Cathedral Energy Services reports results for 2010 Q1, updated 2010 capital
budget and 2010 Q2 dividend
/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/
CALGARY, May 5 /CNW/ - Cathedral Energy Services Ltd. (the "Company" or "Cathedral" /TSX: CET) is pleased to report its results for 2010 Q1, updated 2010 capital budget and 2010 Q2 dividend. Dollars are in '000's except for day rates and per share amounts.
FINANCIAL HIGHLIGHTS
Dollars in 000's except per share amounts
Three months ended March 31
2010 2009
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Revenues (excluding discontinued
operations 2010 - $1,927; 2009 - $4,839) $ 35,676 $ 26,529
Gross margin %(1) 50% 48%
EBITDAS(1) from continuing operations $ 11,616 $ 7,342
Per share - diluted $ 0.32 $ 0.23
EBITDAS(1) $ 10,479 $ 6,785
Per share - diluted $ 0.29 $ 0.21
Income before taxes and discontinued operations $ 9,091 $ 3,273
Net income $ 6,737 $ 1,404
Basic per share $ 0.19 $ 0.04
Diluted per share $ 0.18 $ 0.04
Dividends declared per share $ 0.06 $ 0.15
Property and equipment additions $ 7,714 $ 4,137
Weighted average shares outstanding:
Basic ('000) 36,400 32,582
Diluted ('000) 36,726 32,582
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March 31 December 31
2010 2009
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Working capital $ 23,854 $ 22,451
Long-term debt excluding current portion $ 39,519 $ 39,526
Shareholders' equity $ 101,758 $ 97,422
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(1) Refer to MD&A; see "NON-GAAP MEASUREMENTS"
MANAGEMENT'S DISCUSSION & ANALYSIS
This Management's Discussion & Analysis ("MD&A") for the three months ended March 31, 2010 should be read in conjunction with the annual audited consolidated financial statements and notes thereto for the year ended December 31, 2009, as well as the MD&A in the 2009 Annual Report of Cathedral Energy Services Ltd. ("the Company" / "Cathedral"). This MD&A has been prepared as of May 5, 2010. Dollar amounts are in '000's except for day rates and per share amounts.
FORWARD LOOKING STATEMENTS
This MD&A contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words suggesting future outcomes. In particular, this MD&A contains forward-looking statements relating to: access to capital; projected capital expenditures and commitments and the financing thereof; expected proceeds on disposal of wireline and other property and equipment; equipment delivery dates; establishment of new operating bases; customer commitments; financial results; activity levels; technology advances; and dividends. The Company believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.
Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to the Company, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and material factors are presented elsewhere in this MD&A in connection with the forward-looking statements. You are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to:
- the performance of the Company's businesses, including current
business and economic trends;
- oil and natural gas commodity prices and production levels;
- capital expenditure programs and other expenditures by the Company and
its customers;
- the ability of the Company to retain and hire qualified personnel;
- the ability of the Company to obtain parts, consumables, equipment,
technology, and supplies in a timely manner to carry out its
activities;
- the ability of the Company to maintain good working relationships with
key suppliers;
- the ability of the Company to market its services successfully to
existing and new customers;
- the ability of the Company to obtain timely financing on acceptable
terms;
- currency exchange and interest rates;
- risks associated with foreign operations;
- the ability of the Company to realize the benefit of its conversion
from an income trust to a corporation;
- changes under governmental regulatory regimes and tax, environmental
and other laws; and
- a stable competitive environment.
Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in this MD&A and in the Company's Annual Information Form under the heading "Risk Factors". Any forward-looking statements are made as of the date hereof and, except as required by law, the Company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.
All forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements is available in the Company's current Annual Information Form and Annual Report which have been filed with Canadian provincial securities commissions and are available on www.sedar.com.
NON-GAAP MEASUREMENTS
This MD&A refers to certain financial measurements that do not have any standardized meaning within Canadian Generally Accepted Accounting Principles ("GAAP") and therefore may not be comparable to similar measures provided by other companies.
The specific measures being referred to include the following:
i) "Gross margin" - calculated as revenues less operating expenses is
considered a primary indicator of operating performance (see tabular
calculation under Results of Operations);
ii) "Gross margin %" - calculated as gross margin divided by revenues is
considered a primary indicator of operating performance (see tabular
calculation under Results of Operations);
iii) "EBITDAS" - defined as earnings before interest on long-term debt,
taxes, depreciation, amortization, non-cash compensation expense and
unrealized foreign exchange gain/loss; this measure is considered an
indicator of the Company's ability to generate funds from operations
prior to consideration of how activities are financed, how the
results are taxed and measured and non-cash expenses. The
definition of EBITDAS was changed in 2009 Q2 to adjust for
unrealized foreign exchange gain/loss. Comparative amounts presented
have been restated to the new calculation (see tabular calculation
under EBITDAS);
iv) "EBITDAS from continuing operations" - defined as earnings before
interest on long-term debt, taxes, depreciation, amortization, non-
cash compensation expense and unrealized foreign exchange gain/loss
excluding the portion due from discontinued operations in each
component of the calculation;
v) "Maintenance capital expenditures" - refers to capital expenditures
required to maintain existing levels of service but excludes
replacement cost of lost-in-hole equipment to the extent the
replacement equipment is financed from the proceeds on disposal of
the equipment lost-in-hole; and
vi) "Funds from continuing operations" - calculated as cash flow from
continuing operating activities before changes in non-cash working
capital is considered an indicator of the Company's ability to
generate funds flow from operations but excluding changes in non-
cash working capital which is financed using the Company's bank
indebtedness/line of credit facility.
OVERVIEW
The Company is incorporated under the Business Corporations Act (Alberta) (the "Act"). The Company was created as a result of the conversion of Cathedral Energy Services Income Trust (the "Trust") to a corporation pursuant to a Plan of Arrangement under the Act, entered into by various entities including the Trust, Cathedral Energy Services Ltd. ("CES") and SemBioSys Genetics Inc. ("SBS") (the "Reorganization"). The Reorganization was completed on December 18, 2009 (see 2009 Annual Report for further details). As a result of the application of the continuity of interests method of accounting, certain terms such as shareholders'/unitholders', dividends/distributions and share-based/unit-based may be used interchangeably throughout this MD&A.
During the quarter, the Company made the decision to discontinue its operations of the wireline division. On March 31, 2010, it closed its Canadian slickline operations and on April 20, 2010 it completed the sale of its U.S. wireline operations. As such, for the three months ended March 31, 2010 and the related assets are classified as held for sale and the revenues and expenses for the wireline business have been included in the statements of operations and statements of cash flows as discontinued operations. The 2009 figures have been reclassified to be consistent with this presentation.
On April 20, 2010, the Company closed the sale of its U.S. based electric wireline business to Pure Energy Services Ltd. ("Pure") in exchange for the operating assets of Pure's Motorworks division and approximately $2,100 cash. The Motorworks division includes 58 drilling motors, 23 drilling jars, spare mud motor power sections and shop equipment valued at approximately $5,000. The assets of the Motorworks operations will be utilized in Cathedral's current directional drilling business, and the net sale proceeds will be used to reduce bank indebtedness.
The Company completed the first quarter of 2010 with quarterly revenues of $35,676 compared to 2009 Q1 at $26,529. The 2010 Q1 revenues were comprised of 77% (2009 Q1 - 77%) from the directional drilling division and 23% (2009 Q1 - 23%) from the production testing division.
2010 Q1 EBITDAS was $10,479 ($0.29 per share - diluted) which represents a $3,694 or 54% increase from $6,785 ($0.21 per share - diluted) in 2009. 2010 Q1 EBITDAS from continuing operations was $11,616 ($0.32 per share - diluted) an increase of $4,274 or 58% increase from $7,342 ($0.23 per share - diluted) in 2009 Q1. The Company's net income for 2010 Q1 was $6,737 (2009 - $1,404) or $0.18 (2009 - $0.04) per share - diluted.
RESULTS OF OPERATIONS
Revenues and operating expenses
2010 Q1 2009 Q1 Change %
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Revenues (excluding
discontinued operations 2010
- $1,927; 2009 - $4,839) $ 35,676 $ 26,529 $ 9,147 34
Operating expenses (18,005) (13,664) 4,341 32
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Gross margin - $ $ 17,671 $ 12,865 $ 4,806 37
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Gross margin - % 50% 48% 2%
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Three months ended Three months ended
March 31, 2010 March 31, 2009
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Direct- Produc- Direct- Produc-
ional tion ional tion
Revenues drilling testing Total drilling testing Total
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Canada $ 18,398 $ 5,225 $ 23,623 $ 10,793 $ 3,725 $ 14,518
United States 9,000 3,053 12,053 9,556 2,455 12,011
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$ 27,398 $ 8,278 $ 35,676 $ 20,349 $ 6,180 $ 26,529
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2010 Q1 revenues were $35,676 which represented an increase of $9,147 or 34% from 2009 Q1 revenues of $26,529. The increase is primarily attributed to the strengthening demand for oil drilling services, an increased focus on shale gas drilling and operations related to the unconventional gas and oil plays. Since the third quarter 2009, the Company has experienced, on a quarter-over-quarter basis, a sequential improvement in operating activities across all of its service areas in both Canada and the U.S. In Canada, the market has improved as we are seeing old areas being redeveloped (i.e. Cardium) and new zones being discovered (i.e. Duvernay) which are predominately employing the use of horizontal, multi-stage fracturing technology and this work is beneficial to both the directional drilling and production testing divisions of the Company.
The directional drilling division revenues have increased from $20,349 in 2009 to $27,398 in 2010. This increase is the net result of: i) a 69% increase in activity days from 1,929 in 2009 to 3,261 in 2010; and ii) a decrease in the average day rate from $10,253 in 2009 to $8,244 in 2010, which was due in large part to the decrease in U.S. rates due to the increase in exchange rate for the Canadian dollar compared with 2009 Q1 and due in part in reduction in drilling rates to remain competitive. For 2009 Q4, the average day rate was $8,517. Canadian activity days increased from 1,129 to 2,303 and U.S. activity days increased from 800 to 958.
The Company's production testing division contributed $8,278 in revenues during 2010 Q1 which is a 34% increase over 2009 revenues of $6,180. This increase is attributable to the overall increase in oilfield service activities on a year-over-year basis.
The gross margin for 2010 Q1 was 50% compared to 48% in 2009 Q1. This slight increase is primarily attributed to the net effect of a 1.5% decline in labour costs, a 0.5% decrease in repairs and a 1% increase in equipment rentals. Labour costs as a percentage of revenue decreased due to changes in labour rates made throughout 2009. In 2009 Q1 the U.S. directional drilling division incurred higher repair costs, this division did not experience the same level of repairs. The Company's production testing division incurred additional equipment rentals in order to complete all of its work engagements.
General and administrative expenses
General and administrative expenses were $6,840 in 2010 Q1; an increase of $803 compared with $6,037 in 2009. The increase was primarily related to increases in payroll related expenses as well as other general increases due to the increased activity levels.
Depreciation and amortization
Depreciation for 2010 Q1 was $2,154 which compares to $2,878 in 2009 Q1. This slight decrease is due to in part the declining balance depreciation method used by the Company and is expected as its assets get older. In addition, the Company reviewed its estimate of useful lives of assets as at January 1, 2010 and adjusted its declining balance depreciation rates accordingly. As a percentage of revenues, depreciation amounted to 6% for 2010 and 11% for 2009.
Share-based compensation expense
For 2010 Q1 the Company had share-based compensation expense of $690 compared to $277 recognized in 2009 Q1. The increase is mainly due to options issued in the quarter. The value of the options is being amortized against income over the three-year vesting periods.
Interest expense
Interest expense related to long-term debt decreased from $366 in 2009 Q1 to $307 in 2010 Q1 due to the decrease in the average level of debt outstanding. Other interest expense, which decreased marginally on a year-over-year basis from $115 in 2009 Q1 to $111 in 2010 Q1, relates mainly to interest charges on use by the Company of its bank indebtedness/line of credit facility.
Foreign exchange gain/loss
The Company's foreign exchange gain/loss has changed from a $639 loss in 2009 Q1 to a gain of $676 in 2010 Q1 due to the fluctuations in the Canadian dollar. Upon consolidation the Company's foreign operations are considered to be self-sustaining and therefore gains and losses due to fluctuations in the foreign currency exchange rates are recorded in other comprehensive income ("OCI") on the balance sheet as a component of equity. However, gains and losses in the Canadian entity on U.S. denominated intercompany balances continue to be recognized in the statement of income. Included in the 2010 Q1 foreign currency gain are unrealized gains of $626 related to intercompany balances.
Gain on disposal of property and equipment
During 2010 Q1 the Company had a gain on disposal of property and equipment of $846 which compares to $720 in 2009 Q1. The Company's gains are mainly due to recoveries of lost-in-hole equipment costs including previously expensed depreciation on the related assets. The timing of lost-in-hole recoveries is not in the control of the Company and therefore can fluctuate significantly from quarter-to-quarter.
Taxes
For 2010 Q1, the Company had a tax expense of $329 as compared to $826 in 2009 Q1. All of the Company's Canadian taxable income was reduced to $Nil due to the utilization of tax pools and tax loss carry-forwards.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of liquidity is cash generated from operations. The Company also has the ability to fund liquidity requirements through its credit facility and the issuance of debt and/or equity. At March 31, 2010, the Company had an operating line of credit with a major Canadian bank in the amount of $20,000 (December 31, 2009 - $20,000) of which $4,917 (December 31, 2009 - $2,181) was drawn. In addition, the Company has a non-reducing revolving term loan facility in the amount of $45,000 (December 31, 2009 - $45,000) of which $39,500 (December 31, 2009 - $39,500) was drawn as at March 31, 2010. In addition, at March 31, 2010, the Company had other long-term debt of $180 (December 31, 2009 - $234).
Operating activities
Cash flow from operating activities for the three months ended March 31, 2010 decreased from $12,304 in 2009 to $1,780, a decrease of $10,524 or 86%. This decrease reflects a further investment in working capital in the amount of $8,108. Funds from continuing operations (see Non-GAAP Measurements) for 2010 were $10,795 which compares to $2,631 for 2009 an increase of $8,164. This increase was caused mainly by the increase on earnings due to increased activity levels. The Company has a working capital position at March 31, 2010 at $23,854 which compares to $22,451 at December 31, 2009.
Investing activities
Cash used in investing activities for the three months ended March 31, 2010 amounted to $5,420 which compares to $5,335 for the same period in 2009. During 2010 Q1 the Company invested an additional $7,714 (2009 - $4,137) in property and equipment with the main additions being deposits made for resistivity (logging while drilling) equipment and three additional production testing units. At March 31, 2010, the Company's operating entities had 96 MWD systems and 35 production testing units. On April 20, 2010, the Company closed the sale of its U.S. wireline business including 10 electric line wireline units. The Company has 14 slickline wireline units which are classified as held for sale.
Financing activities
Cash from financing activities for the quarter ended March 31, 2010 amounted to $2,682 as compared to cash used by financing activities of $11,386 in 2009 Q1. During 2010 Q1, the Company made repayments of other long-term debt of $54 (2009 - $55). Advances on bank indebtedness for 2010 Q1 were $2,736 (2009 - repayments of $6,966). The Company received advances of long-term debt in the amount of $Nil (2009 - $1,500). Dividends paid in 2010 Q1 were $Nil (2009 - $5,865). The dividends declared in 2010 Q1 were paid April 15, 2010. As at March 31, 2010, the Company was in compliance with all covenants under its credit facility. At May 5, 2010, the Company has 36,405,361 shares and 3,081,969 share options outstanding.
Contractual obligations
In the normal course of business, the Company incurs contractual obligations and those obligations are disclosed in the Company's MD&A for the year ended December 31, 2009. As at March 31, 2010, the Company has a commitment to purchase approximately $5,647 of property and equipment.
UPDATED 2010 CAPITAL PROGRAM
For 2010, the Board of Directors of the Company has approved an updated capital budget of $29,380 (excluding the $5,000 of directional drilling equipment acquired in the asset swap with Pure). Included in the 2010 capital budget is approximately $7,710 for maintenance capital and $3,800 allocated to the new head office and operations centre located in Calgary, which was purchased in 2008. The maintenance capital includes the retro-fit and upgrades to downhole tools. The balance of the 2010 capital program relates mainly to the purchase and integration of resistivity (logging while drilling "LWD") equipment, 8 Electro-Magnetic Measurement-While-Drilling ("EM-MWD") systems, 5 pulse MWD systems and 6 high pressure production testing units. These capital expenditures are expected to be financed by way of cash flow from operations, proceeds on the disposal of wireline and other property and equipment and the Company's credit facility. The Company anticipates proceeds from the disposal of wireline and other property and equipment to be approximately $8,500 including approximately $2,100 related to the asset swap transaction with Pure.
DIVIDENDS
It is the intent of the Company to pay quarterly dividends to shareholders. The Board of Directors will review the amount of dividends on a quarterly basis with due consideration to current performance, historical and future trends in the business, the expected sustainability of those trends and enacted tax legislation which will affect future taxes payable as well as required long-term debt repayments, maintenance capital expenditures required to sustain performance and future growth capital expenditures. The Directors have approved a 2010 Q2 dividend in the amount of $0.06 per share which will have a date of record of June 30, 2010 and a payment date of July 15, 2010.
CONTROLS AND PROCEDURES
Management is responsible for establishing and maintaining adequate disclosure controls and internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with GAAP. Internal control over financial reporting may not prevent or detect fraud or misstatements because of limitations inherent in any system of internal control. There were no significant changes in the design or effectiveness of the Company's disclosure controls or internal controls over financial reporting in the first quarter of 2010.
NEW ACCOUNTING POLICIES
In February, 2008, the CICA confirmed that the use of International Financial Reporting Standards ("IFRS") will be required in Canada for publicly accountable profit oriented enterprises for fiscal years beginning on or after January 1, 2011. The Company will be required to report using IFRS beginning January 1, 2011.
The Company's IFRS project plan has four phases: education, analysis, design and implementation and testing. The Company is continuing the process of education for all levels of the organization and has completed the analysis phase during which it identified specific significant differences between Canadian GAAP and IFRS. The Company is in the design phase in which it is determining its policies and procedures for IFRS. This phase will be completed and the Company will move into the implementation and testing phase in 2010 Q2 & Q3.
The Company is in the process of preparing draft accounting policy choices and financial statement formats which will be presented and vetted by the Company's external auditors and Audit Committee. During 2010 Q2 & Q3, the Company anticipates completion of this process and to quantify the impact of any changes.
Based upon work completed to date, the Company has determined that IFRS may have a significant impact on share-based compensation and the valuation of goodwill. In addition, the Company anticipates that its policies with respect to financial statement presentation and various other items will change as a result of adopting IFRS. The areas impacted by IFRS discussed above should not be regarded as a comprehensive list of changes that will result from the transition to IFRS. The impact of IFRS on the consolidated financial statements is not quantifiable at this time.
BUSINESS RISKS
The MD&A for the year ended December 31, 2009, which is included in the Company's 2009 Annual Report, includes an overview on business risks associated with the Company and its operating entities. Those business risks remain in effect as at March 31, 2010.
EBITDAS
EBITDAS (refer to Non-GAAP Measurements) is calculated as follows:
Three months ended March 31
2010 2009
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Income from continuing operations $ 8,762 $ 2,447
Add (deduct):
Depreciation and amortization -
continuing operations 2,154 2,878
Interest - long-term debt -
continuing operations 307 366
Share-based compensation expense 690 277
Unrealized exchange gain (626) 548
Taxes - continuing operations 329 826
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EBITDAS from continuing operations 11,616 7,342
EBITDAS from discontinued operations (1,137) (557)
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EBITDAS $ 10,479 $ 6,785
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GOVERNANCE
The Audit Committee of the Board of Directors has reviewed this MD&A and the related unaudited interim consolidated financial statements and recommended they be approved to the Board of Directors. Following a review by the full Board, the MD&A and financial statements were approved.
SUMMARY OF QUARTERLY RESULTS
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Three month period ended Mar Dec Sep Jun
2010 2009 2009 2009
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Revenues(1) $ 35,676 $ 24,740 $ 20,176 $ 10,654
EBITDAS 10,479 5,864 5,724 (1,721)
Net income (loss) 6,737 2,236 3,125 (1,484)
Net income (loss) per share
- basic 0.19 0.06 0.09 (0.04)
Net income (loss) per share
- diluted 0.18 0.06 0.09 (0.04)
Dividends declared per share 0.06 - 0.04 0.12
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Three month period ended Mar Dec Sep Jun
2009 2008 2008 2008
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Revenues(1) $ 26,529 $ 43,514 $ 45,549 $ 25,384
EBITDAS 6,785 13,554 16,887 4,632
Net income (loss) 1,404 9,737 10,296 189
Net income (loss) per share
- basic 0.04 0.30 0.32 0.01
Net income (loss) per share
- diluted 0.04 0.30 0.32 0.01
Dividends declared per share 0.15 0.21 0.21 0.21
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(1) Revenue has been restated to exclude discontinued operations,
consistent with 2010 Q1 presentation
OUTLOOK
The focus on horizontal, multi-stage fracturing technology to complete conventional and unconventional resource plays in both Canada and the U.S. is benefitting Cathedral with increased activity levels. This change in completion techniques has dramatically increased the percentage of wells being drilled horizontally to over 60% of the total wells drilled. With the rig count in both Canada and the U.S. experiencing significant increases coupled with the increased percentage of wells being drilled horizontally, demand for the Company's services remains strong. After breakup, Cathedral is expecting activity levels to be above those experienced in 2010 Q1.
The sale of our U.S. based electric wireline business effective April 20, 2010 and the closing of the Canadian slickline business will result in a more focused oilfield services entity that provides directional drilling and production testing services. The sale of the wireline assets will allow for the redeployment of proceeds into Cathedral's core business lines. Without expanding the overall capital budget (net of proceeds on disposal of wireline assets) Cathedral will add 8 EM-MWD systems and 5 mud pulse MWD systems to its fleet as well as related equipment to expand overall job capacity.
Prior to the end of 2010 Q1, Cathedral's operations facility in Washington, Pennsylvania, which services the Marcellus resource play, was fully operational and commenced re-building equipment (mud motors and MWD). The Company currently has a 10 job capacity in the U.S. northeast region.
The Company has begun operating in the southern U.S. (Texas/Oklahoma area) and expects to establish an operations base to service this region in 2010 Q3 with an initial 5 job capability.
Cathedral is currently building six high pressure production testing units to add to its fleet. Three of these units are contracted and will be part of Cathedral's entry into the Marcellus shale play in the U.S. northeast. The Company expects these units to be operational in 2010 Q2. We expect the next three units to be contracted by the time they are completed in the third quarter of 2010. As customer demand grows, the Company expects it will continue to build new high pressure equipment.
CONSOLIDATED BALANCE SHEETS
Dollars in '000's March 31 December 31
(unaudited) 2010 2009
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Assets
Current assets:
Cash and cash equivalents $ - $ 491
Accounts receivable 35,673 27,727
Income taxes receivable 3,075 2,550
Inventory 5,778 5,389
Prepaid expenses and deposits 1,276 1,629
Assets held for sale 773 740
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46,575 38,526
Property and equipment 82,278 77,425
Assets held for sale 13,290 14,027
Future income taxes 21,596 23,491
Intangibles - 293
Goodwill 19,075 19,775
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$ 182,814 $ 173,537
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Liabilities and Shareholders' Equity
Current liabilities:
Cheques issued in excess of bank balance $ 476 $ -
Bank indebtedness 4,917 2,181
Accounts payable and accrued liabilities 14,983 13,686
Dividends payable 2,184 -
Current portion of long-term debt 161 208
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22,721 16,075
Long-term debt 39,519 39,526
Deferred credit 18,816 20,514
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81,056 76,115
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Shareholders' equity:
Share capital 68,995 68,995
Contributed surplus 5,080 4,390
Retained earnings 30,557 26,004
Accumulated other comprehensive income (loss) (2,874) (1,967)
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101,758 97,422
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$ 182,814 $ 173,537
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CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
Dollars in '000's except per
share amounts Three months ended March 31
(unaudited) 2010 2009
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Revenues $ 35,676 $ 26,529
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Expenses:
Operating 18,005 13,664
General and administrative 6,840 6,037
Depreciation and amortization 2,154 2,878
Share-based compensation 690 277
Interest - long-term debt 307 366
Interest - other 111 115
Foreign exchange loss (gain) (676) 639
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27,431 23,976
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8,245 2,553
Gain on disposal of property and equipment 846 720
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Income before taxes and discontinued operations 9,091 3,273
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Taxes:
Current (recovery) (332) 3,625
Future income taxes (recovery) 661 (2,799)
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329 826
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Income from continuing operations 8,762 2,447
Loss from discontinued operations,
net of tax (2,025) (1,043)
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Net income 6,737 1,404
Retained earnings, beginning of period 26,004 31,559
Dividends (2,184) (4,887)
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Retained earnings, end of period $ 30,557 $ 28,076
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Income from continuing operations per share:
Basic $ 0.24 $ 0.07
Diluted $ 0.24 $ 0.07
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Loss from discontinued operations per share:
Basic $ (0.06) $ (0.03)
Diluted $ (0.06) $ (0.03)
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Net income per share:
Basic $ 0.19 $ 0.04
Diluted $ 0.18 $ 0.04
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND ACCUMULATED OTHER
COMPREHENSIVE INCOME (LOSS)
Dollars in '000's Three months ended March 31
(unaudited) 2010 2009
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Net income $ 6,737 $ 1,404
Other comprehensive income (loss):
Unrealized foreign exchange gain (loss)
on translation of self-sustaining
foreign operations (907) 1,072
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Comprehensive income $ 5,830 $ 2,476
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Accumulated other comprehensive income (loss),
beginning of period $ (1,967) $ 3,326
Other comprehensive income (loss) (907) 1,072
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Accumulated other comprehensive income (loss),
end of period $ (2,874) $ 4,398
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in '000's Three months ended March 31
(unaudited) 2010 2009
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Cash provided by (used in):
Operating activities:
Income from continuing operations $ 8,762 $ 2,447
Items not involving cash:
Depreciation and amortization 2,154 2,878
Future income taxes 661 (2,799)
Unrealized foreign exchange (gain) loss (626) 548
Share-based compensation 690 277
Gain on disposal of property and equipment (846) (720)
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Cash flow from continuing operations 10,795 2,631
Cash flow from discontinued operations (907) (88)
Changes in non-cash operating working capital (8,108) 9,761
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1,780 12,304
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Investing activities:
Property and equipment additions (7,714) (4,137)
Proceeds on disposal of property and equipment 1,262 1,078
Changes in non-cash investing working capital 1,032 (2,276)
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(5,420) (5,335)
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Financing activities:
Change in bank indebtedness 2,736 (6,966)
Advances (repayments) of long-term debt (54) 1,445
Dividends paid - (5,865)
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2,682 (11,386)
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Effect of exchange rate on changes in
cash and cash equivalents (9) 184
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Change in cash and cash equivalents (967) (4,233)
Cash and cash equivalents, beginning of period 491 7,551
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Cash and cash equivalents (cheques issued
in excess of bank balance), end of period $ (476) $ 3,318
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%SEDAR: 00000484E
For further information: Mark L. Bentsen, President and Chief Executive Officer or P. Scott MacFarlane, Chief Financial Officer, Cathedral Energy Services Ltd., 1700, 715 - 5th Avenue S.W., Calgary, Alberta, T2P 2X6, Telephone: (403) 265-2560, Fax: (403) 262-4682, www.cathedralenergyservices.com
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