VANCOUVER, British Columbia, Feb. 07, 2018 (GLOBE NEWSWIRE) -- Hanwei Energy Services Corp. (TSX:HE) (“Hanwei” or the “Company”) today reported its financial results for the nine months ended December 31, 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 nine months ended December 31, 2017:

• Total Company revenues were approximately $8.8 million as compared to $6.2 million for the same period of the prior year.  The $2.6 million (or 42%) increase in revenues was driven by growth in FRP pipe sales, primarily in the Company’s China market, offset by a decrease in oil and gas revenues due to drilling and work-over programs requiring the shut-in of production at the Company’s Leduc Lands to accommodate such capital improvements. 
   
• Total FRP pipe sales were $7.5 million as compared to $4.6 million for the same period of the prior year. The $2.9 million (or 63%) increase was primarily driven by the Company’s China market, which recorded sales of $5.8 million as compared to $1.3 million for the same period of the prior year representing a $4.5 million or approximately 350% increase. The China sales were offset by a reduction of sales in Canada due to timing of orders.
   
• Revenues from the Company’s oil and gas production net of royalties was $1.3 million as compared to $1.5 million for the same period of the prior year. The majority of the oil and gas revenues were generated during the previous quarters while production for the current quarter was impacted by drilling activities and work-over programs that reduced oil and gas production. These capital improvements at the Leduc Lands include the upgrading of the Company’s battery facility, completion of a water disposal well to reduce operating expenses, and placing on production a new Nisku horizontal well and four re-entered vertical Wabamun wells to increase both production and operating netback.  The Company expects to complete these activities and place its Leduc Lands back on production within the first quarter of calendar 2018.
  
  -  The Company produced approximately 134 barrels of oil equivalent per day (boed) versus 193 boed for the same period of the prior year representing a 30% production decrease due to the capital improvements requiring production shut-in.
  
  -  Notwithstanding the lower production volumes the average sales price per boe was $37.00 with a netback of $14.59 per boe (or an operating netback margin of 39%) as compared to average sales price per boe of $30.90 with a netback of $10.32 per boe (or an operating netback margin of 33%) for the same period of the prior year primarily due to increase in commodity prices. The Company expects its netback to significantly increase once its Leduc Lands are back on production with the utilization of the new water disposal well eliminating previous trucking costs related to water disposal.
   
• Total Company Adjusted EBITDA from continuing operations was $0.9 million as compared to negative EBITDA of $1.0 million for the same period of the prior year. The increase in Adjusted EBITDA was driven by the previously described increase in sales and gross margin from the FRP pipe business (Adjusted EBITDA from the FRP pipe business of $1.8 million). This was offset by the decrease in oil and gas income due to drilling and work-over programs and suspended production with negative Adjusted EBITDA of $0.2 million and $0.7 million respectively attributable to the Company’s oil and business and corporate operations.
   
• The Company had a loss from continuing operations of $0.4 million for the nine months ended December 31, 2017 as compared to loss from continuing operations of $1.7 million for the same period of the prior year. The reduction in loss from continuing operations was primarily due to the aforementioned increase in the Company’s China market FRP pipe sales.

As of December 31, 2017 the Company had:

• Cash balance (inclusive of short term investments) of $1.3 million
• Net Asset Value per share for its continuing operations of $0.14 (on total shares outstanding of approximately 194.2 million)

Update on Oil and Gas Activities

During the three months ended December 31, 2017, the Company acquired certain oil and gas rights located approximately 50 km east of Red Dear, Alberta from a third party (the “Nevis Lands”). The Nevis Lands occupy approximately 1,040 net acres with 12 wells (five producing) and one battery facility providing nominal production currently of approximately 10 boed. The Company is targeting the area for certain future work-over programs to exploit the remaining reserve to increase recovery and production.

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 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.