Xtreme Drilling Corp. (Formerly, Xtreme Drilling and Coil Services Corp.) Announces Management Changes and Reports 2nd Quarter 2016 Financial and Operating Results

CALGARY, ALBERTA--(Marketwired - Aug. 4, 2016) - Xtreme Drilling Corp. (TSX:XDC) ("Xtreme", the "Company") announces second quarter 2016 financial and operating results. It is anticipated that filing will take place on SEDAR of interim Consolidated Financial Statements as well as Management's Discussion and Analysis for the three and six months ended June 30, 2016, by August 5, 2016.

The Company announces the following management changes to take place effective immediately. Tom Wood will be replaced as Chief Executive Officer by Matt Porter in the position of President and Chief Executive Officer, effective August 4, 2016. Mr. Wood will also be replaced by Mr. Porter on the Board of Directors of the Company. Mr. Porter will step down from his role as Chief Financial Officer.

The Company would further like to announce the promotion of Martin Ramirez to Vice President, Finance and Corporate Development and the promotion of John Wray to Vice President, Drilling Operations. Mr. Ramirez will assume the responsibilities of principal financial officer of the Company.

Xtreme's Board of Directors would like to express their sincere appreciation and gratitude to Mr. Wood for his predominant role in founding and growing the Company since its inception. The technology behind the XSR coiled tubing segment that was recently sold to Schlumberger was created and developed into a successful North American and Middle East business under Mr. Wood's leadership. Mr. Wood was also involved in the design and development of Xtreme's tier 1 drilling fleet.

Following the sale of the XSR division and the repositioning of Xtreme as a pure contract drilling company, Mr. Wood and the Board of Directors had differing perspectives on the strategic vision for the Company and mutually agreed to part ways.

Doug Dafoe, Chairman of the Board of Directors, stated, "The Board believes the Company is extremely well situated financially to weather the current market downturn and prosper in the eventual recovery. The Board has chosen Matt to take the helm based upon his experience and leadership as well as our experience of working with him for the past five years. We are extremely confident in his ability to lead Xtreme and are excited to work with Mr. Porter and his team to create further shareholder value as a tier 1 AC drilling rig contractor." Mr. Porter commented, "It is an honor that the Board has this level of confidence in me. As we transition into a stand-alone drilling contractor we have all of the components to be successful, in no small part due to our strong, execution oriented management team which has consistently delivered over the past several years. We will continue to work with existing customers as well as pursue opportunities where our assets are fit for purpose as we strive to deliver the highest level of efficiency and service quality. Thanks to Tom and his leadership we have a best in class balance sheet, particularly relative to our size, and plan to maximize our financial flexibility and look forward to being opportunistic at the appropriate time."

Q2 2016 Highlights

(amounts in thousands of Canadian dollars, unless otherwise noted)

• Effective June 22, 2016, the Company completed the announced sale of substantially all of the assets of the previously operated service line, coil services ("XSR") to Schlumberger for $205,000. The sale included eleven operating units and related equipment, inventory and consumables, and related patents and intellectual property, as well as customer lists and the transfer of rights under contracts held by the XSR business segment, which has operations in the US and Saudi Arabia. Assets excluded from the sale include real property and land. The earnings of the XSR Segment for the three and six months ended June 30, 2016, have been presented on the Company's consolidated statements of income as discontinued operations.

• Adjusted EBITDA was $1.9 million in the second quarter of 2016, down from $9.2 million in the first quarter of 2016. Adjusted EBITDA from continuing operations was ($5.5) million in the second quarter of 2016, down from $0.8 million in the first quarter of 2016. Adjusted EBITDA from discontinued operations was $7.4 million in the second quarter of 2016, down from $8.5 million in the first quarter of 2016.

• Revenue from continuing operations decreased to $7.4 million in the second quarter of 2016, from $16.3 million in the first quarter of 2016. Revenue from discontinued operations, or XSR Coil Services Segment, increased to $19.7 in the second quarter of 2016, from $19.1 million in the first quarter of 2016. The decrease in revenue for the period was primarily a function of decreased operating days and utilization in the US Drilling Segment. Total operating days across the Company decreased to 738 for the second quarter of 2016 as compared to 894 in the first quarter of 2016.

• In the quarter overall revenue per operating day decreased by 7% to $36,700 from the prior quarter. Continuing operations revenue per day decreased by 30% during the second quarter to $20,200 while discontinued operations revenue per day decreased by 9% during the second quarter to $52,700.

• The XDR Segment achieved utilization of 19% on 364 operating days for the quarter. This was comprised of a 25% utilization rate for the 16 rig US XDR fleet and 0% for the three rig Canadian XDR fleet. The XDR Segment operating profit decreased to $0.2 million in the second quarter of 2016 as compared to $5.5 million in the previous quarter. This was driven primarily by lower average revenue per day and fewer overall operating days in the US.

• Total capital expenditures were $1.5 million during the second quarter of 2016, down from $3.2 million in the previous quarter. Currently the Company has an approved 2016 capital expenditure budget of $10.0 million with a focus in the second half of the year on deployment of capital in anticipation of rigs returning to work.

• During the quarter, the Company paid all outstanding debt and terminated the existing credit facility and agreement with the syndicate of financial institutions. At quarter end the Company had no long term debt and a cash balance of $122.2 million, including restricted cash of about $11.0 million related to the XSR sale.

• During the second quarter, the Company recorded $1.1 million in allowance for doubtful accounts along with $5.0 million in payments triggered by the sale of the XSR business. These one-time expenses significantly increased G&A costs for the period and were classified as costs of continuing operations.

• As a result of the sale of the XSR assets, intellectual property and transfer of customer contracts, the Company recognized a gain on sale during the second quarter of $51.0 million, net of transaction-related costs of $10.0 million. In connection with the sale, the Company has entered into a Transition Services Agreement with Schlumberger whereby Xtreme will bill Schlumberger certain costs and administrative fees in connection with services performed during the transition period.

• Currently, the Company has six of 21 XDR rigs earning revenue and approximately 270 days contracted under term contracts across the fleet.

Selected Quarterly Financial Information from Continuing Operations
Three months ended		Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015
Revenue		7,369			16,266			23,370			29,758
Adjusted EBITDA		(5,472	)		760			2,109			6,564
Adjusted EBITDA as a percentage of revenue		-			5	%		9	%		22	%
Adjusted EBITDA per share - basic ($)		(0.06	)		0.01			0.03			0.08
Net Income (loss)		20,892			(7,473	)		(35,574	)		(50,938	)
Net income (loss) per share - basic ($)		0.25			(0.09	)		(0.43	)		(0.62	)
Capital assets		266,188			276,521			303,168			318,639
Total assets		409,794			316,270			361,809			394,121
Net debt		(110,794	)		90,242			96,123			93,389
Operating days		364			565			932			1,069
Utilization (percentage)		19			30			48			55
Weighted average rigs in service		21			21			21			21
Total rigs, end of quarter		21			21			21			21
		Jun 30, 2015			Mar 31, 2015			Dec 31, 2014			Sep 30, 2014
Revenue		33,563 33,563			44,523			46,381			45,735
Adjusted EBITDA		8,275			12,669			8,918			7,576
Adjusted EBITDA as a percentage of revenue		25	%		28	%		19	%		17	%
Adjusted EBITDA per share - basic ($)		0.10			0.15			0.11			0.09
Net loss		(3,860	)		(1,825	)		(4,703	)		(5,851	)
Net loss per share - basic ($)		(0.05	)		(0.03	)		(0.06	)		(0.07	)
Capital assets		340,800			360,802			344,345			347,466
Total assets		427,303			456,739			430,954			438,452
Net debt		112,113			125,869			115,520			116,768
Operating days		1,072			1,385			1,645			1,794
Utilization (percentage)		56			73			86			92
Weighted average rigs in service		21			21			21			21
Total rigs, end of quarter		21			21			21			21

Excerpt from Management's Discussion and Analysis for the three months ended June 30, 2016

In the second quarter, Xtreme closed on the sale of all the XSR coiled tubing assets to Schlumberger for $205 million. As previously discussed, this was an exciting transaction as it provides the Company significant optionality in a very challenging environment. The Company is committed to a strong balance sheet and ultimate flexibility in determining the next steps.

We believe, that although the rig count appears to have bottomed in North America, the peak of distress for many oilfield service companies has not been reached as of yet. As the cycle drags on it is likely that there will be opportunities to build shareholder value as stakeholders determine the path for distressed companies and assets. Xtreme intends to be opportunistic in reviewing all strategic options.

The rig count has bounced off of the bottom in the United States from a trough of 380 active rigs in May of 2016. Currently, there are 440 drilling rigs operating as compared to 672 and 1,744 at the beginning of 2016 and 2015 respectively. Xtreme continues to focus on basins where we believe the Company has a competitive advantage and allow for the highest probability to return to work. Specifically these are the Greater DJ Basin in Colorado and the Anadarko Basin in central and western Oklahoma. Both of these markets in our analysis have fewer tier one rigs available than other US basins. In our estimation there are in excess of 500 idle 1,500 horsepower AC rigs in the United States. This significant excess supply will require a sustained period of higher commodity prices in order to be absorbed. Xtreme is well positioned in our current operating regions as roughly 75% of these idled AC rigs are located in the Permian, Eagle Ford and Bakken.

Customer inquiries have increased in the past several months. However, these inquiries have consistently come with higher specification rig requirements. Most operators are utilizing this downturn to improve overall rig quality and capacity. In order to improve their own economics E&P operators have chosen to not only drill in the sweet spots of the respective plays but also to increase well design to maximize production results. This means that on average most wells are now drilled with longer horizontals and increased fluid volume. As such, in the past nine months we have increased our fluid operating system on five of our rigs from 5,000 psi to 7,500 psi as this trend will continue. Our goal is to have our fleet as well positioned as possible to return to work in the eventual recovery.

Based on current market conditions it appears that the second quarter represents the trough in terms of Xtreme's activity levels. As mentioned, customer inquiries have increased for the second half of the year. While we anticipate utilization increasing through 2016 and in to 2017 it is unlikely that pricing will follow. Pricing has likely bottomed with the rig count but will remain challenged due to the significant number of idle AC rigs. Xtreme will continue to focus on cost management in order to offset lower utilization and pricing and maximize EBITDA margins.

We continue to explore international opportunities with the Middle East being the primary focus. Activity levels should remain robust in these markets as many NOC's in the region look to add capacity. We maintain a presence in Saudi Arabia through our entity that housed our XSR assets in country. We hope to use this entity along with our strong operating history as a path to this market. We maintain a sales group in the region that is actively pursuing opportunities.

Based on the current market conditions, Xtreme has aggressively right sized the organization after the close of the XSR sale. Our focus is on continued cost control, maintaining our best in class balance sheet and being opportunistic when attractive strategic options are presented.

Conference Call Details

Xtreme has scheduled a conference call to discuss results with investors, analysts, and stakeholders on Friday, August 5, 2016, beginning promptly at 9:00 am MT (10:00 am CT, 11:00 am ET).

Matt Porter, President and Chief Executive Officer, will host the conference call with participation from Doug Dafoe, Chairman of the Board of Directors.

Conference operator dial‐in numbers

To participate in the conference call, please dial in as follows approximately ten minutes before the start time in your time zone.

+1 866-223-7781 (North America Toll‐Free) or +1 416-340-2216 (Alternate)

http://www.gowebcasting.com/7720

An audio replay of the call will be available until Wednesday, August 10, 2016. To access the replay, call +1 800‐408‐3053 or +1 905‐694‐9451 and enter pass code 9602661.

Xtreme Drilling Corp. (formerly, Xtreme Drilling and Coil Services Corp.)
Interim Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
(unaudited)
			June 30, 2016			Dec 31, 2015
Assets
Current assets
	Cash and cash equivalents		122,152			11,223
	Accounts receivable		16,407			39,771
	Other receivables		1,707			351
	Inventory		2,770			8,693
	Prepaid expenses and other		570			2,461
			143,606			62,499
Non-current assets
Property and equipment			266,188			446,417
Intangible assets			-			3,310
Total Assets			409,794			512,226
Liabilities and Equity
Current liabilities
	Accounts payable and accrued liabilities		26,635			29,729
	Income tax payable		7,165			3,918
	Current portion of long-term debt		-			107,346
Total Liabilities			33,800			140,993
Shareholders' equity
Share capital			338,521			333,515
Share option reserve			12,949			15,478
Accumulated deficit			(57,409	)		(80,831	)
Foreign currency translation reserve			81,933			103,071
Total Shareholders' Equity			375,994			371,233
Total Liabilities and Shareholders' Equity			409,794			512,226

Xtreme Drilling Corp. (formerly, Xtreme Drilling and Coil Services Corp.)
Interim Consolidated Statements of Income (Loss)
For the three and six months ended June 30, 2016 and 2015
(in thousands of Canadian dollars, except share and per share data)
(unaudited)
		Three months ended						Six months ended
		June 30, 2016			Represented June 30, 2015			June 30, 2016			Represented June 30, 2015
Revenue		7,369			33,563			23,635			78,086
Expenses
Operating expenses		7,206			19,999			18,109			47,818
General and administrative expenses		10,605			5,289			15,208			9,324
Depreciation of property and equipment		9,686			11,348			19,204			22,893
Stock-based compensation		1,395			620			1,983			1,274
Foreign exchange loss (gain)		2,638			27			(1,238	)		145
Gain on disposal of equipment and assets held for sale		(50,946	)		(74	)		(51,027	)		(118	)
Other expenses		-			-			-			2
Interest expense		2,443			1,117			4,116			2,261
Income (loss) before tax for the period		24,342			(4,763	)		17,280			(5,513	)
Tax expense (benefit)
Current		3,450			1,435			3,860			1,727
Deferred		-			(2,338	)		-			(1,555	)
Total tax expense (benefit)		3,450			(903	)		3,860			172
Net income (loss) from continuing operations for the period		20,892			(3,860	)		13,420			(5,685	)
Net income from discontinued operations, net of tax		6,267			3,084			10,002			7,664
Net income (loss) for the period		27,159			(776	)		23,422			1,979
Net income (loss) per common share from continuing operations
- basic		0.25			(0.05	)		0.16			(0.07	)
- diluted		0.25			(0.05	)		0.16			(0.07	)
Net income per common share from discontinued operations
- basic		0.08			0.04			0.12			0.09
- diluted		0.08			0.04			0.12			0.09
Net income (loss) per common share
- basic		0.33			(0.01	)		0.28			0.02
- diluted		0.33			(0.01	)		0.28			0.02
Weighted average number of common shares
- basic		83,180,947			82,530,120			83,229,521			82,561,937
- diluted		83,338,703			82,719,053			83,361,994			82,729,665

Xtreme Drilling Corp. (formerly, Xtreme Drilling and Coil Services Corp.)
Interim Consolidated Statements of Comprehensive Income (Loss)
For the three and six months ended June 30, 2016 and 2015
(in thousands of Canadian dollars)
(unaudited)
		Three months ended					Six months ended
		June 30, 2016		Represented June 30, 2015			June 30, 2016			Represented June 30, 2015
Net income (loss) for the period		27,159		(776	)		23,422			1,979
Other comprehensive income (loss)
Items that may be subsequently reclassified to profit or loss
Unrealized gain (loss) on translating financial statements of foreign operations		3,849		(5,273	)		(21,138	)		26,689
Comprehensive income (loss) for the period		31,008		(6,049	)		2,284			28,668
Total comprehensive income (loss) for the period arising from:
Continuing operations		24,741		(9,063	)		(7,718	)		20,918
Discontinued operations		6,267		3,014			10,002			7,750
		31,008		(6,049	)		2,284			28,668

Xtreme Drilling Corp. (formerly, Xtreme Drilling and Coil Services Corp.)
Interim Consolidated Statements of Changes in Equity
For the six months ended June 30, 2016 and 2015
(in thousands of Canadian dollars) (unaudited)
			Share capital		Share option reserve			Accumulated deficit			Foreign currency translation reserve			Total Shareholders' Equity
Balance at Jan 1, 2015			330,964		14,803			(12,487	)		43,213			376,493
Net income for the year			-		-			1,979			-			1,979
Other comprehensive income
	Currency translation differences		-		-			-			26,689			26,689
Total comprehensive income			-		-			1,979			26,689			28,668
Employee share option scheme:
	Value of employee services		-		1,280			-			-			1,280
	Transfer from share option		33		(33	)		-			-			-
	Proceeds from shares issued		86		-			-			-			86
Total transactions with owners			119		1,247			-			-			1,366
Balance at June 30, 2015			331,083		16,050			(10,508	)		69,902			406,527
Balance at Jan 1, 2016			333,515		15,478			(80,831	)		103,071			371,233
Net income for the year			-		-			23,422			-			23,422
Other comprehensive loss
	Currency translation differences		-		-			-			(21,138	)		(21,138	)
Total comprehensive income (loss)			-		-			23,422			(21,138	)		2,284
Employee share option scheme:
	Value of employee services		-		2,451			-			-			2,451
	Transfer from share option		4,980		(4,980	)		-			-			-
	Proceeds from shares issued		26		-			-			-			26
Total transactions with owners			5,006		(2,529	)		-			-			2,477
Balance at June 30, 2016			338,521		12,949			(57,409	)		81,933			375,994

Xtreme Drilling Corp. (formerly, Xtreme Drilling and Coil Services Corp.) Interim Consolidated Statements of Cash Flows For the six months ended June 30, 2016 and 2015
(in thousands of Canadian dollars)
(unaudited)
			2016			Represented 2015
Cash flow provided by:
Operating activities
Net income (loss) for the period			13,420			(5,685	)
Items not affecting cash:
	Depreciation and amortization		19,204			22,893
	Stock-based compensation		2,451			1,274
	Gain on disposal of equipment and assets held for sale		(51,027	)		(118	)
	Provision for doubtful accounts		(1,051	)		(515	)
	Interest expense		2,144			2,261
	Interest paid		(2,144	)		(1,965	)
	Amortization of debt issuance costs		1,972			262
	Foreign exchange (gain) loss		(1,238	)		40
	Current tax expense		3,860			1,727
	Deferred tax benefit		-			(1,555	)
	Taxes paid		(1,105	)		(818	)
	Operating activities of discontinued operations		12,446			12,434
	Changes in items of working capital		24,694			(3,754	)
Net cash generated from operating activities			23,626			26,481
Financing activities
	Proceeds from exercise of stock options		26			86
	Repayment of long-term debt		(100,774	)		(11,276	)
	Debt issuance cost		(1,409	)		-
Net cash used in financing activities			(102,157	)		(11,190	)
Investing activities
	Proceeds from sale of equipment		195,281			272
	Capital expenditures		(3,371	)		(3,941	)
	Investing activities of discontinued operations		(1,348	)		(11,802	)
	Changes in items of working capital relating to capital items		(133	)		(1,861	)
Net cash generated from (used in) investing activities			190,429			(17,332	)
Effect of exchange rate changes on cash and cash equivalents			(969	)		4,150
Increase in cash and cash equivalents			110,929			2,109
Cash and cash equivalents - beginning of period			11,223			13,102
Cash and cash equivalents - end of period			122,152			15,211

Xtreme Drilling Corp. (formerly, Xtreme Drilling and Coil Services Corp.)
EBITDA and Adjusted EBITDA
For the three and six months ended June 30, 2016 and 2015
(in thousands of Canadian dollars)
(unaudited)
EBITDA from Continuing Operations
		Three months ended					Six months ended
		Jun 30, 2016		Jun 30, 2015			Jun 30, 2016		Jun 30, 2015
Net income (loss)		20,892		(3,860	)		13,420		(5,685	)
Tax expense (benefit)		3,450		(903	)		3,860		172
Interest expense		2,443		1,117			4,116		2,261
Depreciation and impairment of property and equipment		9,686		11,348			19,204		22,893
EBITDA		36,471		7,702			40,601		19,641

EBITDA from Discontinued Operations
		Three months ended				Six months ended
		Jun 30, 2016		Jun 30, 2015		Jun 30, 2016		Jun 30, 2015
Net income		6,267		3,084		10,002		7,664
Tax expense		1,150		480		1,933		1,250
Amortization of intangibles		-		76		76		152
Depreciation and impairment of property and equipment		-		3,121		3,889		5,787
EBITDA		7,417		6,761		15,900		14,853

EBITDA from Continuing and Discontinued Operations
EBITDA		43,888		14,463		56,501		34,494

Adjusted EBITDA from Continuing Operations
		Three months ended						Six months ended
		Jun 30, 2016			Jun 30, 2015			Jun 30, 2016			Jun 30, 2015
EBITDA		36,471			7,702			40,601			19,641
Adjustments for non-cash items		(41,943	)		573			(45,312	)		1,303
Adjusted EBITDA		(5,472	)		8,275			(4,711	)		20,944
Adjusted EBITDA as a percentage of revenue		(74	%)		25	%		(20	%)		27	%
Adjusted EBITDA per share ($)		(0.07	)		0.10			(0.06	)		0.25
Net income (loss) per share ($)		0.25			(0.05	)		0.16			(0.07	)

Adjusted EBITDA from Discontinued Operations
		Three months ended						Six months ended
		Jun 30, 2016			Jun 30, 2015			Jun 30, 2016			Jun 30, 2015
EBITDA		7,417			6,761			15,900			14.853
Adjustments for non-cash items		-			-			-			-
Adjusted EBITDA		7,417			6,761			15,900			14,853
Adjusted EBITDA as a percentage of revenue		38	%		34	%		41	%		33	%
Adjusted EBITDA per share ($)		0.09			0.08			0.19			0.18
Net income (loss) per share ($)		0.08			0.04			0.12			0.09

Adjusted EBITDA from Continuing and Discontinued Operations
		Three months ended						Six months ended
		Jun 30, 2016			Jun 30, 2015			Jun 30, 2016			Jun 30, 2015
Adjusted EBITDA		1,945			15,036			11,189			35,797
Adjusted EBITDA as a percentage of revenue		7	%		28	%		18	%		29	%
Adjusted EBITDA per share ($)		0.02			0.18			0.13			0.43
Net income (loss) per share ($)		0.33			(0.01	)		0.28			0.02

Non-Cash Items and Other Non-Recurring Items from Continuing Operations
		Three months ended						Six months ended
		Jun 30, 2016			Jun 30, 2015			Jun 30, 2016			Jun 30, 2015
Stock-based compensation		1,395			620			1,983			1,274
Gain on disposal of equipment and assets held for sale		(50,946	)		(74	)		(51,027	)		(118	)
Foreign exchange loss (gain)		2,638			27			(1,238	)		145
Other management compensation related to XSR sale		4,970			-			4,970			2
Total adjustments for non-cash items		(41,943	)		573			(45,312	)		1,303

Reader Advisory

This news release contains forward-looking statements ("FLS"). The use of the words "may", "believe", "could", "would", "might", "will be taken", "occur" or "be achieved" and similar expressions identify FLS. More particularly, this news release contains statements that may relate to contracting, marketing, financing, construction, modifications, deployment, operation, utilization of drilling rigs in the Company's current and future fleet. Although Xtreme believes expectations reflected in these FLS are reasonable, readers should not place undue reliance on them because Xtreme can give no assurance they will prove to be correct. There are many factors that could cause FLS not to be correct, including risks and uncertainties inherent in the Company's business.

These statements are based on certain factors and assumptions including, but not limited to: the assessment of current and projected future operations; ongoing and future strategic business alliances, negotiations and opportunities to enter new, extend or complete existing contracts; the availability and cost of financing; foreign currency exchange rates; timing and magnitude of capital expenditures; expenses and other variables affecting rig operation, modification and construction; the ability and commitment of vendors to provide rig component equipment, services and supplies, including labor, in a cost-effective and timely manner; the issuance of applied-for patents; changes in tax rates; and government regulations. Although Xtreme considers the assumptions used to prepare this news release reasonable, based on information available to management as of August 4, 2016, ultimately the assumptions may prove to be incorrect.

Forward-looking statements are also subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from management's current expectations. These factors include, but are not limited to: the cyclical nature of drilling market demand, foreign currency exchange rates, and commodity prices; access to credit and to equity markets; the availability of qualified personnel; vendor-provided rig components; and, competition for customers.

Management's assumptions considered the following: compliance with the terms of the Company's current and proposed new credit facility; ongoing access to key supplies and components required to continue operating and maintaining equipment, including fuel; continued successful performance of drilling and related equipment; expectations regarding gross margin; recruitment and retention of qualified personnel; continuation or extension of existing long-term or multi-well contracts; revenue expectations related to shorter-term drilling opportunities; willingness and ability of customers to remit amounts owing to Xtreme in accordance with normal industry practices; and management of accounts receivable in direct relation to revenue generation.

In preparing this news release, management considered the following risk factors: fluctuations in crude oil and natural gas prices, supply and demand; fluctuation in foreign currency exchange and interest rates; financial stability of Xtreme's customers; current and future applications for Xtreme's proprietary technology; competition from other drilling contractors; regulatory and economic conditions in regions where Xtreme operates; environmental constraints; changes to government legislation; international trade barriers or restrictions; and, where appropriate, global political and military events.

Financial outlook information contained in this news release about prospective results of operations, financial position or cash provided by operating activities is based on assumptions about future events, including economic conditions and proposed courses of action, and on management's assessment of relevant information currently available. Readers are cautioned such financial outlook information contained in this news release is not appropriate for purposes other than for which it is disclosed here. Readers should not place undue importance on FLS and should not rely on this information as of any other date. Except as required pursuant to applicable securities laws, Xtreme disclaims any intention, and assumes no obligation, to update publicly or revise FLS to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such FLS or otherwise, or to explain any material difference between subsequent actual events and such FLS.