Cathedral Energy Services reports results for the three and nine months ended
September 30, 2009
/NOT FOR DISSEMINATION IN THE
FINANCIAL HIGHLIGHTS
$ in 000's except per
Trust Unit amounts Three months ended Nine months ended
September 30 September 30
-------------------- -------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
Revenues $ 23,544 $ 52,686 $ 67,825 $ 128,422
Gross margin %(1) 49% 46% 44% 46%
EBITDAS(1) $ 5,724 $ 16,887 $ 10,788 $ 36,875
Diluted per Trust Unit $ 0.16 $ 0.52 $ 0.31 $ 1.14
Income before taxes $ 3,207 $ 13,022 $ 905 $ 25,508
Net income $ 3,125 $ 10,296 $ 3,045 $ 20,402
Basic per Trust Unit $ 0.09 $ 0.32 $ 0.09 $ 0.64
Diluted per Trust Unit $ 0.09 $ 0.32 $ 0.09 $ 0.63
Cash distributions
declared per Trust Unit $ 0.04 $ 0.21 $ 0.31 $ 0.63
Distributable cash(1),
including one-time 2009
Q1 current tax provision
of $4,168 (refer to MD&A) $ 5,093 $ 13,844 $ 4,915 $ 28,996
Adjusted distributable
cash(3), excluding
one-time 2009 Q1 current
tax provision of $4,168
(refer to MD&A) $ 5,093 $ 13,844 $ 9,083 $ 28,996
Cash distributions
declared(2) $ 1,448 $ 6,813 $ 10,534 $ 20,252
Payout ratio(1), net of
one-time 2009 Q1 current
tax provision of $4,168 28% 49% 214% 70%
Adjusted payout ratio(3),
net of one-time 2009 Q1
current tax provision of
$4,168 28% 49% 116% 70%
Property and equipment
additions $ 1,333 $ 15,129 $ 7,309 $ 26,564
Weighted average Trust
Units outstanding:
Basic ('000) 36,198 32,384 34,370 32,091
Diluted ('000) 36,198 32,522 34,370 32,318
September 30 December 31
2009 2008
-------------------------------------------------------------------------
Working capital $ 16,095 $ 17,435
Long-term excluding current portion $ 36,571 $ 40,233
Unitholders' equity $ 93,938 $ 91,859
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to MD&A; see "NON-GAAP MEASUREMENTS"
(2) Excludes foreign taxes paid that have been allocated to Unitholders
(3) Refer to MD&A; see "DISTRIBUTIONS"
MANAGEMENT'S DISCUSSION & ANALYSIS
This Management's Discussion & Analysis ("MD&A") for the three and nine months ended
FORWARD-LOOKING INFORMATION
Certain statements in this MD&A including (i) statements that may contain words such as "anticipate", "could", "expect", "seek", "may", "intend", "will", "believe", "should", "project", "forecast", "plan" and similar expressions, including the negatives thereof, (ii) statements that are based on current expectations and estimates about the markets in which the Trust/Cathedral operates and (iii) statements of belief, intentions and expectations about developments, results and events that will or may occur in the future, constitute "forward-looking statements" and are based on certain assumptions and analysis made by the Trust/Cathedral. Forward-looking statements in this MD&A specifically include, but are not limited to, statements with respect to future capital expenditures, including the amount, nature and timing thereof; oil and natural gas prices and demand; other development trends within the oil and natural gas industry; business strategy; expansion and growth of the Trust/Cathedral's business and operations including the Trust/Cathedral's market share and position in the oilfield service market; the arrangement (as herein discussed) and the expected benefits thereof; future financial position; results of operations; dividend policy; tax pools and the availability of such tax pools; taxes; plans and objectives; access to capital; liquidity and trading volumes; projected costs; business strategy and anticipated benefits of the arrangement; financial results; future cash flows; value and debt levels; future tax basis and the treatment of the Trust and the Trust Unitholders under tax laws and other such matters.
The forward-looking statements contained in this MD&A reflect several material factors, expectations and assumptions including, without limitation: (i) oil and natural gas production levels; (ii) commodity prices and interest rates; (iii) capital expenditure programs and other expenditures by the Trust/Cathedral and its customers; (iv) supply and demand for oil and natural gas; (v) expectations regarding the Trust's/Cathedral's ability to raise capital, generate cash flow and to increase its equipment fleets through acquisitions and manufacture; (vi) schedules and timing of certain projects and the Trust's/Cathedral's strategy for growth; (vii) the Trust's/Cathedral's future operating and financial results; (viii) the Trust's/Cathedral's ability to retain and hire qualified personnel; (ix) treatment under governmental regulatory regimes and tax, environmental and other laws; (ix) the completion of the arrangement; * the utilization of the tax basis by New Cathedral; and (xi) the timely receipt of required regulatory approvals.
Financial outlook information contained in this MD&A about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this MD&A and certain documents incorporated by reference into this MD&A should not be used for purposes other than for which it is disclosed herein.
Such forward-looking statements are subject to important risks and uncertainties, which are difficult to predict and that may affect the Trust/Cathedral's operations, including, but not limited to: the impact of general economic conditions in
All forward-looking statements contained in this document are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements is available in the Trust/Cathedral's current Annual Information Form which has been filed with the applicable Canadian provincial securities commissions and is 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 and/or trusts.
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, unit-based compensation expense
and foreign currency gain/loss on intercompany debt; this measure
is considered an indicator of the Trust's ability to generate
funds flow from operations prior to consideration of how
activities are financed, how the results are taxed and measured
and non-cash expenses (see tabular calculation under EBITDAS);
iv) "Distributable cash" - defined as cash flow from operating
activities before changes in non-cash operating working capital
less required principal repayments on long-term debt and
maintenance capital expenditures; distributable cash is a key
performance measurement used by management, analysts and investors
to evaluate the financial performance of the Trust (see tabular
calculation under Distributions);
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;
vi) "Payout ratio" - calculated as cash distributions declared divided
by distributable cash, is an indicator of the Trust's ability to
fund its distributions from the Trust's ongoing operations
excluding changes in non-cash working capital (see tabular
calculation under Distributions) (see distributable cash
definition above); and
vii) "Funds from operations" - calculated as cash flow from operating
activities before changes in non-cash working capital is
considered an indicator of the Trust's ability to generate funds
flow from operations but excluding changes in non-cash working
capital which is financed using the Trust's bank indebtedness/line
of credit facility.
OVERVIEW
The Trust completed the third quarter of 2009 with quarterly revenues of
2009 year-to-date EBITDAS was
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2009
Revenues and operating expenses
2009 Q3 2008 Q3 Change %
-------------------------------------------------------------------------
Revenues $ 23,544 $ 52,686 $ (29,142) (55)
Operating expenses (12,104) (28,212) (16,108) (57)
-------------------------------------------------------------------------
Gross margin - $ $ 11,440 $ 24,474 $ (13,034) (53)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Gross margin - % 49% 46% 3%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended September 30, 2009
-------------------------------------------------------------------------
Directional Production
Revenues drilling Wireline testing Total
-------------------------------------------------------------------------
Canada $ 11,836 $ 996 $ 1,495 $ 14,327
United States 4,863 2,372 1,982 9,217
-------------------------------------------------------------------------
$ 16,699 $ 3,368 $ 3,477 $ 23,544
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended September 30, 2008
-------------------------------------------------------------------------
Directional Production
Revenues drilling Wireline testing Total
-------------------------------------------------------------------------
Canada $ 22,992 $ 5,069 $ 3,814 $ 31,875
United States 17,917 2,068 826 20,811
-------------------------------------------------------------------------
$ 40,909 $ 7,137 $ 4,640 $ 52,686
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2009 Q3 revenues were
The directional drilling division revenues have decreased from
The Trust's production testing division contributed
The gross margin for 2009 Q3 was 49% compared to 46% in 2008 Q3. The increase is attributed to cost reductions in a number of areas including: i) reductions in labour rates; ii) reductions in equipment rentals as a result in decreased activity levels; net of iii) increases in repair and maintenance costs.
General and administrative expenses
General and administrative expenses were
Depreciation and amortization
Depreciation for 2009 Q3 was
Interest expense
Interest expense related to long-term debt increased from
Foreign exchange gain/loss
The Trust's foreign exchange gain/loss has changed from a
Unit-based compensation expense
For 2009 Q3 the Trust had unit-based compensation expense of
Gain on disposal of property and equipment
During 2009 Q3 the Trust had a gain on disposal of property and equipment of
Taxes
For 2009 Q3, the Trust had a tax expense of
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2009
Revenues and operating expenses
2009 YTD 2008 YTD Change %
-------------------------------------------------------------------------
Revenues $ 67,825 $ 128,422 $ (60,597) (47)
Operating expenses (37,737) (69,265) (31,528) (46)
-------------------------------------------------------------------------
Gross margin - $ $ 30,088 $ 59,157 $ (29,069) (49)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Gross margin - % 44% 46% (2%)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Nine months ended September 30, 2009
-------------------------------------------------------------------------
Directional Production
Revenues drilling Wireline testing Total
-------------------------------------------------------------------------
Canada $ 26,001 $ 5,905 $ 5,530 $ 37,436
United States 19,713 4,561 6,115 30,389
-------------------------------------------------------------------------
$ 45,714 $ 10,466 $ 11,645 $ 67,825
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Nine months ended September 30, 2008
-------------------------------------------------------------------------
Directional Production
Revenues drilling Wireline testing Total
-------------------------------------------------------------------------
Canada $ 55,335 $ 14,089 $ 9,001 $ 78,425
United States 44,444 4,727 826 49,997
-------------------------------------------------------------------------
$ 99,779 $ 18,816 $ 9,827 $ 128,422
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2009 revenues were
The directional drilling division revenues have decreased from
Expansion to the U.S. resulted in increased revenues for the Trust's production testing division. The Trust's production testing division contributed
The gross margin for 2009 was 44% compared to 46% in 2008. The decrease is attributed to a number of factors including: i) an increase in labour costs as percentage of revenue in the first six months of 2009; ii) greater impact of annual equipment repairs and maintenance costs (spread over less revenue); iii) an overall change in revenue mix as wireline and production testing revenues now make up a greater percentage of total revenues and these divisions have a lower gross margin; and iv) included in 2009 Q2 operating expenses were
General and administrative expenses
General and administrative expenses were
Depreciation and amortization
Depreciation for 2009 was
Interest expense
Interest expense related to long-term debt increased from
Foreign exchange gain/loss
The Trust's foreign exchange gain/loss has changed from a
Unit-based compensation expense
For 2009, the Trust had unit-based compensation expense of
Gain on disposal of property and equipment
During 2009 the Trust had a gain on disposal of property and equipment of
Taxes
For 2009, the Trust had a tax recovery of
Included in the 2009 net tax recovery is
LIQUIDITY AND CAPITAL RESOURCES
The Trust's primary source of liquidity is cash generated from operations. The Trust also has the ability to fund liquidity requirements through its credit facility and the issuance of debt and/or equity. Effective
Operating activities
Cash provided by (used in) operating activities for the three and nine months ended
Investing activities
Cash used in investing activities for the three and nine months ended
Financing activities
Cash provided by (used in) financing activities for the three and nine months ended
Distributions paid to Unitholders for the three and nine months ended
At
Contractual obligations
In the normal course of business, the Trust incurs contractual obligations and those obligations are disclosed in the Trust's MD&A for the year ended
On
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 Trust's disclosure controls or internal controls over financial reporting in the third quarter of 2009.
NEW ACCOUNTING POLICIES
Effective
BUSINESS RISKS
The MD&A for the year ended
EBITDAS
EBITDAS (refer to Non-GAAP Measurements) is calculated as follows:
Three months ended Nine months ended
September 30 September 30
---------------------- ----------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
Net income for the period $ 3,125 $ 10,296 $ 3,045 $ 20,402
Add (deduct):
- depreciation and
amortization 3,539 3,411 11,342 9,281
- interest - long-term
debt 303 266 979 785
- unit-based compensation
expense 200 215 740 1,367
- unrealized foreign
currency gain on
inter-company debt (1,525) (27) (3,178) (66)
- provision for taxes
(recovery) 82 2,726 (2,140) 5,106
-------------------------------------------------------------------------
EBITDAS $ 5,724 $ 16,887 $ 10,788 $ 36,875
-------------------------------------------------------------------------
-------------------------------------------------------------------------
DISTRIBUTIONS
The Administrator of the Trust reviewed the level and nature of distributions (cash, in-kind or a combination of cash and in-kind) on an on-going basis giving consideration to current performance, historical and future trends in the business, the expected sustainability of those trends and enacted tax legislation which affected future taxes payable as well as required long-term debt repayments, maintenance capital expenditures required to sustain performance and future growth capital expenditures. Despite the seasonality of the Trust's business, it was the Trust's policy to pay consistent distributions throughout the year. The Trust's operations in western
Distributable cash is a supplemental non-GAAP measurement that management considers a key measure in demonstrating the Trust's ability to generate the cash necessary to pay distributions, fund future capital investments and the repayment of long-term debt. Distributable cash as presented is not intended to represent operating profit for the period nor should it be viewed as an alternative to operating profit, net income or other measures of financial performance calculated in accordance with Canadian GAAP. Distributable cash does not have any standardized meaning within Canadian GAAP and therefore may not be comparable to similar measures presented by other trusts (refer to Non-GAAP Measurements).
As part of the Trust's conversion to a growth oriented corporation, the Trust ceased paying distributions effective
The following is a comparison of cash distributions declared and certain defined amounts:
Fiscal year
2009 ----------------------
2009 Q3 YTD 2008 2007
-------------------------------------------------------------------------
Cash flow from operating
activities $ (5,085) $ 16,389 $ 36,143 $ 39,729
Net income for the period $ 3,125 $ 3,045 $ 30,139 $ 24,863
Distributable cash $ 5,093 $ 4,915 $ 39,791 $ 38,993
Cash distributions
declared $ 1,448 $ 10,534 $ 27,094 $ 26,405
Excess (shortfall) of cash
flow from operating
activities over cash
distributions declared $ (6,533) $ 5,855 $ 9,049 $ 13,324
Excess (short-fall) of net
income over cash
distributions declared $ 1,677 $ (7,489) $ 3,045 $ (1,542)
Excess (short-fall) of
distributable cash over
cash distributions
declared $ 3,645 $ (5,619) $ 12,697 $ 12,588
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income includes significant non-cash items which for the three and nine months ended
The 2009 Q3 short-fall of cash flow from operating activities over cash distributions declared was mainly caused by the change in non-cash working capital. Traditionally this is negative in Q3 due to the increase in business after the traditional slow down of Q2. On an annualized basis, the change in non-cash working capital is positive. Management evaluates this criteria based upon the projected annualized amount.
With respect to the short-fall of distributable cash over cash distributions declared for 2009 Q3 year-to-date, if the calculation of distributable cash is adjusted for the one-time current tax provision (
Distributable cash (refer to Non-GAAP Measurements) is calculated as follows:
Three months ended Nine months ended
September 30 September 30
---------------------- ----------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
Cash flow from operating
activities $ (5,085) $ (427) $ 16,389 $ 24,051
Add (Less):
- changes in non-cash
operating working
capital(1) 10,289 14,407 (11,000) 5,849
- required principal
repayments on
long-term debt (48) (78) (154) (232)
- maintenance capital
expenditures (63) (58) (320) (672)
-------------------------------------------------------------------------
Distributable cash $ 5,093 $ 13,844 $ 4,915 $ 28,996
Add: one-time 2009 Q1
current tax provision (see
comments below) - - 4,168 -
-------------------------------------------------------------------------
Adjusted distributable
cash $ 5,093 $ 13,844 $ 9,083 $ 28,996
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash distributions
declared(2) $ 1,448 $ 6,813 $ 10,534 $ 20,252
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Payout ratio, net of
one-time 2009 Q1 current
tax provision of $4,168 28% 49% 214% 70%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Adjusted payout ratio,
excluding one-time 2009 Q1
current tax provision of
$4,168 28% 49% 116% 70%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Changes in non-cash operating working capital have been added back
(deducted) as such changes are financed using the Trust's bank
indebtedness/line of credit facility. In addition, if changes in non-
cash operating working capital were not excluded from the calculation
of distributable cash it would introduce cash flow variability and
affect underlying cash flow from operating activities.
(2) Excludes foreign taxes paid that have been allocated to Unitholders
At the beginning of 2009 Q1 the Trust's U.S. subsidiary sold the majority of its operating assets to the Trust's Canadian operating entity, Cathedral Energy Services Limited Partnership, as part of an internal reorganization related to ownership of operating assets within the Trust. This transaction created a one-time current tax expense in the amount of
DIVIDENDS
It is the intention of the Trust, once it converts to a growth-oriented corporation, to pay quarterly dividends. Trustees 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.
As reported in the Trust's news release on
SUMMARY OF QUARTERLY RESULTS
-------------------------------------------------------------------------
Three month period ended Sep Jun Mar Dec
2009 2009 2009 2008
-------------------------------------------------------------------------
Revenues $ 23,544 $ 12,913 $ 31,368 $ 50,506
EBITDAS 5,724 (1,721) 6,237 13,932
Net income (loss) 3,125 (1,484) 1,404 9,737
Net income (loss) per Trust
Unit - basic and diluted 0.09 (0.04) 0.04 0.30
Cash distributions declared
per Trust Unit 0.04 0.12 0.15 0.21
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three month period ended Sep Jun Mar Dec
2008 2008 2008 2007
-------------------------------------------------------------------------
Revenues $ 52,686 $ 29,483 $ 46,253 $ 39,054
EBITDAS 16,887 4,632 15,395 13,707
Net income (loss) 10,296 189 9,917 10,365
Net income (loss) per Trust
Unit - basic and diluted 0.32 0.01 0.31 0.33
Cash distributions declared
per Trust Unit 0.21 0.21 0.21 0.21
-------------------------------------------------------------------------
OUTLOOK
As announced on
All of the Trust's operating units are experiencing an increase in activity levels in Q4 versus Q3. That improvement is expected to continue into Q1 of 2010 with an active winter drilling season. The increase in activity levels that is being experienced is mainly related to the unconventional gas and oil plays. The Trust continues its focus on unconventional plays and has expanded into various North American shale plays (including Montney, Bakken, Horn River, Utica, Marcellus and
The Trust will continue with technology as a focal point of its operations and further enhancements to its overall suite of directional drilling equipment is expected. The Trust has numerous development projects in process that are expected to allow the Trust to be a significant player in the directional drilling market.
Trustees have now completed the review of the Trust's 2010 operating and capital budget and are intending to declare a 2010 Q1 dividend of
CONSOLIDATED BALANCE SHEETS
Dollars in 000's September 30 December 31
(unaudited) 2009 2008
-------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,196 $ 7,551
Accounts receivable 21,299 43,629
Taxes recoverable 641 688
Inventory 6,342 8,963
Prepaid expenses and deposits 1,843 1,538
-------------------------------------------------------------------------
31,321 62,369
Property and equipment 95,495 101,287
Intangibles 330 441
Goodwill 19,775 19,775
-------------------------------------------------------------------------
$ 146,921 $ 183,872
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND UNITHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 5,705 $ 15,406
Accounts payable and accrued liabilities 9,306 27,040
Distribution payable to Unitholders - 2,281
Current portion of long-term debt 215 207
-------------------------------------------------------------------------
15,226 44,934
Long-term debt 36,571 40,233
Future income taxes 1,186 6,846
Unitholders' equity:
Unitholders' capital 68,131 54,311
Contributed surplus 3,403 2,663
Retained earnings 23,679 31,559
Accumulated other comprehensive income (loss) (1,275) 3,326
-------------------------------------------------------------------------
93,938 91,859
-------------------------------------------------------------------------
$ 146,921 $ 183,872
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
Dollars in 000's except per
Trust Unit amounts
(unaudited) Three months ended Nine months ended
September 30 September 30
---------------------- ----------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
Revenues $ 23,544 $ 52,686 $ 67,825 $ 128,422
Expenses:
Operating 12,104 28,212 37,737 69,265
General and administrative 5,630 7,943 19,609 22,965
Depreciation and
amortization 3,539 3,411 11,342 9,281
Interest - long-term debt 303 266 979 785
Interest - other 51 115 214 290
Foreign exchange (gain)
loss (1,404) 21 (2,838) 20
Unit-based compensation
expense 200 215 740 1,367
-------------------------------------------------------------------------
20,423 40,183 67,783 103,973
-------------------------------------------------------------------------
3,121 12,503 42 24,449
Gain on disposal of property
and equipment 86 519 863 1,059
-------------------------------------------------------------------------
Income before taxes 3,207 13,022 905 25,508
Taxes:
Current 131 2,122 3,557 5,131
Future (recovery) (49) 604 (5,697) (25)
-------------------------------------------------------------------------
82 2,726 (2,140) 5,106
-------------------------------------------------------------------------
Net income for the period 3,125 10,296 3,045 20,402
Retained earnings, beginning
of period 22,010 25,519 31,559 28,852
Less: distributions (1,456) (6,813) (10,925) (20,252)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings, end of
period $ 23,679 $ 29,002 $ 23,679 $ 29,002
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income per Trust Unit:
Basic $ 0.09 $ 0.32 $ 0.09 $ 0.64
Diluted $ 0.09 $ 0.32 $ 0.09 $ 0.63
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED
OTHER COMPREHENSIVE LOSS
Dollars in 000's
(unaudited) Three months ended Nine months ended
September 30 September 30
---------------------- ----------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
Net income for the period $ 3,125 $ 10,296 $ 3,045 $ 20,402
Other comprehensive income
(loss):
Unrealized foreign
exchange gain (loss) on
translation of
self-sustaining
foreign operations (2,485) 959 (4,601) 1,393
-------------------------------------------------------------------------
Comprehensive income (loss)
for the period $ 640 $ 11,255 $ (1,556) $ 21,795
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other
comprehensive income (loss),
beginning of period $ 1,210 $ (1,460) $ 3,326 $ -
Adjustment for change in
foreign currency
translation method - - - (1,894)
Other comprehensive
income (loss) (2,485) 959 (4,601) 1,393
-------------------------------------------------------------------------
Accumulated other
comprehensive loss, end
of period $ (1,275) $ (501) $ (1,275) $ (501)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in 000's
(unaudited) Three months ended Nine months ended
September 30 September 30
---------------------- ----------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
Cash provided by (used in):
Operating activities:
Net income (loss) for the
period $ 3,125 $ 10,296 $ 3,045 $ 20,402
Items not involving cash:
Depreciation and
amortization 3,539 3,411 11,342 9,281
Future taxes (recovery) (49) 604 (5,697) (25)
Unrealized foreign
exchange gain (1,525) (27) (3,178) (66)
Unit-based compensation
expense 200 215 740 1,367
Gain on disposal of
property and equipment (86) (519) (863) (1,059)
-------------------------------------------------------------------------
5,204 13,980 5,389 29,900
Changes in non-cash operating
working capital (10,289) (14,407) 11,000 (5,849)
-------------------------------------------------------------------------
(5,085) (427) 16,389 24,051
-------------------------------------------------------------------------
Investing activities:
Property and equipment
additions (1,333) (15,129) (7,309) (26,564)
Proceeds on disposal of
property and equipment 800 1,047 2,426 1,849
Changes in non-cash investing
working capital (849) 8,921 (4,737) 8,290
-------------------------------------------------------------------------
(1,382) (5,161) (9,620) (16,425)
-------------------------------------------------------------------------
Financing activities:
Proceeds on Trust Units
issued for cash, net of
issuance costs - - 13,820 -
Distributions paid to
Unitholders (2,903) (6,797) (13,206) (20,188)
Repayment of long-term debt (48) (78) (5,154) (232)
Advances under long-term debt - 10,000 1,500 10,047
Proceeds on exercise of Trust
Unit options - 776 - 4,904
Change in bank indebtedness 5,705 2,093 (9,701) 1,093
-------------------------------------------------------------------------
2,754 5,994 (12,741) (4,376)
-------------------------------------------------------------------------
Effect of exchange rate on
changes in cash and cash
equivalents (384) - (383) -
-------------------------------------------------------------------------
Change in cash and cash
equivalents (4,097) 406 (6,355) 3,250
Cash and cash equivalents,
beginning of period 5,293 4,150 7,551 1,306
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 1,196 $ 4,556 $ 1,196 $ 4,556
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cathedral Energy Services Income Trust (the "Trust"/"Cathedral") is a limited purpose trust that is engaged, through its operating entities, in providing selected oilfield drilling and completion services to oil and natural gas industry in western
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Certain statements in this press release including (i) statements that may contain words such as "anticipate", "could", "expect", "seek", "may" "intend", "will", "believe", "should", "project", "forecast", "plan" and similar expressions, including the negatives thereof, (ii) statements that are based on current expectations and estimates about the markets in which the Trust/Cathedral operates and (iii) statements of belief, intentions and expectations about developments, results and events that will or may occur in the future, constitute "forward-looking statements" and are based on certain assumptions and analysis made by the Trust/Cathedral. Forward-looking statements in this press release specifically include, but are not limited to, statements with respect to future capital expenditures, including the amount, nature and timing thereof; oil and natural gas prices and demand; other development trends within the oil and natural gas industry; business strategy; expansion and growth of the Trust/Cathedral's business and operations including the Trust/Cathedral's market share and position in the oilfield service market; the arrangement (as herein discussed) and the expected benefits thereof; future financial position; results of operations; dividend policy ; tax pools and the availability of such tax pools; taxes; plans and objectives; access to capital; liquidity and trading volumes; projected costs; business strategy and anticipated benefits of the arrangement; financial results; future cash flows; value and debt levels; future tax basis and the treatment of the Trust and the Trust Unitholders under tax laws and other such matters.
The forward-looking statements contained in this press release reflect several material factors, expectations and assumptions including, without limitation: (i) oil and natural gas production levels; (ii) commodity prices and interest rates; (iii) capital expenditure programs and other expenditures by the Trust/Cathedral and its customers; (iv) supply and demand for oil and natural gas; (v) expectations regarding the Trust's/Cathedral's ability to raise capital, generate cash flow and to increase its equipment fleets through acquisitions and manufacture; (vi) schedules and timing of certain projects and the Trust's/Cathedral's strategy for growth; (vii) the Trust's/Cathedral's future operating and financial results; (viii) the Trust's/Cathedral's ability to retain and hire qualified personnel; (ix) treatment under governmental regulatory regimes and tax, environmental and other laws; (ix) the completion of the arrangement; * the utilization of the tax basis by New Cathedral; and (xi) the timely receipt of required regulatory approvals.
Financial outlook information contained in this press release about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this press release and certain documents incorporated by reference into this press release should not be used for purposes other than for which it is disclosed herein.
Such forward-looking statements are subject to important risks and uncertainties, which are difficult to predict and that may affect the Trust/Cathedral's operations, including, but not limited to: the impact of general economic conditions in
All forward-looking statements contained in this document are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements is available in the Trust/Cathedral's current Annual Information Form which has been filed with the applicable Canadian provincial securities commissions and is available on www.sedar.com.
%SEDAR: 00018316E
For further information: Requests for further information should be directed to: 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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