Impax Energy Services Income Trust

Impax Energy Services Income Trust

August 14, 2009 17:30 ET

Impax Energy Services Income Trust Releases Financial Results for the Second Quarter Ended June 30, 2009

CALGARY, ALBERTA--(Marketwire - Aug. 14, 2009) - Impax Energy Services Income Trust (TSX:MPX.UN) ("Impax" or the "Trust") today announced its financial results for the second quarter ended June 30, 2009.

For the three months ended June 30, 2009, which is typically the lowest activity quarter of the year, Impax had a loss of $4.62 million compared to a loss of $4.25 million for the three months ended June 30, 2008. For the six months ended June 30, 2009 the loss was $5.76 million compared to a loss of $2.14 million for the six months ended June 30, 2008.


Three months Six months
(in 000's of Canadian ended June 30, ended June 30,
dollars, except per unit amounts) 2009 2008 2009 2008

Revenue $2,163 $5,113 $11,941 $20,283
Net loss (4,623) (4,252) (5,762) (2,143)
EBITDA(1) (1,838) (329) 269 6,055
Standardized distributable
cash(1) (342) 1,734 1,461 3,954
Total assets 62,464 102,208 62,464 102,208
Loss per unit - basic and
diluted $(0.34) $(0.35) $(0.42) $(0.18)

Revenue for the three months ended June 30, 2009 decreased by $2.95 million or approximately 58% compared to the same period in 2008, while EBITDA for the same period decreased by $1.51 million or approximately 459% due in part to the normal seasonality (slowdown) inherent to our industry. However, this was further exacerbated by the ongoing impact of the current global financial crisis characterized by credit constraints, a significant decline in commodity prices and reduced energy demand resulting in lower overall Trust activities during the period.


The third quarter of 2009 is expected to experience ongoing low levels of industry activity primarily due to extreme weakness in natural gas fundamentals as well as delays in planned industry activity until later in the third quarter. Overall, 2009 activity will be significantly lower than 2008. This is consistent with the recent PSAC drilling activity forecast update which estimates a total of 9,500 wells drilled across Canada in 2009 reduced from a previous forecast of 10,000 wells drilled. PSAC noted that the forecast decline was mitigated due to an expected decrease in well service costs implying significant competitive pressures on the Trust's activities.

The Trust realized a loss of $5.76 million for the six months ended June 30, 2009 and had a working capital deficit of $1.98 million (including the current portion of long-term debt of $2.2 million) at June 30, 2009. In the event that the Trust's activities do not return to normal levels or are reduced through delayed industry activity, the Trust may require additional working capital in the short-term to maintain its operating infrastructure and to service its debt facilities. The Trust intends to address this short term liquidity concern by continuing to reduce its non-essential operating costs and through the issuance of additional debt or equity while continuing to pursue other strategic alternatives. However, if additional funding is required there is no assurance that it will be available to the Trust on acceptable terms, if at all. As part of the cost saving measures, the Trust has eliminated certain compensation programs for employees, reduced staffing levels to meet the anticipated activity levels and deferred some of its repairs and maintenance activities not essential to current operations. It is expected these steps will reduce operating and general and administrative costs further for the third quarter and onwards. In addition to its short term liquidity concern, delays in the resumption of oil field service activities may result in operating and financial targets not being met by year end. Should the Trust not meet these targets, it may breach the financial covenants of its credit facility.

While the near-term provides several challenges, the long-term fundamentals of the oil and gas business offer opportunities. Impax has reputable, well located business units positioned to take advantage of any increased activity in the sector. Impax has reduced both corporate and field costs to compete in this constrained environment and will continue to eliminate costs not essential to sustained operations while proactively seeking strategic alternatives to address the issues noted above.

Impax Energy Services Income Trust is an open-ended trust, providing oilfield services in western Canada. The Trust indirectly owns an approximate 72% interest in Impax Energy Services Master Limited Partnership, which indirectly acquired and now operates through its subsidiaries the businesses of McClelland Oilfield Rentals Limited Partnership, EGOC Enviro Group Limited Partnership, Denray Rathole Drilling Limited Partnership and Dwayne Hommy Trucking Limited Partnership. These businesses provide services in the areas of oilfield rental, specialized equipment rental, access mat rental, waste management services, rat hole drilling and specialty fluid hauling.

This news release may contain forward-looking statements relating to expected future events and financial and operating results of the Trust that involve known and unknown risks and uncertainties. Although the Trust has attempted to identify important factors that could cause results to differ materially from those contained in forward-looking information, actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including market and general economic conditions and the risks and uncertainties detailed in the Trust's March 30, 2009 Annual Information Form filed with the Canadian securities regulatory authorities. Due to the potential impact of these factors, the Trust disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.


(1) As discussed in the Management's Discussion and Analysis, EBITDA is not an earnings measurement recognized by GAAP and does not have a standardized meaning prescribed by GAAP. References to "EBITDA" are to net earnings before interest expense, income taxes, amortization, impairment charges, unit based compensation and non-controlling interest. Management believes that, in addition to net earnings, EBITDA is a useful supplemental measure of both performance and cash available for distribution before debt service, changes in working capital, capital expenditures and income taxes.

Additional Financial Information

The unaudited consolidated financial statements with accompanying notes and Management's Discussion and Analysis will be filed on SEDAR.

Contact Information

  • Impax Energy Services Income Trust
    William McClelland
    President and Chief Executive Officer
    (780) 539-3656
    Impax Energy Services Income Trust
    Raymond P. Cej
    (403) 233-8110