Enerchem International Inc. releases financial results



    CALGARY, May 11 /CNW/ -

    
    Enerchem International Inc. Reports Financial Results
    For the First Three Months of 2009

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

    Three months ended March 31                               2009      2008
    -------------------------------------------------------------------------

    Revenues                                                22,921    33,747
    -------------------------------------------------------------------------

    Net loss for the period                                   (323)      (70)
    -------------------------------------------------------------------------

    Net loss per share
      Basic                                                  (0.02)     0.00
    -------------------------------------------------------------------------
      Diluted                                                (0.02)     0.00
    -------------------------------------------------------------------------

    EBITDA (1)                                                 271       553
    EBITDA per share (1)                                      0.02      0.04
    -------------------------------------------------------------------------

    (1) EBITDA is a non-GAAP measure which the Company defines as earnings
        before interest expense, income taxes, depreciation, amortization,
        accretion expense, restructuring costs and write-downs. EBITDA per
        share represents EBITDA divided by the basic weighted average common
        shares outstanding. 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 is used by
        management to assist in assessing comparative performance of the
        Company.
    

    Industry Activity and Financial Overview

    Industry activity fell significantly during the first three months of
2009, with year-over-year well completions down 12% and rig utilization rates
falling from 59% to 37% compared to the first quarter of 2008. Unlike many
first quarters, the latter half of this one was not significantly impacted by
uncooperative weather patterns.
    Presumably due to the complex interplay of economic factors brought to
bear, there have been few prognosticators willing to express clear views on
future industry activity, though some suggest a change of trajectory late in
the year. At its spring update the Petroleum Services Association of Canada
("PSAC") decreased its forecast for wells drilled on a rig-released basis in
2009 by 41% from 16,940 wells predicted last November to 10,000 wells. Natural
gas drilling is most heavily affected as gas prices have tracked into the mid
to low $3 dollar range and US natural gas storage remains above the 5 year
average.
    Oil prices over the quarter have exhibited a narrower range of price
volatility than we experienced through the latter half of 2008. Although our
fluid volume sales are largely reflective of drilling activity which in turn
is influenced by commodity price, we are able to manage our margins better in
a low volatility environment than we are when oil prices are either rising or
falling precipitously.
    Revenue decreased 32% for the quarter compared to the first quarter of
2008, reflecting a 50% decrease in the average price of crude oil year over
year. This was offset by a sales volume increase of 17% which reflects an
improved production capacity as we operated both our Sundre and Slave Lake
facilities through the quarter. It also suggests an improvement in market
share, as volumes increased despite the above referenced decline in drilling
activity.
    The quarter was challenging as regards inventory management, as sales of
our fluid lines were particularly asymmetrical; demand for some products
remained high throughout the quarter, while sales of others were concentrated
in the middle of the quarter. As a result we carried high levels of some
inventories and disposed of some inventory at reduced margin. As we exited the
quarter, we have concentrated our efforts on reducing inventory going into our
slowest sales period.

    Strategy and Outlook

    Since the beginning of the year, our emphasis has been on maintaining the
Company's resiliency in the face of the current industry downturn. We have
undertaken a number of cost reduction measures including targeted staff
reductions. Our efforts to improve logistics management include a reduction in
our leased fluid storage capacity and, with a view to reducing intra-company
fluid transfer, a concentration of storage in fewer sites. Our pipeline
connection in Slave Lake has been in service since the beginning of the year,
permitting us to redeploy trucks which had been committed to hauling fluid
from this facility.
    We also continue in our efforts to find alternative markets for our
fluids. We have made significant progress in identifying potential markets,
developing contacts and qualifying our fluids to meet required specifications.
    Our approach to the remainder of 2009 remains cautious, measured and
focused on protecting our healthy balance sheet. Our capital investment
strategy remains focused on maintaining plant reliability and safety. As the
economic environment in which we are now working improves, we will be well
positioned to take advantage of opportunities.

    
    Annual General Meeting
    The Annual General Meeting of the Shareholders will be held on:
    Thursday, May 21, 2009 at 2:00 p.m.
    Metropolitan Conference Centre
    Plaza Room
    333 - 4 Avenue S.W.
    Calgary, Alberta
    

    Enerchem International Inc. is a producer 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, 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".

    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
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 factor as listed in the
Company's Annual Information Form.

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





For further information:

For further information: Mr. Kenneth Bagan, President and Chief
Executive Officer, Telephone: (403) 269-1500, Fax. (403) 269-1559, E-mail
kbagan@enerchem.com; or Mr. Timothy Lemke, Vice-President, Finance and Chief
Financial Officer, Telephone: (403) 269-1500, Fax. (403) 269-1559, E-mail
tlemke@enerchem.com; Additional information on Enerchem International Inc.,
may be viewed at our website at: www.enerchem.com or by visiting
www.sedar.com

Organization Profile

ENERCHEM INTERNATIONAL INC.

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