CALGARY, AB--(Marketwired - October 14, 2015) - Aveda Transportation and Energy Services Inc. ("Aveda" or the "Company") (TSX VENTURE: AVE), a leading provider of oilfield hauling services and equipment rentals to the energy industry, provides the following operational update:
In 2015, drilling activity in the Western Canadian Sedimentary Basin ("WCSB") and US has been negatively impacted due to lower average oil and natural gas prices compared to 2013 and 2014. This has largely been the result of increased supply in both the US and other oil producing countries, combined with slowing demand in large economies such as China and Europe. As a result, most oilfield service companies are seeing a very competitive environment for their services. This has been especially true in the rig moving and rental markets in which Aveda operates in. Even though the Company is invited to bid on a vast variety of projects, many bids are being lost due to competitors creating unsustainable pricing pressures for the industry and pricing services at levels which would generate negative gross profit margins.
Cost Management Initiatives
Experts have varying opinions on how long depressed commodity prices and the economic downturn is expected to last. Recognizing that the current economic downturn appears to be prolonged, Aveda has taken aggressive action to cut costs. During the third quarter of 2015, Aveda eliminated a total of 51 administrative and non-revenue generating positions in the field, including, corporate positions in Calgary and Houston. In addition, Aveda closed its branch in Mineral Wells, TX as there are only 4 rigs operating in that area and also merged its Cherokee, OK branch with its Oklahoma City, OK branch. The Company expects that it will generate operational savings of approximately $5.0 million annually as a result of the cost cuts. These cuts are in addition to the cuts Aveda previously announced.
Aveda is also taking aggressive action to manage overtime in the field and is looking at additional wage reduction opportunities to better align the Company's cost structure with market prices for its services. The Company is focusing greater attention to working with customers who align with Aveda's core safety values and is allocating resources and sales efforts to target the most profitable rig moves.
Third Quarter Outlook and Balance of 2015 Outlook
The Company anticipates generating between $22.0 million and $24.0 million in revenue in the third quarter of 2015. Aveda has generated an Adjusted EBITDA loss of approximately $3.3 million for the combined months of July and August 2015. The Company is expecting a further Adjusted EBITDA loss in September.
"Adjusting to the current economic climate has been an arduous task. We, like many other oilfield service companies are making the difficult decisions to be successful in our new reality," said David Werklund, Executive Chairman of Aveda. "We sincerely appreciate the support of our people as we make the necessary changes for Aveda's future growth and success."
Aveda is also pleased to report that it has obtained early release of the $1.3 million held in escrow from the previously announced sale of the assets of Hodges. These funds are expected to be received by the Company in October 2015.
Aveda will consolidate the majority of its Houston US corporate office, including all Houston based C-level positions, into its head office in Calgary. Due to the consolidation, Kevin Roycraft will be leaving the Company. The Company is pleased to announce the appointment of David Werklund as the interim President and Chief Executive Officer of Aveda. The board of directors of Aveda will immediately commence a search for a permanent President and Chief Executive Officer who has experience in transportation and logistics management.
Kevin Roycraft, the current President and Chief Executive Officer of Aveda, has agreed to assist the interim President and Chief Executive Officer until November 6, 2015. The Company's board of directors thanks Mr. Roycraft for his significant contributions during his time with the Company.
Mr. Werklund will remain as Executive Chairman and a member of the Company's board of directors.
About Aveda Transportation and Energy Services
Aveda provides specialized transportation services and equipment required for the exploration, development and production of petroleum resources in the Western Canadian Sedimentary Basin and in the United States of America principally in and around the states of Texas, Pennsylvania, Oklahoma and North Dakota. Transportation services include both the equipment necessary to move the load as well as a trained, professional driver capable of securing, moving and manipulating the load at its origin and destination. Aveda's rental operations include the rental of well-sites, tanks, mats, pickers, light towers and other equipment necessary for oilfield operations.
Aveda was incorporated in 1994 as a private company to serve the oil and gas industry. In the spring of 2006 the Company went public on the TSX Venture Exchange. Aveda has major operations in Calgary, AB, Leduc, AB, Sylvan Lake, AB, Edson, AB, Pleasanton, TX, Midland, TX, Marshall, TX, Williamsport, PA, Buckhannon, WV, Williston, ND and Oklahoma City, OK. Aveda is publicly traded on the TSX Venture Exchange under the symbol AVE. For more information on Aveda please visit www.avedaenergy.com.
This News Release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words, including negatives thereof, suggesting future outcomes. In particular, this News Release contains forward-looking statements relating to: demand for the Company's services and general industry activity level; the Company's growth opportunities; and expectations regarding the Company's revenue, EBITDA and equipment utilization. Aveda believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.
Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to Aveda, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and material factors are presented elsewhere in this News Release in connection with the forward-looking statements. Readers are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to:
• the performance of Aveda's businesses, including current business and economic trends;
• oil and natural gas commodity prices and production levels;
• capital expenditure programs and other expenditures by Aveda and its customers:
• the ability of Aveda to retain and hire qualified personnel;
• the ability of Aveda to obtain parts, consumables, equipment, technology, and supplies in a timely manner to carry out its activities;
• the ability of Aveda to maintain good working relationships with key suppliers;
• the ability of Aveda to market its services successfully to existing and new customers;
• the ability of Aveda to obtain timely financing on acceptable terms;
• currency exchange and interest rates;
• risks associated with foreign operations;
• changes under governmental regulatory regimes and tax, environmental and other laws in Canada and the United States; and
• a stable competitive environment.
The forward-looking statements regarding Aveda's potential revenue and Adjusted EBITDA are included herein to provide readers with an understanding of Aveda's anticipated cash flow and Aveda's ability to fund its expenditures based on the assumptions described herein. Readers are cautioned that this information may not be appropriate for other purposes.
Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties, some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Aveda's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in Aveda's annual information form and management discussion and analysis for the year ended December 31, 2014 (the "MD&A"), which are available for viewing on SEDAR at www.sedar.com. Any forward-looking statements are made as of the date hereof and, except as required by law, Aveda assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.
This News Release contains the terms "EBITDA" and "Adjusted EBITDA" which are defined in the MD&A. EBITDA and Adjusted EBITDA as presented do not have any standardized meanings prescribed by international financial reporting standards ("IFRS") and therefore may not be comparable with the calculation of similar measures for other entities. Management uses Adjusted EBITDA to analyze the operating performance of the business. Adjusted EBITDA as presented is not intended to represent cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.