Hyduke Energy Services Inc. announces results for three and six months ended June 30, 2007



    EDMONTON, AB, Aug. 22 /CNW/ - Hyduke Energy Services Inc. (HYD - TSX
Venture), announced operating results for the three and six months ended June
30, 2007. A summary of those results is as follows:

    
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    Selected Income Statement
          Information                 Three Months Ended    Six Months Ended
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                                       June 30   July 31   June 30   July 31
    ($000's, except per share data)      2007     2006       2007      2006
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    Revenue                             18,672    23,056    38,992    47,189
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    Gross margin                         3,920     5,237     7,650     9,798
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    Gross margin (%)                     21.0%     22.7%     19.6%     20.8%
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    EBITDA(1)                            2,499     3,973     4,851     6,892
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    Net income                           1,331     2,407     2,567     4,212
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    Net income per share - basic ($)     0.061     0.110     0.117     0.193
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    Net income per share - diluted ($)   0.061     0.110     0.117     0.191
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    Selected Balance Sheet Information               As At
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                                       June 30    December 31       April 30
    ($000's, except ratios)              2007         2006            2006
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    Total assets                        54,141         57,802         50,372
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    Total long-term debt                 2,674          2,933          3,312
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    Total shareholders' equity          36,416         33,757         27,213
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    Current ratio (current
     assets divided by
     current liabilities)         2.57 to 1.00   2.01 to 1.00   1.99 to 1.00
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    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.
    

    Decreased drilling and well service activity in Western Canada combined
with record levels of equipment capacity has driven a decrease in new capital
expenditures and overall activity levels on a year-over-year basis. Despite
these industry conditions, Hyduke has maintained reasonable activity levels
and profitability.
    Revenue of $18.672 million for the three months ended June 30, 2007
represented a $4.384 million decrease (19%) compared to the three months ended
July 31, 2006. Revenue of $38.992 million for the six months ended June 30,
2007 represented an $8.197 million decrease (17%) compared to the six months
ended July 31, 2006.
    Net income of $1.331 million ($0.061 per share) for the three months
ended June 30, 2007 represents a $1.076 million decrease (45%) compared to the
three months ended July 31, 2006. Net income of $2.567 million ($0.117 per
share) for the six months ended June 30, 2007 represents a $1.645 million
decrease (39%) compared to the six months ended July 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 $2.499 million for the three months ended June 30, 2007
represents a $1.474 million decrease (37%) compared to the three months ended
July 31, 2006. EBITDA of $4.851 million for the six months ended June 30, 2007
represents a $2.041 million decrease (30%) compared to the six months ended
July 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 generally remained consistent with prior
periods as a consequence of continued emphasis on production efficiencies in
the face of reduced pricing power resulting from the decrease in new capital
equipment spending. Gross margin percentage of 21.0% realized in the three
months ended June 30, 2007 represents a decrease of 1.7 percentage points over
the 22.7% gross margin realized in the three months ended July 31, 2006. Gross
margin percentage of 19.6% realized in the six months ended June 30, 2007
represents a decrease of 1.2 percentage points over the 20.8% gross margin
realized in the six months ended July 31, 2006. Gross margin of $3.92 million
for the three months ended June 30, 2007 represents a $1.317 million decrease
(25%) compared to the three months ended July 31, 2006. Gross margin of $7.65
million for the six months ended June 30, 2007 represents a $2.148 million
decrease (22%) compared to the six months ended July 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 June 30, 2007 remains very strong with a
current ratio of 2.57 to 1.00 and a debt to equity ratio of 0.07 to 1.00.
    As at August 20, 2007, the Company had 21,965,331 common shares
outstanding and 828,250 share options outstanding.

    OUTLOOK

    Industry expectations for the remainder of 2007 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 in 2007 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, reduced small producer activity due to capital
availability, the threat of increased environmental regulation and uncertainty
around 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 will be
significantly less than 2006 and 2005, our 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 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 our 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 July 19, 2007, Hyduke received conditional approval to list its common
shares on the Toronto Stock Exchange ("TSX"). Listing of the common shares is
subject to Hyduke's compliance with all of the TSX requirements including
receipt of the documentation prior to trading on the 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.

    TSX Venture Exchange 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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