Central Alberta Well Services Corp.
TSX VENTURE : CWC.A

Central Alberta Well Services Corp.

November 27, 2008 08:30 ET

Central Alberta Well Services Releases Third Quarter 2008 Results

CALGARY, ALBERTA--(Marketwire - Nov. 27, 2008) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Central Alberta Well Services Corp. ("CWC" or the "Company")(TSX VENTURE:CWC.A) is pleased to announce its third quarter results. For the three months ending September 30, 2008, the Company generated $23.0 million in revenues and $5.6 million in earnings before income taxes, depreciation, amortization and stock based compensation expense ("EBITDAS"), compared to $11.9 million in revenues and $2.5 million in EBITDAS in the same quarter of 2007.

For the nine months ending September 30, 2008, the Company generated $60.4 million in revenues and $14.2 million of EBITDAS compared to revenues of $34.8 million and $6.9 million of EBITDAS respectively, in the same period of 2007. In the first nine months of 2008, the Company exceeded both revenues and EBITDAS generated in the full twelve months of 2007.

The following table sets out comparative financial information for the reporting segments:



THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 2008 2007 2008 2007
----------------------------------------------------------------------------
WELL SERVICING
Revenues $16,732,287 $7,269,691 $43,103,966 $21,374,502
Income before taxes 2,781,347 693,143 5,136,607 2,492,798
-----------------------------------------------
Depreciation and amortization 2,319,387 1,478,062 7,331,277 4,264,413
EBITDAS (1) 5,100,734 2,171,205 12,467,884 6,757,211

OTHER OILFIELD SERVICES
Revenues 6,289,570 4,643,335 17,259,553 13,401,885
Income (loss) before taxes 827,647 53,584 2,257,357 (587,279)
-----------------------------------------------
Depreciation and amortization 599,558 862,920 2,103,244 2,518,582
EBITDAS (1) 1,427,205 916,504 4,360,601 1,931,303

CORPORATE
Revenues - - - -
Income (loss) before taxes (2,554,106)(1,346,283) (7,353,557) (7,749,336)
-----------------------------------------------
Depreciation and amortization 112,378 55,621 208,161 162,387
Interest 1,273,326 744,671 3,874,713 4,508,906
Stock based compensation 266,307 - 658,937 1,257,117
-----------------------------------------------
EBITDAS (1) (902,095) (545,991) (2,611,746) (1,820,926)

TOTAL
Revenues 23,021,857 11,913,026 60,363,519 34,776,387
Income (loss) before taxes 1,054,888 (599,556) 40,407 (5,843,817)
-----------------------------------------------
Depreciation and amortization 3,031,323 2,396,603 9,642,682 6,945,382
Interest 1,273,326 744,671 3,874,713 4,508,906
Stock based compensation 266,307 - 658,937 1,257,117
-----------------------------------------------
EBITDAS (1) 5,625,844 2,541,718 14,216,739 6,867,588
----------------------------------------------------------------------------

Note: (1) EBITDAS is calculated from the statement of income (loss) as
revenue less operating costs and general and administrative
expenses, exclusive of stock based compensation costs, and is
used to assist management and investors in assessing the Company's
ability to generate cash from operations. EBITDAS is a non-GAAP
measure and does not have any standardized meaning prescribed by
GAAP and may not be comparable to similar measures provided by
other companies.


WELL SERVICING

The Well Servicing Segment generated revenues of $16.7 million in the third quarter of 2008 compared to $7.3 million in the comparative period in 2007. EBITDAS increased by $2.9 million to $5.1 million compared to the same period in 2007. The Well Servicing Segment achieved a utilization of 71% in the third quarter, up from 58% in the comparative period of 2007. The Company realized increased utilizations from both service rigs and coil tubing units within this segment.

OTHER OILFIELD SERVICES

The Other Oilfield Services Segment increased revenues to $6.3 million in the third quarter of 2008 from $4.6 million for the comparative period in 2007. This segment is comprised of nitrogen delivery and pumping, snubbing, well testing and rentals. The utilization rate for this segment in the third quarter was 54% compared to 36% in the same period of 2007. EBITDAS of $1.4 million is an increase of $0.5 million from the same quarter of 2007 of $0.9 million.

OUTLOOK

The remainder of 2008 and early 2009 is surrounded by uncertainty as a result of the ongoing global financial crisis. The Company believes that this crisis has impacted customers' ability to access debt and equity markets for new funding. This has resulted in many of the Company's customers reducing budgets for the remainder of 2008 and the impact of these changes, if any, will not be fully determined until 2009. The Company believes that, while there may be a decrease in the number of wells being completed, there will likely be an increase in the percentage of wells requiring servicing and maintenance.

Following the completion of the addition of six new mobile double service rigs and one slant service rig at the end of 2008 or early in the first quarter of 2009, the Company will be well positioned to capitalize on the busy first quarter of 2009. The new technology built into the mobile double service rigs enables this equipment to travel during all four seasons, including the spring season when road bans are in effect. The Company expects to see above average utilization for this equipment, in what is typically a slow time of the year for the service rig business.

The Company has been spending considerable efforts in marketing and streamlining processes in order to offer a "full suite" of services to each customer to better meet their demands. This results in a more efficient project and provides cost savings to the customer while increasing utilization among all divisions of the Company.

2008 INTERIM FINANCIAL STATEMENTS

Attached to this release are the Company's Interim Financial Statements for the quarter ended September 30, 2008. These Unaudited Financial Statements should be read in conjunction with the Unaudited Financial Statements and the Management's Discussion and Analysis for the quarter ended June 30, 2008, and the Audited Financial Statements and the Management's Discussion and Analysis for the year ended December 31, 2007, all of which are filed on SEDAR at www.SEDAR.com.



BALANCE SHEETS
Central Alberta Well Services Corp.
For the periods ended September 30, 2008 and December 31, 2007


2008 2007
(Unaudited)
----------------------------------------------------------------------------
ASSETS
Current assets
Cash $ - $ 1,870,034
Restricted cash 20,000 415,000
Accounts receivable 21,859,332 10,868,117
Shareholder loans 241,672 128,470
Inventory and work in progress 1,985,349 1,676,610
Prepaid expenses and deposits 157,133 252,028
Income tax receivable - 115,736
-----------------------------
24,263,486 15,325,995
Property and equipment 116,025,352 98,497,905
Shareholder loans - 70,625
Intangible assets 4,118,560 4,570,792
-----------------------------
$ 144,407,398 $ 118,465,317
-----------------------------
-----------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness $ 3,085,029 $ -
Accounts payable and accrued liabilities 7,154,465 7,095,463
-----------------------------
10,239,494 7,095,463

Future income taxes 59,000 -
Long-term debt 52,215,477 29,453,660
-----------------------------
62,513,971 36,549,123
-----------------------------

SHAREHOLDERS' EQUITY
Share capital 79,740,986 80,710,016
Contributed surplus 5,216,161 4,135,569
Warrants 2,412,121 2,412,121
Deficit (5,475,841) (5,341,512)
-----------------------------
81,893,427 81,916,194
-----------------------------

-------------- --------------
$ 144,407,398 $ 118,465,317
----------------------------------------------------------------------------
----------------------------------------------------------------------------



STATEMENTS OF INCOME (LOSS), COMPREHENSIVE INCOME (LOSS) AND DEFICIT
Central Alberta Well Services Corp.
For the three and Nine months ended September 30, 2008 and 2007

Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------------------------------
2008 2007 2008 2007
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------------------------------------------------------------------------
REVENUE $23,021,857 $ 11,913,026 $ 60,363,519 $ 34,776,387

EXPENSES
Operating
expenses 14,519,105 7,757,490 38,155,032 23,021,321
General and
administrative 2,876,908 1,613,818 7,991,748 4,887,478
Stock based
compensation 266,307 - 658,937 1,257,117
Interest 1,273,326 744,671 3,874,713 4,508,906
Depreciation 2,880,579 2,245,859 9,190,450 6,493,150
Amortization 150,744 150,744 452,232 452,232
----------------------------- ----------------------------
21,966,969 12,512,582 60,323,112 40,620,204
----------------------------- ----------------------------

NET INCOME (LOSS)
BEFORE TAX 1,054,888 (599,556) 40,407 (5,843,817)

INCOME TAXES
Current - - 115,736 1,162
Future
(reduction) 59,000 184,000 59,000 (498,100)
----------------------------- ----------------------------
59,000 184,000 174,736 (496,938)
----------------------------- ----------------------------

NET INCOME (LOSS)
AND COMPREHENSIVE
INCOME (LOSS) 995,888 (783,556) (134,329) (5,346,879)

DEFICIT, BEGINNING
OF PERIOD (6,471,729) (4,563,323) (5,341,512) (15,097,957)

APPLICATION OF
PRIOR YEAR
DEFICIT TO
SHARE CAPITAL - - - 15,097,957

----------------------------- ----------------------------
DEFICIT, END
OF PERIOD $(5,475,841) $ (5,346,879) $ (5,475,841) $ (5,346,879)
----------------------------- ----------------------------
----------------------------- ----------------------------

NET EARNINGS
(LOSS) PER SHARE
Basic and
diluted loss
per share $ 0.04 $ (0.03) $ - $ (0.19)
----------------------------------------------------------------------------



STATEMENT OF CASH FLOWS
Central Alberta Well Services Corp.
For the periods ended September 30, 2008 and 2007

Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------------------------------
2008 2007 2008 2007
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------------------------------------------------------------------------

CASH PROVIDED
BY (USED IN):

OPERATING:
Net income
(loss) $ 995,888 $ (783,556) $ (134,329) $ (5,346,879)
Items not
affecting
cash:
Stock based
compensation 266,307 - 658,937 1,257,117
Interest on
shareholder
loans (2,056) (2,057) (5,663) (7,858)
Accretion of
debt
financing
costs and
warrants 431,979 375,929 1,261,816 976,528
Loss (gain)
on disposal
of assets - (54,816) (14,095) (23,506)
Future income
tax
(reduction) 59,000 184,000 59,000 (498,100)
Depreciation
and
amortization 3,031,321 2,396,603 9,642,683 6,945,382
------------------------------------------------------------
4,782,439 2,116,103 11,468,349 3,302,684
Change in
non-cash
working
capital (4,866,282) (4,135,940) (11,067,232) 2,087,809
------------------------------------------------------------
(83,843) (2,019,837) 401,117 5,390,493
------------------------------------------------------------

INVESTING:
Purchase of
property and
equipment (6,817,504) (5,550,611) (26,717,899) (24,897,616)
Proceeds on
sale of assets - 105,000 14,095 110,508
Decrease in
restricted
cash - - 395,000 -
------------------------------------------------------------
(6,817,504) (5,445,611) (26,308,804) (24,787,108)
------------------------------------------------------------

FINANCING:
Issue of
short-term
debt 1,408,499 - 3,085,029 -
Issue of
long-term
debt 6,000,000 4,500,000 25,500,000 67,500,000
Retirement of
long-term debt - (4,000,000) (59,499,334)
Restructure of
short-term
debt - - - (35,000,000)
Deferred
financing
costs - - - 803,194
Debt financing
costs and
warrants - - - (2,714,184)
Transaction
costs - - (306) -
Issue
(repurchase)
of common
shares (507,153) (85,801) (547,070) 49,914,199
Share issue
costs - - - (830,434)
Increase
(repayment) of
shareholder
loans - - - (121,158)
------------------------------------------------------------
6,901,346 4,414,199 24,037,653 20,052,283
------------------------------------------------------------

INCREASE
(DECREASE) IN
CASH - (3,051,249) (1,870,034) 655,668

CASH,
BEGINNING OF
PERIOD - 5,395,843 1,870,034 1,688,926
------------------------------------------------------------
CASH, END OF
PERIOD $ - $ 2,344,594 $ - $ 2,344,594
----------------------------------------------------------------------------

Supplementary
Information:
Interest paid $ 846,687 $ 409,033 $ 2,641,635 $ 2,980,870
Payout
penalties
paid on
replacement
of old loans - - - 608,071
Interest
received 3,284 38,235 23,381 109,388
Income taxes
paid - - - 48,824
Income taxes
refunded - 381,381 381,381 381,381


ABOUT CENTRAL ALBERTA WELL SERVICES

Central Alberta Well Services has its corporate office in Calgary, Alberta, with its operational head office in Red Deer, Alberta, and additional operating centres in Provost, Brooks and Whitecourt, Alberta. The Company provides oilfield services, including well servicing, coil tubing, snubbing, nitrogen, well testing and oilfield equipment rentals to oil and gas companies operating in the Western Canadian Sedimentary Basin.

Certain statements contained in this press release, including statements which may contain such words as "could", "should", "believe", "expect", "will", and similar expressions and statements relating to matters that are not historical facts are forward-looking statements, including, but not limited to, statements as to: future capital expenditures, including the amount and nature thereof; business strategy; expansion and growth of the Company's business and operations; and other matters. Management has made certain assumptions and analyses which reflect their experiences and knowledge in the industry. These assumptions and analyses are believed to be accurate and truthful at the time, but the company can not assure readers that actual results will be consistent with these forward-looking statements. However, whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to known and unknown risks and uncertainties which could cause actual results to differ materially from the Company's expectations. All forward-looking statements made in the press release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected outcomes to, or effects on, the Company or its business operations. The Company does not intend and does not assume any obligation to update these forward-looking statements. Any forward-looking statements made previously may be inaccurate now.

Class A Common Shares (Trading): 20,825,830

Class B Common Shares (Non-Trading): 6,603,531

The TSXV has neither approved nor disapproved the contents of this news release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Central Alberta Well Services Corp.
    Darryl E. Wilson
    President & Chief Executive Officer
    (403) 264-2177
    Email: darrylwilson@cawsc.com
    or
    Central Alberta Well Services Corp.
    Darcy A. Campbell, CMA
    Vice-President, Finance and Chief Financial Officer
    (403) 264-2177
    Email: darcycampbell@cawsc.com
    or
    Central Alberta Well Services Corp.
    2325, 330 - 5th Avenue SW
    Calgary, Alberta T2P 0L4
    (403) 264-2177