VANCOUVER, British Columbia, Aug. 06, 2020 (GLOBE NEWSWIRE) -- Hanwei Energy Services Corp. (TSX: HE) (“Hanwei” 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 Update
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 market.
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 boed.
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 Corp.
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 MEASURES
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 LEGISLATION.
CONTACT: For more information, please contact: Graham Kwan Executive Vice President, Strategic Development and Corporate Affairs 604-685-2239 firstname.lastname@example.org Irene Mai Chief Financial Officer 604-685-2239 email@example.com