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Press release from CNW Group

Hyduke Provides Fair Value Update to Shareholders' Equity

Tuesday, October 16, 2012

Hyduke Provides Fair Value Update to Shareholders' Equity14:00 EDT Tuesday, October 16, 2012NISKU, AB, Oct. 16, 2012 /CNW/ - October 16, 2012 - Hyduke Energy Services Inc. ("Hyduke") (TSX:HYD) reports an update to the fair value of net assets on the balance sheet as of June 30, 2012.Do All Industries Ltd. ("DoAll") has put forth an unsolicited tender offer to acquire all of the outstanding common shares of Hyduke for cash consideration of $0.83 per common share (the "Offer").  DoAll is offering to buy Hyduke for approximately $20 million (based on $0.83 per share and 24,162,364 common shares outstanding).Hyduke's Board of Directors and Management are strongly of the opinion that the DoAll Offer is opportunistic and grossly undervalues the fair value of the company.  This fair value update of shareholders' equity is intended to highlight just how undervalued the DoAll Offer is.Hyduke has real estate and equipment assets.  In connection with a bank financing, Hyduke obtained fair market value appraisals on these assets from a qualified appraiser in Q4 of 2011.  The appraisal reports reveal that the fair value of these assets is significantly higher than the book value.  The total fair market value in excess of book value for land, building and equipment was over $6.2 million at that time.  Additionally, since Q4 of 2011, anecdotal evidence indicates that land prices have continued to increase in Nisku, Alberta and accordingly, the fair market value of Hyduke real estate today is likely even higher than what was appraised one year ago.Hyduke's most recently prepared financial statements as at August 31, 2012 (not released) present book value of net assets of $34 million.  When fair market values of real estate and equipment are considered, the fair value of net assets of Hyduke as at August 31, 2012 is approximately $40 million.  This number represents the total equity in Hyduke owned by the shareholders.  Accordingly, the unsolicited DoAll Offer of $20 million is grossly undervalued.  The Offer of $0.83 per common share is approximately 50% of the fair value of shareholder equity.  Fair value of shareholder equity of $40 million represents approximately $1.66 per common share to the Hyduke shareholders.It is very important that Hyduke shareholders consider this fair market value information when deciding whether the DoAll Offer represents a fair transaction price.  It is extremely obvious to the Board of Directors and Management of Hyduke that the Offer does not represent fair value to the shareholders.As mentioned on October 6, 2012, the Board of Directors and Management of Hyduke are currently undertaking a review of strategic alternatives.  One course of action Hyduke has undertaken is to solicit strategic investors and partners with an objective of enhancing shareholder value.  The fair values of the net assets of Hyduke represent a significant value opportunity to strategic investors and partners.About HydukeHyduke is an integrated oilfield services company with over thirty years experience in the manufacture, repair and distribution of oilfield equipment and supplies in Canada and worldwide.  Hyduke specializes in providing customized, integrated solutions to the drilling and well service industries including:Turn-Key Equipment - drilling rig and service rig packages including in-house design, engineering and drafting, major component procurement and overall project management;Life Cycle Management - inspection, certification, service, repair and supply services throughout the operating life of the drilling or well service rig; andSingle Source Supply - providing new capital equipment, repair and maintenance on existing capital equipment and supply of operating consumables.Hyduke is headquartered in Nisku, Alberta and has facilities in Edmonton, Calgary, Nisku, Leduc, Red Deer and Lloydminster, Alberta and Houston, Texas, USA.Hyduke operates in three operating segments.  The Drilling Equipment segment includes manufacture and repair of land based drilling rigs and drilling rig structures, supply and repair of drilling rig equipment, procurement and distribution of drilling supplies, supply and service of pneumatic controls, engineering and design of drilling rigs and inspection and certification of drilling rig equipment.  The Well Service Equipment segment includes manufacture and repair of well service rigs, mobile and skid mounted pump units and other well service equipment, procurement and distribution of well servicing supplies, supply and service of pneumatic controls, engineering and design of well service rigs and inspection and certification of well service equipment.  The Other Oilfield Services segment includes manufacture and distribution of cased hole and overburden drill bits and drilling systems, custom and production machining services, distribution and repair of truck-mounted equipment including cranes, winches and dump boxes and industrial sandblasting, painting and collision repair.__________________________________________________________________________________________________________________________________________The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this News Release.Forward Looking StatementsThis report contains certain forward-looking statements under the heading "Outlook" and elsewhere concerning future events or the Company's operations, anticipated financial performance, business prospects and strategies of Hyduke.  Forward-looking information typically contains statements with words such as "anticipate", "believe", "estimate", "expect", "plan", "intend" or similar words suggesting future outcomes or outlooks on, without limitation, estimates of business activity, supply and demand for the Company's products, the estimated amounts and timing of capital expenditures, anticipated future debt levels, or other expectations, beliefs, plans, objectives, assumptions or statements about future events or performance.  Readers are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties both general and specific that may cause actual future results to differ materially from those contemplated and contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur.  These factors may affect anticipated earnings or assets and include, but are not limited to: industry activity levels, market liquidity, customer credit risk, competition, oil and gas prices, product liability, fixed price contracts, development of new products, uninsured and underinsured losses, access to additional financing, source of supply of raw material and third party components, availability of key personnel, agreements and contracts, government regulations, foreign exchange exposure, interest rate risk, international scope of operations, environmental health and safety regulations and Hyduke's anticipation of and success in managing the risks implied by the foregoing.  The Company cautions that the foregoing list of important factors is not exhaustive.  The Company believes that the expectations reflected in the forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this report should not be unduly relied upon.  The forward-looking statements in this report speak only as of the date of this report.  Hyduke undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required pursuant to applicable securities legislation. SOURCE: Hyduke Energy Services Inc.For further information: Myron Yurko  Chair of the Board  (780) 955-0355  Gordon R. McCormack President and Chief Executive Officer  (780) 955-0355