CALGARY, ALBERTA–(Marketwired – March 31, 2016) – New West Energy Services Inc. (TSX VENTURE:NWE) (the “Corporation”) is pleased to announce the financial results for the Corporation for its third quarter ended January 31, 2016.
Operational and Financial Results for the third quarters ended January 31, 2016 and 2015:
- Revenue of $3.76 million (2015 – $6.85 million).
- Gross margin of $1.03 million (2015 – $1.60 million).
- Net loss from operations of $160,000 (2015 – net loss of $792,000). Included in the net loss for 2015 was a non-cash item of a loss on goodwill impairment of $650,000.
- Loss per share (basic and diluted) of $0.002 (2015 – $0.008).
- EBITDA was $222,000 (2015 $263,000). This calculation is a non-IFRS measure.
- The Corporation continued to reduce costs during the quarter which included further compensation reductions related to field and office personnel in response to the prolonged slowdown in the oil and gas industry due to low oil and gas prices.
Due to the reduction in Western Canadian drilling activity since mid 2014, when oil prices started to decline, the Corporation has initiated and continues to take steps to reduce costs to prepare for a prolonged period of lower activity. Direct and overhead costs have been reduced significantly and continue to be monitored on a monthly basis to stay in line with customer requirements and overall activity levels. Management will continue to review the financial position of the Corporation and will consider various options to support its current and future cash flow requirements.
Subsequent to the quarter end, the Corporation has announced that it intends to complete a non-brokered private placement of up to 33,333,333 common shares of the Corporation to be issued at a price of $0.03 per share for aggregate gross proceeds of up to $1,000,000. The proceeds will be used to repay certain bank indebtedness as well as equipment purchases and general working capital. The closing of the private placement is subject to shareholders’ and applicable regulatory approvals.
The Corporation announced that it has engaged PwC Corporate Finance, which specializes in providing M&A related advisory services, as its exclusive advisor to assist with target identification, valuation analysis, structuring and negotiations. Management believes that now is the time to pursue a strategic acquisition or merger which would add shareholder value and position the Corporation for future growth and diversification when activity levels increase again.
OUTLOOK AND STRATEGY
The Corporation has two operating segments – Vacuum Truck Services and Environmental Services – which have a solid client base of over 150 oil and gas operators and service companies. With the current oil price, activity levels have decreased substantially and the Corporation expects activity to remain depressed for the first half of 2016. The Corporation has reduced its rates by approximately 15 to 25% depending on the type of service offered but has also decreased operating and overhead costs to remain in line with those reductions.
The Corporation has initiated a research and development project which involves the transportation of unstabilized drill cuttings. The Corporation has completed the design phase and anticipates a prototype unit to be completed during the spring breakup period of 2016.
With activity levels expected to remain low for the next several months, the Corporation will closely monitor its cash flow during this period.
Through its subsidiaries, the Corporation operates a fleet of straight, combo and hydro vac trucks as well as end dumps, water and tank trucks with bulk transport trailers and environmental services. The Corporation operates throughout Western Canada in the drilling, completions and production sectors of the oil and gas industry with its main service centres located in Beaverlodge and Medicine Hat with its head office in Calgary, Alberta.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
Gerry E. Kerkhoff
New West Energy Services Inc.
President & Chief Executive Officer
403.984.9798 or 1.888.977.2327 (BEAR)