Enerchem International Inc. releases financial results



    CALGARY, Aug. 9 /CNW/ -

    Enerchem International Inc. Reports Financial Results
    For the Three and Six Months Ended June 30, 2007.

    
    Financial highlights (unaudited)
    (in Cdn $ 000's except per share amounts)
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                                       Three month ended    Six months ended
                                                 June 30             June 30
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                                          2007      2006      2007      2006
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    Revenues                             7,468    22,093    35,344    54,409
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    Net (loss) earnings for the period    (648)      765     1,195     3,521
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    Net (loss) earnings per share
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    Basic                                (0.04)     0.05      0.08      0.23
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    Diluted                              (0.04)     0.05      0.08      0.23
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    EBITDA(1)                             (441)    1,363     2,827     5,819
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    (1) EBITDA is a non-GAAP measure which the Company defines as earnings
        before interest expense, taxes, depreciation, amortization, accretion
        expense and write-downs. 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 is used by
        management to assist in assessing comparative performance of the
        Company.
    

    Overview

    The first half of 2007 has clearly been challenging for Canadian oil and
gas service companies. Year to date the weekly rig count has averaged 334
rigs, 35% below the average weekly record rig count of 516 rigs for the same
period last year and 20% below the five-year average of 413 rigs. The industry
drilled 7,749 wells so far this year compared to 10,608 wells in the same time
last year, a 27% drop in activity. This decrease in activity has also been
reflected in our financial performance for the year to date with an overall
drop in revenue of 35% and a 66% drop in earnings.
    During the second quarter this year, 1,765 wells were drilled
representing a 41% decline from the 2,997 wells drilled in the same three
month period last year. Much of this decline in second quarter activity
resulted from a longer than normal spring break-up combined with a reduction
in exploration and development programs in the face of lower natural gas
prices and concerns over high North American natural gas inventory levels. The
foregoing combined with the impact of a higher Canadian dollar on realized
Canadian commodity prices have caused producers to re-evaluate and defer their
drilling programs.
    Shallow areas of western Canada have seen the most significant decrease
in activity; however, activity levels in the deeper areas of the basin have
also seen a slowdown since the fourth quarter of 2006.
    Despite these challenges it is encouraging to see drilling rig activity
start to return to more normal levels as we start the third quarter.

    Facilities Update

    We are continuing with the implementation of our strategic initiatives
focused on increasing efficiencies and improving performance to reduce our
operational costs.
    Our new flowback return cleaning facility was commissioned in May and has
cleaned over 7,500 m(3) of used fracturing fluid that has been reprocessed
into almost 6,000 m(3) of new product. This has significantly increased our
product cuts and reduced feedstock costs at our Sundre refinery. We expect
this to give us considerable competitive advantage.
    The Sundre turnaround is scheduled in August and we will be proceeding
with the two major projects slated for the refinery. The first project is to
complete the automation of tower one to operate in conjunction with the other
two towers that were automated last year. This should provide us with
increased cuts on the manufacture of our solvent products. The second project
will be the replacement of the old style salt bath heaters to new crude
heaters that will increase the operating temperature for the refining process
and thereby increase the plant's production capacity and also contribute to
reduce operating costs.
    In Slave Lake, we will be installing a new oil water-wash system to clean
the feedstock before it is processed in the refinery. This should remove a lot
of the impurities in the crude oil and reduce our operational costs. We have
also started to install a blend facility which we hope to have pipeline
connected sometime in the third quarter, this expansion will facilitate
greater opportunities for our energy marketing operations and we anticipate
that this project will be completed before year end.

    Outlook

    The downturn in industry activity over the last three quarters is
expected to continue through to the fourth quarter of 2007. Then we should
start to see an increase in activity going into the winter drilling season,
but we don't anticipate any move back to more robust activity levels until mid
to late 2008. The long term fundamentals still require continued exploration
in western Canada to meet the North American demand for commodities. Despite
the short-term weakness currently being experienced in our industry, we
believe that the overall outlook remains positive for the longer term. With
$20 million in working capital, cash of over $7 million and unused credit
facilities, we are well positioned to take advantage of any opportunities that
may develop.

    Conference Call

    Mr. Doug Robinson, President and Chief Executive Officer and Mr. Brian
Zubach, Chief Financial Officer, will host a conference call on Friday
August 10, 2007 at 9:00 a.m. MST (11:00 a.m. EST) to discuss the Company's
results for the First Quarter 2007.
    To access the conference call, contact the conference call operator at
1-800-814-4890 or in the Toronto area 1-416-644-3429 approximately 10 minutes
prior to the call's start time and ask for the "Enerchem International Inc. -
Second Quarter 2007 Conference Call".
    A replay of the conference call will be available until August 17, 2007
by dialing 1-877-289-8525 (passcode: 21231267 followed by the pound sign) or
in the Toronto area at 1-416-640-1917 (passcode: 21231267 followed by the
pound sign).

    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,
but are not limited to, 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 factors.

    Enerchem International Inc. is a manufacturer and distributor of
hydrocarbon drilling and fracturing fluids designed to provide cost effective
solutions to the upstream oil and gas industry and specialty solvents to help
resolve production and processing problems to the downstream producers. The
Company also provides energy marketing services and, through its wholly-owned
subsidiary company, Millard Trucking Ltd., provides fluid transportation and
other related oilfield services. The Company's common shares trade on the
Toronto Stock Exchange under the symbol "ECH".
    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.

    Enerchem International Inc.

    Per: signed "Douglas F. Robinson"
    ---------------------------------
    President and CEO





For further information:

For further information: Mr. Douglas F. Robinson, President and CEO,
Telephone: (403) 269-1500, Fax. (403) 269-1559, E-mail drobinson@enerchem.com,
or Mr. Brian Zubach, Chief Financial Officer, Telephone: (780) 980-1682, Fax.
(780) 980-2610, E-mail bzubach@enerchem.com

Organization Profile

ENERCHEM INTERNATIONAL INC.

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