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Press release from CNW Group

Petrowest Energy Services Trust announces 2010 second quarter financial results

Monday, August 09, 2010

Petrowest Energy Services Trust announces 2010 second quarter financial results19:57 EDT Monday, August 09, 2010CALGARY, Aug. 9 /CNW/ - Petrowest Energy Services Trust (TSX: PRW.UN) announced today its consolidated financial results for the three and six month periods ended June 30, 2010.Revenue from continuing operations for the three months ended June 30, 2010, was $26.0 million, a 53% increase from revenue of $17.0 million in the comparable period of 2009. Gross margin and EBITDA margin percentages were 10% and 6% respectively, representing an increase of 22% and 26% over the comparable period of 2009. For the three month period ended June 30, 2010 the net loss and comprehensive loss from continuing operations was $5.5 million compared to $46.5 million in the comparable period of 2009. This represents net loss per unit of $0.16 and $1.41 respectively, basic and fully diluted. The net loss and comprehensive loss (including Discontinued Operations) was $5.5 million compared to $48.6 million in the comparable period of 2009. This represents net loss per unit of $0.16 and $1.48 respectively, basic and fully diluted.Revenue from continuing operations for the six months ended June 30, 2010, was $61.8 million, a 12% increase from revenue of $55.1 million in the comparable period of 2009. Gross margin and EBITDA margin percentages were 14% and 12% respectively, representing an increae of 6% and 10% over the comparable period of 2009. For the six month period ended June 30, 2010 the net loss and comprehensive loss from continuing operations was $6.6 million compared to $45.8 million in the comparable period of 2009. This represents net loss per unit of $0.20 and $1.39 respectively, basic and fully diluted. The net loss and comprehensive loss (including Discontinued Operations) was $6.6 million compared to $53.3 million in the comparable period of 2009. This represents net loss per unit of $0.20 and $1.62 respectively, basic and fully diluted.On June 29, 2010, pursuant to a public rights offering, the Trust issued an aggregate of 53,571,434 Trust units and 168,536 subordinated units at $0.14 per unit. The units issued pursuant to the rights offering were valued at $7,523,595 before issue costs of $1,043,099 (including $400,125 non-cash costs related to warrants). The Trust intends to utilize net proceeds of the rights offering to fund working capital requirements and daily operations, primarily fuel, salaries and operating lease payments.The Trust's ability to continue operations is dependent on the continued support of the banking syndicate 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 has a total commitment of $70.0 million, comprised of a $63.0 million syndicated facility and $7.0 million working capital facility. There are scheduled reductions and cancellations of commitments due June 30, 2010, September 30, 2010, and December 31, 2010 of $3.75 million on each date in addition to a further scheduled reduction of $2.5 million on March 31, 2011. As at June 30, 2010, after the scheduled reduction of $3.75 million there was a total commitment of $67.5 million, comprised of a $60.75 million syndicated facility and $6.75 million working capital facility ($1.2 million drawn June 30, 2010). The credit facility will have a total commitment of $57.5 million on the stated maturity date of April 30, 2011. The Credit Agreement contains two financial covenants, the "Funded debt to EBITDA Ratio" and the "Fixed Charge Coverage Ratio". As at June 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 Six months ended June 30 June 30 ------------------------------------------------------------------------- (thousands of dollars, except per unit amounts, margins and ratios) 2010 2009 2010 2009 ------------------------------------------------------------------------- Revenue from continuing operations 26,037 17,003 61,793 55,139 Gross margin from continuing operations(1) 2,560 (2,062) 8,691 4,577 Gross margin percentage(1) 10% (12%) 14% 8% General and administrative 883 1,409 2,441 3,257 EBITDA from continuing operations(1) 1,677 (3,471) 6,250 1,320 EBITDA margin percentage(1) 6% (20%) 12% 2% Net loss and comprehensive loss from continuing operations (5,463) (46,468) (6,560) (45,781) Discontinued operations, net of tax - (2,170) (45) (7,503) Net loss and comprehensive loss (5,463) (48,638) (6,605) (53,284) Cash provided from operating activities 1,032 (3,377) 2,266 7,280 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Units outstanding 86,686,228 32,946,308 86,686,228 32,946,308 Weighted average units outstanding - basic 35,029,523 32,941,253 33,243,214 32,933,822 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) See "Non-GAAP Measures" >> 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 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 the largest area of potential growth for the Trust.SELECTED FINANCIAL INFORMATIONSelected financial information for the three and six months ended June 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 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 June 30, December 31, (In thousands of dollars) 2010 2009 ------------------------------------------------------------------------- Assets Current assets Accounts receivable 28,219 28,262 Prepaid expenses and other 2,979 2,158 Inventory 4,086 3,984 Assets related to discontinued operations 21 174 ------------------------------------------------------------------------- 35,305 34,578 Property and equipment 64,192 67,972 Intangible assets 6,597 8,330 ------------------------------------------------------------------------- 106,094 110,880 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Current liabilities Bank overdraft 1,226 270 Accounts payable and accrued liabilities 12,306 11,689 Revolving bank term loan 60,750 67,950 Current portion of obligations under capital leases 1,067 544 Liabilities related to discontinued operations 1 11 ------------------------------------------------------------------------- 75,350 80,464 Obligations under capital leases 804 331 ------------------------------------------------------------------------- 76,154 80,795 Unitholders' Equity Units 298,978 292,498 Warrants 400 - Contributed surplus 630 1,050 Accumulated loss (232,105) (225,500) Accumulated distributions to unitholders (37,963) (37,963) ------------------------------------------------------------------------- 29,940 30,085 ------------------------------------------------------------------------- 106,094 110,880 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Petrowest Energy Services Trust Consolidated Statements of Loss, Comprehensive Loss and Accumulated Loss ------------------------------------------------------------------------- (Unaudited) Three months ended Six months ended June 30 June 30 ------------------------------------------------------------------------- (In thousands of dollars, except per unit amounts) 2010 2009 2010 2009 ------------------------------------------------------------------------- Revenue 26,037 17,003 61,793 55,139 Expenses Operating expenses 23,477 19,065 53,102 50,562 General and administrative 883 1,409 2,441 3,257 Interest 2,444 1,312 3,307 2,339 Amortization of property and equipment 3,673 5,261 7,791 10,283 Amortization of intangible assets 871 984 1,733 1,957 Impairment of goodwill and intangible assets - 35,446 - 35,446 ------------------------------------------------------------------------- 31,348 63,477 68,374 103,844 ------------------------------------------------------------------------- (5,311) (46,474) (6,581) (48,705) ------------------------------------------------------------------------- Other income (loss) Gain (loss) on disposal of property and equipment (154) - 15 (19) Interest and other income 2 - 6 2 ------------------------------------------------------------------------- Net loss and comprehensive loss before taxes (5,463) (46,474) (6,560) (48,722) Future income tax recovery - (6) - (2,941) ------------------------------------------------------------------------- Net loss and comprehensive loss from continuing operations (5,463) (46,468) (6,560) (45,781) Discontinued operations, net of tax - (2,170) (45) (7,503) ------------------------------------------------------------------------- Net loss and comprehensive loss for the period (5,463) (48,638) (6,605) (53,284) ------------------------------------------------------------------------- Accumulated loss - beginning of period (226,642) (170,916) (225,500) (166,270) ------------------------------------------------------------------------- Accumulated loss - end of period (232,105) (219,554) (232,105) (219,554) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net loss per unit -basic and diluted from continuing operations ($0.16) ($1.41) ($0.20) ($1.39) -basic and diluted from discontinued operations (0.00) (0.07) (0.00) (0.23) -basic and diluted (0.16) (1.48) (0.20) (1.62) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Petrowest Energy Services Trust Consolidated Statements of Cash Flows ------------------------------------------------------------------------- (Unaudited) Three months ended Six months ended June 30 June 30 ------------------------------------------------------------------------- (In thousands of dollars) 2010 2009 2010 2009 ------------------------------------------------------------------------- Cash provided by (used in) Operating activities Net loss from continuing operations (5,463) (46,468) (6,560) (45,781) Items not affecting cash Amortization of property and equipment 3,673 5,261 7,791 10,283 Amortization of intangible assets 871 984 1,733 1,957 Impairment of goodwill and intangible assets - 35,446 - 35,446 Unit-based compensation expense (548) 112 (420) 140 Units issued for service - 6 - 6 Future income taxes (recovery) - (6) - (2,941) (Gain) loss on disposal of property and equipment 154 - (15) 19 ------------------------------------------------------------------------- (1,313) (4,665) 2,529 (871) Changes in non-cash working capital Accounts receivable 877 4,010 43 15,986 Prepaid expenses and other 13 (396) (821) (361) Inventory (15) (94) (102) (337) Accounts payable and accrued liabilities 1,470 (2,232) 617 (7,137) ------------------------------------------------------------------------- 1,032 (3,377) 2,266 7,280 ------------------------------------------------------------------------- Financing activities Issuance of units 7,523 - 7,523 - Unit issue costs (643) (643) Repayment of capital lease obligations (302) (150) (592) (319) Repayment of revolving term bank loan (7,200) (4,550) (7,200) (15,550) ------------------------------------------------------------------------- (622) (4,700) (912) (15,869) ------------------------------------------------------------------------- Investing activities Purchase of property and equipment (851) (2,722) (3,127) (4,779) Proceeds on property and equipment disposals 502 16 719 328 Purchase price adjustment - - - - ------------------------------------------------------------------------- (349) (2,706) (2,408) (4,451) ------------------------------------------------------------------------- Net change in cash from continuing operations 61 (10,783) (1,054) (13,040) ------------------------------------------------------------------------- Cash flow from discontinued operations Operating activities 69 1,407 98 116 Financing activities - (7) - (10) Investing activities - 5,927 - 5,794 ------------------------------------------------------------------------- Net change in cash from discontinued operations 69 7,327 98 5,900 ------------------------------------------------------------------------- Decrease in cash and cash equivalents 130 (3,456) (956) (7,140) ------------------------------------------------------------------------- Cash and cash equivalents (bank overdraft), beginning of period (1,356) (1,336) (270) 2,348 ------------------------------------------------------------------------- Cash and cash equivalents (bank overdraft), end of period (1,226) (4,792) (1,226) (4,792) ------------------------------------------------------------------------- Supplementary cash flow information Interest paid 1,871 1,400 2,737 2,626 ------------------------------------------------------------------------- Non cash transactions Property and equipment financed by capital leases 266 - 1,588 - ------------------------------------------------------------------------- ------------------------------------------------------------------------- >> For further information: Ralph Hesje, President and CEO, or Lloyd A. Wiggins, Chief Financial Officer, at (403) 237-0881 or info@petro-west.com