IN THE NEWS / Fracmaster sinks after big net loss
Shares in Fracmaster Ltd. sank in strong volume on Thursday after the embattled oil service firm reported a deep third-quarter loss with a big writedown in the value of its Russian operations.
Fracmaster stock in Toronto was off C$0.70 to C$4.30 with 1.5 million shares changing hands. It sank by as much as C$1 earlier in the trading session.
Calgary-based Fracmaster, which is seeking a buyer following a wholesale default on payments for stock sold by its former chairman, posted a net loss of C$124.6 million or C$C$2.86 a share.
That compared to a third-quarter 1997 profit of C$12.9 million or C$0.30 a share. Quarterly revenues dropped by 33 percent to C$78.1 million from year-earlier C$117.2 million.
Fracmaster said revenues from its Russian oil joint ventures and fee-for-service oil well stimulation services, which last year accounted for 61 percent of its total sales, sank by 45 percent in 1998.
That led the company to write down the value of the operation in the third quarter by C$126.1 million.
"The unusual charge represents the potential impairment in the value of Fracmaster's Russian related assets resulting from the significant downturn in the Russian oil industry anddeterioration in the Russian operating climate," Fracmaster said in its results statement, issued late Wednesday.
Fracmaster said more than 60 percent of the charge represented accounts and loans receivable that its management believed may never be recovered amid Russia's economic woes.
The company said its earnings before interest taxes and depreciation declined in its North American segment as well because of a big cutback in oil and gas drilling, a result of stubbornly depressed oil prices.
The poor results were just the latest in a recent string of disappointments for Fracmaster.
In September, the company put itself on the auction block after its former chairman, Geneva-based businessman Alfred Balm, vowed to collect C$177 million owed to him by investors, even if it menat selling his remaining shares to a third party.
Balm reluctantly owns 43 percent of Fracmaster after investors defaulted en masse on the final payment of an instalment plan set up when he tried to sell his entire controlling stake last year.
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