Petrowest Energy Services Trust announces 2010 second quarter financial
results
CALGARY, Aug. 9 /CNW/ - Petrowest Energy Services Trust (TSX: PRW.UN) announced today its consolidated financial results for the three and six month periods ended June 30, 2010.
Revenue from continuing operations for the three months ended June 30, 2010, was $26.0 million, a 53% increase from revenue of $17.0 million in the comparable period of 2009. Gross margin and EBITDA margin percentages were 10% and 6% respectively, representing an increase of 22% and 26% over the comparable period of 2009. For the three month period ended June 30, 2010 the net loss and comprehensive loss from continuing operations was $5.5 million compared to $46.5 million in the comparable period of 2009. This represents net loss per unit of $0.16 and $1.41 respectively, basic and fully diluted. The net loss and comprehensive loss (including Discontinued Operations) was $5.5 million compared to $48.6 million in the comparable period of 2009. This represents net loss per unit of $0.16 and $1.48 respectively, basic and fully diluted.
Revenue from continuing operations for the six months ended June 30, 2010, was $61.8 million, a 12% increase from revenue of $55.1 million in the comparable period of 2009. Gross margin and EBITDA margin percentages were 14% and 12% respectively, representing an increae of 6% and 10% over the comparable period of 2009. For the six month period ended June 30, 2010 the net loss and comprehensive loss from continuing operations was $6.6 million compared to $45.8 million in the comparable period of 2009. This represents net loss per unit of $0.20 and $1.39 respectively, basic and fully diluted. The net loss and comprehensive loss (including Discontinued Operations) was $6.6 million compared to $53.3 million in the comparable period of 2009. This represents net loss per unit of $0.20 and $1.62 respectively, basic and fully diluted.
On June 29, 2010, pursuant to a public rights offering, the Trust issued an aggregate of 53,571,434 Trust units and 168,536 subordinated units at $0.14 per unit. The units issued pursuant to the rights offering were valued at $7,523,595 before issue costs of $1,043,099 (including $400,125 non-cash costs related to warrants). The Trust intends to utilize net proceeds of the rights offering to fund working capital requirements and daily operations, primarily fuel, salaries and operating lease payments.
The Trust's ability to continue operations is dependent on the continued support of the banking syndicate or the ability to refinance the existing bank credit facility. In the second quarter of 2010 the Trust and the banking syndicate executed the Credit Agreement. The Credit Agreement has a total commitment of $70.0 million, comprised of a $63.0 million syndicated facility and $7.0 million working capital facility. There are scheduled reductions and cancellations of commitments due June 30, 2010, September 30, 2010, and December 31, 2010 of $3.75 million on each date in addition to a further scheduled reduction of $2.5 million on March 31, 2011. As at June 30, 2010, after the scheduled reduction of $3.75 million there was a total commitment of $67.5 million, comprised of a $60.75 million syndicated facility and $6.75 million working capital facility ($1.2 million drawn June 30, 2010). The credit facility will have a total commitment of $57.5 million on the stated maturity date of April 30, 2011. The Credit Agreement contains two financial covenants, the "Funded debt to EBITDA Ratio" and the "Fixed Charge Coverage Ratio". As at June 30, 2010 the Trust was in compliance with these covenants. Under the Credit Agreement amounts outstanding bear interest at the prime rate plus 5.5.
FINANCIAL HIGHLIGHTS
Three months ended Six months ended
June 30 June 30
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(thousands of dollars,
except per unit amounts,
margins and ratios) 2010 2009 2010 2009
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Revenue from continuing
operations 26,037 17,003 61,793 55,139
Gross margin from
continuing operations(1) 2,560 (2,062) 8,691 4,577
Gross margin percentage(1) 10% (12%) 14% 8%
General and administrative 883 1,409 2,441 3,257
EBITDA from continuing
operations(1) 1,677 (3,471) 6,250 1,320
EBITDA margin
percentage(1) 6% (20%) 12% 2%
Net loss and comprehensive
loss from continuing
operations (5,463) (46,468) (6,560) (45,781)
Discontinued operations,
net of tax - (2,170) (45) (7,503)
Net loss and comprehensive
loss (5,463) (48,638) (6,605) (53,284)
Cash provided from
operating activities 1,032 (3,377) 2,266 7,280
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Units outstanding 86,686,228 32,946,308 86,686,228 32,946,308
Weighted average units
outstanding - basic 35,029,523 32,941,253 33,243,214 32,933,822
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(1) See "Non-GAAP Measures"
The oil and natural gas drilling sector will continue to impact the Trust's operations and financial results and will remain an important part of the Trust's operations going forward. The amount of the Trust's services directly relating to the oil and gas sector will fluctuate as the activity in this sector changes in addition to the amount of non-oil and gas related projects which the Trust is successful in securing. The Trust is continuing to pursue geographic diversification in 2010 with redeployment of equipment and skilled personnel to capitalize on demand in nearby regions plus improving utilization rates and financial results. With the shift in the North American natural gas markets towards unconventional shale gas basins, the Trust has moved quickly to position itself in two of North America's premier shale gas plays. The Trust has opened a full service office and maintenance facility in Fort Nelson and increased marketing emphasis in the northeastern British Columbia emerging Horn River and Montney shale gas plays. Petrowest has also undertaken a strategy to expand its presence in the oil sands mining sector by appointing a divisional vice president and by securing office and industrial space in Fort McMurray. This sector represents the largest area of potential growth for the Trust.
SELECTED FINANCIAL INFORMATION
Selected financial information for the three and six months ended June 30, 2010 is attached below. This information should be read in conjunction with the audited consolidated financial statements for the twelve months ended December 31, 2009 and the Trust's Management, Discussion and Analysis, available under the Trust's profile on the SEDAR website at www.sedar.com.
FORWARD LOOKING INFORMATION
This news release contains forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are identified by their use of terms and phrases such as "anticipate," "achievable," "believe," "expect," "estimate," "plan," "intend," "project," "may," "should", "could", "predict", "may," "will," or similar words suggesting future outcomes or language suggesting an outlook. Forward-looking statements and information are based on Petrowest's current beliefs as well as assumptions made by and information currently available to Petrowest concerning anticipated business performance. Although management of Petrowest considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking statements are subject to many external variables that are beyond Petrowest's control, such as fluctuating prices for crude oil and natural gas, changes in drilling activity, and general local and global economic, political, business and weather conditions. If any of these, or other uncertainties, materialize the actual results of Petrowest may vary materially from those expected.
Petrowest Energy Services Trust
Consolidated Balance Sheets
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(Unaudited)
As at As at
June 30, December 31,
(In thousands of dollars) 2010 2009
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Assets
Current assets
Accounts receivable 28,219 28,262
Prepaid expenses and other 2,979 2,158
Inventory 4,086 3,984
Assets related to discontinued operations 21 174
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35,305 34,578
Property and equipment 64,192 67,972
Intangible assets 6,597 8,330
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106,094 110,880
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Liabilities
Current liabilities
Bank overdraft 1,226 270
Accounts payable and accrued liabilities 12,306 11,689
Revolving bank term loan 60,750 67,950
Current portion of obligations under capital
leases 1,067 544
Liabilities related to discontinued operations 1 11
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75,350 80,464
Obligations under capital leases 804 331
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76,154 80,795
Unitholders' Equity
Units 298,978 292,498
Warrants 400 -
Contributed surplus 630 1,050
Accumulated loss (232,105) (225,500)
Accumulated distributions to unitholders (37,963) (37,963)
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29,940 30,085
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106,094 110,880
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Petrowest Energy Services Trust
Consolidated Statements of Loss, Comprehensive Loss and Accumulated Loss
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(Unaudited)
Three months ended Six months ended
June 30 June 30
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(In thousands of dollars,
except per unit amounts) 2010 2009 2010 2009
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Revenue 26,037 17,003 61,793 55,139
Expenses
Operating expenses 23,477 19,065 53,102 50,562
General and administrative 883 1,409 2,441 3,257
Interest 2,444 1,312 3,307 2,339
Amortization of
property and equipment 3,673 5,261 7,791 10,283
Amortization of intangible
assets 871 984 1,733 1,957
Impairment of goodwill
and intangible assets - 35,446 - 35,446
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31,348 63,477 68,374 103,844
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(5,311) (46,474) (6,581) (48,705)
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Other income (loss)
Gain (loss) on disposal
of property and equipment (154) - 15 (19)
Interest and other income 2 - 6 2
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Net loss and comprehensive
loss before taxes (5,463) (46,474) (6,560) (48,722)
Future income tax recovery - (6) - (2,941)
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Net loss and comprehensive
loss from continuing
operations (5,463) (46,468) (6,560) (45,781)
Discontinued operations,
net of tax - (2,170) (45) (7,503)
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Net loss and comprehensive
loss for the period (5,463) (48,638) (6,605) (53,284)
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Accumulated loss -
beginning of period (226,642) (170,916) (225,500) (166,270)
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Accumulated loss - end of
period (232,105) (219,554) (232,105) (219,554)
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Net loss per unit
-basic and diluted from
continuing operations ($0.16) ($1.41) ($0.20) ($1.39)
-basic and diluted from
discontinued operations (0.00) (0.07) (0.00) (0.23)
-basic and diluted (0.16) (1.48) (0.20) (1.62)
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Petrowest Energy Services Trust
Consolidated Statements of Cash Flows
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(Unaudited)
Three months ended Six months ended
June 30 June 30
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(In thousands of dollars) 2010 2009 2010 2009
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Cash provided by (used in)
Operating activities
Net loss from continuing
operations (5,463) (46,468) (6,560) (45,781)
Items not affecting cash
Amortization of property
and equipment 3,673 5,261 7,791 10,283
Amortization of
intangible assets 871 984 1,733 1,957
Impairment of goodwill
and intangible assets - 35,446 - 35,446
Unit-based compensation
expense (548) 112 (420) 140
Units issued for service - 6 - 6
Future income taxes
(recovery) - (6) - (2,941)
(Gain) loss on disposal
of property and equipment 154 - (15) 19
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(1,313) (4,665) 2,529 (871)
Changes in non-cash working
capital
Accounts receivable 877 4,010 43 15,986
Prepaid expenses and other 13 (396) (821) (361)
Inventory (15) (94) (102) (337)
Accounts payable and
accrued liabilities 1,470 (2,232) 617 (7,137)
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1,032 (3,377) 2,266 7,280
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Financing activities
Issuance of units 7,523 - 7,523 -
Unit issue costs (643) (643)
Repayment of capital
lease obligations (302) (150) (592) (319)
Repayment of revolving
term bank loan (7,200) (4,550) (7,200) (15,550)
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(622) (4,700) (912) (15,869)
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Investing activities
Purchase of property
and equipment (851) (2,722) (3,127) (4,779)
Proceeds on property and
equipment disposals 502 16 719 328
Purchase price adjustment - - - -
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(349) (2,706) (2,408) (4,451)
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Net change in cash from
continuing operations 61 (10,783) (1,054) (13,040)
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Cash flow from discontinued
operations
Operating activities 69 1,407 98 116
Financing activities - (7) - (10)
Investing activities - 5,927 - 5,794
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Net change in cash from
discontinued operations 69 7,327 98 5,900
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Decrease in cash and cash
equivalents 130 (3,456) (956) (7,140)
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Cash and cash equivalents
(bank overdraft), beginning
of period (1,356) (1,336) (270) 2,348
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Cash and cash equivalents
(bank overdraft), end of
period (1,226) (4,792) (1,226) (4,792)
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Supplementary cash flow
information
Interest paid 1,871 1,400 2,737 2,626
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Non cash transactions
Property and equipment
financed by capital leases 266 - 1,588 -
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For further information: Ralph Hesje, President and CEO, or Lloyd A. Wiggins, Chief Financial Officer, at (403) 237-0881 or [email protected]
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