Kinetex Resources Corporation
TSX VENTURE : KTX

Kinetex Resources Corporation

December 02, 2009 10:23 ET

Kinetex Announces Third Quarter Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 2, 2009) - Kinetex Resources Corp. (TSX VENTURE:KTX) (the "Company" or "Kinetex") is pleased to announce its consolidated operating and financial results for the third quarter ended September 30, 2009.

Readers are encouraged to view the Company's Interim Financial Statements and accompanying Management Discussion and Analysis on the Company's website and SEDAR at www.sedar.com.

Highlights of Third Quarter activity

The Company continued to make steady progress during the quarter ended September 30, 2009. As Kinetex executes upon its business plan, the Company is expanding its contract base by capitalizing on the efforts of its South American operations and on Kinetex's market position in Canada. During the period management made a conscious shift to focus on the reduction of third party billing. This shift enables Kinetex to manage its customer base more efficiently and improve its cash flow and profit margins. The Company continues to attract a significant amount of business. As per the Company's June 4, 2009 announcement, Kinetex announced a record amount of committed work contracts in excess of $20 million. The Company commenced said work programs during the quarter which are scheduled to be completed in the first quarter of 2010.

Revenue for the quarter was $3,026,873 compared to $4,209,973 for the quarter ended September 30, 2008, representing a decrease of 28.1% and revenue for the corresponding nine month period was $10,175,796 compared to $11,040,357 for the prior year, representing a decrease of 7.8%. Revenue was significantly lower than the prior year (primarily due to the reduction in third party billing) while the requirement to complete extensive environmental assessments and permitting prior to commencement of field operations has shifted the recognition of a significant portion of revenues into the fourth quarter of 2009.

While energy and resource exploration and development activity in Western Canada is well below historical levels, the Company's performance to date has not been adversely affected largely due to a strong presence in South America where activity remains high along with a diversified mix of services across the spectrum of commodities; notably, uranium, coal and potash in addition to Oil and Gas. The Company has established through its wholly owned Colombian subsidiary, a strong presence in Colombia where the Company is advantaged with key management personnel fluent in Spanish and familiar with local business culture.

As a result of efforts to manage its business more effectively the Company has been able to improve its gross margin and overall profitability on less revenue for both the quarter and year to date. The Company is pleased to announce positive net income of $306,950 ($0.01 basic and diluted per share) for the quarter (compared to a loss of $185,416 in 2008) and $287,704 ($0.01 basic and diluted per share) for the year to date (compared to a loss of $1,381,333 in 2008). Profitability was maintained through strategic focus on cost reduction, optimization of the Company's resources and customer management. Management believes these changes are positioning the Company for ongoing profitable operations and expansion in the future.

The Company's cash flow situation has improved substantially since last quarter as it has completed the build up of its operating foundation and capacity. As profitability continues to improve (and the rate of cash burn declines) the Company continues to rely on available bank financings and equity offerings in order to take advantage of the growing opportunities available to it. The Company has made new arrangements with its lenders during the quarter and on November 19, 2009 announced a $1,500,000 private placement share offering.

"We continue to be cautiously optimistic in the headwinds of the current downturn and are confident our leadership in adopting new technologies will continue to produce positive results," said Leonard Van Betuw, CEO of Kinetex Multi-Component Services. "Colombia continues to see strong activity, as reported by our South American branch offices, Kinetex Surcusal and Kinetex Geosciences headquartered in Bogota.

Under the direction of Andres Hernandez, VP of Operations, sales revenue from South America accounts for 40% of revenues year to date, up from 35% last year. The Board joins me in congratulating our management and field personnel on their achievements and thanks them for their continuing efforts; we look forward to their growing contribution to the company's revenue as we continue to expand our capacity in the region."

Outlook for 2009

Kinetex Resources Corporation is pleased to provide an overview of its activities and plans for expansion in 2009 for its subsidiary, Kinetex. The Company reports excellent progress in the third quarter, traditionally a seasonally slow activity period. Kinetex currently has 3 crews in the field. As previously announced, the bid book remains strong with over $50 million in active solicitations, while we continue to carry a signed order book of over $25 million into the 4th quarter of 2009. (Shareholders are cautioned that, while management remains optimistic pertaining to future awarded prospects, there can be no guarantee or assurance that the Company will be the successful bidder respecting any or all of the active solicitations.)

A key strength of the Company is its use of digital 3C multi-component services – the superiority of this multi-component seismic data continues to be apparent as demonstrated by the results and the continuing demand by our array of both energy and metals exploration and development contracts underway.

The expansion of infrastructure over the past three years is now providing a solid foundation for future growth and has increased revenue generation opportunities previously unavailable to the Company. The Company is able to bid on larger projects which gives the Company the opportunity to address (among other things) requests from senior petroleum clients for large capacity surveys and the ongoing growth seen in both the domestic and international markets. The Company notes that its geographic and industrial diversity is providing opportunities for growth despite the economic challenges being felt across the board all by energy services companies worldwide.

The recent successes and discoveries enjoyed by a number of our mining clientele are very exciting to see and it is encouraging to know that we played a part in their successes.

Kinetex's presence in South America (through its subsidiary, Kinetex Surcusal Colombia Inc.) provides the Company with a new market and geographical diversification. The Company established a regional office in Bogota, Colombia in late 2008 to identify and seize business opportunities in both Colombia and other parts of South America, and enjoys strong growth with an expanding list of clientele.

Looking forward, the Company sees opportunity for growth at an accelerated rate once overall confidence returns to the world markets. The Company very cautiously is extremely encouraged by the reported developments associated with our strategic long term investments; "Our appropriately conservative treatment of recognizing these items at a modest discount to cost represent an area of unbudgeted earnings in 2010." We caution there remain hurdles to be overcome, but progress achieved year to date provide us growing confidence that we will be potentially rewarding our shareholders in the future with additional strong returns on the most significant asset: The collectively growing intellectual capacity of Kinetex.

In conclusion, the Company has continued to execute its business plan throughout the past year and current quarter. While the Company's growth rate has slowed somewhat due to the delay and or postponement of some projects, the Company remains confident that its business strategy and projections remain intact. Management is looking forward to a busy year and is confident that the Company will be able to take advantage of the opportunities available to it.

Forward-Looking Statements
Certain statements contained in this news release constitute forward-looking statements. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements. Based on current available information, the Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that those expectations will prove to be correct. The forward-looking statements in this news release are expressly qualified by this statement, and readers are advised not to place undue reliance on the forward-looking statements.

About Kinetex
Kinetex is an oil, gas and mineral exploration services company with offices in Vancouver, BC, Calgary, Alberta and Bogota, Colombia. Through its subsidiaries, Kinetex provides data-rich high resolution subsurface images - essentially a brand-new exploration tool - to the energy, metals and minerals exploration and development industries seeking to go beyond the limitations of traditional data acquisition methods.

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. The company seeks safe harbour.

Contact Information

  • Kinetex Resources Corporation
    Gil Schneider
    Chief Executive Officer
    604-484-5761 or Toll-Free: 1-888-484-5761
    604-484-5760 (FAX)
    gil@kinetex.ca
    www.kinetex.ca