Dalmac Energy Inc.
TSX VENTURE : DAL

Dalmac Energy Inc.

August 03, 2005 13:50 ET

CORRECTION FROM SOURCE: Dalmac Energy Inc.: 16 Month Year Ended April 30, 2005 (6 Months of Operations)

EDMONTON, ALBERTA--(CCNMatthews - Aug. 3, 2005) - In the news release issued on Aug. 3, 2003 @ 11:52ET there was an error in the table titled "Selected Financial Year End Information." The lines under "Net earnings (loss) per share" should read as follows:



Basic 0.08 (0.02)
Diluted 0.07 (0.02)


The correct release, in full, appears below:


John Babic, President and CEO of Dalmac Energy Inc. (TSX VENTURE:DAL) ("Dalmac") announces the results of operations for the 16 month ended April 30, 2005. The year ending April 30, 2005, represents only 6 months of operations due to Dalmac having completed its qualifying transaction of McClelland Oil Services Inc. on November 8th of 2004. Prior to November 2004 Dalmac Energy Inc. was a Capital Pool Company with no assets other than the capital raised as a result of its IPO. Therefore the comparison with similar periods in the previous year provides no benefit. After the completion of Qualifying Transaction, being the purchase of McClelland Oil Services Inc. ("McClelland"), Dalmac's year-end was changed to April 30, 2005 in order to be coordinated with McClelland's operations. This resulted in Dalmac's first full financial year being 16 months in length.



Selected Financial Year End Information

Sixteen months Five months
ended ended
April 30, Dec 31,
For the periods ended (Cdn Dollars) 2005 2003
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Revenues 7,309,943 -
Operating income (loss) from
continuing operations 938,190 (17,271)
Operating income (loss) per share
from continuing operations
Basic 0.23 (0.02)
Diluted 0.20 (0.02)
Net earning (loss) for the period 327,551 (16,981)
Net earnings (loss) per share
Basic 0.08 (0.02)
Diluted 0.07 (0.02)
Total Assets 9,727,208 750,604

Total long-term financial liabilities 3,724,637 -

Weighted average common shares -basic 4,154,757 879,661
Weighted average common shares - diluted 4,816,814 1,476,524
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The revenues from equipment operations were $7,309,943, for the 16 months ended April 30, 2005, this represents an increase of 100% over from the previous financial year. Total assets at April 30, 2005 increased to $9,727,208 up from $750,604 as at December 31, 2003.

The net income for the Corporation at the financial year ending April 30, 2005 was $327,551 or $0.08 per share on a fully diluted basis. The net loss for the Corporation for the preceding financial year was $16,981 or $0.02 per share on a fully diluted basis.

Gross profit for the 16 months ended April 30, 2005 was $2,158,002 or 30% as a percentage of revenues, compared to no activity in the preceding financial year. Net income from operations for the period ended April 30, 2005 were $938,190 or 13% as a percentage of revenue, compared to $(17,271) for the previous financial year.

Selling, general and administration ("SG&A") costs for the 16 months ended April 30, 2005 were $1,219,812, up from last year's total of $17,271 in the previous financial year. As a percentage of revenues the SG&A costs were 17% for the current period.

Amortization charges for the 16 months ended April 30, 2005 were $388,846.
The Corporation has incurred expenses for professional and consulting services related to conferences, stock compensation expense, travel, acquisition investigation costs and office expenses. The total amounts of these expenses were $342,634, of which the majority is non-reoccurring, for the 16 months ended April 30, 2005 and, $16,977 for the previous financial year.

For year the 16 month period ended April 30, 2005, the Corporation has paid $570,613 management fees, salaries and employee benefits. There were no salaries or employee benefits paid for the same period in the preceding financial year.

Selling, general and administration ("SG&A) costs for the quarter was limited to the expenses referred above below.



Sixteen months Five months
ended ended
April 30, Dec 31,
Expenses 2005 2003
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Salaries and related benefits 507,513 -
Interest on LTD 120,733 -
Repairs & Maintenance 73,402 -
Management Salaries 63,100 -
Interest & Bank Charges 64,692
Stock Compensation expense 66,309
Office 53,644 2,693
Professional Fees 203,153 10,174
Travel and automotive 14,756 4,110
Dues and memberships 2,293 -
Telephone and Utilities 1,552
Taxes and licenses 207 -
Conferences 6,389 -
Advertising and promotion 37,233 294
Bad Debts 4,836

Total 1,219,812 17,271
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Liquidity and Capital Resources

At April 30, 2005, the Corporation had a bank indebtedness of $1,156,733, accounts payable of $1,056,704 and accounts receivable of $2,197,000. The working capital of the Corporation at April 30, 2005 was $(960,317) before adjusting for the current portion of long term debt.

The Corporation's cash flows, at the 16 month financial year ended April 30, 2005, was $(1,456,733) compared to $88,183 in the previous financial year. In the financial year ended April 30, 2005 the Corporation's investing activities increased to $6,788,808 while cash flow from financing activities were $5,680,776 as compared to the previous financial year where cash flows from investing activities was $600,000 and cash flows from financing activities was $761,733 . Changes in non cash working capital items increased $1,179,986, or 96% to $1,236,555 from $56,569 in the previous financial year.

There is an element of cyclicality in the Corporations activities. The winter period is the most active for Dalmac and the demands on working capital are highest during this period.

During the financial year ending April 30, 2005 Dalmac issued 210,169 common shares for the purchase of the business and assets of S Young Oilfield Ltd. Also, Wolverton Securities Ltd. exercised 84,812 of its agent's options for common shares of Dalmac energy for proceeds of $25,444 pursuant to the Agent's' stock option agreement.

Recent Investment Activities

On March 15, 2005, Dalmac announced completion of its purchase the business and assets of S Young Oilfield Ltd., a company engaged in "hydro vac" operations in the Fox Creek, Alberta region. Hydro vac operations involve excavation and trench of mainly non-contaminated materials where as McClelland vac operations mainly involve work with contaminated material. Dalmac paid a total of $850,000, of which $150,000 will be paid in cash on closing; $124,000 was paid by the issuance of Dalmac shares at $0.59. Dalmac paid out approximately $190,000 in debt on the equipment, and the Vendor will finance the balance over 3 years. For the 12 months ended September 30, 2004, S Young Oilfield Ltd. reported revenues of approximately $950,000 and a net income of approximately $100,000 (based on unaudited information).

Outlook

Current world commodity prices continue to be at an all time high levels. Exploration and production from the Western Canadian Sedimentary Basin is also continuing at record levels. This bodes well for Dalmac in the foreseeable future. With current demands for the company's products and services exceeding the Corporations capacity to supply the same, there is ample opportunity for growth.

The spring breakup conditions, which usually occur in April - May, impacted very slightly on the Corporation's activity levels. This impacted positively on the Corporation's financial and operating results.

Dalmac believes it has adequate working capital, cash flow from operations, and access to capital to fund ongoing business requirements. Management believes the Corporation has a cost structure that has sufficient variability to be able to adapt to the volatility of the industry. The Corporation has experienced management at all levels of operations and administration who are motivated to achieve success in both the short and long term.

Dalmac is currently reviewing expansion opportunities, which may involve the requirement for capital expenditures beyond the normal course for the Corporation. Dalmac may pursue any or all these opportunities that may present themselves. In doing so the Corporation may incur term debt, issue equity, and retain cash that might otherwise be paid as dividends or any combination of the foregoing.

The activity levels for Dalmac's operations are expected to remain very strong. The Corporation's wholly owned subsidiary, McClelland Oil Services Inc., is experiencing record levels of revenue growth nearing 50% per year. According to CAODC forecasts, the industry will complete over 24,000 wells this year. With industry activity at these levels Dalmac is projecting another banner year in fiscal 2006.

Dalmac Energy Inc. is a provider of "hot oiler", "hydro vac", "vacuum", "pressure" and "tanker truck" services to the energy sector. Dalmac also provides "methanol/glycol", and "KCL" distribution and delivery services.

Statements throughout this report that are not historical facts may be considered "forward looking statements". Such statements are based on current expectations that involve risks and uncertainties, which could cause actual results to differ from those anticipated. Important factors that can cause anticipated outcomes to differ materially from actual outcomes include the impact of general economic conditions, industry conditions, competition from other industry participants, volatility of petroleum prices, the ability to attract and retain qualified personnel, changes in laws or regulations, currency fluctuations, continued ability to access capital from available facilities and environmental risks. References in this MD&A to "Dalmac", the "Corporation", "Company", "us", "we" and "our" mean Dalmac Energy Inc. and its subsidiaries 750761 Alberta Ltd. And McClelland Oil Services Inc.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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