Bri-Chem cuts costs, debt, in response to drilling downturn by David Howell, August 12, 2015, Edmonton Journal
Bri-Chem Corp. in the Acheson Industrial Park west of Edmonton reported financial results for the second quarter of 2015 on Wednesday. Sales and revenues fell because of the downturn in oilfield activity, the company said. Officials of Bri-Chem Corp. of Acheson, outside Edmonton’s western limits, says an aggressive “rightsizing” campaign is helping it weather the dramatic downturn in oilfield service activity.
The company, which trades on the TSX Venture Exchange, is a leading North American distributor and manufacturer of chemical fluids used in oilfield drilling, completion, stimulation and production.
After markets closed Tuesday, Bri-Chem issued its second-quarter 2015 financial results. The company reported sharp drops in sales and revenues through the first half of 2015 but said it has reacted by reducing operating expenses, debt and inventory.
“We’re going to continue to rightsize our business and then seek to be in the right position when the recovery returns,” chief executive Don Caron said Wednesday in an interview.
“The oil and gas industry has been around a long time and this isn’t the first time we’ve seen these significant, significant declines, and obviously we have to react accordingly.”
Bri-Chem said its results have been affected by volatile oil and natural gas prices, the widespread reduction in oilfield activity, and — in Canada — a prolonged spring breakup.
For the first six months of 2015, consolidated revenues from continuing operations was $47.8 million, compared to $81.1 million in the first half of 2014 — a decrease of 41.1 per cent.
Canadian drilling fluid sales for the first half of 2015 were $13.8 million, compared to $38.2 million in the same period of 2014. The company’s U.S. drilling fluid sales were $24.1 million in the first six months of 2015, compared to $30.7 million in the same period of 2014.
Bri-Chem recorded a net loss of $1.3 million through the first six months of the year.
During the same period, it reduced operating expenses $2.1 million and senior operating debt by $17.8 million.
It also reduced inventory by $12.3 million — in part by “liquidating” supplies of bulk commodities such as bentonite and barite, Caron said.
Product prices have been adjusted and staffing levels have been trimmed. The company had 86 employees as of June 30, down from 123 at the end of 2014.
Bri-Chem has operated in Canada since 1985.
Caron said the company’s 2011 expansion into the U.S. has been a help in the current downturn. Rig activity is down significantly in the U.S., but to a far lesser degree than in Canada, he said.
“We’re one of the only national wholesale suppliers of drilling fluids in the U.S., so we’re still finding new customers,” he said. [Emphasis added]
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