Mr. Michael West reports

CE FRANKLIN LTD. ANNOUNCES 2011 THIRD QUARTER RESULTS

CE Franklin Ltd. has released financial results, including net earnings of $4.8-million or 27 cents per share for the third quarter ended Sept. 30, 2011, a significant increase from net earnings of $2.2-million or 12 cents per share generated in the third quarter ended Sept. 30, 2010.

"Improved product margins, supported by disciplined revenue growth, led to increased profitability. Activity levels are expected to remain at or above prior-year levels as the industry works through this period of economic volatility," said Michael West, president and chief executive officer.

The Sept. 30, 2011, condensed interim consolidated financial statements are prepared under international financial reporting standards. Consequently the comparative figures for 2010 and the company's statement of financial position as at Jan. 1, 2010, have been restated from accounting principles generally accepted in Canada to comply with IFRS. The reconciliations from the previously published Canadian generally accepted accounting principles financial statements are summarized in Note 3 to the condensed interim consolidated financial statements, and there were no material differences.

Net earnings for the third quarter of 2011 were $4.8-million, an increase of $2.6-million from the third quarter of 2010. Revenues were $140.5-million, an increase of $8.3-million (6 per cent) from the third quarter of 2010. Industry activity continued to improve and is focused on oil, oil sands and liquid-rich natural gas plays. Well completions increased 34 per cent compared with the third quarter of 2010. Capital project business revenue grew $6.2-million year over year due to improved industry activity levels. Gross profits increased by $4.7-million (24 per cent) due to the increase in revenues and improved gross profit margins year over year. Average gross profit margins were consistent with the second quarter of 2011 but improved over the third quarter 2010 average gross profit margin, as increased purchasing levels contributed to higher-volume rebate income. Selling, general and administrative expenses increased by $2.3-million (15 per cent) from prior year to $17.8-million for the quarter as compensation and operating costs have increased in response to higher revenue levels. During the quarter, the company moved its head office location within downtown Calgary and, as a consequence, recorded a one-time lease charge of $700,000 in relation to its old head office lease obligations, net of expected sublease revenue. The company also recorded an unrealized foreign exchange gain of $1.0-million in the quarter on foreign exchange contracts used to manage currency exposure on U.S.-denominated product purchases. The weighted average number of shares outstanding during the third quarter was consistent with the prior-year period as the rise in share price during the last year has limited the activity occurring under the normal course issuer bid program. Net earnings per share (basic) were 27 cents in the third quarter of 2011, compared with net earnings of 12 cents per share in the third quarter of 2010.

Net earnings for the nine months ended Sept. 30, 2011, at $9.8-million were more than double the net income for the same prior-year period. Revenues were $392.0-million, an increase of $38.1-million (11 per cent) over the comparable 2010 period due to improvements in capital project and maintenance repair and operating revenues. Well completions have increased 32 per cent year over year as industry activity continues to build. Gross profit was up $10.9-million (20 per cent) due to the increase in revenues combined with an increase in vendor rebate income due to increased purchasing levels. Selling, general and administrative expenses increased by $5.4-million (12 per cent) to $51.2-million for the nine months for the same reasons they were higher in the third quarter. Income taxes increased by $1.9-million for the nine months ended Sept. 30, 2011, compared with the prior-year period due to higher pretax earnings. The weighted average number of shares outstanding (basic) during the third quarter was consistent with the prior-year period as the rise in share price during the last year has limited the activity occurring under the normal course issuer bid program. Net earnings per share (basic) were 56 cents for the nine months ended Sept. 30, 2011, compared with 24 cents earned in same prior-year period.

Business outlook

Oil and gas industry activity in 2011 is expected to remain at or above 2010 levels for the rest of the year. Natural gas prices remain depressed as North American production capacity and inventory levels continue to dominate demand. Natural gas capital expenditure activity is focused on the emerging shale gas plays in northeastern British Columbia and liquid-rich gas plays in northwestern Alberta, where the company has a strong market position. Conventional and heavy oil economics are attractive at current price levels leading to continuing activity in eastern Alberta and southeast Saskatchewan. Oil sands project announcements continue at current oil price levels. Approximately 50 per cent to 60 per cent of the company's total revenues are driven by customers' capital expenditure requirements. CE Franklin's revenues are expected to increase modestly in 2012 as the oil and gas industry activity levels remain relatively consistent with 2011 levels.

Gross profit margins are expected to remain under pressure as customers that produce natural gas focus on reducing their costs to maintain acceptable project economics and due to continued aggressive oil field supply industry competition as industry activity levels remain below the last five-year average. The company will continue to manage its cost structure to protect profitability while maintaining service capacity and advancing initiatives.

Over the medium to longer term, the company's strong financial and competitive positions should enable profitable growth of its distribution network through the expansion of its product lines, supplier relationships and capability to service additional oil and gas and other industrial end use markets.

Additional information

Additional information relating to CE Franklin, including its third quarter 2011 management's discussion and analysis and interim consolidated financial statements and its Form 20-F/annual information form, is available under the company's profile on the SEDAR website and at the company website.

Conference call and webcast information

A conference call to review the third quarter 2011 results, which is open to the public, will be held on Oct. 28, 2011, at 11 a.m. Eastern Time (9 a.m. Mountain Time).

Participants may join the call by dialling 1-647-427-7450 in Toronto or dialling 1-888-231-8191 at the scheduled time of 11 a.m. Eastern Time. For those unable to listen to the live conference call, a replay will be available at approximately 2 p.m. Eastern Time on the same day by calling 1-416-849-0833 in Toronto or dialling 1-855-859-2056 and entering the passcode of 15091601 and may be accessed until midnight on Nov. 4, 2011.

The call will also be available on the company's website.

Mr. West, president and chief executive officer, will lead the discussion and will be accompanied by Derren Newell, vice-president and chief financial officer. The discussion will be followed by a question-and-answer period.

                            THIRD QUARTER OPERATING RESULTS                                                                                    
                  (in millions of Canadian dollars except per share data)                   
                                                                                                                 
                                                            Three months               Nine months 
                                                          ended Sept. 30,           ended Sept. 30,
                                                          2011      2010            2011      2010       

Revenues                                                $140.5    $132.2          $392.0    $353.9 
Cost of sales                                           (116.6)   (113.0)         (326.6)   (299.5)
Gross profit                                              23.9      19.2            65.4      54.4 
Selling, general and administrative expenses             (17.8)    (15.5)          (51.2)    (45.8)
Foreign exchange and other                                 1.6       0.1             1.8        -- 
EBITDA (1)                                                 7.7       3.8            16.0       8.6 
Depreciation                                              (0.6)     (0.6)           (1.8)     (1.8)
Interest                                                  (0.2)     (0.1)           (0.4)     (0.5)
Earnings before tax                                        6.9       3.1            13.8       6.3 
Income tax expense                                        (2.1)     (0.9)           (4.0)     (2.0)
Net earnings                                               4.8       2.2             9.8       4.3 
Net earnings per share                                                                                             
Basic                                                 $   0.27   $  0.12        $   0.56   $  0.24 
Diluted                                               $   0.26   $  0.12        $   0.54   $  0.24 
                                                                                                                   
(1) EBITDA represents net earnings before interest, taxes, depreciation and amortization. 
EBITDA is a supplemental non-generally accepted accounting principles financial measure 
used by management, as well as industry analysts, to evaluate operations. Management 
believes that EBITDA, as presented, represents a useful means of assessing the performance 
of the company's continuing operating activities, as it reflects the company's earnings 
trends without showing the impact of certain charges. The company is also presenting
EBITDA and EBITDA as a percentage of revenues because they are used by management as 
supplemental measures of profitability. The use of EBITDA by the company has certain 
material limitations because it excludes the recurring expenditures of interest, income tax
and depreciation expenses. Interest expense is a necessary component of the company's 
expenses because the company borrows money to finance its working capital and capital 
expenditures. Depreciation expense is a necessary component of the company's expenses 
because the company is required to pay cash to acquire equipment to generate revenues. 
Management compensates for these limitations to the use of EBITDA by using EBITDA 
as only a supplementary measure of profitability. EBITDA is not used by management as an 
alternative to net earnings, as an indicator of the company's operating performance, as 
an alternative to any other measure of performance in conformity with generally accepted 
accounting principles or as an alternative to cash flow from operating activities as a 
measure of liquidity. A reconciliation of EBITDA to net earnings is provided within 
this table. Not all companies calculate EBITDA in the same manner, and EBITDA does not 
have a standardized meaning prescribed by GAAP. Accordingly, EBITDA, as the term is used 
herein, is unlikely to be comparable with EBITDA as reported by other entities.

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