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New West Energy Services Cuts Costs as Drilling Slows
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New West Energy Services Inc. has reported the financial results for the Corporation for its second quarter ended October 31, 2015.
Highlights
Operational and Financial Results for the second quarters ended October 31, 2015 and 2014:
- Revenue of $2.61 million (2014 - $6.64 million).
- Gross margin of $666,100 (2014 - $1.48 million).
- Net loss from operations of $548,800 before income tax (2014 - net income of $30,900).
- Loss per share (basic and diluted) after income tax of ($0.006) (2014 - $0.000).
- EBITDA was a negative $159,200 (2014 a positive $472,100). This calculation is a non-IFRS measure.
- The Corporation continued to reduce costs during the quarter which included staff and wage reductions related to field and office personnel in response to the declining oil price and the overall slowdown in the oil and gas industry which began in the fall of 2014.
Company Developments:
Due to the reduction in Western Canadian drilling activity since mid 2014, when oil prices started to decline, the Corporation has initiated steps to reduce costs to prepare for a prolonged period of lower activity. Direct and overhead costs have been reduced significantly and continue to be monitored to stay in line with customer requirements. Management will continue to review the financial position of the Corporation and will consider various options to support its current and future cash flow requirements. Management has been proactive in looking for possible acquisition/merger opportunities which would increase shareholder value and conserve equity in the Corporation.
Outlook & Strategy
The Corporation has two operating segments - Vacuum Truck Services and Environmental Services - which have a solid client base of over 150 oil and gas operators and service companies. With the current oil price, activity levels have decreased and the Corporation expects activity to remain depressed for the remainder of 2015 and the first half 2016. The Corporation has reduced its rates by approximately 15 to 25% depending on the type of service offered but has also decreased operating and overhead costs to remain in line with those reductions.
With activity levels expected to remain low for the next several months, the Corporation will closely monitor its cash flow during this period.
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