Essential Energy Services : 2023 First Quarter Financial Statements

Unaudited Condensed Consolidated Interim Financial Statements

Essential Energy Services Ltd.

March 31, 2023

ESSENTIAL ENERGY SERVICES LTD.

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited)

			As at		As at
			March 31,		December 31,
(in thousands of dollars)			2023		2022
Assets
Current
Cash	$	1,778	$	2,063
Trade and other accounts receivable (note 3)			33,216		27,085
Inventory (note 4)			36,564		34,617
Prepayments and deposits			1,807		2,264
			73,365		66,029
Non‐current
Property and equipment (note 5)			74,567		76,180
Right‐of‐use lease assets (note 8)			7,721		8,317
			82,288		84,497
Total assets	$	155,653	$	150,526
Liabilities
Current
Trade and other accounts payable (note 6)	$	19,333	$	14,307
Share‐based compensation (note 11)			1,235		2,721
Income taxes payable			31		30
Current portion of lease liabilities (note 8)			3,755		4,237
			24,354		21,295
Non‐current
Share‐based compensation (note 11)			4,162		5,357
Long‐term debt (note 7)			3,100		950
Long‐term lease liabilities (note 8)			5,045		5,542
			12,307		11,849
Total liabilities			36,661		33,144
Equity
Share capital (note 9)			254,282		256,409
Deficit			(156,327)		(158,362)
Other reserves (note 10)			21,037		19,335
Total equity			118,992		117,382
Total liabilities and equity		$	155,653	$	150,526

See accompanying notes to the unaudited condensed consolidated interim financial statements.

ESSENTIAL ENERGY SERVICES LTD. 2

ESSENTIAL ENERGY SERVICES LTD.

CONSOLIDATED INTERIM STATEMENTS OF NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (Unaudited)

		For the three months ended
		March 31,
(in thousands of dollars, except per share amounts)		2023		2022
Revenue (note 15)	$	45,862	$	37,741
Operating expenses		37,004		31,720
Gross margin		8,858		6,021
General and administrative expenses		3,035		2,406
Depreciation and amortization (notes 5 and 8)		4,063		4,186
Share‐based compensation (recovery) expense (note 11)		(237)		3,039
Other (income) expense		(265)		93
Operating income (loss)		2,262		(3,703)
Finance costs		227		218
Net income (loss)		2,035		(3,921)
Unrealized foreign exchange gain (note 10)		4		64
Comprehensive income (loss)	$	2,039	$	(3,857)
Net income (loss) per share (note 12)
Basic and diluted	$	0.02	$	(0.03)
Comprehensive income (loss) per share (note 12)
Basic and diluted	$	0.02	$	(0.03)

See accompanying notes to the unaudited condensed consolidated interim financial statements.

ESSENTIAL ENERGY SERVICES LTD. 3

ESSENTIAL ENERGY SERVICES LTD.

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (Unaudited)

	For the three months ended
		March 31,
(in thousands of dollars)		2023		2022
Equity:
Share Capital
Balance, January 1	$	256,409	$	272,732
Shares repurchased and cancelled under normal course issuer bid (note 9)		(2,127)		(3,190)
Balance, March 31	$	254,282	$	269,542
Deficit
Balance, January 1	$	(158,362)	$	(156,607)
Net income (loss)		2,035		(3,921)
Balance, March 31	$	(156,327)	$	(160,528)
Other reserves
Balance, January 1	$	19,335	$	6,701
Other comprehensive gain (note 10)		4		64
Shares repurchased and cancelled under normal course issuer bid (note 10)		1,698		2,484
Balance, March 31	$	21,037	$	9,249
Total equity	$	118,992	$	118,263
See accompanying notes to the unaudited condensed consolidated interim financial statements.

ESSENTIAL ENERGY SERVICES LTD. 4

ESSENTIAL ENERGY SERVICES LTD.

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Unaudited)

	For the three months ended
		March 31,
(in thousands of dollars)		2023		2022
Operating Activities:
Net income (loss)	$	2,035	$	(3,921)
Non‐cash adjustments to reconcile net income (loss) to operating cash flow:
Depreciation and amortization (notes 5 and 8)		4,063		4,186
Provision (recovery) of trade accounts receivable (note 3)		30		(100)
Finance costs		227		218
Gain on disposal of assets		(300)		(82)
Funds flow		6,055		301
Changes in non‐cash operating working capital:
Trade and other accounts receivable before provision		(6,159)		(1,273)
Inventory		(1,947)		(2,353)
Prepayments and deposits		457		223
Trade and other accounts payable		5,028		3,618
Share‐based compensation		(2,682)		(2,520)
Changes in non‐cash operating working capital		(5,303)		(2,305)
Net cash provided by (used in) operating activities		752		(2,004)
Investing Activities:
Purchase of property and equipment (note 5)		(1,956)		(1,361)
Non‐cash investing working capital in trade and other accounts payable		‐		(9)
Proceeds on disposal of equipment		614		165
Net cash used in investing activities		(1,342)		(1,205)
Financing Activities:
Increase in long‐term debt (note 7)		2,150		2,600
Shares repurchased and cancelled under normal course issuer bid (note 9)		(429)		(706)
Finance costs paid		(90)		(46)
Payments of lease liabilities (note 8)		(1,328)		(1,417)
Net cash provided by financing activities		303		431
Foreign exchange gain (loss) on cash held in a foreign currency		2		(9)
Net decrease in cash		(285)		(2,787)
Cash, beginning of period		2,063		6,462
Cash, end of period	$	1,778	$	3,675

See accompanying notes to the unaudited condensed consolidated interim financial statements.

ESSENTIAL ENERGY SERVICES LTD. 5