- Generated record Adjusted EBITDA1 of $154 million and $0.50 per basic share in Q3 2022, reflecting realized synergies, strong operational performance and industry fundamentals, up 47% from both Q3 2021 and on a per basic share basis1
- Recorded net income of $60 million or $0.19 per share in Q3 2022 compared to a net loss of $22 million or $0.07 per share in Q3 2021
- Realized $76 million of run-rate synergies impacting Adjusted EBITDA, exceeding target of $75 million ahead of expectations
- Generated $108 million of discretionary free cash flow1, up 42% from Q3 2021 and 40% on a per basic share basis1
- Improved our Total Debt to EBITDA2 covenant ratio to 2.2x and Total Debt2 outstanding to $1.1 billion. In the three and nine months ended September 30, 2022, the Corporation has repaid or repurchased $89 and $224 million of debt, respectively
- Announced our 2023 capital allocation priorities which includes continued debt repayment, an increase of our quarterly dividend to $0.10 per share commencing with the dividend payment in January 2023, and equal to $0.40 per share, or an aggregate of approximately $125 million annually, opportunistic share repurchases and expected 2023 growth capital of approximately $50 million
- Intention to apply for Normal Course Issuer Bid ("NCIB") in Q4 2022
- Increased activity levels resulted in higher oil, water, and solid volumes across our environmental and energy infrastructure network, including improved facility utilization and margins
- On target to exceed our freshwater usage reduction target of 5% in 2022. SECURE has decreased water usage across our facilities by 7.6% in the first half of 2022 through streamlining operations and optimizing use of chemicals
- Promoted Allen Gransch to President and Corey Higham to Chief Operating Officer
- Appointed Joseph Lenz of Angelo, Gordon & Co., L.P. to the Board of Directors
CALGARY, AB, Nov. 2, 2022 /CNW/ - SECURE ENERGY Services Inc. ("SECURE" or the "Corporation") (TSX: SES) reported the Corporation's operational and financial results for the three and nine months ended September 30, 2022.
"The results achieved in the third quarter of 2022 demonstrate the enhanced scale, utilization and efficiencies we have been able to achieve from the merger with Tervita," said Rene Amirault, President and Chief Executive Officer of SECURE. "Our disciplined approach to pursuing merger synergies and continued focus on managing costs, along with improved industry fundamentals, drove a 42% increase in discretionary free cash flow compared to the third quarter of 2021. In the near-term, we expect to continue repurchasing our 11% senior secured notes which will result in lower interest costs and improved financial flexibility. Since September 30, 2022, we have repurchased an additional US$46 million of these notes, resulting in US$174 million principal amount outstanding. We are extremely pleased with our efforts to date in achieving these operational and financial objectives.
"I am also pleased to announce the Corporation's 2023 capital allocation priorities which includes further debt reduction and our commitment to returning cash to shareholders by increasing our base dividend from $0.0075 per share to $0.10 per share effective with our dividend payment in the first quarter of 2023, for an annualized base dividend of $0.40 per share, which equates to a total of approximately $125 million in 2023. Increasing our base dividend is meant to establish our commitment to return cash to shareholders and our commitment to continue to grow the dividend for years to come. The Board and management intend to move forward with an NCIB, providing further opportunities to return capital to shareholders.
"Effective November 2, 2022, Allen Gransch has been appointed President and Corey Higham will take on the expanded role of Chief Operating Officer. Both individuals have been with SECURE since it was founded in 2007 and have been critical to its growth and success. Allen has served as SECURE's Chief Operating Officer since 2019, and prior to this held executive vice president roles in Corporate Development and Finance. Corey has held various senior leadership positions in our Midstream Infrastructure business, most recently serving as Senior Vice President, Midstream Operations.
"We are also pleased to add Joseph Lenz of Angelo, Gordon & Co. to our Board. Angelo, Gordon & Co., through its affiliates, is currently our largest shareholder and has been very supportive of our business strategy. Joseph has been at Angelo, Gordon & Co. since 2012 and has previously served on two boards within the energy industry. Adding Joseph to the Board reinforces Angelo, Gordon & Co.'s long-term view of SECURE's strategy and value.
"As we look ahead, SECURE is very well positioned to deliver on our strategic priorities of providing best-in-class customer service and growing the volumes we handle across the business. Our extensive network of environmental and energy infrastructure in place today can handle higher processing, recovery and disposal volumes without significant incremental investment. By thinking differently about energy, waste and the environment, we can offer our customers cost effective solutions that meet our shared ESG objectives."
In connection with appointing Mr. Lenz, SECURE, Angelo, Gordon & Co. L.P. and certain of its affiliates (collectively, the "AG Parties") entered into a shareholder agreement (the "Agreement") dated effective November 1, 2022. Under the terms of the Agreement, among other things, the AG Parties agreed to certain voting obligations and standstill provisions. The Agreement is available under SECURE's profile on SEDAR at www.sedar.com.
1 Non-GAAP financial measure/ratio. Refer to the "Non-GAAP and other specified financial measures" section herein.
FINANCIAL AND OPERATING HIGHLIGHTS
The Corporation's operating and financial highlights for the three and nine months ended September 30, 2022, and 2021 can be summarized as follows:
Three months ended
Nine months ended
($ millions except share and per share data)
Revenue (excludes oil purchase and resale)
Oil purchase and resale
Adjusted EBITDA (1)
Per share ($), basic (1)
Per share ($), diluted (1)
Net income (loss) attributable to shareholders of SECURE
Per share ($), basic and diluted
Funds flow from operations
Per share ($), basic (1)
Per share ($), diluted (1)
Discretionary free cash flow (1)
Per share ($), basic
Per share ($), diluted (1)
Capital expenditures (1)
Dividends per common share
Common shares - end of period
Weighted average common shares:
(1) Refer to the "Non-GAAP and other specified financial measures" section for further information.
FINANCIAL AND OPERATIONAL RESULTS
The following should be read in conjunction with the Corporation's MD&A for the three and nine months ended September 30, 2022, and the consolidated financial statements and notes thereto for the three and nine months ended September 30, 2022 ("Interim Financial Statements"), and the Corporation's annual audited consolidated financial statements and notes thereto for the year ended December 31, 2021 and 2020, which are available on SEDAR at www.sedar.com.
THIRD QUARTER HIGHLIGHTS
- Record Adjusted EBITDA of $154 million and $0.50 per basic share - increases of 47% compared to the third quarter of 2021, driven by higher oil and natural gas prices resulting in improved energy market conditions and increased activity levels in a number of the Corporation's operating areas, which led to higher processing and disposal volumes at our Midstream Infrastructure facilities and landfills and increased demand for services related to increased drilling and completion activity within the Environmental and Fluid Management segment.
- Adjusted EBITDA margin1 of 37% - increased from 33% in the third quarter of 2021, due to the higher activity levels and higher revenue contributing to improved fixed cost absorption, particularly in the service lines impacted by increased drilling and completion activity during the quarter. Additionally, integration cost savings as a result of the Tervita Transaction (the "Transaction") have contributed to a higher adjusted EBITDA margin during the quarter.
- Integration cost savings of $76 million (101% of initial target) realized - achieved an incremental $9 million of annualized cost savings as a result of the Transaction impacting Adjusted EBITDA in the third quarter of 2022, increasing total realized cost savings from $67 million to $76 million on an annual run-rate basis. As a result, the Corporation has now achieved 101% of the $75 million cost savings target it established following completion of the Transaction. The $9 million achieved in the quarter is mainly a result of operational savings. In the three months ended September 30, 2022, $4 million of costs related to the Transaction and integration of the legacy businesses were incurred.
- Revenue (excluding oil purchase and resale) of $419 million - an increase of 32% compared to the third quarter of 2021 with Midstream Infrastructure revenue (excluding oil purchase and resale) increasing by $49 million to $181 million and Environmental and Fluid Management revenue increasing by $53 million to $238 million for the quarter. These increases were primarily due to an increase in energy-related industry activity levels as benchmark oil and natural gas prices stayed strong in the quarter. Both reportable segments benefited from improved industry activity levels, driving incremental volumes at Midstream Infrastructure facilities and industrial landfills, and demand for drilling and completion related services as underpinned by an approximate 53% increase in the average active rig count as compared to the third quarter of 2021. Higher crude oil pricing in the third quarter of 2022 also positively impacted recovered oil revenue and contributed to the increase in oil purchase and resale revenue which increased by 85% to $1.7 billion compared to the comparative 2021 period.
- Net income attributable to shareholders of $60 million and $0.19 per share - an increase of $82 million or $0.26 per share compared to the third quarter of 2021, as general industry conditions continued to strengthen. The increase was primarily driven by higher gross margins and other income partially offset by a deferred income tax expense.
- Funds flow from operations of $132 million - an increase of $58 million from the prior year comparative period, or 79% per basic share, driven by the increase in Adjusted EBITDA and lower interest payments in the quarter resulting from improved capital cost structure with the repurchase of US$80 million 11% 2025 senior secured notes ("2025 senior secured notes") in the 2022 year to date.
- Discretionary free cash flow of $108 million - which was used primarily to reduce overall debt levels, including $84 million on our $800 million senior secured revolving credit facility ("Revolving Credit Facility"), and settle a portion of SECURE's 2025 senior secured notes, as well as fund the Corporation's quarterly dividend, Transaction related costs and growth capital expenditures. At September 30, 2022, SECURE carried Working Capital3 of $239 million, an increase of $40 million in the third quarter.
- Improved our Total Debt to EBITDA covenant ratio to 2.2x - Adjusted EBITDA and cash generation was supported by an improved commodity pricing environment and, increased industry activity. The debt reduction is consistent with our current capital allocation objective to target lower overall debt levels.
- Midstream Infrastructure segment profit margin of 65% - increased from 64% in the third quarter of 2021, driven by synergies and increased activity.
- Environmental and Fluid Management segment profit margin of 29% - increased from 26% in the third quarter of 2021, primarily driven by increased waste disposal and drilling and completion activity.
- G&A expense before DD&A and share-based compensation as a percentage of revenue (excluding oil purchase and resale) of 7% - an improvement of 2% compared to 9% in the third quarter of 2021, driven by synergies related to the Transaction and supported by increased activity levels.
- Repurchased US$3 million of our 2025 senior secured notes - the Corporation remains focused on improving our capital structure and as such, the Corporation opportunistically repurchased US$3 million aggregate principal amount of our 2025 senior secured notes in the quarter. Subsequent to September 30, 2022, the Corporation repurchased an additional US$46 million principal amount of 2025 senior secured notes at an average price of $109.20.
- Growth capital expenditures of $9 million - related to the expansion of a water disposal facility which is backstopped by a commercial agreement with an existing customer at the facility and adding in blending capabilities at existing facility locations.
- Sustaining capital expenditures of $21 million - related primarily to well and facility maintenance, landfill cell expansions and asset integrity and inspection programs.
- Liquidity3 of $381 million - As at September 30, 2022, the Corporation had drawn $368 million aggregate principal amount on the Revolving Credit Facility and a total of $104 million of letters of credit ("LCs") have been issued against SECURE's credit facilities resulting in $381 million of Liquidity (available capacity under SECURE's credit facilities and cash on hand, subject to covenant restrictions).
- Renewed and extended the Corporation's $800 million Revolving Credit Facility – the Revolving Credit Facility was extended for one year to July 2025, and the Corporation was also able to lower its interest rate margins to pre-COVID levels.
The following table outlines SECURE's covenant ratios2, calculated in accordance with the Corporation's credit facilities, at September 30, 2022, and December 31, 2021:
3 Capital management measure. Refer to the "Non-GAAP and other specified financial measures" section herein.
September 30, 2022
December 31, 2021
Senior Debt to EBITDA
not to exceed 2.75
Total Debt to EBITDA
not to exceed 4.5
not to be less than 2.5
CAPITAL ALLOCATION PRIORITIES
SECURE is pleased to announce our capital allocation priorities that take into account the increased breadth and size of the Corporation, our commitment to maintaining a strong balance sheet, unlocking additional shareholder value through increasing returns to shareholders, and sustainably growing our business through our capital investment program. Since July 2021, SECURE has been focused on reducing leverage taken on from the Transaction and realizing our synergy target of $75 million in annualized Adjusted EBITDA savings. We have reached and exceeded our synergy target ahead of schedule, and we have also reduced leverage faster than expected, from 3.5x Total Debt to EBITDA to 2.2x Total Debt to EBITDA at the end of Q3 with a continuing focus on debt repayment for the remainder of 2022. In 2023, our capital allocation priorities are as follows:
Balance sheet strength
Maintaining a strong balance sheet remains a priority for SECURE, and we will continue to prioritize allocation of discretionary free cash flow to debt repayments driving toward a principal debt target (defined as draws on our Revolving Credit Facility plus Secured and Unsecured Notes) of $850 to $950 million (currently $1.0 billion), a target that allows significant financial flexibility during all business cycles. The principal debt target range will be pursued along with increased returns to shareholders and growth capital.
Increased returns to shareholders
In the past twelve months, SECURE has generated $321 million in discretionary free cash flow. We expect that to increase in 2023 as we see the benefit of a full year of realized synergies and continuing momentum in the macro-economic environment in which we operate. As a result, beginning with the quarterly dividend payable in January 2023, we will materially increase our base dividend to $0.10 per share quarterly and $0.40 per share annually from the current $0.03 per share annually, representing, in aggregate, expected shareholder returns through dividends of approximately $125 million per year starting in 2023 (currently, approximately $9 million per year) or 39% of discretionary free cash flow generated in the past twelve months. The increased dividend approximates a 5.5% annualized yield (for shareholders) based on SECURE's closing share price on November 1, 2022. The increased dividend will continue to be declared and paid on a quarterly basis at the sole discretion of the Board of Directors and is subject to ongoing evaluation.
The Board of Directors and management believe SECURE's current share price does not accurately reflect the underlying value of the Corporation, and therefore SECURE intends to initiate an NCIB and subject to market conditions at the applicable time, pursue share repurchases in 2023, which is expected to further enhance shareholder value.
Growth capital in 2023
SECURE is in a strong business position as our infrastructure is currently operating below full capacity, and therefore EBITDA growth does not require significant incremental capital. In 2023 we expect to spend approximately $50 million on opportunities that leverage or build upon our existing infrastructure through longer-term contracts.
The steps SECURE has taken in 2021 and 2022 to strengthen both our balance sheet and operations has put us in position to materially increase our sustainable base dividend while continuing to pay down significant amounts of debt, allocate capital to future growth, and opportunistically repurchase shares. We believe this combination will unlock significant shareholder value.
During the remainder of 2022 and into 2023, the Corporation expects continued volatility in the benchmark crude oil price and US Dollar exchange rate as a result of macroeconomic factors such as significant inflationary pressures, the likelihood of a near-term recession, geopolitical risk premium due to the current war in Ukraine, as well as continued changes to the supply and demand outlook. Notwithstanding the fluctuation in the price of benchmark crude, hydrocarbon demand remains strong, and producer cash flows remain robust, and therefore, we expect continued strong energy industry activity. As a result, SECURE expects:
- Increased utilization at our midstream processing facilities as higher drilling, completion and production volumes from increased activity levels require additional treating, processing, terminalling and disposal. The Corporation has significant capacity to increase facility throughput and disposal with minimal incremental fixed costs or additional capital. Higher drilling and completion activity is expected to continue to have a positive impact on our drilling and production services business within the Environmental and Fluid Management segment.
- Increased volumes at the Corporation's industrial landfills and industrial waste facilities as both industry activity and abandonment, remediation and reclamation activity continue to trend higher as there is direction from the Alberta Energy Regulator requiring energy producers and other companies that have retirement obligations related to inactive (non-producing) wells and facilities to spend an amount each year towards addressing those obligations, and a similar program initiated by the Saskatchewan provincial government is also expected to begin in 2023. SECURE anticipates policy changes to increase abandonment, remediation, and reclamation activity in the years to come will positively impact all of SECURE's Canadian operations, particularly within the Environmental and Fluid Management segment as a result of higher demand for environmental site assessments, abandonment, remediation and reclamation work.
We expect to end the year spending approximately $45 million of growth capital relating to two pipeline tie ins to existing water disposal infrastructure and a pipeline tie in and terminalling infrastructure, commercially backed with a long-term arrangement in the Clearwater region of north central Alberta. These projects are expected to be operational during the third quarter of 2023.
SECURE's financial results in the year to date demonstrate the successful integration of Tervita and the improved scale of the combined operations. The Corporation expects strong momentum from the third quarter to continue with robust industry activity resulting in increased demand for drilling and completion services and incremental facility volumes as described above, and the full run rate of realized synergies adding incremental Adjusted EBITDA. These positive factors may be partially offset by reduced recovered oil revenue resulting from lower benchmark crude prices, and reduced marketing opportunities due to less volatile differentials. Additionally, fourth quarter results will be impacted by the typical December holiday drilling slow-down.
SECURE will continue to work diligently to manage inflationary costs including purchasing materials in advance and in bulk, working with customers and negotiating with suppliers or finding alternate suppliers. To date, we have been able to effectively manage some of the cost pressures we are currently experiencing due to higher inflation.
Additional savings through initiatives such as improving our capital structure as well as minimizing sustaining capital by managing underutilized assets are expected to provide incremental discretionary free cash flow beyond those factors impacting Adjusted EBITDA. To date, SECURE has repurchased US$326 million, or 65%, of the 2025 senior secured notes assumed through the Transaction, resulting in annualized interest savings of approximately $20 million. As at November 1, 2022, US$174 million aggregate principal amount of these notes remain outstanding. The Corporation expects to continue to repurchase these notes where market conditions are favourable which will result in lower interest costs next year along with improved financial flexibility.
Financial Strength and Flexibility
One of SECURE's key priorities has always been maintaining a strong balance sheet and financial resiliency. Since the closing of the Transaction, the Corporation has been focused on achieving our near-term objective of reducing leverage to below 2.5x Total Debt to EBITDA ratio by utilizing discretionary free cash flow to pay down debt. Strong Adjusted EBITDA and cash generation driven by synergy realization and robust industry activity levels resulted in the achievement of this objective during the third quarter of 2022, well in advance of our target of the second quarter of 2023.
With a Total Debt to EBITDA ratio of 2.2x at September 30, 2022, we are well positioned to balance our priorities going forward between continuing to reduce our absolute debt balance, returning cash to shareholders and allocating funds to incremental growth opportunities that provide reliable volumes and recurring cash flows.
The strategic plan following the Transaction was to achieve the $75 million in synergies and to continue to pay down debt and restructure the balance sheet. In the 15 months since the close of the Transaction, we have succeeded in achieving our synergy and debt targets earlier than expected. In addition to the above, over the past few months we have held strategic planning sessions to discuss our strategic initiatives, priorities, and our capital allocation plan into 2023 and beyond. As noted above, our capital allocation priorities include continued debt repayment, increasing our annualized base dividend to an aggregate of approximately $125 million ($0.40 per share annually), opportunistic share repurchases, and an expected 2023 growth capital budget of approximately $50 million. In 2023, we also expect to incur approximately $60 million of sustaining capital and $25 million of capital related to landfill expansions. The additional landfill expansions are in anticipation of increased abandonment spend obligations driven from government regulations.
The high-level strategic plan for the organization moving forward includes the following:
- Enhancing the business with best-in-class customer service and effective optimization of our infrastructure
- Growing the volumes handled across the network
- Investing capital in environmental and energy infrastructure that has a contracted and/or recurring cash flows
- Targeting strategic partnerships for opportunities that reduce inefficiencies and redundant assets
- Executing a digital transformation of the business internally and externally
- Evaluating potential ESG growth opportunities that fit our core competencies
Embedded in both our capital allocation priorities and our strategic plan is to maintain a strong balance sheet and financial resiliency.
With the current macroeconomic conditions, including the ongoing war in Ukraine, high energy prices and a lack of reliable supply have caused an energy crisis around the globe. As a result, nations are turning to dirtier forms of energy such as coal to meet their demands, which moves us further away from our collective goal of net zero carbon emissions. Renewable energy has proven to be a good source of energy but is too far away to be a reliable and realistic replacement for fossil fuels any time soon. Canada has best in class safety, environmental and social practices, and the natural resources to make it a reliable provider of sustainably produced energy. Increasing Canadian energy is a long-term solution to providing energy security and a lower carbon future.
Industry fundamentals remain favourable and provide support for our business outlook for the remainder of 2022 and into 2023. Our priorities are to improve our capital structure, continue to optimize operations and realize cost savings between business units, and use our discretionary free cash flow to pay an increased dividend to our shareholders, further strengthen our balance sheet, grow our business, and opportunistically repurchase shares. With our efforts to date and the continuing hard work of our employees, we believe we are well positioned to execute on these priorities.
NON-GAAP AND OTHER SPECIFIED FINANCIAL MEASURES
The Corporation uses accounting principles that are generally accepted in Canada (the issuer's "GAAP"), which includes International Financial Reporting Standards ("IFRS"). This news release contains certain supplementary non-GAAP financial measures, such as Adjusted EBITDA and discretionary free cash flow and certain non-GAAP financial ratios, such as Adjusted EBITDA Margin, Adjusted EBITDA per share and discretionary free cash flow per share, which do not have any standardized meaning as prescribed by IFRS. These measures are intended as a complement to results provided in accordance with IFRS. The Corporation believes these measures provide additional useful information to analysts, shareholders and other users to understand the Corporation's financial results, profitability, cost management, liquidity and ability to generate funds to finance its operations.
However, these measures should not be used as an alternative to IFRS measures because they are not standardized financial measures under IFRS and therefore might not be comparable to similar financial measures disclosed by other companies. See the "Non-GAAP and other specified financial measures" section of the Corporation's MD&A for the three and nine months ended September 30, 2022 for further details, which is incorporated by reference herein and available on SECURE's profile at www.sedar.com and on our website at www.secure-energy.com.
Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA per share
Adjusted EBITDA is calculated as noted in the table below and reflects items that the Corporation considers appropriate to adjust given the irregular nature and relevance to comparable operations. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue (excluding oil purchase and resale). Adjusted EBITDA per basic and diluted share is defined as Adjusted EBITDA divided by basic and diluted weighted average common shares.
The following table reconciles the Corporation's net income (loss), being the most directly comparable financial measure disclosed in the Interim Financial Statements, to Adjusted EBITDA for the three and nine months ended September 30, 2022 and 2021.
Three months ended
Nine months ended
Net income (loss)
Depreciation, depletion and amortization (1)
Deferred tax expense (recovery)
Share-based compensation (1)
Interest, accretion and finance costs
Unrealized gain on mark to market transactions (2)
Other (income) expense
Transaction and related costs
(1) Included in cost of sales and/or general and administrative expenses on the Consolidated Statements of Comprehensive Income (Loss).
(2) Net balance. Includes amounts presented in revenue and cost of sales on the Consolidated Statements of Comprehensive Income (Loss).
In the three and nine months ended September 30, 2022 and 2021, transaction and related costs included costs associated with the Transaction and integration of the acquired Tervita business.
The Corporation also adjusted for other (income) expense resulting mainly from a sale of an interest in a facility in the three months ended September 30, 2022, along with the sale of unused land in the first quarter of 2022, realized and unrealized foreign exchange gains or losses, realized and unrealized gains or losses related to the cross currency swaps to hedge foreign exchange exposure on U.S. dollar denominated debt and other non-cash expenses including the loss of control of a former subsidiary and a loss on the repurchase of 2025 senior secured notes.
Discretionary Free Cash Flow and Discretionary Free Cash Flow per share
Discretionary free cash flow is defined as funds flow from operations adjusted for sustaining capital expenditures, and lease payments (net of sublease receipts). The Corporation may deduct or include additional items in its calculation of discretionary free cash flow that are unusual, non-recurring, or non-operating in nature. Discretionary free cash flow per basic and diluted share is defined as discretionary free cash flow divided by basic and diluted weighted average common shares. For the three and nine months ended September 30, 2022 and 2021, transaction and related costs have been adjusted as they are costs outside the normal course of business.
The following table reconciles the Corporation's funds flow from operations, being the most directly comparable financial measure disclosed in the Interim Financial Statements, to discretionary free cash flow for the three and nine months ended September 30, 2022 and 2021.
Three months ended
Nine months ended
Funds flow from operations
Lease liability principal payment (net of sublease receipts)
Transaction and related costs
Discretionary free cash flow
FINANCIAL STATEMENTS AND MD&A
The Corporation's consolidated financial statements and notes thereto and MD&A for the three and nine months ended September 30, 2022, are available on SECURE's website at www.secure-energy.com and on SEDAR at www.sedar.com.
THIRD QUARTER 2022 CONFERENCE CALL
SECURE will host a conference call on Wednesday, November 2, 2022, at 9:00 a.m. MDT to discuss the third quarter results. To participate in the conference call, dial 416-764-8650 or toll free 888-664-6383. To access the simultaneous webcast, please visit www.secure-energy.com. For those unable to listen to the live call, a taped broadcast will be available at www.secure-energy.com and, until midnight MDT on Wednesday, November 9, 2022 by dialing 888-390-0541 and using the pass code 086220.
Certain statements contained in this press release constitute "forward-looking statements and/or "forward-looking information" within the meaning of applicable securities laws (collectively referred to as "forward-looking statements"). When used in this press release, the words "achieve", "advance", "anticipate", "believe", "can be", "capacity", "commit", "continue", "could", "deliver", "drive", "enhance", "ensure", "estimate", "execute", "expect", "focus", "forecast", "forward", "future", "goal", "grow", "integrate", "intend", "may", "maintain", "objective", "ongoing", "opportunity", "outlook", "plan", "position", "potential", "prioritize", "realize", "remain", "result", "seek", "should", "strategy", "target" "will", "would" and similar expressions, as they relate to SECURE, its management, or the combined company, are intended to identify forward-looking statements. Such statements reflect the current views of SECURE and speak only as of the date of this press release.
SECURE's priorities for the remainder of 2022, 2023 and beyond and its high-level strategic plan, including related to ESG, maintaining a strong balance sheet and financial resiliency, debt reduction, increased dividends, share repurchases, SECURE's intentions to initiate a NCIB and the timing and impacts thereof, and its ability and position to achieve such priorities; SECURE's capital allocation priorities; note repurchases and the impacts thereof on interest costs and financial flexibility; incremental capital required to grow EBITDA; increased industry activity, including related to abandonment, remediation and reclamation and the impacts thereof; SECURE's 2023 capital program; expected capital expenditures and the timing of the completion of projects related thereto; SECURE's ability to repay debt and achieve its near-term debt targets; SECURE's ability to execute and deliver on the expected benefits of the Transaction; improving SECURE's capital structure and minimizing SECURE's sustaining capital by managing underutilized assets to generate incremental discretionary free cash flow; commodity prices and foreign exchange rates, and the effects of macroeconomic factors thereon; sustained inflationary pressures and increased interest rates, their impact on SECURE's business and SECURE's ability to manage such pressures; the impact of increased industry activity on SECURE's business and demand for SECURE's products and services, including increased utilization at SECURE's midstream facilities; the impact of new or existing regulatory requirements, including mandatory spend requirements for retirement obligations on SECURE's business, and the introduction of such requirements; seasonal slowdowns in energy industry activity; SECURE's discretionary free cash flow and the use and portion of such discretionary free cash flow to reduce debt; SECURE's ability to increase throughput with minimal incremental fixed costs or additional capital; the form, amount and timing of shareholder returns; maintaining cost control measures; changes to SECURE's dividend policy, the declaration, timing and amount of dividends thereunder and the continued monitoring of such policy by the Board and management; the Corporation's ability to fund its capital needs and the amount thereof; and maintaining financial resiliency. Forward-looking statements are based on certain assumptions that SECURE has made in respect thereof as at the date of this press release regarding, among other things: economic and operating conditions, including commodity prices, crude oil and natural gas storage levels, interest rates, exchange rates, and inflation; the changes in market activity and growth will be consistent with industry activity in Canada and the U.S. and growth levels in similar phases of previous economic cycles; the impact of the COVID-19 pandemic (including its variants) and geopolitical events, including government responses related thereto and their impact on global energy pricing, oil and gas industry exploration and development activity levels and production volumes; the ability of the Corporation to realize the anticipated benefits of the Transaction; the resolution of the review of the Transaction under the Competition Act on terms acceptable to the Corporation; SECURE's ability to successfully integrate Tervita's legacy business; anticipated sources of funding being available to SECURE on terms favourable to SECURE; the success of the Corporation's operations and growth projects; the Corporation's competitive position; the Corporation's ability to attract and retain customers (including Tervita's historic customers); that counterparties comply with contracts in a timely manner; that there are no unforeseen events preventing the performance of contracts or the completion and operation of the relevant facilities; that there are no unforeseen material costs in relation to the Corporation's facilities and operations; that prevailing regulatory, tax and environmental laws and regulations apply or are introduced as expected, and the timing of such introduction; the end of the Canadian Federal Government's stimulus package; increases to the Corporation's share price and market capitalization over the long term; the Corporation's ability to repay debt and return capital to shareholders; the Corporation's ability to implement a NCIB under market conditions, and on terms, acceptable to the Corporation; the Corporation's ability to obtain and retain qualified staff and equipment in a timely and cost-efficient manner; the Corporation's ability to access capital and insurance; operating and borrowing costs, including costs associated with the acquisition and maintenance of equipment and property the ability of the Corporation and our subsidiaries to successfully market our services in western Canada and the U.S.; an increased focus on ESG, sustainability and environmental considerations in the oil and gas industry; the impacts of climate-change on the Corporation's business; the current business environment remaining substantially unchanged; present and anticipated programs and expansion plans of other organizations operating in the energy service industry resulting in an increased demand for the Corporation's and our subsidiaries' services; future acquisition and maintenance costs; the Corporation's ability to achieve its ESG and sustainability targets and commitments; and other risks and uncertainties described in the Corporation's annual information form for the year ended December 31, 2021 and from time to time in filings made by SECURE with securities regulatory authorities.
Forward-looking statements involve significant known and unknown risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether such results will be achieved. Readers are cautioned not to place undue reliance on these statements as a number of factors could cause actual results to differ materially from the results discussed in these forward-looking statements, including but not limited to: general global financial conditions, including general economic conditions in Canada and the U.S.; the effect of the COVID-19 pandemic (including its variants) and geopolitical events and governmental responses thereto on economic conditions, commodity prices and the Corporation's business and operations; changes in the level of capital expenditures made by oil and natural gas producers and the resultant effect on demand for oilfield services during drilling and completion of oil and natural gas wells; volatility in market prices for oil and natural gas and the effect of this volatility on the demand for oilfield services generally; a transition to alternative energy sources; the Corporation's inability to retain customers; risks inherent in the energy services industry, including physical climate-related impacts; the Corporation's ability to generate sufficient cash flow from operations to meet our current and future obligations; the seasonal nature of the oil and gas industry; increases in debt service charges including changes in the interest rates charged under the Corporation's current and future debt agreements; inflation and supply chain disruptions; the Corporation's ability to access external sources of debt and equity capital and insurance; disruptions to our operations resulting from events out of our control; the timing and amount of stimulus packages and government grants relating to site rehabilitation programs; the cost of compliance with and changes in legislation and the regulatory and taxation environment, including uncertainties with respect to implementing binding targets for reductions of emissions and the regulation of hydraulic fracturing services and services relating to the transportation of dangerous goods; uncertainties in weather and temperature affecting the duration of the oilfield service periods and the activities that can be completed; competition; impairment losses on physical assets; sourcing, pricing and availability of raw materials, consumables, component parts, equipment, suppliers, facilities, and skilled management, technical and field personnel; supply chain disruption; the Corporation's ability to effectively complete acquisition and divestiture transactions on acceptable terms or at all; a failure to realize the benefits of the Transaction and risks related to the associated business integration; the inaccuracy of pro forma information prepared in connection with the Transaction; risks related to a new business mix and significant shareholder; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations, including those associated with the Transaction; the Corporation's ability to integrate technological advances and match advances of our competition; credit, commodity price and foreign currency risk to which the Corporation is exposed in the conduct of our business; compliance with the restrictive covenants in the Corporation's current and future debt agreements; the Corporation's or our customers' ability to perform their obligations under long-term contracts; misalignment with our partners and the operation of jointly owned assets; the Corporation's ability to source products and services on acceptable terms or at all; the Corporation's ability to retain key or qualified personnel; uncertainty relating to trade relations and associated supply disruptions; the effect of changes in government and actions taken by governments in jurisdictions in which the Corporation operates, including in the U.S.; the effect of climate change activism on our operations and ability to access capital and insurance; exposure of the Corporation's information technology systems to external threats and the effects of any unauthorized access to such system and potential disclosure of confidential information; the Corporation's ability to bid on new contracts and renew existing contracts; potential closure and post-closure costs associated with landfills operated by the Corporation; the Corporation's ability to protect our proprietary technology and our intellectual property rights; legal proceedings and regulatory actions to which the Corporation may become subject, including in connection with the review of the Transaction under the Competition Act and any claims for infringement of a third parties' intellectual property rights; the Corporation's ability to meet its ESG targets or commitments and the costs associated therewith; claims by, and consultation with, Indigenous Peoples in connection with project approval; disclosure controls and internal controls over financial reporting; and those risk factors identified in the Corporation's annual information form for the year ended December 31, 2021 and from time to time in filings made by the Corporation with securities regulatory authorities.
Although forward-looking statements contained in this press release are based upon what the Corporation believes are reasonable assumptions, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements in this press release are expressly qualified by this cautionary statement. Unless otherwise required by applicable securities laws, SECURE does not intend, or assume any obligation, to update these forward-looking statements.
SECURE is a publicly traded energy infrastructure and environmental business listed on the Toronto Stock Exchange ("TSX"). SECURE provides industry leading midstream infrastructure and environmental and fluid management to predominantly upstream oil and natural gas companies operating in western Canada and certain regions in the U.S. SECURE's Midstream Infrastructure business segment includes a network of midstream processing and storage facilities, crude oil and water pipelines, and crude by rail terminals located throughout key resource plays in western Canada, North Dakota and Oklahoma. SECURE's midstream infrastructure operations generate cash flows from oil production processing and disposal, produced water disposal, and crude oil storage, logistics, and marketing. SECURE's Environmental and Fluid Management business segment includes a network of industrial landfills, hazardous and non-hazardous waste management and disposal, onsite abandonment, environmental solutions for site remediation and reclamation, bio-remediation and technologies, waste treatment & recycling, emergency response, rail services, metal recycling services, as well as fluid management for drilling, completion and production activities.
TSX Symbol: SES
SOURCE SECURE Energy Services Inc.