VANCOUVER, British Columbia, Feb. 07, 2019 (GLOBE NEWSWIRE) -- Hanwei Energy Services Corp. (TSX: HE) (“Hanwei” or the “Company”) today reported its financial results for the three and nine months ended December 31, 2018. 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 December 31, 2018:
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Total Company revenues were approximately $4.2 million as compared to $3.6 million for the same period of the prior year.
Revenues from the Company’s oil and gas production net of royalties was $0.4 million ($27.73 per barrel of oil equivalent or “boe”), with a netback of $15.59 per boe, from production of approximately 153 barrels of oil equivalent per day (boed), as compared to revenue of $0.1 million ($47.00 per boe), with a netback of $20.06 per boe, from production of approximately 24 boed for the same period of the prior year. The revenue and production increase was mainly attributed to the Leduc Lands being placed back on production (being shut in for capital improvements during the prior year). However, the decrease in netback notwithstanding the revenue increase was mainly due to certain expenses of system commissioning and improvements at the Leduc Lands as well as the low oil prices received by the Company in November and December 2018 affecting the entire oil and gas industry throughout Western Canada. The Company expects its netback to increase in the next quarterly period as the capital works projects at its Leduc Lands have now been fully commissioned and oil prices have subsequently risen from the December 2018 levels following the Government of Alberta’s production restrictions placed on medium and large producers in the province.
FRP pipe sales increased to $3.8 million from $3.5 million for the same period of the prior year. For the Chinese market sales decreased to $2.6 million as compared to $3.0 million for the prior year due to alternate pipe specifications and changes in project requirements. For the Canadian market sales increased significantly to $1.1 million from $40,000 for the same period of the prior year due to timing of projects in this market confirmed prior to the impact of reduced oil prices as before noted. For other international markets, sales were $0.2 million as compared to $0.4 million for the prior year.
Total Company Adjusted EBITDA from continuing operations was negative $54,000 as compared to $0.8 million for the same period of the prior year. The $0.9 million decrease for the period was mainly due to the costs of system commissioning and improvements at the Leduc Lands, losses in the Company’s oil and gas business as a result of the aforementioned low oil prices received in November and December 2018, as well as certain one-time recoveries in the prior year period in the FRP pipe business.
The Company had a loss from continuing operations of $0.8 million as compared to income from continuing operations of $0.5 million for the same period of the prior year.
For the nine months ended December 31, 2018:
Total Company revenues were approximately $9.2 million as compared to $8.8 million for the same period of the prior year.
Revenues from the Company’s oil and gas production net of royalties was $2.0 million ($49.04 per boe) with a netback of $5.42 per boe and from production of approximately 150 boed, as compared to revenue of $1.3 million ($37.00 per boe) with a netback of $14.59 per boe from production of approximately 134 boed for the same period of the prior year. The production increase was mainly attributed to the Leduc Lands being placed back on production with the decrease in netback notwithstanding the revenue increase was mainly due to certain expenses of system commissioning and improvements at the Leduc Lands.
FRP pipe sales decreased to $6.9 million from $7.5 million for the same period of the prior year and due to alternate pipe specifications and changes in project requirements in the Company’s China market.
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Total Company Adjusted EBITDA from continuing operations was negative $0.2 million as compared to $0.9 million for the same period of the prior year. The $1.1 million decrease for the period was mainly due to the costs of system commissioning and improvements at the Leduc Lands as well as certain one-time recoveries in the prior year period in the FRP pipe business.
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The Company had a loss from continuing operations of $1.9 million as compared to loss from continuing operations of $0.4 million for the same period of the prior year.
As of December 31, 2018, the Company had:
Cash balance (inclusive of short-term investments) of $0.8 million
Net Asset Value per share for its continuing operations of $0.13 (on total shares outstanding of approximately 194.2 million)
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.
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 19, 2018 and Management Discussion and Analysis for the year ended March 31, 2018 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.
