Enerchem International Inc. releases financial results

    Enerchem International Inc. Reports Financial Results For the Three and
    Six Months Ended June 30, 2008

    CALGARY, Aug. 11 /CNW/ -

    Financial highlights (unaudited)
    (in Cdn $ 000's except per share amounts)
                                       Three month ended    Six months ended
                                                 June 30             June 30
                                          2008      2007      2008      2007

    Revenues                            21,390     7,468    55,137    35,344

    Net (loss) earnings for the period  (1,067)     (648)   (1,137)    1,195

    Net (loss) earnings per share
    Basic                                (0.07)    (0.04)    (0.07)     0.08
    Diluted                              (0.07)    (0.04)    (0.07)     0.08

    EBITDA (1)                             153      (441)      706     2,827
    EBITDA per share (1)                  0.01     (0.03)     0.05      0.18

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

    Industry Activity and Operations Overview

    Against the backdrop of an industry quarter that was essentially flat
year-over-year, Enerchem's revenues increased by 186% when compared to the
same quarter last year and by 56% for the first half of 2008 versus the same
period in 2007. These increases reflect a significant increase in sales volume
over the comparative periods in 2007 and are also a function of higher prices
charged for our finished products as we attempt to remain aligned with the
rise in crude oil prices. These results also reflect our effort to improve our
plant output and efficiency as well as maximize our finished goods sales. We
believe that having both manufacturing and distribution capability provides us
with a competitive advantage in this price driven commodity market.
    Throughout the quarter we have also concentrated on maximizing production
out of our Slave Lake facility and increasing our storage capacity in order to
be better prepared to meet the seasonal requirements of our clients. As a
result, we have built up finished goods inventory over the quarter, which is
reflected on the balance sheet at June 30, 2008, by the approximately
$2.0 million increase in inventory over the $8.7 million in inventory at the
end of the first quarter of 2008 and $4.8 million over the $5.8 million of
inventory at the end of 2007.
    For both the second quarter and the year-to-date of 2008 we have posted a
loss of $1.1 million. This result includes a provision for restructuring costs
of $850,000 relating to the consolidation of our accounting and administrative
offices from Leduc to Calgary, Alberta. The consolidation is expected to be
completed by October 31, 2008. The net loss for both periods also reflects the
effects of margin compression associated with the increase in feedstock costs
caused by the dramatic rise in commodity prices. However, with the return to
operation of our Sundre plant in the third quarter of this year, we anticipate
lowering overall production costs and increased leverage on our fixed cost
    Over the reporting quarter of 2008 industry activity continued to track
below 2007 levels with a 3% drop in wells drilled on a completion basis (3,148
compared to 3,232 in the second quarter of 2007); the year-to-date decline is
17% (8,134 compared to 9,822 in 2007). (1) Rig utilization rates improved
slightly quarter-over-quarter (19% compared to 17%), but trail 2007
year-to-date utilization rates at 38% vs. 39%. It has become somewhat
commonplace to report that weather affected the second quarter; it did again
this year, particularly in June which provided the industry with only two
weeks of productive activity.
    There are some indications that the cycle's downward movement may have
moderated. During this reporting quarter the Petroleum Services Association of
Canada ("PSAC") increased its forecast for wells drilled on a rig-released
basis in 2008 by 2,000 wells. In addition, although natural gas prices have
weakened in recent weeks, US natural gas storage for the week of July 18th was
estimated to be tracking about 11% below this time last year and slightly
below the five year average. Provided that natural gas prices remain above
economically viable levels, we see this trend, together with the approximately
60% year-over-year reduction (July import figures) in LNG imports into North
America, as positive for the Western Canadian natural gas producers and
therefore gas drilling in this region.

    Strategy and Outlook

    Our operating strategy remains unchanged from that outlined in the first
quarter report for 2008. We continue to make investments in our fractionation
plants to improve their operating efficiency. With respect to our Sundre
plant, we announced on July 8, 2008 that we were re-installing its salt-bath
heaters in order to return the plant to production during the busy drilling
quarters of the year. This initiative is proceeding as planned, and we expect
to soon announce its completion. The project to replace these salt-bath
heaters with more efficient, re-designed direct-fired heaters is also
continuing, and is in the early re-engineering phase.
    Given the continued strength in commodity prices and record cash flows
being generated by producers, there is growing industry consensus that these
underlying fundamentals may provide for stronger than expected levels of
oilfield activity during the second half of 2008 and in 2009. Enerchem is well
positioned to take full advantage of this opportunity.

    Conference Call

    Mr. Kenneth Bagan, President and Chief Executive Officer and Mr. Brian
Zubach, Chief Financial Officer, will host a conference call on Tuesday August
12, 2008 at 9:00 a.m. MST (11:00 EST) to discuss the Company's results for the
Second Quarter 2008.
    To access the conference call, contact the conference call operator at
1-800-814-4861 or in the Toronto area 416-915-5650 approximately 10 minutes
prior to the calls start time and ask for the "Enerchem International Inc. -
Second Quarter 2008 Conference Call".
    A replay of the conference call will be available until August 19, 2008
by dialing 1-877-289-8525 (passcode: 21280104 followed by the pound sign) or
in the Toronto area at 416-640-1917 (passcode: 21280104 followed by the pound

    Enerchem International Inc. is a manufacturer and distributor of
hydrocarbon drilling and fracturing fluids designed to provide cost effective
solutions to the upstream and downstream oil and gas industry and specialty
solvents to help resolve production and processing problems to the downstream
producers. The Company is also a provider of 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".

    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 factors.

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


    Enerchem International Inc.

    Per:  signed "Kenneth Bagan"
    President and CEO

    (1) Source: Canadian Association of Drilling Contractors ("CAODC")

For further information:

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

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