Hyduke Energy Services Inc. announces results for three and nine months ended September 30, 2007



    TSX Symbol: HYD

    Website: www.hyduke.com

    EDMONTON, Nov. 2 /CNW/ - Hyduke Energy Services Inc. (HYD - TSX),
announced operating results for the three and nine months ended September 30,
2007. A summary of those results is as follows:


    
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    Selected Income
    Statement Information            Three Months Ended    Nine Months Ended
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    ($000's, except                 September   October  September   October
    per share data)                  30, 2007  31, 2006   30, 2007  31, 2006
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    Revenue                            16,064    28,401     55,056    75,590
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    Gross margin                        2,752     5,268     10,379    14,996
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    Gross margin (%)                    17.1%     18.6%      18.9%     19.8%
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    EBITDA(1)                           1,080     3,887      5,931    10,778
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    Net income                            400     2,303      2,967     6,515
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    Net income per share
     - basic ($)                        0.018     0.105      0.135     0.298
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    Net income per share
     - diluted ($)                      0.018     0.105      0.135     0.296
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    Selected Balance Sheet
    Information                                        As At
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    ($000's, except ratios)         September 30   December 31      April 30
                                            2007          2006          2006
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    Total assets                          51,377        57,802        50,372
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    Total long-term debt                   2,544         2,933         3,312
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    Total shareholders' equity            36,946        33,757        27,213
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    Current ratio (current
     assets divided by
     current liabilities)           3.03 to 1.00  2.01 to 1.00  1.99 to 1.00
    -------------------------------------------------------------------------
    Debt to Equity ratio
     (long-term debt divided
     by shareholders' equity)       0.07 to 1.00  0.09 to 1.00  0.12 to 1.00
    -------------------------------------------------------------------------

    (1) EBITDA (earnings before interest, taxes, depreciation and
        amortization) is a financial measure that does not have any
        standardized meaning prescribed by Canadian GAAP and may not be
        comparable to similar measures presented by other companies. EBITDA
        provides an indication of the results generated by the Company's
        business activities prior to how these activities are financed,
        assets are amortized or how the results are taxed in various
        jurisdictions.
    

    Continued weakness in drilling and well service activity in Western
Canada combined with record levels of equipment capacity has significantly
decreased new capital equipment expenditures and overall activity levels on a
year-over-year basis. Offsetting this significant downturn in Western Canada
is Hyduke's continuing success at developing international sales.
    Revenue of $16.064 million for the three months ended September 30, 2007
represents a $12.337 million decrease (43%) compared to the three months ended
October 31, 2006. Revenue of $55.056 million for the nine months ended
September 30, 2007 represents a $20.534 million decrease (27%) compared to the
nine months ended October 31, 2006.
    Net income of $0.4 million ($0.018 per share) for the three months ended
September 30, 2007 represents a $1.903 million decrease (83%) compared to the
three months ended October 31, 2006. Net income of $2.967 million ($0.135 per
share) for the nine months ended September 30, 2007 represents a
$3.548 million decrease (55%) compared to the nine months ended October 31,
2006. Reduction in net income for both periods is due primarily to a decrease
in revenue combined with a reduced gross margin percentage and increased
selling, general and administrative expenses.
    EBITDA of $1.08 million for the three months ended September 30, 2007
represents a $2.807 million decrease (72%) compared to the three months ended
October 31, 2006. EBITDA of $5.931 million for the nine months ended September
30, 2007 represents a $4.847 million decrease (45%) compared to the nine
months ended October 31, 2006. Reduction in EBITDA for both periods is due
primarily to a decrease in revenue combined with a reduced gross margin
percentage and increased selling, general and administrative expenses.
    Gross margin percentages have decreased compared to prior periods due
primarily to decreased pricing power associated with the industry slowdown.
Gross margin percentage of 17.3% realized in the three months ended
September 30, 2007 represents a decrease of 1.3 percentage points over the
18.6% gross margin realized in the three months ended October 31, 2006. Gross
margin percentage of 18.9% realized in the nine months ended September 30,
2007 represents a decrease of 0.9 percentage points over the 19.8% gross
margin realized in the nine months ended October 31, 2006. Gross margin of
$2.752 million for the three months ended September 30, 2007 represents a
$2.516 million decrease (48%) compared to the three months ended October 31,
2006. Gross margin of $10.379 million for the nine months ended September 30,
2007 represents a $4.617 million decrease (31%) compared to the nine months
ended October 31, 2006. Reduction in gross margin for both periods is due
primarily to a decrease in revenue combined with a reduced gross margin
percentage.
    Hyduke's financial position at September 30, 2007 remains very strong
with a current ratio of 3.03 to 1.00 and a debt to equity ratio of 0.07 to
1.00. This financial strength provides security against a prolonged downturn
in Western Canada. Additionally, Hyduke is well positioned to increase
leverage to take advantage of growth opportunities.
    As at November 2, 2007, the Company had 21,965,331 common shares
outstanding and 820,750 share options outstanding.

    OUTLOOK

    Industry expectations for the remainder of 2007 and 2008 continue to
reflect a reduction in overall activity in Western Canada as measured by the
number of wells drilled. Both the Canadian Association of Oilwell Drilling
Contractors (CAODC) and The Petroleum Services Association of Canada (PSAC)
are forecasting significantly decreased drilling activity for the remainder of
2007 and for 2008 as compared to 2006 activity. Additionally, the biggest
reduction in drilling activity continues to be in natural gas drilling.
Factors supporting this decrease are low commodity prices, weather, reductions
in small producer activity due to capital availability, the threat of
increased environmental regulation and negative impact of changes to Alberta
provincial royalty regimes.
    Hyduke is well positioned to weather this reduced activity. With respect
to new build capital equipment revenue, which approximates 50% of overall
revenue, Hyduke is well positioned to respond to reduced domestic orders with
an increasing presence in international markets. While it is expected that new
rig builds in Western Canada during the remainder of 2007 and 2008 will be
significantly less than 2006 and 2005, Hyduke's larger domestic customers have
indicated that they will be approaching their capital build programs from a
longer-term perspective and while the short-term uncertainties in commodity
prices may delay some projects, it will not cause them to be cancelled.
    Offsetting this potential slowdown domestically, Hyduke continues to
actively market its products and services to international markets in the
Russian Federation, India, South America, North Africa, Middle East,
Asia-Pacific and Latin America. While the project decision making cycle is
longer on international work, active quoting continues on a significant number
of international opportunities. Over the past three years, Hyduke's
international revenues have approximated 20% of total revenue and it is
expected that the volume and proportion of international revenue will increase
as additional international opportunities are secured.
    The reduced levels of industry activity experienced in 2007 to date and
forecast for 2008 are also anticipated to impact Hyduke's Life Cycle
Management businesses such as repair and maintenance, inspections and
certification, and consumables. These activity-based businesses comprise
approximately 50% of overall Hyduke revenue, are less reliant on capital
spending and business activity levels generally trend along with drilling and
well service activity. There is a continued focus on increasing market share
through marketing Hyduke's Life Cycle Management and Single Source Supplier
platforms to customers. These platforms benefit customers by offering
continued support throughout the useful life of their equipment and by
offering a wide array of consistent, reliable services from a single source.
    On September 24, 2007, Hyduke began trading its common shares on the
Toronto Stock Exchange ("TSX"). Listing on the TSX will improve Hyduke's
access to capital and improve Hyduke's ability to execute on its strategic
plan.
    Hyduke continues to be confident that its strategic plan considers
current and expected market conditions and that strategic growth will continue
to be achieved through increased products and services and increased
penetration into international markets.

    Forward-looking Statements

    This news release contains forward-looking statements based upon current
expectations that involve a number of business risks and uncertainties. These
business risks and uncertainties may cause actual results, events or
developments to be materially different from any future results, events or
developments expressed or implied by such forward looking statements.

    About Hyduke

    Hyduke is an integrated oilfield services company with over thirty years
experience in the manufacture, repair and distribution of oilfield equipment
and supplies in Canada and worldwide. Hyduke specializes in providing
customized, integrated solutions to the drilling and well service industries
including:

    
    -  Turn-Key Equipment - drilling rig and service rig packages including
       in-house design, engineering and drafting, major component procurement
       and overall project management
    -  Life Cycle Management - inspection, certification, service, repair and
       supply services throughout the operating life of the drilling or well
       service rig
    -  Single Source Supply - providing new capital equipment, repair and
       maintenance on existing capital equipment and supply of operating
       consumables
    

    Hyduke is headquartered in Nisku, Alberta and has facilities in Edmonton,
Calgary, Nisku, Red Deer and Lloydminster, Alberta.
    Hyduke operates in three industry segments. The Drilling Equipment
segment includes manufacture and repair of land based drilling rigs and
drilling rig structures, supply and repair of drilling rig equipment,
procurement and distribution of drilling supplies, supply and service of
pneumatic controls, engineering and design of drilling rigs and inspection and
certification of drilling rig equipment. The Well Service Equipment segment
includes manufacture and repair of well service rigs, mobile and skid mounted
pump units and other well service equipment, procurement and distribution of
well servicing supplies, supply and service of pneumatic controls, engineering
and design of well service rigs and inspection and certification of well
service equipment. The Other Oilfield Services segment includes manufacture
and distribution of cased hole and overburden drill bits and drilling systems,
custom and production machining services, and distribution and repair of
truck-mounted equipment including cranes, winches and dump boxes.

    The TSX has not reviewed and does not accept responsibility for the
    adequacy or accuracy of this News Release.





For further information:

For further information: Gordon R. McCormack, President and Chief
Executive Officer, (780) 955-0355; Veronica Driesen, Chief Financial Officer,
(780) 955-0355


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