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Press release from CNW Group

Ensign Energy Services Inc. Reports Strong 2012 First Quarter Results

Monday, May 07, 2012

Ensign Energy Services Inc. Reports Strong 2012 First Quarter Results05:00 EDT Monday, May 07, 2012CALGARY, May 7, 2012 /CNW/ -OverviewRecord revenue was recorded in the first quarter of 2012 for Ensign Energy Services Inc. ("Ensign" or the "Company"), increasing 35 percent over the first quarter of 2011 to $677.7 million, the highest quarterly revenue in the Company's history.  Net income for the first quarter of 2012 increased 32 percent to $105.5 million ($0.69 per common share) compared to net income of $79.7 million ($0.52 per common share) for the first quarter of 2011.  EBITDA (defined as earnings before interest, income taxes, depreciation, and share-based compensation expense (recovery)) totaled $211.1 million ($1.38 per common share) in the first quarter of 2012, 24 percent higher than EBITDA of $170.3 million ($1.11 per common share) in the first three months of 2011.  Similarly, Funds from operations increased 15 percent to $177.0 million ($1.16 per common share) in the first three months of 2012 from $154.5 million ($1.01 per common share) in the first three months of the prior year.  The acquisition of the land drilling division of Rowan Companies Inc. ("Rowan Land Drilling"), subsequently renamed Ensign US Southern Drilling LLC ("Ensign US Southern"), in the third quarter of 2011 significantly contributed to the strong start to the 2012 financial year compared to the prior year.  Additionally, all other areas of the Company produced strong first quarter results, with levels of activity comparable to those of the first quarter of 2011.  A slight strengthening in the United States dollar over the Canadian dollar in the first quarter of 2012 compared to the first quarter of the prior year had a positive impact on the operating results of the Company's United States and international operations when translated into Canadian dollars.Gross margin improved to $234.3 million (34.6 percent of revenue) for the first quarter of 2012 compared with gross margin of $171.9 million (34.2 percent of revenue) for the first quarter of 2011.  Increased revenue rates in the Company's North American operations contributed to the improved margins.  Major maintenance expenses had less of an impact in the first quarter of 2012 compared to the prior two quarters as the majority of the maintenance was completed in prior quarters in anticipation of the increased operating activity levels in the first quarter of 2012 and the Canadian winter drilling season.  These costs are generally expensed as incurred.In February 2012 the Company issued USD $300.0 million of senior unsecured notes with the proceeds applied to partially repay the USD $400.0 million term loan.  The senior unsecured notes consist of: USD $100.0 million in five year notes with an interest rate of 3.43 percent; USD $100.0 million in seven year notes with an interest rate of 3.97 percent; and USD $100.0 million in ten year notes with an interest rate of 4.54 percent.  The remaining USD $100.0 million balance of the term loan makes up the current portion of the Company's long-term debt and is due in February 2013.  Long-term debt as at March 31, 2012 totaled $297.6 million. FINANCIAL AND OPERATING HIGHLIGHTS($ thousands, except per share data and operating information)Three months ended March 31       20122011% change      Revenue677,671502,21135      EBITDA 1211,147170,26324      EBITDA per share 1    Basic$1.38 $1.1124 Diluted$1.38 $1.1124      Adjusted net income 2103,62587,70018Adjusted net income per share 2    Basic$0.68 $0.5719 Diluted$0.68 $0.5719      Net income105,52479,69132Net income per share    Basic$0.69 $0.5233 Diluted$0.69 $0.5233      Funds from operations 3177,036154,54115Funds from operations per share 3    Basic$1.16 $1.0115 Diluted$1.16 $1.0115      Weighted average shares - basic (000s)152,893152,950-Weighted average shares - diluted (000s)153,252153,208-      Drilling    Number of marketed rigs     Canada      Conventional and ADRs1311282   Oil sands coring/coal bed methane3738(3)  United States1138238  International 45659(5)Operating days    Canada 57,4317,927(6) United States6,3134,26648 International2,7972,6655      Well Servicing    Number of marketed rigs      Canada103994   United States392650 Operating hours      Canada40,13539,5212   United States30,14917,45073  1 EBITDA is defined as "income before interest expense, income taxes, depreciation and share-based compensation (recovery) expense".  Management believes that in addition to net income, EBITDA and EBITDA per share are useful supplemental measures as they provide an indication of the results generated by the Company's principal business activities prior to consideration of how these activities are financed, how the results are taxed in various jurisdictions or how the results are impacted by the accounting standards associated with the Company's share-based compensation plans.  EBITDA and EBITDA per share as defined above are not recognized measures under International Financial Reporting Standards and accordingly may not be comparable to measures used by other companies.2 Adjusted net income is defined as "net income before share-based compensation (recovery)/expense, tax-effected using an income tax rate of 35%".  Adjusted net income and Adjusted net income per share are useful supplemental measures as they provide an indication of the results generated by the Company's principal business activities prior to consideration of how the results are impacted by the accounting standards associated with the Company's share-based compensation plans, net of income taxes.  Adjusted net income and Adjusted net income per share as defined above are not recognized measures under International Financial Reporting Standards and accordingly may not be comparable to measures used by other companies.3 Funds from operations is defined as "cash provided by operating activities before the change in non-cash working capital".  Funds from operations and Funds from operations per share are measures that provide additional information regarding the Company's liquidity and its ability to generate funds to finance its operations.  Management utilizes these measures to assess the Company's ability to finance operating activities and capital expenditures.  Funds from operations and Funds from operations per share are not measures that have any standardized meaning prescribed by International Financial Reporting Standards and accordingly may not be comparable to similar measures used by other companies.4 Includes workover rigs.5 Excludes coring rig operating days.  Revenue and Oilfield Services Expense Three months ended March 31       ($ thousands)        2012   2011  % changeRevenue      Canada        324,852 275,213 18 United States       249,433 148,464 68 International       103,386 78,534 32        677,671 502,211 35Oilfield services expense       443,343 330,320 34        234,328 171,891 36       Gross margin (%)34.6 34.2     Total revenue recorded in the first quarter of 2012 was the highest quarterly revenue in the Company's history, totaling $677.7 million, an increase of 35 percent over the first quarter of 2011.  As a percentage of revenue, gross margin for the first quarter of 2012 increased to 34.6 percent from 34.2 percent for the first quarter of 2011.The growth in the Company's revenues is a reflection of the increased operations through the addition of Ensign US Southern in the third quarter of 2011 as well as additions to the Company's North American rig fleet through the new build program.  The Company added 10 ADR®-style drilling rigs and 16 well servicing rigs in 2011 all through the new build program.  The fleet has been further expanded with the delivery of five ADR®-style drilling rigs and three well servicing rigs in the first quarter of 2012.  The Company's North American operations benefited in the first quarter of 2012 from higher revenue rates which resulted in increased revenues over the first quarter of 2011.  International operating results also improved in the first quarter of 2012 over the first quarter of 2011 as a result of reduced weather impacts in Australia as regional flooding had negatively impacted operating results in the first quarter of 2011.Canadian Oilfield ServicesRevenue increased 18 percent to $324.9 million for the three months ended March 31, 2012, from $275.2 million for the three months ended March 31, 2011.  Canadian revenues accounted for 48 percent of the Company's total revenue in the first quarter of 2011, compared with 55 percent in the first quarter of 2011. Revenue growth in Canada was a result of improved pricing for Canadian oilfield services as activity levels were generally similar to those of the first quarter of the prior year.The Company recorded 7,431 drilling days in the first quarter of 2012, this compares with 7,927 drilling days for the first quarter of 2011, a six percent decrease due to an earlier spring break-up.  Canadian well servicing hours increased by two percent to 40,135 operating hours in the first quarter of 2012 compared with 39,521 operating hours in the corresponding period of 2011.During the three months ended March, 31, 2012, the Company added three newly constructed ADRs to its Canadian drilling rig fleet, and decommissioned three inactive drilling rigs.United States Oilfield ServicesThe Company's United States operations recorded revenue of $249.4 million in the first quarter of 2012, a 68 percent increase from the $148.5 million recorded in the corresponding period of the prior year.  The Company's United States operations accounted for 37 percent of the Company's revenue in the first quarter of 2012, compared to 29 percent in the same period in 2011.  Drilling rig operating days increased by 48 percent to 6,313 drilling days in the first quarter of 2012 from 4,266 drilling days in the first quarter of 2011.  Well servicing activity increased by 73 percent in the first quarter of 2012 to 30,149 operating hours from 17,450 operating hours in the first quarter of 2011.A significant expansion to the Company's United States equipment fleet in 2011 contributed to the increase in first quarter revenue and operating activity compared to the prior year.  The Company acquired Rowan Land Drilling and its fleet of 30 ADR®-style drilling rigs in the third quarter of 2011; and added eight new ADR® drilling rigs and 12 new well servicing rigs throughout 2011.  The Company added two new ADR® drilling rigs and three new well servicing rigs; and decommissioned six inactive drilling rigs in the first quarter of 2012.Results from the Company's United States operations were positively impacted on translation to Canadian dollars by a strengthening United States dollar against the Canadian dollar during the first quarter of 2012.  In the first three months of 2012 the United States dollar increased by two percent when compared to the same period of the prior year.International Oilfield ServicesThe Company's international operations recorded revenue of $103.4 million in the first quarter of 2012, a 32 percent increase from $78.5 million recorded in the corresponding period of the prior year.  International operations contributed 15 percent of the Company's revenue in the first quarter of 2012 compared with 16 percent in the same period of 2011.  International operating days for the three months ended March 31, 2012 totaled 2,797 drilling days compared with 2,665 drilling days in 2011, an increase of five percent.The improved start to 2012 from the Company's international operations is mainly a result of increased operating results from the Company's Australian operations which had been negatively impacted by severe flooding in the first quarter of the prior year.  Operating results from the Company's other operations (excluding operations in Libya, which remain suspended) were generally consistent in the first quarter of 2012 with the comparable quarter of the prior year.  Similar to the Company's United States operations, international operations benefited from the strengthening United States dollar over the Canadian dollar on translation into Canadian dollars for reporting purposes in the first quarter of 2012 compared to the first quarter of the prior year.  Depreciation  Three months ended March 31      ($ thousands)        2012   2011  % change      Depreciation        58,159 40,778 43     The Company uses the unit of production method of calculating depreciation for the majority of its property and equipment.  Depreciation expense totaled $58.2 million for the first quarter of 2012 compared with $40.8 million for the first quarter of 2011, an increase of 43 percent.  Increased depreciation reflects the impact from the growth of the Company's North American fleet through the addition of Ensign US Southern in the third quarter of 2011 and additions from the Company's new build program.  General and Administrative Expense   Three months ended March 31      ($ thousands)        2012 2011 % change      General and administrative        19,407 15,016 29      % of revenue2.9 3.0     General and administrative expense increased 29 percent to $19.4 million (2.9 percent of revenue) for the first quarter of 2012 compared with $15.0 million (3.0 percent of revenue) for the first quarter of 2011.  The overall increase in general and administrative expense was to support the increased operating activity during the first quarter of 2012, including the impact from the addition of Ensign US Southern in the third quarter of 2011, and also includes the negative translational impact of a stronger United States dollar on United States and international administrative expenses in the current quarter.  Share-Based Compensation (Recovery) Expense Three months ended March 31      ($ thousands)        2012  2011 % change      Share-based compensation        (2,922) 12,322 (124)    Share-based compensation (recovery) expense arises from the Black-Scholes valuation accounting associated with the Company's share-based compensation plans, whereby the liability associated with share-based compensation is adjusted for the effect of granting and vesting of employee stock options and changes in the underlying price of the Company's common shares.For the three months ended March 31, 2012, share-based compensation (recovery) expense was a recovery of $2.9 million compared with an expense of $12.3 million recorded in the first quarter of 2011.  The decrease in share-based compensation expense in the first quarter of 2012 is a result of the change in the fair value of share-based compensation liability primarily resulting from a decrease in the price of the Company's common shares during the first three months of 2012.  The closing price of the Company's common shares was $14.91 at March 31, 2012 ($18.26 at March 31, 2011) compared with $16.25 at December 31, 2011 ($15.03 at December 31, 2010).  Interest Expense   Three months ended March 31      ($ thousands)        2012 2011 % change      Interest expense        4,254 419 915Interest income        (97)  (135)  (28)       4,157  284 1,364    Interest is incurred on the Company's $10.0 million Canadian-based revolving credit facility, the $250.0 million global revolving credit facility, the USD $100.0 million remaining balance of the term loan, and the USD $300.0 million senior unsecured notes issued in February 2012.  The amortization of deferred financing costs associated with the issuance of the Company's long-term debt are included in interest expense in the first quarter of 2012.The increase in interest expense in the first quarter of 2012 reflects the additional debt incurred by the Company in connection with the Rowan Land Drilling acquisition, completed in the third quarter of 2011.  Foreign Exchange and Other (Loss/(Gain))   Three months ended March 31      ($ thousands)        2012 2011 % change      Foreign exchange and other        3,774 (13,388) (128) Included in this amount is the impact of the conversion of the Australian operations from Australian dollars to United States dollars.  Similar to the first quarter of 2011, the Australian currency strengthened against the United States dollar during the first quarter of 2012, however the impact was much lower in 2012 compared to the prior year.  Income Taxes  Three months ended March 31      ($ thousands)        2012 2011 % change      Current income tax        31,741 16,260 95Deferred income tax        14,488 20,928  (31)       46,229 37,188 24      Effective income tax rate (%)        30.5 31.8    The effective income tax rate for the three months ended March 31, 2012 was 30.5 percent compared with 31.8 percent for the three months ended March 31, 2011.  The effective income tax rate in both quarters was lower than the expected annualized income tax rate for the Company due to the relatively high proportion of taxable income earned in Canada during the first quarter, due to the seasonality of Canadian operations.Financial PositionThe following chart outlines significant changes in the consolidated statement of financial position from December 31, 2011 to March 31, 2012:   ($ thousands)Change Explanation Cash and cash equivalents   20,255 See consolidated statements of cash flows.   Accounts receivable   70,888 Increase is consistent with increased operating activity in the first quarter of 2012 compared to the fourth quarter of 2011.   Inventories and other   (7,171) Decrease due to normal course use of consumables offset by additional inventory.   Property and equipment   (4,708) Decrease is due to a reduction in the quarter end foreign exchange rate on the consolidation of the Company's foreign subsidiaries and depreciation offset by additions from the current new build construction program.   Note receivable   (1,016) Decrease is due to the reclassification of the current portion of the note receivable to accounts receivable and accretion of interest income during the first quarter of 2012.   Accounts payable and accruals   (8,834) Decrease is due to foreign exchange fluctuations on the consolidation of the Company's foreign subsidiaries and timing of payments to external vendors during the period.   Operating lines of credit   (10,084) Decrease is due to repayments during the period and the impact of foreign exchange fluctuations on the consolidation of the Company's foreign subsidiaries.   Current portion of long-term debt   99,660 Increase is due to the reclassification of the remaining balance of the term loan due in February 2013.   Income taxes payable   21,317 Increase due to the current income tax provision for the period, net of tax instalments and refunds.   Share-based compensation   (3,038) Decrease is due to the decrease in the price of the Company's common shares as at March 31, 2012 compared with December 31, 2011.   Long-term debt   (108,351) Decrease reflects the reclassification of the current portion of the term loan and foreign exchange fluctuations on the opening balance of the long-term debt.   Deferred income taxes   13,940Increase primarily due to accelerated tax depreciation of assets added during the current quarter and partnership timing differences in Canada.   Shareholders' equity   73,638 Increase due to net income for the period offset by the amount of dividends declared in the period and the impact of foreign exchange rate fluctuations on net assets of foreign subsidiaries.     Funds from Operations and Working Capital   Three months ended March 31      ($ thousands)        2012  2011 % changeFunds from operations        177,036 154,541 15Funds from operations per share       $1.16 $ 1.01 15Working capital 1        (25,039) (10,233) 145    1 Comparative figure as of December 31, 2011. During the three months ended March 31, 2012, the Company generated Funds from operations of $177.0 million ($1.16 per common share) compared with Funds from operations of $154.5 million ($1.01 per common share) for the three months ended March 31, 2011, an increase of 15 percent.  This increase is primarily attributable to the increased operations in North America as a result of the addition of Ensign US Southern in the third quarter of 2011 as well as additions from the new build program throughout 2011 and 2012.At March 31, 2012, the Company's working capital totaled negative $25.0 million, compared to negative $10.2 million at December 31, 2011.  Included in working capital at March 31, 2012 is the remaining balance of the term loan totaling $99.7 million at March 31, 2012.  The Company expects funds generated by operations, combined with current and future credit facilities, to fully support current operating and capital requirements.  Existing revolving credit facilities provide for total borrowing of $260.0 million, of which $20.4 million was available at March 31, 2012.  Investing Activities  Three months ended March 31      ($ thousands)        2012  2011   % change      Purchase of property and equipment        (80,554)  (66,683)  21Net change in non-cash working capital        (12,309)  (10,682) 15 Cash used in investing activities        (92,863)  (77,365) 20     Purchases of property and equipment during the first quarter of 2012 totaled $80.6 million (2011 - $66.7 million).  The purchase of property and equipment relates predominantly to expenditures made pursuant to the Company's ongoing new build program.  Financing Activities  Three months ended March 31($ thousands)        2012 2011 % change      Net decrease in operating lines of credit        (5,985)  (14,494) (59)Issue of senior unsecured notes        300,000  - -Repayment of term loan        (300,000) -  -Issue of capital stock        43 - -Purchase of shares held in trust        (633)  (664)  (5)Deferred financing costs         (2,156)  -  -Dividends        (16,087) (14,555)  11Net change in non-cash working capital        1,016 33 2,979      Cash used in financing activities(23,802) (29,680) (20)    The Company's available operating lines of credit consist of a $250.0 million global revolving credit facility (the "Global Facility") and a $10.0 million Canadian based revolving credit facility (the "Canadian Facility"). The Global Facility is available to the Company and certain of its wholly-owned subsidiaries, and may be drawn in Canadian, United States or Australian dollars, up to the equivalent value of $250.0 million Canadian dollars. The amount available under the Canadian Facility is $10.0 million or the equivalent United States dollars.Net repayments of the operating lines of credit were the result of operating cash flows generated by the Company's United States and international divisions in excess of capital expenditure requirements.  As of March 31, 2012, the operating lines of credit are primarily being used to fund the completion of the most recent new build program and to support international operations.In February 2012, the Company completed the private placement of USD $300.0 million of senior unsecured notes (the "Notes"), with the proceeds from the issuance being used to repay a portion of the term loan.  The Notes consist of: USD $100.0 million in five year notes with an interest rate of 3.43 percent and a maturity date of February 22, 2017; USD $100.0 million in seven year notes with an interest rate of 3.97 percent and a maturity date of February 22, 2019; and USD $100.0 million in ten year notes with an interest rate of 4.54 percent and a maturity date of February 22, 2022.  The Notes rank equally with the Company's Global Facility.  The remaining USD $100.0 million balance of the term loan matures on February 28, 2013. On June 3, 2011, the Company received approval from the Toronto Stock Exchange to acquire for cancellation up to five percent of the Company's issued and outstanding common shares under a Normal Course Issuer Bid (the "Bid").  The Company may purchase up to 7,660,512 common shares for cancellation.  The Bid commenced on June 7, 2011 and will terminate on June 6, 2012 or such earlier time as the Bid is completed or terminated at the option of the Company.  As at March 31, 2012, no common shares have been purchased and cancelled pursuant to the Bid.The Board of Directors of the Company has declared a second quarter dividend of $0.105 per common share to be payable July 6, 2012 to all Common Shareholders of record as of June 21, 2012.  The dividend is pursuant to the quarterly dividend policy adopted by the Company.  Pursuant to subsection 89(1) of the Canadian Income Tax Act ("ITA"), the dividend being paid is designated as an eligible dividend, as defined in subsection 89(1) of the ITA.New BuildsDuring the quarter ended March 31, 2012, the Company commissioned two new ADR® drilling rigs and three new well servicing rigs in the United States; and three new ADR® drilling rigs in Canada.The remaining new build estimated delivery schedule, by geographic area, is as follows:  Estimated Delivery Date Q2-2012  Q3-2012 Q4-2012 Q1-2013 TotalADRs Canada2 1 - 1 4 United States4 - - 4 8 International2 - - -  2Total8 1 - 5 14Well Servicing Canada- - 4 -  4 United States7 1 -  -  8 International- - - - -Total7 1 4 - 12       OutlookThe impact of modestly improving economic conditions in North America, together with a continuing premium for potential Middle East supply disruptions has sustained WTI crude oil prices above the USD$100 level. However, softening economic expansion in Asia and the ongoing debt crisis in Europe continue to weigh on future prospects for energy demand. Further complicating the outlook for crude oil development in North America are the infrastructure constraints that are resulting in regional differentials from the headline crude oil price.  A widening of such differentials would likely have a negative impact on the demand for oilfield services in certain regions.  Additionally, the natural gas supply glut in North America has further reduced natural gas prices and activities.  While the reduction in natural gas drilling has generally been offset by an increase in drilling and production development activities in crude oil and liquids-rich natural gas plays, a further consequence of lower natural gas prices is the impact on the funds available to producing companies for oilfield services expenditures.  While the economics for crude oil development remain encouraging, it may take several years for a rebalancing of the natural gas market to occur in North America.Despite an earlier spring breakup in 2012 compared to the prior year, the Company's Canadian operations had a very strong first quarter, with operating days very similar to the levels recorded last year. Based on forecasts from the Canadian Association of Oilwell Drilling Contractors, activity levels in the Company's Canadian operations are currently expected to continue in line with those experienced in 2011. Margins for the first quarter of 2012 were improved from the fourth quarter of 2011, due to reduced requirements in the current quarter for major maintenance expenditures to prepare the fleet for strong levels of demand. The Company's ability to maintain margins for the remainder of 2012 will depend on successful cost containment, particularly as higher activity and demand for oilfield services has created inflationary pressures on some input costs.  The Company expects to add four new ADR® drilling rigs and four new well servicing rigs to the Canadian fleet over the next twelve months pursuant to the ongoing new build program.Despite the anticipated softening of demand for natural gas drilling, the Company's United States activity levels in the first quarter of 2012 were a continuation of the strong performance in the last quarter of 2011 and includes a full quarter of operations from Ensign US Southern, acquired in September 2011.  The downward trend in the number of land-based rigs drilling for natural gas continued with the industry recording a 20 percent reduction during the quarter, substantially offset by an increased number of land-based rigs drilling for crude oil and liquids-rich natural gas. The Company currently plans to add eight new ADR® drilling rigs and eight new well servicing rigs to the United States fleet during the next twelve months.  This will further increase the Company's operational capability in this important market.The Company's international operations continued to generate steady operating and financial results in the first quarter of 2012. The Company anticipates that demand for international oilfield services will continue to expand at a steady pace, barring any major unforeseen global events.  The current new build program will add two new ADR® drilling rigs to the Company's international equipment fleet in 2012.The Company's private placement issuance of USD$300 million of long-term notes during the first quarter of 2012 provides the Company with a measure of stability with respect to its capital structure.  The private placement and the recently expanded operating debt facilities, together with the Company's levels of funds from operations and prudent cash management, are expected to serve the Company well in funding further expansion, both in the form of opportunistic acquisitions, and the ongoing new build and fleet modernization program.Risks and UncertaintiesThis document contains forward-looking statements based upon current expectations that involve a number of business risks and uncertainties.  The factors that could cause results to differ materially include, but are not limited to, political and economic conditions, crude oil and natural gas prices, foreign currency fluctuations, weather conditions and the ability of oil and natural gas companies to raise capital or other unforeseen conditions which could impact on the use of the services supplied by the Company.Conference CallA conference call will be held to discuss the Company's first quarter 2012 results at 2:00 p.m. MDT (4:00 p.m. EDT) on Monday, May 7, 2012.  The conference call number is (647) 427-7450 (in Toronto) or 1-888-231-8191 (outside Toronto).  A taped recording will be available until May 14, 2012 by dialing 1-416-849-0833 (in Toronto) or 1-855-859-2056 (outside Toronto) and entering the reservation number 43339866.  A live broadcast may be accessed through the Company's web site at www.ensignenergy.com.Ensign Energy Services Inc. is an international oilfield services contractor and is listed on the Toronto Stock Exchange under the trading symbol ESI. Ensign Energy Services Inc.Consolidated Statements of Financial PositionAs at March 31   December 31 2012   2011(Unaudited, in thousands of Canadian dollars)    AssetsCurrent Assets Cash and cash equivalents    $22,868  $2,613 Accounts receivable       548,031   477,143 Inventories and other       74,807   81,978          645,706   561,734        Property and equipment       2,474,910   2,479,618Note receivable       5,745   6,761  $3,126,361  $3,048,113LiabilitiesCurrent Liabilities  Accounts payable and accruals    $280,707  $289,541 Operating lines of credit       228,356   238,440 Current portion of long-term debt  99,660   - Income taxes payable      32,811    11,494 Dividends payable        16,087   16,087 Share-based compensation       13,124    16,405           670,745    571,967        Long-term debt      297,602     405,953Share-based compensation 5,547     5,304Deferred income taxes       355,407   341,467     1,329,301   1,324,691Shareholders' Equity   Share capital      168,776     166,864 Contributed surplus      2,215   3,448 Foreign currency translation reserve  (15,446)     1,032 Retained earnings        1,641,515   1,552,078     1,797,060   1,723,422    $3,126,361  $3,048,113     Ensign Energy Services Inc.Consolidated Statements of Income For the three months ended March 31 (Unaudited,in thousands of Canadian dollars - except per share data)   March 31    March 31  2012   2011 Revenue     $677,671  $502,211 Expenses Oilfield services         443,343    330,320 Depreciation        58,159   40,778 General and administrative         19,407    15,016 Share-based compensation         (2,922)    12,322 Foreign exchange and other         3,774    (13,388)     521,761    385,048        Income before interest and income taxes 155,910   117,163        Interest income         97   135Interest expense        (4,254)   (419)   Income before income taxes       151,753   116,879   Income taxes    Current tax         31,741     16,260 Deferred tax        14,488      20,928   46,229    37,188   Net income     $105,524  $79,691  Net income per share  Basic    $0.69  $0.52 Diluted    $0.69  $0.52       Ensign Energy Services Inc.Consolidated Statements of Cash FlowsFor the three months ended March 31         (Unaudited, in thousands of Canadian dollars)  March 31   March 31  2012   2011Cash provided by (used in)     Operating activities  Net income      $105,524  $79,691Items not affecting cash   Depreciation         58,159   40,778 Share-based compensation, net of cash paid      (1,746)   13,144 Accretion on long-term debt        611    - Deferred income tax       14,488    20,928Net change in non-cash working capital     (41,641)   (94,274)     135,395    60,267Investing activities  Purchase of property and equipment           (80,554)   (66,683)Net change in non-cash working capital       (12,309)     (10,682)     (92,863)    (77,365)Financing activities  Net decrease in operating lines of credit       (5,985)    (14,494)Issue of senior unsecured notes         300,000   -Repayment of term loan        (300,000)    -Issue of capital stock         43     -Purchase of shares held in trust         (633)    (664)Deferred financing costs   (2,156)   -Dividends         (16,087)   (14,555)Net change in non-cash working capital       1,016   33         (23,802)    (29,680)       Net increase (decrease) in cash and cash equivalents      18,730   (46,778)Effects of foreign exchange on cash and cash equivalents     1,525    (2,571)Cash and cash equivalents - beginning of period      2,613   89,520Cash and cash equivalents - end of period    $22,868  $40,171  Supplemental information  Interest paid    $2,434  $428 Income taxes paid    $10,424  $6,063           For further information: Glenn Dagenais, Executive Vice President Finance and Chief Financial Officer, (403) 262-1361.