Gross margin and EBITDA percentages both decreased by 7% compared to the comparable period of 2008. During the quarter, CAD4.5 million impairment was recorded relating to the property and equipment of the rig mobilization and demobilization business, as this part of the trust’s operations is directly affected by the significantly reduced drilling activity in the oil and gas sector.
As at March 31, 2009 the revolving bank term loan (including bank overdraft) was CAD73.8 million, a reduction of CAD7.3 million from the CAD81.1 million of net debt as at December 31, 2008 and a reduction of CAD19.6 million since September 30, 2008. There was a decrease in working capital of CAD5.8 million during the first quarter of 2009, after adjusting for net debt.
Ralph Hesje, president and chief executive officer of the trust stated that “the first quarter financial results are reflecting depressed oil and gas industry activity levels combined with challenging economic conditions. Margins declined due primarily to pricing pressures from customers and reduced equipment utilization rates.”
“We continue to review our fixed cost structure and make changes accordingly. These changes relate to our consolidation of various entities within our operating segments which has resulted in consolidating certain management functions as well as improving operating efficiencies. Diversification to industrial and civil infrastructure projects remains a priority.”
The trust continues to focus on diversification into industrial and civil infrastructure activities. The oil and natural gas drilling sector will continue to impact the trust’s operations and financial results and will remain an important part of the trust’s operations going forward. However, infrastructure project demand is expected to be strong over the next couple of years as a result of government stimulus packages, with more of the trust’s activities and resources anticipated to be focused and deployed in this area during the summer construction season.
The amount of the trust’s services relating to the oil and gas sector will fluctuate as the activity in this sector changes in addition to the amount of non-oil and gas related projects which the trust is successful in securing. The trust continued to pursue geographic diversification in 2009 with redeployment of equipment and skilled personnel to capitalize on demand in nearby regions plus improving utilization rates and financial results.
