/EINPresswire.com/ -- VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/04/16 -- Hanwei Energy Services Corp. (TSX: HE) ("Hanwei" or the "Company"), today reported its financial results for the three months ending June 30, 2016. All amounts are in Canadian Dollars unless otherwise noted.

The Company has two reportable segments for its continuing operations: its FRP pipe manufacturing and its oil and gas production. The pipe segment produces and sells fiberglass reinforced plastic ("FRP") pipe for the oil and gas industry and other infrastructure applications. The oil and gas segment is engaged in the exploration and production of oil and natural gas in Western Canada.

For the three months ended June 30, 2016:

--  Total Company revenues for the three months ended June 30, 2016 totalled
    some $1.4 million as compared to $1.7 million for same period of the
    prior year. Both business segments of the Company continued to be
    impacted by the downturn in the oil and gas industry.

--  FRP pipe sales totalled $1.0 million and equal to that of the same
    period of the prior year. The reduction in oil and gas commodity prices
    continued to negatively impact the overall oil and gas industry with
    numerous projects placed on hold or delayed.

    --  For the Company's Chinese market FRP pipe sales was $421,000 for the
        three months ended June 30, 2016 as compared to $938,000 for the
        prior year. The Chinese market remains weak given low oil prices
        effecting capital works projects in this market.
    --  For the Kazakhstan market no FRP pipe sales were recorded for the
        three months ended June 30, 2016, as compared to $57,000 for the
        same period of the prior year. This market remains weak due to the
        downturn in capital works projects further impacted by US dollar
        foreign exchange erosion in this market.
    --  For the Canada market FRP pipe sales was $543,000 for the three
        months ended June 30, 2016, as compared to $47,000 for the same
        period of the prior year.

        The Company confirmed a new 4" and 6" FRP pipe order for some
        $870,000 to a Canadian client on June 20, 2016. The order was
        manufactured and shipped subsequent to June 30, 2016 and as such was
        not recorded in the aforementioned Canada market sales for the three
        months ended June 30, 2016. The Canadian market remains a growth
        market for the Company with some 110,000 meters of the Company's FRP
        pipe currently installed and operational in Canada.


--  Oil and gas production revenues net of royalties amounted to $0.4
    million as compared to $0.7 million for the same period of the prior
    year. The decrease in revenues from the oil and gas business was driven
    by lower commodity prices.

--  EBITDA from continuing operations for the three months ended June 30,
    2016 totalled some negative $0.4 million as compared to negative EBITDA
    of $0.5 million for the same period of the prior year. Negative EBITDA
    for the three months ended June 30, 2016 was primarily driven by the
    downturn in the commodity market which impacted the Company's oil and
    gas production business and FRP pipe business.

--  The Company had a loss from continuing operations of $1.4 million for
    the three months ended June 30, 2016 as compared to loss from continuing
    operations of $1.5 million for the same period of the prior year.

--  As of June 30, 2016 the Company had:

    --  A cash balance (inclusive of short term investments) of $3 million
    --  A Net Asset Value per share for its continuing operations of $0.14
        (on total shares outstanding of approximately 194.2 million)


--  Subsequent to the three months ended June 30, 2016

    --  The Company received payments totalling $1.2 million (RMB6.0
        million) as part of the outstanding accounts receivable due from its
        wind farm customers. The full amount of these receivables was
        previously allowed for and the Company's wind power business has
        been discontinued. As of the date of this news release approximately
        $39.7 million (RMB198.7 million) has been collected with a balance
        of $4.9 million (RMB24.4 million) outstanding. The Company is
        continuing its efforts to collect the balance of this outstanding
        amount.
    --  The Company was refunded $1.7 million (RMB 8.5 million) in certain
        prepayments from certain large projects that have been delayed.
    --  The Company negotiated improved commercial terms with its materials
        suppliers resulting in prepayments of some $1.4 million (RMB 6.8
        million) being refunded.
    --  The above noted amounts total some $4.3 million of which $2.9
        million were previously provided for. As of the date of this news
        release the Company had a cash balance (inclusive of short term
        investments) of approximately $5.5 million.
    --  After a principal repayment of RMB 4 million the total principal
        amount of all bank loans is $5.8 million as of the date of this news
        release. A short-term loan of $3.9 million (RMB20 million) owed by
        Harvest (the Company's wholly owned subsidiary in China) to a
        Chinese bank is currently due and paying interest of 7.9% per annum.
        The Company is discussing the renewal or extension of the loan with
        the lender.

The Company continues to increase its activities and revenues in Canada. Canadian revenues as a percentage of total revenues increased to 70% for the three months ended June 30, 2016 as compared to 40% for the same period of the prior year.

Update on Oil and Gas Activities in Canada

--  For the three months ended June 30, 2016,

    --  The Company produced approximately 158 barrels of oil equivalent per
        day (boed) for a total of 14,354 boe, including 82 bbl/d of oil for
        a total of 7,494 barrels, 323 mcf/d of gas per day for a total of
        29,366 mcf, and 22 boe/d of liquids for a total of 1,965 boe. The
        majority of the Company's oil production was from its 13-33-49-26W4
        and 13-4-49-26W4 Nisku horizontal wells on its Leduc Lands and flow
        test production from its new 14-01-023-28W4 vertical well on its
        Entice Lands.
    --  The Company generated revenues net of royalties of $0.4 million and
        net back of $44,000. This was equivalent to gross revenue of $30.56
        per boe with a netback of $3.10 per boe. The reduction in gross
        revenue and netback as compared to the prior year period (as
        described below) was primarily due to lower commodity prices
        together with expensed and non-capitalized work over costs on the
        Company's 13-33-49-26W4M, 13-4-50-26W4M, and 11-33-49-26W4M wells
        and by certain costs to initiate test production of the Company's
        new well 14-01-023-28W4 at its Entice Lands.


--  As a comparison, for the three months ended June 30, 2015,

    --  The Company produced approximately 167 barrels of oil equivalent per
        day (boed) for a total of 15,189 boe, including 70 bbl/d of oil for
        a total of 6,464 barrels, 437 mcf/d of gas per day for a total of
        39,824 mcf, and 24 boe/d of liquids for a total of 2,145 boe. The
        majority of the Company's oil production was from its existing 13-
        33-49-26W4 Nisku horizontal well.
    --  The Company generated revenues net of royalties of $0.7 million and
        net back of $0.4 million. This was equivalent to gross revenue of
        $40.73 per boe with a netback of $23.47 per boe.


--  Drill Program:

    --  At its Entice Lands the Company spud its new 14-01-023-28W4 vertical
        well in November 2015 with subsequent flow tests, and spud its new
        15-12-023-28W4 horizontal well in June 2016. These wells are
        expected to be on production during 2016 and operate from a shared
        well pad that can accommodate a further 5 to 6 horizontal wells.
    --  Upon these two initial wells being placed on production and initial
        results being forthcoming, the Company will determine a drill
        program for expansion with additional horizontal wells at its Entice
        Lands.
    --  The 14-01-023-28W4 vertical well was drilled and completed for an
        amount of $2.6 million with all capital costs on this well fully
        paid. The 15-12-023-28W4 horizontal well has been budgeted for
        drilling and completion at a cost of $2.6 million which will be paid
        from the Company's current approximately $5.5 million cash balance.
        The Company achieved certain economies on this well from the
        utilization of the same surface pad as the 14-01-023-28W4 vertical
        well.

Hanwei will host a conference call to discuss its operational and financial results for the first quarter ended June 30, 2016. Graham Kwan, Executive Vice President and Rick Huang, Chief Financial Officer of Hanwei will host the call. Management invites analysts and investors to participate on the conference call:

Date:               Friday, August 5, 2016

Time:               1:00 p.m., Eastern Time (10:00 am Pacific Time)

Dial in number:     1-888-778-8861 or 1-913-312-1453

A replay of the conference call will be available on the Company's website www.hanweienergy.com.

About Hanwei Energy Services Corp.

Hanwei Energy Services Corp.'s principal business operations are in two complementary key segments of the oil and gas industry as both an equipment supplier to the industry (as a leading manufacturer of high pressure, fiberglass reinforced plastic ("FRP") pipe products and associated technologies serving major energy customers in the global energy market) and as an operator of its producing oil and gas mineral rights at its Leduc and Entice Lands in Alberta.

www.hanweienergy.com

Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.

FORWARD-LOOKING INFORMATION AND NON-GAAP MEASURES

Certain information in this press release is forward-looking within the meaning of certain securities laws, and is subject to important risks, uncertainties and assumptions a description of which is set out in the risk factors section of the Company's Annual Information Form dated June 22, 2016 and Management Discussion and Analysis for the year ended March 31, 2016 both of which are filed with Canadian securities regulators and available on SEDAR at www.sedar.com. The forward-looking information in this press release describes the Company's expectations as of the date of this press release.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE PRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, THE COMPANY DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME, EXCEPT AS REQUIRED BY APPLICABLE SECURITIES LEGISLATION.

Contacts:
Graham Kwan
Executive Vice President, Strategic Development and
Corporate Affairs
604-685-2239
gkwan@hanweienergy.com

Yucai (Rick) Huang
Chief Financial Officer
604-685-2239
yhuang@hanweienergy.com