Enseco Energy Services Corp.

Enseco Energy Services Corp.

February 29, 2012 08:59 ET

Enseco Energy Services Corp. Announces Record Results for Quarter Ending December 31, 2011

CALGARY, ALBERTA--(Marketwire - Feb. 29, 2012) - Enseco Energy Services Corp. ("Enseco" or the "Comp any") (TSX VENTURE:ENS) announces its financial results for the three months ended December 31, 2011.


  • Enseco achieved the following quarterly results compared to same period in the prior year as follows:
    • Revenue increase of 8%
    • Adjusted gross margin increase of 23%
    • EBITDAS increase of 54%
    • Net income increase from $28 thousand to $1.6 million.
  • Enseco has reduced the Company's long term debt by 20% ($5.0 million) since March 31, 2011 and continues to execute a strategy of aggressively reducing its debt.
  • On February 3, 2012, the Company closed a non-brokered private placement of the sale of 2.05 million units at a price of $1.15 per unit. Each unit consists of one common share and one-half warrant. Each whole warrant entitles the holder to acquire one common share until September 30, 2012 at a price of $1.65 per share.
  • The proceeds from the private placement and operating cash flows were used to repay the 12% debenture liability of $3.0 million on February 17, 2012, reducing the Company's debt a further 9%.
  • Continued strong North American demand for production testing frac flowback and directional drilling services has the Company well positioned for ongoing growth this quarter and rest of the year.
Three months ended December 31,
In thousands of dollars 2011 2010
Revenue from continuing operations $ 21,537 $ 20,009
Adjusted gross margin from continuing operations 1 $ 8,313 $ 6,736
EBITDAS from continuing operations 1 $ 4,375 $ 2,844
Net income (loss) from continuing operations $ 1,615 $ 28
Per common share - basic and diluted $ 0.08 $ 0.00
Total net income (loss) $ 1,615 $ 28
Per common share - basic and diluted $ 0.08 $ 0.00
Cash flow from continuing operations, before changes in non-cash working capital items 1 $ 4,479 $ (527 )
Cash flow from/(used in) continuing operations, after changes in non-cash working capital items $ 1,033 $ (662 )
1 See Non-IFRS Measures


Management believes drilling activity in oil and liquids rich environments will continue to be strong throughout 2012. Enseco is well positioned in the current commodity price environment with approximately 85% of its income related to horizontal oil and liquids drilling activity. Enseco's operating areas include the US and Canadian Bakken, Cardium, Viking, Montney, Green River and related fields in which the underlying fundamentals should remain strong. These plays are expected to remain active and grow as drilling programs continue to shift from dry gas to oil and liquids rich developments.

Directional drilling continues to increase as a percentage of total wells drilled and now comprises over 80% of total wells drilled. Demand for the Company's directional drilling services and production testing frac flowback services are expected to continue to grow in all areas that the Company operates. Longer, more complex, flow back operations are expected to greatly increase the requirements for production testing services.

With continued positive cash flow, Enseco is focused on reducing overall debt levels while opportunistically increasing its capital expenditures to take advantage of the strong growth in activity expected in our core operating areas. This includes the development of a motor repair facility and additional production testing assets to be deployed in the USA Bakken throughout 2012.

It is expected that the pursuit of these growth opportunities, accompanied by initiatives to improve margin efficiency, and reduced debt levels will continue to improve the Company's financial performance going forward.


Enseco has filed with Canadian securities regulatory authorities its unaudited consolidated financial statements for the three and nine months ended December 31, 2011 and the accompanying management's discussion and analysis ("MD&A"). These filings are available under Enseco's SEDAR profile at www.sedar.com.


Enseco is a premier supplier of directional drilling and production testing frac flowback services operating throughout the Western Canadian Sedimentary Basin and select markets in the United States, with operations in the Bakken, Cardium, Viking, Montney and Green River resource plays, a corporate office located in Calgary and sales offices located in Calgary and Denver. Enseco is led by an experienced management team with a focus on continued value creation through accretive acquisitions and organic growth.


Certain information and statements contained in this press release constitute forward-looking information, including, but not limited to: statements concerning Enseco's future business strategy, marketing and expansion plans; expectations regarding future revenues, gross margins, improved efficiencies, cost reductions, and other financial results; expectations regarding resource play drilling activity levels and drilling programs; general industry and operating conditions, expectations regarding future higher utilization rates and demand for the Company's services; future geographical and product focus; plans to develop a motor repair facility and the source of funding planned capital expenditures and acquisitions, and plans to continue to reduce debt levels; and the Company's ability to raise additional debt or equity; expectations respecting the competitive position of Enseco's business divisions;. Although management of the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Accordingly, readers should not place undue reliance upon any of the forward-looking information set out in this press release. Readers should review the cautionary statement respecting forward-looking information that appears below. All of the forward looking statements of the Company contained in this press release are expressly qualified, in their entirety, by this cautionary statement.

The information and statements contained in this press release that are not historical facts are forward- looking statements. Forward-looking statements (often, but not always, identified by the use of words such as "seek", "plan", "continue", "estimate", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "expect", "may", "ant icipate" or "will" and similar expressions) may inc lude plans, expectations, opinions, or guidance that are not statements of fact. Forward-looking statements are based upon the opinions, expectations and estimates of management as at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. These factors include, but are not limited to, such things as changes in industry conditions (including the levels of capital expenditures made by oil and gas producers and explorers), the credit risk to which the Company is exposed in the conduct of its business, fluctuations in prevailing commodity prices or currency and interest rates, the competitive environment to which the various business divisions are, or may be, exposed in all aspects of their business, the ability of the Company's various business divisions to access equipment (including parts) and new technologies and to maintain relationships with key suppliers, the ability of the Company's various business divisions to attract and maintain key personnel and other qualified employees, various environmental risks to which the Company's business divisions are exposed in the conduct of their operations, inherent risks associated with the conduct of the businesses in which the Company's business divisions operate, timing and costs associated with the acquisition of capital equipment, the impact of weather and other seasonal factors that affect business operations, availability of financial resources or third-party financing and the impact of new laws or changes in administrative practices on the part of regulatory authorities.

Forward-looking information concerning the nature and timing of growth within the various business divisions is based on the current budget of the Company (which is subject to change), factors that affected the historical growth of such business divisions, sources of historic growth opportunities, anticipated capital expenditures, and expectations relating to future economic and operating conditions. Forward-looking information concerning the future competitive position of the Company's business divisions is based upon the current competitive environment in which those business divisions operate, expectations relating to future economic and operating conditions, current and announced build programs and other expansion plans of other organizations that operate in the energy service business. Forward- looking information concerning the financing of future business activities is based upon the financing sources on which the Company has historically relied and expectations relating to future economic and operating conditions. Forward-looking information concerning future economic and operating conditions is based upon historical economic and operating conditions, opinions of third-party analysts respecting anticipated economic and operating conditions.

With respect to forward-looking statements contained in this press release, Enseco has made assumptions regarding commodity prices and royalty regimes, availability of skilled labour, timing and amount of capital expenditures, future foreign exchange rates, interest rates, the impact of increasing competition, conditions in general economic and financial markets, effects of regulation by governmental agencies, and future operating costs.

Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide shareholders with a more complete perspective on Enseco's future operations and such information may not be appropriate for other purposes. Enseco's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Enseco will derive there from. Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of in this press release and Enseco disclaims any obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.


EBITDAS means earnings before interest, taxes, depreciation and amortization, and stock-based compensation and is equal to earnings before income taxes from continuing operations plus interest on debt, other charges and interest expense, depreciation and amortization, stock-based compensation, unrealized foreign exchange loss, and loss on sale of equipment. Adjusted gross margin from continuing operations equals gross margin, plus interest on debt, other charges and interest expense, depreciation and amortization, stock-based compensation, impairment loss/recovery, and loss on sale of equipment. Cash flow means cash flows provided by continuing operations before changes in non-cash working capital items.

EBITDAS, adjusted gross margin from continuing operations, and cash flows from continuing operations before changes in non-cash working capital items are not recognized measures under International Financial Reporting Standards ("IFRS"). Management believes that in addition to net losses, EBITDAS and cash flows, are useful supplemental measures as they provide an indication of the results generated by the Company'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 the Company's primary business activities. Readers should be cautioned, however, that EBITDAS and cash flows from continuing operations before changes in non-cash working capital items should not be construed as an alternative to net losses determined in accordance with IFRS as an indicator of Enseco's performance. Enseco's method of calculating operating losses, EBITDAS and cash flows from continuing operations before changes in non-cash working capital items may differ from other organizations and, accordingly, such measures may not be comparable to measures used by other organizations. For reconciliation to the appropriate IFRS measure, see our MD&A.

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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