Central Alberta Well Services Corp.
TSX VENTURE : CWC

Central Alberta Well Services Corp.

November 24, 2010 17:37 ET

Central Alberta Well Services Corp. Releases Third Quarter 2010 Financial Results

CALGARY, ALBERTA--(Marketwire - Nov. 24, 2010) - Central Alberta Well Services Corp. ("CWC" or the "Company") (TSX VENTURE:CWC) releases the operational and financial results for the three and nine months ended September 30, 2010 and announces it has filed its Management Discussion and Analysis and unaudited interim financial statements for the three and nine months ended September 30, 2010 on SEDAR. An electronic copy of these documents may be obtained on the Company's SEDAR profile at www.sedar.com.



Third Quarter 2010 Financial Highlights

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(unaudited)
$ thousands, except per THREE MONTHS ENDED NINE MONTHS ENDED
share amounts, margins SEPTEMBER 30, SEPTEMBER 30,
and ratios 2010 2009 2010 2009
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FINANCIAL RESULTS
Revenue $ 16,413 $ 10,259 $ 45,789 $ 35,693

EBITDAS (1) 3,263 (383) 7,422 1,121
EBITDAS margin (%) (1) 20% (4)% 16% 3%

Funds from (used in)
operations (2) 2,629 (1,566) 5,103 (1,736)

Net loss (905) (5,235) (5,177) (11,703)
Net loss margin (%) (6)% (51)% (11)% (33)%

Per share information
Weighted average number of
shares outstanding 158,739 27,187 159,033 27,193

EBITDAS (1) per share
- basic and diluted 0.02 (0.01) 0.05 0.04
Funds from (used in)
operations per share
- basic and diluted 0.02 (0.06) 0.03 (0.06)
Net loss per share
- basic and diluted (0.01) (0.19) (0.03) (0.43)
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September 30, December 31,
2010 2009
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FINANCIAL POSITION AND LIQUIDITY
Working capital (excluding debt) (3) 10,050 7,711
Working capital (excluding debt) ratio 2.6:1 2.3:1
Total assets 128,433 134,481
Total long-term debt 29,684 31,730
Shareholders' equity 92,440 96,774

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Notes 1-3 - Please refer to the Notes to the Financial Highlights at the
end of this release


Overview

Increased activity across all divisions in the Company resulted in revenue for the third quarter rising 60% compared to the third quarter of 2009 and 28% year to date versus the nine months ended September 30, 2009. Utilization in the Well Services segment expanded to 52% from 34% in the third quarter of 2009, contributing to year over year revenue improvement of $6.1 million. The Other Oilfield service segment posted a 13% year over year increase in activity resulting in a $1.2 million increase in revenue. EBITDAS for the third quarter rose to $3.3 million from a $383,000 loss in the third quarter of 2009 and increased more than six-fold to $7.4 million for the nine months year to date.

Under new leadership, CWC is embarking on an aggressive cost reduction program to improve profitability and operational efficiency. Strategies for cost reductions will be implemented throughout the fourth quarter of 2010 and the first quarter of 2011 and are aimed at producing immediate decreases in general and administrative expenses and overhead to improve cash flow and position the Company to capitalize on opportunities as the economy recovers.

Outlook

Despite the wet weather conditions prevailing in the third quarter of 2010, CWC experienced an increase in oil-related activities and utilization and anticipates that such activity levels will continue into the fourth quarter of 2010 and in to 2011. Petroleum Services Association of Canada ("PSAC") is forecasting an 8% increase in drilling activity to 12,250 wells in 2011and that oil prices will remain at levels necessary to encourage drilling in areas such as Saskatchewan and northeast Alberta. Conversely, PSAC anticipates that gas prices will remain relatively low and without improvement through 2011, leading to a projected 11% drop in the conventional shallow gas drilling area of southeast Alberta. CWC is presently dedicating 90% of its Well Servicing fleet to oil-related activities and 10% to natural gas, enabling it to capitalize on a continuing strong oil price. As an example, the Company's recent expansion and relocation of service rigs to its facilities in Grande Prairie, Alberta to service the Peace River Arch and the emerging Pekisko play at Judy Creek as well as Weyburn, Saskatchewan to service the Bakken play, is expected to continue through the end of 2010 and into 2011. The Company is also well positioned to benefit from the increased activity levels in the Cardium play through its operational head office in Red Deer, Alberta and the continued oil-related activity in the Viking play with its facilities in Provost, Alberta.

In early October and November 2010, the Company accepted the resignation of its President and Chief Executive Officer and of its Vice President, Finance and Chief Financial Officer and appointed Mr. Duncan Au, a member of CWC's Board of Directors, as interim President and Chief Executive Officer. Mr. Au has extensive experience in the energy services sector and has been instrumental in formulating strategies for cost reduction and business rationalization since joining the Company's Board of Directors in July 2010.

CWC is well positioned to capitalize on improved oil-related activities in the WCSB, with a strong balance sheet, working capital (excluding debt) of 2.6:1 and no significant maturities under its bank credit facility until April 2013.

Selected Financial Information

Selected financial information for the three and nine months ended September 30, 2010 are attached below with the detailed unaudited financial statements and the Management Discussion and Analysis available on the Company's profile on SEDAR at www.sedar.com or the Company's website at www.cawsc.com.



BALANCE SHEET
Central Alberta Well Services Corp.
For the periods ended September 30, 2010 and December 31, 2009
(unaudited)

($ in thousands) 2010 2009
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ASSETS
Current assets
Marketable securities 67 2
Accounts receivable 13,104 10,239
Shareholder loans 167 189
Inventory 2,848 2,996
Prepaid expenses and deposits 172 263
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16,358 13,689

Property and equipment 108,260 116,426
Shareholder loans 872 986
Intangible assets 2,943 3,380
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$ 128,433 $ 134,481
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness $ 1,597 $ 586
Accounts payable and accrued liabilities 4,711 4,180
Warrants - 1,212
Current portion of long-term debt 3,000 1,705
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9,308 7,683

Long-term debt 26,684 30,025
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35,992 37,707
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SHAREHOLDERS' EQUITY
Share capital 110,774 111,080
Contributed surplus 8,479 7,329
Deficit (26,812) (21,635)
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92,441 96,774
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$ 128,433 $ 134,481
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STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND DEFICIT
Central Alberta Well Services Corp.
(unaudited)

For the
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Three months ended Nine months ended
September 30 September 30
($ in thousands) 2010 2009 2010 2009
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REVENUE $ 16,413 $ 10,259 $ 45,789 $ 35,693

EXPENSES
Operating expenses 10,229 7,451 29,717 25,361
General and administrative 2,920 3,191 8,650 9,211
Stock based compensation 363 260 954 774
Interest 655 1,839 2,431 4,537
Depreciation 3,005 2,607 8,776 7,582
Amortization 146 146 437 442
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17,318 15,494 50,965 47,908
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NET LOSS (905) (5,235) (5,176) (12,215)

INCOME TAXES
Future tax reduction - - - (512)
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- - - (512)
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NET LOSS AND COMPREHENSIVE LOSS (905) (5,235) (5,176) (11,703)

DEFICIT, BEGINNING OF PERIOD (25,907) (12,586) (21,635) (6,119)

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DEFICIT, END OF PERIOD $ (26,812) $ (17,822) $ (26,811) $ (17,822)
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NET LOSS PER SHARE
Basic and diluted loss
per share $ (0.01) $ (0.19) $ (0.03) $ (0.43)
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STATEMENT OF CASH FLOWS
Central Alberta Well Services Corp.
(unaudited)

For the
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Three months ended Nine months ended
September 30 September 30
($ in thousands) 2010 2009 2010 2009
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CASH PROVIDED BY (USED IN):

OPERATING:
Net loss $ (905) $ (5,235) $ (5,176) $ (11,703)
Items not affecting cash:
Stock based compensation 363 260 954 774
Interest on shareholder loans (5) (1) (16) (3)
Accretion of debt financing
costs and warrants 44 567 264 1,661
Unrealized gain on
marketable securities (12) - (50) -
Loss (gain) on disposal
of equipment (8) 89 (86) 22
Future income tax (reduction) - - - (512)
Depreciation and amortization 3,151 2,753 9,213 8,025
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2,629 (1,567) 5,103 (1,736)
Change in non-cash working
capital (3,726) 93 (2,048) 3,178
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(1,097) (1,473) 3,055 1,442
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INVESTING:
Purchase of property and
equipment (377) (5,017) (638) (13,402)
Proceeds on sale of assets 10 5,234 113 5,361
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(367) 217 (524) (8,041)
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FINANCING:
Issuance (repayment) of
long-term debt - - (1,900) 2,200
Increase(decrease) in bank
indebtedness 1,513 688 1,011 688
Redemption of warrants - - (1,212) -
Financing costs (49) - (430) -
Repurchase of common shares - - - (29)
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1,465 688 (2,531) 2,859
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INCREASE (DECREASE) IN CASH 0 (568) (0) (3,740)
CASH, BEGINNING OF PERIOD - 568 - 3,740
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CASH, END OF PERIOD $ 0 $ (0) $ (0) $ -
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Supplementary Information:
Interest paid $ 615 $ 772 $ 2,182 $ 2,383
Interest received 0 1 1 6


About Central Alberta Well Services

Central Alberta Well Services is a premier well servicing company operating in the Western Canadian Sedimentary Basin with a complementary suite of oilfield services including service rigs, coil tubing, snubbing, nitrogen and well testing. The Company's corporate office is located in Calgary, Alberta, with operational locations in Red Deer, Provost, Brooks, Grande Prairie and Whitecourt, Alberta and Weyburn, Saskatchewan.

Notes to Financial Highlights

(1) EBITDAS (earnings before income tax, depreciation and stock based compensation) is calculated from the statement of income (loss) as revenue less operating costs and general and administrative expenses, exclusive of stock based compensation costs, and is used to assist management and investors in assessing the Company's ability to generate cash from operations. EBITDAS is a non-GAAP measure and does not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures provided by other companies.

(2) Funds from operations is defined as cash from operating activities before changes in non-cash working capital. Funds from operations and funds from operations per share are measures that provide investors additional information regarding the Company's liquidity and its ability to generate funds to finance its operations. Funds from operations and Funds from operations per share do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures provided by other companies.

(3) Working capital (excluding debt) is calculated based on current assets less current liabilities excluding the current portion of long-term debt. Working capital is used to assist management and investors in assessing the Company's liquidity and its' ability to generated funds. Working capital (excluding debt) does not have any meaning prescribed by GAAP and may not be comparable to similar measures provided by other companies.

Certain statements contained in this press release, including statements which may contain such words as "could", "should", "believe", "expect", "will", and similar expressions and statements relating to matters that are not historical facts are forward-looking statements, including, but not limited to, statements as to: future capital expenditures, including the amount and nature thereof; revenue growth; equipment additions; business strategy; expansion and growth of the Corporation's business and operations; service rig utilization rates, outlook for natural gas prices and general market conditions and other matters. Management has made certain assumptions and analyses which reflect their experiences and knowledge in the industry, including, without limitations, assumptions pertaining to well services demand as a result of commodity prices. These assumptions and analyses are believed to be accurate and truthful at the time, but the Corporation cannot assure readers that actual results will be consistent with these forward-looking statements. However, whether actual results, performance or achievements will conform to the Corporation's expectations and predictions is subject to known and unknown risks and uncertainties which could cause actual results to differ materially from the Corporation's expectations. All forward-looking statements made in the press release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Corporation will be realized or, even if substantially realized, that they will have the expected outcomes to, or effects on, the Corporation or its business operations. The Corporation does not intend and does not assume any obligation to update these forward-looking statements, except as expressly required to do so pursuant to applicable securities laws. Any forward-looking statements made previously may be inaccurate now.

READER ADVISORY - 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.

Contact Information

  • Central Alberta Well Services Corp.
    Duncan T. Au, CA, CFA
    Interim President & Chief Executive Officer
    (403) 264-2177
    or
    Central Alberta Well Services Corp.
    755, 255 - 5 Avenue SW
    Calgary, Alberta T2P 3G6
    ir@cawsc.com
    www.cawsc.com