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CALGARY, May 27 /CNW/ - Western Energy Services Corp. (WSV on the Tsx-V), Calgary, Alberta is pleased to announce its results for the first quarter of 2008. Highlights for the first quarter of 2008 include:
- A new operations centre was opened in Ashdown Arkansas.
- Income from operations before amortization, interest, income taxes,
non-cash stock compensation expense and loss or gains on sale was
$240,714 for the first quarter of 2008 compared to $854,152 for the
first quarter of 2007. Income before amortization, interest and
income taxes ("EBITDA") for the first quarter of 2008 was $106,996
compared to $668,796 for the first quarter of 2007.
- Nitrogen pumping and transport assets were purchased to equip the new
operations centre. Contributions to revenue and EBITDA from this new
investment will be noticed in the second quarter of 2008.
- Revenues improved 10% from Q4 2007 but dropped 34% from the results
in Q1 of 2007. Revenues from the Company's core business of remedial
stimulation were comparable for the three months ended March 31, 2008
versus 2007. The revenue reduction is attributable to the sale of the
well testing assets, the downsizing of the coiled tubing business and
reductions experienced in the downhole tool rental business.
- General and administrative expenses ("G&A") are down 29% compared to
the first quarter of 2007.
Management's focus for the 2008 will be to continue to grow revenues and increase profitability, to continue rationalizing non core assets and to address the maturities of the current liabilities which will occur in the fall of 2008.
Quarterly revenues totalled $3,336,081 during the three months ended March 31, 2008 contrasted with $3,029,342 for the three months ended December 31, 2007 and $5,215,618 for the three months ended March 31, 2007. The 2008 revenues reflect stable revenues from the core business of remedial stimulation services, which were offset by declines in revenues of $436 thousand from well testing, $797 thousand from Canadian shallow coiled tubing services and $596 thousand from tool rental revenues.
Revenues from US operations, in US dollars, increased 12% in the three months ended March 31, 2008 as compared to the three months ended March 31, 2007, however due to the declines in the US currency, revenues reported in Canadian dollars from US operations decreased 4%. The continued growth in this revenue stream is reflective of the strong market conditions for oil field services in the United States and demand for the Company's services, particularly nitrogen pumping and transportation services.
Revenues from Canadian operations for the first quarter of 2008, other than well testing and shallow coiled tubing, were 92% of their value in the first quarter of 2007, reflecting the tight Canadian market conditions. All the Company's well testing assets were sold in the second quarter of 2007. In addition, the Company downsized its Canadian shallow coiled tubing services in 2007, effectively shutting down this service line given its dependence upon the Canadian natural gas drilling business, pending an improvement in the market for these services.
Operating expenses represent 84% of revenues during the first quarter of 2008 showing an improvement from the 87% achieved for the 2007 fiscal year.
G&A expenses decreased throughout 2007 and the first quarter of 2008 to $305 thousand for the three months ended March 31, 2008 or 9.2% of revenues. 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 the first quarter of 2008 was $339 thousand compared to $515 thousand for the three months ended March 31, 2007. This savings is attributable to the third quarter, 2007 pay down of the convertible note and renegotiation of the short term borrowings.
It is expected that 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 remedial stimulation services, management is confident that Western will become increasingly profitable and generate positive returns for our shareholders.
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.