Enerchem International Inc. releases financial results



    CALGARY, Nov. 14 /CNW/ -

    Enerchem International Inc. Reports Financial Results
    For the Three and Nine Months Ended September 30, 2007.

    Financial highlights (unaudited)
    (in Cdn $ 000's except per share amounts)

    
                                        Three month ended  Nine months ended
                                             September 30       September 30

                                            2007     2006      2007     2006

    Revenues                              19,823   29,138    55,167   83,547
    -------------------------------------------------------------------------

    Net (loss) earnings for the
     period (1)                           (6,319)   2,036    (5,124)   5,557
    -------------------------------------------------------------------------

    Net (loss) earnings per share (1)

    Basic                                  (0.41)    0.13     (0.33)    0.37
    -------------------------------------------------------------------------
    Diluted                                (0.41)    0.13     (0.33)    0.36
    -------------------------------------------------------------------------

    EBITDA (2)                               325    3,002     3,153    8,821
    -------------------------------------------------------------------------

    (1)  Net loss for the three and nine months ended September 30, 2007
         includes a goodwill impairment of $6,049,530.

    (2)  EBITDA is a non-GAAP measure which the Company defines as earnings
         before interest expense, taxes, depreciation, amortization,
         accretion expense and write-downs. Non-GAAP measures do not have any
         standard meaning prescribed by GAAP and are therefore unlikely to be
         comparable to similar measures presented by other issuers. The
         Company includes these non-GAAP measures as it believes they are
         used by investors to assess the performance of the Company, and are
         used by management to assist in assessing comparative performance of
         the Company.
    

    Operating Environment

    Oilfield activity levels in the Western Canadian Sedimentary Basin
("WCSB") and overall industry conditions during the first nine months of 2007
have provided a challenging business climate for Canadian oil and gas service
companies. Year to date, the weekly rig count has averaged 338 rigs,
representing an average utilization rate of 39% of the total rig fleet
available. This represents a 26% decline in rig utilization rates when
compared to the same period last year and the lowest ratio of active rigs to
available rigs since 1999. As a result, during the first nine months of 2007 a
total of 13,260 wells were drilled compared to 17,740 wells drilled in the
corresponding period last year. More specific to our regions of operation,
during the third quarter this year, the industry drilled 5,460 wells
representing a 24% decline from 7,160 wells drilled in the same quarter last
year.
    Much of this decline in activity levels affecting the WCSB has been
precipitated by the significant build up in North American natural gas
inventories over the past five quarters which, in turn, has influenced the
continuing weakness in natural gas prices to levels that are economically
unattractive to support gas drilling programs in western Canada. Adding more
uncertainty was the recent announcement of the new Alberta Royalty Program
which may have a significant effect on future activity levels in Alberta.
    As a result of the above described reduction in oilfield activity, the
industry's expectations of activity levels in 2008 and the overall decline in
the Company's market capitalization, we have recorded a goodwill impairment of
$6,050,000, representing the entire amount of goodwill that was being carried
on the balance sheet. As a summary, for the three months ended September 30,
2007, we experienced a 32% decline in consolidated revenues to $19,823,000
from $29,138,000 for the same period last year and net loss for the period of
$6,319,000 compared to net earnings of $2,036,000 in the third quarter of
2006. Excluding the effects of the non-recurring goodwill impairment, the
Company had a net loss for the three months ended September 30, 2007 of
$269,000 and had net earnings of $925,000 for the nine months ended September
30, 2007.

    Facilities Update

    Our new flowback cleaning facility operated until early August, 2007 at
which time damages caused by a small fire at the facility and the subsequent
time required to affect the required repairs and additional engineering
suspended the operation of this facility until October, 2007. However, with
the facility back in production, we have been pleased with the results being
achieved in cleaning used fracturing fluid and with the high finished product
yields resulting through the use of cleaned flowback as feedstock. We continue
to expect that this facility will provide us with a considerable competitive
advantage.
    The automation of tower one at the Sundre refinery has been completed and
the benefits thus far have exceeded our expectations with respect to increased
product yield. The replacement of the old style salt bath heaters has been
delayed by the manufacturer and we expect completion of this project before
the end of the year.
    The completion of the Slave Lake water-wash system and blending plant
will be completed in the first quarter of 2008. We anticipate having the
blending facility pipeline connected shortly thereafter. This will
significantly reduce trucking costs associated with our by-product streams.

    Outlook

    Industry expectations for activity levels in the WCSB fall in the range
of 13,500 to 15,000 wells drilled in 2008, which represents a reduction in
activity of over 20% when compared to activity levels anticipated for 2007.
The Canadian Association of Oilwell Drilling Contractors has recently
predicted that first quarter activity for 2008 will only reach a utilization
level of 50%, which represents a utilization level not seen since 1992.
    This has added increased pressure in our business environment and on our
pricing competitiveness. Early indications of fourth quarter 2007 activity
levels suggest that the Company's consolidated revenues may resemble third
quarter of 2007. Given the foregoing, management is pursuing initiatives that
will contribute to improve the Company's financial performance.
    Notwithstanding, the Company has maintained a strong balance sheet with
almost five million in cash, nineteen million in working capital and no debt.
Over the past several months we have been proactive in implementing processes
and undertaking capital projects that we anticipate will contribute to improve
our financial performance and provide growth opportunities for the Company. We
anticipate that our capital expansion requirements in 2008 should be minimal,
with most projects to be completed shortly after the 2007 year end.
    As well, given the current general near term outlook for our industry, we
are well positioned to take advantage of any opportunities that may develop.

    Conference Call

    Mr. Doug Robinson, President and Chief Executive Officer and Mr. Brian
Zubach, Chief Financial Officer, will host a conference call on Thursday
November 15, 2007 at 9:00 a.m. MST (11:00 a.m. EST) to discuss the Company's
results for the Third Quarter 2007.
    To access the conference call, contact the conference call operator at
1-800-591-7539 or in the Toronto area at 416-644-3426 approximately 10 minutes
prior to the calls start time and ask for the "Enerchem International Inc. -
Third Quarter 2007 Conference Call".
    A replay of the conference call will be available until November 22, 2007
by dialing 1-877-289-8525 (passcode: 21253177 followed by the pound sign) or
in the Toronto area at 416-640-1917 (passcode: 21253177 followed by the pound
sign).

    Certain statements contained in this press release, including statements
which may contain words such as "could", "should", "expect", "anticipate",
"believe", "will", and similar expressions and statements relating to matters
that are not historical facts are forward looking statements. Such forward
looking statements involve known and unknown risks and uncertainties which may
cause the actual results, performances or achievements of Enerchem to be
materially different from any future results, performances or achievements
expressed or implied by such forward looking statements. Such factors include,
but are not limited to, fluctuations in oil and gas activity levels, political
and economic conditions, the demand for services provided by Enerchem,
Enerchem's ability to attract and retain key personnel and other factors.

    Enerchem International Inc. is a manufacturer and distributor of
hydrocarbon drilling and fracturing fluids designed to provide cost effective
solutions to the upstream oil and gas industry and specialty solvents to help
resolve production and processing problems to the downstream producers. The
Company also provides energy marketing services and, through its wholly-owned
subsidiary company, Millard Trucking Ltd., provides fluid transportation and
other related oilfield services. The Company's common shares trade on the
Toronto Stock Exchange under the symbol "ECH".

    Additional information on Enerchem International Inc., may be viewed at
our website at: www.enerchem.com or by visiting www.sedar.com

    THE TSX HAS NEITHER APPROVED NOR DISAPPROVED THE INFORMATION CONTAINED
    HEREIN.

    Enerchem International Inc.
    Per: signed "Douglas F. Robinson"
    ---------------------------------
    President and CEO





For further information:

For further information: Mr. Douglas F. Robinson, President and CEO,
Telephone: (403) 269-1500, Fax. (403) 269-1559, E-mail drobinson@enerchem.com;
or Mr. Brian Zubach, Chief Financial Officer, Telephone: (780) 980-1682, Fax.
(780) 980-2610, E-mail bzubach@enerchem.com

Organization Profile

ENERCHEM INTERNATIONAL INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890