Cordy Oilfield Services Inc.
TSX VENTURE : CKK

Cordy Oilfield Services Inc.

August 27, 2009 20:21 ET

Cordy Announces 2009 Second Quarter Results

CALGARY, ALBERTA--(Marketwire - Aug. 27, 2009) - Cordy Oilfield Services Inc. ("Cordy" and or the "Company") (TSX VENTURE:CKK) announces its consolidated operating and financial results for the second quarter ended June 30, 2009.



Selected Quarterly Information

($ millions, except per share amounts)
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Financial Position as at June 30, 2009 and December 31, 2008
2009 2008 Change
Cash and equivalents 4.3 5.4 (1.1)
Working Capital 14.3 19.1 (4.8)
Total Assets 89.5 105.2 (15.7)
Total Debt 16.2 20.5 (4.3)
Total Liabilities 25.4 36.1 (10.7)
Shareholders' Equity 64.2 69.1 (4.9)
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Operating Results for the Quarters Ended June 30,
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Three months ended Six months ended
2009 2008 Change 2009 2008 Change
Revenue 8.1 22.8 (14.7) 24.3 50.5 (26.2)
EBITDAS (2.6) (0.3) (2.3) (1.5) 2.4 (3.9)
Net loss (3.9) (3.0) (0.9) (5.1) (3.6) (1.5)
Loss per share - basic &
diluted (0.05) (0.04) (0.01) (0.06) (0.04) (0.02)
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Cash Flows for the Quarters Ended June 30,
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Three months ended Six months ended
2009 2008 Change 2009 2008 Change
Operating Cash Flows 0.5 2.4 (1.9) 2.6 4.0 (1.4)
Financing Cash Flows (2.2) (0.1) (2.1) (4.2) 0.1 (4.3)
Investing Cash Flows 0.3 (3.5) 3.8 0.6 (6.1) 6.7
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The oilfield services industry in Alberta is transitioning from a period of rapid growth fueled by record high commodity prices and drilling activity to a year where drilling activity is below 10 year lows. Adjusting to the changing market for Cordy's services has been a challenge. In response to the decrease in drilling activity and the demand for Cordy's services, management has instituted measures to decrease costs, mainly through reducing field and office staff, and reducing debt levels by selling non-core, inactive equipment. During the second quarter of 2009, Cordy further reduced personnel in addition to the layoffs instituted late in 2008. These measures have a lag time involved as employees are given sufficient notice and severance under employment laws in Canada and so the cost reductions of this more recent round of layoffs will be better reflected in the third quarter's results.

Cordy disposed of equipment for proceeds of $0.8 million during the quarter resulting in a gain on sale of $0.2 million. The market for used equipment has been flooded as other construction and oilfield services companies in Alberta are either liquidated or are trying as Cordy has to reduce their debt levels resulting in lower sales proceeds at the auctions and other venues where construction equipment is sold. Cordy will continue to responsibly divest of non-core and under utilized equipment as management negotiates sales prices that are reasonable.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2009, the Company had a positive working capital position, excluding current portions of debt, of $23.1 million including cash reserves of $4.3 million. Cordy's strong working capital position is in excess of its total debts outstanding of $16.2 million which bear interest at an average rate of 6% and is scheduled to be repaid over the next four years. Cordy's ability to meet the scheduled debt repayments and other commitments is dependant upon maintaining current cash flows from operations, refinancing debt or the sale of property and equipment.

The annual renewal of Cordy's $20 million operating line of credit is being negotiated at present. Currently, funds are available under the existing agreement. The amount available under the current agreement at any time is based upon levels of eligible accounts receivable calculated monthly. At June 30, 2009, due to the significant decline in receivables on the balance sheet, Cordy had only $4.0 million available to it under the current line of credit agreement. The current agreement also requires Cordy to maintain certain financial covenants, calculated quarterly which it was in compliance with at June 30, 2009. As at June 30, 2009, Cordy has never draw on the current operating line of credit. Management expects to renew the operating line of credit with a lower borrowing level and changes to the financial covenants being in order to provide Cordy increased financial flexibility while restructuring.

OUTLOOK

The economic downturn and decline of oil and gas drilling in western Canada has been deeper and has lasted longer than previously anticipated. In response to this and the current operating results, management has taken further steps to reduce personnel and debt levels. Based on the cuts already instituted management expects a return to better operating results in the third and fourth quarters of 2009. Debt and property and equipment levels remain too high for the current level of operations and management is working on plan to reduce these amounts through a combination of sales of assets and debt refinancing. Cordy's balance sheet remains strong with a positive current ratio of over 2.0 times assets to liabilities and a positive working capital balance, including the current portion of debt, of $14.3 million, affording Cordy the leverage to restructure operations at reasonable terms.

In addition to restructuring the current operations, management is working on securing projects that could utilize the majority of Cordy's property and equipment. There are still areas of potential growth within western Canada that are more focused on oil rather than gas or are benefiting from large government sponsored infrastructure projects. Cordy has secured strategic partnerships with various First Nations groups and other non- first nation partners which given the construction expertise and financial backing of Cordy can secure large projects.

The Special Committee of the Board of Directors of the Corporation constituted in May 2009 has been disbanded having reported its findings to the Board.

Additional information on Cordy is available on our website www.cordy.ca or on SEDAR at www.sedar.com.

This report contains forward-looking statements which reflect management's expectations regarding the Company's future plans and intentions, results of operations, performance and business prospects and opportunities. Words such as "may", "will", "should", "could", "anticipate", "believe", "expect", "intend", "plan", "potential", "continue", and similar expressions have been used to describe these forward-looking statements. These statements reflect management's current beliefs and are based on the information currently available to management. Forward-looking statements involve significant risk and uncertainties. A number of risks and uncertainties could cause actual results to differ materially from the results discussed in the forward-looking statements. These risks and uncertainties, include, but are not limited to, risks associated with the oilfield services sector (such as demand, pricing and terms for oilfield services; current and expected oil and gas prices; competition; equipment and material costs; exploration and development costs and delays; reserves discovery rates; pipeline and transportation capacity; weather, health, safety and environmental risks), integration of acquisitions, access to capital markets, interest and currency exchange rates, technological developments, political and economic conditions, a ready market for Cordy to dispose of under utilized equipment, Cordy's ability to renegotiate its operating line of credit and Cordy's ability to attract and retain key personnel. Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, management cannot assure that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date hereof and the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as required by securities law.

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.

Contact Information

  • For general information:
    Cordy Oilfield Services Inc.
    David Mullen, Chairman and CEO
    (403) 802-6005
    (403) 266-2087 (FAX)
    Email: dmullen@cordy.ca
    or
    For investor relations information:
    Cordy Oilfield Services Inc.
    David Orr, Senior Vice President
    (403) 802-6008
    (403) 266-2087 (FAX)
    Email: dorr@cordy.ca
    Website: www.cordy.ca