EcoMax Energy Services Ltd.

EcoMax Energy Services Ltd.

September 09, 2008 08:57 ET

EcoMax Announces Q2 Results

CALGARY, ALBERTA--(Marketwire - Sept. 9, 2008) - EcoMax Energy Services Ltd. (TSX VENTURE:EES) ("EcoMax") announced record earnings for the quarter ended June 30, 2008.

The sale of the Company's Sylvan Lake assets resulted in a gain (after taxes) of $684,000, which contributed to the Company recording net income of $498,000 ($0.020 per share) for the quarter ended June 30, 2008 compared to $66,000 ($0.003 per share) in the same period of 2007. The Company's continuing operations recorded a loss of $116,000 ($0.005 per share) in the quarter compared to a loss of $73,000 ($0.003 per share) in the 2nd quarter of 2007. The 2nd quarter's operations were adversely affected by continuing reduced activity levels in the drilling and well service industries. Industry analysts seem to be of the view that this activity will improve starting in the 3rd quarter of 2008.

In reviewing the Company's past and future performance, Mark Hopkins, the Company's CEO, noted:

"The Company is making progress in restructuring its operations to create a financially sound and profitable business. In May, EcoMax completed the sale of its Sylvan Lake valve operation for net proceeds of approximately $2.3 million and the consignment of its inventory with the purchaser. This allowed the Company to repay and restructure the credit facility with its bank and will allow the Company to complete the closure of its Calgary shop in the 3rd quarter of this year.

The sale of the valve operation at Sylvan Lake and the closure of the Calgary shop will significantly reduce the Company's cost base and will allow EcoMax to concentrate on growing its BOP sales and service business. The Red Deer BOP facility and the completion of the expansion to our Leduc BOP facility should allow us to generate new business and improve profitability.

While the Company and many in the natural gas industry believe the EcoMax Pump is a viable economic and environmental solution to the emission of CO2 at natural gas facilities, the lack of sales has resulted in EcoMax significantly reducing our investment in marketing the Pump until a suitable partner can be found to provide adequate funding and share the risk. The Company has reduced costs through staff reductions and the moving of the Pump inventory and equipment to our Red Deer facility will reduce facility costs. We are maintaining the ability to pursue existing sales leads, seek a partner to market the Pump and to maintain pumps purchased by our customers.

The sale of our valve business has significantly improved the Company's financial position. Working capital at June 30, 2008 was $900,000 compared to negative working capital of $1,150,000 at the end of the previous quarter. The Company is pursuing various alternatives to further solidify our financial position. These possibilities include raising new equity and/or securing a term debt facility.

The Company also believes that this is a very difficult and expensive time to be a small public company. We are looking at alternatives that would spread the costs of being public over a much larger revenue base. These would include acquisitions, sales or mergers that would allow our shareholders to benefit from being part of a larger business. The changes made to date have taken longer than we had originally anticipated, but we believe they put us on a much better footing to move forward."

Summarized financial information for the quarter and six months ended June 30, 2008 and 2007 are as follows (in thousands of Canadian dollars):

Quarter ended June 30 Six months ended June 30
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2008 2007 2008 2007
------- -------- ------- -------
Sales 1,743 2,773 3,913 4,778
Cost of sales 1,398 2,111 3,088 3,663
------- -------- ------- -------
Gross margin 346 662 825 1,115
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Selling, general & admin 381 585 860 997
Stock-based compensation 29 55 58 110
Amortization 28 66 50 131
Interest 24 29 73 61
------- -------- ------- -------
462 735 1,041 1,299
------- -------- ------- -------
Loss from continuing
operations (116) (73) (216) (184)
Income from discontinued
operations 614 139 382 134
------- -------- ------- -------
Net income 498 66 166 50
------- -------- ------- -------
------- -------- ------- -------

Working capital 901 497

Shareholder's equity 1,719 2,870

To review the complete financials, please go to SEDAR's web-site at

About EcoMax Energy Services Ltd.:

EcoMax Energy Services Ltd. is an oilfield services company whose product offering includes BOP sales and service solutions to the oil and gas and other industries in Western Canada and the patented EcoMax Chemical Pump.

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

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