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CALGARY, Nov. 5 /CNW/ - Western Energy Services Corp. ("Western" or the
"Company") is pleased to announce that during the third quarter of 2007 it
dramatically improved its balance sheet and improved results from operations.
The third quarter results build upon the positives that were demonstrated
in the second quarter of 2007 and are indicative of the success of the change
in direction and turnaround plan adopted by the Company. Most importantly, the
Company continues to demonstrate an improvement in income from continuing
operations before amortization, interest and income taxes ("EBITDA").
Highlights for the third Quarter include:
- Quarterly revenues are up 36% over 2006 and 49% over the previous
- General and administrative expenses ("G&A") are down to 10% of
revenue for the quarter. G&A is down 23% from the first quarter of
2007 and down 10% from the second quarter of 2007.
- EBITDA for the nine months ended September 30, 2007 improved 440%
over the same period in 2006.
- Significant reductions in debt were achieved and interest expense
decreased by $82,037 or 17% from the second quarter, 2007.
During the later part of 2006 and into 2007 Western's new management team
continued the implementation of a turnaround plan and change in direction for
the Company. The key components of the turnaround plan are: shifting the
direction of the Company's business to the less volatile production
optimization though stimulation services; concentrating the Company's services
in fewer operational bases; increasing efficiencies and reducing costs. The
Company's plan took a big step forward in the second quarter with the purchase
of the assets of Grenville Energy Partnership ("Grenville") and by disposing
of its non core well testing assets. During the third quarter of 2007 the
Company took additional steps in its plan by significantly reducing debt and
interest expense, disposing of additional non core assets (being the Company's
Plata Inca mining property) and increasing EBITDA. Management's focus for the
balance of 2007 and into 2008 will be to continue to increase revenues and
Quarterly revenues for the third quarter increased by 36%, compared to
2006. Revenues were $4,142,846 for the three months ended September 30, 2007
compared to $3,051,967 for the three months ended September 30, 2006. Revenues
for the three months ended September 30, 2007 increased 49% from the
seasonally slow quarter second quarter of 2007. Despite unusually wet weather
in the state of Texas during the spring and summer, a year over year increase
of 12% in USD revenues was achieved for the nine months ended September 30.
Revenues from Western Canada improved by 37% for the nine months ended
September 30 2007 as compared to 2006. This increase was achieved as a result
of the Company's focus on production optimization though stimulation services
and despite an industry wide downturn for Canadian oilfield service companies.
EBITDA for the nine months ended September 30, 2007 totalled $1,131,533,
a 440% increase over the $208,678 reported for the comparative nine month
period in 2006. Operating costs during the third quarter of 2007 were 81% of
revenues compared to 88% in the third quarter of 2006.
General and administrative ("G&A") expenses decreased for the second
consecutive quarter to 10% of quarterly revenues. G&A expenses for the nine
months ended September 30, 2007 were $527,474 lower than for the comparable
nine month period in 2006, a 27% reduction. G&A expenses for the third quarter
of 2007 were $427,686, being 10% of revenues compared to $411,205 for the
third quarter of 2006, being 13% of revenues. Management has established and
achieved a goal to maintain G&A expenses at 12% or less of revenues as the
Company's business continues to grow.
Quarterly interest expense declined $82,037 or 17% from the second
quarter of 2007, as the result of a lower interest rate negotiated by
Management on the Company's short term borrowings. At the end of the third
quarter, the Company completed an approximately $6.1 million private placement
and used $5.7 million to reduce its obligations under its convertible note.
This repayment will save the Company approximately $457,000 of interest
expense on an annualized basis, commencing at the start of the fourth quarter
of 2007. This repayment also substantially improved the Company's debt to
equity ratio from $3.12 per dollar of equity to $1.13 per dollar of equity.
In addition to the $5.7 million debt reduction the Company repaid
$387,263 of its demand loan facilities, $182,217 of its long term debt and
capital lease obligations, and $45,000 of its short term borrowings during the
third quarter of 2007.
During the second quarter of 2007 the Company and Grenville completed the
purchase by the Company of all of Grenville's oilfield service equipment for
$12.5 million and terminated their revenue sharing joint venture. Commencing
January 1, 2007 the Company was no longer responsible to distribute a
component of its revenues to Grenville. This revenue increase will continue to
be significant as the Company's business grows.
The Company's efforts to focus and streamline its business were enhanced
by the disposition of its well testing equipment during the second quarter and
by the sale of its interest in the Plata Inca mining property in the Yukon
Territories during the third quarter. The net sales proceeds were redeployed
into new capital assets and to support the Company's new direction.
Despite the progress that has been made, management recognizes that much
still needs to be done. The balance of 2007 and 2008 will see a continued
expansion and realignment of the Company's fleet of equipment along with a
concerted effort to improve revenues while maintaining the cost control
measures already achieved. By focusing on the Company's core business of
production optimization through stimulation services, management is confident
that Western will become increasingly profitable and generate positive returns
for our shareholders.
Forward Looking Information
This release contains certain forward-looking statements related but not
limited to the Company's expectations, intentions, plans and beliefs.
Investment advisors, shareholders and potential investors are cautioned not to
place undue reliance on forward-looking information which by its nature
involves assumptions, risks and uncertainties, both general and specific, that
contribute to the possibilities that predictions, projections, forecasts and
future events will not occur. Consequently, actual results could differ
materially from the expectations expressed in these forward-looking
statements. The Company does not assume any responsibility to update this
information for events subsequent to its preparation.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
For further information:
For further information: Additional information relating to the Company
including the interim, unaudited, consolidated financial statements and
management discussion and analysis for the quarter ended September 30, 2007 is
filed on SEDAR at www.sedar.com. Please visit the web site: www.wesc.ca or
contact: Jim McQuarrie, President & CEO or Nick Pohorelic, CFO, (403)
266-0667. If you would like to receive future information releases by email
please provide your email address to firstname.lastname@example.org