TAG Oil Ltd reports 995% Net Income decline and 13.1% Revenue decline
29.06.2015 • About TAG Oil Ltd (
$TAO) • By InTwits
TAG Oil Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- TAG Oil Ltd doesn't have a profitable business model yet: FY2015 ROIC is -35.3%
- EBITDA Margin is quite volatile: -130.4% in FY2015, 53.5% in FY2014, 44.5% in FY2013, 48.2% in FY2012, 6.3% in FY2011
- TAG Oil Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 139.1%. At the same time it's a lot of higher than industry average of 93.9%.
- CAPEX is quite volatile: 50.7 in FY2015, 71.5 in FY2014, 68.5 in FY2013, 35.8 in FY2012, 15.6 in FY2011
- The company has unprofitable business model: ROIC is at -35.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
TAG Oil Ltd ($TAO) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 9.511 | 33.202 | 39.555 | 51.765 | 44.983 | -13.1% |
| Gross Profit | 5.906 | 24.653 | 21.770 | 28.163 | 19.937 | -29.2% |
| SG&A | | | | | 0.774 | |
| EBITDA | 0.601 | 16.016 | 17.615 | 27.686 | -58.657 | -311.9% |
| Net Income | -1.090 | 12.376 | 5.093 | 7.699 | -68.907 | -995.0% |
Balance Sheet
|
|---|
| Cash | 69.380 | 63.006 | 68.931 | 52.004 | 27.055 | -48.0% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 15.565 | 35.832 | 68.523 | 71.494 | 50.707 | -29.1% |
Ratios
|
|---|
| Revenue growth | 104.4% | 249.1% | 19.1% | 30.9% | -13.1% | |
| EBITDA growth | 3.2% | 2,566.5% | 10.0% | 57.2% | -311.9% | |
| Gross Margin | 62.1% | 74.3% | 55.0% | 54.4% | 44.3% | -10.1% |
| EBITDA Margin | 6.3% | 48.2% | 44.5% | 53.5% | -130.4% | -183.9% |
| Net Income Margin | -11.5% | 37.3% | 12.9% | 14.9% | -153.2% | -168.1% |
| SG&A, % of revenue | | | | | 1.7% | 1.7% |
| CAPEX, % of revenue | 163.6% | 107.9% | 173.2% | 138.1% | 112.7% | -25.4% |
| ROIC | | 9.4% | 3.6% | 6.5% | -35.3% | -41.8% |
| ROE | -1.9% | 10.9% | 3.1% | 3.6% | -33.7% | -37.2% |
| Net Debt/EBITDA | -115.5x | -3.9x | -3.9x | -1.9x | | 1.9x |
Revenue and profitability
TAG Oil Ltd's Revenue dropped on 13.1% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 9.4 pp from 59.8% to 69.2% in 2015.
Gross Margin dropped on 10.1 pp from 54.4% to 44.3% in FY2015.
Net Income marign dropped on 168 pp from 14.9% to -153% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 TAG Oil Ltd had CAPEX/Revenue of 113%. CAPEX/Revenue increased on 4.8 pp from 108% in FY2012 to 113% in FY2015. It's average level of CAPEX/Revenue for the last three years was 141%.
Return on investment
The company operates at negative ROIC (-35.29%) and ROE (-33.68%). ROIC dropped on 41.8 pp from 6.5% to -35.3% in FY2015. ROE dropped on 37.2 pp from 3.6% to -33.7% in FY2015.
Leverage (Debt)
The company has no debt. Cash dropped on 48.0% in FY2015.
Appendix 1: Peers in Energy
Below we provide TAG Oil Ltd benchmarking against other companies in Energy industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Petro Rio SA ($PRJ) | -36.3% | -32.1% | -34.9% | 10,977.1% | |
| ONEnergy Inc ($OEG) | | | | 6,002.6% | |
| Sterling Resources Ltd ($SLG) | | -94.8% | 4,514.9% | 2,244.4% | |
| Ikkuma Resources Corp ($IKM) | 22.5% | 17.0% | -4.5% | 1,231.1% | |
| Spartan Energy Corp ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 37.7% | 9.5% | 16.2% | 17.6% | -19.0% |
|---|
| TAG Oil Ltd ($TAO) | | 249.1% | 19.1% | 30.9% | -13.1% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| TransAlta Renewables Inc ($RNW) | | | 94.4% | 94.5% | |
| Advantage Oil & Gas Ltd ($AAV) | 70.5% | 62.0% | 84.5% | 92.5% | |
| Freehold Royalties Ltd ($FRU) | 91.7% | 90.4% | 89.0% | 90.2% | |
| MEG Energy Corp ($MEG) | 85.5% | 86.8% | 87.4% | 87.6% | |
| NXT Energy Solutions Inc ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| |
|---|
| Median (140 companies) | 33.3% | 29.3% | 31.5% | 29.6% | 64.4% |
|---|
| TAG Oil Ltd ($TAO) | 62.1% | 74.3% | 55.0% | 54.4% | 44.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Seven Generations Energy Ltd ($VII) | | 56.9% | 54.0% | 106.0% | |
| Tourmaline Oil Corp ($TOU) | 67.4% | 67.9% | 80.0% | 97.6% | |
| Bonavista Energy Corp ($BNP) | 63.8% | 64.6% | 62.6% | 91.6% | |
| Bellatrix Exploration Ltd ($BXE) | 42.7% | 58.6% | 83.6% | 89.6% | |
| Advantage Oil & Gas Ltd ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | |
| |
|---|
| Median (159 companies) | 25.5% | 25.0% | 30.5% | 28.9% | -23.0% |
|---|
| TAG Oil Ltd ($TAO) | 6.3% | 48.2% | 44.5% | 53.5% | -130.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | | 1,997.8% | |
| Petroshale Inc ($PSH) | 30.6% | | 346.6% | 865.9% | |
| Toro Oil & Gas Ltd ($TOO) | 192.4% | 139.0% | 39.2% | 808.7% | |
| Athabasca Oil Corp ($ATH) | 176.2% | 2,426.4% | 596.6% | 504.7% | |
| BNK Petroleum Inc ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 42.0% | 47.3% | 39.1% | 47.1% | 49.6% |
|---|
| TAG Oil Ltd ($TAO) | 163.6% | 107.9% | 173.2% | 138.1% | 112.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pason Systems Inc ($PSI) | 33.5% | 30.0% | 29.7% | 41.0% | |
| Sea Dragon Energy Inc ($SDX) | -10.1% | 8.1% | 21.8% | 32.9% | |
| Raging River Exploration Inc ($RRX) | | | | 29.1% | |
| High Arctic Energy Services Inc ($HWO) | 27.0% | 31.4% | 26.3% | 24.9% | |
| Rooster Energy Ltd ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.4% | 3.2% | 4.6% | 5.0% | -16.9% |
|---|
| TAG Oil Ltd ($TAO) | | 9.4% | 3.6% | 6.5% | -35.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Veresen Inc ($VSN) | 22.3x | 16.2x | 14.7x | 30.3x | |
| Lightstream Resources Ltd ($LTS) | | 2.0x | | 27.8x | |
| Petroshale Inc ($PSH) | 0.1x | | | 21.7x | |
| Connacher Oil and Gas Ltd ($CLC) | 9.7x | 16.7x | 8.8x | 17.1x | |
| Pengrowth Energy Corp ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.6x | 1.5x | 1.4x | 16.1x |
|---|
| TAG Oil Ltd ($TAO) | -115.5x | -3.9x | -3.9x | -1.9x | |
