Tesco Corporation Announces Filing of Annual Report (10-K) for the year ended December 31, 2006, Confirms Report of Record Revenues and Earnings & Amends March 8th, 2007 Press Release



    Trading Symbol:
    "TESOF" on NASDAQ
    "TEO" on TSX

    HOUSTON, TX, March 28 /CNW/ - Tesco Corporation ("TESCO" or the
"Company") today announced the filing of its first Annual Report on Form 10-K
with the Securities and Exchange Commission as a U.S. domestic filer; the
Company had previously reported as a foreign private issuer. The Annual Report
on Form 10-K includes final audited financial statements. As previously
announced, the Company's net income for the year ended December 31, 2006 was
$30.5 million and diluted earnings per share was $0.83.

    Background
    ----------

    The Company had previously reported that it delayed its filing of the
Form 10-K because of its discovery of certain errors that would require it to
restate its financial statements for the second and third fiscal quarters of
2006, its becoming subject to the reporting and disclosure requirements under
the Securities Exchange Act and related rules beginning January 1, 2007, the
identification of certain material weaknesses in internal controls over
financial reporting, and its adjustment to reflect the results of a
self-initiated review of its past stock option granting practices and related
accounting. As a result of final adjustments made in connection with the
preparation of its financial statements included in the Form 10-K, there were
several adjustments to financial information that had been previously reported
or announced in the Company's earnings release of March 8, 2007. These
restatements and adjustments did not change the full year 2006 net income or
earnings per share. Some of the more significant changes include the
following:

    
    -   Net Income for the year ended December 31, 2005 was $8.1 million, as
        opposed to $7.0 million as previously reported. The revised earnings
        per share (fully diluted) was $0.23 (as opposed to $0.20 as
        previously reported). This difference relates to a correction in the
        application of foreign currency rates.

    -   Reclassification of the 2005 $8.4 million gain on the sale of
        operating assets from Corporate/Unallocated to the Casing Services
        segment, and

    -   Other reclassifications within operating income for certain segments.
    

    Also, as previously announced, the Company made adjustments to its
unaudited quarterly results for the second, third and fourth quarters of 2006
and filed restatements of its quarterly information for the second and third
quarters. As revised, net income for the second quarter 2006 was $2.6 million
on a U.S. GAAP basis, not $3.0 million. A corresponding adjustment was made
with respect to the fourth quarter, so that net income for the fourth quarter
was $10.5 million on a U.S. GAAP basis as opposed to $10.2 million ($0.29 per
share on a fully diluted basis as opposed to $0.28 per share). Third quarter
2006 reported net income of $8.5 million, on a U.S. GAAP basis, is the same as
previously reported in the March 8, 2007 earnings release. Other adjustments
are described in the section titled "Additional Disclosures."
    Because of various adjustments described above, the restatements for the
second and third quarters of 2006 and other adjustments made during the course
of preparing the final audited financial statements included in its Form 10-K,
the Company has decided to revise and reissue its March 8, 2007 earnings
release and to withdraw the prior release in order to provide investors,
analysts and other interested persons with a composite report based on the
Company's audited financial information. All information included below is on
a U.S. GAAP basis.

    
                        Updated Financial Information

                             Summary of Results
      (in millions of U.S. $, except per share amounts and percentages)

                                   Quarter 4     Quarter 3    Twelve Months
                                   ---------     ---------    -------------
                                2006      2005    2006(*)     2006      2005
                                ----      ----    -------     ----      ----

    Revenues                $  114.3  $   65.6  $  101.5  $  386.2  $  202.7

    Operating Income (loss)     19.3       1.1      14.6      60.9      17.7

    Net Income (loss)           10.5      (1.2)      8.5      30.5       8.1

    EPS (diluted)           $   0.29  $  (0.04) $   0.23  $   0.83  $   0.23

    EBITDA (as defined)(xx) $   26.4  $    6.4  $   22.2  $   85.0  $   36.7

     (*) As restated, as more fully described in "Additional Disclosures"
         below.
    (xx) As defined to consist of net income (loss) before net interest
         expense, depreciation and amortization, non-cash stock compensation
         expense and other non-cash items: See "Non-GAAP Measures" below.


                             Segment Information
                           (in millions of U.S. $)

                                   Quarter 4     Quarter 3    Twelve Months
                                   ---------     ---------    -------------
                                2006      2005    2006(*)     2006      2005
                                ----      ----    -------     ----      ----
    Revenues:
    ---------
        Top Drives:
      Sales and aftermarket $   38.9  $   13.5  $   32.9  $  117.3  $   51.3
          Rental                27.9      20.7      25.6     101.9      74.5
                            --------- --------- --------- --------- ---------
                                66.8      34.2      58.5     219.2     125.8
      Casing Services:          47.6      31.4      43.0     167.0      77.0
                            --------- --------- --------- --------- ---------
    Total Revenues          $  114.3  $   65.6  $  101.5  $  386.2  $  202.7
                            --------- --------- --------- --------- ---------
                            --------- --------- --------- --------- ---------

    Operating Income (xx):
    ----------------------

        Top Drives          $   22.7  $(1.9)(1) $   17.1  $   64.8  $ 23.5(1)
      Casing Services            7.7    10.5(2)      6.3      28.4    19.0(2)
    Research and Engineering    (2.2)     (0.6)     (1.2)     (6.0)     (3.9)
      Corporate/Unallocated     (8.9)     (6.9)     (7.6)    (26.4)    (20.9)
                            --------- --------- --------- --------- ---------
    Total Operating Income  $   19.3  $    1.1  $   14.6  $   60.9  $   17.7
                            --------- --------- --------- --------- ---------
                            --------- --------- --------- --------- ---------

     (*) As restated, as more fully described in "Additional Disclosure"
         below.
    (xx) The Company is reporting its Research and Engineering Expenses(R&E)
         as a separate reportable segment. Previously R&E was included in the
         Corporate and Unallocated reporting segment. All prior periods have
         been reclassified to be consistent with these reportable segments.

    (1) Includes a $6.6 million charge related to the Company's Top Drive
        "Load Path" replacement program
    (2) Includes an $8.4 million gain from the sale of drilling rigs


                     Financial and Operating Highlights

    -   Year over year (2006 vs. 2005):
        -   A 90% increase in Revenue.
        -   A 244% increase in Operating Income.
        -   A 276% increase in Net Income.
        -   A 129% increase in Top Drive sales and aftermarket support
            revenue.
        -   A 37% increase in Top Drive rental revenue.
        -   A 175% increase in Top Drive operating income. 2005 Top Drive
            operating income includes a $6.6 million charge to Cost of Sales
            and Services related to its Top Drive "Load Path" replacement
            program.
        -   A 117% increase in Casing Services revenue.
        -   A 49% increase in Casing Services operating income. 2005
            operating income includes an $8.4 million gain from the sale of
            rigs.

    -   Top Drive sales for Q4 2006 were 30 units (29 new and 1 from the
        rental fleet). This compares to 26 units sold in Q3 2006 and 7 sold
        in Q4 2005.

    -   At December 31, 2006, Top Drive backlog amounted to 68 units versus
        80 units at September 30, 2006. Based on current production levels,
        our capacity to deliver Top Drives, assuming sustained market demand
        and orders, is expected to be about 30 units per quarter in 2007.

    -   The utilization of the Company's Top Drive rental fleet increased to
        23,873 operating days for 2006 compared to 21,713 operating days for
        2005. Additionally, we continued to see an increase in our average
        rental revenues per operating day. Our rental fleet today stands at
        115 units.

    -   The growth in TESCO's Casing Services revenues for the quarter and
        the year ended December 31, 2006 reflect the impact of the two
        acquisitions made in November 2005 as well as organic growth
        associated with the Company's automated proprietary Casing Drive
        System(TM). Our 2006 proprietary Casing Running revenues more than
        doubled as compared to 2005 and we experienced a 10% increase in Q4
        2006 revenues as compared to Q3 2006.

    -   In January 2007, we announced the successful deployment of our CASING
        DRILLING(R) technology to drill the first ever offshore well
        utilizing industry standard rotary steerable systems. We believe this
        technology will generate serious industry interest and represents an
        important strategic initiative for TESCO's future.

    -   By the end of 2006, we had drilled our 300th well and over 2 million
        feet with our proprietary CASING DRILLING(R) technology.

    -   At December 31, 2006, cash and cash equivalents totaled $14.9 million
        while debt totaled $44.5 million. This represents a net debt to book
        capitalization of 11%(2).

    -   Total capital expenditures in 2006 amounted to $46.2 million. We have
        budgeted capital expenditures in 2007 close to $50 million.

    -   Selling, General and Administrative (SG&A) costs for Q4 2006 amounted
        to $12.1 million which compares to $10.9 million for Q4 2005. For all
        of 2006, SG&A totaled $36.1 million compared to $28.1 million for
        2005. This represents a drop in SG&A as a percent of revenue from 14%
        to 9%. The increase in SG&A for the 4th quarter of 2006 compared to
        the same quarter in 2005 primarily relates to expanded sales and
        marketing expenses associated with both the growth in the business as
        well as the acquisitions associated with our Casing Services segment
        in 2005. In addition, we incurred increased legal, accounting and
        compliance costs (including, Section 404 of the Sarbanes Oxley Act)
        associated with our transition from a foreign private issuer to a
        domestic reporting issuer under the Securities Exchange Act of 1934.

    -   Research and Engineering (R&E) costs for Q4 2006 amounted to
        $2.2 million which compares to $0.6 million for Q4 2005. For all of
        2006, R&E totaled $6.0 million compared to $3.9 million for 2005.
        This increase in R&E was due to additional product development
        activity focusing on the commercialization and enhancement of
        existing proprietary technologies in Casing Services and the
        development of a new generation of Top Drive units. The Company plans
        to increase R&E spending 80% in 2007 primarily to further expand our
        commercialization and enhancement of existing proprietary
        technologies in Casing Services.

    -   The Company's effective tax rate for Q4 2006 was 43%. This effective
        tax rate was primarily impacted by reserves recorded against certain
        foreign tax credit carry forwards. The Company expects its effective
        tax rate in 2007 to be in the range of 35-40%.

    ---------------------
    (1) This ratio is calculated by dividing financial debt, less cash by the
        sum of financial debt, net of cash plus shareholders' equity.
    

    Additional Disclosures

    As a result of our transition from a foreign private issuer to a domestic
reporting issuer under the Securities Exchange Act of 1934, we became subject
to the reporting and disclosure requirements under the Securities Exchange Act
and related rules. We also conducted an evaluation of our internal controls
over financial reporting as of December 31, 2006 in accordance with Section
404 of the Sarbanes Oxley Act. In addition, as part of the transition process,
our board of directors and management conducted a self-initiated review of our
past stock option granting practices and related accounting. We note that our
review of our stock option practices did not uncover any evidence of fraud or
manipulative intent.
    During the course of preparing our initial Annual Report on Form 10-K for
the year ended December 31, 2006 (including the financial statements to be
filed therewith), the related evaluation of internal controls, and the review
of our stock option practices and accounting, we made the following
determinations (all of which are more thoroughly described in our Annual
Report on Form 10-K for December 31, 2006):

    
    -   For years prior to 2006, we identified certain errors totaling
        $0.8 million; specifically, additional stock compensation expense
        ($0.5 million), depreciation expense ($0.5 million), billings
        ($0.1 million), a reduction in accrued cost of sales and services
        ($0.1 million) and related tax effects of these items ($0.2 million).
        Applying SEC Staff Accounting Bulletin No. 99, we determined that the
        errors did not result in a material misstatement with respect to any
        of the prior periods that would be impacted by their correction,
        either individually or in the aggregate. As these adjustments are not
        material to any of the years prior to 2006, we have elected to apply
        the guidance in Staff Accounting Bulletin No. 108 by adjusting the
        carrying values of assets and liabilities as of January 1, 2006 with
        an offsetting adjustment of $0.8 million recorded to retained
        earnings as of such date, as the cumulative amount of these errors
        would be material to the year prior to the adoption of Staff
        Accounting Bulletin No. 108.

    -   In 2006, we also identified errors in recording stock compensation,
        depreciation expense, research and engineering costs and in posting
        from sub accounts to our general ledger that resulted in a material
        misstatement of our previously reported results for the second and
        third quarters of 2006. Accordingly, we have filed restated financial
        statements with securities regulatory authorities in Canada and
        furnished such statements pursuant to amended Form 6Ks that are filed
        with the Securities and Exchange Commission. Certain of these errors
        mentioned above also impacted the first quarter of 2006; however, the
        Company determined that the net impact was not material to the
        previously reported amounts and therefore has not amended such
        financial statements previously reported on a Form 6K. A summary of
        these adjustments, as related to Q2 and Q3 2006 are reconciled below:


    (in millions of U.S.$)                   Reconciliation    Reconciliation
                                               to Q2 2006        to Q3 2006
                                               (after tax)       (after tax)
                                             --------------    --------------
    Net income, as previously reported-
     Canadian GAAP                              $    3.1            $    9.3
    Stock Compensation adjustment                   (0.2)               (0.3)
    Under-accrued expenses                          (0.3)               (0.7)
    Research & Engineering adjustment               (0.3)                  -
    Depreciation corrections and other errors       (0.1)               (0.1)
                                             --------------    --------------
    Adjusted net income-Canadian GAAP           $    2.2            $    8.2
    Conversion to U.S. GAAP                          0.4                 0.3
                                             --------------    --------------
    Net income on a U.S. GAAP basis             $    2.6            $    8.5
                                             --------------    --------------
                                             --------------    --------------


    -   Based upon our testing, we identified certain material weaknesses in
        internal controls and concluded that the Company did not maintain an
        effective control environment at and over its U.S. Casing Services
        business unit. These material weaknesses are more fully described in
        our annual report on Form 10-K for the year ended December 31, 2006.
        A material weakness is a control deficiency, or combination of
        control deficiencies, that results in more than a remote likelihood
        that a material misstatement of the annual or interim financial
        statements will not be prevented or detected. As a result, management
        has concluded that our internal control over financial reporting was
        not effective as of December 31, 2006. Management, with the oversight
        of the Audit Committee, has begun to address these control
        deficiencies and is committed to correcting these deficiencies
        expeditiously.
    

    Tesco Corporation is a global leader in the design, manufacture and
service of technology based solutions for the upstream energy industry. The
Corporation's strategy is to change the way people drill wells by delivering
safer and more efficient solutions that add real value by reducing the costs
of drilling for and producing oil and gas.

    
    Non-GAAP Measures- EBITDA (as defined below)

    (in millions of U.S. $)        Quarter 4     Quarter 3    Twelve Months
                                   ---------     ---------    -------------
                                2006      2005    2006(*)     2006      2005
                                ----      ----    -------     ----      ----

    Net Income (loss)       $   10.5  $   (1.2) $    8.5  $   30.5  $    8.1
    Income Taxes                 8.1         -       5.2      23.3       6.3
    Depreciation and
     Amortization                5.4       5.4       6.0      22.5      17.3
    Net Interest expense         0.9       1.2       0.8       3.2       1.4
    Stock Compensation
     Expense-non-cash            1.5       1.0       1.7       5.7       3.6
    Cumulative Change in
     accounting method             -         -         -      (0.2)        -
    EBITDA                  $   26.4  $    6.4  $   22.2  $   85.0  $   36.7

    (*) As restated, as more fully described in "Additional Disclosures"
        above.
    


    Our management evaluates Company performance based on non-GAAP measures,
of which a primary performance measure is EBITDA. EBITDA consists of earnings
(net income or loss) available to common stockholders before interest expense,
income tax expense, non-cash stock compensation, non-cash impairments,
depreciation and amortization and other non-cash items. This measure may not
be comparable to similarly titled measures employed by other companies and is
not a measure of performance calculated in accordance with GAAP. They should
not be considered in isolation or as substitutes for operating income, net
income or loss, cash flows provided by operating, investing and financing
activities, or other income or cash flow statement data prepared in accordance
with GAAP.
    We believe EBITDA is useful to an investor in evaluating our operating
performance because:

    
    -   it is widely used by investors in our industry to measure a company's
        operating performance without regard to items such as net interest
        expense, depreciation and amortization, which can vary substantially
        from company to company depending upon accounting methods and book
        value of assets, financing methods, capital structure and the method
        by which assets were acquired;
    -   it helps investors more meaningfully evaluate and compare the results
        of our operations from period to period by removing the impact of our
        capital structure (primarily interest) and asset base (primarily
        depreciation and amortization) and actions that do not affect
        liquidity (stock compensation expense) from our operating results;
        and
    -   it helps investors identify items that are within our operational
        control. Depreciation and amortization charges, while a component of
        operating income, are fixed at the time of the asset purchase in
        accordance with the depreciable lives of the related asset and as
        such are not a directly controllable period operating charge.

    Our management uses EBITDA:

    -   as a measure of operating performance because it assists us in
        comparing our performance on a consistent basis as it removes the
        impact of our capital structure and asset base from our operating
        results;
    -   as one method we use to evaluate potential acquisitions;
    -   in presentations to our Board of Directors to enable them to have the
        same consistent measurement basis of operating performance used by
        management;
    -   to assess compliance with financial ratios and covenants included in
        our credit agreements; and
    -   in communications with investors, analysts, lenders, and others
        concerning our financial performance.
    

    Caution Regarding Forward-Looking Information; Risk Factors

    This press release contains forward-looking statements within the meaning
of Canadian and United States securities laws, including the United States
Private Securities Litigation Reform Act of 1995. From time to time, our
public filings, press releases and other communications (such as conference
calls and presentations) will contain forward-looking statements.
Forward-looking information is often, but not always identified by the use of
words such as "anticipate", "believe", "expect", "plan", "intend", "forecast",
"target", "project", "may", "will", "should", "could", "estimate", "predict"
or similar words suggesting future outcomes or language suggesting an outlook.
Forward-looking statements in this press release include, but are not limited
to, statements with respect to expectations of TESCO's prospects, future
revenues, earnings, activities and technical results.
    Forward-looking statements and information are based on current beliefs
as well as assumptions made by, and information currently available to, TESCO
concerning anticipated financial performance, business prospects, strategies
and regulatory developments. Although management considers these assumptions
to be reasonable based on information currently available to it, they may
prove to be incorrect. The forward-looking statements in this press release
are made as of the date it was issued and TESCO does not undertake any
obligation to up date publicly or to revise any of the included
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by applicable law.
    By their very nature, forward-looking statements involve inherent risks
and uncertainties, both general and specific, and risks that outcomes implied
by forward-looking statements will not be achieved. We caution readers not to
place undue reliance on these statements as a number of important factors
could cause the actual results to differ materially from the beliefs, plans,
objectives, expectations and anticipations, estimates and intentions expressed
in such forward-looking statements.
    These risks and uncertainties include, but are not limited to, the impact
of changes in oil and natural gas prices and worldwide and domestic economic
conditions on drilling activity and demand for and pricing of our products and
services, other risks inherent in the drilling services industry (e.g.
operational risks, potential delays or changes in customers' exploration or
development projects or capital expenditures, the uncertainty of estimates and
projections relating to levels of rental activities, uncertainty of estimates
and projections of costs and expenses, risks in conducting foreign operations,
the consolidation of our customers, and intense competition in our industry),
and risks associated with our intellectual property and with the performance
of our technology. These risks and uncertainties may cause our actual results,
levels of activity, performance or achievements to be materially different
from those expressed or implied by any forward-looking statements. When
relying on our forward-looking statements to make decisions, investors and
others should carefully consider the foregoing factors and other uncertainties
and potential events.
    Further information regarding these factors may be found in TESCO's most
recent annual information form and in TESCO's most recent consolidated
financial statements, management information circular, quarterly reports,
management's discussion and analysis, material change reports and news
releases and in TESCO's Annual Report on Form 10-K for the year ended December
31, 2006 and in TESCO's Annual Report on Form 40-F for the year ended December
31, 2005. Copies of TESCO's Canadian public filings are available at
www.tescocorp.com and on SEDAR at www.sedar.com. TESCO's U.S. public filings
are available at www.sec.gov and at www.tescocorp.com.

    
                              TESCO CORPORATION
    (Millions of U.S. Dollars, except share and per share information)

            COMPARATIVE CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                     For the                 For the
                                Three Months Ended     Twelve Months Ended
                              ----------------------  -----------------------
                                 2006        2005        2006        2005
                              ----------  ----------  ----------  -----------

    REVENUE                     $  114.3    $   65.6    $  386.2    $  202.7

    OPERATING EXPENSES
    Cost of Sales and Services      80.7        61.4       283.2       161.9
    Selling, General and
     Administrative                 12.1        10.9        36.1        28.1
    Research and Engineering         2.2         0.6         6.0         3.9
    Gain on Sales of Operating
     Assets                            -        (8.4)          -        (8.9)
                              ----------  ----------  ----------  -----------
                                    95.0        64.5       325.3       185.0
                              ----------  ----------  ----------  -----------
      OPERATING INCOME              19.3         1.1        60.9        17.7
    Interest Expense, net            0.9         1.2         3.2         1.4
    Other (Income) Expense, net     (0.2)        1.1         4.1         1.9
                              ----------  ----------  ----------  -----------
      INCOME BEFORE INCOME
       TAXES                        18.7        (1.2)       53.6        14.4
    Income taxes                     8.1           -        23.3         6.3
                              ----------  ----------  ----------  -----------
      NET INCOME BEFORE
       CUMULATIVE EFFECT OF
       ACCOUNTING CHANGE            10.5        (1.2)       30.3         8.1
    Cumulative Effect of
     Accounting Change, net            -           -         0.2           -
                              ----------  ----------  ----------  -----------
      NET INCOME                $   10.5    $   (1.2)   $   30.5    $    8.1
                              ----------  ----------  ----------  -----------
                              ----------  ----------  ----------  -----------

    Earnings per share:
      Basic                     $   0.29      ($0.04)   $   0.85    $   0.23
      Diluted                   $   0.29      ($0.04)   $   0.83    $   0.23
    Weighted average number
     of shares:
      Basic                   35,995,353  35,294,639  35,847,266  35,173,264
      Diluted                 36,545,812  35,294,639  36,593,409  35,628,543


              COMPARATIVE CONDENSED CONSOLIDATED BALANCE SHEETS

                                                            December 31,
                                                      -----------------------
                                                          2006        2005
                                                      ----------  -----------
    ASSETS
      Cash and Cash Equivalents                         $   14.9    $   35.4
      Accounts Receivables, net                             80.5        56.3
      Inventories                                           85.4        40.1
      Other Current Assets                                  18.1        17.8
                                                      ----------  -----------
        Current Assets                                     198.9       149.6
      Property, Plant and Equipment, net                   132.4       109.7
      Goodwill                                              16.6        16.9
      Other Assets                                          24.3        34.1
                                                      ----------  -----------
                                                        $  372.2    $  310.3
                                                      ----------  -----------
                                                      ----------  -----------
    LIABILITIES AND SHAREHOLDERS' EQUITY
      Current Maturities of Long Term Debt              $   10.0    $    0.4
      Accounts Payable                                      27.8        23.0
      Accrued and Other Current Liabilities                 49.3        29.6
                                                      ----------  -----------
        Current Liabilities                                 87.1        53.0
      Long Term Debt                                        34.5        40.8
      Deferred Income Taxes                                 11.2        13.0
      Shareholders' Equity                                 239.4       203.5
                                                      ----------  -----------
                                                        $  372.2    $  310.3
                                                      ----------  -----------
                                                      ----------  -----------
    

    %SEDAR: 00002774E




For further information:

For further information: Julio Quintana, (713) 359-7000; Anthony
Tripodo, (713) 359-7000, Tesco Corporation

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