CALGARY, Alberta, April 02, 2020 (GLOBE NEWSWIRE) — STEP Energy Services Ltd. (the “Company” or “STEP”) is providing an update on actions taken in response to the COVID-19 pandemic (“COVID-19”), and current market conditions. The following press release should be read in conjunction with the management’s discussion and analysis (“MD&A”) and audited consolidated financial statements as at and for the year ended December 31, 2019. The above documents are available on STEP’s website at www.stepenergyservices.com or on SEDAR at www.sedar.com.
STEP is responding to the rapidly deteriorating business conditions brought about by the combined impact of COVID-19 and the oil price war among certain OPEC+ members. These global events have caused a material decline in commodity prices globally and are expected to result in reductions in planned spending by our clients.
STEP places the health and safety of our employees and the clients and communities we serve among our highest priorities. As a result, in response to COVID-19, we have implemented our Emergency Response Plan which included:
- enhancing communication with our employees and our clients;
- implementing enhanced personal hygiene, increase social distancing and self-quarantine practices;
- banning non-essential travel;
- further measures to ensure all employees are fit-for-duty; and
- implementing remote working plans.
STEP will continue to monitor the situation and ensure we are adopting guidance provided by government and health authorities.
The combined impact of COVID-19 and the OPEC+ price war is expected to impact client spending and demand for our services. In anticipation of these factors, STEP has taken the following measures:
- reduced 2020 planned capital program by 50% to $ 23.5 million;
- reduced general and administrative and operations overhead by approximately 50% through a combination of headcount reductions and salary rollback for remaining staff of between 5 and 10%;
- reduced manned equipment by a similar percentage. STEP will continue to monitor client programs and will make further adjustments as more information becomes available;
- reduced Board compensation by 20%;
- eliminated all non-essential travel, entertaining and other discretionary spending.
The business environment continues to remain fluid as a result of these major disruptions. STEP will continue to monitor both the expected impact and duration of these factors on our business and will continue to adjust our business accordingly.
FORWARD‐LOOKING INFORMATION & STATEMENTS
Certain statements contained in this release constitute “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws (collectively, “forward-looking statements”). These statements relate to the expectations of management about future events, results of operations and STEP’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. While STEP believes the expectations reflected in the forward-looking statements included in this release are reasonable, such statements are not guarantees of future performance or outcomes and may prove to be incorrect and should not be unduly relied upon.
In particular, but without limitation, this release contains forward-looking statements pertaining to: 2020 operation outlook; including potential deferral or cancellation of completion programs; client capital budgets and market conditions; supply and demand for oilfield services and industry activity levels; OPEC production, price competition, related market uncertainty, and its effect on commodity prices; the Company’s anticipated business strategies; expected completions activity; pricing received for the Company’s services; the Company’s capital program in 2020; expected profitability; the Company’s expected performance in 2020; planned deployment and staffing levels for the Company’s equipment; monitoring of industry demand, and on the effect of the COVID-19 outbreak and OPEC related market uncertainty on client work programs and activity in 2020.
The forward-looking information and statements contained in this release reflect several material factors and expectations and assumptions of the Company including, without limitation: 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; pricing of the Company’s services; the Company’s ability to market successfully to current and new clients; the Company’s ability to utilize its equipment; the Company’s ability to collect on trade and other receivables; the Company’s ability to obtain qualified staff and equipment in a timely and cost effective manner; levels of deployable equipment; future capital expenditures to be made by the Company; future funding sources for the Company’s capital program; the Company’s future debt levels; the impact of competition on the Company; the Company’s ability to obtain financing on acceptable terms; the amount of available equipment in the marketplace; and client activity levels. 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 release: effect of the COVID-10 outbreak on the Company’s and its clients’ ability to conduct business; 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.
Any financial outlook or future orientated financial information contained in this release regarding prospective financial performance, financial position or cash flows is based on the assumptions about future events, including economic conditions and proposed courses of action based on management’s assessment of the relevant information that is currently available. Projected operational information, including the Company’s capital program, contains forward looking information and is based on a number of material assumptions and factors, as are set out above. These projections may also be considered to contain future oriented financial information or a financial outlook. The actual results of the Company’s operations will likely vary from the amounts set forth in these projections and such variations may be material. Readers are cautioned that any such financial outlook and future oriented financial information contains herein should not be used for purposes other than those for which it is disclosed herein.
The forward‐looking information and statements contained in this release speak only as of the date of the document, and none of the Company or its subsidiaries assumes any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws. The reader is cautioned not to place undue reliance on forward‐looking information.
STEP is an oilfield service company that provides stand-alone and fully integrated fracturing, coiled tubing and wireline solutions. Our combination of modern equipment along with our commitment to safety and quality execution has differentiated STEP in plays where wells are deeper, have longer laterals and higher pressures.
Founded in 2011 as a specialized deep capacity coiled tubing company, STEP now provides an integrated solution for deep capacity coiled tubing services and fracturing to exploration and production (“E&P”) companies in Canada and the U.S. Our Canadian integrated services are focused in the Western Canadian Sedimentary Basin (“WCSB”), while in the U.S., our fracturing and coiled tubing services are focused in the Permian and Eagle Ford in Texas, and the Haynesville in Louisiana.
Our four core values; Safety, Trust, Execution and Possibilities inspire our team of professionals to provide differentiated levels of service, with a goal of flawless execution and an unwavering focus on safety.
|For more information please contact:|
President & Chief Executive Officer
Executive Vice President & Chief Financial Officer