Horizon North Logistics Inc. Announces Results For The Period Ended March 31, 2009



    CALGARY, May 5 /CNW/ - TSX Symbol: HNL - Horizon North Logistics Inc.
("Horizon" or the "Corporation") reported its financial and operating results
for the three months ended March 31, 2009 and 2008.

    
    Highlights

    -------------------------------------------------------------------------
                             Three         Three
    (000's except     months ended  months ended
     per share            March 31,     March 31,     Increase/    Increase/
     amounts)                 2009          2008     (decrease)$  (decrease)%
    -------------------------------------------------------------------------
    Revenue              $  38,638     $  41,409     $  (2,771)         (7%)
    EBITDAS(1)              12,090        12,170           (80)         (1%)
    Operating earnings(1)    5,110         6,758        (1,648)        (24%)
    Net earnings             3,702         4,535          (833)        (18%)
    Net earnings per
     share - diluted     $    0.03     $    0.04     $   (0.01)        (25%)
    Total assets           244,793       344,123       (99,330)        (29%)
    Total long-term
     financial
     liabilities(2)         44,789        41,475         3,314            8%
    Funds from
     operations(3)          11,072         9,857         1,215           12%
    Capital spending         6,043        18,761       (12,718)        (68%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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. For a reconciliation of EBITDAS and operating earnings
        (loss) to net earnings, please refer to page 2 of the News Release.
    (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

    Overall revenues for Horizon decreased $2,771,000 to $38,638,000 in the
three months ended March 31, 2009. EBITDAS also decreased $80,000 to
$12,090,000 in the three months ended March 31, 2009. Activity levels for the
Camps & Catering segment decreased from the comparative period, but were
offset by the added revenues of the BlackSand Executive Lodge, resulting in
higher revenues and EBITDAS. The Matting and Marine segments experienced
decreased equipment utilization and sales, resulting in lower revenues and
EBITDAS.

    Outlook

    Horizon's businesses have certainly been negatively impacted by the world
recession with its contracting economies, tight credit markets and low
commodity prices. This situation will likely persist through 2009 and into
2010 before we see the beginnings of a recovery. The majority of Horizon's
customers are in the natural resource extraction business and have thus seen
large declines in their cash flow which have caused them to curtail
operations, resulting in reduced demand for the services we offer.
    A prime example of this reduced demand is the renegotiation of our
contract for our BlackSand Executive Lodge in Fort McMurray. While a negative
from a short-term cash flow perspective, the negotiations should strengthen
our relationship with a customer who is a long-term player in the development
of Canada's oilsands. At the same time, the extended term of the contract
provided Horizon with a strong anchor tenant for its camp assets on the
BlackSand site, providing an operating base to effectively market the
remaining rooms.
    Lower demand for services means competition for work that is taking place
will be tougher and this will translate into lower pricing and margins.
Horizon will counter the resulting lower revenue and cash flow with a
substantially reduced capital spending program, right-sizing operations to
meet demand and cost control measures such as salary rollbacks which will take
effect in the second quarter of 2009.
    One of the Corporation's objectives has always been to maintain a
conservative balance sheet as measured by our relatively low debt levels.
Through 2009 we should see a continued reduction of our outstanding bank
borrowings putting us in a very good position to weather this economic storm
and perhaps to take advantage of asset buying opportunities that could
materialize.

    
    Financial Results

    -------------------------------------------------------------------------
                                 Three months ended March 31, 2009

                                                              Inter-
                                                             segment
                        Camps &            Marine             Elimi-
    (000's)            Catering  Matting Services Corporate  nations   Total
    -------------------------------------------------------------------------
    Revenue             $32,177  $ 5,127  $ 1,755  $     -  $  (421) $38,638
    Expenses
      Cost of goods sold  3,456    1,239        -        -        -    4,695
      Operating          16,380    2,641      850        -     (421)  19,450
      General &
       administrative       460      151       14    1,785        -    2,410
      Foreign exchange
       loss (gain)            -       59        -      (66)       -       (7)
    -------------------------------------------------------------------------
    EBITDAS             $11,881  $ 1,037  $   891  $(1,719) $     -  $12,090

      Stock based
       compensation         108       15        3     (215)       -      (89)
      Depreciation &
       amortization       5,137    1,556      289       51      (32)   7,001
      Loss on disposal
       of property,
       plant & equipment      4       64        -        -        -       68

    -------------------------------------------------------------------------
    Operating earnings
     (loss)             $ 6,632  $  (598) $   599  $(1,555) $    32  $ 5,110
    ----------------------------------------------------------------

    Interest income                                                       (9)
    Interest expense on
     operating lines of
     credit                                                               64
    Interest expense on
     long-term debt                                                      435
    Earnings on equity
     investments                                                        (111)
    Income tax expense                                                 1,029
                                                                    ---------

    Net earnings                                                     $ 3,702
                                                                    ---------
                                                                    ---------



    -------------------------------------------------------------------------
                                 Three months ended March 31, 2008

                                                              Inter-
                                                             segment
                        Camps &            Marine             Elimi-
    (000's)            Catering  Matting Services Corporate  nations   Total
    -------------------------------------------------------------------------
    Revenue             $28,807  $10,006  $ 3,379  $     -  $  (783) $41,409
    Expenses
      Cost of goods sold  5,361    2,014      218        -        -    7,593
      Operating          14,058    4,705    1,011        -     (717)  19,057
      General &
       administrative       612      143        -    1,819        -    2,574
      Foreign exchange
       loss                   -       15        -        -        -       15
    -------------------------------------------------------------------------
    EBITDAS             $ 8,776  $ 3,129  $ 2,150  $(1,819) $   (66) $12,170

      Stock based
       compensation         217       53        6      218        -      494
      Depreciation &
       amortization       3,129    1,451      254       40        -    4,874
      Loss on disposal
       of property,
       plant & equipment     32       12        -        -        -       44

    -------------------------------------------------------------------------
    Operating
     earnings (loss)    $ 5,398  $ 1,613  $ 1,890  $(2,077) $   (66) $ 6,758
    ----------------------------------------------------------------

    Interest income                                                       (4)
    Interest expense on
     operating lines of
     credit                                                              209
    Interest expense on
     long-term debt                                                      245
    Earnings on equity
     investments                                                        (264)
    Income tax expense                                                 2,037
                                                                    ---------

    Net earnings                                                     $ 4,535
                                                                    ---------
                                                                    ---------

    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
    (000's except             ending March 31,        Increase/     Increase/
     rental days        -------------------------    (Decrease)    (Decrease)
     and mandays)             2009          2008          $             %
                        -----------   -----------   -----------   -----------
    Camps, catering and
     service revenue     $  26,930     $  18,787     $   8,143           43%
    Camp sales revenue       3,341         6,197        (2,856)         (46%)
    Space sales revenue      1,264         2,723        (1,459)         (54%)
    Space rental revenue       642         1,100          (458)         (42%)
                        -----------   -----------   -----------   -----------
    Total revenue        $  32,177     $  28,807     $   3,370           12%
                        -----------   -----------   -----------   -----------
                        -----------   -----------   -----------   -----------
    EBITDAS              $  11,881     $   8,776     $   3,105           35%
    Operating earnings   $   6,632     $   5,398     $   1,234           23%
    Bed rental days(1)     133,315       148,775       (15,460)         (10%)
    Catering mandays       111,893       122,188       (10,295)          (8%)

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

    The Camps & Catering segment earned $32,177,000 of revenue and generated
$11,881,000 of EBITDAS and $6,632,000 operating earnings in the three months
ended March 31, 2009 as compared to $28,807,000 of revenue, $8,776,000 of
EBITDAS and $5,398,000 of operating earnings in the three months ended March
31, 2008.
    Camps, catering and service revenue increased $8,143,000, or 43%, to
$26,930,000 in the three months ended March 31, 2009 as compared to
$18,787,000 in the three months ended March 31, 2008. This increase in revenue
is a result of the higher rates earned at the BlackSand Executive Lodge near
Fort McMurray, Alberta and counters the decrease in revenue associated with
the decrease in bed rental days and catering mandays of 10% and 8%
respectively.
    Camp and space sales revenues decreased $4,315,000, or 48%, to $4,605,000
in the three months ended March 31, 2009 as compared to $8,920,000 in the
three months ended March 31, 2008. This decrease is a result of the decline in
the economy as fewer companies are purchasing camps and space assets. Space
rental revenue also declined $458,000, or 42%, to $642,000 in the three months
ended March 31, 2009 as compared to $1,100,000 in the three months ended March
31, 2008 as a result of the decline in economic activity.
    EBITDAS in the three months ended March 31, 2009 increased $3,105,000, or
35%, to $11,881,000, or 37% of revenue, as compared to $8,776,000, or 30% of
revenue, in the three months ended March 31, 2008. This increase is
attributable to the change in revenue mix as camps, catering, and service
revenue has higher margins than camp and space sales revenue.
    The $1,234,000 increase in operating earnings is a result of the above,
countered by an increase in depreciation and amortization of $2,008,000 as a
result of new BlackSand Executive Lodge.

    Matting

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

    
                                Three months
    (000's except             ending March 31,
     rental days        -------------------------     Decrease      Decrease
     and mats)                2009          2008          $             %
                        -----------   -----------   -----------   -----------
    Mat rental revenue   $     905     $   1,926     $  (1,021)         (53%)
    Mat sales revenue        1,523         2,545        (1,022)         (40%)
    Installation,
     transportation,
     service and
     other revenue           2,699         5,535        (2,836)         (51%)
                        -----------   -----------   -----------   -----------
    Total revenue        $   5,127     $  10,006     $  (4,879)         (49%)
                        -----------   -----------   -----------   -----------
                        -----------   -----------   -----------   -----------
    EBITDAS              $   1,037     $   3,129     $  (2,092)         (67%)
    Operating (loss)
     earnings            $    (598)    $   1,613     $  (2,211)        (137%)
    Mat rental days        305,638       620,605      (314,967)         (51%)
    Average mats in
     rental fleet           13,437        17,189        (3,752)         (22%)
    Mats sold                2,335         3,324          (989)         (30%)
    

    The Matting segment earned revenues of $5,127,000, EBITDAS of $1,037,000
and an operating loss of $598,000 in the three months ended March 31, 2009 as
compared to $10,006,000 of revenue, $3,129,000 of EBITDAS and $1,613,000 of
operating earnings in the three months ended March 31, 2008.
    Mat rental revenue has decreased $1,021,000, or 53%, to $905,000 in the
three months ended March 31, 2009 as compared to $1,926,000 in the three
months ended March 31, 2008. This decrease is as a result of the decrease in
activity levels which have occurred due to the decline in the economy, oil and
natural gas prices and oilfield activity.
    Mat sales revenue has decreased $1,022,000, or 40%, to $1,523,000 in the
three months ended March 31, 2009 as compared to $2,545,000 in the three
months ended March 31, 2008. This decrease is as a result of the number of
mats sold decreasing 30% and the average selling price decreasing
approximately 15% due to a new, less expensive hybrid mat being sold in 2009
in addition to pricing competition due to a weaker economy.
    Installation, transportation, service and other revenue decreased
$2,836,000, or 51%, to $2,699,000 in the three months ended March 31, 2009 as
compared to $5,535,000 in the three months ended March 31, 2008. This decrease
is consistent with the decrease in mat rental and mat sales.
    The $2,092,000 decrease in EBITDAS and $2,211,000 decrease in operating
earnings are a result of the above decreases in revenues and margins.

    Marine Services

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

    
                                Three months
                              ending March 31,
                        -------------------------     Decrease      Decrease
    (000's)                   2009          2008          $             %
                        -----------   -----------   -----------   -----------
    Barge revenue        $       -     $     196     $    (196)        (100%)
    Barge camp revenue       1,282         2,575        (1,293)         (50%)
    Rental and
     other revenue             473           608          (135)         (22%)
                        -----------   -----------   -----------   -----------
    Total revenue        $   1,755     $   3,379     $  (1,624)         (48%)
                        -----------   -----------   -----------   -----------
                        -----------   -----------   -----------   -----------
    EBITDAS              $     891     $   2,150     $  (1,259)         (59%)
    Operating earnings   $     599     $   1,890     $  (1,291)         (68%)
    

    The Marine Services segment earned revenues of $1,755,000, EBITDAS of
$891,000 and operating earnings of $599,000 in the three months ended March
31, 2009 as compared to $3,379,000 of revenue, $2,150,000 of EBITDAS and
$1,890,000 of operating earnings in the three months ended March 31, 2008. The
decrease in revenues was a result of not leasing out all of the barge camps in
the three months ending March 31, 2009, while all equipment was utilized in
the three months ending March 31, 2008. Also contributing to the decrease in
utilization were some pricing constraints as a result of the recent economic
downturn. Operating expenses in the three months ended March 31, 2009 were
comparable to those in the three months ended March 31, 2008 as they are
largely fixed during the winter months, therefore, the decrease in revenue
also resulted in a similar decrease in EBITDAS and operating earnings.

    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. The decrease in corporate costs to $1,785,000
in the three months ended March 31, 2009 from $1,819,000 in the three months
ended March 31, 2008 is a result of cost reductions in 2009. Corporate costs
during the last quarter of 2008 amounted to $2,701,000, including a $475,000
charge related to the departure of a senior executive.

    Other Items

    Interest on operating lines of credit and long-term debt

    Interest on operating lines of credit and long-term debt increased to
$499,000 in the three months ended March 31, 2009 from $454,000 in the three
months ended March 31, 2008. The increase in interest expense is attributable
to the increase in the average amount of debt held of $45,994,000 in the three
months ended March 31, 2009 as compared to $32,431,000 in the three months
ended March 31, 2008, offset by a reduction of the average interest rate from
5.7% to 4.3%.

    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
("MDIOS") decreased to $111,000 in the three months ended March 31, 2009 from
$264,000 in the three months ended March 31, 2008. Activity in the Northwest
Territories has decreased in the three months ended March 31, 2009 as compared
to the three months ended March 31, 2008, resulting in the decrease in
earnings.

    Income taxes

    Income tax expense decreased to $1,029,000, an effective tax rate of
21.8%, in the three months ended March 31, 2009 from $2,037,000, an effective
tax rate of 31.0%, in the three months ended March 31, 2008. The decrease 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)                   March 2009    December 2008         Decrease $
    -------------------------------------------------------------------------
    Current assets             $  49,992        $  49,951          $      41

    Operating lines of credit      7,619            8,834             (1,215)
    Current liabilities
     excluding borrowings(1)      15,175           18,177             (3,002)
    Current portion of
     long-term debt                  467              488                (21)
    -------------------------------------------------------------------------
    Current liabilities           23,261           27,499             (4,238)
    -------------------------------------------------------------------------

    Working capital(2)            26,731           22,452              4,279

    Bank borrowings
      Operating lines of credit    7,619            8,834             (1,215)
      Senior secured revolving
       term facility              36,600           38,400             (1,800)
    -------------------------------------------------------------------------
    Total bank borrowings         44,219           47,234             (3,015)

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

    Borrowing capacity(4)         36,281           33,266              3,015
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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 three months ended March 31, 2009, Horizon's working capital
position increased $4,279,000 and bank borrowings decreased $3,015,000. Bank
borrowings were reduced in the three months ending March 31, 2009 using the
cash flow from operations which remained after funding capital additions.
    During the three months ended March 31, 2009, the Corporation spent
$6,043,000 on capital asset additions. The majority of the capital additions
were related to the expansion of the BlackSand Executive Lodge near Fort
McMurray, Alberta. The Matting segment replenished some of the mats sold
through the addition of 540 hybrid mats to its rental fleet. The remainder of
the capital additions included vehicles, leasehold improvements, camp and
catering supplies, and other miscellaneous additions.
    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                                             March 31, 2009
    -------------------------------------------------------------------------
    Current ratio(1) - must be greater than 1.2:1                     2.15:1
    Debt(2) to EBITDAS(3)(4) - must be less than 2:1                   1.0:1
    Debt service coverage(5) - must be greater than 1.5:1             15.2:1
    Debt(2) to total capitalization(6) - must be less than 0.5:1       0.2:1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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 alternatives 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)                                       March 2009   December 2008
    -------------------------------------------------------------------------
    Assets

    Current assets:
      Accounts receivable                          $  34,362       $  37,873
      Inventory                                       12,196           9,960
      Prepaid expenses                                 1,081           1,168
      Income tax receivable                            2,353             950
    -------------------------------------------------------------------------
                                                      49,992          49,951

    Property, plant and equipment, net               148,140         147,924

    Intangible assets, net                            40,790          43,032

    Long-term investment                               5,871           5,760

    -------------------------------------------------------------------------
                                                   $ 244,793       $ 246,667
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Bank indebtedness                            $     641       $   1,776
      Operating lines of credit                        7,619           8,834
      Accounts payable and accrued liabilities        10,815          14,234
      Deferred revenue                                 3,719           2,167
      Current portion of long-term debt                  467             488
    -------------------------------------------------------------------------
                                                      23,261          27,499

    Long-term debt                                    35,956          38,110

    Future income tax liability                       12,361          11,456
    -------------------------------------------------------------------------
                                                      71,578          77,065
    Shareholders' equity:
      Share capital                                  257,505         257,505
      Contributed surplus                              5,475           5,564
      Deficit                                        (89,765)        (93,467)
    -------------------------------------------------------------------------
                                                     173,215         169,602

    -------------------------------------------------------------------------
                                                   $ 244,793       $ 246,667
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Operations and (Deficit) Retained Earning
    Three months ended March 31, 2009 and 2008 (Unaudited)

    -------------------------------------------------------------------------
    (000's except per share amounts)              March 2009      March 2008
    -------------------------------------------------------------------------

    Revenue                                        $  38,638       $  41,409

    Expenses:
      Cost of goods sold                               4,695           7,593
      Operating                                       19,450          19,057
      General and administrative                       2,410           2,574
      Stock based compensation                           (89)            494
      Depreciation of property, plant and equipment    4,759           2,632
      Amortization of intangible assets                2,242           2,242
      Loss on disposal of property,
       plant and equipment                                68              44
      Foreign exchange (gain) loss                        (7)             15
    -------------------------------------------------------------------------
                                                      33,528          34,651
    -------------------------------------------------------------------------
    Operating earnings                                 5,110           6,758

    Interest income                                       (9)             (4)
    Interest expense on operating lines of credit         64             209
    Interest expense on long-term debt                   435             245
    Earnings on equity investments                      (111)           (264)
    -------------------------------------------------------------------------
    Earnings before income taxes                       4,731           6,572

    Income taxes
      Current tax expense                                124           1,436
      Future tax expense                                 905             601
    -------------------------------------------------------------------------
                                                       1,029           2,037

    -------------------------------------------------------------------------
    Net earnings and other comprehensive income        3,702           4,535

    (Deficit) retained earnings,
     beginning of period                             (93,467)          4,482

    -------------------------------------------------------------------------
    (Deficit) retained earnings,
     end of period                                 $ (89,765)      $   9,017
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share:
      Basic                                        $    0.03       $    0.04
      Diluted                                      $    0.03       $    0.04
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows
    Three months ended March 31, 2009 and 2008 (Unaudited)

    -------------------------------------------------------------------------
    (000's)                                       March 2009      March 2008
    -------------------------------------------------------------------------
    Cash provided by (used in):

    Operating activities:
    Net earnings                                   $   3,702       $   4,535
      Items not involving cash:
        Depreciation of property,
         plant and equipment                           4,759           2,632
        Amortization of intangible assets              2,242           2,242
        Future income tax expense                        905             601
        Stock based compensation                         (89)            494
        Earnings on equity investments                  (111)           (264)
        Gain on sale of property,
         plant and equipment                            (336)           (383)
    -------------------------------------------------------------------------
                                                      11,072           9,857

      Changes in non-cash working capital items       (1,908)        (11,340)
    -------------------------------------------------------------------------
                                                       9,164          (1,483)
    Investing activities:
      Purchase of property, plant and equipment       (6,043)        (18,761)
      Proceeds on sale of property,
       plant and equipment                             1,404           1,612
      Business acquisitions                                -            (532)
    -------------------------------------------------------------------------
                                                      (4,639)        (17,681)
      Changes in non-cash working capital items            -             776
    -------------------------------------------------------------------------
                                                      (4,639)        (16,905)
    Financing activities:
      Repayment of bank indebtedness                  (1,135)              -
      Share issuance costs                                 -             (15)
      Repayment of operating lines of credit          (1,215)         (8,612)
      Proceeds from long-term debt                         -          27,300
      Repayment of long-term debt                     (1,942)           (574)
      Repayment of capital leases                          -             (26)
      Payment of deferred financing costs               (289)              -
      Items not involving cash:
        Amortization of deferred financing costs          56               -
    -------------------------------------------------------------------------
                                                      (4,525)         18,073

      Changes in non-cash working capital items            -            (210)
    -------------------------------------------------------------------------
                                                      (4,525)         17,863

    -------------------------------------------------------------------------
    Decrease in cash position                              -            (525)

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

    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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