New West Energy Services Inc. Announces First Quarter 2020 Financial Results

CALGARY, AB, July 14, 2020 /CNW/ – New West Energy Services Inc. (TSXV: NWE), an oil and gas and environmental services company focused on Western Canada, today announced its first quarter 2020 financial results.

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

ACCOUNTING TREATMENT OF DISCONTINUED OPERATIONS

NWE completed on August 6, 2019 a reorganization where it discontinued its fluid transportation operations in Grande Prairie and, going forward, 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. As such, NWE’s financial results distinguish between continuing and discontinued operations.  

FINANCIAL HIGHLIGHTS

  • Continuing operations revenue was $1,892,471 in the three months ended March 31, 2020, compared to $3,196,071 in the same period the year prior. This reduction was due mostly to a decrease in drilling activity, especially in March when winter projects ended early due to the effects of Covid-19 and the collapse in oil prices.
  • Discontinued operations revenue was zero in the three months ended March 31, 2020, as NWE completed its August 6, 2019 reorganization and ceased its fluid transportation operations in Grande Prairie, and $1,104,730 in the same period the year prior.
  • Continuing operations gross margin was 37% in the three months ended March 31, 2020 compared to 39% in the same period the year prior, representing a consistency between reporting periods.
  • Discontinued operations gross margin is not applicable for the three months ended March 31, 2020 as there were no operations during the time period, and was 2% in the same period the year prior.  
  • Continuing general and administrative expenses were $427,999 in the three months ended March 31, 2020 compared to $583,519 in same period the year prior. This decrease was due mainly to a reduction in overhead costs and implementation of cost cutting measures.
  • Discontinued general and administrative expenses were zero in the three months ended March 31, 2020 as there were no operations during the time period, and were $342,755 in same period the year prior.   
  • Normalized EBITDAC was $263,168 in the three months ended March 31, 2020 compared to $651,369 in the same period last year.

The oil and gas industry in Western Canada experienced a reduction in activity in 2019 due primarily to producers delaying their capital spending programs, or even shifting them outside of Alberta, due to lack of market access, continued infrastructure constraints and production restrictions on oil from the Government of Alberta’s mandated curtailment rules. 

In 2020, like other junior energy services companies in Western Canada, NWE’s revenues have been materially impacted by reduced capital spending by producers due to the COVID-19 pandemic and record low oil prices. As a result, NWE has aggressively moved to reduce costs and seek all avenues for governmental assistance. There remains significant uncertainty with respect to the recovery of the Western Canadian oil and gas industry, generally, and the future price of crude, specifically. 

Continuing operations

              For the three months ended March 31,  

              For the three months ended March 31,  

2020

2019

Vacuum Truck &
Fluid
Transportation
Services

Environmental
Services

Corporate

Total

Vacuum Truck &
Fluid
Transportation
Services

Environmental
Services

Corporate

Total

$

$

$

$

$

$

$

$

Revenue

1,238,864

653,607

1,892,471

1,997,199

1,198,872

3,196,071

Direct costs

749,427

451,877

1,201,304

1,274,612

686,571

1,961,183

Gross margin

489,437

201,730

691,167

722,587

512,301

1,234,888

G & A expenses

181,671

206,604

39,724

427,999

173,847

344,362

65,310

583,519

Finance charges

60,092

7,554

5,730

73,376

35,232

19,875

44,853

99,960

Depreciation

129,785

129,785

121,537

121,537

Income (loss) from operations

117,889

(12,428)

(45,454)

60,007

391,971

148,064

(110,163)

429,872

EBITDAC

307,766

(4,874)

(39,724)

263,168

548,740

167,939

(65,310)

651,369

Discontinued operations

              For the three months ended March 31,  

              For the three months ended March 31,  

2020

2019

Vacuum Truck &
Fluid
Transportation
Services

Environmental
Services

Corporate

Total

Vacuum Truck &
Fluid
Transportation
Services

Environmental
Services

Corporate

Total

$

$

$

$

$

$

$

$

Revenue

1,104,730

1,104,730

Direct costs

1,077,471

1,077,471

Gross margin

27,259

27,259

G & A expenses

342,755

342,755

Finance charges

78,701

78,701

Depreciation

198,043

198,043

Disposal of assets

24,985

24,985

Debt extinguishment

Loss from operations

(24,985)

(24,985)

(592,240)

(592,240)

* 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.

https://markets.businessinsider.com/news/stocks/new-west-energy-services-inc-announces-first-quarter-2020-financial-results-1029394343

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