Press release from Marketwire
Strad Energy Services Announces Record Results in Third Quarter 2011
Thursday, November 10, 2011
Strad Energy Services Announces Record Results in Third Quarter 201105:00 EST Thursday, November 10, 2011CALGARY, ALBERTA--(Marketwire - Nov. 10, 2011) - NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.The news release contains "forward-looking information and statements" within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Cautionary Statement Regarding Forward-Looking Information and Statements" later in this news release. Selected financial and operational information is contained below and should be read in conjunction with the interim financial statements and the related MD&A which are available for review at www.stradenergy.com or www.sedar.com.Strad Energy Services Ltd., ("Strad" or the "Company") (TSX:SDY), a North America focused, diversified energy services company, today announced its financial results for the three and nine month periods ended September 30, 2011. All amounts are stated in Canadian dollars unless otherwise noted.SELECTED FINANCIAL AND OPERATIONAL HIGHLIGHTS:Record third quarter EBITDA(1) of $18.6 million, a 116% increase compared with $8.6 million in the third quarter of 2010 and a 65% increase in EBITDA compared with the second quarter of 2011; Capital expenditures of $6.8 million, net of disposals, in the third quarter. By the end of September, $58.9 million of the $86.5 million approved capital program for 2011 had been spent; Continued deployment of assets to high growth resource areas in the United States. Record third quarter United States revenues of $29.6 million increased 132% compared with the third quarter of 2010. Total gross capital assets based in the United States now comprise 47% of total Drilling Services gross capital assets compared with 32% at the end of the third quarter of 2010; Ongoing success in the development of new products, including solids control, composite matting and satellite communications rental equipment with $11.3 million spent on new products in the first nine months of 2011; and Total funded debt to trailing EBITDA ratio of 0.7 at the end of the third quarter. "For the second straight quarter, Strad has succeeded in generating record-setting financial performance that was driven by strong utilization rates across our Canadian and U.S. operating regions. Following several quarters of sound investment in growing our asset base, third quarter EBITDA more than doubled from the same period a year ago," said Henry van der Sloot, Chief Executive Officer of Strad. "In keeping with our commitment to disciplined growth, we are also mindful of the current volatility of the global macroeconomic picture and are closely monitoring our anticipated capital spending for the balance of 2011 and beyond. We feel we are well positioned to rapidly scale the level of investment in our business as broader industry conditions dictate." "This quarter's success speaks to the growing strength and depth of our customer base which includes major producers on both sides of the border," said Andy Pernal, President of Strad. "As the industry continues to shift towards increasingly complex and larger-scale projects that require broader rental equipment fleets, it is our growing investment in our asset base and expanded knowledge of our customers' businesses that allows us to penetrate deeper into the marketplace and ensure a growing reliance on the Strad brand." Notes: Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS or previous Generally Accepted Accounting Principles in Canada ("GAAP"); see "Non-IFRS Measures Reconciliation" in this press release.FINANCIAL REVIEW FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2011 Effective January 1, 2011, Strad began reporting its financial results in accordance with International Financial Reporting Standards ("IFRS"). Prior year comparative amounts were changed to reflect results as if Strad had always prepared its financial results using IFRS. Please see additional discussion regarding IFRS later in this news release.SELECTED FINANCIAL AND OPERATING HIGHLIGHTSFor the three and nine months ended September 30, ($000's, except per share amounts)Three months ended September 30,Nine months ended September 30,20112010% chg.20112010% chg.Revenue78,12141,61588175,482108,68361EBITDA(1)18,5998,59111638,36420,44288Per share ($), basic0.510.441.051.04Per share ($), diluted0.500.341.040.92Net Income7,4362,32322012,5804,733166Per share ($), basic0.200.12670.340.2442Per share ($), diluted0.200.100.340.23Funds from Operations(2)17,32410,3716737,34620,54182Per share ($), basic0.470.531.021.04Per share ($), diluted0.470.411.010.93Capital Expenditures(3)6,81711,54458,92730,501Total assets260,575165,44557260,575165,44557Long term debt(4)29,52636,88029,52636,880Total long term liabilities61,17543,20761,17543,207Common Shares – end of period ('000's)37,24620,40337,24620,403Weighted average Common Sharesbasic36,69219,72736,69219,743diluted37,03625,26437,01822,127Notes:(1)Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS or previous GAAP; see "Non-IFRS Measures Reconciliation". (2)Funds from operations is cash flow from operating activities before changes in working capital. Funds from operations is not a recognized measure under IFRS or previous GAAP; see "Non-IFRS Measures Reconciliation". (3)Includes assets acquired under finance lease. Segmented information does not include capital expenditures for the corporate segment of Strad as they are minimal. (4)Excluding current portion; includes long term portion of finance lease obligations and convertible debentures less cash. FINANCIAL POSITION AND RATIOS September 30, ($000's except ratios)20112010Working Capital (1)39,27511,323Funded Debt (2) 34,47759,597Cash 6,000-Total Assets (3)260,575165,445Funded Debt to EBITDA(2)0.72.6(1)Working capital is calculated as current assets less current liabilities. See "Non-GAAP Measures Reconciliation". (2)Funded debt includes bank indebtedness plus current and long-term portion of debt plus current and long-term obligations under finance lease plus convertible debentures less cash. EBITDA is based on trailing twelve months. See "Non-GAAP Measures Reconciliation". (3)Includes assets acquired under finance lease. SEGMENTED INFORMATIONStrad operates in Canada and the United States through two business segments: Drilling Services and Production Services. Drilling Services includes a comprehensive range of drilling-related products and services, including a wide range of environmental solutions. Production Services includes mechanical services, production equipment packaging and electrical and instrumentation services. All divisional figures are reported based on these two segments.For the three and nine months ended September 30,($000's, except per share amounts)Three months ended September 30,Nine months ended September 30,($000's)20112010% chg.20112010% chg.Drilling ServicesRevenue62,67525,985141126,17462,021103EBITDA(1)19,2879,62210040,48721,19891EBITDA %30.8%37.0%32.1%34.2%Capital Expenditures(2)6,1309,71357,88027,556Gross Capital Assets143,23873,112143,23873,112Total Assets198,821106,59187198,821106,59187Annualized Return on Average Total Assets %(3)46.0%45.5%38.2%34.2%Production ServicesRevenue15,44615,630(1)49,30846,6626EBITDA(1)1,115593883,2243,768(14)EBITDA %7.2%3.8%6.5%8.1%Capital Expenditures(2)1841,5492711,763Gross Capital Assets14,86716,43814,86716,438Total Assets56,19358,08056,19358,080Annualized Return on Average Total Assets %(3)7.7%3.8%7.2%8.0%Corporate EBITDA(1)(1,802)(1,624)(5,347)(4,524)Total EBITDA(1)18,5998,59138,36420,442Notes:(1)Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS or previous GAAP; see "Non-IFRS Measures Reconciliation". (2)Includes assets acquired under finance lease. Segmented information does not include capital expenditures for the corporate segment of Strad as they are minimal. (3)Annualized return on average total drilling assets is not a recognized measure under IFRS or previous GAAP; see "Non-IFRS Measures Reconciliation". RESULTS OF OPERATIONS The record revenue and EBITDA results for the nine months ended September 30, 2011, are due to the successful execution of Strad's 2010 and 2011 capital programs. In the second quarter, Strad increased its 2011 capital expenditure program to $86.5 million (from $66.5 million), of which 68% had been purchased as of September 30, 2011. Strad's scalable capital program is being driven by continued organic demand for the Company's rental products and services. Horizontal drilling and multi-stage fracing activity have increased in the industry. In addition, there is increasingly stringent regulation and scrutiny of environmental practices, especially around high-profile resource plays in the U.S. These trends have increased the amount of equipment required on sites, the technical nature of the equipment, and the planning time required prior to execution of drilling. Strad partners with customers at the planning phase to ensure all equipment, logistical and safety needs are being satisfied efficiently. The Company's growing United States business provides geographical diversification, exposure to a larger range of resource plays and helps stabilize seasonal impacts for its rental equipment operations.Consolidated revenue generated for the three and nine months ended September 30, 2011, increased 88% and 61%, respectively, to $78.1 million and $175.5 million compared with $41.6 million and $108.7 million for the same periods in 2010. Higher rental equipment utilization, additional capital expenditures and increased product sales contributed to the significant increase in revenue compared to 2010. Revenues generated from the Company's Drilling Services segment for the three and nine months ended September 30, 2011, increased 141% and 103%, respectively, to $62.7 million and $126.2 million versus $26.0 million and $62.0 million for the same periods in 2010. Included in revenue for the three and nine months ended September 30, 2011 are product sales of $17.0 million and $28.2 million compared with $0.5 million and $4.8 million for the same periods in 2010. The remaining increase is primarily due to additions to the rental asset fleet in both Canada and the United States. Revenue generated from the United States for the three and nine months ended September 30, 2011, increased to $29.6 million and $54.2 million, respectively, or 131% and 137%, from $12.8 million and $22.9 million in the same periods in 2010. Canadian Drilling Services revenue also improved; for the three and nine months ended September 30, 2011, revenue of $33.1 million and $72.0 million increased 151% and 84%, respectively, compared with revenue of $13.2 million and $39.1 million for the same periods in 2010. Production Services revenue decreased 1% and improved 6% to $15.4 million and $49.3 million for the three and nine months ended September 30, 2011, respectively, compared with $15.6 million and $46.7 million for the same periods in 2010. Revenue for the year to date period increased as the number of field service technicians in the group grew 13% over September 30, 2010, but was negatively impacted by delays in servicing due to continuing weak industry conditions in the Western Canadian Sedimentary Basin ("WCSB"), which have not changed significantly over that of last year due to depressed natural gas prices.Consolidated EBITDA for the three and nine months ended September 30, 2011, of $18.6 million and $38.4 million improved 116% and 88%, respectively, compared with $8.6 million and $20.4 million for the same periods in 2010 for the reasons stated above. EBITDA for the quarter, excluding product sales noted above, was $16.9 million. EBITDA as a percentage of revenue for the three and nine months ended September 30, 2011, was 24% and 22% compared with 21% and 19% for the same periods in 2010. Drilling Services EBITDA for the three and nine months ended September 30, 2011, of $19.3 million and $40.5 million improved 100% and 91%, respectively, compared with $9.6 million and $21.2 million for the same periods in 2010 for the reasons stated above. EBITDA as a percentage of revenue for the three and nine months ended September 30, 2011, was 31% and 32% compared with 37% and 34% for the same periods in 2010. EBITDA as a percentage of revenue for the three and nine months ended September 30, 2011, excluding EBITDA from product sales of $1.7 million and $3.3 million, was 38% compared with 37% and 36% excluding $0.1 million and $0.5 million of product sales EBITDA for the same period in 2010. Production Services EBITDA for the three and nine months ended September 30, 2011, of $1.1 million and $3.2 million increased 88% and decreased 14%, respectively, compared with $0.6 million and $3.8 million for the same periods in 2010 for the reasons stated above. EBITDA as a percentage of revenue for the three and nine months ended September 30, 2011, was 7% compared with 4% and 8% for the same periods in 2010. LIQUIDITY AND CAPITAL RESOURCESAs of September 30, 2011, Strad's principal sources of liquidity include working capital of $39.3 million, an increase of $28.0 million compared with September 30, 2010; a syndicated banking facility of $100.0 million consisting of a $15.0 million operating facility of which $nil was drawn; and a revolving facility of $85.0 million of which $31.5 million was drawn as of September 30, 2011. As at September 30, 2011, the Company was in compliance with all of its bank facility covenants. OUTLOOK Industry conditions remained strong in the third quarter, driven by activity in increasingly dynamic resource plays focused on oil and liquids rich natural gas. Demand for Strad's services continued to outstrip supply which translated into high utilization rates and strong pricing in key regional markets, trends that management expects to continue through the balance of the year and into 2012. In the WCSB, drilling utilization of 56% for the third quarter of 2011 was up from 41% in the third quarter of last year; well permits for the third quarter of 2011 increased 15% over the third quarter of 2010; and meters drilled in the third quarter of 2011 increased 37% over that of the third quarter of 2010. Positive industry indicators were also present in the United States where land rig counts grew due to continued growth in the number of rigs currently targeting oil (53%). Horizontal drilling and multi-stage fracing are also being utilized more often to exploit both unconventional resource plays and mature conventional plays. So far this year, 57% of U.S. rig activity was focused on horizontal drilling techniques, compared with 52% in 2010. In Canada, 57% of total wells drilled in 2011 were horizontal, compared with 51% in 2010. Horizontal drilling techniques require a larger footprint and more advanced planning and equipment on the well site. Strad is successfully accessing the emerging market opportunity created by these large and complex initiatives by being one of the few companies able to deploy the volume of equipment and expertise required to support them. Management is increasingly focused on signing contracts associated with these projects, which drives utilization and provides more stable revenue. Management believes the focus on horizontal drilling techniques, as well as increasingly complex completions, are expected to drive growth through the winter drilling season.On the back of these trends Strad generated record revenue and earnings in the third quarter. These results are a direct reflection of the successful implementation of the Company's strategy to grow its asset base and Strad's return on assets remains strong. On a year-to-date basis, the Company allocated approximately 60% of its total Drilling Services capital expenditures to the U.S. and total gross capital assets in the U.S. now comprise 47% of total Drilling Services gross capital assets. New product initiatives such as solids control, satellite communications equipment and composite mats made up $11.3 million of capital expenditures in the first nine months of 2011. The new products and services enhance the value the Company can offer to its customers and helps to further diversify the product suite. Driving further demand for these new products are the continuously evolving high standards of safety and environmental stewardship that continue to present significant concern for customers, particularly those in high profile, new resource plays. These higher standards, in combination with increasingly large and complex deployments, have created barriers to entry and a drive to use single source, full-service vendors like Strad. On that basis, the Company substantially increased its customer base in 2011 with the majority of customers ranked among the largest companies of their type in Canada and the U.S.With increased recent volatility in commodity prices, brought on by European economic uncertainty and concerns for a potential downturn in the U.S., management expects Exploration and Production ("E&P") companies to exercise caution and to potentially moderate capital spending in 2012 versus 2011 levels. Formal approval of Strad's 2012 capital expenditure program will be confirmed in December. However, management expects that the program will approximate cash flow for the year. Management believes it has the flexibility to rapidly scale its capital expenditure program in the coming quarters in concert with changes in broader macroeconomic conditions and spending by E&P customers. Flexibility is the result of Strad manufacturing in-house a substantial portion of the rental equipment in its 2011 capital expenditure program, and maintaining strong relationships with third-party equipment providers. This should allow the Company to take advantage of robust market conditions while they persist and mitigate the potential impact of any deterioration in economic conditions should industry dynamics change in 2012. Management intends to allocate additional capital in the coming months with a focus on continued development of new and technically advanced products. The Company typically averages a three month lag between the date of expenditures and the date that assets are deployed in the field and generating revenue, although the lag varies by product line. The lag is due to internal preparation necessary to ready the equipment for customer use.Strad remains cognizant that a strong balance sheet is essential to remaining a successful company operating against a backdrop of fluctuating market conditions. The funds raised last November through the initial public offering, operational cash flow and the existing bank facilities, have provided for a strong balance sheet and the required funding for the 2011 capital program. Management views funded debt to EBITDA as an important tool in the prudent management of its balance sheet and intends to continue carefully allocating capital. At September 30, 2011, the funded debt to EBITDA ratio was 0.7. NON-IFRS MEASURES RECONCILIATIONCertain supplementary measures in this Press Release do not have any standardized meaning as prescribed under IFRS and previous GAAP and, therefore, are considered non-IFRS measures. These measures are described and presented in order to provide shareholders and potential investors with additional information regarding the Company's financial results, liquidity and its ability to generate funds to finance its operations. These measures are identified and presented, where appropriate, together with reconciliations to the equivalent IFRS or previous GAAP measure. However, they should not be used as an alternative to IFRS or previous GAAP, because they may not be consistent with calculations of other companies. These measures are further explained below.Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS and previous GAAP. Management believes that in addition to net income, EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Company's principal business activities prior to consideration of how those activities are financed or how the results are taxed. EBITDA is calculated as net income plus interest, taxes, depreciation and amortization, non-controlling interest, loss on disposal of property, plant and equipment, accretion of convertible debentures, loss on foreign exchange, less gain on foreign exchange and gain on disposal of property, plant and equipment. Segmented EBITDA is based upon the same calculation for defined business segments, which are comprised of Drilling Services, Production Services and Corporate.Funds from operations are cash flow from operating activities excluding changes in working capital. It is a supplemental measure to gauge performance of the Company before non-cash items. Working capital is calculated as current assets minus current liabilities. Working capital is used by Management to gauge what banking facilities are available for reinvestment in the business. Annualized return on average total assets for the first nine months is calculated as annualized current period EBITDA divided by the average of total assets over Q4 2010, Q1 2011 and Q2 2011. Annualized return on average total assets for the three months ended September 30, 2011, is calculated as annualized current period EBITDA divided by the averaged total assets over the prior quarter. The three month lag represents the time between the purchase of capital assets and when they are deployed in the field and earning revenue. Funded debt is calculated as bank indebtedness plus current and long-term portion of debt plus current and long-term portion of finance lease obligations plus convertible debentures less cash.Reconciliation of EBITDA and Funds from OperationsReconciliation of non-IFRS measures ($000's)Three Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,Nine Months Ended September 30,2011201020112010(unaudited)(unaudited)(unaudited)(unaudited)Net income7,4362,32312,5804,733Add:Depreciation and amortization6,1733,77516,46010,667Accretion of convertible debenture-22-22(Gain)/loss on disposal of PP&E63-(94)(61)Share-based payments187130642435Non-controlling interest497445830639Deferred income tax expense2,4542,9165,6702,325Interest expense5147601,2581,781Funds from operations17,32410,37137,34620,541Add:(Gain)/Loss on foreign exchange(914)(195)(319)119Income tax expense2,376(1,455)1,979217Subtotal18,7868,72139,00620,877Deduct:Share-based payments187130642435EBITDA18,5998,59138,36420,442Reconciliation of quarterly non-IFRS measures ($000's)Three months ended (unaudited)Sept. 30,Jun. 30,Mar. 31,Dec. 31,2011201120112010 (1)Net income7,4363,5571,5872,579Add:Depreciation and amortization Accretion of convertible debenture6,173 −5,606 −4,681 −4,043 13(Gain)/loss on disposal of PP&E63(145)(12)(68)(Gain)/loss on foreign exchange(914)325270526Non-controlling interest497(210)54376Income tax expense/(recovery)2,376(417)20(522)Deferred income tax expense2,4542,0941,1221,144Interest expense514510234569EBITDA18,59911,3208,4458,360(1)2010 amounts are presented in accordance with IFRS. 2009 amounts are presented in accordance with previous GAAP. Reconciliation of quarterly non-IFRS measures ($000's)Three months ended (unaudited)Sept. 30,Jun. 30,Mar. 31,Dec. 31,2010 (1)2010 (1)2010 (1) 2009Net income (loss)2,3238521,558(11,403)Add:Depreciation and amortization3,7753,5463,3463,080Accretion of convertible debenture22−−−Impairment of goodwill−−−11,000(Gain)/loss on disposal of PP&E−(27)(34)90(Gain)/Loss on foreign exchange(195)185129(245)Non-controlling interest445(20)214−Income tax expense/(recovery)(1,455)6531,019(15)Deferred income tax expense (recovery) 2,916 (393) (198) (821)Interest expense760560461424EBITDA8,5915,3566,4952,110(1)2010 amounts are presented in accordance with IFRS. 2009 amounts are presented in accordance with previous GAAP. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTSCertain statements and information contained in this Press Release constitute forward-looking statements. More particularly, this Press Release contains forward-looking statements concerning future capital expenditures of the Company, demand for the Company's products and services, pricing of the Company's products and services and expected exploration and production industry activity. These statements relate to future events or to the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. The use of any of the words "expect", "plan", "continue", "estimate", "anticipate", "targeting", "intend", "could", "might", "should", "believe", "may", or "will" and similar expressions are intended to identify forward-looking information or statements. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this Press Release. The forward-looking information and statements included in this Press Release are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements. These factors include, but are not limited to, such things as the impact of general industry conditions, fluctuation of commodity prices, industry competition, availability of qualified personnel and management, stock market volatility and timely and cost effective access to sufficient capital from internal and external sources. The risks outlined above should not be construed as exhaustive. Although management of the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Accordingly, readers should not place undue reliance upon any of the forward-looking information set out in this Press Release. All of the forward looking statements of the Company contained in this Press Release are expressly qualified, in their entirety, by this cautionary statement. Except as required by law, the Company disclaims any intention or obligation to update or revise any forward-looking information or statements, whether the results of new information, future events or otherwise.THIRD QUARTER 2011 EARNINGS CONFERENCE CALLStrad Energy Services Ltd. has scheduled a conference call to begin promptly at 10:00 a.m. MDT on Thursday, November 10, 2011.The conference call dial in numbers are 1-877-240-9772 or 1-416-340-8530.The conference call will also be accessible via webcast at:www.stradenergy.comA replay of the call will be available approximately one hour after the conference call ends until Thursday, November 17th. To access the replay, call 1-800-408-3053 or 1-905-694-9451, followed by pass code 8520500.Strad Energy Services Ltd.Consolidated Statement of Financial Position(Unaudited)(in thousands of Canadian dollars)September 30,December 31,2011 2010$$AssetsCurrent assetsCash and cash equivalents6,0008,416Accounts receivable58,73341,700Inventories13,98115,171Prepaid expenses and deposits3,6822,887Income taxes receivable11424182,51068,415Non-current assetsProperty, plant and equipment (note 5)117,95970,128Intangible assets (note 6)9,15111,446Goodwill36,00436,004Deferred income taxes14,9515,475Total assets260,575191,468LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities35,62126,755Deferred revenue4993,387Current portion of obligations under finance lease (note 7)4,9514,662Income taxes payable2,1643643,23534,840Non-current liabilitiesLong-term debt (note 8)31,500-Obligations under finance lease (note 7)4,0265,282Deferred income tax liabilities25,64910,462Total liabilities104,41050,584EquityEquity attributable to owners of the parentShare capital (note 9)157,043157,071Contributed surplus2,8632,221Accumulated other comprehensive income (loss)207(924)Deficit(5,655)(18,235)154,458140,133Non-controlling interests1,707751Total equity156,165140,884Total liabilities and equity260,575191,468Strad Energy Services Ltd.Consolidated Statement of IncomeFor the three and nine months ended September 30, 2011 and 2010(Unaudited)(in thousands of Canadian dollars, except per share data)Three months ended September 30Nine months ended September 302011201020112010Revenue78,12141,615175,482108,683ExpensesOperating expenses49,03725,220109,86768,187Depreciation5,2662,85913,8037,918Amortization of intangible assets9079162,6572,749Accretion of convertible debentures-22-22Selling, general and administration10,2987,67426,60919,619Share-based payments187130642435Loss (gain) on disposal of property, plant and equipment63-(94)(61)Foreign exchange (gain) loss(914)(195)(319)119Net interest expense5147601,2581,781Income before income tax12,7634,22921,0597,914Income tax (note 10)4,8301,4617,6492,542Net income for the period7,9332,76813,4105,372Net income attributable to:Owners of the parent 7,436 2,323 12,580 4,733Non-controlling interests4974458306397,9332,76813,4105,372Earnings per share:Basic$0.20$0.12$0.34$0.24Diluted$0.20$0.10$0.34$0.23Consolidated Statement of Comprehensive IncomeFor the three and nine months ended September 30, 2011 and 2010(Unaudited)(in thousands of Canadian dollars)Three months ended September 30Nine months ended September 302011201020112010Net income for the period7,9332,76813,4105,372Other comprehensive income (loss)Cumulative translation adjustment2,320(466)1,257(466)Total other comprehensive income (loss)2,320(466)1,257(466)Comprehensive income for the period10,2532,30214,6674,906Comprehensive income attributable to:Owners of the parent9,5241,90413,7114,314Non-controlling interests72939895659210,2532,30214,6674,906Strad Energy Services Ltd. Consolidated Statement of Cash FlowFor the three and nine months ended September 30, 2011 and 2010(Unaudited)(in thousands of Canadian dollars)Cash flow provided by (used in)Three months ended September 30Nine months ended September 302011201020112010Operating ActivitiesNet income for the period7,9332,76813,4105,372Adjustments for:Depreciation and amortization6,1733,77516,46010,667Accretion of convertible debentures-22-22Deferred income tax expense2,4542,9165,6702,325Share-based payments187130642435Net interest expense5147601,2581,781Loss (gain) on disposal of property, plant and equipment63-(94)(61)Changes in items of non-cash working capital:Accounts receivable(13,346)(8,071)(17,033)(20,077)Inventories2,0145661,1903,994Prepaid expenses(723)208(795)(1,087)Accounts payable and accrued liabilities7,920(822)8,8665,823Note receivable2,949---Other current liabilities(1,113)(1,437)(634)665Net cash generated from operating activities15,02581528,9409,859Investing activitiesPurchase of property, plant and equipment(5,081)(11,264)(55,552)(29,339)Proceeds from sale of property, plant and equipment374314826776Purchase of intangible assets(28)(26)(366)(180)Net cash generated from investing activities(4,735)(10,976)(55,092)(28,743)Financing activitiesChange in bank indebtedness(10,070)(2,584)-1,968Proceeds on issuance of long-term debt35,00014,51957,0003,559Repayment of long-term debt(25,500)-(25,500)-Repayment of finance lease obligations (net)(1,259)(1,048)(4,343)(1,052)Proceeds on issuance of convertible debentures---16,166Net interest expense(514)(760)(1,258)(1,781)Repurchase of share capital - (2) - (12)Share issuance costs--(147)-Repayment of shareholder loan119-119-Net cash generated in financing activities(2,224)10,12525,87118,848Effect of exchange rate changes on cash and cash equivalents(2,066)36(2,135)36Increase (decrease) in cash and cash equivalents6,000-(2,416)-Cash and cash equivalents – Beginning of period--8,416-Cash and cash equivalents – End of period6,000-6,000-ABOUT STRAD ENERGY SERVICES LTD.Strad is a diversified energy services company that focuses on providing oilfield solutions to the oil and natural gas industry in the WCSB and throughout the United States. Strad operates with two core divisions: Drilling Services and Production Services. Drilling Services focuses on providing complete customer solutions in drilling-related oilfield equipment for producers active in unconventional resource plays. Production Services focuses on delivering a range of products and services to support the ongoing maintenance of natural gas and oil production. Strad is headquartered in Calgary, Alberta, Canada. Strad is listed on the Toronto Stock Exchange under the trading symbol "SDY".FOR FURTHER INFORMATION PLEASE CONTACT: Henry van der SlootStrad Energy Services Ltd.Chief Executive Officer(403) 249-7336(403) 232-6901 (FAX)firstname.lastname@example.orgORAndy PernalStrad Energy Services Ltd.President(403) 775-9202(403) 232-6901 (FAX)email@example.comThe TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this Press Release.