Hanwei Energy Services Reports First Quarter Fiscal 2021 Financial and Operational Results
Hanwei Energy Services Corp. (TSX: HE)
or the “Company”), today reported its financial results for the
three months ended June 30, 2020. All amounts are in Canadian
Dollars unless otherwise noted.
Update on COVID-19 Impact
Global commodity prices have declined
significantly due to a collapse in demand attributed to COVID-19 in
combination with an oversupply of oil due to disputes between major
oil producing countries. The commodity price environment remains
extremely volatile due to COVID-19.
The COVID-19 situation is dynamic and the
ultimate duration and magnitude of the impact on the economy and
the financial effect on the Company is not known at this time.
Financial and Operating
Hanwei's principal business operations are in two complementary
segments of the oil and gas industry as an operator and developer
of its own oil and gas assets in Canada and as a specialized pipe
supplier to the industry, both in Canada and internationally.
- Total Company revenues for the three months ended June 30, 2020
decreased to $1.8 million as compared to $2.6 million for the same
period of the prior year. The $0.8 million (or 32%) decrease was
due to a $0.2 million decrease in FRP pipe revenue and a $0.6
million decrease in the oil and gas business.
- The FRP pipe business revenue decreased to $1.7 million from
$1.9 million for the same period of the prior year. The decrease
was mainly due to all sales solely coming from the China
- The oil and gas business revenues net of royalties decreased to
$69,000 (averaging 50 boed) from $0.6 million (averaging 122 boed)
for the same period of the prior year. The reduction in production
volume during the period was due to: the Nevis Lands being shut in
on April 30, 2020 as production is uneconomic at current low crude
oil prices; certain low production Wabamun wells at the Leduc Lands
also considered uneconomic being shut in since April 16, 2020; and
repairs and maintenance on one of the Company’s main Nisku wells
also at the Leduc Lands that was shut in for the majority of the
three months ended June 30, 2020 and which was placed back on
production on June 25, 2020. Following this Nisku well being placed
back on production, the Company produced approximately 90
- Adjusted EBITDA from continuing operations for the three months
ended June 30, 2020 was negative $0.6 million as compared to
Adjusted EBITDA of negative $0.2 million for the same period of the
prior year. The decrease in Adjusted EBITDA was due to decreased
revenue in the FRP pipe business and the decreased production and
revenue in the oil and gas business.
The Company had a loss from continuing
operations of $0.7 million for the three months ended June 30, 2020
as compared to loss from continuing operations of $0.6 million for
the same period of the prior year.
About Hanwei Energy Services
Hanwei Energy Services Corp.’s principal
business operations are in two complementary key segments of the
oil and gas industry as both an equipment supplier to the industry
(as a manufacturer of high pressure, fiberglass reinforced plastic
(“FRP”) pipe products serving energy customers in the global energy
market) and as an and gas producer with properties in Alberta
and joint venture interests in Manitoba.
Neither the TSX nor its Regulation Services Provider (as that
term is defined in the policies of the TSX) accepts responsibility
for the adequacy or accuracy of this release.
FORWARD-LOOKING INFORMATION AND NON-GAAP
Certain information in this press release is
forward-looking within the meaning of certain securities laws, and
is subject to important risks, uncertainties and assumptions a
description of which is set out in the risk factors section of the
Company’s Annual Information Form dated June 25, 2020 and
Management Discussion and Analysis for the year ended March 31,
2020 both of which are filed with Canadian securities regulators
and available on SEDAR at www.sedar.com. The forward-looking
information in this press release describes the Company’s
expectations as of the date of this press release.
THE FORWARD-LOOKING INFORMATION CONTAINED IN
THIS PRESS RELEASE PRESENTS THE EXPECTATIONS OF THE COMPANY AS OF
THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO
CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE
ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS
INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO,
THE COMPANY DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY
PARTICULAR TIME, EXCEPT AS REQUIRED BY APPLICABLE SECURITIES
For more information, please contact:
Executive Vice President, Strategic Development and Corporate Affairs
Chief Financial Officer