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Intercept Energy Services Inc

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Intercept Energy Services Reports Second Quarter – June 30, 2015 Results

(via Thenewswire.ca)

Edmonton, Canada / TheNewswire / August 19, 2015 - Intercept Energy Services Inc. ("IES" or the "Corporation") (TSX-V: IES / OTCBB: IESCF), a leading Oilfield Services Firm ("OSF") specializing in frac water heating, unconventional energy extraction, oilfield equipment, oilfield waste disposal and recovery of reusable products from waste, today reported financial results for the second quarter ended June 30, 2015.

Second Quarter Ended June 30, 2015 Highlights

  • -Gross revenues were higher by 114 percent to $1.1 million compared to $0.5 million for the same quarter last year and were higher by 19 percent to $2.2 million compared to $1.9 million on a year to date basis, due to increase in number of Heating Units in operation in 2015 and also additional revenues generated during the second quarter of 2015 on acquisition of 640 Energy by managing a water depot and a disposal well;

    -The Company successfully completed the acquisition of 640 Energy Inc. on April 1, 2015 after receiving all necessary regulatory approvals in exchange for 13 million Common Shares of the Corporation. 640 Energy Inc, now operates as a fully owned subsidiary of the Corporation effective April 1, 2015;

    -Net loss before other items for the quarter ended June 30, 2015 decreased to $0.5 million compared to a net loss before other items of $0.8 million for the same quarter last year due to increase in revenues during the quarter. Net loss before other items was $1.4 million compared to $1.1 million on a year to date basis compared to the same period last year, mainly due to increase in overall operation costs in first quarter of 2015.

Net loss for the quarter ended June 30, 2015 was $0.2 million compared to a net loss of $0.2 million for the same quarter last year and net loss was $1.9 million compared to $1.3 million on a year to date basis compared to the same period last year, mainly due to increase in overall operating costs in first quarter of 2015 and increase in finance expense on a year to date basis.

Commenting on second quarter ended June 30, 2015 results, Mr. Swapan Kakumanu, IES Chief Financial Officer stated, "Although our second quarter results showed continued growth, there is ongoing pressure on revenues and cost of operations, especially due to the continued slowdown in oil and gas activities in the regions we currently operate. The Company continues to explore and take necessary steps to generate alternate revenue streams in addition to the traditional Heating Unit operations. The recent acquisition of 640 Energy Inc. is a result of one of such initiatives to expand the revenue streams beyond Heating Units and generate revenues by managing a water depot and a disposal well in the USA under an agreement with 640 Energy Inc. We expect to see continued pressure on our charge out rates on our Heating Units during the remainder of 2015. Having closed a private placement of $1 million in the first quarter of 2015, and the acquisition of 640 Energy Inc. in the second quarter of 2015, the Corporation is working on a plan to sustain and grow over the remainder of 2015 and manage its working capital during this process."

The following pages are taken from the Completed Financial Statements and are available through SEDAR at http://sedar.com or on the Company's website.

page 2 of 6

June 30, 2015 condensed interim consolidated financial statements

INTERCEPT ENERGY SERVICES INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian dollars - Unaudited)

June 30

2015

Unaudited

December 31,

2014

Audited

ASSETS

Current assets

Cash

$ 2,036,172

$ 109,577

Trade and other receivables

1,641,308

3,251,976

Prepaids and deposits

170,136

37,113

Total current assets

3,847,616

3,398,666

Non-current assets

Equipment

6,430,535

3,446,677

Goodwill

95,237

-

Total non-current assets

6,525,772

3,446,677

TOTAL ASSETS

$ 10,373,388

$ 6,845,343

LIABILITIES

Current liabilities

Trade and other payables

$ 4,060,677

$ 2,922,406

Current portion of loans and borrowings

887,184

830,693

Current portion of finance lease obligations

710,832

346,465

Current portion of derivative liability

31,195

42,311

Total current liabilities

5,689,888

4,141,875

Non-current liabilities

Loans and borrowings

353,163

340,702

Finance lease obligations

4,538,927

2,031,376

Derivative liability

52,405

38,460

Total long term liabilities

4,944,495

2,410,538

TOTAL LIABILITIES

10,634,383

6,552,413

SHAREHOLDERS' (DEFICIENCY) EQUITY

Share capital

12,469,885

11,554,885

Contributed surplus

6,460,349

6,078,559

Deficit

(19,191,229)

(17,340,514)

TOTAL (DEFICIENCY) EQUITY

(260,995)

292,930

TOTAL LIABILITIES AND EQUITY

$ 10,373,388

$ 6,845,343

page 3 of 6

INTERCEPT ENERGY SERVICES INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS

(Expressed in Canadian dollars - Unaudited)

Three months ended

June 30,

Three months ended

June 30,

Six months ended

June 30,

Six months ended

June 30,

2015

2014

2015

2014

REVENUE

Rental and management fee income

$ 1,071,224

$ 501,190

$ 2,230,497

$ 1,866,536

EXPENSES

Consulting fees

116,857

68,817

319,308

196,058

Depreciation

190,164

198,987

366,221

343,281

Equipment maintenance and rental

162,645

132,737

301,124

182,779

Fuel and sundry direct operating costs

313,889

159,346

682,739

746,413

Occupancy costs

38,559

38,808

128,718

82,910

Office and sundry

125,835

53,846

267,679

103,155

Professional fees

59,730

143,802

140,301

210,816

Royalties

71,336

70,524

179,392

287,607

Salaries and wages

347,467

336,300

882,541

698,461

Share based compensation

13,357

10,465

21,790

43,654

Travel, marketing and conferences

43,926

35,962

82,690

69,129

Allowance for doubtful debts

69,337

-

416,518

-

Foreign exchange (gain) loss

26,999

8,614

(120,494)

8,614

1,580,101

1,258,208

3,668,527

2,972,877

Loss before other items

(508,877)

(757,018)

(1,438,030)

(1,106,341)

OTHER ITEMS

Gain (loss) on derivative liability

2,070

(14,487)

(12,186)

(15,301)

Finance expense

(213,786)

(149,668)

(400,499)

(217,800)

(211,716)

(164,155)

(412,685)

(233,101)

Net loss and total comprehensive loss for the period

$ (720,593)

$ (921,173)

$ (1,850,715)

$ (1,339,442)

Basic and diluted loss per common share

$ (0.00)

$ (0.01)

$ (0.01)

$ (0.01)

Weighted average number of common shares outstanding

141,478,579

109,873,310

149,323,882

109,583,164

page 4 of 6

INTERCEPT ENERGY SERVICES INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' (DEFICIENCY) EQUITY

(Expressed in Canadian dollars - Unaudited)

Share Capital Number of shares

Share Capital

Amount

Contributed surplus

Deficit

Total

Balance at December 31, 2013

109,289,794

$ 11,117,213

$ 5,646,571

$(18,398,509)

$ (1,634,725)

Bonus shares issued

900,000

30,490

-

-

30,490

Share based compensation

-

-

43,654

-

43,654

Net income and comprehensive income for the period

-

-

-

(1,339,442)

(1,339,442)

Balance at June 30, 2014

110,189,794

$11,147,703

$5,690,225

$(19,737,951)

$(2,900,023)

Balance at December 31, 2014

122,859,794

$ 11,554,885

$ 6,078,559

$ (17,340,514)

$ 292,930

Private placement (Note 11(v))

20,000,000

1,000,000

-

-

1,000,000

Warrants (Note 11(v))

-

(360,000)

360,000

-

-

Share issue costs (Note 11(v))

-

(50,000)

-

-

(50,000)

Issued on acquisition of 640 Energy Inc. (Note 4)

13,000,000

325,000

-

-

325,000

Share based compensation

-

-

21,790

-

21,790

Net income and comprehensive income for the period

-

-

-

(1,850,715)

(1,850,715)

Balance at June 30, 2015

155,859,794

$ 12,469,885

$ 6,460,349

$ (19,191,229)

$ (260,995)

page 5 of 6

INTERCEPT ENERGY SERVICES INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Canadian dollars - Unaudited)

Three months ended

Three months ended

Six months ended

Six months ended

June 30, 2015

June 30, 2014

June 30, 2015

June 30, 2014

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss) and comprehensive income (loss)

$ (720,593)

$ (921,173)

$ (1,850,715)

$ (1,339,442)

Add back (deduct) items not involving cash

Accretion

6,444

5,562

12,461

15,419

Depreciation

190,164

198,987

366,221

343,281

Non cash portion of (gain) loss on derivative

liability

(2,070)

16,115

12,186

15,301

Share based compensation

13,357

10,465

21,790

43,654

(512,698)

(690,044)

(1,438,057)

(921,787)

Changes in non-cash working capital items:

Trade and other receivables

4,196,222

421,046

4,998,754

(122,217)

Prepaids and deposits

23,469

(9,115)

31,830

(17,456)

Inventory

-

-

-

(11,816)

Trade and other payables

(3,121,456)

143,684

(2,555,516)

944,109

1,098,235

555,615

2,475,068

792,620

Net cash generated (used) in operating activities

585,537

(134,429)

1,037,011

(129,167)

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of equipment

(533,940)

(11,120)

(533,940)

(30,002)

Net cash generated (used) in investing activities

(533,940)

(11,120)

(533,940)

(30,002)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of shares

-

-

1,000,000

-

Share issue costs

-

-

(50,000)

-

Cash received on acquisition of 640 Energy

188,973

-

188,973

-

Loans and borrowings

28,380

201,066

56,491

448,631

Loans and borrowings repayments

-

2,571

-

-

Derivative liability

(5,238)

(21,628)

(9,357)

(31,118)

Finance leases

395,000

-

395,000

-

Finance leases repayments

(80,591)

(93,996)

(157,583)

(266,228)

Net cash generated (used) in financing activities

526,524

88,013

1,423,524

151,285

Net increase in cash for the period

578,121

(57,536)

1,926,595

(7,884)

Cash, beginning of period

1,458,051

58,497

109,577

8,845

Cash, end of period

$ 2,036,172

$ 961

$ 2,036,172

$ 961

page 6 of 6

About Intercept Energy Services Inc. ("IES")

Intercept Energy Services Inc. employs innovative and proprietary technology to provide the highest efficiency heated water, used by oil and gas exploration and production companies in the fracturing process in Canada and the United States. Through the utilization of HE Heaters(TM), IES is able to reduce fuel consumption and emissions, enhance safety and productivity and enable extreme cold weather operations with significantly lower operating costs that result in a direct competitive advantage for its customers. For more information, visit http://InterceptES.com

IES is based in Edmonton, Alberta, Canada.


For more information, visit the IES website: www.InterceptES.com

Contacts:

Mr. Keith Morlock Mr. Swapan Kakumanu

President & Chief Operating Officer Chief Financial Officer

1.877.975.0558 1.877.975.0558

kmorlock@Interceptes.com skakumanu@Interceptes.com

Media:

Ms. Julie Shepherd

Accentuate PR

1.973.331.9063

julie@accentuatepr.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 the accuracy of this release.

Forward-looking statements

Certain information regarding IES in this news release, including management's assessment of its future development plans and access to various external sources of capital, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with heating technology and oilfield services operations, general risks associated with oil and gas exploration, development, production, marketing and disposal of waste, loss of markets, environmental risks, competition from other service providers, delays resulting from inability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect IES's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements or information contained in this news release are made as of the date hereof and IES does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Copyright (c) 2015 TheNewswire - All rights reserved.

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