Ceiba Energy Services Announces Third Quarter 2015 Operating and Financial Results
CALGARY, ALBERTA--(Marketwired - Nov. 19, 2015) - Ceiba Energy Services Inc. ("Ceiba" or the "Company") (TSX VENTURE:CEB) is pleased to announce its third quarter 2015 financial results highlighted by revenue of $1,911 thousand and an adjusted EBITDA of $499 thousand. Ceiba has filed its Financial Statements, related Management's Discussion and Analysis and Annual Information Form for the three and nine months ended September 30, 2015 on the Company's profile at www.sedar.com.
All tabular amounts are in CDN$ thousands except for per share amounts and where otherwise noted.
OPERATIONAL AND FINANCIAL HIGHLIGHTS - 2015 Q3
For the three months For the nine months
September September vs. 2015
30, 2015 30, 2014 2014 September September vs.
($000's unless noted) (Q3) (Q3) Q3 30, 2015 30, 2014 2014
Total received volume
(000's m3) 103 119 (13%) 320 299 7%
Revenue 1,911 1,815 5% 5,581 4,943 13%
Gross margin(1) 974 873 12% 2,583 2,453 5%
Gross margin %(1) 51% 48% 3% 46% 50% (4%)
Adjusted EBITDA(1) 499 492 1% 1,046 829 26%
Total assets 35,550 45,721 N/A
Net working capital(1) 3,405 18,112 N/A
Convertible debentures 8,512 8,171 N/A
(1) Refer to "NON-GAAP MEASURES AND OPERATIONAL DEFINITIONS" for
2015 Q3 Highlights
-- Opened the Gordondale 1B waste water facility in late August 2015.
-- Total received volume of 103,000 m3 in Q3 2015 decreased by 13% compared
to the prior year. The Silver Valley and Chamberlain facilities
experienced declines in emulsion and produced water volumes year-over-
year, offset by the newly opened Gordondale facility and an increase of
1B waste fluids at Chamberlain. The Central Alberta facilities also
experienced declines in produced water volumes, accounting for the
majority of the year-over-year volume decline.
-- Revenue increased by 5% and 13% in the three and nine months ended
September 30, 2015 compared to the respective periods in 2014. Revenues
were negatively impacted by lower pricing for recovered oil and the
overall volume decline as a result of the industry slowdown. Revenue was
positively impacted by the increased volume of higher margin services at
Chamberlain and the opening of the Gordondale 1B waste water facility in
late August, 2015.
-- Gross margin increased in the quarter by 3% compared to the prior year
largely due to the relative contribution of the Chamberlain expansion
that was completed in November of 2014. Gross margin for the nine months
ending September 30, 2015 is down 4% from prior year primarily from
crude oil prices on recovered oil.
-- Adjusted EBITDA increased by 1% and 26% in the three and nine months
ended September 30, 2015 compared to the respective periods in 2014.
Adjusted EBITDA continues to improve with the Company's focus on cost
control and the introduction of higher margin services.
-- Ceiba recorded a loss before income tax of $294 thousand in Q3 2015
compared to a loss before income tax of $1,110 in Q3 2014, an
improvement of $816 thousand (74%).
Balance sheet highlights
-- Ceiba ended Q3 2015 with $9.6 million in cash and cash equivalents and
$3.4 million of positive net working capital. Net working capital has
decreased compared to June 30, 2015 due to capital expenditures on the
Gordondale facility and was impacted by the reclassification of the 12%
convertible debentures that mature July 31, 2016 as a current liability.
-- Ceiba acquired a Class II disposal well in the Obed area from an oil and
gas producer. Ceiba intends to reactivate the disposal well in early Q1
2016 to dispose of Class II fluids from third parties.
-- Ceiba initiated drilling and completion activities on a new disposal
well in the Kaybob region, consistent with the Company's plan to open a
new waste water facility in this active market area by early 2017. The
well is being drilled on a lease acquired in early 2015.
FUTURE PLANS AND OUTLOOK
Demand for services at Ceiba's facilities is tied to the levels of drilling and production in the geographical regions where the Company operates. The current environment of lower commodity pricing continues to provide short-term uncertainty. Ceiba plans to continue its measured investment into services and locations where waste fluid and water disposal demand remains relatively strong and where industry recovery is expected to be stronger when commodity pricing improves.
The recently opened Gordondale facility adds approximately 120,000 m3 per year of disposal capacity to the Company. Gordondale will contribute to Ceiba's goal of increasing total received volume year-over-year with a focus on higher margin waste fluids.
The Company is currently constructing its Athabasca waste fluid facility, which is scheduled to open in the first half of 2016. Ceiba is well capitalized to complete the Athabasca facility with additional available liquidity to pursue development of future facilities and assess potential accretive acquisitions that are consistent with the Company's long-term strategy. The Company continues activities to acquire suitable locations for new facilities in under serviced or constrained markets. At its Q2 2015 meeting, the Board of Directors approved additional capital expenditures of $6.5 million to complete the Athabasca facility (approximately $4.0 million) and to begin development of a new greenfield facility. Ceiba has initiated drilling and completion activities in the Kaybob region consistent with the plan to open a new waste water facility in this active market area by early 2017.
In early Q4 2015, Ceiba acquired a suspended Class II disposal well for a nominal amount in the Obed area from an oil and gas producer. Ceiba intends to reactivate the disposal well by early 2016 to receive Class II fluids from third parties.
Ceiba is actively considering various debt alternatives to refinance the convertible debentures that mature in July 2016. The Company has initiated discussions with several parties and is working towards undertaking a refinancing transaction in the first half of 2016. A refinancing will provide the Company with additional financial flexibility to pursue its short to mid-term growth plans.
Ceiba continues to assess and evaluate acquisition opportunities that are both complimentary to the existing asset base and are accretive to the five-year business plan.
Demand for the Company's services is dependent on oil and gas production in areas where it has facilities. Uncertainty in oil, gas and natural gas liquids pricing may influence customer's capital spending decisions related to production and ultimately demand for the Company's services. Demand for the Company's services is also affected by seasonal variations in the Western Canadian Sedimentary Basin. Any adverse changes in the global economy markets may impact oil prices and hence the oilfield industry in the region. This may impact the ability of the Company to raise capital to support its future growth plans and working capital needs.
SHARE UNIT GRANT
Ceiba has today granted a total of 209,455 share units to executives and non-executive directors of the Company in lieu of cash compensation. This represents approximately 90% of the non-executive directors' compensation and 10% of executive management salaries for the quarter. The share units have been granted pursuant to the Company's share unit compensation plan, have a $0.01 exercise price and will expire five years from the date of grant. Subsequent to this share unit grant, Ceiba will have a total of 395,110 share units outstanding.
NON-GAAP MEASURES AND OPERATIONAL DEFINITIONS
Certain supplementary measures in this MD&A do not have any standardized meaning as prescribed under GAAP and, therefore, are considered non-GAAP measures. These measures are described and presented in order to provide information regarding the Company's financial results, liquidity and its ability to generate funds to finance its operations. These measures are identified and presented, where appropriate, together with reconciliations to the equivalent GAAP measure. However, they should not be used as an alternative to GAAP measures because they may not be consistent with calculations of other companies. These non-GAAP measures, and certain operational definitions used by the Company, are further explained below.
Gross Margin and Gross Margin %
Gross margin is calculated as revenue less operating expenses which includes direct product costs for services but excludes depreciation, depletion and amortization and general and administrative expenses. Management analyzes gross margin as a key indicator of cost control and operating efficiency. Gross margin % is calculated as gross margin as a percentage of revenue.
EBITDA and Adjusted EBITDA
EBITDA refers to net income before finance costs, taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before costs associated with non-recurring business acquisition costs and share based-compensation. These measures do not have standardized definition prescribed by IFRS and therefore may not be comparable to similar captioned terms presented by other users.
Management believes that EBITDA and Adjusted EBITDA are key indicators for the results generated by the Company's core business activities as they eliminate non-recurring items, certain non-cash items and the impact of finance and tax structure variables that exist between entities.
Three months ended Nine months ended
($000's) September 30, September 30,
2015 2014 2015 2014
Total loss and comprehensive
loss for the period (294) (1,110) (1,741) (2,548)
Finance costs 238 308 726 1,386
Depreciation 190 334 904 776
Income tax (recovery) - - - (387)
EBITDA 134 (468) (111) (773)
Share-based compensation 250 550 789 763
Loss on disposal of asset - - 43 -
Loss on settlement with Cancen
Oil Processors Inc. ("COPI") - 268 - 268
Accretion 43 50 112 153
Transaction costs 72 92 213 418
Adjusted EBITDA 499 492 1,046 829
Net Working Capital
Net Working Capital is calculated as total current assets less total current liabilities. Management analyzes net working capital as a measure of our ability to settle short term liabilities with currently available assets.
About Ceiba Energy Services Inc.
Ceiba provides specialized services to the energy sector, specifically to companies involved in the exploration, extraction and production of oil and natural gas in Western Canada. Ceiba develops and constructs facilities in proximity to its customers to provide treatment of crude oil emulsion, terminalling, storage and marketing of oil and disposal of production water.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or the accuracy of this release.
Certain information regarding Ceiba in this news release, including management's assessment of its future development plans and access to various external sources of capital, may constitute forward looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with facility construction and oilfield services operations, general risks associated with oil and gas exploration, development, production, marketing and disposal of waste, loss of markets, environmental risks, competition from other service providers, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Ceiba's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements or information contained in this news release are made as of the date hereof and Ceiba does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
FOR FURTHER INFORMATION PLEASE CONTACT:
Ceiba Energy Services Inc.
Ceiba Energy Services Inc.
CFO and Corporate Secretary