Petrowest Energy Services Trust announces 2009 first quarter financial results



    CALGARY, May 13 /CNW/ - Petrowest Energy Services Trust (TSX: PRW.UN)
announced today its interim consolidated financial results for the three month
period ended March 31, 2009.
    Consolidated revenue for the three months ended March 31, 2009 was $42.8
million, a 28% decrease over consolidated revenue of $59.0 million in the
comparable period of 2008. Gross margin and EBITDA percentages both decreased
by 7% compared to the comparable period of 2008. During the quarter, a $4.5
million impairment was recorded relating to the property and equipment of the
rig mobilization and demobilization business, as this part of the Trust's
operations is directly affected by the significantly reduced drilling activity
in the oil and gas sector. As at March 31, 2009 the revolving bank term loan
(including bank overdraft) was $73.8 million, a reduction of $7.3 million from
the $81.1 million of net debt as at December 31, 2008 and a reduction of $19.6
million since September 30, 2008. There was a decrease in working capital of
$5.8 million during the first quarter of 2009, after adjusting for net debt.
The Trust obtained a waiver from the bank syndicate of the "funded debt to
four quarters trailing EBITDA" financial covenant contained in the credit
facility.
    Ralph Hesje, President and Chief Executive Officer of the Trust stated
that "the first quarter financial results are reflecting depressed oil and gas
industry activity levels combined with challenging economic conditions.
Margins declined due primarily to pricing pressures from customers and reduced
equipment utilization rates. We continue to review our fixed cost structure
and make changes accordingly. These changes relate to our consolidation of
various entities within our operating segments which has resulted in
consolidating certain management functions as well as improving operating
efficiencies. Diversification to industrial and civil infrastructure projects
remains a priority."

    
    FINANCIAL HIGHLIGHTS

    Financial Summary
                                                        For the three months
                                                           ended March 31
    (thousands)                                           2009          2008
    -------------------------------------------------------------------------

    Revenue                                             42,800        59,039
    Gross Margin(1)                                      6,497        12,850
    Gross Margin Percentage(1)                             15%           22%
    EBITDA(1)                                            4,649        10,796
    EBITDA Percentage(1)                                   11%           18%
    Cash provided from operating activities              9,366           287
    Net earnings (loss)                                 (4,646)          385
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total units outstanding                             32,926        33,266
    Weighted average units outstanding - basic          32,926        33,266
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) See "Non-GAAP Measures" in Trust's MD&A (available at www.sedar.com)
    

    The Trust continues to focus on diversification into industrial and civil
infrastructure activities. The oil and natural gas drilling sector will
continue to impact the Trust's operations and financial results and will
remain an important part of the Trust's operations going forward. However,
infrastructure project demand is expected to be strong over the next couple of
years as a result of government stimulus packages, with more of the Trust's
activities and resources anticipated to be focused and deployed in this area
during the summer construction season. The amount of the Trust's services
relating to the oil and gas sector will fluctuate as the activity in this
sector changes in addition to the amount of non-oil and gas related projects
which the Trust is successful in securing. The Trust continued to pursue
geographic diversification in 2009 with redeployment of equipment and skilled
personnel to capitalize on demand in nearby regions plus improving utilization
rates and financial results.

    SELECTED FINANCIAL INFORMATION

    Selected financial information for the three month periods ended March
31, 2009 and 2008 is attached below. This information should be read in
conjunction with the audited consolidated financial statements for the twelve
months ended December 31, 2008 and the Trust's Management, Discussion and
Analysis, available under the Trust's profile on the SEDAR website at
www.sedar.com and at www.petro-west.com.

    FORWARD LOOKING INFORMATION

    This news release contains forward-looking statements that involve
substantial known and unknown risks and uncertainties. These forward-looking
statements are identified by their use of terms and phrases such as
"anticipate," "achievable," "believe," "expect," "estimate," "plan," "intend,"
"project," "may," "should", "could", "predict", "may," "will," or similar
words suggesting future outcomes or language suggesting an outlook.
Forward-looking statements and information are based on Petrowest's current
beliefs as well as assumptions made by and information currently available to
Petrowest concerning anticipated business performance. Although management of
Petrowest considers these assumptions to be reasonable based on information
currently available to it, they may prove to be incorrect. Forward-looking
statements are subject to many external variables that are beyond Petrowest's
control, such as fluctuating prices for crude oil and natural gas, changes in
drilling activity, and general local and global economic, political, business
and weather conditions. If any of these, or other uncertainties, materialize
the actual results of Petrowest may vary materially from those expected.


    
    Petrowest Energy Services Trust
    Consolidated Balance Sheets
    -------------------------------------------------------------------------
    (Unaudited)

                                                         As at         As at
                                                      March 31,  December 31,
    (In thousands of dollars)                             2009          2008
    -------------------------------------------------------------------------
    Assets
    Current assets
      Cash and cash equivalents                              -         2,348
      Accounts receivable                               36,161        47,761
      Prepaid expenses and other                         1,318         1,196
      Inventory                                          5,718         5,476
    -------------------------------------------------------------------------
                                                        43,197        56,781

    Property and equipment                              91,104        99,336
    Intangible assets                                   12,592        13,582
    Goodwill                                            34,321        34,321
    Future income taxes                                    667           727
    -------------------------------------------------------------------------

                                                       181,881       204,747
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Current liabilities
      Bank overdraft                                     1,336             -
      Accounts payable and accrued liabilities          12,938        18,355
      Revolving bank term loan                          72,500        83,500
      Current portion of obligations
       under capital leases                                638           661
    -------------------------------------------------------------------------
                                                        87,412       102,516

    Obligations under capital leases                       725           874
    Future income taxes                                  9,468        12,463
    -------------------------------------------------------------------------
                                                        97,605       115,853
    Unitholders' Equity
    Units                                              292,492       292,492
    Contributed surplus                                    663           635
    Accumulated loss                                  (170,916)     (166,270)
    Accumulated distributions to unitholders           (37,963)      (37,963)
    -------------------------------------------------------------------------
                                                        84,276        88,894
    -------------------------------------------------------------------------

                                                       181,881       204,747
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Petrowest Energy Services Trust
    Consolidated Statements of Earnings (Loss), Comprehensive Earnings (Loss)
    and Accumulated Earnings (Loss)
    -------------------------------------------------------------------------
    For the three months ended March 31
    (Unaudited)


    (In thousands of dollars)                             2009          2008
    -------------------------------------------------------------------------

    Revenue                                             42,800        59,039

    Expenses
      Operating expenses                                36,303        46,189
      General and administrative                         1,848         2,054
      Interest                                           1,132         1,936
      Amortization of property and equipment             5,591         7,069
      Amortization of intangible assets                    990         1,227
      Impairment of property and equipment               4,500             -
    -------------------------------------------------------------------------

                                                        50,364        58,475
    -------------------------------------------------------------------------

                                                        (7,564)          564
    -------------------------------------------------------------------------

    Other income
      Loss on disposal of property and equipment           (19)          (38)
      Interest and other income/(expense)                    2           (24)
    -------------------------------------------------------------------------

    Net earnings (loss) and
     comprehensive earnings (loss) before taxes         (7,581)          502

    Future income tax expense (recovery)                (2,935)          117
    -------------------------------------------------------------------------

    Net earnings (loss) and
     comprehensive earnings (loss)                      (4,646)          385

    Accumulated loss - beginning of period            (166,270)     (133,694)
    -------------------------------------------------------------------------

    Accumulated loss - end of period                  (170,916)     (133,309)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings (loss) per unit
     - basic and diluted                                ($0.14)        $0.01
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Petrowest Energy Services Trust
    Consolidated Statements of Cash Flows
    -------------------------------------------------------------------------
    For the three months ended March 31
    (Unaudited)


    (In thousands of dollars)                             2009          2008
    -------------------------------------------------------------------------
    Cash provided by (used in)
    Operating activities
    Net earnings (loss) for the period                  (4,646)          385
    Items not affecting cash
      Amortization of property and equipment             5,591         7,069
      Amortization of intangible assets                    990         1,227
      Impairment of property and equipment               4,500             -
      Unit-based compensation                               28             -
      Future income taxes                               (2,935)          117
      Loss on disposal of property and equipment            19            38
    -------------------------------------------------------------------------
                                                         3,547         8,836
    Changes in non-cash working capital
      Accounts receivable                               11,600        (4,509)
      Prepaid expenses and other                          (122)          770
      Inventory                                           (242)          682
      Accounts payable and accrued liabilities          (5,417)       (5,492)
    -------------------------------------------------------------------------
                                                         9,366           287
    -------------------------------------------------------------------------
    Financing activities
      Unitholder distributions                               -          (953)
      Repayment of capital lease obligations              (172)         (193)
      Proceeds from revolving term bank loan                 -         5,000
      Repayment of revolving term bank loan            (11,000)            -
    -------------------------------------------------------------------------
                                                       (11,172)        3,854
    -------------------------------------------------------------------------
    Investing activities
      Purchase of property and equipment                (1,945)       (4,776)
      Proceeds on property and equipment disposals          67           116
      Purchase price adjustment                              -             9
    -------------------------------------------------------------------------
                                                        (1,878)       (4,651)
    -------------------------------------------------------------------------

    Increase (decrease) in cash and cash equivalents    (3,684)         (510)
    Cash and cash equivalents, beginning of period       2,348           215
    -------------------------------------------------------------------------
    Cash and cash equivalents (bank overdraft),
     end of period                                      (1,336)         (295)
    -------------------------------------------------------------------------

    Supplementary cash flow information
    Interest paid                                        1,225         1,729
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Non cash transactions
    Property and equipment financed by capital leases        -           353
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Ralph Hesje, President and CEO, or Lloyd A.
Wiggins, Chief Financial Officer, at (403) 237-0881 or info@petro-west.com

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PETROWEST ENERGY SERVICES TRUST

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