Phoenix Oilfield Hauling Inc.

Phoenix Oilfield Hauling Inc.

November 26, 2010 17:08 ET

Phoenix Oilfield Hauling Inc. Announces Second Quarter Financial Results

NISKU, ALBERTA--(Marketwire - Nov. 26, 2010) -


Phoenix Oilfield Hauling Inc. (the "Company") (TSX VENTURE:PHN) announces its financial and operating results for the third quarter ended September 30, 2010.

In commenting on the results Christopher W. Challis President and CEO stated, "The third quarter was a turning point for the Company as the first two months saw robust activity with Canadian drilling activity starting to improve. In addition the US basins where the Company has become more active continued to experience increased promise. While demand for our services increased as a direct result of improved drilling activity, pricing in both Canada and the U.S. has remained a challenge for oilfield transportation service providers".

Notwithstanding the positive results from the beginning of the quarter, the entire oil and gas industry was hampered by an extremely wet September similar to what was experienced at the end of the second quarter. Had the September weather remained seasonally normal, the Company believes it would have had better revenues and EBITDA margins.

The Company's first wind turbine transportation project had a positive impact on our operations as the diversification into this industry segment was successfully completed. The Company will continue to pursue future wind turbine transportation projects.

We are encouraged to see improved well counts in the Western Canadian Sedimentary Basin for the remainder of 2010 compared to 2009 and the increased well count for 2011 recently reported to now be up to 12,250 wells. The Company had strategically redeployed equipment into newer markets in Canada earlier this year and these areas are starting to show positive results. The fourth quarter drilling activity in Canada continues to show signs of recovery with some slight improvement in pricing.

The drilling activity in the United States continues to improve as it moves toward its 2008 peak levels of close to 2,000 active rigs. The redeployment strategy into new US markets earlier this year with its associated one time start up costs had a negative impact on Company earnings of approximately $1,000,000 up until the third quarter of this year. The US operations are now in a very solid position with adequate equipment and personnel to take advantage of the increasing drilling activity in these market areas.

Management continues to exercise discipline demonstrated by aggressively managing operating costs during the third quarter, in an attempt to offset the continued pricing pressure for the Company's services".

Highlights from Q3 include:

- Successful completion of the Company's first wind turbine transportation contract in North Eastern British Columbia

- Redeployment of assets into oil based drilling markets have started to have a positive impact on operations

- Improved utilization of equipment throughout the Company evidenced (i) by increased revenue and (ii) by reductions in operating costs as a percentage of revenue to 77% in Q3 2010 compared to 90% in Q3 2009

- Positive EBITDA contribution of 8% in Q3 2010 compared to negative 28% in Q3 2009

- Continued strong operating results from our U.S. subsidiary

Financial Summary

The following table summarizes selected financial data for:

Three months ended Nine months ended
(In thousands of dollars, September 30, September 30,
except per share data) 2010 2009 2010 2009

Revenue $ 10,031 $ 5,862 $ 24,958 $ 26,767
Operating expenses 7,761 5,261 19,383 20,224
Operating expenses, % of revenue 77% 90% 78% 76%
Selling, general and administrative
expenses 1,259 1,602 3,986 5,046
Foreign exchange (gain) loss 48 214 84 491
Loss on disposal of equipment 188 431 1,259 450
EBITDA (1) 775 (1,646) 246 556
EBITDA, % of revenue 8% (28%) 1% 2%
Loss (841) (5,084) (4,797) (7,720)
Loss per share - basic - (0.08) (0.03) (0.12)
Loss per share - diluted - (0.08) (0.03) (0.12)
Cash flow from operations $ (1,246) $ (1,132) $ (927) $ 3,980

September 30, December 31,
(In thousands of dollars) 2010 2009

Total assets $ 36,530 $ 40,547
Long-term financial liabilities 367 11,620

(1) EBITDA is not a recognized measure under GAAP and consequently does not
have a standard prescribed meaning. EBITDA is equal to net earnings
adjusted to exclude amortization expense, depreciation expense, interest
expense, impairment charges related to goodwill, intangible assets and
equipment and income taxes. EBITDA includes stock-based compensation
expense. EBITDA is commonly used by investors and financial analysts in
the oilfield services industry as a supplementary non-GAAP financial
measure in order to evaluate a company's operating performance.
Phoenix'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.

EBITDA (1) is calculated by the Company as follows:

Three months ended Nine months ended
September 30, September 30,
(In thousands of dollars) 2010 2009 2010 2009
Loss $ (841) $(5,084) $(4,797) $(7,720)
Add (Deduct):
Depreciation 1,067 1,434 3,366 4,417
Interest on long-term debt 491 1,972 1,481 3,647
Other interest 89 23 258 90
Amortization of intangible assets 36 47 126 170
Income tax expense (recovery) (67) (38) (188) (48)
EBITDA $ 775 $(1,646) $ 246 $ 556

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

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) cash flow. 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 Corporation 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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