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New West Focusing on Cost Reduction as Activity Remains Low

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New West Energy Services Inc. reported financial results for the Corporation for its first quarter ended July 31, 2015.

Highlights:

Operational and Financial Results for the first quarters ended July 31, 2015 and 2014:

• Revenue of $2.97 million (2014 - $5.24 million). 
• Gross margin of $721,000 (2014 - $1 million). 
• Net loss from operations of $496,000 before income tax (2014 - net loss of $532,000). 
• Loss per share (basic and diluted) after income tax of ($0.005) for both 2015 and 2014. 
• EBITDA was a negative $87,000 (2014 a negative $176,000). This calculation is a non-IFRS measure. 
• The Corporation continued to reduce costs during the quarter which included staff and wage reductions 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 November 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.

Outlook & Strategy

Both segments, Vacuum Truck Services and Environmental Services, 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 into 2016. The Corporation has reduced its rates by approximately 10 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. The Corporation continues to look for strategic acquisitions or mergers during this downturn which would add shareholder value and position the Corporation for future growth and diversification.