ST. ALBERT, ALBERTA--(Marketwire - Aug. 15, 2011) - Enterprise Oilfield Group, Inc. (News - Market indicators) realized consolidated revenue of $2.6 million for the three months ended June 30, 2011, compared to $2.9 million for the three months ended June 30, 2010, a decrease of $0.3 million. The consolidated revenue for the six months ended June 30, 2011, was $6.8 million compared to $8.2 million for the same period last year, a decrease of $1.4 million. The decrease in revenue is mostly attributed to the late spring thaw, forest fires in the Slave Lake area, followed by an unusually wet spring and summer across the province. This caused delayed projects and decreased margins in energy sector as well as the underground utilities and directional drilling division. Additionally, projects in the energy sector were still being awarded at low margins and the Company continued its practice of bidding projects at margins that it feels is competitive, without putting it at a greater risk of large losses.
Revenue in the underground utilities and directional drilling division decreased by $295 thousand in the quarter, over the previous year and EBITDAS fell to negative $154 thousand, a decrease of $595 thousand. The Company anticipated stronger results from this division, however heavy snow fall in the winter led to a late spring thaw, which was then followed by very wet soil conditions in the spring and summer months. This resulted in lower than anticipated revenues and negatively impacted margins. However, this division has a significant backlog of work and management expects it to return to full capacity with margins returning to historical averages for the remainder of the year and into 2012.
Revenue in the energy sector was unchanged compared to the same quarter in the prior year, however EBITDAS was $348 thousand compared to $42 thousand in the prior quarter, an increase of $306 thousand. In spite of a late spring thaw, evacuation and stop work orders due to forest fires in the Slave Lake area, followed by heavy rain, flooding and very wet soil conditions, the Company's decision to avoid projects with smaller margins in the energy sector has proven to be successful even under these adverse conditions, as this division made a positive contribution to the EBITDAS of the Company.
Along with increasing EBITDAS, the Company improved its balance sheet and repaid a significant portion of its debt facilities. In June, Enterprise secured conventional financing in the form of a $1.8 million term debt facility which was used to pay down the Company's high interest term debt. For the quarter ended June 30, 2011, Enterprise repaid $2.7 million of loans and borrowings and in total repaid $3.1 million of loans and borrowings since the year ended December 31, 2010.
The Company continues to monitor its overheads and reduce costs where necessary while maintaining the effectiveness of the operations. Equipment costs, operational costs and G&A costs are continually under review. Management and administrative salaries, depreciation, office, travel, advertising/promotions and telephone communications costs were reduced by $251 thousand for the three months ended June 30, 2011. However these were offset by increases in interest on long term debt, professional fees and share-based payments.
Enterprise Oilfield Group, Inc., would also like to announce the appointment of Kevin Spitzmacher, CA, B.Comm, CCIM, CFE, CFA, CA-IFA as the Corporation's Chief Financial Officer. Mr. Spitzmacher replaces Brian Stasynec, CA.
Mr. Spitzmacher comes with several relevant designations and a wide range of experience. Kevin is the founder of Encore Capital Advisors, a boutique corporate finance firm specializing in mergers & acquisitions, divestitures and financing transactions. Prior to founding Encore Mr. Spitzmacher was the Vice President and Director of Corporate Finance with Tamarack Capital Advisors managing the Edmonton office. Preceding Tamarack he was an Investigative Accountant with the Enforcement Section of the Alberta Securities Commission.
Enterprise Oilfield Group, Inc., further announces the resignation of Director, Jim Stout. Mr. Stout has served the Company well during the last few years. He will be replaced by Fredy Ramsoondar, CGA, B.Comm. Mr. Ramsoondar has over 20 years of experience in corporate finance and mergers and acquisitions. Mr. Ramsoondar is the Chief Executive Officer of United Protection Security Group Inc., a TSXV issuer. He holds a Bachelor of Commerce Degree and is a Certified General Accountant; Microsoft Certified Solutions Provider as well as a Certified Network Administrator.
[1] EBITDAS = Earnings Before Interest, Taxes, Depreciation, Amortization and Stock Based Compensation
Forward-looking Information
Certain statements contained in this release constitute forward-looking information. These statements relate to future events or the Company's future performance. The use of any of the words "could", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on current beliefs or assumptions as to the outcome and timing of future events. Actual future results may differ materially. In particular, statements with respect to anticipated activity levels and profitability of the Company's utility and infrastructure division and anticipated increases in revenue and margins attributed to services provided by the Company to the energy sector contain forward looking information. The Company's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website at www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. The forward-looking statements and information contained in this document are made as of the date hereof for the purpose of providing the readers with the Company's expectations for the next year. The forward-looking statements and information may not be appropriate for other purposes. The Company disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.
