Saxon Earnings up 16% and Deploys New Rigs to the US and Mexico

Saxon Energy continues to see the positive results of its expansion initiatives as the Corporation recorded an increase in net earnings of 78% on a year-to-date basis and posted its thirteenth quarter of sequential revenue growth. In the third quarter of 2007 two of Saxon's ATS(TM) rigs were deployed into the United States under long term contracts and the remaining three are expected to be deployed in November, December and January respectively. Additionally, the Corporation is pleased to report the first two of three drilling rigs for the Corporation's Mexican joint venture were deployed with the remaining rig expected in the fourth quarter. After deployment of these remaining rigs the Corporation will have a fleet of 59 (53.5 net) rigs.

The Corporation generated $62.7 million in revenue and $12.2 million (20% of revenue) in operating earnings during the third quarter of 2007, an increase of 25% and 17% respectively compared to the same periods in 2006. On a year-to-date basis, the Corporation generated $174.2 million in revenue and $34.3 million (20% of revenue) in operating earnings, an increase of 47% each compared to 2006. Net earnings increased to $6.8 million ($0.08 per diluted share) for the third quarter of 2007 compared to $5.9 million ($0.07 per diluted share) in 2006. For the nine months ended September 30, 2007 net earnings increased to $19.5 million ($0.23 per diluted share) compared to $10.9 million ($0.13 per diluted share) in 2006, an increase of 78%.

Operating days recorded by the Corporation declined slightly during the three and nine-month periods ended September 30, 2007 to 3,117 and 9,239 days compared to 3,351 and 9,522 operating days for the same periods in 2006. This resulted in a utilization rate of 70% and 72% respectively during the three and nine-month periods ended September 30, 2007, compared to 85% and 87% for the same periods in 2006. Increased operating days generated through rig fleet expansion in the United States during the nine month period ended September 30, 2007 were offset by a number of factors. These included lower activity in both Canada and Ecuador and the fact that in the prior year the Corporation operated seven light workover rigs in Venezuela and three drilling rigs in the United States on a dry-lease basis for which no activity was recorded in 2007. Utilization in the third quarter of 2007 was positively impacted by 100% utilization of all available rigs in Colombia, Peru, Mexico and Venezuela and by full utilization of 11 rigs under long term contracts in the United States. However, utilization during the third quarter was negatively impacted by the overall slowdown in the Canadian marketplace as the Canadian operation recorded 18% utilization for the quarter (a decrease of 387 operating days compared to the third quarter of 2006), continued government transition issues and permit delays in Ecuador and by the three drilling rigs in the United States that have remained stacked throughout 2007.

For the three months ended September 30, 2007, the Corporation's drilling activity generated average revenue per operating day of $22,600 (2006: $17,500) while workover activity generated average revenue per operating day of $8,200 (2006: $6,400). Overall, average revenue per operating day increased to $19,800 during the third quarter of 2007 from $14,900 in 2006. For the nine months ended September 30, 2007, the Corporation's drilling activity generated average revenue per operating day of $21,600 (2006: $16,200) while workover activity generated average revenue per operating day of $8,100 (2006: $5,000). Overall, average revenue per operating day increased to $18,700 during the nine months ended September 30, 2007 from $12,400 in 2006.

Drilling activity comprised a much higher proportion of the Corporation's activity in 2007 compared to 2006 resulting in higher average revenue per operating day. Furthermore, day rate increases throughout all of the Corporation's operations, particularly in Colombia, Mexico and Peru, contributed to the increase. Throughout the first three quarters of 2006 average revenue per operating day in the United States was lower due to three rigs operating under dry lease contracts, which remained stacked during 2007. In addition, the two Peru-based drilling rigs spent more time in either standby mode or mobilizing at less than full day rates during the first three quarters of 2006. The increase in average revenue per day for workover activity in both periods is due primarily to day rate increases in Ecuador combined with the Corporation's decision to exit the light workover rig market in Venezuela in the third quarter of 2006. The Venezuelan workover rigs were operated on a dry lease basis during the first half of 2006.

Growth in the Corporation's North American segment continues to be the primary driver of the increase in revenue and operating earnings in the current year. The Corporation's North American segment generated $29.1 million in revenue and $5.5 million (19% of revenue) in operating earnings during the third quarter of 2007, compared to $26.3 million in revenue and $5.3 million (20% of revenue) in operating earnings in 2006, an increase of 11% and 3% respectively. On a year-to-date basis, the Corporation's North American segment generated $86.4 million in revenue and $20.4 million (24% of revenue) in operating earnings, compared to $48.4 million in revenue and $8.7 million (18% of revenue) in operating earnings in 2006, an increase of 78% and 133% respectively.

Growth in revenue and operating earnings in the North American segment during the three and nine month periods ended September 30, 2007 compared to 2006 is due primarily to rig fleet expansion and the related economies of scale in the United States, and due to rig fleet expansion and improved day rates in Mexico. These developments were partially offset by reduced activity and day rate compression in Canada as low natural gas commodity prices caused by high inventories in the United States have had a negative effect on rig utilization in western Canada during the second and third quarters of 2007. As it will likely take a sustained increase in natural gas prices before exploration and production companies substantially increase spending levels, the Corporation does not anticipate any significant improvement in the Canadian marketplace in the near term.

The Corporation's South American segment generated $32.7 million in revenue and $7.4 million (23% of revenue) in operating earnings during the third quarter of 2007, compared to $23.8 million in revenue and $7.0 million (29% of revenue) in operating earnings in 2006, an increase of 37% and 6% respectively. On a year-to-date basis, the Corporation's South American segment generated $86.4 million in revenue and $18.4 million (21% of revenue) in operating earnings in 2007, compared to $69.8 million in revenue and $20.0 million (29% of revenue) in operating earnings in 2006, an increase of 24% and a decline of 8% respectively.

Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE


Most Popular Articles


From the Career Center
Jobs that may interest you
Financial Reporting Analyst
Expertise: Accounting
Location: Houston, TX
 
Director Downhole Tool Engineering
Expertise: Electrical Engineering|Engineering Manager|MWD / LWD
Location: Houston, TX
 
AP Specialist
Expertise: Accounting
Location: Alpharetta, GA
 
search for more jobs

Brent Crude Oil : $51.46/BBL 4.63%
Light Crude Oil : $48.9/BBL 4.78%
Natural Gas : $3.18/MMBtu 0.90%
Updated in last 24 hours