Chemical solutions provider CES Energy Solutions Corp. reported net income of $25.05 million (CAD 33.9 million) in the second quarter, a 69 percent increase from net income of $14.85 million (CAD 20.1 million) in the year-ago quarter, driven by “significantly higher levels of industry activity,” the company said in a recent earnings release.
In the second quarter, CES generated revenue of $381.1 million (CAD 515.8 million), a decrease of $30.96 million (CAD 41.9 million) or eight percent compared to the previous quarter, at seasonally lower activity levels in Canada. The second quarter was up 19% year over year, CES noted, as “producer capital spending and production levels have stabilized, improvements in U.S. drilling market share and production chemical volumes resulted in a significant increase in revenue compared to the prior year.”
CES revenue generated in the United States during the quarter was $277.44 million (CAD 375.5 million), representing an increase of $4.8 million (CAD 6.5 million) or two percent compared to the previous quarter and a 25 percent increase compared to the previous year’s quarter. . US revenue for the three-month period was positively impacted by increased industry activity, higher production levels and improved year-over-year market share, CES said.
CES said it maintained its strong position in the industry, with a market share of drilling fluids in the United States of 20 percent in the first two quarters of the year.
CES revenue generated in Canada for the quarter was $103.73 million (CAD 140.4 million), representing a decrease of $35.69 million (CAD 48.3 million) or a 26 percent compared to the previous quarter, as expected on a seasonal basis, and an increase of 5 percent in the prior year quarter. Canadian revenue was negatively impacted by a 42 percent sequential decline in rig count relative to the spring break first quarter, with production levels rising marginally year-over-year in the three-year period. months, despite customer shutdowns due to the Canadian wildfires, the company said.
The company’s average North American rig count increased 17 percent to 143 rigs in the second quarter compared to 122 rigs in the year-ago quarter. Its U.S. Production Chemicals business saw a year-over-year increase in production and sales of frac chemicals in the second quarter as actual volumes and realized revenue per treatment point continued to increase , said CES. Meanwhile, its Canadian average rig count was flat at 43 teams in the second quarter compared to the year-ago quarter.
The recovery in global energy demand, combined with several years of lower investment in the oil and gas sector, have resulted in a balanced market for oil and natural gas, higher commodity prices and a favorable outlook for the sector in the target market of the North American company. , said CES.
“We expect current levels of activity to continue through 2023, moderated by potential challenges with labor availability and supply chain constraints. In addition, there are major economic concerns regarding the risk of recession, interest rates and geopolitical instability, which can affect customers’ spending plans,” CES noted.
CES said it is bullish on its outlook for 2023 as it expects to benefit from elevated upstream activity, increased service intensity levels and continued strength in commodity prices in the Americas. Nord taking advantage of its established infrastructure, its leading position in the sector and its vertically integrated business model. , and strategic hiring practices.
Additionally, CES said it expects the consumable chemicals market to increase its share of oilfield spending as operators continue to drill long-reach laterals and drill them faster, expanding and optimizing the utilization of bearing drilling, increasing the intensity and size of its hydraulic fracturing. , and require increasingly technical and specialized chemical treatments to effectively maintain existing cash-generating wells and deal with increasing production volumes and water cuts from new wells.
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