Drillers Technology Corp.
TSX : DLR

Drillers Technology Corp.

August 15, 2005 17:30 ET

Drillers Technology Releases Second Quarter Results

CALGARY, ALBERTA--(CCNMatthews - Aug. 15, 2005) - Drillers Technology Corp. (TSX:DLR):

Highlights:

- International revenue increase offsets early break-up and wet weather in Canada.

- Increase in 2005 net earnings compared to 2004.

FINANCIAL SUMMARY

The information provided below includes the Corporation's proportionate share of the Mexican Joint Venture's revenue, net earnings and cash flow.



Three months Six months
($000) ended June 30 ended June 30
2005 2004 2005 2004

Consolidated Financial Results
Revenue $ 6,265 $ 6,286 $17,909 $16,704
Operating expenses 4,267 4,633 10,963 12,301
Gross Margin 1,998 1,653 6,946 4,403
% of revenue 32% 26% 39% 26%
General and administrative 753 497 1,523 924
Depreciation and amortization 1,280 1,101 2,731 2,567
Financial items 465 616 728 1,145
Gain on sale (617) - (617) (863)
Income tax expense (recovery) (139) (559) 318 (203)
Net earnings (loss) 256 (2) 2,263 833
Net earnings per diluted share 0.01 - 0.07 0.03
Funds from operations 693 449 4,519 2,180
Funds per diluted share 0.02 0.01 0.14 0.07

Financial Position
Working capital before current
portion long-term debt 4,311 125
Long-term debt including current portion 13,875 18,826
Shareholder's equity 51,451 48,122



Three months Six months
ended June 30 ended June 30
2005 2004 2005 2004
Operating Results
Wholly owned
Number of rigs 6 6 6 6
Operating days 42 106 385 493
Rig utilization rate 8% 19% 35% 46%
Canadian industry utilization rate 33% 30% 52% 52%

Mexico - Joint Venture
Number of operating rigs 8 8 8 8
Operating days 626 624 1265 1,191
Rig utilization rate 86% 89% 87% 89%
Drillers Technology share of JV
Share of rigs 4 4 4 4
Share of operating days 319 318 645 607


Funds from operations is defined as earnings (loss) for the period adjusted for items not involving cash, before changes in non-cash working capital.

Mexican Joint Venture Results of operations

The Corporation has included in its accounts the following information in respect of its 51% ownership in the Mexican Joint Venture.



Three months Six months
($000) ended June 30 ended June 30
2005 2004 2005 2004

Revenue $ 5,715 $ 5,162 $11,132 $ 9,654

Expenses
Operations 3,472 3,646 6,767 7,122
General and administrative 306 130 450 243
Financial items 15 31 15 92

Funds from operations 1,922 1,355 3,900 2,197
Depreciation and amortization 1,183 901 2,037 1,694
Withholding tax expense 127 241
Future income tax (recovery) (12) (137) (126) (144)
Net earnings 624 591 1,748 647

Current assets $ 5,109 $ 6,448
Drilling rigs and related equipment 28,149 31,803
Current liabilities 2,375 6,073


In the second quarter 2005, Drillers Technology generated revenues of $6,265 compared to $6,286 generated during the same period of 2004. Increased international revenue offset lower than anticipated second quarter revenues for the wholly owned rigs, due to a short winter drilling season resulting from early break-up in Canada and continued wet weather in the second quarter.

Mexican Joint Venture

Drillers Technology de Mexico currently has two rigs drilling in Chicontepec and six rigs operating in Burgos under the new Burgos V contract. The eight rigs achieved utilization rates of 86% during the second quarter 2005.

The Mexican Joint Venture experienced significant growth in revenue with the commencement of the new Burgos V contract on December 21, 2004. Revenue contributed by Mexico was $5,715 in the second quarter 2005, an increase of 11% compared to revenues of $5,162 in 2004. With management continuing to control operating expenditures during the same period, gross margins generated from operations were $2,243 or 39% of revenue compared to $1,516 or 29% of revenue in 2004.

Wholly Owned Rigs

In Western Canada early break-up and wet weather in the second quarter resulted in a decrease in revenues to $550 for the three months.

The Corporation has leased three wholly owned rigs to a shareholder for potential casing drilling opportunities in the US. The rigs have been leased at competitive rates for a guaranteed 300 operating days over a twelve month term.

In Alaska Rig 5 did not operate during the second quarter. Rig 5 will commence a drilling program on the Kenai Peninsula in August.

The corporation feels that it can achieve more favorable rates on both our Long Term and Subordinate Debt and is in the process of evaluating various refinancing alternatives.

The second quarter 2005 report to shareholders, including the Corporation's consolidated financial statements and management discussion and analysis will be posted to the Drillers Technology Corp. website on August 15, 2005. Website: http://www.drillerstech.com/investor_relations.html.

Certain statements contained in this press release, including statements which are related to drilling activity and future profitability and which may contain words such as "could", "should", "expect", "believe", "will", and similar expressions and statements relating to matters that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of Drillers Technology Corp. to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such factors include fluctuations in the market for oil and gas and related products and services; competition; political and economic conditions in countries in which Drillers Technology Corp. does business; the demand for services provided by Drillers Technology Corp.; changes in laws and regulations, including environmental, to which Drillers Technology Corp. is subject and other factors.

Contact Information

  • Drillers Technology Corp.
    Ronald Gnyra
    President and Chief Executive Officer
    (403) 261-9877
    (403) 213-4860 (FAX)
    or
    Drillers Technology Corp.
    Darcy Campbell
    Vice President, Finance and Chief Financial Officer
    (403) 261-9877
    (403) 213-4860 (FAX)
    Website: www.drillerstech.com