Leader Energy Services Reports Second Quarter 2012 Results

Leader Energy Services Ltd. ("Leader" or the "Company") (TSX VENTURE:LEA) has
released its financial and operating results for the three and six month periods
ended June 30, 2012.




Performance Summary                                                         
(000's) (Unaudited)                                                         
                                   -----------------------------------------
                                     June 30,  June 30,                     
Quarter ended                           2012      2011  $ Change  % Change  
                                   -----------------------------------------
                                                                            
Revenue - continuing operations       $2,330    $2,920     $(590)      (20)%
Operating Expenses - continuing                                             
 operations                            4,173     3,856       317         8% 
                                   -----------------------------------------
                                      (1,843)     (936)     (907)      n/a  
General and Administrative -                                                
 continuing operations                 1,115     1,183       (68)       (6)%
Amortization - continuing                                                   
 operations                              828       635       193        30% 
Finance cost                             610       859      (249)      (29)%
Loss on settlement of loans and                                             
 borrowings                              762         -       762       n/a  
Other (gains) losses                     (49)       37       (86)      n/a  
                                   -----------------------------------------
Loss - continuing operations          (5,109)   (3,650)   (1,459)      n/a  
                                   -----------------------------------------
Income - discontinued operations           -        15       (15)      n/a  
                                   -----------------------------------------
Net loss                             $(5,109)  $(3,635)  $(1,474)      n/a  
                                   -----------------------------------------
Loss per share - Basic                $(0.17)   $(0.19)   $(0.02)      n/a  
Loss per share - Diluted              $(0.17)   $(0.19)   $(0.02)      n/a  
                                                                            
EBITDA(i)                            $(2,937)  $(2,056)    $(881)      n/a  
                                   -----------------------------------------
                                                                            
                                                                            
                                   -----------------------------------------
                                     June 30,  June 30,                     
6 months ended                          2012      2011  $ Change  % Change  
                                   -----------------------------------------
                                                                            
Revenue - continuing operations      $13,402   $13,058      $344         3% 
Operating Expenses - continuing                                             
 operations                           10,893     8,987     1,906        21% 
                                   -----------------------------------------
                                       2,509     4,071    (1,562)      (38)%
General and Administrative -                                                
 continuing operations                 2,393     2,241       152         7% 
Amortization - continuing                                                   
 operations                            1,538     1,224       314        26% 
Finance cost                           1,489     1,634      (145)       (9)%
Loss on settlement of loans and                                             
 borrowings                            1,338     1,401       (63)       (4)%
Other gains                              (77)      (54)      (23)      n/a  
                                   -----------------------------------------
Loss - continuing operations          (4,172)   (2,375)   (1,797)      n/a  
                                   -----------------------------------------
Income - discontinued operations           -        31       (31)      n/a  
                                   -----------------------------------------
Net loss                             $(4,172)  $(2,344)  $(1,828)      n/a  
                                   -----------------------------------------
Loss per share - Basic                $(0.17)   $(0.12)   $(0.05)      n/a  
Loss per share - Diluted              $(0.17)   $(0.12)   $(0.05)      n/a  
                                                                            
EBITDA(i)                               $168    $1,941   $(1,773)      (91)%
                                   -----------------------------------------
                                                                            
(i) EBITDA means loss from continuing operations before finance costs, loss 
    on settlement of loans and borrowings, taxes, amortization, other       
    (gains) losses, and share based compensation. Readers are cautioned that
    EBITDA is generally regarded as an indirect measure of operating cash   
    flow, and, as such, the Company believes it is a significant indicator  
    of success of public companies, and is particularly relevant to readers 
    within the investment community. EBITDA is not a measure that has a     
    standardized meaning and accordingly may not be comparable to similar   
    measures used by other companies.                                       



Overview

In the second quarter of 2012 revenues were $2.3 million, a $0.6 million
reduction from the second quarter of 2011. On a year-to-date basis, revenues
increased to $13.4 million as compared to $13.1 million reported for the six
month period in 2011. Activity in the second quarter was severely constrained by
a prolonged spring break-up and extremely wet weather conditions delaying the
completion of work in the quarter. In addition, the reduction in stand-alone
nitrogen work had a negative effect on revenue in the quarter. For the six month
period, the 3% increase in revenue reflects the increase in horizontal drilling
activity requiring deeper and larger diameter coil which translates to higher
day rates. The Company has continued to focus its service activities to meet the
demands of the growing horizontal drilling market and has increased its
operational focus to cover a larger area within the Western Canadian Sedimentary
Basin ("WCSB").


In the second quarter of 2012, the Company reported a loss from continuing
operations of $5.1 million as compared to a loss of $3.7 million in the second
quarter of 2011. During the second quarter, the Company experienced a reduction
in field activity due to spring break-up and weather related delays, along with
higher operating costs. To prepare operations for an expected increase in
activity in the latter half of 2012, the Company, where possible, retained
qualified field personnel during spring break-up, took advantage of
opportunities to hire additional field and mechanical personnel and performed
maintenance on its key equipment. On a year-to-date basis, the Company reported
a loss from continuing operations of $4.2 million as compared to a loss from
continuing operations of $2.4 million in the six month period ended June 30,
2011.


On March 27, 2012, the Company completed its bought deal equity financing for
gross proceeds of $6,853,000 representing the issue of 9,790,000 common shares
of the Company at $0.70 per share, including 1,218,000 common shares pursuant to
the partial exercise of an over-allotment option. After deducting underwriter
fees and transaction costs, net proceeds from the equity financing were $6.1
million. On April 4, 2012, the Company repaid $6.1 million of the outstanding
$15 million balance to the holder of its secured debt facility.


On June 14, 2012, the Company entered into new credit facilities with a Canadian
chartered bank. The credit facilities include a new demand revolving facility of
up to $5 million, a three year committed non- revolving term loan of up to $9.0
million amortized over 60 months with provision to extend for two additional one
year terms subject to lender approval, and a demand revolving reducing capital
expenditure loan of up to $2.0 million. These credit facilities contemplate
interest at prime plus 1.25% and are subject to normal and customary terms and
coverage ratios including working capital, tangible net worth, debt to EBITDA
and fixed charge coverage ratios. As a result of entering into these facilities,
Leader made an $8.9 million payment to retire its 12% secured debt facility and
transferred its $5.0 million demand revolving facility to its new lender.




Results of Continuing Operations                                            
                                                                            
Well Stimulation Services (000's) (Unaudited)                               
                                                                            
                                    ----------------------------------------
                                      June 30,  June 30,                    
Quarter ended                            2012      2011  $ Change % Change  
                                    ----------------------------------------
                                                                            
Revenue                                $2,330    $2,920     $(590)     (20)%
Operating Expenses                      4,173     3,856       317        8% 
                                    ----------------------------------------
Gross profit(i)                       $(1,843)    $(936)    $(907)     n/a  
                                                                            
                                    ----------------------------------------
                                      June 30,  June 30,                    
Six months ended                         2012      2011  $ Change % Change  
                                    ----------------------------------------
                                                                            
Revenue                               $13,402   $13,058      $344        3% 
Operating Expenses                     10,893     8,987     1,906       21% 
                                    ----------------------------------------
Gross profit(i)                        $2,509    $4,071   $(1,562)     (38)%
                                                                            
(i) Management believes that gross profit provides investors with an        
    indication of income before administrative costs, amortization, finance 
    costs, taxes and other. Readers are cautioned that gross profit should  
    not be considered as an alternative to income determined in accordance  
    with International Financial Reporting Standards ("IFRS") as an         
    indicator of the Company's performance.                                 



Revenues from well stimulation services decreased 20% in the second quarter of
2012 as compared to the second quarter of 2011. On a year-to-date basis, revenue
increased 3% to $13.4 million.


As a result of the typical seasonality in the oil and gas industry in western
Canada, the Company experienced reduced activity in mid-March which carried
forward throughout the second quarter of 2012. Historically, the second quarter
represents the lowest level of activity in the calendar year due to spring
break-up. The wet spring and early summer weather combined with the thawing of
ground frost renders many roads incapable of supporting the weight of heavy
equipment. As a result, operators are subject to road bans which restrict the
ability to access well sites. In the second quarter of 2012, the Company
experienced a prolonged spring break-up due to rain in western Canada which
delayed the completion of work scheduled during the quarter. This reduction in
activity resulted in lower than expected equipment utilization across the
industry which had the effect of increasing competition for available work. In
addition, the Company experienced a reduction in the number of nitrogen jobs
performed in the quarter as compared to the second quarter of 2011. This
decrease is attributed to the reduction in stand-alone nitrogen work caused by
customers reducing activity on gas wells.


For the six month period ended June 30, 2012, revenue increased $0.3 million to
$13.4 million. This increase in revenue is mainly attributed to the continued
demand for deeper, larger diameter coil equipment applicable to the horizontal
drilling market in north-central Alberta and northeast British Columbia,
particularly in the first quarter of 2012. This concentration on larger diameter
deep coil work focuses on oil and liquids-rich resource plays, and has resulted
in higher day rates being charged by the Company. These higher revenues reported
in the first quarter were partially offset by an increase in equipment standby
at lower day rates as a result of an industry-wide shortage of class three 2"
and 2 3/8" coiled tubing units. As a result of this shortage in the first
quarter, customers requested equipment stay on location at lower standby rates
in anticipation of further work at these locations, forcing the Company to delay
upcoming jobs and in some circumstances turn down potential projects while this
equipment was deployed. Increases in revenue reported in the first quarter of
2012 as compared to the same period in 2011 were substantially reversed in the
second quarter due to a prolonged spring break-up and wet weather in the WCSB
resulting in lower than expected equipment utilization across the industry which
had the effect of increasing competition for available work. Activity was also
affected as customers evaluated their capital expenditure spending in light of
current commodity price fluctuations. In addition, the Company experienced a
reduction in the number of stand-alone nitrogen jobs particularly in the second
quarter.


The Company exited the quarter with six coil units plus one reel trailer with 2
3/8" coil, seven nitrogen pumpers and three fluid pumpers.


Operating costs totaled $4.2 million during the second quarter of 2012 compared
to $3.9 million during the comparable period in 2011. During the current
quarter, the Company retained its qualified field personnel through spring
break-up and took advantage of opportunities to hire additional mechanics and
field personnel, particularly fluid pumper personnel to run equipment added to
the fleet late in the first quarter of 2012. Over the past few years, the
biggest challenge facing the Company has been the ability to hire enough
qualified personnel to operate the equipment in the field. In response to this
challenge, the Company has been successful in hiring personnel from both within
and outside western Canada. In addition to the above, the wet weather and
extended road bans experienced during the second quarter resulted in the Company
renting additional trailers to redistribute weight of its equipment to ensure
that it complied with road ban and published weight restrictions. These
modifications reduce operational efficiency due to an increase in personnel
traveling to location, higher fuel costs due to an increase in the number of
tractors transporting equipment to location, and varying travel times, resulting
in higher daily costs for lodging and field pay such as day rates and
subsistence. The Company also incurred additional training of personnel during
spring break-up and repair and maintenance costs to prepare the equipment for an
expected increase in activity in the second half of 2012.


For the six month period ended June 30, 2012, the Company reported operating
costs of $10.9 million as compared to $9.0 million in the six month period ended
June 30, 2011. Operating costs for the first six months increased 21% over the
same period in 2011 reflecting the increased costs incurred in the second
quarter to hire additional qualified field staff to operate equipment added to
the fleet, the repair and maintenance of equipment in anticipation of increased
activity in the second half of 2012, the inefficiencies caused by weight
re-distribution during spring break-up, and the reliance on third party
transportation services in the first quarter of 2012. As stated previously, the
Company has taken delivery of additional equipment in April 2012 to reduce the
reliance on third party transportation on a go-forward basis.


Outlook

The recent volatility in commodity prices has reduced drilling, well licensing
and completion activities in Alberta. In an environment of continued commodity
price volatility, many customers may choose to further reduce or delay capital
expenditures. Although the summer has continued to be fairly wet in central and
northern Alberta, Leader expects activity levels to increase consistently during
the course of the third quarter, heading into the busy winter drilling season.
The Company expects some compression of its operating margins relative to the
first quarter of 2012, due to an increase in competing coiled tubing units and
recently announced reductions in customers' budgets. Although there is some
near-term uncertainty facing industry activity levels, the Company is confident
of the direction the Company is headed. Leader remains focused on operational
excellence, growing its client base, increasing profitability and reducing debt.


Other

Additional information can be found on SEDAR at www.sedar.com or the Company web
site at www.leaderenergy.com. The number of common shares issued and outstanding
at the date hereof was 29,378,021 which does not include 1,636,000 unexercised
stock options and 4,250,000 share purchase warrants.


Forward-looking information

This press release contains certain statements or disclosures relating to the
Company that are based on the expectations of the Company as well as assumptions
made by and information currently available to the Company which may constitute
forward-looking information under applicable securities laws. All such
statements and disclosures, other than those of historical fact, which address
activities, events, outcomes, results or developments that the Company
anticipates or expects may, or will occur in the future (in whole or in part)
should be considered forward-looking information.