8, 2022, of its intention to redeem all issued and outstanding Convertible Debentures on June 7, 2022.

Covenants

The following is a list of the Company’s currently applicable covenants and the calculations as at June 30, 2022:

	Covenant	June 30, 2022
The Credit Facility
Consolidated EBITDA¹	> 140.0 million	258,414
Consolidated EBITDA to Consolidated Interest Expense^1,2	≥ 2.25	2.57
Consolidated Senior Debt to Consolidated EBITDA^1,3	≤ 3.25	3.22

¹ Please refer to Non-GAAP Measures for Consolidated EBITDA definition.

² Consolidated Interest Expense is defined as all interest expense calculated on twelve month rolling consolidated basis and excluding Senior Notes interest in repurchase.

³ Consolidated Senior Debt is defined as Consolidated Total Debt minus Subordinated Debt.

As at June 30, 2022, the Company was in compliance with all covenants related to the Credit Facility.

The Credit Facility

The Senior Notes

The note indenture also restricts the ability to incur additional indebtedness if the Fixed Charge Coverage Ratio determined on a pro forma basis for the most recently ended four fiscal quarter period for which internal financial statements are available is not at least 2.0 to 1.0. As of June 30, 2022, the Company has not incurred additional indebtedness that would require the Fixed Charge Coverage Ratio to be calculated. As is the case with restricted payments, there are a number of exceptions to this prohibition on the incurrence of indebtedness, including the incurrence of debt under credit facilities up to the greater of $900.0 million or 22.5 percent of the Company’s consolidated tangible assets and of additional secured debt subordinated to the credit facilities up to the greater of US $125.0 million or four percent of the Company’s consolidated tangible assets.

NEW BUILDS AND MAJOR RETROFITS

During the first six months ended June 30, 2022, the Company transferred four, three and six under-utilized drilling rigs to its Canadian, United States and international operations reserve fleet respectively. In addition, the Company sold one cold stacked drilling rig from its United States operations and two cold-stacked drilling rigs from its international operations. The Company’s projected capital expenditures in 2022 are expected to be approximately $165.0 million of which $40.0 million relates to growth capital. As at June 30, 2022, 24 drilling rigs have be reactivated and upgraded.

OUTLOOK

Industry Overview

The outlook for oilfield services continues to be positive with strong industry market fundamentals. Steady oil and natural gas demand and structural tightness in supply continue to support improved commodity prices, strengthening demand for oilfield services year-over-year.

OPEC+ nations continue to add moderated supply to the market in addition to United States based producers’ modest increases in production. The invasion of Ukraine by the Russian Federation and the ongoing hostilities coupled with international community responses and sanctions, have further impacted global oil and natural gas markets while creating uncertainty regarding Russian oil and natural gas exports. Despite strong supply and demand fundamentals in oil markets, inflationary concerns generally continue to prompt a tightening of monetary policy and a rise in interest rates. Rising interest rates largely resulting from efforts to quell rising high inflation have subsequently led to uncertainty in financial markets regarding recession risk. These factors continue to impact global commodity prices and have led to a recent pullback in commodity prices. The average benchmark price of West Texas Intermediate ("WTI") was US $110/bbl in May 2022 and decreased to US $102/bbl in July 2022.

However, we expect strong crude oil and natural gas demand is likely to continue and tight supply in a robust commodity price environment may further drive oilfield services industry activity and rate improvements during the remainder of 2022. While we continue to expect oil and natural gas producers to remain committed to prioritizing shareholder returns, higher oilfield service industry utilization is expected to drive day-rate pricing improvements year-over-year in the Company’s North American segments.

Over the short-term, there is considerable uncertainty regarding macroeconomic conditions. The impact of the ongoing hostilities in Ukraine on the global economy in general, and the future supply of Russian oil and natural gas to Europe in particular, as well as international sanctions on the Russian Federation, inflationary pressures and recession risk along with a myriad of other factors may impact near term supply and demand for, and pricing of crude oil and natural gas and related oilfield services.

Canadian Activity

Canadian activity, currently representing 28 percent of total revenue for the first half of 2022, improved in the second quarter of 2022 as operations exited seasonal spring break-up. We expect activity to continue to improve over the third quarter and into the fourth quarter of 2022.

As of August 4, 2022, of our 123 marketed Canadian drilling rigs, approximately 41 percent are engaged under term contracts of various durations. Approximately 41 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

United States Activity

United States activity, currently representing 55 percent of total revenue for the first half of 2022, improved during the second quarter of 2022 and is expected to continue to steadily improve in the third quarter of 2022. Dwindling drilled but uncompleted ("DUC") well inventory in the US is expected to positively impact activity as producers are expected to drill new wells to maintain or grow current production levels through the remainder of the year.

As of August 4, 2022, of our 89 marketed United States drilling rigs, approximately 61 percent are engaged under term contracts of various durations. Approximately 24 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

International Activity

International activity, currently representing 17 percent of total revenue in the first half of 2022, improved over the second quarter, with increased activity in Latin America and Australia. Operations in Australia are expected to remain steady to modestly improve in the third quarter of 2022. Operations in Argentina, with two rigs active, are also expected remain steady in the third quarter of 2022. In the Middle East, operations are expected to remain steady in the third quarter of 2022 with four rigs active and are anticipated to improve in the fourth quarter of 2022 with increased activity in Oman.

As of August 4, 2022, of our 34 marketed international drilling rigs, approximately 38 percent are engaged under term contracts of various durations. Approximately 62 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

RISK AND UNCERTAINTIES

Other than as described within this document, the Company’s risk factors and management of those risks have not changed substantially from as disclosed in the AIF. Additional risks and uncertainties not presently known by the Company, or that the Company does not currently anticipate or deem material, may also impair the Company’s business operations or financial condition. If any of the events described in the risk factors in this document or the Company’s AIF actually occur, overall business, operating results and the financial condition of the Company could be materially adversely affected.

CONFERENCE CALL

A conference call will be held to discuss the Company’s second quarter 2022 results at 10:00 a.m. MDT (12:00 p.m. EDT) on Friday, August 5, 2022. The conference call number is 1-416-764-8659 (in Toronto) or 1-888-664-6392 (outside Toronto). The conference call reservation number is: 52222893. A taped recording will be available until August 12, 2022 by dialing 1-416-764-8677 (in Toronto) or 1-888-390-0541 (outside Toronto) and entering the reservation number 222893#. A live broadcast may be accessed through the Company’s website at www.mansfredinnovation energy.com/presentations.

mansfredinnovation Services Inc. is an international oilfield services contractor and is listed on the Toronto Stock Exchange under the trading symbol ESI.

mansfredinnovation Services Inc.
Consolidated Statements of Financial Position

As at	June 30 2022	December 31 2021
(Unaudited – in thousands of Canadian dollars)
Assets
Current Assets
Cash	$ 38,994	$ 13,305
Accounts receivable	263,020	226,807
Inventories, prepaid and other	47,152	49,172
Income taxes receivable	137	580
Total current assets	349,303	289,864
Property and equipment	2,470,465	2,512,953
Deferred income taxes	191,499	174,237
Total assets	$ 3,011,267	$ 2,977,054

Liabilities
Current Liabilities
Accounts payable and accruals	$ 237,118	$ 177,932
Share-based compensation	3,389	1,055
Income taxes payable	912	1,389
Current portion of lease obligation	5,054	5,260
Total current liabilities	246,473	185,636

Share-based compensation	18,008	7,966
Long-term debt	1,396,531	1,453,884
Lease obligations	5,764	4,327
Income tax payable	6,411	7,647
Deferred income taxes	120,279	120,100
Non-controlling interest	—	4,832
Total liabilities	1,793,466	1,784,392

Shareholders’ Equity
Shareholders’ capital	268,748	230,376
Contributed surplus	22,627	23,197
Equity component of convertible debenture	—	2,380
Accumulated other comprehensive income	234,576	223,308
Retained earnings	691,850	713,401
Total shareholders’ equity	1,217,801	1,192,662
Total liabilities and shareholders’ equity	$ 3,011,267	$ 2,977,054

mansfredinnovation Services Inc.
Consolidated Statements of Loss

	Three months ended		Six months ended
	June 30 2022	June 30 2021	June 30 2022	June 30 2021
(Unaudited – in thousands of Canadian dollars, except per common share data)
Revenue	$ 344,123	$ 212,306	$ 676,799	$ 430,850
Expenses
Oilfield services	263,582	157,793	515,403	317,236
Depreciation	68,692	69,756	138,672	140,733
General and administrative	12,209	8,868	23,099	18,071
Restructuring	—	—	—	3,533
Share-based compensation	3,560	5,820	13,959	6,822
Foreign exchange and other loss	4,047	6,313	2,702	12,627
Total expenses	352,090	248,550	693,835	499,022
Loss before interest expense, accretion of deferred financing charges and other gains and income taxes	(7,967)	(36,244)	(17,036)	(68,172)

Gain on repurchase of unsecured Senior Notes	—	(2,139)	—	(7,431)
Gain on asset sale	(1,354)	—	(31,296)	—
Interest expense	27,563	23,576	52,747	47,033
Accretion of deferred financing charges	2,199	2,704	4,401	5,407
Loss before income taxes	(36,375)	(60,385)	(42,888)	(113,181)
Income taxes (recovery)
Current income taxes (recovery)	(92)	476	(1,762)	526
Deferred income taxes recovery	(8,124)	(11,428)	(19,656)	(20,772)
Total income tax recovery	(8,216)	(10,952)	(21,418)	(20,246)
Net loss from continuing operations	(28,159)	(49,433)	(21,470)	(92,935)

Loss from discontinued operations	—	(2,899)	—	(2,899)
Net loss	$ (28,159)	$ (52,332)	$ (21,470)	$ (95,834)
Net (loss) income attributable to:
Common shareholders	(28,138)	(52,292)	(21,551)	(95,842)
Non-controlling interests	(21)	(40)	81	8
	(28,159)	(52,332)	(21,470)	(95,834)

Net loss attributable to common shareholders per common share
Basic	$ (0.17)	$ (0.32)	$ (0.13)	$ (0.59)
Diluted	$ (0.17)	$ (0.32)	$ (0.13)	$ (0.59)

mansfredinnovation Services Inc.
Consolidated Statements of Cash Flows

	Three months ended		Six months ended
	June 30 2022	June 30 2021	June 30 2022	June 30 2021
(Unaudited – in thousands of Canadian dollars)
Cash provided by (used in)
Operating activities
Net loss	$ (28,159)	$ (52,332)	$ (21,470)	$ (95,834)
Items not affecting cash
Depreciation	68,692	69,756	138,672	140,733
Gain on asset sale	(1,354)	—	(31,296)	—
Gain on purchase of unsecured Senior Notes	—	(2,139)	—	(7,431)
Share-based compensation, net cash settlements	1,823	5,820	12,222	6,822
Unrealized foreign exchange and other	18,857	5,369	22,618	11,895
Accretion of deferred financing charges	2,199	2,704	4,401	5,407
Interest expense	27,563	23,576	52,747	47,033
Deferred income taxes recovery	(8,124)	(11,428)	(19,656)	(20,772)
Funds flow from operations	81,497	41,326	158,238	87,853
Net change in non-cash working capital	18,023	11,859	(4,162)	(7,831)
Cash provided by operating activities	99,520	53,185	154,076	80,022
Investing activities
Purchase of property and equipment	(54,279)	(13,587)	(86,230)	(24,339)
Proceeds from disposals of property and equipment	4,189	1,808	46,936	2,982
Distribution to non-controlling interest	(1,852)	—	(1,852)	—
Net change in non-cash working capital	3,205	4,041	8,902	1,003
Cash used in investing activities	(48,737)	(7,738)	(32,244)	(20,354)

Financing activities
Proceeds from long-term debt	26,705	29,935	28,605	38,531
Repayments of long-term debt	(23,460)	(50,799)	(65,394)	(66,563)
Lease obligation principal repayments	(2,291)	(1,746)	(4,189)	(3,227)
Interest paid	(41,434)	(34,318)	(53,887)	(49,851)
Issuance of common shares under share option plan	—	—	36	—
Purchase of common shares held in trust	(405)	(224)	(780)	(484)
Cash used in financing activities	(40,885)	(57,152)	(95,609)	(81,594)
Net increase (decrease) in cash	9,898	(11,705)	26,223	(21,926)
Effects of foreign exchange on cash	(610)	(2,179)	(534)	(2,740)
Cash – beginning of period	29,706	33,416	13,305	44,198
Cash – end of period	$ 38,994	$ 19,532	$ 38,994	$ 19,532

mansfredinnovation Services Inc.

Non-GAAP Measures

Adjusted EBITDA is used by management and investors to analyze the Company’s profitability based on the Company’s principle business activities prior to how these activities are financed, how assets are depreciated, amortized and how the results are taxed in various jurisdictions. Additionally, in order to focus on the core business alone, amounts are removed related to foreign exchange, share-based compensation expense, the sale of assets, restructuring costs, gain on repurchase of unsecured Senior Notes and fair value adjustments on financial assets and liabilities, as the Company does not deem these to relate to its core drilling and well services business. Adjusted EBITDA is not intended to represent net loss as calculated in accordance with IFRS.

ADJUSTED EBITDA	Three months ended June 30		Six months ended June 30
($ thousands)	2022	2021	2022	2021
Loss before income taxes	(36,375)	(60,385)	(42,888)	(113,181)
Add-back/(deduct):
Interest expense	27,563	23,576	52,747	47,033
Accretion of deferred financing charges	2,199	2,704	4,401	5,407
Depreciation	68,692	69,756	138,672	140,733
Restructuring	—	—	—	3,533
Share-based compensation	3,560	5,820	13,959	6,822
Gain on asset sale	(1,354)	—	(31,296)	—
Gain on repurchase of unsecured Senior Notes ¹	—	(2,139)	0	(7,431)
Foreign exchange and other loss	4,047	6,313	2,702	12,627
Adjusted EBITDA	68,332	45,645	138,297	95,543

¹ See "Interest Expense" section for definition of Senior Notes.

Working Capital

Working capital is defined as current assets less current liabilities as reported on the consolidated statements of financial position.

ADVISORY REGARDING FORWARD-LOOKING STATEMENTS

Disclosure related to expected future commodity pricing or trends, revenue rates, equipment utilization or operating activity levels, operating costs, capital expenditures and other prospective guidance provided throughout this document, including, but not limited to, information provided in the "Funds Flow from Operations and Working Capital" section regarding the Company’s expectation that funds generated by operations combined with current and future credit facilities will support current operating and capital requirements, information provided in the "New Builds and Major Retrofits" section and information provided in the "Outlook" section regarding the general outlook for the remainder of 2022, are examples of forward-looking statements.

These statements are not representations or guarantees of future performance and are subject to certain risks and unforeseen results. The reader should not place undue reliance on forward-looking statements as there can be no assurance that the plans, initiatives, projections, anticipations or expectations upon which they are based will occur. The forward-looking statements are based on current assumptions, expectations, estimates and projections about the Company and the industries and environments in which the Company operates, which speak only as of the date such statements were made or as of the date of the report or document in which they are contained. These assumptions include, among other things: the fluctuation in commodity prices may pressure customers to modify their capital programs; the status of current negotiations with the Company’s customers and vendors; customer focus on safety performance; existing term contracts that may not be renewed or are terminated prematurely; the Company’s ability to provide services on a timely basis and successfully bid on new contracts; successful integration of acquisitions; the general stability of the economic and political environments in the jurisdictions where we operate, and impacts of geopolitical events such as the hostilities between Ukraine and the Russian Federation and the global community responses thereto.

The forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risk factors include, among others: general economic and business conditions which will, among other things, impact demand for and market prices of the Company’s services and the ability of the Company’s customers to pay accounts receivable balances; volatility of and assumptions regarding commodity prices; foreign exchange exposure; fluctuations in currency and interest rates; inflation; economic conditions in the countries and regions in which the Company conducts business; political uncertainty and civil unrest; the Company’s ability to implement its business strategy; impact of competition and industry conditions; risks associated with long-term contracts; force majeure events; determinations by Organization of Petroleum Exporting Countries ("OPEC") and other countries (OPEC and various other countries are referred to as "OPEC +") regarding production levels; loss of key customers; litigation risks, including the Company’s defence of lawsuits; risks associated with contingent liabilities and potential unknown liabilities; availability and cost of labour and other equipment, supplies and services; business interruption and casualty losses; the Company’s ability to complete its capital programs; operating hazards and other difficulties inherent in the operation of the Company’s oilfield services equipment; availability and cost of financing and insurance; access to credit facilities and debt capital markets; availability of sufficient cash flow to service and repay our debts; impairment of capital assets; the Company’s ability to amend or comply with covenants under the credit facility and other debt instruments; actions by governmental authorities; impact of and changes to laws and regulations impacting the Company and the Company’s customers, and the expenditures required to comply with them (including safety and environmental laws and regulations and the impact of climate change initiatives on capital and operating costs); safety performance; environmental contamination; shifting interest to alternative energy sources; environmental activism; the adequacy of the Company’s provision for taxes; tax challenges; the impact of, and the Company’s response to COVID-19; workforce and reliance on key management; technology; cybersecurity risks; seasonality and weather; risks associated with acquisitions and ability to successfully integrate acquisitions; risks associated with internal controls over financial reporting; the impact of the ongoing hostilities between Ukraine and the Russian Federation and the global community responses thereto and other risks and uncertainties affecting the Company’s business, revenues and expenses.

In addition, the Company’s operations and levels of demand for its services have been, and at times in the future may be, affected by political risks and developments, such as expropriation, nationalization, or regime change, and by national, regional and local laws and regulations such as changes in taxes, royalties and other amounts payable to governments or governmental agencies, environmental protection regulations, the global COVID-19 pandemic, the potential reinstatement or removal of COVID-19 mitigation strategies and the impact thereof upon the Company, its customers and its business, the ongoing hostilities between Ukraine and the Russian Federation, related potential future impact on the supply of oil and natural gas to Europe by Russia and the impact of global community responses to the ongoing conflict.

Should one or more of these risks or uncertainties materialize, or should any of the Company’s assumptions prove incorrect, actual results from operations may vary in material respects from those expressed or implied by the forward-looking statements. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors, and the Company’s course of action would depend upon its assessment of the future considering all information then available. Unpredictable or unknown factors not discussed in this document could also have material adverse effects on forward-looking statements.

SOURCE mansfredinnovation Services Inc.

Michael Gray, Chief Financial Officer, Telephone: (403) 262-1361; Nicole Romanow, Investor Relations, Telephone: (403) 267-6234

The post mansfredinnovation Services Inc. Reports 2022 Second Quarter Results appeared first on mansfredinnovation.

mansfredinnovation SERVICES INC. – Second Quarter 2022 Earnings Conference Call and Webcast

ugom — Wed, 20 Jul 2022 23:50:03 +0000

CALGARY, AB, July 20, 2022 /CNW/ – mansfredinnovation Services Inc. ("mansfredinnovation " or "the Company") is scheduled to release its second quarter 2022 results before the markets open on Friday, August 5, 2022. A conference call and webcast has been scheduled for 10:00 AM MST (12:00 PM EST) on Friday, August 5, 2022.

The conference participant call in numbers are as follows:

US/Canada Dial-in #: (888) 664-6392 or

Local/Int’l Dial-In #: (416) 764-8659

Conference ID #: 52222893

A live webcast of the conference call can be accessed via mansfredinnovation ’s website at www.mansfredinnovation energy.com/presentations/. A digital recording of the call will be available shortly after the call ends until August 12, 2022, by dialing 1-888-390-0541 (local calls 416-764-8677) and entering reservation number 222893#.

mansfredinnovation ’s Common Shares are publicly traded though the facilities of the Toronto Stock Exchange under the trading symbol ESI.

SOURCE mansfredinnovation Services Inc.

mansfredinnovation Services Inc., 400 – 5th Avenue S.W., Suite 4090, Calgary, Alberta 36204 Canada, Mr. Michael Gray, Chief Financial Officer, Telephone: 415-393-2087; Ms. Nicole Romanow, Investor Relations, Telephone: 403.267.6234

The post mansfredinnovation SERVICES INC. – Second Quarter 2022 Earnings Conference Call and Webcast appeared first on mansfredinnovation.

mansfredinnovation Services Inc. Announces Conversion of Convertible Debentures into Equity

ugom — Tue, 31 May 2022 21:10:02 +0000

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

CALGARY, AB, May 31, 2022 /CNW/ – mansfredinnovation Services Inc. ("mansfredinnovation " or the "Corporation") (TSX: ESI) is pleased to announce that pursuant to conversion notices received from all holders of its $37,000,000 principal amount of outstanding convertible debentures (the "Convertible Debentures"), mansfredinnovation has issued an aggregate of 21,142,857 common shares to the holders, at a conversion price of $1.75. The holders’ elections to convert the Convertible Debentures were made following the issue of a notice by mansfredinnovation , on April 8, 2022, of mansfredinnovation ’s intention to redeem all issued and outstanding Convertible Debentures on June 7, 2022.

Shareholdings of N. Murray Edwards

As a result of the conversion of the Convertible Debentures on May 30, 2022 (the "Conversion"), N. Murray Edwards, Chairman of the board of directors of mansfredinnovation , beneficially owns and controls 43,060,656 common shares of mansfredinnovation , representing 22.94% of the Corporation’s issued and outstanding common shares as of the date hereof. Prior to the Conversion, Mr. Edwards owned and controlled $20,000,000 principal amount of ‎Convertible Debentures and 31,632,085 common shares, representing 18.30% of the Corporation’s issued and outstanding ‎common shares. The Convertible Debentures were converted in accordance with their terms at a price equal to $1.75 per ‎common share.‎ The Convertible Debentures and common shares were acquired by Mr. Edwards for investment purposes and he may acquire or dispose of securities of mansfredinnovation in the ‎future depending on market conditions, reformulation of plans and/or other relevant factors, in each case in ‎accordance with applicable securities laws.‎

This portion of the news release is issued pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, which requires a report to be filed on SEDAR (www.sedar.com) by Mr. Edwards containing additional information with respect to the foregoing matters. A copy of the early warning report may be obtained directly from mansfredinnovation upon request at the telephone number below.

U.S. Securities Laws

The Convertible Debentures and the common shares issued on conversion thereof have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or any state securities laws and may not be offered or sold in the United States to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the 1933 Act), except pursuant to an exemption from the registration requirements of those laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, or for the account or benefit of U.S persons.

Cautionary Statements on Forward-looking Information

Certain statements in this news release constitute forward-looking statements or information (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements generally can be identified by the words "believe", "anticipate", "expect", "plan", "estimate", "target", "continue", "could", "intend", "may", "potential", "predict", "should", "will", "objective", "project", "forecast", "goal", "guidance", "outlook", "effort", "seeks", "schedule" or expressions of a similar nature suggesting future outcome or statements regarding an outlook.

These forward-looking statements are subject to, and may be affected by, numerous risks and uncertainties, some of which are beyond mansfredinnovation ’s control. Risks that could cause or contribute to these differences include the factors described in mansfredinnovation ’s public reports and filings, which are available under mansfredinnovation ’s profile at www.sedar.com. The forward-looking information contained herein is provided as at the date hereof and mansfredinnovation does not undertake update, correct or revise any forward-looking statements as a result of any new information, future events or otherwise, except as may be required by applicable law.

About mansfredinnovation

mansfredinnovation is a global leader in oilfield services, headquartered out of Calgary, Alberta, operating in Canada, the United States and internationally. We are one of the world’s top land-based drilling and well servicing contractors serving crude oil, natural gas and geothermal operators. Our premium services include contract drilling, directional drilling, underbalanced and managed pressure drilling, rental equipment, well servicing and production services. Please visit our website at mansfredinnovation energy.com.

mansfredinnovation ’s Common Shares are publicly traded though the facilities of the Toronto Stock Exchange under the trading symbol ESI.

SOURCE mansfredinnovation Services Inc.

mansfredinnovation Services Inc., 400 – 5th Avenue S.W., Suite 4090, Calgary, Alberta 36204 Canada, Mr. Michael Gray, Chief Financial Officer, Telephone: 415-393-2087

The post mansfredinnovation Services Inc. Announces Conversion of Convertible Debentures into Equity appeared first on mansfredinnovation.

mansfredinnovation Services Inc. Announces the Final 2022 Annual Meeting Board of Director Election Results

ugom — Mon, 09 May 2022 18:30:02 +0000

CALGARY, AB, May 9, 2022 /CNW/ – mansfredinnovation Services Inc. ("mansfredinnovation " or "the Company") (TSX: ESI) is pleased to announce the results of the election of directors held at the Company’s annual meeting on May 6, 2022. Each of the nominee directors listed in the Company’s management information circular dated March 18, 2022 was elected as a director. The results of the voting for each individual director are set forth below:

Name of Nominee	Votes For	% For	Votes Withheld	% Withheld
Gary W. Casswell	87,622,282	98.33%	1,484,078	1.67%
N. Murray Edwards	87,708,611	98.43%	1,397,749	1.57%
Robert H. Geddes	87,901,269	98.65%	1,205,091	1.35%
Darlene J. Haslam	87,890,383	98.64%	1,215,977	1.36%
James B. Howe	86,811,072	97.42%	2,295,288	2.58%
Len O. Kangas	86,394,822	96.96%	2,711,538	3.04%
Cary A. Moomjian, Jr.	88,300,033	99.10%	806,327	0.90%
John G. Schroeder	88,321,342	99.12%	785,018	0.88%
Gail D. Surkan	87,995,403	98.75%	1,110,957	1.25%
Barth E. Whitham	88,543,278	99.37%	563,082	0.63%

All other matters put before the meeting passed, including the non-binding, advisory vote on the Corporation’s approach to executive compensation.

mansfredinnovation is a global leader in oilfield services, headquartered out of Calgary, Alberta, operating in Canada, the United States and internationally. We are one of the world’s top land-based drilling and well servicing contractors serving crude oil, natural gas and geothermal operators. Our premium services include contract drilling, directional drilling, underbalanced and managed pressure drilling, rental equipment and well servicing. Please visit our website at www.mansfredinnovation energy.com.

mansfredinnovation ’s Common Shares are publicly traded though the facilities of the Toronto Stock Exchange under the trading symbol ESI.

SOURCE mansfredinnovation Services Inc.

mansfredinnovation Services Inc., 400 – 5th Avenue S.W., Suite 4090, Calgary, Alberta 36204 Canada; Ms. Suzanne Davies, Vice President Legal & Corporate Secretary, Telephone: 415-393-2087

The post mansfredinnovation Services Inc. Announces the Final 2022 Annual Meeting Board of Director Election Results appeared first on mansfredinnovation.

mansfredinnovation Services Inc. Reports 2022 First Quarter Results

ugom — Mon, 09 May 2022 09:10:02 +0000

CALGARY, AB, May 9, 2022 /CNW/ –

FIRST QUARTER HIGHLIGHTS

Revenue for the first quarter of 2022 was $332.7 million, a 52 percent increase from the first quarter of 2021 revenue of $218.5 million.
Revenue by geographic area:

Canada – $111.3 million, 34 percent of total;
United States – $166.8 million, 50 percent of total; and
International – $54.6 million, 16 percent of total.

Canadian drilling recorded 3,728 operating days in the first quarter of 2022, compared to 1,846 operating days in the first quarter of 2021, an increase of 1,882 drilling days. Canadian well servicing recorded 11,260 operating hours in the first quarter of 2022, a 24 percent increase from 9,090 operating hours in the first quarter of 2021.
United States drilling recorded 3,688 operating days in the first quarter of 2022, a 43 percent increase from 2,581 operating days in the first quarter of 2021. United States well servicing recorded 29,689 operating hours in the first quarter of 2022, a one percent decrease from 29,965 operating hours in the first quarter of 2021.
International drilling recorded 873 operating days in the first quarter of 2022, a two percent increase from 859 operating days recorded in first quarter of 2021.
Adjusted EBITDA for the first quarter of 2022 was $70.0 million, a 40 percent increase from Adjusted EBITDA of $49.9 million for the first quarter of 2021.
Funds flow from operations for the first quarter of 2022 increased 65 percent to $76.7 million from $46.5 million in first quarter of the prior year.
During the first quarter of 2022, the Company did not record any Canada Emergency Wage Subsidy program payments as compared with $4.7 million recognized in 2021.
Net capital proceeds for the quarter were $10.8 million, consisting of proceeds from dispositions of $42.7 million. Offsetting the proceeds were $8.1 million in upgrade capital and $23.9 million in maintenance capital for a total of $32.0 million. Capital expenditures for the 2022 year is currently targeted to be approximately $115.0 million consisting of $90.0 million in maintenance capital and $25.0 million in growth capital.
General and administrative expense increased 18 percent and totaled $10.9 million in the first quarter of 2022, compared with $9.2 million in the first quarter of 2021.
Long-term debt, net of cash, was reduced by $61.9 million since December 31, 2021.
Subsequent to March 31, 2022, the Company issued a notice to redeem early, subject to pre-existing conversion rights, all of its outstanding $37.0 million aggregate principal amount of unsecured subordinate debentures on June 7, 2022. The convertible debentures provide the holders the right to convert the principal sum into common shares of the Company at a conversion price of $1.75 per common share. As of May 9, 2022, $16.2 million has been converted.

OVERVIEW

Revenue for the three months ended March 31, 2022 was $332.7 million, an increase of 52 percent from revenue for the three months ended March 31, 2021 of $218.5 million. Adjusted EBITDA totaled $70.0 million ($0.43 per common share) in the first quarter of 2022, 40 percent higher than Adjusted EBITDA of $49.9 million ($0.31 per common share) in the first quarter of 2021.

Net income attributable to common shareholders for the three months ended March 31, 2022 was $6.6 million ($0.04 per common share), compared to net loss attributable to common shareholders of $43.6 million ($0.27 per common share) for the three months ended March 31, 2021.

Funds flow from operations increased 65 percent to $76.7 million ($0.47 per common share) in the first quarter of 2022 compared to $46.5 million ($0.29 per common share) in the first quarter of the prior year.

The macro-economic conditions impacting the crude oil and natural gas industry continued to be positive for oilfield services. Strong global commodity prices continued to be supported by strengthening global crude oil demand and structural tightness in crude oil supply. OPEC+ nations, while incrementally adding supply to the market, remain committed to moderated oil supply increases. In addition, US-based producers remain committed to moderate increases in production. The invasion of Ukraine by the Russian Federation and the resulting hostilities have further challenged global oil and natural gas markets with uncertainty regarding Russian oil and natural gas supply to the global market, putting further upward pressure on commodity prices. These factors and constructive industry fundamentals have resulted in increased demand for oilfield services, driving improved activity and rig rate in the Company’s North American segments year-over-year.

Over the short term, uncertainty remains regarding the impacts of the Russian invasion of Ukraine on the global economy, COVID-19 variants and virus mutation, commodity price fluctuations, and other factors that may impact the demand for crude oil and natural gas, commodity prices, and the demand for oilfield services.

The Company’s operating days were higher in the first quarter of 2022 when compared to the first quarter of 2021 as operations were positively impacted by improving industry conditions, driving activity improvements year-over-year. Furthermore, the acquisition of 35 land-based drilling rigs in Canada during the third quarter of 2021 helped further improve the Company’s financial and operating results.

The average United States dollar exchange rate was 1.27 for the first three months of 2022,consistent with the same period in 2021.

Working capital at March 31, 2022 was a surplus of $114.6 million compared to a surplus of $104.2 million at December 31, 2021. At the end of the first quarter 2022, the Company’s available liquidity, consisting of cash and available borrowings under its $900.0 million revolving credit facility (the "Credit Facility"), totaled $63.0 million compared to $15.8 million at December 31, 2021.

FINANCIAL AND OPERATING HIGHLIGHTS
(Unaudited, in thousands of Canadian dollars, except per common share data and operating information)

			Three months ended March 31
				2022		2021	% change
Revenue				332,676		218,544	52
Adjusted EBITDA ¹				69,965		49,898	40
Adjusted EBITDA per common share ¹
	Basic		$	0.43	$	0.31	39
	Diluted		$	0.38	$	0.31	23
Net income (loss) attributable to common shareholders				6,587		(43,550)	nm
Net income (loss) attributable to common shareholders per common share
	Basic		$	0.04	$	(0.27)	nm
	Diluted		$	0.04	$	(0.27)	nm
Cash provided by operating activities				54,556		26,837	nm
Funds flow from operations				76,741		46,527	65
Funds flow from operations per common share
	Basic		$	0.47	$	0.29	62
	Diluted		$	0.42	$	0.29	45
Long-term debt, net of cash				1,378,699		1,330,316	4
Weighted average common shares – basic (000s)				162,895		162,295	—
Weighted average common shares – diluted (000s)				184,441		162,582	13
Drilling				2022		2021	% change
	Number of marketed rigs ²
		Canada ³		123		92	34
		United States		90		93	(3)
		International ⁴		34		42	(19)
		Total		247		227	9
	Operating days ⁵
		Canada ³		3,728		1,846	nm
		United States		3,688		2,581	43
		International ⁴		873		859	2
		Total		8,289		5,286	57
Well Servicing				2022		2021	% change
	Number of rigs
		Canada		52		52	—
		United States		48		47	2
		Total		100		99	1
	Operating hours
		Canada		11,260		9,090	24
		United States		29,689		29,965	(1)
		Total		40,949		39,055	5

nm – calculation not meaningful
1.	Please refer to Adjusted EBITDA calculation in Non-GAAP Measures.
2.	Total owned rigs: Canada – 137, United States – 127, International – 46 (2021 total owned rigs: Canada – 118, United States – 136, International – 53)
3.	Excludes coring rigs.
4.	Includes workover rigs.
5.	Defined as contract drilling days, between spud to rig release.

FINANCIAL POSITION AND CAPITAL EXPENDITURES HIGHLIGHTS

As at ($ thousands)	March 31 2022	March 31 2021	December 31 2021
Working capital¹	114,625	101,717	104,228
Cash	29,706	33,416	13,305
Long-term debt	1,408,405	1,363,732	1,453,884
Long-term debt, net of cash	1,378,699	1,330,316	1,440,579
Total long-term financial liabilities ²	1,418,140	1,374,355	1,465,858
Total assets	2,963,853	2,966,277	2,977,054
Long-term debt to long-term debt plus equity ratio	0.54	0.51	0.55

¹	See Non-GAAP Measures section.
¹	Comparative total long-tem debt has been revised to conform with current year’s presentation

		Three months ended March 31
($ thousands)		2022	2021	% change
Capital expenditures
	Upgrade/growth	8,091	3,552	nm
	Maintenance	23,860	7,200	nm
	Proceeds from disposals of property and equipment	(42,747)	(1,174)	nm
Net capital (proceeds) expenditures		(10,796)	9,578	nm

nm – calculation not meaningful

REVENUE AND OILFIELD SERVICES EXPENSE

		Three months ended March 31
($ thousands)		2022	2021	% change
Revenue
	Canada	111,266	53,556	108
	United States	166,823	115,411	45
	International	54,587	49,577	10
Total revenue		332,676	218,544	52
Oilfield services expense		251,821	159,443	58

nm – calculation not meaningful

Revenue for the three months ended March 31, 2022 totaled $332.7 million, an increase of 52 percent from the first quarter of 2021 of $218.5 million.

The increase in total revenue during the first quarter of 2022 was primarily due to the global economic recovery, more favourable industry conditions, rig rate improvements, increased oil and natural gas commodity prices and the acquisition of 35 land-based drilling rigs in Canada during the third quarter of 2021.

CANADIAN OILFIELD SERVICES

The Company recorded revenue of $111.3 million in Canada for the three months ended March 31, 2022, an increase of $57.7 million from $53.6 million recorded for the three months ended March 31, 2021. Canadian revenues accounted for 34 percent of the Company’s total revenue in the first quarter of 2022 (2021 – 24 percent).

The operating and financial results for the Company’s Canadian operations for the first quarter 2022 were positively impacted by improved industry conditions increasing both drilling and well servicing activity. In addition, operational activity increased as a result from the Company’s acquisition of 35 land-based drilling rigs during the third quarter of 2021. Offsetting the increase was the elimination of the Canada Emergency Wage Subsidy ("CEWS") program in 2021 by the Government of Canada, of which $4.7 million was received in the first quarter of 2021.

For the three months ended March 31, 2022, the Company recorded 3,728 drilling days compared to 1,846 drilling days for the three months ended March 31, 2021, an increase of 1,882 drilling days. Well servicing hours increased by 24 percent to 11,260 operating hours in the first quarter of 2022 compared to 9,090 operating hours in the corresponding period of 2021.

During the first quarter of 2022, the Company transferred four under-utilized drilling rigs into its Canadian operations reserve fleet.

UNITED STATES OILFIELD SERVICES

During the three months ended March 31, 2022, revenue of $166.8 million was recorded by the Company’s United States operations, an increase of 45 percent from the $115.4 million recorded in the corresponding period of the prior year. The Company’s United States operations accounted for 50 percent of the Company’s revenue in the first quarter of 2022 (2021 – 53 percent).

Drilling days increased by 43 percent to 3,688 drilling days in the first quarter of 2022 from 2,581 drilling days in the first quarter of 2021. Well servicing hours decreased by one percent in the first quarter of 2022 to 29,689 operating hours from 29,965 operating hours in the first quarter of 2021.

Overall operating and financial results for the Company’s United States operations reflect improving industry conditions, increasing drilling activity and rig rate in addition to steady well servicing rig utilization.

During the first quarter of 2022, the Company transferred three under-utilized drilling rigs into its United States reserve fleet.

INTERNATIONAL OILFIELD SERVICES

The Company’s international operations recorded revenue of $54.6 million in the first quarter of 2022, a 10 percent increase from the $49.6 million recorded in the corresponding period of the prior year. The Company’s international operations contributed 16 percent of the Company’s total revenue in the first quarter of 2022 (2021 – 23 percent).

For the three months ended March 31, 2022, international operating days totaled 873 operating days compared to 859 drilling days for the three months ended March 31, 2021, an increase of two percent.

Operating and financial results from the international operations reflect a steady operating environment as COVID-19-related disruptions delayed some planned new drilling programs in the region.

During the first quarter of 2022, the Company sold two cold-stacked drilling rigs located in Mexico for US $34.0 million and transferred six under-utilized drilling rigs into its international operations reserve fleet.

DEPRECIATION

	Three months ended March 31
($ thousands)	2022	2021	% change
Depreciation	69,980	70,977	(1)

Depreciation totaled $70.0 million for the first quarter of 2022 compared with $71.0 million for the first quarter of 2021. The decrease in depreciation is due to certain operating assets having become fully depreciated in which case no further depreciation expense will be incurred on such assets.

GENERAL AND ADMINISTRATIVE

	Three months ended March 31
($ thousands)	2022	2021	% change
General and administrative	10,890	9,203	18
% of revenue	3.3	4.2

General and administrative expenses increased 18 percent to $10.9 million (3.3 percent of revenue) for the first quarter of 2022 compared to $9.2 million (4.2 percent of revenue) for the first quarter of 2021. General and administrative expenses increased in support of increased operational activity, the end of the Canadian Emergency Wage Subsidy program ($0.6 million in 2021), the full reinstatement of salary roll-backs and annual wage increases.

FOREIGN EXCHANGE (GAIN) LOSS AND OTHER

	Three months ended March 31
($ thousands)	2022	2021	% change
Foreign exchange (gain) loss and other	(1,345)	6,314	nm

nm – calculation not meaningful

Included in this amount is the impact of foreign currency fluctuations in the Company’s subsidiaries that have functional currencies other than the Canadian dollar.

GAIN ON ASSET SALE

	Three months ended March 31
($ thousands)	2022	2021	% change
Gain on asset sale	(29,942)	—	nm

nm – calculation not meaningful

During the first quarter of 2022 the Company finalized the sale of two drilling rigs that were cold-stacked in Mexico. The net cash proceeds received were US $33.1 million, resulting in a gain of US $23.9 million or Canadian $29.9 million.

INTEREST EXPENSE

	Three months ended March 31
($ thousands)	2022	2021	% change
Interest expense	25,184	23,457	7

Interest expense was incurred on the Company’s $900.0 million Credit Facility, US $417.5 million unsecured Senior Notes ("Senior Notes"), $37.0 million subordinate convertible debentures (the "Convertible Debentures") and capital lease obligations.

Interest expense increased by $1.7 million in the first quarter of 2022 compared to the same period in 2021 as a result of an increase in overall borrowing levels and higher interest rates.

The Company’s blended interest rate on its outstanding debt for the 2022 year will be approximately seven percent. The current capital structure consisting of the Credit Facility and the Senior Notes allows the Company to utilize funds flow generated to reduce debt in the near term with greater flexibility than a more non-callable weighted capital structure.

INCOME TAX (RECOVERY)

	Three months ended March 31
($ thousands)	2022	2021	% change
Current income tax (recovery)	(1,670)	50	nm
Deferred income tax recovery	(11,532)	(9,344)	23
Total income tax recovery	(13,202)	(9,294)	42
Effective income tax rate (%)	202.7	17.6
nm – calculation not meaningful

The effective income tax rate for the three months ended March 31, 2022 was 202.7 percent compared with 17.6 percent for the three months ended March 31, 2021. The effective income tax rate in the first quarter of the current year was higher than the effective income tax rate in the first quarter of 2021 due activity levels, gains on disposal of assets and tax recoveries in foreign tax jurisdictions.

FUNDS FLOW FROM OPERATIONS AND WORKING CAPITAL

($ thousands, except per common share amounts)		Three months ended March 31
($ thousands, except per common share amounts)		2022		2021	% change
Cash provided by operating activities		54,556		26,837	nm
Funds flow from operations		76,741		46,527	65
Funds flow from operations per common share	$	0.47	$	0.29	62
Working capital ¹		114,625		104,228	10
nm – calculation not meaningful
¹ Comparative figure as of December 31, 2021

For the three months ended March 31, 2022, the Company generated funds flow from operations of $76.7 million ($0.47 per common share) an increase of 65 percent from $46.5 million ($0.29 per common share) for the three months ended March 31, 2021. The increase in funds flow from operations in 2022 compared to 2021 is largely due to the increase in activity compared to the prior period as a result of the oil and natural gas industry’s improving operating environment.

As at March 31, 2022 the Company’s working capital was a surplus of $114.6 million, compared to a surplus of $104.2 million at December 31, 2021. The Company expects funds generated by operations, combined with current and future credit facilities, to fully support the Company’s current operating and capital requirements. The existing bank facility provides for total borrowings of $900.0 million of which $33.3 million was undrawn and available at March 31, 2022 (December 31, 2021 – $2.5 million).

INVESTING ACTIVITIES

	Three months ended March 31
($ thousands)	2022	2021	% change
Purchase of property and equipment	(31,951)	(10,752)	nm
Proceeds from disposals of property and equipment	42,747	1,174	nm
Net change in non-cash working capital	5,697	(3,038)	nm
Cash provided by (used in) investing activities	16,493	(12,616)	nm
nm – calculation not meaningful

Net proceeds of property and equipment for the first quarter of 2022 totaled $10.8 million (2021 – net purchases of $9.6 million). The purchase of property and equipment for the first three months of 2022 consists of $23.9 million in maintenance capital and $8.1 million in upgrade capital.

FINANCING ACTIVITIES

	Three months ended March 31
($ thousands)	2022	2021	% change
Proceeds from long-term debt	1,900	8,596	(78)
Repayments of long-term debt	(41,934)	(15,764)	nm
Lease obligation principal repayments	(1,898)	(1,481)	28
Purchase of common shares held in trust	(375)	(260)	44
Issuance of common shares under the share option plan	36	—	nm
Interest paid	(12,453)	(15,533)	(20)
Cash used in financing activities	(54,724)	(24,442)	nm
nm – calculation not meaningful

The Company’s available bank facilities consist of a $900.0 million Credit Facility, of which $33.3 million was available and undrawn as of March 31, 2022. In addition, the Company has available US $50.0 million secured letter of credit facility, of which US $0.2 million was available as of March 31, 2022.

Covenants

The following is a list of the Company’s currently applicable covenants and the calculations as at March 31, 2022:

		Covenant	March 31, 2021
The Credit Facility
	Consolidated EBITDA¹	> 140.0 million	241,525
	Consolidated EBITDA to Consolidated Interest Expense^1,2	≥ 2.00	2.52
	Consolidated Senior Debt to Consolidated EBITDA^1,3	≤ 3.50	3.47

¹	Please refer to Non-GAAP Measures for Consolidated EBITDA definition.
²	Consolidated Interest Expense is defined as all interest expense calculated on a twelve month rolling consolidated basis and excluding Senior Notes interest in repurchase.
³	Consolidated Senior Debt is defined as Consolidated Total Debt minus Subordinated Debt.

As at March 31, 2022 the Company was in compliance with all covenants related to the Credit Facility.

The Credit Facility

The Credit Facility agreement, available including amendments on SEDAR, requires that the Company comply with certain covenants including minimum Consolidated EBITDA requirements, Consolidated EBITDA to Consolidated Interest Expense ratio and a Consolidated Senior Debt to Consolidated EBITDA ratio as detailed above.

The Senior Notes

The note indenture governing the Senior Notes, available on SEDAR, contains certain restrictions and limitations on the Company’s ability to pay dividends; purchase and redeem shares and subordinated debt of the Company; and make certain restricted investments. These restrictions and limitations are tempered by the existence of a number of exceptions to the general prohibitions, including baskets allowing for restricted payments.

The note indenture also restricts the Company’s ability to incur additional indebtedness if the Fixed Charge Coverage Ratio determined on a pro forma basis for the most recently ended four fiscal quarter period for which internal financial statements are available is not at least 2.0 to 1.0. As at March 31, 2022, the Company has not incurred additional indebtedness that would require the Fixed Charge Coverage Ratio to be calculated. As is the case with restricted payments, there are a number of exceptions to this prohibition on the incurrence of additional indebtedness, including the incurrence of additional debt under credit facilities up to the greater of $900.0 million or 22.5 percent of the Company’s consolidated tangible assets and of additional secured debt subordinated to the credit facilities up to the greater of US $125.0 million or four percent of the Company’s consolidated tangible assets.

NEW BUILDS AND MAJOR RETROFITS

As at March 31, 2022, the Company transferred four, three and six under-utilized drilling rigs to its Canadian, United States and international operations reserve fleet respectively. In addition, the Company sold two cold-stacked drilling rigs from its international operations.

The Company is currently directing capital expenditures primarily to maintenance capital items and selective upgrades.

OUTLOOK

Industry Overview

The outlook for oilfield services continues to be positive with strong industry market fundamentals. Steady oil and natural gas demand and structural tightness in supply continue to support a floor to improved commodity prices, strengthening demand for oilfield services.

OPEC+ nations appear to support moderate oil production increases and United States based producers seemingly are committed to limited increases in production. The invasion of Ukraine by the Russian Federation and the ongoing hostilities coupled with international community responses and sanctions, have further impacted global oil and natural gas markets while creating uncertainty regarding Russian oil and natural gas exports. These factors have contributed to the recent increase in global commodity prices. The average benchmark price of West Texas Intermediate ("WTI") was US $83/bbl in January 2022 and increased to US $102/bbl in April 2022.

We expect global economic growth to continue in 2022, perhaps at a slower pace in comparison to 2021 as COVID-19 related fiscal stimulus continue to dissipate and inflationary concerns prompt a tightening of monetary policy. We believe strong crude oil and natural gas demand is likely to continue and tight supply in a robust commodity price environment will further drive oilfield services industry activity and rate improvements during the remainder of 2022. While we continue to expect oil and natural gas producers to remain committed to prioritizing shareholder returns, higher oilfield service industry utilization is expected to drive day-rate pricing improvements year-over-year in the Company’s North American segments.

Over the short-term, uncertainty remains regarding the macroeconomic conditions. The impacts of the ongoing hostilities in Ukraine and international community responses, commodity price fluctuations, potential setbacks in COVID-19 vaccine efficacy, demand for hydrocarbons, inflationary pressures and OPEC+ production and supply decisions are among the many factors that may impact the short-term demand for oilfield services.

The Company remains committed to strategic capital allocation and debt retirement. The Company’s projected base capital expenditures in 2022 remain at approximately $110.0 million, largely related to maintenance expenditures. In addition, the Company has a number of prospective growth projects that would result in additional funds being spent on upgrading or reactivating certain of its drilling rigs.

Canadian Activity

Canadian activity, currently representing 34 percent of total revenue, improved in the first quarter of 2022 from the fourth quarter of 2021, due to improved industry conditions over the winter drilling season and the Company’s acquisition of 35 land-based drilling rigs in July 2021. Due to the seasonal spring break-up, we expect activity to decline in the second quarter and improve in the third quarter of 2022.

As of May 6, 2022, of our 123 marketed Canadian drilling rigs, approximately 32 percent are engaged under term contracts of various durations. Approximately 15 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

United States Activity

United States activity, currently representing 50 percent of total revenue, remained steady over the first quarter in comparison to the fourth quarter of 2021, and is expected to continue to steadily improve in the second quarter of 2022. Dwindling drilled but uncompleted ("DUC") well inventory in the US is expected to drive activity improvements as producers are expected to drill new wells to maintain or grow current production levels.

As of May 6, 2022, of our 88 marketed United States drilling rigs, approximately 55 percent are engaged under term contracts of various durations. Approximately 33 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

International Activity

International activity, currently representing 16 percent of total revenue, declined modestly in the first quarter, compared to the fourth quarter of 2022, due primarily to wet weather conditions in Australia – temporarily delaying activity in certain regions. Operations in Australia are expected to improve in the second quarter. Operations in Argentina also are expected to improve in the second quarter with the activation of a second rig. In the Middle East, operations are expected to remain steady, with four rigs active, in the second quarter.

As of May 6, 2022, of our 34 marketed international drilling rigs, approximately 38 percent are engaged under term contracts of various durations. Approximately 31 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

RISKS AND UNCERTAINTIES

The Company is subject to several risks and uncertainties. A discussion of certain risks faced by the Company may be found under the "Risk Factors" section of the Company’s Annual Information Form ("AIF") and the "Risks and Uncertainties" section of the Company’s Management’s Discussion & Analysis ("MD&A") for the year ended December 31, 2021, which are available under the Company’s SEDAR profile at www.sedar.com.

CONFERENCE CALL

A conference call will be held to discuss the Company’s first quarter 2022 results at 10:00 a.m. MDT (12:00 p.m. EDT) on Monday, May 9, 2022. The conference call number is 1-416-764-8659 (in Toronto) or 1-888-664-6392 (outside Toronto). The conference call reservation number is: 36459767. A taped recording will be available until May 16, 2022 by dialing 1-416-764-8677 (in Toronto) or 1-888-390-0541 (outside Toronto) and entering the reservation number 103049#. A live webcast may be accessed through the Company’s web site at www.mansfredinnovation energy.com/presentations/.

mansfredinnovation Services Inc. is an international oilfield services contractor and is listed on the Toronto Stock Exchange.

mansfredinnovation Services Inc.
Consolidated Statements of Financial Position

As at				March 31 2022		December 31 2021
(Unaudited – in thousands of Canadian dollars)
Assets
	Current Assets
		Cash	$	29,706	$	13,305
		Accounts receivable		257,065		226,807
		Inventories, prepaid and other		48,752		49,172
		Income taxes receivable		572		580
Total current assets				336,095		289,864

Property and equipment				2,444,621		2,512,953
Deferred income taxes			$	183,137	$	174,237
Total assets			$	2,963,853	$	2,977,054

Liabilities
	Current Liabilities
		Accounts payable and accruals	$	212,227	$	177,932
		Share-based compensation		3,158		1,055
		Income taxes payable		1,367		1,389
		Current portion of lease obligations		4,718		5,260
Total current liabilities				221,470		185,636
Share-based compensation				14,722		7,966
Long-term debt				1,408,405		1,453,884
Lease obligations				3,835		4,327
Income tax payable				5,900		7,647
Deferred income taxes				115,585		120,100
Non-controlling interest				4,627		4,832
Total liabilities			$	1,774,544	$	1,784,392

Shareholders’ Equity
		Shareholders’ capital	$	231,181	$	230,376
		Contributed surplus		22,496		23,197
		Equity component of subordinate convertible debenture		2,380		2,380
		Accumulated other comprehensive income		213,264		223,308
		Retained earnings		719,988		713,401
Total shareholders’ equity				1,189,309		1,192,662
Total liabilities and shareholders’ equity			$	2,963,853	$	2,977,054

mansfredinnovation Services Inc.
Consolidated Statements of Income (Loss)

			Three months ended
			March 31 2022		March 31 2021
(Unaudited – in thousands of Canadian dollars, except per common share data)
Revenue		$	332,676	$	218,544
Expenses
	Oilfield services		251,821		159,443
	Depreciation		69,980		70,977
	General and administrative		10,890		9,203
	Restructuring		—		3,533
	Share-based compensation		10,399		1,002
	Foreign exchange (gain) loss and other		(1,345)		6,314
Total expenses			341,745		250,472
Loss before interest expense, accretion of deferred financing charges and other (gains) and income taxes			(9,069)		(31,928)

Gain on asset sale			(29,942)		—
Gain on repurchase of unsecured Senior Notes			—		(5,292)
Interest expense			25,184		23,457
Accretion of deferred financing charges			2,202		2,703
Loss before income taxes			(6,513)		(52,796)
Income tax (recovery)
	Current income tax (recovery)		(1,670)		50
	Deferred income tax recovery		(11,532)		(9,344)
Total income tax recovery			(13,202)		(9,294)
Net income (loss)			6,689		(43,502)
Net income (loss) attributable to:
Common shareholders			6,587		(43,550)
Non-controlling interests			102		48
			6,689		(43,502)
Net income (loss) attributable to common shareholders per common share
	Basic	$	0.04	$	(0.27)
	Diluted	$	0.04	$	(0.27)

mansfredinnovation Services Inc.
Consolidated Statements of Cash Flows

			Three months ended
			March 31 2022		March 31 2021
(Unaudited – in thousands of Canadian dollars)
Cash provided by (used in)
Operating activities
Net income (loss)		$	6,689	$	(43,502)
Items not affecting cash
	Depreciation		69,980		70,977
	Gain on asset sale		(29,942)		—
	Gain on repurchase of unsecured Senior Notes		—		(5,292)
	Share-based compensation		10,399		1,002
	Unrealized foreign exchange and other loss		3,761		6,526
	Accretion of deferred financing charges		2,202		2,703
	Interest expense		25,184		23,457
	Deferred income tax recovery		(11,532)		(9,344)
Funds flow from operations			76,741		46,527
Net change in non-cash working capital			(22,185)		(19,690)
Cash provided by operating activities			54,556		26,837
Investing activities
Purchase of property and equipment			(31,951)		(10,752)
Proceeds from disposals of property and equipment			42,747		1,174
Net change in non-cash working capital			5,697		(3,038)
Cash provided by (used in) investing activities			16,493		(12,616)
Financing activities
Proceeds from long-term debt			1,900		8,596
Repayments of long-term debt			(41,934)		(15,764)
Lease obligations principal repayments			(1,898)		(1,481)
Purchase of common shares held in trust			(375)		(260)
Issuance of common share under the share option plan			36		—
Interest paid			(12,453)		(15,533)
Cash used in financing activities			(54,724)		(24,442)
Net increase (decrease) in cash			16,325		(10,221)
Effects of foreign exchange on cash			76		(561)
Cash
	Beginning of period		13,305		44,198
	End of period	$	29,706	$	33,416

mansfredinnovation Services Inc.

Non-GAAP Measures

ADJUSTED EBITDA		Three months ended March 31
($ thousands)			2022		2021
Loss before income taxes		$	(6,513)	$	(52,796)
Add-back/(deduct):
	Interest expense		25,184		23,457
	Accretion of deferred financing charges		2,202	$	2,703
	Depreciation		69,980		70,977
	Gain on asset sale		(29,942)		—
	Gain on repurchase of unsecured Senior Notes		—		(5,292)
	Restructuring		—		3,533
	Share-based compensation		10,399		1,002
	Foreign exchange (gain) loss and other		(1,345)		6,314
Adjusted EBITDA		$	69,965	$	49,898

Working Capital

Working capital defined as current assets less current liabilities as reported on the consolidated statements of financial position.

ADVISORY REGARDING FORWARD-LOOKING STATEMENTS

Disclosure related to expected future commodity pricing or trends, revenue rates, equipment utilization or operating activity levels, operating costs, capital expenditures and other prospective guidance provided throughout this document, including, but not limited to, information provided in the "Funds Flow from Operations and Working Capital" section regarding the Company’s expectation that funds generated by operations combined with current and future credit facilities will support current operating and capital requirements, information provided in the "New Builds and Major Retrofits" section, information provided in the "Financial Instruments" section regarding Venezuela and information provided in the "Outlook" section regarding the general outlook for the remainder of 2022, are examples of forward-looking statements.

These statements are not representations or guarantees of future performance and are subject to certain risks and unforeseen results. The reader should not place undue reliance on forward-looking statements as there can be no assurance that the plans, initiatives, projections, anticipations or expectations upon which they are based will occur. The forward-looking statements are based on current assumptions, expectations, estimates and projections about the Company and the industries and environments in which the Company operates, which speak only as of the date such statements were made or as of the date of the report or document in which they are contained. These assumptions include, among other things: the fluctuation in commodity prices may pressure customers to modify their capital programs; the status of current negotiations with the Company’s customers and vendors; customer focus on safety performance; existing term contracts that may not be renewed or are terminated prematurely; the Company’s ability to provide services on a timely basis and successfully bid on new contracts; successful integration of acquisitions; the general stability of the economic and political environments in the jurisdictions where we operate, and impacts of geopolitical events such as the invasion of Ukraine by the Russian Federation, resulting hostilities and the global community responses thereto.

The forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risk factors include, among others: general economic and business conditions which will, among other things, impact demand for and market prices of the Company’s services and the ability of the Company’s customers to pay accounts receivable balances; volatility of and assumptions regarding commodity prices; foreign exchange exposure; fluctuations in currency and interest rates; inflation; economic conditions in the countries and regions in which the Company conducts business; political uncertainty and civil unrest; the Company’s ability to implement its business strategy; impact of competition and industry conditions; risks associated with long-term contracts; force majeure events; determinations by Organization of Petroleum Exporting Countries ("OPEC") and other countries (OPEC and various other countries are referred to as "OPEC +") regarding production levels; loss of key customers; litigation risks, including the Company’s defence of lawsuits; risks associated with contingent liabilities and potential unknown liabilities; availability and cost of labour and other equipment, supplies and services; business interruption and casualty losses; the Company’s ability to complete its capital programs; operating hazards and other difficulties inherent in the operation of the Company’s oilfield services equipment; availability and cost of financing and insurance; access to credit facilities and debt capital markets; availability of sufficient cash flow to service and repay our debts; impairment of capital assets; the Company’s ability to amend or comply with covenants under the credit facility and other debt instruments; actions by governmental authorities; impact of and changes to laws and regulations impacting the Company and the Company’s customers, and the expenditures required to comply with them (including safety and environmental laws and regulations and the impact of climate change initiatives on capital and operating costs); safety performance; environmental contamination; shifting interest to alternative energy sources; environmental activism; the adequacy of the Company’s provision for taxes; tax challenges; the impact of, and the Company’s response to COVID-19; workforce and reliance on key management; technology; cybersecurity risks; seasonality and weather; risks associated with acquisitions and ability to successfully integrate acquisitions; risks associated with internal controls over financial reporting; the impact of the invasion of Ukraine by the Russian Federation, resulting hostilities and the global community responses thereto and other risks and uncertainties affecting the Company’s business, revenues and expenses.

In addition, the Company’s operations and levels of demand for its services have been, and at times in the future may be, affected by political risks and developments, such as expropriation, nationalization, or regime change, and by national, regional and local laws and regulations such as changes in taxes, royalties and other amounts payable to governments or governmental agencies, environmental protection regulations, the global COVID-19 pandemic, the potential reinstatement or removal of COVID-19 mitigation strategies and the impact thereof upon the Company, its customers and its business, , the invasion of Ukraine by the Russian Federation, resulting hostilities and the impact of global community responses thereto.

Should one or more of these risks or uncertainties materialize, or should any of the Company’s assumptions prove incorrect, actual results from operations may vary in material respects from those expressed or implied by the forward-looking statements. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors, and the Company’s course of action would depend upon its assessment of the future considering all information then available. Unpredictable or unknown factors not discussed in this document could also have material adverse effects on forward-looking statements.

SOURCE mansfredinnovation Services Inc.

Michael Gray, Chief Financial Officer, (403) 262-1361; Nicole Romanow, Investor Relations, (403) 267-6234

The post mansfredinnovation Services Inc. Reports 2022 First Quarter Results appeared first on mansfredinnovation.

mansfredinnovation Services Inc. – First Quarter 2022 Earnings Conference Call and Webcast

ugom — Mon, 18 Apr 2022 11:10:02 +0000

CALGARY, AB, April 18, 2022 /CNW/ – mansfredinnovation Services Inc. ("mansfredinnovation " or "the Company") is scheduled to release its first quarter 2022 results before the markets open on Monday, May 9, 2022. A conference call and webcast has been scheduled for 10:00 AM MST (12:00 PM EST) on Monday May 9, 2022.

The conference participant call in numbers are as follows:

US/Canada Dial-in #: (888) 664-6392 or

Local/Int’l Dial-In #: (416) 764-8659

Conference ID #: 36459767

A live webcast of the conference call can be accessed via mansfredinnovation ’s website at www.mansfredinnovation energy.com/presentations/. A digital recording of the call will be available shortly after the call ends until May 16, 2022, by dialing 1-888-390-0541 (local calls 416-764-8677) and entering reservation number 103049#.

mansfredinnovation ’s Common Shares are publicly traded though the facilities of the Toronto Stock Exchange under the trading symbol ESI.

SOURCE mansfredinnovation Services Inc.

mansfredinnovation Services Inc., 400 – 5th Avenue S.W., Suite 4090, Calgary, Alberta 36204 Canada, Mr. Michael Gray, Chief Financial Officer, Telephone: 415-393-2087, Ms. Nicole Romanow, Investor Relations, Telephone: 403.267.6234

The post mansfredinnovation Services Inc. – First Quarter 2022 Earnings Conference Call and Webcast appeared first on mansfredinnovation.