SOURCE: Cabo Drilling Corp.

October 29, 2009 09:15 ET

Cabo Announces Annual and Fourth Quarter Results

VANCOUVER, BC--(Marketwire - October 29, 2009) -


Telephone: (604) 984-8894

Facsimile: (604) 983-8056

e-mail:     ir@cabo.ca

CONTACT:    John A. Versfelt, Chairman, President and CEO
            web site: www.cabo.ca

Cabo Announces Annual and Fourth Quarter Results

North Vancouver, BC - Cabo Drilling Corp. ("Cabo" or the "Company") (TSX-V: CBE) reports results for its fourth quarter and fiscal year ended June 30, 2009.

4th QUARTER & ANNUAL HIGHLIGHTS

+-------------------------------------------------------------------+
| (CDN   $000s,   except |  3 months  | 3 months |         |        |
| earnings per share)    |   ending   |  ending  |         |        |
|                        | June 30-09 |   June   | FY 2009 | FY2008 |
|                        |            |  30-08   |         |        |
|------------------------+------------+----------+---------+--------|
| Revenue                |      6,197 |   14,634 |  41,162 | 58,645 |
|------------------------+------------+----------+---------+--------|
| Net  Earnings   (Loss) |            |          |         |        |
| Before Interest,  Tax, |       (62) |      701 |   3,981 |  6,757 |
| Amortization,          |            |          |         |        |
| Stock-based            |            |          |         |        |
| Compensation and Other |            |          |         |        |
| Items (EBITDA)         |            |          |         |        |
|------------------------+------------+----------+---------+--------|
| Net  Earnings   (Loss) |    (1,028) |    (115) |     408 |  3,951 |
| Before Taxes           |            |          |         |        |
|------------------------+------------+----------+---------+--------|
| Net  Earnings   (Loss) |    (1,192) |      581 |   (847) |  3,203 |
| After Taxes            |            |          |         |        |
|------------------------+------------+----------+---------+--------|
| Earnings  (Loss)   per |            |          |         |        |
| Share ($) Basic Before |            |          |         |        |
| Interest,         Tax, |       0.00 |     0.02 |    0.08 |   0.15 |
| Amortization,          |            |          |         |        |
| Stock-based            |            |          |         |        |
| Compensation and Other |            |          |         |        |
| Items (EBITDA)         |            |          |         |        |
|------------------------+------------+----------+---------+--------|
| Earnings  (Loss)   per |     (0.02) |     0.01 |  (0.02) |   0.07 |
| Share ($) Basic        |            |          |         |        |
|------------------------+------------+----------+---------+--------|
| Cash from operations*  |      (339) |      814 |   2,060 |  5,149 |
|------------------------+------------+----------+---------+--------|
| Gross Margin %         |      29.6% |    20.0% |   26.7% |  23.4% |
|------------------------+------------+----------+---------+--------|
| Working Capital        |      4,588 |    7,239 |   4,588 |  7,239 |
+-------------------------------------------------------------------+

*before changes in non-cash working capital items

The Company reports:

§ Revenue of $6.20 million for the 4th quarter of 2009 compared to 4th quarter revenue of $14.63 million in fiscal 2008.

§ Net 4th quarter 2009 loss before interest, tax, amortization, stock-based compensation and other items of $61,635 and a net loss of $1.19 million after interest, tax, amortization, stock-based compensation and other items resulting in a loss of $0.00 per share and a loss of $0.02 per share, respectively. This compares with the 4th quarter 2008 earnings before interest, tax, amortization, and stock-based compensation of $701,078 and net earnings of $581,487 after interest, tax, amortization, and stock-based compensation resulting in earnings of $0.02 per share and $0.01 per share respectively.

§ Net before tax earnings for fiscal 2009 of $407,905 compared to a net before tax earnings for fiscal 2008 of $3.95 million.

§ Net after tax loss for the fiscal year 2009 of $846,909 compared to net after tax earnings for fiscal 2008 of $3.20 million.

§ Gross margin percentage for the 4th quarter fiscal 2009 was 29.6%, compared with a gross margin of 20.0% in the 4th quarter of fiscal 2008 and 26.7% in fiscal 2009 compared to 23.4% in fiscal 2008.

§ Cash from operations, before changes in non-cash working capital items, was a decrease of $339,131 for the 4th quarter 2009 and $2.06 million for fiscal 2009, compared to 4th quarter 2008 cash from operations of $814,615 and $5.15 million for the fiscal year 2008.

§ A current asset balance of $16.63 million and working capital of $4.6 million.

§ Total assets of $33.19 million and total liabilities of $14.10 million.

"Consistent with our third quarter fiscal 2009, Cabo experienced a continued decrease in rig utilization during the fourth quarter of fiscal 2009," stated John A. Versfelt, Cabo Drilling's President and CEO. "Due to the uncertainty in the economy, clients delayed their exploration drilling programs. There was significant contraction in the Canadian and United States market, with a 58% reduction in revenues in the fourth quarter of fiscal 2009. Fortunately, this was offset somewhat by a 56% revenue growth in our international divisions."

"We recorded our lowest quarterly revenue, in the fourth quarter of fiscal 2009," commented Mr. Versfelt. "We believe this is the bottom of the curve, as we have seen improvements in more signed contracts into the first and second quarters of fiscal 2010. In addition we have received larger numbers of bid requests from mining and exploration companies who have increased their exploration budgets, as a result of new financings."

"Cabo had a gross margin performance of 29.6% for the 4th quarter fiscal 2009 (20.0% 4th quarter fiscal 2008), our highest gross margin performance to date, and 26.7% for the fiscal year 2009 (23.4% for 2008)," Mr. Versfelt stated. "We have recorded improved gross margins since the beginning of 2009 and expect this trend to continue, due to operational efficiencies and an upgraded and modernized drill fleet. Going into 2010 we will remained focus on cost saving measures, continuing reduced support costs, improved performance for each drill and greater utilization of the drills, which will lead to improved profitability."

"During fiscal 2009, the Company recorded an allowance of $700,000 to reduce inventory to net realizable value," commented Mr. Versfelt. This together with recorded stock based compensation expense of $120,118 in fiscal 2009 negatively affected net income by $820,118. Without recording these accounting adjustments Cabo would have had a net loss after taxes of only $26,791. It is important to note that Cabo can increase the value of inventory to net realized value in the future and recapture the $700,000 allowance."

"As markets improved Cabo received more bid requests, and gold is leading the way in Canada, as well as Mexico and Central America. Copper and iron ore projects are also requesting bids for drilling services," stated Mr. Versfelt. "Cabo was able to take advantage of opportunities to acquire six newer drills at significantly reduced prices on special terms, which has enabled the Company to improve its fleet during tough times at a greatly reduced price, at the same time, allowing it to put these drills into production with improved margins. Consequently, Cabo Drilling is experiencing and projecting growth in drill utilization for the balance of fiscal 2010."

Fourth quarter ended June 30, 2009

Revenue for the three months ending June 30, 2009 decreased to $6.20 million, compared to $14.63 million in the comparable period in fiscal 2008 and compared to $6.52 million in the third quarter of fiscal 2009. Revenues from the international divisions represented 65% of the revenues for fourth quarter of fiscal 2009, as compared to 27% during the fourth quarter of fiscal 2008.

Net loss for the fourth quarter of fiscal 2009 was $1.19 million compared to net earnings of $581,487 in the fourth quarter of fiscal 2008 and fiscal 2008 and a net loss of $765,330 in the third quarter of fiscal 2009. Earnings primarily decreased during the quarter due to the $700,000 allowance for inventory and the $120,118 stock based compensation.

Year ended June 30, 2009

Revenue for the year ending June 30, 2009 decreased $17.48 million or 30% to $41.16 million, compared to $58.64 million in fiscal 2008. The primary reason for the decrease is due to the contraction of the drilling market, as a result of the economic downturn. The revenues from the Canadian and United States divisions decreased by 50%, while the other divisions increased by 56%. Panama provided most of the growth during this period as drill utilization increased 100% to an average of six drills per month. Revenues from Spain, Mexico and Liberia decreased from the previous years as several projects were shut down. During the first year of operation, Albania recorded $912,944 in revenues before the economic downturn. All the Canadian divisions were negatively affected by the contracted market during fiscal 2009. The expansion into the international market helped Cabo Drilling to weather the downturn in the global markets. Management expects international operations to stabilize between 30-40% throughout fiscal 2010 as the market in Canada also improves.

Gross margins for the year ended June 30, 2009 were 26.7% compared to 23.4% during the fiscal year ending June 30, 2008. The increased gross margin is a direct result of cost reduction measures implemented during fiscal 2009. Management expects gross margins to increase to between 28-30% range during fiscal 2010 due to improved cost controls, and upgrades and modernization of the drill fleet.

EBITDA (earnings before interest, tax, amortization, stock-based compensation and other items) for fiscal 2009 decreased $2.78 million to $3.98 million ($0.08 per share basic dilution) as compared to $6.76 million ($0.15 per share basic dilution) in fiscal 2008.

Net loss for fiscal 2009 was $846,909 compared to net earnings of $3.20 million in fiscal 2008. Earnings decreased during fiscal 2009 due to lower revenues, increased amortization and increased income taxes.

For the full version of this news release please go to the Company's website www.cabo.ca or SEDAR www.sedar.ca.

About Cabo Drilling Corp. (TSX-V: CBE)

Cabo Drilling Corp. is a drilling services company headquartered in North Vancouver, British Columbia, Canada. The Company provides mining related and specialty drilling services through its Canadian divisions in Surrey, British Columbia; Montréal, Quebec; Kirkland Lake, Ontario; and Springdale, Newfoundland; as well as Cabo Drilling de Mexico S.A. de C.V. of Hermosillo, Mexico; Cabo Drilling (Panama) Corp. of Panama, Republic of Panama; Cabo Drilling Spain S.L. of Sevilla, Spain; Balkan States Drilling SH.P.K. of Tirana, Albania; Cabo Drilling (Ghana) Limited of Accra, Ghana; and Cabo Drilling (International) Inc. The Company's common shares trade on the Frankfurt Exchange under the symbol: DHL and on the TSX Venture Exchange under the symbol: CBE.

ON BEHALF OF THE BOARD

     "John A. Versfelt"

John A. Versfelt
Chairman, President and CEO

Further information about the Company can be found on the Cabo website (http://www.cabo.ca) and SEDAR (www.sedar.com) or by contacting Sheri Barton, Corporate Communications at 403-217-5830 or Mr. John A. Versfelt, Chairman, President & CEO of the Company at 604-984-8894. For general investor relation inquiries you may also contact Renmark Financial Communications Inc. Barbara Komorowski: bkomorowski@renmarkfinancial.com or Dan Symons: dsymons@renmarkfinancial.com at Tel: 514-939-3989 or 416-644-2020.

* * * *

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, potential mineral recovery processes and other business transactions timing. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.


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