Horizon North Logistics Inc. Announces Results For The Period Ended June 30, 2009



    CALGARY, Aug. 5 /CNW/ - TSX Symbol: HNL - Horizon North Logistics Inc.
("Horizon" or the "Corporation") reported its financial and operating results
for the three and six months ended June 30, 2009 and 2008.

    
    Highlights
    -------------------------------------------------------------------------
                      Three months  Three months    Six months    Six months
    (000's except            ended         ended         ended         ended
     per share             June 30,      June 30,      June 30,      June 30,
     amounts)                 2009          2008          2009          2008
    -------------------------------------------------------------------------
    Revenue               $ 42,126      $ 28,943      $ 80,764      $ 70,352
    EBITDAS(1)              15,309         4,809        27,399        16,979
    Operating
     earnings(1)             9,157        (1,051)       14,267         5,707
    Net earnings (loss)      5,883        (1,150)        9,585         3,385
    Net earnings (loss)
     per share -
     diluted              $   0.05      $  (0.01)     $   0.09      $   0.03
    Total assets           228,013       351,057       228,013       351,057
    Total long-term
     financial
     liabilities(2)         21,914        46,745        21,914        46,745
    Funds from
     operations(3)          13,826         3,302        24,898        13,159
    Capital spending         2,027        19,874         8,070        38,635
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) EBITDAS (Earnings before interest, taxes, depreciation, amortization,
        gain/loss on disposal of property, plant and equipment and stock
        based compensation) and operating earnings (loss) are not recognized
        measures under Canadian generally accepted accounting principles
        (GAAP). Management believes that in addition to net earnings, EBITDAS
        is a useful supplemental measure as it provides an indication of the
        Corporation's ability to generate cash flow in order to fund working
        capital, service debt, pay current income taxes and fund capital
        programs. Management believes that in addition to net earnings,
        operating earnings (loss) is a useful supplemental measure as it
        provides an indication of the results generated by the Corporation's
        principal business activities prior to consideration of how those
        activities are financed or taxed. Investors should be cautioned,
        however, that EBITDAS and operating earnings (loss) should not be
        construed as alternatives to net earnings determined in accordance
        with GAAP as an indicator of the Corporation's performance. Horizon's
        method of calculating EBITDAS and operating earnings (loss) may
        differ from other entities and accordingly, EBITDAS and operating
        earnings (loss) may not be comparable to measures used by other
        entities.
    (2) Long-term financial liabilities include operating lines of credit,
        the current and long-term portions of long-term debt, the current and
        long-term portions of capital lease obligations, and exclude deferred
        financing costs.
    (3) Funds from operations is not a recognized measure under GAAP.
        Management believes that in addition to cash flow from operations,
        funds from operations is a useful supplemental measure as it provides
        an indication of the cash flow generated by the Corporation's
        principal business activities prior to consideration of changes in
        working capital. Investors should be cautioned, however, that funds
        from operations should not be construed as an alternative to cash
        flow from operations determined in accordance with GAAP as an
        indicator of the Corporation's performance. Horizon's method of
        calculating funds from operations may differ from other entities and
        accordingly, funds from operations may not be comparable to measures
        used by other entities. Funds from operations is equal to cash flow
        from operations before changes in non-cash working capital items
        related to operations.
    

    Overview

    Revenues for the three months ended June 30, 2009 increased $13.2 million
to $42.1 million as compared to the same period in the prior year.
    Camp & Catering revenues increased $11.9 million and include an $8.0
million cancellation fee ($5.6 million after tax) related to the restructuring
of a long term contract with a large oil sands client that will be collected
in early 2010. Excluding this amount Camp & Catering revenues increased $3.9
million. The BlackSand Executive Lodge was on-stream for the full quarter in
2009, whereas the facility was still being completed in the prior year. The
majority of our camp manufacturing capacity in the prior year was dedicated to
internal capital construction, including the BlackSand Executive Lodge,
whereas in the current year there were several large external sales recognized
in the quarter.
    Matting revenues increased $0.3 million with mat rental volumes up
significantly as several large projects came online, but with decreased rental
rates as a result of market pressures. Mat sales volumes were up year over
year, with the majority of sales coming from used rental mats versus new mats.
    Marine revenues were up $0.6 million despite minimal tug and barge
revenue which reflected reduced activity in the region. Revenues from barge
camps benefitted from improvements in contract structure and overall rates for
the active barge camp assets, and were bolstered by a $0.5 million
cancellation fee related to a winter 2009/2010 barge camp project.
    EBITDAS and operating earnings increased by $10.5 million and $10.2
million respectively as compared to the same period in the prior year.
Excluding the $8.0 million cancellation fee noted above, EBITDAS for the
quarter increased by $2.5 million to $7.3 million or 21% of revenues, and
operating earnings increased by $2.2 million to $1.2 million or 3% of
revenues.

    Outlook

    Horizon's businesses are continuing to experience the impact of the
global recession through reduced activity levels and margin contraction as
competitors vie for fewer jobs. Our customers in the conventional oil and gas
exploration and production business have seen their cash flows reduced
dramatically by lower commodity prices. This will lead to 2009 drilling
activity declining to levels not seen in over a decade. Relief from this
situation is unlikely to occur until general economic activity improvements
spur increased industrial demand for commodities, in particular for natural
gas.
    Crude oil prices have improved somewhat from their recent low in the $35
US per barrel range to nearly $70 US per barrel. The combination of this price
improvement and labor and materials cost deflation has helped restart a number
of northern Alberta oil sands projects. Horizon's investments in camp and
catering facilities in the region should benefit from this increase in
activity and help offset the continued depressed conventional oil and gas
market.
    Horizon's strong and improving financial position should ensure that we
see our way through these difficult economic times. During the second quarter
of 2009, the Corporation repaid over $20 million of bank borrowings and exited
the quarter with $57 million of borrowing capacity under its $80 million bank
credit facility. At time of writing, this had further improved to $62 million
of borrowing capacity.
    Early in the third quarter of 2009, the Corporation took advantage of its
strong financial position to take the initial steps to add a product line to
its service offerings. The Corporation acquired 100% of the common shares of
Paramount Structures Inc. ("Paramount") for $490,000 plus an additional
capital infusion of $510,000. Paramount has developed a modular blast
resistant structure that is very much in demand by customers with refinery and
petrochemical plant operations. Horizon plans to spend up to $5 million over
the next year to build a blast resistant structures rental fleet, utilizing
manufacturing capacity at our existing plant in Grande Prairie, Alberta.


    
    Financial Results
    -------------------------------------------------------------------------
                              Three months ended June 30, 2009
                                                            Inter-
                                                           segment
                   Camps &              Marine              Elimi-
    (000's)       Catering   Matting  Services Corporate   nations     Total
    -------------------------------------------------------------------------
    Revenue       $ 36,477  $  4,039  $  1,992  $      -  $   (382) $ 42,126
    Expenses
      Cost of
       goods sold    7,491       539         -         -        (5)    8,025
      Operating     13,946     2,034     1,059         -      (377)   16,662
      General &
       administrative  489       100         4     1,518         -     2,111
      Foreign
       exchange
       loss (gain)       -       121         -      (102)        -        19
    -------------------------------------------------------------------------
    EBITDAS       $ 14,551  $  1,245  $    929  $ (1,416) $      -  $ 15,309

      Stock based
       compensation     17        23         3       154         -       197
      Depreciation &
       amortization  5,204     1,513       289        59       (32)    7,033
      Gain on
       disposal of
       property,
       plant &
       equipment    (1,027)      (51)        -         -         -    (1,078)

    -------------------------------------------------------------------------
    Operating
     earnings
     (loss)       $ 10,357  $   (240) $    637  $ (1,629) $     32  $  9,157
    -------------------------------------------------------------------------

    Interest
     income                                                              (10)
    Interest
     expense on
     operating
     lines of
     credit                                                               88
    Interest
     expense on
     long-term debt                                                      419
    Earnings on
     equity
     investments                                                        (132)
    Income tax
     expense                                                           2,909
                                                                    ---------
    Net earnings                                                     $ 5,883
                                                                    ---------
                                                                    ---------



    -------------------------------------------------------------------------
                              Three months ended June 30, 2008
                                                             Inter-
                                                            segment
                   Camps &              Marine               Elimi-
    (000's)       Catering   Matting  Services Corporate   nations     Total
    -------------------------------------------------------------------------
    Revenue       $ 24,552  $  3,787  $  1,371  $      -  $   (767) $ 28,943
    Expenses
      Cost of
       goods sold    3,271       214         -         -         -     3,485
      Operating     14,483     3,080     1,275         -      (667)   18,171
      General &
       administrative  657         4         -     1,784         -     2,445
      Foreign
       exchange
       loss              -        33         -         -         -        33
    -------------------------------------------------------------------------
    EBITDAS       $  6,141  $    456  $     96  $ (1,784) $   (100) $  4,809

      Stock based
       compensation    218        52         6       232         -       508
      Depreciation &
       amortization  3,536     1,522       260        41        (6)    5,353
      Loss (gain) on
       disposal of
       property, plant
       & equipment      15       (16)        -         -         -        (1)

    -------------------------------------------------------------------------
    Operating
     earnings
     (loss)       $  2,372  $ (1,102) $   (170) $ (2,057) $    (94) $ (1,051)
    -------------------------------------------------------------------------

    Interest income                                                       (4)
    Interest
     expense on
     operating
     lines of
     credit                                                              138
    Interest
     expense on
     long-term debt                                                      396
    Earnings on
     equity
     investments                                                        (173)
    Income tax
     expense                                                            (258)
                                                                    ---------
    Net loss                                                        $ (1,150)
                                                                    ---------
                                                                    ---------



    Camps & Catering

    Camps & Catering revenue is comprised of camp, catering and service
revenue, camp and space sales, and space rental revenue as follows:

                            Three months ending          Six months ending
    (000's except                  June 30                     June 30
     rental days         ------------------------    ------------------------
     and mandays)             2009          2008          2009          2008
                         ----------    ----------    ----------    ----------
    Revenue from
     Operations
      Camps, catering &
       service revenue    $ 15,966      $ 17,969      $ 41,948      $ 36,756
      Camp sales revenue    10,714         3,430        15,319         9,627
      Space sales revenue      347         1,680         1,295         4,403
      Space rental
       revenue               1,450         1,473         2,092         2,573
                         ----------    ----------    ----------    ----------
    Revenue from
     Operations           $ 28,477      $ 24,552      $ 60,654      $ 53,359
      Cancellation fee       8,000             -         8,000             -
                         ----------    ----------    ----------    ----------
    Total Revenue         $ 36,477      $ 24,552      $ 68,654      $ 53,359
                         ----------    ----------    ----------    ----------
                         ----------    ----------    ----------    ----------
    EBITDAS
      Operations          $  6,551      $  6,141      $ 18,432      $ 14,917
      Cancellation fee       8,000             -         8,000             -
                         ----------    ----------    ----------    ----------
    Total EBITDAS         $ 14,551      $  6,141      $ 26,432      $ 14,917
                         ----------    ----------    ----------    ----------
    Operating earnings
      Operations          $  2,357      $  2,372      $  8,989      $  7,770
      Cancellation fee       8,000             -         8,000             -
                         ----------    ----------    ----------    ----------
    Total Operating
     earnings             $ 10,357      $  2,372      $ 16,989      $  7,770
                         ----------    ----------    ----------    ----------

    Bed rental days(1)     108,801       115,854       242,116       264,629
    Catering mandays        92,017        85,909       203,910       208,097

    (1)     One bed rental day equals the rental of one bed for one day.
    

    Revenue from the Camps & Catering segment increased by $11,925,000 in the
three months ending June 30, 2009 as compared to the three months ended June
30, 2008.
    Camps, catering and service revenues decreased $2,003,000 in the three
months ended June 30, 2009 as compared to the three months ended June 30,
2008. Utilization of conventional equipment declined in the quarter as overall
demand decreased following general industry trends. In addition, there was an
increase in the proportion of jobs earning only catering revenue (without
associated bed rentals) during the second quarter of 2009 which resulted in
lower revenues, and is driven by customers on a site specific basis. These
effects were offset by higher utilization of the BlackSand Executive Lodge as
beds were utilized throughout the quarter in 2009 while occupancy began
mid-way through May in 2008.
    Combined camp and space sales revenues increased $5,951,000 in the three
months ended June 30, 2009 as compared to the three months ended June 30,
2008. A significant amount of our production facilities in 2008 were dedicated
to building the BlackSand Executive Lodge. As a result, there were less
external sales in Q2 2008. In the current quarter, several large manufacturing
jobs were completed and shipped.
    Total revenue includes an $8.0 million cancellation fee related to the
restructuring of a long term contract with a large oil sands client which
flows directly into EBITDAS and operating earnings during the quarter.
    EBITDAS from operations was $6,551,000, or 23% of revenue in the three
months ended June 30, 2009 as compared to $6,141,000 or 25% of revenue in the
three months ended June 30, 2008. As a percentage of revenue, EBITDAS was
similar to the same quarter last year as increased utilization of the
BlackSand Executive Lodge and increased external camp sales offset decreases
in conventional operations and a higher proportion of catering only revenue.
    Operating earnings were $2,357,000 or 8% of revenue in the three months
ended June 30, 2009 as compared to $2,372,000 or 10% of revenue in the three
months ended June 30, 2008. Depreciation and amortization increased $1,668,000
as the BlackSand Executive Lodge was operational for a full quarter in 2009,
which was offset by gains of $1,042,000 on the disposal of used rental
equipment during the quarter.

    Matting

    Matting revenue is comprised of mat rental revenue, mat sales,
installation, transportation, service, and other revenue as follows:


    
                            Three months ending          Six months ending
    (000's except                  June 30                     June 30
     rental days         ------------------------    ------------------------
     and mandays)             2009          2008          2009          2008
                         ----------    ----------    ----------    ----------
    Mat rental revenue    $  1,309      $    840     $   2,214     $   2,766
    Mat sales revenue          597           164         2,120         2,950
    Installation,
     transportation,
     service and other
     revenue                 2,133         2,783         4,832         8,077
                         ----------    ----------    ----------    ----------
    Total revenue         $  4,039      $  3,787     $   9,166     $  13,793
                         ----------    ----------    ----------    ----------
                         ----------    ----------    ----------    ----------
    EBITDAS               $  1,245      $    456     $   2,282     $   3,585
    Operating (loss)
     earnings             $   (240)     $ (1,102)    $    (838)    $     511
    Mat rental days        538,209       259,329       843,847       879,934
    Average mats in
     rental fleet           12,479        18,222        12,958        17,526
    Mats sold                1,029           369         3,364         3,693

    

    Revenue from the Matting segment increased by $252,000 in the three
months ending June 30, 2009 as compared to the three months ended June 30,
2008. Mat rental revenues for the three months ending June 30, 2009 were
$469,000 higher than the three months ending June 30, 2008. Activity levels
were reasonably strong as customers who had delayed projects from Q1 2009
began moving early in Q2. In addition, there was a late spring break up in
2008 and very wet weather in northern Alberta throughout the second quarter of
2008 which did not allow for movement of rental mats. Market conditions and
competition had a negative effect on rental pricing during the quarter with
average mat rental revenue per day dropping to $2.43/mat rental day in Q2 2009
as compared to $3.24/mat rental day in Q2 2008.
    Mat sales revenues for the three months ending June 30, 2009 were
$433,000 higher than the three months ending June 30, 2008 following the
overall increase in mats sold. Average revenue per mat sold was $580/mat as
compared to $444/mat the same period in 2008. Although the majority of mats
sold in both Q2 2009 and Q2 2008 were used mats (Q2 2009 - 981; Q2 2008 - 266)
the mats sold in Q2 2009 tended to be newer and therefore brought a slightly
higher price per mat. This is a shift from Q1 2009 where 53% of mats sold were
new mats as compared to Q1 2008 where 66% of mats sold were new mats.
    Installation, transportation, service and other revenue for the three
months ending June 30, 2009 were $650,000 lower than the three months ended
June 30, 2008. This decrease was driven primarily by a drop in trucking
activity as customers focused on project specific services and reduced staging
and strategic relocation work that has been typical in the past.
    The increase in both EBITDAS and operating earnings by $789,000 and
$862,000 respectively were driven by higher rental revenues, which contribute
the highest margin, and stronger sales revenues combined with a sharp focus on
cost control during the period.

    Marine Services

    Marine Services revenue is comprised of tug and barge revenue, barge camp
revenue, and rental and other revenue as follows:


    
                            Three months ending          Six months ending
                                   June 30                     June 30
                         ------------------------    ------------------------
    (000's)                   2009          2008          2009          2008
                         ----------    ----------    ----------    ----------
    Tug revenue           $     30      $    351      $     30     $     351
    Barge revenue                -           212             -           408
    Barge camp revenue       1,676           539         2,958         3,114
    Rental and other
     revenue                   286           269           759           877
                         ----------    ----------    ----------    ----------
    Total revenue         $  1,992      $  1,371      $  3,747     $   4,750
                         ----------    ----------    ----------    ----------
                         ----------    ----------    ----------    ----------
    EBITDAS               $    929      $     96      $  1,820     $   2,246
    Operating (loss)
     earnings             $    637      $   (170)     $  1,236     $   1,720
    

    Revenues from the Marine Services segment for the three months ended June
30, 2009 increased $621,000 as compared to the same period in the prior year.
    Tug and barge revenues were minimal as there was little activity in the
region during the quarter. Included in the barge camp revenue is a $500,000
cancellation fee with respect to the upcoming winter season for one of the
barge camps. Utilization of the barge camps in the quarter was comparable to
the prior year, with differences in contract structure and overall rates
driving the increase in revenues as compared to Q2 2008. Rental and other
revenues are generated mainly from storage of equipment and supplies for
customers and were consistent with the same period in 2008.
    Excluding the $500,000 cancellation fee, EBITDAS for the three months
ended June 30, 2009 was $429,000 or 29% of revenues as compared to $96,000 or
7% of revenues in the same period in 2008 mainly as a result of higher rental
revenues from the barge camps.

    Corporate

    Corporate costs are the costs of the head office which include the Chief
Executive Officer, President, Chief Financial Officer, Vice President of
Safety, Corporate Secretary, Corporate Accounting staff, and associated costs
of supporting a public company. Overall cash costs were $1,518,000 in the
three months ended June 30, 2009 as compared to $1,784,000 in the same period
in 2008. This decrease is a result of cost reductions in 2009 including salary
rollbacks implemented in the second quarter of 2009, led by senior management
at 20%.

    Other Items

    Interest on operating lines of credit and long-term debt

    Interest on operating lines of credit and long-term debt decreased to
$507,000 in the three months ended June 30, 2009 from $534,000 in the three
months ended June 30, 2008. This decrease is attributable to a decrease in the
weighted average amount of debt held to $38,364,000 in the three months ended
June 30, 2009 as compared to $42,745,000 in the three months ended June 30,
2008, and a reduction in interest rates.

    Earnings on equity investments

    The earnings on equity investments of Kitikmeot Caterers Ltd.
("Kitikmeot"), Sakku Caterers Limited ("Sakku"), Mackenzie Valley Logistics
Inc. ("Mackenzie Valley"), and Mackenzie Delta Integrated Oilfield Services
Ltd. ("MDIOS") decreased to $132,000 in the three months ended June 30, 2009
from $173,000 in the three months ended June 30, 2008. Activity in the
Northwest Territories has decreased in the three months ended June 30, 2009 as
compared to the three months ended June 30, 2008, resulting in the decrease in
earnings.

    Income taxes

    Income tax expense increased to $2,909,000, an effective tax rate of
33.1%, in the three months ended June 30, 2009 from a recovery of $258,000, an
effective tax rate of 18.3%, in the three months ended June 30, 2008. The
increase in the effective tax rate is attributable to changes in the
scheduling of the estimated realization of temporary differences.


    
    Liquidity and Capital Resources

    The Corporation has a strong working capital position and borrowing
capacity as set out below:

    -------------------------------------------------------------------------
                                                                  Increase /
    (000's)                        June 2009   December 2008    (Decrease) $
    -------------------------------------------------------------------------
    Current assets                  $ 41,216        $ 49,951        $ (8,735)

    Operating lines of credit          9,338           8,834             504
    Current liabilities excluding
     borrowings(1)                    11,596          18,177          (6,581)
    Current portion of long-term
     debt                                352             488            (136)
    -------------------------------------------------------------------------
    Current liabilities               21,286          27,499          (6,213)
    -------------------------------------------------------------------------

    Working capital(2)                19,930          22,452          (2,522)

    Bank borrowings
      Operating lines of credit     $  9,338        $  8,834        $    504
      Senior secured revolving
       term facility                  13,926          39,112         (25,186)
    -------------------------------------------------------------------------
    Total bank borrowings             23,264          47,946         (24,682)

    Available bank lines(3)           80,500          80,500               -
    -------------------------------------------------------------------------

    Borrowing capacity(4)           $ 57,236        $ 32,554        $ 24,682
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Calculated as the sum of bank indebtedness, accounts payable and
        accrued liabilities, deferred revenue and income taxes payable.
    (2) Calculated as current assets less current liabilities.
    (3) Includes $80,000,000 available to Horizon and $1,000,000 (Horizon's
        50% portion - $500,000) available to Horizon's joint venture,
        Arctic Oil & Gas Services Inc.
    (4) Calculated as available bank lines less total bank borrowing.
    

    In the six months ended June 30, 2009, Horizon's working capital position
decreased $2,522,000 and bank borrowings decreased $24,682,000. Bank
borrowings were reduced in the six months ending June 30, 2009 using the cash
flow from operations and proceeds from the sale of used equipment which
remained after funding capital additions.
    During the three and six months ended June 30, 2009, the Corporation
spent $2,027,000 and $8,070,000 on capital asset additions respectively. The
majority of the capital spending was related to the expansion of the BlackSand
Executive Lodge near Fort McMurray, Alberta. The Matting segment added 685
hybrid mats to its rental fleet to replenish mats sold. The remainder of the
capital additions included expansion of manufacturing capacity in Grande
Prairie, vehicle replacements, leasehold improvements, camp and catering
supplies, and other miscellaneous additions.
    The Corporation was granted approval from the Toronto Stock Exchange for
a normal course issuer bid to repurchase up to a maximum of 7,426,978 common
shares of the Corporation over the period from July 24, 2009 to July 23, 2010.
All shares repurchased will be cancelled. To date, no common shares have been
repurchased.
    The Corporation does not anticipate having any issues with respect to
covenant violations. The Corporation is in compliance with its four debt
covenants on its bank borrowings as set out below:

    
    -------------------------------------------------------------------------
    Debt Covenant                                              June 30, 2009
    -------------------------------------------------------------------------
    Current ratio(1) - must be greater than 1.2:1                     1.94:1
    Debt(2) to EBITDAS(3)(4) - must be less than 2:1                   0.4:1
    Debt service coverage(5) - must be greater than 1.5:1             20.3:1
    Debt(2) to total capitalization(6) - must be less than 0.5:1      0.11:1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Current ratio is calculated as ratio of current assets to current
        liabilities.
    (2) Calculated as the sum of operating lines of credit and long-term debt
        less deferred financing costs.
    (3) EBITDAS (Earnings before interest, taxes, depreciation, amortization,
        gain/loss on disposal of property, plant and equipment and stock
        based compensation) is not a recognized measure under Canadian
        generally accepted accounting principles (GAAP). Management believes
        that in addition to net earnings, EBITDAS is a useful supplemental
        measure as it provides an indication of the Corporation's ability to
        generate cash flow in order to fund working capital, service debt,
        pay current income taxes and fund capital programs. Investors should
        be cautioned, however, that EBITDAS should not be construed as an
        alternative to net earnings determined in accordance with GAAP as an
        indicator of the Corporation's performance. Horizon's method of
        calculating EBITDAS may differ from other entities and accordingly,
        EBITDAS may not be comparable to measures used by other entities.
    (4) Debt to EBITDAS is calculated as the ratio of debt to trailing
        12 months EBITDAS.
    (5) Debt service coverage is calculated as the ratio of trailing
        12 months EBITDAS less cash taxes to debt service. EBITDAS less cash
        taxes is calculated as the trailing 12 months EBITDAS less trailing
        12 months current tax expense. Debt service is calculated as the sum
        of trailing 12 months interest expense on operating lines of credit,
        trailing 12 months interest expense on long-term debt and current
        portion of long-term debt.
    (6) Debt to total capitalization is calculated as the ratio of debt to
        total capitalization. Total capitalization is calculated as the sum
        of debt and shareholder's equity.



    Consolidated Balance Sheets (Unaudited)

    -------------------------------------------------------------------------
    (000's)                                        June 2009   December 2008
    -------------------------------------------------------------------------
    Assets

    Current assets:
      Accounts Receivable                           $ 28,670        $ 37,873
      Inventory                                       10,504           9,960
      Prepaid expenses                                 1,176           1,168
      Income tax receivable                              866             950
    -------------------------------------------------------------------------
                                                      41,216          49,951

    Property, plant and equipment, net               142,835         147,924

    Intangible assets, net                            38,548          43,032

    Long-term investments                              5,414           5,760

    -------------------------------------------------------------------------
                                                    $228,013        $246,667
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Bank indebtedness                             $    251        $  1,776
      Operating lines of credit                        9,338           8,834
      Accounts payable and accrued liabilities         8,851          14,234
      Deferred revenue                                 2,494           2,167
      Current portion of long-term debt                  352             488
    -------------------------------------------------------------------------
                                                      21,286          27,499

    Long-term debt                                    12,899          38,110

    Future income tax liability                       14,533          11,456
    -------------------------------------------------------------------------
                                                      48,718          77,065

    Shareholders' equity:
      Share capital                                  257,505         257,505
      Contributed surplus                              5,672           5,564
      Deficit                                        (83,882)        (93,467)
    -------------------------------------------------------------------------
                                                     179,295         169,602

    -------------------------------------------------------------------------
                                                    $228,013        $246,667
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Operations and (Deficit) Retained Earnings
    Three and six months ended June 30, 2009 and 2008 (Unaudited)
    -------------------------------------------------------------------------
                      Three months ended June 30    Six months ended June 30
    (000's)                   2009          2008          2009          2008
    -------------------------------------------------------------------------

    Revenue               $ 42,126      $ 28,943      $ 80,764      $ 70,352

    Expenses:
      Cost of goods sold     8,025         3,485        12,720        11,078
      Operating             16,662        18,171        36,112        37,228
      General and
       administrative        2,111         2,445         4,521         5,019
      Stock based
       compensation            197           508           108         1,002
      Depreciation of
       property, plant
       and equipment         4,791         3,111         9,550         5,743
      Amortization of
       intangible assets     2,242         2,242         4,484         4,484
      (Gain) loss on
       disposal of
       property, plant
       and equipment        (1,078)           (1)       (1,010)           43
      Foreign exchange
       loss                     19            33            12            48
    -------------------------------------------------------------------------
                            32,969        29,994        66,497        64,645
    -------------------------------------------------------------------------
    Operating earnings       9,157        (1,051)       14,267         5,707

    Interest income            (10)           (4)          (19)           (8)
    Interest expense on
     operating lines of
     credit                     88           138           152           347
    Interest expense on
     long-term debt            419           396           854           641
    Earnings on equity
     investments              (132)         (173)         (243)         (437)
    -------------------------------------------------------------------------
    Earnings before income
     taxes                   8,792        (1,408)       13,523         5,164

    Income taxes
      Current tax expense      737           602           861         2,038
      Future tax expense
       (recovery)            2,172          (860)        3,077          (259)
    -------------------------------------------------------------------------
                             2,909          (258)        3,938         1,779

    -------------------------------------------------------------------------
    Net earnings (loss) and
     other comprehensive
     income (loss)           5,883        (1,150)        9,585         3,385

    (Deficit) retained
     earnings, beginning
     of period             (89,765)        9,017       (93,467)        4,482

    -------------------------------------------------------------------------
    (Deficit) retained
     earnings, end of
     period               $(83,882)     $  7,867      $(83,882)     $  7,867
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share:
      Basic               $   0.05      $  (0.01)     $   0.09      $   0.03
      Diluted             $   0.05      $  (0.01)     $   0.09      $   0.03
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows
    Three and six months ended June 30, 2009 and 2008 (Unaudited)
    -------------------------------------------------------------------------
                      Three months ended June 30    Six months ended June 30
    (000's)                   2009          2008          2009          2008
    -------------------------------------------------------------------------
    Cash provided by (used in):

    Operating activities:

    Net earnings (loss)   $  5,883      $ (1,150)     $  9,585      $  3,385
    Items not involving
     cash:
      Depreciation of
       property, plant and
       equipment             4,791         3,111         9,550         5,743
      Amortization of
       intangible assets     2,242         2,242         4,484         4,484
      Future income tax
       expense (recovery)    2,172          (860)        3,077          (259)
      Stock based
       compensation            197           508           108         1,002
      Earnings on equity
       investments            (132)         (173)         (243)         (437)
      Gain on sale of
       property, plant and
       equipment            (1,327)         (376)       (1,663)         (759)
    -------------------------------------------------------------------------
                            13,826         3,302        24,898        13,159

    Changes in non-cash
     working capital items   5,587         8,199         3,679        (3,141)
    -------------------------------------------------------------------------
                            19,413        11,501        28,577        10,018
    Investing activities:

    Purchase of property,
     plant and equipment    (2,027)      (19,874)       (8,070)      (38,635)
    Proceeds on sale of
     property, plant and
     equipment               3,868         1,636         5,272         3,248
    Return of capital from
     equity investments        589             -           589             -
    Business acquisitions        -           (48)            -          (580)
    -------------------------------------------------------------------------
                             2,430       (18,286)       (2,209)      (35,967)
    Changes in non-cash
     working capital items       -          (208)            -           568
    -------------------------------------------------------------------------
                             2,430       (18,494)       (2,209)      (35,399)
    Financing activities:

    (Repayment of) proceeds
     from bank indebtedness   (390)        1,028        (1,525)        1,028
    Share issuance costs         -             -             -           (15)
    Proceeds from (repayment
     of) operating lines of
     credit                  1,719         2,002           504        (6,610)
    Proceeds from long-term
     debt                        -         3,500             -        30,800
    Repayment of long-term
     debt                  (23,244)         (205)      (25,186)         (779)
    Payment of deferred
     financing costs             -             -          (289)            -
    Repayment of capital
     leases                      -           (27)            -           (53)
    Items not involving
     cash:
      Amortization of
       deferred financing
       costs                    72             -           128             -
    -------------------------------------------------------------------------
                           (21,843)        6,298       (26,368)       24,371
    Changes in non-cash
     working capital items       -             -             -          (210)
    -------------------------------------------------------------------------
                           (21,843)        6,298       (26,368)       24,161
    Decrease in cash
     position                    -          (695)            -        (1,220)

    Cash, beginning of
     period                      -           695             -         1,220
    -------------------------------------------------------------------------
    Cash, end of period   $      -      $      -      $      -      $      -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary
     information:
      Income taxes
       (received) paid    $ (3,293)     $    842      $   (152)     $  3,983
      Interest income
       received                 10             4            19             8
      Interest paid            615           535         1,107         1,027
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    This press release may contain forward-looking statements that are
subject to risk factors associated with the oil and gas and mining businesses
and the overall economy. The Corporation believes that the expectations
reflected in this press release are reasonable, but results may be affected by
a variety of variables. The Corporation relies on litigation protection for
"forward-looking" statements.





For further information:

For further information: Ric Peterson, Chairman, President and Chief
Executive Officer or Bob German, Vice President Finance and Chief Financial
Officer, 1600, 505 - 3rd Street S.W., Calgary, Alberta T2P 3E6; Telephone:
(403) 517-4654, Fax: (403) 517-4678; website: www.horizonnorth.ca


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