Enerchem International announces first quarter results

CALGARY, May 13 /CNW/ -

    
    Enerchem International Inc. Reports Financial Results
    For the three months ended March 31, 2010

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

                                                 Three months ended March 31
                                                          2010          2009
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    Revenues                                            55,860        22,921
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    Net income (loss)                                    4,630          (323)
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    Net income (loss) per share
      Basic                                               0.31         (0.02)
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      Diluted                                             0.30         (0.02)
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    EBITDA(1)                                            6,495           271
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    EBITDA per share(2)                                   0.43          0.02

    (1) EBITDA is a non-GAAP measure which the Company defines as earnings
        before interest expense, income taxes, depreciation, amortization and
        accretion expense.
    (2) 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 are used by management to assist in assessing comparative
    performance of the Company.
    

Industry Activity and Financial Overview

Oilfield activity levels in the WCSB and overall industry conditions improved substantially coming into the 2009/2010 drilling season with drilling rig utilization rates up in the first quarter of 2010 at 54% compared to 35% for the first quarter of the prior year. Natural gas prices remained low, slowing drilling for that commodity while higher average crude oil prices and the application of horizontal drilling technology to developed fields in the WCSB drove the increase in oilwell drilling activity. Though well completions for the first quarter of 2010 were lower, at 3,133 compared to 4,434 during the first quarter of 2009, the nature of the wells being drilling increased demand for the Company's fluids.

Consolidated revenue for the three months ended March 31, 2010 increased by $32,939 when compared to the same period of 2009. The Company's pricing in two of its business segments is directly linked to the price of crude oil, which is used as a feedstock in the Oilfield services segment and as a marketed product in the Energy marketing segment. Higher average crude oil prices and higher sales volumes in the first quarter of 2010 combined to drive revenues up in the Oilfield services and Energy marketing segments and higher industry activity levels contributed to higher revenues in the Transportation services segment.

A more direct indicator of Enerchem's financial performance is overall margin achieved measured against the relatively fixed cost structure of the business, as evidenced in the EBITDA results. EBITDA for the first three months of 2010 has increased to $6,495 from $271 for the same period of the previous year. The combined impact of high plant utilization and more effective inventory management provided significantly higher margin contribution in the current period than the Company experienced throughout 2009.

Strategy and Outlook

Although the prospects for the world's economic recovery remain the subject matter of cautious commentary by analysts, Enerchem management believes that the cost containment work, inventory management effort and plant utilization rate improvement put in place over the last year along with a capital investment strategy targeting plant reliability and safety will continue to provide positive financial results in the favorable economic environment currently in existence in the areas of the WCSB that the Company serves.

On May 3, 2010, Trinity Capital Partners Ltd., mailed a Take-Over Bid Circular and Offer to shareholders of Enerchem to acquire all of the issued and outstanding common shares of Enerchem (the "Offer") at a price of $2.75 in cash per share by way of a take-over bid, in connection with the Offer. Concurrently with the mailing of the Take-Over Bid Circular and Offer, the Board of Directors of Enerchem mailed a Directors' Circular with respect to the Offer recommending that shareholders tender their common shares. The Board has unanimously approved the Offer and has concluded, based on the Fairness Opinion received from the its financial advisor and upon consultation with its outside legal advisors, that the transaction is in the best interests of Enerchem. Both the Take-over Bid Circular and Offer and the Directors' Circular have been filed with Canadian securities regulatory authorities.

The Offer expires at 3:00 p.m. (Calgary time) on June 8, 2010, unless withdrawn or extended. The consideration offered for each Common Share under the Offer represents a 47% premium over the closing price of Enerchem on April 21, 2010.

Enerchem International Inc. fractionates and distributes hydrocarbon fluids designed for use in the fracturing (Fracsol(TM)) and drilling (Drillsol(TM)) of oil and natural gas wells as well as solvents (Waxsol(TM)) used to resolve production and processing problems for downstream producers. The Company's energy marketing group purchases crude oil and crude derived fractions for the Company's feedstock requirements and for resale. Through its wholly owned subsidiary, acquired on May 1, 2006, Millard Trucking Ltd., the Company provides fluid transportation and related oilfield services.

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.

Additional information on Enerchem International Inc., may be viewed at our website at: www.enerchem.com or by visiting www.sedar.com.

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

For further information: Mr. Kenneth Bagan, President and Chief Executive Officer, Telephone: [phone], Fax. [phone], E-mail [email protected]; or Mr. Kim Hubick, Vice President, Finance and Chief Financial Officer, Telephone: [phone], Fax. [phone], E-mail [email protected]