Enseco Energy Services Corp.
TSX VENTURE : ENS

Enseco Energy Services Corp.

August 21, 2014 18:39 ET

Enseco Energy Services Corp. Announces Results for the Three and Six Months Ended June 30, 2014

CALGARY, ALBERTA--(Marketwired - Aug. 21, 2014) - ENSECO ENERGY SERVICES CORP (TSX VENTURE:ENS) ("Enseco" or the "Company") announces its financial results for the three and six months ended June 30, 2014.

Results from Operations

Three months ended
June 30,
Six months ended
June 30,
($ thousands, except per share amounts) 2014 2013 2014 2013
Revenue $ 12,750 $ 6,843 $ 35,785 $ 24,044
Gross margin $ (59 ) $ (67 ) $ 4,591 $ 3,805
Gross margin % 0 % -1 % 13 % 16 %
Adjusted gross margin 1 $ 1,562 $ 1,293 $ 7,848 $ 6,615
Adjusted gross margin % 12 % 19 % 22 % 28 %
EBITDAS 1 $ (2,214 ) $ (1,994 ) $ 220 $ (381 )
EBITDAS % -17 % -29 % 1 % -2 %
Net income (loss) before tax 1 $ (4,454 ) $ (3,793 ) $ (3,979 ) $ (4,050 )
Per common share - basic $ (0.20 ) $ (0.17 ) $ (0.18 ) $ (0.18 )
Per common share - diluted $ (0.20 ) $ (0.17 ) $ (0.18 ) $ (0.18 )
Net income (loss) $ (4,454 ) $ (3,337 ) $ (3,979 ) $ (3,737 )
Per common share - basic $ (0.20 ) $ (0.15 ) $ (0.18 ) $ (0.17 )
Per common share - diluted $ (0.20 ) $ (0.15 ) $ (0.18 ) $ (0.17 )
Cash flow before changes in non-cash working capital 1 $ (2,369 ) $ (1,899 ) $ 120 $ (472 )
Cash flow from (used in) operating activities $ 5,841 $ 3,860 $ 598 $ 7,661
1See definition within the Non-IFRS Measures section of this press release
Highlights for the three and six months ended June 30, 2014
  • Revenue for Q2 2014 was up 86% versus the prior year and up 49% for the six months as compared to the same period in the prior year. Enseco has increased its sales presence in all divisions and the reported increase in revenue is a reflection of the effectiveness of that strategy.
  • USA Directional Drilling achieved all-time record quarterly revenue of $4.6 million, up 1538% as compared to one year ago.
  • Both US divisions showed substantial increases in activity and market share in Q2 versus year ago. Canadian activity, while similar to year ago, was negatively impacted with wet weather in particular throughout the month of June.
  • A focus on improving service quality through internal proprietary technology improvements has resulted in higher mean time between failures ("MTBFs"), higher customer satisfaction, and increasing market share.

Outlook

  • Industry fundamentals that contributed to a strong first half of 2014 are expected to continue into the back half of the year. Producers increased their capital spending due to improved cash flows from operations and access to capital markets.
  • Our USA Directional Drilling division continues to make strides increasing activity levels and further growth in activity is expected throughout the balance of 2014.
  • In all divisions the Company is increasing efforts towards enhancing profitability through better cost management and a reduction in rentals.
  • Enseco's Operational Strategy for 2014 continues to be 1) improve service quality and overall customer satisfaction, 2) gain market share, and 3) maintain a superior safety and quality assurance/quality control focus.
  • Enseco will continue to search for new opportunities to grow the Company while looking for efficiencies and cost reductions to increase its gross margins and EBITDAS. It is expected that the pursuit of these opportunities, accompanied by initiatives to both improve margin efficiency, and reduce debt levels, will continue to improve the Company's financial performance going forward.

Filings

Enseco has filed with Canadian securities regulatory authorities its unaudited interim consolidated financial statements for the three and six months ended June 30, 2014 and accompanying management's discussion and analysis ("MD&A"). These filings are available under Enseco's SEDAR profile at www.sedar.com.

About Enseco Energy Services Corp.

Enseco is a premier supplier of directional drilling, production testing and frac flowback services operating throughout the Western Canadian Sedimentary Basin and select markets in the United States, Our corporate office is located in Calgary and sales offices are located in both Calgary and Denver. 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, but not limited to: statements concerning Enseco's future business strategy, focus, marketing and other plans; expectations regarding the future performance of the Company including its USA Directional Drilling operations, plans to reduce rental costs; including increased reliability; and expectations regarding future revenues, cash flow, gross margins, EBITDAS, efficiencies and cost reductions, future debt levels, sales and services, and other financial results and industry activity levels; 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", "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, the continued cooperation of the Company's lender, 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 and customers, 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 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 programs and 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 the continued cooperation of the Company's lender and future economic and operating conditions. Forward-looking information concerning future economic and operating conditions is based upon historical economic and operating conditions, and 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 labor, 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. 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.

Contact Information

  • Enseco Energy Services Corp.
    Kent Devlin
    CEO
    403-806-0088

    Enseco Energy Services Corp.
    Blair Layton
    CFO
    403-806-0088
    Info@enseco.com