Tulsa-based Cypress Energy Partners L.P. announced its year-end 2017 earnings report showing a more than 30% increase in net income in the fourth quarter of the year compared to a year ago. Company leaders say it’s a sign things are turning around for the company.
Revenue for the fourth quarter was $69.4 million, down from the $77.7 million reported in the third quarter of the year. Net income for the quarter was only $1.9 million, a 245% increase compared to the $0.6 million reported at the end of the third quarter.
Company Chairman and Chief Executive Officer Peter C. Boylan III, in a statement, said, “2017 represented a turning point for CELP relative to the bottom of the downturn experienced in the second quarter of 2016.”
He said margins and margin percentages as well as revenues were higher in the second half of 2017 compared to the first half of the year.
” During 2017, customer spending was generally higher than the prior year and many new projects have been announced by several clients. Demand remains strong for inspection and integrity services. Pipeline Inspection and Integrity services represented approximately 97% of our revenues and approximately 85% of our gross margin in 2017.”
Just this month, the company negotiated refinancing and loan capabilities. The new three-year credit agreement is for $100 million but the bank group required a substantial reduction in Cypress Energy’s outstanding debt to reduce leverage.
The company repaid $4 million of principal on its revolving credit facility in January through the sale of its saltwater disposal facility in Pecos, Texas. Cypress also intends to use nearly $7 million in existing cash on hand to educe indebtedness at the closing of the new credit facility. The company expects to reduce its outstanding debt balance from $136.9 million to nearly $76.1 million.
As far as operations are concerned, the company’s Orla facility in Reeves County, Texas in the Delaware basin will reopen for regular business in the next 30 days. Cypress also com;pleted two pipelines in January that connect large multi-well pads into one of the operations in the Bakken for a large public energy company.
While Cypress Energy continues to search for attractive acquisition opportunities, in January it terminated discussions for one such large opportunity in the Permian Basin.