Production Enhancement Group, Inc.
TSX : WIS
June 05, 2009 18:19 ET
Production Enhancement Group Announces 2009 First Quarter Results: Wise Well Intervention Services, Inc. Foreclosed on by Senior Lender
HOUSTON, TEXAS--(Marketwire - June 5, 2009) - Production Enhancement Group, Inc. (TSX:WIS) ("PEG" or the "Company") today announced interim financial and operating results for the three months ended March 31, 2009.
SELECTED FINANCIAL INFORMATION (1), (2), (3)
(Stated in USD)
Three months ended
2009 2008 Change
Revenue (1) 4,729,842 8,116,713 -42%
EBITDAS (2) (3,041,529) (613,569) -396%
Loss before income taxes (6,589,302) (4,134,950) -59%
Net loss from continuing operations (6,595,765) (4,134,950) -60%
Net loss from discontinued operations (93) (121,743) 100%
Loss per share from continuing
operations (3) (0.06) (0.07) 15%
Loss per share from discontinued
operations (3) 0.00 (0.00) 100%
Total assets 37,617,978 49,668,253 -24%
Notes and debt 40,157,370 48,386,891 -17%
Number of common shares outstanding:
Weighted average (basic and diluted) 107,901,283 57,757,114 87%
(1) WISE Alberta was classified as loss from discontinued operations in the
(2) EBITDAS means earnings from continuing operations before interest,
taxes, depreciation and amortization and stock based compensation.
Readers are cautioned that EBITDAS is generally regarded as an indirect
measure of operating cash flow and, as such, the Company believes it is
a significant indicator of success of public companies, and is
particularly relevant to readers within the investment community. These
measures do not have any standardized meaning prescribed by Canadian
GAAP and may not be comparable to similar measures presented by other
companies; however, PEG is consistent in its calculation of EBITDAS for
each reporting period.
(3) Basic and diluted shares.
The following is a summary of selected financial information of the Company:
First Quarter Highlights
Consolidated revenues for the three months ended March 31, 2009 and 2008 were $4,730,000 and $8,117,000, respectively. The Company experienced continued lower utilization due to the impact still being felt by the hurricanes in the third quarter of 2008.
- Coiled Tubing Division revenues for the first quarter of 2009 were $2,412,000, a 33% decrease from the 2008 first quarter revenues of $3,604,000. The current quarter decrease compared to the same period in 2008 was primarily attributable to lower onshore and offshore equipment utilization caused by the hurricane related well service delays.
- Pumping Division revenues for the first quarter of 2009 were $1,290,000, a 49% decrease over the 2008 first quarter revenue of $2,539,000. This decrease was primarily due to lower offshore utilization due to the adverse impact of the hurricanes. The Company is also being impacted by pricing pressure due to the decline in oil and gas prices.
- The Slickline Services Division revenues for the first quarter of 2009 were $916,000, a 48% decrease from first quarter 2008 revenue of $1,747,000 due to the hurricane related activity.
- The Nitrogen Services Division contributed $112,000 in revenues during the first quarter of 2009, a 50% decrease from first quarter 2008 revenue of $227,000.
EBITDAS for the three months ended March 31, 2009 and 2008 were ($3,042,000) and ($614,000), respectively. The decrease from the first quarter last year was primarily attributable to lower equipment utilization.
WISE Well Intervention Services, Inc. Foreclosed on by Senior Lender
On April 3, 2009, the Company announced that it received from its senior lender a notice of default dated April 1, 2009, as a result of the Company's failure to make its March 30, 2009 principle and interest payment. Accordingly, the senior lender gave notice that the March 2009 principle and interest payments and all other obligations under the senior facility were immediately due and payable and that the obligation to make further loans was thereby terminated. The senior lender has a security interest in all of the assets of the Company, including the intellectual property assets. On May 4, 2009, the Company announced that despite the best efforts of management and the Board of Directors of the Company, it has not been able to reach agreement with its senior lender to forbear enforcing its indebtedness. The Board of Directors has therefore resolved to co-operate with the senior lender in the enforcement of its security and to provide for an orderly transition of management and operations. Several alternatives were considered by the Board of Directors and the officers of the Company and its principal shareholder, but none were considered to be acceptable to the senior lender. The senior lender has given notice it will be taking immediate steps to enforce its security and intends to carry out a UCC foreclosure of the shares pledged by PEG in its principal operating subsidiary, Wise Well Intervention Services Inc., ("WWIS"), based in Houston. Steps may also still be taken in the U.S. and Canada in connection with the enforcement of the security of the senior lender or to preserve the assets of the Company and its subsidiaries. On May 11, 2009, the senior lender completed its steps to enforce its security and carried out a UCC foreclosure of the shares pledged by PEG in its principal operating subsidiary, WWIS. A transition to the senior lender of WWIS has been completed.
PEG Shares Suspended by TSX
On May 6, 2009, further to the TSX bulletin No.2009-0562 dated May 4, 2009, the common shares of Production Enhancement Group, Inc. (the "Company") (Symbol: WIS) will be delisted at the close of market on June 4, 2009 for failure to meet the continued listing requirements of TSX.
On application by the Company that it was evaluating listing on another exchange and required time to resolve matters with its creditors, on June 2, 2009 the TSX advised that the shares would now be delisted on July 3, 2009. Trading in the Company's common shares will remain suspended.
The Company is currently seeking to resolve any remaining issues with its senior lenders and other creditors and evaluating listing on another exchange.
"Clearly, the rapidly deteriorating market conditions of oil and gas prices and the credit markets extracted a toll on the Company. Despite the best efforts of management and the Board of Directors of the Company, we were not able to reach agreement with our senior lender to forbear enforcing its indebtedness," said Joseph P. Lahey, PEG's Chief Executive Officer. "The Company is currently exploring its options with what is remaining of the Company. However we have not reached any conclusions at this time as part of this will be needed capital. I am very proud of all our people as they all did their parts with professionalism."
For a complete copy of PEG's 2009 interim financial statements and management's discussion and analysis, please visit www.sedar.com
About Production Enhancement Group, Inc.
Production Enhancement Group, Inc., a Houston-based energy services company incorporated in Alberta, Canada, trades on the TSX under the symbol WIS. PEG's wholly owned subsidiary, WISE® Well Intervention Services, Inc., has developed patented WISE multifunction coiled tubing technologies and markets a full range of coiled tubing, pressure pumping, nitrogen, and wireline services.
WISE® is a registered trademark of Production Enhancement Group, Inc.
This release and PEG's website referenced in this release may contain forward-looking information, including expectations of future components of revenue, cash flow, earnings, cost reductions and negotiations with its lender. By their very nature, the preparation of such forward-looking information requires the Company to make assumptions, and involves inherent risks and uncertainties, both general and specific. There is significant risk that express or implied projections contained in such forward-looking information will not materialize or will be inaccurate. A number of factors could cause actual future results, conditions, actions or event to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking information. Such differences may be caused by factors, many of which are beyond PEG's control, which include, but are not limited to, the level of operations carried on by PEG's customers, oil and gas prices, weather conditions in offshore and land markets including natural disasters, availability of capital, access to current or future financing arrangements, manufacturing cycles of new equipment, the effects of competition in the markets in which PEG operates, difficulty in continuing to develop, produce and commercialize technologically advanced services, availability of human resources and PEG's success in anticipating and managing the foregoing risks. The preceding list is not comprehensive, and as such, investors and others who rely on these statements should consider the above factors as well as the uncertainties they represent and the risk they entail. The risks outlined above should not be construed as exhaustive and include assumptions on which forward-looking information is based on. Investors are cautioned not to place undue reliance on any forward-looking information. PEG undertakes no obligation to update or revise any forward-looking information.
The TSX does not accept responsibility for the adequacy or accuracy of this release.