New West Energy Services Inc. Announces Third Quarter 2020 Financial Results

CALGARY, AB, Nov. 30, 2020 /CNW/ - New West Energy Services Inc. (TSXV: NWE), an oil and gas and environmental services company focused on Western Canada, today announced its third quarter 2020 financial results.

ACCOUNTING TREATMENT OF DISCONTINUED OPERATIONS

NWE completed on August 6, 2019 a reorganization where it discontinued its fluid transportation operations in Grande Prairie and, going forward, 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.  As such, NWE's financial results distinguish between continuing and discontinued operations. 

FINANCIAL HIGHLIGHTS

• Continuing operations revenue was $2,328,847 in the nine months ended September 30, 2020, compared to $6,931,299 in the same period the year prior. This reduction was due to a decrease in drilling activity associated with the effects of COVID-19 and the collapse in oil prices. Discontinued operations revenue was zero in the nine months ended September 30, 2020, as NWE completed its August 6, 2019 reorganization and ceased its fluid transportation operations in Grande Prairie, and $1,139,827 in the same period the year prior.
  
  
• Continuing operations revenue was $352,963 in the three months ended September 30, 2020, compared to $2,091,032 in the same period the year prior. This reduction was due to a decrease in drilling activity associated with the effects of COVID-19 and the collapse in oil prices. Discontinued operations revenue was zero in the three months ended September 30, 2020, as NWE completed its August 6, 2019 reorganization and ceased its fluid transportation operations in Grande Prairie, and zero in the same period the year prior due to the suspension of operations in advance of the reorganization.
  
  
• Continuing operations gross margin was 38% in the nine months ended September 30, 2020 compared to 37% in the same period the year prior, representing a consistency between reporting periods. Discontinued operations gross margin is not applicable for the nine months ended September 30, 2020 as there were no operations during the time period, and was a negative 11% in the same period the year prior.
  
  
• Continuing operations gross margin was 44% in the three months ended September 30, 2020 compared to 35% in the same period the year prior. This increase was due mainly to a reduction in direct costs relative to revenues and receipt of the Canadian Emergency Wage Subsidy. Discontinued operations gross margin is not applicable for the three months ended September 30, 2020 and 2019 as there were no operations during the time periods.
  
  
• Continuing general and administrative expenses were $885,310 in the nine months ended September 30, 2020 compared to $1,807,581 in same period the year prior. This decrease was due mainly to a reduction in overhead costs, the implementation of cost cutting measures and receipt of the Canadian Emergency Wage Subsidy. Discontinued general and administrative expenses were zero in the nine months ended September 30, 2020 as there were no operations during the time period, and were $670,414 in same period the year prior.
  
  
• Continuing general and administrative expenses were $220,699 in the three months ended September 30, 2020 compared to $589,530 in same period the year prior. This decrease was due mainly to a reduction in overhead costs, the implementation of cost cutting measures and receipt of the Canadian Emergency Wage Subsidy. Discontinued general and administrative expenses were zero in the three months ended September 30, 2020 as there were no operations during the time period, and were $63,899 in same period the year prior.
  
  
• Normalized EBITDAC was $8,519 in the nine months ended September 30, 2020 compared to $766,793 in the same period last year.
  
  
• Normalized EBITDAC was negative $64,390 in the three months ended September 30, 2020 compared to $134,288 in the same period last year.

Continuing operations	For the nine months ended September 30,					For the nine months ended September 30,
	2020					2019
	Fluid Transportation Services	Environmental Services	Corporate	Total		Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	1,448,474	880,373	-	2,328,847		4,736,311	2,194,988	-	6,931,299
Direct costs	865,989	569,029	-	1,435,018		3,088,170	1,268,755	-	4,356,925
Gross margin	582,485	311,344	-	893,829		1,648,141	926,233	-	2,574,374
G & A expenses	371,384	388,911	125,015	885,310		596,994	986,183	224,404	1,807,581
Finance charges	244,933	16,598	17,621	279,152		95,969	39,886	139,740	275,595
Depreciation	388,343	-	-	388,343		316,309	-	-	316,309
Loss on disposal of assets	-	-	-	-		411,595	-	-	411,595
Income (loss) from operations	(424,195)	(94,165)	(142,636)	(658,976)		227,274	(99,836)	(364,144)	(236,706)
EBITDAC	211,101	(77,567)	(125,015)	8,519		1,051,147	(59,950)	(224,404)	766,793
Discontinued operations	For the nine months ended September 30,					For the nine months ended September 30,
	2020					2019
	Fluid Transportation Services	Environmental Services	Corporate	Total		Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	-	-	-	-		1,139,827	-	-	1,139,827
Direct costs	-	-	-	-		1,269,959	-	-	1,269,959
Gross margin	-	-	-	-		(130,132)	-	-	(130,132)
G & A expenses	-	-	-	-		670,414	-	-	670,414
Finance charges	-	-	-	-		196,764	-	-	196,764
Depreciation	-	-	-	-		475,868	-	-	475,868
Disposal of assets	-	-	-	-		320,230	-	-	320,230
Debt extinguishment	31,525	-	-	31,525		819,566	-	-	819,566
Loss from operations	(31,525)	-	-	(31,525)		(2,612,974)	-	-	(2,612,974)
Continuing operations	For the three months ended September 30,					For the three months ended September 30,
	2020					2019
	Fluid Transportation Services	Environmental Services	Corporate	Total		Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	149,360	203,603	-	352,963		1,525,451	565,581	-	2,091,032
Direct costs	85,465	111,189	-	196,654		1,029,568	337,646	-	1,367,214
Gross margin	63,895	92,414	-	156,309		495,883	227,935	-	723,818
G & A expenses	88,879	91,771	40,049	220,699		204,251	307,916	77,363	589,530
Finance charges	166,384	3,368	6,041	175,793		27,412	7,379	49,546	84,337
Depreciation	128,773	-	-	128,773		62,311	-	-	62,311
Loss on disposal of assets	-	-	-	-		411,595	-	-	411,595
Income (loss) from operations	(320,141)	(2,725)	(46,090)	(368,956)		(209,686)	(87,360)	(126,909)	(423,955)
EBITDAC	(24,984)	643	(40,049)	(64,390)		291,632	(79,981)	(77,363)	134,288

Discontinued operations	For the three months ended September 30,					For the three months ended September 30,
	2020					2019
	Fluid Transportation Services	Environmental Services	Corporate	Total		Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	-	-	-	-		-	-	-	-
Direct costs	-	-	-	-		23,607	-	-	23,607
Gross margin	-	-	-	-		(23,607)	-	-	(23,607)
G & A expenses	-	-	-	-		63,899	-	-	63,899
Finance charges	-	-	-	-		20,675	-	-	20,675
Depreciation	-	-	-	-		79,029	-	-	79,029
Disposal of assets	-	-	-	-		293,706	-	-	293,706
Debt extinguishment	-	-	-	-		819,566	-	-	819,566
Loss from operations	-	-	-	-		(1,300,482)	-	-	(1,300,482)

* 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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