Collicutt Energy Services Ltd.
TSX : COH

Collicutt Energy Services Ltd.

November 09, 2005 17:00 ET

Collicutt Energy Services Ltd. Announces Results for the Third Quarter Ended September 30, 2005

RED DEER, ALBERTA--(CCNMatthews - Nov. 9, 2005) - Collicutt Energy Services Ltd. (TSX:COH) is pleased to announce its results for the third quarter ended September 30, 2005.

Basic and diluted earnings per share for the quarter ended September 30, 2005 were 11 cents per share compared to 4 cents per share in the third quarter of 2004.

Third quarter revenues rose to $34.1 million from $31.0 million in 2004 as a result of improved sales of manufactured products in the Fabrication division. Gross profits improved $0.6 million on the increased sales volume in the quarter to $5.8 million from $5.2 million in the third quarter of 2004. Net earnings for the three months ended September 30, 2005 was $1.1 million, an increase of $0.8 million from the $0.4 million in the prior year.

Year to date revenues for the first nine months of 2005 were $101.3 million, a 19.6% increase over the comparable 2004 revenues of $84.7 million. Net earnings for the nine months ended September 30, 2005 were $2.6 million versus a prior year loss of $0.6 million, an improvement of $3.2 million. Basic earnings per share for the first three quarters of 2005 of 24 cents is an increase of 30 cents from the 6 cent loss per share in 2004.

The Company is actively participating in the good fortunes of the energy boom. Confirmed orders in the Fabrication division extend to approximately May 2006. Driven by increased customer requirements, we appreciate the effort and dedication of the Collicutt Energy Services Ltd. workforce during these busy times. Now more than ever employee partnerships and relationships are key to the continued growth and success of Collicutt Energy Services Ltd.

The normal course issuer bid (NCIB) authorized by the Board of Directors in May 2005 was the result of the strong belief that the market price of the Company's shares was not reflective of their true underlying value. Up to November 9th 2005, the Company had purchased 125,900 common shares for cancellation at an average price of $3.22, representing total consideration of $0.4 million.

The Company embraces government programs that help youth develop key skills as they enter the workforce. Collicutt Energy Services researches training programs that will foster growth and development in its employees while encouraging and mentoring them into the next stage of their professional lives. One such program is the Alberta Registered Apprenticeship Scholarship Program (or RAP). RAP scholarships are given to high school apprentices as a vital step to raise the profile of the trades as a successful career path for young Albertans. These scholarships recognize the excellent skills and performance demonstrated by young apprentices. Collicutt Energy Services is very proud to advise that four of its young apprentices have been awarded scholarships so far this year.

Collicutt Energy Services Ltd. has successfully implemented its Business Recovery Plan. The Plan covers each functional area within its business groups and maps out critical steps, from evacuation procedures to document retention, to ensure the timely and efficient resumption of business in the event of a disaster. The Plan was developed by an internal cross-functional team, the Business Recovery Planning Committee. A mock disaster was conducted on October 12 at our Red Deer facility as a last essential step to fine-tune the Plan, and will be an ongoing practice to ensure readiness and protection. I would like to take this opportunity to thank and congratulate all our staff who participated in the drill. It helped us immensely to refine the Plan, reduced our insurance premiums, and demonstrated your commitment to the community and employee safety. May we never have the occasion to use those particular skills!

As Collicutt Energy Services Ltd. steadfastly moves forward in the 20th year of its journey, and on behalf of the Board of Directors and officers of the Company, we would like to express our sincere thanks to our customers, to each of our employees and to all our stakeholders for travelling with us.



STEVEN M. COLLICUTT
President and Chief Executive Officer
November 9, 2005


MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)

The following constitutes management's opinion concerning the Company's operating and financial results for the three and nine month period ended September 30, 2005 and its outlook based on current available information and expectations as at November 9, 2005. This discussion and analysis should be read in conjunction with the audited consolidated financial statements and MD&A in the Company's Annual Report for the year ended December 31, 2004. Additional information is also available on the Company's website (www.collicutt.com) and all previous public filings, including the Annual Information Form (AIF) are available through SEDAR (www.sedar.com).

EXECUTIVE OVERVIEW

Collicutt Energy Services has two business segments - Service and Fabrication. The Service division maintains, repairs, and refurbishes natural gas compression and power generation equipment. The Fabrication division designs and assembles natural gas compression packages, power generation systems and oilfield production equipment. The Company is geographically focused within Western Canada, but does complete a number of projects globally, particularly within the fabrication group.



------------------------------------------------------------------------
EARNING HIGHLIGHTS
(Thousands of dollars - Unaudited)

2005 2004
--------------------------------------------------------
Quarter Quarter Quarter Quarter Quarter Quarter Quarter
3 2 1 4 3 2 1
--------------------------------------------------------
Revenue
Service 11,287 14,534 10,073 15,220 12,976 11,387 10,861
Fabrication 22,847 21,447 21,086 17,971 18,070 16,348 15,026
--------------------------------------------------------
34,134 35,981 31,159 33,191 31,046 27,735 25,887

Gross profit 5,769 5,241 3,546 5,696 5,211 4,062 4,026
Gross profit
percentage 16.90% 14.57% 11.38% 17.16% 16.78% 14.65% 15.55%

EBITDA(1) 2,923 2,138 2,108 2,091 1,927 598 485

Net earnings
(loss) 1,149 669 748 488 389 (479) (557)

Capital
Expenditures 388 589 682 822 1,024 314 192

--------------------------------------------------------
YTD at YTD at
Sept. 30, 2005 Sept. 30 2004
--------------------------------------------------------
Revenue
Service 35,894 35,224
Fabrication 65,380 49,444
--------------------------------------------------------
101,274 84,668

Gross profit 14,556 13,299
Gross profit percentage 14.37% 15.71%

EBITDA(1) 7,169 3,010

Net earnings (loss) 2,566 (647)

Capital Expenditures 1,659 1,530

(1) EBITDA is calculated from the consolidated statement of earnings as
revenue less operating and general and administrative expenses and
is used to assist management and investors in assessing the
Company's ability to generate cash from operations. Cash flow, which
is expressed before changes in non-cash working capital, is used by
management to analyse operating performance, leverage and liquidity.
EBITDA and cash flow are non-GAAP earning measures that do not have
any standardized meaning prescribed by GAAP and may not be
comparable to similar measures provided by other companies.

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


High demand in the Fabrication division for new compression equipment and custom welded fabrications pushed consolidated sales up $3.1 million to $34.1 million in the quarter ended September 30, 2005 from $31.0 million in the third quarter of 2004.

Included in the gross profit of $5.8 million for the third quarter of 2005 was $0.8 million for inventory obsolescence versus $0.1 million in the third quarter of 2004 gross profit of $5.2 million. For the nine months ended September 30, 2005 the gross profit of $14.6 million included an inventory obsolescence expense of $1.2 million compared to an inventory obsolescence expense of $0.3 million within the $13.3 million gross profit in 2004. The increased provision for inventory obsolescence resulted after a detailed review in the third quarter by Service division management considering current Canadian dollar market values for inventory items with emphasis given to evaluating customer acceptance of alternative solutions and technological obsolescence perspectives. The Company is focusing staff resources on inventory management to improve cash flow while ensuring availability for customer requirements.

Included in EBITDA and net earnings (loss) are pre-tax and after-tax, respectively, gains and losses on the sale of assets. The quarter ended March 31, 2005 included a total gain on sale of $1.5 million ($1.4 million after-tax) with the sale of the Red Deer service facility generating $1.3 million of the total pre-tax gain on sale reported in the first quarter of 2005. Vacant land was sold in the quarter ended June 30, 2005 for a pre-tax gain of $0.1 million. No gains or losses on sale were reported in 2004.



------------------------------------------------------------------------
COMMON SHARE INFORMATION
(Thousands of dollars and shares except per share data - Unaudited)

2005 2004
--------------------------------------------------------
Quarter Quarter Quarter Quarter Quarter Quarter Quarter
3 2 1 4 3 2 1
--------------------------------------------------------
Per share
- basic
earnings
(loss) 0.11 0.06 0.07 0.04 0.04 (0.04) (0.05)
- diluted
earnings
(loss) 0.11 0.06 0.07 0.05 0.04 (0.04) (0.05)
- book value 4.91 4.80 4.73 4.67 4.62 4.59 4.63

Shares Outstanding
- average
basic 10,888 10,913 10,913 10,913 10,913 10,913 10,910
- average
diluted 10,943 10,940 10,969 10,969 10,964 10,913 10,910
- end of period 10,861 10,892 10,913 10,913 10,913 10,913 10,913

- end of period
share
options 570 557 592 622 634 644 639

Market
Capitalization 38,012 23,200 26,847 26,737 21,826 25,646 26,410

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


Basic earnings per share on a twelve month basis were 28 cents per share at September 30, 2005 compared to 21 cents for the twelve months ended June 30, 2005 and 7 cents for the twelve months ended September 30, 2004. At September 30, 2005 the book value of the Company was $4.91 per share or $53.3 million versus the market capitalization of $38.0 million.



------------------------------------------------------------------------
BALANCE SHEET SUMMARY
(Thousands of dollars - Unaudited)

2005 2004
--------------------------------------------------------
Quarter Quarter Quarter Quarter Quarter Quarter Quarter
3 2 1 4 3 2 1
--------------------------------------------------------

Total assets 104,322 118,743 103,729 110,158 106,833 99,105 92,094

Total debt 50,994 66,443 52,062 59,232 56,398 49,066 41,582
Shareholders'
equity 53,328 52,300 51,667 50,926 50,435 50,039 50,512

Debt to equity 0.96 1.27 1.01 1.16 1.12 0.98 0.82

Total interest
bearing debt 25,287 30,383 24,937 30,851 34,522 35,831 30,190

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


Total interest bearing debt decreased $5.1 million from June 30, 2005 to September 30, 2005. The reduction in interest bearing debt in the third quarter was principally the result of the $3.2 million reduction in working capital in the quarter. The primary components of the reduction in working capital in the quarter consisted of $15.5 million in reduced accounts receivable, partially offset by a $10.4 million reduction in deferred revenue and a $2.0 million increase in inventory and work-in-progress.

Total debt decreased $15.4 million in the quarter ended September 30, 2005. The significant components of the reduction in total debt were the $5.1 million reduction in total interest bearing debt and the $10.4 million reduction in deferred revenue in the third quarter.

Year to date, for the first nine months of 2005, total interest bearing debt decreased $5.6 million. The significant contributing factors to the reduction in interest bearing debt included cash flow from earnings of $4.0 million, proceeds from the sale of capital assets of $5.8 million (including $4.8 million in proceeds from the sale of the Red Deer service facility) partially offset by capital asset purchases of $1.7 million, share repurchases of $0.2 million and $2.4 million required to fund working capital requirements. The $2.4 million increase in working capital in the nine months ended September 30, 2005 was principally attributed to a reduction in accounts payable and accrued liabilities of $4.4 million, increases in inventory and work-in-process of $6.7 million partially offset by decreases in accounts receivable of $6.2 million, an increase of $1.2 million in accrued income taxes moving from recoverable to payable and an increase in deferred revenue of $0.6 million.

Total debt decreased $8.2 million in the three quarters ended September 30, 2005. The reduction of $5.6 million in interest bearing debt detailed above as well as the reduction in accounts payable and accrued liabilities of $4.4 million were the significant contributing factors to the reduction in total debt.

Non capital tax losses of $0.7 million available to the Corporation at December 31, 2004 were fully utilized in the first three quarters of 2005. Federal and provincial taxes payable of $0.7 million have been accrued in the September 30, 2005 balance sheet.



LIQUIDITY AND CAPITAL RESOURCES

($000s - Unaudited) Three months ended Nine months ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
--------------------------------------------
--------------------------------------------

Cash flow from operations 2,084 1,464 3,991 1,770
Reduction (increase) in
non-cash working capital 3,178 830 (2,376) (2,132)
Issuance (repurchase) of
share capital (126) - (175) 21
Cash (invested in) received
from acquisition and
disposal of capital assets (40) (985) 4,124 (1,479)
--------------------------------------------
Reduction (increase) in
interest bearing debt 5,096 1,309 5,564 (1,820)
Repayment of long-term debt (378) (458) (1,121) (1,350)
--------------------------------------------
Reduction (increase) in
operating loan 4,718 851 4,443 (3,170)
--------------------------------------------
--------------------------------------------


Cash flow generated from operations, before changes in non-cash working capital, increased by $0.6 million in the third quarter of 2005 to $2.1 million compared to $1.5 million generated in the third quarter of 2004. Year to date cash flow from operations increased by $2.2 million to $4.0 million compared to $1.8 million for the same nine-month period in 2004.

Total interest bearing debt decreased $5.1 million in the quarter ended September 30, 2005 versus a reduction of $1.3 million in the third quarter of 2004. During the first nine months of 2005 total interest bearing debt decreased $5.6 million compared to an increase of $1.8 million in the comparable 2004 period.



September June December
As at ($000s - Unaudited) 30, 2005 30, 2005 31, 2004
-------------------------------
Working capital 21,869 20,160 17,975
-------------------------------
Operating loan 14,270 18,988 18,713
Current portion of long-term debt 1,525 1,543 1,542
Non current portion of callable
long-term debt 8,708 8,991 9,544
Long-term debt 784 861 1,052
-------------------------------
Total interest bearing debt 25,287 30,383 30,851
-------------------------------

Total interest bearing debt to equity .47 .58 0.61


The Company has an operating loan of $38.0 million (December 31, 2004: $38.0 million) available to finance current operations. At September 30, 2005 $14.3 million had been drawn (December 31, 2004: $18.7 million). Management is confident that this level of financing, combined with cash flow generated from operations, is sufficient to fund operational activities for the foreseeable future.

In compliance with a CICA Emerging Issues Committee abstract, the non-current portion of long-term debt has been classified as current due to its callable feature. This accounting disclosure is not indicative of the Company's intention to repay these amounts within the next year or of the lender's intention to enforce repayment within the next year.

OUTLOOK

The Service division expects demand in the fourth quarter of 2005 for routine maintenance as well as for re-fabrication services to approximate third quarter results. Quarterly activity levels within the Service division are fairly neutral across the quarters. The fourth quarter of 2004 included a significant amount of re-fabrication revenues that are not expected to be replicated in the fourth quarter of 2005.

The Fabrication division confirmed orders extend into May 2006. The fourth quarter of 2005 is expected to reflect revenue similar to the first and second quarters of 2004.

Fabrication will continue to focus on increasing margin percentages by improving production and quoting efficiencies. In the current robust market, timely access to major components from suppliers will continue to be a challenge. The Company believes that current and future customer needs will be met by a combination of existing inventory and the network of supply chain relationships in place.

The ability to attract and retain skilled labour will be a primary driver of financial results in both the Service and Fabrication divisions.

The Company's management is continuing to analyze new market opportunities that have opened up as a result of Hanover's divestiture of its ownership interest in Collicutt, including the introduction of a leasing and rental option for our customers and a geographic expansion of our service activities into the north western United States.

ADVISORY

This quarterly report contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions. Should one or more of these risk factors materialize, or should assumptions prove incorrect, actual results may vary significantly from those expected.



CONSOLIDATED BALANCE SHEET
($000s - Unaudited)

As at
September December
30, 2005 31, 2004
----------------------
ASSETS

Current
Accounts receivable (Note 3) 22,415 28,642
Inventory and work-in-progress 48,330 41,673
Assets held for resale (Note 4) - 3,860
Prepaid expenses and deposits 275 572
Future income taxes 280 510
Income taxes recoverable - 513
----------------------
71,300 75,770
Capital assets 33,022 34,388
----------------------
104,322 110,158
----------------------
----------------------

LIABILITIES

Current
Operating loan 14,270 18,713
Accounts payable and accrued liabilities 8,967 13,366
Income taxes payable 698 -
Deferred revenue 15,263 14,630
Current portion of long-term debt (Note 3) 1,525 1,542
Non-current portion of callable long-term debt
(Note 3) 8,708 9,544
----------------------
49,431 57,795
Long-term debt (Note 3) 784 1,052
Future income taxes 779 385
----------------------
50,994 59,232
----------------------

SHAREHOLDERS' EQUITY

Share capital (Note 5) 40,285 40,500
Contributed surplus 79 28
Retained earnings 12,964 10,398
----------------------
53,328 50,926
----------------------
104,322 110,158
----------------------
----------------------

Approved by the Board of Directors


Steven M. Collicutt Peter. A. Lacey
Director Director




CONSOLIDATED STATEMENT OF (LOSS) EARNINGS AND RETAINED EARNINGS
($000s except share and per share data - Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2005 2004 2005 2004
--------------------------------------------------------
--------------------------------------------------------
Sales 34,134 31,046 101,274 84,668
Cost of goods
sold 28,365 25,835 86,718 71,369
--------------------------------------------------------
Gross profit 5,769 5,211 14,556 13,299
Other income
(Note 4) 27 17 1,620 66
--------------------------------------------------------
5,796 5,228 16,176 13,365
--------------------------------------------------------
Expenses
General and
administration 2,873 3,301 9,007 10,355
Interest 339 442 1,023 1,334
Amortization 806 885 2,277 2,561
--------------------------------------------------------
4,018 4,628 12,307 14,250
--------------------------------------------------------

Earnings (loss)
before income
taxes 1,778 600 3,869 (885)
--------------------------------------------------------

Income tax
(recovery)
expense
Current 660 6 758 55
Future (31) 205 545 (293)
--------------------------------------------------------
629 211 1,303 (238)
--------------------------------------------------------

Net earnings
(loss) 1,149 389 2,566 (647)
Retained earnings,
beginning
of period 11,815 9,521 10,398 10,557

--------------------------------------------------------
Retained earnings,
end of period 12,964 9,910 12,964 9,910
--------------------------------------------------------
--------------------------------------------------------

Earnings (loss)
per share (Note 2)
- basic 0.11 0.04 0.24 (0.06)
- diluted 0.11 0.04 0.23 (0.06)

WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES
- basic 10,888,047 10,913,215 10,904,289 10,912,189
- diluted 10,942,820 10,915,523 10,937,588 10,912,189
--------------------------------------------------------
--------------------------------------------------------




CONSOLIDATED STATEMENT OF CASH FLOWS
($000s - Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2005 2004 2005 2004
--------------------------------------------------------
--------------------------------------------------------
Cash flows
related to the
following
activities

Operating
Net earnings
(loss) for
the period 1,149 389 2,566 (647)
Adjustments for:
Amortization 806 885 2,277 2,561
(Gain) on sale
of assets (5) 19 (1,536) 19
Compensation
expense 5 6 10 18
Future income
tax (recovery) (31) 205 624 (293)
Provision for
warranty costs 160 (40) 50 112
--------------------------------------------------------
2,084 1,464 3,991 1,770
Net change in
non-cash
working capital 3,178 830 (2,376) (2,132)
--------------------------------------------------------
5,262 2,294 1,615 (362)
--------------------------------------------------------

Financing
Repurchase/
issuance of
share capital (126) - (175) 21
Repayment/
advance on
operating loan (4,718) (851) (4,443) 3,170
Repayment of
long-term debt (378) (458) (1,121) (1,350)
--------------------------------------------------------
(5,222) (1,309) (5,739) 1,841
--------------------------------------------------------

Investing
Purchase of
capital assets (388) (1,024) (1,659) (1,530)
Proceeds on
disposition of
capital assets 348 39 5,783 51
--------------------------------------------------------
(40) (985) 4,124 (1,479)
--------------------------------------------------------

Net decrease in
cash and cash
equivalents - - - -

Cash and cash
equivalents,
beginning of
period - - - -
--------------------------------------------------------

Cash and cash
equivalents,
end of period - - - -
--------------------------------------------------------
--------------------------------------------------------



Supplementary cash
flow items
Interest paid 337 444 1,003 1,342
Interest
received 5 3 32 16
--------------------------------------------------------
--------------------------------------------------------

Income taxes
paid 7 69 73 229
Income taxes
refunded 44 - 599 65
--------------------------------------------------------
--------------------------------------------------------



SEGMENTED INFORMATION
($000s - Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2005 2004 2005 2004
--------------------------------------------------------

Revenue
Service 11,287 12,976 35,894 35,224
Fabrication 22,847 18,070 65,380 49,444
--------------------------------------------------------
34,134 31,046 101,274 84,668
--------------------------------------------------------

Amortization
Service 368 404 1,059 1,146
Fabrication 358 459 1,062 1,353
Corporate 80 22 156 62
--------------------------------------------------------
806 885 2,277 2,561
--------------------------------------------------------

Earnings (loss)
before interest
and income taxes
Service 878 1,576 3,008 2,894
Fabrication 1,888 425 2,175 81
Corporate (649) (959) (291) (2,526)
--------------------------------------------------------
2,117 1,042 4,892 449
--------------------------------------------------------

Capital expenditures
Service 159 344 671 758
Fabrication 57 90 445 176
Corporate 172 590 543 596
--------------------------------------------------------
388 1,024 1,659 1,530
--------------------------------------------------------

As at
September 30, 2005 December 31, 2004
--------------------------------------------------------
ASSETS
Service 40,202 37,169
Fabrication 40,743 44,963
Corporate 23,377 28,026
--------------------------------------------------------
104,322 110,158
--------------------------------------------------------
--------------------------------------------------------


NOTES TO FINANCIAL STATEMENTS

NOTE 1: ACCOUNTING POLICIES

The unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Annual Report for the year ended December 31, 2004. The interim consolidated financial statements do not contain all of the disclosures required for annual financial statements. The interim financial statements follow the same accounting policies and methods of application as the most recent annual financial statements.

Effective January 1, 2004, Canadian accounting standards require recognition of compensation costs arising out of stock-based compensation plans. In 2003, the Company prospectively adopted this requirement in accordance with CICA handbook section 3870.



NOTE 2: BASIC AND DILUTED EARNINGS PER SHARE
($000s except share data - Unaudited)

THREE MONTHS ENDED
September 30, 2005 September 30, 2004
Net Per Net Per
Earnings Shares share Earnings Shares share
--------------------------------------------------------

Basic earnings
per share 1,149 10,888,047 0.11 389 10,913,215 0.04

Dilutive effect
of stock option
conversions 54,773 2,308
Diluted earnings
per share 1,149 10,942,820 0.11 389 10,915,523 0.04
--------------------------------------------------------
--------------------------------------------------------

Options and
warrants
excluded from
diluted income
per common
share as their
effect could be
anti-dilutive 321,500 473,500
--------------------------------------------------------
--------------------------------------------------------


NINE MONTHS ENDED
September 30, 2005 September 30, 2004
Net Per Net Per
Earnings Shares share Earnings Shares share
--------------------------------------------------------
Basic earnings
(loss) per share 2,566 10,904,289 0.24 (647) 10,912,189 (0.06)

Dilutive effect
of stock option
conversions 33,299
Diluted earnings
(loss) per
share 2,566 10,937,588 0.23 (647) 10,912,189 (0.06)
--------------------------------------------------------
--------------------------------------------------------

Options and
warrants
excluded from
diluted income
per common
share as their
effect could be
anti-dilutive 379,500 633,500
--------------------------------------------------------
--------------------------------------------------------


NOTE 3: FINANCIAL INSTRUMENTS

To mitigate its exposure to fluctuations in interest rates, the Company entered into an interest rate swap arrangement to fix the interest rate on $9.8 million of its debt at 6.5%, inclusive of bank stamping fees of 2.05%. The fair value of the interest rate swap contracts at September 30, 2005 was negative $69,923. This arrangement matures April 30, 2006.

The Company purchases foreign exchange forward contracts as a hedge against certain US dollar denominated sales and the related accounts receivable. At September 30, 2005 the Company held forward contracts with a book value of $900,903. These derivative financial instruments are accounted for using the fair value method. The foreign exchange translation gains and losses on these instruments are accrued under accounts receivable on the balance sheet and recognized currently in cost of sales as foreign exchange gains/losses. The forward premium or discount on forward exchange contracts is recognized in cost of sales at the time the sale is recognized. The fair value of the foreign exchange contracts at September 30, 2005 is $86,397.

NOTE 4: ASSETS HELD FOR RESALE

The lands held for resale were sold June 2005 for $423,900 resulting in a gain on sale of $58,374, which has been included in Other Income for the nine months ended September 30, 2005 ($0.4 million for land as well as the Red Deer service facility $3.5 million: December 31, 2004). The Red Deer service facility was sold in February 2005 for total proceeds of $4.8 million resulting in a gain on sale of $1.3 million which has been included in Other Income for the nine months ended September 30, 2005.

NOTE 5: SHARE CAPITAL

During the quarter, the Company issued 12,000 shares pursuant to the exercise of stock options.

The Company made a normal course issuer bid to purchase from time to time, as it considers advisable, up to 545,000 of the issued and outstanding common shares of Collicutt Energy Services Ltd. on the open market through the facilities of the Toronto Stock Exchange. The bid commenced on June 20, 2005 and will terminate on June 19, 2006, or such earlier time as the bid is completed or terminated by the Company. During the period ended September 30, 2005, the Company purchased and later cancelled 64,600 common shares at an average price of $3.07, for a total cost of $198,547, including commissions, pursuant to the issuer bid.



As at ($000s - Unaudited) September 30, 2005 December 31, 2004
------------------------------------------------------------------------

Issued Common shares Amount Common shares Amount
----------------------------------------------
Balance, beginning of year 10,913,215 40,500 10,903,215 40,479
Stock options exercised 12,000 26 10,000 21
Common shares purchased (64,600) (241) - -
----------------------------------------------
Balance, end of year 10,860,615 40,285 10,913,215 40,500
------------------------------------------------------------------------
------------------------------------------------------------------------


NOTE 6: COMPARATIVE AMOUNTS

Certain comparative numbers have been reclassified to confirm to the presentation in the current year.

NOTE 7: CONTINGENCIES

The Company is involved in various litigation matters arising in the ordinary course of business. The Company is currently defending an action that was initiated in 2005 totaling $6 million relating to the alleged non-performance and termination of a contract. The Company intends to vigorously defend this action and does not believe any liability will be incurred. Accordingly, no provision has been made in the financial statements with respect to this matter.

Collicutt Energy Services Ltd. is an oilfield service company operating from its centrally located headquarters in Red Deer, Alberta and 11 strategic branch locations throughout the Western Canadian Sedimentary Basin.

Contact Information