Expro Takes $344.5 Mln Non-Cash Charge in FY15
International oilfield services company, Expro, has posted headline revenue of $1.3bn for the fiscal year ending March 31, 2015.
The headline revenues were down 5.6%, and EBITDA, down 15.1% compared the fiscal year ending March 31, 2014.
However, Asia, Middle East and North Africa (AMENA) achieved revenue growth, up 13.3% to $415.6m, compared to the prior fiscal year. This performance was led by the Middle East and North Africa, following strong results in Saudi Arabia and Algeria, on the back of contracts awarded at the end of the last fiscal year. The company also saw strong performance in Asia, with new contracts in Australia and Brunei. Revenue earned by our Production Testers International (PTI) business was up on higher sales from early production facilities equipment.
North and Latin America (NLA) revenue was up 0.8% to $327m compared to the prior fiscal year as a result of sustained performance in North America. This was partly off-set by reduced revenue in Brazil following lower well test activity, and decreased overall exploration and appraisal activity.
Europe Commonwealth of Independent States (Europe CIS) revenue was down 14.8% to $301.2m, compared to the prior fiscal year, primarily as result of decreased well test and subsea activity in Norway and the UK, where customers have been tightly managing their costs throughout the year. This was offset by growth in CIS, driven by Kazakhstan and the start-up of a new subsea project in Azerbaijan.
Sub-Saharan Africa revenue was down 7.5% to $262.6m compared to the prior fiscal year. This was driven by Angola but offset by lower activity in the Gulf of Guinea and East Africa as a result of lower exploration and appraisal activity.
Goodwill impairment and statutory result
As a result of the current business environment, Expro booked a non-cash accounting charge of $344.5m to record an impairment against its goodwill and intangible assets. The company also incurred other non-cash charges of $215.3m and exceptional costs of $24.6m, leaving a statutory operating loss of $257.7m.
Net finance costs closed at $291m and included $80m of one-time costs related to the refinancing of senior secured notes during the year.
Significant equity injection and debt repayment
Expro’s principal shareholders have fully underwritten a rights issue to raise between $300m and $350m of new equity. At the same time the company reached agreement with its mezzanine lenders to amend the terms and extend the maturity date of a portion of Expro’s mezzanine loan facility. The new equity will be used to repay between $250m and $300m of our mezzanine loan facility; and to provide an additional $50m of liquidity to the company. The final amount to be raised under the rights issue will depend on the proportion of mezzanine lenders who elect to extend the maturity of their commitments under the mezzanine loan facility, thereby being paid down in part.
Charles Woodburn, CEO said: “While it is undoubtedly a challenging time for the energy sector, Expro has responded proactively by partnering with customers to provide innovative solutions that help to manage costs.
“This includes a strong focus on engineered solutions that reduce field development and operating overheads, and enhance production. These solutions come from the subsurface expertise that Expro has built in our core products, services and technologies.
“Despite the current downturn, the subsea industry continues to be an area of significant interest and continued growth. Opportunities in deep and ultra-deepwater offshore fields do exist and in many cases, these fields remain economically viable to develop and produce even at current oil prices.
“A significant number of new wells will be required to make up for the decline in production from existing fields and in the longer term, projected increase in global oil demand.
“We remain positive about the future outlook of the industry, which is supported by the additional capital investment from our owners. This clearly reflects the ongoing confidence they have in the strength of our operating model.”