From the Wires
Trican Announces 2013 Russian Contract Update
By: Marketwired .
Jan. 14, 2013 10:40 PM
CALGARY, ALBERTA -- (Marketwire) -- 01/15/13 -- Trican Well Service Ltd. (TSX:TCW) is pleased to announce the results of the 2013 Russian contract tendering season. Management is currently estimating 2013 revenue to increase by approximately 25%, as measured in Russian roubles, relative to 2012.
Customer interest in horizontal completions and multi-stage fracturing is significantly increasing and is expected to represent 20% of Russian fracturing revenues in 2013 compared to 12% in 2012. This is expected to improve equipment utilization and fits well with Trican's completion tool service line.
The estimated revenue increase is based on a 2% expected increase in overall activity combined with a 23% expected increase in average revenue per job. The expected increase in average revenue per job is the combined result of the trend towards larger fracturing job sizes in multi-stage completions, a shift in the sales mix toward more fracturing work relative to coiled tubing and cementing and a modest increase in pricing. Bidding for the Russian contracts was very aggressive with a number of competitors attempting to gain market share, which limited the year-over-year price increases obtained.
A high rate of inflation in the Russian market and strong competition continues to challenge the Russian operations profitability. That being said, management is anticipating moderate improvements in the operating income margin in 2013 as a result of a shift in our work scope to higher margin work and multi-stage activity, including completion tool revenue, and a continued focus on optimizing the Russian operations' cost structure.
The actual 2013 financial results for our Russian operations could be impacted by revisions in customer budgets, exploration levels, the price of commodities and general economic conditions in the Russian market.
In summary, management is pleased with the results of the 2013 tenders. Activity and pricing in the Russian market continue to strengthen and there is a strong customer interest in the development of oil and gas reservoirs utilizing state of the art technology.
Headquartered in Calgary, Alberta, Trican has operations in Canada, the United States, Russia, Kazakhstan, Australia and North Africa. Trican provides a comprehensive array of specialized products, equipment and services that are used during the exploration and development of oil and gas reserves.
This document contains information that constitutes forward-looking information and financial outlook within the meaning of applicable securities legislation. This forward-looking information and financial outlook is identified by the use of terms and phrases such as "anticipate," "achieve", "achievable," "believe," "estimate," "expect," "intend", "plan", "planned", and other similar terms and phrases. This information and outlook speaks only as of the date of this document and we do not undertake to publicly update the forward-looking information and financial outlook contained in this document except in accordance with applicable securities laws. This forward-looking information and financial outlook includes:
-- The expectation that 2013 Russian revenue will increase by 25%, as measured in Russian roubles, compared to 2012; -- The expectation that horizontal completions and multi-stage fracturing is significantly increasing in Russia and is expected to represent 20% of Russian fracturing revenues in 2013; -- The expectation that the estimated revenue increase is based on a 2% expected increase in overall activity combined with a 23% expected increase in average revenue per job; -- The expectation that the increase in average revenue per job is the combined result of, the trend towards larger fracturing job sizes in multi-stage completions, a shift in the sales mix toward more fracturing work relative to coiled tubing and cementing and a modest increase in pricing; -- The expectation that the operating income margin will increase in 2013 as a result of a shift in our work scope to higher margin work and multi-stage activity, including completion tool revenue, and a continued focus on optimizing the Russian operations' cost structure.
Forward-looking information and financial outlook is based on current expectations, estimates, projections and assumptions, which we believe are reasonable but which may prove to be incorrect and therefore such forward-looking information and financial outlook should not be unduly relied upon. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: industry activity; the general stability of the economic and political environment; effect of market conditions on demand for the Company's products and services; the ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability to operate its business in a safe, efficient and effective manner; the performance and characteristics of various business segments; the effect of current plans; the timing and costs of capital expenditures; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its products and services.
Forward-looking information and financial outlook is subject to a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks and uncertainties include: customers' completion of expected work programs; fluctuating prices for crude oil and natural gas; changes in drilling activity; general global economic, political and business conditions; weather conditions; regulatory changes; the successful exploitation and integration of technology; customer acceptance of technology; success in obtaining issued patents; the potential development of competing technologies by market competitors; and availability of products, qualified personnel, manufacturing capacity and raw materials, and Trican's successful performance under contracts. In addition, actual results could differ materially from those anticipated in the forward-looking information and financial outlook provided herein as a result of the risk factors set forth under the section entitled "Risk Factors" in our Annual Information Form dated March 22, 2012.
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