Cypress Environmental Partners released its third quarter financial report on Monday showing the Tulsa company continues struggling to recover from the 2020 COVID-19 impact on the oil and gas industry. Its report included a basic and diluted loss per unit of 33 cents.
The company reported not only a drop in revenue but a loss in operating income. Revenue for the third quarter was down nearly 11 million from a year ago and totaled $32,431,000 compared to $43,375,000 12 months earlier. But the third quarter revenue was 6% higher than the second quarter of the year.
After operating expenses, the company managed a margin of only $4.3 million for the third quarter but it was 5% more than the previous quarter. It also reported a net income loss of $4,230,000 million for the quarter while the loss for the first nine months totaled $9,404,000.
In a statement filed with the Securities and Exchange Commission, management called the 2020 results the “worst in our short history following our best year in 2019.”
“Our third quarter performance showed some sequential improvement from the prior quarter. We are beginning to see signs of a multi-year upcycle driven by much higher commodity prices that benefit all of our customers in the energy industry,” said Peter C. Boylan III, Chairman, President and CEO in a press release late Monday.
Management laid the groundwork to explain its bad third quarter, saying crude oil prices increased in 2021 reaching $81.96 per barrel as of Nov. 8, 2021.
“We expect that a sustained increase in crude oil prices would lead customers to increase their maintenance and capital spending plans, although to this point, customers have been slow to increase activity,” stated the company in its filing.
“During the quarter we decided to discontinue our Pipeline & Process Services segment, given its performance, operating losses, and structural challenges in the hydrotesting business. We entered this market in 2015 and struggled over the two subsequent down cycles to consistently earn profits. We have begun a sale process of the remaining assets and will use the proceeds to reduce debt,” added Boylan.
As to how and when the company might see improved financial results, “The near-term recovery remains fragile, as market participants evaluate the risks associated with new variants of the coronavirus. Our customers continue to evaluate these changing circumstances.”
Management expressed optimism for improved finances.
” We believe there will be significant long-term demand for our services, and we continue our efforts to diversify our customer base.”
The growing losses forced Cypress to discontinue operations in September of its Cypress Brown Integrity which had provided customers with hydrotesting, chemical cleaning, drying, water treatment, nitrogen and other related services. CBI was located in Giddings, Texas.
Cypress left that part of the business because of the decline in new pipeline construction projects and the inability to obtain more work directly with pipeline owners on maintenance projects. Cypress said it recorded a $1.9 million loss on the disposal of intangible assets connected with CBI.
The Tulsa-based company also reported $50.4 million of goodwill on its unaudited condensed consolidated balance sheet as of Sept. 30, 201.
