Well-servicing firm embarking on ‘aggressive cost reduction program’

Central Alberta Well Services Corp. (TSXV: CWC) managed improved performance in its third quarter, but the well-servicing company remains in the red.

Central Alberta Well Services Corp. (TSXV: CWC) managed improved performance in its third quarter, but the well-servicing company remains in the red.

It reported on Wednesday that revenue for the three months ended Sept. 30 was $16.4 million. That led to a net loss of $905,000, or one cent per share.

For the same quarter in 2009, Central Alberta Well Services’ revenue was $10.3 million. It suffered a net loss of $5.2 million, or 19 cents a share.

A release issued by the company, which maintains its operational head office in Red Deer, said it’s embarking on “an aggressive cost reduction program.” Strategies, which will be implemented in the final quarter of this year and the first quarter of 2011, will focus on decreasing general and administrative expenses and overhead to improve cash flow and position the company to take advantage of opportunities, it said.

In October, Central Alberta Well Services announced that Darryl Wilson, its president and CEO, had resigned and also relinquished his position on the company’s board of directors. Duncan Au, president and CEO of private equity firm JAFETICA Capital Inc. and a director with Central Alberta Well Services, was named interim president and CEO.

Earlier this month, Darcy Campbell, the company’s vice-president, finance and chief financial officer, also resigned. A replacement was not named.

In the release that accompanied Central Alberta Well Services’ third quarter results, increased activity in the oilpatch was credited for the company’s improved year-over-year revenues and income.

Revenues for the first nine months of this year, at $45.8 million, were up from the $35.7 million recorded during the same period in 2009. Meanwhile, the company’s net loss for the year improved to $5.2 million, from $11.7 million.

The company cited the Petroleum Services Association of Canada’s forecast of an eight per cent increase in drilling activity in 2011, thanks to improved oil prices. It also noted that PSAC expects natural gas prices to remain low, which should reduce conventional shallow gas drilling.

Central Alberta Well Services said it is dedicating 90 per cent of its well-servicing fleet to oil-related activities and 10 per cent to natural gas. Its Red Deer base should allow it to take advantage of increased activity levels in the Cardium formation, it added.

Central Alberta Well Services provides a range of oilfield services, including the provision of service rigs, coil tubing, snubbing, nitrogen and well testing. Its corporate office is in Calgary, and it has operational offices across Alberta and in Saskatchewan.

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