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| PRESS RELEASE |
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WAVEFRONT ENERGY & ENVIRONMENTAL SERVICES
INC. |
For Immediate Release: |
Wavefront Announces Third Quarter Results -
Further Production Improvement Seen in Alberta Powerwave Project
EDMONTON, Alta., July 30, 2008/ Wavefront Energy and Environmental Services
Inc. (“Wavefront”), a leader in technology development and implementation
for improved oil recovery and optimized groundwater remediation announces
its financial and operating results for the third quarter ended May 31,
2008.
During the nine month reporting period Wavefront has made significant
strides in showcasing the efficacy of both Powerwave and Primawave in the
energy and environmental sectors respectively. The push of our game changing
injection process, Powerwave, has resulted in a growing list of clients who
are looking to maximize oil recovery factor and extend field life.
For the Alberta Powerwave project first announced June 27, 2008, prior to
the installation of Powerwave in the three waterflood patterns where it is
employed, production levels were on a steady decline of approximately 2.3%
per month. The production level in December 2006 was approximately 164 bopd
(26.07 m3/d) and declining to a value of 135 bopd (21.46 m3/d) at the time
of the Powerwave installations in September 2007. In the ensuing six months
of Powerwave enhanced injection ending May 2008, production levels had
increased to approximately 220 bopd (34.98 m3/d). Assuming the injection
patterns had continued on their natural decline of 2.3% per month (without
Powerwave) during the same six month period it is estimated that the
production levels would have decreased to 120 bopd (19.11 m3/d).
Wavefront President and CEO, Brett Davidson stated, “The Alberta Powerwave
results are very compelling and unequivocally demonstrate the benefits and
impact the process can have at maximizing recovery factor and extending
field life. The Alberta client remains committed to installing multiply
systems in the field to gain further upside potential. In the coming weeks
and months Wavefront fully anticipates the entirety of results we are
amassing from all locations to be pivotal in global acceptance of Powerwave,
equating to a sizable number of units being installed.”
Revenues for the nine months ended February 29, 2008 were $1,311,113, an
increase of $241,698 from the revenues recognized in the corresponding
period of 2007 of $1,069,415. The increase in revenue is primarily a result
of the acquisition of Wavefront Sand Pumps & Rentals Ltd and increased
interest revenue. The Corporation also recognized production revenue,
exclusive of operator fees, of $120,164 (2007 - $54,323) related to the
Rogers County venture and Rodney South venture, and interest income of
$319,147 (2007 - $277,589).
The net loss for the nine months ended May 31, 2008 was $3,341,583 ($0.06
per share), compared to $3,115,549 ($0.07 per share) in 2007. The
Corporation’s operating expenses through the nine month period were
$4,416,755, an increase of $1,503,887 incurred for the same period of last
year. The operating expense increase was primarily from:
- Amortization, depreciation, depletion and accretion expense increase by $385,343, which relates to increased Powerwave and Primawave systems, and the amortization of the Greentree definite life intangible asset that amounted to $112,622;
- General and administrative expenses increased by $333,364 due to increased wage, office, vehicle, and repair and maintenance expenses.
- Selling, marketing and travel expenses increased by $265,882, which relates to increased activity in securing of Powerwave projects across North America. Also included in the cost category are costs totaling $99,458 related to pilot Powerwave projects in Alberta, Saskatchewan and Pennsylvania that will start to generate revenue shortly;
- Research and development expenses increased by $255,259. Included in the current period’s expenses are $252,412 of costs that were previously included in assets under construction; and
- Research and development expenses increased by $255,259. Included in the current period’s expenses are $252,412 of costs that were previously included in assets under construction; and
- Direct costs increased by $201,687, which relates to the nature of the business associated with the rental and sale of associated pumps and services in the heavy oil sector versus a product mix with a heavier weighting towards the licensing of Powerwave and Primawave.
Offsetting operating expense increases noted above were decreases in stock-based compensation, the recognition of foreign currency gains associated with the translation of the Corporation’s United State’s subsidiary, and decreases in the write-down of property, plant and equipment. During the nine month reporting period Wavefront invested $808,356 in property, plant and equipment and $282,321 in intangible assets.
The above financial highlights should be read in conjunction with the unaudited consolidated financial statements and management discussion and analysis of results for Wavefront’s most recently completed quarter, ended May 31, 2008, which have been filed on SEDAR.
In the environmental sector Wavefront is buoyed by the progress Primawave is achieving in the marketplace. The process has been utilized by several of the largest United States environmental consulting firms and service contractors to great accolades.
“Primawave and the associated Hornet tool represent the first truly new innovative technology for the delivery of treatment fluids in the environmental sector in the past ten years”, commented Mr. Pat Hicks, Ph.D., Technical Director of Zebra Environmental, a specialized environmental contacting company based in Lynbrook, NY. “Zebra and its clients have successfully used Primawave in challenging subsurface environments where conventional methods have proven ill-effective. There is no question Primawave will be in great demand in the environmental marketplace.”
“With significant opportunity in the United States and a growing industry worldwide, the environmental sector is of strategic importance to Wavefront’s overall business objectives to build shareholder value” stated Brett Davidson. “Primawave has been embraced by a multi-national, integrated oil and gas company as a key component of a remedial approach for a former refinery site and we also continue to see favorable uptake of the process across the United States for remedial fluid injections. To compliment Primawave and create the environmental sectors first broad-based specialty injection provider, Wavefront will endeavor to evaluate the acquisition of injection technologies such as hydraulic and pneumatic fracturing.”
About Wavefront Energy and Environmental Services Inc.
Wavefront is a technology-based company with a focused, strategic plan to leverage the value of our intellectual property in order to maximize oil production recovery operations, as well as provide additional solutions for environmental applications.
For further information please contact:
Brad Paterson, CFO
780-486-2222 ext. 224 Tel
investor.info@onthewavefront.com
On behalf of the Board Of Directors, Wavefront Energy & Environmental Services Inc.
“D. Brad Paterson” (signed)
D. Brad Paterson, CFO and Director
Cautionary Disclaimer –
Forward Looking Statements
Certain statements contained herein regarding Wavefront and its operations
constitute “forward-looking statements” within the meaning of Canadian
securities laws and the United States Private Securities Litigation Reform
Act of 1995. All statements that are not historical facts, including without
limitation statements regarding future estimates, plans, objectives,
assumptions or expectations or future performance, are “forward-looking
statements”. In some cases, forward-looking statements can be identified by
terminology such as ‘‘may’’, ‘‘will’’, ‘‘should’’, ‘‘expect’’, ‘‘plan’’,
‘‘anticipate’’, ‘‘believe’’, ‘‘estimate’’, ‘‘predict’’, ‘‘potential’’,
‘‘continue’’ or the negative of these terms or other comparable terminology.
We caution that such “forward-looking statements” involve known and unknown
risks and uncertainties that could cause actual results and future events to
differ materially from those anticipated in such statements. Such factors
include fluctuations in the acceptance rates of Wavefront’s Powerwave and
Primawave Processes, demand for products and services, fluctuations in the
market for oil and gas related products and services, the ability of
Wavefront to attract and maintain key personnel, technology changes, global
political and economic conditions, and other factors that were described in
further detail in Wavefront’s continuous disclosure filings, available on
SEDAR at www.sedar.com. Wavefront expressly disclaims any obligation to
up-date any “forward-looking statements”, other than as required by law.
THE TSX VENTURE EXCHANGE NEITHER APPROVES NOR DISAPPROVES THE CONTENTS OF THIS RELEASE WHICH WAS PREPARED SOLELY AT THE DISCRETION OF MANAGEMENT