Impax Energy Services Income Trust

Impax Energy Services Income Trust

March 10, 2008 08:31 ET

Impax Energy Services Income Trust Releases Financial Results for the Year Ended December 31, 2007

TORONTO, ONTARIO--(Marketwire - March 10, 2008) - Impax Energy Services Income Trust (TSX:MPX.UN)("Impax" or the "Trust") today announced its financial results for the year ended December 31, 2007.


201-day period
(in 000's of Canadian dollars, Year ended ended
except per unit amounts) December 31, 2007 December 31, 2006

Revenue $41,380 $36,630
Net (loss)/income (36,525) 899
EBITDA(1) 11,497 16,253
Standardized distributable cash(1) 9,207 6,174
Total assets 107,376 152,186
(Loss)/earnings per unit - basic and
diluted $(3.12) $0.08

Impax entered into 2007 with a reasonably strong performance in the first quarter given an operating environment that had begun to slow during late 2006. This performance was in large part due to the benefits of a client base active in the deep-well regions of the Western Canadian Sedimentary Basin and an ability, during difficult market conditions, to balance revenue between both new well completions and re-completion activities. Unfortunately, the balance of 2007 saw a relative year-over-year decline in both drilling and service rig utilization rates, and a related reduction in the demand for oil and gas services.

At December 31, 2007, the Trust's assets were $107 million after a non-cash $32 million writedown of goodwill and intangibles, which also accounts for a large portion of the Trust's net loss for the year. As at December 31, 2007, the Trust was not in compliance with certain financial covenants under its credit facility which gives the lenders the ability to demand repayment of the facility. Under generally accepted accounting principles, this right has caused the full amount of the facility to be classified as a current liability. The lenders have not demanded repayment of the facility and the Trust is continuing to work with its lenders to remedy the situation. The Trust had a working capital deficit, as at December 31, 2007, of $41 million, comprising current assets of $11 million and current liabilities of $52 million (which included the reclassified long-term debt of $45 million).

The industry decline in activity was driven largely by external factors which included an extended spring-breakup, ongoing wet weather throughout the summer and fall, record high North American natural gas storage levels, depressed natural gas prices and an appreciating Canadian dollar. The Report of the Alberta Royalty Review Panel in September 2007, recommending a general increase in royalty rates, and the Alberta Government's response a month later, added further instability to the industry during the capital budgeting period for many of the exploration and production enterprises. The result was an almost immediate reduction in near-term capital spending on the part of exploration and production companies.

It is important to note that, even during this challenging period, there were certain areas of the business that were not affected. These relate to Impax's competitiveness within the industry and its customer base and market share.

During 2007 Impax had:

- Revenue of $41.4 million and EBITDA of $11.5 million

- Cash flow from operations of $13.2 million

- Standardized distributable cash of $9.2 million

- Net capital expenditures of $4.0 million: Impax possesses a solid asset base, requiring low near-term maintenance expense and leaving Impax well positioned for a rebound in industry activity

"Impax management remains focused on managing the Trust through this challenging environment and have taken a number of important steps which are intended to bolster demand for our services, improve operating margins given lower revenue generation, strengthen our balance sheet and position the company for continued success in the future", said Impax President & Chief Executive Officer, Scott Delaney.

Impax Energy Services Income Trust is an open-ended trust, providing oilfield services in western Canada. The Trust indirectly owns an approximate 54% interest in Impax Energy Services Master Limited Partnership, which indirectly acquired and now operates through its subsidiaries the businesses of McClelland Oilfield Rentals Limited Partnership, EGOC Enviro Group Limited Partnership, Denray Rathole Drilling Limited Partnership and Dwayne Hommy Trucking Limited Partnership. These businesses provide services in the areas of oilfield rental, specialized equipment rental, access mat rental, waste management services, rat hole drilling and specialty fluid hauling.

This news release may contain forward-looking statements relating to expected future events and financial and operating results of the Trust that involve risks and uncertainties. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including market and general economic conditions and the risks and uncertainties detailed in the Trust's March 27, 2007 Annual Information Form filed with the Canadian securities regulatory authorities. Due to the potential impact of these factors, the Trust disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.


(1) As discussed in the Management's Discussion and Analysis, EBITDA and Standardized Distributable Cash are not earnings measures recognized by GAAP and do not have a standardized meaning prescribed by GAAP. References to "EBITDA" are to net earnings before interest expense, income taxes, amortization, impairment charges, unit based compensation and non-controlling interest and references to "Standardized Distributable Cash" are to cash available for distribution to Unitholders in accordance with the distribution policies of the Trust. Management believes that, in addition to net earnings, EBITDA is a useful supplemental measure of both performance and cash available for distribution before debt service, changes in working capital, capital expenditures and income taxes. Standardized Distributable Cash is a measure generally used by income trusts as an indicator of financial performance and is a useful supplemental measure that may assist prospective investors in assessing an investment in the Trust. Management has calculated Standardized Distributable Cash as cash flow from operations including non-cash working capital changes less all capital expenditures net of any proceeds from sales of capital assets.

Additional Financial Information

The full annual report, including the audited consolidated financial statements with accompanying notes and Management's Discussion and Analysis will be filed on SEDAR.

Contact Information

  • Impax Energy Services Income Trust
    Scott D. Delaney
    President and Chief Executive Officer
    (416) 304-6867