TAG Oil Ltd reports 58.6% CAPEX decline and 49.8% Revenue decline
29.06.2016 • About TAG Oil Ltd (
$TAO) • By InTwits
TAG Oil Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- TAG Oil Ltd doesn't have a profitable business model yet: FY2016 ROIC is -63.4%
- The company operates at negative EBITDA Margin: -296.1%
- TAG Oil Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 was 0.0%. On average EBITDA Margin was -33.4% for the sames years0
- TAG Oil Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 125.0%. At the same time it's a lot of higher than industry average of 44.7%.
- CAPEX is quite volatile: 21.0 in FY2016, 50.7 in FY2015, 71.5 in FY2014, 68.5 in FY2013, 35.8 in FY2012
- The company has unprofitable business model: ROIC is at -63.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
TAG Oil Ltd ($TAO) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 33.202 | 39.555 | 51.765 | 44.983 | 22.571 | -49.8% |
| Gross Profit | 24.653 | 21.770 | 28.163 | 19.937 | 0.656 | -96.7% |
| SG&A | | | | 0.774 | 0.621 | -19.8% |
| EBITDA | 16.016 | 17.615 | 27.686 | -58.657 | -66.843 | |
| Net Income | 12.376 | 5.093 | 7.699 | -68.907 | -81.619 | |
Balance Sheet
|
|---|
| Cash | 63.006 | 68.931 | 52.004 | 27.055 | 16.846 | -37.7% |
| 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 | 35.832 | 68.523 | 71.494 | 50.707 | 20.979 | -58.6% |
Ratios
|
|---|
| Revenue growth | 249.1% | 19.1% | 30.9% | -13.1% | -49.8% | |
| EBITDA growth | 2,566.5% | 10.0% | 57.2% | -311.9% | 14.0% | |
| Gross Margin | 74.3% | 55.0% | 54.4% | 44.3% | 2.9% | -41.4% |
| EBITDA Margin | 48.2% | 44.5% | 53.5% | -130.4% | -296.1% | -165.8% |
| Net Income Margin | 37.3% | 12.9% | 14.9% | -153.2% | -361.6% | -208.4% |
| SG&A, % of revenue | | | | 1.7% | 2.8% | 1.0% |
| CAPEX, % of revenue | 107.9% | 173.2% | 138.1% | 112.7% | 93.0% | -19.8% |
| ROIC | 9.4% | 3.6% | 6.5% | -35.3% | -63.4% | -28.1% |
| ROE | 10.9% | 3.1% | 3.6% | -33.7% | -66.9% | -33.3% |
| Net Debt/EBITDA | -3.9x | -3.9x | -1.9x | | | 0.0x |
TAG Oil Ltd ($TAO) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 8 | 5 | 5 | 2 | -42.6% | -64.7% | -55.3% | -72.9% |
| EBITDA | 2 | 0 | -3 | -62 | -80.3% | -96.4% | -172.6% | |
| Net Income | -2 | -5 | -12 | -64 | -145.3% | -190.7% | | |
Balance Sheet
|
|---|
| Cash | 21 | 21 | 16 | 17 | -55.8% | -47.6% | -48.8% | -37.7% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | |
Ratios
|
|---|
| Gross Margin | 26.9% | -16.9% | -9.7% | -58.8% | -26.5% | -64.6% | -47.2% | -83.5% |
| EBITDA Margin | 18.8% | 5.4% | -61.5% | -4,098.2% | -35.9% | -48.5% | -99.4% | -2,700.4% |
| Net Income Margin | -22.5% | -87.7% | -254.0% | -4,173.9% | -50.9% | -121.8% | -246.7% | -2,795.5% |
Revenue and profitability
The company's Revenue dropped on 49.8%. Revenue decline showed acceleration in FY16Q4 - it was 72.9% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 166 pp from -130% to -296% in FY2016.
Gross Margin dropped on 41.4 pp from 44.3% to 2.9% in FY2016. SG&A as a % of Revenue increased slightly on 1.0 pp from 1.7% to 2.8% in FY2016.
Net Income marign dropped on 208 pp from -153% to -362% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 93.0%. CAPEX/Revenue dropped on 80.3 pp from 173% in FY2013 to 93.0% in FY2016. It's average level of CAPEX/Revenue for the last three years was 115%.
Return on investment
The company operates at negative ROIC (-63.42%) and ROE (-66.93%). ROIC dropped on 28.1 pp from -35.3% to -63.4% in FY2016. ROE dropped on 33.3 pp from -33.7% to -66.9% in FY2016.
Leverage (Debt)
The company has no debt. Cash dropped on 37.7%.
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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | | -18.4% | 141.2% |
| Seven Generations Energy Ltd ($VII) | | 115.7% | 340.2% | 39.0% | 94.4% |
| Athabasca Oil Corp ($ATH) | | 342.7% | 5.5% | -22.9% | 73.1% |
| Painted Pony Petroleum Ltd ($PPY) | | 41.3% | 56.0% | -42.5% | 60.7% |
| ONEnergy Inc ($OEG) | | | 6,002.6% | 231.5% | 57.4% |
| |
|---|
| Median (117 companies) | -29.1% | 16.2% | 17.0% | -29.5% | -19.0% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($BOE) | 77.1% | 43.3% | -34.3% | 121.1% | |
| TransAlta Renewables Inc ($RNW) | | 94.4% | 94.5% | 94.5% | 91.1% |
| Serinus Energy Inc ($SEN) | 80.5% | 76.5% | 86.8% | 88.5% | |
| Advantage Oil & Gas Ltd ($AAV) | 62.0% | 84.5% | 92.5% | 88.5% | 90.3% |
| Polaris Infrastructure Inc ($PIF) | 39.9% | 33.6% | 32.0% | 86.7% | 88.6% |
| |
|---|
| Median (116 companies) | 32.0% | 32.1% | 32.2% | 33.6% | 32.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($GXO) | 59.4% | 64.5% | 70.8% | 201.9% | |
| Perpetual Energy Inc ($PMT) | 35.5% | 70.7% | 58.0% | 110.3% | |
| Petro Rio SA ($PRJ) | -4,809.7% | -6,899.7% | 28.2% | 90.7% | |
| Peyto Exploration & Development Corp ($PEY) | 86.1% | 83.2% | 86.3% | 84.6% | 80.7% |
| Innergex Renewable Energy Inc ($INE) | 111.8% | 110.0% | 82.9% | 83.4% | 83.5% |
| |
|---|
| Median (130 companies) | 25.3% | 34.1% | 28.9% | 8.1% | 28.2% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | 1,997.8% | 712.8% | |
| WesternZagros Resources Ltd ($WZR) | | | | 385.6% | |
| Athabasca Oil Corp ($ATH) | 2,426.4% | 596.6% | 504.7% | 315.2% | 83.7% |
| TORC Oil & Gas Ltd ($TOG) | 453.8% | 466.9% | 104.5% | 229.4% | 76.3% |
| Seven Generations Energy Ltd ($VII) | 452.8% | 513.1% | 227.4% | 191.2% | 73.5% |
| |
|---|
| Median (131 companies) | 43.8% | 39.0% | 45.0% | 27.6% | 23.0% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerplus Corp ($ERF) | -17.3% | 10.2% | 11.5% | -55.5% | 16.3% |
| Whitecap Resources Inc ($WCP) | 7.1% | 8.1% | 9.6% | -10.6% | 10.1% |
| Ecopetrol SA ($ECP) | 29.3% | 24.4% | 16.5% | 3.0% | 9.6% |
| Parkland Fuel Corp ($PKI) | 22.3% | 23.3% | 9.9% | 7.8% | 8.6% |
| Inter Pipeline Ltd ($IPL) | 9.5% | 8.0% | 7.5% | 9.6% | 8.5% |
| |
|---|
| Median (129 companies) | 3.8% | 5.4% | 5.5% | -8.5% | -1.9% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($PXX) | -0.2x | -0.1x | 0.2x | 3,726.1x | -0.2x |
| Paramount Resources Ltd ($POU) | 14.6x | 23.9x | 8.9x | 421.5x | -5.8x |
| Precision Drilling Corp ($PD) | 2.2x | 1.9x | 2.0x | 68.4x | 7.6x |
| Trican Well Service Ltd ($TCW) | 2.5x | 3.4x | 2.9x | 31.4x | |
| Trilogy Energy Corp ($TET) | 2.6x | 1.8x | 2.3x | 25.5x | 7.3x |
| |
|---|
| Median (79 companies) | 1.6x | 1.4x | 1.4x | 2.6x | 2.7x |
|---|
