Enseco Energy Services Corp.
TSX VENTURE : ENS

Enseco Energy Services Corp.

September 29, 2011 09:40 ET

Enseco Energy Services Corp. Announces Results for Quarter Ending June 30, 2011

CALGARY, ALBERTA--(Marketwire - Sept. 29, 2011) - Enseco Energy Services Corp. ("Enseco" or the "Company") (TSX VENTURE:ENS) announces its financial results for the three months ended June 30, 2011.

Operational Highlights

Despite wet weather prolonging the spring breakup throughout Western Canada and North Dakota this year, Enseco revenues increased 33% to $10.6 million from the same time period last year.

Enseco opened a new MWD repair and maintenance facility in April 2011. The companies MWD technicians have made a number of significant improvements to the MWD downhole tools. These enhancements have resulted in increased service quality, quicker turnaround of equipment and almost eliminated the need for third party rental equipment.

Enseco paid down its principal debt by approximately $1.3 million this quarter from cash flows. With strong activity and margins forecast, Enseco continues to execute its business plan to use increasing cash flows to aggressively pay down its loans and borrowings.

Enseco increased its dedicated North Dakota frac flowback fleet from 7 to 9 units with a 10th unit scheduled for startup in October.

Three months ended June 30 ,
2011 2010
Revenue from continuing operations $ 10,596 $ 7,953
Revised gross margin from continuing operations 1 2,858 2,833
EBITDAS from continuing operations 1 (416 ) (495 )
Net income (loss) from continuing operations (3,149 ) (2,573 )
Per common share - basic and diluted $ (0.02 ) $ (0.02 )
Net loss from discontinued operations - (184 )
Per common share - basic and diluted $ 0.00 $ (0.00 )
Total net income (loss) (3,149 ) (2,757 )
Per common share - basic and diluted $ (0.02 ) $ (0.02 )
Cash flow from/(used in) continuing operations, before changes in non-cash working capital items 1 (416 ) (495 )
Cash flow from/(used in) continuing operations, after changes in non-cash working capital items 6,686 6,189
Cash flow from/(used in) discontinued operations - (173 )
1 See definition within the Non-IFRS measures section

Outlook

Activity levels in Enseco's operating areas of Western Canada and the North Dakota and Rocky Mountain regions of the United States continue to be very strong, particularly following the wet spring quarter. It is expected that demand for Enseco's services in both divisions will be at record levels throughout the rest of the year.

Continued emphasis on resource play horizontal drilling will keep demand for both directional drilling services and production testing flow back services at a premium this year.

With the engineering improvements and reductions in rebuild times now available through Enseco's in-house Measurement while Drilling lab, it is expected that its rental requirements will remain minimal as activity continues to grow throughout the year.

With the increased revised gross margins, strong activity, minimal rentals and reduced repair costs, it is expected that Enseco will realize stronger revised gross margins throughout the remainder of the year.

At the time of this press release, Enseco is expecting record results for the month of August.

Share Consolidation and Option Grants

Enseco is also pleased to announce that its Board of Directors has decided to proceed with the consolidation the Company's issued and outstanding common shares on the basis of ten (10) pre-consolidated shares for one (1) post-consolidated share, as more particularly described in the Company's information circular – proxy statement dated April 4, 2011, which was approved by the Company's shareholders on May 9, 2011. Enseco does not intent to change its name in conjunction with the consolidation.

Enseco believes that the consolidation will benefit the Company on a go forward basis by: (i) generating greater investor interest, (ii) increasing liquidity for shareholders, and (iii) enabling the Company to be better able to respond to the demands of the capital markets. The Company currently has 195,983,719 common shares outstanding, which after giving effect to the proposed consolidation, would result in the Company having approximately 19,598,372 common shares outstanding. Completion of the consolidation is subject to the final acceptance of the TSX Venture Exchange.

Enseco also announces that its Board of Directors has approved the grant of an aggregate of 6,900,000 stock options to various officers, employees and consultants of the Company. The options will have an exercise price equal to the closing market price of the Company's common shares on the date that is five trading days after the Company has released its June 30, 2011 financial statements. The options will vest at the rate of one third per year commencing on the grant date and will expire five years thereafter. Executive officers of the Company will receive an aggregate of 1.4 million of the options granted.

ABOUT ENSECO ENERGY SERVICES CORP.

Enseco is a premier supplier of directional drilling and production testing 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 as well as a corporate and sales office located in Calgary. Enseco is led by an experienced management team with a focus on continued value creation through accretive acquisitions and organic growth.

For further information please contact:

Enseco Energy Services Corp.

Lane Roberts, President and CEO

Blair Layton, CFO

FORWARD-LOOKING STATEMENTS

Certain information and statements contained in this press release constitute forward-looking information, including, but not limited to: statements concerning Enseco's ability to comply with its credit facility covenants, the benefits to be achieved with respect to Enseco's MWD laboratory; anticipated growth in the Company's businesses; expectations regarding future revenues, cash flow and margins, rental requirements and other financial results; expectations regarding drilling activity levels and drilling programs, the benefits of and completion of the proposed consolidation, and general industry conditions and demand for the Company's services. 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.

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. The various risks to which Enseco is exposed are described in additional detail in the Company's Annual Information Form under the heading "Risk Factors" which is available on SEDAR at www.sedar.com.

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.

NON-IFRS MEASURES

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. Cash flow means cash flows provided by continuing operations before changes in non-cash working capital items. Revised gross margin is calculated as revenues less direct costs. EBITDAS, cash flows from continuing operations before changes in non-cash working capital, and revised gross margin are not recognized measures under IFRS. Management believes that in addition to net losses, EBITDAS, cash flows from continuing operations before changes in non-cash working capital, and revised gross margin 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, EBITDAS, cash flows from continuing operations before changes in non-cash working capital, and revised gross margin 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 EBITDAS, cash flows from continuing operations before changes in non-cash working capital, and revised gross margin may differ from other organizations and, accordingly, EBITDAS, cash flows from continuing operations before changes in non cash working capital, and revised gross margin may not be comparable to measures used by other organizations. See the Non-IFRS section in the Company's Management's Discussion and Analysis for a reconciliation of these non-IFRS measures to the Company's Financial Statements.

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.

Contact Information

  • Enseco Energy Services Corp.
    500, 500 - 4th Ave SW
    Calgary, Alberta T2P 2V6
    1-866-806-0088
    403-806-0084 (FAX)
    www.enseco.com