CALGARY, Aug. 13 /CNW/ - Petrowest Energy Services Trust (TSX: PRW.UN) announced today its interim consolidated financial results for the three and six month periods ended June 30, 2009.
Consolidated revenue from continuing operations for the three months ended June 30, 2009 was $17.0 million, a 48% decrease over consolidated revenue from continuing operations of $32.8 million in the comparable period of 2008. Gross margin and EBITDA percentages both decreased significantly compared to the comparable period of 2008. During the quarter a $35.4 million impairment relating to goodwill ($34.3 million) and intangible assets ($1.1 million) was recorded, as management of the Trust determined the carrying values of goodwill and intangible assets exceeded their estimated fair values. On May 14, 2009 the Trust closed the sale of certain under-performing rig mobilization and demobilization assets in the Transportation sector. For the three months ended June 30, 2009 the net loss from these discontinued operations was $2.2 million compared to a loss of $1.6 million in the comparable period of 2008. As at June 30, 2009 the revolving bank term loan (including bank overdraft) was $72.7 million, a reduction of $8.4 million from the $81.1 million of net debt as at December 31, 2008 and a reduction of $20.6 million since September 30, 2008. During the second quarter of 2009 there was a $3.8 million reduction in working capital after adjusting for net debt. The Trust obtained waivers from the bank syndicate for three financial covenants contained in the credit facility until September 25, 2009.
Consolidated revenue from continuing operations for the six months ended June 30, 2009 was $55.1 million, a decrease of 35% over consolidated revenue from continuing operations of $84.6 million in the comparable period of 2008. Gross margin and EBITDA percentages decreased by 11% and 12% respectively compared to 2008. For the six months ended June 30, 2009 the net loss from discontinued operations was $7.5 million compared to a loss of $1.3 million in the comparable period of 2008.
Ralph Hesje, President and Chief Executive Officer of the Trust stated that "the second quarter financial results continue to reflect the significantly reduced activity in the energy sector. While oil prices strengthened during the quarter, the price of natural gas deteriorated further. With spring break-up the financial results for the second quarter are typically the lowest of the year. However, margins were negative during the quarter as a result of revenue decreases exceeding cost reductions in addition to continuing pricing pressures from customers and reduced equipment utilization rates. We are effecting further cost cutting measures and pursuant to the press release issued on July 27, 2009, the Trust is reviewing all available strategic and financial restructuring options."
FINANCIAL HIGHLIGHTS
Financial Summary
Three months ended Six months ended
June 30 June 30
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(thousands of dollars,
except per unit amounts,
margins and ratios) 2009 2008 2009 2008
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Revenue from
continuing operations 17,003 32,834 55,139 84,603
Gross margin from
continuing operations(1) (2,062) 4,230 4,577 16,002
Gross margin percentage(1) (12%) 13% 8% 19%
General and administrative 1,409 1,698 3,257 3,752
EBITDA from
continuing operations(1) (3,471) 2,532 1,320 12,250
EBITDA margin percentage(1) (20%) 8% 2% 14%
Net loss and
comprehensive loss from
continuing operations (46,468) (9,595) (45,781) (9,563)
Discontinued operations,
net of tax (2,170) (1,628) (7,503) (1,275)
Net loss and
comprehensive loss (48,638) (11,223) (53,284) (10,838)
Cash provided from
operating activities (3,377) 2,872 7,280 2,082
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Total units outstanding 32,946,308 33,266,308 32,946,308 33,266,308
Weighted average units
outstanding - basic 32,941,253 33,266,308 32,933,822 33,266,308
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(1) See "Non-GAAP Measures" in Trust's MD&A (available at www.sedar.com)
The Trust continues to focus on diversification into industrial and civil infrastructure activities. This diversification objective has had limited success due to pricing pressures in bidding processes with numerous parties providing bids. On April 7, 2009, the Government of Alberta released its 2009 budget (the "Budget"). The Budget included $23.2 billion of infrastructure projects over the next three years. These infrastructure projects will not only assist in stimulation of the economy, but will provide Albertans with jobs. Included in the capital plan is $5.8 billion for provincial highway networks.
The oil and natural gas drilling sector will continue to impact the Trust's operations and financial results and will remain an important part of the Trust's operations going forward. However, infrastructure project demand is expected to be strong over the next couple of years as a result of government stimulus packages, with more of the Trust's activities and resources anticipated to be focused and deployed in this area during the summer construction season. The amount of the Trust's services relating to the oil and gas sector will fluctuate as the activity in this sector changes in addition to the amount of non-oil and gas related projects which the Trust is successful in securing. The Trust continued to pursue geographic diversification in 2009 with redeployment of equipment and skilled personnel to capitalize on demand in nearby regions plus improving utilization rates and financial results. With the shift in the North American natural gas markets towards unconventional shale gas basins, the Trust has moved quickly to position itself in two of North America's premier shale gas plays. The Trust has opened a full service office and maintenance facility in Fort Nelson and increased marketing emphasis in the northeastern British Columbia emerging Horn River and Montney shale gas plays. Petrowest has also undertaken a strategy to expand its presence in the oil sands mining sector by appointing a Divisional vice president and by securing office and industrial space in Fort McMurray. This sector represents the largest area of potential growth for the Trust.
SELECTED FINANCIAL INFORMATION
Selected financial information for the three and six month periods ended June 30, 2009 and 2008 is attached below. This information should be read in conjunction with the audited consolidated financial statements for the twelve months ended December 31, 2008 and the Trust's Management, Discussion and Analysis, available under the Trust's profile on the SEDAR website at www.sedar.com.
FORWARD LOOKING INFORMATION
This news release contains forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are identified by their use of terms and phrases such as "anticipate," "achievable," "believe," "expect," "estimate," "plan," "intend," "project," "may," "should", "could", "predict", "may," "will," or similar words suggesting future outcomes or language suggesting an outlook. Forward-looking statements and information are based on Petrowest's current beliefs as well as assumptions made by and information currently available to Petrowest concerning anticipated business performance. Although management of Petrowest considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking statements are subject to many external variables that are beyond Petrowest's control, such as fluctuating prices for crude oil and natural gas, changes in drilling activity, and general local and global economic, political, business and weather conditions. If any of these, or other uncertainties, materialize the actual results of Petrowest may vary materially from those expected.
Petrowest Energy Services Trust
Consolidated Balance Sheets
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(Unaudited)
As at As at
June 30, December 31,
(In thousands of dollars) 2009 2008
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Assets
Current assets
Cash and cash equivalents - 2,348
Accounts receivable 28,320 44,306
Prepaid expenses and other 1,444 1,083
Inventory 4,832 4,495
Assets related to discontinued operations 666 4,549
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35,262 56,781
Property and equipment 81,780 87,636
Intangible assets 10,319 13,402
Goodwill - 34,321
Future income taxes 734 727
Assets held for sale - 11,880
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128,095 204,747
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Liabilities
Current liabilities
Bank overdraft 4,792 -
Accounts payable and accrued liabilities 8,781 15,918
Revolving bank term loan 67,950 83,500
Current portion of obligations
under capital leases 600 651
Liabilities related to discontinued operations 81 2,447
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82,204 102,516
Obligations under capital leases 606 874
Future income taxes 9,529 12,463
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92,339 115,853
Unitholders' Equity
Units 292,498 292,492
Contributed surplus 775 635
Accumulated loss (219,554) (166,270)
Accumulated distributions to unitholders (37,963) (37,963)
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35,756 88,894
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128,095 204,747
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Petrowest Energy Services Trust
Consolidated Statements of Loss, Comprehensive Loss and Accumulated Loss
-------------------------------------------------------------------------
(Unaudited)
Three months ended Six months ended
June 30 June 30
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(In thousands of dollars,
except per unit amounts) 2009 2008 2009 2008
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Revenue 17,003 32,834 55,139 84,603
Expenses
Operating expenses 19,065 28,604 50,562 68,601
General and administrative 1,409 1,698 3,257 3,752
Interest 1,312 1,509 2,339 3,444
Amortization of property
and equipment 5,261 6,405 10,283 12,766
Amortization of
intangible assets 984 1,210 1,957 2,421
Impairment of goodwill
and intangible assets 35,446 1,874 35,446 1,874
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63,477 41,300 103,844 92,858
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(46,474) (8,466) (48,705) (8,255)
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Other income (loss)
Loss on disposal of
property and equipment - (2,097) (19) (2,135)
Interest and other income - 34 2 10
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Net loss and comprehensive
loss before taxes (46,474) (10,529) (48,722) (10,380)
Future income tax
expense (recovery) (6) (934) (2,941) (817)
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Net loss and comprehensive
loss from continuing
operations (46,468) (9,595) (45,781) (9,563)
Discontinued operations,
net of tax (2,170) (1,628) (7,503) (1,275)
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Net loss and comprehensive
loss for the period (48,638) (11,223) (53,284) (10,838)
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Accumulated loss -
beginning of period (170,916) (133,309) (166,270) (133,694)
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Accumulated loss -
end of period (219,554) (144,532) (219,554) (144,532)
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Net loss per unit
-basic and diluted from
continuing operations ($1.41) ($0.29) ($1.39) ($0.29)
-basic and diluted from
discontinued operations (0.07) (0.05) (0.23) (0.04)
-basic and diluted (1.48) (0.34) (1.62) (0.33)
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Petrowest Energy Services Trust
Consolidated Statements of Cash Flows
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(Unaudited)
Three months ended Six months ended
June 30 June 30
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(In thousands of dollars) 2009 2008 2009 2008
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Cash provided by (used in)
Operating activities
Net loss from continued
operations (46,468) (9,595) (45,781) (9,563)
Items not affecting cash
Amortization of
property and equipment 5,261 6,405 10,283 12,766
Amortization of
intangible assets 984 1,210 1,957 2,421
Impairment of goodwill
and intangible assets 35,446 1,874 35,446 1,874
Unit-based compensation
expense 112 143 140 143
Units issued for service 6 - 6 -
Future income taxes
(recovery) (6) (934) (2,941) (817)
Loss on disposal of
property and equipment - 2,097 19 2,135
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(4,665) 1,200 (871) 8,959
Changes in non-cash working
capital
Accounts receivable 4,010 3,645 15,986 (864)
Prepaid expenses and other (396) (42) (361) 728
Inventory (94) 583 (337) 1,265
Accounts payable and
accrued liabilities (2,232) (2,514) (7,137) (8,006)
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(3,377) 2,872 7,280 2,082
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Financing activities
Unitholder distributions - - - (953)
Repayment of capital
lease obligations (150) (147) (319) (338)
Proceeds from revolving
term bank loan - - - 5,000
Repayment of revolving
term bank loan (4,550) - (15,550) -
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(4,700) (147) (15,869) 3,709
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Investing activities
Purchase of property
and equipment (2,722) (2,465) (4,779) (6,983)
Proceeds on property
and equipment disposals 16 2,615 328 2,731
Purchase price adjustment - (34) - (25)
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(2,706) 116 (4,451) (4,277)
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Net change in cash from
continuing operations (10,783) 2,841 (13,040) 1,514
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Cash flow from discontinued
operations
Operating activities 1,407 (2,866) 116 (1,789)
Financing activities (7) (3) (10) (5)
Investing activities 5,927 (665) 5,794 (923)
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Net change in cash from
discontinued operations 7,327 (3,534) 5,900 (2,717)
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Decrease in cash and
cash equivalents (3,456) (693) (7,140) (1,203)
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Cash and cash equivalents
(bank overdraft),
beginning of period (1,336) (295) 2,348 215
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Cash and cash equivalents
(bank overdraft),
end of period (4,792) (988) (4,792) (988)
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Supplementary cash flow
information
Interest paid 1,400 1,770 2,626 3,499
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Non cash transactions
Property and equipment
financed by capital leases - 231 - 593
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