CALGARY, ALBERTA--(Marketwired - Sept. 29, 2016) - New West Energy Services Inc. (TSX VENTURE:NWE) (the "Corporation") is pleased to announce the financial results for the Corporation for its first quarter ended July 31, 2016.
Operational and Financial Results for the three months ended July 31, 2016 and 2015:
- Revenue of $1.39 million (2015 - $2.97 million).
- Gross margin of $274K (2015 - $721K).
- Net loss from operations of $782K (2015 - net loss of $496K).
- Loss per share (basic and diluted) of $0.008 (2015 - $0.005).
- EBITDA was a negative $410K (2015 was a negative $87K). This calculation is a non-IFRS measure.
- Current liabilities were $2.36 million (2015 - $2.13 million) and long term liabilities were $1.97 million (2015 - $2.12 million).
- The Corporation continues to reduce operational and overhead costs during the quarter in response to the prolonged slowdown in the oil and gas industry due to low oil and gas prices.
- The Corporation is continuing to actively pursue an acquisition or merger which will strengthen the Corporation and position it for growth when oil and gas activity levels increase.
Due to the reduction in Western Canadian drilling activity since mid 2014, when oil prices started to decline, the Corporation has initiated and continues to take steps to reduce costs to prepare for a prolonged period of lower activity. Direct and overhead costs have been reduced significantly and continue to be monitored on a monthly basis to stay in line with customer requirements and overall activity levels. Management will continue to review the financial position of the Corporation and will consider various options to support its current and future cash flow requirements.
During the quarter, the Corporation completed the final phase of a non-brokered private placement of 666,667 common shares of the Corporation issued at a price of $0.03 per share for aggregate gross proceeds of $20,000. Also during the quarter, the Corporation has received an unsecured loan from a director of the Corporation in the amount of $300,000 payable on demand at an interest rate of 9%. These proceeds and the loan have been used to repay certain bank indebtedness and general working capital. Subsequent to the quarter end, an additional $200,000 of unsecured loans from the same director have been received for the purposes of general working capital. The Corporation does not anticipate the director will seek repayment of any of the loans in a manner that would prejudice the Corporation's financial position.
The Corporation engaged PwC Corporate Finance, which specializes in providing M&A related advisory services, as its exclusive advisor to assist with target identification, valuation analysis, structuring and negotiations. Management believes that now is the time to pursue a strategic acquisition or merger which would add shareholder value and position the Corporation for future growth and diversification when activity levels increase again.
OUTLOOK AND STRATEGY
The Corporation has a solid client base and has been successful in leveraging this client base to include the new diversified services being offered in the production and maintenance sectors of the oil and gas industry. Management will continue to focus on diversification as well as cost reductions through the downturn in the industry and is confident that overall margins will increase in the long term as operating efficiencies are recognized.
Through its subsidiaries, the Corporation operates a fleet of straight, combo and hydro vac trucks as well as end dumps, water and tank trucks with bulk transport trailers and environmental services. The Corporation operates throughout Western Canada in the drilling, completions and production sectors of the oil and gas industry with its main service centres located in Beaverlodge and Medicine Hat with its head office in Calgary, Alberta.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.