Canyon Services Group Inc. reports second quarter 2014 results

TSX - FRC

CALGARY, July 31, 2014 /CNW/ - Canyon Services Group Inc. ("Canyon" or the "Company") is pleased to announce its second quarter 2014 results.  The following results should be read in conjunction with the Management's Discussion and Analysis, the interim consolidated financial statements and notes of Canyon Services Group Inc. for the six months ended June 30, 2014 and should also be read in conjunction with the audited consolidated financial statements and Annual Information Form for the year ended December 31, 2013, which are available on SEDAR at www.sedar.com.

HIGHLIGHTS SUMMARY

The operating and financial highlights for the three and six months ended June 30, 2014 are summarized as follows:

  • Q2 2014 experienced increased activity levels from the prior year comparable quarter as a long cold winter delayed the seasonal spring break-up into early April and June experienced drier than normal field conditions especially in the northern portions of the WCSB compared to the same month last year when operations were impacted by extremely wet weather.
  • Jobs completed in the current quarter increased by 130% to 347 from 151 in Q2 2013, while consolidated revenues increased by 120% to $60.3 million in Q2 2014 from $27.4 million in Q2 2013.  For the six months ended June 30, 2014, jobs completed increased by 99% to 1,237 from 621 in the prior year comparable period, while consolidated revenues increased by 74% to $198.5 million from $114.3 over the same periods.
  • Canyon's increased activity and revenues in Q2 2014 were offset by an increase in fixed costs due to staff additions in the quarter and significant seasonal price discounts which are traditionally offered to customers during spring break up.  As a result, Canyon recorded negative EBITDA before share based payments of $9.2 million, a 30% improvement over the negative $13.1 million recorded in Q2 2013.  Canyon exited Q2 2014 with just under 1,100 people compared to about 800 at the same time last year.
  • For the six months ended June 30, 2014, EBITDA before share based payments more than doubled to $18.2 million from $7.2 million recorded in the prior year comparable period.
  • In the six months ended June 30, 2014, loss and comprehensive loss was $3.4 million, down from the loss and comprehensive loss of $8.7 million in the six months ended June 30, 2013.
  • Effective July 1, 2014 Canyon closed the previously announced acquisition of Fraction Energy Services Ltd. ("Fraction"), a leading water and fracturing fluid logistics, containment, transfer and storage management business for total consideration of approximately $106.1 million which consisted of 5.4 million common shares of Canyon issued at $18.81 per share and cash consideration of $4.5 million to settle outstanding options to acquire Fraction common shares.
  • Effective July 14, 2014, Canyon acquired four deep coiled tubing packages which included twin fluid pumpers, BOPs, injectors and three cranes (the "Assets") from a Canadian oilfield services company for approximately $19.7 million. This acquisition will increase Canyon's deep coiled tubing fleet to 11 packages. Canyon expects to deploy the Assets in NW Alberta and NE British Columbia.
  • Including the purchase of the Assets, Canyon's 2014 capital budget has increased to $94.5 million.  This amount also includes the previously announced $62.9 million, $3.2 million recently allocated to expand Canyon's Grande Prairie operating base and approximately $8.7 million that will be spent over the remainder of 2014 in the Fraction business.
  • On July 2, 2014 Canyon amended its bank credit facilities to extend the term by one year.  The facilities consist of a $20 million Operating Facility and an $80 million Revolving Facility which includes a $30 million accordion feature.  Canyon remains in a very strong financial position.  As at June 30, 2014, Canyon had available credit facilities combined with positive working capital totaling $112 million
  • On June 26, 2014, Canyon declared a quarterly dividend of $0.15 per common share, or $10.3 million, which was paid to shareholders on July 25, 2014.

OVERVIEW OF SECOND QUARTER 2014

000's except per share, job amounts and

hydraulic pumping capacity
(Unaudited)

Three Months Ended
June 30


Six Months Ended
June 30


2014

2013

2012


2014

2013

2012

Consolidated revenues

$60,279

$27,431

$37,974


$198,464

$114,318

$173,909

Profit (loss) and comprehensive

    income (loss)

$(15,263)

$(17,186)

$(6,940)


$(3,413)

$(8,659)

$30,227

Per share-basic

$(0.24)

$(0.28)

$(0.11)


$(0.05)

$(0.14)

$0.49

Per share-diluted

$(0.24)

$(0.28)

$(0.11)


$(0.05)

$(0.14)

$0.48

EBITDA before share- based 

    payments(1)

$(9,186)

$(13,134)

$(1,552)


$18,246

$7,230

$56,462

Funds from (used in)

    operations(1)

$(4,071)

$(11,822)

$2,723


$19,795

$6,826

$49,306

Total jobs completed (2)

347

151

251


1,237

621

1,185

Consolidated average revenue

    per job (2)

$178,028

$181,979

$155,545


$161,333

$184,389

$147,343

Average fracturing revenue per

    job

$275,423

$320,769

$203,759


$214,580

$261,204

$222,404

Hydraulic Pumping Capacity








Average HHP

245,500

225,500

194,000


238,000

225,500

185,000

Exit HHP

245,500

225,500

218,000


245,500

225,500

218,000

Capital expenditures

$18,589

$2,310

$20,653


$31,871

$5,811

$54,779

000's except per share amounts

(Unaudited)

As at

June 30,

2014

As at

December 31,

2013

As at

December 31,

2012


Cash and cash equivalents

$6,372

$21,308

$22,584


Working capital

$27,391

$41,730

$56,245


Total long-term financial liabilities

$17,517

$3,096

$3,475


Total assets

$391,245

$402,707

$406,113


Cash dividends declared per share

$0.30

$0.60

$0.60














Note (1):    

See Non-GAAP Measures

Note (2):    

Includes all jobs from each service line, specifically hydraulic fracturing; coiled tubing; nitrogen fracturing; acidizing and remedial cementing

In Q2 2014, jobs completed and consolidated revenues increased by 130% and 120% respectively compared to Q2 2013.  The quarter got off to a strong start as a long cold winter delayed the seasonal spring break-up into early April, while June experienced drier field conditions especially in the northern portions of the Western Canadian Sedimentary Basin ("WCSB") compared to the same month last year when operations were impacted by extremely wet weather.  In addition, Canyon's ongoing sales initiatives resulted in further market share growth with companies operating in the deep basin as well as market share expansion in southeast Saskatchewan and southwest Manitoba.  As a result, jobs completed in the current quarter increased by 130% to 347 from 151 in Q2 2013, while consolidated revenues increased by 120% to $60.3 million in Q2 2014 from $27.4 million in Q2 2013.  For the six months ended June 30, 2014, jobs completed increased by 99% to 1,237 from 621 in the prior year comparable period, while consolidated revenues increased by 74% to $198.5 million from $114.3 million over the same periods.

We estimate that overall industry activity in the WCSB as measured by total meters drilled increased by over 30% percent in Q2 2014 year over year.  This increasing trend in industry activity has been evident since late 2013 and is driven by several factors including strong natural gas prices in the first half of 2014, stable oil prices and oil price differentials, more favourable Canadian/US exchange rates and E&P companies' improved access to capital markets to fund capital programs.  The AECO spot natural gas price averaged CAD$4.70 per mcf in Q2 2014, up 32% from CAD$3.55 per mcf in Q2 2013.  Crude oil prices for Edmonton Light increased by 12% to CAD$104.54 per barrel in Q2 2014 from CAD$93.08 per barrel in Q2 2013.  Also evident of the increased industry-wide activity are the key industry indicators such as well licensing, drilling rig utilization and well completions which all point to a positive outlook for the remainder of 2014 and into 2015.  Well licensing for service-intensive deep wells in the WCSB increased by about 40% in Q2 2014 compared to Q2 2013, and by 43% for the six months ended June 30, 2014.  Drilling rig utilization increased by about 33% in Q2 2014 compared to Q2 2013, and by about 12% on a year to date basis.  Although well completions were relatively flat in Q2 2014 for the year to date compared to the prior year comparable period, total meters completed increased by 15% compared to Q2 2013.  Natural gas well completions have increased by about 51% for the year to date mainly due to LNG related delineation drilling in the deeper, more service intensive parts of the WCSB requiring increasing fracturing stages per well and greater proppant tonnages.

Canyon's increased activity and revenues in Q2 2014 were offset by an increase in fixed costs due to staff additions in the quarter and significant seasonal price discounts which are traditionally offered to customers during spring break up.  As a result, in Q2 2014, Canyon recorded negative EBITDA before share based payments of $9.2 million, a 30% improvement over the negative $13.1 million recorded in Q2 2013.  For the six months ended June 30, 2014, EBITDA before share based payments more than doubled to $18.2 million from $7.2 million recorded in the prior year comparable period.  In Q2 2014, Canyon's fixed costs increased by approximately 30% compared to Q2 2013, as Canyon continuously added field and support staff throughout 2013 and 2014 to prepare for a busier industry as discussed above.  In Q2 2014 Canyon added approximately 140 field staff and exited Q2 2014 with just under 1,100 people compared to about 800 at the same time last year.  In Q2 2014, Canyon recorded a loss and comprehensive loss of $15.3 million, compared to a loss and comprehensive loss of $17.2 million in Q2 2013.  In the six months ended June 30, 2014, loss and comprehensive loss was $3.4 million, down from the loss and comprehensive loss of $8.7 million in the six months ended June 30, 2013.

Subsequent Events

Fraction Acquisition

Effective July 1, 2014 Canyon closed the previously announced acquisition of Fraction Energy Services Ltd. ("Fraction"), a privately held company based in Calgary, Alberta (the "Acquisition") for total consideration of approximately $106.1 million which consisted of 5.4 million common shares of Canyon issued at a then market value of $18.81 per share and cash consideration of $4.5 million to settle outstanding options to acquire Fraction common shares.

Fraction was founded in 2012 and has grown into a leading provider of water and fracturing fluid logistics, containment, transfer and storage management services.  It provides services to customers focused in northeast British Columbia and northwest Alberta, with field offices in Fort St. John, British Columbia and Grande Prairie, Alberta.  Fraction currently employs approximately 150 people and in the three and six months ending June 30, 2014, generated approximately $6 million and $14 million of EBITDA respectively.  This business has a variable cost structure where field salaries and wages fluctuate with activity.  Thus, although Fraction's second quarter was impacted by the seasonal spring break up it was able to generate positive EBITDA in a period of lower activity.  This will benefit Canyon's future consolidated results.  Canyon's results will incorporate Fraction's results of operations commencing with Q3 2014.

In connection with the acquisition, Fraction management and employee shareholders have agreed to enter into a three year escrow agreement whereby 25% of the Canyon common shares received became freely tradable upon closing of the Acquisition with the remaining 75% of the Canyon Shares being released equally on the first, second and third anniversaries of the closing date.

Coiled Tubing Assets Acquisition

Effective July 14, 2014, Canyon acquired four deep coiled tubing packages which include twin fluid pumpers, BOPs, injectors and three cranes (the "Assets") from a Canadian oilfield services company for approximately $19.7 million. All of the Assets are less than 12 months old and the coiled tubing units have depth capacities of approximately 6,000 meters with 2 3/8 inch diameter coil. This acquisition will increase Canyon's deep coiled tubing fleet to 11 packages. Canyon expects to deploy the Assets in northwest Alberta and northeast British Columbia.

Including the purchase of the Assets, Canyon's 2014 capital budget has increased to approximately $94.5 million. This amount includes the previously announced budget of $62.9 million, $3.2 million recently allocated to expand Canyon's Grande Prairie operating base and approximately $8.7 million that will be spent over the remainder of 2014 in the Fraction business.

NON-GAAP MEASURES

The Company's Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"). Certain measures in this document do not have any standardized meaning as prescribed by IFRS and are considered NON-GAAP measures.

EBITDA before share-based payments and funds from operations are not recognized measures under IFRS.  Management believes that in addition to profit and comprehensive income, EBITDA before share-based payments and funds from operations are useful supplemental measures as they provide an indication of the results generated by the Company's business activities prior to consideration of how those activities are financed, amortized or taxed, as well as the cash generated by the Company's business activities without consideration of the timing of the monetization of non-cash working capital items.  Readers should be cautioned, however, that EBITDA before share-based payments and funds from operations should not be construed as an alternative to profit and comprehensive income determined in accordance with IFRS as an indicator of the Company's performance.  Canyon's method of calculating EBITDA before share-based payments and funds from operations may differ from other companies and accordingly, EBITDA before share-based payments and funds from operations may not be comparable to measures used by other companies.  Canyon calculates EBITDA before share-based payments as profit and comprehensive income for the year adjusted for depreciation and amortization, equity settled share-based payment transactions, gain or loss on sale of property and equipment, finance costs, foreign exchange (gain) loss and income tax expense.  Reconciliations of these NON-GAAP measures to the most directly comparable IFRS measures are outlined below.

The Company describes revenue less cost of services as gross profit. 

EBITDA before share-based payments

000's
(Unaudited)

Three Months Ended

June 30

Six Months Ended
June 30


2014

2013

2014

2013

Loss and comprehensive loss

$(15,263)

$(17,186)

$(3,413)

$(8,659)

Add (Deduct):





Depreciation and amortization

9,892

7,792

19,706

15,496

Finance costs

70

162

251

318

Foreign exchange (gain) loss

(100)

12

268

(50)

Share-based payment transactions

1,006

1,241

1,886

2,151

Gain on sale of property and equipment

(26)

(12)

(16)

(44)

Income tax recovery

(4,765)

(5,143)

(436)

(1,982)

EBITDA before share-based payments

$(9,186)

$(13,134)

$18,246

$7,230

Funds from Operations

000's
(Unaudited)

Three Months Ended

June 30

Six Months Ended
June 30


2014

2013

2014

2013

Net cash from operating activities

$8,934

$10,140

$10,989

$29,472

Add (Deduct):





Income Tax paid

-

2,512

-

3,667

Change in working capital

(18,090)

(25,960)

6,738

(26,177)

Current tax recovery (expense)

5,085

1,486

2,068

(136)

Funds from operations

$(4,071)

$(11,822)

$19,795

$6,826

QUARTERLY COMPARATIVE STATEMENTS OF OPERATIONS

000's except per share amounts

(Unaudited)

Three Months Ended
June 30


2014


2013

Revenues

$60,279


$27,431

Cost of services

(73,313)


(44,035)

Gross loss 

(13,034)


(16,604)

Administrative expenses

(7,024)


(5,551)

Results from operating activities

(20,058)


(22,155)

Finance costs

(70)


(162)

Foreign exchange gain (loss)

100


(12)

Loss before income tax

(20,028)


(22,329)

Income tax recovery

4,765


5,143

Loss and comprehensive loss 

$(15,263)


$(17,186)

EBITDA before share-based payments(1)

$(9,186)


$(13,134)

Earnings  (loss) per share:




      Basic

$(0.24)


$(0.28)

      Diluted

$(0.24)


$(0.28)

Note (1):     See Non-GAAP Measures

Revenues

In Q2 2014, jobs completed increased by 130% to 347 from 151 in Q2 2013, while consolidated revenues increased by 120% to $60.3 million from $27.4 million in the prior year quarter.  WCSB industry total meters drilled increased by over 30% in the current quarter over Q2 2013 in response to not only favourable field conditions especially in the northern parts of the WCSB but also due to several factors including strong natural gas prices in the quarter, stable oil prices and E&P companies' improved access to capital markets to fund capital programs.  Over 90% of Q2 2014 consolidated revenues were provided by hydraulic fracturing services with average fracturing revenue per job decreasing by 14% to $275,423 from $320,769 in Q2 2013.  The decrease in average fracturing revenue per job is due to industry pricing pressure and job mix. 

Cost of services

Cost of services for the three months ended June 30, 2014 totaled $73,313 (2013: $44,035) and includes materials, products, transportation and repair costs of $45,413 (2013: $23,558), employee benefits expense of $18,473 (2013: $13,053), and depreciation of property and equipment of $9,427 (2013: $7,424).

Materials, products, transportation and repair costs increased by 93% to $45,413 in the current quarter from $23,558 in Q2 2013 due to the increased job count in the quarter.  The increase in employee benefits expense is mainly due to field staff additions to support higher activity levels in 2014 and inflation in labour rates experienced in 2013.  The increase in depreciation of property and equipment is due to additional depreciation pertaining to equipment introduced into service in the second half of 2013 and accelerated depreciation relating to the replacement of a number of pump components.   

Administrative expenses

Administrative expenses for the three months ended June 30, 2014 totaled $7,024 compared to $5,551 in Q2 2013 and include employee benefits expense of $3,300 (2013: $2,182) and share-based payments expense of $1,006 (2013: $1,241).  Administrative expenses also include depreciation of buildings and office equipment and amortization of intangibles of $464 (2013: $367).  In addition, other administrative expenses totaled $2,254 in Q2 2014 compared to $1,760 in Q2 2013.  The increase in employee benefits expense was mainly attributable to staff additions and the implementation of a cost of living increase effective Q4 2013.  Other administrative expenses include $612 of transaction costs pertaining to the acquisition of Fraction as discussed above.

Share-based payments expense represents the value assigned to the granting of options and incentive-based units under the Company's Share Purchase Option Plan and Stock Based Compensation Plan respectively, using the Black-Scholes model.  For Q2 2014, $1,006 (Q2 2013 - $922) was charged to expenses and included in contributed surplus in respect of these two plans.  In addition, obligations for payments under the Company's Deferred Share Unit Plan are accrued as share-based payments expense over the vesting period.  The accrued liability increases or decreases with fluctuations in the price of the Company's common shares, with a corresponding increase or decrease in the share-based payments expense.  In Q2 2014, share-based payments expense was nil (2013: $319) for the Company's Deferred Share Unit Plan to reflect changes in the price of the common shares of the Company.

EBITDA before share-based payments (See Non-GAAP Measures)

In Q2 2014, Canyon's increased activity which was offset by an increase in fixed costs due to staff additions and significant seasonal price discounts which are traditionally offered to customers during spring break up resulted in EBITDA before share-based payments (see NON-GAAP MEASURES) of negative $9,186, a 30% improvement over the negative $13,134 recorded in the comparable 2013 quarter. 

Finance costs

Finance costs include interest on finance lease obligations and automobile loans and totaled $70 in Q2 2014 (2013: $162).

Income Tax Expense

At the expected combined income tax rate of 25%, the loss before income tax for Q2 2014 of $20,028 would have resulted in an expected recovery of $5,007, compared to the actual income tax recovery of $4,765.  The actual income tax recovery was reduced by non-deductible expenses.

Loss and comprehensive loss and loss per share

Loss and comprehensive loss totaled $15,263 in Q2 2014 compared to $17,186 in Q2 2013.

Basic and diluted loss per share were $0.24 for the three months ended June 30, 2014 compared to basic and diluted loss per share of $0.28 for the comparable 2013 quarter.

SIX MONTHS TO JUNE 30, 2014 COMPARATIVE STATEMENTS OF OPERATIONS

000's except per share amounts

(Unaudited)

Six Months Ended
June 30


2014


2013

Revenues

$198,464


$114,318

Cost of services

(187,892)


(113,617)

Gross profit

10,572


701

Administrative expenses

(13,902)


(11,074)

Results from operating activities

(3,330)


(10,373)

Finance costs

(251)


(318)

Foreign exchange (loss) gain

(268)


50

Loss before income tax

(3,849)


(10,641)

Income tax recovery

436


1,982

Loss and comprehensive loss 

$(3,413)


$(8,659)

EBITDA before share-based payments(1)

$18,246


$7,230

Earnings  (loss) per share:




      Basic

$(0.05)


$(0.14)

      Diluted

$(0.05)


$(0.14)

Note (1):     See Non-GAAP Measures

Revenues

The increased job count resulting from improved industry activity resulted in consolidated revenues increasing by 74% to $198,464 in the six months ended June 30, 2014 from $114,318 in the 2013 comparable period.  Jobs completed increased by 99% to 1,237 in the six months ended June 30, 2014 from 621 in the 2013 comparable period.  The improved industry-wide activity is supported by several factors including strong natural gas prices in the first half of 2014, stable oil prices and oil price differentials, more favourable Canadian/US exchange rates and E&P companies' improved access to capital markets to fund capital.  Over 90% of consolidated revenues in the six months ended June 30, 2014 were provided by hydraulic fracturing services with average fracturing revenue per job decreasing by 18% to $214,580 from $261,204 in the 2013 comparable period.  The decrease in average fracturing revenue per job is due to industry pricing pressure compared to last year and job mix.

Cost of services

Cost of services for the six months ended June 30, 2014 totaled $187,892 (2013: $113,617) and includes materials, products, transportation and repair costs of $123,137 (2013: $66,433), employee benefits expense of $45,954 (2013: $32,412), and depreciation of property and equipment of $18,801 (2013: $14,772).

Materials, products, transportation and repair costs increased by 85% to $123,137 in the current quarter from $66,433 as the job count increased by 99% in the current period compared to the comparable six month period in 2013.  The increase in employee benefits expense is mainly due to field staff additions to support higher activity levels in 2014 and inflation in labour rates experienced in 2013.  Canyon had approximately 1,100 employees as at June 30, 2014 compared to about 800 at the same time last year.  The increase in depreciation of property and equipment is due to additional depreciation pertaining to equipment introduced into service in the second half of 2013 and accelerated depreciation relating to the replacement of a number of pump components 

Administrative expenses

Administrative expenses for the six months ended June 30, 2014 totaled $13,902 compared to $11,074 in the 2013 comparable period and include employee benefits expense of $7,134 (2013: $4,899) and share-based payments expense of $1,886 (2013: $2,152).  Administrative expenses also include depreciation of buildings and office equipment and amortization of intangibles of $905 (2013: $724).  In addition, other administrative expenses totaled $3,977 in the six months ended June 30, 2014 compared to $3,299 in the 2013 comparable period.  The increase in employee benefits expense was mainly attributable to staff additions and the implementation of a cost of living increase effective Q4 2013.  Other administrative expenses include $612 of transaction costs pertaining to the acquisition of Fraction as discussed above. 

Share-based payments expense represents the value assigned to the granting of options and incentive-based units under the Company's Share Purchase Option Plan and Stock Based Compensation Plan respectively, using the Black-Scholes model.  For the six months ended June 30, 2014, $2,022 (Q2 2013 - $1,921) was charged to expenses and included in contributed surplus in respect of these two plans.  In addition, obligations for payments under the Company's Deferred Share Unit Plan are accrued as share-based payments expense over the vesting period.  The accrued liability increases or decreases with fluctuations in the price of the Company's common shares, with a corresponding increase or decrease in the share-based payments expense.  For the six months ended June 30, 2014, share-based payments expense decreased by $136 (2013: an increase of $230) for the Company's Deferred Share Unit Plan to reflect changes in the price of the common shares of the Company.

EBITDA before share-based payments (See Non-GAAP Measures)

For the six months ended June 30, 2014, improved industry-wide conditions as previously discussed, resulted in EBITDA before share-based payments (see NON-GAAP MEASURES) more than doubling to $18,246 from $7,230 recorded in the comparable 2013 period. 

Finance costs

Finance costs include interest on finance lease obligations and automobile loans and totaled $251 for the six months ended June 30, 2014 (2013: $318).

Income Tax Expense

At the expected combined income tax rate of 25%, the loss before income tax for the six months ended June 30, 2014 of $3,849 would have resulted in an expected recovery of $962, compared to the actual income tax recovery of $436.  The actual income tax recovery was reduced by non-deductible expenses.

Profit (Loss) and comprehensive income (loss) and earnings (loss) per share

Loss and comprehensive loss totaled $3,413 for the six months ended June 30, 2014 compared to loss and comprehensive loss of $8,659 in the 2013 comparable period.

Basic and diluted loss per share were $0.05 for the six months ended June 30, 2014 compared to basic and diluted earnings per share of $0.14 for the comparable 2013 period.

FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking information and statements within the meaning of applicable securities laws.  The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "should", "believe", "plans" and similar expressions are intended to identify forward-looking information or statements.  In particular, but without limiting the foregoing, this document contains forward-looking information and statements pertaining to the following: future oil and natural gas prices; future results from operations; future liquidity and financial capacity and financial resources; future costs, expenses and royalty rates; future interest costs; future capital expenditures; future capital structure and expansion; the making and timing of future regulatory filings; and the Company's ongoing relationship with major customers.

The forward-looking information and statements contained in this document reflect several material factors and expectations and assumptions of the Company including, without limitation: that the Company will continue to conduct its operations in a manner consistent with past operations; the general continuance of current or, where applicable, assumed industry conditions; the continuance of existing (and in certain circumstances, the implementation of proposed) tax, royalty and regulatory regimes; certain commodity price and other cost assumptions; the continued availability of adequate debt and/or equity financing and cash flow to funds its capital and operating requirements as needed; and the extent of its liabilities.  The Company believes the material factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable but no assurance can be given that these factors, expectations and assumptions will prove to be correct.

The forward-looking information and statements included in this document are not guarantees of future performance and should not be unduly relied upon.  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 including, without limitation: changes in commodity prices; changes in the demand for or supply of the Company's services; unanticipated operating results; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in the development plans of third parties; increased debt levels or debt service requirements; limited, unfavourable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; reliance on industry partners; attracting and retaining skilled personnel and certain other risks detailed from time to time in the Company's public disclosure documents (including, without limitation, those risks identified in this document and the Company's Annual Information Form).

The forward-looking information and statements contained in this document speak only as of the date of the document, and none of the Company or its subsidiaries assumes any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.

SOURCE Canyon Services Group Inc.

For further information: Brad Fedora, President and CEO, Canyon Services Group Inc., 2900 Bow Valley Square III, 255 - 5 Avenue SW, Calgary, Alberta, T2P 3G6, Phone: 403-290-2491, Fax: 403-355-2211; Barry O'Brien, Vice President, Finance and CFO, Canyon Services Group Inc., 2900 Bow Valley Square III, 255 - 5 Avenue SW, Calgary, Alberta, T2P 3G6, Phone: 403-290-2478, Fax: 403-355-2211