Global Energy Services Ltd.
TSX VENTURE : GLK

Global Energy Services Ltd.

August 29, 2005 20:03 ET

Global Energy Services Ltd.: Second Quarter Results

CALGARY, ALBERTA--(CCNMatthews - Aug. 29, 2005) - Derek Begin, President & CEO of Global Energy Services Ltd. (TSX VENTURE:GLK) ("Global Energy"), is pleased to provide the following review of Global Energy Services Ltd. ("Global Energy") second quarter results.

Corporate Developments

- We have changed our name from Global Link Data Solutions Ltd. to Global Energy Services Ltd. effective August 17, 2005. The new name more accurately portrays our business and increased product lines.

- The company has 100 percent ownership in Western Pump Solutions Ltd ("WPS") through its acquisition of the remaining two-thirds interest in WPS effective April 29, 2005.

- New facilities have been established in Edmonton and Barrhead with dedicated staff to support the development and deployment of our products and services.

- We have extended our managed system services into the United States market with the parent company of one of our major clients.

- Additional equity of $640,000 was raised in a private placement with a private energy fund.

- Our debenture debt of $400,000 has been converted to equity in accordance with the debenture agreement.

- We have extended our satellites services with the introduction of what we consider the most advanced satellite internet offering available today. It is designed for business applications and based on proven satellite technology to provide flexible IP connectivity.

- Our customer service area is being reorganized to support all of our business lines on a 24/7/365 basis.

- New staff has been added and an intensive training program is underway.

Financial Highlights

- Strong commodity prices have led to higher activity levels and better equipment utilization rates for the oil field service companies.

- Our second quarter revenues grew from $1,201,339 to $1,443,181, increasing more than 20 percent. These revenues reflect the continued strong activity levels when the weather permitted.

- We posted a loss for the second quarter which was not from our core operations, but rather from development costs in our pump products line. This loss may be mitigated through future tax credits and SR&ED grants. Any recovery will positively influence future reporting period.

- Global Energy has a strong balance sheet due to new equity and debt conversions. We had an excess of current assets over current liabilities of $1,970,544 at June 30, 2005.

Going Forward

- By owning 100 percent of WPS, we can focus on realizing the potential we believe this part of our business provides.

- The huge resource potential of wet coal bed methane "CBM", while still technologically challenging, is being pursued by industry. This was evidenced recently by two CBM consortiums announcing plans which may result in a billion dollars in new expenditures in the wet coal bed methane projects over the next eighteen months.

- We welcome this news as our hydraulic submersible pumps have performed well during the various pilot phases, and we are confident in our technology and the role Global Energy will play in unlocking this resource.

- We are, however, still firmly committed to our core business and, with our satellite services, our improved customer service program, and our focus on motivating and training our staff, we are solidifying our existing client relationships and earning new ones.

- With this growing core business base, the existing opportunities ahead for our pump technologies, and our strong balance sheet, we see continued growth for Global Energy.

Second quarter results can be accessed through SEDAR at www.sedar.com



GLOBAL LINK DATA SOLUTIONS LTD.
CONSOLIDATED BALANCE SHEETS
As At June 30, 2005
(unaudited)

30-Jun 31-Dec
Note 2005 2004
ASSETS

Current assets
Cash 806,967 338,044
Income taxes recoverable 150,444 -
Accounts receivable 2,039,629 1,826,425
Inventory 399,542 88,753
Deposits and prepaids 18,175 25,894
------------------------
3,414,757 2,279,116
Future income taxes 192,187 192,187

Property and equipment 2,416,997 2,426,519

Investments 2 1,803 1,203,350

Intangible assets 2 430,212 -

Goodwill 2,315,738 2,315,738

------------------------
8,771,694 8,416,910
------------------------
------------------------
LIABILITIES
Current liabilities
Accounts payable & accrued liabilities 1,144,283 1,070,292
Current income tax payable - 317,457
Current portion of obligations
under capital leases 256,790 342,343
Current portion of long-term debt 92,090 93,422
------------------------
1,493,163 1,823,514

Obligations under capital leases 30,269 117,564
Long-term debt 49,185 81,802

Convertible debentures 3 - 400,000

------------------------
1,572,617 2,422,880
------------------------

SHAREHOLDERS' EQUITY

Equity portion of convertible debentures 3 - 100,000
Capital stock 4 7,677,465 5,699,515
Contributed surplus 51,235 27,786
Retained earnings (deficit) (529,624) 166,728
------------------------
7,199,076 5,994,029
------------------------
8,771,694 8,416,909
------------------------
------------------------


GLOBAL LINK DATA SOLUTIONS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
For The Six Months Ended June 30, 2005 and 2004
(unaudited)

30-Jun 30-Jun
Note 2005 2004

Revenue $4,534,820 $4,123,596

Direct Costs 1,922,654 1,533,388

------------------------
2,612,166 2,590,208
------------------------

Expenses
Wages and benefits 849,337 885,888
Re-valuation of intangible assets 5 837,891 -
Amortization of property and equipment 616,888 280,561
Facilities, vehicles and communication 327,329 285,590
Administration 286,682 270,322
Development costs 5 220,001 -
Interest 40,541 38,504
Amortization of intangible assets 5 30,729 -
Loss on disposal of property and equipment 26,620 25,486
------------------------
3,236,018 1,722,361
------------------------

Income (loss) before income taxes (623,852) 867,847
Provision for income taxes
Future income taxes - 22,000
Current income taxes 72,500 253,541
------------------------
72,500 275,541
------------------------

Net income (loss) for the period (696,352) 592,306

Retained earnings (deficit)
- Beginning of period 166,728 (516,626)
------------------------

Retained earnings - End of period (529,624) 75,680
------------------------
------------------------

Earnings per Common Share
Basic (0.046) 0.055
Diluted (0.046) 0.050

Weighted average number
of shares outstanding 15,157,276 10,714,292


GLOBAL LINK DATA SOLUTIONS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOW
For The Six Months Ended June 30, 2005 and 2004
(unaudited)

30-Jun 30-Jun
2005 2004

Cash provided by (used in):

Operating activities
Net income for the period $ (696,352) $ 592,306
Items not affecting cash
Amortization of property and equipment 616,888 280,561
Loss on sale of property and equipment 286,682 270,322
Re-valuation of intangible assets 837,891
Loss from investments accounted
for by the equity method 33,657
Amortization of intangible assets 30,729
Provision for future income taxes - 22,000
Stock-based compensation expense 26,832 3,243
------------------------
1,136,326 1,168,432

Net change in non-cash working capital items (464,956) (267,601)
------------------------
671,370 900,831
------------------------
Financing activities
Proceeds from (repayment) of long-term debt (70,404) 4,279
Proceeds from sale of Common Shares 774,567 -
Proceeds (repayment) of obligations
under capital leases (172,848) 239,679
------------------------
531,315 243,958
------------------------
Investing activities
Purchase of property and equipment (519,566) (883,195)
Acquisition of Western Pump Solution
Ltd. net of cash 13,237
Proceeds on sale of property and equipment 32,627 93,960
------------------------
(473,701) (789,235)
------------------------

Increase in cash 728,984 355,554

Cash (Bank indebtedness) - beginning of period 338,044 (252,299)

------------------------
Cash (Bank indebtedness) - end of period 1,067,028 103,255
------------------------
------------------------
Supplementary information
Cash used for
Interest paid 41,972 20,504
Taxes paid 523,999 262,653


GLOBAL LINK DATA SOLUTIONS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
For The Three Months Ended June 30, 2005 and 2004
(unaudited)

30-Jun 30-Jun
Note 2005 2004


Revenue $1,443,181 $1,201,339

Direct Costs 737,188 392,564

------------------------
705,993 808,776
------------------------

Expenses
Wages and benefits 319,487 412,326
Re-valuation of intangible assets 5 837,891 -
Amortization of property and equipment 309,894 147,796
Facilities, vehicles and communication 162,364 128,616
Administration 141,835 135,283
Development costs 5 220,001 -
Interest 19,247 17,877
Amortization of intangible assets 5 30,729 -
Loss on disposal of property and equipment 19,678 17,510
------------------------
2,061,127 859,408
------------------------

Income (loss) before income taxes (1,355,134) (50,632)
Provision for income taxes
Future income taxes - 22,000
Current income taxes (183,750) (61,788)
------------------------
(183,750) (39,788)
------------------------

Net income (loss) for the period (1,171,384) (10,844)

Retained earnings (deficit)
- Beginning of period 641,760 22,534
------------------------

Retained earnings (deficit) - End of period (529,624) 11,690
------------------------
------------------------

Earnings per Common Share
Basic (0.077) (0.001)
Diluted (0.077) (0.001)

Weighted average number of shares outstanding 14,570,857 10,714,292



GLOBAL LINK DATA SOLUTIONS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOW
For The Three Months Ended June 30, 2005 and 2004
(unaudited)

30-Jun 30-Jun
2005 2004

Cash provided by (used in):
Operating activities

Net income for the period $(1,171,384) $ (10,844)
Items not affecting cash
Amortization of property and equipment 309,894 147,796
Loss on sale of property and equipment 19,678 17,510
Re-valuation of intangible assets 837,891
Loss from investments accounted
for by the equity method 8,360
Amortization of intangible assets 30,729
Provision for future income taxes - 22,000
Stock-based compensation expense 14,146 1,785
------------------------
49,313 178,247

Net change in non-cash working capital items 594,909 325,377
------------------------
644,223 503,624
------------------------

Financing activities
Repayment of long-term debt (47,106) 23,520
Proceeds from sale of Common Shares 709,567 -
Repayment of obligations under capital leases (87,468) (65,070)
------------------------
574,994 (41,550)
------------------------
Investing activities
Purchase of property and equipment (302,860) (343,039)
Acquisition of Western Pump Solutions
Ltd. net of cash 13,237
Proceeds on sale of property and equipment 28,209 77,273
------------------------

(261,413) (265,766)
------------------------

Increase in cash 957,804 196,308


Cash (Bank indebtedness) - beginning of period (150,837) (401,879)
------------------------

Cash (Bank indebtedness) - end of period 806,967 (205,571)
------------------------
------------------------

Supplementary information
Cash used for
Interest paid 19,923 8,877
Taxes paid 164,401 60,000


NOTES TO FINANCIAL STATEMENTS

1) Basis of Presentation

These interim unaudited consolidated financial statements do not include all of the disclosures required by Canadian generally accepted accounting principles for annual financial statements and, accordingly, should be read in conjunction with the consolidated financial statements included in the Corporation's annual report for the year ended December 31, 2004. These interim consolidated financial statements follow the same accounting policies and method of computation as used in the 2004 consolidated financial statements. The accompanying financial statements include all normally recurring adjustments, which in the opinion of management, are necessary to present fairly the Corporation's financial position as at June 30, 2005 and the results of operations and earnings (deficit) and cash flows for the six month period ending June 30, 2005.

2) Acquisition of Western Pump Solutions Ltd.

On April 30, 2005, the company acquired the remaining two thirds of the outstanding common and preferred shares of Western Pump Solutions Ltd.("WPS"). Prior to that date, the company had a one third ownership and accounted for its investment on an equity basis. From April 30, 2005, the company has fully consolidated Western Pump Solutions Ltd. in its financial statements.

Since the second stage of its investments was obtained at a lower price, the company has revalued its investment based on the consideration paid and taken a charge to income.



Cash Shares Total
Number Amount

Purchase price: August 1, 2004 1,000,000 500,000 200,000 1,200,000
Equity in earnings August 2004
to April 2005 (32,109)

Re-valuation April 30, 2005 (837,891)
----------

330,000

Purchase price April 30, 2005 30,000 1,260,000 630,000 660,000
---------------------------------------

1,030,000 1,760,000 830,000 990,000
---------------------------------------
Net assets acquired:

Cash 43,237

Working capital 445,229

Property and equipment 147,047

Patents and technology 390,941

Long term debt (36,455)
----------

990,000
----------

Intangible Assets

Acquired with Western Pump Solutions Ltd 390,941

Patents acquired through issuance of common shares 70,000
----------

460,941

Amortization (based on straight line over
thirty months starting May 1, 2005) (30,729)
----------

430,212
----------
----------


3) Convertible Debentures

On June 30, 2005 convertible debentures were redeemed in accordance with the debenture agreement and the holders elected to receive 1,250,000 shares. Both the debt component of $400,000 and the equity component of $100,000 were added to capital stock as a result of the conversion.



4) Capital Stock

a) Authorized

Unlimited number of voting Class A common shares
Unlimited number of non-voting Class A common shares
Unlimited number of preferred shares, issuable in series
Unlimited number of non-voting preferred shares

b) Issued

Common
Shares Amount

Balance as at December 31, 2004 14,514,292 5,699,515
Options exercised 396,667 67,067

Reclassification of contributed surplus
on options exercised 3,383

Private placement for cash 1,000,000 640,000

Private placement issued for acquisition of WPS 1,260,000 630,000

Private placement issued for patents 140,000 70,000

Conversion of debentures 1,250,000 500,000

Loan agreement proceeds 67,500
------------------------

Balance as at June 30, 2005 18,560,959 7,677,465
------------------------
------------------------

c) Stock Options

Weighted
Average
Shares Exercise Price

Balance as at December 31, 2004 1,095,000 0.32

Granted 150,000 0.60

Cancelled (149,999) 0.35

Exercised (396,667) 0.24

Balance as at June 30, 2005 698,334 0.42


Exercise
Options Expiry Date Outstanding Price
------------------------------------------------------------------------

July 4, 2005 50,000 $ 0.38

June 20, 2007 33,334 $ 0.19

August 17, 2008 100,000 $ 0.10

June 22, 2009 150,000 $ 0.40

August 30, 2009 165,000 $ 0.54

December 15, 2009 50,000 $ 0.37

May 23, 2010 100,000 $ 0.60

May 30, 2010 50,000 $ 0.60
-------------
698,334
-------------

d) Stock Warrants

Weighted
Average
Shares Exercise Price

Granted 500,000 0.90
-------------------------

Balance as at June 30, 2005 500,000 0.90
-------------------------
-------------------------


In connection with a private placement of common share units dated June 30, 2005, the company issued 500,000 share purchase warrants to purchase common shares at an exercise price of $0.90 expiring December 31, 2006.

5) Costs related to Western Pump Solutions

The company has incurred costs related to the development of artifical lift pumping solutions which were charged to income during the second quarter of 2005. These costs include revaluation of intangible assets in connection with the aquistion of Western Pump Solutions Ltd in the amount of $837,891 and $30,729 of amortization of intangible assets as described in note 2. Additional development costs of $275,426 were incurred in the second quarter. These costs are presented net of revenues from customers of $55,425.

The coalbed methane business in western Canada is in the precommercialization stage as at June 30, 2005 and future revenues while promising lack the certainty required under Canadian GAAP for capitalization as intangible assets.

6) Segmented Information

With the acquistion of Western Pump Solutions Ltd, the Company now operates in two segments. The main business segment consists of providing communications and technology solutions and services to the oil and gas industry within western Canada. The second segment is the provision of artifical lift products and services primarily to the coalbed methane industry. With the exception of the development related costs, as discussed in Note 5, all revenues and expenditures relate to the main business segment.

The split of total assets between the two segments at June 30, 2005 is 89 percent in the main segment and 11 percent in the artifical lift segment.

The company operated in only one geographic segment during the six month period ending June 30, 2005.

7) Industry Seasonality

Readers of these interim consolidated financial statements should be aware that the Corporation operates in a seasonal industry whereby activity in the fall and winter months are significantly higher than in the spring and summer months. Therefore these statements are not considered as being representative of the Corporation's expected performance over the remaining six months of the current year.

8) Contingencies

The Company has been added an a defendant in a lawsuit against the orginal principals of Western Pumps Solutions Ltd. The Company's opinion is the claim is without merit, however the claim is recent, and as such it is premature to determine the outcome of this claim.

9) Comparative Figures

Certain comparative figures have been reclassified to conform to the current period presentation.

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion has been prepared by management dated August 24, 2005 and is a review of the financial results of the Company based on accounting principles generally accepted in Canada. Its focus is primarily a comparison of the financial performance for the six months ended June 30, 2005 and 2004 and should be read in conjunction with the consolidated financial statements and accompanying notes in the Company's annual report for the year ended December 31, 2004.

Certain information regarding the Company contained herein may constitute forward-looking statements under applicable securities laws. Such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements.

Developments in the Quarter

Western Pump Solutions Ltd

The company acquired the remaining two-thirds interest in Western Pump Solutions Ltd. ("WPS") effective April 29, 2005 and we are continuing our research and development efforts, thereby positioning the Company to enter the coal bed methane (CBM) market ahead of its competition. Facilities have been established in Edmonton and Barrhead with dedicated staff to support manufacturing, development and deployment of our products and services. This acquisition has been accounted for using the step-by-step consolidation method.

Conversion of Debentures

On June 30, 2005, the convertible debentures were settled and the Corporation issued 1,250,000 common shares to the debenture holders. Both the debt component of $400,000 and the equity component of the debentures of $100,000 were added to capital stock as a result of the conversion.

Review of Operating Results

Revenue

Revenue totaled $4,534,820 for the six months ended June 30, 2005 compared to $4,123,596 for the same period in 2004. Revenues for the three month period increased 20 percent to $1,443,181 from $1,201,339 in 2004. Revenue generated from communications (intercom, satellite, radio and cellular) increased by 8 percent to $3,857,600 from $3,561,218 in 2004. This accounted for 85 percent of the total revenues in 2005 versus 86 percent in 2004. Revenues from communications improved during the second quarter by $188,927 to $1,259,103 from $1,070,176 in 2004. Two factors which had an impact on revenues were the increased number of computers on rental contracts and the effect of the weather related slow-down of drilling activity.

Portable gas detection (PGD) contributed $677,219 or 15 percent of Global Link's revenue compared to $562,378 the previous year. PGD revenues are continuing to increase and rose $114,841 or 20 percent compared to last year. Revenues for the second quarter were $184,078 versus $131,164 in 2004. The Company has expanded its number of available units by ten and has realized an increase in its daily rental rate of approximately 7 percent.

Gross Margin

The gross margin improved by 1 percent or $21,958, to $2,612,166 in 2005 from $2,590,208 in 2004. The gross margin as a percentage of sales declined to 58 percent from 63 percent in the comparable period in 2004. The gross margins from communications increased by 2 percent to $2, 097,707, from $2,060,469 reported in 2004. Communications contributed 80 percent of Global Link margins in 2005 and 79 percent in 2004. The gross margin from portable gas detectors declined by 3 percent ($15,279) to $514,460, versus $529,739 recorded in the comparable period in 2004.

Communication gross margin for the second quarter declined 8 percent to $615,083 from $667,131 in 2004. There is a fixed monthly airtime component of communication equipment such as cellular phones, air cards, and satellite phones. These semi fixed costs influence the gross margins comparisons between the reporting periods. Portable gas detector gross margins dropped by $50,733 or 36 percent to $90,910 in 2005 versus the gross margin of $141,643 reported in 2004. The gross margins normally decline during the second quarter as this time period is when there are increased levels of equipment maintenance and enhancements.

Expenses

The six month period costs for wages and benefits; facilities, vehicles and communications; and general and administrative expenses increased 1 percent to $1,463,348 from $1,441,800 in 2004. The cost for the second quarter showed a decline of $52,539 to $623,683 from $676,225 recorded in 2004. The decline in the second quarter occurred in the wages and benefits where the accruals for management bonuses were eliminated while the Company is in a loss position. Management bonuses are based on expected annual net income and growth in tangible assets. The revaluation of the intangible assets in the quarter has resulted in this adjustment.

Amortization expense on capital assets rose 120 percent or $336,327 to $616,888 in the first six months of 2005 versus $280,561 in the comparable period in 2004. The Company changed its depreciation method in the fourth quarter of 2004 from a declining balance to a straight-line methodology to more closely align amortization with the effective rental life of the assets. Interest expense increased slightly, rising to $40,541 from $38,504 in 2004.

The interest arises from the Company's long term liabilities including leases, debentures, and vehicle loans. The debenture interest accounted for $24,000 or 59 percent of these cost. With the retirement of the debentures effective June 30, 2005, this component of interest costs will be eliminated in future periods.

Costs related to Western Pump Solutions Ltd of $1,088,621 were charged against operations during the second quarter of 2005. These costs include the revaluation of the intangible assets ($837,891), the subsequent amortization of the remaining intangible assets ($30,729) and additional development costs during May and June 2005 net of the revenues of $55,425 generated from sales of the products and services. Included in development costs are the costs associated with establishing new facilities, hiring of new staff, and rigorous engineering and scientific efforts.

The majority of the net development costs that were incurred by Western Pump Solutions Ltd are expected to be eligible for partial recovery under the scientific research and development (SR&ED) grant programs. Development expenditures incurred subsequent April 30, 2005, are made within Global Link may be eligible for future tax credits. Any recoveries will be reflected in future periods when the amounts are determinable. Development costs did not meet the criteria for deferral under Canadian generally accepted accounting principles mainly because the CBM industry in Canada in the wet coals is in the early stages and as a result the cash flows from products supplied is uncertain.

Net Income (Loss) and Cash Flow

Net income declined by $1,224,940, providing a net loss of $696,352 in 2005 compared to a net income of $528,315 in 2004. On a weighted average per share basis, the net loss was ($0.046) versus $0.049 in 2004. The period over period change in earnings per share was substantially due to the expensing of the development costs of $1,088,621 and increase in the Company's amortization expenses.

The net income before development cost for the six month period ended June 30, 2005 was $392,269 versus $528,316 in 2004. This $136,047 decrease in adjusted net income is substantially less than the corresponding increase in amortization expenses of $336,327. The three month period ending June 30, 2005 showed a net loss before development costs $82,763 which is a $71,919 increase in the loss for the comparable period in 2004. The second quarter is historically the slowest period for oil field supply companies, and 2005 with its extended spring breakup and heavy rainfall proved to be slower than normal.

Cash flow from operating activities shows $535,137 being generated in the six month period ended June 30, 2005 versus $592,005 being generated in comparable period in 2004. Cash flow from operating activities includes the net change in non-cash working capital items which shows that working capital needs increased by $307,470 during the first six months of 2005. Income tax payments of $523,999 along with increased receivables and inventories contributed to the jump in working capital requirements. The increase in inventory is due in part to the planned buildup of finished goods in the amount of $232,377 the Western Pump Solutions product line needed to support the increasing activity levels anticipated by our customers.

Liquidity and Capital Resources

At June 30, 2005, the Company had an excess of current assets over current liabilities of $1,921,594 compared to $455,602 at the end of 2004. Operating funds were used to repay capital leases of $172,848, to repay long term debt of $70,404 and purchase capital assets totaling $519,566. Global Link continued to invest in the improvement of its rental fleet by purchasing additional laptop computers and associated cellular cards, portable radios, and new cell repeaters. The sale of obsolete assets netted the Company $32,627 while the sale of common shares in a private placement and upon the exercise of options yielded $774,567. These activities resulted in a cash increase of $468,922 for the six month period and $957,804 for the three month period ending June 30, 2005.



Summary of Quarterly Results

------------------------------------------------------------------------
Q1 Q2 Q3 Q4
------------------------------------------------------------------------
$ $ $ $
------------------------------------------------------------------------
2005
------------------------------------------------------------------------
Revenue 3,091,639 1,443,181
------------------------------------------------------------------------
EBITDA 1,059,570 (157,373)
------------------------------------------------------------------------
Net income (loss) 475,032 (1,171,384)
------------------------------------------------------------------------
Per share 0.033 (0.077)
------------------------------------------------------------------------
2004
------------------------------------------------------------------------
Revenue 2,922,257 1,201,339 1,825,858 2,020,215
------------------------------------------------------------------------
EBITDA 1,009,339 115,041 363,225 389,111
------------------------------------------------------------------------
Net income 539,160 (10,844) 128,515 33,554
------------------------------------------------------------------------
Per share 0.050 (0.001) 0.011 0.002
------------------------------------------------------------------------
2003
------------------------------------------------------------------------
Revenue 2,396,549 1,283,644 1,546,560 1,574,026
------------------------------------------------------------------------
EBITDA 807,292 142,062 418,507 (133,108)
------------------------------------------------------------------------
Net income 402,312 (9,614) 182,005 (203,575)
------------------------------------------------------------------------
Per share 0.038 (0.001) 0.017 (0.019)
------------------------------------------------------------------------
------------------------------------------------------------------------


Critical Accounting Estimates

Effective January 2002, Canadian generally accepted accounting principles required a change in the treatment of goodwill. Under the new accounting standard, goodwill and certain "indefinite life" assets are no longer subject to amortization, but instead are tested for impairment. The Company has chosen June 30 as the effective date for its annual impairment test. In 2005, management completed a goodwill impairment test, the results of which did not indicate impairment.

In addition, Canadian generally accepted accounting principles required that companies use a recognized valuation model to report the value of their stock options. Effective January 1, 2003 the Company adopted the revised requirements in the CICA standard for stock-based compensation, which requires the use of the fair value method of accounting for all awards of stock options, including those granted to employees and directors.

Development costs that meet the Canadian Institute of Chartered Accountants ("CICA") requirements for deferral are capitalized, otherwise they are expensed. Finite life intangible assets acquired from third parties are amortized over thirty months.

Financial Data Presentation

The financial data presented has been prepared in accordance with Canadian generally accepted accounting principles (GAAP), except for the term EBITDA (earnings before interest, taxes, depreciation and amortization) which is a non-GAAP measurement used by companies within the oil and gas service industry for analysis and comparison, and is presented for information purposes only. It is not intended to replace any GAAP measure nor is it to be considered more meaningful than GAAP.

Business Risks

As an evolving oilfield service and technology company, Global Link faces several key risks in its business, including possible commodity price downturns, emergence of superior competing technologies, challenges to patents, retention of skilled employees, reliance on relatively few key suppliers and customers, and adequacy of capital and/or cash flow to pursue its business plan objectives. This list is not intended to be exhaustive, but merely to communicate to shareholders certain key risks faced by the Company in its business operations.

Global Link attempts to mitigate these risks through various strategic and operating mechanisms such as ongoing research and investigation of leading edge technologies, growth through diversification into new industry segments, fair and equitable compensation and workplace policies, flexibility in operational decision-making, review and discussion of competitors' policies to maintain market advantage, and ongoing interaction with both debt and capital markets. The Company feels these strategies reduce its business risk to an acceptable level, which will allow it to continue to grow and maximize shareholder value.

TSX-V: "GLK" - Close: $ 0.85

Shares outstanding: 18,610,959

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

Contact Information

  • Global Energy Services Ltd.
    Derek M. Begin
    President and Chief Executive Officer
    (403) 243-0820
    Email: dbegin@global-energv.ca
    or
    Global Energy Services Ltd.
    Don Jorgensen
    VP Finance & CFO
    (403) 243-0820
    (403) 243-3425 (FAX)
    Email: djorgensen@global-energy.ca
    Website: www.global-energy.ca
    or
    Global Energy Services Ltd.
    #10,5920 - 11th Street S.E.
    Calgary, Alberta T2H 2M4