Enseco Energy Services Corp.

Enseco Energy Services Corp.

June 04, 2007 20:13 ET

Enseco Energy Services Corp. Announces Its Results for the Three and Twelve Months Ended March 31, 2007

CALGARY, ALBERTA--(Marketwire - June 4, 2007) - Enseco Energy Services Corp. (TSX VENTURE:ENS)("Enseco") announces its consolidated financial results for the three and twelve months ended March 31, 2007.

Financial Highlights
($000's except per share data)

Three Months Ended Twelve Months Ended
March 31, 2007 March 31, 2007
(unaudited) (audited)
------------------- --------------------
Revenue $ 11,304 $ 29,250
Operating loss (1) (173) (4,188)
EBITDA (1) 1,506 431
Cashflow (1) 1,478 1,473
Net loss (93) (3,626)

Per Share Data
EBITDA (1) $ 0.11 $ 0.02
Cashflow (1) $ 0.06 $ 0.06
Net loss $ (0.00) $ (0.26)

March 31 March 31
2007 2006
(audited) (audited) % change
------------------- -------------------- ---------
Financial Position
Total assets $ 83,332 $ 15,878 425%
Long-term debt 6,272 113 5,450%
Working capital (2) (665) (615) 8%
Shareholders' equity 50,917 1,896 2,585%

(1) Operating loss is loss before gain (loss) on sale of equipment,
accretion of convertible debentures and income taxes. EBITDA means
earnings before interest, taxes, depreciation and amortization and is
equal to earnings before income taxes plus interest on long-term debt
plus other interest expense plus depreciation plus amortization.
Cashflow means cash flows provided by operations before changes in
non-cash working capital items. Operating loss, EBITDA and cashflow are
not recognized measures under Canadian generally accepted accounting
principles ("GAAP"). Management believes that in addition to net
earnings, operating loss, EBITDA and cashflow are useful supplemental
measures as they provide an indication of the results generated by
Enseco's primary business activities prior to consideration of how
those activities are financed, amortized or how the results are taxed
in various jurisdictions as well as the cash generated by Enseco's
primary business activities. Readers should be cautioned, however,
that operating loss, EBITDA and cashflow should not be construed as an
alternative to net earnings determined in accordance with GAAP as an
indicator of Enseco's performance. Enseco's method of calculating
operating loss, EBITDA and cashflow may differ from other organizations
and, accordingly, these figures may not be comparable to those disclosed
by other organizations.

(2) Working capital equals current assets minus current liabilities.

The year ended March 31, 2007 was a year of tremendous growth and change for Enseco with Enseco going from a concept to an operating oil and gas services company with a significant presence in its operating lines of business. Enseco was incorporated on March 6, 2006 and did not commence active operations until March 21, 2006. As such, the revenue, expenses and results of operations for the comparative period ended March 31, 2006 are nominal and comparisons are not provided.

Enseco has focused on developing service lines that are complementary to the maturing Western Canadian Sedimentary Basin (the "WCSB") and in which Enseco can differentiate itself from its competitors. Enseco completed a number of significant milestones in that regard during the fiscal year ended March 31, 2007:

- Completed the four acquisitions of Swab Services Ltd, Swab-Co Inc, Swab-Flow Inc and Expro Canada Group Inc. totaling $42 million.

- Completed a $12 million equity issue at $3.25 per common share in May 2006.

- Completed a $7.2 million convertible redeemable 10% debenture issue in December 2006 in which the debentures are convertible and redeemable to common shares at $3.50.

- Completed the Nexia Enseco plan of arrangement on October 23, 2006 with approximately $50 million of tax pools.

- Entered into a new credit facility with a major Canadian Chartered bank with an $8 million operating line and a $10 million revolving evergreen facility.

- Began trading on the TSX Venture Exchange under the symbol ENS on March 27, 2007.

- Entered into an agreement with an established multinational down hole tool manufacturer to obtain exclusive Canadian rights to a new suite of open hole logging tools. Full commercialization of the open hole tools is expected to occur prior to the upcoming winter drilling season.

The first calendar quarter of 2007 generated significantly higher revenue and operating earnings than in prior periods. Industry activity levels in the WCSB during the first calendar quarter increased as compared to the prior quarter. Natural gas prices were stable. Activity levels in Enseco's divisions increased in the quarter relative to the prior quarter as is seasonally typical in the WCSB. However, strong activity in the quarter did not achieve high operational levels until into the second week of January.

The acquisitions in the testing and swabbing divisions and the resulting integration of operations in the fiscal year resulted in significant one-time costs relating to the building up of infrastructure, bringing the equipment acquired up to Enseco standards, re-branding, and marketing efforts. The start-up of Enseco's wireline and directional businesses also resulted in significant one-time costs relating to personnel, infrastructure, marketing and overhead. Enseco estimates that these one-time costs incurred were in the range of $2.0 million to $3.0 million.

Net losses for Enseco for the three months and year ended March 31, 2007 were $93,000 and $3.6 million, respectively, as compared to $1.5 million for the three months ended December 31, 2006. The improved results were due to increased revenues and corresponding margins in Enseco's businesses.

Susequent to year end, Enseco also redeemed an $9.8 million unsecured debenture held by Expro International B.V. through the issuance of an aggregate of 2,828,000 common voting shares of Enseco and the payment of approximately $66,000 in accrued interest. The 2,828,000 common shares of Enseco issued to Expro International B.V. represents approximately 13.6% of the issued and outstanding voting common shares of Enseco prior to giving effect to the redemption and approximately 12% after giving effect to the redemption.


While the fourth fiscal quarter was seasonally active, the current industry activity is challenging as "break-up" continues. Industry activity levels are expected to continue to be challenging in the near term. Given lower industry activity and increased equipment capacity in the WCSB, corresponding equipment utilization rates are expected to remain low by historical standards. This has resulted and is expected to continue to result in pricing pressures in all operating divisions until utilizations in the industry increase. Enseco is focused on efficient operation of its existing business and client service through this period.

While Enseco is entering a period of challenging activity, its strong balance sheet, strong operational and management staff and established operating businesses leave Enseco well positioned for continued growth and to capitalize on any industry upturn.

Enseco is an emerging supplier of energy related services operating throughout the Western Canadian Sedimentary Basin with operational centres in Red Deer, Whitecourt, Edmonton, Beaverlodge, Grande Prairie, and Fort St. John, as well as corporate and sales offices located in Calgary. Enseco is led by an experienced management team currently offering well swabbing, production testing, cased hole logging, perforating and propellant stimulation services and directional drilling services with a focus on continued value creation through accretive acquisitions and organic growth.

This press release contains forward-looking statements subject to various risk factors and uncertainties, which may cause the actual results, performances or achievements of Enseco to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, fluctuations in the market for oil and gas and related products and services, political and economic conditions, the demand for services provided by Enseco, industry competition and Enseco's ability to attract and retain both customers and key personnel.

The TSX Venture Exchange has neither approved nor disapproved the contents of this press release.

Contact Information

  • Enseco Energy Services Corp.
    Kelly M. Nichol
    President and CEO
    (403) 806-0088
    Enseco Energy Services Corp.
    David A. Hawkins
    Senior Vice President and CFO
    (403) 806-0088