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Positive Trends for Canadian Pressure Pumping
31 Aug 16
WCSB pressure pumping supply and demand is poised to benefit from an increase in stages per well and proppant per well. We believe this could cause supply and demand to tighten more quickly than anticipated in an activity recovery. Higher service intensity has been particularly evident in the Montney and Duvernay, where stages per well have generated a 2012-1Q16 CAGR of 23% and 44%, respectively, and a proppant per well CAGR of 39% and 62%. Our investment bias is towards Trican given it is the largest pure play Canadian pressure pumper, with excess equipment and a discounted valuation relative to its peers.
Announces Transactions to Improve Balance Sheet
21 Jun 16
Trican announced an equity issuance on June 1st totaling $69 mm (including the over-allotment), which resulted in the issuance of ~43.1 mm shares, or 28% of the outstanding share count as at March 31, 2016. The offering price was $1.60/share or an 8.6% discount to the halt price on June 1st. The Company concurrently announced the sale of its Completion Tools business to National Oilwell Varco Ltd. (NOV-N, not covered). The sale price was $53.5 mm, which was comprised of $30 mm cash and C$23.5 mm of NOV shares. We estimate 2016e year-end exit net debt of $159 mm, down from our prior estimate of $283 mm. The Company also received covenant relief, and we expect it to remain in compliance for the duration of our forecast. The changes to our operational forecasts are minimal. We have decreased 2016e EBITDAS to a loss of $31 mm (prior: -$30 mm) and 2017e EBITDAS to $47 mm from $50 mm.
06 May 16
Trican reported negative adjusted 1Q16 EBITDAS of $16 mm and EBITDAS of negative $26 mm. Comparisons to our estimates are not meaningful given the discontinuation of U.S. operations in the quarter. Canadian operating margins of negative 8.6% were much lower than our expectation of negative 1.4%. We believe this is important when considering the turnaround in profitability needed in 3Q16e for Trican to remain in compliance with its covenants. The risk of the Company having to use its equity cure provision has increased materially due to potential covenant violations as early as 3Q16e, absent a rebound in profitability or additional asset sales (both of which are possible).
1Q16 RESULTS MARRED BY ONE-TIME EVENTS
04 May 16
Trican's results were marred by one-time costs related to severance and professional fees ($10.6 mm) as well as the U.S. pressure pumping business being moved to discontinued operations. We believe the most important data for investors is the performance of the Canadian operations as that is what Trican will largely consist of moving forward. Consolidated results can be found at the end of this document. We believe the primary focus on the conference call tomorrow will be on the Company's ability to remain in compliance with its covenants in 3Q16e or whether further asset sales or use of the equity cure provision will need to be executed.
TRICAN WELL SERVICE LTD. ANNOUNCES RETIREMENT OF PRESIDENT AND COO
02 May 16
Trican has announced that Mr. Don Luft, President and COO will be retiring from his role effective May 3, 2016. Additionally, Mr. Luft will not stand for reelection as a Director of the Company at the upcoming AGM. Recall, Mr. Luft was one of the early instrumental players in transforming Trican from a private entity into a successful public company in 1996, and in the success and growth of the company since that time.
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£70m placing and open offer
21 Oct 16
Hurricane has successfully raised £70m by issuing c.205.9m shares at a price of 34p. The company is also undertaking an open offer at the same price to raise a further £4.4m. The proceeds will be used to fund two exploration wells on Lincoln and Warwick as well as further development activity on the Lancaster field.