DALMAC ENERGY INC. TSX Venture: "DAL"
EDMONTON, Dec. 22, 2015 /CNW/ - John Babic,
President and CEO of Dalmac Energy Inc. ("Dalmac") (TSX Venture
"DAL") is pleased to announce second quarter results for the period
ended October 31, 2015.
FINANCIAL
HIGHLIGHTS
|
|
|
Change
|
|
|
Change
|
(000's Cdn
Dollars, except per share data)
|
Q2'16
|
Q2'15
|
%
|
YTD '16
|
YTD'15
|
%
|
Revenues
|
5,714
|
8,611
|
(34)
|
11,051
|
15,810
|
(30)
|
EBITDAS
(loss)
|
983
|
1,432
|
(31)
|
906
|
2,010
|
(55)
|
Earnings before
income tax
|
(94)
|
286
|
(133)
|
(1,129)
|
(194)
|
(481)
|
Net earnings
(loss)
|
(74)
|
213
|
(135)
|
(836)
|
(147)
|
(469)
|
|
Earnings (loss) per
share - basic
|
(0.00)
|
0.01
|
(135)
|
(0.04)
|
(0.01)
|
(467)
|
|
Earnings (loss) per
share - diluted
|
(0.00)
|
0.01
|
(135)
|
(0.04)
|
(0.01)
|
(468)
|
Q2 is usually a flat quarter for Dalmac. It is a time when oil
and gas companies begin readying themselves for the upcoming fall
and winter drilling season that follows after the spring break up
season. The following are of significant developments which
factored in pushing our Q2'16 down by 34% from Q2'15.
- The "Big Stone", a major arterial oilfield haul road near
Fox Creek, was largely out of
commission from about June to mid-November due to upgrading and
construction. This caused major transportation delays and also
resulted in numerous wells being shut in during this period.
- The Alliance Pipeline system was down for repairs for about 3
weeks in August which prevented the transportation of about 1.6
billion cubic feet per day of liquids rich natural gas from
reaching the Chicago markets from
western Canada.
- Various distressed smaller competitors began offering
discounted prices at below cost to get a share of the fluid
transfer market which drove down the overall rates for these
services.
The first two bullet points address non-recurring events that
managed to significantly curtail oilfield production and well
service operations, in a key part of the Duvernay basin over the course of the current
quarter. The third bullet point speaks to the current state of
conditions in the oil and gas services industry. Earlier in the
year, many of our key customers requested a 20-30% rate cut. Dalmac
responded accordingly with a varied price schedule whereby the
higher margin services would be discounted more than the low margin
services. This was satisfactory to many of our customers.
Dalmac made a strategic decision not to match pricing on certain
contracts that were below cost and chose to stick to higher margin
service related work. As a result of this decision, the
Company managed to maintain a healthy 30% gross profit margin for
Q2'16. The effect of all the aforementioned events resulted
culminated in a net loss of $74K for
the quarter and $836K for the year to
date.
Gross Margin
Gross Margin, defined as revenue less direct operating costs as a
percentage of revenue, had actually improved 1% to 30% for on the
quarter. This speaks favorably to the efficiency improvement
efforts and cost control initiatives implemented by Dalmac over
there course of the quarter, especially in the light of the 20%
rate cut that was requested by our key customers earlier in the
year. The year to date gross margin was down by 3% to 23%
which mainly impacted by a slower than expected Q1'16 along with
the equipment certifications and repair that were scheduled for
that spring breakup quarter.
Outlook
Dalmac's revenue is primarily derived from the
provision of specialized transportation and oilfield services to
companies engaged in exploration, development of petroleum
production. As such the demand for Dalmac's services are
inextricably connected to the general economic conditions of the
energy industry and the utilization levels of drilling and
completion activity. The low oil prices are not only impacting the
oil and gas industry, but are having a trickle down negative impact
on many of companies servicing the energy sector. Although
the energy industry is less robust than expected, some of our key
customers have indicated that they will proceed with planned
drilling and completions projects targeted for this fall-winter
season and certain others are not anticipating real growth for the
remainder of the year. The degree of timing variation for the
commencement of scheduled projects may create fluctuations in
revenue over the balance of the year. Though these conditions may
present challenges, we will continue to focus on our commitment to
operational excellence by tightening up on cost controls,
rationalizing capital expenditures and improving asset utility
wherever possible. Dalmac will also continue to focus on improving
the balance sheet while keeping close watch on debt levels which
will allow us to take advantage of revenue growth opportunities
that may require new capital or opportunistic acquisitions that
match our strategic growth objective of delivering value for our
shareholders.
Statements throughout this report that are not historical
facts may be considered 'forward looking statements'. Such
statements are based on current expectations that involve risks and
uncertainties, which could cause actual results to differ from
those anticipated. Important factors that can cause
anticipated outcomes to differ materially from actual outcomes
include the impact of general economic conditions, industry
conditions, competition from other industry participants,
volatility of petroleum prices, the ability to attract and retain
qualified personnel, changes in laws or regulation, currency
fluctuations, continued ability to access capital from available
facilities and environmental risks. References to "Dalmac',
the "Corporation", "Company", "us", "we", and "our" mean Dalamc
Energy Inc. and its subsidiary Dalmac Oilfield Services Inc.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release. We seek safe
harbor.
SOURCE Dalmac Energy Inc.