MATRRIX Energy Technologies Inc. ("MATRRIX" or the "Corporation") (TSX-V: MXX) announces financial results for the three month period ended March 31, 2017.
(All monetary amounts contained herein are expressed in thousands of Canadian dollars, except for per share amounts)
For the three month period ended March 31, 2017, the Corporation experienced a 119% increase in operating days related to horizontal drilling and motor rental activity in Canada relative to the comparative 2016 period. The Corporation's overall increase in operational activity was due to the addition of new customers related to the increase in overall activity in the Western Canadian Sedimentary Basin ("WCSB") as compared to the comparative 2016 period.
The Corporation continues to be in a strong financial positon with positive working capital of $4,143 ($0.13/per share) including $3,119 ($0.10/per share) of cash and cash equivalents on hand as at March 31,
FIRST QUARTER 2017 SUMMARY (Compared with the first quarter of 2016)
The current business strategy of MATRRIX is to deploy horizontal and directional drilling technology in Canada, while actively seeking investment opportunities to acquire existing drilling services businesses and/or equipment. As at the date of this MD&A, 25 Horizontal and Directional Systems are available within MATRRIX for deployment to the field in the WCSB.
The Corporation has announced it intends to investigate entering the land-based contract drilling business to complement its business of supplying horizontal and directional drilling technologies for the oil and gas industry in North America. MATRRIX continues to evaluate opportunities to purchase contract drilling companies and/or drilling rig assets and will transact when and if an appropriate opportunity exists.
The oil and gas industry in North America extensively uses horizontal drilling to exploit conventional and unconventional oil and liquids-rich natural gas plays in most basins within North America. Oil prices have significantly rebounded from lows experienced in early 2016, which have positively affected capital expenditures and drilling programs by the Corporation's oil and gas clients, while improving the outlook for oil and gas service companies including MATRRIX.
The Corporation expects 2017 to be a recovery year for the industry. Supply of oil and gas services equipment continues to exceed demand, and until activity meets a reasonable threshold to improve the supply / demand imbalance, we expect the market for the Corporation's services to remain highly competitive. To that end, the Corporation continues to drive efficiency and scalability into its systems and processes, with a view that fixed expenses will be spread over a larger revenue base as the Corporation's revenue base recovers.
Predicated upon improvements in oil and gas prices, and improvements in market access, the Corporation expects industry activity levels in Western Canada to grow through 2017 and into 2018.
MATRRIX continues to have success leveraging and building relationships with active current and potential customers in Western Canada, and expects growth in revenue and earnings within an improving industry environment. The Corporation continues to effectively balance costs with forecasted activity levels, while managing equipment vendor relationships, and perpetually improving operational results and efficiency through use of its proprietary D2ROXTM software platform
The Corporation will evaluate, assess, and execute (if it deems appropriate) an expansion program into markets outside of North America, with a goal to improving geographic diversity. Opportunities will be evaluated based upon expected financial impact and risk to the Corporation through delivery of appropriate levels of revenue, income, and returns in each geographic region.
In considering geographic expansion, the Corporation will assess the potential of partnering with established organizations that have significant, existing operations in certain regions of interest.
President Richard Ryan states:
"In the Canadian market, fundamentals and service company activity levels continue to improve, the catalyst being stronger oil prices and stronger levels of industry investment when compared to 2016.
The company's first quarter 2017 activity levels were certainly improved from the comparable period in 2016. Certain MATRRIX clients experienced delays in accessing pressure pumping and cementing equipment during Q1 2017, causing wells scheduled for that period to be delayed into Q2 2017 and beyond.
With respect to improving quality of well-bore life cycles, we are very encouraged by client feedback regarding the effect of D2ROXTM on client drilling operations. D2ROXTM is a proprietary web based software platform, designed and utilized by MATRRIX in all aspects of service delivery, resulting in high quality field operations and highly accurate wellbore placement for MATRRIX clients.
As activity continues to improve, it's our intention to use D2ROXTM to drive scalable growth, maintain high levels of service quality, while automating certain routine aspects of the sales / engineering / operations / accounting cycle of MATRRIX drilling services. The D2ROXTM foundation is designed to operate in both Canadian and American units, and will accommodate needs of the MATRRIX drilling rig division, assuming the company is successful in launching that service offering.
We have zero debt and strong working capital and cash positions. We're very encouraged by the firming market, our activity increases and sales momentum, and the growth opportunities that exist for the company. Our team is working hard to leverage market improvements, remaining focused on measurable, sustainable value for clients and shareholders while returning to a mindset of growth and profitability."
SOURCE: MATRRIX Energy Technologies Inc.
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