Hanwei Energy Reports Third Quarter Fiscal 2021 Financial and Operational Results

VANCOUVER, British Columbia, Feb. 10, 2021 (GLOBE NEWSWIRE) -- Hanwei Energy Services Corp. (TSX: HE) (“Hanwei” or the “Company”) today reported its financial results for the three and nine months ended December 31, 2020. All amounts are in Canadian Dollars unless otherwise noted.

Update on COVID-19 Impact

With the recent announcements of various COVID-19 vaccine approvals in Canada and around the world, oil prices have recently increased. Commodity prices and the economic environment remains volatile and challenging which has adversely affected the Company's operational results and financial position. 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

The Company has two reportable segments for its continuing operations: its FRP pipe manufacturing and its oil and gas production. The pipe segment produces and sells fiberglass reinforced plastic (“FRP”) pipe for the oil and gas industry and other infrastructure applications. The oil and gas segment is engaged in the exploration and production of oil and natural gas in Western Canada.

For the three months ended December 31, 2020:

• Total Company revenues were approximately $2.5 million as compared to $4.0 million for the same period of the prior year. The $1.5 million or 38% decrease in revenue was due to a $1.4 million decrease in FRP pipe revenue and a $0.1 million decrease in the oil and gas business.
  
  • FRP pipe sales totalled $2.2 million, as compared to $3.6 million for the same period of the prior year. Sales in both periods were entirely contributed by the Company’s China market with no sales contributed from international markets. The $1.4 million or 39% decrease in sales resulted from the general downturn in the oil and gas industry due to the impact of COVID-19 (with sales orders deferred until the economic outlook improves) and specifically the postponement of certain projects of a major customer.
    
  • The Company produced approximately 77 barrels of oil equivalent per day (boed) with gross revenue of $43.84 per boe and a netback of $7.44 per boe, generating revenues net of royalties of $0.3 million as compared to 81 barrels of oil equivalent per day (boed) with gross revenue of $57.69 per boe and a netback of negative $0.05 per boe, generating revenues net of royalties of $0.4 million for the same period of the prior year. The decrease in production was due to the shut-in of oil wells at the Nevis Lands and natural production decline at the Leduc Lands. The increase in netback primarily resulted from reduced operating expenses compared to the same period of the prior year that included certain expenses for the repair of a horizontal well at the Leduc Lands. The decrease in revenue was primarily due to lower commodity prices.