Ceiba Energy Services Inc.
TSX VENTURE : CEB

Ceiba Energy Services Inc.

May 21, 2015 17:32 ET

Ceiba Energy Services Announces First Quarter 2015 Financial Results, Operational Update and Annual General Meeting Date

CALGARY, ALBERTA--(Marketwired - May 21, 2015) - Ceiba Energy Services Inc. ("Ceiba" or the "Company") (TSX VENTURE:CEB) is pleased to announce its first quarter 2015 financial results highlighted by an adjusted EBITDA of $31 thousand, an increase of 107% from the first quarter of 2014. Ceiba has filed its Financial Statements, related Management's Discussion and Analysis and Annual Information Form for the quarter ended March 31, 2015 on the Company's profile at www.sedar.com.

The Company's annual general and special meeting has been scheduled for June 24, 2015 at 10:00 a.m. Calgary time at the Eau Claire Place II conference room, second floor, 521 - 3rd Avenue S.W., Calgary, Alberta, T2P 3T3.

All tabular amounts are in CDN$ thousands except for per share amounts and where otherwise noted.

OPERATIONAL AND FINANCIAL HIGHLIGHTS - 2015 Q

($000's unless noted) March 31,
2015
March 31,
2014
2015 Q1 vs.
2014 Q1
Total received volume (000's m3) 110 77 43%
Revenue 1,613 1,243 30%
Gross margin(1) 632 563 12%
Gross margin %(1) 39% 45% (6%)
Adjusted EBITDA(1) 31 15 107%
Total assets 35,116 27,858 N/A
Net working capital(1) 13,125 (6,961) N/A
(1) Refer to "NON-GAAP MEASURES AND OPERATIONAL DEFINITIONS" for additional information

2015 Q1 Highlights

  • The Company received 110,000 m3 of fluid in Q1 2015, an increase of 33,000 m3 (43%) over Q1 2014. The volume increase in Q1 2015 compared to Q1 2014 is mainly attributable to the re-licensing of the Chamberlain facility in November 2014 to accept 1B fluids as well as continued sales efforts to increase overall volumes. The Silver Valley, Kinsella and Central Alberta facilities also experienced increased volumes in Q1 2015 compared to Q1 2014.
  • Revenue in Q1 2015 of $1,613 thousand, an increase of $370 thousand (30%) compared to revenue of $1,243 thousand in Q1 2014. Increased revenues are a result of the increased volumes at all facilities and the re-licensing of the Chamberlain facility to accept 1B fluids in November 2014. The revenue associated with the increased volumes was offset with lower commodity prices received for recovered oil. Benchmark oil prices in Q1 2015 were 50% lower on average compared to the same period in 2014.
  • The Company had gross margin in Q1 2015 of $632 thousand (39% of revenue) compared to Q1 2014 of $563 thousand (45% of revenue). The increase of $69 thousand (12%) compared to Q1 2014 is attributable to the increased volumes leading to higher revenue. The decline as a percentage of revenue is primarily the result of lower commodity pricing received from recovered oil and certain non-recurring operating expenses incurred at Silver Valley during Q1 2015.
  • Adjusted EBITDA was $31 thousand in Q1 2015, marking five consecutive quarters of positive Adjusted EBITDA. The increase of $16 thousand (107%) in Adjusted EBITDA from Q1 2014 to Q1 2015 is attributable to the increased volumes received at all facilities offset by lower volumes and lower pricing received for recovered oil. Also negatively impacting Adjusted EBITDA in Q1 2015 was certain non-recurring operating expenses at Silver Valley.
  • Ceiba recorded a loss before income tax of $885 thousand in Q1 2015 compared to a loss before income tax of $1,135 in Q1 2014, a decrease of $250 thousand (22%).
  • The Company acquired three well bores in an oil producing area in Alberta for the purpose of developing future waste disposal sites.

Balance sheet highlights

  • Ceiba ended Q1 2015 with $12.2 million in cash and cash equivalents and $13.1 million of positive net working capital.
  • Development continued at Ceiba's new Gordondale waste water disposal facility which is scheduled to open in Q4 2015. The Gordondale facility received its waste management permits from the Alberta Energy Regulator ("AER") and incurred $220 thousand in capital expenditures during Q1 2015.
  • Ceiba entered into a $15 million credit facility commitment letter with ATB on March 26, 2015 to ensure sufficient cash is available to fund future operations and capital requirements.

FUTURE PLANS AND OUTLOOK

Each of Ceiba's facilities will be impacted differently by current low oil and natural gas prices in Western Canada. Ceiba's Silver Valley and future Gordondale sites are located in areas of continued strong industry activity. Silver Valley's overall volumes are not expected to change significantly in 2015 compared to 2014. The Chamberlain facility has been positively impacted by its re-designation as a Class 1B facility in November 2014. New waste fluids received are expected to more than offset a reduction in custom treating activity at this facility. The Central Alberta facilities have been impacted by lower oil and natural gas prices and volumes are expected to decline in 2015 compared to 2014. The Kinsella facility continues to operate near capacity, though this facility is non-core and does not contribute materially to Ceiba's gross margins. The weakening of the Canadian dollar relative to the US Dollar has reduced the impact of a drop in global and North American oil prices for Canadian producers. However, current lower oil prices have resulted in lower revenue for the Company's recovered oil. Management will continue to monitor producer activity levels in Western Canada in general and around our current and planned facilities in particular with a view of reducing financial risk from further drops in the price of oil and natural gas.

The Company continues to develop its Gordondale waste facility, looking to break ground on construction post break-up. The waste disposal permit for the disposal well is expected in the near future. The addition of the Gordondale facility is expected to support disposal volumes of 300 m3 to 400 m3 per day.

The Company has currently suspended the development of the Athabasca facility until commitments for disposal volumes are established. Ceiba has received the development permit, waste management permit and the waste disposal permit for the disposal well related to Athabasca. The combination of the development permit and the waste management permit allows the Company to proceed with construction of the facility within one-year of the development permit, unless extended.

The Company's operating and capital activities include continued sales efforts for all its current operating facilities and the development of facilities to receive new and incremental waste streams.

NON-GAAP MEASURES AND OPERATIONAL DEFINITIONS

Certain supplementary measures in this MD&A do not have any standardized meaning as prescribed under GAAP and, therefore, are considered non-GAAP measures. These measures are described and presented in order to provide information regarding the Company's financial results, liquidity and its ability to generate funds to finance its operations. These measures are identified and presented, where appropriate, together with reconciliations to the equivalent GAAP measure. However, they should not be used as an alternative to GAAP measures because they may not be consistent with calculations of other companies. These non-GAAP measures, and certain operational definitions used by the Company, are further explained below.

Gross Margin and Gross Margin %

Gross margin is calculated as revenue less operating expenses which includes direct product costs for services but excludes depreciation, depletion and amortization and general and administrative expenses. Management analyzes gross margin as a key indicator of cost control and operating efficiency. Gross margin % is calculated as gross margin as a percentage of revenue.

EBITDA and Adjusted EBITDA

EBITDA refers to net income before finance costs, taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before costs associated with non-recurring business acquisition costs and share based-compensation. These measures do not have standardized definition prescribed by IFRS and therefore may not be comparable to similar captioned terms presented by other users.

Management believes that EBITDA and Adjusted EBITDA are key indicators for the results generated by the Company's core business activities as they eliminate non-recurring items, certain non-cash items and the impact of finance and tax structure variables that exist between entities.

($000's) Three months ended March 31,
2015 2014
Total loss and comprehensive loss for the period (885) (748)
Add back:
Finance costs 259 477
Depreciation 355 252
Income tax expense/(recovery) - (387)
EBITDA (271) (406)
Add back:
Share-based compensation 154 122
Loss on disposal of asset 43 -
Accretion 35 45
Transaction costs 70 254
Adjusted EBITDA 31 15

Net Working Capital

Net Working Capital is calculated as total current assets less total current liabilities. Management analyzes net working capital as a measure of our ability to settle short term liabilities with currently available assets.

About Ceiba Energy Services Inc.

Ceiba provides specialized services to the energy sector, specifically to companies involved in the exploration, extraction and production of oil and natural gas in Western Canada. Ceiba develops and constructs facilities in proximity to its customers to provide treatment of crude oil emulsion, terminalling, storage and marketing of oil and disposal of production water.

Reader Advisory

Neither the 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 the accuracy of this release.

Forward-looking statements

Certain information regarding Ceiba in this news release, including management's assessment of its future development plans and access to various external sources of capital, may constitute forward looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with facility construction and oilfield services operations, general risks associated with oil and gas exploration, development, production, marketing and disposal of waste, loss of markets, environmental risks, competition from other service providers, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward‐looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Ceiba's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward‐looking statements or information contained in this news release are made as of the date hereof and Ceiba does not undertake any obligation to update publicly or revise any forward‐looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Contact Information

  • Ceiba Energy Services Inc.
    Ian Simister
    President
    403-262-2783

    Ceiba Energy Services Inc.
    Peter Cheung
    CFO and Corporate Secretary
    403-262-2783