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New West Energy Services Inc. Announces Third Quarter 2019 Financial Results

CALGARY , Nov. 29, 2019 /CNW/ - New West Energy Services Inc. (TSX Venture: NWE), an oil and gas and environmental services company focused on Western Canada , today announced its third quarter 2019 financial results.

New West Energy Services Inc. (CNW Group/New West Energy Services Inc.)

FINANCIAL HIGHLIGHTS

  • Revenue was $8,071,126 in the nine months ended September 30, 2019 compared to $14,827,975 in the same period last year, and $2,091,032 in the three months ended September 30, 2019 compared to $4,297,083 in the same period last year.  This significant reduction was mostly due to NWE ceasing its fluid transportation operations in Grande Prairie as a result of a significant decrease in revenue associated with this segment stemming from the continuing decline in completions activity in northwestern Alberta .


    As previously announced, on August 7, 2019 , NWE completed a restructuring of its operations whereby NWE's then operating subsidiary, BearStone Environmental Solutions Inc., sold to NWE's new operating subsidiary, Silverpoint Energy Services Inc., all of the equipment associated with its vacuum and water truck services business operated out of Medicine Hat. 


    As consideration for the equipment acquisition, Silverpoint assumed $2,733,911 of BearStone's current secured indebtedness, subject to downward adjustment under certain conditions.  Silverpoint also borrowed an additional $315,000 to pay wages to the closing date of those BearStone employees who are being hired by Silverpoint.  The total indebtedness is for a term of five years.


    Silverpoint also secured a revolving operating line of credit of up to $1.5 million , based upon eligible accounts and other considerations, to be used for general corporate purposes.  Silverpoint may draw down on, and repay, the loan from time to time as needed.  The line of credit is also for a term of five years.


    Going forward, Silverpoint will be NWE's sole operating subsidiary and will focus on vacuum and water truck services out of Medicine Hat , as well as environmental services out of the company's headquarters in Calgary .


    Pursuant to an order of the Court of Queen's Bench in Alberta , KPMG was appointed receiver over the remaining assets and undertakings of BearStone.  The Court also approved the sale by BearStone to Silverpoint of the above-mentioned equipment.


    Silverpoint also assumed approximately $430,000 of BearStone's indebtedness towards other third-party lenders in exchange for Sliverpoint acquiring certain of BearStone's drilling services equipment.


    As a result of the restructuring, NWE recorded a net loss from receivership of $819,565 .  This net loss incorporates the book value of equipment remaining with BearStone of $3,538,959 resulting in a loss on assets of $5,617,020 , offset by a gain on liabilities of $4,797,455 .

  • Gross margin was 30% in the nine months ended September 30, 2019 compared to 19% in the same period last year, and 33% in the three months ended September 30, 2019 compared to 26% in the same period last year.  The environmental and vacuum and water truck services operating in the drilling services sector realized an increase in gross margins offsetting a decrease in gross margin from the fluid transportation services operating in the completions and production sectors.

  • General and administrative expenses were $2,477,996 in the nine months ended September 30, 2019 compared to $2,777,314 in same period last year, and $653,431 in the three months ended September 30, 2019 compared to $901,188 in same period last year.  This decrease was mainly due to lower salaries and wages resulting from the closing of Grand Prairie operations.

  • Normalized EBITDAC was negative $33,754 in the nine months ended September 30, 2019 compared to $19,875 in the same period last year, and $46,780 in the three months ended September 30, 2019 compared to $224,655 in the same period last year.



For the nine months ended September 30, 


 For the nine months ended September 30,


2019


2018


Vacuum Truck &
Fluid
Transportation
Services

Environmental
Services

Corporate

Total


Vacuum Truck &
Fluid
Transportation
Services

Environmental
Services

Corporate

Total












$

$

$

$


$

$

$

$

Revenue

5,876,138

2,194,988

-

8,071,126


11,714,051

3,113,924

-

14,827,975

Direct costs

4,358,130

1,268,754

-

5,626,884


9,985,819

2,092,105

-

12,077,924

Gross margin

1,518,008

926,234

-

2,444,242


1,728,232

1,021,819

-

2,750,051

G & A expenses

1,267,409

986,183

224,404

2,477,996


1,454,070

1,059,417

263,827

2,777,314

Share base pmts

-

-

-

-


-

-

109,043

109,043

Finance charges

292,733

39,886

139,740

472,359


443,112

45,745

77,993

566,850

Depreciation

792,177

-

-

792,177


1,112,002

-

-

1,112,002

Disposal of assets

731,825

-

-

731,825


141,894

-

-

141,894

Loss on receivership

819,565

-

-

819,565


-

-

-

-

Net loss before tax

(2,385,701)

(99,835)

(364,144)

(2,849,680)


(1,422,846)

(83,343)

(450,863)

(1,957,052)

Total assets 

2,864,779

215,309

15,285

3,095,373


11,643,203

771,752

13,822

12,428,777

EBITDAC*

250,599

(59,949)

(224,404)

(33,754)


310,029

(37,598)

(252,556)

19,875



For the three months ended September 30,


For the three months ended September 30,


2019


2018


Vacuum Truck &
Fluid
Transportation
Services

Environmental
Services

Corporate

Total


Vacuum Truck &
Fluid
Transportation
Services

Environmental
Services

Corporate

Total












$

$

$

$


$

$

$

$

Revenue

1,525,450

565,582

-

2,091,032


3,360,041

937,042

-

4,297,083

Direct costs

1,053,176

337,645

-

1,390,821


2,574,902

607,609

-

3,182,511

Gross margin

472,274

227,937

-

700,211


785,139

329,433

-

1,114,572

G & A expenses

268,151

307,917

77,363

653,431


458,112

341,640

101,436

901,188

Share base pmts

-

-

-

-


-

-

92,532

92,532

Finance charges

48,087

7,379

49,546

105,012


145,886

13,290

30,450

189,626

Depreciation

141,339

-

-

141,339


375,221

-

-

375,221

Disposal of assets

705,301

-

-

705,301


70,013

-

-

70,013

Loss on receivership

819,565

-

-

819,565


-

-

-

-

Net loss before tax

(1,510,169)

(87,359)

(126,909)

(1,724,437)


(264,093)

(25,497)

(224,418)

(514,008)

Total assets 

2,864,779

215,309

15,285

3,095,373


11,643,203

534,160

13,822

12,191,185

EBITDAC*

204,123

(79,980)

(77,363)

46,780


327,027

(12,207)

(90,165)

224,655




*

Normalized EBITDAC is earnings from continuing operations before interest, taxes, depreciation, amortization and share-based payments and is a measure of NWE's operating profitability. The calculation is further adjusted to normalize EBITDAC by removing any non-reoccurring transactions that are not in the normal course of operations.

**

Copies of NWE's financial statements, MD&A and other public filings are available under the company's profile on SEDAR at www.sedar.com.

 

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Information

Certain statements in this news release may constitute "forward-looking information" within the meaning of applicable securities laws that involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information and financial outlook.  Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions.  Such information may involve, but is not limited to, comments with respect to strategies, expectations, planned operations or future actions.  Forward-looking information in this news release includes, without limitation, statements with respect to: the use of proceeds of its loans; the use of the acquired equipment; planned changes in NWE's business and revenues; the competitive environment in which NWE operates; and the assessment of future plans and operations.  Actual events or results may differ materially.  The forward-looking information in this news release is based on assumptions which includes, but is not limited to: NWE realizing the expected benefits of its loans and acquired equipment; the general state of the economy and the oil and gas industry not worsening; NWE not losing any key personnel; NWE sustaining or increasing their level of revenues and EBITDAC  NWE growing its businesses long term and managing its growth; NWE complying with existing regulations and not becoming subject to more stringent regulations; and, NWE's insurance being sufficient to cover losses that may occur as a result of its operations.  The forward-looking information in this news release is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information.  The factors which could cause results to differ from current expectations include, but are not limited to: failure to realize the expected benefits of its loans and acquired equipment; potential undisclosed liens associated with the acquired equipment; NWE's results being dependent upon the general state of the economy and the oil and gas industry; NWE being dependent on key personnel, the loss of which could harm its business; NWE may not be able to sustain or increase their revenues or EBITDAC; NWE may be unable to grow its business long term or to manage any growth; NWE may be unable to integrate the acquired equipment into its business; competition in NWE's markets may lead to reduced revenues and EBITDAC; NWE may fail to comply with existing regulations or become subject to more stringent regulations; NWE's insurance may be insufficient to cover losses that may occur as a result of NWE's operations; the market price of NWE's common shares will fluctuate; and, there is a possibility of dilution of existing holders of NWE's common shares due to future financings or acquisitions.  Although NWE has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements in this news release, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of NWE.  Accordingly, readers should not place undue reliance on the forward-looking information in this news release.  The forward-looking information is made as of the date of this news release, and NWE does not assume any obligation to publicly update or revise such forward-looking information to reflect new information, subsequent or otherwise, except as may be required by applicable law.  The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement.

SOURCE New West Energy Services Inc.


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