QIS Update #34 2014 - November 27th 2014
Included in this update:
- Blackbird Energy files annual financials and releases reserves information
- Dalmac Energy reports second quarter results
- NTG Clarity announces stellar Q3 financial results
Going forward, we are going to be posting more regular updates in the QIS Capital Forum on smallcaps.ca at www.smallcaps.ca/forum. These updates will include links to any recently issued updates and to any recently updated corporate profiles or research reports. We’ll touch on some of the news and financial results that we expect out in the near future. We will also incorporate some current events that affect small cap stocks. In addition, at the end of each weekly forum recap, we will add some stocks to watch that may be worth your time in performing some additional due diligence.
Please feel free to email us anytime at email@example.com or call us at (250) 377-1182. We look forward to your comments, questions, and feedback.
Blackbird Energy Inc. (BBI:TSX-V)
Current Price: $0.365 (coverage commenced Aug 19/11 - $0.18)
Blackbird Energy Inc. has announced that it has filed its audited financial statements and related management's discussion and analysis for the year ended July 31, 2014 on SEDAR at www.sedar.com.
In addition, the company has filed its statements of reserves data and other oil and gas information for the year ended July 31, 2014 as mandated by National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (NI 51-101) of the Canadian Securities Administrators.
Blackbird's reserves were evaluated as at July 31, 2014 by the independent engineering firm of GLJ Petroleum Consultants Ltd. (GLJ).The evaluation by GLJ was conducted in accordance with standards set out in the Canadian Oil and Gas Evaluation Handbook and are compliant with NI 51-101.
Blackbird is also pleased to announce that Garth Braun has been appointed as Chairman of the Company's board of directors.
Blackbird Energy Inc. has increased the previously announced non-brokered flow-through-share private placement to 16,231,446 shares at a price of 45 cents per flow-through share for gross proceeds of $7.30-million.
The available proceeds from the private placement will be used by the company to incur eligible Canadian exploration expense. The completion of the private placement is subject to receipt of all necessary regulatory approvals, including TSX Venture Exchange acceptance. The company may pay finder's fees consisting of cash and/or common shares pursuant to the closing of the private placement.
QIS Capital: On October 20, 2014, the Company announced that it had spud its first Middle Montney well at Elmworth. The well will be drilled to a vertical depth of approximately 2,330 meters and a lateral length of approximately 2,000 meters to location 6-26-70-07W6. Drilling operations are expected to take approximately 30 days to complete. This well should be at or very near total depth.
The Company has designed the drill program so that the first two wells are drilled in succession followed by completion of both of the wells in January 2015. We expect the company to be moving to its second location either this week or next.
Blackbird has held up remarkable well during the same period when it seems that all other oil and gas producers have been falling along with the oil price. The company received a positive research report from Jennings Capital in the past week. Anyone that would like a copy of this report, please send us an email request.
Dalmac Energy Inc. (DAL:TSX-V)
Current Price: $0.31 (coverage commenced Nov 15/11 - $0.37)
Dalmac Energy Inc. has announced its financial and operating results for the second quarter and six months ended October 31, 2014.
Second Quarter Financial Highlights:
- Revenues of $8.6 million
- EBITDAS increased 67% to $1,432K from $857K
- Gross Margin improved to 30% from 22%
- Positive net income of $213K from $8K
- Reduction in G&A and Wages Expenses, Increase in Amortization
Revenue in the second quarter was $8.6 million as compared with $9.3 million in the second quarter of the prior year. Regional drilling and completions activity didn’t kick into gear for Dalmac until the third month of Q2’15. Management noted a considerable pickup in servicing activity during the month of October and expects this trend to continue until spring breakup. For the six month period, revenues were $15.8 million compared to $16.9 million last year.
Gross Margin as a percentage of revenue increased to 30% for the quarter and to 26.4% for the year to date. This demonstrates an overall improvement in gross margin by 34% and 63% respectively as compared to the same periods in the previous year. This affirms management’s strategy towards improving internal controls along with the implementation of the new computerized dispatching and invoicing system.
The improvement in the current Gross Margin coupled with lease restatements resulted in a 67% EBITDAS gain for Q2’15 and a 982% gain for the year to date as compared to the same period in the prior year.
Net income for the quarter was $213K as compared to $8K in Q2’14. The net loss for YTD’15 was $147K as compared to a loss of $1,210K at the same time in the previous year.
|LATEST FINANCIAL RESULTS – in 000s|
|3 Mos Ended Oct. 31||6 Mos Ended Oct. 31|
|Revenues||$ 8,611||$ 9,330||$ 15,810||$ 16,944|
|Income Tax Exp. (Recovery)||73||3||(47)||(403)|
|Net Income (Loss)||213||8||(147)||(1,210)|
(as at October 31, 2014)
|Current Assets||$ 8,402,391|
|* includes finance lease obligations|
Dalmac remains optimistic that the remainder of fiscal 2015 will translate into a very profitable year. In spite of the slower start in drilling and completions activity for the first 6 months of the year, the current activity is showing a significant pickup. Seasonal fluid transfers and well stimulation work orders associated with drilling and completions activity are currently underway. This will also lead to more steady fluid transfer runs from new wells which are coming on line. The winter drilling season is traditionally the busiest part of Dalmac’s operating year. Unless the current softening of oil prices deter the existing drilling and completion programs already in place, management expects that the activity levels for the remainder of fiscal 2015 will be trending at a record pace. Any potential disruptions of drilling and completion activity due to the current volatility of oil prices will be mitigated on Dalmac’s part by the fact that the majority of the company’s revenue is generated from recurring fluid transfers from existing production wells.
Management feels that the current upswing in oilfield activity coupled with numerous productivity improvements such as the implementation of the new computerized dispatching and invoicing system should translate to more growth and continued sustainable profitability in the future.
A conference call to discuss the results will be held Friday, November 28, 2013, at 1:30pm EST/11:30 am MST. To participate in the conference call, please dial 416-204-9524 local in Toronto or toll-free 1-800-505-9587 and request the Dalmac Energy conference.
QIS Capital: Dalmac continued to cut costs during Q2 and improved its gross margin back to the 30% threshold. Revenues continue to be lower than anticipated as the company was slower than expected during August and September but busier than forecast in October. Management has indicated that it expects the robust activity experienced in October to last throughout the remainder of the fiscal year. If revenues can be increased and margins are held above 30%, Dalmac should be able to return to more meaningful levels of profitability. This quarter was a step in the right direction with a little more work to do.
NTG Clarity Networks Inc. (NCI:TSX-V)
Current Price: $0.33 (coverage commenced Feb. 4/10 - $0.045)
NTG Clarity Networks Inc. has announced its financial results for the three and nine months ended September 30, 2014. The Company reported record third quarter 2014 revenues of $4,557,801 as compared to $3,767,669 in the same period last year, a 21% increase. Year to date revenues are $11,386,745 compared to $7,403,921 in 2013, a 54% increase (All amounts in Canadian dollars).
The Company reported net income for the three months ended September 30, 2014 of $1,102,674 before taxes or $712,674 after taxes, compared to net income of $784,669 (no taxes) for the comparable period last year. For the nine month period, pre-tax earnings were $2,286,897 or $0.06 per share this year compared to $1,816,136 or $0.06 per share last year. The Company booked income taxes of $740,000 for the nine months ended September 30, 2014, resulting in net after tax income of $1,546,897 or $0.04 per share.
As at September 30, 2014, NTG Clarity had positive working capital of $6,235,279 ($0.17 per share) and no long-term debt.
|LATEST FINANCIAL RESULTS|
|3 Mos. Ended Sept. 30||9 Mos. Ended Sept. 30|
|Cost of Sales||2,374,706||2,102,245||6,075,169||3,683,395|
|Selling and G&A Exp.||723,826||501,895||2,326,225||1,364,026|
|Forex Loss (gain)||126,491||41,552||(102,307)||(161,836)|
|Net Income Before Tax||1,102,674||784,669||2,286,897||1,816,136|
(as at Sept. 30, 2014)
|Current Assets||$ 11,507,495|
Management is very pleased with the Company’s financial performance YTD in 2014. Revenues are now ahead of pace for projections set earlier this year, and with pre-tax earnings up more than 25% during the first nine months of the year, NTG Clarity is delivering another record year for its shareholders. The new office in Qatar is now contributing to revenue and the new Kuwait office is now set up. These offices will expand our sales reach in those countries as well as the Gulf region.
One of the reasons for our strong growth that continues in 2014 has been a renewed international focus on state-of-the-art technology and networking capabilities. Our NTS software and dedicated professionals continue to be in high demand. Additional software contracts announced in the last few months reflect our customer’s satisfaction with NTG’s products and services.
Also, as mobile applications have been the fastest growing technology trend, NTG’s mobile application development is being increasingly chosen as a leading product in these markets. NTG provides mobile application development and outsourcing of experienced resources to the industry. We also develop apps, for our customers and our own products, including front ends to NTS and the technology development of Mi-World Mall Inc. of which we own 53%. Set for soft launch in December 2014, Mi-World will provide customers with a smart phone-based shopping experience and access to local community organizations and information and we are actively marketing this software to international companies.
On November 20, 2014 NTG Clarity filed with the TSX Venture Exchange a notice of intention to make a normal course issuer bid to purchase for cancellation up to one million of the Company’s issued and outstanding common shares. The purchases are to be made through the facilities of the TSX Venture Exchange or other recognized marketplaces during the period from Nov. 27, 2014, to Nov. 26, 2015, or the date by which NTG Clarity has purchased the full allotment of shares. Purchases pursuant to the bid will be made by Global Maxfin Capital Inc. on behalf of the Company. Given the strong financial performance and stable financial position of the Company, the board of directors of NTG Clarity do not believe that the current market prices of NTG Clarity's shares reflect the underlying value of the Company and thus believe that the purchase and cancellation of its shares represent a good use of available capital and will be advantageous to existing shareholders.
Looking towards the future, we remain committed to our growth strategy and continue to focus on growing organic operations, expanding our marketing reach geographically and enhancing our product offering. We are also looking to increase our reach through acquisitions and/or partnerships with global system integrators.
In an unrelated matter, the Company announced that 100,000 share options will be issued for Mr. Nick Hamilton-Piercy, a member of the Board of Directors for the Company. Each option will be exercisable at a price of $0.23 per share and will vest six months from date of issuance.
QIS Capital: NTG Clarity is on pace to significantly exceed its previous projection of $14 million in revenues for 2014. Our optimistic projection for earnings this year was $0.06 eps after tax and the company is now up to $0.043 so is well on pace. Investors are reminded that NTG Clarity did not have to pay income taxes last year. Pre-tax earnings in 2014 are now at $0.064. Working capital also continues to improve in 2014 and is now at $0.17 per share with no long-term debt. NTG Clarity’s shares showed a little life yesterday improving to $0.32. Despite the company’s strong financial performance, NTG’s shares are still trading at only 5.3 times trailing earnings (after-tax) and at just 2.5 times trailing earnings adjusting for working capital.
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 130,000 shares, 706,348 warrants, and 350,000 options of Blackbird Energy Inc., 103,500 shares and 200,000 options of Dalmac Energy Inc., and 1,522,000 shares and 100,000 options of NTG Clarity Networks Inc. QIS Capital may have a financial relationship with these companies and may trade in the stocks mentioned. No stock exchange has approved or disapproved of the information contained herein. Copyright © 2003 - 2014 QIS Capital Corporation.