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Press release from Marketwire

Enseco Energy Services Corp. Announces Record Results for the Quarter Ended September 30, 2012

Monday, November 26, 2012

Enseco Energy Services Corp. Announces Record Results for the Quarter Ended September 30, 201206:00 EST Monday, November 26, 2012CALGARY, ALBERTA--(Marketwire - Nov. 26, 2012) - Enseco Energy Services Corp. ("Enseco" or the "Company") (TSX VENTURE:ENS) is pleased announce its financial results for the quarter ended September 30, 2012.HIGHLIGHTS FOR THE QUARTER ENDING SEPTEMBER 30, 2012Enseco achieved the following results for the three and six months ended September 30, 2012.Revenue decreased 14% to $19.1 million but increased by 1% to $33.1 million for the three and six months ended September 30, 2012 respectively as compared with the same p eriods in the prior year. Excluding one-time charges allowed for in the quarter, EBITDA as a percent age of revenue remained constant at 23%, demonstrating the effectiveness of Enseco's cost cutting and operational efficiency. Enseco's Canadian Directional Drilling division increased both adjusted gross margin and EBITDA for both the three and six months ended September 30, 2012, despite decreasing revenue caused by declining rig counts and pricing pressures. The motor repair facility, which has now been operating for 6 months, is at full efficiency and has contributed significantly to these results. Both the motor repair facility and the MWD Facility have reduced reliance on third party service providers and lowered development and r epair costs, which has resulted in increasing adjusted gross margins and EBITDAs. Enseco's Production Testing division acquired two high pressure 1440 psi pressure vessels, further augmenting our service offering. Enseco took the opportunity during low lev els of activity to reinvest in its personnel through training and education as well as review and improve its internal procedures and processes. In doing so, Enseco is well positioned to meet peak activity levels through the upcoming winter season. Enseco is currently increasing its sales presence both in Canada and the US to better position itself for 2013. RESULTS FROM OPERATIONSThree months ended September 30,Six months ended September 30,In thousands of dollars2012201120122011Revenue$19,167$22,294$33,086$32,890Adjusted gross margin1$7,575$8,784$11,570$11,641EBITDAS1$3,231$5,085$3,385$4,669Net income (loss) from continuing operations, before tax$(253)$3,264$(2,391)$115Per common share - basic and diluted$(0.04)$0.17$(0.15)$0.01Deferred taxes included in cash flow before changes in non-cash working capital items$(612)$(892)Cash flow, before changes in non-cash working capital items 1$3,086$5,035$2,493$4,619Cash flow from/(used in), operating activities$(106)$55$6,193$6,7401 See definition within the Non-IFRS M easures section of this MD&AOUTLOOKManagement continues to carefully monitor industry activity levels in western Canada and the Corporation's US operating areas to ensure equipment and manpower are positioned to provide sustainable equipment utilization rates given the current volatility in commodity prices, increased competition and decreased activity levels.Enseco is pleased with the implementation of its corporate capital and operations strategy, which has resulted in service quality, rental reduction and cost monitoring improvements.With the engineering improvements and reductions in rebuild times now available through Enseco's motor repair facility, it is expected that its rental requirements and repair costs will continue to remain low even as activity grows. The motor repair facility was able to repair 50% of the motor fleet through the quarter, and expects its internal repair rate to increase to 80% by year end.Enseco will continue to focus on investing in capital that will reduce rentals and enhance our internal repair and maintenance capabilities. These initiatives continue to enhance its operating efficiencies and margins.Management believes that activity levels will continue to be constrained; however, we are cautiously optimistic that we will be able to improve the adjusted gross margin and EBITDAs through continued engineering improvements, internal repairs, and reduction of rental equipment.FILINGSEnseco has filed with Canadian securities regulatory authorities its unaudited condensed consolidated financial statements for the three and six months ending September 30, 2012 and the accompanying management's discussion and analysis ("MD&A"). These filings are available under Enseco's SEDAR profile at www.sedar.com.ABOUT ENSECO ENERGY SERVICES CORP.Enseco is a premier supplier of directional drilling, production testing and frac flowback services operating throughout the Western Canadian Sedimentary Basin and select markets in the United States, Our corporate office is located in Calgary and sales offices are located in both Calgary and Denver. Enseco is led by an experienced management team with a focus on continued value creation through accretive acquisitions and organic growth.FORWARD LOOKING DISCLAIMERCertain information and statements contained in this press release constitute forward-looking information, including, but not limited to: statements concerning Enseco's future business strategy, marketing and expansion plans; expectations regarding future revenues, gross margins, EBITDA, cash flow, improved efficiencies, cost reductions, and other financial results; expectations regarding resource play drilling activity levels and drilling programs; plans to increase staffing levels; general industry and operating conditions, expectations regarding future utilization rates and demand for the Company's services; future geographical and product focus; the impact of the Company's MWD lab and motor repair facility; anticipated future rental and repair costs; planned capital expenditures and acquisitions, and plans to continue to reduce debt levels; and the competitive position of Enseco's business divisions. Although management of the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Accordingly, readers should not place undue reliance upon any of the forward-looking information set out in this press release. Readers should review the cautionary statement respecting forward-looking information that appears below. All of the forward looking statements of the Company contained in this press release are expressly qualified, in their entirety, by this cautionary statement.The information and statemen ts contained in this press release that are not historical facts are forward-looking statements. Forward-looking statements (often, but not always, identified by the use of words such as "seek", "plan ", "continue", "estimate", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "e xpect", "may", "anticipate" or "will" and similar expressions) may include plans, expectations, opinions, or guidance that are not statements of fact. Forward-looking statements are based upon the opinions, expectations and estimates of management as at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. These factors include, but are not limited to, such things as changes in industry conditions (including the levels of capital expenditures made by oil and gas producers and explorers), the credit risk to which the Company is exposed in the conduct of its business, fluctuations in prevailing commodity prices or currency and intere st rates, the competitive environment to which the various business divisions are, or may be, exposed in all aspects of their business, the ability of the Company's various business divisions to access equipment (including parts) and new technologies and to maintain relationships with key suppliers, the ability of the Company's various business divisions to attract and maintain key personnel and other qualified employees, various environmental risks to which the Company's business divisions are exposed in the conduct of their operations, in herent risks associated with the conduct of the businesses in which the Company's business divisions operate, timing and costs associated with the acquisition of capital equipment, the impact of weather and other seasonal factors that affect business operations, availability of financial resources or third-party financing and the impact of new laws or changes in administrative practices on the part of regulatory authorities.Forward-looking information concerning the nature and timing of growth within the various business divisions is based on the current budget of the Company (which is subject to change), factors that affected the historical growth of such business divisions, sources of historic growth opportunities, anticipated capital expenditures, and expectations relating to future economic and operating conditions. Forward-looking information concerning the future competitive position of the Company's business divisions is based upon the current competitive environment in which those business divisions operate, expectations relating to future economic and operating conditions, current and announced build programs and other expansion plans of other organizations that operate in the energy service business. Forward-looking information conc erning the financing of future business activities is bas ed upon the financing sources on which the Company has historically relied and expectations relating to future economic and operating conditions. Forward-looking information concerning future economic and operating conditions is based u pon historical economic and operating conditions, opinions of third-party analysts respecting anticipated economic and operating conditions.With respect to forward-looking statements contained in this press release, Enseco has made assumptions regarding commo dity prices and royalty regimes, availability of skilled labour, timing and amount of capital expen ditures, future foreign exchange rates, interest rates, the impact of increasing competition, conditions in general economic and financial markets, effects of regulation by governmental agencies, and future operating costs.Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide shareholders with a more complete perspective on Enseco's future operations and such information may not b e appropriate for other purposes. Enseco's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Enseco will derive there from. Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statem ents are made as of the date of in this press release and Enseco disclaims any obligation to updat publicly any forward- looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.NON-IFRS MEASURESEBITDAS means earnings before interest, taxes, depreciation and amortization, and stock-based compensation and is equal to earnings before income taxes from continuing operations plus interest on debt, other charges and interest expense, depreciation and amortization, stock-based compensation, unrealized foreign exchange loss, and loss on sale of equipment. Adjusted gross margin equals gross margin, plus interest on debt, other charges and interest expense, depreciation and amortization, stock-based compensation, impairment loss/recovery, and loss on sale of equipment. Cash flow means cash flows provided by continuing operations before changes in non-cash working capital items.EBITDAS, adjusted gross marg in, and cash flows from continuing operations before changes in non-cash working capital items are not recognized measures under Internation al Financial Reporting Standards ("IFRS"). Management believes that in addition to net losses, EBITDAS, adjusted gross margin and cash flows, are useful supplemental measures as they provide an indication of the results generated by the Company's pr imary business activities prior to consideration of how those activities are financed, amortized or how the results are taxed in various jurisdictio ns as well as the cash generated by the Company's pr imary business activities. Readers should be cautioned, however, that EBITDAS, adjusted gross margins and cash flows from continuing operations before changes in non-cash working capital items should not be construed as an alternative to net losses determined in accordance with IFRS as an indicator of Enseco's performance. Enseco's method of calculating operating losses, EBITDAS, adjusted gross margin and cash flows from continuing operations before changes in non-cash working capital items may differ from other organizations and, accordingly, such measures may not be comparable to measures used by other organizations. For reconciliation to the appropriate IFRS measure, see our MD&A.FOR FURTHER INFORMATION PLEASE CONTACT: Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. Contact Information: Enseco Energy Services Corp.Kent DevlinPresident403-806-0088Enseco Energy Services Corp.Blair LaytonCFO403-806-0088info@enseco.com