IROC Energy Services Corp. announces record second quarter results, filing of interim financial statements, and declaration of

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Iroc Energy Services Corp.	TSXV:ISC	TSX Venture	Common Stock

Iroc Energy Services Corp. (TSXV:ISC)
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CALGARY, Aug. 14, 2012 /CNW/ - IROC Energy Services Corp. ("IROC" or the "Corporation") is pleased to present a summary of its operating and financial results for the three and six months ended June 30, 2012. For a complete copy of IROC's interim financial statements and management's discussion and analysis ("MD&A") please visit www.sedar.com. Basis of Presentation Throughout this news release amounts are presented on a continuing operations basis to more accurately reflect the way in which IROC intends to operate on a continuing basis. Highlights for the three month quarter ended June 30, 2012: -- Total revenue increased 43% to $16.7 million for the three months ended June 30, 2012 as compared to $11.7 million in the second quarter of 2011. -- Gross margin increased 46% to $5.1 million for the three months ended June 30, 2012 as compared to $3.5 million in the second quarter of 2011. -- EBITDAS increased 93% to $3.2 million for the three months ended June 30, 2012 as compared to $1.6 million in the second quarter of 2011. -- Net income from continuing operations was $0.1 million for the three months ended June 30, 2012 as compared to a net loss of $0.3 million in the second quarter of 2011 marking the first time in the Corporation's history that the Corporation was profitable during the spring breakup period. Highlights for the six months ended June 30, 2012: -- Total revenue increased 36% to $49.1 million for the six months ended June 30, 2012 as compared to $36.1 million during the comparable period of the prior year. -- Gross margin increased 39% to $19.5 million for the six months ended June 30, 2012 as compared to $14.0 million during the comparable period of the prior year. -- EBITDAS increased 49% to $14.9 million for the six months ended June 30, 2012 as compared to $10.0 million during the comparable period of the prior year. -- Net income from continuing operations increased 61% to $6.9 million for the six months ended June 30, 2012 as compared to $4.3 million during the comparable period of the prior year. Operations IROC's operations are reported in three segments; the Drilling and Production Services segment, the Rental Services segment and Corporate Services and Other. The following is a discussion of the reporting segments in which IROC operates. DRILLING AND PRODUCTION SERVICES The Drilling and Production Services segment provides services to oil and gas exploration, development and production companies with most of our customers and operations being located in western Canada, in the provinces of Alberta and Saskatchewan. The Drilling and Production Services segment consists of two divisions: Eagle Well Servicing ("Eagle") contracts service rigs to oil and gas companies to perform various completion, work-over and maintenance services on oil and natural gas wells. Eagle has offices and equipment in Red Deer and Grande Prairie in Alberta and Lloydminster and Estevan in Saskatchewan with equipment being used in those geographic areas. Helix Coil Services ("Helix") contracts coil tubing units to oil and gas companies to perform various completion, workover and maintenance services on oil and natural gas wells. Helix is based in Red Deer, Alberta with equipment generally being used in Alberta and Saskatchewan, Canada. Three months ended June 30, March 31, December 31, September 30, 2012 2012 2011 2011 Eagle Well Servicing: Number of service rigs (end of period) 46 44 41 38 Service rig utilization (1) 43% 74% 69% 69% Commodity prices: NYMEX crude oil $US/bbl 93.49 102.93 94.06 89.76 AECO Monthly index natural gas $CAD/GJ 1.74 2.39 3.29 3.53 Three months ended June 30, March 31, December 31, September 30, 2011 2011 2010 2010 Eagle Well Servicing: Number of service rigs 36 36 35 35 (end of period) Service rig utilization 42% 78% 66% 57% (1) Commodity prices: NYMEX crude oil 102.60 94.08 85.17 76.20 $US/bbl AECO Monthly index 3.54 3.58 3.39 3.52 natural gas CAD/GJ (1) IROC calculates utilization based on full utilization being 10 hours days, 365 days per year consistent with the CAODC standard. IROC commences calculation of utilization for a new rig on the first day it goes into the field for active service. As at June 30, 2012, Eagle had a fleet of 46 service rigs having added two double service rigs in the quarter and three single service rigs into our fleet since the start of the year. Eagle's service rig fleet and equipment are among the newest in the industry. All of Eagle's service rigs are free standing mobile service rigs and are internally guyed with no requirement for external anchors. This reduces set up time and corresponding costs when compared to service rigs which require external anchors or are skid mounted. During the past nine months Eagle has deployed its first two slant rigs. Slant rig designs are optimized for use in the heavy oil and SAGD markets and our slant rigs have been well received by the customers who have put them into service. These rigs tend to work on locations with multiple well bores referred to in the industry as "pads" which can mean more hours of operation due to shorter rig moves and less impact from spring breakup conditions. Eagle's third slant rig was delivered following quarter end and went into service in July, 2012. Currently Eagle's service rig fleet consists of 47 rigs, all of which are fully crewed and operated. In addition, 3 new service rigs are currently being built, with expected delivery and deployment of one rig by September 30, 2012 and the other two before year end. This will give Eagle 50 service rigs in operation by December 31, 2012. One key challenge facing the energy services industry is staffing, particularly of field personnel. Eagle has been and continues to be able to fully crew its assets in this very tight labour market across the service industry. The trend toward increased oil-related activity continues to provide benefit for the Corporation's service rig division. Current activity levels are estimated to be in excess of 80% levered to oil, with completion, workover and abandonment activity all providing continued strong demand for the Corporation's services in the foreseeable future. Commodity prices are the main activity driver as the Corporation's customers' exploration and development programs are directly impacted by oil and natural gas prices. Oil and gas producers spend capital on new wells and service operations when they are economic within the context of current and forecasted commodity prices. Crude oil prices have continued to be strong during the first seven months of 2012. Year over year, prices for the first six months of 2012 were on par with 2011 with NYMEX crude oil averaging $US 98.21/barrel in 2012 as compared to $US 98.34/barrel in 2011. In contrast, the historically low natural gas prices in 2011 have given way to a near collapse in 2012. For the first six months of 2012 Alberta natural gas prices have averaged $2.06/GJ as compared to $3.56/GJ in the first half of 2011. This quarter's $1.74/GJ average price is the lowest in over four years and has created hardship for many of our natural gas weighted customers. In Alberta, the AECO monthly index for May settled at $1.5586, marking the lowest AECO index settlement since February 1998, a period of 14 years and three months. At these price levels, natural gas development has been focused on resource type development projects and liquids rich reservoirs as much conventional shallow gas is not economic. Service rig utilization for the second quarter was 43% in the current year as compared to 42% in the prior year quarter. The second quarter is typically our weakest quarter due to spring breakup when the frost comes out of the ground and spring rainfall makes many well sites and roads unusable by heavy equipment. Seasonality is a significant activity driver for all of our businesses as certain areas are only accessible by service rigs and other heavy equipment during winter when the ground is frozen. Activity levels in 2012 continue to be driven by horizontal drilling focussed largely on oil production. The complexity of horizontal wells typically make completion operations more time consuming and therefore impact utilization percentages. In the second quarter of 2011 crude oil prices were on an increasing trend reaching levels not seen since before the economic downturn in 2008 and 2009, oil and gas producers equity values were also increasing rapidly, and the equity markets had opened up to allow producers to raise additional equity and expand their capital programs. In short, producers were optimistic and investing in new capital projects, at least new oil or liquids rich natural gas projects. In contrast, in 2012 crude oil prices peaked in the first quarter and declined for three consecutive months in April, May and June. This declining trend in oil prices and volatility in the equity markets for oil and natural gas producers has tempered the optimism and moderated or delayed the capital spending plans of many of our customers. Considering the very strong activity levels in the last half of 2011 and the recent oil, natural gas and equity price declines, we anticipate year over year declines in demand and activity levels relative to last year as we move into the third and fourth quarters of the current year due to producers reducing their spending relative to last year. Helix Coil Services began operations in July 2011 with the deployment of two truck mounted coil tubing units, each with 2" capabilities placing the equipment in the intermediate size range. In the fourth quarter of 2011 Helix added one trailer unit with 2" capabilities, along with crane support equipment. We have not achieved the performance targets initially set for this division in 2012. Increased competition in the coiled tubing services segment of the industry is expected to continue to put pressure on this division of our business. The Corporation has taken a measured approach to the growth of this new business line, focussing on developing both the internal business processes to support this business and a customer base from which we can scale growth going forward. RENTAL SERVICES The Rental Services segment consists of the Aero Rental Services division. Aero provides rental equipment for surface pressure control in drilling and workover operations and tubular handling equipment used for the workover, re-entry and completion operations. Aero has an office in Red Deer, Alberta with equipment being rented for use primarily in Alberta. Three months ended June 30, March 31, December 31, September 30, $ 000's 2012 2012 2011 2011 Aero Rental Services: Gross margin 1,136 3,409 2,653 2,533 Book value of rental 17,866 16,099 14,641 12,887 equipment (end of period) Three months ended June 30, March 31, December 31, September 30, $ 000's 2011 2011 2010 2010 Aero Rental Services: Gross margin 826 2,793 1,739 784 Book value of rental 11,799 11,249 10,121 8,802 equipment (end of period) Aero continues to have strong absolute margin growth on a year over year basis. The trend of seasonality adjusted increases in gross margin has been driven by the increasing size of our rental asset base in each of the past eight quarters. CORPORATE SERVICES AND OTHER IROC's non-operating segment, Corporate Services and Other, captures general and administrative expenses associated with supporting each of the reporting segments operations noted above, plus costs associated with being a public company. Also included in Corporate Services is interest expense for debt servicing and income tax expense and other amounts not relating to the two main operating segments. Comparison of results from the three and six month periods ended June 30, 2012 to the same periods last year REVENUE Three months ended June 30, June 30, Change Change $ 000's 2012 2011 $ % Revenue: Drilling and Production Services 13,813 9,552 4,261 45% Rental Services 2,925 2,175 750 34% Inter-segment eliminations (48) (35) (13) 37% Total revenue 16,690 11,692 4,998 43% Six months ended June 30, June 30, Change Change $ 000's 2012 2011 $ % Revenue: Drilling and Production Services 40,778 29,230 11,548 40% Rental Services 8,778 6,994 1,784 26% Inter-segment eliminations (408) (124) (284) 229% Total revenue 49,148 36,100 13,048 36% Total revenues for the second quarter increased 43% over the prior year quarter reflecting the growth in the Corporation's service rig fleet, coil tubing units, and rental assets. Activity in both the current and prior year quarters was weaker than other quarters due to the seasonal impact of spring breakup. In both the current and prior year periods we saw relatively strong demand for the Corporation's products and services. The increase in revenues for the Drilling and Production Services segment in the current year quarter is due primarily to an increase in the number of service rig hours with utilization being 43% based on an average of 44.6 active rigs as compared to 42% based on 36 service rigs in the comparative quarter of the prior year. Also contributing to the increases on a year over year basis was increased pricing and the additional revenue from our three new coil tubing units which were put into service during the third and fourth quarters of 2011. Helix Coil Services began operations in July 2011. Currently, Helix has two truck mounted coil tubing units and one trailer mounted coil tubing unit, each with 2" coil capabilities placing the equipment in the intermediate size range. Additionally, Helix owns related crane and support equipment. Coil tubing demand was impacted more on a relative basis than demand for our service rigs due to the coil tubing division's focus being concentrated on completion and fracturing operations, which were impacted by prolonged periods of wet weather throughout the second quarter. The increase in revenue for the Rental Services segment in the current year quarter as compared to the prior year quarter is primarily due to the increase in the amount of rentable equipment in the current year as compared to the prior year. Over the past two years, Aero has more than doubled the amount of rental equipment in its inventory. This increase has provided a larger and more diverse range of rental equipment. Additionally, as we grow our rental equipment assets, proportionately less of our rental revenue is related to third party equipment rentals, reducing operating expenses as we are not required to incur third party rental fees. Crude oil and natural gas prices are activity drivers for all of our businesses as our customers make capital and operating expenditure decisions based on their revenue streams generated by selling crude oil and natural gas. NYMEX Crude oil prices in the current year quarter were weaker, averaging $US 93.49 / barrel as compared to $US 102.60 / barrel in the prior year quarter. As well, natural gas prices were weaker averaging just 49% of the prior level at $1.74 per GJ in the current year quarter as compared to $3.54 per GJ in the prior year quarter. The AECO monthly index for May 2012 settled at $1.5586, marking the lowest AECO index settlement since February 1998, a period of 14 years and three months. Low natural gas prices have significantly reduced natural gas focused activity by our customers. OPERATING COSTS AND GROSS MARGIN Three months ended June 30, June 30, Change Change $ 000's 2012 2011 $ % Operating costs: Drilling and Production Services 9,882 6,896 2,986 43% Rental Services 1,789 1,349 440 33% Inter-segment eliminations (48) (35) (13) 37% Total operating costs 11,623 8,210 3,413 42% Gross margin:(1) Drilling and Production Services 3,931 2,656 1,275 48% Rental Services 1,136 826 310 38% Total gross margin 5,067 3,482 1,585 46% Gross margin %(1): Drilling and Production Services 28% 28% - % Rental Services 39% 38% 1% Total gross margin % 30% 30% -% (1)See Non-GAAP Measures. Six months ended June 30, June 30, Change Change $ 000's 2012 2011 $ % Operating costs: Drilling and Production Services 25,872 18,878 6,994 37% Rental Services 4,233 3,375 858 25% Inter-segment eliminations (408) (124) (284) 229% Total operating costs 29,697 22,129 7,568 34% Gross margin:(1) Drilling and Production Services 14,906 10,352 4,554 44% Rental Services 4,545 3,619 926 26% Total gross margin 19,451 13,971 5,480 39% Gross margin %(1): Drilling and Production Services 37% 35% 2% Rental Services 52% 52% -% Total gross margin % 40% 39% 1% (1)See Non-GAAP Measures. In the Drilling and Production Services segment, most operating costs are variable in nature and increase or decrease with activity levels such that much of the change in operating costs in the year over year periods is due to the increases in revenues in the current year periods as compared to the prior year periods. The largest cost in this segment is service rig crew salaries and wages with most employees being hourly in nature and paid only when they are working on service rigs. In contrast to service rig crews, coil tubing crews are paid both a base salary plus an hourly wage when working. This results in the cost structure for coil tubing operations being less variable than for our service rig operations. Gross margin is calculated as revenue minus operating costs and provides a measure of cash flow available to cover all of the other costs of the business. Gross margin percentages are calculated as gross margin divided by revenue and is used by management as a measure of relative profitability. EBITDAS Three months ended June 30, June 30, Change Change $ 000's except per share amounts 2012 2011 $ % EBITDAS(1): Drilling and Production Services 3,212 2,035 1,177 58% Rental Services 867 607 260 43% Corporate and other (915) (1,000) 85 (9%) Total EBITDAS 3,164 1,642 1,522 93% EBITDAS per common share(1) - Basic $ 0.063 $ 0.033 $ 0.030 91% - Diluted $ 0.061 $ 0.033 $ 0.028 85% ((1) See Non-GAAP Measures.) Six months ended June 30, June 30, Change Change $ 000's except per share amounts 2012 2011 $ % EBITDAS(1): Drilling and Production Services 12,955 8,838 4,117 47% Rental Services 3,896 3,083 813 26% Corporate and other (1,920) (1,882) (38) 2% Total EBITDAS 14,931 10,039 4,892 49% EBITDAS per common share(1) - Basic $ 0.297 $ 0.219 $ 0.078 36% - Diluted $ 0.290 $ 0.214 $ 0.076 36% Earnings before interest, income taxes, depreciation, amortization, and stock based compensation ("EBITDAS"), is used by the Corporation as a measure of cash flow and liquidity. Positive EBITDAS provides cash needed to grow our business through the purchase of new equipment or business acquisitions, reduce outstanding bank debt, repurchase common shares, or pay dividends to our shareholders. GENERAL AND ADMINISTRATIVE EXPENSES Three months ended June 30, June 30, Change Change $ 000's 2012 2011 $ % General and administrative Drilling and Production Services 719 621 98 16% Rental Services 269 219 50 23% Corporate services and other 915 1,000 (85) (9%) Total general and administrative 1,903 1,840 63 3% Six months ended June 30, June 30, Change Change $ 000's 2012 2011 $ % General and administrative Drilling and Production Services 1,951 1,514 437 29% Rental Services 649 536 113 21% Corporate services and other 1,920 1,882 38 2% Total general and administrative 4,520 3,932 588 15% Increased year over year activity levels are the primary driver for the increase in general and administrative costs. Year over year percentage increases in revenue and EBITDAS, as highlighted in those sections of this MD&A, were larger than the percentage increases in general and administrative expenses. General and administrative expenses are a combination of fixed and variable costs. A portion of the increase in general and administrative expenses is related to the increase in EBITDAS as some employees have a component of variable compensation based on EBITDAS performance. NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE Three months ended $ 000's except share and per June 30, June 30, Change $ Change share amounts 2012 2011 or number % Net income (loss) from 145 (331) 476 (144%) continuing operations Net income from discontinued - 23 (23) (100%) operations Net income (loss) and 145 (308) 453 (147%) comprehensive income (loss) Earnings (loss) per share from continuing operations: - Basic $0.00 ($0.01) $0.01 (100%) - Diluted $0.00 ($0.01) $0.01 (100%) Weighted average common shares outstanding: - Basic 50,287,715 49,083,995 1,203,720 2% - Diluted 51,513,371 49,083,995 2,429,376 5% Six months ended $ 000's except share and per June 30, June 30, Change $ Change share amounts 2012 2011 or number % Net income from continuing 6,895 4,271 2,624 61% operations Loss from discontinued - (216) 216 (100%) operations Net income and comprehensive 6,895 4,055 2,840 70% income Earnings per share from continuing operations: - Basic $0.14 $0.09 $0.05 37% - Diluted $0.13 $0.09 $0.04 34% Weighted average common shares outstanding: - Basic 50,246,119 45,867,848 4,378,271 10% - Diluted 51,480,568 46,819,846 4,660,722 10% On April 11, 2011, the Corporation completed a short form prospectus offering of 7,200,361 common shares. This share issue is the primary reason for the increased the average number of shares outstanding during the six months ended June 30, 2012 as compared to the six months ended June 30, 2011. The diluted number of common shares is directly impacted by the trading price of the Corporation's common shares. Increased trading prices will also increase the number of diluted shares calculated for options issued under the Corporation's stock option plan. Capital Expenditures IROC's capital expenditures were as follows: Six months Three months ended ended June 30, June 30, March 31, $ 000's 2012 2012 2012 Capital expenditures: Drilling and production services 12,630 5,792 6,838 Rental services 4,845 2,908 1,937 Corporate 104 65 39 Discontinued operations - - - Total capital expenditures 17,579 8,765 8,814 Six months Three months ended ended June 30, June 30, March 31, $ 000's 2011 2011 2011 Capital expenditures: Drilling and production services 8,352 4,783 3,569 Rental services 2,385 860 1,525 Corporate 38 17 21 Discontinued operations 360 329 31 Total capital expenditures 11,135 5,989 5,146 The Corporation's strategy to organically grow its capital asset base, focused on our core businesses, has resulted in IROC having capital assets, as a whole, in new or like new condition. Our service rigs represent the largest percentage of the Corporation's overall net book value of fixed assets and they are among the newest fleet of service rigs in the industry. The Corporation has budgeted $29.4 million for capital expenditures during 2012 consisting of the following: -- $20.9-million -- for construction of eight new service rigs in the Eagle Well Servicing division (includes $4.8 million from assets which were purchased in the fourth quarter of 2011); -- $8-million -- for expansion of rental inventory assets in the Aero Rental division; -- $0.5-million -- for maintenance and infrastructure expenditures. As at June 30, 2012, the Corporation estimates $22.4 million of the $29.4 million 2012 capital budget has been spent with $7.0 million remaining to be spent. Management continuously evaluates opportunities to grow the business and will adjust or increase the capital program if the opportunities and conditions warrant. Dividends and Outstanding Share Data: The following table summarizes outstanding share data and potentially dilutive securities: August 14, 2012 Common 50,344,663 shares Stock 1,740,330 options Restricted 424,838 share units The following table summarizes dividends declared or paid since December 31, 2011: Declaration Record Date Payment Date Amount of Date Dividend per Common Share December 20, January 9, January 13, $0.025 2011 2012 2012 March 20, April 6, 2012 April 13, $0.025 2012 2012 May 23, 2012 July 6, 2012 July 13, $0.025 2012 August October 5, October 12, $0.025 14,2012 2012 2012 Outlook IROC Energy Services Corp. had a record second quarter, posting a second quarter net income for the first time in the Corporation's history. This also marked the 32(nd) consecutive quarter of positive EBITDAS, underscoring the fundamental strength of our core businesses and the ability of our assets to generate positive operating cash flow. Our ability to address the needs of our customers as they continue to expand their use of horizontal drilling and multistage fracturing technologies remains the focus of each of our operating divisions. Until recently, we expected activity levels in 2012 would be similar to those experienced in 2011. This expectation was based on oil prices in the first quarter of 2012 being the highest since 2008 and the robust capital spending programs of producers. However, NYMEX crude oil prices declined for three consecutive months during the second quarter, and Alberta oil price levels were further impacted by wider differentials, reducing the price received by our customers for their crude oil even further than the declines in the NYMEX prices. Natural gas prices also declined further in the second quarter, but since natural gas activity had already become a minor part of our business these declines have had a negligible impact on the demand for our services. As a result of these commodity price declines, and equity market volatility for oil and gas companies, we have seen capital budget reductions at many oil and gas companies and we expect demand for the last half of 2012 to fall short of the levels experienced in the last half of 2011 for most services. Despite our expectations of lower year over year industry activity levels in the second half of 2012, each of our business segments are expected to be profitable and provide positive operating cash flow and EBITDAS through the last half of the year. Our service rig division is expected to continue to be the largest contributor of revenues and profits in our company. Eagle averaged 37.3 rigs during 2011, starting the year with 36 rigs and ending with 41 rigs in the field. Eagle averaged 43.6 service rigs during the first half of 2012 with 46 rigs in service at June 30 and another 4 service rigs on track to be in service by the end of the year. We plan to average 45 rigs for calendar 2012 as compared to the 37.3 rigs in 2011, an increase of 7.7 rigs or 21%. Even with lower industry activity levels, we expect year over year growth in revenue, margin and EBITDAS for this division for the last half and full year 2012. Eagle's new equipment specifically addresses the current needs of our customers or targeted areas of operation and provides greater operating efficiency with minimal downtime. We continue to build equipment that is lighter and more adaptable to the various areas where we operate. This new and innovative equipment continues to attract both work and competent personnel, enabling Eagle to achieve high equipment utilization, a benefit to our employees and customers alike. Our rental business continues to operate very well and the demand for its products and services continues to increase as our customers exploit oil opportunities in both the application of horizontal technology, and the SAGD operating segments of the oil and gas business in Western Canada. We continue to unlock the operating leverage available to us in this division as we add more equipment with increasing revenues and margins. As industry acceptance of the new equipment and services remains strong, we anticipate being able to continue to profitably add assets in this division and are on track to meeting our budgeted $8 million in asset acquisitions for 2012, having spent $4.8 million in the first six months. Geographic expansion remains a priority focus for this business. The contribution from our new start-up coil tubing assets was positive for the first six months of 2012, but performance is lower than the targets we had set for these assets. We continue to expect some growth from our coiled tubing operations as we add additional auxiliary equipment and continue to work through the operational challenges of starting a new service line. The coiled tubing operation is very complementary to our other services and we expect it will continue to provide a positive contribution to our bottom line over the coming quarters and years. Given the continuing growth of our businesses, our ability to attract and retain personnel in a very tight labour market is critical to all of our businesses. We have been able to fully crew all of our service rigs and coil tubing units through the first half of 2012 and continue to be able to do so. Our recent and planned growth continues to make IROC an attractive employer and provides opportunities to our workforce for career advancement. We continue to have a strong balance sheet, the newest in equipment, and a talented group of employees that will allow us to continue to grow and capitalize on opportunities as they present themselves. Declaration of Quarterly Dividend The Board of Directors has declared a quarterly cash dividend of $0.025 per common share. The dividend will be payable October 12, 2012 to shareholders of record at the close of business on October 5, 2012. This dividend is an eligible dividend for Canadian income tax purposes. Conference Call and Webcast IROC will conduct a conference call on Wednesday August 15, 2012 at 9:00 a.m. MST (11:00 a.m. EST). Thomas Alford, President and CEO, and Ryan Michaluk, CFO, will both be presenting during the call. To access the conference call, contact the conference call operator at (888) 231-8191 (North America) or (647) 427-7450 (Toronto and outside North America) approximately 10 minutes prior to the call and request the "IROC Energy Services Corp. 2012 Second Quarter Results Conference Call". The call will be open to all analysts, investors and other interested parties. The conference call will also be available via webcast by visiting http://www.newswire.ca/en/webcast/detail/1008861/1090015 from a web browser. About IROC Energy Services Corporation IROC Energy Services Corp. is an Alberta oilfield services company that, through the IROC Energy Services Partnership, provides a diverse range of products, services and equipment to the oil and gas industry that are among the newest and most innovative in the WCSB. IROC Energy Services Partnership operates under the business names of Eagle Well Servicing, Aero Rental Services and Helix Coil Services. IROC combines cutting-edge technology with depth of experience to deliver a product and services offering in the following core areas: well servicing & equipment, rental services and coil tubing services. For more information on IROC Energy Services Corp., visit our website at www.iroccorp.com. Cautionary Statement Regarding Forward Looking Information and Statements Certain information contained in this news release, including information related to the completion and timing of the construction, delivery and deployment of IROC's new service rigs and new coiled tubing units, the expected demand for our services, the Corporation's planned capital expenditures and growth opportunities, outlook for future oil and gas prices, cyclical industry fundamentals, drilling, completion, work over and abandonment activity levels, the Corporation's ability to fund future obligations and capital expenditures, and information or statements that contain words such as "could", "should", "can", "anticipate", "expect", "believe", "will", "may", "likely", "estimate", "predict", "potential", "continue", "maintain", "retain", "grow", and similar expressions and statements relating to matters that are not historical facts, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation. This information or these statements are based on certain assumptions and analysis made by the Corporation in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. In particular, the Corporation's expectation of uncertain demand and prices for oil and natural gas and the resulting future industry activity, is premised on the Corporation's understanding of customers' capital budgets and their ability to access capital, the focus of its customers on deeper and horizontal drilling opportunities in the current natural gas pricing environment, and the continuing impact of the recent global financial crisis and the current economic recovery all of which affects the demand for oil and gas. Whether actual results, performance or achievements will conform to the Corporation's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from the Corporation's expectations. Such risks and uncertainties include, but are not limited to: fluctuations in the price and demand for oil and natural gas; fluctuations in the level of oil and natural gas exploration and development activities; the lack of availability of qualified personnel or management; fluctuations in the demand for well servicing; the effects of weather conditions on operations and facilities; the existence of competitive operating risks inherent in well servicing; general economic, market or business conditions; changes in laws or regulations, including taxation, environmental and currency regulations; the other risk factors set forth under the heading "Risks" in the annual MD&A for the year ended December 31, 2011 and other unforeseen conditions which could impact on the use of services supplied by the Corporation. Consequently, all of the forward-looking information and statements made in this news release are qualified by this cautionary statement and there can be no assurance that the actual results or developments anticipated by the Corporation will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Corporation or its business or operations. Except as may be required by law, the Corporation assumes no obligation to update publicly any such forward-looking information and statements, whether as a result of new information, future events, or otherwise. This press release is not for dissemination in United States or to any United States news services. The Common Shares of IROC have not and will not be registered on the United States Securities Act of 1933, as amended (the "United States Securities Act") or any state securities laws and are not offered or sold in the United States or to any US person except in certain transactions exempt from the registration requirements of the United States Securities Act and applicable state securities laws. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. Non-GAAP Measures The financial statements have been prepared in accordance with IFRS. Certain supplementary information and measures not recognized under IFRS are provided where Management believes they assist the reader in understanding IROC's results. These measures include: 1. EBITDAS and EBITDAS per share- EBITDAS is defined as earnings before interest, taxes, depreciation and amortization, stock-based compensation expense, foreign exchange gains and losses, goodwill impairment, note receivable impairment, and gains or losses on disposal of property and equipment. EBITDAS and EBITDAS per share are not recognized measures under GAAP or IFRS. The Corporation believes that EBITDAS is provided as a measure of operating performance without reference to financing decisions, income tax impacts and non-cash expenses, which are not controlled at the operating management level. Accordingly, the Corporation believes EBITDAS is a useful measure for prospective investors in evaluating the financial performance of the Corporation, and specifically, the ability of the Corporation to service the interest on its indebtedness. Investors should be cautioned that EBITDAS should not be construed as an alternative to net income determined in accordance with IFRS as an indicator of the Corporation's performance. IROC's method of calculating EBITDAS may differ from those of other companies, and accordingly, EBITDAS may not be directly comparable to measures used by other companies. EBITDAS % is calculated as EBITDAS divided by revenue. 2. Gross margin is defined as revenue less operating expenses. Gross margin % is defined as gross margin divided by revenue. The Company believes that gross margin and gross margin % are useful measures which provide an indicator of the Corporation's fundamental ability to make money on the products and services it sells. The Corporation believes the relationship between revenues and costs expressed by the gross margin % is a useful measure when compared between different financial periods as it demonstrates the trending relationship between revenues, costs and margins. Gross margin and gross margin % are not recognized measures of IFRS and do not have any standardized meaning prescribed by IFRS. IROC's method of calculating gross margin and gross margin % may differ from those of other companies, and accordingly, may not be directly comparable to measures used by other companies. The following is a reconciliation of EBITDAS and EBITDAS per share to net income from continuing operations: Six months ended Three months ended $ 000's except June 30, March 31, December 31, September 30, number of 2012 2012 2011 2011 shares and per June 30, share amounts 2012 Net income 6,895 145 6,750 4,778 4,330 from continuing operations Depreciation 4,938 2,546 2,392 2,111 1,920 and amortization Loss (gain) on 4 10 (6) (1) 23 foreign exchange Stock based 313 168 145 167 169 compensation expense Loss (gain) on (28) (8) (20) (8) 7 disposal of equipment Interest and 349 168 181 163 164 financing costs Income taxes: Current - (1,185) 1,185 - - Deferred 2,460 1,320 1,140 1,432 1,619 EBITDAS - 14,931 3,164 11,767 8,642 8,232 continuing operations EBITDAS per share - continuing operations Basic $0.30 $0.06 $0.23 $0.18 $0.16 Diluted $0.29 $0.06 $0.23 $0.18 $0.16 Six months ended Three months ended $ 000's except number of shares and per June 30, June 30, March 31, December 31, September 30, share amounts 2011 2011 2011 2010 2010 Net income 4,271 (331) 4,602 2,703 1,068 (loss) from continuing operations Depreciation 3,365 1,715 1,650 1,857 1,755 and amortization Loss (gain) on 8 8 - - (2) foreign exchange Stock based 268 115 153 105 82 compensation expense Loss (gain) on (18) 7 (25) (17) (24) disposal of equipment Interest and 476 190 286 305 304 financing costs Note - - - - (300) receivable recovery Income taxes: Current - - - - - Deferred 1,669 (62) 1,731 367 414 EBITDAS - 10,039 1,642 8,397 5,320 3,297 continuing operations EBITDAS per share - continuing operations Basic $0.20 $0.03 $0.20 $0.12 $0.08 Diluted $0.20 $0.03 $0.19 $0.12 0.08 IROC Energy Services Corp. CONTACT: IROC Energy Services Corp.Mr. Thomas M. Alford, President and CEO,Telephone: (403) 263-1110Email: investorrelations@iroccorp.com orMr. Ryan A. Michaluk, Chief Financial OfficerTelephone: (403) 263-1110Email: investorrelations@iroccorp.com

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ISC Iroc Energy Services Corp.