Nov. 10, 2010 (Canada NewsWire Group) --
CALGARY, Nov. 10 /CNW/ - Petrowest Energy Services Trust (TSX: PRW.UN) announced today its consolidated financial results for the three and nine month periods ended September 30, 2010.
Revenue from continuing operations for the three months ended September 30, 2010, was $39.6 million, a 23% increase from revenue of $32.1 million in the comparable period of 2009. Gross margin and EBITDA margin percentages were 18% and 15% respectively, compared to 20% and 13% in the comparable period of 2009. For the three month period ended September 30, 2010 the net loss and comprehensive loss from continuing operations was $0.9 million compared to $1.9 million in the comparable period of 2009. This represents net loss per unit of $0.01 and $0.06 respectively, basic and fully diluted. The net loss and comprehensive loss (including Discontinued Operations) was $0.9 million compared to $2.0 million in the comparable period of 2009. This represents net loss per unit of $0.01 and $0.06 respectively, basic and fully diluted.
Revenue from continuing operations for the nine months ended September 30, 2010, was $101.4 million, a 16% increase from revenue of $87.3 million in the comparable period of 2009. Gross margin and EBITDA margin percentages were 16% and 12% respectively, representing an increase of 3% and 6% over the comparable period of 2009. For the nine month period ended September 30, 2010 the net loss and comprehensive loss from continuing operations was $7.5 million compared to $47.6 million in the comparable period of 2009. This represents net loss per unit of $0.15 and $1.45 respectively, basic and fully diluted. The net loss and comprehensive loss (including Discontinued Operations) was $7.5 million compared to $55.2 million in the comparable period of 2009. This represents net loss per unit of $0.15 and $1.68 respectively, basic and fully diluted.
The Trust's ability to continue operations is dependent on Petrowest's ability to maintain compliance with its credit facility or the ability to refinance the existing bank credit facility. In the second quarter of 2010, the Trust and the banking syndicate executed the Credit Agreement. The Credit Agreement provided for credit facilities in an initial aggregate principal amount of $70.0 million, consisting of a revolving credit facility in the principal amount of $63.0 million and a working capital facility in the principal amount of $7.0 million, subject to scheduled reductions over the term of the facility as follows: a reduction of $2.5 million on June 30, 2010; a reduction of $3.75 million on September 30, 2010; a reduction of $3.75 million on December 31, 2010; and a reduction of $2.5 million on March 31, 2011. As at September 30, 2010, after a reduction of $0.625 million from the net proceeds of a sale of assets and a $1.375 million additional reduction there was a total commitment of $65.5 million, comprised of a $58.95 million syndicated facility and $6.55 million working capital facility ($4.182 million drawn at September 30, 2010). The June 30, 2010 amendment became effective reducing the aggregate principal amount of the credit facility to $67,500,000.
However, as a result of the increased levels of activity in Petrowest's business, increased funding of working capital was required. As a result, Petrowest entered into an amending agreement effective September 30, 2010 which replaced the remaining three scheduled reductions with four reductions as follows: a reduction of $1.375 million on September 30, 2010, a reduction of $2.375 million on October 29, 2010, a reduction of $3.75 million on December 31, 2010 and a reduction of $2.5 million on March 31, 2011. In addition, the Credit Agreement contains two financial covenants, the "Funded debt to EBITDA Ratio" and the "Fixed Charge Coverage Ratio". As at September 30, 2010 the Trust was in compliance with these covenants. Under the Credit Agreement amounts outstanding bear interest at the prime rate plus 5.5%.
FINANCIAL HIGHLIGHTS
|
Three months ended September 30 |
Nine months ended September 30 |
|||
| (thousands of dollars, except per unit amounts, margins and ratios) | 2010 | 2009 | 2010 | 2009 |
| Revenue from continuing operations | 39,594 | 32,138 | 101,387 | 87,277 |
| Gross margin from continuing operations(1) | 7,188 | 6,414 | 15,879 | 10,991 |
| Gross margin percentage(1) | 18% | 20% | 16% | 13% |
| General and administrative | 1,206 | 2,230 | 3,647 | 5,487 |
| EBITDA from continuing operations(1) | 5,982 | 4,184 | 12,232 | 5,504 |
| EBITDA margin percentage(1) | 15% | 13% | 12% | 6% |
| Net loss and comprehensive loss from continuing operations | (900) | (1,877) | (7,460) | (47,658) |
| Discontinued operations, net of tax | (20) | (85) | (65) | (7,588) |
| Net loss and comprehensive loss | (920) | (1,962) | (7,525) | (55,246) |
| Cash provided from operating activities | (1,450) | 1,249 | 816 | 8,529 |
| Units outstanding | 86,686,278 | 32,946,308 | 86,686,278 | 32,946,308 |
| Weighted average units outstanding - basic | 86,686,278 | 32,946,308 | 51,253,331 | 32,938,030 |
(1) See "Non-GAAP Measures"
The oil and natural gas drilling sector will continue to impact the Trust's operations and financial results and remains an important part of the Trust's operations going forward. The amount of the Trust's services directly 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 is continuing to pursue geographic diversification in 2010 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 significant potential growth for the Trust
SELECTED FINANCIAL INFORMATION
Selected financial information for the three and nine months ended September 30, 2010 is attached below. This information should be read in conjunction with the audited consolidated financial statements for the twelve months ended December 31, 2009 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
(Unaudited)
| (In thousands of dollars) |
As at September 30, 2010 |
As at December 31, 2009 |
|
| Assets | |||
| Current assets | |||
| Accounts receivable | 37,440 | 28,262 | |
| Prepaid expenses and other | 3,138 | 2,158 | |
| Inventory | 4,348 | 3,984 | |
| Assets related to discontinued operations | - | 174 | |
| 44,926 | 34,578 | ||
| Property and equipment | 60,144 | 67,972 | |
| Intangible assets | 5,716 | 8,330 | |
| 110,786 | 110,880 | ||
| Liabilities | |||
| Current liabilities | |||
| Bank overdraft | 4,182 | 270 | |
| Accounts payable and accrued liabilities | 15,935 | 11,689 | |
| Revolving bank term loan | 60,188 | 67,950 | |
| Current portion of obligations under capital leases | 963 | 544 | |
| Liabilities related to discontinued operations | - | 11 | |
| 81,268 | 80,464 | ||
| Obligations under capital leases | 539 | 331 | |
| 81,807 | 80,795 | ||
| Unitholders' Equity | |||
| Units | 298,937 | 292,498 | |
| Warrants | 400 | - | |
| Contributed surplus | 630 | 1,050 | |
| Accumulated loss | (233,025) | (225,500) | |
| Accumulated distributions to unitholders | (37,963) | (37,963) | |
| 28,979 | 30,085 | ||
| 110,786 | 110,880 | ||
Petrowest Energy Services Trust
Consolidated Statements of Loss, Comprehensive Loss and Accumulated Loss
(Unaudited)
|
Three months ended September 30 |
Nine months ended September 30 |
|||||||||
| (In thousands of dollars, except per unit amounts) | 2010 | 2009 | 2010 | 2009 | ||||||
| Revenue | 39,594 | 32,138 | 101,387 | 87,277 | ||||||
| Expenses | ||||||||||
| Operating expenses | 32,406 | 25,724 | 85,508 | 76,286 | ||||||
| General and administrative | 1,206 | 2,230 | 3,647 | 5,487 | ||||||
| Interest | 1,423 | 1,269 | 4,730 | 3,608 | ||||||
| Amortization of property and equipment | 4,049 | 5,361 | 11,841 | 15,644 | ||||||
| Amortization of intangible assets | 881 | 904 | 2,613 | 2,861 | ||||||
| Impairment of property and equipment | - | 5,301 | - | 5,301 | ||||||
| Impairment of goodwill and intangible assets | - | - | - | 35,446 | ||||||
| 39,965 | 40,789 | 108,339 | 144,633 | |||||||
| (371) | (8,651) | (6,952) | (57,356) | |||||||
| Other income (loss) | ||||||||||
| Gain (loss) on disposal of property and equipment | (533) | 175 | (518) | 156 | ||||||
| Interest and other income | 4 | 73 | 10 | 75 | ||||||
|
Net loss and comprehensive loss before taxes |
(900) | (8,403) | (7,460) | (57,125) | ||||||
| Future income tax recovery | - | (6,526) | - | (9,467) | ||||||
| Net loss and comprehensive loss from continuing operations | (900) | (1,877) | (7,460) | (47,658) | ||||||
| Discontinued operations, net of tax | (20) | (85) | (65) | (7,588) | ||||||
| Net loss and comprehensive loss for the period | (920) | (1,962) | (7,525) | (55,246) | ||||||
| Accumulated loss - beginning of period | (232,105) | (219,554) | (225,500) | (166,270) | ||||||
| Accumulated loss - end of period | (233,025) | (221,516) | (233,025) | (221,516) | ||||||
| Net loss per unit | ||||||||||
| - basic and diluted from continuing operations | $(0.01) | $(0.06) | $(0.15) | $(1.45) | ||||||
| - basic and diluted from discontinued operations | (0.00) | (0.00) | (0.00) | (0.23) | ||||||
| - basic and diluted | (0.01) | (0.06) | (0.15) | (1.68) | ||||||
Petrowest Energy Services Trust
Consolidated Statements of Cash Flows
(Unaudited)
|
|
Three months ended September 30 |
Nine months ended September 30 |
|||
| (In thousands of dollars) | 2010 | 2009 | 2010 | 2009 | |
| Cash provided by (used in) | |||||
| Operating activities | |||||
| Net loss from continuing operations | (900) | (1,877) | (7,460) | (47,658) | |
| Items not affecting cash | |||||
| Amortization of property and equipment | 4,049 | 5,361 | 11,841 | 15,644 | |
| Amortization of intangible assets | 881 | 904 | 2,613 | 2,861 | |
| Impairment of property and equipment | - | 5,301 | - | 5,301 | |
| Impairment of goodwill and intangible assets | - | - | 35,446 | ||
| Unit-based compensation expense | - | 147 | (420) | 287 | |
| Units issued for service | - | - | - | 6 | |
| Future income tax recovery | - | (6,526) | - | (9,467) | |
| (Gain) loss on disposal of property and equipment | 533 | (175) | 518 | (156) | |
| 4,563 | 3,135 | 7,092 | 2,264 | ||
| Changes in non-cash working capital | |||||
| Accounts receivable | (9,221) | (4,948) | (9,178) | 11,038 | |
| Prepaid expenses and other | (159) | (1,306) | (980) | (1,667) | |
| Inventory | (262) | 406 | (364) | 69 | |
| Accounts payable and accrued liabilities | 3,629 | 3,962 | 4,246 | (3,175) | |
| (1,450) | 1,249 | 816 | 8,529 | ||
| Financing activities | |||||
| Issuance of units | - | - | 7,523 | - | |
| Unit issue costs | (41) | (684) | |||
| Repayment of capital lease obligations | (369) | (172) | (961) | (491) | |
| Repayment of revolving term bank loan | (562) | - | (7,762) | (15,550) | |
| (972) | (172) | (1,884) | (16,041) | ||
| Investing activities | |||||
| Purchase of property and equipment | (1,150) | (629) | (4,277) | (5,164) | |
| Proceeds on property and equipment disposals | 616 | 322 | 1,335 | 406 | |
| (534) | (307) | (2,942) | (4,758) | ||
| Net change in cash from continuing operations | (2,956) | 770 | (4,010) | (12,270) | |
| Cash flow from discontinued operations | |||||
| Operating activities | - | 465 | 98 | 581 | |
| Financing activities | - | - | - | (10) | |
| Investing activities | - | - | - | 5,794 | |
| Net change in cash from discontinued operations | - | 465 | 98 | 6,365 | |
| Decrease in cash and cash equivalents | (2,956) | 1,235 | (3,912) | (5,905) | |
|
Cash and cash equivalents (bank overdraft), beginning of period |
(1,226) | (4,792) | (270) | 2,348 | |
| Cash and cash equivalents (bank overdraft), end of period | (4,182) | (3,557) | (4,182) | (3,557) | |
| Supplementary cash flow information | |||||
| Interest paid | 1,858 | 1,264 | 4,595 | 3,890 | |
| Non cash transactions | |||||
| Property and equipment financed by capital leases | - | - | 1,588 | - | |
Richard Quigley, Interim CEO, or Lloyd A. Wiggins, Chief Financial Officer, at (780) 830-0881 or info@petro-west.com.
