Cordy Oilfield Services Inc.
TSX VENTURE : CKK

Cordy Oilfield Services Inc.

August 24, 2010 17:44 ET

Cordy Announces Appointment of Interim Chief Financial Officer and 2010 Second Quarter Results

CALGARY, ALBERTA--(Marketwire - Aug. 24, 2010) - Cordy Oilfield Services Inc. ("Cordy" and or the "Company") (TSX VENTURE:CKK) is pleased to announce that Matt Braaten has been appointed Cordy's Interim, Chief Financial Officer. Mr. Braaten, who joined Cordy in April, is a designated Chartered Accountant.

Cordy also announces its consolidated operating and financial results for the second quarter ended June 30, 2010.



SELECTED QUARTERLY INFORMATION
($ millions, except per share amounts)

----------------------------------------------------------------------------
Financial Position as at June 30, 2010 and December 31, 2009
2010 2009 Change
Cash and equivalents 1.8 0.2 1.6
Total Assets 71.2 78.5 (7.3)
Total Debt 10.4 12.3 (1.9)
Total Liabilities 18.2 22.4 (4.2)
Shareholders' Equity 53.1 56.1 (3.0)
----------------------------------------------------------------------------
Operating Results for the Quarters Ended June 30,
----------------------------------------------------------------------------
Three months ended Six months ended
2010 2009 Change 2010 2009 Change
Revenue 11.4 8.1 3.3 29.6 24.3 5.3
EBITDAS (1) (0.6) (2.6) 2.0 (0.7) (1.5) 0.8
Net loss (1.8) (3.9) 2.1 (3.1) (5.1) 2.0
Loss per share
- basic & diluted (0.02) (0.05) 0.03 (0.04) (0.06) 0.02
----------------------------------------------------------------------------
Cash Flows for the Quarters Ended June 30,
----------------------------------------------------------------------------
Three months ended Six months ended
2010 2009 Change 2010 2009 Change
Operating Cash Flows 2.0 0.5 1.5 1.9 2.6 (0.7)
Financing Cash Flows (0.6) (2.2) 1.6 (2.0) (4.2) (2.2)
Investing Cash Flows (0.9) 0.3 1.2 1.7 0.6 1.1
----------------------------------------------------------------------------
(1) Earnings before interest, taxes, depreciation, amortization and
impairment and stock based compensation ("EBITDAS"). Refer to the "Non
GAAP Measures" section for further details


SECOND QUARTER 2010 PERFORMANCE OVERVIEW

Revenue for the three months ended June 30, 2010 increased by $3.3 million (41%) to $11.4 million from $8.1 million during the same period of 2009. Revenue for the six months ended June 30, 2010 increased by $5.3 million (22%) to $29.6 million from $24.3 million during the same period of 2009. The net loss in the three months ended June 30, 2010 was $1.8 million, a decrease of $2.1 million (53%) from the second quarter 2009 loss of $3.9 million. The net loss from the six months ended of 2010 was $3.1 million compared to the six months ended net loss in 2009 of $5.1 million, a decrease of $2.0 million, or 39%. The improved performance in the second quarter 2010 over the second quarter of 2009 resulted from increased activity levels at several of the business units, with an increased focus on cost control and reduced general and administrative expenses compared to the similar period of 2009.

Seven of the Company's ten business units generated positive EBITDAS for the six months ended, June 30, 2010 period whereas five of the Company's ten business units generated positive EBITDAS for the three months ended June 30, 2010. Historically the second quarter has been the slowest quarter for both activity and revenue due to road bans and spring break up in the oilfield services sector. Unseasonably wet weather during the quarter further negatively affected the financial results for both the construction and pipeline segments as projects were delayed, resulting in decreased construction activity and corresponding revenue.

Excess capacity within the oilfield services sector continues to affect the operating margins throughout all operating segments. While the downward pressure on pricing is beginning to ease as activity in the oilfield services sector slowly increases, resulting in increased revenues; the excess capacity within the sector continues to affect the Company's ability to realize operating margins which exceed overall operational costs, general and administrative, and other costs.

Continued focus on reducing the general and administrative expense resulted in a $0.1 million decrease in the second quarter of 2010 compared to the second quarter of 2009. This supplements the reductions achieved in the first quarter of 2010 resulting in a $0.4 million accumulated reduction for the six months ended in 2010, compared to the similar period in 2009.

Management continued to focus on increased operational efficiencies in the second quarter of 2010. Operational restructuring activities included optimizing the deployment of people and equipment to service offerings with increased activity and scaling back operations in areas where activity has decreased, reassessing pricing strategies and reducing the workforce where necessary. Restructuring activities in the heavy construction segment will continue through the remainder of 2010.

The Company continued to rationalize its equipment fleet through divestiture of assets and services offerings which Management deemed to be no longer in-line with overall corporate strategy. The disposition of these assets from one of the construction segment business units during the second quarter provided additional net proceeds of $0.8 million. Overall, a gain of $0.2 million has been realized on the sale of these assets. Management will continue to assess its asset fleet to ensure they remain in line with overall corporate strategy. Additionally during the second quarter the Company acquired assets, where necessary, to meet operational obligations to its clients.

During the second quarter of 2010 the Company, through its regularly scheduled payments, decreased its total long term debt by $1.1 million from $10.9 million at the end of the first quarter to $9.8 million for the quarter ended. The Company also increased its cash reserves by $1.6 million during the second quarter. The Company has working capital, excluding current portions of debt, in excess of $10.5 million at June 30, 2010. Management believes the Company is well-positioned to increase market share as drilling, mining and construction activity picks up again in western Canada.

OUTLOOK

Oil prices have remained favorable during 2010 due to increased demand within the conventional oil sector. This is partially offset by natural gas which has remained below favorable prices resulting in stagnant activity in the conventional gas sector. Higher levels of drilling and completion activity in western Canada compared to the similar period in 2009 provide cautious optimism about a continuing improvement in industry conditions.

Management is cautiously optimistic about energy industry activity levels going forward but still expects pricing pressures to continue and the economic environment to remain volatile, uncertain and more complex than at any previous time. Management believes that 2010 will likely continue to be a challenging and uncertain period of time for service providers and will limit opportunity to increase operating margins.

The 2010 spring break up came earlier and lasted longer than expected. The wet weather delayed a significant number of projects for oil and gas companies. As a result, third and fourth quarter demand for certain of the corporation's oilfield services could be near first quarter levels due to the oil companies desire to complete their outstanding projects and make up for lost time.

Some of the positive economic and industry signals include:

- Stronger land sales in the first two quarters

- The number of applications to drill for oil and natural gas in the second half of 2010 compared to last year has almost doubled

- Improved future outlook from analysts including rig utilization, meters drilled and forecasted commodity prices

The significant reduction in capital spending in the oil and gas sector during the past two years ultimately led to the Alberta Government to amend its royalty structure.

Management remains sharply focused on using the corporation's diversification to support the redeployment of equipment and skilled personnel to meet the demand for customers and in certain geographic areas to improve utilization rates and financial results.

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

This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. 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. More particularly and without limitation, this news release contains forward looking statements and information concerning Cordy's expectations of future cash flow and earnings. The forward-looking statements and information are based on certain key expectations and assumptions made by Cordy, including expectations and assumptions concerning fluctuations in the level of oil and gas industry capital expenditures, Cordy's ability to integrate acquired businesses and complete strategic acquisitions of additional business and other factors that affect demand for Cordy's products and services. Although Cordy believe that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Cordy can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause Cordy's actual results and experience to differ materially from the anticipated results or expectations expressed. 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 and Cordy's ability to attract and retain key personnel. Additional information on these and other factors is available in continuous disclosure materials filed by Cordy with Canadian securities regulators. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this news release or otherwise, and to not use future-oriented information or financial outlooks for anything other than their intended purpose. Cordy undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by 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) 266-2067
    (403) 266-2087 (FAX)
    dmullen@cordy.ca
    or
    For investor relations information:
    Cordy Oilfield Services Inc.
    H. Allen Cameron, President
    (403) 266-2067
    (403) 266-2087 (FAX)
    acameron@cordy.ca
    www.cordy.ca