CBE Cabo Drilling Corp

NEW WESTMINSTER, BRITISH COLUMBIA--(Marketwired - May 30, 2014) - Cabo Drilling Corp. ("Cabo" or the "Company") (TSX-VENTURE:CBE)(FRANKFURT:DHL) reports the results for its third quarter of fiscal year 2014, ended March 31, 2014.

3rd QUARTER HIGHLIGHTS

The Company reports:

• Revenue for the third quarter fiscal 2014 ("Q3 FY2014") of $4.81 million compared to $10.62 million in the third quarter fiscal 2013 ("Q3 FY2013").
• Gross margin percentage for the quarter was 2.7% (with depreciation included in direct costs), compared with 19.7% in for the corresponding period last year.
• Negative EBITDA of $563,087 for the quarter compared to $1.07 million, in Q3 FY2013, resulting in EBITDA per share of $0.00 for the quarter compared to $0.01 in Q3 FY2013.
• Net loss was for the quarter was $1.94 million or $0.02 per share ($0.02 per share diluted), compared to net income of $19,730 or $0.00 per share ($0.00 per share diluted) for the corresponding period last year.
• Cash from operations, before changes in non-cash working capital items, was $857,590 for the nine months ending March 31, 2014 compared to $2.28 million for the first nine months of fiscal 2013.

"Cabo Drilling generated revenues of $18.28 million during the first nine months of fiscal 2014," stated Mr. Versfelt, Cabo's President & CEO. "This represents a 46% decrease compared to the $33.62 million in the comparable period in fiscal 2013."

"Gross margin, adjusted to include depreciation, was 9.9% or $1.80 million in the first nine months of fiscal 2014, as compared to 20.2% in the first nine months of fiscal 2013," stated Mr. Versfelt. "In accordance with IFRS, depreciation expenses of $1.79 million are included in direct costs as compared to $1.81 million in fiscal 2013. Adjusted gross margin, when depreciation expense is excluded from direct costs, is 19.6% in the first nine months of fiscal 2014, as compared to 25.6% in the comparable period in fiscal 2013."

The Company reports a negative EBITDA of $561,680 for the first nine months of fiscal 2014, compared to $3.53 million in the first nine months of fiscal 2013," said Mr. Versfelt. "The Company recorded a loss of $3.74 million during the first nine months of fiscal 2014 compared to earnings of $144,791 in the first nine months of fiscal 2013," noted Mr. Versfelt, and, "c ash from operations was $857,590 during the first nine months of fiscal 2014, compared to $2.28 million in the first nine months of fiscal 2013."

"Cabo Drilling's working capital decreased to $10.29 million during the first nine months of fiscal 2014, from $13.45 million at June 30, 2013," commented Mr. Versfelt. "Total liabilities decreased by $317,957 during the first nine months of fiscal 2014 to $13.52 million at March 31, 2014."

"Approximately 43% of revenues came from gold related projects, 45% from copper, 4% from iron and the remaining 8% from other base metals." stated Mr. Versfelt.

Consolidated Quarterly Financial Results

Revenue for the quarter ending March 31, 2014, decreased $5.81 million, or 55%, to $4.81 million, compared to $10.62 million in the third quarter of fiscal 2013. The primary reason for the decrease is due to reduced demand for drilling in all market areas where Cabo has operations, as a result of projects being scaled back, delayed or terminated. Latin America division revenues decreased by 42% due to lower drill utilization, which was offset by the increased activity in Europe. The Canadian and USA divisions recorded a significant decrease in revenues of 66% to $1.91 million in the third quarter of fiscal 2014, as compared to $5.67 million in the comparable period in fiscal 2013.

Revenues from surface drilling services decreased 52%, from $8.14 million in the third quarter of fiscal 2013 to $3.89 million in the third quarter of fiscal 2014, largely due to the early completion or termination of drilling projects and overall reduced demand in the drilling industry. Revenues from reverse circulation programs decreased by 83% to $1.26 million, with reduced activity in the Labrador/Quebec iron ore area. Underground drilling decreased by 57% in the third quarter of fiscal 2014 to $674,212, as compared to $1.56 million in the comparable period in fiscal 2013.

Direct costs for the quarter ended March 31, 2014, were $4.68 million compared to $8.52 million in the quarter ending March 31, 2013, as adjusted to include depreciation in accordance with IFRS. The decrease is a direct result of the decreased activity in fiscal 2014. Gross margins, under IFRS reporting, for the quarter ended March 31, 2014, were 2.7% compared to 19.7% during the quarter ending March 31, 2013. The lower margins are primarily a result of operational challenges in all divisions as discussed earlier in this MD&A, resulting in significantly higher costs and reduced production.

In accordance with IFRS, depreciation expense of property, plant and equipment of $579,970 is included in direct costs for the quarter ending March 31, 2014, as compared to $618,821 in the third quarter of fiscal 2013.

General and administrative expenses decreased by $237,262 from $1.65 million for the third quarter of fiscal 2013 to $1.41 million in the third quarter of fiscal 2014. General and administration costs decreased by 14% in comparable periods, when excluding the stock based compensation costs. The decrease is a result of lower salary, insurance, professional fees and travel costs. The Company is restructuring its Pacific division and the Colombia divisions, with additional savings to be reflected in fiscal 2015, and has closed its Montreal division. Management expects general and administration costs to range between $5.6 and $5.8 million for 2014.

Net loss for the third quarter of fiscal 2014 is $1.94 million compared to a net income of $19,730 in the third quarter of fiscal 2013. This is a direct result of the decreased activity in the global drilling market.

The Company's cash (cash and cash equivalents) position at March 31, 2014, is $153,335 compared to $134,248 at June 30, 2013.

Marketable securities decreased by $1.02 million, from $1.11 million at June 30, 2013, to $86,291 at March 31, 2014. During the nine month period, Cabo sold 1,500,000 shares of Standard Gold Inc. for $395,813. A loss of $314,846 was recognized. Marketable securities consist of 4.31 million shares of International Millennium Mining Corp. We have adjusted the value of our holdings at March 31, 2014, as recorded in the comprehensive income statement.

Accounts receivable decreased by $1.77 million to $5.72 million at March 31, 2014, from $7.49 million at June 30, 2013. The decrease is primarily due to reduced activity during fiscal 2014.

Property, plant & equipment decreased to $10.68 million at March 31, 2014 from $12.28 million at June 30, 2012, a decrease of $1.60 million during the first nine months of fiscal 2014, primarily resulting from equipment depreciation, with minimal capital expenditures in the quarter.

Consolidated Financial Results for the Nine Months Ended March 31, 2014

Revenue for the nine months ending March 31, 2014 decreased approximately 45.6% to $18.28 million, compared to $33.62 million in the comparable period in fiscal 2013. Revenues from our international divisions continue to represent a significant part of Cabo Drilling's operations with 52% of revenues for the first nine months of fiscal 2014, as compared to 30% during the comparable period in fiscal 2013. Management expects the international revenues to continue to represent a larger portion of overall revenues in the remaining three months of fiscal 2014.

Surface drilling decreased by 33% during the nine month period ending March 31, 2014 to $14.79 million, due to projects finishing earlier than anticipated in the Canadian operations. Underground drilling decreased by 71% during the nine month period ending March 31, 2014 to $3.14 million, compared to $10.91 million during the comparable period in fiscal 2013. The decrease is primarily a result of reduced drill utilization in Ontario and no underground drilling in the Atlantic division to date in fiscal 2014.

Direct costs for the nine months ended March 31, 2014 were $16.47 million compared to $26.83 million in the comparable period in fiscal 2013. Gross margins for the nine months ended March 31, 2014 were 9.9% compared to 20.1% during the nine months ended March 31, 2013, when direct costs include depreciation expenses (or 19.6% compared to 25.6% for the respective periods, when direct costs are adjusted to exclude depreciation expense).

General and administrative expenses decreased by approximately 14% or $716,149 from $5.19 million in the first nine months of fiscal 2013 to $4.47 million in the first nine months of fiscal 2014. The decrease is primarily a result of decreased salary costs from restructuring the Canadian and Colombia operations, lower insurance costs and professional fees and fewer travel expenditures.

Net loss for the first nine months of fiscal 2014 was $3.74 million compared to net income after tax of $144,791 earned in the comparable period of fiscal 2013. The main difference is lower revenues reported in the first nine months of fiscal 2014, as compared to the first nine months of fiscal 2013.

Cash flow from operations was $857,590 in the nine months ended March 31, 2014 as compared $2.28 million for the nine months ended March 31, 2013.

Cabo Drilling continues to reduce operating, as well as general and administrative costs and is improving its balance sheet debt position. We have closed our Montreal operations and moved all geotechnical drilling equipment and management to our other Canadian divisions. Our safety record is one of the best in the industry and our relationships with existing clients are very good. Looking forward, a continued focus on excellent safety, high environmental stewardship and improved productivity, plus the improved availability of good to excellent drilling personnel, should result in better projects and better margins, with high safety standards and high quality clients.

The drilling services business is always challenging and we do not forecast any significant turnaround for the balance of 2014. However, Cabo Drilling's management team continues to focus on quality customer relations, high respect for employees and quality human relations, superb safety procedures and practices, careful attention to the protection of the environment and community relations, and trust. These practices, plus effective cost controls and management of equipment and drilling practices and services invoiced to the customers at a fair price and in an honest manner, will enhance Cabo Drilling's ability to grow profitably.

About Cabo Drilling Corp. (TSX-VENTURE:CBE)

Cabo Drilling Corp. is a drilling services company headquartered in New Westminster, British Columbia, Canada. The Company provides mining specialty drilling services through its Canadian divisions in Surrey, British Columbia; Kirkland Lake, Ontario; and Springdale, Newfoundland; as well as Cabo Drilling (America) Inc. of the United States; Cabo Drilling (Panama) Corp. of Panama, Republic of Panama; Cabo Drilling (Colombia) Corp. of Colombia; Balkan States Drilling SH.P.K. of Tirana, Albania; and Cabo Drilling (International) Inc. The Company's common shares trade on the Frankfurt Exchange under the symbol: DHL and on the TSX Venture Exchange under the symbol: CBE.

ON BEHALF OF THE BOARD

John A. Versfelt, Chairman, President and CEO

Further information about the Company can be found on the Cabo Drilling website (http://www.cabo.ca) and SEDAR (www.sedar.com) or by contacting Ms. Jolene Timmer, Corporate Communications or Mr. John A. Versfelt, Chairman, President & CEO at 604-527-4201.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, potential mineral recovery processes and other business transactions timing. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.

John A. VersfeltChairman, President and CEO(604) 527-4201(604) 527-9126ir@cabo.cawww.cabo.ca

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