Step Energy Services Ltd. Provides a Strategic Business Update, an Update to Its Amended Credit Facilities and Fourth Quarter and Year End 2019 Conference Call Details
CALGARY, Alberta, Jan. 22, 2020 (GLOBE NEWSWIRE) — STEP Energy Services Ltd. (the “Company” or “STEP”) provides a strategic business update, announces an amendment to its credit facilities, and provides fourth quarter and year end 2019 results conference call details.
STRATEGIC BUSINESS UPDATESTEP is pleased to provide an update on 2020 work programs for its Canadian and U.S. operations. Throughout 2019, STEP focused on executing work programs for large, blue-chip clients with active and stable work programs while broadening our client base across our different service offerings. This allowed STEP to drive utilization and increase efficiencies in our operations. We were also successful in effectively deploying our assets to areas of greater activity, including opening a new coiled tubing operation in North Dakota towards the end of the year.Heading into 2020, the Company’s goal was to build on this focus and STEP is pleased to announce it has been successful in achieving its 2020 RFP goals, which provide clear line-of-sight to work programs to enable greater stability, predictability and equipment utilization.Canadian Operations HighlightsSuccessful renewal of key fracturing work programs with similar or larger work scopesAdded another large fracturing work program and retained other key clientsRetained and added key coiled tubing clients, with STEP’s suite of technologies and field execution being a differentiatorU.S. Operations HighlightsSuccessfully retained fracturing work programs with a large, international client for two fleetsAdded another large fracturing work program for the third fleet with a large, blue-chip clientAwarded first call options for coiled tubing work across the Permian, Bakken and Eagle Ford basins, with outcomes for further RFPs still pending across our U.S. footprintCREDIT FACILITY UPDATESTEP has maintained an ongoing focus on capital discipline and balance sheet efficiency and is pleased to report that at December 31, 2019 net debt (bank debt less cash on hand) was $232.6 million, down from $254.2 million at December 31, 2018. At year end, the Company was also onside with all covenants related to this facility.Based on the Company’s current outlook for the business, STEP expects to remain on side with all financial covenants for 2020. However, given the volatility of commodity prices which underpin customer cash flows, and therefore demand for our services, management felt it was prudent to approach our banking syndicate to seek an extension of the increased covenant levels granted in Q1 2019. We are pleased to announce that as of January 22, 2020, the Company has entered into an agreement with its syndicate of lenders to make an amendment to its credit facilities in order to provide increased financial flexibility. The amendment was a change to the required Funded Debt to EBITDA Ratio (as defined in the credit facilities). The Funded Debt to EBITDA Ratio continues to be calculated in the same manner as it was prior to the amendment, but is now required to meet the following ratios:Interest continues to be payable monthly at the bank’s prime lending rate plus 50 basis points to 300 basis points depending on certain financial ratios of the Company.FOURTH QUARTER AND YEAR END 2019 RESULTS RELEASE DATE AND CONFERENCE CALL DETAILSSTEP intends to release its 2019 fourth quarter and year end results on Thursday, March 12, 2020 before markets open and will host a conference call at 8:00 a.m. MT (10:00 a.m. ET) on the same morning.To access the conference call in North America, dial 1-877-375-3078 (toll-free) or 1-629-228-0731 and enter the conference passcode 7641909, or ask for the “STEP Energy Services Fourth Quarter and Year End 2019 Financial and Operating Results Call”.To listen to a live webcast of the conference call, or to hear a replay, please enter the following URL into your web browser: https://edge.media-server.com/mmc/p/mnhhnt6r.The conference call will be available for replay over phone approximately three hours after the end of the call. To access the replay, dial 1-855-859-2056 (toll-free) or 1-404-537-3406 and enter the passcode 7641909. The replay over phone will remain available until March 19, 2020. The webcast replay will remain available until March 12, 2021.Financial Statements and Management’s Discussion and Analysis will be posted to STEP’s website and SEDAR immediately after the press release is disseminated.FORWARD LOOKING STATEMENTSCertain statements contained in this press release constitute “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws (collectively, “forward-looking statements”). These statements relate to management’s expectations about future events, results of operations and the Company’s future performance (both operational and financial) and business prospects. All statements other than statements of historical fact are forward-looking statements. The use of any of the words “anticipate”, “plan”, “contemplate”, “continue”, “estimate”, “expect”, “intend”, “propose”, “might”, “may”, “will”, “shall”, “project”, “should”, “could”, “would”, “believe”, “predict”, “forecast”, “pursue”, “potential”, “objective” and “capable” and similar expressions are intended to identify forward-looking statements. These statements 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. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this presentation should not be unduly relied upon. These statements speak only as of the date of this presentation. In addition, this presentation may contain forward-looking statements and forward looking information attributed to third-party industry sources.In particular, but without limitation, this document contains forward-looking statements pertaining to: 2020 operation outlook; anticipated market recovery; supply and demand for oilfield services and industry activity levels, including the Company’s integrated service offerings; the Company’s anticipated business strategies and expected success; covenant compliance under the Company’s syndicated credit facilities; expected completions activity, utilization levels and operating margins in 2019 and 2020; expected profitability for fracturing services in 2019 and 2020; ability of the Company to maintain its track record of returns and margin performance; the Company’s expected performance in 2019 and 2020; future development activities; the Company’s ability to retain existing clients and attract new business; monitoring of industry demand, client capital budgets and market conditions; and client activity in 2020.The forward-looking information and statements contained in this document reflect several material factors and expectations and assumptions of the Company including, without limitation: that the Company will continue to conduct its operations in a manner consistent with past operations; the general continuance of current or, where applicable, assumed industry conditions; the Company’s future debt levels; the Company’s ability to market successfully to current and new clients; the likelihood of the Company’s clients to execute on work programs as awarded; the Company’s ability to utilize its equipment; the Company’s ability to obtain qualified staff and equipment in a timely and cost efficient manner; levels of deployable equipment; future sources of funding for the Company’s capital program; and the impact of competition on the Company. The Company believes the material factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable but no assurance can be given that these factors, expectations and assumptions will prove correct.Actual results could differ materially from those anticipated in these forward-looking statements due to the risk factors set forth below and elsewhere in this document: volatility of the oil and natural gas industry; excess equipment levels; competition in the oilfield services industry; restrictions on access to capital; reliance on suppliers of raw materials, diesel fuel and component parts; reliance on equipment suppliers and fabricators; direct and indirect exposure to volatile credit markets; fluctuations in currency exchange rates; merger and acquisition activity among the Company’s clients; federal and provincial legislative and regulatory initiatives could result in increased costs and additional operating restrictions or delays; health, safety and environment laws and regulations may require the Company to make substantial expenditures or cause it to incur substantial liabilities; loss of a significant client could cause the Company’s revenue to decline substantially; negative cash flows from operating activities; third party credit risk; hazards inherent in the oilfield services industry which may not be covered to the full extent by the Company’s insurance policies; difficulty in retaining, replacing or adding personnel; seasonal volatility due to adverse weather conditions; reliance on a few key employees; legal proceedings involving the Company; failure to maintain the Company’s safety standards and record; inability to manage growth; failure to continuously improve operating equipment and proprietary fluid chemistries; actual results may differ materially from management estimates and assumptions; and the risk factors set forth under the heading “Risk Factors” in the AIF.ABOUT STEPSTEP is an oilfield service company founded in 2011 that provides fully integrated coiled tubing and fracturing solutions. STEP’s combination of modern, fit-for-purpose fracturing and coiled tubing equipment has differentiated it in plays where wells are deeper, have longer laterals, and higher pressure.Initially operating as a specialized, deep capacity coiled tubing provider, STEP’s service offering expanded to include fully integrated coiled tubing and fracturing solutions. STEP operates primarily in the Montney, Duvernay, and Viking in Canada, and in the Anadarko, Arkoma, Permian, Eagle Ford, Haynesville, and Bakken in the U.S. STEP’s track record of safety, efficiency and execution drives repeat business from its blue-chip exploration and production clients.