CALGARY, Dec. 4, 2014 /CNW/ - Secure Energy Services Inc. (TSX:SES) ("Secure" or the "Corporation") is pleased to announce its Board of Directors has approved an initial 2015 capital budget of $225 million. Secure's disciplined approach to building a strong yet flexible balance sheet will allow the Corporation to continue to execute on the Corporation's strategy to: design, construct and expand facilities in key under-serviced and capacity constrained markets in both Canada and the United States; expand complementary and recycling services at facilities, and to provide full cycle environmental and midstream solutions in the energy services market.
The Corporation intends to fund the 2015 capital budget with cash flows from operations and the recently announced amended and restated $700 million syndicated credit facility which can be expanded to $800 million through the exercise of an additional $100 million accordion feature.
The $225 million capital budget consists of new facilities, expansions and equipment in strategic growth areas in both Canada and the United States.
The Corporation expects to invest the $225 million capital budget as follows:
- Processing Recovery and Disposal ("PRD") division capital budget of $200 million allocated as follows:
- Growth capital of $150 million consisting of:
- Two stand-alone water disposal ("SWD") facilities;
- Two Full Service Terminal ("FST") facilities;
- Construction of one Landfill;
- Water and oil recycling initiatives and long lead items;
- Expansion capital of $42 million relating to additional truck unload stations, tanks, treaters, pumps and disposal wells; and
- Sustaining capital of $8 million for normal course maintenance operations.
- Growth capital of $150 million consisting of:
- Drilling Services ("DS") division capital budget of $12 million consisting of rental and lab equipment; and
- Onsite Services ("OS") division capital budget of $13 million allocated to heavy duty equipment, and rental equipment to complement the existing assets of the Integrated Fluids Solutions service line.
The Corporation's PRD division is a capital intensive business requiring upfront lead time to obtain the appropriate regulatory approvals, order the necessary long lead items and construct the facilities. Given the approval and construction timelines for these types of facilities, it is expected that the majority of the above capital program for 2015 will not have any cash flow impact until 2016. The Corporation's capital investments made in the short-term will deliver sustained and continued long-term growth of the Corporation effectively increasing free cashflows allowing the Corporation to deliver increased returns to shareholders in the form of sustainable dividends and continued investment in high return, organic projects.
Update on 2014 capital budget
The Corporation anticipates capital expenditures (excluding acquisitions) of approximately $275 million for the year ended December 31, 2014, and is in-line with previously announced budgeted amounts and expectations. The carryover capital for 2014 projects is not expected to be significant as upfront amounts have been invested to complete these projects in early 2015, with the exception of Kindersley full service rail which is expected to be complete in the second quarter.
About Secure Energy Services Inc.
SECURE is a TSX publicly traded energy services company that provides safe and environmentally responsible fluids and solids solutions to the oil and gas industry.
The Corporation operates three divisions:
Processing, Recovery and Disposal Division ("PRD"): The PRD division owns and operates midstream infrastructure that provides processing, storing, shipping and marketing of crude oil, oilfield waste disposal and recycling. Specifically these services are clean oil terminalling and rail transloading, custom treating of crude oil, crude oil marketing, produced and waste water disposal, oilfield waste processing, landfill disposal, and oil purchase/resale service. Secure currently operates a network of facilities throughout western Canada and in North Dakota, providing these services at its full service terminals, landfills, stand-alone water disposal facilities, and rail transloading facilities.
Drilling Services Division ("DS"): The DS division provides equipment and chemicals for building, maintaining, processing and recycling of drilling and completion fluids. The drilling fluids service line comprises the majority of the revenue for the division which includes the design and implementation of drilling fluid systems for producers drilling for oil, bitumen and natural gas. The DS division focuses on providing products and systems that are designed for more complex wells, such as medium to deep wells, horizontal wells and horizontal wells drilled into the oil sands.
On Site Division ("OS"): The operations of the OS division include environmental services which provide pre-drilling assessment planning, drilling waste management, remediation and reclamation assessment services, laboratory services, and "CleanSite" waste container services; integrated fluid solutions which include water management, recycling, pumping and storage solutions; and projects which include pipeline integrity (inspection, excavation, repair, replacement and rehabilitation); demolition and decommissioning and reclamation and remediation of former wellsites, facilities, commercial and industrial properties.
Certain statements contained in this document 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 document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", and similar expressions, as they relate to Secure, or its management, are intended to identify forward-looking statements. Such statements reflect the current views of Secure with respect to future events and operating performance and speak only as of the date of this document. In particular, this document contains forward-looking statements pertaining to: the amount of the Corporation's 2015 capital budget, the source of funding the 2015 capital budget, the allocation of the 2015 capital budget among the PRD, DS and OS divisions, the intended use thereof, and the expected date of completion of the Kindersley full service rail facility.
Forward-looking statements concerning expected operating and economic conditions are based upon prior year results as well as the assumption that increases in market activity and growth will be consistent with industry activity in Canada and the United States, and growth levels in similar phases of previous economic cycles. Forward-looking statements concerning the availability of funding for future operations are based upon the assumption that the sources of funding which the Corporation has relied upon in the past will continue to be available to the Corporation on terms favorable to the
Corporation and that future economic and operating conditions will not limit the Corporation's access to debt and equity markets. Forward-looking statements concerning the relative future competitive position of the Corporation are based upon the assumption that economic and operating conditions, including commodity prices, crude oil and natural gas storage levels, interest rates, the regulatory framework regarding oil and natural gas royalties, environmental regulatory matters, the ability of the Corporation and its subsidiaries' to successfully market their services and drilling and production activity in North America will lead to sufficient demand for the Corporation's services and its subsidiaries' services including demand for oilfield services for drilling and completion of oil and natural gas wells, that the current business environment will remain substantially unchanged, and that present and anticipated programs and expansion plans of other organizations operating in the energy service industry will result in increased demand for the Corporation's services and its subsidiary's services.
Forward-looking statements concerning the nature and timing of growth are based on past factors affecting the growth of the Corporation, past sources of growth and expectations relating to future economic and operating conditions. Forward- looking statements in respect of the costs anticipated to be associated with the acquisition and maintenance of equipment and property are based upon assumptions that future acquisition and maintenance costs will not significantly increase from past acquisition and maintenance costs.
Forward-looking statements involve significant 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 those factors referred to and under the heading "Business Risks" and under the heading "Risk Factors" in the Corporation's annual information form ("AIF") for the year ended December 31, 2013 and the Corporation's Three and Nine months ended September 30, 2014 Management's Discussion and Analysis. 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 law, Secure does not intend, or assume any obligation, to update these forward-looking statements.