Cordy Oilfield Services Inc.
TSX VENTURE : CKK

Cordy Oilfield Services Inc.

October 28, 2005 18:18 ET

Cordy Oilfield Services Inc.: Proposed Acquisition of Calgary Septic Co. Ltd. and Mesken Contracting Limited, and Sponsorship

CALGARY, ALBERTA--(CCNMatthews - Oct. 28, 2005) - CORDY OILFIELD SERVICES INC. (the "Corporation") (TSX VENTURE:CKK) is pleased to provide the following update regarding its proposed acquisition of each Calgary Septic Co. Ltd. ("Calgary Septic") and Mesken Contracting Limited ("Mesken").

Calgary Septic

Calgary Septic was incorporated under the laws of Alberta on May 18, 1989. Thomas Vaughn Reid of Calgary, Alberta owns all of the issued and outstanding shares of Calgary Septic. CSC Ltd. was incorporated under the laws of Alberta on November 19, 2002 as a wholly-owned subsidiary of Calgary Septic. Calgary Septic's goodwill was transferred to CSC Ltd. in exchange for additional shares of CSC Ltd. effective January 1, 2003, in a corporate reorganization. Mr. Reid is the sole director and officer of Calgary Septic and CSC Ltd.

CSC Ltd., as Calgary Septic's operating subsidiary, carries on the business previously conducted by Calgary Septic of supplying the commercial and oil and gas industries in Southern Alberta with services including hydro vacuuming, tank and vessel cleaning, high pressure and steam washing, tank inspections, transport and disposal of dangerous good and 24-hour emergency response.

The Corporation intends to purchase all of the issued and outstanding common shares of Calgary Septic in consideration of $9,292,000, paid by way of $4,000,000 in cash and $5,292,000 by the issue of 5,400,000 common shares of the Corporation at the deemed price of $0.98 per share. The cash portion of the purchase price will be funded by cash on hand. Readers are referred to the Corporation's Press Release of August 30, 2005 for further information regarding the proposed acquisition of Calgary Septic.

The following is summary draft management prepared unaudited consolidated financial information of Calgary Septic for the four month period commencing May 1, 2005 and ending August 31, 2005 and for the years ending April 30, 2005 and April 30, 2004.



Income Statement ($000)

For the Four For the For the
Month Period Ended Year Ended Year Ended
August 31, 2005 April 30, 2005 April 30, 2004
------------------------------------------------------------------------

Revenue 2,194 4,368 4,476
--------------------------------------------------
Cost of Sales 1,019 2,368 2,268
--------------------------------------------------
Gross Profit 1,175 2,000 2,208
--------------------------------------------------
Expenses (1) 359 1,062 931
Amortization 111 346 375
Interest 15 57 52
--------------------------------------------------
Total Expenses 485 1,465 1,358
--------------------------------------------------
Operating Income 690 535 850
Gain on Disposal
of Assets (4) 14 12
--------------------------------------------------
Earnings Before
Taxes 686 549 862
Provision for Tax 180 170 240
--------------------------------------------------
Net Income 506 379 622
--------------------------------------------------
--------------------------------------------------

(1) Expenses other than amortization and interest.


As at As at As at
Balance Sheet ($000) August 31, 2005 April 30, 2005 April 30, 2004
------------------------------------------------------------------------

ASSETS
Current Assets 2,119 1,438 1,681
Capital Assets - Net 2,268 2,017 2,069
Other Assets 92 92 92
--------------------------------------------------
4,479 3,547 3,842
--------------------------------------------------
LIABILITIES & EQUITY
Current Liabilities 348 144 449
Current Portion
- LT Debt 378 301 327
LT Portion - LT Debt 742 615 917
Due to related
entities (242) (260) (219)
Future Taxes - - -

Shareholders Equity 3,253 2,747 2,368
--------------------------------------------------
4,479 3,547 3,842
--------------------------------------------------
--------------------------------------------------


Mesken

Mesken is a construction company based in Okotoks, Alberta that has specialized in oilfield site preparation and reclamation as well as highway and subdivision construction since 1982. Leonard Messmer of Okotoks, Alberta owns all of the issued and outstanding shares of Mesken.

The Corporation intends to purchase all of the issued and outstanding common shares of Mesken in consideration of $8,100,000, paid by way of $4,500,000 in cash and $3,600,000 by the issue of 3,000,000 common shares of the Corporation at the deemed price of $1.20 per share. The cash portion of the purchase price will be funded by a combination of cash presently on hand and the proceeds of the Corporation's debenture financing announced on September 15, 2005. Readers are referred to the Corporation's Press Release of September 20, 2005 for further information regarding the proposed acquisition of Mesken.

The following is a summary of the draft management prepared unaudited consolidated financial statements of Mesken for the 11 month period commencing October 1, 2004 and ending August 31, 2005 and for the years ending September 30, 2004 and September 30, 2003.



For the 11 For the For the
Month Period Ended Year Ended Year Ended
Income Statement August September September
($000) 31, 2005 30, 2004` 30, 2003
------------------------------------------------------------------------

Revenue 10,446 15,113 13,955
--------------------------------------------------
Cost of Sales 7,410 14,146 12,520
--------------------------------------------------
Gross Profit 3,036 967 1,435
--------------------------------------------------
Expenses (1) 1,175 1,350 1,300
Amortization 271 384 385
Interest 56 167 99
Total Expenses 1,502 1,901 1,784
--------------------------------------------------
Operating Income 1,534 (934) (349)
Gain on Disposal
of Assets (52) 886 185
--------------------------------------------------
Earnings Before Taxes 1,482 (48) (164)
Provision for Tax 450 (46) (31)
--------------------------------------------------
Net Income 1,032 (2) (133)
--------------------------------------------------
--------------------------------------------------

(1) Expenses other than amortization and interest.


As at As at As at
August September September
Balance Sheet ($000) 31, 2005 30, 2004 30, 2003
------------------------------------------------------------------------

ASSETS
Current Assets 5,054 3,153 5,371
Capital Assets - Net 2,081 1,977 3,067
Other Assets - - -
--------------------------------------------------
7,135 5,130 8,438
--------------------------------------------------
--------------------------------------------------
LIABILITIES & EQUITY
Current Liabilities 3,320 2,105 5,061
Current Portion
- LT Debt 150 173 527
LT Portion - LT Debt 568 279 256
Due to related
entities 52 560 533
Future Taxes 214 214 260

Shareholders Equity 2,831 1,799 1,801
--------------------------------------------------
7,135 5,130 8,438
--------------------------------------------------
--------------------------------------------------


Readers are cautioned that the draft financial information has been provided to the Corporation by management of Calgary Septic and Mesken respectively. There is no assurance that the draft financial information provided in this Press Release is accurate prior to the completion of an independent audit. Management of the Corporation has not verified the accuracy of this information.

Blackmont Capital Inc. Retained as Sponsor

The Corporation is very pleased to announce that, subject to completion of satisfactory due diligence, Blackmont Capital Inc. has agreed to act as sponsor to the Corporation in connection with the proposed acquisitions of Calgary Septic and Mesken. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.

Completion of each of the proposed acquisitions is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance and, if applicable pursuant to TSX Venture Exchange requirements, disinterested shareholder approval. Where applicable, the proposed acquisitions cannot close until the required shareholder approval is obtained. There can be no assurance that the proposed acquisitions will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management filing statement to be prepared in connection with the proposed acquisitions, any information released or received with respect to the proposed acquisition may not be accurate or complete and should not be relied upon. Trading in the common shares of the Corporation should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed transactions and has neither approved nor disapproved of the contents of this press release.

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

Contact Information

  • Cordy Oilfield Services Inc.
    David Orr
    Vice President - Corporate Development
    (403) 266-2067
    1 (866) 854-8075 (FAX)
    Email: dorr@cordy.ca