Highlights for 2008:
— Annual revenues in 2008 were down 16% from 2007 reflecting the slow economic and industry conditions in 2008 and the company’s sale of non-core business assets. However revenues from the company’s core business of production optimization were up slightly year over year.
— Income before loss on sale, amortization, interest and income taxes was CAD27,692 for the year-end 2008, compared with the CAD574,359. This measure would have improved in 2008 if not for the effect of foreign exchange fluctuations over the two years
— Operating margins were maintained despite falling revenues due to the industry and general economic slowdown
— The remaining note payable to the Grenville Energy partnership was converted into equity. Combined with other debt repayments this conversion resulted in the removal of CAD5.3 million of debt
— General and administrative (G&A) expenses were decreased to 12% for the year-end 2008
— The process of disposing of non-core assets and re-investing in Western Energy Services fleet of production stimulation equipment was largely concluded in 2008.
Western Energy Services has reported revenues of CAD3.14 million for the fourth quarter of 2008, compared with the revenues of CAD3.02 million in the year-ago quarter.
Operating expenses were down by 85% of revenues for the year-end 2008 compared to 88% in the previous year, as a result 2008 operating margin (revenue less operating costs) was CAD1,853,372, being 98% of the 2007, operating margin of CAD1.9 million.
G&A expenses continued to decline for the year-end 2008, seeing a further drop of 12%. Western Energy Services started an aggressive campaign to manage these costs in 2006 and has continued to realize salary and occupancy costs savings.
Interest expense declined to CAD1.3 million for the year-end 2008 from CAD1.65 million, reflecting decreasing debt levels and lowered variable costs of borrowing.
During the year the note payable to Grenville Energy partnership was converted into about 18 million shares on December 29, 2008, resulting in the removal of about CAD3.6 million in debt and a decrease of future annual interest costs of CAD0.28 million.
