EDMONTON, Alberta, Aug. 28, 2019 (GLOBE NEWSWIRE) -- John Babic, President and CEO of Dalmac Energy Inc. (“Dalmac”) (TSX Venture “DAL”) is pleased to announce fourth quarter and annual financial results for the fiscal year ended April 30, 2019.
|(000’s Cdn Dollars, except per share data)||Q4'19||Q4'18||YTD '19||YTD'18|
|Gross Margin %||22||%||26||%||23||%||28||%|
|Earnings (loss) before income tax||(672||)||(276||)||(2,668||)||(1,464||)|
|Net earnings (loss)||(672||)||(276||)||(2,668||)||(1,142||)|
|Earnings (loss) per share - basic||(0.02||)||(0.01||)||(0.09||)||(0.04||)|
|Earnings (loss) per share - diluted||(0.02||)||(0.01||)||(0.09||)||(0.04||)|
- The months of September and October were affected by a maintenance related shut down of US refineries on the east coast which created extra demand on western pipeline networks resulting in a system overload for oil and gas egress from Alberta which in turn caused WCS oil prices to drop to $10/bbl in November.
- Alberta’s oil production storage inventory hit 35 million bbls which prompted the Alberta government to introduce a temporary production curtailment of approximately 325,000 bbs/day effective January 1st 2019.
- By end January 2019 curtailment measures showed results and the WCS spot price rebounded to over $40/bbl and storage inventories were reduced to 30 million bbls. Curtailment was reduced by 150,000 at the end of May 2019.
- The Alberta Government announced plans for the procurement of 7000 additional rail cars by the end of 2019 to supplement lack of pipeline access.
- E&P producers respond to a drop in WCS pricing and egress constraints by cancelling or rescheduling drilling and completion programs scheduled for the winter season. Cap-ex budgets were also trimmed and, in some cases, producing wells were shut in. Correspondingly, the Corporation’s utilization levels were also affected.
- Dalmac responded with a new round of cost cutting measures such as reducing staff positions and streamlining inter branch operations.
- As a result of the rescheduling and cancellation of scheduled drilling and completion programs, revenue for the Q4’19 decreased 20% compared to the same time in the previous year. YTD the decrease was 12%. As a result of commencement of cost reduction activities initiated in January 2019, gross margin for the quarter decreased 4% on the quarter as compared to 5% decrease on the YTD.
- The net loss for Q4’19 was $672K and $2.7M for YE’19
There has been some positive news for the industry over the last few months:
- Construction on the Trans Mountain pipeline which was purchased by the Federal Government began in July of 2019
- The LNG Canada project in Kitimat, B.C. was confirmed to proceed
- The new Alberta government announced that oil production curtailment which was announced late last year will be rescinded in September 2019.
There is also some additional good pipeline new from the US. The Plains All American Cactus II pipeline, which will carry crude from the Permian basin to Corpus Christi, Texas is scheduled to commence operation in mid-August 2019. Cactus II has a name plate capacity of 670,000 barrels per day and this additional capacity is expected relieve some of the egress bottlenecks from the main oil hub corridor in Cushing, Oklahoma and will thereby help bolster prices.
The unseasonably wet conditions over the course of the summer have pushed back the start of several drilling and completion projects into the fall. As a result of ongoing discussions and commitments with customers, management confident in its outlook for the fall and winter season. Dalmac is committed to its solid customer base in West Central Alberta and is confident in its seasoned leadership team ability to provide high quality service to its customers.
Management is committed to prioritizing our emphasis on streamlining and maximizing efficiencies of our operations. The Corporation has already introduced measures to reduce costs which are estimated in the neighborhood of $1.4M over the course of a 12-month period. The Corporation has already secured service commitments from many of our key customers on various production, drilling and completion projects which are scheduled to commence over the course of the year. With our fall and winter log books filling up the Company is optimistic about its prospects for improving utilization levels over the fall and winter season
For more information contact:
John Babic - CEO - Dalmac Energy
Statements throughout this report that are not historical facts may be considered ‘forward looking statements’. Such statements are based on current expectations that involve risks and uncertainties, which could cause actual results to differ from those anticipated. Important factors that can cause anticipated outcomes to differ materially from actual outcomes include the impact of general economic conditions, industry conditions, competition from other industry participants, volatility of petroleum prices, the ability to attract and retain qualified personnel, changes in laws or regulation, currency fluctuations, continued ability to access capital from available facilities and environmental risks. References to “Dalmac’, the “Corporation”, “Company”, “us”, “we”, and “our” mean Dalamc Energy Inc. and its subsidiary Dalmac Oilfield Services Inc. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. We seek safe harbor.