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Press release from CNW Group

PETROWEST ENERGY SERVICES TRUST ANNOUNCES FOURTH QUARTER AND TWELVE MONTH FINANCIAL RESULTS FOR 2010

Wednesday, March 23, 2011

PETROWEST ENERGY SERVICES TRUST ANNOUNCES FOURTH QUARTER AND TWELVE MONTH FINANCIAL RESULTS FOR 201020:39 EDT Wednesday, March 23, 2011CALGARY, March 23 /CNW/ - Petrowest Energy Services Trust (TSX: PRW.UN) announced today its consolidated financial results for the three and twelve month periods ended December 31, 2010.Consolidated revenue from continuing operations for the year ended December 31, 2010 was $136.0 million, an increase of 14% over consolidated revenue from continuing operations of $119.6 million in 2009. Gross margin and EBITDA percentages increased by 2% and 4% respectively compared to 2009. For the year ended December 31, 2010 the net loss and comprehensive loss from continuing operations was $13.1 million compared to $51.7 million in 2009. This represents net loss per unit of $0.22 and $1.57 respectively, basic and fully diluted. The net loss and comprehensive loss (including Discontinued Operations) was $13.2 million compared to $59.2 million in 2009. This represents net loss per unit of $0.22 and $1.80 respectively, basic and fully diluted.Revenue from continuing operations for the three months ended December 31, 2010, was $34.6 million, a 7% increase from revenue of $32.3 million in the comparable period of 2009. Gross margin and EBITDA percentage decreased by 3% and 2% respectively compared to 2009. For the three month period ended December 31, 2010 the net loss and comprehensive loss from continuing operations was $5.7 million compared to $4.0 million in the comparable period of 2009. This represents net loss per unit of $0.07 and $0.12 respectively, basic and fully diluted.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 an amended and restated credit agreement (the "Credit Agreement") and in the third quarter executed an amending agreement (effective September 30, 2010). The Trust entered into an amending agreement effective December 31, 2010 to provide for the issuance of the convertible debenture and the security relating to the debentures. The Credit Agreement has a stated maturity of April 30, 2011 with a further $2.5 million scheduled reductions and cancellation of commitments due prior to maturity.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.As at December 31, 2010, after a reduction of $0.625 million from the net proceeds of a sale of assets and the scheduled reductions to that date, there was a total commitment of $59.376 million, compromised of a $53.438 million syndicated facility and a $5.938 working capital facility ($2.4 million drawn at December 31, 2010).In addition, the Trust entered into an amending agreement effective December 31, 2010 to provide for the issuance of the convertible debentures and the security relating to the debentures.The Credit Agreement contains two financial covenants, the "Funded debt to EBITDA Ratio" and the "Fixed Charge Coverage Ratio". As at December 31, 2010 the Trust was not in compliance with the "Funded Debt to EBITDA Ratio" and has obtained a waiver of this breach from the banking syndicate until March 31, 2011. Under the Credit Agreement, amounts outstanding under the credit facilities bear interest at the prime rate plus 5.5%.The Trust's current credit facility is due April 30, 2011 and the Trust is in the process of arranging alternative financing. However, no alternative financing has been obtained at this time, and there is no assurance the Trust will obtain such refinancing on acceptable terms and conditions.FINANCIAL HIGHLIGHTS           (thousands of dollars, except per unit amounts, margins and ratios)     2010   2009Revenue from continuing operationsGross margin from continuing operationsGross margin percentageGeneral and administrativeEBITDA from continuing operationsEBITDA margin percentageNet loss and comprehensive loss from continuing operationsDiscontinued operations, net of taxNet loss and comprehensive lossCash provided from operating activities     136,01917,86213%4,82513,03710%(13,142)(65)(13,207)7,114    119,62213,74411%6,8986,8466%(51,687)(7,543)(59,230)13,757Units outstandingWeighted average units outstanding - basic     86,686,27860,184,375   32,946,30832,940,116The 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 continued its strategy of 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 INFORMATIONSelected financial information for the three and twelve month periods ended December 31, 2010 and 2009 is attached below. This information should be read in conjunction with the audited consolidated financial statements for the three and twelve months ended December 31, 2010 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 As at December 31                                      (In thousands of dollars)          2010     2009Assets                 Current assets                  Accounts receivablePrepaid expenses and otherInventoryAssets related to discontinued operations29,4622,5494,373-28,2622,1583,984174           36,384     34,578Property and equipmentIntangible assets57,7604,83667,9728,330           98,980     110,880Liabilities                 Current liabilities                  Bank overdraftAccounts payable and accrued liabilitiesRevolving bank term loanCurrent portion of obligations under capital leasesLiabilities related to discontinued operations2,40914,30353,4381,107-27011,68967,95054411           71,257     80,464Obligations under capital leasesConvertible debentures7313,043331-           75,031     80,795Unitholders' Equity                 UnitsConversion feature of convertible debenturesWarrantsContributed surplusAccumulated lossAccumulated distributions to unitholders298,937652400630(238,707)(37,963)292,498--1,050(225,500)(37,963)           23,949     30,085           98,980     110,880                  Petrowest Energy Services TrustConsolidated Statements of Loss, Comprehensive Loss and Accumulated Loss                 For the year ended December 31                 (In thousands of dollars, except per unit amounts)        2010     2009                 Revenue        136,019     119,622                 Expenses                Operating expensesGeneral and administrativeInterestAmortization of property and equipmentAmortization of intangible assetsImpairment of property and equipmentImpairment of intangible assets and goodwill        118,1574,8256,14716,0033,494--     105,8786,8984,85321,0023,7655,30135,628         148,626     183,325         (12,607)     (63,703)Other income (loss)                Gain (loss) on disposal of property and equipmentInterest and other income        (545)10     18892                 Net loss and comprehensive loss before taxes        (13,142)     (63,423)                 Future income tax recovery        -     (11,736)                 Net loss and comprehensive loss from continuing operations        (13,142)     (51,687)                 Discontinued operations, net of tax        (65)     (7,543)Net loss and comprehensive loss        (13,207)     (59,230)Accumulated loss - beginning of year        (225,500)     (166,270)Accumulated loss - end of year        (238,707)     (225,500)                 Net loss per unit                -basic and diluted from continuing operations-basic and diluted from discontinued operations-basic and diluted        $(0.22)(0.00)(0.22)     $(1.57)(0.23)(1.80)                 Petrowest Energy Services TrustConsolidated Statements of Cash Flows                For the year ended December 31                               (In thousands of dollars)        2010     2009                Cash provided by (used in)                               Operating activitiesNet loss from continuing operationsItems not affecting cash        (13,142)     (51,687) Amortization of property and equipmentAmortization of intangible assetsImpairment of property and equipmentImpairment of intangible assets and goodwillUnit-based compensation expenseUnits issued for serviceFuture income tax expense recovery(Gain) loss on disposal of property and equipment        16,0033,494--(420)--545     21,0023,7655,30135,6284156(11,736)(188)         6,480     2,506Changes in non-cash working capital                Accounts receivablePrepaid expenses and otherInventoryAccounts payable and accrued liabilities        (1,200)(391)(389)2,614     16,044(1,075)511(4,229)         7,114     13,757Financing activities                Issuance of unitsUnit issue costsRepayment of capital lease obligationsProceeds from debentures, netRepayment of revolving term bank loan        7,523(684)(1,487)3,695(14,512)     --(650)-(15,550)         (5,465)     (16,200)Investing activities                Purchase of property and equipmentProceeds on property and equipment disposals        (5,224)1,338     (7,022)565         (3,886)     (6,457)Net change in cash from continuing operations        (2,237)     (8,900)Cash flow from discontinued operationsOperating activitiesFinancing activitiesInvesting activities        98--     498(10)5,794Net change in cash from discontinued operations        98     6,282Decrease in cash and cash equivalents        (2,139)     (2,618)Cash and cash equivalents (bank overdraft), beginning of year        (270)     2,348Cash and cash equivalents (bank overdraft), end of year        (2,409)     (270)Supplementary cash flow informationInterest paid        6,008     5,140Non cash transactionsProperty and equipment financed by capital leasesWarrants        2,450400     -- For further information: Richard Quigley, President and Chief Executive Officer, or Lloyd A. Wiggins, Chief Financial Officer, at (780) 830-0881 or info@petro-west.com