.jpg)
4 hours ago
1
Article content
Canada
Article content
(Stated in thousands of dollars)
Article content
| Three-month periods ended March 31, | |||||||||
| 2025 | 2024 | % Change | |||||||
| Directional drilling services | 56,872 | 51,652 | 10 | ||||||
| Motor rental | 692 | 321 | 116 | ||||||
| Total revenue | 57,564 | 51,973 | 11 | ||||||
| Direct costs | 44,119 | 40,240 | 10 | ||||||
| Gross profit | 13,445 | 11,733 | 15 | ||||||
| Expenses: | |||||||||
| Selling, general and administrative expenses | 4,197 | 4,136 | 1 | ||||||
| Research and development expenses | – | – | – | ||||||
| Finance expense | – | – | – | ||||||
| Finance expense lease liability | 290 | 303 | (4 | ) | |||||
| Other income | (3,001 | ) | (2,125 | ) | 41 | ||||
| Reportable segment profit before income taxes | 11,959 | 9,419 | 27 | ||||||
Article content
For the three-month period ended March 31, 2025, PHX Energy’s Canadian operations generated revenue of $57.6 million, an 11 percent increase from $52 million in the same 2024-period and only 3 percent lower than the all-time quarterly record reported in the fourth quarter of 2014.
Article content
In the 2025 three-month period, PHX Energy’s Canadian segment’s operating days(3) grew by 5 percent to 4,052 days from 3,858 days in the same 2024-quarter and its RSS operating days accounted for 6 percent of its activity in the 2025-period (2024 – 4 percent). In comparison, industry horizontal and directional drilling activity, as measured by drilling days, increased by 3 percent to 17,867 in the first quarter of 2025 from 17,380 in the 2024-quarter. In the 2025-period, the Canadian segment’s growth in activity primarily resulted from its increasing market presence as an RSS provider. During the 2025-quarter, the Corporation was active in the Duvernay, Montney, Glauconite, Frobisher, Cardium, Viking, Bakken, Torquay, Colony, Ellerslie, Charlie Lake, Cummings, Sparky, Clearwater, and Scallion basins.
Article content
Article content
The Canadian division’s average revenue per day(3) for directional drilling services increased 5 percent to $14,037 in the 2025-quarter, as compared to $13,390 in the corresponding 2024-quarter. The increase was mainly driven by higher RSS days as a percentage of total activity.
Article content
PHX Energy’s Canadian reportable segment profit increased by 27 percent to $12 million in the 2025-quarter from $9.4 million in the 2024-quarter. The increase in profitability in the 2025-period was mainly due to increased activity in the Canadian segment’s high-margin RSS revenue stream and more instances of downhole equipment losses while maintaining the same level of SG&A costs.
Article content
Investing Activities
Article content
Net cash used in investing activities for the three-month period ended March 31, 2025 was $10.5 million as compared to $4.9 million in the corresponding 2024-period. During the first quarter of 2025, the Corporation spent $15.6 million (2024 – $24.2 million) to grow the Corporation’s fleet of drilling equipment, $7.8 million (2024 – $4.1 million) was used to maintain capacity in the Corporation’s fleet of drilling and other equipment, and $1.3 million (2024 – $1.3 million) was spent to replace equipment lost downhole during drilling operations. With proceeds on disposition of drilling and other equipment of $10.9 million (2024 – $12.3 million), the Corporation’s net capital expenditures for the 2025-period were $13.8 million (2024 – $17.3 million).
Article content
(Stated in thousands of dollars)
Article content
| Three-month periods ended March 31, | |||||||
| 2025 | 2024 | ||||||
| Growth capital expenditures | 15,605 | 24,224 | |||||
| Maintenance capital expenditures from asset retirements | 7,837 | 4,141 | |||||
| Maintenance capital expenditures to replace downhole equipment losses | 1,250 | 1,275 | |||||
| Total capital expenditures | 24,692 | 29,640 | |||||
| Deduct: | |||||||
| Proceeds on disposition of drilling equipment | (10,919 | ) | (12,301 | ) | |||
| Net capital expenditures | 13,773 | 17,339 | |||||
Article content
The 2025-quarter capital expenditures comprised of:
Article content
- $8.4 million in downhole performance drilling motors;
- $7.9 million in RSS;
- $7.5 million in MWD systems and spare components; and
- $0.9 million in machinery and equipment and other assets.
Article content
The capital expenditure program undertaken in the year was primarily financed from proceeds on disposition of drilling equipment, cash flows from operating activities, and the Corporation’s credit facilities when required.
Article content
The change in non-cash working capital balances of $6.9 million (source of cash) for the three-month period ended March 31, 2025, relates to the net change in the Corporation’s trade payables that are associated with the acquisition of capital assets (2024 – $12.5 million).
Article content
Financing Activities
Article content
For the three-month period ended March 31, 2025, net cash used in financing activities was $0.6 million as compared to $9.6 million in the same 2024-period. In the 2025-quarter:
Article content
- dividends of $9.1 million were paid to shareholders;
- payments of $0.9 million were made towards lease liabilities;
- $9.3 million net drawings were made from the Corporation’s syndicated credit facility; and
- 50,000 common shares were issued from treasury for proceeds of $0.2 million upon the exercise of share options.
Article content
Capital Resources
Article content
As of March 31, 2025, the Corporation had CAD $23.3 million drawn on its Canadian credit facilities, USD $2 million drawn on its US operating facility, and a cash balance of $14 million. As at March 31, 2025, the Corporation had CAD $71.5 million and USD $18 million available from its credit facilities. The credit facilities are secured by substantially all of the Corporation’s assets and mature in December 2026.
Article content
As at March 31, 2025, the Corporation was in compliance with all its financial covenants. Under the syndicated credit agreement, in any given period, the Corporation’s distributions (as defined therein) cannot exceed its maximum aggregate amount of distributions limit as defined in the Corporation’s syndicated credit agreement. Distributions include, without limitation, dividends declared and paid, cash used for common shares purchased by the independent trustee in the open market and held in trust for potential settlement of outstanding retention awards, as well as cash used for common shares repurchased and cancelled under the NCIB.
Article content
Cash Requirements for Capital Expenditures
Article content
Historically, the Corporation has financed its capital expenditures and acquisitions through cash flows from operating activities, proceeds on disposition of drilling equipment, debt and equity. In February 2025, the Board approved an increase to the preliminary 2025 capital expenditure budget from $50 million to $55 million. With $10 million in expected additional capital expenditures largely related to growing the Corporation’s RSS fleet and Real Time RSS Communications technology, PHX Energy now anticipates spending $65 million in capital expenditures during 2025. Of the total expenditures, $40 million is anticipated to be spent on growth and the remainder is anticipated to be spent to maintain capacity in the fleet of drilling and other equipment and replace equipment lost downhole during drilling operations. The amount expected to be allocated towards replacing equipment lost downhole could increase, should more downhole equipment losses occur throughout the year.
These planned expenditures are expected to be financed from cash flow from operating activities, proceeds on disposition of drilling equipment, cash and cash equivalents, and the Corporation’s credit facilities, if necessary. However, if a sustained period of market uncertainty, threat of trade wars, and financial market volatility persists in 2025, the Corporation’s activity levels, cash flows and access to credit may be negatively impacted, and the expenditure level would be reduced accordingly where possible. Conversely, if future growth opportunities present themselves, the Corporation would look at expanding this planned capital expenditure amount.
Article content
As at March 31, 2025, the Corporation has commitments to purchase drilling and other equipment for $33.2 million. Delivery is expected to occur within the second quarter of 2025.
Article content
About PHX Energy Services Corp.
Article content
PHX Energy is a growth-oriented, public oil and natural gas services company. The Corporation, through its directional drilling subsidiary entities provides horizontal and directional drilling services and technologies to oil and natural gas exploration and development companies principally in Canada and the US. In connection with the services it provides, PHX Energy engineers, develops and manufactures leading-edge technologies. In recent years, PHX Energy has developed various new technologies that have positioned the Corporation as a technology leader in the horizontal and directional drilling services sector.
Article content
PHX Energy’s Canadian directional drilling operations are conducted through Phoenix Technology Services LP. The Corporation maintains its corporate head office, research and development, Canadian sales, service and operational centers in Calgary, Alberta. In addition, PHX Energy has a facility in Estevan, Saskatchewan. PHX Energy’s US operations, conducted through the Corporation’s wholly-owned subsidiary, Phoenix Technology Services USA Inc., is headquartered in Houston, Texas. Phoenix USA has sales and service facilities in Houston, Texas; Midland, Texas; Casper, Wyoming; and Oklahoma City, Oklahoma. Internationally, PHX Energy has an administrative office in Nicosia, Cyprus and also supplies technology to the Middle East regions.
Article content
The common shares of PHX Energy trade on the Toronto Stock Exchange under the symbol PHX
Article content
The common shares of PHX Energy trade on the Toronto Stock Exchange under the symbol PHX.
PHX Energy Services Corp.
Suite 1600, 215 9th Avenue SW, Calgary Alberta T2P 1K3
Tel: 403-543-4466 Fax: 403-543-4485 www.phxtech.com
Article content
Consolidated Statements of Financial Position
Article content
| (Stated in thousands of dollars, unaudited) | March 31, 2025 | December 31, 2024 | |||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash | $ | 13,971 | $ | 14,163 | |||||
| Trade and other receivables | 148,814 | 133,589 | |||||||
| Inventories | 63,287 | 63,135 | |||||||
| Prepaid expenses | 1,597 | 2,628 | |||||||
| Current tax assets | 1,072 | 502 | |||||||
| Total current assets | 228,741 | 214,017 | |||||||
| Non-current assets: | |||||||||
| Drilling and other long-term assets | 175,683 | 166,081 | |||||||
| Right-of-use assets | 24,125 | 24,943 | |||||||
| Intangible assets | 17,627 | 14,611 | |||||||
| Investments | 2,171 | 2,171 | |||||||
| Other long-term assets | 1,697 | 1,463 | |||||||
| Total non-current assets | 221,303 | 209,269 | |||||||
| Total assets | $ | 450,044 | $ | 423,286 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
| Current liabilities: | |||||||||
| Trade and other payables | $ | 125,180 | $ | 116,668 | |||||
| Dividends payable | 9,112 | 9,102 | |||||||
| Current lease liabilities | 3,820 | 3,702 | |||||||
| Total current liabilities | 138,112 | 129,472 | |||||||
| Non-current liabilities: | |||||||||
| Lease liabilities | 30,683 | 31,650 | |||||||
| Loans and borrowings | 26,145 | 16,827 | |||||||
| Deferred tax liabilities | 20,609 | 19,792 | |||||||
| Other | 912 | 3,340 | |||||||
| Total non-current liabilities | 78,349 | 71,609 | |||||||
| Equity: | |||||||||
| Share capital | 204,060 | 203,841 | |||||||
| Contributed surplus | 7,239 | 7,189 | |||||||
| Deficit | (17,244 | ) | (28,291 | ) | |||||
| Accumulated other comprehensive income (AOCI) | 39,528 | 39,466 | |||||||
| Total equity | 233,583 | 222,205 | |||||||
| Total liabilities and equity | $ | 450,044 | $ | 423,286 | |||||
Article content
Article content
Condensed Consolidated Interim Statements of Comprehensive Earnings
(Stated in thousands of dollars except earnings per share, unaudited)
Article content
| Three-month periods ended March 31, | |||||||||
| 2025 | 2024 | ||||||||
| Revenue | $ | 193,704 | $ | 166,123 | |||||
| Direct costs | 153,415 | 129,044 | |||||||
| Gross profit | 40,289 | 37,079 | |||||||
| Expenses: | |||||||||
| Selling, general and administrative expenses | 19,130 | 21,017 | |||||||
| Research and development expenses | 1,780 | 1,202 | |||||||
| Finance expense | 606 | 334 | |||||||
| Finance expense lease liability | 506 | 541 | |||||||
| Other income | (7,645 | ) | (8,757 | ) | |||||
| 14,377 | 14,337 | ||||||||
| Earnings before income taxes | 25,912 | 22,742 | |||||||
| Provision for income taxes | |||||||||
| Current | 4,907 | 1,986 | |||||||
| Deferred | 846 | 3,302 | |||||||
| 5,753 | 5,288 | ||||||||
| Net earnings | 20,159 | 17,454 | |||||||
| Other comprehensive income | |||||||||
| Foreign currency translation, net of tax | 62 | 3,573 | |||||||
| Total comprehensive earnings | $ | 20,221 | $ | 21,027 | |||||
| Earnings per share – basic | $ | 0.44 | $ | 0.37 | |||||
| Earnings per share – diluted | $ | 0.44 | $ | 0.37 | |||||
Article content
Article content
Condensed Consolidated Interim Statements of Cash Flows
(Stated in thousands of dollars, unaudited)
Article content
| Three-month periods ended March 31, | ||||||
| 2025 | 2024 | |||||
| Cash flows from operating activities: | ||||||
| Earnings | $ | 20,159 | $ | 17,454 | ||
| Adjustments for: | ||||||
| Depreciation and amortization | 12,569 | 10,319 | ||||
| Depreciation and amortization right-of-use asset | 888 | 849 | ||||
| Provision for income taxes | 5,753 | 5,288 | ||||
| Unrealized foreign exchange loss | 117 | 148 | ||||
| Net gain on disposition of drilling equipment | (7,861 | ) | (8,886 | ) | ||
| Equity-settled share-based payments | 89 | 100 | ||||
| Finance expense | 606 | 334 | ||||
| Finance expense lease liability | 506 | 541 | ||||
| Provision for inventory obsolescence | 1,042 | 535 | ||||
| Interest paid on lease liability | (506 | ) | (541 | ) | ||
| Interest paid | (384 | ) | (204 | ) | ||
| Income taxes paid | (5,485 | ) | (185 | ) | ||
| Change in non-cash working capital | (16,574 | ) | (14,585 | ) | ||
| Net cash from operating activities | 10,919 | 11,167 | ||||
| Cash flows from investing activities: | ||||||
| Proceeds on disposition of drilling equipment | 10,919 | 12,301 | ||||
| Acquisition of drilling and other equipment | (24,692 | ) | (29,640 | ) | ||
| Acquisition of intangible assets | (3,640 | ) | – | |||
| Change in non-cash working capital | 6,872 | 12,469 | ||||
| Net cash used in investing activities | (10,541 | ) | (4,870 | ) | ||
| Cash flows from financing activities: | ||||||
| Net proceeds from (Net repayment of) loans and borrowings | 9,269 | (60 | ) | |||
| Proceeds from exercise of options | 180 | 712 | ||||
| Dividends paid to shareholders | (9,102 | ) | (9,453 | ) | ||
| Payments of lease liability | (920 | ) | (830 | ) | ||
| Net cash used in financing activities | (573 | ) | (9,631 | ) | ||
| Net decrease in cash | (195 | ) | (3,334 | ) | ||
| Cash, beginning of period | 14,163 | 16,433 | ||||
| Effect of movements in exchange rates on cash held | 3 | 281 | ||||
| Cash, end of period | $ | 13,971 | $ | 13,380 | ||
Article content
Article content
Cautionary Statement Regarding Forward-Looking Information and Statements
Article content
This document contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of “expect”, “anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “project”, “could”, “should”, “can”, “believe”, “plans”, “intends”, “strategy”, “targets” and similar expressions are intended to identify forward-looking information or statements.
Article content
The forward-looking information and statements included in this document are not guarantees of future performance and should not be unduly relied upon. These statements and information involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements and information. The Corporation believes the expectations reflected in such forward-looking statements and information are reasonable, but no assurance can be given that these expectations will prove to be correct. Such forward-looking statements and information included in this document should not be unduly relied upon. These forward-looking statements and information speak only as of the date of this document.
Article content
In particular, forward-looking information and statements contained in this document include without limitation, the Corporation’s intent to preserve balance sheet strength and continue to reward shareholders, including through its ROCS program, intentions for the distributable cash under ROCS to be stay within the targeted at 70 percent of excess cash flow in 2025, PHX Energy’s intentions with respect to the NCIB and purchases thereunder and the effects of repurchases under the NCIB, the anticipated industry activity and demand for the Corporation’s services and technologies in North America, the projected capital expenditures budget for 2025, and how the budget will be allocated and funded, the timeline for delivery of equipment on order, in the anticipated continuation of PHX Energy’s quarterly dividend program and the amounts of dividends, the potential material adverse effect on the Canadian and US economy, the Canadian and US oil and natural gas industry and the Corporation and its results that existing or new tariffs, and any changes to these tariffs, taxes or import or export restrictions or prohibitions, could have, the Corporation ability to reduce the impact of potential and existing tariffs in its supply chain, and the impact of OPEC+ production strategies on commodity prices and industry activity.
Article content
The above are stated under the headings: “Financial Results”, “Overall Performance”, “Dividends and ROCS”, “Capital Spending”, and “Capital Resources”. In addition, all information contained under the heading “Outlook” of this document may contain forward-looking statements.
Article content
In addition to other material factors, expectations and assumptions which may be identified in this document and other continuous disclosure documents of the Corporation referenced herein, assumptions have been made in respect of such forward-looking statements and information regarding, without limitation, that: the Corporation will continue to conduct its operations in a manner consistent with past operations; the general continuance of current industry conditions and the accuracy of the Corporation’s market outlook expectations for 2025 and in the future; that future business, regulatory and industry conditions will be within the parameters expected by the Corporation; that there will be no adverse tariff events including intentional tariff wars that could have a significant impact on the markets in which the Corporation operates; anticipated financial performance, business prospects, impact of competition, strategies, the general stability of the economic and political environment in which the Corporation operates; the potential impact of trade wars, pandemics, the Russian-Ukrainian war, Middle-East conflict and other world events on the global economy, specifically trade, manufacturing, supply chain, inflation and energy consumption, among other things and the resulting impact on the Corporation’s operations and future results which remain uncertain; exchange and interest rates, and inflationary pressures including the potential for further interest rate hikes by global central banks and the impact on financing charges and foreign exchange and the anticipated global economic response to concerted interest rate hikes; the continuance of existing (and in certain circumstances, the implementation of proposed) tax, royalty and regulatory regimes; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services and the adequacy of cash flow; debt and ability to obtain financing on acceptable terms to fund its planned expenditures, which are subject to change based on commodity prices; market conditions and future oil and natural gas prices; and potential timing delays. Although management considers these material factors, expectations, and assumptions to be reasonable based on information currently available to it, no assurance can be given that they will prove to be correct.
Article content
Readers are cautioned that the foregoing lists of factors are not exhaustive. Additional information on these and other factors that could affect the Corporation’s operations and financial results are included in reports on file with the Canadian Securities Regulatory Authorities and may be accessed through the SEDAR+ website (www.sedarplus.ca) or at the Corporation’s website. The forward-looking statements and information contained in this document are expressly qualified by this cautionary statement. The Corporation does not undertake any obligation to publicly update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
Article content
Non-GAAP and Other Financial Measures
Article content
Non-GAAP Financial Measures and Ratios
Article content
a) Adjusted EBITDA
Article content
Adjusted EBITDA, defined as earnings before finance expense, finance expense lease liability, income taxes, depreciation and amortization, impairment losses on drilling and other equipment and goodwill and other write-offs, equity-settled share-based payments, severance payouts relating to the Corporation’s restructuring cost, and unrealized foreign exchange gains or losses, does not have a standardized meaning and is not a financial measure that is recognized under GAAP. However, Management believes that adjusted EBITDA provides supplemental information to earnings that is useful in evaluating the results of the Corporation’s principal business activities before considering certain charges, how it was financed and how it was taxed in various countries. Investors should be cautioned, however, that adjusted EBITDA should not be construed as an alternative measure to earnings determined in accordance with GAAP. PHX Energy’s method of calculating adjusted EBITDA may differ from that of other organizations and, accordingly, its adjusted EBITDA may not be comparable to that of other companies.
Article content
The following is a reconciliation of earnings to adjusted EBITDA:
Article content
(Stated in thousands of dollars)
Article content
| Three-month periods ended March 31, | |||||
| 2025 | 2024 | ||||
| Earnings: | 20,159 | 17,454 | |||
| Add: | |||||
| Depreciation and amortization drilling and other equipment | 12,569 | 10,319 | |||
| Depreciation and amortization right-of-use asset | 888 | 849 | |||
| Provision for (Recovery of) income taxes | 5,753 | 5,288 | |||
| Finance expense | 606 | 334 | |||
| Finance expense lease liability | 506 | 541 | |||
| Equity-settled share-based payments | 89 | 100 | |||
| Unrealized foreign exchange loss (gain) | 117 | 148 | |||
| Adjusted EBITDA | 40,687 | 35,033 | |||
Article content
b) Adjusted EBITDA Per Share – Diluted
Article content
Adjusted EBITDA per share – diluted is calculated using the treasury stock method whereby deemed proceeds on the exercise of the share options are used to reacquire common shares at an average share price. The calculation of adjusted EBITDA per share – dilutive is based on the adjusted EBITDA as reported in the table above divided by the diluted number of shares outstanding.
Article content
c) Adjusted EBITDA as a Percentage of Revenue
Article content
Adjusted EBITDA as a percentage of revenue is calculated by dividing the adjusted EBITDA as reported in the table above by revenue as stated on the Condensed Consolidated Interim Statements of Comprehensive Earnings.
Article content
d) Adjusted EBITDA Excluding Cash-settled Share-based Compensation Expense
Article content
Adjusted EBITDA excluding cash-settled share-based compensation expense is calculated by adding cash-settled share-based compensation expense to adjusted EBITDA as described above. Management believes that this measure provides supplemental information to earnings that is useful in evaluating the results of the Corporation’s principal business activities before considering certain charges, how it was financed, how it was taxed in various countries, and without the impact of cash-settled share-based compensation expense that is affected by fluctuations in the Corporation’s share price.
Article content
The following is a reconciliation of earnings to adjusted EBITDA excluding cash-settled share-based compensation expense:
Article content
(Stated in thousands of dollars)
Article content
| Three-month periods ended March 31, | |||||
| 2025 | 2024 | ||||
| Earnings: | 20,159 | 17,454 | |||
| Add: | |||||
| Depreciation and amortization drilling and other equipment | 12,569 | 10,319 | |||
| Depreciation and amortization right-of-use asset | 888 | 849 | |||
| Provision for (recovery of) income taxes | 5,753 | 5,288 | |||
| Finance expense | 606 | 334 | |||
| Finance expense lease liability | 506 | 541 | |||
| Equity-settled share-based payments | 89 | 100 | |||
| Unrealized foreign exchange loss | 117 | 148 | |||
| Cash-settled share-based compensation expense | 2,660 | 5,710 | |||
| Adjusted EBITDA excluding cash-settled share-based compensation expense | 43,347 | 40,743 | |||
Article content
e) Adjusted EBITDA Excluding Cash-settled Share-based Compensation Expense as a Percentage of Revenue
Article content
Adjusted EBITDA excluding cash-settled share-based compensation expense as a percentage of revenue is calculated by dividing adjusted EBITDA excluding cash-settled share-based compensation expense as reported above by revenue as stated on the Condensed Consolidated Interim Statements of Comprehensive Earnings.
Article content
f) Gross Profit as a Percentage of Revenue Excluding Depreciation & Amortization
Article content
Gross profit as a percentage of revenue excluding depreciation & amortization is defined as the Corporation’s gross profit excluding depreciation and amortization divided by revenue and is used to assess operational profitability. This Non-GAAP ratio does not have a standardized meaning and is not a financial measure recognized under GAAP. PHX Energy’s method of calculating gross profit as a percentage of revenue may differ from that of other organizations and, accordingly, it may not be comparable to that of other companies.
Article content
The following is a reconciliation of revenue, direct costs, depreciation and amortization and gross profit to gross profit as a percentage of revenue excluding depreciation and amortization:
Article content
(Stated in thousands of dollars)
Article content
| Three-month periods ended March 31, | |||||||||
| 2025 | 2024 | ||||||||
| Revenue | 193,704 | 166,123 | |||||||
| Direct costs | 153,415 | 129,044 | |||||||
| Gross profit | 40,289 | 37,079 | |||||||
| Depreciation & amortization drilling and other equipment (included in direct costs) | 12,569 | 10,319 | |||||||
| Depreciation & amortization right-of-use asset (included in direct costs) | 888 | 849 | |||||||
| 53,746 | 48,247 | ||||||||
| Gross profit as a percentage of revenue excluding depreciation & amortization | 28 | % | 29 | % | |||||
Article content
g) SG&A Costs Excluding Share-Based Compensation as a Percentage of Revenue
Article content
SG&A costs excluding share-based compensation as a percentage of revenue is defined as the Corporation’s SG&A costs excluding share-based compensation divided by revenue and is used to assess the impact of administrative costs excluding the effect of share price volatility. This Non-GAAP ratio does not have a standardized meaning and is not a financial measure recognized under GAAP. PHX Energy’s method of calculating SG&A costs excluding share-based compensation as a percentage of revenue may differ from that of other organizations and, accordingly, it may not be comparable to that of other companies.
Article content
The following is a reconciliation of SG&A costs, share-based compensation, and revenue to SG&A costs excluding share-based compensation as a percentage of revenue:
Article content
(Stated in thousands of dollars)
Article content
| Three-month periods ended March 31, | ||||||||||
| 2025 | 2024 | |||||||||
| SG&A Costs | 19,130 | 21,017 | ||||||||
| Deduct: | ||||||||||
| Share-based compensation (included in SG&A) | 2,749 | 5,810 | ||||||||
| 16,381 | 15,207 | |||||||||
| Revenue | 193,704 | 166,123 | ||||||||
| SG&A costs excluding share-based compensation as a percentage of revenue | 8 | % | 9 | % | ||||||
Article content
Capital Management Measures
Article content
a) Funds from Operations
Article content
Funds from operations is defined as cash flows generated from operating activities before changes in non-cash working capital, interest paid, and income taxes paid. This financial measure does not have a standardized meaning and is not a financial measure recognized under GAAP. Management uses funds from operations as an indication of the Corporation’s ability to generate funds from its operations before considering changes in working capital balances and interest and taxes paid. Investors should be cautioned, however, that this financial measure should not be construed as an alternative measure to cash flows from operating activities determined in accordance with GAAP. PHX Energy’s method of calculating funds from operations may differ from that of other organizations and, accordingly, it may not be comparable to that of other companies.
Article content
The following is a reconciliation of cash flows from operating activities to funds from operations:
Article content
(Stated in thousands of dollars)
Article content
| Three-month periods ended March 31, | |||||
| 2025 | 2024 | ||||
| Cash flows from operating activities | 10,919 | 11,167 | |||
| Add (deduct): | |||||
| Changes in non-cash working capital | 16,574 | 14,585 | |||
| Interest paid | 384 | 204 | |||
| Income taxes paid | 5,485 | 185 | |||
| Funds from operations | 33,362 | 26,141 | |||
Article content
b) Excess Cash Flow
Article content
Excess cash flow is defined as funds from operations (as defined above) less cash payment on leases, growth capital expenditures, and maintenance capital expenditures from downhole equipment losses and asset retirements, and increased by proceeds on disposition of drilling equipment. This financial measure does not have a standardized meaning and is not a financial measure recognized under GAAP. Management uses excess cash flow as an indication of the Corporation’s ability to generate funds from its operations to support operations and grow and maintain the Corporation’s drilling and other equipment. This performance measure is useful to investors for assessing the Corporation’s operating and financial performance, leverage and liquidity. Investors should be cautioned, however, that this financial measure should not be construed as an alternative measure to cash flows from operating activities determined in accordance with GAAP. PHX Energy’s method of calculating excess cash flow may differ from that of other organizations and, accordingly, it may not be comparable to that of other companies.
Article content
The following is a reconciliation of cash flows from operating activities to excess cash flow:
Article content
(Stated in thousands of dollars)
Article content
| Three-month periods ended March 31, | |||||||
| 2025 | 2024 | ||||||
| Cash flows from operating activities | 10,919 | 11,167 | |||||
| Add (deduct): | |||||||
| Changes in non-cash working capital | 16,574 | 14,585 | |||||
| Interest paid | 384 | 204 | |||||
| Income taxes paid (received) | 5,485 | 185 | |||||
| Cash payment on leases | (1,426 | ) | (1,371 | ) | |||
| 31,936 | 24,770 | ||||||
| Proceeds on disposition of drilling equipment | 10,919 | 12,301 | |||||
| Maintenance capital expenditures to replace downhole equipment losses and asset retirements | (9,087 | ) | (5,416 | ) | |||
| Net proceeds | 1,832 | 6,885 | |||||
| Growth capital expenditures | (15,605 | ) | (24,224 | ) | |||
| Excess cash flow | 18,163 | 7,431 | |||||
Article content
c) Working Capital
Article content
Working capital is defined as the Corporation’s current assets less its current liabilities and is used to assess the Corporation’s short-term liquidity. This financial measure does not have a standardized meaning and is not a financial measure recognized under GAAP. Management uses working capital to provide insight as to the Corporation’s ability to meet obligations as at the reporting date. PHX Energy’s method of calculating working capital may differ from that of other organizations and, accordingly, it may not be comparable to that of other companies.
Article content
The following is a reconciliation of current assets and current liabilities to working capital:
(Stated in thousands of dollars)
Article content
| March 31, 2025 | December 31, 2024 | ||||||
| Current assets | 228,741 | 214,017 | |||||
| Deduct: | |||||||
| Current liabilities | (138,112 | ) | (129,472 | ) | |||
| Working capital | 90,629 | 84,545 | |||||
Article content
d) Net Debt (Net Cash)
Article content
Net debt is defined as the Corporation’s loans and borrowings less cash. This financial measure does not have a standardized meaning and is not a financial measure recognized under GAAP. Management uses net debt to provide insight as to the Corporation’s ability to meet obligations as at the reporting date. PHX Energy’s method of calculating net debt may differ from that of other organizations and, accordingly, it may not be comparable to that of other companies.
Article content
The following is a reconciliation of loans and borrowings and cash to net debt:
Article content
(Stated in thousands of dollars)
Article content
| March 31, 2025 | December 31, 2024 | |||||
| Loans and borrowings | 26,145 | 16,827 | ||||
| Deduct: | ||||||
| Cash | (13,971 | ) | (14,163 | ) | ||
| Net debt (Net cash) | 12,174 | 2,664 | ||||
Article content
e) Net Capital Expenditures
Article content
Net capital expenditures is comprised of total additions to drilling and other long-term assets, as determined in accordance with IFRS, less total proceeds from disposition of drilling equipment, as determined in accordance with IFRS. This financial measure does not have a standardized meaning and is not a financial measure recognized under GAAP. Management uses net capital expenditures to provide insight as to the Corporation’s ability to meet obligations as at the reporting date. PHX Energy’s method of calculating net capital expenditures may differ from that of other organizations and, accordingly, it may not be comparable to that of other companies.
Article content
The following is a reconciliation of additions to drilling and other equipment and proceeds from disposition of drilling equipment to net capital expenditures:
Article content
(Stated in thousands of dollars)
Article content
| Three-month periods ended March 31, | |||||||
| 2025 | 2024 | ||||||
| Growth capital expenditures | 15,605 | 24,224 | |||||
| Maintenance capital expenditures from asset retirements | 7,837 | 4,141 | |||||
| Maintenance capital expenditures to replace downhole equipment losses | 1,250 | 1,275 | |||||
| Total capital expenditures | 24,692 | 29,640 | |||||
| Deduct: | |||||||
| Proceeds on disposition of drilling equipment | (10,919 | ) | (12,301 | ) | |||
| Net capital expenditures | 13,773 | 17,339 | |||||
Article content
f) Remaining Distributable Balance under ROCS
Article content
Remaining distributable balance under ROCS is comprised of 70% of excess cash flow as defined above less repurchases of shares under the Normal Course Issuer Bids in effect during the period and less the dividends paid to shareholders during the period. This financial measure does not have a standardized meaning and is not a financial measure recognized under GAAP. Management uses the remaining distributable balance under ROCS to provide insight as to the Corporation’s ROCS strategy as at the reporting date. PHX Energy’s method of calculating remaining distributable balance under ROCS may differ from that of other organizations and, accordingly, it may not be comparable to that of other companies.
Article content
The following is a reconciliation of excess cash flow as defined above to remaining distributable balance under ROCS:
Article content
(Stated in thousands of dollars)
Article content
| Three-month periods ended March 31, | |||||||
| 2025 | 2024 | ||||||
| Excess cash flow | 18,163 | 7,431 | |||||
| 70% of excess cash flow | 12,714 | 5,202 | |||||
| Deduct: | |||||||
| Dividends paid to shareholders | (9,102 | ) | (9,453 | ) | |||
| Repurchase of shares under the NCIB | – | – | |||||
| Remaining Distributable Balance under ROCS | 3,612 | (4,251 | ) | ||||
Article content
Article content
Supplementary Financial Measures
Article content
“Average consolidated revenue per day” is comprised of consolidated revenue, as determined in accordance with IFRS, divided by the Corporation’s consolidated number of operating days. Operating days is defined under the “Definitions” section below.
“Average revenue per operating day” is comprised of revenue, as determined in accordance with IFRS, divided by the number of operating days.
“Dividends paid per share” is comprised of dividends paid, as determined in accordance with IFRS, divided by the number of shares outstanding at the dividend record date.
“Dividends declared per share” is comprised of dividends declared, as determined in accordance with IFRS, divided by the number of shares outstanding at the dividend record date.
“Effective tax rate” is comprised of provision for or recovery of income tax, as determined in accordance with IFRS, divided by earnings before income taxes, as determined in accordance with IFRS.
“Funds from operations per share – diluted” is calculated using the treasury stock method whereby deemed proceeds on the exercise of the share options are used to reacquire common shares at an average share price. The calculation of funds from operations per share – diluted is based on the funds from operations as reported in the table above divided by the diluted number of shares outstanding.
Article content
Definitions
Article content
“Operating days” throughout this document, it is referring to the billable days on which PHX Energy is providing services to the client at the rig site.
“Capital expenditures” equate to the Corporation’s total acquisition of drilling and other equipment as stated on the Condensed Consolidated Interim Statements of Cash Flows and Note 6(a) in the Notes to the Financial Statements.
“Growth capital expenditures” are capital expenditures that were used to expand capacity in the Corporation’s fleet of drilling equipment.
“Maintenance capital expenditures” are capital expenditures that were used to maintain capacity in the Corporation’s fleet of drilling equipment and replace equipment that were lost downhole during drilling operations.
Article content
Article content
Article content
Article content
Article content
Article content
English (US)