CBE Cabo Drilling Corp

NEW WESTMINSTER, BRITISH COLUMBIA--(Marketwired - Mar 4, 2014) - Cabo Drilling Corp. ("Cabo" or the "Company") (TSX-VENTURE:CBE)(FRANKFURT:DHL) reports the results for its second quarter of fiscal year 2014, ended December 31, 2013.

2nd QUARTER HIGHLIGHTS

The Company reports:

• Revenue for the second quarter fiscal 2014 ("Q2 FY2014") of $6.82 million compared to $9.16 million in the second quarter fiscal 2013 ("Q2 FY2013") and $6.65 million in the first quarter of fiscal 2014.
• Gross margin percentage for the quarter was 11.7% (with depreciation included in direct costs), compared with 19.1% in for the corresponding period last year and 13.2% in the first quarter of fiscal 2014.
• EBITDA of ($53,567) for the quarter compared to $624,100, in Q2 FY2013, resulting in EBITDA per share of $0.00 for the quarter compared to $0.01 in Q2 FY2013 and 0.00 in the first quarter of fiscal 2014.
• Net loss was for the quarter was $991,003 or $0.01 per share ($0.01 per share diluted), compared to net loss of $434,676 or $0.01 per share ($0.01 per share diluted) for the corresponding period last year.
• Cash from operations was $86,928 compared to $86,307 in the same quarter last year.

"Cabo Drilling generated revenues of $13.47 million during the first six months of fiscal 2014," stated Mr. Versfelt, Cabo's President & CEO. "This represents a 41% decrease from the $23.00 million recorded in the comparable period in fiscal 2013."

"Gross margin, adjusted to include depreciation, was 12.4%, or $1.67 million, in the first six months of fiscal 2014, as compared to 20.4% in the first six months of fiscal 2013," stated Mr. Versfelt. "In accordance with IFRS, depreciation expenses of $1.27 million are included in direct costs as compared to $1.30 million in fiscal 2013. Adjusted gross margin, when depreciation expense is excluded from direct costs, is 21.9% in the first six months of fiscal 2014, as compared to 26.1% in the comparable period in fiscal 2013."

The Company reports $1,407 in EBITDA for the first six months of fiscal 2014, compared to $2.45 million in the first six months of fiscal 2013," said Mr. Versfelt. "The Company recorded a loss of $1.81 million during the first six months of fiscal 2014 compared to earnings of $125,061 in the first six months of fiscal 2013," noted Mr. Versfelt, and, "cash from operations was $821,988 during the first six months of fiscal 2014, compared to $1.44 million in the first six months of fiscal 2013."

"Cabo Drilling's working capital decreased to $11.53 million during the first six months of fiscal 2014, from $13.45 million at June 30, 2013," commented Mr. Versfelt. "Total liabilities increased by $37,105 during the first six months of fiscal 2014 to $13.87 million at December 31, 2013."

"Approximately 43% of Cabo Drilling's revenues came from gold related projects, 45% from copper, 4% from iron and the remaining 8% from other base metals." stated Mr. Versfelt.

Consolidated Quarterly Financial Results

Revenue for the quarter ending December 31, 2013, decreased $2.34 million, or 26%, to $6.82 million, compared to $9.16 million in second quarter of fiscal 2013. The primary reason for the decrease is due to reduced demand for drilling in North America, as a result of projects being scaled back, delayed or terminated. Latin America division revenues decreased by 28% due to lower drill utilization, which was offset by the increased activity in Europe. The Canadian and USA divisions recorded a significant decrease in revenues of 32% to $3.41 million in the second quarter of fiscal 2014, as compared to $5.05 million in the comparable period in fiscal 2013.

Revenues from surface drilling services decreased 34%, from $6.81 million in the second quarter of fiscal 2013 to $4.50 million in the second quarter of fiscal 2014, largely due to the early completion or termination of drilling projects with major mining clients in Canada and Colombia. Revenues from reverse circulation programs increased by 435% to $1.26 million, with increased activity in Labrador iron ore formations. Underground drilling decreased by 46% in the second quarter of fiscal 2014 to $976,214, as compared to $1.81 million in the comparable period in fiscal 2013.

Direct costs for the quarter ended December 31, 2013, were $6.03 million compared to $7.41 million in the quarter ending December 31, 2012, as adjusted to include depreciation in accordance with IFRS. The decrease is a direct result of the decreased activity in fiscal 2014. Gross margins, under IFRS reporting, for the quarter ended December 31, 2013, were 11.7% compared to 19.1% during the quarter ending December 31, 2012. The lower margins are primarily a result of a project in Labrador that had several operational challenges resulting in significantly higher costs.

In accordance with IFRS, depreciation expense of property, plant and equipment of $622,620 is included in direct costs for the quarter ending December 31, 2013, as compared to $649,821 in the second quarter of fiscal 2013.

General and administrative expenses decreased by $256,611 from $1.78 million for the second quarter of fiscal 2013 to $1.52 million in the second quarter of fiscal 2014. General and administration costs decreased by 18% in comparable periods, when excluding the stock based compensation costs. The decrease is a result of lower salary, insurance, professional fees and travel costs. Management expects general and administration costs to range between $5.4 and $5.8 million for 2014.

Net loss for the second quarter of fiscal 2014 is $991,003 compared to a net loss of $434,676 in the second quarter of fiscal 2013. This is a direct result of the decreased activity in the global drilling market.

The Company's cash (cash and cash equivalents) position at December 31, 2013, is $434,972 compared to $134,248 at June 30, 2013.

Marketable securities decreased $937,763 from $1.11 million at June 30, 2013, to $172,583 at December 31, 2013. During the six month period, Cabo sold 1,500,000 shares of Standard Gold Inc. for $395,813. A loss of $315,000 was recognized in Other Comprehensive Income during the six month period. Marketable securities consist of 4.31 million shares of International Millennium Mining Corp. We have adjusted the value of our holdings at December 31, 2013, as recorded in the comprehensive income statement.

Accounts receivable decreased by $1.21 million to $6.28 million at December 31, 2013, from $7.49 million at June 30, 2013. The decrease is primarily due to reduced activity during fiscal 2014.

Property, plant & equipment decreased to $11.15 million at December 31, 2013 from $12.28 million at June 30, 2012, a decrease of $1.12 million during the first six months of fiscal 2014, primarily resulting from equipment depreciation, with minimal capital expenditures in the quarter.

Consolidated Financial Results for the Six Months Ended December 31, 2013

Revenue for the six months ending December 31, 2013 decreased approximately 41% to $13.47 million, compared to $23.00 million in the comparable period in fiscal 2013. Revenues from our international divisions continue to represent a significant part of Cabo Drilling's operations with 50% of revenues for the first six months of fiscal 2014, as compared to 30% during the comparable period in fiscal 2013. Management expects the international revenues to continue to represent a larger portion of overall revenues in the remaining six months of fiscal 2014.

Surface drilling decreased by 36% during the six month period ending December 31, 2013 to $10.82 million, due to projects finishing earlier than anticipated in the Canadian operations. Underground drilling decreased by 55% during the six month period ending December 31, 2013 to $2.47 million, compared to $5.49 million during the comparable period in fiscal 2013. The decrease is primarily a result of reduced drill utilization in Ontario and no underground drilling in the Atlantic division to date in fiscal 2014.

Direct costs for the six months ended December 31, 2013 were $11.80 million compared to $18.31 million in the comparable period in fiscal 2013. Gross margins for the six months ended December 31, 2013 were 12.4% compared to 20.4% during the six months ended December 31, 2012, when direct costs include depreciation expenses (or 21.9% compared to 26.1% for the respective periods, when direct costs are adjusted to exclude depreciation expense). Although margins in Canada were lower, the Company was able to maintain higher margins in the international operations.

General and administrative expenses decreased by approximately 14% or $478,887 from $3.54 million in the first six months of fiscal 2013 to $3.06 million in the first six months of fiscal 2014. The decrease is primarily a result of decreased salary costs from restructuring the Canadian operations, lower insurance costs and professional fees and fewer travel expenditures.

Net loss for the first six months of fiscal 2014 was $1.81 million compared to net income after tax of $125,061 earned in the comparable period of fiscal 2013. The main difference is lower revenues reported in the first six months of fiscal 2014, as compared to the first six months of fiscal 2013.

Cash flow from operations was $821,988 in the six months ended December 31, 2013 as compared $1.44 million for the six months ended December 31, 2012.

Cabo Drilling has reduced costs over the past two years and has improved its balance sheet debt position. Productivity has improved, our safety record is one of the best in the industry and our client relationships are very good. With a continued focus on excellent safety, high environmental stewardship and improved productivity, plus the improved availability of good to excellent drilling personnel, we believe we will experience better projects and better margins, with high safety standards and high quality clients.

As has been stated in the past, the drilling services business is always challenging. However, Cabo Drilling's management team continues to focus on quality customer relations, high respect for employees and quality human relations, superb safety procedures and practices, careful attention to the protection of the environment and community relations, and trust. These practices, plus effective cost controls and management of equipment and drilling practices and services invoiced to the customers at a fair price and in an honest manner, will enhance Cabo Drilling's ability to grow profitably.

About Cabo Drilling Corp. (TSX-VENTURE:CBE)

Cabo Drilling Corp. is a drilling services company headquartered in New Westminster, British Columbia, Canada. The Company provides mining specialty drilling services through its Canadian divisions in Surrey, British Columbia; Kirkland Lake, Ontario; and Springdale, Newfoundland; as well as Cabo Drilling (America) Inc. of the United States; Cabo Drilling (Panama) Corp. of Panama, Republic of Panama; Cabo Drilling (Colombia) Corp. of Colombia; Balkan States Drilling SH.P.K. of Tirana, Albania; and Cabo Drilling (International) Inc. The Company's common shares trade on the Frankfurt Exchange under the symbol: DHL and on the TSX Venture Exchange under the symbol: CBE.

Further information about the Company can be found on the Cabo Drilling website (http://www.cabo.ca) and SEDAR (www.sedar.com).

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, potential mineral recovery processes and other business transactions timing. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.

Ms. Jolene TimmerCorporate Communications604-527-4201Mr. John A. VersfeltChairman, President & CEO604-527-4201(604) 527-9126ir@cabo.cawww.cabo.ca

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