HE Hanwei Energy Services Corp

Hanwei Energy Services Corp. (TSX: HE) (“Hanwei” or the “Company”), today reported its financial results for the second quarter and nine months ended September 30, 2021(“Q2 2022” and “YTD”). All amounts are in Canadian Dollars unless otherwise noted.

Financial and Operating Update

Prior to the sale of its oil and gas business, Hanwei's principal business operations are in two segments of the oil and gas industry as an operator and developer of its oil and gas assets in Canada and as a specialized pipe supplier internationally.

Q2 2022

Total revenues for Q 2 2022 increased to $1.35 million from $1.05 million for the same quarter in the prior year; the 28% increase was due to a $0.47 million increase in FRP pipe revenue partially offset by a $0.18 million decrease in oil and gas revenue.

• Q2 2022 FRP pipe business revenue increased to $1.15 million from $0.68 million for the same quarter in the prior year. The increase of $0.47 million was mainly due to the timing of sales orders from existing Chinese clients and the appreciation of RMB against Canadian dollar in this quarter.
• The oil and gas business revenue totalled $0.19 million as compared to revenue of $0.39 million for the same period in the prior year.

In August 2021, the Company completed the sale of its oil and gas business with August 1, 2021 as the transaction effective date; therefore, only one month’s revenues, royalties and expenses were recorded in Q2 2022. The Company recognized a gain of $1.57 million on the sale of its oil and gas business.

Q2 2022 Adjusted EBITDA was negative $0.27 million versus negative $0.51 million for the same period in the prior year. The improvement of $0.24 million was mainly because of the decrease in operating expenses, partially offset by the reduction of gross profit.

The Company made a profit of $0. 66 million in Q2 2022 as compared to a loss of $1.15 million for the same quarter in the preceding year. The substantial difference was mainly due to the gain of $ 1.57 million on sale of the Company’s oil and gas business.

Six months ended September 30, 2021

YTD total revenues were $3.21million, a 13% increase from prior year’s revenue of $2.85 million. The 13% increase was due to the combination of a $0.21million increase in oil and gas revenue and a $0.15 million increase in FRP pipe revenue.

• YTD FRP pipe sales totalled $2.55 million versus $2.40 million for the same period of the prior. The increases of $0.15 million was because of the timing of sales orders from existing Chinese clients.
• YTD oil and gas business revenue totaled $0.66 million as compared to $0.45 million for the same period in the prior year and the increase was due to increased production volumes and higher commodity prices.

YTD Adjusted EBITDA was negative $0.44 million, an improvement of $0.66 million from negative $1.10 million for the same period of the prior year mainly because YTD Adjusted EBITDA from oil and gas business was $50,000, an improvement of $0.61 million as compared to the same period in the prior year.

YTD loss was $0.11 million as compared to loss of $1.88 million for the same period in the prior year. The significant difference was mainly due to the gain of $ 1.57 million on sale of the Company’s oil and gas business.

At the end of September 2021, the Company’s current ratio (current assets divided by current liabilities) was 0.40.

About Hanwei Energy Services Corp.

Hanwei’s principal business operations are in the oil and gas industry as an equipment supplier to the industry (as a manufacturer of high pressure, fiberglass reinforced plastic (FRP) pipe products serving energy customers in the global energy market).

For more information, please contact:

Mary MaChief Financial Officer604-685-2239mma@hanweienergy.com

Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.

FORWARD-LOOKING INFORMATION AND NON-GAAP MEASURES

Certain information in this press release is forward-looking within the meaning of certain securities laws, and is subject to important risks, uncertainties and assumptions a description of which is set out in the risk factors section of the Company’s Annual Information Form dated June 24, 2021 and Management Discussion and Analysis for the year ended March 31, 2021 both of which are filed with Canadian securities regulators and available on SEDAR at www.sedar.com. The forward-looking information in this press release describes the Company’s expectations as of the date of this press release.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE PRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, THE COMPANY DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME, EXCEPT AS REQUIRED BY APPLICABLE SECURITIES LEGISLATION.