Cordy Oilfield Services Inc.
TSX VENTURE : CKK

Cordy Oilfield Services Inc.

November 27, 2006 15:41 ET

Cordy Announces Third Quarter Results

CALGARY, ALBERTA--(CCNMatthews - Nov. 27, 2006) - Cordy Oilfield Services Inc. (TSX VENTURE:CKK) ("Cordy" and or the "Company") announces its consolidated operating and financial results for the three and nine month period ended September 30, 2006 with comparisons to the same period last year.



Three months ended Nine months ended
September 30, 2006 September 30, 2006
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($ millions, except
per share amounts) 2006 2005 Change 2006 2005 Change
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Revenue 31.1 0.0 31.1 57.6 0.2 57.4
Operating Income 2.9 (0.1) 3.0 4.1 (0.5) 4.6
Net income 2.3 (0.1) 2.4 3.8 (0.5) 4.3
EBITDA (1) 6.5 (0.1) 6.6 11.0 (0.5) 11.5
Earnings per share
Basic 0.03 (0.00) 0.03 0.06 (0.02) 0.08
Fully diluted 0.03 (0.00) 0.03 0.05 (0.02) 0.07
Weighted Average
number of Shares
Outstanding
Basic 77,739,152 20,628,585 64,831,708 20,628,585
Fully diluted 83,069,255 20,696,085 72,989,717 20,696,085
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(1) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization.


David Mullen, Cordy Chief Executive Officer, is pleased with the financial performance of Cordy and advises that recently acquired operations have been successfully integrated into the Cordy group of companies. Mr. Mullen further indicates that the diversification within the Cordy structure has produced positive results stating "I believe that we are fortunate to have a degree of diversification in Cordy which provides us with some protection from negative impacts which often result from cycles and abrupt changes in the oil and gas sector."

OVERVIEW

The Company completed ten acquisitions during the nine month period ended September 30, 2006: Calgary Septic Company Ltd. ("Calgary Septic"), Mesken Contracting Limited. ('Mesken"), NWP Construction Ltd. ("NWP"), Coverall Pipeline Construction Ltd. ("Coverall") on January 31, 2006, Nohels Group Inc. ("Nohels") and Top-Notch Oilfield Services Inc. ("Top-Notch") on April 1, 2006, Sphere Drilling Fluids Ltd. ("Sphere") on May 31, 2006, 522532 Alberta Ltd. ("Hartwell"), Battle River Oilfield Construction Ltd. ("Battle River") and Lamont Drilling Bit Services Ltd. ("Lamont") effective August 1, 2006. The results of operations are included in the consolidated financial statements from the date of acquisition. The relevance of the year to year comparisons are minimal given that the company operated as a technology company and had minimal operations during the three and nine month periods ending September 30, 2005.

THREE MONTHS ENDED SEPTEMBER 30, 2006

Consolidated revenues were $31.1 million, up $31.1 million from $0.0 million in 2005.

Consolidated direct operating expenses were $22.4 million, up $22.4 million from $0.0 million in 2005. Consolidated general and administrative expenses were $2.2 million, up $2.1 million from $0.1 million in 2005.

Consolidated EBITDA for the three months ended September 30, 2006 was $6.5 million, up $6.6 million from a $0.1 million EBITDA loss in 2005. EBITDA represented 21% of revenue.

Consolidated operating income increased $3.0 million to $2.9 million from a $0.1 million operating loss in 2005. Net income increased $2.4 million to $2.3 million from a $0.1 million loss in 2005.

The increases are directly attributed to the operating results generated from the ten acquisitions completed by Cordy in 2006 as compared to minimal operations in the prior year.

NINE MONTHS ENDED SEPTEMBER 30, 2006

Consolidated revenues were $57.6 million, up $57.4 million from $0.2 million in 2005.

Consolidated direct operating expenses were $41.3 million, up $41.1 million from $0.2 million in 2005.

Consolidated general and administrative expenses were $5.5 million, up $5.1 million from $0.4 million in 2005.

Consolidated EBITDA for the nine months ended September 30, 2006 was $11.0 million, up $11.5 million from a $0.5 million loss in 2005. EBITDA represented 19% of revenue.

Consolidated operating income increased $4.6 million to $4.1 million from a $0.5 million operating loss in 2005.

Consolidated net income increased $4.3 million to $3.8 million from a $0.5 million net loss in 2005.

The increases are directly attributed to the operating results generated from the ten acquisitions completed by Cordy in 2006 as compared to minimal operations in the prior year.

CAPITAL RESOURCES AND LIQUIDITY

The consolidated cash resources of the Company at September 30, 2006 were $36.8 million compared to consolidated cash resources of $19.1 million at December 31, 2005, an increase of $17.7 million. This increase resulted primarily from the proceeds of a $57.5 million private placement completed in April 2006 resulting in net proceeds of $54.6 million and was partially offset by funds used for acquisitions during the year.

The Company had $33.8 million of consolidated long-term debt (including current portion) at September 30, 2006. This is comprised primarily of $19 million debentures which mature in 2007 and 2008. The consolidated net working capital as at September 30, 2006 was $40.6 million. The Company has various operating lines in each subsidiary that fund each company's operating requirements.

As at September 30, 2006 the Company has placed orders for construction equipment valued at approximately $2.6 million. These orders are in the normal course of business and it is anticipated that all of the equipment will be leased or financed on a basis that will not require significant capital resources.

The Company anticipates that its current cash resources will be sufficient to meet all anticipated obligations throughout the balance of 2006.

OUTLOOK

The outlook for the fourth quarter of 2006 looks positive as the Cordy operations, particularly those in northern Alberta, enter the busier months. Weather conditions experienced in October by certain of Cordy's construction subsidiaries will decrease earnings expected for the fourth quarter, however Management believes that November and December will produce strong results.

Management is monitoring the potential impacts of lower hydrocarbon pricing although it is believed that Cordy's fourth quarter earnings will not be materially affected due to committed work in place and sales in the construction and mining sectors which are not being impacted by softening of hydrocarbon pricing.

Cordy intends to continue its strategy of growth through acquisition and organic growth within its existing subsidiaries. Cordy management believes that Cordy is positioned well to expand due to a strong cash position and the capital being generated by its subsidiaries. Management believes that the recently announced 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 also continues to spread its focus to the infrastructure build out which continues to take place in Alberta and S. E. British Columbia. With a large portion of Cordy's business derived from this build out, Cordy remains optimistic about the outlook for the last quarter of 2006 and the first quarter of 2007.

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
    For investor relations information:
    Cordy Oilfield Services Inc.
    David Orr
    Vice President - Corporate Development
    Email: dorr@cordy.ca
    Website: www.cordy.ca