New West Energy Services Inc. Announces Second Quarter 2019 Financial Results

CALGARY, Aug. 29, 2019 /CNW/ - New West Energy Services Inc. (TSX Venture: NWE), an oil and gas and environmental services company focused on Western Canada, today announced its second quarter 2019 financial results.

FINANCIAL HIGHLIGHTS

• Revenue was $5,980,094 in the six months ended June 30, 2019 compared to $10,530,892 in the same period last year, and $1,679,293 in the three months ended June 30, 2019 compared to $2,622,753 in the same period last year. This significant reduction was mostly due to NWE ceasing its fluid transportation operations in Grande Prairie as a result of a significant decrease in revenue associated with this segment stemming from the continuing decline in completions activity in northwestern Alberta.
  
  As previously announced, on August 7, 2019, NWE completed a restructuring of its operations whereby NWE's then operating subsidiary, BearStone Environmental Solutions Inc., sold to NWE's new operating subsidiary, Silverpoint Energy Services Inc., all of the equipment associated with its vacuum and water truck services business operated out of Medicine Hat.
  
  As consideration for the equipment acquisition, Silverpoint assumed $2,733,911 of BearStone's current secured indebtedness, subject to downward adjustment under certain conditions. Silverpoint also borrowed an additional $315,000 to pay wages to the closing date of those BearStone employees who are being hired by Silverpoint. The total indebtedness is for a term of five years.
  
  Silverpoint also secured a revolving operating line of credit of up to $1.5 million, based upon eligible accounts and other considerations, to be used for general corporate purposes. Silverpoint may draw down on, and repay, the loan from time to time as needed. The line of credit is also for a term of five years.
  
  Going forward, Silverpoint will be NWE's sole operating subsidiary and will focus on vacuum and water truck services out of Medicine Hat, as well as environmental services out of the company's headquarters in Calgary.
  
  Pursuant to an order of the Court of Queen's Bench in Alberta, KPMG was appointed receiver over the remaining assets and undertakings of BearStone. The Court also approved the sale by BearStone to Silverpoint of the above-mentioned equipment.
  
  Silverpoint also assumed approximately $430,000 of BearStone's indebtedness towards other third-party lenders in exchange for Sliverpoint acquiring certain of BearStone's drilling services equipment.
  
  
• Gross margin was 29% in the six months ended June 30, 2019 compared to 16% in the same period last year, and 29% in the three months ended June 30, 2019 compared to 10% in the same period last year.  The environmental and vacuum and water truck services operating in the drilling services sector realized an increase in gross margins offsetting a decrease in gross margin from the fluid transportation services operating in the completions and production sectors.
  
  
• General and administrative expenses were $1,824,565 in the six months ended June 30, 2019 compared to $1,876,126 in same period last year, and $898,291 in the three months ended June 30, 2019 compared to $932,012 in same period last year, reflecting a consistency between reporting periods.
  
  
• Normalized EBITDAC was negative $80,534 in the six months ended June 30, 2019 compared to negative $204,780 in the same period last year, and negative $416,407 in the three months ended June 30, 2019 compared to negative $642,590 in the same period last year.

	For the three months ended June 30,					For the three months ended June 30,
	2019					2018
	Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total		Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	1,248,759	430,534	-	1,679,293		2,088,190	534,563	-	2,622,753
Direct costs	952,872	244,537	-	1,197,409		2,046,952	322,246	-	2,369,198
Gross margin	295,887	185,997	-	481,884		41,238	212,317	-	253,555
G & A expenses	482,655	333,906	81,730	898,291		497,206	346,388	88,418	932,012
Share base pmts	-	-	-	-		-	-	16,511	16,511
Finance charges	130,713	12,632	45,341	188,686		119,104	16,150	23,909	159,163
Depreciation	331,258	-	-	331,258		365,699	-	-	365,699
Disposal of assets	26,524	-	-	26,524		(6,733)	-	-	(6,733)
Net loss before tax	(675,263)	(160,541)	(127,071)	(962,875)		(934,038)	(150,221)	(128,838)	(1,213,097)
Total assets	7,810,883	558,940	-	8,369,823		10,843,330	534,160	31,997	11,409,487
EBITDAC*	(186,768)	(147,909)	(81,730)	(416,407)		(420,101)	(134,071)	(88,418)	(642,590)
	For the six months ended June 30,					For the six months ended June 30,
	2019					2018
	Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total		Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	4,350,688	1,629,406	-	5,980,094		8,354,010	2,176,882	-	10,530,892
Direct costs	3,304,954	931,109	-	4,236,063		7,410,917	1,484,496	-	8,895,413
Gross margin	1,045,734	698,297	-	1,744,031		943,093	692,386	-	1,635,479
G & A expenses	999,258	678,266	147,041	1,824,565		995,958	717,777	162,391	1,876,126
Share base pmts	-	-	-	-		-	-	16,511	16,511
Finance charges	244,646	32,507	90,194	367,347		297,226	32,455	47,543	377,224
Depreciation	650,838	-	-	650,838		736,781	-	-	736,781
Disposal of assets	26,524	-	-	26,524		71,881	-	-	71,881
Net loss before tax	(875,532)	(12,476)	(237,235)	(1,125,243)		(1,158,753)	(57,846)	(226,445)	(1,443,044)
Total assets	7,810,883	558,940	-	8,369,823		10,843,330	534,160	31,997	11,409,487
EBITDAC*	46,476	20,031	(147,041)	(80,534)		(16,998)	(25,391)	(162,391)	(204,780)

* Normalized EBITDAC is earnings from continuing operations before interest, taxes, depreciation, amortization and share-based payments and is a measure of NWE's operating profitability. The calculation is further adjusted to normalize EBITDAC by removing any non-reoccurring transactions that are not in the normal course of operations.

** Copies of NWE's financial statements, MD&A and other public filings are available under the company's profile on SEDAR at www.sedar.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 accuracy of this release.

Cautionary Note Regarding Forward-Looking Information

Certain statements in this news release may constitute "forward-looking information" within the meaning of applicable securities laws that involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information and financial outlook.  Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions.  Such information may involve, but is not limited to, comments with respect to strategies, expectations, planned operations or future actions.  Forward-looking information in this news release includes, without limitation, statements with respect to: the use of proceeds of its loans; the use of the acquired equipment; planned changes in NWE's business and revenues; the competitive environment in which NWE operates; and the assessment of future plans and operations.  Actual events or results may differ materially.  The forward-looking information in this news release is based on assumptions which includes, but is not limited to: NWE realizing the expected benefits of its loans and acquired equipment; the general state of the economy and the oil and gas industry not worsening; NWE not losing any key personnel; NWE sustaining or increasing their level of revenues and EBITDAC  NWE growing its businesses long term and managing its growth; NWE complying with existing regulations and not becoming subject to more stringent regulations; and, NWE's insurance being sufficient to cover losses that may occur as a result of its operations.  The forward-looking information in this news release is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information.  The factors which could cause results to differ from current expectations include, but are not limited to: failure to realize the expected benefits of its loans and acquired equipment; potential undisclosed liens associated with the acquired equipment; NWE's results being dependent upon the general state of the economy and the oil and gas industry; NWE being dependent on key personnel, the loss of which could harm its business; NWE may not be able to sustain or increase their revenues or EBITDAC; NWE may be unable to grow its business long term or to manage any growth; NWE may be unable to integrate the acquired equipment into its business; competition in NWE's markets may lead to reduced revenues and EBITDAC; NWE may fail to comply with existing regulations or become subject to more stringent regulations; NWE's insurance may be insufficient to cover losses that may occur as a result of NWE's operations; the market price of NWE's common shares will fluctuate; and, there is a possibility of dilution of existing holders of NWE's common shares due to future financings or acquisitions.  Although NWE has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements in this news release, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of NWE.  Accordingly, readers should not place undue reliance on the forward-looking information in this news release.  The forward-looking information is made as of the date of this news release, and NWE does not assume any obligation to publicly update or revise such forward-looking information to reflect new information, subsequent or otherwise, except as may be required by applicable law.  The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement.

SOURCE New West Energy Services Inc.

Gerry E. Kerkhoff, New West Energy Services Inc., President and Chief Executive Officer, Phone - 403.984.9798 or 1.888.977.2327 (BEAR), Fax - 403.984.9799, Email - [email protected]

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