QIS Update #16 2012 - June 8th 2012
Included in this update:
- Dalmac Energy to exceed annual revenue forecast
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Dalmac Energy Inc. (DAL:TSX-V)
Current Price: $0.47 (coverage commenced Nov 15/11 - $0.37)
John Babic, President and CEO of Dalmac Energy Inc. has announced that revenues for fiscal 2012 ended April 30, 2012 will exceed $35 million. Revenues were expected to reach $30 million for the year, but higher utilization rates and increased demand has kept Dalmac running at record levels. Full 2012 financial results are expected to be released in July 2012.
The Canadian Association of Oilwell Drilling Contractors (CAODC) Industry recently released its first quarter update highlighting strong utilization rates for drilling equipment as forecast. The number of wells projected to be drilled in Dalmac's operating area remains robust. CAODC further commented that the industry continues to drill increasingly complex horizontal wells and raised its forecast for average days per well to 12. These are all extremely positive trends for Dalmac for the service work associated with getting the new wells completed and for the trucking and handling of the production in the post completion phase.
Dalmac has positioned itself to meet the escalating demand for its services by recently investing over $2.0 million in capital expenditures to increase the number of pieces of rolling stock equipment from 169 to 179 and increasing the number of oilfield rental equipment from 250 pieces to 270. The company has commenced working with a number of new clients on substantial drilling programs and remains committed for the use of the majority of its existing equipment throughout the remainder of calendar 2012. The new equipment will be financed through operating cash flow and revolving bank lines. Management is confident that the positive industry indicators and new equipment purchases will continue to translate into higher revenues and earnings for Dalmac in fiscal 2013.
QIS Capital Comments:
Dalmac appears to be continuing its trend of positive financial and operating performance. Based on annual revenues of over $35 million, the fourth quarter should be another positive period for the company both from a revenues and earnings perspective. We expect to see fourth quarter financial results around the middle of July. Spring break-up has always resulted in a loss for Dalmac during its first quarter, but in our discussions with a number of oil and gas service companies, it appears that activity levels this year have been well above normal. Dalmac is presently trading at about 4 times trailing annual earnings and at 0.3 times annual revenues as disclosed in the latest press release.
Disclaimer: This article is for informational purposes only. The information contained within this article should not be construed as offering investment advice. Those seeking direct investment advice should consult a qualified, registered, investment professional. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. The company profiled assumes no liability for the information presented. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock. The author(s) owns directly or indirectly 31,000 shares and 200,000 options of Dalmac Energy Inc. QIS Capital has a financial relationship with Dalmac Energy and may trade in the stocks mentioned. No stock exchange has approved or disapproved of the information contained herein. Copyright © 2003 - 2012 QIS Capital Corporation.