Winalta Inc. Announces Results for Third Quarter Ending September 30, 2012

CALGARY, Nov. 23, 2012 /CNW/ - Winalta Inc. (TSXV: WTA.A) ("Winalta" or the "Company") announces results for the three months ending September 30, 2012 with revenue for the quarter of $3.6 million and EBITDA of $1.3 million showed decreases of $1.3 million and $1.5 million, respectively, for the comparable three month period in 2011.  The change from the comparative period can be attributed to a decrease in customer demand for our services as customers have adjusted or reduced their drilling activity.  The Company also recorded a decrease in third party rental equipment that the Company managed during the period ending September 30, 2012.

The Company realized 46% utilization across its entire fleet of equipment for the 9 months ending September 30, 2012, resulting in positive consolidated EBITDA of $6.1 million as compared to $6.8 million for the 9 months ending September 30, 2011. Oilfield Rentals net income of $1.5 million or $0.04 per share compared favourably to net income of $1.3 million or $0.03 per share for the 9 months ended September 30, 2011.

During the first 9 months of 2012, Winalta continued to increase its asset base, building $4.4 million of Wellsites and Dedicated Geo Lab units, a 13% increase in fleet size. The Company's build program is part of its strategy to provide newer Wellsite units and Dedicated Geo-Lab units to its customers.  The Company remains on schedule with its planned build program for 2012.

Revenue
Winalta revenue decreased by $1.3 million, a decrease of 27% for the 3 months ended September 30, 2012 (the "Period") compared to the three months ended September 30, 2011 (the "Comparative Period"). This 27% decrease in revenue year over year is attributable to decreases in utilization and third party revenue.

Fleet Expansion
Over the past 12 months, the Company has added 22 Wellsite units and 10 Dedicated Geo-Labs. The Company continues to expand its fleet.  For the current Period, the fleet increased by 9 Wellsite units and 2 Dedicated Geo-Lab units.

Utilization
Utilization of Wellsite units for the Period was 33% as compared to 82% for the Comparative Period.  A contributing factor to the utilization decrease was the increase in Wellsite units of 10% over the Comparative Period.  Adjusting for the fleet increase, the Company would have achieved a 42% utilization rate in the Period.

Utilization of Dedicated Geo-Labs units for the Period was 34% as compared to 76% for the Comparative Period.  Dedicated Geo-Lab units increased by 111% over the Comparative Period.  Actual rental days for Dedicated Geo-Lab units increased by 28% in the Period, compared to the Comparative Period.

General and Administrative
For the Period, administrative costs were $974 thousand, up from $933 thousand, for the Comparative Period.  The Company has continued to focus on cost controls and reductions occurred in salaries and benefits of $34 thousand; stock based compensation of $30 thousand; travel, meals and entertainment of $10 thousand; and, office expenses of $77 thousand.  These reductions were offset by an increase of $65 thousand in professional fees;  additional administrative expenses of $58 thousand relating to the remaining 50% acquisition of the Sylvan Lake joint venture; $17 thousand in promotional activities; $31 thousand relating to the completion of an outstanding  legal issue; and, $19 thousand relating to a subsidiary company.

Depreciation and Amortization
Depreciation and amortization was $1,284 thousand for the Period as compared to $1,213 thousand for the Comparative Period.  The increase in depreciation and amortization expense reflects the acquisition of $4.6 million of equipment in the trailing 12 months.

Interest Expense

Interest expense for the Period was $187 thousand as compared to $303 thousand for the Comparable Period.  The decrease in interest expense in the Period was the result of the Company renegotiating its financing facility to more favorable terms.

Outlook
The third quarter of 2012 resulted in some challenges for the Company due to adverse weather conditions and volatile market conditions relating to gas and oil price fluctuations which impact drilling activities.  Demand for our services from customers improved over second quarter 2012 utilization rate  however, anticipated activity in the third quarter did not materialize to the same degree as expected as customers continued to control spending due to  uncertain market conditions, infrastructure and oil transportation bottle-necks continue to be a concern.  Management continues to monitor these factors as this would impact quarterly results as changing conditions directly impact drilling activities and Company asset utilizations.  The Company continues to be conservatively optimistic in regards to the balance of 2012 and into 2013 for the winter drilling season as the Company has received verbal commitments which would fully utilize the Company's assets.  This combined with the continued Western Canadian economic activity, in both oil and gas exploration, should continue to provide opportunities for the Company.  The Company believes the economy will continue at the same pace for the foreseeable future, as further supported by PSAC (Petroleum Services Association of Canada) forecast for the balance of 2012 and 2013, which should translate to improved utilization rates for Winalta's equipment.  In conjunction with the expected demand, the Company is continuing to expand the fleet of oilfield Wellsite units and Dedicated Geo-Labs units in order to meet demand and to maintain a relatively new fleet of units.  The additions to the fleet will allow the Company to continue to support its customer base in meeting their needs as well as expanding to new customers.

Winalta Inc., operating under the trade name, Winalta Oilfield Rentals, is an oilfield service provider that specializes in portable industrial rental accommodations, remote offices and Dedicated Geo Labs; servicing the Western Canadian oil and gas Industry.

Neither the 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.

Forward-looking information
Certain information set forth in this press release, including management's assessment of the potential for increased cash flows, continued growth of the Company's rental fleet, demand for the Company's rental units and the Company's expectation regarding the status of the economy and its impact on the Company, may constitute forward-looking statements. By their nature, forward-looking statements involve material assumptions and are subject to numerous risks and uncertainties, including with respect to market and economic conditions and their impact on the Company's business, some of which, are beyond the Company's control. Readers are cautioned not to place undue reliance on the forward-looking statements as the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and actual results, performance or outcomes could materially differ from those expressed or implied in such forward-looking statements and accordingly, no assurance can be given that any of the events anticipated by forward looking statements will transpire or occur, or if any of them do so, what benefit Winalta will derive therefrom. The Company does not assume the obligation to revise or update this forward-looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.

SOURCE: Winalta Inc.