SERVICE SECTOR / Computalog Ltd reports 1997 Results
(Thousands of Canadian Dollars except per share data)
1997 OPERATING RESULTS
Computalog Ltd. of Calgary, Alberta, announced today that for the year
ended December 31, 1997, it generated a net income of $19,726 ($1.49 per share
on a fully diluted basis) from revenues of $223,056. Cash flow from
operations totalled $38,117.
Further details and a comparison to 1996, are provided as follows:
<<
1997 1996
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Revenue $ 223,056 $ 147,945
Expenses
Operating 140,992 98,814
Selling, general & administration 22,308 16,257
Depreciation & amortization 16,036 10,797
Research & development 6,784 5,936
Loss (gain) on foreign exchange (989) (195)
Interest 2,801 626
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Net income from operations before
taxes and minority interest $ 35,124 $ 15,710
Income taxes 15,415 5,126
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Net income before minority interest $ 19,709 $ 10,584
Minority interest (17) (74)
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Net Income $ 19,726 $ 10,658
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Earnings per share
Basic $ 1.73 $ 1.22
Fully diluted $ 1.49 $ 0.84
Cash flow from operations $ 38,117 $ 22,419
>>
During 1997, Computalog experienced revenue increases in all three of its
geographic segments. The increase in the Company's Canadian revenue was
primarily the result of the increase in drilling activity and the inclusion of
a full twelve months of revenue from the acquisition of Norjet Geotechnologies
Inc., which occurred on March 7, 1996. The western Canadian average drilling
rig count increased by 148, or 46%, and the number of well completions
increased by 3,140, or 32%, in 1997 compared to 1996. Canadian operations
comprised 64% of the Company's total revenue for the period, as compared to
65% during 1996.
The remainder of the Company's revenue is derived from the United States
and international markets. These two geographic areas contributed 21% and 15%
of the total revenue of Computalog, respectively, in 1997 compared to 18% and
17%, respectively, in 1996.
The increase in revenue in the United States primarily occurred in the
Company's wireline and directional drilling activities. The increase in
wireline services revenue occurred primarily as a result of the acquisition
strategy followed by Computalog during 1997. Through this effort, the Company
increased the size of its wireline operations from four stations operating 31
units in three states to 21 stations operating 70 wireline units in eight
states. Activity increases in the Gulf Coast region of Louisiana and in Texas
also had a positive impact on revenues. The Company's directional drilling
service experienced increased revenue as a consequence of recording a full
yearŠs revenue from The Bob Fournet Company, which was acquired in May 1996.
Revenue from wireline product sales in North America also increased as
independent wireline companies increased their purchases of products as the
demand for their services increased during the year.
The increase in revenue from international sales was the result of the
Company's success in obtaining directional drilling contracts outside North
America and the continued expansion of the Company's wireline operations in
Venezuela and, through a 49% interest in a joint venture to provide wireline
services, in Argentina. These revenue increases were offset by lower product
sales to international markets. Although South American wireline revenues are
increasing, the Venezuelan market has suffered a reduction in activity which
has been attributed to the reorganization of the state-owned oil company. The
Company believes that this reorganization will continue to effect revenues in
1998.
The increase in operating expenses in 1997 was consistent with the
increase in revenue although fixed cost efficiencies were gained through the
higher levels of activity experienced during the year. During 1997, revenues
increased 51% and operating expenses increased 43%. Operating expenses are
approximately 64% of operating revenues during 1997 as compared to 67% during
1996. In preparation for new segmented reporting standards the Company has
more closely defined operating, selling, general and administrative, and
research and development expenses. Certain comparative figures have therefore
been reclassified to conform with the current year's presentation.
In 1997, selling, general and administrative expenses increased by $6.1
million, or 37%, to $22.3 million. These expenses represented 10% of revenue
in 1997 compared to 11% of revenue in 1996. During 1997, the Company
increased its sales and administration efforts in the United States to take
advantage of Computalog's expanding operation. Selling, general and
administration costs increased in Canada as a result of increased activity and
the initiation of a financial accounting and information system replacement
project. Internationally, the Company focused its efforts to complement the
expansion of services into Venezuela and Argentina.
In 1997, depreciation and amortization expenses increased $5.2 million,
or 49%, to $16.0 million as compared to 1996. This increase was due to the
amortization of goodwill acquired of $1.6 million, the depreciation on assets
acquired through acquisitions and on new asset additions of $2.9 million,
lower gains from the disposal of certain assets of $0.5 million and asset
writeoffs during 1997 of $0.2 million.
$2.2 million as the
Company maintained higher average bank borrowings during the first half of
1997 as compared to 1996. During August of 1997, Computalog completed the
private placement of U.S. $35 million in unsecured senior notes which bear
interest at 7.78% payable semi-annually. The notes have an average term of
6.08 years and require annual principal repayments of U.S. $7.0 million
commencing on September 1, 2001. The funds from this borrowing were used
primarily to repay bank debt, fund business acquisitions and purchase new
capital assets for market expansion and new international ventures. Excess
cash balances were held in United States dollars and were invested in low risk
short term deposits of less than 90 days. During January 1998, United States
dollar denominated short term deposits held by the parent company were
converted into Canadian Dollars.
Cash flow from operations before working capital changes totalled $38.1
million in 1997, an increase of $15.7 million, or 70%, from 1996. Working
capital changes resulted in a source of cash totalling $0.7 million in 1997.
In 1996, working capital used additional funds of $11.3 million. The funds
provided by working capital during 1997 were a result of higher accrued
liabilities offset by increased accounts receivable resulting from increased
revenues.
Computalog provides wellbore knowledge and solutions through its electric
wireline and directional drilling services. These services enable oil and gas
producers to manage risk and maximize production. The Company's common shares
trade on the Toronto Stock Exchange under the symbol CGH and on the Nasdaq
National Market. under the symbol CLTDF.
Certain statements included in this news release may constitute
''forward-looking statements'' within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of the Company, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. |
