Dalmac Energy Inc.

Dalmac Energy Inc.

September 29, 2010 09:30 ET

Dalmac Energy Inc.: Period Ended July 31, 2010 ("Q1'11")

EDMONTON, ALBERTA--(Marketwire - Sept. 29, 2010) - John Babic, President and CEO of Dalmac Energy Inc. ("Dalmac") (TSX VENTURE:DAL) announces the Corporations first quarter results.

Selected Financial Information        
(000's Cdn Dollars, except per share) Q1'11   Q1'10  
Revenues 3,814   3,567  
Gross Margin 1,127   453  
Gross Margin % 30 % 13 %
EBITDAS (loss) 389   (376 )
EBIDTAS per share - basic 0.03   (0.03 )
Net income (loss) (236 ) (805 )
  Net income (loss) per share - basic (0.01 ) (0.06 )
  Net income (loss) per share - diluted (0.01 ) (0.06 )

Total revenue for Q1'11 increased 7% to $3.8M from the $3.6M reported at Q1'10. The first three months of 2010 began with strong drilling utilizations, however when spring commenced, the wet weather and rain plagued Dalmac's operations until the middle of June. This created delays in getting heavy equipment into the oilfields and thereby resulted in a protracting the spring breakup period. By mid June the ground in the foothills areas of Alberta begin to dry up until and activity levels began to pick up again. The gross margin for Q1'11 increased by 148% to $1.1M from the $453K reported in Q1'10. As a percentage of revenue the gross profit margin for the current quarter was 30% compared to 13% in previous year. This increase is attributed to the Company's commitment to trim costs and to confine the utilization of sub contractors to areas where company equipment cannot be deployed. EBITDAS for Q1'11 increased 203% to $389K from $(376)K reported in Q1'10 and net loss decreased by 71% to $(236)K from $(805)K.


The spring break up didn't end for Dalmac until the middle of June. The rain and muddy terrain stalled the movement of heavy equipment to oilfield locations. Since the middle of June drilling rig utilizations have bounced back to near record levels for the season. The Canadian Association of Oilwell Drilling Contractors ("CAODC") states that current drilling utilization in Alberta levels are 73% higher than they were in 2009. The Petroleum Services Association of Canada ("PSAC") is forecasting a 35% increase in wells drilled for this year as compared to last. This brings the total well tally for 2010 to about 11,587 as compared to the 8,350 in 2009.

With the increased activity in the Cardium zone, PSAC has predicted that 2010 will see more oil than gas wells drilled in Alberta for the first time in 40 years. Dalmac's core operations are situated in the geographical area of the Cardium zone and this is providing more opportunities for increased wells servicing activities. Dalmac's utilization levels do not hinge on the aggregate number of wells drilled but rather those being drilled in our operating areas. Many of the current wells being drilled in west central Alberta are the deeper kind which involves multi-stage fracturing. These wells are more capital intensive and take more time to complete thus requiring more of our products and services.

The long term fundamentals continue to point to an expanding demand for oil and gas. With the production rates in the Western Canadian Sedimentary Basin ("WCSB") continuously declining, the current production levels can only be maintained through more drilling. The outlook for Dalmac's products and services continues to be more positive year over year. Over the past year, the majority of Dalmac's revenue was derived from existing production services such as fluid hauling which usually exclude drilling and well workovers. Expected increased drilling and well servicing activity will further supplement the Company's existing revenue base by creating an additional demand for our products and services. Dalmac's focus is on developing more relationships with new customers in the Cardium zone while concurrently maintaining and strengthening established relationships with core customers in our existing area of operations. Dalmac's goal is to provide a select range of products and services that provide an optimum solution for all our customers' needs.

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