The board of directors of GASFRAC Energy Services Inc. has announced that they had commenced an operational review and restructuring of the management team at GASFRAC.
The company has determined that it is prudent to focus its near term growth opportunities on North America and specifically in Western Canada and in South Texas and Colorado in the USA. Concurrent with this focused growth, cost control is equally important. As a result, cost reductions will be realized both from staff reductions and other fixed cost reductions. Specifically:
- The overhead staffing in the Houston office has been reduced from 16 to a sales and engineering team of six;
- U.S. field and support staff levels have been reduced by 25% to a level to support two sets of equipment;
- Canadian staffing levels have been reduced by 20% to a level to support three sets of equipment;
- Costs related to facilities, staff housing, insurance and other fixed costs have been reduced.
The five sets of equipment will provide sufficient revenue producing capacity to allow for growth through 2013 and additional sets can be manned as demand increases.
GASFRAC says it will continue to examine cost efficiencies with a goal to drive revenue breakeven levels toward $10 million on a monthly basis from previous levels of $14 million. At the same time, it has established a core sales and engineering team in the U.S. focused on building its client base in South Texas and Colorado. This team is targeting-intermediate sized operators active in these basins with a goal to establish one to two core customers in each basin to drive core utilization together with ancillary customers to build toward future utilization.
The company expects revenues for the third quarter to be approximately $40 million with approximately $25 million from Canada and $15 million from the U.S. Canadian operations have demonstrated continued improvement through the quarter with approximately half of the quarter's revenue being earned in September. In the U.S. the majority of the revenue was from Blackbrush. However, while they prepared additional wells, Blackbrush, was not actively fracturing from September 8 until the end of the month and is scheduled to resume fracturing on October 14.
The board has engaged a search firm to locate a new Chief Executive Officer. It is expected that this process will be completed in 90-120 days.
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