Cordy Oilfield Services Inc.
TSX VENTURE : CKK

Cordy Oilfield Services Inc.

April 02, 2009 14:01 ET

Cordy Announces 2008 Fourth Quarter Results

CALGARY, ALBERTA--(Marketwire - April 2, 2009) - Cordy Oilfield Services Inc. ("Cordy" and or the "Company") (TSX VENTURE:CKK) announces its consolidated operating and financial results for the quarter and year ended December 31, 2008.



CONSOLIDATED FINANCIAL RESULTS
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Selected (Unaudited)
Financial Quarter ended
Information December 31 Year ended December 31
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($ millions, except per
share amounts) 2008 2007 2008 2007 2006
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Revenue 26.2 31.2 115.5 129.5 87.0
EBITDAS (1) 2.1 2.2 9.9 19.3 15.1
Net Earnings (Loss) (5.2) (1.3) (38.6) 1.7 3.5
Earnings Per Share
- Basic and Diluted (0.06) (0.02) (0.46) 0.02 0.05
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Total Assets, as at
December 31st 105.2 153.8 168.9
Total Liabilities, as at
December 31st 36.1 47.5 68.3

Cash and Equivalents, as at
December 31st 5.4 8.9 37.3
Shareholders' Equity, as at
December 31st 69.1 106.4 100.5
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(1)EBITDAS, a non-GAAP measure, is defined by Cordy as earnings before
interest, taxes, depreciation, amortization, impairment and stock-based
compensation.


RESULTS FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2008

Revenues for the fourth quarter of 2008 were $26.2 million compared to $31.2 million for the same period in 2007. This decrease reflects the impact on the Company's customers of reduced market prices for oil and gas, credit difficulties and limited access to capital. Major oil and gas exploration and production companies have significantly reduced their capital expenditure programs and these reductions impact the amount of work and revenues available from these companies. While approximately half of the Company's revenues in 2008 came from the oil and gas exploration and development industries, Cordy's diversification in other industries such as civil infrastructure and environmental remediation helped the Company maintain a level of activity in these challenging economic times.

Competition, especially in Alberta amongst oil and gas services companies, continued to present a challenge. Now, as drilling activity slows at an even faster pace services companies are slashing their rates and profit margins to undercut the competition and entering new markets putting pressure on Cordy's civil construction operations.

Due to the adverse economic conditions in the oil and gas industry, the Company assessed the carrying value of its goodwill and intangible assets during the third and fourth quarters of 2008 and determined that impairment of value existed. The net loss for the fourth quarter and year ended 2008 include non-cash goodwill and intangible asset impairment charges of $5.3 million and $40.2 million respectively. The impairment charges reflect the current sentiment in the economy as well as current oil and gas exploration prospects in western Canada. The non-cash impairment charges are not reflective of the prospects of a quick economic recovery or the value of the Company during times of historic oil and gas exploration and development.

EBITDAS, which the Company uses as a measure of cash flows from operations before financing costs, decreased by only $0.1 million or 4% from the prior year despite the substantial decline in revenues. This increase in profitability is the result of implementing cost cutting measures and improving efficiencies. Forecasted drilling activity in Alberta for 2009, which is expected to be below five year lows, have obliged the Company to examine and adjust the operating capacity within each of its business units.



CASH RESOURCES AND LIQUIDITY
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Quarter ended Year ended
December 31 December 31
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($ millions) 2008 2007 Change 2008 2007 Change
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Cash provided by (used for):
Operating Activities 2.6 2.7 (0.1) 9.0 9.0 (0.0)
Financing Activities (1.7) (8.2) 6.5 (4.5) (18.1) 13.6
Investing Activities (1.8) (1.7) (0.1) (8.0) (19.3) 11.3
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Increase (Decrease) in Cash (0.9) (7.2) 6.3 (3.5) (28.4) 24.9
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The Company's net working capital position remains strong with positive working capital including current portions of debt of $19.1 million (2007 - $20.4 million). The Company renegotiated certain loans during the fourth quarter of 2008 which enabled it to remove a portion of the loans from current liabilities. The Company anticipates its current cash resources will be sufficient to meet all anticipated obligations throughout 2009.

At December 31, 2008, the Company had $5.4 million in cash and cash equivalents compared to $8.9 million at December 31, 2007. During the year Cordy used a portion of its cash resources to repay its debt. The Company repaid $4.5 million of debt during the 2008 year bringing Cordy's consolidated total debt to an all time low of $20.5 million at December 31, 2008. Cordy will continue to responsibly reduce its debt in 2009 through scheduled debt repayments.

Cash used by investing activities was decreased significantly during the year as Cordy did not complete any acquisitions in 2008 and reduced its expenditures on property and equipment by 56% or $8.6 million compared to the prior year. In the forth quarter of 2008 the Company acquired equipment for the environmental segment which continues to operate at a profit throughout this economic downturn.

Cordy has a bank operating line of credit of $20 million available which has not been drawn on to date. Interest is based on the bank prime rate, is secured by a general security agreement covering all unencumbered assets and requires maintenance of certain financial ratios and other covenants. The Company was in compliance with all financial covenants at December 31, 2008.

OUTLOOK

The world-wide economy is in a severe contraction which is pervasive and deep. No one has really seen a downturn that looks like this one - very fast, very deep, with a vast number of industry sectors impacted all at once. No one is really prepared to say we have hit bottom yet. Volatility and uncertainty appear to rule the day. As a result, the challenges and problems companies face today are real, serious and many. These challenges cannot be met easily in a short period of time. There is no silver bullet - no quick fix. One of the key indicators of a future recovery in oilfield services activity will be a stabilization and recovery in the demand for oil and gas. The Company has not seen any evidence of this demand change yet.

The first order of the day is to survive this downturn regardless of its depth and duration. Management believes the Company is in a position to face these uncertain economic times and challenging market conditions. Cordy is financially sound with a positive working capital position of $19.1 million and a $20 million line of credit available at year end. The Company has purposefully elected to preserve cash for future opportunities and has financing arrangements in place that provide stability and support the pursuit of new growth opportunities.

Management is committed to a highly selective capital spending strategy focused entirely on projects with the potential to deliver high returns on investment. Two of the biggest challenges today are assessing risk and determining value. The Company is looking for opportunities that make sense, add value and do not increase our risk profile in any material way.

Cordy's diversification is, and will remain, a key driver of the overall business.

Additional information on Cordy is available on our website www.cordy.ca or on SEDAR at www.sedar.com.

This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward looking statements and information concerning Cordy's expectations of future cash flow and earnings. The forward-looking statements and information are based on certain key expectations and assumptions made by Cordy, including expectations and assumptions concerning fluctuations in the level of oil and gas industry capital expenditures, Cordy's ability to integrate acquired businesses and complete strategic acquisitions of additional business and other factors that affect demand for Cordy's products and services. Although Cordy believe that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Cordy can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause Cordy's actual results and experience to differ materially from the anticipated results or expectations expressed. These risks and uncertainties, include, but are not limited to, risks associated with the oilfield services sector (such as demand, pricing and terms for oilfield services; current and expected oil and gas prices; competition; equipment and material costs; exploration and development costs and delays; reserves discovery rates; pipeline and transportation capacity; weather, health, safety and environmental risks), integration of acquisitions, access to capital markets, interest and currency exchange rates, technological developments, political and economic conditions and Cordy's ability to attract and retain key personnel. Additional information on these and other factors is available in continuous disclosure materials filed by Cordy with Canadian securities regulators. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this news release or otherwise, and to not use future-oriented information or financial outlooks for anything other than their intended purpose. Cordy undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

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

  • For general information:
    Cordy Oilfield Services Inc.
    David Mullen, Chairman and CEO
    (403) 266-2067
    (403) 266-2087 (FAX)
    Email: dmullen@cordy.ca
    or
    For investor relations information:
    Cordy Oilfield Services Inc.
    David Orr, Senior Vice President
    (403) 266-2067
    (403) 266-2087 (FAX)
    Email: dorr@cordy.ca
    Website: www.cordy.ca