Saxon delivers 16% increase in net earnings and deploys new rigs to the United States and Mexico



    All amounts are expressed in U.S. dollars unless otherwise noted

    TSX Symbol: SES

    CALGARY, Nov. 1 /CNW/ - Saxon Energy Services Inc. ("Saxon" or "the
Corporation") continues to see the positive results of its expansion
initiatives as the Corporation recorded an increase in net earnings of 78% on
a year-to-date basis and posted its thirteenth quarter of sequential revenue
growth. In the third quarter of 2007 two of Saxon's ATS(TM) rigs were deployed
into the United States under long term contracts and the remaining three are
expected to be deployed in November, December and January respectively.
Additionally, the Corporation is pleased to report the first two of three
drilling rigs for the Corporation's Mexican joint venture were deployed with
the remaining rig expected in the fourth quarter. After deployment of these
remaining rigs the Corporation will have a fleet of 59 (53.5 net) rigs.
    The Corporation generated $62.7 million in revenue and $12.2 million (20%
of revenue) in operating earnings during the third quarter of 2007, an
increase of 25% and 17% respectively compared to the same periods in 2006. On
a year-to-date basis, the Corporation generated $174.2 million in revenue and
$34.3 million (20% of revenue) in operating earnings, an increase of 47% each
compared to 2006. Net earnings increased to $6.8 million ($0.08 per diluted
share) for the third quarter of 2007 compared to $5.9 million ($0.07 per
diluted share) in 2006. For the nine months ended September 30, 2007 net
earnings increased to $19.5 million ($0.23 per diluted share) compared to
$10.9 million ($0.13 per diluted share) in 2006, an increase of 78%.

    
    Highlights:
    -----------

                                 Three months ended      Nine months ended
    ($000's, except per share       September 30           September 30
    amounts and operating data)  2007     2006     %     2007     2006     %
                               ----------------------------------------------
    Revenue                    62,668   50,071    25  174,228  118,269    47
    Operating earnings(1)      12,240   10,423    17   34,343   23,435    47
    Net earnings                6,837    5,908    16   19,455   10,901    78
    Earnings per share ($)
      Basic                      0.08     0.07    14     0.23     0.14    64
      Diluted                    0.08     0.07    14     0.23     0.13    77
                               ----------------------------------------------
    Cash flow from operations  11,524    1,621   611   42,296    8,715   385
    Funds from operations(2)   12,706   11,439    11   37,613   25,868    45
    Funds from operations per
     share ($)(2)
      Basic                      0.15     0.14     7     0.45     0.32    41
      Diluted                    0.15     0.14     7     0.45     0.32    41
                               ----------------------------------------------
    Weighted average shares
     (000's)
      Basic                    84,410   83,799     1   84,179   80,290     5
      Diluted                  84,819   84,142     1   84,405   81,000     4
                               ----------------------------------------------
    Utilization
      Operating days(3)         3,117    3,351    (7)   9,239    9,522    (3)
                               ----------------------------------------------
                               ----------------------------------------------
    

    Operating days recorded by the Corporation declined slightly during the
three and nine month periods ended September 30, 2007 to 3,117 and 9,239 days
compared to 3,351 and 9,522 operating days for the same periods in 2006. This
resulted in a utilization rate of 70% and 72% respectively during the three
and nine month periods ended September 30, 2007, compared to 85% and 87% for
the same periods in 2006. Increased operating days generated through rig fleet
expansion in the United States during the nine month period ended September
30, 2007 were offset by a number of factors. These included lower activity in
both Canada and Ecuador and the fact that in the prior year the Corporation
operated seven light workover rigs in Venezuela and three drilling rigs in the
United States on a dry-lease basis for which no activity was recorded in 2007.
Utilization in the third quarter of 2007 was positively impacted by 100%
utilization of all available rigs in Colombia, Peru, Mexico and Venezuela and
by full utilization of 11 rigs under long term contracts in the United States.
However, utilization during the third quarter was negatively impacted by the
overall slowdown in the Canadian marketplace as the Canadian operation
recorded 18% utilization for the quarter (a decrease of 387 operating days
compared to the third quarter of 2006), continued government transition issues
and permit delays in Ecuador and by the three drilling rigs in the United
States that have remained stacked throughout 2007.
    For the three months ended September 30, 2007, the Corporation's drilling
activity generated average revenue per operating day of $22,600 (2006:
$17,500) while workover activity generated average revenue per operating day
of $8,200 (2006: $6,400). Overall, average revenue per operating day increased
to $19,800 during the third quarter of 2007 from $14,900 in 2006. For the nine
months ended September 30, 2007, the Corporation's drilling activity generated
average revenue per operating day of $21,600 (2006: $16,200) while workover
activity generated average revenue per operating day of $8,100 (2006: $5,000).
Overall, average revenue per operating day increased to $18,700 during the
nine months ended September 30, 2007 from $12,400 in 2006.
    Drilling activity comprised a much higher proportion of the Corporation's
activity in 2007 compared to 2006 resulting in higher average revenue per
operating day. Furthermore, day rate increases throughout all of the
Corporation's operations, particularly in Colombia, Mexico and Peru,
contributed to the increase. Throughout the first three quarters of 2006
average revenue per operating day in the United States was lower due to three
rigs operating under dry lease contracts which remained stacked during 2007.
In addition, the two Peru-based drilling rigs spent more time in either
standby mode or mobilizing at less than full day rates during the first three
quarters of 2006. The increase in average revenue per day for workover
activity in both periods is due primarily to day rate increases in Ecuador
combined with the Corporation's decision to exit the light workover rig market
in Venezuela in the third quarter of 2006. The Venezuelan workover rigs were
operated on a dry lease basis during the first half of 2006.
    Growth in the Corporation's North American segment continues to be the
primary driver of the increase in revenue and operating earnings in the
current year. The Corporation's North American segment generated $29.1 million
in revenue and $5.5 million (19% of revenue) in operating earnings during the
third quarter of 2007, compared to $26.3 million in revenue and $5.3 million
(20% of revenue) in operating earnings in 2006, an increase of 11% and 3%
respectively. On a year-to-date basis, the Corporation's North American
segment generated $86.4 million in revenue and $20.4 million (24% of revenue)
in operating earnings, compared to $48.4 million in revenue and $8.7 million
(18% of revenue) in operating earnings in 2006, an increase of 78% and 133%
respectively.
    Growth in revenue and operating earnings in the North American segment
during the three and nine month periods ended September 30, 2007 compared to
2006 is due primarily to rig fleet expansion and the related economies of
scale in the United States, and due to rig fleet expansion and improved day
rates in Mexico. These developments were partially offset by reduced activity
and day rate compression in Canada as low natural gas commodity prices caused
by high inventories in the United States have had a negative effect on rig
utilization in western Canada during the second and third quarters of 2007. As
it will likely take a sustained increase in natural gas prices before
exploration and production companies substantially increase spending levels,
the Corporation does not anticipate any significant improvement in the
Canadian marketplace in the near term.
    The Corporation's South American segment generated $32.7 million in
revenue and $7.4 million (23% of revenue) in operating earnings during the
third quarter of 2007, compared to $23.8 million in revenue and $7.0 million
(29% of revenue) in operating earnings in 2006, an increase of 37% and 6%
respectively. On a year-to-date basis, the Corporation's South American
segment generated $86.4 million in revenue and $18.4 million (21% of revenue)
in operating earnings in 2007, compared to $69.8 million in revenue and
$20.0 million (29% of revenue) in operating earnings in 2006, an increase of
24% and a decline of 8% respectively.

    Compared to the prior year, operating earnings as a percentage of revenue
    in the Corporation's South American segment was negatively impacted by:

    
    -  A substantial appreciation of the Colombian peso relative to the
       United States dollar at a cost of approximately $1.2 million and
       $2.9 million for the three and nine month periods ended September 30,
       2007. Since the second quarter, the Corporation has taken steps to
       reduce the effect of the further appreciation of the Colombian peso
       by entering into a series of foreign exchange contracts to fix the
       exchange rate on a portion of Saxon's Colombian peso exposure.
       Additionally, as customer contracts in Colombia are renewed, it is
       the Corporation's intention to have a portion of those contracts
       denominated in Colombian pesos to act as a natural offset to the
       Colombian peso exposure;

    -  An increase in reimbursable costs in the third quarter, primarily
       related to importation duties on a drilling rig in Venezuela of
       approximately $1.1 million;

    -  Costs incurred of approximately $500,000 on the relocation of
       equipment from Venezuela to the United States in the third quarter;
       and

    -  On a year-to-date basis, by initial mobilization and start-up costs on
       three rigs mobilizing to new contracts in Colombia and Venezuela in
       the second quarter. While initial mobilizations are reimbursable by
       the client, they typically have little margin associated with them.
    

    Excluding the impact of the above items, the Corporation estimates
operating earnings as a percentage of revenue would have been 29% and 27%
during the three and nine month periods ended September 30, 2007 respectively.
    On a sequential basis, the Corporation's revenue grew by 11% or $6.0
million to $62.7 million in the third quarter of 2007 compared to $56.6
million in the second quarter of 2007, while operating earnings increased by
48%, or $4.0 million, to $12.2 million (20% of revenue) from $8.3 million (15%
of revenue) in the second quarter of 2007.
    For the three months ended September 30, 2007, the Corporation generated
average revenue per operating day of $19,800 compared to $18,400 per day
during the second quarter of 2007. The Corporation's drilling activity
generated average revenue per operating day of $22,600 compared to $21,900 per
day during the second quarter of 2007, while workover activity generated
average revenue per operating day of $8,200 compared to $8,000 per day during
the second quarter of 2007. The primary drivers for the quarter-over-quarter
increase in average revenue per operating day were the deployment of two
ATS(TM) rigs to the United States in the third quarter, higher day rates in
Peru as a rig came off of standby mode, increased drilling rig activity with
three South American rigs operating for the entire third quarter, and
decreased workover activity in Ecuador.
    Utilization of the Corporation's rig fleet was 70% during the quarter
ended September 30, 2007, compared to 71% in the second quarter of 2007 as the
Corporation generated 3,117 operating days in the third quarter of 2007
compared to 3,049. Utilization in the Corporation's South American segment
decreased to 88% in this quarter compared to 95% in the prior quarter. The
decrease is due to lower activity in Ecuador where political issues and
bureaucratic delays associated with the government transition continue to
impact our customers' plans. Outside Ecuador, utilization was 100% in South
America. Utilization in the Corporation's North American segment increased to
57% in the third quarter of 2007 compared to 53% in the second quarter of
2007. The Corporation recorded utilization of 69% and 100% on its drilling
rigs located in the United States and Mexico, respectively. However,
utilization in these two countries was offset by continued low utilization in
the Corporation's Canadian operation. Utilization in Canada improved to 18% in
the third quarter of 2007 compared to 4% in the second quarter. This level of
utilization realized by the Corporation's Canadian operation was significantly
less than in recent years due to the continued drilling activity slowdown
resulting from the effect of high natural gas inventories in the United States
which have resulted in low natural gas commodity prices.
    The Corporation's North American segment generated $29.1 million in
revenue and $5.5 million (19% of revenue) in operating earnings during the
third quarter of 2007, compared to $25.0 million in revenue and $4.7 million
(19% of revenue) in operating earnings during the second quarter of 2007,
increases of 16% and 17% respectively.
    The Corporation's South American segment generated $32.7 million in
revenue and $7.4 million (23% of revenue) in operating earnings during the
third quarter of 2007, compared to $31.2 million in revenue and $5.6 million
(18% of revenue) in operating earnings during the second quarter of 2007, an
increase of 5% and 32% respectively.
    Operating earnings as a percentage of revenue in the Corporation's South
American segment improved in comparison to the second quarter, primarily due
to the absence of initial mobilizations and related startup costs in the third
quarter. The second quarter included the impact of the initial mobilization of
three rigs, two in Colombia and one in Venezuela. This was offset by lower
activity in Ecuador in the third quarter due to government transition and
customer permitting delays and by an increase in low margin reimbursable costs
in the third quarter primarily related to reimbursable importation duties on a
drilling rig in Venezuela.

    
    Operating Data for the Period:
    ------------------------------

                           Three months ended           Nine months ended
                              September 30                 September 30

                       2007    2006  Change   %    2007    2006  Change    %
                    ---------------------------------------------------------
    Revenue ($000's)
      South America  32,667  23,800   8,867  37  86,392  69,812  16,580   24
      North America  29,059  26,271   2,788  11  86,393  48,457  37,936   78
                    ---------------------------------------------------------
                     61,726  50,071  11,655  23 172,785 118,269  54,516   46
                    ---------------------------------------------------------
      Corporate and
       Other            942       -     942 NM(4) 1,443       -   1,443   NM
                    ---------------------------------------------------------
                     62,668  50,071  12,597  25 174,228 118,269  55,959   47
                    ---------------------------------------------------------
    Revenue per
     operating day
     ($000's)
      South America    19.6    13.5     6.1  45    18.1    11.5     6.6   57
      North America    20.0    16.5     3.5  21    19.3    14.0     5.3   38
                    ---------------------------------------------------------
      Weighted
       Average         19.8    14.9     4.9  33    18.7    12.4     6.3   51
                    ---------------------------------------------------------
    Operating days(5)
      South America   1,664   1,758     (94) (5)  4,771   6,052  (1,281) (21)
      North America   1,453   1,593    (140) (9)  4,468   3,470     998   29
                    ---------------------------------------------------------
                      3,117   3,351    (234) (7)  9,239   9,522    (283)  (3)
                    ---------------------------------------------------------
    Available rig
     days(5)
      South America   1,887   1,932     (45) (2)  5,454   6,879  (1,425) (21)
      North America   2,560   2,016     544  27   7,398   4,099   3,299   80
                    ---------------------------------------------------------
                      4,447   3,948     499  13  12,852  10,978   1,874   17
                    ---------------------------------------------------------
    Utilization (%)     70%     85%                 72%     87%
                    ----------------            ----------------
    


    Other Financial Information:
    ----------------------------

    Working Capital and Funds from Operations:

    The financial results achieved during the first nine months of 2007
reflect the Corporation's aggressive capital expansion and resulting increase
in activity levels, as well as day rate improvements compared to 2006.
    The increase in Saxon's fleet size, the continuing evolution of the
Corporation's fleet towards drilling activity compared to 2006, and the
increase in average revenue per operating day offset the decline in
utilization resulting in an 11% increase in funds generated from operations
during the third quarter of 2007 to $12.7 million ($0.15 per diluted share)
from $11.4 million ($0.14 per diluted share) in 2006. On a year-to-date basis,
funds generated from operations increased by 45% to $37.6 million ($0.45 per
diluted share) from $25.9 million ($0.32 per diluted share).
    Working capital at September 30, 2007 was $20.4 million compared to
$12.1 million at December 31, 2006. This increase reflects the decline in the
combined current portion of the Corporation's revolving credit facility
("Revolver") and term debt facilities to $13.6 million at September 30, 2007,
compared to $22.6 million at December 31, 2006. The decline in the combined
current portion is due to the fact that on June 22, 2007, the Corporation
renegotiated the terms of the Revolver and Saxon's principal term debt
facility ("Term") including extending the term of the Revolver from 364 days
to two years along with a principal repayment holiday for the Term to May
2008, at which time Saxon will restart principal repayments in 11 quarterly
installments. Excluding the current portion of the Revolver, working capital
at December 31, 2006 was $19.9 million.
    Cash on hand at September 30, 2007 was $16.6 million compared to
$10.5 million at December 31, 2006, an increase of $6.2 million.

    Financing Activities:

    During the three month period ended September 30, 2007, the Corporation
drew $24.0 million under its term debt and revolving credit facilities, and
made $18.3 million in repayments. During the nine months ended September 30,
2007 the Corporation drew $38.0 million under its term debt and revolving
credit facilities, and made $25.7 million in repayments. The Corporation used
the funds drawn to finance its construction program and partially fund its
commitment to acquire its proportionate share of three drilling rigs for
deployment in Mexico.
    As at September 30, 2007 the Corporation had drawn a total of
$31.0 million under the revolving credit facility and $72.6 million (net of
repayments) under its term debt facilities.

    Investing Activities:

    During the three and nine month periods ended September 30, 2007 the
Corporation invested $22.1 million and $51.0 million respectively in property
and equipment as follows:

    
    -  $20.0 million and $45.0 million respectively on the construction of
       new drilling rigs for deployment under long term contracts; and

    -  $2.1 million and $6.0 million respectively on various capital upgrades
       to the Corporation's existing asset base.
    

    Outlook:
    --------

    The Corporation is pleased with the progress that it has made to date as
its strategy of deploying technologically advanced equipment and operating in
a number of different geographic markets continues to reap rewards. Our
diverse international presence insulates us somewhat from the market shocks
such as we are seeing in Canada, and also provides us with a number of
opportunities for growth.
    While the operating environment in Canada will continue to be challenging
and the political climate in Ecuador still provides some uncertainty, our
operations elsewhere continue to be robust. We have full utilization in
Colombia, Venezuela, Peru and Mexico and still have three additional ATS(TM)
rigs to roll out in the U.S. and one further rig in Mexico. Against this
back-drop the Corporation expects to finish 2007 with revenues in the range of
$235 million to $240 million with further growth to come in 2008 as the new
rigs start to attain peak operating efficiency. Capital expenditures for the
current year are expected to reach between $68 million and $72 million.
    Once the remaining three ATS(TM) rigs and the third new rig destined for
Mexico are deployed, the Corporation will have a total North American rig
count of 38 (33 net), and a fleet of 21 rigs (20.5 net) in South America,
comprised of 50 (44.5 net) drilling rigs and 9 workover rigs for a total of 59
(53.5 net). The Corporation will also continue to actively pursue
opportunities in its current areas of operation as well as other markets as
they arise and believe that it has the financial capacity and expertise to
take advantage of such opportunities.

    
    Notes:
    ------

    1.  Operating earnings is not a recognized measure under Canadian
        Generally Accepted Accounting Principles ("GAAP"). Management
        believes that in addition to net earnings, operating earnings 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, how the
        results are taxed in various jurisdictions, or how the results are
        impacted by the accounting standards associated with the
        Corporation's stock-based compensation plans. Investors should be
        cautioned that operating earnings should not be construed as an
        alternative to net earnings determined in accordance with GAAP as an
        indicator of the Corporation's performance. The Corporation's method
        of calculating operating earnings may differ from other companies and
        accordingly may not be comparable to measures used by other
        companies. Operating earnings is calculated as earnings before income
        taxes plus or minus financial expense or income, plus stock-based
        compensation expense.

    2.  Neither funds from operations nor funds from operations per share are
        recognized measures 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. Readers
        should be cautioned 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. The Corporation's method of calculating funds from
        operations may differ from other companies and accordingly may not be
        comparable to measures used by other companies. Funds from operations
        is calculated as cashflow from operations before changes in non-cash
        working capital.

    3.  Operating days is not a recognized measure under GAAP. Management
        believes that in addition to net earnings, operating days is a useful
        supplemental measure as it provides an indication of the utilization
        of the Corporation's asset base. The Corporation's method of
        calculating operating days may differ from other companies and may
        not be comparable to measures used by other companies. Operating days
        is the total of all drilling, completion, workover, mobilization,
        standby and other revenue days in the period.

    4.  Not measurable or meaningful.

    5.  Net to the Corporation.



    Consolidated Balance Sheets:
    ----------------------------

    (Unaudited - $000's)                           September 30, December 31,
                                                           2007         2006
                                                   --------------------------
    ASSETS
    Current assets:
      Cash and cash equivalents                          16,634       10,455
      Accounts receivable                                58,322       57,001
      Prepaid expenses and other deposits                 4,329        3,040
                                                   --------------------------
                                                         79,285       70,496
    Property and equipment                              342,014      298,727
    Other receivables                                     2,885            -
    Intangible assets                                     1,462          460
    Goodwill                                              3,458        2,219
    Deferred financing charges                                -        2,575
    Future income tax asset                                 152            -
                                                   --------------------------
                                                        429,256      374,477
                                                   --------------------------
                                                   --------------------------
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued liabilities           34,232       30,029
      Income and other taxes payable                     10,987        5,490
      Current portion of long-term debt                  13,590       22,643
      Current portion of capital lease obligations           65          192
                                                   --------------------------
                                                         58,874       58,354

    Long-term debt                                       87,986       68,639
    Capital lease obligations                                37            -
    Future income tax liability                               -          269
    Shareholders' equity:
      Share capital                                     216,624      213,950
      Share purchase warrants                             7,118        7,118
      Contributed surplus                                15,067       12,720

      Retained earnings                                  35,339       15,884
      Accumulated other comprehensive income (loss)       8,211       (2,457)
                                                   --------------------------
                                                         43,550       13,427
                                                   --------------------------
      Total shareholders' equity                        282,359      247,215
                                                   --------------------------
                                                        429,256      374,477
                                                   --------------------------
                                                   --------------------------




    Consolidated Statements of Operations and Retained Earnings:
    ------------------------------------------------------------


    (Unaudited - $000's except          Three months ended  Nine months ended
     per share amounts)                      September 30      September 30
                                             2007     2006     2007     2006
                                        -------------------------------------
    Revenue                                62,668   50,071  174,228  118,269
    Expenses:
      Direct operating                     39,525   30,631  107,217   72,668
      General and administrative            6,600    4,923   17,684   12,500
      Stock-based compensation              1,260      850    3,438    2,790
      Accelerated stock-based compensation      -        -        -    1,285
      Depreciation and amortization         5,475    3,917   15,600    9,935
      Foreign exchange (gain)              (1,121)     227     (249)      (1)
      Financial expense                     1,685    1,669    4,859    3,316
      Gain on disposal of property
       and equipment                          (51)     (50)    (367)    (268)
                                        -------------------------------------
                                           53,373   42,167  148,182  102,225
                                        -------------------------------------

    Earnings before income taxes            9,295    7,904   26,046   16,044
    Income taxes
      Current                               2,185    1,337    6,450    4,306
      Future                                  273      659      141      837
                                        -------------------------------------
                                            2,458    1,996    6,591    5,143
                                        -------------------------------------
    Net earnings                            6,837    5,908   19,455   10,901
    Retained earnings, beginning
     of period                             28,502    5,224   15,884      231
                                        -------------------------------------
    Retained earnings, end of period       35,339   11,132   35,339   11,132
                                        -------------------------------------
                                        -------------------------------------
    Net earnings per share:
      Basic                                  0.08     0.07     0.23     0.14
      Diluted                                0.08     0.07     0.23     0.13
                                        -------------------------------------
                                        -------------------------------------


    Consolidated Statements of Comprehensive Income:
    ------------------------------------------------

    (Unaudited - $000's)                Three months ended  Nine months ended
                                             September 30      September 30
                                             2007     2006     2007     2006
                                        -------------------------------------
    Net earnings                            6,837    5,908   19,455   10,901
    Unrealized gains (losses) recorded
     on translation of assets and
     liabilities of self-sustaining
     operations denominated in
     foreign currency                       4,354     (395)  10,389       31
    Gains on derivatives designated
     as cash flow hedges, net
     of tax of $114                           279        -      279        -
                                        -------------------------------------
    Comprehensive income                   11,470    5,513   30,123   10,932
                                        -------------------------------------




    Consolidated Statements of Cashflows:
    -------------------------------------

                                        Three months ended  Nine months ended
                                             September 30      September 30
    (Unaudited - $000's)                     2007     2006     2007     2006
                                        -------------------------------------
    Cash provided by (used in):
    Operating activities:
      Net earnings                          6,837    5,908   19,455   10,901
      Items not involving cash:
        Stock-based compensation            1,260      850    3,438    2,790
        Accelerated stock-based
         compensation                           -        -        -    1,285
        Depreciation and amortization       5,475    4,072   15,600   10,323
        Unrealized foreign exchange gain   (1,399)       -   (1,399)       -
        Other                                 311        -      745        -
        Future income tax                     273      659      141      837
        Gain on disposal of property
         and equipment                        (51)     (50)    (367)    (268)
                                        -------------------------------------
                                           12,706   11,439   37,613   25,868
      Change in non-cash working capital   (1,182)  (9,818)   4,683  (17,153)
                                        -------------------------------------
                                           11,524    1,621   42,296    8,715
    Financing activities:
      Increase (decrease) in long-term
       debt                                 5,716     (268)  12,288   46,529
      Issue of share capital                   92       89    1,583   20,034
      Restricted cash                           -        -        -    1,922
      Deferred debt financing costs           (35)     (47)    (567)  (1,756)
      Intangible assets                         -        -     (763)       -
      Decrease in capital lease obligations   (45)    (100)    (103)    (287)
      Change in non-cash working capital        -        -        -     (171)
                                        -------------------------------------
                                            5,728     (326)  12,438   66,271
    Investing activities:
      Restricted cash                           -   55,186        -        -
      Business acquisition                      -  (55,186)       -  (55,186)
      Additions to property and
       equipment                          (22,096) (18,290) (50,992) (53,582)
      Proceeds on disposal of property
       and equipment                          888      893    2,144    2,375
      Change in non-cash working capital    4,460    1,633      293     (185)
                                        -------------------------------------
                                          (16,748) (15,764) (48,555)(106,578)
                                        -------------------------------------
    Change in cash position                   504  (14,469)   6,179  (31,592)
    Cash and cash equivalents, beginning
     of period                             16,130   26,154   10,455   43,277
                                        -------------------------------------
    Cash and cash equivalents, end
     of period                             16,634   11,685   16,634   11,685
                                        -------------------------------------
                                        -------------------------------------
    Interest paid                           2,018    1,591    6,224    3,514
    Interest received                         156       98      272      827
    Income taxes paid                       1,785        -    4,584       54
                                        -------------------------------------
                                        -------------------------------------


    

    The Corporation is an emerging international oilfield services company
that operates an established oil and gas drilling and workover business
focusing on providing these services to major and intermediate oil and gas
companies in North and South America. The common shares of the Corporation
trade on the TSX under the symbol "SES".

    Forward-Looking Information
    ---------------------------
    Certain information contained in this press release, including
information and statements which may contain words such as "could", "plans",
"should", "anticipates", "expects", "believes", "will", "forecasts", "budget"
and similar expressions and statements relating to matters that are not
historical facts, are forward-looking information including, but not limited
to, information as to expected: revenue and capital expenditures, including
the amount and nature thereof; oilfield service activity levels; oil and gas
prices and demand; expansion and other development trends of the oil and gas
industry; improvement in day rates; business strategy; completion of rig and
equipment construction and deployment; and expansion and growth of the
Corporation's business and operations, including the Corporation's market
share, and other such matters.
    This forward-looking information is based on certain material factors,
assumptions and analyses made by the Corporation in light of its experience
and its perception of historical trends, current conditions and expected
future developments as well as other factors it believes are appropriate in
the circumstances. In particular, our assessment as to the financial
performance and capital expenditures expected for the year ending December 31,
2007 and deployment of rigs at projected times is based upon rigs presently
under contract, the current demand for the Corporation's services plus the
general oil and gas services industry projection that the current demand
should continue through 2007, the Corporation's ability to complete its
capital program at the projected times which the Corporation believes is
achievable based on the Corporation's recent experience in constructing rigs
and other equipment and representations given by manufacturers as to
completion times and the Corporation's ability to manage its costs, including
capital costs, at levels consistent with the Corporation's internal
assumptions and projections, which the Corporation believes to be conservative
relative to the present costs. However, whether actual results, performance or
achievements will conform with the Corporation's conclusions, forecasts,
projections, expectations and predictions expressed or implied by the forward
looking information in this press release is subject to known and unknown
risks and uncertainties which could cause actual results to differ materially
from the Corporation's conclusions, forecasts, projections, expectations and
predictions expressed or implied by the forward looking information in this
press release, including: fluctuations in the price and demand of oil and gas;
fluctuations in the level of oil and gas exploration and development
activities; fluctuations in the demand for the Corporation's services; the
ability of the Corporation to raise capital; the existence of credit risk
inherent within the international oil and gas services business; competitors;
technological changes and developments in the oil and gas industry; the
effects of unpredictable weather conditions on operations and facilities; the
existence of operating risks inherent in the Corporation's services;
identifying and acquiring suitable acquisition targets on reasonable terms and
successful integration of such targets when acquired; delays in developing and
constructing rigs and equipment for the Corporation including difficulties in
sourcing the services and the raw materials and parts at reasonable prices for
such rigs and equipment; political and labour unrest and economic conditions
in countries in which the Corporation does business; foreign currency exchange
rate fluctuations; general economic, market or business conditions, including
stock market volatility; changes in laws or regulations, including taxation
and environmental regulations; the lack of availability of qualified personnel
or management; other unforeseen conditions which could impact on the use of
services supplied by the Corporation and those risks and uncertainties
described in the Corporation's continuous disclosure filings, including those
referred to in the Corporation's Management's Discussion and Analysis for the
most recently completed financial year end and in the Corporation's most
recent Annual Information Form, all of which may be found on SEDAR at
www.sedar.com. If any of the above risks or uncertainties materialize, or if
the material factors, assumptions and analyses applied by the Corporation are
incorrect, actual results may vary materially from those expected in the
forward looking information in this press release.
    Consequently, all of the forward-looking information contained in this
press release are qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by the
Corporation expressed or implied by the forward looking information in this
press release will be realized or, even if substantially realized, that they
will have the expected consequences to or effects on the Corporation or its
business operations. The Corporation assumes no obligation, except as required
by law, to update publicly any such forward-looking information, whether as a
result of new information, future events or otherwise. Readers should not
place undue reliance on forward-looking information.

    %SEDAR: 00009478E




For further information:

For further information: Dale E. Tremblay, President and C.E.O. - or -
Michael J. McNulty, Senior V.P. Finance and C.F.O., Saxon Energy Services
Inc., Telephone: (403) 716-4150, Fax: (403) 716-4151, www.saxonservices.com

Organization Profile

SAXON ENERGY SERVICES INC.

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