Enseco Energy Services Corp.
TSX VENTURE : ENS

Enseco Energy Services Corp.

February 28, 2011 19:02 ET

Enseco Energy Services Corp. Announces Results for the Three Months Ended December 31, 2010

CALGARY, ALBERTA--(Marketwire - Feb. 28, 2011) - Enseco Energy Services Corp. ("Enseco" or the "Company") (TSX VENTURE:ENS) announces its third quarter financial results for the three and nine months ended December 31, 2010. The unuadited financial statements and notes, as well as management 's discussion and analysis are available on Enseco's profile on SEDAR at www.sedar.com.

RESOURCE PLAYS CONTINUE GROWTH

Enseco continues its rapid growth and profitability in the North American resource plays. The Company repositioned itself in 2010 as a directional drilling led company focusing on oil and liquid resource plays. Activity and fundamentals in oil and liquid related resource plays continue to strengthen. Improved pricing and utilizations are expected to continue through 2011.   

  • Continued strong, focused growth in Saskatchewan, Alberta, North Dakota and Wyoming resource play basins    

  • Quarterly revenue increased 187% to $20.0 million over the same quarter in the prior year

  • Quarterly gross margin increased 1374% to $6.5 million over the same quarter in the prior year

  • Quarterly EBITDA increased to $2.6 million from $(1.0) million in the prior year

  • The Company has continued to grow it's resource play specific assets as it focuses on its two core businesses, directional drilling and flowback production testing

RESULTS FROM OPERATIONS        
 
  Three months ended December 31,
    2010   2009
Revenue from continuing operations 2 $ 20,009 $ 6,962
Gross margin from continuing operations 1   6,544 $ 443
EBITDA from continuing operations 1   2,596 $ (1,009)
Operating loss   (55) $ (3,507)
Net income (loss) from continuing operations   (3,278) $ (3,527)
  Per common share - basic and diluted   (0.02) $ (0.05)
Net loss from discontinued operations   - $ (1,801)
  Per common share - basic and diluted   (0.00) $ (0.03)
Total net income (loss)   (3,278) $ (5,328)
  Per common share - basic and diluted   (0.02) $ (0.08)
Cash flow from/(used in) continuing operations, before changes in        
non-cash working capital items 1   1,520 $ (2,525)
Cash flow from/(used in) continuing operations, after changes in non-      
cash working capital items   (2,087) $ (3,204)
Cash flow from/(used in) discontinued operations 1   - $ (550)

1 See definition within the Non-GAAP Measures section of this press release

2 Revenues from discontinued operations were $nil for the period (Q3 2010 - $777 thousand)

OUTLOOK

Enseco's third quarter results continue to reflect the implementation of the Company's strategy of focusing on key resource plays in North America by growing its directional drilling and production testing businesses for which demand in the resource plays continues to increase.

The outlook for Enseco's operation continues to be very favorable. The significant increase in horizontal multi-stage fracturing operations in North American resource plays continue to create a growing market for the Corporation's services. Resource play drilling in both Canada and the United States have led to record levels of horizontal drilling activity. Currently, over 75% of Enseco's total revenue is related to oil/liquids operations. Activity in the North Dakota and Saskatchewan Bakken, Cardium, Montney and additional oil/liquid reservoirs in the Western Canadian Sedimentary Basin is expected to continue to be strong through 2011.

Drilling operations continue to push technical and operational boundaries, Enseco is developing a MWD electronics laboratory, in their existing Leduc facility, that will allow MWD tools to be assembled, serviced, repaired and calibrated in house. This strategy will lower repair costs and the time that equipment is down for repair and will have a significant positive impact on directional drilling margins going forward. This laboratory is expected to be operational in April, 2011.

Enseco's production testing divisions posted record quarterly revenues and EBITDA, and will continue to expand as demand for testing services increases.

We are pleased with the results of our efforts to refocus the Company and look forward to reporting increasingly stronger financial results in the upcoming quarters.

ABOUT ENSECO

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 Montney, Cardium, Viking, Bakken, Green River and Eagle Ford 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.

FORWARD-LOOKING STATEMENTS

Certain information and statements contained in this press release constitute forward-looking information, including, without limitation, expectations regarding Enseco's plans to continue to significantly expand its business into 2011; expectations regarding the impact of the Company's larger fleet and anticipated pricing on the Company's future financial results; expectations regarding industry conditions, including continued growth in oil and liquid resource plays and anticipated resource play drilling activity levels and drilling programs; expectations regarding future utilization rates and demand for the Company's services; Enseco's plans with respect to a MWD electronics lab and the timing of having it operational; anticipated declines in repair 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 future revenues, costs, EBITDA, profit margins and financial results; and Enseco's ongoing focus, strategy, and business plans, which are provided by management to enable investors to better understand our business, and such information may not be appropriate for other purposes. These forward- looking statements are based upon the opinions, expectations and estimates of management as at the date the statements are made including the Company's current budget (which is subject to change), expectations regarding the Company's ability to continue its operations, the continued support of the Company's lender and the Company's ability to raise additional equity, expectations relating to future economic and operating conditions and statements relating to Enseco's marketing, operational and business plans, the competitive environment and opinions of third- party analysts respecting anticipated economic and operating conditions.

These forward-looking statements 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. 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 and the Company's ability to continue its operations, the continued support of the Company's lender and Enseco's ability to raise additional equity. Enseco has made assumptions regarding, but not limited to, commodity prices, foreign exchange rates, interest rates, the availability of skilled labour, and the timing and amount of capital expenditures. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Enseco's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, or if any of them do so, what benefits that Enseco will derive therefrom. Enseco disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

NON-GAAP MEASURES

Operating loss are losses before loss on disposal of equipment, income taxes, and discontinued operations. EBITDA means earnings before interest, taxes, depreciation and amortization and is equal to earnings before income taxes from continuing operations plus interest on debt, other interest expense, depreciation and amortization, restructuring charges 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, EBITDA, 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, EBITDA, 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, EBITDA, 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, EBITDA, cash flow and gross margin may differ from other organizations and, accordingly, operating losses, EBITDA, cash flow and gross margin may not be comparable to measures used by other organizations.

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.
    Lane Roberts
    President and CEO
    (403) 806-0088