Cordy Oilfield Services Inc.
TSX VENTURE : CKK

Cordy Oilfield Services Inc.

August 16, 2007 14:23 ET

Cordy Announces Second Quarter Results

CALGARY, ALBERTA--(Marketwire - Aug. 16, 2007) - Cordy Oilfield Services Inc. ("Cordy" and or the "Company")(TSX VENTURE:CKK) announces its consolidated operating and financial results for the three and six month period ended June 30, 2007 with comparisons to the same period last year.



CONSOLIDATED FINANCIAL RESULTS
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Q2 FINANCIAL HIGHLIGHTS

Selected Quarterly Information Three months ended Six months ended
June 30 June 30
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($ millions, except per
share amounts) 2007 2006 Change 2007 2006 Change
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Revenue 23.9 17.3 6.6 61.4 26.5 34.9
Operating income (loss) (2.8) (0.6) (2.2) 2.1 .3 1.8
Net income (loss) (2.0) 0.2 (2.2) 1.2 .6 .6
EBITDA (1) .9 1.5 (.6) 9.6 3.4 6.2
EBITDAS (2) 1.3 2.2 (.9) 10.5 4.3 6.2

Earnings per share -
basic & diluted (.02) - (.02) .01 .01 -
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Total assets, as at
June 30th 168.9 133.9 35.0 168.9 133.9 35.0

Cash and equivalents,
as at June 30th 35.6 52.4 (16.8) 35.6 52.4 (16.8)
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Shareholders' equity,
as at June 30th 103.6 81.2 22.4 103.6 81.2 22.4
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(1) EBITDA, a non-GAAP measure, is defined by Cordy as earnings before
interest, taxes, depreciation and amortization.
(2) EBITDAS, a non-GAAP measure, is defined by Cordy as earnings before
interest, taxes, depreciation, amortization and stock-based
compensation.


David Mullen, Cordy's Chief Executive Officer, announces the financial performance of Cordy and advises that the structure diversification within Cordy has produced positive results stating "We have a degree of diversification in Cordy which provides us with some protection from the uncertain impacts of the cycles and abrupt changes in the oil and gas sector that we are now experiencing. There has been a steady slow-down in drilling and oilfield services commencing in 2006 that many are forecasting will not turn around until 2008. With our diversification in the construction, manufacturing and environmental segments, we believe we are in a better position to weather the storm."

BUSINESS ACQUISITIONS

Effective May 31, 2007, Battle River acquired 100% of the outstanding shares of Bry-Don Oilfield Contracting Ltd. ("Bry-Don") for $5.9 million in exchange for cash of $3.1 million, an amount to be paid of $0.7 million in cash and $2.1 million by the issuance of 1,200,000 common shares at an attributable price of $1.75 and related acquisition costs. Bry-Don has subsequently become a division of Battle River.

RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2007

Consolidated revenues for the six months to June 30, 2007 were $61.4 million, an increase of $34.9 million from $26.5 million in 2006. The three months revenue followed a similar trend of increasing over 2006. The increase in revenue period over period is partially attributable to the inclusion of the operations of all ten acquisitions for the full six months in 2007 while 2006 reflects the results of seven acquisitions for varying periods of time in 2006.

Consolidated net income for the six months was $1.2 million, up $0.6 million from $0.6 million in 2006. The increase is directly attributed to the income generated from the ten acquisitions while the comparable period in 2006 reflects the results of only seven of the acquisitions for varying periods of time. The consolidated net loss of $2.0 million for the second quarter in 2007 results from lower business activity due to spring breakup and unusually wet weather.

Consolidated EBITDAS for the three months ended June 30, 2007 was $1.3 million and for the six months was $10.5 million. The Company remained in a positive position during difficult times in the resource sector.

CAPITAL RESOURCES AND LIQUIDITY

The consolidated cash resources of the Company at June 30, 2007 were $35.6 million compared to consolidated cash of $37.2 million at December 31, 2006, a decrease of $1.6 million. The decrease in cash partially results from the acquisition of Bry-Don and the acquisition of equipment.

The Company has $41.5 million of consolidated long-term debt and capital leases (including current portion) at June 30, 2007. This includes $19 million of debentures of which $12.8 million mature in 2007 and $6.2 million mature in early 2008. The consolidated net working capital at June 30, 2007 was $19.5 million.

At June 30, 2007, the Company had operating lines of credit totaling $9.9 million, of which $0.9 million was drawn and term loans payable on demand of $4.3 million.

OUTLOOK

The outlook for the remainder of 2007 is cautiously optimistic as the Cordy operations, particularly the Heavy Construction division, ramp up for summer and fall work. The businesses related to the oil and related gas sector will show a slowdown as the industry suffers through a predicted slump for the remainder of the year.

Cordy intends to continue its strategy of growth through acquisition and organic growth within its existing subsidiaries. Cordy's management believes that Cordy is well positioned to expand due to a strong cash position and the capital being generated by its subsidiaries. Management believes that the changes to the taxing of income trusts will result in both a softening of purchase prices for potential acquisitions and fewer competing potential purchasers. This is anticipated by management to result in additional opportunities for Cordy.

Cordy management will continue to construct efficiencies in relation to its ten business units while proceeding with expansions and new acquisitions. The future of the Alberta oil and gas industry is strong regardless of the softening of market conditions from time to time. Cordy management remains confident in the growth of their businesses in Northern Alberta. Cordy will continue to spread its focus to the infrastructure build out in Alberta and S. E. British Columbia along with the opening in September 2007 of our new camp operation in N.W. British Columbia.

CORPORATE PROFILE

Cordy presently consists of ten wholly-owned operating subsidiaries, Calgary Septic Company Ltd. ("CSC"), Mesken Contracting Limited ("Mesken"), New West Pipelines Ltd. ("NWP"), Coverall Pipeline Construction Ltd. ("Coverall"), Nohels Group Inc. ("Nohels"), Top-Notch Oilfield Services Inc. ("Top-Notch"), Sphere Drilling Fluids Ltd. ("Sphere"), 522532 Alberta Ltd. ("Hartwell"), Battle River Oilfield Construction Ltd. ("Battle River") and Lamont Bit Services Ltd. ("Lamont"), each operating as a separate business accountable for its own profitability and performance. The operating businesses provide specialized services that include; small diameter pipeline and facilities construction, oilfield site preparation and reclamation, highway and subdivision construction, environmental services and drilling solutions. The Company provides management and financial expertise, capital resources and strategic planning to enable its subsidiaries to expand and increase profits.

This press release may contain forward-looking statements including expectations of future cash flow and earnings. These statements are based on current expectations that involve a number of risks and uncertainties which could cause actual results to differ from those anticipated. These risks include, but are not limited to: risks associated with the oilfield services sector (e.g. demand, pricing and terms for oilfield services; current and expected oil and gas prices; exploration and development costs and delays; reserves discovery rates; pipeline and transportation capacity; weather, health, safety and environmental risks), integration if acquisitions, competition, and uncertainties resulting from potential delays or changes in plans with respect to acquisitions, development projects or equipment expenditures. Additional information on these and other factors that could affect the Company's operations or financial results are included in the Company's documentation and filings with Canadian securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this press release. The Company does not assume any obligation to update these forward-looking statements, except as required by law.

Additional information on Cordy is available on our website www.cordy.ca or on SEDAR at www.sedar.com.

The TSX Venture Exchange does not accept responsibility for the accuracy or adequacy of this release.

Contact Information

  • Cordy Oilfield Services Inc.
    David Mullen
    Chairman and CEO
    (403) 266-2067
    (403) 266-2087 (FAX)
    Email: dmullen@cordy.ca
    or
    Cordy Oilfield Services Inc.
    David Orr
    Vice President - Corporate Development
    (403) 266-2067
    (403) 266-2087 (FAX)
    Email: dorr@cordy.ca
    Website: www.cordy.ca