CALGARY, ALBERTA - Dec. 14, 2015 /CNW/ - Newalta Corporation (TSX:NAL) today announced its 2016 capital budget.
Newalta expects to spend a range of $30 to $40 million in incremental capital in 2016 and will only deploy growth capital where sufficient returns can be achieved in the current environment. Maintenance capital is expected to be approximately $10 million in 2016, unchanged from 2015, while new growth capital is expected to range between $20 million to $30 million, compared with $70 million in 2015.
In addition to the $20 to $30 million budgeted growth capital, Newalta has approximately $50 million of standardized assets and equipment in inventory to provide modular solutions to customers. Including these assets, Newalta's total available growth capital is between $70 and $80 million for 2016. These underutilized assets were acquired in previous year capital programs and provide Newalta with flexibility and agility to respond quickly to opportunities.
In 2016, Newalta expects to benefit from contributions from new facilities that came on stream in the second half of 2015. Newalta also expects to benefit from a full year of cost reductions implemented during 2015, which are at a current run rate of $40 million.
Newalta continues to focus on managing costs and being prudent and disciplined with expenditures. Newalta remains well positioned to generate strong returns and growth from its investments, with significant torque in the business model to any recovery in activity levels.
The amount of the capital budget should allow Newalta to maintain balance sheet stability during 2016 and beyond and to move closer towards a position of free cash flow neutral after all cash financing, dividend and capital expenditures. Newalta anticipates meeting its target of positive free cash flow generation in 2017.
About Newalta
Newalta is a leading provider of innovative engineered environmental solutions that enable customers to reduce disposal, enhance recycling and recover valuable resources from oil and gas exploration and production waste streams. We simplify the critical challenges of sustainable environmental practices through the use of advanced processing capabilities deployed through a differentiated business model. We serve customers onsite directly at their operations and through a network of locations throughout North America. Our proven processes and excellent record of safety make us the first-choice provider of sustainability-enhancing services for oil and gas customers. With a highly skilled team of people, a two-decade track record of innovation and a commitment to commercializing new solutions, Newalta is positioned for sustained future growth and improvement. We are Sustainability Simplified™. Newalta trades on the TSX as NAL. For more information, visitwww.newalta.com.
Forward Looking Statements
This press release contains forward-looking information. More particularly, this press release contains forward-looking information relating to Newalta's future operating and financial results, business prospects and strategy including related capital expenditure programs and timelines; and the realization of anticipated benefits of growth capital investments and from the implementation of cost rationalization initiatives including the anticipated value and sustainability of the cash savings from such initiatives. Although Newalta believes that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on it because Newalta can give no assurance that it will prove to be correct. Forward-looking information is based on current expectations, estimates and assumptions that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Newalta and described in the forward-looking information contained in this press release. Among the various factors that could cause results to vary materially from those indicated in the forward-looking information include: general market conditions of the industries we service; strength of the oil and gas industry, including drilling activity; and the success of our growth strategies. Readers should also be aware that the forward-looking information is affected by the risk factors described in Newalta's annual information form and those set forth from time to time in Newalta's other continuous disclosure filings with Canadian securities regulatory authorities, which are available under Newalta's SEDAR profile atwww.sedar.com.
The forward-looking information contained in this press release is made as of the date hereof and Newalta undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.