Cabo Announces 1st Quarter Results

North Vancouver, BC - Cabo Drilling Corp. ("Cabo" or the "Company") (TSX-V:CBE) today reported results for its fiscal year 2011 first quarter ended September 30, 2010

1st QUARTER HIGHLIGHTS

*before changes in non-cash working capital items

The Company reports:

• Quarterly revenue for the 1st quarter fiscal 2011 of $10.27 million, a 62% improvement compared to $6.34 million in the 1st quarter fiscal 2010.
• 1st quarter fiscal 2011 earnings before interest, taxes, amortization, stock-based compensation and other items of $1.01 million compared to 1st quarter fiscal 2010 earnings before interest, tax, amortization, stock based compensation and other items (EBITDA) of $482,152, resulting in 1st quarter fiscal 2011 earnings before interest, taxes, amortization, stock-based compensation and other items of $0.02 per share and $0.01 per share in the 1st quarter of fiscal 2010.
• Net before tax income for the 1st quarter of fiscal 2011 of $307,544 compared to a 1st quarter fiscal 2010 before tax loss of $463,495.
• Net after tax earnings for the 1st quarter of fiscal 2011 of $197,544 compared to a net after tax loss for the 1st quarter of fiscal 2010 of $463,495, resulting in 1st quarter fiscal 2011 net after tax earnings of $0.00 per share compared to a net after tax loss for 1st quarter fiscal 2010 of $0.01 per share.
• Gross margin percentage for the 1st quarter fiscal 2011 was 24.0% compared with a gross margin of 29.1% in 1st quarter fiscal 2010 and 19.4% in the 4th quarter of fiscal 2010.
• Cash from operations, before changes in non-cash working capital items, was $868,036 for the 1st quarter fiscal 2011 compared to 1st quarter fiscal 2010 cash from operations of $388,239.
• A current asset balance of $20.66 million and working capital of $6.4 million.
• Total assets of $35.01 million and total liabilities of $16.04 million.

"Cabo Drilling's first quarter for fiscal 2011 is on track for the $40 million in gross revenues that the Company is budgeting for the fiscal year," said Mr. Versfelt, Cabo's President & CEO. "Gross revenues of $10.27 million improved 62% compared to the first quarter of fiscal 2010 and 26% compared to the fourth quarter of fiscal 2010. Drilling activity and revenues in all regions where Cabo Drilling is working has improved, with utilization at approximately 50% for the quarter."

"Gross margin improved from 19.4% in the fourth quarter of fiscal 2010 to 24.0% in the first quarter of fiscal 2011" stated Mr. Versfelt. "This increase is within 1% of what management is expecting for the year."

"The Company recorded earnings of $197,544 during the 1st quarter of fiscal 2011 or $0.00 earnings per share compared to a loss of $463,495 or $0.01 per share in the 1st quarter of fiscal 2010," noted John A. Versfelt. "EBITDA improved dramatically quarter over quarter to $1.01 million for the first quarter ending September 30, 2010 from $75,136 in the previous quarter and from $482,152 in the first quarter of fiscal 2010. Both before and after tax earnings of $307,544 and $197,544 for the first quarter of fiscal 2011 were the highest earnings that the Company experienced since the December 31, 2008 quarter."

First quarter ended September 30, 2011
Revenue for the quarter ending September 30, 2010 increased $3.93 million or 62% to $10.27 million, compared to $6.34 million comparable period in fiscal 2010. The primary reason for the increase is the increased activity in Canada and the international activity in Colombia and Albania. The Pacific and the Atlantic divisions represent the majority of the increase in activity in the first quarter of fiscal 2011 as compared to the first quarter of fiscal 2010.

The Company also experienced a 26% increase in revenues comparing the $8.16 million recorded in the fourth quarter of fiscal 2010 to the $10.27 million in the first quarter of fiscal 2011. This increase is directly related to increased revenues in the Pacific and Atlantic divisions and in Columbia. Management expects international operations from its bases in Panama and Albania to achieve approximately 25-30% of revenues in fiscal 2011.

Surface drilling revenues increased 108% from $4.21 million in the first quarter of fiscal 2010 to $8.74 million during the first quarter in fiscal 2011. Underground activity decreased from $1.98 million in the first quarter of fiscal 2010 to $1.08 million during the comparable period in fiscal 2011. This increased activity in surface revenues was a result of several new multi-drill programs in the Pacific and Ontario divisions compared to fiscal 2010 while the decreased revenues from the underground revenues was a result of the two unexpected shutdowns during the quarter in the Ontario division. Geotechnical drilling increased by 209% during the first quarter of fiscal 2011, due to increased demand in the division for Montreal division for such services.

Direct costs for the quarter ended September 30, 2010 were $7.80 million compared to $4.50 million in the quarter ended September 30, 2009. The increase is a direct result of the increased drilling services activity in fiscal 2011. Gross margin for the quarter ended September 30, 2010 was 24.0% compared to 29.1% during the quarter ending September 30, 2009. The decreased gross margin is a direct result of increased pricing pressures experienced in the expanding markets. Field wage costs increased without a corresponding increase in prices for drilling and the Company experienced higher operating costs in the Ontario and Pacific divisions primarily due to our clients experiencing technical difficulties. Management expects gross margins to remain in the 25% range during fiscal 2011.

General and administrative expenses increased by approximately 6.7 % or $91,767 from $1.37 million in the first
quarter of fiscal 2010 to $1.46 million in the first quarter of fiscal 2011. The increase from the first quarter of fiscal 2010 is a direct result of increased salary costs of 5%, and some additional travel and marketing costs when comparing the first quarter of fiscal 2011. General and administration costs represent 14% of revenues during the first quarter of fiscal 2011 as compared to 22% in the first quarter of fiscal 2010.

A decrease in general and administration costs of $134,333 from $1.59 million incurred in the fourth quarter of fiscal 2010 as compared to the $1.45 million in the first quarter of fiscal 2011 is largely due to one-time costs incurred in shutting down the Mexico operation.

Amortization of property, plant and equipment for the quarter ending September 30, 2010 decreased by $253,955 to $597,779 during the first quarter of fiscal 2011 as compared to $851,734 in the comparable period in fiscal 2010. The decrease is due to the lower amortization expense on the drilling equipment due to the change in estimated life of our drill fleet. This change effectively extends the amortization period by three years for the drilling equipment.

Net income for the first quarter of fiscal 2011 was $197,544 compared to a net loss of $463,495 in the first quarter of fiscal 2010 and a net loss of $106,120 during the fourth quarter of fiscal 2010.

The Company's cash (cash and cash equivalents) position at September 30, 2010, is $258,442 compared to $43,502 at June 30, 2010. Short term investments and marketable securities decreased $19,560, from $37,560 at June 30, 2010, to $18,000 at September 30, 2010. The decrease can be attributed to changes in market share prices at September 30, 2010. We have adjusted the value of our holdings at September 30, 2010, as recorded in the comprehensive income statement. At September 30, 2010, the balance of $18,000 consists of shares in Canadian public corporations.

Accounts receivable increased by $678,141 or 10% to $7.57 million at September 30, 2010 from $6.89 million at June 30, 2010. The increase is primarily due to increased activity during the first quarter of fiscal 2011.

Property, plant & equipment decreased to $12.27 million at September 30, 2010 from $12.74 million at June 30, 2010, a decrease of $467,574 during the first quarter of fiscal 2011, largely due to amortization and taking into account a $130,205 in capital expenditures. The Company is budgeting for an increase in the utilization of its fleet without significant capital expansion in fiscal 2011. The Company invested over $4.54 million in new property plant and equipment during fiscal 2009 and 2010. This will favourably position the Company in the present drilling cycle with a modernized and upgraded drill fleet.

Cash flow from operations (before changes in non-cash operating working capital items) was $868,036 during the 1st quarter of fiscal 2011, compared $388,239 in the 1st quarter of fiscal 2010.

The mineral drilling industry is dependent on demand for and supply of precious, base and strategic metals as well as precious stones. Demand and supply factors for these commodities can change dramatically up and down, as we have witnessed in the past two years, causing dynamic shifts in the supply of drills and drilling personnel from under supply to over supply. The recent financial stress in financial credit and equity markets, as well as significant global currency and economy changes have caused substantial negative changes to the global metals supply and demand factors, resulting in much uncertainty in the global mining and related services markets. Management has initiated comprehensive cost and spending controls, as well as risk management procedures throughout the Company. Senior management is focused on careful cash management, reduction of debt, high customer relations and high employee relations.

About Cabo Drilling Corp. (TSX-V: CBE)
Cabo Drilling Corp. is a drilling services company headquartered in North Vancouver, British Columbia, Canada. The Company provides mining related and specialty drilling services through its Canadian divisions in Surrey, British Columbia; Montr�al, Quebec; Kirkland Lake, Ontario; and Springdale, Newfoundland; as well as Cabo Drilling (Panama) Corp. of Panama, Republic of Panama; Cabo Drilling Spain S.L. of Sevilla, Spain; 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.

ON BEHALF OF THE BOARD

"John A. Versfelt"
John A. Versfelt
Chairman, President and CEO

Further information about the Company can be found on the Cabo website (http://www.cabo.ca) and SEDAR (www.sedar.com) or by contacting Sheri Barton, Corporate Communications at 403-217-5830 or Mr. John A. Versfelt, Chairman, President & CEO of the Company at 604-984-8894. For general investor relation inquiries you may also contact Renmark Financial Communications Inc. Barbara Komorowski: bkomorowski@renmarkfinancial.com or Arash Shahi: ashahi@renmarkfinancial.com at Tel: 514-939-3989 or 416-644-2020.

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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.