Phoenix Oilfield Hauling Inc.
TSX VENTURE : PHN

Phoenix Oilfield Hauling Inc.

June 27, 2011 18:36 ET

Phoenix Oilfield Hauling Inc. Announces Record Quarterly Financial Results

CALGARY, ALBERTA--(Marketwire - June 27, 2011) -

THIS PRESS RELEASE IS NOT TO BE DISTRIBUTED TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Phoenix Oilfield Hauling Inc. (TSX VENTURE:PHN) (the "Company") announces its financial and operating results for the three months ended March 31, 2011 ("2011 Q1").

Effective January 1, 2011, the Company began reporting its financial results in accordance with International Financial Reporting Standards ("IFRS"). Prior year comparative amounts have been restated to reflect results as if the Company had always prepared its financial results using IFRS.

Highlights from 2011 Q1 include:

  • Quarterly revenue and EBITDA were the highest in the Company's history
  • Quarterly revenue of $20.4 million for 2011 Q1, a 110% increase compared to 2010 Q1
  • Quarterly EBITDA of $4.2 million for 2011 Q1, a 216% increase compared to 2010 Q1
  • Activity levels for the Company increased in several markets, particularly in its US operating areas
  • The Company continued to benefit from its strategic redeployment of assets to certain markets in its ongoing effort to optimize equipment in key locations and long term utilization levels

In commenting on the results Christopher W. Challis, President and CEO, stated, "I am pleased to recognize the efforts of all our employees which led to the successful completion of our busiest quarter in the Company's history; producing record revenue and strong EBITDA across all our divisions."

These results are a direct reflection of the commitment and dedication of our team and our strategic planning. The Company experienced a 14% reduction in operating costs as these costs were prudently managed and pricing improved in certain market areas. EBITDA also improved year over year as a percentage of revenue to 21% in Q1 2011 from 14% in Q1 2010. The focus on developing solid relationships based on safety and performance with strategic customers in both Canada and the US had a tremendous impact on our ability to achieve profitability.

Both the Canadian and US operations saw drilling activity levels increase during the first quarter. The number of wells drilled in Canada in Q1 2011 increased 29% year over year compared to Q1 2010 from 3,086 to 3,996 respectively (see www.caodc.ca). A successfully executed rig moving contract in Canada during Q1 resulted in an extension with the same client for the remainder of 2011. The long winter period and delayed spring break up in Canada allowed our customers drilling programs and facility construction to continue into the second quarter in Canada. Our US divisions experienced increased drilling activity with more drilling rigs moving into these market areas.

The Company's US operations also experience increased drilling activity in its market areas resulting in improved utilization as more equipment was redeployed from Canada to the Company's US locations. The Company is continuing with its strategy of shifting underutilized assets in Canada to more active areas in the United States.

According to Baker Hughes (see www.bakerhughes.com) total average rig count in the US for Q1 increased 30% from an average 1,300 active drilling rigs during the first quarter in 2010 to an average of 1,691during Q1 2011, by the end of the first quarter of 2011 there were over 1,800 active drilling rigs operating in the US.

Outlook

The Company has enjoyed improved demand for its equipment, resulting in improved revenue and profitability levels. The Company expects to report higher revenue and EBITDA during 2011 Q2 compared to 2010 Q2, a significant achievement for the Company during this traditionally weak period.

Current activity in several petroleum resource regions where the Company has operations remains robust, as do future expectations. Most other regions where the Company operates, although less robust, currently appear stable. The Company is exploring alternatives to increase its presence in its most active current markets, as well as to pursue opportunities to establish operations in new markets where it believes it can generate profitable results and diversify operations.

Financial Summary

Three months ended March 31,
20112010
Revenue$20,443$9,750
EBITDA1$4,241$1,342
EBITDA1, % of revenue21%14%
Income (loss)$1,675$(885)
Income (loss), % of revenue8%(9%)
Earnings (loss) per share – basic & diluted$0.01$(0.01)
Weighted average shares – basic & diluted170,381161,722

1 See Non-IFRS measures.

Non-IFRS Measures – EBITDA

The Company defines EBITDA as earnings before finance costs, taxes, depreciation, amortization, impairments related to equipment and leaseholds, goodwill and intangible assets, gains or losses on disposal of equipment and leaseholds and stock based compensation. Management believes that in addition to income (loss), EBITDA is a useful supplemental performance measure as it used by management to evaluate the results generated by the Company's principal business activities prior to depreciation, amortization and impairment charges or reversals, consideration of how these activities are financed and how the results are taxed in various jurisdictions. The Company modified its method of calculating EBITDA after December 31, 2010, and has revised prior period EBITDA amounts to be consistent with this modified definition. EBITDA is not a recognized measure under IFRSs and consequently does not have a standard prescribed meaning. The Company's method of calculating EBITDA may differ from other companies, and accordingly, it may not be comparable to a similarly described measure used by another company.

Three months ended March 31,
20112010
Income (Loss)$1,675$(885)
Add (Deduct):
Finance costs896868
Income taxes expense (recovery)518(27)
Depreciation and amortization1,0201,018
(Gain) loss on disposal of assets(6)355
Stock based compensation13813
EBITDA$4,241$1,342

The Company's consolidated financial statements and Management's Discussion and Analysis are available on the SEDAR website at www.sedar.com.

Reader Advisory

This news release may contain certain forward-looking statements, which include assumptions with respect to (i) future operations; (ii) future economic conditions; (iii) future capital expenditures; and (iv) EBITDA. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward-looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with loss of markets, volatility of commodity prices, fluctuations in foreign exchange or interest rates environmental risks, competition from other companies, ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, the lack of availability of qualified personnel or management, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances 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, including the amount of proceeds, that the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All forward-looking statements contained in this press release are expressly qualified in their entirety by these cautionary statements.

The forward-looking statements contained in this news release are made as at the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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