Dalmac Energy Inc.

Dalmac Energy Inc.

August 19, 2010 09:30 ET

Dalmac Energy Inc.: Year Ended and Quarter Ended April 30, 2010 ("Ye'10" and "Q4'10")

EDMONTON, ALBERTA--(Marketwire - Aug. 19, 2010) - John Babic, President and CEO of Dalmac Energy Inc. ("Dalmac") (TSX VENTURE:DAL) announces the Corporations year end results.

Selected Financial Information                        
(000's Cdn Dollars, except per share)   Q4'10     Q4' 09     YE' 10     YE' 09  
Revenues   4,788     5,821     16,573     21,492  
Gross Margin   1,938     1,322     4,174     5,757  
Gross Margin %   40 %   23 %   25 %   27 %
EBITDAS (loss)   1,144     (1,140 )   782     319  
EBIDTAS per share - basic   0.08     (0.09 )   0.05     0.02  
Net income (loss)   424     (1,869 )   (1,756 )   (1,909 )
  Net income (loss) per share - basic   0.03     (0.14 )   (0.12 )   (0.15 )
  Net income (loss) per share - diluted   0.03     (0.14 )   (0.12 )   (0.15 )

Net income of $424 thousand for Q4'10.

Total revenue for Q4'10 decreased by 18%, to $4.8 million from the $5.8 million reported at Q4'09. A significant portion of the reduced revenue is a result of phasing out of subcontractor operations in favour of deploying Company assets. The profit margins on subcontractors are considerably less than on Company equipment. The gross margin for Q4'10 increased by 47% to $1.9 million from the $1.3 million reported in Q4'09. This improvement is the result of the reduced use of subcontractors, improved cost efficiencies and cost reductions implemented over the course of the quarter.

Increased oilfield activity levels as of January 2010 also helped boost the Q4'10 EBITDAS to $1.1 million from the $(1.1 million) loss reported in the same period last year. The net income for the period increased to $424 thousand as compared to the $(1.9 million) reported in Q4'09*. The YE'10 EBITDAS also increased by $463 thousand to $0.8 million from $319 thousand at YE'09. The net loss for the year was $1.8 million, a decrease of 8% from the $1.9 million loss reported at YE'09.

* the goodwill write down for fiscal 2009 was adjusted for in Q4'09


The winter drilling season did not really kick off until January of 2010 after which drilling activity roared back to near record levels. Nickle's Daily Oil Bulletin reported that Alberta had drilling rig utilizations around 60-65% for the first month of 2010, which marks a 40% improvement compared to the same time in the previous year. February 2010 continued the trend with utilizations peaking over 70%. A significant driver for these developments is the rediscovery of an all but abandoned oilfield which is transforming into one of Canada's biggest light oil opportunities. This field is located in west central Alberta and is referred to as the Cardium zone. Its reserves are estimated at about 10 billion barrels and it is believed that 70% of the oil is still in place. With the application of newly developed multi-stage fracturing technologies, the extraction of oil from the tight rock formation of the Cardium is now economically attractive. These developments, coupled with the recently announced changes in the Alberta oil and gas royalty rates are creating conditions that are expected to spark more activity in the Alberta energy sector.

The Canadian Association of Oilwell Drilling Contractors ("CAODC") has already bumped up its drilling forecasts by 36% for the second half of 2010. The CAODC anticipates that 11,587 wells will be completed in 2010, some 3,000 higher than its October projection of 8,523. Petroleum Services Association of Canada ("PSAC") has predicted that 2010 will see more oil than gas wells drilled in Alberta for the first time in 40 years. Dalmac's core operations are situated in the geographical area of the Cardium zone and we expect to benefit directly from the activities required in its development. Management estimates that Dalmac's operations in this area only require about 20-30 good wells to keep our equipment utilizations operating at a fairly steady pace.

The long term fundamentals still point to an expanding demand for oil and gas. The production rates in the Western Canadian Sedimentary Basin ("WCSB") are continuously declining. This implies that more drilling will be required to maintain production at the current levels.

The outlook for Dalmac's products and services continues to be more positive year over year. Over the main part of the past year the majority of Dalmac's revenue stream was derived from existing production services such as fluid hauling. Production services usually exclude drilling and well workovers. Continued increases in drilling activity will only serve to supplement the existing revenue base. Dalmac plans to expand its continued focus on increasing relationships with new customers in the Cardium zone while concurrently maintaining and strengthening our relationships with existing customers. Dalmac's goal is to provide a select range of products and services that provide an optimum solution for all our customers' needs. 

We seek Safe Harbor.

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