CALGARY, Aug. 14, 2012 /CNW/ - IROC Energy Services Corp. ("IROC"
or the "Corporation") is pleased to present a summary of its
operating and financial results for the three and six months ended
June 30, 2012. For a complete copy of IROC's interim financial
statements and management's discussion and analysis ("MD&A")
please visit www.sedar.com. Basis of Presentation Throughout this
news release amounts are presented on a continuing operations basis
to more accurately reflect the way in which IROC intends to operate
on a continuing basis. Highlights for the three month quarter ended
June 30, 2012: -- Total revenue increased 43% to $16.7 million for
the three months ended June 30, 2012 as compared to $11.7 million
in the second quarter of 2011. -- Gross margin increased 46% to
$5.1 million for the three months ended June 30, 2012 as compared
to $3.5 million in the second quarter of 2011. -- EBITDAS increased
93% to $3.2 million for the three months ended June 30, 2012 as
compared to $1.6 million in the second quarter of 2011. -- Net
income from continuing operations was $0.1 million for the three
months ended June 30, 2012 as compared to a net loss of $0.3
million in the second quarter of 2011 marking the first time in the
Corporation's history that the Corporation was profitable during
the spring breakup period. Highlights for the six months ended June
30, 2012: -- Total revenue increased 36% to $49.1 million for the
six months ended June 30, 2012 as compared to $36.1 million during
the comparable period of the prior year. -- Gross margin increased
39% to $19.5 million for the six months ended June 30, 2012 as
compared to $14.0 million during the comparable period of the prior
year. -- EBITDAS increased 49% to $14.9 million for the six months
ended June 30, 2012 as compared to $10.0 million during the
comparable period of the prior year. -- Net income from continuing
operations increased 61% to $6.9 million for the six months ended
June 30, 2012 as compared to $4.3 million during the comparable
period of the prior year. Operations IROC's operations are reported
in three segments; the Drilling and Production Services segment,
the Rental Services segment and Corporate Services and
Other. The following is a discussion of the reporting segments
in which IROC operates. DRILLING AND PRODUCTION SERVICES The
Drilling and Production Services segment provides services to oil
and gas exploration, development and production companies with most
of our customers and operations being located in western Canada, in
the provinces of Alberta and Saskatchewan. The Drilling and
Production Services segment consists of two divisions: Eagle Well
Servicing ("Eagle") contracts service rigs to oil and gas companies
to perform various completion, work-over and maintenance services
on oil and natural gas wells. Eagle has offices and equipment
in Red Deer and Grande Prairie in Alberta and Lloydminster and
Estevan in Saskatchewan with equipment being used in those
geographic areas. Helix Coil Services ("Helix") contracts coil
tubing units to oil and gas companies to perform various
completion, workover and maintenance services on oil and natural
gas wells. Helix is based in Red Deer, Alberta with equipment
generally being used in Alberta and Saskatchewan, Canada. Three
months ended June 30, March 31, December 31, September 30, 2012
2012 2011 2011 Eagle Well Servicing: Number of service rigs (end of
period) 46 44 41 38 Service rig utilization (1) 43% 74% 69% 69%
Commodity prices: NYMEX crude oil $US/bbl 93.49 102.93 94.06 89.76
AECO Monthly index natural gas $CAD/GJ 1.74 2.39 3.29 3.53 Three
months ended June 30, March 31, December 31, September 30, 2011
2011 2010 2010 Eagle Well Servicing: Number of service rigs 36 36
35 35 (end of period) Service rig utilization 42% 78% 66% 57% (1)
Commodity prices: NYMEX crude oil 102.60 94.08 85.17 76.20 $US/bbl
AECO Monthly index 3.54 3.58 3.39 3.52 natural gas CAD/GJ (1) IROC
calculates utilization based on full utilization being 10 hours
days, 365 days per year consistent with the CAODC standard. IROC
commences calculation of utilization for a new rig on the first day
it goes into the field for active service. As at June 30, 2012,
Eagle had a fleet of 46 service rigs having added two double
service rigs in the quarter and three single service rigs into our
fleet since the start of the year. Eagle's service rig fleet and
equipment are among the newest in the industry. All of Eagle's
service rigs are free standing mobile service rigs and are
internally guyed with no requirement for external
anchors. This reduces set up time and corresponding costs when
compared to service rigs which require external anchors or are skid
mounted. During the past nine months Eagle has deployed its first
two slant rigs. Slant rig designs are optimized for use in the
heavy oil and SAGD markets and our slant rigs have been well
received by the customers who have put them into
service. These rigs tend to work on locations with multiple
well bores referred to in the industry as "pads" which can mean
more hours of operation due to shorter rig moves and less impact
from spring breakup conditions. Eagle's third slant rig was
delivered following quarter end and went into service in July,
2012. Currently Eagle's service rig fleet consists of 47 rigs, all
of which are fully crewed and operated. In addition, 3 new
service rigs are currently being built, with expected delivery and
deployment of one rig by September 30, 2012 and the other two
before year end. This will give Eagle 50 service rigs in
operation by December 31, 2012. One key challenge facing the
energy services industry is staffing, particularly of field
personnel. Eagle has been and continues to be able to fully
crew its assets in this very tight labour market across the service
industry. The trend toward increased oil-related activity continues
to provide benefit for the Corporation's service rig division.
Current activity levels are estimated to be in excess of 80%
levered to oil, with completion, workover and abandonment activity
all providing continued strong demand for the Corporation's
services in the foreseeable future. Commodity prices are the main
activity driver as the Corporation's customers' exploration and
development programs are directly impacted by oil and natural gas
prices. Oil and gas producers spend capital on new wells and
service operations when they are economic within the context of
current and forecasted commodity prices. Crude oil prices have
continued to be strong during the first seven months of
2012. Year over year, prices for the first six months of 2012
were on par with 2011 with NYMEX crude oil averaging $US
98.21/barrel in 2012 as compared to $US 98.34/barrel in
2011. In contrast, the historically low natural gas prices in
2011 have given way to a near collapse in 2012. For the first six
months of 2012 Alberta natural gas prices have averaged $2.06/GJ as
compared to $3.56/GJ in the first half of 2011. This quarter's
$1.74/GJ average price is the lowest in over four years and has
created hardship for many of our natural gas weighted
customers. In Alberta, the AECO monthly index for May settled
at $1.5586, marking the lowest AECO index settlement since February
1998, a period of 14 years and three months. At these price
levels, natural gas development has been focused on resource type
development projects and liquids rich reservoirs as much
conventional shallow gas is not economic. Service rig utilization
for the second quarter was 43% in the current year as compared to
42% in the prior year quarter. The second quarter is typically
our weakest quarter due to spring breakup when the frost comes out
of the ground and spring rainfall makes many well sites and roads
unusable by heavy equipment. Seasonality is a significant
activity driver for all of our businesses as certain areas are only
accessible by service rigs and other heavy equipment during winter
when the ground is frozen. Activity levels in 2012 continue to
be driven by horizontal drilling focussed largely on oil
production. The complexity of horizontal wells typically make
completion operations more time consuming and therefore impact
utilization percentages. In the second quarter of 2011 crude
oil prices were on an increasing trend reaching levels not seen
since before the economic downturn in 2008 and 2009, oil and gas
producers equity values were also increasing rapidly, and the
equity markets had opened up to allow producers to raise additional
equity and expand their capital programs. In short, producers were
optimistic and investing in new capital projects, at least new oil
or liquids rich natural gas projects. In contrast, in 2012
crude oil prices peaked in the first quarter and declined for three
consecutive months in April, May and June. This declining trend in
oil prices and volatility in the equity markets for oil and natural
gas producers has tempered the optimism and moderated or delayed
the capital spending plans of many of our
customers. Considering the very strong activity levels in the
last half of 2011 and the recent oil, natural gas and equity price
declines, we anticipate year over year declines in demand and
activity levels relative to last year as we move into the third and
fourth quarters of the current year due to producers reducing their
spending relative to last year. Helix Coil Services began
operations in July 2011 with the deployment of two truck mounted
coil tubing units, each with 2" capabilities placing the equipment
in the intermediate size range. In the fourth quarter of 2011 Helix
added one trailer unit with 2" capabilities, along with crane
support equipment. We have not achieved the performance targets
initially set for this division in 2012. Increased competition
in the coiled tubing services segment of the industry is expected
to continue to put pressure on this division of our
business. The Corporation has taken a measured approach to the
growth of this new business line, focussing on developing both the
internal business processes to support this business and a customer
base from which we can scale growth going forward. RENTAL SERVICES
The Rental Services segment consists of the Aero Rental Services
division. Aero provides rental equipment for surface pressure
control in drilling and workover operations and tubular handling
equipment used for the workover, re-entry and completion
operations. Aero has an office in Red Deer, Alberta with
equipment being rented for use primarily in Alberta. Three months
ended June 30, March 31, December 31, September 30, $ 000's 2012
2012 2011 2011 Aero Rental Services: Gross margin 1,136 3,409 2,653
2,533 Book value of rental 17,866 16,099 14,641 12,887 equipment
(end of period) Three months ended June 30, March 31, December 31,
September 30, $ 000's 2011 2011 2010 2010 Aero Rental Services:
Gross margin 826 2,793 1,739 784 Book value of rental 11,799 11,249
10,121 8,802 equipment (end of period) Aero continues to have
strong absolute margin growth on a year over year basis. The
trend of seasonality adjusted increases in gross margin has been
driven by the increasing size of our rental asset base in each of
the past eight quarters. CORPORATE SERVICES AND OTHER IROC's
non-operating segment, Corporate Services and Other, captures
general and administrative expenses associated with supporting each
of the reporting segments operations noted above, plus costs
associated with being a public company. Also included in
Corporate Services is interest expense for debt servicing and
income tax expense and other amounts not relating to the two main
operating segments. Comparison of results from the three and six
month periods ended June 30, 2012 to the same periods last year
REVENUE Three months ended June 30, June 30, Change Change $ 000's
2012 2011 $ % Revenue: Drilling and Production Services 13,813
9,552 4,261 45% Rental Services 2,925 2,175 750 34% Inter-segment
eliminations (48) (35) (13) 37% Total revenue 16,690 11,692 4,998
43% Six months ended June 30, June 30, Change Change $ 000's 2012
2011 $ % Revenue: Drilling and Production Services 40,778 29,230
11,548 40% Rental Services 8,778 6,994 1,784 26% Inter-segment
eliminations (408) (124) (284) 229% Total revenue 49,148 36,100
13,048 36% Total revenues for the second quarter increased 43% over
the prior year quarter reflecting the growth in the Corporation's
service rig fleet, coil tubing units, and rental assets. Activity
in both the current and prior year quarters was weaker than other
quarters due to the seasonal impact of spring breakup. In both the
current and prior year periods we saw relatively strong demand for
the Corporation's products and services. The increase in revenues
for the Drilling and Production Services segment in the current
year quarter is due primarily to an increase in the number of
service rig hours with utilization being 43% based on an average of
44.6 active rigs as compared to 42% based on 36 service rigs in the
comparative quarter of the prior year. Also contributing to
the increases on a year over year basis was increased pricing and
the additional revenue from our three new coil tubing units which
were put into service during the third and fourth quarters of 2011.
Helix Coil Services began operations in July 2011. Currently,
Helix has two truck mounted coil tubing units and one trailer
mounted coil tubing unit, each with 2" coil capabilities placing
the equipment in the intermediate size range. Additionally, Helix
owns related crane and support equipment. Coil tubing demand was
impacted more on a relative basis than demand for our service rigs
due to the coil tubing division's focus being concentrated on
completion and fracturing operations, which were impacted by
prolonged periods of wet weather throughout the second quarter. The
increase in revenue for the Rental Services segment in the current
year quarter as compared to the prior year quarter is primarily due
to the increase in the amount of rentable equipment in the current
year as compared to the prior year. Over the past two years, Aero
has more than doubled the amount of rental equipment in its
inventory. This increase has provided a larger and more diverse
range of rental equipment. Additionally, as we grow our rental
equipment assets, proportionately less of our rental revenue is
related to third party equipment rentals, reducing operating
expenses as we are not required to incur third party rental fees.
Crude oil and natural gas prices are activity drivers for all of
our businesses as our customers make capital and operating
expenditure decisions based on their revenue streams generated by
selling crude oil and natural gas. NYMEX Crude oil prices in
the current year quarter were weaker, averaging $US 93.49 / barrel
as compared to $US 102.60 / barrel in the prior year
quarter. As well, natural gas prices were weaker averaging
just 49% of the prior level at $1.74 per GJ in the current year
quarter as compared to $3.54 per GJ in the prior year quarter. The
AECO monthly index for May 2012 settled at $1.5586, marking the
lowest AECO index settlement since February 1998, a period of 14
years and three months. Low natural gas prices have significantly
reduced natural gas focused activity by our customers. OPERATING
COSTS AND GROSS MARGIN Three months ended June 30, June 30, Change
Change $ 000's 2012 2011 $ % Operating costs: Drilling and
Production Services 9,882 6,896 2,986 43% Rental Services 1,789
1,349 440 33% Inter-segment eliminations (48) (35) (13) 37% Total
operating costs 11,623 8,210 3,413 42% Gross margin:(1) Drilling
and Production Services 3,931 2,656 1,275 48% Rental Services 1,136
826 310 38% Total gross margin 5,067 3,482 1,585 46% Gross margin
%(1): Drilling and Production Services 28% 28% - % Rental Services
39% 38% 1% Total gross margin % 30% 30% -% (1)See Non-GAAP
Measures. Six months ended June 30, June 30, Change Change $ 000's
2012 2011 $ % Operating costs: Drilling and Production Services
25,872 18,878 6,994 37% Rental Services 4,233 3,375 858 25%
Inter-segment eliminations (408) (124) (284) 229% Total operating
costs 29,697 22,129 7,568 34% Gross margin:(1) Drilling and
Production Services 14,906 10,352 4,554 44% Rental Services 4,545
3,619 926 26% Total gross margin 19,451 13,971 5,480 39% Gross
margin %(1): Drilling and Production Services 37% 35% 2% Rental
Services 52% 52% -% Total gross margin % 40% 39% 1% (1)See Non-GAAP
Measures. In the Drilling and Production Services segment, most
operating costs are variable in nature and increase or decrease
with activity levels such that much of the change in operating
costs in the year over year periods is due to the increases in
revenues in the current year periods as compared to the prior year
periods. The largest cost in this segment is service rig crew
salaries and wages with most employees being hourly in nature and
paid only when they are working on service rigs. In contrast to
service rig crews, coil tubing crews are paid both a base salary
plus an hourly wage when working. This results in the cost
structure for coil tubing operations being less variable than for
our service rig operations. Gross margin is calculated as revenue
minus operating costs and provides a measure of cash flow available
to cover all of the other costs of the business. Gross margin
percentages are calculated as gross margin divided by revenue and
is used by management as a measure of relative profitability.
EBITDAS Three months ended June 30, June 30, Change Change $ 000's
except per share amounts 2012 2011 $ % EBITDAS(1): Drilling and
Production Services 3,212 2,035 1,177 58% Rental Services 867 607
260 43% Corporate and other (915) (1,000) 85 (9%) Total EBITDAS
3,164 1,642 1,522 93% EBITDAS per common share(1) - Basic $ 0.063 $
0.033 $ 0.030 91% - Diluted $ 0.061 $ 0.033 $ 0.028 85% ((1) See
Non-GAAP Measures.) Six months ended June 30, June 30, Change
Change $ 000's except per share amounts 2012 2011 $ % EBITDAS(1):
Drilling and Production Services 12,955 8,838 4,117 47% Rental
Services 3,896 3,083 813 26% Corporate and other (1,920) (1,882)
(38) 2% Total EBITDAS 14,931 10,039 4,892 49% EBITDAS per common
share(1) - Basic $ 0.297 $ 0.219 $ 0.078 36% - Diluted $ 0.290 $
0.214 $ 0.076 36% Earnings before interest, income taxes,
depreciation, amortization, and stock based compensation
("EBITDAS"), is used by the Corporation as a measure of cash flow
and liquidity. Positive EBITDAS provides cash needed to grow
our business through the purchase of new equipment or business
acquisitions, reduce outstanding bank debt, repurchase common
shares, or pay dividends to our shareholders. GENERAL AND
ADMINISTRATIVE EXPENSES Three months ended June 30, June 30, Change
Change $ 000's 2012 2011 $ % General and administrative Drilling
and Production Services 719 621 98 16% Rental Services 269 219 50
23% Corporate services and other 915 1,000 (85) (9%) Total general
and administrative 1,903 1,840 63 3% Six months ended June 30, June
30, Change Change $ 000's 2012 2011 $ % General and administrative
Drilling and Production Services 1,951 1,514 437 29% Rental
Services 649 536 113 21% Corporate services and other 1,920 1,882
38 2% Total general and administrative 4,520 3,932 588 15%
Increased year over year activity levels are the primary driver for
the increase in general and administrative costs. Year over
year percentage increases in revenue and EBITDAS, as highlighted in
those sections of this MD&A, were larger than the percentage
increases in general and administrative expenses. General and
administrative expenses are a combination of fixed and variable
costs. A portion of the increase in general and administrative
expenses is related to the increase in EBITDAS as some employees
have a component of variable compensation based on EBITDAS
performance. NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE Three
months ended $ 000's except share and per June 30, June 30, Change
$ Change share amounts 2012 2011 or number % Net income (loss) from
145 (331) 476 (144%) continuing operations Net income from
discontinued - 23 (23) (100%) operations Net income (loss) and 145
(308) 453 (147%) comprehensive income (loss) Earnings (loss) per
share from continuing operations: - Basic $0.00 ($0.01) $0.01
(100%) - Diluted $0.00 ($0.01) $0.01 (100%) Weighted average common
shares outstanding: - Basic 50,287,715 49,083,995 1,203,720 2% -
Diluted 51,513,371 49,083,995 2,429,376 5% Six months ended $ 000's
except share and per June 30, June 30, Change $ Change share
amounts 2012 2011 or number % Net income from continuing 6,895
4,271 2,624 61% operations Loss from discontinued - (216) 216
(100%) operations Net income and comprehensive 6,895 4,055 2,840
70% income Earnings per share from continuing operations: - Basic
$0.14 $0.09 $0.05 37% - Diluted $0.13 $0.09 $0.04 34% Weighted
average common shares outstanding: - Basic 50,246,119 45,867,848
4,378,271 10% - Diluted 51,480,568 46,819,846 4,660,722 10% On
April 11, 2011, the Corporation completed a short form prospectus
offering of 7,200,361 common shares. This share issue is the
primary reason for the increased the average number of shares
outstanding during the six months ended June 30, 2012 as compared
to the six months ended June 30, 2011. The diluted number of common
shares is directly impacted by the trading price of the
Corporation's common shares. Increased trading prices will
also increase the number of diluted shares calculated for options
issued under the Corporation's stock option plan. Capital
Expenditures IROC's capital expenditures were as follows: Six
months Three months ended ended June 30, June 30, March 31, $ 000's
2012 2012 2012 Capital expenditures: Drilling and production
services 12,630 5,792 6,838 Rental services 4,845 2,908 1,937
Corporate 104 65 39 Discontinued operations - - - Total capital
expenditures 17,579 8,765 8,814 Six months Three months ended ended
June 30, June 30, March 31, $ 000's 2011 2011 2011 Capital
expenditures: Drilling and production services 8,352 4,783 3,569
Rental services 2,385 860 1,525 Corporate 38 17 21 Discontinued
operations 360 329 31 Total capital expenditures 11,135 5,989 5,146
The Corporation's strategy to organically grow its capital asset
base, focused on our core businesses, has resulted in IROC having
capital assets, as a whole, in new or like new condition. Our
service rigs represent the largest percentage of the Corporation's
overall net book value of fixed assets and they are among the
newest fleet of service rigs in the industry. The Corporation has
budgeted $29.4 million for capital expenditures during 2012
consisting of the following: -- $20.9-million -- for construction
of eight new service rigs in the Eagle Well Servicing division
(includes $4.8 million from assets which were purchased in the
fourth quarter of 2011); -- $8-million -- for expansion of rental
inventory assets in the Aero Rental division; -- $0.5-million --
for maintenance and infrastructure expenditures. As at June 30,
2012, the Corporation estimates $22.4 million of the $29.4 million
2012 capital budget has been spent with $7.0 million remaining to
be spent. Management continuously evaluates opportunities to
grow the business and will adjust or increase the capital program
if the opportunities and conditions warrant. Dividends and
Outstanding Share Data: The following table summarizes outstanding
share data and potentially dilutive securities: August 14, 2012
Common 50,344,663 shares Stock 1,740,330 options Restricted 424,838
share units The following table summarizes dividends declared or
paid since December 31, 2011: Declaration Record Date Payment Date
Amount of Date Dividend per Common Share December 20, January 9,
January 13, $0.025 2011 2012 2012 March 20, April 6, 2012 April 13,
$0.025 2012 2012 May 23, 2012 July 6, 2012 July 13, $0.025 2012
August October 5, October 12, $0.025 14,2012 2012 2012 Outlook IROC
Energy Services Corp. had a record second quarter, posting a second
quarter net income for the first time in the Corporation's
history. This also marked the 32(nd) consecutive quarter of
positive EBITDAS, underscoring the fundamental strength of our core
businesses and the ability of our assets to generate positive
operating cash flow. Our ability to address the needs of our
customers as they continue to expand their use of horizontal
drilling and multistage fracturing technologies remains the focus
of each of our operating divisions. Until recently, we expected
activity levels in 2012 would be similar to those experienced in
2011. This expectation was based on oil prices in the first quarter
of 2012 being the highest since 2008 and the robust capital
spending programs of producers. However, NYMEX crude oil
prices declined for three consecutive months during the second
quarter, and Alberta oil price levels were further impacted by
wider differentials, reducing the price received by our customers
for their crude oil even further than the declines in the NYMEX
prices. Natural gas prices also declined further in the second
quarter, but since natural gas activity had already become a minor
part of our business these declines have had a negligible impact on
the demand for our services. As a result of these commodity
price declines, and equity market volatility for oil and gas
companies, we have seen capital budget reductions at many oil and
gas companies and we expect demand for the last half of 2012 to
fall short of the levels experienced in the last half of 2011 for
most services. Despite our expectations of lower year over year
industry activity levels in the second half of 2012, each of our
business segments are expected to be profitable and provide
positive operating cash flow and EBITDAS through the last half of
the year. Our service rig division is expected to continue to be
the largest contributor of revenues and profits in our
company. Eagle averaged 37.3 rigs during 2011, starting the
year with 36 rigs and ending with 41 rigs in the field. Eagle
averaged 43.6 service rigs during the first half of 2012 with 46
rigs in service at June 30 and another 4 service rigs on track to
be in service by the end of the year. We plan to average 45
rigs for calendar 2012 as compared to the 37.3 rigs in 2011, an
increase of 7.7 rigs or 21%. Even with lower industry
activity levels, we expect year over year growth in revenue, margin
and EBITDAS for this division for the last half and full year 2012.
Eagle's new equipment specifically addresses the current needs of
our customers or targeted areas of operation and provides greater
operating efficiency with minimal downtime. We continue to build
equipment that is lighter and more adaptable to the various areas
where we operate. This new and innovative equipment continues
to attract both work and competent personnel, enabling Eagle to
achieve high equipment utilization, a benefit to our employees and
customers alike. Our rental business continues to operate very well
and the demand for its products and services continues to increase
as our customers exploit oil opportunities in both the application
of horizontal technology, and the SAGD operating segments of the
oil and gas business in Western Canada. We continue to unlock
the operating leverage available to us in this division as we add
more equipment with increasing revenues and margins. As industry
acceptance of the new equipment and services remains strong, we
anticipate being able to continue to profitably add assets in this
division and are on track to meeting our budgeted $8 million in
asset acquisitions for 2012, having spent $4.8 million in the first
six months. Geographic expansion remains a priority focus for
this business. The contribution from our new start-up coil tubing
assets was positive for the first six months of 2012, but
performance is lower than the targets we had set for these
assets. We continue to expect some growth from our coiled
tubing operations as we add additional auxiliary equipment and
continue to work through the operational challenges of starting a
new service line. The coiled tubing operation is very complementary
to our other services and we expect it will continue to provide a
positive contribution to our bottom line over the coming quarters
and years. Given the continuing growth of our businesses, our
ability to attract and retain personnel in a very tight labour
market is critical to all of our businesses. We have been able to
fully crew all of our service rigs and coil tubing units through
the first half of 2012 and continue to be able to do so. Our
recent and planned growth continues to make IROC an attractive
employer and provides opportunities to our workforce for career
advancement. We continue to have a strong balance sheet, the newest
in equipment, and a talented group of employees that will allow us
to continue to grow and capitalize on opportunities as they present
themselves. Declaration of Quarterly Dividend The Board of
Directors has declared a quarterly cash dividend of $0.025 per
common share. The dividend will be payable October 12, 2012 to
shareholders of record at the close of business on October 5, 2012.
This dividend is an eligible dividend for Canadian income tax
purposes. Conference Call and Webcast IROC will conduct a
conference call on Wednesday August 15, 2012 at 9:00 a.m. MST
(11:00 a.m. EST). Thomas Alford, President and CEO, and Ryan
Michaluk, CFO, will both be presenting during the call. To access
the conference call, contact the conference call operator at (888)
231-8191 (North America) or (647) 427-7450 (Toronto and outside
North America) approximately 10 minutes prior to the call and
request the "IROC Energy Services Corp. 2012 Second Quarter Results
Conference Call". The call will be open to all analysts,
investors and other interested parties. The conference call will
also be available via webcast by visiting
http://www.newswire.ca/en/webcast/detail/1008861/1090015 from a web
browser. About IROC Energy Services Corporation IROC Energy
Services Corp. is an Alberta oilfield services company that,
through the IROC Energy Services Partnership, provides a diverse
range of products, services and equipment to the oil and gas
industry that are among the newest and most innovative in the
WCSB. IROC Energy Services Partnership operates under the
business names of Eagle Well Servicing, Aero Rental Services and
Helix Coil Services. IROC combines cutting-edge technology
with depth of experience to deliver a product and services offering
in the following core areas: well servicing & equipment, rental
services and coil tubing services. For more information on IROC
Energy Services Corp., visit our website at www.iroccorp.com.
Cautionary Statement Regarding Forward Looking Information and
Statements Certain information contained in this news release,
including information related to the completion and timing of the
construction, delivery and deployment of IROC's new service rigs
and new coiled tubing units, the expected demand for our services,
the Corporation's planned capital expenditures and growth
opportunities, outlook for future oil and gas prices, cyclical
industry fundamentals, drilling, completion, work over and
abandonment activity levels, the Corporation's ability to fund
future obligations and capital expenditures, and information or
statements that contain words such as "could", "should", "can",
"anticipate", "expect", "believe", "will", "may", "likely",
"estimate", "predict", "potential", "continue", "maintain",
"retain", "grow", and similar expressions and statements relating
to matters that are not historical facts, constitute
"forward-looking information" within the meaning of applicable
Canadian securities legislation. This information or these
statements are based on certain assumptions and analysis made by
the Corporation in light of its experience and its perception of
historical trends, current conditions and expected future
developments as well as other factors it believes are appropriate
in the circumstances. In particular, the Corporation's expectation
of uncertain demand and prices for oil and natural gas and the
resulting future industry activity, is premised on the
Corporation's understanding of customers' capital budgets and their
ability to access capital, the focus of its customers on deeper and
horizontal drilling opportunities in the current natural gas
pricing environment, and the continuing impact of the recent global
financial crisis and the current economic recovery all of which
affects the demand for oil and gas. Whether actual results,
performance or achievements will conform to the Corporation's
expectations and predictions is subject to a number of known and
unknown risks and uncertainties which could cause actual results to
differ materially from the Corporation's expectations. Such
risks and uncertainties include, but are not limited to:
fluctuations in the price and demand for oil and natural gas;
fluctuations in the level of oil and natural gas exploration and
development activities; the lack of availability of qualified
personnel or management; fluctuations in the demand for well
servicing; the effects of weather conditions on operations and
facilities; the existence of competitive operating risks inherent
in well servicing; general economic, market or business conditions;
changes in laws or regulations, including taxation, environmental
and currency regulations; the other risk factors set forth under
the heading "Risks" in the annual MD&A for the year ended
December 31, 2011 and other unforeseen conditions which could
impact on the use of services supplied by the Corporation.
Consequently, all of the forward-looking information and statements
made in this news release are qualified by this cautionary
statement and there can be no assurance that the actual results or
developments anticipated by the Corporation will be realized or,
even if substantially realized, that they will have the expected
consequences to or effects on the Corporation or its business or
operations. Except as may be required by law, the Corporation
assumes no obligation to update publicly any such forward-looking
information and statements, whether as a result of new information,
future events, or otherwise. This press release is not for
dissemination in United States or to any United States news
services. The Common Shares of IROC have not and will not be
registered on the United States Securities Act of 1933, as amended
(the "United States Securities Act") or any state securities laws
and are not offered or sold in the United States or to any US
person except in certain transactions exempt from the registration
requirements of the United States Securities Act and applicable
state securities laws. Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release. Non-GAAP Measures The
financial statements have been prepared in accordance with
IFRS. Certain supplementary information and measures not
recognized under IFRS are provided where Management believes they
assist the reader in understanding IROC's results. These
measures include: 1. EBITDAS and EBITDAS per share- EBITDAS is
defined as earnings before interest, taxes, depreciation and
amortization, stock-based compensation expense, foreign exchange
gains and losses, goodwill impairment, note receivable impairment,
and gains or losses on disposal of property and equipment. EBITDAS
and EBITDAS per share are not recognized measures under GAAP or
IFRS. The Corporation believes that EBITDAS is provided as a
measure of operating performance without reference to financing
decisions, income tax impacts and non-cash expenses, which are not
controlled at the operating management level. Accordingly, the
Corporation believes EBITDAS is a useful measure for prospective
investors in evaluating the financial performance of the
Corporation, and specifically, the ability of the Corporation to
service the interest on its indebtedness. Investors should be
cautioned that EBITDAS should not be construed as an alternative to
net income determined in accordance with IFRS as an indicator of
the Corporation's performance. IROC's method of calculating EBITDAS
may differ from those of other companies, and accordingly, EBITDAS
may not be directly comparable to measures used by other companies.
EBITDAS % is calculated as EBITDAS divided by revenue. 2. Gross
margin is defined as revenue less operating expenses. Gross margin
% is defined as gross margin divided by revenue. The Company
believes that gross margin and gross margin % are useful measures
which provide an indicator of the Corporation's fundamental ability
to make money on the products and services it sells. The
Corporation believes the relationship between revenues and costs
expressed by the gross margin % is a useful measure when compared
between different financial periods as it demonstrates the trending
relationship between revenues, costs and margins. Gross margin and
gross margin % are not recognized measures of IFRS and do not have
any standardized meaning prescribed by IFRS. IROC's method of
calculating gross margin and gross margin % may differ from those
of other companies, and accordingly, may not be directly comparable
to measures used by other companies. The following is a
reconciliation of EBITDAS and EBITDAS per share to net income from
continuing operations: Six months ended Three months ended $ 000's
except June 30, March 31, December 31, September 30, number of 2012
2012 2011 2011 shares and per June 30, share amounts 2012 Net
income 6,895 145 6,750 4,778 4,330 from continuing operations
Depreciation 4,938 2,546 2,392 2,111 1,920 and amortization Loss
(gain) on 4 10 (6) (1) 23 foreign exchange Stock based 313 168 145
167 169 compensation expense Loss (gain) on (28) (8) (20) (8) 7
disposal of equipment Interest and 349 168 181 163 164 financing
costs Income taxes: Current - (1,185) 1,185 - - Deferred 2,460
1,320 1,140 1,432 1,619 EBITDAS - 14,931 3,164 11,767 8,642 8,232
continuing operations EBITDAS per share - continuing operations
Basic $0.30 $0.06 $0.23 $0.18 $0.16 Diluted $0.29 $0.06 $0.23 $0.18
$0.16 Six months ended Three months ended $ 000's except number of
shares and per June 30, June 30, March 31, December 31, September
30, share amounts 2011 2011 2011 2010 2010 Net income 4,271 (331)
4,602 2,703 1,068 (loss) from continuing operations Depreciation
3,365 1,715 1,650 1,857 1,755 and amortization Loss (gain) on 8 8 -
- (2) foreign exchange Stock based 268 115 153 105 82 compensation
expense Loss (gain) on (18) 7 (25) (17) (24) disposal of equipment
Interest and 476 190 286 305 304 financing costs Note - - - - (300)
receivable recovery Income taxes: Current - - - - - Deferred 1,669
(62) 1,731 367 414 EBITDAS - 10,039 1,642 8,397 5,320 3,297
continuing operations EBITDAS per share - continuing operations
Basic $0.20 $0.03 $0.20 $0.12 $0.08 Diluted $0.20 $0.03 $0.19 $0.12
0.08 IROC Energy Services Corp. CONTACT: IROC
Energy Services Corp.Mr. Thomas M. Alford, President and
CEO,Telephone: (403) 263-1110Email: investorrelations@iroccorp.com
orMr. Ryan A. Michaluk, Chief Financial OfficerTelephone: (403)
263-1110Email: investorrelations@iroccorp.com
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