Dalmac Energy Inc.

Dalmac Energy Inc.

September 30, 2009 11:33 ET

Dalmac Energy Inc.: First Quarter Interim Period Ended July 31, 2009 ("Q1'10")

EDMONTON, ALBERTA--(Marketwire - Sept. 30, 2009) - John Babic, President and CEO of Dalmac Energy Inc. ("Dalmac") (TSX VENTURE:DAL) announces the Corporations year end results.

Selected Financial Information

(000's Cdn Dollars, except per share data) Q1'10 Q1'09

Revenues 3,567 3,970
Gross Margin 453 946
Gross Margin % 13% 24%
General and administrative expenses(i) 323 291
EBITDAS (loss) (377) 223
EBITDAS per share - basic (0.03) 0.02
EBITDAS per share - diluted (0.03) 0.02
Stock based compensation 4 22
Interest 162 168
Depreciation and amortization 491 403
Impairment of Goodwill 0 0
Net income (loss) (805) (425)
Loss per share - basic (0.06) (0.03)
Loss per share - diluted (0.06) (0.03)
Total Assets 21,478 23,946
Total long-term financial liabilities(ii) 5,397 6,033
Shareholder Equity 7,274 8,075

Weighted average common shares -basic 12,974,522 12,974,522
Weighted average common shares - diluted 12,974,522 12,974,522

(i) General and administrative expenses include travel and automotive,
advertising & promotion, telephone and utilities, insurance, business
taxes and training.

(ii) Includes callable debt and callable capital lease obligations due
beyond one year.

Total revenue for Q1'10 decreased by 10%, or $403K, to $3.6M from the $4.0M reported at Q1'09.This decrease in revenue was largely due to the slowdown in the oil and gas sector as a result of the seasonal and general economic conditions stemming from the world wide recession. The gross margin for Q1'10 decreased by 52% or $493K to $453K from the $946K reported in Q1'09. In Q1'10 the Company had an EBITDAS loss of $377K, compared to a gain of $223K as reported in Q1'09. The net income loss for Q1'10 was $805K compared to a loss of $425K in the same period in the previous year.

Q1 is traditionally Dalmac's slowest quarter due to the spring break up and road bans. As the ground thaws, regulators and landowners prohibit the Company from accessing most work areas until the ground dries out and becomes passable to heavy equipment that may cause damage to the land. Traditionally road bans are lifted in May. The Company is further restricted from certain areas that protect various wildlife species during their migrations and calving seasons which usually extend to the middle of June. Production related projects are often given a waiver with respect to road bans which include such things as limiting hauls to half loads etc. The Combined breakup conditions and depressed drilling activity contributed to make for a worsening of circumstances. Oil and gas servicing activity levels don't usually bounce back to their pre ban levels until the Company's third quarter of the Company's fiscal year.


Management continues to believe that the long term outlook for its products and services remains positive. However, in the short term the demand for the Company's products and services remains linked to the economic conditions of the energy industry and the general level of exploration, development and production of petroleum resources in Western Canadian Sedimentary Basin ("WCSB"). Drilling and exploration activity in the WCSB has been adversely affected by low natural gas prices and higher than normal natural gas inventories.

The long term fundamentals still point to an increasing demand for oil and gas. Given the increasing decline in production rates in the Western Canadian Sedimentary Basin ("WCSB"), more drilling will be required to maintain current production levels.

We seek Safe Harbor.

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