Leader Energy Services Reports Second Quarter 2013 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, 2013. 




Performance Summary                                                         
(000's) (unaudited)                                                         
                                  ------------------------------------------
                                     June 30,   June 30,          $        %
Quarter ended                            2013       2012     Change   Change
                                  ------------------------------------------
                                                                            
 Revenue                           $    2,673 $    2,330 $      343      15%
 Operating Expenses                     3,137      4,173    (1,036)    (25)%
                                  ------------------------------------------
                                        (464)    (1,843)      1,379      n/a
 General and Administrative               989      1,115      (126)    (11)%
 Amortization                           1,002        828        174      21%
 Finance cost                             829        610        219      36%
 Loss on settlement of loans and                                            
  borrowings                                -        762      (762)      n/a
 Other losses (gains)                       1       (49)         50      n/a
                                  ------------------------------------------
 Net loss                          $  (3,285) $  (5,109) $    1,824      n/a
                                  ------------------------------------------
                                  ------------------------------------------
 Loss per share - Basic            $   (0.11) $   (0.17) $     0.06      n/a
 Loss per share - Diluted          $   (0.11) $   (0.17) $     0.06      n/a
 EBITDA(i)                         $  (1,426) $  (2,937) $    1,511      n/a
                                  ------------------------------------------
                                  ------------------------------------------
                                                                            
                                  ------------------------------------------
                                     June 30,   June 30,          $        %
6 months ended                           2013       2012     Change   Change
                                  ------------------------------------------
                                                                            
 Revenue                           $   10,940 $   13,402 $  (2,462)    (18)%
 Operating Expenses                     8,756     10,893    (2,137)    (20)%
                                  ------------------------------------------
                                        2,184      2,509      (325)    (13)%
 General and Administrative             2,000      2,393      (393)    (16)%
 Amortization                           1,993      1,538        455      30%
 Finance cost                           2,019      1,489        530      36%
 Loss on settlement of loans and                                            
  borrowings                              233      1,338    (1,105)    (83)%
 Other losses (gains)                      60       (77)        137      n/a
                                  ------------------------------------------
 Net loss                          $  (4,121) $  (4,172) $       51      n/a
                                  ------------------------------------------
                                  ------------------------------------------
 Loss per share - Basic            $   (0.14) $   (0.17) $     0.03      n/a
 Loss per share - Diluted          $   (0.14) $   (0.17) $     0.03      n/a
 EBITDA(i)                         $      243 $      168 $       75      45%
                                  ------------------------------------------
                                  ------------------------------------------



(i) EBITDA means income before finance costs, loss on settlement of loans and
borrowings, taxes, amortization, other losses (gains), and share based payments.
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.


Revenues from well stimulation services increased 15% to $2.7 million in the
second quarter of 2013 as compared to $2.3 million reported in the second
quarter of 2012. Like prior second quarters, the Company was affected by the
typical seasonality in the oil and gas industry in western Canada. 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. Despite the effects of spring
break-up and the June flood in southern Alberta, the Company was able to
generate a 15% increase in revenue as compared to the second quarter of 2012.
This increase is attributed to the completion of some large deep coil jobs
during the second quarter which kept all services active while these jobs were
in process combined with an increase in the utilization of nitrogen pumpers.
During the second quarter, the number of nitrogen jobs completed by the Company
increased by 30% including some stand-alone nitrogen jobs where the Company was
required to supply significant volumes of nitrogen having a positive effect on
reported revenue. 


For the six month period ended June 30, 2013, revenue decreased by $2.5 million
to $10.9 million. Despite the 15% increase in second quarter revenue as
discussed above, the Company reported a 25% decrease in revenue in the first
quarter of 2013 which accounted for the shortfall in the first six months of
2013. The first quarter decrease is mainly attributed to a slow start to winter
drilling activity, a small reduction in average pricing for Leader's services on
a per job basis, the continued effect of equipment on standby, and the
availability of personnel to operate the equipment at certain times during the
first quarter. After the slow start in January and early February, activity
improved significantly in the last six weeks of the first quarter with Leader
remaining active through until the end of March. Although, Leader performed
fewer jobs in the first quarter as compared to 2012, a higher percentage of work
required the Company to supply equipment to complete full service deep coiled
tubing jobs utilizing 2" and 2 3/8" coiled tubing units, nitrogen units and
fluid pumpers. Based on this activity in the quarter, the Company continued to
see demand for deeper, larger diameter coil equipment applicable to the
horizontal drilling market where the Company concentrates its operations in
north-central Alberta and northeast British Columbia. In addition to fewer jobs
performed in the quarter, another factor contributing to lower revenues in the
first quarter was the increase in work performed in geographic areas where
pricing for services is historically lower than other areas within the WCSB. As
a result of lower prices charged in these areas, increased competition for
available work due to the slow start in the quarter, and the mix of jobs
performed in the quarter, the Company experienced a small reduction in average
pricing on a per job basis as compared to the first quarter of 2012. In addition
to the above, changes in customer timing resulted in the Company continuing to
experience situations where its equipment was deployed at lower standby rates
waiting for work to commence. In these situations and when the demand for
services was at its highest, the Company was periodically short of qualified
personnel due to regular scheduled days off. At times, this forced the Company
to delay upcoming work and in some circumstances turn down potential jobs while
equipment and personnel were not available.


During the first six months of 2013, the Company's fleet consisted of six coiled
tubing units plus one reel trailer capable of 2-3/8" deep coil applications,
seven nitrogen pumpers and three fluid pumpers. Three of the coiled tubing units
and one reel trailer are classified as "deep" coil units. The Company has the
equipment capable of running up to six coiled tubing jobs concurrently.


Operating costs in the second quarter of 2013 totaled $3.1 million as compared
to $4.2 million for the second quarter of 2012. During the second quarter, the
Company has reduced its operating costs by $1.0 million while increasing its
revenue by $0.3 million. During the quarter, the Company has realized savings in
repair and maintenance, third party charges, field pay, fuel, lodging and wages.
These savings were partially offset by higher nitrogen and chemical costs as a
result of a higher level of activity in the field for nitrogen and fluid pumping
services. As a result of lower activity levels during spring break-up, the
Company takes the opportunity to perform routine repair and maintenance on its
equipment. In the second quarter of 2013, the Company realized savings in repair
and maintenance as compared to the second quarter of 2012 due to a substantial
reduction in third party personnel utilized to assist with certain maintenance
issues. Having hired and developed much of this expertise in house has assisted
Leader in reducing its maintenance costs in the current period. Like 2012 and
other second quarters, the wet weather and road bans result in the Company
renting additional trailers to redistribute the weight of its equipment to
comply with road ban and published weight restrictions. These modifications tend
to reduce operational efficiency due to an increase in personnel travelling 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.
As a result of the Company operating a number of longer full service jobs during
the quarter, the Company was able to limit these inefficiencies as equipment
remained at a single location for an extended period of time reducing its costs
accordingly. In conjunction with the cost reduction initiatives implemented in
the fourth quarter of 2012 and further reductions during spring break-up, the
Company has maintained a smaller, but more experienced operations group in 2013
as compared to 2012 resulting in further cost savings.


For the six month period ended June 30, 2013, the Company reported operating
costs of $8.8 million as compared to $10.9 million for the six month period
ended June 30, 2012. In this six month period, the Company has experienced a 3%
decrease in variable costs as a percentage of revenue as compared to the same
period in 2012. Savings in repair and maintenance and third party equipment
rentals and transportation charges noted above, partially offset by higher
coiled tubing charges resulting from the Company utilizing a higher percentage
of larger diameter coiled tubing which is more expensive than smaller diameter
coiled tubing, higher fuel costs due to an increase in equipment on location
(with the addition of fluid pumpers added to the fleet and support trailers
utilized on the deep coil jobs) and higher field compensation rates accounted
for the decrease in variable costs. As a result of cost reduction initiatives
implemented in late 2012 and to coincide with spring break-up, the Company also
saved $0.6 million in operational wages in the first six months of 2013.


For the three months ended June 30, 2013, the Company reported a net loss of
$3.3 million ($0.11 per basic and diluted share) compared to a loss of $5.1
million ($0.17 per basic share and diluted share) for the three months ended
June 30, 2012. A significant contributor to the reduced loss during spring
break-up was the $0.3 million increase in revenue combined with a $1.0 million
reduction in operating costs. For the six month period ended June 30, 2013, the
Company reported a loss of $4.1 million as compared to a loss of $4.2 million
for the comparative period in 2012.


Outlook

Wet weather including flooding in Alberta in late June had the effect of
extending spring breakup into the third quarter. Although second quarter revenue
increased relative to the comparable period last year, inclement weather
postponed some activity, however this activity is expected to be recovered in
the remainder of the year. Resulting competitive pressures highlight the
importance of managing corporate and operating costs, and the Company has
continued its efforts in this regard. During the third quarter, the Company
continues to establish formal relationships with large customers. The Company
expects solid demand for its services during the winter season.


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 is 29,388,021 which does not include 2,608,000 unexercised
stock options and 4,400,000 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.


Neither the 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 news release.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Leader Energy Services Ltd.
Rod Hauser
President & CEO
[phone]
[e-mail]


Leader Energy Services Ltd.
Jason Krueger, CFA
Executive VP & Director
[phone]
[e-mail]


Leader Energy Services Ltd.
Graham Reid, CA
VP Finance & CFO
[phone]
[e-mail]
www.leaderenergy.com