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Ceiba Energy Services Announces Improved First Quarter 2017 Financial and Operating Results

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Ceiba Energy Services Announces Improved First Quarter 2017 Financial and Operating Results

Ceiba Energy Services Announces Improved First Quarter 2017 Financial and Operating Results

CALGARY, ALBERTA--(Marketwired - May 23, 2017) - Ceiba Energy Services Inc. ("Ceiba" or the "Company") (TSX:CEB) is pleased to announce its first quarter financial results. Ceiba has filed its Financial Statements and related Management's Discussion and Analysis for the period ended March 31, 2017 on the Company's profile at www.sedar.com.

In Q1 2017, Ceiba recorded revenue of $2.3 million, an increase of 44% compared to Q1 2016 and an increase of 53% from Q4 2016. The increase in revenue is attributed to the increase in activity and pipeline access at the Gordondale and Silver Valley facilities. Adjusted EBITDA for Q1 2017 was $320 thousand, an improvement of $285 thousand from $35 thousand in Q1 2016 and an improvement of $608 thousand from negative $288 thousand in Q4 2016.

At March 31, 2017, the Company had a working capital deficit of $2.7 million compared to a working capital deficit of $6.9 million as at December 31, 2016. The improvement in working capital is due to the reclassification of $4.3 million of bank debt as long term as the result of the Company being compliant with its credit facility financial covenant at March 31, 2017 as compared to being non-compliant at December 31, 2016.

Ceiba has plans to increase disposal injection rates at its Obed facility. Plans to remediate the disposal well at the Kaybob facility are currently on hold. Ceiba expects to achieve overall revenue growth in 2017 from contributions from its newly opened facilities as well as a return to higher utilization levels at existing facilities, particularly Gordondale, Silver Valley and Obed.

All tabular amounts are in CDN$ thousands except for per share amounts and where otherwise noted.

FIRST QUARTER OPERATIONAL AND FINANCIAL HIGHLIGHTS

For the three months ended,
($000's unless noted) March 31,

2017
March 31,

2016
% Change
Total received volume (000's m3) 123 77 60 %
Revenue 2,296 1,598 44 %
Gross margin(1) 869 572 52 %
Gross margin %(1) 38 % 36 % 2 %
Adjusted EBITDA(1) 320 35 NMF
Adjusted EBITDA(1) as a % of revenue 14 % 2 % 12 %
Total assets 34,602 36,173 (4 %)
Net working capital(1) (2,650 ) (3,680 ) N/A
Convertible debentures 1,899 8,683 N/A
Net loss and comprehensive loss (499 ) (808 ) N/A
Net loss per share, basic and fully diluted $ (0.00 ) $ (0.01 ) N/A
Funds from/(used in) operations 175 (212 ) N/A
(1) Refer to "NON-GAAP MEASURES AND OPERATIONAL DEFINITIONS" for additional information
(2) NMF = Not meaningful

Q1 2017 Operating and Financial Highlights

  • Revenue for Q1 2017 increased $0.7 million (44%) to $2.3 million as compared to $1.6 million in Q1 2016. Revenue in Q1 2017 also increased $0.9 million (59%) as compared to Q4 2016.
  • Revenue for Q1 2017 as compared to Q1 2016 increased as a result of increased activity levels at the Silver Valley, Gordondale and Obed facilities despite a $0.5 million revenue decline at the Chamberlain facility. The Kaybob facility, which opened in Q4 2017 contributed $0.1 million in revenue.
  • The increase in revenue from Q4 2016 to Q1 2017 is almost entirely attributable to increased activity and pipeline accessibility at the Gordondale and Silver Valley facilities.
  • Gross margin for Q1 2017 increased $297 thousand from $572 thousand to $869 thousand. Silver Valley, Gordondale and Obed increased $670 thousand and Chamberlain decreased $235 thousand. The Kaybob facility which opened in Q4 2016 had a negative margin of $225 thousand.
  • Gross margin in Q1 2017 increased $650 thousand as compared to Q4 2016 as a result of increased activity and pipeline accessibility at Silver Valley and Gordondale offset by negative margins at Kaybob and the Central Alberta facilities.
  • Adjusted EBITDA for Q1 2017 was $0.3 million, an increase from $35 thousand in Q1 2016 and ($0.3 million) in Q4 2016.
  • During the quarter, it was determined that the disposal zone that the Kaybob facility was completed into was unsuitable for sustained water disposal. Operations at the Kaybob facility are temporarily suspended.

Strategic Review

On September 9, 2016 the Company initiated a process to identify, examine and consider a range of strategic alternatives available to the Company with a view to enhance shareholder value.

On May 14, 2017, Ceiba and Secure Energy Services Inc. ("SECURE") entered into an arrangement agreement (the "Arrangement Agreement") whereby SECURE will acquire all the shares of Ceiba for $0.205 for each share, to be paid in cash or by the issuance of 0.02115 of a SECURE common share, at Ceiba shareholders' election, provided that a maximum of approximately 1.3 million SECURE common shares will be issued (representing approximately 50% of the consideration to be paid to Ceiba shareholders) (the "Transaction"). The Transaction will require approval by at least 66 2/3 percent of holders of the Ceiba common shares and Ceiba warrants, voting together as a single class, at a special meeting to be called to consider the Transaction. The Transaction is expected to be completed in the third quarter of 2017 and is subje

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