EDMONTON, Aug. 29, 2014 /CNW/ - John Babic, President and CEO of Dalmac Energy Inc. ("Dalmac") (TSX Venture "DAL") is pleased to announce fourth quarter and annual financial results for the fiscal year ended April 30, 2014.
Fourth Quarter and Annual Financial Highlights:
•EBITDAS increases 83% to $2.1M for Q4'14 •Non recurring adjustments concerning equipment lease expenses decrease net income by $1.6 million. •2014 revenue down by $4.0 million due to cancellation of committed drilling programs by key customer. Dalmac hires new CFO •Over $175K spent on modern IT system development, designed to reduce costs.
Selected Financial Information
(000's Cdn Dollars, except per share data)
General and administrative expenses*
EBIDTAS per share - basic
Net income (loss)
Net income (loss) per share - basic
Net income (loss) per share - diluted
Revenue for YE'14 came in at $37M
which represents a decrease of about 10% or $4.1M
from the previous year. Fiscal 2014 was weighed down by factors such as a slower than expected first quarter and a lower than normal utilization of well servicing equipment. As stated in earlier MD&A's, this year's first quarter operations were hampered by rainy and wet seasonal conditions which resulted in the cancellation of many work projects. The latter issue which concerns the lower than expected well service equipment utilizations is attributed to a late cancellation of committed drilling projects by one of our main customers. Given that the bookings for drilling and completion work were made months in advance, this late cancelation resulted in lost opportunities for bidding on other drilling and completion projects. This decrease in service revenue also affected Q4'14 which was down 14% or $1.5M
in comparison to the same quarter last year. Responding to this development Dalmac has redressed its handling of committed equipment contracts by making provisions for non performance in the event a similar situation arises.
Gross Margin as a percentage for YE'14 was 23% compared to 25% for YE'13. The decline is a direct result of non recurring lease payments expensed in the amount of $1.6M
in YE'14 related to operating lease agreements entered into by the Company in 2013. During Q4'14 the Company exercised the buyout clause of these lease agreements as the buyout amount was at a significant discount to fair value. Even after factoring in new finance costs, the decision to exercise the buyout resulted in a further monthly cash savings of about $100K
by eliminating the lease payments. Other factors impacting the gross margin in YE'14 were rising fuel and maintenance costs.Net Income
– The YE'14 was impacted by $1.6M
in non reoccurring lease payment expenses, referenced earlier in the gross margin section of this MD&A, which resulted in a net loss of $520K
as compared to a net income of $1.5M
in the previous year.
EBITDAS, for the fourth quarter, improved by an impressive 83%, to $2.1M
, as compared to the same period last year. Year end EBITDAS dropped marginally by 2% to $5.1M
as compared to YE'13. Had it not been for the rough start to the beginning of the year and the cancellation of seasonal drilling programs by one of our key customers, the EBITDAS would have been in the proximity of record levels.
In May of 2014 Dalmac's CFO resigned for personal reasons. On August 22, 2014
the Company announced the hiring of Jonathan Gallo, CA, MBA as our new CFO and has released a press release on the same date.
Also as part of its continuous improvement process, Dalmac has invested over $175K
in the development and implementation of a modern IT system which is part and parcel of the process control system for dispatching, fleet management and tracking, invoicing and journey management. Management feels that this system will enable the Company to operate more efficiently and effectively and will enable us to reduce costs and improve profits and revenues.Outlook
Dalmac remains optimistic looking forward as rig counts are projected to continue to improve over the remainder of 2014 and into 2015. Confidence in the Canadian oil and gas market is further illustrated through the approximately $15 billion
worth of mergers and acquisitions in the first six months of 2014 as compared to $12.4 billion
during all of 2013. The driving factor for all of this activity is mainly the increased interest in the shale oil and gas plays. Dalmac's focus for the remainder of 2014 will be on continued productivity improvements such as the implementation of a new computerized dispatching and invoicing system. Not only will these improvements aid in streamlining labor costs, optimize equipment deployment, monitor and expedite improvements in fleet operations and maintenance but will also shed more light as to how to better utilize excess capacity. Management feels these processes will not only help lower operating costs but will also afford Dalmac the opportunity to better position itself for increased growth and profitability in fiscal 2015.
A conference call to discuss the results will be held Friday August 29, 2014
, at 1:30 pm EST
/11:30 am MST
To participate in the conference call, please dial 416-847-6330 local in Toronto
or toll-free 1-866-530-1553 and request the Dalmac Energy
conference. Statements throughout this report that are not historical facts may be considered 'forward looking statements'. Such statements are based on current expectations that involve risks and uncertainties, which could cause actual results to differ from those anticipated. Important factors that can cause anticipated outcomes to differ materially from actual outcomes include the impact of general economic conditions, industry conditions, competition from other industry participants, volatility of petroleum prices, the ability to attract and retain qualified personnel, changes in laws or regulation, currency fluctuations, continued ability to access capital from available facilities and environmental risks. References to "Dalmac', the "Corporation", "Company", "us", "we", and "our" mean Dalamc Energy Inc. and its subsidiary Dalmac Oilfield Services Inc. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. We seek safe harbor.
SOURCE Dalmac Energy Inc.