Enseco Energy Services Corp. Announces Results for the Three Months and Year Ended March 31, 2010
July 26 2010 - 7:24PM
Marketwired Canada
Enseco Energy Services Corp. (TSX VENTURE:ENS) ("Enseco" or "the Company")
announces its consolidated financial results for the three months and year ended
March 31, 2010.
Enseco has filed its audited financial statements as at and for the three months
and year ended March 31, 2010, and the accompanying Management's Discussion and
Analysis separately under Enseco's SEDAR profile at www.sedar.com.
Financial Highlights
($000's except per share data)
Three months ended Year ended
March 31, March 31,
2010 2009 2010 2009
----------------------------------------------------------------------------
Revenue from continuing operations
(1) $ 18,531 $ 8,811 $ 35,347 $ 28,478
----------------------------------------------------------------------------
Gross margin from continuing
operations (1) 4,460 1,681 4,974 4,252
----------------------------------------------------------------------------
EBITDA from continuing operations
(1) 1,711 (78) (2,738) (1,702)
----------------------------------------------------------------------------
Net loss from continuing
operations (3,867) (1,193) (12,460) (6,105)
Per common share - basic and
diluted (0.03) (0.02) (0.17) (0.14)
----------------------------------------------------------------------------
Net income (loss) from
discontinued operations (347) 1,676 (2,557) (1,073)
Per common share - basic and
diluted - 0.03 (0.04) (0.02)
----------------------------------------------------------------------------
Total net income (loss) (4,214) 483 (15,017) (7,178)
Per common share - basic and
diluted (0.03) 0.01 (0.21) (0.16)
----------------------------------------------------------------------------
Cash flow from/(used in)
continuing operations, before
changes in non-cash working capital
items (1) 1,405 (268) (3,718) (2,256)
Cash flow from/(used in)
discontinued operations, before
changes in non-cash working capital
items (1) (347) (116) (1,411) (1,763)
----------------------------------------------------------------------------
Consolidated revenues for the three months ending March 31, 2010 increased 210%
to $18.5 million compared to $8.8 million for the prior year. This increase was
due to growth in the directional drilling business including the acquisition of
Focus Directional Services Inc. ("Focus") which increased directional drilling
revenues to $11.5 million compared to $1.3 million in the prior year. Gross
margin from continuing operations increased to $4.5 million in the fourth
quarter compared to $1.7 million in the prior year. EBITDA from continuing
operations increased to $1.7 million from $(78) thousand in the prior year due
to significant increases in revenues and gross margin and increased oilfield
activity during the fourth quarter. The impact of the acquisition of directional
drilling assets in February 2010 was not realized in Enseco's fourth quarter and
as a result of the increased activity, Enseco experienced rental costs exceeding
20% of the directional revenues which directly impacted the directional drilling
division EBITDA. It is expected that the impact of the additional directional
drilling assets will be significant in the financial year beginning April 2010
and that rental costs will be mainly eliminated. Cash flows from operations,
before changes in non-cash working capital items increased to $1.4 million in
the fourth quarter compared to $(268) thousand in the prior year. The net loss
from continuing operations increased to $3.9 million from $1.2 million in the
prior year due to the impairment loss of $3.4 million on the Company's swabbing
assets, offset by higher revenues and gross margins, and the discontinuation of
the Company's open-hole wireline business in the fourth quarter.
HIGHLIGHTS
- Increased 4th quarter revenues from $8.8 million last year to $18.5 million
this year, an increase of 210%.
- Successfully repositioned the Company for future growth in directional
drilling services by appointing a new CEO and completing the acquisition of
Focus in November 2009. Added an additional 10 directional drilling kits through
the acquisition of the assets of a private directional services company in
February 2010.
- Further strengthened and solidified Enseco's presence in the US directional
drilling market through the acquisition of the assets of a private directional
services company with 7 directional drilling kits.
- Due to increasing customer demand for directional and horizontal drilling,
Enseco purchased an additional 6 directional drilling kits and 28 motors to be
delivered within the second and third quarters of 2010. The additional
directional drilling kits will bring Enseco's total to 47.
- Streamlined Enseco's business lines through the disposition of the Company's
Open Hole wireline assets for proceeds of $1.2 million.
- Raised $8 million through a private placement completed in February 2010.
- Continued to add high demand assets for resource play activity in both
directional drilling and high pressure flow back testing that will allow Enseco
to grow their resource play revenues with higher margins, and reduce rental
costs going forward.
OUTLOOK
Enseco has positioned its business toward services that will increase in demand
in North American resource play environments. Current higher resource play
drilling levels in both Canada and the United States have led to record levels
of horizontal drilling activity. Many of Enseco's North American clients are
increasing their drilling programs through 2010. As a result, it is expected
that Enseco will see continued higher utilization rates through the upcoming
quarters.
A clear focus on resource play activity and its rapid recent growth leaves the
company in a stronger position going forward into the new fiscal year.
ABOUT ENSECO
Enseco is a premier supplier of directional drilling, production testing, and
swabbing services operating throughout the Western Canadian Sedimentary Basin
and select markets in the United States, with operations in the Montney,
Cardium, Viking, Bakken, Green River and Eagle Ford resource plays as well as a
corporate and sales office located in Calgary. Enseco is led by an experienced
management team with a focus on continued value creation through accretive
acquisitions and organic growth.
NON-GAAP MEASURES
1. Operating loss is loss before impairment loss on fixed assets, gain (loss) on
sale of equipment and income taxes and gain (loss) on foreign exchange. EBITDA
means earnings before interest, taxes, depreciation and amortization and is
equal to earnings before income taxes plus interest on long-term debt plus other
interest expense, plus depreciation, plus (gain)/loss on disposal of assets,
plus foreign exchange loss, plus impairment loss on fixed assets, plus accretion
expense, less foreign exchange gain. Cashflow means cash flows provided by
operations before changes in non-cash working capital items. Gross margin is
calculated as revenues less direct operating costs. Operating loss, EBITDA,
cashflow and gross margin are not recognized measures under Canadian generally
accepted accounting principles ("GAAP"). Management believes that in addition to
net earnings, operating loss, EBITDA, cashflow and gross margin are useful
supplemental measures as they provide an indication of the results generated by
Enseco's primary business activities prior to consideration of how those
activities are financed, amortized or how the results are taxed in various
jurisdictions as well as the cash generated by Enseco's primary business
activities. Readers should be cautioned, however, that operating loss, EBITDA,
cashflow and gross margin should not be construed as an alternative to net
earnings determined in accordance with GAAP as an indicator of Enseco's
performance. Enseco's method of calculating operating loss, EBITDA, cashflow and
gross margin may differ from other organizations and, accordingly, these figures
may not be comparable to those disclosed by other organizations.
2. Working capital equals current assets minus current liabilities.
FORWARD-LOOKING STATEMENTS
Certain information and statements contained in this press release constitute
forward-looking information, including expectations regarding industry
conditions, conditions including drilling activity levels and expectations
regarding use of horizontal well technology; expectations regarding the impact
of the Focus acquisition, including the effect on Enseco's cash flow, cost
savings and future growth opportunities and the impact of the additions to
Enseco's management team as a result of the acquisition; expectations regarding
the anticipated benefits to be obtained from the acquisition of the assets of a
private directional services company; expectations regarding the delivery of
additional drilling kits and motors; expectations regarding the closing of the
sale of Enseco's Open Hole wireline assets, the timing thereof and the use of
proceeds therefrom; expectations regarding Enseco's credit facility and ability
to meet its obligations when due; and Enseco's ongoing focus, strategy, and
business plans, including demand for oilfield services and, statements as to
future economic and operating conditions, which are provided by Management to
enable investors to better understand our business, and such information may not
be appropriate for other purposes. These forward-looking statements are based
upon the opinions, expectations and estimates of management as at the date the
statements are made including the Company's current budget (which is subject to
change), expectations regarding the Company's ability to continue its
operations, the continued support of the Company's lender and the Company's
ability to raise additional equity, expectations relating to future economic and
operating conditions and statements relating to Enseco's marketing, operational
and business plans, the competitive environment and opinions of third-party
analysts respecting anticipated economic and operating conditions.
These forward-looking statements are subject to a variety of risks and
uncertainties and other factors that could cause actual events or outcomes to
differ materially from those anticipated or implied by such forward-looking
statements. Such factors include, but are not limited to, fluctuations in the
market for oil and gas and related products and services, political and economic
conditions, the demand for services provided by Enseco, industry competition and
Enseco's ability to attract and retain both customers and key personnel and the
Company's ability to continue its operations, the continued support of the
Company's lender and Enseco's ability to raise additional equity. Enseco has
made assumptions regarding, but not limited to, future economic conditions in
Canada and the US, commodity prices, foreign exchange rates, interest rates, the
availability of skilled labour, and the timing and amount of capital
expenditures. Readers are cautioned that the assumptions used in the preparation
of such information, although considered reasonable at the time of preparation,
may prove to be imprecise and, as such, undue reliance should not be placed on
forward-looking statements. Enseco's actual results, performance or achievement
could differ materially from those expressed in, or implied by, these
forward-looking statements, or if any of them do so, what benefits that Enseco
will derive therefrom. Enseco disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.