STEP Energy Services reports wage, job, spending cuts with lower Q1 earnings

STEP Energy Services reports wage, job, spending cuts with lower Q1 earnings

STEP Energy Services reports wage, job, spending cuts with lower Q1 earnings

CALGARY — STEP Energy Services Ltd. is reporting job cuts, wage rollbacks, a reduction of manned equipment and reduced capital spending as it adjusts to lower oilfield activity during the COVID-19 pandemic.

The Calgary-based company says adjusted earnings before interest, taxes, depreciation and amortization fell by 12 per cent to $22.8 million in the three months ended March 31, despite a 10 per cent increase in consolidated revenue to $194 million.

It attributes the decrease to a $2.5 million provision for bad debt and $1.9 million in severance for unspecified workforce reductions in mid-March in reaction to an oilfield slowdown in Canada and the United States.

Despite a recent rise in U.S. benchmark oil prices to above US$30 per barrel, STEP says it has further reduced its 2020 capital program to $15.5 million, down from $24 million previously and its initial plan of $47 million.

It repeated its warning of a potential breach of its debt-to-adjusted-earnings bank agreements within the next two quarters that could enable a demand for immediate repayment of all amounts due, adding it is seeking relief from its lenders.

It reported a first-quarter net loss of $52.2 million, compared with a net loss of $600,000 for the same period in 2019, mainly due to $58.8 million in non-cash impairment charges against its Canadian well-fracturing assets.

Analysts had expected a net loss of $2.56 million, according to financial markets data firm Refinitiv.

This report by The Canadian Press was first published May 20, 2020.

Companies in this story: (TSX:STEP)

The Canadian Press

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