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Cabo Announces 3rd Quarter Results & Resignation of Director

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NEW WESTMINSTER, BRITISH COLUMBIA -- (Marketwired) -- 05/24/13 -- Cabo Drilling Corp. ("Cabo" or the "Company") (TSX VENTURE: CBE)(FRANKFURT: DHL) reports the Company's results for its fiscal year 2013 third quarter ended March 31, 2013.

3rd QUARTER HIGHLIGHTS

----------------------------------------------------------------------------(CDN $000s, except earnings 3 months 3 months 9 months 9 months per share) ending ending ending ending Mar 31/13 Mar 31/12 Mar 31/13 Mar 31/12----------------------------------------------------------------------------Revenue 10,616 14,046 33,619 45,339----------------------------------------------------------------------------Earnings (Loss) Before Interest, Taxes, Depreciation, Stock Based Compensation and Other Items (EBITDA) 1,072 1,551 3,527 6,075----------------------------------------------------------------------------Net Earnings (Loss) Before Taxes 107 230 504 3,130----------------------------------------------------------------------------Net Earnings (Loss) After Taxes 20 430 145 2,389----------------------------------------------------------------------------Earnings (Loss) per Share ($) (Basic and Diluted) Before Interest, Taxes, Depreciation, Stock-based Compensation and Other Items (EBITDA) 0.01 0.02 0.04 0.08----------------------------------------------------------------------------Earnings (Loss) per Share ($) (Basic and Diluted) 0.00 0.01 0.00 0.03----------------------------------------------------------------------------Cash from Operations(i) 458 1,386 2,143 3,968----------------------------------------------------------------------------Gross Margin % 19.7% 18.7% 20.2% 19.8%----------------------------------------------------------------------------Gross Margin % Adjusted(ii) 25.7% 23.4% 25.8% 24.1%----------------------------------------------------------------------------Working Capital 13,841 9,639 13,841 9,639----------------------------------------------------------------------------(i)before changes in non-cash working capital items(ii)gross margin adjusted to exclude depreciation expense



The Company reports:

-- Quarterly revenue for the 3rd quarter fiscal 2013 of $10.62 million, a 24% decrease compared to $14.05 million in the 3rd quarter fiscal 2012.-- 3rd quarter fiscal 2013 earnings before interest, taxes, amortization, stock-based compensation and other items (EBITDA) of $1.07 million compared to 3rd quarter fiscal 2012 earnings before interest, tax, amortization, stock based compensation and other items (EBITDA) of $1.55 million, resulting in 3rd quarter fiscal 2013 earnings before interest, taxes, amortization, stock-based compensation and other items of $0.01 per share and $0.02 per share in the 3rd quarter of fiscal 2012.-- Net before tax income for the 3rd quarter of fiscal 2013 of $106,810 compared to a 3rd quarter fiscal 2012 before tax income of $230,300.-- Net after tax earnings for the 3rd quarter of fiscal 2013 of $19,730 compared to net after tax earnings for the 3rd quarter of fiscal 2012 of $429,692, resulting in 3rd quarter fiscal 2013 net after tax earnings of $0.00 per share compared to a net after tax earnings for 3rd quarter fiscal 2012 of $0.01 per share.-- Gross margin percentage for the 3rd quarter fiscal 2013 was 19.7% compared with a gross margin of 18.7% in 3rd quarter fiscal 2012 and 19.1% in the 2nd quarter of fiscal 2013.-- Cash from operations, before changes in non-cash working capital items, was $2.14 million for the nine months ending March 31, 2013 compared to $3.97 million for the nine months ending March 31, 2012.-- A current asset balance of $23.74 million and working capital of $13.84 million.-- Total assets of $39.33 million and total liabilities of $15.00 million.



"Cabo Drilling generated revenues of $33.62 million during the first nine months of fiscal 2013. This represents a 26% decrease compared to the $45.34 million recorded in the nine month period in fiscal 2012," stated Mr. Versfelt. "The primary reason for the decrease is due to reduced demand for drilling as a result of projects being scaled back or projects being delayed."

"Revenues from our international divisions continue to represent a significant portion of Cabo Drilling's operations with 35% of revenues for the first nine months of fiscal 2013, as compared to 29% during the comparable period in fiscal 2012," commented Mr. Versfelt. "Management expects the international revenues to continue to represent a significant portion of overall revenues in the remaining period of fiscal 2013."

"Gross margin, adjusted to include depreciation, was 19.7% or $2.09 million in the third quarter of fiscal 2013, as compared to 18.7% in the third quarter of fiscal 2012. In accordance with IFRS, depreciation expenses of $638,888 are included in direct costs as compared to $666,994 in the third quarter of fiscal 2012," said Mr. Versfelt. "Adjusted gross margin, when depreciation expense is excluded from direct costs is 25.7% in the third quarter of fiscal 2013, as compared to 23.4% in the third quarter of fiscal 2012."

"The Company reports $3.53 million in EBITDA (10.5%) for the first nine months of fiscal 2013, compared to $6.08 million in the first nine months of fiscal 2012 (12.2% after adjustment for one time gain on the settlement of a debenture of $710,889)," stated Mr. Versfelt.

"For the third quarter ended March 31, 2013 the Company recorded a net income of $19,730 compared to $429,692 in the three month period ended March 31, 2012 and net income of $144,791 during the nine month period ended March 31, 2013 compared to $2.39 million in the comparable period in 2012 which included the one time gain on the settlement of the $710,889 debenture," stated Mr. Versfelt. "Working capital increased to $13.84 million during the nine months ending March 31, 2013, from $12.72 million at June 30, 2012 and total liabilities decreased by $3.56 million during the nine months to $15.00 million at March 31, 2013."

"Overall, Cabo Drilling management expects average drill utilization in fiscal 2013 to remain near the 40-45% level, with gross margins at 25-26%, prior to depreciation expenses included in direct costs," commented Mr. Versfelt. "General and administration expenses should remain in the $7 million range. Cabo Drilling is budgeting annual gross revenues of approximately $43-45 million for fiscal 2013."

Third quarter ended March 31, 2013

Revenue for the quarter ending March 31, 2013, decreased $3.43 million, or 24%, to $10.62 million, compared to $14.05 million in the third quarter of fiscal 2012, and increased 16% from the $9.16 million reported in the second quarter of fiscal 2013. The primary reason for the decrease is due to reduced demand for drilling as a result of projects being scaled back or projects being delayed. Latin America division revenues increased by 6% with slightly higher drill utilization in Panama as compared to the third quarter of fiscal 2012 and revenues increased to $4.47 million, as compared to $4.22 million in the comparable period in fiscal 2012. The Canadian and USA divisions recorded a significant decrease in revenues of 40% to $5.67 million in the third quarter of fiscal 2013, as compared to $9.43 million in the third quarter of fiscal 2012.

Direct costs for the quarter ended March 31, 2013, were $8.52 million compared to $11.42 million in the quarter ending March 31, 2012, as adjusted to include depreciation in accordance with IFRS. The decrease is a direct result of the decreased activity in the third quarter of fiscal 2013. Gross margins, under IFRS reporting, for the quarter ended March 31, 2013, were 19.7% compared to 18.7% during the quarter ending March 31, 2012 and higher than the 19.1% recorded in the second quarter of fiscal 2013. The small increase in gross margin from year to year is directly related to higher fixed costs in the Canadian operations that were offset mostly by higher margins in the Panama and Colombia operations. Management restructured two of its Canadian operations, which is beginning to result in improved margins and profitability.

In accordance with IFRS, $638,888 of depreciation expense of property, plant and equipment is included in direct costs for the quarter ending March 31, 2013, as compared to $666,994 in the third quarter of fiscal 2012.

General and administrative expenses decreased by $283,258 from $1.90 million in the third quarter of fiscal 2012 to $1.65 million in the third quarter of fiscal 2013. The decrease is a result of lower salaries and travel costs.

General and administration costs represent 16% of revenues during the third quarter of fiscal 2013, as compared to 19% reported in the second quarter of fiscal 2013, and 14% in the third quarter of fiscal 2012. Management expects general and administration costs to remain around $1.60 million per quarter for the remainder of fiscal 2013 and into 2014.

Net income after tax for the third quarter of fiscal 2013 is $19,730 compared to a net income after tax of $429,692 in the third quarter of fiscal 2012.

Marketable securities increased $565,910, from $338,698 at June 30, 2012, to $904,608 at March 31, 2013. Marketable securities consist primarily of 1.50 million shares in Standard Gold Inc. and 3.56 million shares of International Millennium Mining Corp. We have adjusted the value of our holdings at March 31, 2013, as recorded in the comprehensive income statement. At March 31, 2013, the balance of $904,608 consists of shares in public corporations.

Accounts receivable decreased by $1.79 million to $8.58 million at March 31, 2013, from $10.37 million at June 30, 2012. The decrease is primarily due to reduced activity during the first nine months of fiscal 2013.

Property, plant & equipment decreased to $12.60 million at March 31, 2013 from $13.47 million at June 30, 2012, a decrease of $875,704 during the first nine months of fiscal 2013, resulting from equipment depreciation offset by equipment purchases of $1.11 million. The Company has a capital expenditure budget of $1.80 million for fiscal 2013, with an emphasis on modernizing its drill fleet.

Consolidated Financial Results for nine months ending March 31, 2013

Revenue for the nine months ending March 31, 2013 decreased approximately 26% to $33.62 million, compared to $45.34 million in the comparable period in fiscal 2012. Revenues from our international divisions continue to represent a significant portion of Cabo Drilling's operations with 35% of revenues for the first nine months of fiscal 2013, as compared to 29% during the comparable period in fiscal 2012. Management expects the international revenues to continue to represent a significant portion of overall revenues in the remaining period of fiscal 2013.

Surface drilling decreased by 24% during the nine month period ending March 31, 2013 to $23.73 million, due to projects completing earlier than anticipated or being delayed in the Canadian operations. Underground drilling decreased by 25% during the nine month period ending March 31, 2013 to $6.00 million, as compared to $8.03 million during the comparable period in fiscal 2012. The decrease is due to an underground contract not being renewed in the Atlantic division.

Direct costs for the nine months ended March 31, 2013 were $26.83 million compared to $36.36 million in the comparable period in fiscal 2012. Gross margins for the nine months ended March 31, 2013 were 20.2% compared to 19.8% during the nine months ended March 31, 2012, when direct costs include depreciation expenses (or 25.8% compared to 24.1% for the respective periods, when direct costs are adjusted to exclude depreciation expense). Although margins in Canada were lower, the Company was able to maintain higher margins in the international operations.

General and administrative expenses decreased by approximately 8% or $453,586 from $5.64 million in the first nine months of fiscal 2012 to $5.19 million in the first six months of fiscal 2013. The decrease is primarily a result of decreased salary costs from restructuring the Canadian operations, lower travel expenditures and lower bad debt allowance.

Net income after tax for the first nine months of fiscal 2013 was $144,791 compared to net income after tax of $2.39 million earned in the comparable period of fiscal 2012. The main differences are the $710,889 extraordinary gain recorded in the first quarter of fiscal 2012 and higher taxes as a result of higher revenues reported in the first nine months of fiscal 2012, as compared to the first nine months of fiscal 2013.

Cash flow from operations (before changes in non-cash operating working capital items) was $2.14 million during the first nine months of fiscal 2013, compared to $3.97 during the first nine months of fiscal 2012.

Virtually all metal prices are adjusting downward to levels last seen throughout 2009 and into early 2010. In addition, the materials sector has become the least favoured sector in the global financial sector. All areas of the mineral exploration and mining sectors are undergoing a significant revaluation and reduction of capital expenditures, as well as increases in cost control programs. The dearth of financings in the junior exploration sector over the last two years is also causing multi-billion dollar cutbacks of global exploration expenditures. Does this mean that the entire mining industry is faced with a long-term major adjustment, or are we looking at an overdue correction? We believe it is the latter, and have adjusted our budgets and plans on this basis. We do not anticipate a material turn in the markets until sometime in 2014, but we see a number of positive consequences of this type of environment.

The better managed juniors with good mining projects will survive and will, over time, encourage the private and public sectors to provide financing for their projects. The mid-tier and major mining companies will become stronger and will, in many cases, acquire good projects previously developed by undercapitalized juniors. Concurrently, the USA economy, emerging market economies and European economies are anticipated to become stronger and increase their demand for metals, from a decreasing supply.

At the same time small, largely single operator, drilling companies, whose financial health is significantly impacted by the financial position of the juniors, will realized that continually underbidding projects during the slow times cannot be sustained. In addition, the availability of experienced drilling personnel will improve, thereby increasing the possibility of higher productivity, improved safety and decreased consumable costs.

Cabo Drilling has reduced costs over the past two years and has improved its balance sheet. Productivity has improved, our safety record is one of the best in the industry and our client relationships are very good. With a continued focus on safety, high environmental stewardship and improved productivity, plus the improved availability of good to excellent drilling personnel, we believe we will experience better projects with better margins and high safety with high quality clients.

Resignation of Director

The Company also announces that Roy Graydon resigned as a director of the Company effective May 22, 2013. Mr. Graydon decided to step down from the board of Cabo Drilling due to other work commitments. Mr. Versfelt, Cabo's President & CEO stated, "We appreciate the contributions Mr. Graydon has made to the Company over the past 18 months and I personally wish Mr. Graydon the greatest amount of success and enjoyment with his future endeavours."

About Cabo Drilling Corp. (TSX VENTURE: CBE)(FRANKFURT: DHL)

Cabo Drilling Corp. is a drilling services company headquartered in New Westminster, British Columbia, Canada. The Company provides mining specialty drilling services through its Canadian divisions in Surrey, British Columbia; Kirkland Lake, Ontario; and Springdale, Newfoundland; as well as Cabo Drilling (America) Inc. of the United States; Cabo Drilling (Panama) Corp. of Panama, Republic of Panama; Cabo Drilling Panama-Pacifico Corp. of Panama, Republic of Panama doing business as Cabo Drilling Colombia Corp.; Balkan States Drilling SH.P.K. of Tirana, Albania; and Cabo Drilling (International) Inc. The Company's common shares trade on the Frankfurt Exchange under the symbol: DHL and on the TSX Venture Exchange under the symbol: CBE.

ON BEHALF OF THE BOARD

John A. Versfelt, Chairman, President and CEO

Further information about the Company can be found on the Cabo website (http://www.cabo.ca) and SEDAR (www.sedar.com).

This news release may contain forward-looking statements including but not limited to, those relating to worldwide demand for gold and base metals and overall commodity prices, the level of activity in the minerals and metals industry and the demand for the Company's services, the Canadian and international economic environments, the impact of operational changes, changes in jurisdictions in which the Company operates (including changes in regulation), failure by counterparties to fulfill contractual obligations, and other factors as may be set forth, as well as objectives or goals. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.



Contacts:
Cabo Drilling Corp.
John A. Versfelt
Chairman, President and CEO
(604) 527-4201
(604) 527-9126 (FAX)
ir@cabo.ca

Cabo Drilling Corp.
Sheri Barton
Corporate Communications
403-217-5830
www.cabo.ca



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