VANCOUVER, British Columbia, Nov. 06, 2019 (GLOBE NEWSWIRE) -- Hanwei Energy Services Corp. (HE.TO) (“Hanwei” or the “Company”), today reported its financial results for the six months ended September 30, 2019. All amounts are in Canadian Dollars unless otherwise noted.
The Company has two reportable segments for its continuing operations: FRP pipe manufacturing and oil and gas production. The pipe segment produces and sells fiberglass reinforced plastic (“FRP”) pipe for the oil and gas industry and other infrastructure applications. The oil and gas segment is engaged in the exploration and production of oil and natural gas in Western Canada.
For the three months ended September 30, 2019:
- Revenues were $2.6 million as compared to $3.3 million for same period of the prior year. The $0.7 million or 21% decrease in revenue was mainly due to lower production and lower commodity prices in the oil and gas business unit.
- FRP pipe sales totalled $2.1 million, and equal to that for the prior year. All sales were contributed by the Company’s China market. Orders in the Company’s Canada market have been negatively affected by the general slow down of the oil and gas industry in Canada with many projects deferred or restricted until the economic outlook improves. Gross profit for the FRP pipe business unit was $0.6 million, or 30% as compared to $0.8 million, or 39% for the same period of the prior year. The decrease was mainly due to lower unit sales pricing on certain projects as a result of competitive biddings.
- The Company produced approximately 93 barrels of oil equivalent per day (boed) with a netback of negative $7.89 per boe, generating revenues net of royalties of $0.5 million as compared to 194 boed with a netback of $23.59 per boe generating revenues net of royalties of $1.1 million for the same period of the prior year. The decrease in production was due to the shut-in of one horizontal well requiring repair and maintenance that reduced production, and the natural decline of the Company’s wells. The decrease in netback was due to lower commodity prices, lower production, higher well repair and maintenance costs, additional system improvement costs and the maintenance of water injection facilities that required water trucking and such associated costs.
- Adjusted EBITDA from continuing operations totalled $0.2 million as compared to Adjusted EBITDA of $0.5 million for the same period of the prior year. The $0.3 million reduction in Adjusted EBITDA was mainly due to the operating loss in the Company’s oil and gas business driven by the lower commodity prices, lower production, and higher operating costs for repairs and maintenance as before noted.
- The Company had a loss from continuing operations of $0.6 million as compared to income from continuing operations of $3,000 for the same period of the prior year.
For the six months ended September 30, 2019:
- Total revenues were $5.3 million as compared to $4.9 million for the same period of the prior year. The 8% increase in revenues for the period was driven by a $0.9 million or 29% increase in FRP pipe sales in China offset by a $0.6 million or 32% decrease in oil and gas production revenues due to lower commodity prices and lower production.
- FRP pipe sales were $4.0 million as compared to $3.1 million. The $0.9 million increase (a 29% increase) was primarily due to orders obtained from new customers in the China market.
- The Company produced approximately 107 barrels of oil equivalent per day (boed) with a netback of $9.95 per boe, generating revenues net of royalties of $1.1 million as compared to 149 boed with a netback of $16.72 per boe generating revenues net of royalties of $1.6 million for the same period of the prior year. The reduction in production and increase in costs was as previously described above.
- Adjusted EBITDA from continuing operations was nil as compared to negative $0.1 million for the same period of the prior year. The slight improvement in Adjusted EBITDA was due to increased sales and operating income in the FRP pipe business, offset by the operating loss in the oil and gas business unit as before noted.
- The Company had a loss from continuing operations of $1.2 million as compared to a loss from continuing operations of $1.0 million for the same period of the prior year.
The total principal amount of all short-term loans was $4.0 million as at September 30, 2019 as compared to $5.3 million as at March 31. The decrease in short-term loans was due to certain short-term loans being repaid during the three months ended June 30, 2019.
About Hanwei Energy Services Corp.
Hanwei Energy Services Corp.’s principal business operations are in two complementary key segments of the oil and gas industry as both an equipment supplier to the industry (as a leading manufacturer of high pressure, fiberglass reinforced plastic (“FRP”) pipe products and associated technologies serving major energy customers in the global energy market) and as oil and gas producer with properties in Alberta and joint venture interests in Manitoba.
For more information, please contact:
Executive Vice President, Strategic Development and Corporate Affairs
Chief Financial Officer
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FORWARD-LOOKING INFORMATION AND NON-GAAP MEASURES
Certain information in this press release is forward-looking within the meaning of certain securities laws, and is subject to important risks, uncertainties and assumptions a description of which is set out in the risk factors section of the Company’s Annual Information Form dated June 18, 2019 and Management Discussion and Analysis for the year ended March 31, 2019 both of which are filed with Canadian securities regulators and available on SEDAR at www.sedar.com. The forward-looking information in this press release describes the Company’s expectations as of the date of this press release.
THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE PRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, THE COMPANY DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME, EXCEPT AS REQUIRED BY APPLICABLE SECURITIES LEGISLATION.