Capital spending on projects in the Alberta oil sands region and across Western Canada remains steady, resulting in high demand for crane and heavy haul transportation services. ENTREC is also benefiting from the growing industrial development occurring in Northern B.C., which includes ongoing mining, hydro-electric, pipeline, and oil and natural gas projects as well as the anticipated development of liquefied natural gas (LNG) facilities in Northwest B.C. The Company is also currently providing crane services to support a multi-billion-dollar revitalization of an aluminum smelter in Kitimat, B.C.
"Based on expected schedules for future projects, we believe demand for our crane and heavy haul transportation services will continue to grow sequentially through 2014 and 2015, and exceed the demand we are anticipating in 2013," added Mr. Stevens.
ENTREC expects demand from conventional oil and natural gas markets will continue to fluctuate with industry exploration and production levels. Approximately 20% of the Company's consolidated revenue is derived from the conventional oil and natural gas sector, with the greatest exposure in ENTREC's operations in Northwest Alberta, Northeast B.C. and North Dakota. During periods of slower activity, ENTREC relocates equipment to support activity and customer demand in other regions.
Moving into the second quarter of 2013, activity levels in some geographic regions have been negatively affected by a wet spring and associated road restrictions that limit access to certain sites. These access restrictions have begun to subside and activity levels are beginning to return to normal levels.
ENTREC today reiterated its previous revenue guidance for 2013. Based on current expectations and assuming no further business acquisitions are completed, ENTREC estimates revenue for the year ending December 31, 2013 could exceed $215 million. Future business acquisitions completed in fiscal 2013 could further increase this revenue estimate.
2013 Capital Expenditure Program
In January 2013, ENTREC approved a 2013 capital expenditure program of $50 million. The program consists of $41 million in growth capital expenditures to expand the Company's equipment fleet, as well as $9 million in maintenance capital expenditures. A large portion of the 2013 capital expenditure program will focus on continued expansion of ENTREC's capability and market share in crane services. As part of this strategy, ENTREC exercised the purchase option on $4.0 million of its rental crane units during the first quarter of 2013. Crane services are highly complementary to heavy haul transportation as they allow customers to meet both their heavy haul and lifting needs through one vendor. Crane services also increase access to recurring onsite maintenance, repair and operations (MRO) support work in the Alberta oil sands region, as well as to the significant industrial construction work occurring in the oil sands and in Northwest B.C.
During the three months ended March 31, 2013, ENTREC made capital expenditures of $15.6 million, consisting of $14.3 million in growth capital expenditures and $1.3 million in maintenance capital expenditures. Approximately $10 million of the capital expenditures in the first quarter were invested in crane equipment, with the remainder directed to tractors and heavy haul trailers, as well as support equipment.
A complete set of ENTREC's most recent financial statements and Management's Discussion and Analysis will be filed on SEDAR (www.sedar.com) and posted on the Company's website (www.entrec.com).
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