Hanwei Energy Services Reports First Quarter Fiscal 2021 Financial and Operational Results

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.