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Press release from CNW Group

Cathedral Energy Services provides operations update and announces initial 2012 capital budget

Monday, December 12, 2011

Cathedral Energy Services provides operations update and announces initial 2012 capital budget08:00 EST Monday, December 12, 2011/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/CALGARY, Dec. 12, 2011 /CNW/ - Cathedral Energy Services Ltd. (the "Company" or "Cathedral" / TSX: CET) has experienced increased operating activity levels in 2011 Q3 and Q4 that have benefited from current year capital additions of 33 Measurement-While-Drilling ("MWD") systems (36% increase in fleet size) and 6 high pressure frac flowback units (11% increase in fleet size).  The Company will exit 2011 with 125 MWD systems and 62 frac flowback units.  Most of this equipment was deployed through Q3 and provides a solid base of equipment to service the Company's expected growth in 2012 activity.The 2011 MWD additions included 15 systems that are based upon Cathedral's Fusion MWD platform which provides for enhanced performance in harsh drilling environments.  The Fusion MWD system has been instrumental in the increased activity levels that Cathedral has realized in the Marcellus basin and further expansion is expected in this area.  In addition, Cathedral has added 8 High Temperature Retrievable ("HTR") MWD systems to its fleet which has allowed the Company to expand into the North Dakota Bakken and Eagleford areas.To further enhance Cathedral's ability to meet the expected 2012 activity levels, the Company's Board of Directors have approved an initial 2012 capital budget of $28 million including $5 million of maintenance capital.  The Directional Drilling division will add 14 MWD systems along with the expansion of the mud motor and drill collar fleet to accommodate increased capacity.  The majority of the MWD systems will be for the continued expansion of the Company's U.S. districts.  The Company will continue its focus on MWD research and development with the goal of continuing to enhance our tools abilities to meet our customer's needs including operating in increasingly challenging environments while at the same time maintaining our focus on reducing operating costs.With the goal of controlling costs and supply chain management Cathedral has internalized certain components of its directional drilling operations. To date, equipment repairs, MWD manufacturing, inspection, battery manufacturing and new product development have been brought in-house.  This in-house capability enables us to control the equipment development process ensuring we are able to respond quickly to customers changing needs.  The next step in Cathedral's vertical integration process is building mud motors in-house.  Extensive testing of the Cathedral proprietary mud motor design has been completed and we are moving forward with the initial capital build out.  The main benefits associated with an in-house mud motor design are lower operating and capital costs and anticipated improvement in durability.The Production Testing division will add 7 frac-flowback units and ancillary equipment.  Several of the units will be designed with automated shutdown equipment required in propane fracing market segment.  Of the 7 frac-flowback units to be added in 2012, the Company expects to utilize 2 in Canada and 5 in the U.S. market.  Cathedral continues to see opportunities in the high pressure market and will expand its fleet as opportunities present themselves.Cathedral intends to finance its initial 2012 capital budget from cash flow from operations and, if necessary, its existing credit facility.Cathedral has recently moved into its new 80,000 square foot "6030 Campus" in Calgary.  This state of the art facility houses Cathedral's head office, engineering, operations coordination, field operator training center, MWD manufacturing, maintenance and repair operations and MWD research and development team.  This new facility will allow the Company to increase capacity and efficiencies in its manufacturing of equipment and repair processes.  In addition, the consolidation of various facilities within Calgary to one location has improved overall communications and efficiencies within the operations group.Cathedral believes its continuous improvement in technologies, service delivery and cost efficiencies will differentiate it from its competitors, now and in the future.FORWARD LOOKING STATEMENTSThis news release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws.  All statements other than statements of present or historical fact are forward-looking statements.  Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words suggesting future outcomes.  In particular, this news release contains forward-looking statements relating to, among other things: projected capital expenditures and the financing thereof; areas of further growth; activity levels; U.S. expansion; benefits associated with an in-house mud motor design; and operating efficiencies. The Company believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements.  Those material factors and assumptions are based on information currently available to the Company, including information obtained from third party industry analysts and other third party sources.  In some instances, material assumptions and material factors are presented elsewhere in this news release in connection with the forward-looking statements.  You are cautioned that the following list of material factors and assumptions is not exhaustive.  Specific material factors and assumptions include, but are not limited to:the performance of the Company's businesses, including current business and economic trends;oil and natural gas commodity prices and production levels;capital expenditure programs and other expenditures by the Company and its customers;the ability of the Company to retain and hire qualified personnel;the ability of the Company to obtain parts, consumables, equipment, technology, and supplies in a timely manner to carry out its activities;the ability of the Company to maintain good working relationships with key suppliers;the ability of the Company to market its services successfully to existing and new customers;the ability of the Company to obtain timely financing on acceptable terms;currency exchange and interest rates;risks associated with foreign operations including Venezuela;the ability of the Company to realize the benefit of its conversion from an income trust to a corporation;risks associated with finalizing ancillary joint venture agreements that are required prior to the commencement of operations of the Venezuela joint venture;risks associated with Venezuela joint venture company being awarded work by the Venezuela state run oil and natural gas corporation;changes under governmental regulatory regimes and tax, environmental and other laws in Canada, United States ("U.S.") and Venezuela; anda stable competitive environment.Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties some of which are described herein.  Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements.  These risks and uncertainties include, but are not limited to, the risks identified in this news release and in the Company's Annual Information Form under the heading "Risk Factors".  Any forward-looking statements are made as of the date hereof and, except as required by law, the Company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.All forward-looking statements contained in this news release are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements is available in the Company's current Annual Information Form and Annual Report which have been filed with Canadian provincial securities commissions and are available on www.sedar.com.Cathedral Energy Services Ltd. (the "Company"/"Cathedral") and its wholly owned subsidiary, Cathedral Energy Services Inc., are engaged in the business of providing selected oilfield services to oil and natural gas companies in western Canada and selected oil and natural gas basins in the United States.  The Company is in the process of establishing operations in Venezuela for providing directional drilling services through its wholly owned subsidiaries Directional Plus International Ltd. and Directional Plus de Venezuela, C.A.  The Company's operating activities are divided into directional drilling and production testing business units.  The Company's shares trade on the TSX under the symbol: CET.  For more information, visit www.cathedralenergyservices.com.For further information: Requests for further information should be directed to:Mark L. Bentsen, President and Chief Executive Officer or P. Scott MacFarlane, Chief Financial OfficerCathedral Energy Services Ltd., 6030 - 3rd Street S.E., Calgary, Alberta T2H 1K2Telephone:  403.265.2560  Fax:  403.262.4682   www.cathedralenergyservices.com