DENVER, CO--(Marketwired - Mar 6, 2014) - ENSERVCO Corporation (OTCQB: ENSV), a provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today issued an update on its fourth quarter preliminary financial performance, addressed recent operational achievements and reported January 2014 revenue of $10.9 million, a single-month record and a 53% improvement over the Company's best prior month.
As previously announced, ENSERVCO expects to report revenue for the fourth quarter ended December 31, 2013, of $15.0 million, a 33% increase over the 2012 fourth quarter. Management said fourth quarter operating income and net earnings are also expected to exceed results in the comparable prior year quarter. However, a sudden, sharp increase in propane costs during December compressed gross margins, which are expected to be 26% for the 2013 quarter versus 32% in the fourth quarter of 2012. Had propane prices remained flat during the comparable quarters, the Company would have expected a gross margin improvement to 33%.
As propane costs continued to rise in January, price renegotiation clauses were triggered. The new pricing structures, which were in place by mid-January, provide for the pass thru of propane at Enservco's cost, regardless of future changes in propane prices. This structure is expected to return frac water heating margins to previous normalized levels beginning early in the first quarter.
Although propane prices were up significantly in all of ENSERVCO's U.S. service territories, the impact to the Company was limited to operations in the D-J Basin, where the pricing structure for frac water heating was historically set at a per-barrel basis that included the cost of propane. The price of propane in the DJ has been extremely volatile during the current heating season, and peaked at approximately $5.00 per gallon in January. The Company's average price in the DJ during January 2012 was approximately $1.50 per gallon.
Management said the anticipated record revenue in January is attributable to very strong demand across all of the Company's service territories, the addition of new heating capacity and the positive impact of the price structure changes in the D-J Basin. Consolidated revenue in February is expected to be $8.4 million, making it the second strongest revenue month in Company history.
ENSERVCO has implemented an aggressive expansion of its frac water heating fleet during recent months, and now has 47 burner boxes, including three rentals, operating in four U.S. oil and gas fields. This represents a 38% increase in frac water heating capacity since the start of October 2013.
The Company also has expanded its hot oiling fleet, which grew to 27 units by the end of 2013, up 23% since the beginning of the year. Four additional hot oilers are on order, with delivery expected by mid-summer 2014.
The Company also has completed construction of an acidizing dock at its new service yard in Rock Springs, Wyoming, and will commence work on a large acidizing project in the region later today. Two new acidizing trucks are in fabrication and should enter the field in the next three to four months.
"We are extremely pleased with our progress in recent months, and with the growing strength of the Company," said Rick Kasch, president. "Thanks to the efforts of our entire team, we have overcome a variety of unavoidable challenges in recent months -- from flooding to equipment delays to wild swings in propane prices -- and entered 2014 in the strongest operational and financial condition in Company history. Our announcement yesterday that we have been approved to trade on the NYSE MKT starting this coming Monday is further illustration of ENSERVCO's evolution as a public company."
ENSERVCO expects to report audited full-year 2013 financial results during the week of March 17. A news release with details on the associated conference call and webcast will be issued in the coming days.
About ENSERVCO
Through its various operating subsidiaries, ENSERVCO has emerged as one of the energy service industry's leading providers of hot oiling, acidizing, frac heating and fluid management services. The Company owns and operates a fleet of more than 230 specialized trucks, trailers, frac tanks and related well-site equipment. ENSERVCO serves customers in seven major domestic oil and gas fields, and operates in Colorado, Kansas, Montana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Ohio, Texas, Wyoming and West Virginia. Additional information is available at www.enservco.com.
Forward-Looking Statements
This news release contains information that is "forward-looking" in that it describes events and conditions ENSERVCO reasonably expects to occur in the future. This forward-looking information includes statements relating to our preliminary, unaudited revenue results, operating income and net earnings for the fourth quarter and full fiscal year ended December 31, 2013. Expectations for the future performance of ENSERVCO are dependent upon a number of factors, and there can be no assurance that ENSERVCO will achieve the results as contemplated herein. Certain statements contained in this release using the terms "may," "expects to," and other terms denoting future possibilities, are forward-looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks, which are beyond ENSERVCO's ability to predict, or control and which may cause actual results to differ materially from the projections or estimates contained herein. Among these risks are those set forth in ENSERVCO's Form 10-K filed on March 28, 2013, in its reports subsequently filed with the Securities and Exchange Commission, all of which are available at www.enservco.com, and in addition to the other risks and caveats included in this press release. It is important that each person reviewing this release understand the significant risks attendant to the operations of ENSERVCO. ENSERVCO disclaims any obligation to update any forward-looking statement made herein.