SERVICE SECTOR / Canadian Fracmaster reports 1997 Financial Results
CALGARY, Feb. 26 /CNW/ - Canadian Fracmaster Ltd. reported consolidated
net earnings for the year ended December 31, 1997 of $43.4 million ($1.01 per
share) on revenues of $447.4 million, compared to earnings of $21.9 million
($0.51 per share) on revenues of $347.1 million in 1996. This represents a
98% increase in net earnings and the strongest performance since becoming
public. Consolidated funds from operations for 1997 increased to $90.0
million ($2.10 per share) from $71.0 million ($1.65 per share) in 1996.
Consolidated net earnings for the fourth quarter of 1997 were $13.4
million ($0.31 per share) on revenues of $127.7 million. This represents a
41% increase over 1996 consolidated fourth quarter earnings of $9.5 million
($0.22 per share) on revenues of $98.6 million. Consolidated funds from
operations were $28.0 million ($0.65 per share) compared to $20.0 million
($0.46 per share) for the corresponding three months of 1996.
The North American Well Services segment provides well stimulation,
cementing, conventional coiled tubing services, and coiled tubing drilling
applications to the Canadian and U.S. oil and gas industry. Revenues from
this segment reached record highs during 1997. The Well Services segment
contributed earnings of $13.6 million on revenues of $174.7 million, up from
earnings of $2.7 million on revenues of $97.1 million in 1996.
On a comparative basis, North American Well Services revenues increased
80% over the prior year, while earnings increased by $10.9 million or some
400% compared to 1996. This significant improvement in results is
attributable to increased activity levels, the growth of new service lines,
improved pricing and reduced discounts, as well as to acquisitions in both
Canada and the United States. The outlook for 1998 remains positive, with
activity levels and equipment utilization expected to remain strong through to
spring break-up. After spring break-up, we expect to see a continued shift
towards gas-intent drilling by the industry which should positively impact
fracturing, acidizing and coiled tubing activity levels for Fracmaster.
The Joint Enterprise Services segment comprises the Company's
proportionate share of Russian operating results, as well as activities
relating to the provision of materials, services, equipment and technology
primarily to the Russian ventures. This segment contributed revenues of
$272.6 million and produced earnings of $33.5 million in 1997, compared to
revenues of $250.0 million and earnings of $25.9 million in 1996.
Earnings from the Company's Russian operations improved almost 50% to
$26.4 million from $17.7 million in the prior year. The improved performance
is attributable to a number of factors including the elimination of the export
tariff, lower income taxes, increased fee-for-service activities and the
acquisition of an additional 25% interest in the Samotlor Joint Enterprise on
July 1, 1997.
In Russia, Fracmaster's financial performance is tied more to activity
levels than to the price of crude. Consequently, the Company's fee-for-service
activities within the Joint Enterprise segment are increasingly important to
performance as well. Fee-for-service activities are an emerging business
sector for Fracmaster in Russia whereby the Company is paid in cash or cash
equivalent for services performed. This is not a new business venture, but,
rather, a new way to expand cash flow and earnings utilizing existing
equipment capacity. During 1997, a total of 595 wells were fractured, all on
a fee-for-service basis. In comparison, only 254 such fractures were carried
out in 1996. Total fracturing activity in the year improved almost 11% over
the prior year, and further increases are expected in 1998 when the Company
intends to perform all fracture treatments on a fee-for-service basis and to
expand the range of its operations to include cementing, acidizing and coiled
tubing services.
Net earnings from the Supply and Service portion of the segment for 1997
were $7.1 million, as compared to $8.2 million contributed in 1996. Supply
and Service results can vary significantly from period to period depending
upon the timing of equipment, parts and chemical purchases in each of the
respective Joint Enterprises. Supply and Service results are expected to
improve in 1998 given current inventory levels and expected increase in
activity in Russia and elsewhere.
Canadian Fracmaster Ltd.'s improved results, combined with emerging
opportunities in both North America and abroad, set the stage for continued
strong performance.
The Company's Board of Directors has today approved the China-Shengli oil
well rehabilitation project and funding required.
Canadian Fracmaster Ltd. is an international oil and gas service and
production company, which is listed on the Toronto and Montreal Stock
Exchanges and trades under the symbol ''CFC''. For further information on the
Company please visit our web site at fracmaster.com.
Year Ended Three Months Ended
December 31, December 31
($ Million) ($ Million)
1997 1996 1997 1996
---- ---- ---- ----
Revenues 447.4 347.1 127.7 98.6
Earnings before Interest, Income
Taxes and Depreciation (EBITD) 107.4 81.2 30.3 26.0
Net Income 43.4 21.9 13.4 9.5
Net Income per Share $1.01 $0.51 $0.31 $0.22
Funds Flow from Operations 90.0 71.0 28.0 20.0
Funds from Operations per Share $2.10 $1.65 $0.65 $0.46 |
