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CALGARY, Nov. 5 /CNW/ - Western Energy Services Corp. ("Western" or the "Company") is pleased to announce that during the third quarter of 2007 it dramatically improved its balance sheet and improved results from operations.
The third quarter results build upon the positives that were demonstrated in the second quarter of 2007 and are indicative of the success of the change in direction and turnaround plan adopted by the Company. Most importantly, the Company continues to demonstrate an improvement in income from continuing operations before amortization, interest and income taxes ("EBITDA").
Highlights for the third Quarter include:
- Quarterly revenues are up 36% over 2006 and 49% over the previous
quarter.
- General and administrative expenses ("G&A") are down to 10% of
revenue for the quarter. G&A is down 23% from the first quarter of
2007 and down 10% from the second quarter of 2007.
- EBITDA for the nine months ended September 30, 2007 improved 440%
over the same period in 2006.
- Significant reductions in debt were achieved and interest expense
decreased by $82,037 or 17% from the second quarter, 2007.
During the later part of 2006 and into 2007 Western's new management team continued the implementation of a turnaround plan and change in direction for the Company. The key components of the turnaround plan are: shifting the direction of the Company's business to the less volatile production optimization though stimulation services; concentrating the Company's services in fewer operational bases; increasing efficiencies and reducing costs. The Company's plan took a big step forward in the second quarter with the purchase of the assets of Grenville Energy Partnership ("Grenville") and by disposing of its non core well testing assets. During the third quarter of 2007 the Company took additional steps in its plan by significantly reducing debt and interest expense, disposing of additional non core assets (being the Company's Plata Inca mining property) and increasing EBITDA. Management's focus for the balance of 2007 and into 2008 will be to continue to increase revenues and profitability.
Quarterly revenues for the third quarter increased by 36%, compared to 2006. Revenues were $4,142,846 for the three months ended September 30, 2007 compared to $3,051,967 for the three months ended September 30, 2006. Revenues for the three months ended September 30, 2007 increased 49% from the seasonally slow quarter second quarter of 2007. Despite unusually wet weather in the state of Texas during the spring and summer, a year over year increase of 12% in USD revenues was achieved for the nine months ended September 30. Revenues from Western Canada improved by 37% for the nine months ended September 30 2007 as compared to 2006. This increase was achieved as a result of the Company's focus on production optimization though stimulation services and despite an industry wide downturn for Canadian oilfield service companies.
EBITDA for the nine months ended September 30, 2007 totalled $1,131,533, a 440% increase over the $208,678 reported for the comparative nine month period in 2006. Operating costs during the third quarter of 2007 were 81% of revenues compared to 88% in the third quarter of 2006.
General and administrative ("G&A") expenses decreased for the second consecutive quarter to 10% of quarterly revenues. G&A expenses for the nine months ended September 30, 2007 were $527,474 lower than for the comparable nine month period in 2006, a 27% reduction. G&A expenses for the third quarter of 2007 were $427,686, being 10% of revenues compared to $411,205 for the third quarter of 2006, being 13% 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.
Quarterly interest expense declined $82,037 or 17% from the second quarter of 2007, as the result of a lower interest rate negotiated by Management on the Company's short term borrowings. At the end of the third quarter, the Company completed an approximately $6.1 million private placement and used $5.7 million to reduce its obligations under its convertible note. This repayment will save the Company approximately $457,000 of interest expense on an annualized basis, commencing at the start of the fourth quarter of 2007. This repayment also substantially improved the Company's debt to equity ratio from $3.12 per dollar of equity to $1.13 per dollar of equity.
In addition to the $5.7 million debt reduction the Company repaid $387,263 of its demand loan facilities, $182,217 of its long term debt and capital lease obligations, and $45,000 of its short term borrowings during the third quarter of 2007.
During the second quarter of 2007 the Company and Grenville completed the purchase by the Company 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. This revenue increase will continue to be significant as the Company's business grows.
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 and to support the Company's new direction.
Despite the progress that has been made, management recognizes that much still needs to be done. The balance of 2007 and 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.
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.
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