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or Name
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Matrrix Energy Technologies Inc
Symbol MXX
Shares Issued 32,184,638
Close 2015-05-22 C$ 0.35
Market Cap C$ 11,264,623
Recent Sedar Documents

Matrrix loses $1.3-million in Q1

2015-05-23 00:11 ET - News Release

Mr. Richard Ryan reports

MATRRIX ANNOUNCES FIRST QUARTER 2015 RESULTS AND MAILING OF AGM MATERIALS

Matrrix Energy Technologies Inc. has released its financial results for the three-month period ended March 31, 2015.

Overall highlights (dollar amounts herein are in thousands)

For the three months ended March 31, 2015, the corporation experienced a significant decline in drilling and motor rental activity in both Canada and the United States. The anticipated decline in overall operational activity was due to the overall decrease in capital expenditures by the corporation's key customers and the industry as a whole, due to weak commodity prices.

The corporation remains in a strong financial position with positive working capital of $7,589, including $5,422 of cash on hand as at March 31, 2015.

First quarter 2015 summary (compared with the first quarter of 2014):

  • Achieved total operating days of 199, down 77 per cent from 873;
  • Achieved consolidated revenue of $2,103, down 81 per cent from $10,854;
  • Consolidated gross margin of 10 per cent, down 68 per cent from 30 per cent;
  • Recorded net loss of $1,302 down 220 per cent from net income of $1,082;
  • Adjusted earnings before interest, taxes, depreciation and amortization of ($678), down 135 per cent from $1,924.

                                                                                
                                     FINANCIAL HIGHLIGHTS  
                             (in $000 except per-share amounts)     
                                                                         Three months ended
                                                                 March 31, 2015      March 31, 2014 (1)

Revenue                                                                  $2,103                $10,854
EBITDA                                                                     (500)                 1,731
EBITDA per share
Basic                                                                     (0.02)                  0.05
Diluted                                                                   (0.02)                  0.05
Adjusted EBITDA                                                            (678)                 1,924
Adjusted EBITDA per share
Basic                                                                     (0.02)                  0.06
Diluted                                                                   (0.02)                  0.06
Net income (loss)                                                        (1,302)                 1,082
Net income (loss) per share
Basic                                                                     (0.04)                  0.04
Diluted                                                                   (0.04)                  0.04
Funds flow                                                                 (713)                 1,876
Gross margin                                                                204                  3,276
Capital expenditures (net of lost-in-hole replacements)                      50                  1,035
Directional and horizontal systems available                                 26                     23

(1) Amounts related to this period are revised amounts as discussed in the Dec. 31, 2014, 
corporation's management's discussion and analysis.

Outlook

The principal business strategy of Matrrix is to purchase and deploy drilling technology in Canada and the United States and to actively seek investment opportunities to acquire existing drilling technology services businesses. As at the current date, 25 systems are available for deployment to the field in Canada and the United States.

The industry in North America now focuses on horizontal drilling to develop conventional and unconventional oil and liquids-rich natural gas plays across North America. There always exists uncertainty over commodity prices and related customer capital expenditure programs. Macroeconomic factors have significantly affected capital spending and overall drilling activity levels in North America, which is the corporation's only operating area. The corporation expects to continue to experience significant reductions in activity and pricing during the first half of 2015, and expects pricing and activity pressure to continue in 2015, until commodity prices improve and operators return to reasonable levels of activity.

Canada

While activity and financial results were at record levels for the corporation in 2014, an abrupt negative change in operating days and pricing leverage occurred in first quarter 2015. At this juncture, the company expects activity and pricing pressure in the Canadian market to persist throughout 2015. This leads the corporation to expect its overall Canadian results to be down materially in 2015. However, with potentially large field developments of liquefied natural gas for eventual export from Canada, there is optimism for improvements in activity beyond 2015, subject to marked improvements in oil and gas commodity pricing and the approval of LNG infrastructure projects, although the timing and likelihood of those projects are uncertain. Matrrix continues to build relationships with active current and potential customers in Canada to maximize revenue in this challenging environment. The corporation is keenly focused on managing costs through reductions in staffing and compensation levels, managing equipment vendor relationships, and a continuous effort to improve operational efficiency.

United States of America

Although Matrrix did not experience any operating activity in the United States during first quarter 2015, it will continue to focus on providing performance drilling operations in Texas (Permian basin) while marketing horizontal and directional drilling services in both Texas and Oklahoma. Activity levels in both of these regions have been negatively impacted by reductions in drilling activity as a result of capital spending reductions due to low commodity prices. As such, the corporation is carefully executing its strategy to maintain and expand its revenue base in these areas, through maximizing service quality, while maintaining reasonable field margins with an eye to strong operational efficiency and optimizing drilling operations.

The corporation's Oklahoma operation consists of a small group of focused and qualified individuals, driving to develop a foothold in the region. The corporation believes the current rig count in Oklahoma has close to bottomed, and with the recent recovery of commodity prices, it is the corporation's goal to use the anticipated rise in activity to capitalize on the opportunity for growth. Costs for the Oklahoma operation are minimal, and reflect a prudent use of financing with a purpose to establishing a solid, long-term presence in the market.

Matrrix has a strong balance sheet, and strives to maintain operational excellence for existing customers, while actively pursuing new sales opportunities within the context of the highly competitive environment in which the corporation operates.

President Richard Ryan stated: "First quarter 2015 results are reflective of a severe downturn in drilling activity for the industry, catalyzed by the drop in commodity prices that occurred in the last half of 2014. Unfortunately for Matrrix, our high concentration of revenue from a small list of clients led to a disproportionate decrease in activity for us, as these clients either consolidated their activity with fewer service providers, or reduced their drilling activity to minimum levels, in some cases to zero. Our response to control costs was swift, but it can never completely match the change in revenue base as we always strive to ensure strong client service. In Q1 2015, we reduced head count by over 40 per cent, implemented reductions in wages for both field and support staff, and acted on opportunities to reduce costs. Our focus for 2015 is to continue to execute at a high level, regardless of activity, using unique systems and processes developed within Matrrix since our inception in mid-2011. We intend to preserve our clean balance sheet and position the organization for the anticipated upturn in the industry, while recognizing the timing of that upturn is uncertain."

The corporation's financial statements and management's discussion and analysis for the three months ended March 31, 2015, will be available on SEDAR.

Mailing of annual general meeting materials

The corporation would also like to announce that it has mailed its management information circular and proxy materials in respect of its annual general meeting to be held on June 16, 2015. The corporation would like to thank Donald Seaman and Kent Jespersen, who will be retiring at the conclusion of their terms as directors of the corporation.

Mr. Ryan stated, "We thank Don and Kent for their hard work and dedication as directors of Matrrix since its founding."

At the AGM, it is expected that Thane Russell will be nominated for election as a director of the corporation. Mr. Russell is currently the vice-president, business development and technology, of Absolute Completion Technologies. Copies of the meeting materials will be filed on SEDAR.

We seek Safe Harbor.

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