Leader Energy Services Ltd.

Leader Energy Services Ltd.

November 15, 2011 18:26 ET

Leader Energy Services Reports Third Quarter 2011 Results

CALGARY, ALBERTA--(Marketwire - Nov. 15, 2011) - Leader Energy Services Ltd. ("Leader" or the "Company")(TSX VENTURE:LEA) today announced financial results for the three and nine-month periods ended September 30, 2011.

In the third quarter of 2011 revenues increased 60% to $10.0 million, as compared to $6.3 million reported in the third quarter of 2010. This increase represents the highest third quarter revenue reported from the Western Canadian Sedimentary Basin ("WCSB") in the Company's ten-year history. On a year-to-date basis, revenues improved 30% to $23.1 million as compared to $17.7 million reported for the nine month period in 2010. Activity in the third quarter recovered from a poor second quarter as a result of continued demand for deeper, larger diameter coil applications and to a certain extent, customers catching up on their drilling programs delayed in the second quarter due to prolonged spring break-up and wet weather conditions. For the nine month period, the 30% increase in revenue reflects the increase in horizontal drilling activity requiring deeper and larger diameter coil applications which translates to higher day rates. The Company has been focusing its service activities to meet the demands of the growing horizontal drilling market and has increased its operational focus to cover a larger area within the WCSB.

In the third quarter of 2011, the Company reported a profit from continuing operations of $2.2 million ($0.11 per diluted share) as compared to a profit from continuing operations of $0.7 million ($0.02 per diluted share) in the third quarter of 2010. The Company's loss from continuing operations of $0.15 million for the first nine months of 2011 includes a one-time loss on the settlement of its convertible debenture in the amount of $1.4 million. Excluding this loss, the Company reported a profit from continuing operations of $1.25 million, compared to a profit from continuing operations of $0.9 million reported for the first nine months of 2010. The Company reported EBITDA of $3.8 million during the third quarter of 2011, an increase of 85% over the comparable period of 2010.

The Company exited the quarter with five coil units plus one reel trailer capable of 2 3/8" coil applications, seven nitrogen pumpers and one fluid pumper. The Company anticipates placing its new 2 3/8" deep coiled tubing unit and its second fluid pumper into service during the fourth quarter of 2011. This equipment is in very high demand and forms an integral component of longer-reach coiled tubing applications.

Performance Summary

Quarter ended Sept. 30, 2011 Sept. 30, 2010 $ Change % Change
Revenue – continuing operations $ 10,020 $ 6,252 $ 3,768 60 %
Operating Expenses – continuing operations 5,056 3,300 1,756 53 %
4,964 2,952 2,012 68 %
General and Administrative – continuing operations 1,196 922 274 30 %
Amortization – continuing operations 643 563 80 14 %
Finance cost 871 813 58 7 %
Loss on settlement of convertible debenture - - - n/a
Other (gains) losses 32 (59 ) 91 n/a
Profit – continuing operations 2,222 713 1,509 212 %
Profit – discontinued operations - 11 (11 ) n/a
Net Profit $ 2,222 $ 724 $ 1,498 207 %
Earnings per share - Basic $ 0.11 $ 0.05 $ 0.06 120 %
Earnings per share - Diluted $ 0.11 $ 0.02 $ 0.09 450 %

$ 3,803 $ 2,057 $ 1,746 85 %
9 months ended Sept. 30, 2011 Sept. 30, 2010 $ Change % Change
Revenue – continuing operations $ 23,078 $ 17,703 $ 5,375 30 %
Operating Expenses – continuing operations 14,043 10,327 3,716 36 %
9,035 7,376 1,659 22 %
General and Administrative – continuing operations 3,437 2,705 732 27 %
Amortization – continuing operations 1,867 1,640 227 14 %
Finance cost 2,505 2,409 96 4 %
Loss on settlement of convertible debenture 1,401 - 1,401 n/a
Other (gains) losses (22 ) (244 ) 222 n/a
Profit (loss) – continuing operations (153 ) 866 (1,019 ) n/a
Profit – discontinued operations 31 210 (179 ) n/a
Net Profit (Loss) $ (122 ) $ 1,076 $ (1,198 ) n/a
Earnings (loss) per share - Basic $ (0.01 ) $ 0.08 $ (0.09 ) n/a
Earnings (loss) per share - Diluted $ (0.01 ) $ 0.05 $ (0.06 ) n/a

$ 5,744 $ 4,726 $ 1,018 22 %

* EBITDA means profit from continuing operations before finance costs, loss on settlement of convertible debenture, taxes, amortization, other (gains) losses, and share based compensation. Readers are cautioned that EBITDA 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. EBITDA is not a measure that has a standardized meaning prescribed by International Financial Reporting Standards ("IFRS"), and accordingly may not be comparable to similar measures used by other companies.


The Western Canadian petroleum industry remains focused on horizontal wells, multistage completions and extended-reach drilling in oil and liquids-rich gas plays. Coiled tubing and affiliated services are in high demand, and this is expected to continue through 2012. By the end of this year, Leader will have significantly increased its deep coiled tubing and fluid pumping capacity, which should further enhance future financial performance.

In the fourth quarter of 2011, Leader anticipates taking delivery of its first dedicated 2 3/8" deep coiled tubing unit. This will be the Company's sixth trailer-mounted coiled tubing unit, a configuration that is required for larger-diameter, extended reach applications. A second dedicated 2 3/8" unit is scheduled for delivery during the first half of 2012. As additional equipment is added to its fleet over the coming quarters, Leader is strongly positioned to provide its services to an increasing client base through the very active corridor from northeastern British Columbia through north-central Alberta.

Leader is encouraged that demand for its services has remained very strong in the face of recent global economic uncertainty. Although commodity prices were especially volatile during the third quarter, Leader's activity levels are expected to remain strong through to spring breakup. The Company is focused on maximizing field margins through the coming year. Additional expansion plans will be determined in the fourth quarter of 2011. Each of the Company's three service lines will benefit from this expansion.


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 is 19,468,021 which does not include 1,709,500 unexercised stock options and 4,250,000 share purchase warrants.

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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