Wavefront Energy & Environmental Services Inc. Announces First Quarter Results



    
    Release TSX-V: WEE
    Pink Sheets:   WEESF
    

    EDMONTON, Jan. 29 /CNW/ - Wavefront Energy and Environmental Services
Inc. ("Wavefront"), a leader in technology development and implementation for
improved oil recovery and optimized groundwater remediation announces its
financial and operating results for the first quarter ended November 30, 2008.
    During the first quarter of fiscal 2009, a licensed provider of Powerwave
completed four, royalty bearing, coil tubing well stimulations in Colombia.
Three of the stimulations were completed with a Brazilian-based oil and gas
producer while one stimulation was undertaken by a Colombia-based client. Also
during the quarter, the Corporation began recognizing revenue from the
installation of Powerwave systems that have been announced over the last
fiscal year. Although the revenues from these systems were not significant,
they are now starting to grow with the increase in the numbers of systems
installed.
    Revenues for the three months ended November 30, 2008 were $430,955, an
increase of $146,137 from the revenues recognized in the corresponding period
of 2007 of $248,818. The increase in revenues relate primarily to the interest
generated from the investments of cash from private placements, and related
subsequent warrant exercises that closed on December 24, 2007 and January 31,
2008.
    The basic and dilute net loss for the three months ended November 30,
2008 was $2,694,935 ($0.04 per share), compared to $1,018,271 ($0.02 per
share) in 2007. The Corporation's expenses through the three month period were
$3,125,890 compared to $1,303,089 for the comparative period in 2007. The
increase of $1,822,801 was primarily from:

    
    -   During the reporting period there was a precipitous drop in
        commodities prices, which in general has affected the valuation of
        resource properties across the energy sector. The drop in commodity
        prices was viewed by the Corporation as a triggering event, causing
        it to fair value its oilfield related assets. As a result, the
        Corporation realized a non-cash, write-down of its Rogers County
        oilfield property, plant and equipment and Royalty Rights by
        $1,689,148.

    -   General and administrative expenses increased by $260,697 due
        principally to increased wage, office, professional, vehicle, and
        consultant expenses; and

    -   Selling, marketing and travel expenses increased by $116,069 which
        relates to increased activity and resulting increase in the size of
        the Corporation's sales force and operating at multiple office
        locations across Canada and the United States. The Corporation will
        continue to expand its sales network focusing on the United States
        southeast and west coast locations.
    

    Offsetting expense increases noted above were decreases in direct
expenses related to service and royalties to $92,710 (or 38.6% of gross
services and royalty revenue), compared to $143,273 (or 71.2% of gross service
and royalty revenue) for the comparative reporting period. The decrease in
direct costs relates principally to the Corporation recognizing the
installation costs of overriding royalty Powerwave projects, i.e., projects
where the Corporation receives a percentage of net or gross production revenue
in the comparative period.
    Research and development expenses also decreased by $102,414. The
decrease can be attributed to the comparative period's reclassification of
$122,074 of costs that were previously included in assets under construction.
    Total assets decreased by $1,932,403 to $29,996,324 from August 31, 2008
to November 30, 2008. The decrease was primarily due to a decrease of
$1,081,138 in cash that was used to fund working capital requirements and for
the purchase or property, plant and equipment. The decrease in assets was also
affected by the decision by the Corporation to write-down its oilfield related
property, plant and equipment and Royalty Rights.
    As at November 30, 2008, the Corporation had working capital of
$20,638,705. The Corporation believes that its working capital position will
continue to decline despite having a significant increase in the number of
Powerwave contracts in-hand, as Wavefront cannot commence billing of Powerwave
clients that have execute contracts in-hand till such time that the Powerwave
systems are installed and operational. The Corporation cannot control the
installation rate of such Powerwave systems, which are controlled and dictated
by the oil producers, who often want such installations to occur when other
work is being performed on the well targeted for the Powerwave installation.
    The Corporation believes that lower commodity prices may also force
producers to look at alternatives to replacing produced reserves, which may be
favorable to the adaptation rate Corporation's Powerwave technology. However,
the Corporation is not immune to the global economic conditions that continue
to deteriorate, inclusive of increases in United States and Canadian
unemployment rate, or the volatility in the commodity markets and foreign
exchange rate.
    The above financial highlights should be read in conjunction with the
unaudited consolidated financial statements and management discussion and
analysis of results for Wavefront's most recently completed quarter, ended
November 30, 2008, which have been filed on SEDAR.
    The Corporation is also pleased to announce that it is currently
finalizing its due diligence and negotiation a potential acquisition of a
complementary company to that of Wavefront Sand Pumps & Rentals Ltd. Although
a non-binding Letter of Intent has been entered into, the closing of the
transaction and the terms cannot be assured at this time.

    About Wavefront Energy and Environmental Services Inc.

    Wavefront is a technology-based company with a focused, strategic plan to
leverage the value of our intellectual property in order to maximize oil
production recovery operations, as well as provide additional solutions for
environmental applications.

    
    ON BEHALF OF THE BOARD OF DIRECTORS

    WAVEFRONT ENERGY AND ENVIRONMENTAL SERVICES INC.

    "D. Brad Paterson" (signed)

    D. Brad Paterson, CFO & Director

             Cautionary Disclaimer - Forward Looking Statements
             --------------------------------------------------
    

    Certain statements contained herein regarding Wavefront and its
operations constitute "forward-looking statements" within the meaning of
Canadian securities laws and the United States Private Securities Litigation
Reform Act of 1995. All statements that are not historical facts, including
without limitation statements regarding future estimates, plans, objectives,
assumptions or expectations or future performance, are "forward-looking
statements". In some cases, forward-looking statements can be identified by
terminology such as ''may'', ''will'', ''should'', ''expect'', ''plan'',
''anticipate'', ''believe'', ''estimate'', ''predict'', ''potential'',
''continue'' or the negative of these terms or other comparable terminology.
We caution that such "forward-looking statements" involve known and unknown
risks and uncertainties that could cause actual results and future events to
differ materially from those anticipated in such statements. Such factors
include fluctuations in the acceptance rates of Wavefront's Powerwave and
Primawave Processes, demand for products and services, fluctuations in the
market for oil and gas related products and services, the ability of Wavefront
to attract and maintain key personnel, technology changes, global political
and economic conditions, and other factors that were described in further
detail in Wavefront's continuous disclosure filings, available on SEDAR at
www.sedar.com. Wavefront expressly disclaims any obligation to up-date any
"forward-looking statements", other than as required by law.

    
    THE TSX VENTURE EXCHANGE NEITHER APPROVES NOR DISAPPROVES THE CONTENTS OF
    THIS RELEASE WHICH WAS PREPARED SOLELY AT THE DISCRETION OF MANAGEMENT
    





For further information:

For further information: D. Brad Paterson, CFO, (780) 486-2222 x224 Tel,
investor.info@onthewavefront.com

Organization Profile

WAVEFRONT ENERGY AND ENVIRONMENTAL SERVICES INC.

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