In the third quarter of 2015, Welltec® revenues declined to USD 57 million. The development reflects the prolonged industry downturn as operators continue to adjust their operations in response to the low oil price environment and continued global oversupply of oil, but also currency headwinds arising from the USD appreciation compared to the same period last year.
EBITDA reduced accordingly to USD 22 million with an EBITDAmargin of 39% underpinned by further cost reduction initiatives completed during the third quarter. Furthermore, increased focus on automation and in-sourcing within manufacturing and engineering continue to generate significant cost savings and improve the internal supply chain and global delivery infrastructure.
Net cash flow was lower than previous quarters due to lower operating cash flow and the semi-annual interest payment in July, partly offset by lower capex.
Michael Krabbe, Chief Financial Officer,
Cell: +45 3034 3000
Simon Stadil, Director, Treasury and Investor Relations
Cell: +45 5213 8944
As industry fundamentals continued to deteriorate in the third quarter, Welltec® is revisiting the full year revenue guidance to USD 240-245 million and a full year EBITDA-margin around 39%.
Jørgen Hallundbæk, CEO: “The third quarter was yet another difficult quarter as the industry was impacted by volatile oil prices, low rig counts, reduced budget etc. Furthermore, it’s evident that operators are struggling to generate cash flow at current oil price levels due to historical capex commitments, changing activity levels and restrictive dividend policies.
Putting things in perspective, even if the underlying oil price fundamentals would improve near term, current expectations are not that of an immediate recovery. Thus consensus is clear; production optimization of existing assets is the cheapest and fastest way to improving cash flows and returns in a low oil price environment, and ultimately building sustainable businesses.
This is what Welltec is all about!”
Investor conference call
Welltec® will discuss its results during an investor conference call today at 5 pm CET. An accompanying slide presentation is available on the “Investor” section of Welltec’s website at www.welltec.com under the subheading “Download Center”. The conference call can be accessed by dialing in a few minutes before the 5 pm CET start and informing the operator that you are dialing in for Welltec’s investor conference call, ID 7081740.
Conference Call Access Numbers:
Denmark: +45 3271 1658
UK: +44 (0)20 3427 1918
US: +1 212 444 0481
The call will be webcast simultaneously and available online following today’s live transmission.
Welltec® is a leading provider of intervention and completion solutions to the oil and gas industry. Our pioneering technology challenges conventions to increase recovery in a safer and more sustainable way, enabling operators to optimize the management and development of their assets throughout the life cycle.
We address the factors that maximize value creation, disruptively innovating to increase reservoir contact over an extended life cycle, in a fraction of the time, energy and logistical effort of the conventional alternatives. The effect is one of increased net present value through higher returns and reduced risks. Our Flex-Well® approach serves to maximize production and increase total recovery while lowering operational and total development costs. Our game-changing solutions extend the productive life of wells and enable clients to pursue fields that would not otherwise be economically viable.
Our unique approach provides for safer operations, removing considerable infrastructure costs and operational effort. Our lightweight technology lowers the complexity and hazard potential of operations, reducing the risk to personnel and allowing smaller work crews, fewer lifts and lighter loads. We reduce dependency on rigs, significantly reducing the industry’s energy consumption and carbon emissions. The ability to operate in extended reach and horizontal wells allows operators to drill multiple wells from the same topside location, thereby further reducing the environmental footprint.
Our technology created the market for robotic well intervention and continued market leadership is the result of constant innovation, rigorous IP protection and a commitment to completely addressing our clients’ challenges. Our completion concept represents the next paradigm shift for the industry, with a simple yet revolutionary approach that allows operators to tap into the full value of their reservoirs at a much lower level of invested capital and with an unprecedented degree of flexibility. As an example, the simple application of expandable metallic well annual barriers (WAB®) overcomes the traditional shortfalls of cementing to enable a lower completion as minimal or intricate as the reservoir characterization itself. Fields can be developed and maintained from fewer topside locations and brought on line faster, for longer.
In an industry characterized by maturing fields and increasing depletion, the premium attached to technology which aids in reversing these trends will continue to gain momentum. Our technology safeguards people and returns on investment, enabling clients to unlock more value from their assets and to address reservoir complexities and uncertainties with a greater number of options.
Any statement in this announcement that is not a historical fact is a “forward-looking statement”. Such statements may include opinions and expectations regarding Welltec® and its future business, management’s confidence and strategies as well as details of management’s expectations of new and existing programs, technology and market conditions. These forward-looking statements rely on assumptions concerning future events that are subject to a number of risks and uncertainties, many of which are outside Welltec’s control, and which could cause Welltec’s actual results to be materially different from these forward-looking statements. While Welltec® believes that its assumptions concerning future events are reasonable; there are inherent difficulties in predicting certain important factors that could impact the future performance or results of Welltec’s business. Accordingly, such statements should not be regarded as representations as to whether such anticipated events will occur nor that expected objectives will be achieved. Welltec® expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise.