CALGARY, Aug. 29, 2019 /CNW/ - New West Energy Services
Inc. (TSX Venture: NWE), an oil and gas and environmental
services company focused on Western
Canada, today announced its second quarter 2019 financial
results.
FINANCIAL HIGHLIGHTS
- Revenue was $5,980,094 in the six
months ended June 30, 2019 compared
to $10,530,892 in the same period
last year, and $1,679,293 in the
three months ended June 30, 2019
compared to $2,622,753 in the same
period last year. This significant reduction was mostly due to NWE
ceasing its fluid transportation operations in Grande Prairie as a result of a significant
decrease in revenue associated with this segment stemming from the
continuing decline in completions activity in northwestern
Alberta.
As previously announced, on August 7,
2019, NWE completed a restructuring of its operations
whereby NWE's then operating subsidiary, BearStone Environmental
Solutions Inc., sold to NWE's new operating subsidiary, Silverpoint
Energy Services Inc., all of the equipment associated with its
vacuum and water truck services business operated out of
Medicine Hat.
As consideration for the equipment acquisition, Silverpoint assumed
$2,733,911 of BearStone's current
secured indebtedness, subject to downward adjustment under certain
conditions. Silverpoint also borrowed an additional $315,000 to pay wages to the closing date of
those BearStone employees who are being hired by Silverpoint. The
total indebtedness is for a term of five years.
Silverpoint also secured a revolving operating line of credit of up
to $1.5 million, based upon eligible
accounts and other considerations, to be used for general corporate
purposes. Silverpoint may draw down on, and repay, the loan from
time to time as needed. The line of credit is also for a term of
five years.
Going forward, Silverpoint will be NWE's sole operating subsidiary
and will focus on vacuum and water truck services out of
Medicine Hat, as well as
environmental services out of the company's headquarters in
Calgary.
Pursuant to an order of the Court of Queen's Bench in Alberta, KPMG was appointed receiver over the
remaining assets and undertakings of BearStone. The Court also
approved the sale by BearStone to Silverpoint of the
above-mentioned equipment.
Silverpoint also assumed approximately $430,000 of BearStone's indebtedness towards
other third-party lenders in exchange for Sliverpoint acquiring
certain of BearStone's drilling services equipment.
- Gross margin was 29% in the six months ended June 30, 2019 compared to 16% in the same period
last year, and 29% in the three months ended June 30, 2019 compared to 10% in the same period
last year. The environmental and vacuum and water truck
services operating in the drilling services sector realized an
increase in gross margins offsetting a decrease in gross margin
from the fluid transportation services operating in the completions
and production sectors.
- General and administrative expenses were $1,824,565 in the six months ended June 30, 2019 compared to $1,876,126 in same period last year, and
$898,291 in the three months ended
June 30, 2019 compared to
$932,012 in same period last year,
reflecting a consistency between reporting periods.
- Normalized EBITDAC was negative $80,534 in the six months ended June 30, 2019 compared to negative $204,780 in the same period last year, and
negative $416,407 in the three months
ended June 30, 2019 compared to
negative $642,590 in the same period
last year.
|
For the three
months ended June 30,
|
|
For the
three months ended June 30,
|
|
2019
|
|
2018
|
|
Vacuum Truck
&
Fluid
Transportation
Services
|
Environmental
Services
|
Corporate
|
Total
|
|
Vacuum Truck
&
Fluid
Transportation
Services
|
Environmental
Services
|
Corporate
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
$
|
$
|
$
|
$
|
|
$
|
$
|
$
|
$
|
Revenue
|
1,248,759
|
430,534
|
-
|
1,679,293
|
|
2,088,190
|
534,563
|
-
|
2,622,753
|
Direct
costs
|
952,872
|
244,537
|
-
|
1,197,409
|
|
2,046,952
|
322,246
|
-
|
2,369,198
|
Gross
margin
|
295,887
|
185,997
|
-
|
481,884
|
|
41,238
|
212,317
|
-
|
253,555
|
G & A
expenses
|
482,655
|
333,906
|
81,730
|
898,291
|
|
497,206
|
346,388
|
88,418
|
932,012
|
Share base
pmts
|
-
|
-
|
-
|
-
|
|
-
|
-
|
16,511
|
16,511
|
Finance
charges
|
130,713
|
12,632
|
45,341
|
188,686
|
|
119,104
|
16,150
|
23,909
|
159,163
|
Depreciation
|
331,258
|
-
|
-
|
331,258
|
|
365,699
|
-
|
-
|
365,699
|
Disposal of
assets
|
26,524
|
-
|
-
|
26,524
|
|
(6,733)
|
-
|
-
|
(6,733)
|
Net loss before
tax
|
(675,263)
|
(160,541)
|
(127,071)
|
(962,875)
|
|
(934,038)
|
(150,221)
|
(128,838)
|
(1,213,097)
|
Total
assets
|
7,810,883
|
558,940
|
-
|
8,369,823
|
|
10,843,330
|
534,160
|
31,997
|
11,409,487
|
EBITDAC*
|
(186,768)
|
(147,909)
|
(81,730)
|
(416,407)
|
|
(420,101)
|
(134,071)
|
(88,418)
|
(642,590)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six
months ended June 30,
|
|
For the six months
ended June 30,
|
|
2019
|
|
2018
|
|
Vacuum Truck
&
Fluid
Transportation
Services
|
Environmental
Services
|
Corporate
|
Total
|
|
Vacuum Truck
&
Fluid
Transportation
Services
|
Environmental
Services
|
Corporate
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
$
|
$
|
$
|
$
|
|
$
|
$
|
$
|
$
|
Revenue
|
4,350,688
|
1,629,406
|
-
|
5,980,094
|
|
8,354,010
|
2,176,882
|
-
|
10,530,892
|
Direct
costs
|
3,304,954
|
931,109
|
-
|
4,236,063
|
|
7,410,917
|
1,484,496
|
-
|
8,895,413
|
Gross
margin
|
1,045,734
|
698,297
|
-
|
1,744,031
|
|
943,093
|
692,386
|
-
|
1,635,479
|
G & A
expenses
|
999,258
|
678,266
|
147,041
|
1,824,565
|
|
995,958
|
717,777
|
162,391
|
1,876,126
|
Share base
pmts
|
-
|
-
|
-
|
-
|
|
-
|
-
|
16,511
|
16,511
|
Finance
charges
|
244,646
|
32,507
|
90,194
|
367,347
|
|
297,226
|
32,455
|
47,543
|
377,224
|
Depreciation
|
650,838
|
-
|
-
|
650,838
|
|
736,781
|
-
|
-
|
736,781
|
Disposal of
assets
|
26,524
|
-
|
-
|
26,524
|
|
71,881
|
-
|
-
|
71,881
|
Net loss before
tax
|
(875,532)
|
(12,476)
|
(237,235)
|
(1,125,243)
|
|
(1,158,753)
|
(57,846)
|
(226,445)
|
(1,443,044)
|
Total
assets
|
7,810,883
|
558,940
|
-
|
8,369,823
|
|
10,843,330
|
534,160
|
31,997
|
11,409,487
|
EBITDAC*
|
46,476
|
20,031
|
(147,041)
|
(80,534)
|
|
(16,998)
|
(25,391)
|
(162,391)
|
(204,780)
|
|
* Normalized EBITDAC
is earnings from continuing operations before interest, taxes,
depreciation, amortization and share-based payments and is a
measure of NWE's operating profitability. The calculation is
further adjusted to normalize EBITDAC by removing any
non-reoccurring transactions that are not in the normal course of
operations.
|
|
** Copies of NWE's
financial statements, MD&A and other public filings are
available under the company's profile on SEDAR at
www.sedar.com.
|
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Cautionary Note Regarding Forward-Looking Information
Certain statements in this news release may constitute
"forward-looking information" within the meaning of applicable
securities laws that involve known and unknown risks, uncertainties
and other factors that may cause actual results, performance or
achievements or industry results to be materially different from
any future results, performance or achievements or industry results
expressed or implied by such forward-looking information and
financial outlook. Forward-looking information is identified
by the use of terms and phrases such as "anticipate", "believe",
"could", "estimate", "expect", "intend", "may", "plan", "predict",
"project", "will", "would", and similar terms and phrases,
including references to assumptions. Such information may
involve, but is not limited to, comments with respect to
strategies, expectations, planned operations or future
actions. Forward-looking information in this news release
includes, without limitation, statements with respect to: the use
of proceeds of its loans; the use of the acquired equipment;
planned changes in NWE's business and revenues; the competitive
environment in which NWE operates; and the assessment of future
plans and operations. Actual events or results may differ
materially. The forward-looking information in this news
release is based on assumptions which includes, but is not limited
to: NWE realizing the expected benefits of its loans and acquired
equipment; the general state of the economy and the oil and gas
industry not worsening; NWE not losing any key personnel; NWE
sustaining or increasing their level of revenues and EBITDAC
NWE growing its businesses long term and managing its growth;
NWE complying with existing regulations and not becoming subject to
more stringent regulations; and, NWE's insurance being sufficient
to cover losses that may occur as a result of its operations.
The forward-looking information in this news release is subject to
risks, uncertainties and other factors that could cause actual
results to differ materially from historical results or results
anticipated by the forward-looking information. The factors
which could cause results to differ from current expectations
include, but are not limited to: failure to realize the expected
benefits of its loans and acquired equipment; potential undisclosed
liens associated with the acquired equipment; NWE's results being
dependent upon the general state of the economy and the oil and gas
industry; NWE being dependent on key personnel, the loss of which
could harm its business; NWE may not be able to sustain or increase
their revenues or EBITDAC; NWE may be unable to grow its business
long term or to manage any growth; NWE may be unable to integrate
the acquired equipment into its business; competition in NWE's
markets may lead to reduced revenues and EBITDAC; NWE may fail to
comply with existing regulations or become subject to more
stringent regulations; NWE's insurance may be insufficient to cover
losses that may occur as a result of NWE's operations; the market
price of NWE's common shares will fluctuate; and, there is a
possibility of dilution of existing holders of NWE's common shares
due to future financings or acquisitions. Although NWE has
attempted to identify factors that would cause actual actions,
events or results to differ materially from those disclosed in the
forward-looking statements in this news release, there may be other
factors that cause actions, events or results not to be as
anticipated, estimated or intended. Also, many of the factors are
beyond the control of NWE. Accordingly, readers should not
place undue reliance on the forward-looking information in this
news release. The forward-looking information is made as of
the date of this news release, and NWE does not assume any
obligation to publicly update or revise such forward-looking
information to reflect new information, subsequent or otherwise,
except as may be required by applicable law. The
forward-looking information contained herein is expressly qualified
in its entirety by this cautionary statement.
SOURCE New West Energy Services Inc.