Enseco Energy Services Corp. ("Enseco" or the "Company") (TSX
VENTURE:ENS) announces its financial results for the three months
ended September 30, 2011.
HIGHLIGHTS FOR THE THREE MONTH PERIOD ENDING SEPTEMBER 30,
2011
-- Enseco achieved the following quarterly results compared to same period
last year as follows:
-- Revenue increase of 35% to $22,294,000 for the quarter
-- Operating margins increased by 47% to 39% for the quarter
-- EBITDAS increased by 63% to $5,085,000 for the quarter
-- Net income increased by 149% to $3,264,000 for the quarter
-- In the first half of this fiscal year Enseco has reduced the Company's
long term debt by 14% ($3,463,000) to approximately $24 million and
continues to execute a strategy of aggressively reducing its debt.
-- Continued strong North American demand for production testing frac
flowback and directional drilling services has the Company well
positioned for ongoing growth this quarter and rest of the year.
Three months ended
September 30,
2011 2010
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Revenue from continuing operations $ 22,294 $ 16,530
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Revised gross margin from continuing operations 8,784 5,993
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EBITDAS from continuing operations 5,085 3,117
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Net income (loss) from continuing operations 3,264 1,313
Per common share - basic and diluted $ 0.17 $ 0.08
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Net loss from discontinued operations - (204)
Per common share - basic and diluted $ 0.00 $ (0.01)
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Total net income (loss) 3,264 1,109
Per common share - basic and diluted $ 0.17 $ 0.07
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Cash flow from/(used in) continuing operations,
before changes in non-cash working capital items 5,035 3,265
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Cash flow from/(used in) continuing operations, after
changes in non-cash working capital items 55 (584)
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Cash flow from/(used in) discontinued operations - (110)
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(i)(See Non-IFRS Measures section)
OUTLOOK
Management believes that the underlying fundamentals in the
North American resource plays will remain strong throughout the
balance of the year. Oil and liquids rich drilling in both Canada
and the USA will continue to provide additional opportunities to
expand the Company's operations as activity levels in each of
Enseco's operating areas of Western Canada, North Dakota and the
Rocky Mountains continue to be very strong. Enseco currently
derives over 80% of its income from oil and liquids rich horizontal
drilling activity.
Directional drilling demand continues to increase as a
percentage of total wells drilled and is now over 80%. Demand for
the Company's directional drilling services and production testing
frac flowback services are expected to continue to grow in all
areas that the Company operates. Longer, more complex, flow back
operations are expected to greatly increase the requirements for
production testing services. The Company has significant
opportunity to continue its growth and expansion of its two
business lines in both Canada and the USA and will continue to add
capacity. Additionally, Enseco continues to work closely with its
clients to enable a continued ramp up of fleet and activity as
required.
During spring breakup, Enseco opened a facility in Leduc to
improve and repair its Measurement While Drilling ("MWD")
equipment. This facility has dramatically improved the run time
performance and efficiency of the Company's Directional Drilling
division. With the engineering improvements and reductions in
rebuild times now available through Enseco's in-house MWD lab,
Enseco anticipates increased directional drilling operating margins
as it will now have minimal requirements to rent additional MWD
units, even as activity continues to grow.
Management believes that additional operational and financial
benefits are available with a full service motor shop facility and
has begun plans to develop this facility which is expected to be
operational in mid 2012.
During 2012, Enseco will continue to implement programs to
increase efficiencies and cost reductions which will increase its
revised gross margins and EBITDAS.
ABOUT ENSECO ENERGY SERVICES CORP.
Enseco is a premier supplier of directional drilling and
production testing frac flowback services operating throughout the
Western Canadian Sedimentary Basin and select markets in the United
States, with operations in the Bakken, Cardium, Viking, Montney and
Green River resource plays, a corporate office located in Calgary
and sales offices located in Calgary and Denver. Enseco is led by
an experienced management team with a focus on continued value
creation through accretive acquisitions and organic growth.
FORWARD LOOKING DISCLAIMER
Certain information and statements contained in this statement
constitute forward-looking information, including, but not limited
to: statements concerning Enseco's future business strategy,
marketing and expansion plans; expectations regarding the growth of
Enseco's fleet and equipment; plans to aggressively reduce debt;
industry demand and demand for the Company's services; expectations
regarding increased directional drilling operating margins and
decreased rental costs; plans to develop a full service motor
facility; expectations regarding future revenues, cash flow,
EBITDAS, cost reductions, rental reductions, improved efficiencies,
profit margins and other financial results; expectations regarding
resource play drilling activity levels and drilling programs;
expectations respecting the competitive position of Enseco's
business divisions; expectations concerning the financing of future
business activities. Although management of the Company believes
that the expectations reflected in such forward looking statements
are reasonable, it can give no assurance that such expectations
will prove to have been correct. Accordingly, readers should not
place undue reliance upon any of the forward-looking information
set out in this press release. Readers should review the cautionary
statement respecting forward-looking information that appears
below. All of the forward looking statements of the Company
contained in this press release are expressly qualified, in their
entirety, by this cautionary statement.
The information and statements contained in this statement that
are not historical facts are forward-looking statements.
Forward-looking statements (often, but not always, identified by
the use of words such as "seek", "plan", "continue", "estimate",
"project", "predict", "potential", "targeting", "intend", "could",
"might", "should", "believe", "expect", "may", "anticipate" or
"will" and similar expressions) may include plans, expectations,
opinions, or guidance that are not statements of fact.
Forward-looking statements are based upon the opinions,
expectations and estimates of management as at the date the
statements are made and 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. These factors include, but are not
limited to, such things as: changes in industry conditions
(including the levels of capital expenditures made by oil and gas
producers and explorers), the credit risk to which the Company is
exposed in the conduct of its business, fluctuations in prevailing
commodity prices or currency and interest rates, the competitive
environment to which the various business divisions are, or may be,
exposed in all aspects of their business, the ability of the
Company's various business divisions to access equipment (including
parts) and new technologies and to maintain relationships with key
suppliers, the ability of the Company's various business divisions
to attract and maintain key personnel and other qualified
employees, various environmental risks to which the Company's
business divisions are exposed in the conduct of their operations,
inherent risks associated with the conduct of the businesses in
which the Company's business divisions operate, timing and costs
associated with the acquisition of capital equipment, the impact of
weather and other seasonal factors that affect business operations,
availability of financial resources or third-party financing and
the impact of new laws or changes in administrative practices on
the part of regulatory authorities. The various risks to which
Enseco is exposed are described in additional detail in the
Company's Annual Information Form under the heading "Risk Factors"
which is available on SEDAR at www.sedar.com.
Forward-looking information concerning the nature and timing of
growth within the various business divisions is based on the
current budget of the Company (which is subject to change), factors
that affected the historical growth of such business divisions,
sources of historic growth opportunities and expectations relating
to future economic and operating conditions. Forward-looking
information concerning the future competitive position of the
Company's business divisions is based upon the current competitive
environment in which those business divisions operate, expectations
relating to future economic and operating conditions, current and
announced build programs and other expansion plans of other
organizations that operate in the energy service business.
Forward-looking information concerning the financing of future
business activities is based upon the financing sources on which
the Company has historically relied and expectations relating to
future economic and operating conditions. Forward-looking
information concerning future economic and operating conditions is
based upon historical economic and operating conditions, opinions
of third-party analysts respecting anticipated economic and
operating conditions.
With respect to forward-looking statements contained in this
press release, Enseco has made assumptions regarding commodity
prices and royalty regimes, availability of skilled labour, timing
and amount of capital expenditures, future foreign exchange rates,
interest rates, the impact of increasing competition, conditions in
general economic and financial markets, effects of regulation by
governmental agencies, and future operating costs.
Management has included the above summary of assumptions and
risks related to forward-looking information provided in this press
release in order to provide shareholders with a more complete
perspective on Enseco's future operations and such information may
not be appropriate for other purposes. Enseco's actual results,
performance or achievement could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, no assurance can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what benefits that the Enseco will
derive there from. Readers are cautioned that the foregoing lists
of factors are not exhaustive. These forward-looking statements are
made as of the date of this press release and Enseco disclaims any
obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or results or
otherwise, other than as required by applicable securities
laws.
NON-IFRS MEASURES
EBITDAS means earnings before interest, taxes, depreciation and
amortization, and stock-based compensation and is equal to earnings
before income taxes from continuing operations plus interest on
debt, other charges and interest expense, depreciation and
amortization, stock-based compensation, unrealized foreign exchange
loss, and loss on sale of equipment. Cash flow means cash flows
provided by continuing operations before changes in non-cash
working capital items.
Gross margin is calculated as revenues less operating expenses.
Operating losses, EBITDAS, cash flow, and gross margin are not
recognized measures under Canadian generally accepted accounting
principles ("GAAP"). Management believes that in addition to net
losses, operating losses, EBITDAS, cash flow, and gross margin are
useful supplemental measures as they provide an indication of the
results generated by the Company'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 the Company's primary business
activities. Readers should be cautioned, however, that operating
losses, EBITDAS, cash flow and gross margin should not be construed
as an alternative to net losses determined in accordance with GAAP
as an indicator of Enseco's performance. Enseco's method of
calculating operating losses, EBITDAS, cash flow and gross margin
may differ from other organizations and, accordingly, operating
losses, EBITDAS, cash flow and gross margin may not be comparable
to measures used by other organizations.
Neither the TSX Venture Exchange nor its Regulation Service
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Enseco Energy Services Corp. Lane Roberts President
and CEO 1-403-806-0088 403-806-0084 (FAX) Enseco Energy Services
Corp. Blair Layton CFO 1-403-806-0088 403-806-0084
(FAX)www.enseco.com