Australian oilfield buoys Total Energy Q2 report despite North American weakness

Total Energy Services Inc. reported a 68 per cent decline in revenue in the second quarter due to a near collapse in oilfield activity in North America but beat analyst estimates for adjusted income.

Total reported adjusted earnings of $12.9 million on revenue of $70.8 million in the three months ended June 30, down from $17.5 million on $212.7 million in the year-earlier period.

Adjusted earnings beat analyst expectations of $7.3 million despite revenue coming in well below forecasts of $100.7 million, according to financial data firm Refinitiv.

Total said utilization of its drilling rig fleet dropped to one per cent in Canada, where it has 80 rigs, and three per cent in the United States, where it has 13 rigs. Its five rigs in Australia, in contrast, operated at 72 per cent utilization.

The company suspended its dividend and cut its 2020 capital budget from $23 million to $10 million to deal with the lower North American activity. It said it received $4.5 million in grants under the Canada Emergency Wage Subsidy program in the quarter.

“Our strategy to diversify geographically and operationally paid off during the tremendously challenging period,” said chief financial officer Yuliya Gorbach on a conference call on Wednesday.

“Reductions in North American revenues were somewhat offset by relatively stable revenues from Australia during the second quarter of 2020.”

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