Leader Energy Services Ltd.
TSX VENTURE : LEE

Leader Energy Services Ltd.

May 27, 2009 17:52 ET

Leader Energy Services Announces First Quarter Financial Results

CALGARY, ALBERTA--(Marketwire - May 27, 2009) - Leader Energy Services Ltd. ("Leader" or the "Company") (TSX VENTURE:LEE) today announced financial and operating performance for the three month period ended March 31, 2009.



Performance Summary (000 s)

-----------------------------------------
Year over Year over
Quarter ended March 31, March 31, Year Year
2009 2008 $ Change % Change
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Revenue continuing operations $ 6,120 $ 5,905 $ 215 4
Operating Expenses continuing
operations 3,351 3,869 (518) (13)
General and Administrative
- continuing operations 692 1,397 (705) (50)
Provision for Bad Debts - continuing
operations 28 - 28 100
-----------------------------------------
EBITDAS - continuing operations(i) 2,049 639 1,410 220
Amortization continuing operations 553 1,384 (831) (60)
Stock Compensation continuing
operations - 262 (262) (100)
Interest - continuing operations 816 2,636 (1,820) (69)
Other - continuing operations 7 100 (93) (93)
-----------------------------------------
Net (Loss)/Income before Tax
- continuing operations 673 (5,743) 6,416 112
Provision for taxes - continuing
operations - - - -
-----------------------------------------
Net Income/(Loss) - continuing
operations 673 (3,743) 4,417 112
-----------------------------------------
Net (Loss) discontinued operations (43) (104) 61 (59)
-----------------------------------------
Net Income/(Loss) 630 (3,847) 4,477 116
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(i) EBITDAS means earnings from continuing operations before interest,
taxes, amortization, and stock based compensation. Readers are cautioned
that EBITDAS is generally regarded as an indirect measure of operating
cash flow, and, as such, the Company believes it is a significant
indicator of success of public companies, and is particularly relevant
to readers within the investment community. EBITDAS is not a measure
that has a standardized meaning prescribed by Canadian GAAP, and
accordingly may not be comparable to similar measures used by other
companies.


Overview

Headquartered out of Calgary, Alberta, Leader's operations are managed from its base in Grande Prairie, Alberta. From this base the Company offers well stimulation services across the Western Canadian Sedimentary Basin ("WCSB").

Industry activity levels continued to decline as commodity prices softened during the latter half of 2008 and into the first quarter of 2009. Adding to the negative impact of softening commodity prices, petroleum explorers continued to relocate drilling activity out of Alberta to other regions of the WCSB due to unfavorable economic implications associated with the changes to the royalty system in Alberta. Further exacerbating the level of drilling activity in Alberta and the rest of the WCSB was the price of natural gas which was, at various times over the past twenty-four months, lower than required in order for drilling of wells to be economically viable.

During the first quarter of 2009 revenues were in line with internal forecasts. For the quarter ended March 31, 2009 the Company recorded positive Earnings from Continuing Operations before Interest, taxes, Amortization and Stock Based Compensation ("EBITDA") of $2.0 million ($0.05 per share) and net income of $630,000 ($0.02 per share) as compared to EBITDA of $639,000 ($0.02 per share) and a net loss of $3.8 million (negative $0.10 per share) in the prior year first quarter. The significant improvement in EBITDA over the prior year results is due to operations in the current quarter consisting of a favourable sales mix with a greater concentration of operations on deeper wells. Net Income at $630,000 for the current period was also markedly improved over the prior year's first quarter loss of $3.8 million due to the Company's improved EBITDA, lower amortization with the sale of operating assets in the United States in mid 2008 and a significantly reduced interest charge in the current quarter due to the Company repaying its entire debt facility in mid 2008 with proceeds received from the sale of its United States assets.

General and administrative expenses consisted primarily of costs relating to corporate office overhead, managerial level staffing and shared corporate services. During the quarter, general and administrative expenses declined by 50% when compared to 2008 due to the Company focusing its operational efforts out of one location and ongoing efforts to reduce corporate office expenses.

Outlook

Oil prices have begun to strengthen and there are further signs that capital markets are moving towards more normal activity levels. However, the Company has taken measures to align its internal cost structures in anticipation of lower activity levels through 2009. These measures include the minimization of capital expenditures, salary and wage reductions and a reduction in staffing numbers. Management will closely monitor internal and external factors in order to be able to react in a timely manner to changes in industry activity levels.

Leader's future success is contingent upon continued effective execution at the field level and achieving positive cash flow in the face of difficult industry conditions. Further information can be found under the Company's listing at www.sedar.com and on the Company's website at www.leaderenergy.com.

Certain statements contained in this press release, including statements which may contain words such as "could", "should", "expect", "estimate", "believe", "likely", "will", or estimates of business activity, and similar expressions and statements relating to matters that are not historical facts, are forward looking statements. Such statements involve known and unknown risks and uncertainties that may cause the actual results, performance or achievements of Leader to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Factors include commodity prices, demand for oil and gas related products and service, competition, political and economic conditions, demand and acceptance of new products and ways of doing business, changes in laws and regulations to which Leader is subject, and the ability to attract and retain key personnel.

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

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