Enseco Energy Services Corp.
TSX VENTURE : ENS

Enseco Energy Services Corp.

February 01, 2010 13:29 ET

Enseco Energy Services Corp. Provides Financing and Operational Update

CALGARY, ALBERTA--(Marketwire - Feb. 1, 2010) - Enseco Energy Services Corp. (TSX VENTURE:ENS) ("Enseco" or the "Company") is pleased to announce that it has received notice from the underwriters that its previously announced private placement (the "Offering") has been fully subscribed and the underwriters are exercising their full option to purchase an additional $3,000,000 (15,000,000 units) of the Offering (the "Underwriters Option"). Each unit consists of one common share and one half (½) of a warrant. Each whole warrant entitles the holder to purchase one additional common share at a price of $0.25 for a period of one year. With the exercise of the Underwriters' Option, the total gross proceeds to the Company from the Offering will be $8,000,000. The Offering is being led by Desjardins Securities Inc. and includes FirstEnergy Capital Corp., Wellington West Capital Markets Inc. and Acumen Capital Finance Partners Limited and is scheduled to close on or about February 10, 2010. The net proceeds of the Offering will be used to fund the previously announced acquisition of the directional drilling kits and related assets of a private energy services company with significant operations in the United States and for general corporate purposes.

Enseco is also pleased to announce that it has entered into an agreement to sell its remaining wireline units for an aggregate purchase price of $1.15 million. The sale is expected to close on February 12, 2010 and will result in the discontinuation of the Company's wireline operations. This is the third step in the Company's new business strategy to expand its North American resource play services. The first step was the acquisition of Focus Directional Drilling ("Focus") on December 1, 2009 (the "Focus Acquisition"). The Focus Acquisition increased Enseco's inventory of directional drilling kits from 6 to 24 and provided Enseco with positive cash flow operations and a solid foundation for future growth. Focus generated revenues of approximately $17.2 million, estimated gross margin of $5.9 million and $4.0 million in earnings before interest, taxes, depreciation and amortization ("EBITDA"), for the twelve months ended September 30, 2009. As at September 30, 2009, Focus had estimated working capital, excluding the current portion of long term debt of approximately $1.2 million, property and equipment with a book value of approximately $5.2 million, estimated assets of $8.6 million and total debt of approximately $3.0 million. 

The second step in the Company's efforts to expand its North American resource play services was the recently announced acquisition of the directional drilling kits and related assets of a private energy services company (the "Private Company") with significant operations in the United States (the "Announced Acquisition"), which is expected to close on February 12, 2010. The Announced Acquisition will include 10 directional drilling kits, 70 motors and other related equipment that are currently operating in west Texas, the Rocky Mountains and the Marcellus shale regions of the United States. The Private Company generated revenues of approximately $10.5 million and $2.0 million in EBITDA (including non-recurring management expenses) for the year ended December 31, 2009. Enseco's obligation to complete the Announced Acquisition is subject to various conditions, including receipt of regulatory approval, completion of the Offering and the satisfactory completion of due diligence.

Enseco expects to realize significant annual cost savings and other synergies from these acquisitions. Consolidated revenues of Enseco after completion of the acquisitions is expected to be approximately $55.0 million for the twelve months ended September 30, 2009 and combined EBITDA (after adjusting for expected cost savings and synergies) of approximately $7.3 million.

Enseco is a growing supplier of energy related services operating throughout western Canada and the United States, with operational centres in Red Deer, Edmonton, Beaverlodge, Fort St. John, Midale (Saskatchewan), Minot (North Dakota) and Gillette (Wyoming) as well as a corporate and sales office located in Calgary and a corporate sales office in Houston. Enseco is led by an experienced management team offering directional drilling, well swabbing and production testing services with a focus on continued value creation through accretive acquisitions and organic growth.

FORWARD-LOOKING STATEMENTS

Certain information and statements contained in this press release constitute forward-looking information. Specifically this press release contains forward-looking statements relating to the closing date of the Offering, the sale of the wireline assets and the Announced Acquisition, the underwriter's intention to exercise the Underwriters' Option, the effect of the Focus Acquisition and the Announced Acquisition on Enseco's business including anticipated cost savings and other synergies, the use of proceeds of the Offering and Enseco's ongoing focus and business plans. The forward-looking statements contained in this press release speak only as of the date of this press release and are expressly qualified by this cautionary statement. These forward-looking statements are based on certain key assumptions regarding, among other things, the benefits to be achieved from the Focus Acquisition and the Announced Acquisition, the timing of closing of the sale of the wireline assets and the Announced Acquisition, the satisfaction of closing conditions, including receipt of regulatory approval, completion of the Offering and the completion of satisfactory due diligence. Furthermore, these forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. Such factors include, but are not limited to general economic conditions in Canada and the United States, industry conditions, changes in laws and regulations and changes in how they are interpreted and enforced, increased competition, volatility of commodity prices, and the inability satisfy the closing conditions, including receipt of regulatory approval and the completion of the Offering. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Enseco's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, or if any of them do so, what benefits that Enseco will derive therefrom. Enseco disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

NON-GAAP MEASURES

This press release refers to earnings before interest, taxes, depreciation and amortization (EBITDA). EBITDA is a measure used by the Company that is not a standard measure under Canadian generally accepted accounting principles ("GAAP"). The Company's method of calculating EBITDA may differ from methods used by other issuers. Therefore, the Company's use of EBITDA may not be comparable to similar measures presented by other issuers. EBITDA refers to net earnings (loss) determined in accordance with GAAP, before depreciation and amortization, net of gain or loss on disposal of capital assets, interest expense and income tax expense. EBITDA is used by management of Enseco to determine the ability of an issuer to generate cash from operations. Management believes EBITDA is a useful supplemental measure from which to determine a company's ability to generate cash available for debt service, working capital, capital expenditures, income taxes and dividends.

Neither the TSX Venture Exchange nor its Regulation Service 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

  • Enseco Energy Services Corp.
    Lane Roberts
    President and CEO
    (403) 806-0088