Enservco Corporation (NYSE:ENSV)

Fourth Quarter 2014 Financial Results

• Revenue in the fourth quarter increased to a record $18.3 million, up 21% over $15.2 million in the same quarter last year
• Net income increased 129% to $2.5 million, or $0.07 per diluted share, from $1.1 million, or $0.03 per diluted share, in the same quarter last year. 

"We are very pleased to announce record revenue and adjusted EBITDA for the full year -- highlighted by a strong fourth quarter in which we achieved record revenue, an 80% increase in adjusted EBITDA and a 133% increase in earnings per share," said Rick Kasch, Chairman and CEO. "These results are especially gratifying given the unusual confluence of certain issues we faced during the year, including (i) temporary safety stand-downs by two large customers (neither deemed a result of our actions); (ii) the effects of severe propane price fluctuations (which among other impacts influenced customers to utilize alternative fuel sources); and (iii) unfavorable weather patterns in the fourth quarter. 

"During 2014 we successfully executed an aggressive capital expenditure program that contributed to record revenue in all three of our well enhancement business lines -- hot oiling, acidizing and frac water heating," Kasch added. "This capacity increase -- essentially doubling our fleet size year over year -- was our response to growing demand from existing and new customers throughout our traditional service territories as well as in new geographical expansion areas. We are particularly focused on growing our hot oiling and acidizing services, which represent less seasonal, recurring revenue streams that give us a more balanced revenue mix while reducing the risks associated with oil and gas price fluctuations. We also continue to build on our leadership position in frac water heating by increasing our capacity 81% year over year and capturing new business with our flexible bi-fuel system, which allows our frac water heating units to switch between using propane or natural gas. Although our introduction of bi-fuel heating units contributed to lower propane revenue in the short term, our early mover status in providing E&P customers with this cost-saving service resulted in increased market share and improved customer loyalty that will serve us well in the long term.

"Looking forward, as projected, we will have 100% of the new equipment from our 2014 capex program available for service by March 31, 2015, resulting in 81 frac water heating units (up from 42 last season); 59 hot oil units (up from 27); and 7 acidizing units (up from 3). This increase in capacity also includes our acquisition in Tioga, ND, which has met our expectations and enabled us to expand our operations in the Bakken, capture additional market share with major producers and grow our recurring maintenance work. In addition to successfully expanding our fleet, we entered 2015 with a track record of solid cash flows; a strong, underleveraged balance sheet; and significant capacity under our bank line. I believe we are in an excellent position to weather the current oil price decline and to aggressively pursue M&A opportunities that we anticipate will be accretive to earnings and enable us to diversify our service offerings, balance revenue streams between recurring maintenance and drilling-related work, further reduce the seasonality aspect of our business, and achieve high gross margins."

ENSERVCO Provides Capital Expenditure and Operational Update

DENVER, CO--(Marketwired - Jul 10, 2014) - ENSERVCO Corporation (NYSE MKT: ENSV)

$7 Million Added to 2014 Capex Budget; Full-Year Budget Totals $16 Million
Annual Revenue Potential of New Equipment Exceeds $35 Million
Company Initiating Acidizing and Hot Oiling Programs with Multiple Customers
Management Provides Update on Anticipated Second Quarter Financial Results

ENSERVCO Corporation (NYSE MKT: ENSV), a provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today provided an update on its 2014 capital expenditure plan and recent operational developments.

2014 CAPEX PLAN

ENSERVCO has added $7 million to its previously announced $9 million capital expenditures plan for 2014. The additional investments will go toward the fabrication of eight frac water "mega" heaters, six hot oiling units and two acidizing units. Annual revenue potential from the additional equipment is estimated to be at least $15 million bringing the estimated annual revenue potential for the entire $16 million 2014 capex plan to more than $35 million.

New frac water heating units designed by ENSERVCO during the past year (being referenced to as mega heaters by the Company), double the capacity of ENSERVCO's legacy frac water heating units (previously referred to as "boxes"). The 18 mega heaters planned under the combined 2014 capex program will therefore be equivalent in both heating and revenue potential to 36 of the Company's prior boxes. In addition, the Company anticipates higher operating margins from efficiencies that should be realized in both labor and fuel expenses from the new design.

In summary, the total capex plan should result in a 2014 year-end equipment fleet of (i) the equivalent of 80 legacy frac water heating units, up from 42 at the end of 2013; (ii) 41 hot oiling units, up from 27; and (iii) seven acidizing units, up from three. Six additional hot oil units from the 2014 plan are scheduled for delivery in the first quarter of 2015.
To date, fabrication is on schedule and the Company has begun receiving and deploying its first hot oil and acidizing units. Due to recent limited availability of specialized trucks required to fabricate acidizing units, management has re-allocated a portion of the initial $9 million in capex toward the construction of acidizing docks and related equipment, and reduced to two the number of acidizing units which, as mentioned, have been received. The remaining two units are now included in the second phase of spending.

As previously announced, the first phase of spending is being funded from internal cash flow. Management plans to fund the second phase with bank financing and is currently reviewing term sheets from two leading commercial lenders. Details of the financing and a detailed deployment schedule for the equipment will be presented during the Company's second quarter earnings announcement in mid-August.

"The decision to increase our capital investments was based on detailed discussions with customers about their expanding service needs and our expansion into new markets," said Rick Kasch, president and CEO. "Much of this demand is for non-seasonal well maintenance work. In recent weeks, we have been commissioned by multiple customers to initiate ongoing well acidizing and hot oiling programs in both our Rocky Mountain service region and in Texas. This work was previously performed by other service providers, and represents an expansion of our market share in very active oil and gas fields."
Kasch added, "These programs, which should represent several million dollars in additional annual revenue, include regular acidizing of more than 1,000 wells for multiple customers operating in central Wyoming's CO2 flood fields. In addition, later in the third quarter, we expect to commence acidizing programs for three companies in the Texas Panhandle region. This year-round work should lead to a strong improvement in our third quarter financial results versus the third quarter last year."

SECOND QUARTER OPERATIONS

The second quarter has historically been one of the Company's two slowest due to the wind down of the seasonal frac water heating work. The Company indicated that despite an almost $1 million increase in second quarter hot oiling revenues versus last year's second quarter, total revenue is expected to be approximately $600,000 below the $7.9 million reported in its 2013 second quarter. The anticipated decline is principally due to a three-week halt in frac water heating for a large customer in the DJ Basin. The stoppage resulted from a well-site accident on a frac job for which ENSERVCO was heating water. The accident triggered an incident review and evaluation of ENSERVCO's safety procedures in the DJ Basin by the customer. The incident analysis determined the accident resulted from the failure of a component on another service provider's equipment. Once the customer's safety evaluation was completed, ENSERVCO was cleared to restart services. However, by the time clearance was obtained, the heating season had slowed significantly and the lost revenue could not be recovered.

Kasch said the Company expects to report a second quarter operating loss of approximately $1 million versus operating income of $550,000 in the same quarter last year. The anticipated decline is due to (i) the reduction in revenue mentioned above; (ii) the addition of safety coordinators during 2013 at each of the Company's locations as a part its commitment to high safety standards; (iii) higher maintenance and repair costs associated with the Company's expanded service fleet; and (iv) the labor costs incurred in retaining the crews waiting for the re-start of activity with the aforementioned large DJ Basin customer.

Fourth Quarter 2013 Results

• Fourth quarter revenue was a quarterly record $15.2 million, up 35% from $11.3 million in the fourth quarter last year.
• The company reported EPS of $0.03, compared to $0.02 in the comparable year-ago quarter.

"Our record-breaking top-line performance during 2013 reflects very strong demand for our services from the exploration and production industry, and our improved ability to meet that demand," said Rick Kasch, president. "The investments made during the past year to expand our equipment fleet have allowed us to better serve customers in our existing territories, and have made possible a continued expansion of our geographic footprint."

"By the end of the fourth quarter, frac water heating capacity had increased by 40% versus the end of 2012, while hot oiling capacity was up 18%. Our fleet expansion has continued into the first quarter, during which we added several additional frac water heating units and hot oilers. By the time we enter our next busy cycle this fall, we will benefit from the full effect of a much larger fleet than we had at the beginning of the current season."

Kasch said aggressive investments in capacity are expected to continue during 2014, and will likely be funded primarily with internal cash flow. "Our next capex budget, which we expect to announce in May, will likely include increased emphasis on acidizing and hot oiling services, which are non-seasonal and experiencing considerable customer demand. We recently opened an acidizing dock at our new service yard in Rock Springs, Wyoming, and are in discussions with prospective customers about expanding these services into north Texas and the Eagle Ford Shale region of southwest Texas."

Kasch said ENSERVCO's next major territory will likely be in Texas or northeast Nevada, where Noble Energy, a large existing customer, has built a 350,000-acre position in Elko County. "We already are servicing the test wells Noble has drilled in the area, which reportedly have delivered initially encouraging results. We are currently serving this region from our Rock Springs facility, but may open a Nevada yard if development activity accelerates as planned. Noble has estimated the Elko play could contain the equivalent of more than one billion barrels of oil."

Kasch said growth opportunities in existing service territories remain strong. "We recently entered into a two-year service commitment with one of the largest operators in the Utica Shale region, and have watched with great interest as customers in the D-J Basin and Marcellus, Utica and Bakken shale regions have released their 2014 drilling plans. It is clear the next 12 months should be another period of strong growth for ENSERVCO.

"We started 2014 with considerable momentum, as January and February represented the two strongest revenue months in Company history," Kasch added. "In addition, earlier this month we completed an up-listing of our common stock to the NYSE MKT exchange, which we believe gives us much greater visibility within the investment community. 

"Last week, we were named the Rocky Mountain region's Service Company of the Year at the annual Oil and Gas Awards event in Denver. This recognition is a source of great pride to the Company, as we were selected by a panel of industry peers, and our category included roughly a dozen other respected service companies, many of which are much larger than ENSERVCO. This award is a tribute to the effort and dedication of our outstanding operational and administrative staff. I am incredibly proud of the entire ENSERVCO team, which has allowed us to deliver very strong financial growth and industry-leading customer satisfaction."

DENVER, CO--(Marketwired - Mar 5, 2014) - ENSERVCO Corporation (OTCQB: ENSV), a provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today announced it has received approval to list its common stock on the New York Stock Exchange MKT. Trading is expected to commence on Monday, March 10, 2014, under the Company's current symbol, ENSV.

Rick Kasch, president, said, "The elevation of our listing status represents an important strategic accomplishment that we believe will help expand the profile of the Company amongst institutional and retail investors. ENSERVCO has delivered strong operational and financial growth in recent quarters, and we anticipate our transition to the NYSE MKT will help facilitate continued growth in shareholder value."

"As we continue to grow our NYSE's community of growth-oriented companies, we are excited to welcome ENSERVCO," said Scott Cutler, executive vice president, head of global listings, NYSE Euronext. "The NYSE MKT fully integrated trading platform, which combines leading technology with the human participation of designated market makers, is a great fit to support the company's ongoing maturation."

The NYSE MKT is a fully integrated trading venue within the NYSE Euronext community and leverages the NYSE's advanced market model to offer a premier location for listing and trading the stocks of small companies. The venue utilizes the trading, connectivity and routing technologies of the NYSE platform and is designed to provide superior price discovery and liquidity, as well as reduced trading volatility. Listed companies benefit from issuer-selected Designated Market Makers (DMM) that utilize NYSE trading systems to discover and improve prices, dampen volatility, add liquidity and enhance value. In addition, NYSE MKT-listed companies gain access to the brand visibility and are eligible for the issuer services enjoyed by the NYSE Euronext community.

ENSERVCO's listing approval is contingent on the Company continuing to meet all of the initial listing requirements on the day it is scheduled to commence trading.

DENVER, CO--(Marketwired - Mar 6, 2014) - ENSERVCO Corporation (OTCQB: ENSV), a provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today issued an update on its fourth quarter preliminary financial performance, addressed recent operational achievements and reportemillion, a single-month record and a 53% improvement over the Company's best prior month.

DENVER, CO--(Marketwired - Jan 9, 2014) - ENSERVCO Corporation (OTCQB: ENSV), a provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today said it expects to report record revenue from continuing operations for the fourth quarter and full fiscal year ended December 31, 2013.

Fourth quarter revenue is expected to be $15.0 million, up 33% versus revenue of $11.3 million in the fourth quarter of 2012. Full-year revenue is expected to be $46.3 million, a 47% increase versus revenue of $31.5 million in fiscal 2012.

The Company also anticipates improved net earnings for both the fourth quarter and full fiscal year. ENSERVCO expects to report audited full-year 2013 financial results by mid-March 2014.

Rick Kasch, president, said, "Our top-line growth during the final quarter of 2013 reflects the continued expansion of our service fleet, outstanding logistical management by our operations team, robust drilling activity by customers in the Rocky Mountains and Northeast, and very strong demand for our fluid heating services. Our fourth quarter revenue results would have been even stronger were it not for delays in receiving several new fluid heating units from our fabricator, which is still working through a production backlog following the Colorado flooding in September. We expect to receive several additional units by the end of January."

Third Quarter 2013 Results

• Total revenues for the third quarter declined 8% to $4.8 million from $5.2 million in the comparable quarter last year.
• Net loss per share was $0.03, versus a net loss per share of $0.02 in the comparable year-ago quarter.

"Our third quarter, which accounts for less than 12% of revenue during the past 12 months, was accompanied by some unavoidable operational challenges that ranged from historic flooding in our most active service region to a customer transition," said Rick Kasch, president. "However, the quarter also was marked by some important strategic developments that have strengthened our business and positioned us for continued growth during what is already proving to be a very active season for our flagship Well Enhancement division.

"Particularly noteworthy was the progress we made during the quarter in our new southwest Wyoming territory, where one of the region's largest operators has commissioned us to perform year-round hot oiling work in the Green River Basin. This program alone could add more than $4 million in incremental revenue to our full-year results. We are currently pursuing several additional opportunities in the region, including the establishment of a significant well acidizing operation. 

"Our Colorado-based fabricator, which suspended equipment deliveries for nearly four weeks due to flood damage, is back on line and has released several new hot oiling and frac heating units to us in recent weeks," Kasch added. "The balance of the equipment commissioned under our initial $4.7 million capital expenditure program should be in the field by the end of November. In the meantime, we have leased three frac heating units from third parties to help us meet demand through the end of the season." 

Kasch said in light of current demand, management is planning to continue the expansion of the Company's equipment fleet. ENSERVCO's commercial lender, PNC Bank, has approved an additional $4.0 million in capital expenditures, $3.0 million of which will be financed from an expansion of the Company's equipment term loan with PNC, and the remaining $1.0 million coming from proceeds of recent warrant exercises. The Company expects to order four new hot oiling trucks and up to four additional frac heating units under the expanded CAPEX program.

"In recent weeks, activity in the DJ Basin has picked up significantly as customers are making up for lost productivity during the floods," Kasch said. "Despite the short-term impact this situation had on our business, we believe the increase in activity in the DJ Basin and our Utica Shale territory, as well as our five other service regions, combined with our new fluid heating capacity and increased water hauling business, will result in meaningful growth in the fourth quarter and first half 2014."

Second Quarter 2013 Results

• Second quarter revenue increased 44% to a record $7.9 million from $5.5 million in the second quarter last year.
• Net Income was $191,000, or $0.01 per diluted share, on 35.7 million diluted shares outstanding, versus a net loss of $442,000, or $0.02 per diluted share, on 21.8 million diluted shares outstanding, in the comparable year-ago quarter.

Management Commentary
"We have seen a significant increase in exploration and production activity in our service territories, particularly in Colorado and Wyoming's D-J Basin," said Rick Kasch, president. "This is fueling increased demand for our full suite of well enhancement services, and is driving much improved financial performance. On a trailing 12-month basis, we have reported revenue of $43.3 million and adjusted EBITDA of $11.1 million."

"Evolving frac designs being employed by several of our customers continue to extend our frac water heating season. Some of our customers have requested water temperatures of up to 25 degrees warmer than historic levels. These changes have somewhat tempered the seasonal slowdown we have historically seen during the summer months."

Kasch said that after a pause in frac heating work during July, the Company recently commenced a project for a large customer targeting Colorado's Niobrara formation. "This represents the earliest we have restarted our frac heating services after the summer break."

He added, "Our capital expenditure and equipment fabrication programs are proceeding on plan, and we expect several additional hot oiling and frac water heating units will enter the field before the fall start to our busy season."

Kasch said the added capacity will come at an ideal time, as the Company is pursuing additional geographic expansion opportunities that would extend ENSERVCO's service territory farther into the western United States. "Active exploration of North America's unconventional shale formations is creating new opportunities for the energy industry, and we stand to be a direct beneficiary," Kasch said. "We are very optimistic about ENSERVCO's prospects for continued operational and financial growth."

In other news, stockholders recently authorized the Company, at the board of directors' discretion, to execute a reverse split of the Company's stock for the purpose of up-listing ENSERVCO's shares to a major U.S. exchange. The reverse split was authorized within a range 1-for-2 to 1-for-3. The Company intends to begin the application process in the coming weeks for a listing on the NYSE-MKT Exchange. If approved by the Exchange, the reverse split could be executed within a six-month window following the authorization.

The company today said it will invest approximately $6.0 million in capital expenditures during 2013, with $4.7 million being allocated toward new equipment fabrication. The capex budget, which also includes $1.3 million for enhancements to existing equipment, will be funded through internal cash flow.

Management commentary...

"Although we reported record financial results during the two most recent quarters, we were nevertheless constrained by capacity limitations," said Rick Kasch, president. "This fleet expansion will enhance our ability to meet growing customer demand as we head into the busy season this fall."

"We believe the improved liquidity is at least partially related to our November 2012 private placement. The shares and associated warrants were priced at $0.35 and $0.55, respectively. Given the significant increase in our share price during recent months, we believe it is likely some of the participants in the transaction are recognizing profits." Kasch added that management has not sold any shares subsequent to the November private placement.

1st Quarter 2013 Results

ENSERVCO's First Quarter Revenue Improves 95% to $18.6 Million Fueling Tenfold Increase in Income From Continuing Operations; Adjusted EBITDA* Increases 251% to $7.3 Million

DENVER, CO--(Marketwired - May 2, 2013) - ENSERVCO Corporation (OTCQB: ENSV)

Selected Highlights:

  *Gross margin improves to 44% from 31% in 2012 first quarter
  *Operating income increases to $6.7 million, up from $721,000 in Q1 2012
  *March 31, 2013 working capital of $7.4 million, up from $1.6 million at year-end 2012
  *Management reports strong start to second fiscal quarter

ENSERVCO Corporation (OTCQB: ENSV), a provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today announced record revenue and earnings** for its first quarter ended March 31, 2013.

First quarter revenue increased 95% to a record $18.6 million from $9.5 million the first quarter last year, and a 65% increase over the previous quarterly revenue record of $11.3 million, which came in the fourth quarter of 2012. The increase was fueled by strong demand for ENSERVCO's well enhancement services (frac heating, hot oiling, acidizing and pressure testing). Well enhancement revenue increased 125% to $16.5 million from $7.3 million in last year's first quarter. Revenue from fluid management services (water hauling/disposal and frac tank rentals) was $1.9 million, down from $2.1 million in the 2012 first quarter.

Gross margin improved to 44% from 31% in the prior year's first quarter. Operating income was $6.7 million versus $721,000 in the first quarter a year ago, while income from continuing operations was $4.0 million, or $0.11 per diluted share, up from $379,000, or $0.01 per diluted share, in the first quarter of 2012. In addition to the strong revenue growth, the Company's earnings reflected a $759,000 decrease in depreciation expense versus the first quarter last year, which was primarily due to a reassessment of the estimated useful lives of its trucks, equipment and disposal wells.

First quarter adjusted EBITDA* increased 251% to $7.3 million from $2.1 million in the 2012 first quarter.

"Our first quarter financial results reflect the rapid evolution of our business during recent quarters," said Rick Kasch, president. "A strong increase in our frac heating and hot oiling capacity combined with normal weather across our expanded service territory led to the sharp increase in first quarter revenue, as well as a very strong improvement in earnings. Our first quarter adjusted EBITDA* nearly equaled our strongest full-year performance of $7.5 million in 2008.

"Cold temperatures have continued into the spring in many of our service regions, and this has led to a strong start to the second quarter. We expect demand for our frac heating, hot oiling and well maintenance services to show meaningful improvements during the second and third quarters versus the same periods in 2012. These expectations are based on our broader customer base and our move into regions where fluid heating work can last most of the year."

One such region is North Dakota's Williston Basin. Kasch said the Company last week entered into an agreement to provide well-enhancement equipment and services to Warrior LLC, a tribal-member-owned energy service company operating on the Fort Berthold Indian Reservation. The nearly million-acre reservation sits in the heart of a large and very active production region where operators are principally targeting the Bakken formation. As part of an effort to expand its service offering, Warrior has partnered with ENSERVCO.

"Our relationship with Warrior could represent a significant increase in activity out of our Killdeer, North Dakota facility," Kasch added. "We look forward to working with the company to offer our well enhancement services to new customers."

Kasch said management is taking additional steps to boost revenue during the summer season. "We are working aggressively to grow our core well maintenance services, such as acidizing and pressure testing, and continue to explore new offerings that could be added through acquisition. Given our strong start to the year and much improved working capital position, we are optimistic 2013 will be another year of record results for ENSERVCO."

DENVER, CO--(Marketwired - Apr 29, 2013) -  ENSERVCO Corporation (OTCQB: ENSV), a provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today announced Robert Devers has been appointed chief financial officer. In addition, ENSERVCO's board of directors has appointed Steve Oppenheim as an independent director, expanding the board to five members. 

Devers joins ENSERVCO with more than 20 years of financial management experience for both publicly traded and private companies in an array of industries, including the natural resource sector. He most recently was an independent consultant to public companies in the mining and beverage distribution industries. From 2007 to 2011 he served as chief financial officer of Silver Bull Resources, a mineral exploration company traded on both the NYSE MKT and TSX exchanges.

A certified public accountant, Devers also served as senior director of financial analysis and internal audit of The Broe Companies Inc., a multi-billion dollar international holding company with investments in real estate, transportation, mining, and oil and gas exploration. In addition to work as a corporate officer and financial executive with several other publicly traded and privately-held companies, Devers spent three years with a regional public accounting firm that specialized in publicly held oil and gas exploration and production companies. Devers earned a bachelor of arts degree in accounting from Western State College.

Devers, 50, assumes the CFO role from Rick Kasch, who has been serving dual roles as both president and CFO since July 2011. Kasch will continue in his role as president. 

"Our rapid financial and operational growth necessitates that we also expand the breadth of our executive management team," Kasch said. "Bob brings a wealth of financial management experience and industry knowledge to the CFO position, and we look forward to his contributions as we work to further expand our presence in the domestic oilfield services industry." 

Oppenheim, 66, joins the ENSERVCO board with 40 years of accounting, securities, tax and finance experience. He has served as a director of several publicly traded and private companies, including SUNAIR, where he spent five years as an independent director and chaired both the compensation and nominating committees, and was a working member of the audit committee. He is currently a director on the boards of Orlando Dinner Entertainment, Inc. and IMS Internet Media Services, Inc.

Oppenheim also provides corporate secretary services to three private U.S. businesses, and is involved in financial, legal and human resource operations for each enterprise. He previously has represented a privately-owned oil refiner and independent oil dealer, and served as the personal advisor to a former President of Texaco Inc. 

Mike Herman, chairman and CEO of ENSERVCO, said, "Steve's financial background and extensive experience as a corporate director will prove valuable assets to our board. We plan to leverage his expertise as we pursue our long-range strategic objectives and address the complexities associated with our rapid growth."

Oppenheim holds a juris doctorate degree from the University of Miami School of Law with an emphasis in securities regulation, finance, and taxation; and a bachelor of business administration in accounting from the University of Miami School of Business.