- Ensign Energy Services (TSX:ESI) reported a C$71.6 million net loss in the last quarter of 2019
- Net profit in 2018 was $154.8 million, representing a $226.4 million reduction for the company
- The company is a multinational oil fields services firm
- The loss equated to 44 cents per diluted share
- Ensign Energy (ESI) was down 37 per cent, with shares trading at $0.96 and a market cap of $155 million
Ensign Energy Services’ (TSX:ESI) share price have received a hammer blow today, after the company reported a big loss in the last quarter of 2019.
This was despite revenue growth of C$29.7 million that quarter, up from 346.1 million in 2018 to $375.8 million in 2019.
For the full year, Ensign posted a loss of $162.9 million or $1.02 per share.
In 2018, they posted a profit of $58.7 million or 37 cents per diluted share.
This is due to some significant write-downs of equipment, most notably their drilling and well servicing rigs.
In Canada, the company moved five under-utilised drilling rigs to the reserve fleet, decommissioned 18 drilling rigs and ten well-servicing rigs, and transferred one drilling rig to the US.
The company also moved one new drilling rig to the international arm of the business and moved two more under-utilised international drilling rigs into the reserve fleet.
The significant amount of equipment write-down and weak oil and gas prices have led to the company’s dramatic swing in financial fortunes.
This news comes on a particularly bad day for all Canadian oil and gas companies.
The Brent price has fallen by almost a third in the space of a day, the largest single drop since the Gulf War in 1991.
But it’s not all doom and gloom for Ensign. Total revenue for the year amounted to $1.59 billion, up from $1.15 billion in 2018. This represented a 38 per cent increase from 2018.
Ensign also purchased an 89.3 per cent stake in Trinidad Drilling Ltd. in the fourth quarter of 2018 and the remaining 10.7 per cent in the first quarter of 2019.
This may have left the company overextended financially, but it did lead to considerable new production facilities.
Ensign Energy will now need to demonstrate it has the capital to weather the storm in the oil and gas market.
The company has a credit limit of $950 million, of which it still has $156.9 million available should it need to take it.
The company restructured debt in 2019, with a senior notes offering paying down previous debt and pushing repayment dates out until 2021.
Ensign Energy (ESI) is down 37 per cent, with shares trading for $0.96 at 12:26pm EST.
