Enseco Energy Services Corp. Announces Record Results for Quarter Ending September 30, 2011
November 15 2011 - 7:09PM
Marketwired Canada
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.