HOUSTON, TX, Jan. 25 /CNW/ - Production Enhancement Group, Inc.
(TSX: WIS) ("PEG" or the "Company") today announced further actions taken in
the restructuring of its organization to improve cash flow and profitability,
resulting in annual savings estimated at USD 3.2 to 3.7 million. This, along
with actions announced on December 11, 2007, is expected to result in total
estimated annual savings of USD 5.9 to 6.4 million. At the same time PEG is
improving its growth capacity, adding two new product lines in the fourth
quarter of 2007 and growing its fleet of well intervention equipment in
response to customer demand.
Don B. Cobb, who joined the Company as President of Wise Well
Intervention Services, PEG's operating subsidiary, in October 2007 and was
appointed CEO of PEG in December 2007, commented that the Company is now well
positioned for improved performance in 2008. "Since taking over as CEO, my
number one priority has been to execute initiatives that will drive the
Company's enduring success and generate immediate and future profits," he
said. "These initiatives will come with changes, some big and some small.
Right now I can tell you we will take the necessary actions to continue to
realign our business to reduce costs and allocate resources to customer-based
revenue-producing initiatives. We expect that increased utilization of our
growing fleet of well intervention equipment will produce satisfactory revenue
growth in 2008. As well, the anticipated USD 5.9 to 6.4 million of annual cost
savings that we have identified will flow straight to the bottom line,
improving expected profitability and cash flow."
The additional cost savings originate primarily from personnel reductions
as the structure of the Company has been flattened by removing several upper
and middle management positions and the corporate team has been structured for
improved operational focus. As part of this effort, Chester J. Jachimiec,
Executive Vice President, has left the Company. Some of PEG's field offices
have been closed, including its Canadian operations which were headquartered
in Brooks, Alberta. The company expects to record a one-time restructuring
charge in the fourth quarter of 2007 of approximately USD 1.2 to 1.5 million
which excludes the associated costs of shutting down the Company's Canadian
operations. The cost of shutting down the Company's Canadian operations is in
the range of USD 2.0 to 2.5 million and will be an additional charge to
discontinued operations in the fourth quarter of 2007.
PEG has geared its operations to focus exclusively on delivering high
quality oil and gas well intervention services in the United States where
growth continues. The Company is continuing to redeploy its equipment to
maximize fleet utilization. Increased focus on technical quality and health,
safety and environment is being implemented in an effort to improve access to
major oil and gas producers.
About Production Enhancement Group, Inc.
Production Enhancement Group, Inc., a Houston-based energy services
company incorporated in Alberta, Canada, trades on the TSX under the symbol
WIS. PEG's wholly owned subsidiary, WISE(R) Well Intervention Services, Inc.,
has developed patented WISE multifunction coiled tubing technologies and
markets a full range of coiled tubing, pressure pumping, nitrogen, and
WISE(R) is a registered trademark of Production Enhancement Group, Inc.
The TSX does not accept responsibility for the adequacy or accuracy of
This release and PEG's website referenced in this release may contain
forward-looking statements, including expectations of future components of
revenue, cash flow and earnings. Investors are cautioned that assumptions used
in the preparation of such information may prove to be incorrect. Events or
circumstances may cause actual results to differ materially from those
predicted, a result of numerous known and unknown risks, uncertainties, and
other factors, many of which are beyond the control of PEG. These risks
include, but are not limited to, the risks associated with the oil and gas
industry, commodity prices, and exchange rate changes. Industry related risks
could include, but are not limited to, operational risks in exploration,
development, and production, delays or changes in plans, and health and safety
risks, including, without limitation, costs and expenses. The risks outlined
above should not be construed as exhaustive. Investors are cautioned not to
place undue reliance on any forward-looking information. PEG undertakes no
obligation to update or revise any forward-looking statements.
For further information:
For further information: visit www.productionenhancement.com or contact:
Douglas Parker, Chief Financial Officer, Production Enhancement Group, Inc.,
(281) 282-1851, firstname.lastname@example.org; Ken Wetherell, Investor
Relations, Bryan Mills Iradesso, (403) 503-0144 x224, email@example.com