Shares in drilling company Ensign Energy Services Inc. plunged by as much as 40 per cent on Monday amid a worldwide oil price and stock market crash.
The company, which reported a loss of $71.6-million in the fourth quarter ended Dec. 31, compared with a profit of $155-million in the year-earlier period, was swept along in a tide that swept away as much as 30 per cent from the value of the S&P/TSX capped energy index.
Ensign stock was trading at 93 cents, down 62 cents, at 12:30 p.m. ET. It’s 52-week high was $6.45 set last April.
The influx of bad news for the energy sector is almost biblical, Ensign chief executive Bob Geddes said on a conference call with analysts.
“If the coronavirus and the Canadian government’s pathetic response to the blockades was not enough, the Saudis’ response to the Russians walking away from the table just cranked up the hurricane level winds even higher,” he said.
“I’m just now waiting for the seas to turn red,” he added, in apparent reference to descriptions of the end of the world in the Bible.
On Sunday, Saudi Arabia slashed its official crude selling price, signalling the start of a price war after OPEC talks with Russia broke down without producing an agreement on production cuts.
Meanwhile, the International Energy Agency said it expects global oil demand to decline this year for the first time since 2009 owing to the new coronavirus or COVID-19’s affect on world travel and broader economic activity.
Ensign’s dividend payments are “under pressure,” Mr. Geddes conceded in answer to a question on the call, adding the Calgary-based company’s board is considering whether to maintain it in view of stock price erosion and debt repayment schedules.
The company said it expects oil field activity to increase in Canada in the first quarter of 2020, but to be flat year over year in both Canada and the United States for 2020.
Ensign left its capital spending budget unchanged at $100-million for 2020.
Analyst Ian Gillies of Stifel First Energy said in a report he expects the huge decline in oil prices will “materially impact” Ensign’s modest activity outlook.
Ensign said fourth-quarter revenue grew to $376-million, up from $346-million in the fourth quarter of 2018.
For the full year, it said it lost $163 million on revenue of $1.59-billion, compared with a profit of $58.7-million on $1.59-billion in 2018.
Ensign acquired a 89.3 per cent stake in Trinidad Drilling Ltd. in the fourth quarter of 2018 and the remaining 10.7 per cent stake in the first quarter of 2019.
It said it now expects to realize $50-million in annual synergy cost savings from the acquisition, up from the previous $40-million forecast.