ENP Newswire -
Release date- 29082014 -
Lower year-over-year revenue is due mostly to the decline in the mineral drilling as well as the manufacturing segment, although the Company realized strong offsetting results in the energy business. These results continue to highlight the successful diversification objectives made by the Company over the last several years.
Gross margin for the quarter on a Company-wide basis improved to 18.7% in the second quarter 2014 compared to 13.5% in the same period in 2013. There was a net loss per share in the second quarter 2014
The second quarter is historically one of the busiest periods for the mineral drilling segment. Presently, there is softness in the junior mining segment, a lack of financial resources to initiate and maintain drill programs and an overall cautious approach towards exploration worldwide. Senior and well-funded intermediate miners still represent the majority of the industry's drilling activity. Notwithstanding, some markets are beginning to improve in Central and
Meanwhile, the diversification of the Company's divisions continue to provide some offsetting results as the energy division has more than tripled its revenue in the second quarter compared to the second quarter 2014. The manufacturing division's contribution during the period reflects typical seasonal effects where this first half of the year involves marketing of products and tendering bids while the latter part of the year reflects fulfilling contracts.
Energold's balance sheet at the end of the second quarter 2014 remained well capitalized with
Given the seasonality of the energy business, the division performed well in the second quarter thanks to strong results from the U.S. where the Company is working through a multi-year geothermal work program. As well, some oil sands work during the period helped the Company achieve significant increase in revenue on a year-over-year basis.
Management is making use of innovative drilling methods to meet evolving demands in the region. Long-term customers appear to be receptive to this approach and have requested specific items and procedures that many competitors cannot offer at this time.
Year-to-date revenue for the Energy division, which include the Company's
The majority of revenues and activity for Bertram are typically generated in the first quarter primarily due to weather factors. The Company has expanded its energy business into
MINERAL DRILLING DIVISION
There is generally a seasonal uptick in activity leading up to and during the summer months in certain regions where Company operates. While the second quarter's performance remains below levels seen in previous years, management is encouraged by quarter over quarter improvements. Many of the Company's existing customers remain cautious with their exploration budgets and are committing to smaller programs on a case-by-case basis.
During the second quarter 2014, Energold's mineral division drilled 61,300 meters compared to 92,100 meters in the second quarter 2013, a decrease of 33%. Revenues for the second quarter 2014 were
The decrease in price is due primarily to competitive pricing pressures from customers seeking to maximize exploration budgets while excess capacity continues to put pressure on pricing and as a result, profit margin remains depressed. Notwithstanding, gross margin remains positive as management seeks to maximize its variable cost structure and employing rigs in contracts where the margin for error can be managed such that profits are mostly protected in the event of delays or malfunctions.
Gross margin percentage from mineral drilling in the second quarter 2014 was 23.7%, compared to 4.5% in the first quarter 2014 and 22.6% in second quarter 2013. On a year-to-date basis, gross margin was 17.0% compared to 29.2% in 2013. The Company maintains a strong infrastructure network in all regions where it operates, which allows for a relatively lean operation.
On a geographical basis, management is seeing some encouraging trends from
MANUFACTURING & WATER DRILLING-DANDO MANUFACTURING & HYDROFOR
Revenues for manufacturing in the second quarter 2014 were
During the first half of 2014, Dando delivered five terriers and 10 D type rigs (2000 - 4000) capacity, one S3.5 rig and 6 WaterTec6 rigs. Revenue for the latter two rigs were accounted for on a percentage of completion basis in 2013.
Revenues for Energold's water drilling joint venture (Hydrofor Togo) for the second quarter 2014 were
Management continues to believe the difficult environment for mineral drilling with last through year-end and a recovery is expected to begin in mid-2015. Activity levels in some geographical areas have provided some encouraging signs although other factors including social, political, weather and health crises continue to create headwinds at this time. Notwithstanding, reserve replacement through exploration is expected to remain the preferred route for most senior miners, as acquisitions have become riskier and more costly over recent years.
The Company's energy business remains strong as oil prices remain at levels required to encourage new exploration and production. Management has been working on growing the business both overseas and in
The manufacturing business has been involved in a greater number of tender opportunities that should help increase output levels and sales to key African and South East Asian markets. Management expects the majority of Dando's sales to continue to come from the water drilling business where it holds a niche market position.
The Company remains well capitalized and maintains a strong balance sheet. With a global footprint across all continents and in approximately 25 countries, management continues to evaluate new expansion opportunities on a regular basis.
Specializing in a socially and environmentally sensitive approach to drilling, Energold provides a comprehensive range of drilling services from early stage exploration to mine site operations for all commodity sectors, and has an established drill rig manufacturer,
Chief Financial Officer
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Some statements in this news release contain forward-looking information. These statements include, but are not limited to, statements with respect to proposed activities, work programs and future expenditures. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements.
Such factors include, among others, the effects of general economic conditions, a reduction in the demand for the Company's drilling services, the price of commodities, changing foreign exchange rates, actions by government authorities, the failure to find economically viable acquisition targets, title matters, environmental matters, reliance on key personnel, the ability for operational and other reasons to complete proposed activities and work programs, the need for additional financing and the timing and amount of expenditures.
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