Hanwei Energy Services Reports Year End Fiscal 2020 Financial and Operational Results

VANCOUVER, British Columbia, June 26, 2020 (GLOBE NEWSWIRE) — Hanwei Energy Services Corp. (TSX: HE) (“Hanwei” or the “Company”) today reported its financial results for the year ended March 31, 2020 (the “2020 Fiscal Year”). All amounts are in Canadian Dollars unless otherwise noted.  
Financial and Operating UpdateHanwei’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. For the financial year ended March 31, 2020, a summary of the Company’s annual financial results are as follows:The Company had revenues of approximately $10.3 million as compared to $10.7 million for the prior year. The 4% decrease in revenues was due to a $1.0 million decrease in oil and gas revenues in Canada from lower oil production offset by a $0.6 million increase in FRP pipe sales driven by the Company’s China market.

• Revenues from the Chinese FRP pipe market increased to $8.0 million (or 97% of total Company FRP pipe revenues) for the year ended March 31, 2020 as compared to $6.1 million (or 79% of total Company FRP pipe revenues) in the prior year. The increase was due to new upstream, distribution projects from both new accounts and existing repeat clients in this market.

• Revenues from the Canadian FRP pipe market decreased to approximately $0.3 million for the year ended March 31, 2020 (or 3% of total Company FRP pipe revenues) as compared to $1.3 million (or 17% of total Company FRP pipe revenues) in the prior year.  The significant reduction was due to the material downturn in the oil and gas industry in Canada affecting oil company project investments including the purchase and installation of FRP pipe products.

• The Company’s Oil and Gas business unit generated revenues net of royalties of $1.7 million and net back of $0.2 million, equivalent to gross revenue of $58.58 per boe with a netback of $6.64 per boe (or a netback margin of 11%) for the year ended March 31, 2020. For the year ended March 31, 2019, the Company generated revenues net of royalties of $2.7 million and net back of $0.5 million, equivalent to gross revenue of $54.60 per boe with a netback of $9.05 per boe (or a netback margin of 17%).  The decrease in revenues was primarily due to lower production volume as one horizontal well was shut-in for half of the year with certain other wells shut-in for various periods during the year due to maintenance and workover requirements.  The reduction in netback per barrel was due to the combination of lower production with higher repairs and maintenance costs.

• The Company produced approximately 93 barrels of oil equivalent per day (boe/d), including 89 bbl/d of oil and 21 mcf/d of gas. as compared to 148 barrels of oil equivalent per day (boe/d), including 138 bbl/d of oil, 59 mcf/d of gas and 1 boe/d of liquids in the prior year.

Adjusted EBITDA from continuing operations for the year ended March 31, 2020 was negative $0.9 million as compared to negative $0.5 million for the prior year. While production and operating costs were $1.5 million for the year ended March 31, 2020 (reduced from production and operating costs of $2.2 million in the prior year) lower production and corresponding lower oil and gas revenue together with fixed costs incurred within the FRP pipe business unit during the period when the plant was closed due to COVID-19 restrictions negatively impacted Adjusted EBITDA for the period.
The Company had a loss from operating activities of $2.3 million for the year ended March 31, 2020 which was the same as that in the prior year.  A $0.2 million decrease in income from operating activities of the FRP pipe business was offset by a $0.2 million decrease in loss from operating activities in the oil and gas business.Update on COVID-19 ImpactGlobal 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. With the low and volatile commodity price environment due to COVID-19, subsequent to the year-end the Company temporarily shut-in part of its production that was considered uneconomic at low crude oil prices.The Company’s FRP pipe manufacturing plant in China was closed for most of the last quarter of the 2020 Fiscal Year due to the Chinese New Year in January 2020 and COVID-19 restrictions put in place by the Chinese government. The plant started reopening in early March 2020 with a graduated, multi-phase plan taking into account health and safety protocols particular to the COVID-19 situation.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. Estimates and judgments made by management in the preparation of our MD&A and financial statements are increasingly difficult and subject to a higher degree of measurement uncertainty during this volatile period.Oil and Gas ReservesThe oil and natural gas reserves of the Company attributable to the Leduc Lands and Entice Lands as at March 31, 2020 (the “2020 Reserves Report”) were evaluated by Trimble Engineering Associates Ltd. (“Trimble”), an independent qualified reserves evaluator.
The following table provides a comparison of the 2020 Reserves Report to the 2019 Reserves Report (as at March 31, 2019) and the “Proved” and “Proved Plus Probable” remaining reserves of the Company’s PNG Properties on a gross (before royalties) and net (after royalties) basis together with the net present values at various discount rates on an after tax basis.For disclosure relating to the oil and gas reserves attributable to Hanwei as of March 31, 2020, please see Hanwei’s Form 51–101F1: Statement of Reserves Data and other Oil and Gas Information of Hanwei Energy Services Corp., Hanwei’s Form 51–101F2: Report of Reserves Data by Independent Qualified Reserves Evaluator or Auditor and Hanwei’s Form 51–101F3: Report of Management and Directors on Reserves Data and Other Information, all of which can be found on SEDAR at www.sedar.com under Hanwei’s profile.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 oil and gas producer with properties in Alberta and joint venture interests in Manitoba.For more information, please contact:Graham Kwan
Executive Vice President, Strategic Development and Corporate Affairs
[email protected]
Irene Mai
Chief Financial Officer
[email protected]
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 INFORMATIONCertain 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.

Bay Street News

Contact Us

We're not around right now. But you can send us an email and we'll get back to you, asap.

Not readable? Change text. captcha txt

Start typing and press Enter to search