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Hanwei Energy Services Reports Second Quarter Fiscal 2018 Financial and Operational Results

/EIN News/ -- VANCOUVER, B.C., Nov. 08, 2017 (GLOBE NEWSWIRE) -- Hanwei Energy Services Corp. (TSX:HE) (“Hanwei” or the “Company”), today reported its financial results for the six months ended September 30, 2017. 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 six months ended September 30, 2017:

  • Total Company revenues for the six months ended September 30, 2017 totalled some $5.3 million as compared to $3.2 million for same period of the prior year.  The increase in revenues for the period was driven by a $1.7 million or 69% increase in FRP pipe sales (primarily from the Company’s Chinese market) and a $0.4 million or 48% increase in oil and gas production revenues (primarily driven by higher production at the Company’s Leduc Lands and commodity prices in the earlier part of the year). 
     
  • FRP pipe sales totalled $4.0 million as compared to $2.4 million in the same period of the prior year.

       •   For the Company’s Chinese market sales were $2.8 million for the six months ended September 30, 2017 as compared to $0.6 million for the prior year. While China market sales for this period were a significant increase over the same period of the prior year, the Company does not expect a material sales rebound to be maintained in this market.

       •   For the Company’s Canada market sales were $0.9 million for the six months ended September 30, 2017, as compared to $1.6 million for the same period of the prior year. The reduction was due to timing of projects in this market, which the Company anticipates will move forward in the balance of the year.
     
  • Oil and gas production revenues net of royalties amounted to $1.2 million as compared to $0.8 million for the same period of the prior year with corresponding netback respectively of $14.24 per boed versus $5.52 per boed. The increase in revenues and netback from the oil and gas business was driven by higher commodity prices primarily during the first half of the period.
     
  • Adjusted EBITDA from continuing operations was $0.1 million as compared to $0.8 million for the same period of the prior year (and including a one time $1.7 million refund of certain prepayments relating to the FRP pipe business expensed in previous periods).  
     
  • The Company had a loss from operating activities of $0.7 million for the six months ended September 30, 2017 as compared to loss from operating activities of $0.3 million for the same period of the prior year (which included in the latter amount the abovementioned $1.7 million refund). 
     
  • As of September 30, 2017 the Company had:

       -   A cash balance (inclusive of short term investments) of $1.6 million
       -   A Net Asset Value per share for its continuing operations of $0.14 (on total shares outstanding of approximately 194.2 million)
       -   A total principal amount of all bank loans of $3.8 million, representing a 24% debt to equity ratio (total bank debt divided by total shareholders' equity)

Update on Oil and Gas Activities in Canada

  • For the six months ended September 30, 2017, the Company produced approximately 376 barrels of oil equivalent per day (boed) for a total of 34,571 boe, including 102 bbl/d of oil for a total of 18,719 barrels, 393 mcf/d of gas per day for a total of 71,832 mcf, and 21 boe/d of liquids for a total of 3,880 boe, generating revenues net of royalties of $1.2 million and net back of $0.5 million. 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.

  • The Company’s oil production on its Leduc Lands was shut in on October 1st, 2017. This was due to a third party gas treatment plant previously taking the Company’s produced gas ceasing to be available due to maintenance and treatment capacity considerations of this third party. In response to this the Company is in discussions with the third party as to available gas handling capacity as well as undertaking its own work to enable gas injection on its Leduc lands with the completion of battery upgrades and a gas injection well. The Company expects to complete this program and bring its wells back on production during the fourth quarter of calendar 2017.

  • At its Entice Lands the Company’s wells are currently shut in as an adjacent gas handling plant accommodating gas production from these wells remains closed. It is not yet known when such gas handling facility shall re-open and the Company is exploring alternative options for its gas handling requirements.

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 oil and gas producer with properties in Alberta and joint venture interests in Manitoba.

www.hanweienergy.com


For more information, please contact:

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

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 20, 2017 and Management Discussion and Analysis for the year ended March 31, 2017 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.