Tesla Reports 2012 Annual and Fourth Quarter Results

Tesla Exploration Ltd. (TSX:TXL) ("Tesla" or the "Company") today announces its
2012 annual and fourth quarter operating and financial results.




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(000s, except per                                                           
 share data)        Three months ended                   Year Ended         
(unaudited)                December 31                  December 31         
                        2012      2011   Change      2012      2011  Change 
                           $         $        %         $         $       % 
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Revenue               41,750    62,319      (33)  191,686   225,450     (15)
Revenue excluding                                                           
 reimbursables        36,479    48,559      (25)  163,218   162,107       1 
Gross margin (1)      11,806    11,691        1    51,866    39,761      30 
 As a % of revenue                                                          
  excluding                                                                 
  reimbursables           32%       24%                32%      25%         
Net earnings (loss)     (566)      719      n/m     5,535       576     861 
 Per share - basic     (0.02)     0.03      n/m      0.24      0.03     863 
EBITDA (2)             6,125     7,486      (18)   31,745    23,923      33 
 Per share - basic      0.27      0.33      (18)     1.40      1.05      33 
Cash flow from                                                              
 operations (3)        5,672     5,933       (4)   30,802    22,277      38 
 Per share - basic      0.25      0.26       (4)     1.36      0.98      39 
Weighted average                                                            
 shares outstanding                                                         
 for the year -                                                             
 basic                22,739    22,793      n/m    22,728    22,794     n/m 
Capital                                                                     
 expenditures          5,190     4,642       12    28,857    12,877     124 
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As at                                            December  December         
                                                       31        31         
                                                     2012      2011  Change 
                                                        $         $        %
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Working capital                                     3,330    10,411     (68)
Total assets                                      129,443   141,088      (8)
Total long-term                                                             
 borrowings (4)                                    22,185    29,073     (24)
Equity                                             63,374    57,993       9 
                                                                            
(1) Gross margin is defined as gross profit before depreciation and         
    amortization. Gross margin is a measure that does not have a meaning    
    prescribed under IFRS in Canada and accordingly, may not be comparable  
    to similar measures used by other companies.                            
(2) EBITDA is defined as income before interest, taxes, depreciation,       
    amortization and impairments, gains or losses on foreign exchange, gains
    or losses on sales of capital assets, bad debt provisions and stock-    
    based compensation. EBITDA and EBITDA per share are presented because   
    they are frequently used by securities analysts and others for          
    evaluating companies and their ability to service debt. EBITDA is a     
    measure that does not have any standardized meaning prescribed under    
    IFRS in Canada and accordingly, may not be comparable to similar        
    measures used by other companies. The Company is consistent with its    
    calculation of EBITDA year over year.                                   
(3) Cash flow from operations is defined as "Cash provided by operating     
    activities before changes in non-cash working capital." Cash flow from  
    operations and cash flow from operations per share are measures that    
    provide shareholders and potential investors with additional information
    regarding the Company's liquidity and its ability to generate funds to  
    finance its operations. Management utilizes these measures to assess the
    Company's ability to finance operating activities and capital           
    expenditures. Cash flow from operations and cash flow from operations   
    per share are not measures that have any standardized meaning prescribed
    by IFRS in Canada, and accordingly, may not be comparable to similar    
    measures used by other companies. The Company is consistent with its    
    calculation of cash flow from operations year over year.                
(4) Includes capital lease obligations and long-term debt, including current
    portions.                                                               



2012 Highlights:



--  Tesla generated $31.7 million of EBITDA(2) and $5.5 million of net
    income on $191.7 million of revenues in 2012, a marked improvement over
    $23.9 million of EBITDA(2) and $0.6 million of net income on $225.4
    million of revenues in 2011. 
    
--  Tesla's gross margin (1) of $51.9 million (32% of revenues excluding
    reimbursables) in 2012 was a significant improvement compared to $39.8
    million (25%) in 2011. 
    
--  Tesla Canada peaked at nine crews and operated over 100,000 channels
    during the seasonally strong first quarter of 2012 almost all of which
    was on three-dimensional ("3D") and three-component ("3C") programs.
    Canadian operations utilized 23,000 stations (69,000 channels) of 3C
    recording equipment, including 13,000 stations (39,000 channels) owned
    by the Company. 
    
--  The Company entered into an extended seismic services agreement (the
    "Agreement") with a multi-client geophysical company for an initial 24
    month period. In connection with the Agreement, the Company purchased
    10,000 stations of a wireless multi-component seismic acquisition system
    ("Hawk") and auxiliary equipment at a cost of approximately $18.0
    million. 
    
--  Tesla USA successfully utilized the Hawk system throughout the second
    half of 2012 under the Agreement before mobilizing the system to Canada
    for a project during the first quarter of 2013. 
    
--  Tesla Trinidad successfully completed the year-long Guayaguayare project
    in Trinidad in the second quarter of 2012. Additionally, Tesla
    incorporated a new subsidiary, Tesla Exploration Colombia S.A.S. ("Tesla
    Colombia") in early 2013 further expanding the Company's geographical
    footprint in the region. 
    
--  Tesla Offshore significantly improved revenues from the comparative year
    benefitting from work on up to four geophysical vessels, most of which
    was on large scale day rate projects during the second half of the year.
    This supplemented the historically strong summer construction season
    supporting client operations on up to 12 vessels. 
    
--  Tesla Offshore expanded its operations outside of the Gulf of Mexico,
    its historical operating area, with special projects in Alaska,
    Trinidad, Israel, Argentina and other international locations. 
    
--  The Company approved a $6 million capital expenditure to acquire a
    Bluefin Autonomous Underwater Vehicle ("AUV") which is expected to be
    operational by September 2013. Tesla Offshore hired several experienced
    personnel to manage the AUV service line and develop international
    markets. 
    
--  Tesla International operated a crew in the UK and Europe throughout 2012
    on hydrocarbon and mineral projects. 
    
--  Tesla International secured land and marine projects in Tanzania and the
    Democratic Republic of the Congo ("DRC") that will operate into May
    2013.Tesla International also strengthened its backlog with a contract
    to provide two crews on a day rate basis in Somaliland for a minimum of
    200 operating days beginning in April of 2013. 
    
--  The Company hired and appointed Rob Kendall to lead Tesla's Research and
    Special Projects group focusing on micro-seismic and fibre optic
    applications. 



Fourth Quarter Financial Results:

Despite a decline in revenues, gross margin grew slightly in the fourth quarter
of 2012 compared to the fourth quarter of 2011. The Company's consolidated
revenues including reimbursables decreased 33% in the fourth quarter of 2012
compared to the fourth quarter of 2011 while the Company's revenue excluding
reimbursables decreased 25%. Improvements in activity levels for Tesla Canada
and Tesla Offshore were more than offset by declines in activity levels for
Tesla USA, Tesla International and Tesla Trinidad. The Company had improvements
in gross margin from Tesla Canada, Tesla USA and Tesla Offshore which more than
offset the decline in Tesla International's gross margin. Gross margin as a
percentage of total revenue (including reimbursables) increased to 28% in the
fourth quarter of 2012 from 19% in the fourth quarter of 2011 due mainly to the
improvement in Tesla USA's operations including the significant decrease in
flow-through reimbursables associated with Tesla USA's revenues. Gross margin as
a percentage of revenue (excluding reimbursables) improved to 32% in the fourth
quarter of 2012 compared to 24% in the fourth quarter of 2011 as improvements in
Tesla USA's operations and a reduced weighting of Tesla Trinidad's low margin
front-end operations more than offset slight declines for Tesla Canada, Tesla
Offshore and Tesla International.


Tesla Canada's revenues improved with an earlier start to winter than the prior
year. There were seven crews operating in November 2012, whereas in 2011, Tesla
Canada didn't have seven crews operating until December. There was growth in
both two-dimensional ("2D") and 3D activity days and similar utilization of
Tesla's 3C equipment. Tesla Canada's gross margin benefitted from the increased
operating revenues.


Tesla USA's activity declined significantly operating two crews early in the
fourth quarter of 2012 including one crew utilizing the Company's Hawk system
for a 2D project compared to the operation of three crews continuously
throughout the fourth quarter of 2011 on large 3D programs requiring increased
levels of equipment and personnel. The Hawk system was put on retainer for part
of the quarter under an extended seismic services agreement with a multi-client
geophysical company before being moved to Canada for the peak winter season.
This decreased activity also led to a corresponding decrease in third-party
contractor revenues. Tesla USA's margins improved despite the slight drop in
revenues. Margins benefitted from the utilization of the Hawk system, related
retainer payments and a significant reduction in rental costs.


Tesla Trinidad completed the Guayaguayare program in April of 2012. As such, no
revenues were generated in the fourth quarter of 2012. Significant revenues were
generated from this project in the fourth quarter of 2011 relating to front-end
operations. Trinidad had limited gross margin during the fourth quarter of 2011
due to the delay in recording start up and ultimate weather shut down during
December 2011.


Tesla International's revenues decreased from the comparative quarter due mainly
to reduced revenues from operations in Africa. Operating activity for the fourth
quarter of 2012 was driven by continuous projects in the UK and Europe for one
crew and the startup of a project in Tanzania for one of the African crews. The
fourth quarter of 2011 included a full workload for the UK crew along with a
full quarter of operating activity, standby and demobilization charges on a
program in northern Ethiopia and the startup of a lake project in the Democratic
Republic of Congo ("DRC"). Tesla International's gross margin declined from the
comparative quarter due to the reduced level of revenues in Africa and limited
margins recognized on the extended mobilization and early phase of the Tanzania
project in late 2012. The fourth quarter of 2011 had benefitted from a full
quarter of operating activities in northern Ethiopia.


Tesla Offshore's activity levels improved dramatically during the fourth quarter
of 2012 as compared to the fourth quarter of 2011 driven by a significant
increase in geophysical activity with multiple vessels working on lump sum, day
rate and deep tow projects. Tesla Offshore's gross margins improved in line with
increased activity levels.


The Company's EBITDA decreased in the fourth quarter of 2012 compared to the
fourth quarter of 2011 due to the growth in absolute gross margin being more
than offset by increased general and administrative costs relating to additional
bonus accruals and growth in business development costs. The Company incurred a
small consolidated net loss in the fourth quarter of 2012 compared to
consolidated net income in the fourth quarter of 2011 due to the reduced EBITDA
and increased depreciation related to the Hawk system. This was partially offset
by a reduction in tax expense.


The Company's working capital increased $2.6 million during the quarter to $3.3
million including a net cash deficit of $5.7 million. Operating lines and a $3.0
million draw on long-term debt were required to fund working capital
requirements in certain jurisdictions, repay $1.1 million of regular finance
leases and related interest and fund $5.1 million of capital expenditures during
the fourth quarter of 2012.


Total long-term borrowings grew by $1.9 million during the quarter to $22.2
million. Draws on long-term debt of $3.0 million were partially offset by
regular payments made on outstanding finance leases.


Shareholders' equity increased $0.2 million to $63.4 million during the quarter
as the loss incurred during the quarter was more than offset by an increase in
accumulated other comprehensive income due to the weakening of the Canadian
dollar against the functional currency of the Company's foreign subsidiaries
along with an increase in contributed surplus relating to share-based payment
charges.


2012 Financial Results:

Gross margin improved in 2012 compared to 2011, despite a drop in revenues. The
Company's consolidated revenues including reimbursables decreased 15% in 2012
compared to 2011 while the Company's revenue excluding reimbursables increased
1%. Additional revenues for Tesla Offshore and Tesla Trinidad were more than
offset by declines in revenues for Tesla Canada, Tesla USA and Tesla
International. The Company had improvements in gross margin across all entities
except for Tesla International with the biggest growth coming from North
American land operations. Gross margin as a percentage of total revenue
(including reimbursables) increased to 27% in 2012 from 18% in 2011 due to
improvements from Tesla Canada and Tesla USA, including a significant decrease
in flow-through reimbursables associated with these operations. Further, 2011
was negatively impacted by the low margin nature of the front-end phase of the
Trinidad operations being conducted mainly by a third-party contractor. Gross
margin as a percentage of revenue (excluding reimbursables) improved to 32% in
2012 compared to 25% in 2011 as improvements from Tesla Canada, Tesla USA and
Tesla Trinidad more than offset the decline of Tesla International. Tesla
Offshore's gross margin as a percentage of revenue (excluding reimbursables)
remained consistent with the prior year.


Tesla Canada's revenues remained strong with the decline in total revenue driven
entirely by a significant drop in reimbursables. Tesla Canada's gross margin
benefitted from improved rates during the peak winter season compared to 2011
driven by continued demand for 3C services, better productivity due to the mild
winter and a reduced level of rental equipment.


Tesla USA's revenues decreased with a decline in activity levels and a
significant drop in associated reimbursables. Tesla USA's gross margin improved
due to the term nature of a large portion of the work performed, the benefits of
utilizing the Hawk system and a significant reduction in rental costs.


Tesla Trinidad's operations generated slightly higher revenues from recording
activities during the first four months of 2012 exceeding revenues generated
from front-end operations completed in 2011. Tesla Trinidad contributed margin
during 2012 with almost all of the recording on the Guayaguayare program
completed during 2012 allowing for the recognition of turnkey revenues that had
been deferred at the end of 2011.


Tesla International's revenues decreased against the comparative period with
reduced utilization of crews in eastern Africa. Tesla International's gross
margins were negatively impacted by the reduced utilization of crews in east
Africa during the year.


Tesla Offshore saw significant growth in both geophysical and construction
revenues compared to 2011 when the impact of the Macondo oil spill and resulting
lease sale cancelations had limited Tesla Offshore's activity levels in the Gulf
of Mexico. Tesla Offshore's gross margin benefitted from increased activity
levels in the Gulf of Mexico.


The Company's EBITDA in 2012 was well ahead of 2011 due to the growth in
absolute gross margin partially offset by an increase in general and
administrative costs. The Company's consolidated net income in 2012 was also a
significant improvement over 2011 due to the increased EBITDA partially offset
by increased depreciation related to the Hawk system and additional tax expense.


The Company's working capital decreased $7.1 million during the year to $3.3
million including a net cash deficit of $5.7 million. Operating cash flows
generated during the year were used to repay $15.3 million of long-term debt and
$5.7 million on outstanding finance leases as well as funding $14.6 million of
capital expenditures (net of $14.1 million of lease financed expenditures)
during 2012. Operating lines were utilized towards the end of 2012 to fund
operations in Canada and International.


Total long-term borrowings were reduced by $6.9 million during the year to $22.2
million. Long-term debt was reduced by $15.3 million with cash flow generated
mainly from Canada's winter season. Finance lease obligations increased by $8.4
million during the year as regular payments on outstanding finance leases
totalling $5.7 million were more than offset by additional lease financing for a
portion of the acquisition of the Hawk system and certain vehicles during the
year. At December 31, 2012, the Company had $34.7 million of unused committed
bank credit and lease facilities.


Shareholders' equity increased $5.4 million to $63.4 million during the year due
to the net income generated during the year along with the exercise of options
and an increase in contributed surplus relating to share-based payment charges.
This was partially offset by a decrease in accumulated other comprehensive
income with the strengthening of the Canadian dollar against the US dollar
functional currency of the Company's US subsidiaries.


Outlook:

North America Land Operations

Tesla Canada saw an early start to the current winter season but has seen
reduced activity levels during the first quarter of 2013 compared to the past
two winters. Tesla Canada is operating seven crews and approximately 80,000
channels for a substantial portion of the quarter at comparable rates to the
previous winter. Limited winter work will extend into April. Activity levels in
Canada continue to be driven by the large number of operators in the oil sands
and shale plays, however, the industry has seen several significant projects
cancelled or deferred in the first quarter of 2013 due to issues surrounding
foreign investment along with challenges obtaining government approvals. The
Company has been able to ensure high utilization of its 13,000 3C stations along
with additional 3C rental stations. Tesla Canada also utilized the Company's
Hawk system on the first phase of a significant program during the first quarter
of 2013 with completion of the project expected in the fourth quarter of 2013.
Low natural gas prices will continue to limit exploration activity during the
summer months. The Company expects to operate one crew periodically during May
and June with a second crew operational during the third quarter with activity
in both western and eastern Canada.


The 10,000 station Hawk system has recently returned to the US from Canada to
continue work on 3D programs under an agreement with a multi-client geophysical
company. The Hawk crew should begin work in mid-March with backlog for the
remainder of 2013 and should continue to generate improved margins from those
realized under current industry metrics. The slow increase in natural gas
pricing continues to be reflected within the industry by increased activity
levels focused on oil and liquids rich shale plays such as the Bakken, Utica
(eastern Ohio) and Marcellus (western Pennsylvania and West Virginia). This has
led to additional contract awards and an additional multi-component 3D recording
crew in the second half of 2013. The Company is investigating long-term rental
and purchase options to service this demand. Activity in the Denver-Julesburg
("DJ") Basin has been slower than projected but is also expected to increase in
the second half of 2013. Pricing of services continues to be the driving factor
in this competitive market with requirements for higher channel counts, wireless
recording systems and third party multi-client programs driving the demand for
services.


South America Operations

Tesla Colombia was formed in February 2013 to provide seismic acquisition
services to companies in Colombia. An experienced management team has spent the
better part of a year researching the South American market. In recent years,
there has been increased foreign investment in Colombian natural resources,
growing exploration activity and a strong demand for experienced and reliable
seismic acquisition companies with modern equipment and experience in comparable
terrains and environments. Meetings have been held and relationships have been
built with both oil and gas and mining companies operating in Colombia. Many of
these companies are Canadian-based or international operators that Tesla has
done work for in other regions of the world. Management has also focused on
developing relationships with local companies that can provide support to
Tesla's operations in Colombia and provide access to potential clients. While no
projects have been awarded at this time, the management team continues to pursue
a number of opportunities that have been identified during Tesla's presence in
the country. Tesla continues to investigate other opportunities in South
America, specifically in Trinidad, Ecuador and Suriname.


International Operations

Tesla International's UK and European crew has seen a sustained demand for
acquisition services in both the hydrocarbon and minerals sectors. Indicators
suggest that this demand will be maintained. Additional applications of seismic
data in the areas of gas storage and CO2 sequestration have been active
indicating a possible opportunity for growth in previously non-perspective areas
of Europe. This crew should be fully utilized for a good portion of 2013 after
securing commitments for a number of projects throughout the year. Management is
pursuing opportunities to fill remaining gaps in the current 2013 work schedule.


Tesla International is currently completing a land and marine project in
Tanzania. This project operated during most of the first quarter of 2013 before
mobilizing for a land and marine project in the DRC. This project is a
continuation of work performed in late 2011 and early 2012. The land portion of
this program is expected to begin in late March with the larger marine portion
to follow in the second quarter of 2013. There remains significant interest in
the lake zones of the Rift Valley with Tesla International well placed to
exploit the transition zone ("TZ") acquisition opportunities in the area. As
such the TZ crew is expected to remain busy during a significant portion of
2013.


Tesla International is also mobilizing equipment from Djibouti and vibroseis
units from Oman to Somaliland after securing work for two crews on a long-term
day-rate project beginning in April. The project is expected to last through the
end of the year with bonus incentives for early completion.


Two key areas of East Africa are expected to see a return to greater activity
following political stabilisation and the interest of some of the Major
operators in developing their activities in the area. The first key area
involves interests along the Great Lakes Trend from Tanzania into Ethiopia. This
interest is in chasing analog plays based on the recent discoveries in Uganda
and successes in Northern Kenya. The second area of increased exploration
activity is near coastal blocks from Mozambique northward to Somalia which are
hinged on recent major gas discoveries offshore East Africa. Tesla International
expects to be successful in obtaining additional work from both these
opportunities and from exploiting some potential new areas of activity to extend
its current backlog. Tesla International's branch office in Islamabad continues
to explore opportunities in the region.


The UK technical services office remains steady with a number of processing and
interpretation projects recently awarded and underway with high utilization of
capacity expected to continue.


The Jakarta processing office has recently been awarded some sizable projects
that will keep the office fully utilized through early 2013. Additional
opportunities continue to be pursued to maintain backlog.


Offshore Operations

Tesla Offshore is benefitting from increased activity levels in the Gulf of
Mexico. The central and eastern Gulf of Mexico lease sale was held on June 20,
2012, the first since the Macondo oil spill in early 2010. The return of lease
sales was positive news for Tesla Offshore, as lease sales generally lead to an
increase in geophysical operations as operators require geophysical surveys for
the purpose of securing drilling permits and evaluating new lease properties.
With 2013's Central Gulf lease sale returning to the standard March schedule, a
significant increase in opportunities during the fair weather season are
expected. In addition, hurricane Isaac's path through the Gulf of Mexico has
resulted in government mandated survey requirements for operators in that impact
corridor of the Gulf of Mexico. Tesla Offshore has a healthy backlog of both
turnkey and day rate work as a direct result of the lease sale and hurricane
Isaac that is keeping multiple vessels occupied throughout the first quarter of
2013. In April 2013, Tesla Offshore will remobilize two geophysical vessels to
continue the large scale day rate exploration projects that were put on hold for
the winter months.


Construction activity has slowed down considerably as is common during the
winter months and will stay that way until spring when improved weather allows
these types of projects to resume.


Tesla Offshore continues to pursue opportunities outside the Gulf of Mexico and
is entering the second year of a multi-year project in Alaska. As long-term
clients expand into international areas, Tesla Offshore is configuring systems
and staff to profitably provide services to support their operations.


Focusing on this growth plan, Tesla Offshore committed to the purchase of a $6
million Bluefin AUV which has the ability to acquire high resolution ocean
bottom data. Tesla Offshore expects the AUV to be delivered and operational in
September 2013. In addition to addressing a much needed service to our existing
customer base, this will open new markets for Tesla Offshore related to deep
water oil and gas field development, along with governmental, environmental and
academic applications. Tesla Offshore plans to operate the AUV not only in the
Gulf of Mexico, where the US Government now requires data across most of the
deep water Gulf of Mexico blocks to be acquired by an AUV, but on a global
basis. Tesla Offshore hired several experienced personnel to manage and optimize
use of state of the art technology in geophysical survey operations, including
the AUV service line, and to further the development of geo-hazards
interpretation services for clients worldwide. The AUV team is also in the
process of identifying other AUV specialists, to support field operations.


Forward-looking Statements:

Certain information set forth in this press release, including management's
assessment of the Company's future plans and operations, contains
forward-looking statements, which are based on the Company's current internal
expectations, estimates, projections, assumptions and beliefs, which may prove
to be incorrect. Some of the forward-looking statements may be identified by
words such as "expects", "anticipates", "believes", "projects", "intends",
"continues", "estimates", "objective", "ongoing", "may", "will", "should",
"might", "plans" and similar expressions. These statements are not guarantees of
future performance and undue reliance should not be placed on them. Such
forward-looking statements are based on current expectations, estimates and
projections that involve a number of known and unknown risks and uncertainties,
which may cause the Company's actual performance and financial results in future
periods to differ materially from any projections of future performance or
results expressed or implied by such forward-looking statements. These include,
but are not limited to, the risks outlined in the "Business Risks" section of
the Company's MD&A for the three and twelve months ended December 31, 2012.


The information contained in this press release should not be considered
all-inclusive as it excludes changes that may occur in general economic,
political and environmental conditions. The Company cautions that actual
performance will be affected by a number of factors, many of which are beyond
its control. Investors are cautioned against attributing undue certainty to
forward-looking statements. The forward-looking information and statements
contained in this press release speak only as of the date hereof and, subject to
its obligations under applicable law, the Company does not intend, and does not
assume any obligation, to update these forward-looking statements if conditions
or opinions should change.


About Tesla

Tesla provides geophysical and related services in Canada, internationally
through its wholly owned subsidiaries Tesla Exploration International Ltd. and
Tesla Exploration Trinidad Ltd., and in the United States through Tesla
Exploration Inc. and Tesla Offshore LLC. Since the Company's inception in 2000,
Tesla has grown both organically and through acquisitions funded by retained
earnings and prudent levels of borrowing, from a Canadian focused land seismic
business to a global provider of a broad suite of geophysical and related
services. Tesla trades on the TSX under the symbol "TXL".


FOR FURTHER INFORMATION PLEASE CONTACT: 
Tesla Exploration Inc.
Mr. Richard Habiak
President and CEO
[phone]


Tesla Exploration Inc.
Mr. Stuart Craven
Vice President and CFO
[phone]