MATRRIX Energy Technologies Inc. ("MATRRIX" or the "Corporation") (TSX-V: MXX) announces financial results for the three month period and the year ended December 31, 2016.
(All monetary amounts contained herein are expressed in thousands of Canadian dollars, except for per share amounts)
For the three month period ended December 31, 2016, the Corporation experienced an increase in operating activity as compared to the corresponding 2015 period. For the year ended December 31, 2016, consistent with industry conditions, the Corporation experienced a significant decline in horizontal drilling and motor rental activity relative to the comparative period in 2015. The anticipated decline in the Corporation's overall 2016 operational activity was due to decreased capital expenditures by the Corporation's key customers due to weak commodity prices.
The Corporation is in a strong financial positon with positive working capital of $4,136 ($0.13/per share) including $3,608 ($0.11/per share) of cash and cash equivalents on hand as at December 31, 2016.
FOURTH QUARTER 2016 SUMMARY (Compared with year prior)
YEAR ENDED 2016 SUMMARY (Compared with year prior)
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 technology services businesses and/or equipment. As at the date of this press release, 25 Systems are available for deployment to the field in the Western Canadian Sedimentary Basin.
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 pricing to remain challenged. 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.
Assuming strength in oil prices, and improvements in market access, the Corporation expects industry activity levels in Western Canada to grow through 2017.
MATRRIX continues to leverage and build relationships with active current and potential customers in Western Canada to grow 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 efficiency.
The Corporation temporarily ceased operations in the USA during 2015 to preserve the Corporation's strong balance sheet and cash position.
The Corporation continues to assess opportunities to re-enter the USA market, and remains opportunistic in its approach to re-establish its presence in that important sector of the North American oil and gas market.
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 its regions of interest.
President Richard Ryan states:
"Oil and gas industry fundamentals and service company activity levels began improving during the last half 2016, bouncing off second quarter 2016 historic lows. Assuming commodity prices continue to hold or improve, we expect 2017 to be characterized by improving client fundamentals, reactivation of capital programs focused on drilling, and a return to reasonable levels of oil and gas services activity.
Regarding 2017 activity levels, there remains an excess of oil and gas services equipment, a situation affecting service company pricing leverage and pricing recovery. During the 2016 downturn, our organization remained focused on building systems and processes, and specifically our D2ROXTM infrastructure, targeting scalable revenue growth while leveraging improvements to MATRRIX revenue, while capping cost escalation. D2ROXTM allows MATRRIX staff to deliver high quality horizontal and directional drilling services by enabling targeted and measured results through the entire MATRRIX sales, service and field delivery chain.
As of December 31, 2016, MATRRIX has zero debt, a strong working capital position, and $3,608 in cash. Our team is working hard to leverage market improvements, and is focused on creating measurable, sustainable value for our clients and shareholders while returning to a mindset of growth and profitability."
SOURCE: MATRRIX Energy Technologies Inc
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.