Production Enhancement Group, Inc. reported further actions taken in the restructuring of its organization to improve cash flow and profitability, resulting in annual savings estimated at USD 3.2 to 3.7 million. This, along with actions announced on December 11, 2007, is expected to result in total estimated annual savings of USD 5.9 to 6.4 million. At the same time PEG is improving its growth capacity, adding two new product lines in the fourth quarter of 2007 and growing its fleet of well intervention equipment in response to customer demand.
Don B. Cobb, who joined the Company as President of Wise Well Intervention Services, PEG's operating subsidiary, in October 2007 and was appointed CEO of PEG in December 2007, commented that the Company is now well positioned for improved performance in 2008. "Since taking over as CEO, my number one priority has been to execute initiatives that will drive the Company's enduring success and generate immediate and future profits," he said. "These initiatives will come with changes, some big and some small. Right now I can tell you we will take the necessary actions to continue to realign our business to reduce costs and allocate resources to customer-based revenue-producing initiatives. We expect that increased utilization of our growing fleet of well intervention equipment will produce satisfactory revenue growth in 2008. As well, the anticipated USD 5.9 to 6.4 million of annual cost savings that we have identified will flow straight to the bottom line, improving expected profitability and cash flow."
The additional cost savings originate primarily from personnel reductions as the structure of the Company has been flattened by removing several upper and middle management positions and the corporate team has been structured for improved operational focus. As part of this effort, Chester J. Jachimiec, Executive Vice President, has left the Company. Some of PEG's field offices have been closed, including its Canadian operations which were headquartered in Brooks, Alberta. The company expects to record a one-time restructuring charge in the fourth quarter of 2007 of approximately USD 1.2 to 1.5 million which excludes the associated costs of shutting down the Company's Canadian operations. The cost of shutting down the Company's Canadian operations is in the range of USD 2.0 to 2.5 million and will be an additional charge to discontinued operations in the fourth quarter of 2007.
PEG has geared its operations to focus exclusively on delivering high quality oil and gas well intervention services in the United States where growth continues. The Company is continuing to redeploy its equipment to maximize fleet utilization. Increased focus on technical quality and health, safety and environment is being implemented in an effort to improve access to major oil and gas producers.
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