EDMONTON, Alberta, Sept. 28, 2018 — Mr. John Babic, President and CEO of Dalmac Energy Inc. (“Dalmac”) (TSX Venture:DAL), reports Dalmac’s first quarter (Q1’19) financial results announcement for the reporting period ended July 31, 2018
|(000’s Cdn Dollars, except per share data)||Q1’19||Q1’18||%|
|Gross Margin %||16||%||23||%||(31||)%|
|Earnings (loss) before income tax||(1,107||)||(621||)||78||%|
|Net earnings (loss)||(1,107||)||(460||)||141||%|
|Earnings (loss) per share – basic||(0.04||)||(0.02||)||141||%|
|Earnings (loss) per share – diluted||(0.04||)||(0.02||)||141||%|
Business Highlights for Q1’19
- Pipeline capacity and lack thereof continued to exercise constraints on capital investments regarding drilling and work over projects. Many producers rescheduled cap ex until later in the year due to uncertainties related to pipeline takeaway capacity in view of the nationalization of Kinder Morgan in Canada.
- Revenues were down 17% or $805K from Q1’18. A substantial portion of this decrease in revenue is attributed to decreased tank rentals due to cancelled and/or postponed projects as previously mentioned
- Gross margin decreased to 16%. Factors contributing to this were higher fuel costs and reduction in rates and utilization of tank rentals over the summer months. Because Q1 is a typically a slower quarter due to spring break up, the Company typically schedules CVIP and inspections of our equipment during this time. From time to time when certain equipment was under repair, the Company hired subcontractors to complete various job requirements which also contributed to pushing margins down,
- Income loss before tax was $1.1M compared to $0.6K last year.
- The Company is in the process of completing its annual review with our senior lender to rectify the covenant breach at year end. This process is taking longer than usual due to the timing and release of the YE’19 financials and the senior lender’s workflow. The completion of the review and covenant amendments are expected to be completed by the end of Q2. Until the review and amendment are complete – all senior lender long term debt is classified and current.
Outlook Consistent with the outlook presented in Dalmac’s YE’18 MD&A – the Canadian oil and gas industry is still trending in recovery mode. News of the recent federal court ruling on the Trans mountain pipeline has put much of the physical activity that was scheduled for the completion of the pipeline expansion on hold until a review of the project can be done. This has not only displaced various service providers who where scheduled for ground breaking and pipe laying projects but put various other capital expenditure projects on the back burner. Dalmac will continue to monitor events relating to the timing of these projects and will continue to defer any significant capital expenditures until increased activity levels are well under way.
Dalmac is relying on its current commitments for various drilling, maintenance, and plant certification projects which are scheduled to run over the course of the current to bolster our activity levels for the remainder of the year. The recent industry announcement that an additional 200 – 300 thousand barrels of oil per day will be moved by rail within the course of one year, along with the prospects of raising energy prices gives greater confidence that further development and activity in our industry will continue.
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John Babic – CEO – Dalmac Energy Tel: 780-988-8510 Email: [email protected]
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 Dalmac 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.