/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES/
CALGARY, April 30 /CNW/ - Western Energy Services Corp. ("Western" or the "Company") is pleased to announce its 2007 results. Highlights for the year include:
- Revenues improved 8% in 2007 versus 2006. The Companies core business
has grown, offsetting revenue reductions from the sale of the well
testing assets and the downsizing of the coiled tubing business.
- General and administrative ("G&A") expenses are down 30%.
- Loss from continuing operations before amortization, interest and
income taxes ("EBITDA") for the 2007 year improved 66% over 2006.
- The purchase of the operating assets of the Grenville Energy
Partnership ("Grenville").
- The disposition of non-core assets including a mining property,
certain coiled tubing units and the well testing assets.
Management's focus for the 2008 will be to continue to grow revenues and
increase profitability and to continue rationalizing non-core assets.
Selected Financial Information
Year ended December 31 2007 ($) 2006 ($) 2005 ($)
--------------------------------------
Revenue 15,201,283 14,118,622 8,046,139
Loss from continuing operations,
before amortization, interest
and income taxes 175,307 513,679 1,911,411
Cash outflow from continuing
operations 1,113,645 921,005 2,059,014
Loss from continuing operations 5,520,830 3,222,375 3,487,461
- per share 0.05 0.03 0.05
Net loss 4,525,850 4,667,951 3,487,461
- per share 0.04 0.05 0.05
Total assets 26,902,201 19,015,931 11,299,158
Long term financial liabilities 1,593,660 1,973,786 392,060
Shareholder's equity 9,505,842 7,754,008 6,481,021
Annual revenues totalled $15,201,283 during 2007 contrasted with $14,118,622 in 2006. The 2007 revenues reflect an increase in revenues from the business of production optimization though stimulation services, which growth offset annual declines in revenues from well testing and Canadian shallow coiled tubing services of over $1.9 million and almost $1.6 million respectively.
Fourth quarter results showed revenues of $3,029,342 for the three months ended December 31, 2007 versus $3,680,106 for the three months ended December 31, 2006, indicative of industry conditions. EBITDA was a loss of $1,306,838 for the three months ended December 31, 2007 compared with a loss of $722,358 in the fourth quarter of 2006. Adding back the one-time, fourth quarter 2007 loss on sale of coiled tubing units, EBITDA during the fourth quarter was improved over 2006, despite the decrease in revenues. The Company's new direction and turnaround plan first adopted in late 2006 are the cause of this increased performance.
Operating expenses represent 87% of revenues in 2007 contrasted with 85% for 2006. G&A expenses decreased throughout 2007 to 8.6% of revenues compared to 13.2% of revenues in 2006. Management has established and achieved a goal to maintain G&A expenses at 12% or less of revenues as the Company's business continues to grow. The cost savings to date have been realized primarily as the result of decreased staffing levels and reduced office space.
Interest expense during 2007 was $1,653,077 compared to $538,165 in 2006, reflecting the substantial borrowings undertaken by the Company to fund its asset purchases and expansion. The third quarter 2007 pay down of the convertible note and renegotiation of the short term borrowings are estimated to save the Company in excess of $600,000 per year in interest. The convertible note payment was funded by an equity private placement, completed on September 28, 2007, for proceeds of $6,117,131.
The Company reduced the carrying value of its future tax assets to zero until it begins to realize upon those assets. The Company estimates that it can shelter approximately $13 million of future income from taxes, based upon past tax losses and timing differences where tax pools exceed book values.
During the second quarter of 2007, the Company completed the purchase of all of Grenville's oilfield service equipment for $12.5 million and terminated their revenue sharing joint venture. Commencing January 1, 2007 the Company was no longer responsible to distribute a component of its revenues to Grenville. These savings will become increasingly significant as the Company's business grows. The purchase price was paid in part by the issuance of a convertible note and in part with the proceeds of a new demand term loan facility.
The Company's efforts to focus and streamline its business were enhanced by the disposition of its well testing equipment during the second quarter and by the sale of its interest in the Plata Inca mining property in the Yukon Territories during the third quarter. The net sales proceeds were redeployed into new capital assets in support of the Company's new direction.
Despite the progress that has been made, management recognizes that much still needs to be done. 2008 will see a continued expansion and realignment of the Company's fleet of equipment along with a concerted effort to improve revenues while maintaining the cost control measures already achieved. By focusing on the Company's core business of production optimization through stimulation services, management is confident that Western will become increasingly profitable and generate positive returns for our shareholders.
Western is an oil field services company trading on the TSX Venture Exchange in Canada under the symbol "WSV". Western is active in Canada, Texas and Latin America.
Forward Looking Information
This release contains certain forward-looking statements related but not limited to the Company's expectations, intentions, plans and beliefs. Investment advisors, shareholders and potential investors are cautioned not to place undue reliance on forward-looking information which by its nature involves assumptions, risks and uncertainties, both general and specific, that contribute to the possibilities that predictions, projections, forecasts and future events will not occur. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements. The Company does not assume any responsibility to update this information for events subsequent to its preparation.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.