New West Energy Services Inc. Announces 2019 Financial Results

CALGARY, AB, June 16, 2020 /CNW/ - New West Energy Services Inc. (TSXV: NWE), an oil and gas and environmental services company focused on Western Canada, today announced its 2019 financial results.

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 $8,189,566 in the twelve months ended December 31, 2019 compared to $10,063,205 in the same period the year prior, and $1,258,267 in the three months ended December 31, 2019 compared to $2,527,028 in the same period the year prior. This reduction was due mainly to an overall decrease in drilling activity in Western Canada.
  
  
• Discontinued operations revenue was $1,139,827 in the twelve months ended December 31, 2019 compared to $10,232,806 in the same period the year prior, and $nil in the three months ended December 31, 2019 compared to $2,941,008 in the same period the year prior. The decrease was due to the company's August 2019 reorganization and NWE ceasing its fluid transportation operations in Grande Prairie.
  
  
• Continuing operations gross margin was 36% in the twelve months ended December 31, 2019 compared to 31% in the same period the year prior, representing a slight improvement in billing rates relative to direct costs, and 31% in the three months ended December 31, 2019 compared to 32% in the same period the year prior, representing a consistency between reporting periods.
  
  
• Discontinued operations gross margin was negative 11% in the twelve months ended December 31, 2019 compared to 8% in the same period the year prior. This decrease was due mainly to the continued decline in billing rates relative to direct costs. Discontinued operations gross margin is not applicable for the three months ended December 31, 2019 as there were no operations during the time period and was 14% in the same period the year prior.
  
  
• Continuing general and administrative expenses were $2,308,516 in the twelve months ended December 31, 2019 compared to $2,561,434 in same period the year prior, and $500,934 in the three months ended December 31, 2019 compared to $719,548 in same period the year prior. This decrease was mainly due to a reduction in overhead costs and implementation of cost cutting measures.
  
  
• Discontinued general and administrative expenses were $594,465 in the twelve months ended December 31, 2019 compared to $1,557,316 in same period the year prior, and was due mainly to NWE ceasing its fluid transportation operations in Grande Prairie. Discontinued operations general and administrative expenses were $75,949 in the three months ended December 31, 2019, reflecting an adjustment to such expenses, compared to $621,889 in same period the year prior. The adjustment was related to the recording of a lease liability.
  
   
• Normalized EBITDAC was $657,645 in the twelve months ended December 31, 2019 compared to $409,739 in the same period last year, and was negative $109,148 in the three months ended December 31, 2019 compared to $243,482 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 twelve months ended December 31,					For the twelve months ended December 31,
	2019					2018
	Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total		Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	5,601,186	2,588,380	-	8,189,566		6,199,889	3,863,316	-	10,063,205
Direct costs	3,673,383	1,550,022	-	5,223,405		4,476,975	2,506,014	-	6,982,989
Gross margin	1,927,803	1,038,358	-	2,966,161		1,722,914	1,357,302	-	3,080,216
G & A expenses	829,882	1,204,292	274,342	2,308,516		755,205	1,427,904	378,325	2,561,434
Share base pmts	-	-	-	-		-	-	109,043	109,043
Finance charges	217,096	48,488	(220,713)	44,871		189,219	65,750	134,253	389,222
Depreciation	599,238	-	-	599,238		574,689	-	-	574,689
Disposal of assets	-	-	-	-		9,289	-	-	9,289
Debt extinguishment	-	-	-	-		-	-	-	-
Miscellaneous income	-	-	-	-		-	-	(11,271)	(11,271)
Gain on debt settlement	-	-	-	-		-	-	(352,611)	(352,611)
Income (loss) from operations	281,587	(214,422)	(53,629)	13,536		194,512	(136,352)	(257,739)	(199,579)
EBITDAC	1,097,921	(165,934)	(274,342)	657,645		967,709	(70,602)	(487,368)	409,739

 

Discontinued operations	For the twelve months ended December 31,					For the twelve months ended December 31,
	2019					2018
	Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total		Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	1,139,827	-	-	1,139,827		10,232,806	-	-	10,232,806
Direct costs	1,269,959	-	-	1,269,959		9,329,180	-	-	9,329,180
Gross margin	(130,132)	-	-	(130,132)		903,626	-	-	903,626
G & A expenses	594,465	-	-	594,465		1,557,316	-	-	1,557,316
Finance charges	196,764	-	-	196,764		453,868	-	-	453,868
Depreciation	475,868	-	-	475,868		887,317	-	-	887,317
Disposal of assets	26,525	-	-	26,525		278,486	-	-	278,486
Debt extinguishment	1,035,444	-	-	1,035,444		-	-	-	-
Loss from from operations	(2,459,198)	-	-	(2,459,198)		(2,273,361)	-	-	(2,273,361)

 

Continuing operations	For the three months ended December 31,					For the three months ended December 31,
	2019					2018
	Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total		Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	864,875	393,392	-	1,258,267		1,777,636	749,392	-	2,527,028
Direct costs	585,213	281,268	-	866,481		1,302,530	413,909	-	1,716,439
Gross margin	279,662	112,124	-	391,786		475,106	335,483	-	810,589
G & A expenses	232,887	218,109	49,938	500,934		236,563	368,487	114,498	719,548
Finance charges	121,127	8,602	(360,453)	(230,724)		68,472	20,005	56,260	144,737
Depreciation	282,929	-	-	282,929		160,819	-	-	160,819
Disposal of assets	(411,595)	-	-	(411,595)		(56,006)	-	-	(56,006)
Debt extinguishment	-	-	-	-		-	-	-	-
Gain on debt settlement	-	-	-	-		-	-	(352,611)	(352,611)
Income (loss) from operations	54,314	(114,587)	310,515	250,242		65,258	(53,009)	181,853	194,102
EBITDAC	46,775	(105,985)	(49,938)	(109,148)		8,164	103,348	131,970	243,482

 

Discontinued operations	For the three months ended December 31,					For the three months ended December 31,
	2019					2018
	Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total		Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	-	-	-	-		2,941,008	-	-	2,941,008
Direct costs	-	-	-	-		2,517,806	-	-	2,517,806
Gross margin	-	-	-	-		423,202	-	-	423,202
G & A expenses	(75,949)	-	-	(75,949)		621,889	-	-	621,889
Finance charges	-	-	-	-		131,503	-	-	131,503
Depreciation	-	-	-	-		189,185	-	-	189,185
Disposal of assets	(293,705)	-	-	(293,705)		201,887	-	-	201,887
Debt extinguishment	215,878	-	-	215,878		-	-	-	-
Income (loss) from operations	153,776	-	-	153,776		(721,262)	-	-	(721,262)

 

*	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.

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