TSX Venture Exchange Symbol "BRY"
EDMONTON, May 30 /CNW/ - Bri-Chem Corp. (the "Company") (TSX Venture Exchange: BRY) a leading Canadian wholesale distributor of drilling fluids, products and services, today announced its financial results for the first quarter ended March 31, 2007. As a result of the reverse take-over by amalgamation with Gwelan Supply Ltd. effective January 1, 2007, the comparative financial figures reflect those of consolidated Gwelan Supply Ltd. operating as a private company and certain of the prior period's figures have been reclassified to conform to the presentation of the current period consolidated financial statements. A complete copy of the Company's report is available on the Internet at www.sedar.com.
Net earnings from operations for the three months ended March 31, 2007 are $900,505 or $0.074 fully diluted earnings per share and earnings before interest, taxes, depreciation and amortization for the same period are $1,312,997. Consolidated revenues were $13,136,256 during the first quarter of 2007 a decline of 43.4% when compared to the same period last year.
The main factor negatively impacting the Company's revenues is the 22% decrease of the number of wells drilled in Canada during the first quarter as compared to the same period last year as drilling rig utilization rates declined to 58% from 80%. Traditionally, the Company's busiest region for the winter drilling season has been the north eastern portion of British Columbia or, more specifically, the Fort Nelson area and the Fort St. John area. These areas have, in the past, produced a large portion of overall winter sales. In the first quarter of 2007, drilling activity in these areas was down 46% with only 441 wells drilled in the area as compared to 811 wells drilled during the same period last year. More specifically, two major oil and gas companies drilling activity, which represented a significant amount of our customers work last year, dropped 63% from 267 wells to 98 wells. As well, the early arrival of spring like conditions in the first part of March further reduced oilfield activity. The Company has witnessed a decline in revenues from the Alberta warehouses of approximately 22% which is consistent with the decline in overall drilling activity.
Outlook
The downturn in industry activity is expected to continue through to the third quarter of 2007 before the Company expects to see any real indication of increased drilling activity. Notwithstanding, we continue to be cautiously optimistic that industry drilling activity for 2007 will provide normal anticipated demand for our products. Despite the short-term weakness currently being experienced in the industry to which the Company sells its products and services, we believe that the overall outlook remains very positive for the longer term. With $19 million in working capital, and unused credit facilities of $18 million, our Company is well positioned to take advantage of any acquisition opportunities that may develop.
About Bri-Chem
The Company operates out of its head office located in Acheson, Alberta and its principal activity is the wholesale/distribution blending and packaging of drilling fluid supplies for the oil and gas industry. The Company provides over 100 domestic and foreign products to customers throughout Alberta, British Columbia and Saskatchewan.
Forward Looking Statements
Certain statements contained in this press release, including statements which may contain words such as "could", "should", "expect", "anticipate", "believe", "will", and similar expressions and statements relating to matters that are not historical facts are forward looking statements. Such forward looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of Bri-Chem Corp. to be materially different from any future results, performances or achievements expressed or implied by such forward looking statements. Such factors include, but are not limited to, fluctuations in oil and gas activity levels, political and economic conditions, and the demand for products provided by Bri-Chem Corp.
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