Calmena Energy Services Inc. Reports 2012 Second Quarter Financial Results

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CALGARY, ALBERTA--(Marketwire - Aug. 9, 2012) -

SECOND QUARTER 2012 RESULTS

Calmena Energy Services Inc. ("Calmena" or the "Company") (CEZ.TO) is pleased to announce its financial results for the second quarter ended June 30, 2012. All figures are reported in Canadian dollars unless otherwise stated. Our unaudited condensed consolidated financial statements and related management's discussion and analysis for the period will be filed separately on SEDAR (www.sedar.com), which should be reviewed in conjunction with this press release.

SECOND QUARTER 2012 HEADLINES

-- Consolidated revenue of $83.3 million and EBITDAS of $11.8 million for

the first half of 2012 were $35.0 million and $9.5 million higher

respectively compared to the first half of 2011. Consolidated revenue of

$34.2 million and EBITDAS of $2.0 million for the second quarter of 2012

were $16.1 million and $4.1 million higher than the second quarter of

2011. Significant growth continued in all operating segments.

-- Directional services in the US achieved 88% and 87% increases in revenue

and 42% and 56% increases in EBITDAS for the three and six months ended

June 30, 2012 compared to the corresponding periods of 2011 on higher

operating days and higher average revenue per day. Three internally

manufactured Measurement While Drilling ("MWD") kits were deployed in

the second quarter of 2012 bringing the total new internally

manufactured kits deployed in the first six months of 2012 to six and 19

MWD kits overall in the United States. Year to date in 2012, US

directional services has logged a record 1,701 operating days compared

to 1,018 in 2011.

-- Mexico revenue for the second quarter and first half of 2012 was 102%

and 175% higher respectively than the corresponding periods in 2011.

Contract drilling achieved near full utilization in the first six months

of 2012 compared to 39% in the first half of 2011.

-- In Colombia, contract drilling achieved a major breakthrough with the

award of a two wells firm, two wells optional contract with Ecopetrol,

the Colombian national resource company. Drilling operations commenced

in the middle of the third quarter. Directional services recorded its

second consecutive quarter with revenue over $1.0 million.

-- Our heli-portable drilling rig and two single drilling rigs continued to

generate revenue in Brazil through the second quarter under long term

contracts. Upgrades and mobilization of the two additional single

drilling rigs being deployed from our Canadian fleet to Brazil under

long term contracts with Petrobras are almost complete, with the rigs

arriving on Brazilian soil in late July. The final in-country leg of

mobilization direct to the first well sites is in progress. With the

deployment of the two remaining single drilling rigs, Calmena now

operates five rigs in Brazil under long term contracts.

-- In Libya, drilling operations for one of our two drilling rigs commenced

in the middle of the second quarter but were temporarily suspended due

to an employee strike in late July. We believe the employee strike will

be resolved and operations will resume in August. We are waiting for

operations to stabilize on the first drilling rig before we commence

drilling operations on the second drilling rig.

SELECTED FINANCIAL INFORMATION

The tables below provide a summary of Calmena's financial and operating results as at and for the three and six months ended June 30, 2012 and 2011.

Three months ended Six months ended

June 30, June 30,

($ thousands, except per share

amounts) 2012 2011 2012 2011

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Revenue 34,154 18,061 83,296 48,312

EBITDAS(i) 2,017 (2,116) 11,789 2,325

Net loss for the period (5,472) (6,530) (1,954) (7,030)

Funds flow from continuing

operations(i) 1,058 (2,363) 9,512 1,361

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Net loss per share - Basic and

diluted (0.02) (0.02) (0.01) (0.02)

Funds flow from continuing

operations per share- Basic and

diluted(i) 0.00 (0.01) 0.03 0.00

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(i) see non-GAAP measures section of this release for a description of this

term.    

June 30, December 31,

($ thousands) 2012 2011

----------------------------------------------------------------------------

Total assets 221,660 221,891

Borrowings and debt 49,434 51,266

Shareholders' equity 142,503 142,647

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OUTLOOK

In Canada, the Canadian Association of Oilfield Drilling Contractors (the "CAODC") is forecasting second half drilling rig utilization to be 6% lower than 2011, but we do not expect that will significantly affect the majority of our services lines. Wireline technologies has completed several high profile wells in the Duvernay for major independents and is developing a solid reputation for performance in high pressure/temperature extended reach completions. Ten horizontal multi-stage completions with three major independents for the second half of 2012 have already been awarded to Calmena. Wireline technologies also recently entered into an agreement with Spectraseis Canada Inc. ("Spectraseis") to provide integrated borehole and surface microseismic fracture monitoring services. Spectraseis and Calmena are currently executing a 60 stage frac monitoring program for a major independent in northeast British Colombia. We see demand for equipment rentals and frac fluids continuing strong and we are continuing our capital investment program for the remainder of 2012. In contract drilling, we expect demand for our single rigs to be typically weak for the remainder of 2012, but to rebound in the first quarter of 2013. During the second quarter of 2012, two single rigs from our Canadian fleet were upgraded and redeployed to Brazil. Early in the third quarter we completed our program to upgrade the top drives on three of our remaining Canadian based single drilling rigs. These upgrades are expected to improve the marketability of these three rigs. Our double drilling rig worked through the second quarter and after a planned shutdown for scheduled maintenance at the end of the third quarter of 2012 it is expected to be utilized for the majority of the remainder of 2012.

The average horizontal land rig count in the United States has stabilized over the first two quarters of 2012 and we believe that activity will likely remain at these levels for the near term. There are still ample opportunities to grow our directional services business in the US over the remainder of 2012. We continue to focus on improving market share in our core mid- continent market, driven by opportunities in Kansas and growing interest in the Mississippian play. In addition we continue to develop our expansion markets in West Texas and Gulf Coast land. To date in 2012 we have added seven new MWD kits to our fleet and plan to introduce nine additional new kits over the remainder of the year. All of our new 2012 positive and rotary pulse MWD kits are manufactured internally. In addition to supporting growth, we expect to see EBITDAS improvements as several of these new kits will replace rentals from third parties, and as repairs costs and turnaround times improve on our standardized platform.

Industry activity in Mexico is picking up and with Pemex awarding new production sharing agreements, this trend should continue over the medium to long term. In the next few months activity will likely remain stable as final terms of the new production sharing agreements are negotiated. Currently, four out of our five rigs are operating under contract. Three rigs are contracted to the end of 2012 and one rig is contracted to August 2012. Interest in our drilling rigs remains high and we are confident the utilization will be strong over the remainder of 2012. Our two directional services kits continued working under contract during the second quarter. The outlook for our directional services business in Mexico looks promising and despite some anticipated short term dips in utilization in the third quarter of 2012, we remain encouraged with the prospects for the remainder of 2012.

The award of the Ecopetrol drilling contract In Colombia is a significant accomplishment and could lead to additional opportunities. The duration of the initial two wells is expected to be between 60 to 90 days, which would double if the two optional wells are drilled. We do not expect difficulties in contracting this rig at the conclusion of this contract, either in Colombia or elsewhere in the region. This type of rig is in high demand in the region and the additional experience of drilling with the biggest resource company in Colombia will add to its marketability. Directional services in Colombia has grown rapidly over the last three quarters, achieving its second consecutive quarter of greater than $1.0 million in revenue in the second quarter of 2012. Our repair shop is fully operational and as we continue to gain experience we are confident that more opportunities will materialize.

In Brazil, the remaining two single drilling rigs committed to Petrobras under long term contracts awarded early in 2011 have been upgraded and arrived in Brazil in late July. They are currently en-route to the first wellsites and are expected to commence drilling operations in August. This brings the Brazilian fleet to four single drilling rigs operating under three year contracts with Petrobras and one heli-portable drilling rig operating under a four year contract with Petrobras. Our near term focus is on improving operating efficiencies, reducing costs and increasing profitability as we gain experience managing the contracts and operational challenges in Brazil. We expect that by the fourth quarter of 2012 our investment in Brazil will begin to reach its full potential and become a solid contributor to Calmena.

One of our two rigs in Libya returned to work in the middle of the second quarter of 2012, and although operations are currently suspended as a result of an employee strike, we are expecting both rigs will return to work during the third quarter. There are very strong long term growth prospects as the country strives to achieve and maintain its oil production targets; however, there remains some labour and infrastructure challenges that may affect utilization and profitability in the very near term.

Overall, Canada, US and Mexico should continue delivering solid results throughout the remainder of 2012. As Colombia builds on the recent successes achieved, Libya returns to full operations and our Brazilian operations change focus from startup mode we expect strong financial results will continue.

ABOUT CALMENA ENERGY SERVICES INC.

Calmena is a diversified energy services company that provides well construction services to its customers operating in Canada, the United States, Latin America and the Middle East and North Africa. The common shares of Calmena trade on the Toronto Stock Exchange under the symbol "CEZ".

FORWARD LOOKING STATEMENTS

This news release contains certain forward-looking statements relating to Calmena's plans, strategies, objectives, expectations and intentions. Expressions such as "may", "anticipate", "expect", "project", "believe", "hope", "estimate", "intend", "will", "continue", "foresee", and "forecast" and similar expressions and statements are intended to identify forward looking statements. Such statements represent Calmena's internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital expenditures, anticipated future debt, revenues or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions and actual events or results may differ materially. Although Calmena believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Calmena's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Calmena.

In particular, forward-looking statements included in this news release include, but are not limited to, statements with respect to timing of deployment of two drilling rigs from Canada to Brazil; expected drilling activity in Canada in 2012; terms of agreement with Spectraseis; expectations regarding demand for equipment rentals and frac fluids, including demand for Calmena's single rigs for the remainder of 2012 and the first quarter of 2013; anticipated utilization of Calmena's double drilling rig for the remainder of 2012; expectations as to levels of horizontal drilling and oil well completions in 2012 in Canada and the United States; opportunities for growth of directional services in the United States over the remainder of 2012; Calmena's focus on improving market share in its core mid-continent market and on developing its expansion markets in West Texas and Gulf Coast land; Calmena's plans to introduce nine additional new MWD kits over the remainder of the year and to manufacture the 2012 positive and rotary pulse MWD kits internally and the effect on EBITDAS, Calmena's costs, repair turnaround time and standardization of its MWD platform; effect of award of Ecopetrol drilling contract on additional opportunities; anticipated duration of drilling of the initial two wells in Colombia; expectations as to the strength of the Colombian drilling industry, including demand for drilling rigs and market conditions; utilization of Calmena's drilling rig in Colombia and ability to re-contract the rig at the end of its current contract; effect of establishing a repair facility in Bogota and deploying additional directional equipment to Colombia on future opportunities and growth; timing of deployment of additional directional kits to Colombia; anticipated timing of two single rigs commencing drilling in Colombia; focus on improving operating efficiencies, reducing costs and increasing profitability and the anticipated effect on the Company's results of operations and financial performance; expected timing of realization of full financial potential of investments in Brazil; terms of drilling rig contracts in Brazil; expected timing of drilling rig in Libya returning to work; Calmena's expectations regarding long term growth prospects in Libya as the country strives to achieve and maintain its oil production targets; labour and infrastructure challenges in Libya and anticipated effect on utilization and profitability; expected results for Canada, the United States and Mexico throughout the remainder of 2012;

Calmena's expectations regarding operating at the full financial potential of its current asset base and the anticipated timing thereof; effect of strategic capital investment, increased levels of industry activity in horizontal drilling and fracing and a focused sales effort on wireline technologies, equipment rentals and frac fluids management; Calmena's plans to pursue growth initiatives in West Texas and the Gulf Coast; expectations for operations in Mexico in 2012, including contract drilling utilization, ability to re-contract drilling rigs and directional kits in Mexico at the end of their current terms and effect of continued operations on operating margins; and the statements under the heading "Outlook" in this news release.

These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Calmena's control, including, but not limited to, the impact of general economic conditions; industry conditions and changes in industry conditions; volatility of commodity prices; decreased demand for energy services; competition from other energy services providers; the lack of availability of qualified personnel or management; ability of Calmena to re-finance or extend the maturity date of its senior debt and generate positive cash flow; failure of counter parties to perform on contracts; failure to successfully negotiate new contracts or renew existing contracts; failure to successfully deploy rigs; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; risks associated with international operations, including, but not limited to, effect of civil unrest on the Company's operations in Libya; seasonality; loss of key customers; fluctuations in foreign exchange or interest rates and stock market volatility; supply and demand for oilfield services relating to the drilling, completion and maintenance of oil and gas wells as well as services related to, oilfield equipment rentals and production and ancillary services; liabilities and risks, including environmental liabilities and risks inherent in oil and natural gas operations; uncertainties in weather and temperature affecting the duration of the service periods and the activities that can be completed; ability to access sufficient capital from internal and external sources; failure to successfully negotiate contracts for drilling rig operations; failure to realize the anticipated benefits of the Company's investments; and the other risks considered under "Risk Factors" in our annual information form for the year ended December 31, 2011 which is available on www.sedar.com.

With respect to forward-looking statements contained in this news release, Calmena has made assumptions regarding, but not limited to: the implementation of the Company's international growth strategy; current commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; ability of Calmena to re-finance or extend the maturity date of its senior debt; ability of Calmena to renew existing contracts and enter into new contracts; rig utilization and pricing; future exchange rates; the impact of increasing competition; conditions in general economic and financial markets; industry conditions; supply and demand for oilfield services relating to the drilling, completion and maintenance of oil and gas wells as well as services related to oilfield equipment rentals and production and ancillary services; effects of regulation by governmental agencies; trends in Calmena's operations; and future operating costs.

Management has included the above summary of assumptions and risks related to forward-looking information provided in this news release in order to provide Shareholders with a more complete perspective on Calmena's current and future operations and such information may not be appropriate for other purposes. Calmena's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Calmena will derive therefrom. Readers are cautioned that the foregoing lists of factors are not exhaustive.

These forward-looking statements are made as of the date of this news release and Calmena disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

NON GAAP MEASURES

The following measures are used within this release, but not recognized under GAAP. As a result, the method of calculation may not be comparable with other companies. These measures should not be considered alternatives to net loss and net loss per share as calculated in accordance with GAAP:

EBITDAS (Earnings before interest, income taxes, depreciation and amortization, other items of income and expense and share based compensation) - Management believes that EBITDAS as derived from information reported in the Consolidated Statement of Operations is a useful supplemental measure as it provides an indication of the Company's ability to generate funds by the Company's core business activities prior to consideration of how those activities are financed, the impact of foreign exchange, how the results are taxed, how funds are invested or how non-cash depreciation and amortization charges affect results. See the reconciliation of EBITDAS to net loss in the Company's management's discussion and analysis for the three and six months ended June 30, 2012.

Funds flow from continuing operations: Management believes that in addition to cash generated from operations, funds flow from continuing operations is a useful supplemental measure because it provides an indication of the funds generated by the Corporation's principal business activities prior to the consideration of working capital, which is primarily made up of highly liquid balances. See the reconciliation of funds flow from continuing operations in the Company's management's discussion and analysis for the three and six months ended June 30, 2012.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact:
John R. King
Calmena Energy Services Inc.
President and Chief Executive Officer
(403) 225-3879
(403) 366-2066 (FAX)

Peter J. Balkwill
Calmena Energy Services Inc.
Vice President, Finance & CFO
(403) 225-3879
(403) 366-2066 (FAX)

700, 333 - 7th Avenue SW
Calmena Energy Services Inc.
Calgary, Alberta T2P 2Z1
www.calmena.com

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