CALGARY, ALBERTA--(Marketwired - Jul 31, 2014) - CanElson Drilling Inc. (TSX:CDI) today announces the financial results for the second quarter compared to a year earlier and declares a second quarter dividend of $0.06 per share.
SECOND QUARTER 2014 SUMMARY (compared with a year earlier)
- Services revenue of $61.9 million, up 65% from $37.5 million
- Adjusted EBITDA of $16.3 million, up 81% from $9.0 million, excluding Adjusted EBITDA from our equity investment joint venture DCM of $2.7 million (2013: $0.8 million)
- Income attributable to shareholders of the Corporation $5.5 million, up 196% from $1.9 million
- EPS (diluted) of $0.06, up 200% from $0.02
- Weighted average diluted shares outstanding 93.9 million, up 20% from 78.3 million
- Declared second quarter dividend of $0.06 per share, same as the prior year
- Canadian utilization of 36% was up 177% year-over-year, and exceeded the industry average by 1.38 times.
- US utilization of 75% was down 5% year-over-year, as a result of three drilling rig re-certifications and adverse weather conditions in North Dakota.
SIX MONTHS ENDED 2014 SUMMARY (compared with a year earlier)
- Services revenue of $159.0 million, up 45% from $109.8 million
- Adjusted EBITDA $48.1 million, up 32% from $36.5 million (excludes Adjusted EBITDA from our equity investment joint venture DCM of $5.6 million (2013: $1.0 million)
- Income attributable to shareholders of the Corporation $20.6 million, up 36% from $15.2 million
- EPS (diluted) of $0.22, up 10% from $0.20
- Weighted average diluted shares outstanding 93.8 million, up 21% from 77.7 million
- Canadian utilization of 57% was up 33% year-over-year, and exceeded the industry average by 1.33 times.
- US utilization of 79% was down 4% year-over-year, as a result of reduced activity in the second quarter (see above).
Second quarter Canadian utilization (spud to rig release days) of 36% was 1.38 times above the industry average utilization level of 25% and 2.32 times above our Q2 2013 utilization level of 13%. We credit our modern drilling fleet and our continued focus on working with our partners to find operating efficiencies as significant contributors to our outperformance in this operating region. In the US, utilization of 75% was down 5% year-over-year, primarily as a result of three drilling rig re-certifications and adverse weather conditions in North Dakota where wet conditions limited our ability to move from well to well. In Mexico, DCM continued to generate strong results, despite redeploying one drilling rig and one service rig in the quarter, driven by the operating efficiencies gained under our performance contracts.
For the first six months ended June 30, 2014, Canadian utilization (spud to rig release days) was 57%, 1.33 times above the average industry utilization level of 43%. Management is encouraged by current activity levels, with 75% of our drilling rig fleet currently working at the time of this press release, compared to 61% in 2013 and with the remaining idle rigs expected to start mid third quarter. Furthermore, 93% of the Canadian drilling rig fleet is committed through the winter drilling season and 43% of the fleet is under long-term contract at the time of this press release.
US utilization of 79% was down 4% year-over-year, due to the aforementioned three drilling rig re-certifications and adverse weather conditions in North Dakota. At the time of this press release 100% of the US drilling rig fleet is working and committed to customers, with 37% under long-term contract. In Mexico, DCM has generated more EBITDA in the first six months of the year than it did in all of 2013, despite significant downtime for one drilling rig and one service rig which were idle awaiting mobilization to the Miquetla Basin. DCM expects more clarity on the timing of resumption of drilling in the Ebano block in Q4. Therefore, the Corporation expects the remaining drilling operations to consist of one drilling rig operating in the Miquetla block during Q3.
The Corporation was able to generate strong three and six months utilization rates relative to the comparative periods and increased revenue and Adjusted EBITDA despite a decrease in Adjusted EBITDA margin percentage. The year- over-year reduction in Adjusted EBITDA margin percentage was primarily the result of a) lower average base revenue rates in Canada, b) the increase in the strength of the US dollar compared to the Canadian dollar; c) inflation increases in direct expenses primarily related to labour costs, and (d) an increase in drilling times for footage wells in Texas, mainly due to regulatory changes dictating an extra casing string in each new well, which introduces a higher revenue level per well, but requires more days that typically produce lower margins than footage performance rates. Earnings per share increased by 10% primarily due to strong second quarter activity levels, partially offset by an increase in the number of shares outstanding as a result of the equity financings in 2013.
"We have reasons to be optimistic across all of our operating geographies, and believe our track record of working with our customers to find efficiencies resulting in reduced well costs will result in continued opportunities for growth." stated Randy Hawkings, President and CEO of CanElson.
Fleet deployment (by rigs) | ||||||||
Canada | Texas | North Dakota | Mexico Drilling | Mexico Service | Total | |||
At June 30, 2014 | 28 (net 26.5) | 13 (net 11.5) | 6 (net 6) | 2 (net 1) | 2 (net 1) | 51 (net 46) | ||
At December 31, 2013 |
29 (net 27.5) |
12 (net 10.5) |
5 (net 5) |
2 (net 1) |
2 (net 1) |
50 (net 45) | ||
Change % | (3)% | 8% | 20% | Unchanged | Unchanged | 2% | ||
Gross fleet deployment (by %) | ||||||||
Canada | Texas | North Dakota | Mexico Drilling | Mexico Service | Total | |||
At June 30, 2014 | 55% | 25% | 12% | 4% | 4% | 100% | ||
At December 31, 2013 | 58% | 24% | 10% | 4% | 4% | 100% | ||
OUTLOOK
Drilling Services
During the first six months of 2014, CanElson generated higher consolidated activity levels than the comparative period, due to relatively strong seasonal activity in Canada and growth in the drilling rig fleet. We believe that our strategy to be measurably more efficient in order to reduce well costs for our customers has uniquely positioned CanElson to sustain relatively strong profitably during the full drilling industry cycle. Specifically, rising horizontal well costs and the inherent instability of commodity prices has created an opportunity in the contract drilling market to gain market share through demonstrated efficiency in the drilling process and cost saving programs. This reduction in drilling costs does not necessarily correspond to a lower revenue rate for the drilling contractor. It instead focuses on the contractor's ability to minimize non-productive time, to maximize performance while drilling, and to flexibly integrate related equipment, services and contract types into the drilling solution.
CanElson's growth opportunities historically have been sourced through existing customers and referrals, rather than through a competitive bid process, which we credit to our performance combined with our ability to identify cost saving opportunities. We currently have clear customer interest for new build drilling rigs across several operating geographies, and have the financial flexibility to pursue meaningful growth. Going forward, we will continue to pursue a disciplined growth strategy, which contemplates obtaining contracts which meet our investment criteria, and which does not exceed our ability to maintain the quality and performance that our customers have grown to expect.
Our primary challenge continues to be sourcing skilled personnel to crew our growing drilling rig fleet. To this end, our goal is to be an employer of choice, which includes a continued focus on safety, an employee stock participation program, and a platform for growth that fosters career advancement opportunities. As a result, we continue to invest in personnel and customer relationships that allow us to assist in the drilling optimization process.
Canada
During the second quarter of 2014, base drilling rig rate pricing levels remained flat in contrast to typical historical rate declines for the drilling industry during the second quarter. The relative strength in 2014 second quarter pricing combined with continued strong demand for drilling rigs capable of efficiently drilling horizontal wells could result in a positive Canadian pricing environment through the upcoming winter drilling season.
United States - Texas
CanElson has 25% of its rig fleet focused on oil directed drilling in the Permian Basin in Texas. Our success to date in this area has largely been the result of our operating efficiencies, coupled with performance-based contract options that deliver reduced customer well costs. The shift to horizontal drilling in the Permian Basin has allowed CanElson to further differentiate itself with the tele-double service offering. Over the last 18 months, the number of our rigs drilling horizontal wells has expanded to five from one. CanElson expects to see further expansion in the Permian Basin of both horizontal and vertical drilling. We believe the continued strong activity levels in the Permian Basin support our expectation to achieve utilization levels in 2014 consistent with 2013.
United States - North Dakota
In the second quarter, CanElson re-deployed one additional drilling rig from Alberta to North Dakota to assist an existing customer. We believe that growth in this area is due to our track record of operating efficiency and resulting reduced drilling times.
Mexico
The rate of wells drilled in the Ebano block by DCM significantly outpaced the budgeted number of wells and the associated production from these wells exceeded the regional infrastructure capacity to handle this production. As a result, our customer released the DCM drilling rig operating in the Ebano block subsequent to the end of the second quarter. DCM expects more clarity on the timing of resumption of drilling in the Ebano block in Q4. The Corporation expects drilling operations for one drilling rig to commence in the Miquetla block during Q3.
Going forward we believe that our historical performance and alignment with an experienced and strong local partner (Grupo Diavaz, with 40 years of experience serving PEMEX) positions DCM to expand its range of services if Mexico's current energy sector reform results in increased demand for drilling rigs.
Rig Assembly
Based on existing customer contracts and those being finalized, CanElson's 2014 investment and deployment of new rig builds is expected to be as follows:
- Rig #44 (tele-double): Delivered in January 2014 under a long-term contract.
- Rig #45 (tele-double): Delivered in April 2014 under a long-term contract.
- Rig #46 (tele-double): Expected to commence operations in August under a long-term contract.
- Rig #103 (AC triple): Expected to be delivered in Q4 2014 with contract pending.
- Rig #49 (AC tele-double): Expected to be delivered in Q4 2014 with contract pending.
- Rig #104 (AC triple): Expected to be delivered in Q1 2015 with contract pending.
CanGas Solutions Inc.
For 2014 we expect to continue investing in our fleet of truck-hauled CNG delivery trailers and compressors. For more information about our investment plan see the Capital Availability and Capital Program below.
Capital Availability and Capital Program
CanElson has approximately $83 million of available capacity on existing credit facilities to fund a portion of the 2014 capital program and take advantage of strategic opportunities. Funds flow continues to be strong and fully supports our current quarterly dividend rate of $0.06 per share as well as a majority of the expected 2014 capital investment program, with the remaining amount being funded through existing credit facilities.
2014 Capital Program | ||||||||||
Drilling Services | ||||||||||
Capital Expenditures |
Spare equipment facility & overhead | Upgrades & maintenance | Expansion | CanGas | Total | |||||
Capital expenditures for the six months ended June 30, 2014 | $ | 2.2 | $ | 15.3 | $ | 35.3 | $ | 2.1 | $ | 54.9 |
Anticipated cost to complete 2014 capital expenditures | 4.1 | 13.4 | 36.5 | 0.2 | 54.2 | |||||
Total expected 2014 capital expenditures | $ | 6.3 | $ | 28.7 | $ | 71.8 | $ | 2.3 | $ | 109.1 |
Previously anticipated 2014 capital expenditures (i) | $ | 6.2 | $ | 25.9 | $ | 68.6 | $ | 2.3 | $ | 103.0 |
Variance from previously anticipated 2014 capital expenditures | $ | 0.1 | $ | 2.8 | $ | 3.2 | $ | - | $ | 6.1 |
(i) Refer to our MD&A dated May 14, 2014 |
2014 expansion capital is for the completion of additional new drilling rig builds (see Rig Assembly in the Outlook). Year to date, CanElson has spent $54.9 million, including $1.0 million in capitalized interest. Total expected capital expenditures for 2014 have increased by $6.1 million to $109.1 million, primarily due to additional components on selected new drilling rigs and various other critical maintenance items and rig equipment upgrades.
Primary Corporate Objectives
CanElson's primary objective is to maintain and strengthen its above industry average utilization by consistently providing operational excellence and drilling efficiencies to its customers. With this focus, our aim is to be well positioned to secure customer commitments and capitalize on new opportunities. Subject to securing suitable customer commitments, we intend to carry out the following activities to further enhance our competitive positioning:
- Continue to expand our standard tele-double fleet.
- Expand further into the AC triple drilling rig market.
- Expand our service offering in Mexico.
- Continue to form innovative long-term business relationships.
- Continue growth through strategic acquisitions.
- Provide customers with lower overall well costs.
DIVIDEND
On July 30, 2014, the Board of Directors approved a quarterly dividend of $0.06 per share to be paid on August 29, 2014 to shareholders of record at the close of business on August 20, 2014. The ex-dividend date is August 18, 2014.
FINANCIAL SUMMARY
(Tabular amounts are stated in thousands of Canadian dollars, except per share amounts and rig operating days)
For the three months ended June 30, | For the six months ended June 30, | ||||||||||
2014 | 2013 |
% change | 2014 | 2013 |
% change | ||||||
Services revenue | $ | 61,904 | $ | 37,499 | 65% | $ | 159,043 | $ | 109,776 | 45% | |
Adjusted EBITDA | $ | 16,316 | $ | 9,036 | 81% | $ | 48,077 | $ | 36,491 | 32% | |
Share of profit unconsolidated joint venture | $ | 596 | $ | 476 | 25% | $ | 2,249 | $ | 514 | 338% | |
Net income attributable to shareholders of the | |||||||||||
Corporation | $ | 5,536 | $ | 1,870 | 196% | $ | 20,638 | $ | 15,205 | 36% | |
Net income per share | |||||||||||
Basic | $ | 0.06 | $ | 0.02 | 200% | $ | 0.22 | $ | 0.20 | 10% | |
Diluted | $ | 0.06 | $ | 0.02 | 200% | $ | 0.22 | $ | 0.20 | 10% | |
Cash dividends per share | $ | 0.06 | $ | 0.06 | -% $ | 0.12 | $ | 0.12 | -% | ||
Funds flow | $ | 17,460 | $ | 9,840 | 77% | $ | 48,185 | $ | 36,691 | 31% | |
Gross Margin | $ | 22,600 | $ | 13,579 | 66% | $ | 61,083 | $ | 45,976 | 33% | |
Weighted average diluted share outstanding | $ | 93,898 | $ | 78,254 | 20% | $ | 93,812 | $ | 77,670 | 21% | |
Revenue and Operating Expenses | |||||||||
For the three months ended June 30, | For the six months ended June 30, | ||||||||
2014 | 2013 | % Change | 2014 | 2013 |
% Change | ||||
Oilfield services segment | |||||||||
Services revenue | |||||||||
Canada | $ | 25,718 | 7,430 | 246% | $ | 86,218 | 50,655 | 70 % | |
US | 36,186 | 30,069 | 20% | 72,825 | 59,121 | 23 % | |||
61,904 | 37,499 | 65% | 159,043 | 109,776 | 45 % | ||||
Other direct operating expenses | 39,304 | 23,920 | 64% | 97,960 | 63,800 | 54 % | |||
Gross margin | $ | 22,600 | 13,579 | 66% | $ | 61,083 | 45,976 | 33 % | |
Gross margin % | 37% | 36% | 38% | 42% | |||||
Administration expenses | 6,284 | 4,543 | 38% | 13,006 | 9,485 | 37 % | |||
Adjusted EBITDA | 16,316 | 9,036 | 81% | 48,077 | 36,491 | 32 % | |||
Adjusted EBITDA % | 26% | 24% | 8% | 30% | 33% | (9)% | |||
Operating days (spud to rig release) | 2,127 | 1,428 | 49% | 5,476 | 4,097 | 34 % | |||
Revenue per operating day (Canada) | 28.58 | 27.42 | 4% | 29.06 | 28.16 | 3 % | |||
Revenue per operating day (US) | 29.48 | 25.99 | 13% | 29.02 | 25.73 | 13 % | |||
Other operating expenses per day | 18.48 | 16.75 | 10% | 17.89 | 15.57 | 15 % |
CANELSON DRILLING INC. | |||||
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||||
(Unaudited, Stated in thousands of Canadian dollars) | June 30, 2014 |
December 31, 2013 | |||
ASSETS | |||||
Current assets: | |||||
Cash | $ | 9,324 | $ | 6,402 | |
Trade and other receivables | 47,569 | 65,055 | |||
Prepaid expenses and deposits | 970 | 1,693 | |||
Current income tax asset | 4,303 | 6,020 | |||
Total current assets | 62,166 | 79,170 | |||
Property and equipment | 460,197 | 422,257 | |||
Deferred tax assets | 769 | 749 | |||
Other intangible assets | 1,814 | 1,872 | |||
Investment in unconsolidated joint venture | 9,426 | 7,062 | |||
Goodwill | 35,696 | 35,696 | |||
Total assets | $ | 570,068 | $ | 546,806 | |
LIABILITIES AND EQUITY | |||||
Current liabilities: | |||||
Trade payables and accrued liabilities | $ | 24,321 | $ | 26,720 | |
Deferred revenue | 465 | 1,532 | |||
Loans and borrowings | 15,933 | 17,163 | |||
Total current liabilities | 40,719 | 45,415 | |||
Deferred revenue | 1,141 | 1,450 | |||
Loans and borrowings | 29,728 | 24,608 | |||
Deferred tax liabilities | 64,390 | 56,423 | |||
Total liabilities | 135,978 | 127,896 | |||
Equity: | |||||
Share capital | 304,742 | 301,439 | |||
Employee benefit reserve | 4,857 | 4,406 | |||
Foreign currency translation reserve | 7,994 | 8,791 | |||
Retained earnings | 90,670 | 81,110 | |||
Equity attributable to shareholders of the Corporation | 408,263 | 395,746 | |||
Equity attributable to non-controlling interest | 25,827 | 23,164 | |||
Total equity | 434,090 | 418,910 | |||
Total liabilities and equity | $ | 570,068 | $ | 546,806 |
CANELSON DRILLING INC. | |||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||
Three months ended June 30, |
Six months ended June 30, | ||||||||
(Unaudited, Stated in thousands of Canadian dollars - except per share data) | 2014 | 2013 | 2014 | 2013 | |||||
Services revenue | $ | 61,904 | $ | 37,499 | $ | 159,043 | $ | 109,776 | |
Cost of sales: | |||||||||
Other direct operating expenses | 39,304 | 23,920 | 97,960 | 63,800 | |||||
Depreciation and amortization | 5,649 | 3,905 | 14,639 | 9,519 | |||||
Stock based compensation | 200 | 118 | 398 | 261 | |||||
Total cost of sales | 45,153 | 27,943 | 112,997 | 73,580 | |||||
Total gross profit | 16,751 | 9,556 | 46,046 | 36,196 | |||||
Expenses: | |||||||||
Administration expenses | 6,284 | 4,543 | 13,006 | 9,485 | |||||
Stock based compensation | 355 | 303 | 722 | 645 | |||||
Foreign exchange loss (gain) | (564) | 249 | 364 | 553 | |||||
Total expenses | 6,075 | 5,095 | 14,092 | 10,683 | |||||
Share of unconsolidated joint venture profits | 596 | 476 | 2,249 | 514 | |||||
Income before interest and taxes | 11,272 | 4,937 | 34,203 | 26,027 | |||||
Interest expense | 108 | 427 | 304 | 944 | |||||
Income before income tax | 11,164 | 4,510 | 33,899 | 25,083 | |||||
Current tax expense (recovery) | (1,910) | (1,578) | 2,403 | 1,309 | |||||
Deferred tax expense | 6,003 | 2,851 | 7,799 | 5,624 | |||||
4,093 | 1,273 | 10,202 | 6,933 | ||||||
Net income | $ | 7,071 | $ | 3,237 | $ | 23,697 | $ | 18,150 | |
Other comprehensive income | |||||||||
Foreign currency translation differences for foreign operations | (5,858) | 4,209 | (1,308) | 6,308 | |||||
Share of unconsolidated joint venture translation differences | (190) | 193 | 115 | 384 | |||||
Total comprehensive income | $ | 1,023 | $ | 7,639 | $ | 22,504 | $ | 24,842 | |
Income attributable to: | |||||||||
Shareholders of the Corporation | $ | 5,536 | $ | 1,870 | $ | 20,638 | $ | 15,205 | |
Non-controlling interest | 1,535 | 1,367 | 3,059 | 2,945 | |||||
$ | 7,071 | $ | 3,237 | $ | 23,697 | $ | 18,150 | ||
Total comprehensive income attributable to: | |||||||||
Shareholders of the Corporation | $ | 690 | $ | 6,669 | $ | 19,841 | $ | 21,789 | |
Non-controlling interest | 333 | 970 | 2,663 | 3,053 | |||||
$ | 1,023 | $ | 7,639 | $ | 22,504 | $ | 24,842 | ||
Income per share: | |||||||||
Basic | $ | 0.06 | $ | 0.02 | $ | 0.22 | $ | 0.20 | |
Diluted | $ | 0.06 | $ | 0.02 | $ | 0.22 | $ | 0.20 |
NON-GAAP MEASURES
This press release contains references to Adjusted EBITDA, funds flow, gross margin, and effective tax rate to shareholders of the Corporation. These financial measures are not measures that have any standardized meaning prescribed by IFRSs and are therefore referred to as non-GAAP measures. The non-GAAP measures used by CanElson may not be comparable to similar measures used by other companies.
Adjusted EBITDA is defined as income (loss) before interest, taxes, business acquisition transaction costs, depreciation and amortization, stock based compensation expense, gains on disposal of property and equipment, foreign exchange and share of unconsolidated joint venture profits. Adjusted EBITDA includes 100% of revenue and expenses from controlled entities where the Corporation holds less than 100% of the outstanding shares. Management believes that, in addition to net and total comprehensive income (loss), Adjusted EBITDA is a useful supplemental measure as it provides an indication of the results generated by CanElson's principal business activities prior to consideration of how these activities are financed, how the results are taxed in various jurisdictions, or how the results are effected by the accounting standards associated with CanElson's stock based compensation plan.
For the three months ended June 30, |
For the six months ended June 30, | |||||||||
2014 | 2013 | % change | 2014 | 2013 | % change | |||||
Net Income | $ | 7,071 | $ | 3,237 | 118 % | $ | 23,697 | $ | 18,150 | 31 % |
Interest Expense | 108 | 427 | (75)% | 304 | 944 | (68)% | ||||
Current and Deferred Taxes | 4,093 | 1,273 | 222 % | 10,202 | 6,933 | 47 % | ||||
Depreciation expense | 5,649 | 3,905 | 45 % | 14,639 | 9,519 | 54 % | ||||
EBITDA | 16,921 | 8,842 | 91 % | 48,842 | 35,546 | 37 % | ||||
Stock based compensation expense | 555 | 421 | 32 % | 1,120 | 906 | 24 % | ||||
Share of profit unconsolidated joint venture | (596) | (476) | 25 % | (2,249) | (514) | 338 % | ||||
Foreign exchange (recovery) losses | (564) | 249 | 327 % | 364 | 553 | 34 % | ||||
Adjusted EBITDA | $ | 16,316 | $ | 9,036 | 81 % | $ | 48,077 | $ | 36,491 | 32 % |
Funds flow from operations is defined as cash provided by operating activities before changes in non-cash working capital. Funds flow from operations is a measure that provides shareholders and potential investors with additional information regarding CanElson's liquidity and its ability to generate funds to finance its operations, fund investing activities and support dividend payments. Management utilizes this measurement to assess CanElson's ability to finance operating activities and capital expenditures.
For the three months ended June 30, |
For the six months ended June 30, | |||||||||
2014 | 2013 | % change | 2014 | 2013 | % change | |||||
Operating cash flow | $ | 41,045 | $ | 23,802 | 72 % $ | 57,789 | $ | 52,097 | 11 % | |
Income taxes paid | 310 | 1,821 | (83)% | 686 | 3,110 | (78)% | ||||
Changes in working capital | (23,895) | (15,783) | 51 % | (10,290) | (18,516) | (44)% | ||||
Funds flow | $ | 17,460 | $ | 9,840 | 77% | $ | 48,185 | $ | 36,691 | 31% |
Gross margin is defined as "gross profit from services revenue before stock based compensation and depreciation". Gross margin is a measure that provides shareholders and potential investors additional information regarding CanElson's cash generating operating performance. Management utilizes this measurement to assess CanElson's operating performance.
For the six months ended June 30, |
For the six months ended June 30, | |||||||||
2014 | 2013 |
% change | 2014 | 2013 | % change | |||||
Gross profit | $ | 16,751 | $ | 9,556 | 75% | $ | 46,046 | $ | 36,196 | 27% |
Depreciation expense | 5,649 | 3,905 | 45% | 14,639 | 9,519 | 54% | ||||
Stock based compensation expense | 200 | 118 | 69% | 398 | 261 | 52% | ||||
Gross margin | $ | 22,600 | $ | 13,579 | 66% | $ | 61,083 | $ | 45,976 | 33% |
STANDARD INDUSTRY DEFINITIONS
In addition to the non-GAAP measures listed above, we use a number of industry and other terms in this press release which are described below:
Drilling rigs are categorized as singles, doubles, or triples based on the number of connected segments or "joints" of drill pipe that can be handled as a "stand" in the mast. Taller masts (e.g. triples) generally correspond to greater drilling depth capacities. We often refer to many of our rigs as tele-doubles - "tele" is short for telescoping, which refers to a design featuring an upper section of the mast that nests inside the lower section for transport and telescopes to full operating height to handle two-joint stands while drilling. Drilling rigs are also categorized as mechanical or AC electric, which refers to the method by which the hoisting and pumping equipment are powered.
CanElson presents its activity levels on a drilling day basis, and sources its utilization statistics from the Canadian Association of Oilwell Drilling Contractors ("CAODC"), which measures drilling rig utilization based on spud to rig release dates. Moving, rig up, and tear down time are excluded, although revenue may be earned during these times.
Revenue per operating day is calculated as total segment revenue divided by the number of drilling days (spud to rig release) and is not indicative of our drilling rig rates.
FORWARD LOOKING INFORMATION
This press release contains forward-looking information pertaining to: our belief that our strategy and key drivers have uniquely positioned us to sustain relatively strong profitability during the full drilling industry cycle; our expectation of a positive Canadian pricing environment through the upcoming winter drilling season; our expectation that we will achieve utilization in 2014 similar to utilization levels of 2013 for our Texas rigs; our expectation that we can continue to grow in North Dakota; our performance and partner relationships in Mexico provides an opportunity for DCM to expand in the region; the construction and deployment of additional rigs in 2014 and 2015; our 2014 capital program; our primary corporate objectives; expected commencement of drilling by DCM in the Miquetla block; and expectations regarding existing credit facilities and cash flow from operating activities described under "Risks and Uncertainties - Liquidity Risk". This forward-looking information involves material assumptions and known and unknown risks and uncertainties, including the risks set out under "Risks and Uncertainties", certain of which are beyond CanElson's control. CanElson's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describe the other risks, the material assumptions and other factors that could influence actual results and which are incorporated herein by reference. Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits CanElson will derive therefrom. The forward-looking information is made as at the date of this press release and CanElson does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.