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Cathedral Energy Services Ltd
Symbol C : CET
Shares Issued 49,468,117
Close 2018-08-09 C$ 1.14
Recent Sedar Documents

Cathedral Energy loses $2.49-million in Q2

2018-08-10 00:53 ET - News Release

Mr. P. Scott MacFarlane reports

CATHEDRAL ENERGY SERVICES REPORTS RESULTS FOR 2018 Q2

Cathedral Energy Services Ltd. has released its consolidated financial results for the three and six months ended June 30, 2018, and June 30, 2017. Dollars are in thousands except per-share amounts.

                                    FINANCIAL HIGHLIGHTS  
                    (in thousands of dollars, except per-share amounts)
  
                                              Three months ended           Six months ended
                                           June 30,      June 30,     June 30,      June 30,
                                              2018          2017         2018          2017        

Revenues                                 $  34,973     $  34,355    $  75,130     $  72,678   
Adjusted gross margin % (1)                     2%           15%           7%           19%          
Adjusted EBITDAS (1)                          (985)        2,363        2,458         9,159    
Basic and diluted per share              $   (0.02)    $    0.05    $    0.05     $    0.20     
As percentage of revenues                      -3%            7%           3%           13%          
Cash flow -- operating activities           (3,731)        2,362       (1,599)        1,794    
Earnings (loss) before income taxes         (4,224)           54       (3,879)        4,026    
Basic and diluted per share              $   (0.09)    $       -    $   (0.08)    $    0.09     
Net earnings (loss)                         (2,498)          186       (2,204)        2,767    
Basic and diluted per share              $   (0.05)    $       -    $   (0.04)    $    0.06     
Equipment additions -- cash basis            4,306     $   2,511        8,780         3,547    

                                                                                      As at
                                                                      June 30,      Dec. 31,
                                                                         2018          2017
                                                                                                
Working capital                                                     $  30,983     $  31,016   
Total assets                                                          128,887       121,630  
Loans and borrowings excluding current portion                          5,534            46       
Shareholders' equity                                                  101,596       101,391  
                                                                                                
(1) Refer to non-GAAP (generally accepted accounting principles) measurements.

2018 Q2 key take-aways

Q2 revenues increased 2 per cent from $34,355 in 2017 Q2 to $34,973 in 2018 Q2 and year to date increased 3 per cent from $72,678 in 2017 to $75,130 in 2018.

Adjusted gross margin decreased to 2 per cent from 15 per cent in 2017 Q2 and to 7 per cent in 2018 year to date from 19 per cent in 2017. This decline was due to non-recurring items, including credits to certain customers, higher equipment repairs due to a more demanding drilling environment and to a lesser extent upgrading the company's existing equipment fleet.

Adjusted EBITDAS decreased from $2,363 in 2017 Q2 to a loss of $985 in 2018 Q2. Year-to-date adjusted EBITDAS decreased from $9,159 in 2017 to $2,458 in 2018.

The company continues to make investments in equipment to relieve capacity constraints and to improve equipment utilization, reliability and performance.

Outlook

The second quarter of 2018 continued to be challenging for Cathedral compared with the prior year. Canadian operations were impacted by low activity levels associated with spring breakup. In the United States, equipment repair expenses continued to be a challenge, along with some one-time operational issues with customers that resulted in unpaid work being done on certain jobs. As noted in previous quarters, expense escalation in the U.S. has been a challenge, coupled with the difficulty of implementing corresponding customer price increases for the company's services in an intensely competitive environment.

In Q1, Cathedral implemented a number of cost-saving measures which started to positively impact results in late Q2. These included better controls on rental expenses, trucking, and continued focus on labour costs and efficiencies. In Q2, Cathedral implemented a number of engineering improvements to its equipment to improve durability and performance, which should mitigate equipment repair and refurbishment costs in future quarters. Cathedral continues to focus on all expense categories impacting its business.

In 2018, Cathedral has increased its capital program for new equipment significantly compared with prior years. The objectives with the company's expanded capital program are to achieve higher drilling performance, reduce operating costs and grow Cathedral's job capacity. Cathedral's main focus with capital expenditure program has been on drilling motors as they currently provide the biggest performance differentiator in the market. To the end of Q2, Cathedral has added 45 new power sections for its next-generation seven-inch CLAW-XT high performance motors with a similar amount to be deployed in Q3. In addition, Cathedral anticipates delivery of new 5-1/2-inch motors by the end of Q3 targeted specifically for 6-3/4ths-inch holes sizes in rotary steerable application rentals. Substantially all of this equipment is targeted at the U.S. market.

On the measurement-while-drilling (MWD) front, Cathedral will be rolling out its new Cathedral linear pulser add-on to its Fusion MWD platform in Q3. This technology will be Cathedral's main MWD pulse telemetry platform going forward and will reduce the company's deployment and repair costs as Cathedral is currently dependent on third party suppliers with its existing linear pulse telemetry platform. Upgrades to Cathedral's existing Fusion MWD platform equipment, which are aimed at improving MWD performance and reliability, continue to be implemented in the company's operations. Cathedral's Fusion MWD platform provides plug and play capability to use electromagnetic or pulse telemetry either stand-alone or combined to provide dual-telemetry (DT) capability. The Fusion MWD platform performance capabilities are further augmented using Cathedral's downhole power generator (EMc2). Progress on the company's next-generation DT MWD tool remains on track for launch in 2019.

Despite a challenging first half of 2018, Cathedral is both optimistic and confident about its prospects for the remainder of 2018 and beyond.

2018 capital program

During the six months ended June 30, 2018, the company invested $8,780 (2017 -- $3,547) in equipment and expended $820 in new technology development primarily related to MWD systems.

Cathedral's current 2018 capital budget totals $18,900, which includes $1,555 for intangible additions. The total net equipment additions are estimated to be approximately $10,500.

The company is monitoring capital expenditure levels in the context of customer equipment requirements, replacement of equipment lost in hole and available cash flow, and will adjust its capital program accordingly. Delivery lead times on capital items, including component parts for self-constructed assets, range from 60 to 180 days.

Results of operations -- three months ended June 30

            REVENUES 
                     2018       2017   
                           
Canada          $   4,465  $   4,914 
United States      30,508     29,441 
Total              34,973     34,355

Revenues

Revenues for 2018 Q2 revenues were $34,973, which represented an increase of $618 or 2 per cent from 2017 Q2 revenues of $34,355.

Canadian revenues (excluding motor rental revenues) decreased to $3,396 in 2018 Q2 from $4,143 in 2017 Q2, an 18-per-cent decrease. This decrease was the result of: (i) a 24-per-cent decrease in activity days to 404 in 2018 Q2 from 533 in 2017 Q2; net of (ii) an 8-per-cent increase in the average day rate to $8,406 in 2018 Q2 from $7,773 in 2017 Q2.

The average active land rig count in Canada was down 8 per cent in 2018 Q2 compared with 2017 Q2 (source -- Baker Hughes). Cathedral's activity levels relative to the industry were impacted by the scope of customer drilling programs and their geographical areas. The 2018 Q2 day rate is higher than recent rates, however, during spring breakup, with the limited operating days, pricing with one or two clients can skew the average day rate significantly.

U.S. directional drilling revenues (excluding motor rental revenues) increased to $29,832 in 2018 Q2 from $29,243 in 2017 Q2, a 2-per-cent increase. This increase was the result of: (i) a 2-per-cent increase in activity days to 2,573 in 2018 Q2 from 2,531 in 2017 Q2; and (ii) a minor increase in the average day rate to $11,594 in 2018 Q2 from $11,554 in 2017 Q2 (when converted to Canadian dollars). However, specific one-time credits related to performance issues with certain U.S. clients reduced the day rate by $501 (Canadian).

The average active land rig count for the United States was up 20 per cent in 2018 Q2 compared with 2017 Q2 (source -- Baker Hughes). The company experienced a 2-per-cent increase in activity days that resulted in a decrease in market share in the period. This decrease in market share was largely due to equipment constraints starting in 2017 that the company has been working to resolve with its capital budget program as well as certain clients altering the timing and scope of their drilling programs. Day rates in U.S. dollars increased to $8,969 (U.S.) in 2018 Q2 from $8,588 (U.S.) in 2017 Q2, a 4-per-cent increase. The increase in day rates was due to general increases in customer pricing. The 2018 Q2 day rate in U.S. dollars has declined in the first two quarters of 2018 due to customer mix and scope of work that the company believes are not indicative of a longer-term trend.

Gross margin and adjusted gross margin

Gross margin for 2018 Q2 was negative compared with 7 per cent in 2017 Q2. Adjusted gross margin (see non-GAAP measurements) for 2018 Q2 was $631 or 2 per cent compared with $5,073 or 15 per cent for 2017 Q2.

Adjusted gross margin, as a percentage of revenue, decreased due to higher equipment repairs, higher equipment rentals and specific one-time credits related to performance issues with certain U.S. clients. Rental expenses in the quarter were higher primarily due to specialty equipment rentals that were billed through to clients with a lower markup than typical margins. Of the decrease in adjusted gross margin, 4 per cent was attributable to the impact of the specialty equipment rental margins and the credits on U.S. work.

The remaining decrease in adjusted gross margin was from increased equipment repairs. Repairs increased in part due to a more demanding drilling environment and to a lesser extent upgrades being made to the company's existing equipment fleet. In addition, there was an increase in the fixed component of cost of sales that was 3 per cent higher on a percentage of revenue basis in 2018 Q2 compared with 2017 Q2. This increase was mostly attributable to office and shop payroll and other labour-related costs.

Depreciation allocated to cost of sales decreased to $2,573 in 2018 Q2 from $2,774 in 2017 Q2. Depreciation included in cost of sales as a percentage of revenue was 7 per cent for 2018 Q2 and 8 per cent in 2017 Q2.

Selling, general and administrative (SG&A) expenses

SG&A expenses were $3,707 in 2018 Q2, a decrease of $2 compared with $3,709 in 2017 Q2. As a percentage of revenue, SG&A was 11 per cent in 2018 Q2 compared with 11 per cent in 2017 Q2.

Technology group expenses

Technology group expenses were $627 in 2018 Q2, an increase of $226 compared with $401 in 2017 Q2. Technology group expenses are related to new product development and supporting and upgrading existing technology. Technology group expenses consist of salaries and related benefits and burdens, as well as shop supplies. Technology group expenses increased primarily due to wage increases, including the reinstatement of previous wage rollbacks, and staff additions. In 2018 Q2, an additional $231 of technology group expenses related to new product development were capitalized as intangible assets (2017 Q2 -- nil).

Gain on disposal of equipment

During 2018 Q2, the company had a gain on disposal of equipment of $2,576 compared with $1,277 in 2017 Q2. These gains mainly relate to equipment lost in hole. Proceeds from clients on lost-in-hole equipment are based on amounts specified in service agreements, and, in most cases, these proceeds exceed the net book value of the equipment and result in a gain. The timing of lost-in-hole recoveries is not in the control of the company and therefore can fluctuate significantly from quarter to quarter. In 2018 Q2, the company received proceeds on lost-in-hole recoveries of $2,859 (2017 Q2 -- $1,621).

Finance costs

Finance costs consist of interest expenses on operating loans, loans and borrowings, and bank charges of $99 for 2018 Q2 versus $96 for 2017 Q2.

Foreign exchange

The company had a foreign exchange loss of $392 in 2018 Q2 compared with a gain of $699 in 2017 Q2 due to the fluctuations of the Canadian dollar relative to the U.S. dollar. The company's foreign operations are denominated in U.S. dollars, and therefore, upon consolidation, gains and losses due to fluctuations in the foreign currency exchange rates are recorded as other comprehensive income on the balance sheet as a component of equity. However, gains and losses in the Canadian entity on U.S.-dollar-denominated intercompany balances continue to be recognized in the statement of comprehensive income (loss). Included in the 2018 Q2 foreign currency gains are unrealized loss of $401 (2017 Q2 -- gain of $682) related to intercompany balances.

Income tax

For 2018 Q2, the company had an income tax recovery of $1,726 compared with a recovery of $149 in 2017 Q2. Included in the 2018 Q2 provision were recoveries of $361 related to provisions of prior periods (2017 Q2 recovery of $93).

The 2018 Q2 effective tax rate excluding adjustments for prior periods was 32 per cent. The 2018 Q2 rate is higher than anticipated as one legal entity has pretax income and the other has pretax losses. Income tax expense is booked based upon expected annualized effective rates based upon the statutory rates of 27 per cent for Canada and 23 per cent for the U.S.

Results of operations -- six months ended June 30

            REVENUES 
                     2018       2017   
                           
Canada          $  15,102  $  15,380
United States      60,028     57,298 
Total              75,130     72,678

Revenues

Revenues for 2018 were $75,130, which represented an increase of $2,452 or 3 per cent from 2017 revenues of $72,678.

Canadian revenues (excluding motor rental revenues) decreased to $13,093 in 2018 from $13,450 in 2017, a 3-per-cent decrease. This decrease was the result of: (i) a 14-per-cent decrease in activity days to 1,676 in 2018 from 1,956 in 2017; net of (ii) a 14-per-cent increase in the average day rate to $7,812 in 2018 from $6,876 in 2017.

The average active land rig count in Canada was down 8 per cent in 2018 compared with 2017 (source -- Baker Hughes). The 2018 day rate increase was consistent with the quarter-over-quarter increases the company has been able to achieve beginning in 2017 Q1.

U.S. directional drilling revenues (excluding motor rental revenues) increased to $58,963 in 2018 from $56,821 in 2017, a 4-per-cent increase. This increase was the result of: (i) a 1-per-cent decrease in activity days to 5,071 in 2018 from 5,096 in 2017; and (ii) a 4-per-cent increase in the average day rate to $11,628 in 2018 from $11,150 in 2017 (when converted to Canadian dollars). However, specific one-time credits related to performance issues with certain U.S. clients reduced the day rate by $254 (Canadian).

The average active land rig count for the U.S. was up 26 per cent in 2018 compared with 2017 (source -- Baker Hughes). The company experienced a 1-per-cent decrease in activity days that resulted in a decrease in market share over this period. This decrease in market share was largely due to equipment constraints starting in 2017 that the company has been working to resolve with its capital budget program, as well as certain clients altering the timing and scope of their drilling programs. Day rates in U.S. dollars increased to $9,098 (U.S.) in 2018 from $8,350 (U.S.) in 2017, a 9-per-cent increase. The increase in day rates was primarily due to customer price increases. U.S. day rates have declined sequentially the first two quarters of 2018 due to customer mix and scope of work that the company believes are not indicative of a longer-term trend.

Gross margin and adjusted gross margin

Gross margin for 2018 was under 1 per cent compared with 11 per cent in 2017. Adjusted gross margin (see non-GAAP measurements) for 2018 was $5,393 or 7 per cent compared with $13,559 or 19 per cent for 2017.

Adjusted gross margin, as a percentage of revenue, decreased due to higher equipment repairs, higher equipment rentals and specific one-time credits related to performance issues with certain U.S. clients in Q2. Rental expenses were adversely impacted by specialty equipment rentals in Q2 that were billed through to clients with a lower markup than typical margins. The impact of these rentals and the credits on U.S. work caused 2 per cent of the decrease in adjusted gross margin.

The remaining decrease in adjusted gross margin was from increased equipment repairs. Repairs increased in part due to a more demanding drilling environment and to a lesser extent upgrades being made to the company's existing equipment fleet. In addition, there was an increase in the fixed component of cost of sales that was 3 per cent higher on a percentage of revenue basis in 2018 compared with 2017. This increase was mostly attributable to office and shop payroll and other labour-related costs.

Depreciation allocated to cost of sales decreased to $4,788 in 2018 from $5,380 in 2017. Depreciation included in cost of sales as a percentage of revenue was 6 per cent for 2018 and 7 per cent in 2017.

Selling, general and administrative expenses

SG&A expenses were $7,534 in 2018, an increase of $667 compared with $6,867 in 2017. As a percentage of revenue, SG&A was 10 per cent in 2018 compared with 9 per cent in 2017. SG&A increased primarily due to wage increases, including the reinstatement of previous wage rollbacks, increased U.S. health benefits and to a lesser extent staff additions offset by lower U.S. state sales tax expenditures. Staffing costs included in SG&A include executive, sales, accounting, human resources, payroll, safety and related support staff.

Technology group expenses

Technology group expenses were $1,228 in 2018, an increase of $162 compared with $1,066 in 2017. Technology group expenses are related to new product development and supporting and upgrading existing technology. Technology group expenses consist of salaries and related benefits and burdens, as well as shop supplies. Technology group expenses increased primarily due to wage increases, including the reinstatement of previous wage rollbacks, and staff additions. In 2018, an additional $461 of technology group expenses related to new product development were capitalized as intangible assets (2017 -- nil).

Gain on disposal of equipment

During 2018, the company had a gain on disposal of equipment of $5,584 compared with $3,291 in 2017. These gains mainly relate to equipment lost in hole. Proceeds from clients on lost-in-hole equipment are based on amounts specified in service agreements, and, in most cases, these proceeds exceed the net book value of the equipment and result in a gain. The timing of lost-in-hole recoveries is not in the control of the company and therefore can fluctuate significantly from quarter to quarter. In 2018, the company received proceeds on lost-in-hole recoveries of $6,599 (2017 -- $3,871).

Finance costs

Finance costs consist of interest expenses on operating loans, loans and borrowings, and bank charges of $144 for 2018 versus $398 for 2017. The decrease in finance costs relate to the reduction of amounts drawn on the company's credit facility. In 2017 Q1, the company finalized the sale of its flowback and production testing (F&PT) assets, raised funds through a private placement of shares, and repaid the outstanding long-term debt.

Foreign exchange

The company had a foreign exchange loss of $1,089 in 2018 compared with a gain of $917 in 2017 due to the fluctuations of the Canadian dollar relative to the U.S. dollar. The company's foreign operations are denominated in U.S. dollars, and therefore, upon consolidation, gains and losses due to fluctuations in the foreign currency exchange rates are recorded as other comprehensive income on the balance sheet as a component of equity. However, gains and losses in the Canadian entity on U.S.-dollar-denominated intercompany balances continue to be recognized in the statement of comprehensive income (loss). Included in the 2018 foreign currency gains are unrealized loss of $1,070 (2017 -- gain of $874) related to intercompany balances.

Income tax

For 2018, the company had an income tax recovery of $1,675 compared with expense of $1,124 in 2017. Included in the 2018 provision was recoveries of $361 related to provisions of prior periods (2017 recovery of $4).

The 2018 effective tax rate excluding adjustments for prior periods was 34 per cent. The 2018 rate was higher than anticipated as one legal entity has pretax income and the other has pretax losses. Income tax expense is booked based upon expected annualized effective rates based upon the statutory rates of 27 per cent for Canada and 23 per cent for the U.S.

Liquidity and capital resources

Overview

On an annualized basis, the company's principal source of liquidity is cash generated from operations. In addition, the company has the ability to finance liquidity requirements through its credit facility and the issuance of debt and/or equity. For the six months ended June 30, 2018, the company had funds used in operations of $1,599 (2017 -- funds from operations of $1,794). The decrease in funds is mainly due to reduced profits.

Working capital

At June 30, 2018, the company had working capital of $30,983 (Dec. 31, 2017 -- $31,016). The decrease in working capital level was primarily due to lower receivables, and higher inventories and trade payables relative to Dec. 31, 2017.

Credit facility

In December, 2017, the company signed a new credit facility with a new lending syndicate. The facility consists of a $5-million operating facility and $15-million extendible revolving credit facility, and expires Dec. 31, 2019. The facility is secured by a general security agreement over all present and future personal property.

The financial covenants associated with the amended facility are as follows:

  • The consolidated-funded-debt-to-consolidated-facility-EBITDA (earnings before interest, taxes, depreciation and amortization) (as defined in the facility agreement) ratio shall not exceed 3.0:1.
  • The consolidated interest coverage ratio shall not be less than 2.5:1.

The facility bears interest at the financial institution's prime rate plus 0.75 per cent to 2.25 per cent or the bankers' acceptance (BA) rate plus 1.75 per cent to 3.00 per cent, with interest payable monthly. Interest rate spreads for the facility depend on the level of funded debt to the 12-month-trailing facility EBITDA. The facility provides a means to lock in a portion of the debt at interest rates through the BA based on the interest rate spread on the date the BA was entered into.

At June 30, 2018, the company had drawn $5,500 of its revolving credit facility. The company's funded debt level under the lending agreement was $3,590. For the rolling 12 months ended June 30, 2018, facility EBITDA was $14,120.

Subsequent to June 30, 2018, the company drew another $1,500 of its revolving credit facility. Based on current available information, Cathedral expects to comply with all covenants for the next 12 months.

Contractual obligations

In the normal course of business, the company incurs contractual obligations and those obligations are disclosed in the company's management's discussion and analysis (MD&A) for the year ended Dec. 31, 2017. As at June 30, 2018, the company had a commitment to purchase approximately $4,109 of equipment. Cathedral anticipates expending these funds in 2018 Q3 and Q4 based upon current delivery lead times.

Share capital

At Aug. 9, 2018, the company has 49,468,117 common shares and 2,716,834 options outstanding with a weighted average exercise price of $1.56

Non-GAAP measurements

Cathedral uses certain performance measures throughout this document that are not defined under GAAP. Management believes that these measures provide supplemental financial information that is useful in the evaluation of Cathedral's operations and are commonly used by other oil field companies. Investors should be cautioned, however, that these measures should not be construed as alternatives to measures determined in accordance with GAAP as an indicator of Cathedral's performance. Cathedral's method of calculating these measures may differ from that of other organizations and accordingly may not be comparable.

The specific measures being referred to include the following:

  • Adjusted gross margin, calculated as gross margin plus non-cash items (depreciation and share-based compensation), is considered a primary indicator of operating performance.
  • Adjusted gross margin per cent, calculated as adjusted gross margin divided by revenues, is considered a primary indicator of operating performance.
  • Total adjusted EBITDAS, defined as earnings before finance costs, unrealized foreign exchange on intercompany balances, taxes, depreciation, writedown of goodwill, writedown of equipment, writedown of inventory and share-based compensation, is considered an indicator of the company's ability to generate funds flow from operations prior to consideration of how activities are financed, how the results are taxed and measured, and non-cash expenses. This measure includes both discontinued F&PT operations and continuing directional drilling operations.
  • Adjusted EBITDAS from discontinued operations is total adjusted EBITDAS as calculated above from discontinued F&PT operations only;
  • Adjusted EBITDAS from continuing operations is total adjusted EBITDAS as calculated above for continuing directional drilling as well as corporate administrative costs;
  • Net equipment additions are equipment additions expenditures less proceeds from equipment lost downhole. Cathedral uses net equipment additions to assess net cash flows related to the financing of Cathedral's equipment additions.

                     CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)  
                            (in thousands of dollars, except per-share amounts)
  
                                                                    Three months ended        Six months ended
                                                                 June 30,      June 30,  June 30,      June 30,
                                                                    2018          2017      2018          2017

Revenues                                                       $  34,973    $  34,355  $  75,130     $  72,678
Cost of sales                                                                                                    
Direct costs                                                     (34,342)     (29,282)   (69,737)      (59,119)
Depreciation                                                      (2,573)      (2,774)    (4,788)       (5,380)
Share-based compensation                                             (33)         (15)       (73)          (30)
Total cost of sales                                              (36,948)     (32,071)   (74,598)      (64,529)
Gross margin                                                      (1,975)       2,284        532         8,149
Selling, general and administrative expenses                                                                  
Direct costs                                                      (3,574)      (3,635)    (7,272)       (6,721)
Depreciation                                                         (41)         (25)       (77)          (50)
Share-based compensation                                             (92)         (49)      (185)          (96)
Total selling, general and administrative expenses                (3,707)      (3,709)    (7,534)       (6,867)
                                                                  (5,682)      (1,425)    (7,002)        1,282
Technology group expenses                                           (627)        (401)    (1,228)       (1,066)
Gain on disposal of equipment                                      2,576        1,277      5,584         3,291
Earnings (loss) from operating activities                         (3,733)        (549)    (2,646)        3,507
Finance costs                                                        (99)         (96)      (144)         (398)
Foreign exchange gain (loss)                                        (392)         699     (1,089)          917
Earnings (loss) before income taxes                               (4,224)          54     (3,879)        4,026
Income tax recovery (expense)                                                                                 
Current                                                             (273)         627       (435)          (28)
Deferred                                                           1,999         (478)     2,110        (1,096)
Total income tax recovery (expense)                                1,726          149      1,675        (1,124)
Net earnings (loss) from continuing operations                    (2,498)         203     (2,204)        2,902
Net (loss) from discontinued operations                                -          (17)         -          (135)
Net earnings (loss)                                               (2,498)         186     (2,204)        2,767
Other comprehensive income (loss)                                                                             
Foreign currency translation differences 
for foreign operations                                               885       (1,285)     2,080        (1,647)   
Total comprehensive income (loss)                                 (1,613)      (1,099)      (124)        1,120
                                                                                                              
Net earnings (loss) from continuing operations per share                                                      
Basic and diluted                                              $   (0.05)   $       -  $   (0.04)    $    0.06
Net (loss) from discontinued operations per share                                                             
Basic                                                          $       -    $       -  $       -     $       -
Net earnings (loss) per share                                                                                     
Basic and diluted                                              $   (0.05)   $       -  $   (0.04)    $    0.06

About Cathedral Energy Services Ltd.

Cathedral, based in Calgary, Alta., is incorporated under the Business Corporations Act (Alberta) and operates in the United States under Cathedral Energy Services Inc. The company is publicly traded on the Toronto Stock Exchange under the symbol CET. Cathedral, is a trusted partner to North American energy companies requiring high performance directional drilling services. Cathedral works in partnership with its customers to tailor its equipment and expertise to meet their specific geographical and technical needs.

We seek Safe Harbor.

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