NORTH VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 15, 2012) - Cabo Drilling Corp. ("Cabo" or the "Company") (News - Market indicators) reports results for its fourth quarter and fiscal year ended June 30, 2012.

• Fiscal revenue for the year ended June 30, 2012, of $58.95 million, a 36% increase compared to $43.42 million in fiscal 2011, and quarterly revenue for the 4^th quarter of fiscal 2012 of $13.61 million, a 5% improvement compared to $13.03 million in the 4^th quarter fiscal 2011.
• Fiscal 2012 income before interest, taxes, amortization, stock-based compensation and other items ("EBITDA") of $6.38 million compared to fiscal 2011 EBITDA of $2.65 million, resulting in fiscal 2012 EBITDA of $0.09 per share compared to $0.04 per share in fiscal 2011, and 4^th quarter fiscal 2012 EBITDA of $293,734 compared to 4^th quarter fiscal 2011 EBITDA of $426,004, resulting in 4^th quarter fiscal 2012 EBITDA of $0.00 per share and $0.00 per share in the 4^th quarter of fiscal 2011.
• Net income after taxes for fiscal 2012 of $1.66 million compared to a net loss after taxes of $840,030 in fiscal 2011, resulting in fiscal 2012 net after tax income of $0.02 per share compared to a net after tax loss for fiscal 2011 of $0.01 per share and an after tax loss for the 4^th quarter of fiscal 2012 of $734,090 compared to a net after tax loss for the 4^th quarter of fiscal 2011 of $807,284, resulting in 4^th quarter fiscal 2012 net after tax loss of $0.01 per share and a net after tax loss for 4^th quarter fiscal 2011 of $0.01 per share.
• Cash from operations, before changes in non-cash working capital items, was $3.72 million for fiscal 2012 compared to fiscal 2011 cash from operations of $1.40 million.
• A current asset balance of $25.93 million and working capital of $12.72 million.

"Cabo Drilling generated record revenues for fiscal 2012 of $58.95 million," stated Mr. Versfelt, Cabo's President & CEO. "This represents a 36% increase over the $43.42 million recorded in the comparable period in fiscal 2011. The Company's quarterly gross revenue for the three months ended June 30, 2012 also increased by 5% to $13.61 million compared to $13.03 million in the comparable three month period in fiscal 2011."

"Gross margin, adjusted to include amortization, was 18.2% or $10.75 million in fiscal 2012, as compared to 16.7% in fiscal 2011," commented Mr. Versfelt. "In accordance with IFRS, amortization expenses of $2.62 million are included in direct costs as compared to $2.48 million in fiscal 2011. Adjusted gross margin, when amortization expense is excluded, is 22.7% in fiscal 2012, as compared to 22.3% in fiscal 2011. Gross margin was also negatively affected, in the fourth quarter, by an inventory adjustment of $355,491."

"EBITDA improved to $6.38 million, or $0.09 per share, for the year ending June 30, 2012, from $2.65 million, or $0.04 per share, in fiscal 2011," stated Mr. Versfelt. "EBITDA was negatively affected by the inventory adjustment in the fourth quarter of fiscal 2012 and $241,720 in foreign exchange losses."

"The Company incurred $498,631 in non-recurring finance costs during the year, and in the fourth quarter, the Company revised the fair value of the 1,500,000 shares of a public company received in September 2011, in settlement of a debenture receivable in the amount of $669,111, to be equal to the settlement amount of the debenture, and the reported gain of $710,989 was reversed," stated Mr. Versfelt. "However, net income for fiscal 2012 was $1,655,203 compared to a loss of $840,030 in fiscal 2011, which resulted in $0.02 earnings per share in fiscal 2012 compared to a loss of $0.01 per share in fiscal 2011."

"Drill utilization increased to over 65% during the peak period in fiscal 2012 with approximately 60% of Cabo's revenues generated from gold related projects, 15% from copper, 11% from iron and the balance from other base metals," commented Mr. Versfelt. "Cabo Drilling continues to build a strong client base within the mining and exploration industry, with its attention to strong customer relations, and remains focused on being one of the safest and most environmentally responsible drilling companies in the world."

"Overall, Cabo Drilling management expect average drill utilization in fiscal 2013 to remain near the 50% level, with gross margins at 25-26%, due to the reduced demand for exploration drilling in the second half of calendar 2012," commented Mr. Versfelt. "For fiscal 2013 Cabo Drilling is budgeting gross revenues of approximately $50-58 million and anticipates general and administration expenses will remain in the $7 million range with average amortization levels decreased to 10%."

Consolidated Annual Financial Results

Revenue for the year ending June 30, 2012 increased $15.53 million or 36% to $58.95 million, compared to $43.42 million in fiscal 2011. The primary reason for the increase is due to the increased demand for drilling worldwide. The Latin America division increased activity with higher drill utilization in Panama and additional drills in Colombia, increasing revenues by 93% to $17.04 million as compared to $8.82 million in fiscal 2011. The Canadian and USA divisions recorded a 23% increase in revenues with higher revenues in all Canadian divisions. Management expects international operations from its bases in Panama, Colombia and Albania to continue to represent approximately 25-30% of its total revenues in fiscal 2013.

Surface drilling revenues increased 35% from $33.26 million to $45.02 million during fiscal 2012, compared to an increase of 17% in underground activity from $6.55 million in fiscal 2011 to $7.68 million in fiscal 2012. This increase in surface drilling is a result of increased revenues from all divisions during fiscal 2012. Geotechnical drilling decreased by 35% during fiscal 2012, due to restructuring in our Forages Cabo division.

Direct costs for the year ended June 30, 2012, were $48.20 million compared to $36.18 million in the fiscal year ending June 30, 2011, as adjusted to include depreciation in accordance with IFRS. The increase is a direct result of the increased activity in fiscal 2012. Gross margin for the year ended June 30, 2012, were 18.2% compared to 16.7% during the fiscal year ending June 30, 2011. The increased gross margin is a direct result of improvements to the Canadian operations and increased revenue from the Company's international divisions. Management restructuring in two of the Canadian operations is showing improvements, with the full impact to be more evident in fiscal 2013.

In accordance with IFRS, $2.62 million of amortization expense of property, plant and equipment is included in direct costs for the year ending June 30, 2012, as compared to $2.49 million in fiscal 2011. The increase is due to the additional capital expenditures during the year. 

General and administrative expenses increased by approximately 8%, or $532,247, from $7.08 million in fiscal 2011 to $7.61 million in fiscal 2012. The increase is a result of the higher bank fees, increased professional fees and stock based compensation. Included in general and administration costs are several non-recurring charges such as $20,000 bad debt expenses and approximately $80,000 in bank fees and $42,100 in legal and professional fees incurred while arranging additional financings.

The Company incurred a significant increase in finance costs during fiscal 2012 to $1.28 million as compared to $412,334 incurred during the year end June 30, 2011. Included in the current year costs are some non-recurring costs: $498,631 in non-recurring finance costs, $176,494 in fair value of bonus shares and warrants from the debentures issued during the year and $603,285 in interest costs as compared to $412,334 in fiscal 2011.

Net income for fiscal 2012 is $1.66 million compared to a net loss of $840,030 in fiscal 2011.

The Company's cash (cash and cash equivalents) position at June 30, 2012, is $1.24 million compared to $102,723 at June 30, 2011. Included in the $1.24 million is $300,000 restricted cash held as security for a corporate credit card facility.

Cash flow from operations (before changes in non-cash operating working capital items) was $3.72 million during fiscal 2012, compared to $1.40 million during fiscal 2011.

Consolidated Fourth Quarter Financial Results

Revenue for the three months ending June 30, 2012, increased to $13.61 million, compared to $13.03 million in the comparable period in fiscal 2011 and compared to $14.05 million in the third quarter of fiscal 2012. Revenues from the Canadian divisions represented 71% of the revenues for the fourth quarter of fiscal 2012, as compared to 77% during the fourth quarter of fiscal 2011. 

Direct costs, adjusted to include amortization of capital assets for the three month period ended June 30, 2012, were $11.75 million compared to $11.05 million in the comparable period in fiscal 2011 and $11.46 million in the third quarter of fiscal 2012. Gross margins for the three month period ended June 30, 2012, were 13.7%, compared to 18.4% during the third quarter of fiscal 2012 and 15.2% during the fourth quarter of fiscal 2011. The decrease is a result of higher than normal costs incurred in preparation for the Summer and Fall 2012 drilling season in the Pacific Division, the costs incurred for demobilizing drill projects in Ontario and New Mexico, projects being shut down due to forest fires in Ontario and political unrest in Colombia.

Amortization of property, plant and equipment for the three months ending June 30, 2012, increased to $637,193 compared to $592,608 during the fourth quarter of fiscal 2011, and decreased compared to $664,994 in the third quarter of fiscal 2012.

General and administration costs decreased to $2.10 million in the fourth quarter of fiscal 2012 from $2.23 million recorded during the fourth quarter of fiscal 2011. Included in general and administration during the quarter are capital taxes for Panama, stock based compensation, higher bank fees incurred from HSBC, additional legal costs on finalizing new credit facilities and increased travel costs.

Net loss for the fourth quarter of fiscal 2012 was $734,090 compared to a net loss of $807,284 in the fourth quarter of fiscal 2011. The fourth quarter net income was negatively impacted by $1.07 million due to an inventory writedown of $355,491 and the $718,193 loss on the Standard Gold Inc. shares.

The drilling services business is always challenging. In times of high demand, like 2011 and the first half of 2012, good drill crews are difficult to recruit and to retain at cost effective prices because many drilling company owners and/or senior managers are prepared to pay unreasonable wages and bonuses. In slower times, like the second half of 2012, good drill crews are available at a more reasonable price; however, unless drilling companies have developed quality relationships with well financed mining and exploration companies and/or mining and exploration companies that are not prepared to compromise their ore reserve or deposit development programs, thereby creating potential balance sheet problems, they will begin to offer their services at less than healthy prices. There is no easy formula to manage a drilling company, but good old fashioned business practices, like quality customer relations, high respect for employees and quality human relations, superb safety procedures and practises, careful attention to the protection of the environment and community relations, plus effective cost controls and management of equipment and drilling practices, invoiced to the customer at a fair price and in an honest manner, will enhance a drilling company's ability to grow profitably at all times.

About Cabo Drilling Corp. (News - Market indicators)
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; Montréal, Quebec; 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 Panama-Pacifico Corp. of Panama, Republic of Panama doing business as Cabo Drilling Colombia Corp.; 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, 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).

This news release may contain forward-looking statements including but not limited to, those relating to worldwide demand for gold and base metals and overall commodity prices, the level of activity in the minerals and metals industry and the demand for the Company's services, the Canadian and international economic environments, the impact of operational changes, changes in jurisdictions in which the Company operates (including changes in regulation), failure by counterparties to fulfill contractual obligations, and other factors as may be set forth, as well as objectives or goals. 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.