Western Energy Services Corp. Announces Q3 2009 Results
/NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
The key operational results for the quarter ended
- Quarterly revenues of $1,215,502 have declined $1,968,312 or 61.8%
from the corresponding quarter in 2008. Year to date revenues of
$4,319,681 have declined $5,271,586 or 55.0% from the levels achieved
in 2008. These results reflect the continuing bleak state of the oil
and gas services sector in Canada and the United States.
- Of the year to date drop in revenues of $5.67 million, $4,432,888 or
84% is directly attributable to a drop in US based revenues and in
particular the development of the Barnett shale gas reserves serviced
from the Company's Abilene base. For the third quarter, the revenues
of both the Canadian and International operations encouragingly
showed slight increases over the corresponding period in 2008.
However US operations saw a 92% decline from the corresponding period
in 2008.
- In the quarter the Company had a net loss of $1,649,209 as compared
to the $2.31 million loss experienced in the corresponding quarter in
2008. When considered in light of the magnitude of the year over year
decline in revenues the loss, although unsatisfactory, could have
been larger had the Company not carried out certain cost-cutting
measures. Specifically in the quarter the Company cut a further three
field staff and one administrative position in Texas plus two field
and one administrative position in Canada. The annualized savings
associated with these cuts is approximately $369,000.
- The Company has continued to seek purchasers for assets that are
surplus to its needs. However the sale of surplus assets has been
challenging due to the amount of underutilized equipment currently on
the market. To date the Company has completed the sale of three
pieces of equipment netting $650,820 in net proceeds. A further two
asset sales are under conditional sales agreements and if completed
will net approximately $1.3 million. These funds will be applied
against the outstanding debt obligations of the Company.
- In the quarter the Company began to see renewed demand for its oil
well remediation services as producers began to spend on work that
had been postponed earlier in the year. This improvement is
attributed by management to the significant increase in oil prices
that has occurred relative to the lows that were reached early in the
year. However, demand for the Company's services related to natural
gas production has remained weak reflecting low natural gas prices
and the industry's concentration on the development of gas reserves
in areas where the Company does not have operations.
- The poor operating conditions continue to place a major burden on the
Company's liquidity position. As mentioned in the previous quarter
the Company initiated discussions with its lenders with the goal of
restructuring its debt obligations. This restructuring was completed
on November 9, 2009, subsequent to the end of the quarter. With this
restructuring completed all of the Company's bank debt is now held by
its senior lender with all but $182,000 of the balance of the
Company's term debt obligations being held by a company controlled by
a director.
- In the quarter the Company restructured its executive team. Mr. Jon
Garner assumed the position of interim President. In this role
Mr. Garner will be primarily responsible for the company's oil and
gas service operations. Mr. Jon Waddell, a Director of the Company,
has assumed the role of interim CFO and is primarily responsible for
the restructuring of the Company's finances.
Drilling and completion activity in Q3 continued at historically low levels with the result that demand for oil and gas services is slow, with significant downward pressure being put on the pricing of those services. The Company expects that the drilling aspect of the industry will continue to experience difficulties throughout the remainder of 2009. Management will continue to focus on improving its business operations in 2009, reacting to the economic slowdown in a proactive manner that will realize upon the Company's strength of providing services to the less cyclical production side of the oil and gas industry. Management believes that the Company's market direction and focus on delivery of acidizing and solvent well remediation services as well as nitrogen and fluid pumping services will continue to provide a core revenue stream which the Company can further build upon.
Summary of Quarterly Results
Three months ended September June 30, March 31, December
30, 2009 2009 2009 31, 2008
($) ($) ($) ($)
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Revenue 1,215,502 974,308 2,129,871 3,140,627
(Loss) income before loss
on sale, amortization,
interest, and income
taxes (80,962) (36,623) (190,764) (293,026)
Loss from continuing
operations (1,649,209) (896,721) (1,101,360) (1,574,438)
Per share (0.05) (0.03) (0.03) (0.11)
Income (loss) (1,649,209) (896,721) (1,101,360) (1,574,438)
Per share (0.05) (0.03) (0.03) (0.11)
Three months ended September June 30, March 31, December
30, 2008 2008 2008 31, 2007
($) ($) ($) ($)
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Revenue 3,183,814 3,071,372 3,336,081 3,029,342
(Loss) income before loss
on sale, amortization,
interest, and income
taxes 237,838 (32,402) 115,282 (508,497)
Loss from continuing
operations (2,306,405) (1,168,489) (980,689) (3,095,946)
Per share (0.16) (0.08) (0.07) (0.30)
Income (loss) (2,306,405) (1,168,489) (980,689) (3,095,946)
Per share (0.16) (0.08) (0.07) (0.30)
Forward-Looking Statements
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws and necessarily involve risks associated with the oil and gas energy services industry, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, volatility of commodity prices, currency fluctuations, environmental risks and competition from other energy services providers. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. The forward-looking statements and information are based on certain key expectations and assumptions made by the Company, including assumptions concerning the state of the economy and energy services business and its expected direction, which expectations and assumptions management of the Company believes to be reasonable at this time. Although the Company believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable at the date of this press release, undue reliance should not be placed on the forward-looking statements and information as the Company can give no assurance that they will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks, including the failure to obtain required regulatory approvals and others. Readers are cautioned that the foregoing list of factors is not exhaustive. The forward-looking statements and information contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Neither 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.
For further information: Additional information relating to the Company is filed on SEDAR at www.sedar.com. Please visit the web site: www.wesc.ca or contact: Jon Garner, Interim President at (403) 782-0017; If you would like to receive future information releases by email please provide your email address to [email protected]
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