Dalmac Energy Reports Year End 2016 Financial Results

EDMONTON, Alberta, Aug. 29, 2016 (GLOBE NEWSWIRE) -- John Babic, President and CEO of Dalmac Energy Inc. (“Dalmac”) (TSX-V:DAL) is pleased to announce fourth quarter and annual financial results for the fiscal year ended April 30, 2016.

Results from operations
The impact of low oil and gas prices couldn’t be more evident than in the Corporation’s revenue decrease from the prior year.  Low commodity prices resulted in reduced activity levels which provoked our competitors to discount their pricing.  To stay competitive, Dalmac responded by also lowering our charge out prices.  Reduction on pricing and activity levels led to a decrease in yearly revenues by 33%.  Dalmac entered the fourth quarter with a healthy book of service related work only to be informed that much of the forecasted activity had to be postponed and rescheduled largely due to early spring break up conditions, forest fires and unseasonal rain. Quarterly revenue for Q4’16 was also down about 34% compared to same period in the prior year.  Dalmac responded to the down turn of events by trimming costs and improving efficiencies. The net effect of our efforts are reflected in maintenance of our gross profit margin which increased 3% to 21% on a quarter to quarter comparison and remain relative flat 23% on a year to year basis. After allowing for an impairment of assets in the amount of $1.0M in Q4’16, Dalmac had a net loss of $1.5M on the quarter and year end loss of $2.7M.

Subsequent Developments
Dalmac has completed a private placement for $500K in May of 2016 which was priced at $0.10 per unit. Each unit consists of a common share plus an option to purchase $0.15/share.  The options are valid for 18 months from issuance.  Subsequent to the above placement Dalmac entered into arrangements for restructuring $1.75M of senior debt with a subordinated debt facility which would not only serve to improve our working capital but will also increase our operating cash availability with our senior lender.  As a further consequence of this refinancing, all covenant related breeches referenced in Q3’16 and YE’16 will be reset placing the Company in full compliance. Due to strict IFRS reporting requirements the Company was required to report, at year end, all senior debt as being current until such time as the revised covenant amendments are in place. After such time there will be a reclassification of about $7.6M of current debt which will then be restated as long term. This change will be reflected in the Q2’17 financial statements.

Outlook
With crude oil prices hovering between $40-$50/bbl, well stimulation and oil field related services seem to be headed for another quarter of declining revenue. Over the course of this year the oil and gas industry has significantly reduced capital spending on infrastructure development and drilling programs to the lowest levels in decades.  This has resulted in recession like conditions which are evidenced by slow demand and lower activity levels and characterized by intensified pricing pressure. There still remains a fair amount of uncertainty as to the magnitude and timing of when oil and gas prices will recover. In responding to this new reality, Dalmac has taken steps to reduce our operating expenses by approximately $1.0M on an annual run basis. We have reduced our employee count by about 30% in addition to cutting salaries, wages and benefits. Subsequent to the year end, we have also raised $500K in cash proceeds from the issuance of 5.0M common shares and refinanced about $2.0M of our senior debt. It is expected that at some point the reduced drilling and completion activity will correct the oil supply resulting in a demand imbalance which will eventually lead to higher oil prices. While a meaningful recovery of drilling and completions may not commence until well into the second half of 2016, we are confident in the belief that the longer the recovery takes, the more acute the drilling response will be.

Our strategy going forward is to aggressively manage all costs while maintaining a disciplined approach towards improving our balance sheet while keeping a close eye on debt levels reduction. We have many talented and dedicated people who are confident of weathering this recent economic downturn with the prospects of coming out stronger than before. In summary, Dalmac is leaner, keener and more proactive in negotiating fair and competitive rates with our key customers who are in pursuit of drilling and completion programs in the Duvernay basin.  Dalmac is committed to capitalizing on cost savings and revenue generation opportunities as we continue on our mission to generate value for all our stakeholders.

For more information contact:

John Babic - CEO - Dalmac Energy
Tel: 780-988-8510
Email: jbabic@dalmac.ca

Statements throughout this report that are not historical facts may be considered ‘forward looking statements’.  Such statements are based on current expectations that involve risks and uncertainties, which could cause actual results to differ from those anticipated.  Important factors that can cause anticipated outcomes to differ materially from actual outcomes include the impact of general economic conditions, industry conditions, competition from other industry participants, volatility of petroleum prices, the ability to attract and retain qualified personnel, changes in laws or regulation, currency fluctuations, continued ability to access capital from available facilities and environmental risks.  References to “Dalmac’, the “Corporation”, “Company”, “us”, “we”, and “our” mean Dalamc Energy Inc. and its subsidiary Dalmac Oilfield Services Inc.  The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.  We seek safe harbor.