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Press release from CNW Group

Petrowest Energy Services Trust announces 2010 first quarter financial results

Friday, May 14, 2010

Petrowest Energy Services Trust announces 2010 first quarter financial results16:01 EDT Friday, May 14, 2010CALGARY, May 14 /CNW/ - Petrowest Energy Services Trust (TSX: PRW.UN) announced today its consolidated financial results for the three months ended March 31, 2010.Revenue from continuing operations for the three months ended March 31, 2010, was $35.8 million, a 6% decrease from revenue of $38.1 million in the comparable period of 2009. Gross margin and EBITDA margin percentages were in line with the comparable period of 2009. For the three month period ended March 31, 2010 the net earnings (loss) and comprehensive earnings (loss) from continuing operations was $(1.1) million compared to $0.7 million in 2009. For the three month period ended March 31, 2010 the net loss and comprehensive loss (including Discontinued Operations) was $1.1 million compared to $4.6 million in 2009. This represents net loss per unit of $0.03 and $0.14 respectively, basic and fully diluted.On May 12, 2010 the Trust filed a preliminary short form prospectus (the "Offering") with the applicable securities regulatory authorities. The prospectus was for the offering and distribution of rights to subscribe for trust units of the Trust to raise a minimum of $7.5 million. On May 12, 2010 The Trust entered into a Standby Purchase Agreement with PetroCorp Group Inc. and seven other individual purchasers (the "Standby Purchasers") whereby the Standby Purchasers agreed to purchase all of the trust units not otherwise purchased pursuant to the Offering. The Offering remains subject to regulatory approval, including the receipt for a final prospectus relating to the Offering and that of the Toronto Stock Exchange. The Offering is conditional upon the entering into of an agreement by the Trust with the banking syndicate.As at March 31, 2010, $69.3 million was outstanding under the Trust's revolving bank term loan (including bank overdraft). The Trust has substantially concluded negotiations with respect to the amendments to its existing secured credit facilities with the banking syndicate. These amendments remain subject to final approval by the syndicate and the execution of an amended and restated credit agreement. The Trust expects that such amended credit facilities will be 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. The Trust has filed a preliminary short form prospectus with the applicable securities regulatory authorities to raise a minimum of $7.5 million through an offering and distribution of rights to subscribe for trust units of the Trust. Failure to raise proceeds of $7.5 million under the Offering is expected to be an event of default under the amended and restated credit agreement.FINANCIAL HIGHLIGHTS << Three months ended March 31 ------------------------------------------------------------------------- (thousands of dollars, except per unit amounts, margins and ratios) 2010 2009 ------------------------------------------------------------------------- Revenue from continuing operations 35,756 38,137 Gross margin from continuing operations(1) 6,131 6,640 Gross margin percentage(1) 17% 17% General and administrative 1,558 1,848 EBITDA from continuing operations(1) 4,573 4,792 EBITDA margin percentage(1) 13% 13% Net earnings (loss) and comprehensive earnings (loss) from continuing operations (1,097) 688 Discontinued operations, net of tax (45) (5,334) Net loss and comprehensive loss (1,142) (4,646) Cash provided from operating activities 1,234 10,657 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Units outstanding 32,946,308 32,926,308 Weighted average units outstanding - basic 32,946,308 32,926,308 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (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 the bidding process with increased number of parties providing bids. The Construction segment, which comprised 44% of the Trust's consolidated revenue in 2010 has less non-energy related activities compared to other business segments, with 88% of activities directly relating to the energy sector during the three months ended March 31, 2010 compared to 96% in the comparable period of 2009.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. 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 continued 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 the largest area of potential growth for the Trust.SELECTED FINANCIAL INFORMATIONSelected financial information for the three months ended March 31, 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 INFORMATIONThis 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) As at As at March 31, December 31, (In thousands of dollars) 2010 2009 ------------------------------------------------------------------------- Assets Current assets Accounts receivable 29,096 28,262 Prepaid expenses and other 2,992 2,158 Inventory 4,071 3,984 Assets related to discontinued operations 90 174 ------------------------------------------------------------------------- 36,249 34,578 Property and equipment 67,404 67,972 Intangible assets 7,468 8,330 ------------------------------------------------------------------------- 111,121 110,880 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Current liabilities Bank overdraft 1,356 270 Accounts payable and accrued liabilities 10,836 11,689 Revolving bank term loan 67,950 67,950 Current portion of obligations under capital leases 1,117 544 Liabilities related to discontinued operations 1 11 ------------------------------------------------------------------------- 81,260 80,464 Obligations under capital leases 790 331 ------------------------------------------------------------------------- 82,050 80,795 Unitholders' Equity Units 292,498 292,498 Contributed surplus 1,178 1,050 Accumulated loss (226,642) (225,500) Accumulated distributions to unitholders (37,963) (37,963) ------------------------------------------------------------------------- 29,071 30,085 ------------------------------------------------------------------------- 111,121 110,880 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Petrowest Energy Services Trust Consolidated Statements of Loss, Comprehensive Loss and Accumulated Loss ------------------------------------------------------------------------- (Unaudited) Three months ended March 31 ------------------------------------------------------------------------- (In thousands of dollars, except per unit amounts) 2010 2009 ------------------------------------------------------------------------- Revenue 35,756 38,137 Expenses Operating expenses 29,625 31,497 General and administrative 1,558 1,848 Interest 863 1,027 Amortization of property and equipment 4,118 5,022 Amortization of intangible assets 862 973 ------------------------------------------------------------------------- 37,026 40,367 ------------------------------------------------------------------------- (1,270) (2,230) ------------------------------------------------------------------------- Other income (loss) Gain (loss) on disposal of property and equipment 169 (19) Interest and other income 4 2 ------------------------------------------------------------------------- Net loss and comprehensive loss before taxes (1,097) (2,247) Future income tax recovery - (2,935) ------------------------------------------------------------------------- Net earnings (loss) and comprehensive earnings (loss) (1,097) 688 Discontinued operations, net of tax (45) (5,334) ------------------------------------------------------------------------- Net loss and comprehensive loss (1,142) (4,646) ------------------------------------------------------------------------- Accumulated loss - beginning of period (225,500) (166,270) ------------------------------------------------------------------------- Accumulated loss - end of period (226,642) (170,916) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net loss per unit - basic and diluted from continuing operations $(0.03) $0.02 - basic and diluted from discontinued operations (0.00) (0.16) - basic and diluted (0.03) (0.14) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Petrowest Energy Services Trust Consolidated Statements of Cash Flows ------------------------------------------------------------------------- (Unaudited) Three months ended March 31 ------------------------------------------------------------------------- (In thousands of dollars) 2010 2009 ------------------------------------------------------------------------- Cash provided by (used in) Operating activities Net earnings (loss) from continuing operations (1,097) 688 Items not affecting cash Amortization of property and equipment 4,118 5,022 Amortization of intangible assets 862 973 Unit-based compensation expense 128 28 Future income tax recovery - (2,935) (Gain) loss on disposal of property and equipment (169) 19 ------------------------------------------------------------------------- 3,842 3,795 Changes in non-cash working capital Accounts receivable (834) 11,976 Prepaid expenses and other (834) 34 Inventory (87) (243) Accounts payable and accrued liabilities (853) (4,905) ------------------------------------------------------------------------- 1,234 10,657 ------------------------------------------------------------------------- Financing activities Repayment of capital lease obligations (290) (169) Repayment of revolving term bank loan - (11,000) ------------------------------------------------------------------------- (290) (11,169) ------------------------------------------------------------------------- Investing activities Purchase of property and equipment (2,276) (1,813) Proceeds on property and equipment disposals 217 68 ------------------------------------------------------------------------- (2,059) (1,745) ------------------------------------------------------------------------- Net change in cash from continuing operations (1,115) (2,257) ------------------------------------------------------------------------- Cash flow from discontinued operations Operating activities 29 (1,291) Financing activities - (3) Investing activities - (133) ------------------------------------------------------------------------- Net change in cash from discontinued operations 29 (1,427) ------------------------------------------------------------------------- Decrease in cash and cash equivalents (1,086) (3,684) ------------------------------------------------------------------------- Cash and cash equivalents (bank overdraft), beginning of period (270) 2,348 ------------------------------------------------------------------------- Bank overdraft, end of period (1,356) (1,336) ------------------------------------------------------------------------- Supplementary cash flow information Interest paid 866 1,225 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Non cash transactions Property and equipment financed by capital leases 1,322 - ------------------------------------------------------------------------- ------------------------------------------------------------------------- >> For further information: Ralph Hesje, President and CEO, or Lloyd A. Wiggins, Chief Financial Officer, at (403) 237-0881 or info@petro-west.com