CALGARY, ALBERTA--(Marketwire - Oct. 10, 2012) - On September 11, 2012 the board of directors of GASFRAC Energy Services Inc. ("GASFRAC") announced that they had commenced an operational review and restructuring of the management team at GASFRAC. Today the Company provides the following update:
The Company has determined that it is prudent to focus its near term growth opportunities on North America and specifically in Western Canada and in South Texas and Colorado in the USA. Concurrent with this focused growth, cost control is equally important. As a result, cost reductions will be realized both from staff reductions and other fixed cost reductions. Specifically:
- The overhead staffing in the Houston office has been reduced from 16 to a sales and engineering team of six;
- US field and support staff levels have been reduced by 25% to a level to support two sets of equipment;
- Canadian staffing levels have been reduced by 20% to a level to support three sets of equipment;
- Costs related to facilities, staff housing, insurance and other fixed costs have been reduced.
The five sets of equipment will provide sufficient revenue producing capacity to allow for growth through 2013 and additional sets can be manned as demand increases.
We will continue to examine cost efficiencies with a goal to drive revenue breakeven levels towards $10 million on a monthly basis from previous levels of $14 million. At the same time we have established a core sales & engineering team in the US focused on building our client base in South Texas and Colorado. This team is targeting intermediate sized operators active in these basins with a goal to establish one to two core customers in each basin to drive core utilization together with ancillary customers to build towards future utilization. As this consistency in activity levels (and related data and operating performance) is established in each basin it will create a solid foundation for additional growth. In Canada, as customers have experienced positive production results, we have experienced solid customer demand in the deep basin. We will continue to focus our sales efforts at expanding our customer base in this area.
We expect revenues for the third quarter to be approximately $40 million with approximately $25 million from Canada and $15 million from the US. Canadian operations have demonstrated continued improvement through the quarter with approximately half of the quarter's revenue being earned in September. In the US the majority of the revenue was from Blackbrush. However, while they prepared additional wells, Blackbrush, was not actively fracturing from September 8 until the end of the month and is scheduled to resume fracturing on October 14.
We expect to draw on our line of credit to fund growth in accounts receivables as revenues increase. Our bank syndicate has increased our Funded Debt to EBITDA ratio for the third and fourth quarters and we will continue to review the structuring of our bank line as our draw for receivables increases.
The board has engaged a search firm to locate a new Chief Executive Officer. It is expected that this process will be completed in 90-120 days.
The Company intends to release its third quarter 2012 results on Wednesday November 7, 2012 after the close of market. The Company will host a conference call on Thursday November 8, 2012 at 9:00 a.m. MT (11:00 a.m. ET) to discuss the Company's results for the third quarter of 2012. To listen to the webcast of the conference call, please enter: http://www.gowebcasting.com/3879 in your web browser or visit the Investor Information section of our website www.gasfrac.com. To participate in the Q&A session, please call the conference call operator at 1-800-769-8320 or 1-416-695-6622 fifteen minutes prior to the call's start time and ask for "GASFRAC Third Quarter Results Conference Call".
A replay of the call will be available until November 15, 2012 by dialing 1-800-408-3053 (North America) or 1-905-694-9451 (outside North America). Playback passcode: 4096897
GASFRAC Energy Services, Inc is an oil and gas technology and service company headquartered in Calgary, Alberta and the sole provider of waterless gelled NGL fracturing technology in North America.
This press release contains certain statements that constitute forward-looking statements under applicable securities legislation. All statements other than statements of historical fact are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", or the negative of these terms or other comparable terminology. These statements are only as of the date of this document and we do not undertake to publicly update these forward looking statements except in accordance with applicable securities laws. Forward-looking statements are based on current expectations, estimates, projections and assumptions, which we believe are reasonable but which may prove to be incorrect and therefore such forward-looking statements should not be unduly relied upon. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: industry activity; the general stability of the economic and political environment; effect of market conditions on demand for the Company's products and services; the ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability to operate its business in a safe, efficient and effective manner; the performance and characteristics of various business segments; the effect of current plans; the timing and costs of capital expenditures; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its products and services. Forward-looking statements are subject to a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks and uncertainties include: fluctuating prices for crude oil and natural gas; changes in drilling activity; general global economic, political and business conditions; weather conditions; regulatory changes; the successful exploitation and integration of technology; customer acceptance of technology; success in obtaining issued patents; the potential development of competing technologies by market competitors; and availability of products, qualified personnel, manufacturing capacity and raw materials. In addition, actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth under the section entitled "Business Risks" in the Company's MD&A.
Requests for shareholder information should be directed to James M Hill.