Enseco Energy Services Corp.

Enseco Energy Services Corp.

July 26, 2011 20:28 ET

Enseco Energy Services Corp. Announces Results for the Year Ending March 31, 2011

CALGARY, ALBERTA--(Marketwire - July 26, 2011) - Enseco Energy Services Corp. ("Enseco" or the "Company") (TSX VENTURE:ENS) announces its year end financial results for the three and twelve months ended March 31, 2011.


  • Annual revenue increased 106% over the previous year
  • Annual gross margin increased by $16 million over the previous year
  • Annual EBITDAS increased from ($2.5 million) to $7.0 million over the prior year
  • Established a Directional Drilling base in Rocky Mountains / North Dakota region
  • North Dakota Production Testing business grew from $5.0 million in annual revenues to $7.5 million
  • Exited the non-resource play business lines including swabbing services
  • Invested $16 million in capital expenditures over the year
  • Continued to add capability into both the Directional Drilling and the Production Testing divisions


Three months ended
March 31, Year ended March 31,
2011 2010 2011 2010
Revenue from continuing operations $ 21,659 $ 17,168 $ 66,151 $ 32,169
Gross margin from continuing operations 5,972 2,792 21,341 5,104
EBITDAS from continuing operations 1,819 1,246 7,007 (2,523 )
Net loss from continuing operations (1,465 ) (738 ) (6,196 ) (8,220 )
Per common share - basic and diluted $ (0.00 ) $ (0.01 ) $ (0.03 ) $ (0.12 )
Net income (loss) from discontinued
operations - (3,477 ) (388 ) (6,797 )
Per common share - basic and diluted $ (0.00 ) $ (0.03 ) $ (0.00 ) $ (0.10 )
Total net income (loss) (1,465 ) (4,215 ) (6,584 ) (15,017 )
Per common share - basic and diluted $ (0.00 ) $ (0.03 ) $ (0.03 ) $ (0.22 )
Cash flow from/(used in) continuing
operations, before changes in non-cash
working capital items 839 848 3,708 (3,816 )
Cash flow from/(used in) continuing
operations, after changes in non-cash
working capital items 2,490 (4,488 ) 3,062 (8,812 )


Enseco's year end results show the strength in activity in North American resource plays including the Bakken, Cardium, Montney and Green River. The results also confirm Enseco's success in its repositioning as a resource play service company. Revenue has grown considerably, and with strengthened 2011 day rates, standardized and internal repair capabilities, and strongly reduced rental requirements, it is expected that margins will continue to grow.

Enseco's two business lines, directional drilling and flowback production testing, are both in increasing demand as horizontal drilling and longer, more complex, completions are performed. Continued strength in oil prices has been favourable as approximately 80% of revenues are generated from oil related activity.

A wet and cool spring quarter has extended the spring breakup period but it is expected that clients will be very busy throughout the summer and through the rest of 2011. Harsher drilling operations resulted in a large amount of directional drilling equipment out for service and repair over extended periods of time during the winter quarter. As a result, in May, Enseco opened a MWD lab in their existing Leduc facility to repair, test and calibrate equipment faster and with lower cost than previous, when it was outsourced to vendors.

Because of the strong demand in both directional drilling and production testing services, Enseco has, and is expected to, continue to show stronger day rates throughout the remainder of calendar 2011.

Longer, more complex, flow back operations are expected to continue to greatly increase requirements for production testing services. Enseco will be working closely with their clients to enable a continued ramp up of fleet and activity as required by their clients.

In the coming year, the Company will continue to search for efficiencies and cost reductions to increase its gross margins and EBITDAS.

We continue to look forward to increasingly stronger financial results in the upcoming fiscal year.


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.


Certain information and statements contained in this statement constitute forward-looking information, including, but not limited to: statements concerning Enseco's future business strategy, marketing and expansion plans; expectations regarding the growth of Enseco's fleet and equipment through organic growth and the acquisition of equipment that is complementary to its existing tools; expectations regarding future rental costs; anticipated declines in repairs costs and the impact of such declines on the Company's financial results; anticipated growth in the Company's directional drilling and production testing businesses; expectations regarding the impact of discontinued operations on the Company's financial performance; future acquisition plans, expectations regarding future revenues, cash flow, EBITDAS, cost reductions, rental reductions, improved efficiencies, profit margins and other financial results; expectations regarding resource play drilling activity levels and drilling programs; general industry conditions, expectations regarding future higher utilization rates and demand for the Company's services; expectations regarding the benefits to be derived from recent and future acquisitions and the timing and costs of such acquisitions; expectations regarding staffing levels; expectations concerning the nature and timing of growth and expansion of the Company and it's various business divisions; expectations regarding future interest levels; expectations regarding Enseco's ability to finance its current operations, capital expenditures, acquisitions, and future growth and to manage its current debt levels; expectations regarding the Company's ability to obtain the continued co-operation of the Company's lender; the Company's ability to raise additional debt or equity; expectations respecting the competitive position of Enseco's business divisions; expectations concerning the financing of future business activities and statements as to future economic, industry and operating conditions, including commodity prices, industry activity levels, access to capital and capital expenditures, expectations regarding the Company's IFRS changeover plans and the results therefrom. 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 MD&A. 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 MD&A are expressly qualified, in their entirety, by this cautionary statement.

The information and statements contained in this statement 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", "anticipate" or "will" and similar expressions) may include 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. 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.

Forward-looking information respecting the anticipated costs associated with the purchase of capital equipment are based upon historical prices for various classes of equipment, expectations relating to the impact of inflation on the future cost of such equipment and management's views concerning the negotiating leverage of the Company and its subsidiaries. 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 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 statement, 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 statement 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 statement 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.

Operating loss are losses from continuing operations before loss on disposal of equipment, income taxes, and realized and unrealized foreign exchange losses. 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. Gross margin is calculated as revenues less operating expenses. Operating losses, EBITDAS, cash flow, and gross margin are not recognized measures under Canadian generally accepted accounting principles ("GAAP"). Management believes that in addition to net losses, operating losses, EBITDAS, cash flow, and 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, that operating losses, EBITDAS, cash flow and gross margin should not be construed as an alternative to net losses determined in accordance with GAAP as an indicator of Enseco's performance. Enseco's method of calculating operating losses, EBITDAS, cash flow and gross margin may differ from other organizations and, accordingly, operating losses, EBITDAS, cash flow and gross margin may not be comparable to measures used by other organizations.

Contact Information

  • Enseco Energy Services Corp.
    Lane Roberts
    President and CEO
    (403) 806-0088