EARNINGS / Peak Energy Services Ltd. Announces Record Fourth
Quarter and Year End Results for 1997
TSE SYMBOL: PES
FEBRUARY 12, 1998
CALGARY, ALBERTA--Peak Energy Services Ltd. ("Peak") is pleased to
announce its record fourth quarter and year end results for the
year ended December 31, 1997.
/T/
Consolidated Statement of Income & Retained Earnings(Deficit)
-------------------------------------------------------------
Three months 12 months 15 months
ended ended ended
Dec. 31/97 Dec. 31/96 Dec. 31/97 Dec. 31/96
Revenue
Operating $15,142,607 $ 1,166,257 $30,225,026 $ 1,811,047
Other 119,170 14,693 822,430 19,441
--------------------------------------------------------------
15,261,777 1,180,950 31,047,456 1,830,488
Expenses
Operating 4,803,309 489,102 11,151,012 872,314
General and
administration 2,740,316 292,257 5,495,853 508,062
Depreciation 855,092 196,881 2,874,949 349,114
Amortization of
goodwill 236,278 8,652 432,364 20,188
Interest on
long-term debt 298,447 12,007 419,495 31,761
-------------------------------------------------------------
8,933,442 $998,899 20,373,673 1,781,439
-------------------------------------------------------------
Income before
income taxes 6,328,335 182,051 10,673,783 49,049
Income taxes:
Current 426,847 - 426,847 -
Deferred 2,530,859 14,300 3,733,066 -
-------------------------------------------------------------
2,957,706 14,300 4,159,913 -
-------------------------------------------------------------
Net Income 3,370,629 167,751 6,513,870 49,049
Retained earnings
(deficit), beginning
of period 197,910 (3,113,082) (2,945,331) (2,994,380)
Reduction of
deficit against
stated share
capital 2,596,862 2,596,862 2,596,862 2,596,862
-------------------------------------------------------------
Retained earnings
(deficit) end
of period $ 6,165,401 $ (348,469)$ 6,165,401 $ (348,469)
--------------------------------------------------------------
Basic earnings
per share $ 0.13 $ 0.02 $ 0.32 $ 0.01
Fully diluted
earnings per
share $ 0.13 $ 0.01 $ 0.31 $ -
Fully diluted
cash flow
per share $ 0.30 $ 0.03 $ 0.63 $ 0.02
Fully diluted
EBITDA per
share $ 0.33 $ 0.04 $ 0.67 $ 0.03
-------------------------------------------------------------
-------------------------------------------------------------
Consolidated Balance Sheet
December 31 December 31
1997 1996
------------------------------------------------------------
Assets
Current Assets $17,123,841 $11,306,274
Capital Assets 71,968,151 6,149,660
Goodwill 20,540,291 325,891
-------------------------------------------------------------
Total Assets $109,632,283 $17,781,825
--------------------------------------------------------------
Liabilities & Shareholders Equity
Current liabilities $ 6,577,246 $ 771,479
Long-term debt 5,162,963 1,118,655
Deferred income taxes 3,383,910 -
Shareholders' equity
94,508,164 15,891,691
------------------------------------------------------------
Total Liabilities &
Shareholders Equity $109,632,283 $17,781,825
------------------------------------------------------------
/T/
The Company has shown significant growth in the fourth quarter of
1997, generating approximately the same revenue that it achieved
in the first three quarters of 1997 combined. Peak also generated
more Net Income, Cash Flow from Operations, and EBITDA (Earnings
before Interest, Taxes, Depreciation, and Amortization) in the
fourth quarter of 1997 than the first three quarters combined.
This growth is attributable to the full impact of the acquisition
of Lykal Sales and Oilfield Rentals Ltd. ("Lykal") and the on
going capital expenditure program within Peak's subsidiaries. In
addition, the Company completed three acquisitions in the fourth
quarter totaling $11 million that were complimentary to Peak's
existing business.
Peak increased its revenues in the fourth quarter of 1997 by 1192
percent as compared to the same quarter in 1996 ($15.3 million
vs.$1.2 million) while expenses increased by 794 percent for the
same period. This resulted in significant growth in Net Income of
1909 percent for the fourth quarter of 1997 as compared with the
same quarter in 1996 ($3.4 million vs. $0.2 million). Fully
diluted EPS grew by 1200 percent for the same period ($0.13 vs.
$0.01). Total assets as at December 31, 1997 increased by 517
percent from December 31, 1996, and shareholders equity increased
by 495 percent for the same period. Peak's revenue for the year
ended December 31, 1997 was $31 million consisting of 40 percent
from well-site accommodations, 24 percent from drilling
instrumentation, 19 percent from solids control, 10 percent from
tension anchoring and 7 percent other.
The exponential growth experienced by Peak during 1997,
especially in the fourth quarter, reflects the success of
management's strategy to increase shareholder value through
strategic acquisitions, internal growth of its subsidiaries and by
generating superior returns on its invested capital . Peak
successfully completed nine acquisitions throughout 1997 totaling
approximately $62 million of which the acquisition of Lykal on
August 7, 1997 was the largest at $43 million. As well, in 1997
Peak invested approximately $12 million on capital expansion in
its subsidiaries of which $8 million was invested in the fourth
quarter. Of the $12 million invested in capital expansion in
1997, $3.4 million was in well-site accommodation, $3.2 million
was in solids control, $3.8 million in drilling instrumentation,
$0.9 million in tension anchoring and $0.7 million in other items.
The majority of the growth was financed through equity issues of
$69 million and the use of $10 million cash on hand at December
31, 1996. This has resulted in a very strong balance sheet with
shareholders' equity of $95 million and a debt to equity ratio of
0.07 to 1.
Entering 1998 with a strong financial position and the ability to
leverage off of our existing infrastructure will enable Peak to
continue to generate significant shareholder value. Peak will
continue to seek out strategic acquisitions that compliment its
existing businesses, pursue an aggressive internal growth strategy
and evaluate opportunities to diversify the company's operations.
Peak's capital expenditure budget for 1998 is $21 million, of
which $20 million will be utilized for expanding its subsidiaries
and $1 million will be used for sustaining capital reinvestment
purposes. These expenditures will be financed from cash flows
from operations.
Peak will continue to be an opportunistic acquirer in the oil and
gas service sector. The recent weakness in the equity market will
result in reduced price expectations for potential acquisition
targets. The company will take advantage of the current
environment by using its strong financial position and a
normalized level of debt to finance its acquisitions in 1998.
During 1997, Peak's management undertook several initiatives to
streamline the operations of its businesses. The Company will
continue to focus on realizing opportunities to increase
efficiency and profitability within all of its operations.
Peak remains optimistic on the long-term industry fundamentals,
however it anticipates a decline to 13,000 to 14,000 wells drilled
in 1998 as compared to the record levels achieved in 1997. In
spite of the slight decline, this level of drilling activity will
continue to generate high utilization rates within the Company due
to its dominance in its business segments, its high quality
equipment and experienced personnel.
Peak Energy Services Ltd. is a diversified energy services company
providing oilfield rental equipment and related services to the
energy industry in Western Canada. Peak's shares are listed on
The Toronto Stock Exchange under the symbol "PES". |
