Leader Energy Services Ltd.
TSX VENTURE : LEA

Leader Energy Services Ltd.

November 15, 2010 08:00 ET

Leader Energy Services Announces Third Quarter Results

CALGARY, ALBERTA--(Marketwire - Nov. 15, 2010) - Leader Energy Services Ltd. ("Leader" or the "Company") (TSX VENTURE:LEA) today announced financial and operating results for the three and nine-month periods ended September 30, 2010. Third quarter revenue and EBITDAS increased by $4.5 million (250%) and $3.1 million (495%) respectively over the comparable period last year. For the nine months to date, revenue and EBITDAS increased by $8.4 million (91%) and $5.3 million (1,873%) respectively over the comparable period last year.




Third Quarter Performance Summary (000s )

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September September
Quarter ended, 30, 2010 30, 2009 $ Change % Change
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Revenue - continuing
operations $ 6,252 $ 1,786 $ 4,466 250%
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E(L)BITDAS from continuing
operations(i) 2,456 (622) 3,078 495%
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Net income (loss) - continuing
operations 1,112 (2,454) 3,566 145%
Net income - discontinued
operations 11 1,663 (1,652) (99)%
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Net income (loss) 1,123 (791) 1,914 242%
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Net income (loss)
Continuing operations
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Per share basic 0.08 (0.19) 0.27 -
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Per share diluted 0.08 (0.19) 0.27 -
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E(L)BITDAS from continuing
operations (ii)
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Per share basic 0.19 (0.05) 0.24 -
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Per share diluted 0.17 (0.05) 0.22 -
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September September
Nine months ended, 30, 2010 30, 2009 $ Change % Change
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Revenue - continuing
operations $ 17,703 $ 9,287 $ 8,416 91%
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E(L)BITDAS from continuing
operations(i) 5,603 284 5,319 1,873%
Net income (loss) - continuing
operations 1,724 (4,444) 6,168 139%
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Net income discontinued
operations 210 2,088 (1,878) (90)%
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Net income (loss) 1,934 (2,356) 4,290 182%

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Net income (loss)
Continuing operations
Per share basic 0.13 (0.34) 0.47 -
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Per share diluted 0.12 (0.34) 0.46 -
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E(L)BITDAS from continuing
operations (ii)
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Per share basic 0.42 0.02 0.40 -
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Per share diluted 0.39 0.02 0.37 -
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(i) E(L)BITDAS is defined herein as earnings(loss) from continuing operations before interest, taxes, amortization, and stock based compensation. Readers are cautioned that E(L)BITDAS 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. E(L)BITDAS 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.

(ii) E(L)BITDAS from continuing operations per share and per share diluted are measures of per share profitability before certain charges and 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").

For the quarter ended September 30, 2010 the Company recorded a profit from continuing operations before interest, taxes, amortization and stock based compensation ("E(L)BITDAS") of $2.5 million and a net income of $1.1 million as compared to a loss of E(L)BITDAS of $622,000 and a net loss from continuing operations of $2.5 million in the prior year third quarter. The improvement in E(L)BITDAS over the prior year third quarter results is due to increased industry activity levels with a greater concentration of operations on deeper wells. The net income of $1.1 million for the current period was also an improvement over the prior year's third quarter loss of $791,000 predominantly due to an improved E(L)BITDAS in the current period.

As a result of the Company's improved E(L)BITDAS, cash flow from continuing operating activities before changes in non-working capital balances was positive $1.8 million in the 2010 third quarter which was a significant improvement over the prior year's third quarter cash flow from continuing operations of negative $1.3 million. Management continues to take all action possible to further increase its revenues while minimizing or reducing its administrative overhead costs and related operational costs in order to improve its cash flow from continuing operations.

Subsequent to the balance sheet date the Company secured a $3.0 million revolving credit facility from a Canadian chartered bank. The interest rate applicable to funds borrowed is the bank's prime rate plus 2.75% with the borrowing based on funds available as determined in reference to the Company's accounts receivable balance. The loan facility has an expiry date of January 31, 2012.

Liquidity and Capital Resources

As at the end of the third quarter of 2010, the Company held cash of $1.5 million and positive working capital of $3.4 million as compared to $1.0 million and $1.8 million respectively as at December 31, 2009.

The 2010 third quarter cash flow from continuing operating activities before changes in non-cash working capital balances was positive $1.8 million while the cash flow from continuing operating activities before changes in non-cash working capital for the nine months ended September 30, 2010 was positive $4.2 million a significant improvement over the 2009 amounts of negative $1.3 million and negative $1.7 million for the respective three and nine month periods.

The improved 2010 cash flows and cash balance were due to increased activity levels and the resulting improvement in income from continuing operations and the effect that the improved operations had on accounts receivable and cash balances.

Management is pleased with the current results of operations and will continue to take action wherever possible to increase the Company's revenues and reduce administrative and operational costs.

Outlook

Leader continues to show much-improved financial results relative to 2009. The Petroleum Services Association of Canada estimates 7,915 wells will be drilled in Alberta in 2011, with the number of oil wells increasing 18% and natural gas wells decreasing 5%. Our client base continues to grow due to increased horizontal drilling in the Cardium, Bakken and other oil resource plays. Our operational activity outlook is encouraging. By the end of 2010 Leader will expand its service capabilities by offering a new 2-3/8" coiled tubing unit to assist in longer horizontal wells that are being drilled in areas where our clients are active.

While improved industry conditions will directly benefit the Company through higher utilization rates, Leader will continue to focus on advancing operational efficiencies where possible, and managing its capital in a prudent manner. Management is grateful for the dedication and hard work of Leader's entire workforce; their efforts are reflected in our customers' satisfaction and in our financial performance. The Company is optimistic that results will show continued improvement during the balance of 2010 and into 2011.

Other

Additional information can be found on SEDAR at www.sedar.com or the Company web site at www.leaderenergy.com. The number of common shares issued and outstanding at the date hereof was 13,265,000 which does not include 1,315,000 unexercised stock options.

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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