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Savanna reported 2Q16 EBITDAS of $9 mm, which was above our estimate of $7 mm due to better than expected cost controls. Performance contracts in Australia had a positive impact of ~$5,000 per day on drilling day rates in 2Q16, indicating the switch to this type of contract could be beneficial to Australian profitability. We have increased 2016e EBITDAS by 10% to $52 mm and 2017e EBITDAS by 11% to $59 mm.
Savanna Energy Services
Impact: Neutral, as the results and outlook were largely in line with expectations
We believe Savanna will trade lower as concerns over future activity in Australia are likely to weigh on the stock.
Savanna reported adjusted EBITDAS of $22 mm (FCC: $21 mm). EBITDAS margins of 22.5% exceeded our estimate of 20.9% as cost cutting efforts continue to be realized in financial results. We have updated our estimates to reflect additional details on contract expiries in Australia and the United States. We have lowered our 2016e EBITDAS to $46 mm ($48 mm after adjustments) from $54 mm and 2017e EBITDAS to $52 mm from $62 mm. Positive revisions to our estimates could occur if re-contracting of rigs or spot activity is more lucrative than we are currently anticipating in Australia.
Impact: neutral
Savanna reported 4Q15 EBITDAS of $23 mm, in line with our expectation of $22 mm. We have reduced our 2016e capital program to $15 mm from $20 mm, which aligns with the Company’s updated guidance. We believe one of the key developments to pay attention to over the course of 2016e will be gross margins for Savanna’s Australian contract drilling and service rig business due to contract rollover. We estimate that Australian operations will contribute 46% of Savanna’s 2016e corporate gross margin. Outside of four contracted rigs in the U.S. and Canada, visibility is limited beyond 1Q16e
Impact: Neutral, as results were in line and the outlook was as expected.
Savanna reported a strong 3Q15 with reported revenue in line with our forecast, but EBITDAS of $24 mm beat our estimate of $20 mm. In addition, the Company announced additional asset sales which will help de-lever the balance sheet. Our 2015e EBITDAS has been increased to $100 mm (prior: $92 mm) and 2016e has been increased to $85 mm (prior: $82 mm) to reflect ongoing benefits from cost control initiatives.
Impact: We expect Savanna to trade higher tomorrow due to EBITDAS coming in higher than expectations (actual: $24 mm, FCC: $20 mm, Consensus: $19 mm) and additional asset sales which will help reduce debt.
Savanna reported 2Q15 EBITDAS of $24 mm, which was far above our expectation of $5 mm as cost controls were realized faster than anticipated and standby revenue (margin) of $5.6 mm earned in 1Q15 was part of 2Q15 results due to revenue recognition policies. In 2015e, we have increased our EBITDAS forecast to $99 mm from $79 mm, which is due to the 2Q15 beat, but our 2H15e modelling changes were mostly housekeeping. In 2016e, we have reduced our revenue forecast to reflect weaker utilization for U.S. and Canadian contract drilling, but this is balanced against stronger margins in Well Servicing. Our 2016e EBITDAS has been lowered by 3% to $104 mm.
We expect Savanna to trade higher tomorrow after it posted 2Q15 results well above consensus. Savanna reported 2Q15 EBITDAS of $24 mm compared to consensus of $6 mm and our estimate of $5 mm. Note that the high 2Q15 EBITDAS estimate on the Street was $10 mm.
Savanna reported EBITDAS of $30 mm, beating our forecast of $24 mm. The Company also realized a gain of $7.0 mm on the sale of two field operating locations, which should be viewed positively. The Company’s appointment of a new CEO last week gave little time for the Company to address a new strategic direction, which we expect will be unveiled in the coming months.
Savanna reported EBITDAS of $30 mm, beating both our forecast of $24 mm and the Street at $26 mm. The Company also realized a gain of $7.0 mm on the sale of two field operating locations, which should be viewed positively. The Company's appointment of a new CEO last week gave little time for the Company to address a new strategic direction, which we expect will be unveiled in the coming months.
Chris Strong has been appointed President and CEO of Savanna. He has been a director of Savanna since October 2013, and was the Chairman of the Special Committee of the Board of Directors that oversaw the operations of the Company post the departure of the former CEO. Previously, Mr. Strong was the President and CEO of Union Drilling, a NASDAQ listed company with 53 rigs operating in the U.S. that was sold in November 2012.
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