Canadian Sub-Surface Energy Services Corp.
TSX : CSE

Canadian Sub-Surface Energy Services Corp.

November 12, 2008 08:30 ET

Canadian Sub-Surface Energy Services Announces Q3 2008 Financial Results

CALGARY, ALBERTA--(Marketwire - Nov. 12, 2008) - Canadian Sub-Surface Energy Services Corp. (TSX:CSE) ("CanSub" or "the Company") announced today its financial and operating results for the three and nine-month periods ended September 30, 2008.

(in thousands of dollars, except per share amounts or as otherwise noted)



----------------------------------------------------------------------------
(Unaudited) Three Three Nine Nine
months months months months
ended ended ended ended
Sept 30, Sept 30, % Sept 30, Sept 30, %
2008 2007 Change 2008 2007 Change
----------------------------------------------------------------------------
Revenue 23,538 17,533 +34.2% 59,472 49,857 +19.3%
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Gross Margin 6,698 4,784 +40.0% 15,215 11,553 +31.7%
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Gross Margin % 28.5% 27.3% +5.1% 25.6% 23.2% +10.4%
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Cash Flow (1) 3,984 2,170 +83.6% 7,351 3,667 +100.5%
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EBITDAS (1) (2) 4,244 2,690 +57.8% 8,502 4,869 +74.6%
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EBITDAS as a
% of revenue 18.2% 15.3% +18.4% 14.3% 9.8% +45.9%
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Net Earnings (loss) 1,153 (830) +238.9% 1,288 (3,713) +134.7%
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Net Earnings (loss)
per share - basic
and diluted $0.04 ($0.04) +200.0% $0.06 ($0.19) +131.6%
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Weighted average number
of Class A common
shares outstanding
(in thousands) 26,124 19,324 +35.2% 22,209 19,324 +14.9%
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Number of field
Locations in WCSB at
end of period 14 10 +40% 14 10 +40%
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Number of field
Locations in U.S. at
end of period 1 0 +100% 1 0 +100%
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(1) Refer to the "Non-GAAP measures" section below for details.

(2) EBITDAS refers to earnings before interest, taxes, depreciation,
amortization and stock-based compensation expense. See section below
titled "Reconciliation of Cash Flow and EBITDAS to Net Earnings".


Operational Highlights

Revenue during Q3 2008 of $23.5 million was 34% higher than the $17.5 million of revenue recognized during Q3 2007. The increased revenue contributed to a higher EBITDAS, which improved from $2.7 million in Q3 2007 to $4.2 million in Q3 2008. Quarter over quarter net earnings improved from a $0.8 million net loss in Q3 2007 to $1.2 million in net earnings in Q3 2008.

Revenue and EBITDAS for the nine months ended September 30, 2008 were $59.5 million and $8.5 million respectively as compared to $49.9 million and $4.9 million respectively for the comparable nine-month period in 2007. For the current nine month period, CanSub reported net earnings of $1.3 million as compared to a net loss of $3.7 million in the comparable nine-month period of the prior year.

CanSub's increased revenue in Q3 2008 reflected higher overall equipment utilization rates in both the Wireline and Testing divisions, combined with an increased equipment base in the Wireline division. The increased utilization occurred despite a decrease in the number of wells drilled (rig released) during the quarter in the Western Canadian Sedimentary Basin ("WCSB"). As reported by Nickles Group, there were 5,275 wells drilled in the WCSB during Q3 2008, compared to 5,493 wells drilled during Q3 2007, a 4% drop. The increased equipment utilization reflects CanSub's geographic diversity, as the Company has exposure to the higher activity areas of the basin, including southeastern Saskatchewan, northeastern British Columbia and coverage throughout Alberta.

During Q3 2008, CanSub further enhanced its geographic diversity in the WCSB by establishing a new operating station in Fort St. John, in northeast British Columbia. In addition, CanSub established its first operating location in the United States in Williston, North Dakota to take advantage of the high activity levels related to the Bakken oil play in the area. The U.S. operations are being run through the Company's newly established, wholly-owned subsidiary, United Sub-Surface Energy Services. The Company currently has two testing packages working in North Dakota, and is evaluating customer demand for additional service lines. Start-up and expansion costs related to new and existing stations in Canada and the U.S. amounted to approximately $0.4 million during Q3 2008.

Due to the increased production royalties that will take effect in Alberta in 2009, affected conventional oil and natural gas producers have shifted investment dollars into the neighboring provinces of British Columbia and Saskatchewan. CanSub is well positioned to continue to take advantage of this change as approximately 50% of CanSub's equipment fleet resides in, or can service, northeast British Columbia and Saskatchewan.

In conjunction with the $15 million (gross) bought deal financing completed by CanSub during June 2008, the Company commenced a capital expansion program early in Q3 2008. As announced in August, the initial orders on the build program consisted of 5 electric line units, 5 slickline units and 4 high pressure testing packages. Due to current customer demand for swabbing services, CanSub has replaced the building of one of the electric line units with the addition of two new swabbing units. This new equipment is scheduled to be operational prior to year end 2008, other than 3 of the slickline units which are scheduled to be delivered in Q1 2009. Based on the current market uncertainty, there are no immediate plans to further increase the equipment fleet.

As previously announced, the Company's capital expenditure program for calendar 2008 had been set at approximately $17.5 million, which included the capital expansion program noted above but excluded the $6.5 million acquisition of wireline assets purchased from an industry peer in May. Approximately $8.1 million of the $17.5 million in capital expenditures has been incurred through the first nine months ended September 30, with an additional $3.1 million advanced to equipment manufacturers in the form of deposits. The remaining $6.3 million is scheduled to be incurred over Q4 2008 and Q1 2009. CanSub plans on financing these remaining capital expenditures primarily through cash flow generated in the next two quarters.

Below is a summary of the changes to CanSub's equipment fleet during Q3 2008 and scheduled additions during Q4 2008.



# of Wireline # of Swabbing # of Testing
Units Units packages
----------------------------------------------------------------------------
Operating fleet at
June 30, 2008 51 8 61
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Acquisition of
Units 1 1 -
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Retirement of old
Wireline unit (1) - -
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Operating fleet at
September 30, 2008 (i) 51 9 (iii) 61
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Scheduled additions
During Q4 2008 (ii) 5 1 4
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Estimated Operating fleet at
December 31, 2008 56 10 65
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(i) Included in the wireline fleet at September 30, 2008 were 29 electric
line and 22 slickline units.

(ii) Included in the scheduled wireline additions for Q4 2008 are 4 electric
line units and 1 slickline unit.

(iii)Comprised of 52 major testing packages plus various other testing
related equipment (ie flow-back tanks, high pressure storage tanks and
cold separators) which equate to approximately an additional 9 major
testing packages when fully utilized. Two of the major testing
packages are currently operating out of Williston, North Dakota.

(iv) Three slickline units originally scheduled for delivery during Q4 2008
have been delayed until Q1 2009. No other fleet additions are
currently budgeted for 2009.


At September 30, 2008 the Company had net debt of $8.6 million, calculated as long-term portion of debt less working capital. The available borrowing capacity of the Company's operating loan and commited, term loan facility are outlined in the section below titled "Liquidity and Capital Resources".

The recent global credit crisis has resulted in a contraction of global economies and a significant reduction in commodity prices for oil and natural gas. Given the drop in these commodity prices, and the reduced access to capital faced by some oil and gas producers, industry experts are predicting a slow-down in drilling activity in 2009. The Petroleum Services Association of Canada ("PSAC") recently estimated that the total number of wells drilled in calendar 2009 would be in the range of 16,750, a 4% decrease over the estimated total wells drilled for calendar 2008 of 17,400. However, CanSub is well positioned to handle this challenge through:

- The Company's strong client base, which is made up of many of the well capitalized senior and intermediate oil and natural gas companies in western Canada, with no single client accounting for more than 13% of total revenue for the nine month period ended September 30, 2008.

- A geographic diversity which gives the Company significant exposure to the busier areas of the WCSB including southeast Saskatchewan and northeast, British Columbia (and more recently into the high activity areas of North Dakota in the U.S.)

- A diverse service offering to clients, which includes services related not only to new well completions but producing wells and well abandonments.

- An experienced management team that has been through previous cycles in the oil patch.

Canadian Sub-Surface Energy Services Corp.

Management's Discussion and Analysis

The following Management's Discussion and Analysis ("MD&A") is for the consolidated financial statements of Canadian Sub-Surface Energy Services Corp. ("CanSub" or "the Company") as at and for the three and nine-month periods ended September 30, 2008 and 2007. The consolidated financial statements and MD&A have been prepared taking into consideration information available as at November 7, 2008 and should be read in conjunction with the interim consolidated financial statements of the Company for the three and nine-month periods ended September 30, 2008 and the audited financial statements of the Company for the year ended December 31, 2007.

Forward-looking statements

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", "predict", "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 Company 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 Company. 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 Company's business and operations including the Company's market share and position in the oilfield service market, use of proceeds of equity offerings 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; (iv) supply and demand for oil and natural gas; (v) expectations regarding the Company's ability to raise capital and to increase its equipment fleets through acquisitions and manufacture; (vi) schedules and timing of certain projects and the Company's strategy for growth; (vii) the Company's future operating and financial results, including pricing of services and activity levels in the Company's operating regions; (viii) the Company's ability to retain and hire qualified personnel; and (ix) treatment under governmental regulatory regimes and tax, environmental and other laws.

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 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 Company's operations, including but not limited to the impact of general economic conditions in Canada and the United States; industry conditions, including the adoption of new environmental, safety and other laws and regulations and changes in how they are interpreted and enforced; volatility of oil and natural gas prices; oil and natural gas product supply and demand; risks inherent in the Company's ability to generate sufficient cash flow from operations to meet its current and future obligations; increased competition; the lack of availability of qualified personnel or labor unrest; fluctuation in foreign exchange or interest rates; stock market volatility; opportunities available to or pursued by the Company and other factors, many of which are beyond the control of the Company. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do transpire or occur, what benefits the Company will derive therefrom. The Company's actual results could differ materially from those anticipated in these forward-looking statements and information as a result of both known and unknown risks. Many of these risk factors and other specific risks and uncertainties are discussed in further detail throughout the Company's Annual Information Form ("AIF") and the Company's Annual MD&A. Readers are specifically referred to the risk factors described in the AIF under "Risk Factors" and in other documents the Company files from time to time with securities regulatory authorities. Copies of these documents are available without charge from the Company or electronically on the internet on the Company's SEDAR profile at www.sedar.com. Accordingly, readers should not place undue reliance upon any of the forward-looking information set out in this MD&A. All of the forward-looking statements in this MD&A are expressly qualified in their entirety by this cautionary statement.

Business Units and Segmentation

The Company's operations are primarily conducted through its operating partnership and consist of two main operating divisions: Wireline and Testing. The Wireline division is comprised primarily of cased-hole wireline services (which include electric line and slickline) and also includes swabbing and well optimization. The Testing division includes primarily natural gas production testing services. A portion of the Testing division operations are conducted in the U.S. through CanSub's wholly-owned U.S. Subsidiary, United Sub-Surface Energy Services Corp.

Seasonality

The Company's Wireline and Testing operations are seasonal. The oil and gas industry is generally more active during the winter months (historically from November through March) as the movement of heavy equipment is easier over frozen ground. In the spring months, road bans and wet weather can limit the ability to move equipment and adversely impacts the Company's revenue generating capability. Rain in the summer and fall months can also have a significant impact on the Company's revenue. However, when equipment is not in use, a portion of the crews are not required and therefore operating costs normally decrease in slow operating periods.

Results of Operations

Revenues

The break-down of consolidated revenue between the Wireline and Testing divisions for the three and nine-month periods ended September 30, 2008 and 2007 are as follows:



----------------------------------------------------------------------------
Three Three Nine Nine
months months months months
ended ended ended ended
$000s Sept 30, Sept 30, % Sept 30, Sept 30, %
(unaudited) 2008 2007 change 2008 2007 change
----------------------------------------------------------------------------
Wireline 15,928 11,496 +38.6% 38,568 30,975 +24.5%
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Testing 7,610 6,037 +26.1% 20,904 18,882 +10.7%
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Consolidated 23,538 17,533 +34.2% 59,472 49,857 +19.3%
----------------------------------------------------------------------------


Revenues for Q3 2008, for both the Wireline and Testing divisions, increased significantly over the comparable quarter of the prior year reflecting higher overall utilization rates and an increased equipment base in the Wireline division. Both divisions received strong contributions from equipment situated in the high activity areas of southeast Saskatchewan. Pricing of services in both divisions continues to be at the lower levels implemented during 2007 when the industry slow-down resulted in competitive pricing in many of CanSub's operating areas. Although commodity prices for both oil and natural gas were robust during Q2 2008 and a portion of Q3 2008, the recent significant reductions in prices for both commodities (due to a large extent to the global credit crisis) are expected to impact the number of wells drilled by producers later in Q4 2008 and calendar 2009. As such, pricing is expected to continue to remain competitive.

In Q3 2008, Wireline divisional revenue amounted to $15.9 million. Of that amount, $13.9 million was related solely to the wireline fleet (electric line and slickline units) which averaged 51 units in operation during the period. The remaining $2.0 million of revenue was attributed to swabbing and well optimization services. The wireline units completed approximately 2,148 jobs during the current quarter at an average per job revenue of approximately $6,480.

In the comparable Q3 2007 period, Wireline divisional revenue amounted to $11.5 million. Of that amount, $9.5 million was attributed solely to the wireline fleet which averaged 42 units in operation. Swabbing and well optimization services comprised the remaining $2.0 million in revenue. The wireline units completed approximately 1,530 jobs during Q3 2007 at an average per job revenue of $6,184.

The higher per job revenue reported in Q3 2008 of $6,480 partially reflects the increased number of "Specialty Service" jobs. During 2008, CanSub has significantly increased its Specialty Services offering capability by acquiring specialty tools as part of the acquisition of assets from an industry peer that closed during Q2 2008. These services (which include production logging, casing inspection, through-casing formation evaluation and surface casing vent flow identification) are typically performed by the Company's electric line units and have been marketed extensively by CanSub over the past year.

Testing division revenue amounted to $7.6 million in Q3 2008 as compared to $6.0 million in Q3 2007. Although CanSub had an in-service fleet of 61 testing packages during both periods, the Company was able to realize the increased revenue as a result of higher equipment utilization rates in most of the Company's operating areas. This higher utilization reflects stronger natural gas prices during Q2 and Q3 2008 and the significant contribution from testing packages recently moved into the busy areas of southeastern Saskatchewan. Approximately 15% of CanSub's Testing fleet is now operating in this area.

Gross Margins (refer to Non-GAAP measures below)

The break-down of gross margins between the Wireline and Testing divisions during the current and prior periods is as follows:



----------------------------------------------------------------------------
Three Three Nine Nine
months months months months
ended ended ended ended
$000s Sept 30, Sept 30, % Sept 30, Sept 30, %
(unaudited) 2008 2007 change 2008 2007 change
----------------------------------------------------------------------------
Gross Margins:
----------------------------------------------------------------------------
Wireline 4,610 3,410 +35.2% 9,466 7,112 +33.1%
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Testing 2,088 1,374 +52.0% 5,749 4,441 +29.5%
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Consolidated 6,698 4,784 +40.0% 15,215 11,553 +31.7%
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Gross Margin %
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Wireline 28.9% 29.7% -2.4% 24.5% 23.0% +6.9%
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Testing 27.4% 22.8% +20.6% 27.5% 23.5% +16.9%
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Consolidated 28.5% 27.3% +4.3% 25.6% 23.2% +10.4%
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Consolidated gross margins were $6.7 million (or 28.5% of revenue) for Q3 2008 compared to $4.8 million (or 27.3% of revenue) for Q3 2007. Pricing for many of CanSub's services remains at competitive rates, which continues to put pressure on gross margins in both of the Company's operating divisions.

Despite the low pricing environment, the Testing division was able to increase gross margins from 22.8% in Q3 2007 to 27.4% in Q3 2008. This increase primarily reflected the quarter over quarter revenue increase of 26% resulting from higher equipment utilization. Testing margins would have been higher during Q3 2008, if not for the $0.1 million in start-up costs related to establishing the new base in Williston, North Dakota.

On a percentage basis, Wireline division margins were slightly lower in Q3 2008 as compared to Q3 2007 despite the higher equipment utilization in the current quarter. This decrease in margin percentage reflects the following one-time costs that occurred during Q3 2008:

- Costs associated with the Company's movement of equipment and hiring of crews for the start-up of the Fort St. John station and the expansion of the Fort Nelson station (both in northeast British Columbia).

- Costs associated with the expansion of CanSub's specialty services department (new staff and related training)

- Costs of re-positioning equipment and crews to certain northern Alberta stations where the client base has expanded.

These costs, which in aggregate were approximately $0.3 million, have better positioned the Company in some of the busier areas of the basin.

For calendar 2008, CanSub has been able to reduce operating costs, optimize operations and preserve margins by implementing the following in the latter part of 2007:

- Negotiating discounts from suppliers.

- Moving equipment to areas of higher activity to increase utilization.

- Re-positioning station managers and some office personnel to work in the field.

- Identifying niche, specialty service markets for both the Wireline and Testing divisions to increase equipment utilization.

Selling, general and administrative expenses

The Company's selling, general and administrative expenses ("SG&A") are recorded on a consolidated basis and not broken out for each division as the two divisions share the same management team as well as accounting, administration and sales staff.



----------------------------------------------------------------------------
Three Three Nine Nine
months months months months
ended ended ended ended
$000s Sept 30, Sept 30, % Sept 30, Sept 30, %
(unaudited) 2008 2007 change 2008 2007 change
----------------------------------------------------------------------------
Selling, general and
admin expenses 2,458 2,094 +17.4% 6,717 6,684 +0.5%
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As a percentage of sales, SG&A expenses declined from 11.9% in Q3 2007 to 10.4% in Q3 2008. On a dollar basis, SG&A expenses were approximately 17% higher in Q3 2008 than the comparable quarter of the prior year. This increase reflects the greater corporate infrastructure required to handle the Company's growth in equipment and operating locations, including entry into the U.S market.



Stock-based compensation expense

----------------------------------------------------------------------------
Three Three Nine Nine
months months months months
ended ended ended ended
$000s Sept 30, Sept 30, % Sept 30, Sept 30, %
(unaudited) 2008 2007 change 2008 2007 change
----------------------------------------------------------------------------
Stock-based
compensation expense 325 338 -3.8% 852 1,012 -15.8%
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Stock-based compensation expense in Q3 2008 was consistent with stock-based compensation expense recognized in Q3 2007. See "Stock Option" section below for further discussion of options.



Depreciation and amortization expense

----------------------------------------------------------------------------
Three Three Nine Nine
months months months months
ended ended ended ended
$000s Sept 30, Sept 30, % Sept 30, Sept 30, %
(unaudited) 2008 2007 change 2008 2007 change
----------------------------------------------------------------------------
Depreciation 2,169 2,118 +2.4% 6,119 6,049 +1.2%
----------------------------------------------------------------------------
Amortization - 635 n/a - 1,969 n/a
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Total 2,169 2,753 -21.2% 6,119 8,018 -23.7%
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Depreciation expense (which relates to depreciation of the Company's property and equipment) amounted to $2.2 million during Q3 2008. The small increase from depreciation expense recognized during Q3 2007 reflects a larger property and equipment base during Q3 2008, offset by a 3% decrease in the declining balance rate at which field equipment (an asset category within property and equipment) is depreciated. During Q1 2008, the Company reduced the declining balance depreciation rate on field equipment from 15% to 12%. In management's opinion, the 12% rate provides a better estimate of the useful life of these types of assets.

Amortization expense (which relates to amortization of the Company's intangible assets) was nil for the nine months ended September 30, 2008. During Q4 2007, a full impairment loss was taken on all of the Company's intangible assets, leaving nil balances for these assets at the December 31, 2007 balance sheet date. As a result, there will be no future amortization expense from the intangible assets acquired during 2007 and prior years.



Interest expense

----------------------------------------------------------------------------
Three Three Nine Nine
months months months months
ended ended ended ended
$000s Sept 30, Sept 30, % Sept 30, Sept 30, %
(unaudited) 2008 2007 change 2008 2007 change
----------------------------------------------------------------------------
Interest on
long-term debt 144 432 -66.7% 978 1,157 -15.5%
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Other interest 116 36 222.2% 173 36 380.6%
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Total interest 260 468 -44.4% 1,151 1,193 -3.5%
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Total interest expense for Q3 2008 of $260,000 was significantly lower than the $468,000 of interest expense recognized for Q3 2007. This reflected a reduction in average total debt balances (such debt comprised of operating loan, long-term debt and capital lease obligations) combined with reduced interest rates.

At the end of Q2, 2008 CanSub applied net proceeds from its bought deal financing of approximately $14 million against long-term debt. This significantly reduced the Company's total debt going into Q3 2008.

Current income tax expense (recovery)

During the nine months ended September 30, 2008, CanSub incurred a net current income tax expense of $0.1 million. This expense was generated in order to utilize expiring investment tax credits ("ITC's") of $0.1 million. The utilization of these credits resulted in nil cash taxes payable for the period.

Future income tax expense (reduction)

The Company recognized future income tax expense of $0.3 million for Q3 2008 resulting in a future income tax reduction of $1.2 million for the nine months ended September 30, 2008. The future income tax expense is typically impacted by net timing differences between amounts for tax and accounting and draw-downs of the deferred credit.

Net Earnings (loss)

The Company recorded net earnings of $1.2 million in Q3 2008 ($0.04 per share - basic and diluted) and net earnings of $1.3 million for the nine months ended September 30, 2008 ($0.06 per share - basic and diluted). This compares to a net loss of $0.8 million during Q3 2007 ( negative $0.04 per share -basic and diluted) and a net loss of $3.7 million (negative $0.19 per share - basic and diluted) for the nine months ended September 30, 2007.

Income tax amounts

The Company had the following estimated tax amounts available at September 30, 2008 to apply against future taxable income: non-capital losses of $11.5 million and unclaimed scientific research and development expenditures ("SRED") of $8.8 million. In addition, the Company had approximately $1.4 million in investment tax credits which may be claimed against taxes otherwise payable for federal purposes and expire between 2018 and 2023. These tax amounts are subject to review and assessment by the taxation authorities.

Share Capital and Normal Course Issuer Bid

During the first nine months of calendar 2008, CanSub completed the following equity issues:

- On May 1, 2008, the Company issued 2.2 million Class A common shares to employees in a non-brokered private placement resulting in gross proceeds of $3.8 million.

- On June 24, 2008, the Company issued 4.6 million Class A common shares in connection with a bought deal financing for gross proceeds of $15.0 million.

There were no shares issued during Q3 2008 and through to November 7, 2008. The Company had 26.1 million shares outstanding at November 7, 2008.

During September 2008, CanSub announced a normal course issuer bid wherein the Company can purchase up to 500,000 of its shares in the open market for a one-year period. There were no shares acquired under this program in Q3 2008. However, there were approximately 100,000 shares acquired during the period from October 1, 2008 through November 7, 2008. Under terms of the issuer bid, the acquired shares will subsequently be canceled.

Stock Options

For the nine months ended September 30, 2008, the Company granted 782,500 options (290,500 which were in Q3 2008) and 320,164 options were forfeited (109,001 which were in Q3 2008) for a net increase of 462,336 options. At September 30, 2008, the Company had 2.1 million options outstanding with an average exercise price of $3.66.

Liquidity and Capital Resources

The Company recorded cash flow from operations (before changes in non-cash working capital) of $4.0 million for Q3 2008 as compared to $2.2 million in Q3 2007. The increase in cash flow primarily reflects the increased revenues and gross margins in Q3 2008 (see Revenue and Gross Margin analysis above).

As at September 30, 2008, the Company had working capital of $5.7 million and long-term debt (i.e. long-term portion of long-term debt and capital leases) of $14.3 million for a net debt position of $8.6 million. The Company has the following two credit facilities:

a) An operating loan facility of a maximum amount of $15 million to finance the Company's working capital requirements; and

b) A committed, term facility of a maximum amount of $30 million to be used for the acquisition of capital assets. Advances under this facility are repayable over a five year term with blended monthly payments of principal and interest.

At September 30, 2008, the Company had outstanding balances of $4.8 million on the operating loan facility and $17.0 million on the committed, term facility. Amounts available to be drawn under the operating loan facility at each month-end are limited to 75% of marginable accounts receivable less certain priority payable amounts. Based on the margin requirements, an additional $7.0 million of operating loan was available to be drawn at September 30, 2008.

Amounts available to be drawn at each month-end under the committed, term facility are limited to approximately 50% of the net book value of property and equipment on the Company's balance sheet. Based on the marginable fixed assets at September 30, 2008, an additional 11.0 million was available to be drawn on this facility. The committed, term facility is reviewed annually by the Company's banker, with the next review scheduled for June 30, 2009.

Amounts the Company is eligible to draw under both facilities are subject to CanSub meeting all related loan covenants and margin requirements. At September 30, 2008, CanSub was in compliance with these terms.

The Company believes that its available credit facilities and cash flow from operating activities will provide sufficient capital resources to fund near term capital expenditures and on-going operations. The Company's management continues to evaluate its capital and operational spending programs in response to industry conditions.

Investing Activities

The Company's net capital expenditures (ie equipment additions net of proceeds from disposals) for property and equipment during Q3 2008 amounted to $5.1 million. This related primarily to equipment being constructed as part of the capital expansion program announced by CanSub after completion of the $15 million (gross) bought deal financing at the end of June 2008.

Net capital expenditures for the nine months ended September 30, 2008 were $14.6 million. Of this amount, $6.5 million related to the acquisition of wireline assets from an industry peer that closed on May 2, 2008. This asset "package" included five electric line units, along with various specialty tools and auxiliary equipment. The chart below provides a quarterly summary of the changes to CanSub's equipment fleet during 2008.



----------------------------------------------------------------------------
# of Wireline # of Swabbing # of Testing
Units Units packages
----------------------------------------------------------------------------
Operating fleet at
December 31, 2007 44 10 61
----------------------------------------------------------------------------
Additions during Q1 2008 1 - -
----------------------------------------------------------------------------
Additions during Q2 2008 5 - -
----------------------------------------------------------------------------
Conversion of swabbing units
to electric line units during Q2 2008 2 (2) -
----------------------------------------------------------------------------
Retirement of wireline
Unit in Q2 2008 (1) - -
----------------------------------------------------------------------------
Additions during Q3 2008 1 1 -
----------------------------------------------------------------------------
Retirement of wireline
Unit in Q3 2008 (1) - -
----------------------------------------------------------------------------
Operating fleet at
September 30, 2008 51 9 61
----------------------------------------------------------------------------


The 51 wireline units in operation at September 30, 2008 were comprised of 29 electric line units and 22 slickline units. The Testing fleet was comprised of 52 major testing packages plus various other testing related equipment (ie flow-back tanks, high pressure storage tanks and cold separators) which equate to approximately an additional 9 major testing packages when fully utilized.

As previously announced, total capital expenditures for calendar 2008 (excluding the $6.5 million asset package acquired on May 2, 2008) are set at approximately $17.5 million. Of this amount, approximately $8.1 million has been incurred over the nine months to September 30, with an additional $3.1 million paid to equipment manufacturers as deposits (and recorded as part of the "Deposits and Other" balance on the September 30, 2008 balance sheet). The balance of approximately $6.3 million is planned to be incurred over the remainder of Q4 2008 and Q1 2009 as a portion of the equipment budgeted to be received in Q4 2008 is now scheduled to be received in Q1 2009.

Financing Activities

During Q3 2008, the Company's financing activities included advances of $17.0 million from its long-term debt facility and repayments on this facility of $10.0 million (net advances of $7.0 million). In addition, during Q3 2008 CanSub made $0.5 million in repayments on the Company's capital lease obligations and had net advances from the operating loan of $1.3 million. The Company did not complete any equity offerings during the current quarter.

Related Party Transactions

There were no material related party transactions during Q3 2008. The only significant related party transaction for the nine months ended September 30, 2008 was a $3.8 million private placement to employees (including certain officers but excluding directors) completed during May. Any minor related party transactions were in the normal course of business at market rates. Material related party transactions during fiscal 2007 are outlined in the notes to the audited December 31, 2007 financial statements.



Quarterly Financial Summary

The financial results of the Company's last eight fiscal quarters are
summarized below.

(in thousands of dollars, except per share amounts or as otherwise noted)

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(Unaudited) Three-month Three-month Three-month Three-month
period ended period ended period ended period ended
Sept 30, 2008 June 30, 2008 Mar 31, 2008 Dec 31, 2007
----------------------------------------------------------------------------
Revenue 23,358 12,543 23,391 16,312
----------------------------------------------------------------------------
Cash Flow (1) 3,984 (1,940) 5,307 1,465
----------------------------------------------------------------------------
Cash Flow from
Operations (2,824) 2,977 (1,774) 2,426
----------------------------------------------------------------------------
EBITDAS (1) (2) 4,244 (1,542) 5,800 1,968
----------------------------------------------------------------------------
EBITDAS as a % of
revenue 18.2% (12.3%) 24.8% 12.1%
----------------------------------------------------------------------------
Net Earnings (loss) 1,153 (2,933) 3,068 (21,024)
----------------------------------------------------------------------------
Net Earnings (loss)
per share - basic $0.04 ($0.14) $0.16 ($1.09)
----------------------------------------------------------------------------

----------------------------------------------------------------------------
(Unaudited) Three-month Three-month Three-month Three-month
period ended period ended period ended period ended
Sept 30, 2007 June 30, 2007 Mar 31, 2007 Dec 31, 2006
----------------------------------------------------------------------------
Revenue 17,533 7,282 25,042 19,611
----------------------------------------------------------------------------
Cash Flow (1) 2,170 (3,370) 4,867 4,110
----------------------------------------------------------------------------
Cash Flow from
Operations (896) 4,918 4,022 4,077
----------------------------------------------------------------------------
EBITDAS (1) (2) 2,690 (3,010) 5,189 4,360
----------------------------------------------------------------------------
EBITDAS as a %
of revenue 15.3% (41.3%) 20.7% 22.2%
----------------------------------------------------------------------------
Net Earnings (loss) (830) (4,597) 1,714 1,616
----------------------------------------------------------------------------
Net Earnings (loss)
per share - basic ($0.04) ($0.24) $0.09 $0.08
----------------------------------------------------------------------------

(1) Refer to the "Non-GAAP measures" section below for details.

(2) EBITDAS means earnings before interest, taxes, depreciation,
amortization, and stock based compensation expense. Refer to the section
below titled "Reconciliation of Cash Flow and EBITDAS to Net Earnings".

(3) Results in the various quarters are subject to seasonality. See above
section titled "Seasonality".


Trends in quarterly results

In a typical calendar period, the first and fourth quarters (during winter season) are the busiest for the oilfield service industry as the movement of heavy equipment is easier over frozen ground. The second quarter (during spring) is typically the slowest quarter as road bans and wet weather can limit the ability to move equipment and adversely impacts the Company's revenue producing capability. The third quarter (summer / early fall) can be negatively impacted by wet weather and availability of personnel and is usually less active than the winter quarters but more active than the second quarter.

During Q3 2006 activity levels in the oil and natural gas industry were robust primarly due to strong natural gas prices. This translated into high utilization rates for CanSub's equipment resulting in revenue of $20.6 million, net earnings of $2.2 million and an EBITDAS percentage of 25.3%. During Q4 2006, many oil and natural gas producers began reducing well drilling activities, due to weakening natural gas prices combined with increased costs to drill and complete wells. This slow-down negatively impacted CanSub's equipment utilization rates in Q4 2006 where the Company posted revenue of $19.6 million, net earnings of $1.6 million and EBITDAS of 22.2%. The Company's results for each of the quarters during 2007 were negatively impacted by the continued slow-down in drilling activity caused primarily by the continued weakness in natural gas prices. Activity levels at the end of 2007 were also negatively impacted by the announcement by the Alberta government in October 2007 that royalties would be increased for oil and natural gas production commencing in 2009. Many producers slowed down drilling activity in Alberta during that period while they assessed the financial impact on their operations.

Due to the lower activity levels during 2007, CanSub and its competitors were forced to reduce prices for their services to maintain equipment utilization rates which adversely affected revenues, gross margins, net earnings and EBITDAS percentages during those periods. In addition, during 2007, the Company's establishment of new field locations in northern Alberta and northeastern British Columbia further reduced gross margins and EBITDAS percentages.

At the end of 2007, to address the impact of reduced operating margins, CanSub implemented the cost cutting measures noted in the above section titled "Gross Margins". These measures were partly responsible for CanSub realizing an improvement in gross margin and EBITDAS percentages in Q1 2008 (as compared to Q1 2007). During Q2 2008, as a result of strengthening oil and natural gas prices, CanSub's equipment utilization rates were higher than the corresponding Q2 2007 (particularly in the Testing division) which resulted in improvements in revenue, gross margins, gross margin percentage, net earnings and EBITDAS percentage. The robust commodity prices continued through part of Q3 2008, which lead to continuing high equipment utilization rates and corresponding improved revenue figures (over the comparable Q3 2007). The improved revenue in Q3 2008 also reflected a higher equipment base, specifically in the Company's Wireline division.

Commitments and obligations

The Company, through the conduct of its operations, has undertaken certain contractual obligations. As at September 30, 2008, CanSub's contractual obligations were as follows:



Contractual
Obligations Carrying Contractual 0 - 12 1 -2 2 - 5 5+
($000's) Amount Cash Flows Months Years Years Years
----------------------------------------------------------------------------
Purchase commitments (1) 9,000 (9,000) (9,000) - - -
----------------------------------------------------------------------------
Operating Loan 4,765 (4,765) (4,765) - - -
----------------------------------------------------------------------------
Long-term debt(2) 17,000 (19,453) (3,566) (3,891)(11,996) -
----------------------------------------------------------------------------
Capital lease
obligations(2) 1,115 (1,147) (1,075) (69) (3) -
----------------------------------------------------------------------------
Operating lease
obligations 24,359 (24,359) (5,042) (3,352) (7,792) (8,173)
----------------------------------------------------------------------------
(1) Includes $3,000 already advanced to manufacturers in the form of
deposits.
(2) Contractual cash flows include principal plus interest


Off balance sheet financing arrangements

The Company has entered into vehicle, equipment and facility operating leases as described in the commitments note in the financial statements for the period ended September 30, 2008. There are no other material off balance sheet financing arrangements.

Use of estimates and assumptions

The financial statements of the Company have been prepared by management in accordance with Canadian Generally Accepted Accounting Principals ("GAAP"). The timely preparation of these financial statements in conformity with Canadian GAAP requires that management make estimates and assumptions and use judgment regarding the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. The most significant are estimates for depreciation and amortization, stock based compensation and other components of employee compensation and valuation of future income tax assets. The financial statements have, in management's opinion, been prepared within reasonable limits of materiality and within the framework of the Company's accounting policies.

New accounting pronouncements

On January 1, 2008, the Company adopted the following sections of the Canadian Institute of Chartered Accountants ("CICA") Handbook: Section 1535 - "Capital Disclosures" and Section 3862 - "Financial Instruments - Disclosures".

The adoption of these new standards has had no material impact on the Company's current or prior period net earnings or cash flows. However, the Company has expanded its disclosure related to these items in the September 30, 2008 interim financial statements (see notes related to Capital Management and Financial Risk Management).

Risks and Uncertainties

A complete discussion on the business risks and uncertainties faced by the Company may be found under the "Risk Factors" section in the Corporation's Annual Information Form which is available under the Corporation's profile at www.sedar.com.

Evaluation of Disclosure Controls and Procedures

Management has designed disclosure controls and procedures to provide reasonable assurance that material information relating to the Company is made known to the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") on a timely basis in order for the Company to comply with its disclosure and financial reporting obligations and in order to safeguard assets. The CEO and CFO have concluded that the Company's disclosure controls and procedures, as at September 30, 2008 were designed and operating effectively in providing reasonable assurance that material information is accumulated and made known to them on a timely basis.

Evaluation of Internal Controls over Financial Reporting

The Company's CEO and CFO are responsible for designing internal controls over financial reporting ("ICFR") or causing them to be designed under their supervision in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

The Company has assessed the design of its internal controls over financial reporting as at September 30, 2008. Based on this assessment, the Company's CEO and CFO have concluded that the Company's ICFR is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

As required, the Company records complex and non-routine transactions. These are sometimes extremely technical in nature and require an in-depth understanding of GAAP. To address this risk, the Company consults with third party advisors as needed in connection with the recording and reporting of complex and non-routine transactions. Management does not expect that the internal controls over financial reporting would prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

There were no material changes to the Company's internal controls over financial reporting that occurred during the most recently completed interim period that have materially affected, or are reasonably likely to materially affect, the Company's ICFR.

Conversion from Canadian GAAP to International Financial Reporting Standards ("IFRS")

In February 2008, the CICA Accounting Standards Board ("AcSB") confirmed that the changeover to IFRS from Canadian GAAP will be required for publicly accountable enterprises effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The AcSB issued the "omnibus" exposure draft of IFRS wherein early adoption by Canadian entities is also permitted. The Canadian Securities Administrators ("CSA") has also issued Concept Paper 52-402, which requested feedback on the early adoption of IFRS as well as the (continued) use of US GAAP by domestic issuers. The eventual changeover to IFRS represents changes due to new accounting standards. The transition from current Canadian GAAP to IFRS is a significant undertaking that may materially affect the Company's reported financial position and results of operations.

The Company is in the early stages of development of its IFRS changeover plan, which will include project structure and governance, resourcing and training, analysis of key GAAP differences and a phased plan to assess accounting policies under IFRS as well as potential IFRS exemptions. The Company plans to complete its project scoping, which will include a timetable for assessing the impact on data systems, internal controls over financial reporting, and business activities, such as financing and compensation arrangements, prior to year end December 31, 2008.

Outlook

Due to the current global credit crisis, North American and worldwide economies have contracted, resulting in reduced demand for commodities such as oil and natural gas. As a result, oil and natural gas prices have significantly declined from the robust levels experienced during the spring and summer of 2008. Given the drop in commodity prices and the reduced access to capital for oil and gas producers, industry experts have predicted a reduction in drilling activity in the WCSB commencing later in 2008 and continuing into 2009.

CanSub is well positioned to respond to these potentially challenging times given the Company's strong client base, geographical spread across the WCSB and diversification of services. As a result of the two equity financings completed by the Company during Q2 2008 (which raised net proceeds of approximately $17.7 million), CanSub is in a strong financial position entering what are historically the two busiest quarters of the year (Q4 and Q1). The Company's management continues to closely monitor industry activity to be able to react to opportunities and challenges that arise in the near term.



RECONCILIATION OF CASH FLOW AND EBITDAS TO NET EARNINGS

----------------------------------------------------------------------------
(Unaudited) Three months Three months Nine months Nine months
ended Sept ended Sept ended Sept ended Sept
In $000's 30, 2008 30, 2007 30, 2008 30, 2007
----------------------------------------------------------------------------
Net earnings (loss) 1,153 (830) 1,288 (3,713)
----------------------------------------------------------------------------
Add back (deduct):
----------------------------------------------------------------------------
Depreciation and
amortization expense 2,169 2,753 6,119 8,018
----------------------------------------------------------------------------
Future income tax
expense (reduction) 337 (91) (1,202) (1,668)
----------------------------------------------------------------------------
Impairment loss on
equipment - - 197 -
----------------------------------------------------------------------------
(Gain) loss on disposal
of capital assets - - - 18
----------------------------------------------------------------------------
Stock-based
compensation expense 325 338 852 1,012
----------------------------------------------------------------------------
Investment tax credit
utilized - - 97 -
----------------------------------------------------------------------------
Cash Flow (1) 3,984 2,170 7,351 3,667
----------------------------------------------------------------------------
Long-term and other
interest expense 260 468 1,151 1,193
----------------------------------------------------------------------------
Current tax expense
(recovery) - 52 97 9
----------------------------------------------------------------------------
Utilization of
investment tax credit - - (97) -
----------------------------------------------------------------------------
EBITDAS (1) 4,244 2,690 8,502 4,869
----------------------------------------------------------------------------

(1) Refer to "Non-GAAP Measures" section below.


NON-GAAP MEASURES

Cash Flow represents cash provided by operations excluding the impact of cash provided by (used in) non-cash working capital changes. The cash provided by (used in) operations figure is reflected in the Company's statement of cash flows. EBITDAS represents earnings before interest, income taxes, depreciation, amortization and stock-based compensation expense and is a widely used financial indicator in the oilfield services sector to compare performance between peers. EBITDAS is provided as a measure of operating performance without reference to financing decisions and income tax impacts, which are not controlled at the operating management level. The EBITDAS measure is also used by the Company to determine bonuses for operating management and assessing divisional performance. Gross Margin represents revenue less operating expenses and is another financial indicator used in the oilfield services sector to assess performance of the business at the field level. Gross Margin will vary quarter over quarter in relation to the seasonality of the Company's business. Cash Flow and EBITDAS are not measures determined in accordance with Canadian GAAP and should not be construed as an alternative to net earnings or cash provided by operations. These measures as presented may not be comparable to similarly titled measures of other companies.



Financial Statements of

CANADIAN SUB-SURFACE ENERGY SERVICES CORP.
For the three and nine months ended September 30, 2008

(unaudited)

Consolidated Balance Sheets
(In thousands of dollars)
(Unaudited)

----------------------------------------------------------------------------
----------------------------------------------------------------------------
September 30, December 31,
2008 2007
----------------------------------------------------------------------------
Assets
Current assets:
Cash $ 132 $ -
Accounts receivable 19,495 13,531
Deposits and other (note 10) 3,690 888
Inventory 362 348
----------------------------------------------------------------------------
23,679 14,767
Property and equipment 59,114 50,809
Future income tax asset (note 8) 9,283 9,442
----------------------------------------------------------------------------
$ 92,076 $ 75,018
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 9,434 $ 7,860
Operating loan (note 6) 4,765 -
Current portion of long-term debt (note 7) 2,781 3,862
Current portion of obligations under capital
leases 1,043 2,091
Income taxes payable - 27
----------------------------------------------------------------------------
18,023 13,840
Long-term debt (note 7) 14,219 19,319
Obligations under capital leases 72 675
Deferred credit (note 8) 5,174 6,723
----------------------------------------------------------------------------
37,488 40,557
Shareholders' equity:
Share capital (note 9) 65,580 47,593
Contributed surplus (note 9) 5,491 4,639
Deficit (16,483) (17,771)
----------------------------------------------------------------------------
54,588 34,461
Contingencies and commitments (note 10)
----------------------------------------------------------------------------
$ 92,076 $ 75,018
----------------------------------------------------------------------------
----------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

On behalf of the Board:

Signed "Darshan Kailly" Signed "Bill Tobman"
------------------------ ---------------------
Director Director

CANADIAN SUB-SURFACE ENERGY SERVICES CORP.
Consolidated Statements of Net Earnings (Loss) and Retained Earnings
(Deficit)
(In thousands of dollars; except per share amounts)

(unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
-----------------------------------------
2008 2007 2008 2007
----------------------------------------------------------------------------
Revenue $ 23,538 $ 17,533 $ 59,472 $ 49,857

Expenses:
Operating 16,840 12,749 44,257 38,304
Selling, general and
administrative 2,458 2,094 6,717 6,684
Stock-based compensation 325 338 852 1,012
Depreciation and amortization 2,169 2,753 6,119 8,018
Interest on long-term debt 144 432 978 1,157
Other interest 116 36 173 36
Impairment loss on equipment - - 197 -
Loss on disposal of equipment - - - 18
Foreign exchange (gain) loss (4) - (4) -
----------------------------------------------------------------------------
22,048 18,402 59,289 55,229
----------------------------------------------------------------------------
Net earnings (loss)
before income taxes 1,490 (869) 183 (5,372)
Income taxes (note 8):
Current (recovery) - 52 97 9
Future (reduction) 337 (91) (1,202) (1,668)
----------------------------------------------------------------------------
337 (39) (1,105) (1,659)
----------------------------------------------------------------------------
Net earnings (loss) 1,153 (830) 1,288 (3,713)

Retained earnings (deficit),
beginning of period (17,636) 4,083 (17,771) 6,966

----------------------------------------------------------------------------
Retained earnings (deficit),
end of period $ (16,483) $ 3,253 $(16,483) $ 3,253
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Net earnings (loss) per common
share:
Basic $ 0.04 $ (0.04) $ 0.06 $ (0.19)
Diluted $ 0.04 $ (0.04) $ 0.06 $ (0.19)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.

CANADIAN SUB-SURFACE ENERGY SERVICES CORP.
Consolidated Statements of Cash Flows
(In thousands of dollars)

(unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
-----------------------------------------
2008 2007 2008 2007
----------------------------------------------------------------------------
Cash provided by (used in):
Operations:
Net earnings (loss) $ 1,153 $ (830) $ 1,288 $ (3,713)
Depreciation and amortization 2,169 2,753 6,119 8,018
Future income taxes (reduction) 337 (91) (1,202) (1,668)
Stock-based compensation 325 338 852 1,012
Investment tax credit utilized - - 97 -
Impairment loss on equipment - - 197 -
Loss on disposal of equipment - - - 18
----------------------------------------------------------------------------
3,984 2,170 7,351 3,667
Change in non-cash working
capital related to operating
activities (6,808) (3,066) (8,972) 4,377
----------------------------------------------------------------------------
(2,824) (896) (1,621) 8,044
----------------------------------------------------------------------------

Financing:
Operating loan 1,315 - 4,765 -
Proceeds from long-term debt 17,000 4,546 20,000 6,892
Repayment of long-term debt (9,954) - (26,181) -
Repayment of obligations under
capital lease (482) (538) (1,651) (1,779)
Proceeds from issue of
share capital (net) (28) - 17,702 -
----------------------------------------------------------------------------
7,851 4,008 14,635 5,113
----------------------------------------------------------------------------

Investing:
Acquisition of business - - - (375)
Acquisition of property and
equipment (5,145) (3,146) (14,642) (13,302)
Proceeds on disposal of property
and equipment 21 - 21 74
Change in non-cash working capital
related to investing activities 229 56 1,739 533
----------------------------------------------------------------------------
(4,895) (3,090) (12,882) (13,070)
----------------------------------------------------------------------------

Net change in cash 132 22 132 87

Cash, beginning of period - 139 - 74

----------------------------------------------------------------------------
Cash, end of period $ 132 $ 161 $ 132 $ 161
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.


CANADIAN SUB-SURFACE ENERGY SERVICES CORP.

Notes to the Consolidated Financial Statements

(In thousands of dollars; except per share amounts)

Three and nine months ended September 30, 2008

(UNAUDITED)

1. Basis of presentation and nature of operations:

These interim consolidated financial statements include the accounts of Canadian Sub-Surface Energy Services Corp. (formerly Canada West Capital Inc. ("CWC")), its two wholly-owned subsidiaries and its wholly-owned partnership (collectively the "Company"), and are presented in accordance with Canadian Generally Accepted Accounting Principles ("GAAP").

The interim consolidated financial statements have been prepared following the same accounting policies and methods of computation as the annual audited financial statements for the year ended December 31, 2007, except as noted below. The disclosures provided below are incremental to those included with the annual audited consolidated financial statements. The interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and the notes thereto for the year ended December 31, 2007.

In the opinion of management, the accompanying unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary to present fairly the consolidated results of the Company's operations and cash flows for the three and nine month periods ended September 30, 2008 and 2007.

The Company provides oilfield services in Western Canada and in the States of North Dakota and Montana through its two operating divisions Wireline and Testing. The Wireline division provides cased-hole electric line and slickline services as well as swabbing and well optimization. The Testing division provides production testing and production evaluation services.

2. Changes in accounting policies and practices:

Effective January 1, 2008, the Company adopted the Canadian Institute of Chartered Accountants ("CICA") Handbook Section 1535 "Capital Disclosures", CICA Handbook Section 3862 "Financial Instruments - Disclosures" and CICA Handbook Section 3863 "Financial Instruments - Presentation".

The adoption of these standards has had no material impact on the Company's current or prior period net earnings or cash flows. The disclosure effects of the implementation of the new standards are described in (a) and (b) below.

(a) Financial instruments - Disclosures and Presentation:

Section 3862 requires disclosure of the significance of financial instruments on the Company's financial position, the nature and extent of the related risks arising from financial instruments and how the Company manages those risks. Section 3863 sets the standards for presentation of financial instruments and non-financial derivatives. Refer to note 11, "Financial risk management."

(b) Capital Disclosures:

Section 1535 requires disclosure of the Company's objectives, policies and processes for managing capital. The disclosure includes a description of what the Company manages as capital, the nature of externally imposed capital requirements and how these requirements are met. The disclosure also includes summary quantitative data regarding the capital, changes from the previous period, and whether the Company has met the externally imposed capital requirements. Refer to note 12, "Capital management."

3. Use of estimates:

The financial statements of the Company have been prepared by management in accordance with Canadian GAAP. The timely preparation of these financial statements in conformity with Canadian GAAP requires that management make estimates and assumptions and use judgment regarding the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. The most significant are the estimates for depreciation and amortization, stock based compensation and valuation of income tax assets. Accordingly, actual results could differ from those estimates. The financial statements have, in management's opinion, been prepared within reasonable limits of materiality and within the framework of the Company's accounting policies.

4. Change in accounting estimate:

Prior to January 1, 2008, the Company used a declining balance depreciation rate of 15% to depreciate property and equipment categorized as "field equipment". Management has determined that a 12% declining balance rate provides a more representative estimate of the useful life of these types of assets. Accordingly, effective January 1, 2008, the rate at which these assets are depreciated was changed from 15% to 12%. The effect on depreciation expense for the nine months ended September 30, 2008, has been to reduce the amount by approximately $755.

5. Business acquisitions:

Acquisition of the assets of Sky-Hook Picker Services Inc.

On June 1, 2007, the Company completed the acquisition of the business assets of Sky-Hook Picker Services Inc. (Sky-Hook) for cash consideration of $375. The results of operations of Sky-Hook have been included since the date of acquisition. The transaction was accounted for using the purchase method and the aggregate purchase price was allocated to the estimated fair values of the net assets acquired as follows:



----------------------------------------------------------------------------
----------------------------------------------------------------------------

Property and equipment $ 316
Intangible asset:
Customer relationships 59

----------------------------------------------------------------------------
Net assets acquired $ 375
----------------------------------------------------------------------------
----------------------------------------------------------------------------


6. Operating loan:

The Company has a demand, revolving credit facility in the maximum amount of $15,000 with a major Canadian chartered bank. The amount available at any one time is equal to 75% of marginable accounts receivable less priority claims. Based on the calculated margin at September 30, 2008, the amount available was $12,000 of which $4,765 was drawn. The facility is secured by:

(a) a general security agreement covering all present and future property of the Company; and

(b) assignment of all risk insurance proceeds

The interest rate on the loan is at the bank's prime rate plus 0.75%.

7. Long-term debt:

The Company has a committed, term credit facility in the maximum amount of $30,000 with a major Canadian chartered bank, for capital asset acquisitions. The amount available at any one time is equal to 50% of the net book value of property and equipment on the Company's balance sheet, less certain computer equipment and leasehold improvements, less property and equipment pledged as security to capital lease obligations. Based on the calculated margin at September 30, 2008, the amount available was $28,000 of which $17,000 was drawn. Advances under this facility have a five year repayment term which includes blended monthly payments of principal and interest. The Company is entitled to request a renewal of this facility for a one year term by providing written notice to the bank at lease sixty days prior to the Term Date of June 30, 2009. Unless otherwise extended, the outstanding balance will be capped and repaid over the remaining amortization schedule in effect. Monthly blended payments for the outstanding advances at September 30, 2008 are $324. The facility is secured by:

(a) a general security agreement covering all present and future property of the Company; and

(b) assignment of all risk insurance proceeds.

The interest rate on the committed, term facility is at the bank's prime rate plus 0.75%.



----------------------------------------------------------------------------
----------------------------------------------------------------------------
September 30, December 31,
2008 2007
----------------------------------------------------------------------------

Total $ 17,000 $ 23,181
Less: Current portion 2,781 3,862
----------------------------------------------------------------------------
Total $ 14,219 $ 19,319
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Estimated principal repayments for the long-term debt are as follows:

Twelve month period ended September 30,
2009 $ 2,781
2010 3,197
2011 3,375
2012 3,563
2013 3,762
Thereafter 322
----------------------------------------------------------------------------
Total $ 17,000
----------------------------------------------------------------------------
----------------------------------------------------------------------------


8. Income taxes:

Income tax expense is calculated using the combined federal and provincial statutory income tax rate. The reconciliation of income tax expense calculations and the provision reported in the financial statements is as follows:



----------------------------------------------------------------------------
----------------------------------------------------------------------------

Three months ended Nine months ended
September 30, September 30,
----------------------------------------
2008 2007 2008 2007
----------------------------------------------------------------------------

Net earnings (loss)
before income taxes $ 1,490 $ (869) $ 183 $ (5,372)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Combined federal and provincial
income tax rate 29.70% 32.42% 29.70% 32.42%

Expected income tax provision 442 (282) 54 (1,742)

Change in deferred credit (104) (270) (1,549) (804)
Non-deductible stock based
compensation expense 96 110 253 328
Other non-deductible expenses 13 86 38 217
Impact of tax rate changes on
future tax expense (110) 263 99 249
Other - 54 - 93

----------------------------------------------------------------------------
Income tax expense (recovery) $ 337 $ (39) $ (1,105) $ (1,659)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


The components of the net future income tax asset are as follows:

----------------------------------------------------------------------------
----------------------------------------------------------------------------
September 30, December 31,
2008 2007
----------------------------------------------------------------------------
Non capital losses and unclaimed scientific
research and development expenses $ 5,448 $ 6,768
Intangible assets 1,637 1,619
Investment tax credits 1,360 1,457
Capital lease obligations 328 818
Transaction costs 856 783
Property and equipment 228 -

----------------------------------------------------------------------------
Total assets $ 9,857 $ 11,445
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Property and equipment $ - $ 888
Partnership income 231 601
Investment tax credits (inclusion in income) 343 514
----------------------------------------------------------------------------
Total liabilities $ 574 $ 2,003
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Net future income tax asset $ 9,283 $ 9,442
----------------------------------------------------------------------------
----------------------------------------------------------------------------


The Company has non-capital losses of $11,528 available to reduce future
taxable income. These losses expire as follows:

----------------------------------------------------------------------------
----------------------------------------------------------------------------

2009 $ 2,402
2010 7,159
2014 272
2015 340
2026 1,355
----------------------------------------------------------------------------
$ 11,528
----------------------------------------------------------------------------
----------------------------------------------------------------------------


In addition, the Company has the following: scientific research and experimental development costs of $8,841 which are available to reduce future taxable income and do not expire; capital losses of $3,500 which are available to reduce future capital gains and do not expire and investment tax credits of $1,360 which can be claimed against federal income taxes payable and expire between 2018 and 2023.The above amounts are subject to review and assessment by taxation authorities.

9. Share capital:

Authorized and issued share capital consists of the following:

(a) Common shares:

(i) Authorized:

Unlimited number of Class A voting common shares

(ii) Issued and outstanding:



----------------------------------------------------------------------------
----------------------------------------------------------------------------
Number of
Class A voting common shares Amount
----------------------------------------------------------------------------

Balance at December 31, 2007 19,323,742 $ 47,593

Shares issued during the period 6,800,000 $ 17,702
Income tax benefit of share issue costs - $ 285

----------------------------------------------------------------------------
Balance at September 30, 2008 26,123,742 $ 65,580
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Diluted average number of shares outstanding is calculated using the
treasury stock method. The amounts outstanding are as follows:

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended September 30,
2008 2007
----------------------------------------------------------------------------
Weighted average shares outstanding - basic
and diluted 26,123,742 19,323,742

----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Nine months ended September 30,
2008 2007
----------------------------------------------------------------------------
Weighted average shares outstanding - basic
and diluted 22,208,724 19,323,742

----------------------------------------------------------------------------
----------------------------------------------------------------------------


There were 6,800,000 shares issued during the nine month period ended September 30, 2008, 2,200,000 of which were issued to employees and officers of the Company. There were no shares issued during the three month period ended September 30, 2008. A future income tax benefit of $285, related to share issue costs, was recognized and credited to share capital. In the calculation of earnings per share, 2,104,086 options were excluded for the three and nine month periods ended September 30, 2008 as the impact would be anti-dilutive.

b) Stock options:

Options to purchase common shares may be granted by the Board of Directors to directors, officers, employees, and consultants of the Company. Options vest one third on each of the first, second and third anniversary dates of the grant date on a cumulative basis and have a maximum term of five years. When stock options are exercised, the proceeds, together with the amount of compensation expense previously recorded in the contributed surplus, are added to capital stock.

The maximum number of shares reserved for issuance under the stock option cannot exceed 10% of the total number of the Company's outstanding common shares.

The following is a summary of the stock option transactions during the respective nine month periods ended September 30:



----------------------------------------------------------------------------
----------------------------------------------------------------------------
2008 2007
------------------------------------------
Weighted Weighted
average average
Number of exercise Number of exercise
Options price Options price
----------------------------------------------------------------------------
Class A common shares:

Outstanding at the beginning
of the period 1,641,750 $ 4.21 1,548,750 $ 5.05

Granted 782,500 2.70 314,750 4.25
Forfeited (320,164) 4.16 (186,750) 4.60
Reduction in average exercise
price as a result of February 20,
2007 re-pricing - (0.77)
----------------------------------------------------------------------------
Outstanding at the end of the
period 2,104,086 3.66 1,676,750 4.21
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Exercisable at the end of the
period 791,807 4.22 442,667 4.21
----------------------------------------------------------------------------
----------------------------------------------------------------------------


(c) Contributed surplus:

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Contributed surplus at December 31, 2007 $ 4,639
Stock based compensation expense for the nine-month
period ended September 30, 2008 852
----------------------------------------------------------------------------
Contributed surplus at September 30, 2008 $ 5,491
----------------------------------------------------------------------------
----------------------------------------------------------------------------


10. Contingencies and Commitments:

Legal contingencies:

At the end of July, 2008, a statement of claim in the amount of $20,000 was served against the Company and certain individuals by Halliburton Group Canada Inc., a competitor in the electric line business. The claim relates to alleged damages resulting from the hiring by the Company of certain former Halliburton employees. The Company has assessed the claim and believes it to be without merit and intends to aggressively defend the lawsuit.

Commitments:

(a) At September 30, 2008, the Company had the following annual commitments
under equipment operating lease agreements:



----------------------------------------------------------------------------

2009 $ 925
2010 305
2011 39
2012 4
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(b) At September 30, 2008, the Company had the following annual commitments
under office and warehouse lease agreements:

----------------------------------------------------------------------------
----------------------------------------------------------------------------

2009 $ 4,117
2010 3,047
2011 2,629
2012 2,541
2013 2,579
Thereafter 8,173
----------------------------------------------------------------------------
----------------------------------------------------------------------------


(c) At September 30,2008, the Company had commitments to purchase approximately $9,000 of wireline, testing and related equipment, of which $3,000 has been advanced to equipment manufacturers in the form of deposits. Delivery of these items is scheduled to occur prior to March 31, 2009.

11. Financial risk management:

Overview

The Company is exposed to the following risks from the use of financial instruments:

- Credit risk

- Liquidity risk

- Market risk

The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management policies. The Company's risk management policies are established to identify and analyze risks faced by the Company, to set risk limits and controls and to monitor compliance with these policies. The Company's Audit Committee oversees management's compliance with risk management policies.

Credit risk

Credit risk is the risk of financial loss to the Company as a result of granting credit to customers and arises principally from the Company's trade receivables from customers.

The Company's exposure to credit risk is influenced primarily by the individual characteristics of each customer. A substantial portion of the accounts receivable are with customers who are dependent upon the oil and gas industry, and are subject to normal industry credit risks. The Company has established a credit policy under which each new customer must be approved for creditworthiness before standard service delivery terms are offered. The Company's review includes information provided by external rating agencies when available, bank and trade references, and customer financial information. Credit limits are established for each customer based on the assessment. Customers that fail to meet the Company's required benchmark for creditworthiness are required to pre-pay for services. The Company reviews customer accounts monthly and circulates a list of those customers that are to be transacted with on pre-payment terms to sales and operations staff.

The Company has established an allowance for doubtful accounts that represents management's best estimate of the losses expected to be incurred in the collection of its trade receivables. The provision is based on both specifically identified accounts at risk, as well as a general provision for accounts based on a combination of aging and amount for losses that may have occurred but have not yet been identified. The carrying amount of accounts receivable represents the Company's maximum exposure to credit risk at the reporting date.

Revenues from one customer accounted for approximately 13% of total revenues for the nine month period ended September 30, 2008. Of the $750 account receivable related to this customer at September 30, 2008, $250k has been subsequently collected as at the date of this report.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company's approach to managing liquidity is to monitor financial performance, forecasting required working capital needs and ensuring that obligations will be met as they become due. The Company maintains a $15,000 operating loan to finance working capital as required. At September 30, 2008, the Company had drawn $4,765 on this operating loan. Bank covenant ratios are calculated monthly and forecast to identify possible areas of concern. The following are the contractual maturities of financial liabilities, including interest payments at the reporting date:



Carrying Contractual 6mths 6 - 12 1 - 2 2 - 5
Amount Cash Flows or less months years years
Non-derivative
financial
Liabilities
Accounts payable
and accrued
Liabilities 9,434 (9,434) (9,434) - - -
Operating loan 4,765 (4,765) (4,765) - - -
Long term debt(1) 17,000 (19,453) (1,621) (1,945) (3,891) (11,996)
Capital lease
obligations(1) 1,115 (1,147) (713) (362) (69) (3)
----------------------------------------------------------------------------
Total $ 32,314 (34,799) (16,533) (2,307) (3,960) (11,999)
----------------------------------------------------------------------------

(1) Contractual cash flows include principal plus interest.


Market risk

Market risk is the risk that changes in market prices, such as interest rates, will affect the income of the Company. The Company is exposed to interest rate risk to the extent that most of its debt is at variable interest rates based on the prime rate. The Company has not entered into any interest rate swaps to fix the rate of its borrowing costs. At the reporting date, the interest rate profile of the Company's interest-bearing financial liabilities was:



Carrying Amount
September 30, Dec 31,
2008 2007

Fixed rate instruments $ 1,115 $ 2,766

Variable rate instruments $ 21,765 $ 23,181


The Company does not account for any financial liabilities as held for trading. A change in interest rates would affect net income with respect to variable rate instruments; a change of 100 basis points in interest rates would have had approximately a $209 affect on interest expense and net income before tax for the nine months ended September 30, 2008.

Fair values

The fair values of accounts receivable, deposits and other, accounts payable and accrued liabilities, and obligations under capital lease approximate their carrying value due to the relatively short-term period to maturity of the instruments. The fair value of the Company's operating loan and long term debt is approximately equal to the carrying value since the interest rate on the debt obligation is based on the prime rate.

12. Capital management:

The Company's objectives when managing capital are to provide an adequate return to shareholders, minimize the cost of capital to the Company, and maintain stakeholder confidence in the Company. Adjustments to the capital structure are made in light of economic conditions and the risk characteristics of the underlying assets. The Company may issue shares or increase debt to take advantage of opportunities as they arise and will adjust capital spending as required to manage its current and projected debt levels.

The Company prepares an annual budget for both operations and capital expenditures which are approved by the Board of Directors. The budgets are reviewed and compared to actual results monthly and expenditures adjusted as necessary.

The Company's credit facilities are subject to externally imposed restrictions regarding the amount available to be borrowed based on the underlying value of the assets being margined and covenants regarding minimum working capital, debt to tangible net worth and debt service ratios. At September 30, 2008, the Company was in compliance with these restrictions.

There were no changes to the Company's approach to capital management from the prior year.

13. Seasonality:

The operations of the Company are seasonal. The oil and gas industry is generally more active during the winter months as the movement of heavy equipment is easier over frozen ground. In the spring months, road bans and wet weather can hamper the ability to move equipment and adversely impacts the Company's revenue generating capability. Rain in the summer and fall months can also have a significant impact on the Company's revenue. When equipment is not in use, a portion of the crews are not required and therefore operating costs normally decrease in slow operating periods.

14. Comparative information:

Certain comparative figures have been reclassified to conform to the current period presentation.

15. Segmented information:

The Company's reportable operating segments, as determined by management, are strategic operating units that offer different products and services, and do not transact with one another. The Company has two reportable operating segments: Wireline and Testing. These two segments operate substantially in one geographic area, the Western Canadian Sedimentary Basin.

The Wireline segment provides primarily cased hole electric line and slick line services as well as swabbing and well optimization services to the oil and natural gas industry.

The Testing segment provides production testing and production evaluation services to the oil and natural gas industry.

The Corporate segment includes the combined selling, general and administrative costs related to the operating divisions.



----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended
September 30, 2008
-----------------------------------------
Wireline Testing Corporate Total
----------------------------------------------------------------------------

Revenue $ 15,928 $ 7,610 $ - $ 23,538
Operating expenses 11,318 5,522 - 16,840
----------------------------------------------------------------------------
4,610 2,088 - 6,698

Selling, general and
administrative - - 2,458 2,458
Stock-based compensation - - 325 325
Depreciation and amortization 1,727 442 - 2,169
----------------------------------------------------------------------------
1,746
Property and equipment 44,435 14,679 - 59,114
Capital expenditures - property
and equipment 4,591 554 - 5,145

Total assets 59,788 22,873 9,415 92,076
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Nine months ended
September 30, 2008
-----------------------------------------
Wireline Testing Corporate Total
----------------------------------------------------------------------------

Revenue $ 38,568 $ 20,904 $ - $ 59,472
Operating expenses 29,102 15,155 - 44,257
----------------------------------------------------------------------------
9,466 5,749 - 15,215

Selling, general and
administrative - - 6,717 6,717
Stock-based compensation - - 852 852
Depreciation and amortization 4,780 1,339 - 6,119
----------------------------------------------------------------------------
1,527

Property and equipment 44,435 14,679 - 59,114
Capital expenditures - property
and equipment 13,609 1,033 - 14,642

Total assets 59,788 22,873 9,415 92,076
----------------------------------------------------------------------------
----------------------------------------------------------------------------


----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended
September 30, 2007
-----------------------------------------
Wireline Testing Corporate Total
----------------------------------------------------------------------------

Revenue $ 11,496 $ 6,037 $ - $ 17,533
Operating expenses 8,086 4,663 - 12,749
----------------------------------------------------------------------------
3,410 1,374 - 4,784

Selling, general and
administrative - - 2,094 2,094
Stock based compensation - - 338 338
Depreciation and amortization 1,868 885 - 2,753
----------------------------------------------------------------------------
1,542 489 (2,432) (401)

Goodwill 8,067 6,110 - 14,177
Property and equipment 35,339 15,476 - 50,815
Intangible assets 3,551 4,612 - 8,163
Capital expenditures -
property and equipment 2,661 485 - 3,146
Capital expenditures - intangible
assets - - - -
Total assets 58,664 31,353 6,382 96,399
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Nine months ended
September 30, 2007
-----------------------------------------
Wireline Testing Corporate Total
----------------------------------------------------------------------------

Revenue $ 30,975 $ 18,882 $ - $ 49,857
Operating expenses 23,863 14,441 - 38,304
----------------------------------------------------------------------------
7,112 4,441 - 11,553

Selling, general and
administrative - - 6,684 6,684
Stock based compensation - - 1,012 1,012
Depreciation and amortization 5,420 2,598 - 8,018
----------------------------------------------------------------------------
1,692 1,843 (7,696) (4,161)

Goodwill 8,067 6,110 - 14,177
Property and equipment 35,339 15,476 - 50,815
Intangible assets 3,551 4,612 - 8,163
Capital expenditures -
property and equipment(1) 10,495 3,123 - 13,618
Capital expenditures - intangible
assets 59 - - 59
Total assets 58,664 31,353 6,382 96,399
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Includes acquisition of business


Certain statements in this news release, including (i) statements that may contain words such as "anticipate", "could", "expect", "seek", "may" "intend", "will", "believe", "should", "project", "predict", "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 Company 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 Company. Forward-looking statements in this press release 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 Corporation's business and operations and other such matters. Such forward-looking statements are subject to important risks and uncertainties, which are difficult to predict and that may affect the Company's operations, including but not limited to the impact of general economic conditions in Canada and the United States; industry conditions, including the adoption of new environmental, safety and other laws and regulations and changes in how they are interpreted and enforced; volatility of oil and natural gas prices; oil and natural gas product supply and demand and related demand for oilfield services; risks inherent in the Company's ability to generate sufficient cash flow from operations to meet its current and future obligations; increased competition; the lack of availability of qualified personnel or labor unrest; fluctuation in foreign exchange or interest rates; stock market volatility; opportunities available to or pursued by the Company and other factors, many of which are beyond the control of the Company. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do transpire or occur, what benefits the Company will derive therefrom. Accordingly, readers should not place undue reliance upon any of the forward-looking information set out in this news release. All of the forward-looking statements in this news release are expressly qualified in their entirety by this cautionary statement.

Contact Information

  • Canadian Sub-Surface Energy Services Corp.
    Brad Gabel
    President & CEO
    (403) 262-3247
    Email: bgabel@cansub.com
    or
    Canadian Sub-Surface Energy Services Corp.
    Chris Martin
    Vice President, Finance & CFO
    (403) 262-3247
    Email: cmartin@cansub.com