Cathedral Energy Services Ltd. reports results for 2012 Q4 and 2013 Q1 dividend

Cathedral Energy Services Ltd. reports results for 2012 Q4 and 2013 Q1 dividend 
/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/ 
CALGARY, March 6, 2013 /CNW/ - Cathedral Energy Services Ltd. (the "Company" 
or "Cathedral" / TSX: CET) announces its consolidated financial results for 
the three months and year ended December 31, 2012 and 2011. Dollars in 000's 
except per share amounts. 
This news release contains "forward-looking statements" within the meaning of 
applicable Canadian securities laws. For a full disclosure of 
forward-looking statements and the risks to which they are subject, see 
"Forward-Looking Statements" later in this news release. 
2012 Q4 KEY TAKEAWAYS 


    --  Operating results were negatively affected by market wide
        reduction in drilling and completions activity on both a
        year-over-year and sequential quarter basis
    --  U.S. directional drilling operations base is set up in Oklahoma
        City, Oklahoma
    --  U.S. Production Testing division receives request to provide
        five testing units for deployment in the Eagleford (Texas)
        resource plan with first two units operational in January 2013
        and remaining three in 2013 Q2
    --  Cathedral announces initial 2013 capital budget of $22,000
        which includes $10,000 of growth capital and $12,000 of
        maintenance capital

2012 Q4 FINANCIAL SUMMARY 
                                                       
                    Three months ended   Year ended December 31
                           December 31
                       2012       2011        2012         2011

Revenues           $ 44,836  $  70,359  $  203,194  $   220,363

Adjusted gross        27.8%      35.0%       28.2%        32.5%
margin % ((1))

EBITDAS ((1))      $  8,296  $  20,969  $   42,858  $    56,085

  Diluted per      $   0.22  $    0.56  $     1.14  $      1.47
  share

EBITDAS ((1) )as      18.5%      29.8%       21.1%        25.5%
% of revenues

Funds from
continuing         $  6,586  $  17,814  $   33,270  $    50,011
operations ((1))

  Diluted per      $   0.18  $    0.47  $     0.88  $      1.31
  share

Net earnings       $  1,578  $  12,551  $   14,797  $    27,634

  Basic per share  $   0.04  $    0.34  $     0.40  $      0.75

  Diluted per      $   0.04  $    0.33  $     0.39  $      0.73
  share

Dividends
declared per       $  0.075  $   0.060  $    0.300  $     0.240
share

Property and
equipment          $  6,934  $   7,072  $   30,650  $    44,413
additions

Weighted average shares outstanding                            

  Basic (000s)       37,209     37,220      37,376       37,062

  Diluted (000s)     37,400     37,631      37,756       38,047
                                                               
                                       December 31  December 31
                                              2012         2011

Working capital                         $   29,173  $    40,052

Total assets                            $  224,080  $   231,923

Loans and
borrowings                              $   46,151  $    50,694
excluding current
portion

Total
shareholders'                           $  137,932  $   136,107
equity
                                                               

((1) Refer to "NON-GAAP MEASUREMENTS")                         



OVERVIEW

The Company completed 2012 Q4 with quarterly revenues of $44,836 compared to 
2011 Q4 revenues of $70,359. The 2012 Q4 revenues were comprised of 66% (2011 
Q4 - 75%) from the directional drilling division; 29% (2011 Q4 - 25%) from the 
production testing division; and 5% (2011 Q4 - 0%) from international resale 
and rentals.

2012 Q4 EBITDAS was $8,296 ($0.22 per share diluted) which represents a 
$12,673 decrease or 60% decrease from 2011 Q4 EBITDAS of $20,969 ($0.56 per 
share diluted). For the three months ended December 31, 2012, the Company's 
net earnings were $1,578 ($0.04 per share diluted) as compared to $12,551 
($0.33 per share diluted) in 2011.

The decline in revenues and was primarily attributed to slow down of drilling 
and completions work in the Canadian market as well as more moderate declines 
in the U.S.

OUTLOOK

On a year-over-year basis, 2013 overall industry activity levels are expected 
to remain relatively flat over 2012. Within the Canadian market, industry 
experts are projecting the oil price differential to narrow in the second half 
of 2013 which should lead to more dollars in the hands of producer and this 
may result in increased funding for drilling and completions programs. So 
far in 2013, industry activity levels in Canada are at lower levels than the 
prior year. This is expected as the industry did not experience the overall 
decline in market activity until after the 2012 spring breakup.

The Company continues to see significant opportunities in the U.S. market for 
both directional drilling and frac flowback services; in particular in the 
Texas and Oklahoma regions where the Company's market share is minimal. In 
late 2012, Cathedral's U.S. Directional Drilling division opened an operations 
base in Oklahoma City, Oklahoma and for 2013 the Company is expecting to 
experience an expanding work base from this area. For 2013 Cathedral is 
planning for increased activity levels from its Texas and Rocky Mountain 
regions.Despite being in a dry gas market, Cathedral's north east U.S. 
(Marcellus) area is expected to remain flat from an activity level basis.

Commencing in January 2013, our U.S. Production Testing division expanded its 
operations into the Eagleford (Texas) resource play with two units that were 
relocated from other area within the U.S. As well, the Company has three 
high pressure units being manufactured for this region and these new builds 
are expected to be operating in 2013 Q2. As Cathedral pursues and obtains 
additional work in the U.S. market, it will reallocate equipment where there 
is demand.

In 2013 Cathedral will continue to convert its mud motor fleet over to its 
in-house proprietary design. At the end of 2012 approximately 21% of the 
fleet had been converted. As part of the conversion process, parts from the 
motors being torn down are reused when repairing like mud motors. This 
allows Cathedral to obtain value for such parts. The rate of conversion is 
dependent on a number of factors including the availability of motor parts 
manufacturing by third parties and the ability of Cathedral to consume in 
operations the parts of the mud motors that are being replaced.

On the technology front, Cathedral anticipates commencing its build out of its 
MWD "at-bit" technology in 2013 Q4. The "at-bit" technology allows for MWD 
measurements (inclination and gamma) that are sourced from directly behind the 
drill bit and this allows for improved geosteering and optimum well 
placement. As well, in 2013 Cathedral will expand its rollout of the 
enhanced Fusion MWD platform electronics.

The Company continues to move forward with the startup of its Venezuela 
operations. With the near completion of the final agreements and the 
movement of equipment into the country, Cathedral continues to focus on being 
prepared for its first field operations.

CAPITAL PROGRAM

Cathedral's 2013 capital budget is $22,000 which includes $10,000 of growth 
capital and $12,000 of maintenance capital.

The major items within the 2013 of growth capital are for the drilling 
division are addition of mud motors and drill collars for the expected 
expansion of Company's Houston and Oklahoma City operation bases and the 
commencement of the build-out of the Company's "at-bit" technology system. 
In addition, the production testing division plans to add 3 frac flowback 
units and related ancillary equipment.

The maintenance capital is expected to allow for: i) expanded rollout of the 
Company's enhanced Fusion MWD platform electronics; ii) addition of mud pulse 
transmitters to the fleet to allow for expanded Fusion MWD platform 
capabilities; iii) continued conversion to Cathedral's proprietary mud motor 
bearing section; and iv) expansion of mud motor power section fleet to 
accommodate extended repair times and new configurations requested by 
customers.

These capital expenditures are expected to be financed by way of cash flow 
from operations and the Company's credit facility.

During 2012 the Company invested an additional $31,422 (2011 - $44,413) in 
property and equipment and intangible assets. The main 2012 additions were 
11 MWD systems, replacement of downhole tools that were lost-in-hole, 7 
production testing units, auxiliary production testing equipment and 
maintenance capital of $7,800. Maintenance capital includes: i) costs 
incurred on conversion of the Company's mud motor fleet to its proprietary 
designed mud motor; ii) upgrading of EM-MWD systems to the Company's Fusion 
MWD platform; and iii) expansion ofmud motor power section fleet to meet 
customers' requests for specific configuration.

The following is a summary of major equipment owned by the Company:
                                                             
                                    December 31 December 31 December 31
                                           2012        2011        2010

Directional drilling - MWD systems          136         125         102
((1))

Production testing units                     69          62          56
                                                                       

((1) December 31, 2012 and 2011 MWD
systems are net of 10 systems that                                     
are removed from service.)



DIVIDENDS

It is the intent of the Company to pay quarterly dividends to shareholders. 
The Board of Directors will review the amount of dividends on a quarterly 
basis with due consideration to current performance, historical and future 
trends in the business, the expected sustainability of those trends and 
enacted tax legislation which will affect future taxes payable as well as 
required long-term debt repayments, maintenance capital expenditures required 
to sustain performance and future growth capital expenditures. The Directors 
have approved a 2013 Q1 dividend in the amount of $0.075 per share which will 
have a date of record March 31, 2013 and a payment date of April 15, 2013.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal source of liquidity is cash generated from 
operations. The Company also has the ability to fund liquidity requirements 
through its credit facility and the issuance of debt and/or equity. At 
December 31, 2012, the Company had an operating loan with a major Canadian 
bank in the amount of $20,000 (December 31, 2011 - $20,000) of which $880 
(December 31, 2011 - $12,797) was drawn. In addition, the Company has a 
non-reducing revolving term loan facility in the amount of $55,000 (December 
31, 2011 - $55,000) of which $45,000 was drawn as at December 31, 2012 
(December 31, 2011 - $50,000.) In addition, at December 31, 2012, the 
Company had finance lease liabilities of $1,862 (December 31, 2011 - $1,492) 
and other long-term debt of $nil (December 31, 2011 - $5).

RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 2012
                                                  
                   Three months ended December 31, 2012    Three months ended December 31,
                                                                                      2011
              Directional Production   Resale             Directional Production          
                                          and

Revenues         drilling    testing   rental     Total      drilling    testing      Total

Canada         $   16,777  $   6,791  $     -  $ 23,568    $   35,890  $  10,223  $ 46,113

United States      12,682      6,391        -    19,073        16,808      7,438    24,246

International           -          -    2,195     2,195             -          -         -

Total          $   29,459  $  13,182  $ 2,195  $ 44,836    $   52,698  $  17,661  $ 70,359



Revenues and gross margin Revenues in Q4 have decreased to $44,836 
in 2012 from $70,359 in 2011, a decrease of $25,523 or 36%. The decrease was 
primarily attributed to slow down of drilling and completions work in the 
Canadian market as well as more moderate declines in the U.S.

The directional drilling division revenues have decreased from $52,698 in 2011 
Q4 to $29,459 in 2012 Q4; a 44% decrease. This decrease was the result of: 
i) a 42% decrease in activity days from 4,656 in 2011 Q4 to 2,691 in 2012 Q4; 
and ii) a decrease in the average day rate from $11,319 in 2011 Q4 to $10,950 
in 2012 Q4, which was driven by market pressures in the Canadian market. 
Canadian activity days decreased from 3,014 to 1,425 and U.S. activity days 
decreased from 1,642 to 1,266.

The Company's production testing division contributed $13,182 in revenues 
during 2012 Q4 which was a 25% decrease over 2011 revenues of $17,661. The 
division ended 2012 Q4 with 39 units (2011 - 38) in Canada and 30 (2011 - 24) 
in the U.S. The decline in revenues was due mainly to the decline in 
completions work in 2012 Q4 compared with the high activity levels in 2011 Q4.

The gross margin for 2011 Q4 was 29.6% compared to 2012 Q4 at 16.3%, a decline 
of 13.3%; 6.1% of this decline related to increase in non-cash depreciation 
and share-based compensation. There was a decline in adjusted gross margin 
of 7.2%. There was no single significant increase in operating expenses in 
the year, but there were several items that had slight increases including 
increase in non-field wages due to the expansion into new geographic areas, 
costs for accommodation of field staff and the cost of equipment 
resold.Despite Cathedral's highly variable field cost structure, non-field 
salaries are of a fixed nature and therefore when the Company's revenue 
declines, such costs become a higher percentage of revenues. The Company 
will continue with its on-going review of all operating costs and general and 
administrative expenditures with the goal of enhancing profitability.

Depreciation allocated to cost of sales increased from $3,712 in 2011 Q4 to 
$5,071 in 2012 Q4 due to capital additions in the period from 2011 Q4 to 2012 
Q4. Depreciation included in cost of sales as a percentage of revenue was 
11% for 2012 Q4 and 5% for 2011 Q4.

For 2012 Q4 the Company had share-based compensation included in cost of sales 
of $76 compared to $136 recognized in 2011 Q4. The fair value of the related 
options is being amortized against income over the three-year vesting periods.

Selling, general and administrative expenses ("SG&A") SG&A expenses 
were $5,573 in 2012 Q4; an increase of $397 when compared with $5,176 in 2011 
Q4 with $57 of this increase related to non-cash depreciation and share-based 
compensation. The remaining increase was primarily related to increases in 
payroll expenses related to staff positions added to accommodate growth that 
occurred in 2011 Q4 and 2012 Q1 and wage increases for existing staff net of a 
decrease in variable compensation and a decline in legal expenses. As a 
percentage of revenues, general and administrative expenses were 12% in 2012 
Q4 and 7% in 2011 Q4.

Depreciation allocated to SG&A increased from $56 in 2011 Q4 to $164 in 2012 
Q4 which has mainly increased due to the depreciation of the new head office 
location which was not depreciated until it was available-for-use until 
mid-way through 2011 Q4.

For 2012 Q4 the Company had share-based compensation included in SG&A of $284 
compared to $335 recognized in 2011 Q4. The fair value of the related 
options is being amortized against income over the three-year vesting periods.

Gain on disposal of property and equipment During 2012 Q4 the Company 
had a gain on disposal of property and equipment of $957, compared to $1,944 
in 2011 Q4. The Company's gains are mainly due to recoveries of lost-in-hole 
equipment costs including previously expensed depreciation on the related 
assets. The timing of lost-in-hole recoveries is not in the control of the 
Company and therefore can fluctuate significantly from quarter-to-quarter.

Foreign exchange gain (loss)  The Company's foreign exchange loss was 
$335 in 2011 Q4 compared to a $136 in 2012 Q4 due to the fluctuations in the 
Canadian dollar compared to U.S. dollars and Venezuelan bolivars. The 
Company's foreign operations are denominated in a currency other than the 
Canadian dollar and therefore, upon consolidation gains and losses due to 
fluctuations in the foreign currency exchange rates are recorded in other 
comprehensive income ("OCI") on the balance sheet as a component of equity. 
However, gains and losses in the Canadian entity on U.S. denominated 
intercompany balances continue to be recognized in the statement of income. 
Included in the 2012 Q4 foreign currency gain are unrealized losses of $156 
(2011 Q4 - $515 gain) related to intercompany balances.

Finance costs  Finance costs consist of interest expenses on operating 
loans, loans and borrowings and bank charges of $464 for 2012 Q4 versus $589 
for 2011 Q4. The net decrease in finance costs mainly relate to a decrease 
in the outstanding balances for the secured revolving term loan and operating 
loans as well as a reduction in the interest rate.

Income tax For 2012 Q4, the Company recorded a tax expense of $456 
($753 current net of $297 deferred recovery) compared to the 2011 Q4 of $4,105 
($1,211 current and $2,894 deferred). In 2012 Q4, the effective tax rate was 
22% as compared to 25% in 2011 Q4. Most of the Company's current tax expense 
relates to its U.S. subsidiary.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION December 31, 2012 and 
2011
Dollars in '000s
                                                             
                                             December 31    December 31
                                                    2012           2011

Assets                                                                 
                                                                       

Current assets:                                                        
    Cash and cash equivalents              $        8,470  $       2,902
    Trade receivables                              36,094         65,568
    Current taxes recoverable                         153              -
    Prepaid expenses and deposits                  10,419          2,217
    Inventories                                    13,006         13,278

Total current assets                              68,142         83,965

Property and equipment                           135,093        129,929

Intangible assets                                    719            230

Deferred tax assets                                9,379         11,951

Investment in associate                            4,899              -

Goodwill                                           5,848          5,848

Total non-current assets                         155,938        147,958

Total assets                              $      224,080  $     231,923
                                                                       

Liabilities and Shareholders' Equity                                   

Current liabilities:                                                   
    Operating loans                        $          880  $      12,797
    Trade and other payables                       21,773         28,046
    Dividends payable                               2,768          2,238
    Loans and borrowings                              711            803
    Current taxes payable                               -             29
    Deferred revenue                               12,837              -

Total current liabilities                         38,969         43,913

Loans and borrowings                              46,151         50,694

Deferred tax liabilities                           1,028          1,209

Total non-current liabilities                     47,179         51,903

Total liabilites                                  86,148         95,816

 Shareholders' equity:                                                 
    Share capital                                  74,408         74,208
    Contributed surplus                             8,863          7,845
    Accumulated other comprehensive loss          (2,679)        (2,141)
    Retained earnings                              57,340         56,195

Total shareholders' equity                       137,932        136,107

Total liabilities and shareholders'       $      224,080  $     231,923
equity 



CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Years ended December 31, 2012 and 2011
Dollars in '000s except per share amounts
                                                                   
                       Three months ended    Year ended December 31
                              December 31
                         2012        2011         2012         2011

Revenues           $   44,836  $   70,359  $   203,194  $   220,363

Cost of sales:                                                     

  Direct costs       (32,388)    (45,699)    (145,902)    (148,689)

  Depreciation        (5,071)     (3,712)     (18,479)     (14,884)

  Share-based            (76)       (136)        (322)        (381)
  compensation 

Total cost of        (37,535)    (49,547)    (164,703)    (163,954)
sales 

Gross margin            7,301      20,812       38,491       56,409

Selling, general                                                   
and                                      
administrative
expenses: 

  Direct costs        (5,125)     (4,785)     (21,012)     (19,724)

  Depreciation          (164)        (56)        (642)        (174)

  Share-based           (284)       (335)      (1,054)      (1,440)
  compensation 

Total selling,                                (22,708)     (21,338)
general and           (5,573)     (5,176)
administrative
expenses 
                        1,728      15,636       15,783       35,071

Gain on disposal                                 6,421        4,264
of property and           957       1,944
equipment 

Earnings from                                   22,204       39,335
operating               2,685      17,580
activities 

Foreign exchange        (136)       (335)          269        (356)
gain (loss) 

Finance costs           (464)       (589)      (2,041)      (1,877)

Share of loss            (51)           -         (51)            -
from associate 

Earnings from                                   20,381       37,102
continuing              2,034      16,656
operations before
income taxes 

Income tax                                                         
(expense)                                
recovery: 

  Current               (753)     (1,211)      (3,167)      (1,362)

  Deferred                297     (2,894)      (2,417)      (8,435)

Total income tax        (456)     (4,105)      (5,584)      (9,797)
expense 

Net earnings from                               14,797       27,305
continuing              1,578      12,551
operations 

Net earnings from                                    -          329
discontinued                -           -
operations 

Net earnings            1,578      12,551       14,797       27,634

Other                                                              
comprehensive                            
income (loss): 

  Foreign                                                          
  currency
  translation                
  differences for
  foreign 
    operations            724       (254)        (538)          673

Total                                      $    14,259  $    28,307
comprehensive      $    2,302  $   12,297
income 
                                                                   

Net earnings from                                                  
continuing                     
operations per
share 

  Basic            $     0.04  $     0.34  $      0.40  $      0.74

  Diluted          $     0.06  $     0.33  $      0.39  $      0.72

Net earnings from                                                  
discontinued                      
operations per
share 

  Basic and        $        -  $        -  $         -  $      0.01
  diluted 

Net earnings                                                       

  Basic            $     0.04  $     0.34  $      0.40  $      0.75

  Diluted          $     0.04  $     0.33  $      0.39  $      0.73



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 
Year ended December 31, 2012 and 2011
Dollars in '000s
                                                                
                                                       2012        2011

Cash provided by (used in):                                            

Operating activities:                                                  

  Net earnings from continuing operations        $   14,797  $   27,305

  Items not involving cash:                                            
    Depreciation                                     19,121      15,058
    Total income tax expense                          5,584       9,797
    Unrealized foreign exchange gain on                (77)       (221)
    intercompany balances 
    Finance costs                                     2,041       1,877
    Share-based compensation                          1,341       1,821
    Gain on disposal of property and equipment      (6,421)     (4,264)
    Share of loss from associate                         51           -

  Cash flow from continuing operations               36,437      51,373

  Changes in non-cash operating working              27,724    (21,857)
  capital 

  Income taxes paid                                 (3,350)     (1,377)

Cash flow from operating activities                  60,811      28,139

Investing activities:                                                  

  Property and equipment additions                 (30,650)    (44,413)

  Intangible asset additions                          (772)           -

  Proceeds on disposal of property and               11,596       6,538
  equipment 

  Proceeds on disposal of assets held for sale            -       3,793

  Investment in equity accounted investee           (3,600)           -

  Changes in non-cash investing working               1,809     (3,633)
  capital 

Cash flow from investing activities                (21,617)    (37,715)

Financing activities:                                                  

  Change in operating loan                         (12,108)       4,609

  Interest paid                                     (2,057)     (2,063)

  Advances of loans and borrowings                        -      15,500

  Repayments on loans and borrowings                (5,509)       (598)

  Proceeds on exercise of share options               1,387       2,744

  Repurchase of common shares                       (3,962)           -

  Dividends paid                                   (10,671)     (8,882)

Cash flow from financing activities                (32,920)      11,310

Effect of exchange rate on changes in cash and        (706)       (572)
cash equivalents 

Change in cash and cash equivalents                   5,568       1,162

Cash and cash equivalents, beginning of period        2,902       1,740

Cash and cash equivalents, end of period         $    8,470  $    2,902



FORWARD-LOOKING STATEMENTS

This news release contains certain forward-looking statements and 
forward-looking information (collectively referred to herein as 
"forward-looking statements") within the meaning of applicable Canadian 
securities laws. All statements other than statements of present or 
historical fact are forward-looking statements. Forward-looking statements 
are often, but not always, identified by the use of words such as 
"anticipate", "achieve", "believe", "plan", "intend", "objective", 
"continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", 
"project", "should" or similar words suggesting future outcomes. In 
particular, this news release contains forward-looking statements relating to, 
among other things: production testing units expected to be deployed to 
Eagleford (Texas) resources play and timing thereof; components of expected 
2013 capital budget and financing thereof; expected commencement of build-out 
of "at-bit" technology; areas of expected growth and opportunities; expected 
activity levels; projected narrowing of oil price "differential" and possible 
consequences thereof; future expansion; commencement of operations in 
Venezuela; intent to pay quarterly dividends; and sources to fund liquidity 
requirements. The Company believes the expectations reflected in such 
forward-looking statements are reasonable as of the date hereof but no 
assurance can be given that these expectations will prove to be correct and 
such forward-looking statements should not be unduly relied upon.

Various material factors and assumptions are typically applied in drawing 
conclusions or making the forecasts or projections set out in forward-looking 
statements. Those material factors and assumptions are based on information 
currently available to the Company, including information obtained from third 
party industry analysts and other third party sources. In some instances, 
material assumptions and material factors are presented elsewhere in this news 
release in connection with the forward-looking statements. You are cautioned 
that the following list of material factors and assumptions is not 
exhaustive. Specific material factors and assumptions include, but are not 
limited to:
    --  the performance of the Company's businesses, including current
        business and economic trends;
    --  oil and natural gas commodity prices and production levels;
    --  capital expenditure programs and other expenditures by the
        Company and its customers;
    --  the ability of the Company to retain and hire qualified
        personnel;
    --  the ability of the Company to obtain parts, consumables,
        equipment, technology, and supplies in a timely manner to carry
        out its activities;
    --  the ability of the Company to maintain good working
        relationships with key suppliers;
    --  the ability of the Company to market its services successfully
        to existing and new customers;
    --  the ability of the Company to obtain timely financing on
        acceptable terms;
    --  currency exchange and interest rates;
    --  risks associated with foreign operations including Venezuela;
    --  the ability of the Company to realize the benefit of its
        conversion from an income trust to a corporation;
    --  risks associated with finalizing ancillary joint venture
        agreements that are required prior to the commencement of
        operations of the Venezuela joint venture;
    --  risks associated with Venezuela joint venture company being
        awarded work by the Venezuela state run oil and natural gas
        corporation;
    --  changes under governmental regulatory regimes and tax,
        environmental and other laws in Canada, United States ("U.S.")
        and Venezuela; and
    --  a stable competitive environment.

Forward-looking statements are not a guarantee of future performance and 
involve a number of risks and uncertainties some of which are described 
herein. Such forward-looking statements necessarily involve 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 risks and uncertainties include, but are 
not limited to, the risks identified in this news release and in the Company's 
Annual Information Form under the heading "Risk Factors". Any 
forward-looking statements are made as of the date hereof and, except as 
required by law, the Company assumes no obligation to publicly update or 
revise such statements to reflect new information, subsequent or otherwise.

All forward-looking statements contained in this news release are expressly 
qualified by this cautionary statement. Further information about the factors 
affecting forward-looking statements is available in the Company's current 
Annual Information Form and Annual Report which have been filed with Canadian 
provincial securities commissions and are available on www.sedar.com.

NON-GAAP MEASUREMENTS

This news release refers to certain non-GAAP measurements that do not have any 
standardized meaning within IFRS and therefore may not be comparable to 
similar measures provided by other companies. Management utilizes these 
non-GAAP measurements to evaluate Cathedral's performance.

The specific measures being referred to include the following:

i)"Adjusted gross margin" - calculated as gross margin plus non-cash items 
(depreciation and share-based compensation); is considered a primary indicator 
of operating performance (see tabular calculation below);

ii)"Adjusted gross margin %" - calculated as adjusted gross margin divided 
by revenues; is considered a primary indicator of operating performance (see 
tabular calculation below);

iii)"EBITDAS" - defined as earnings before finance costs, unrealized foreign 
exchange on intercompany balances, unrealized foreign exchange due to 
hyper-inflation accounting, taxes, depreciation and share-based compensation; 
is considered an indicator of the Company's ability to generate funds flow 
from operations prior to consideration of how activities are financed, how the 
results are taxed and measured and non-cash expenses (see tabular calculation 
below);

iv)"Maintenance capital expenditures" - refers to capital expenditures 
required to maintain existing levels of service but excludes replacement cost 
of lost-in-hole equipment to the extent the replacement equipment is financed 
from the proceeds on disposal of the equipment lost-in-hole; and

v)"Funds from continuing operations" - calculated as cash provided by 
operating activities before changes in non-cash working capital, cash flow 
from discontinued operations and income taxes paid less current tax expense; 
is considered an indicator of the Company's ability to generate funds flow 
from operations on an after tax basis but excluding changes in non-cash 
working capital which is financed using the Company's operating loan (see 
tabular calculation below).

The following tables provide reconciliations from GAAP measurements to 
non-GAAP measurements referred to in this news release:

Adjusted gross margin
                                                  
                   Three months ended December Year Ended December 31
                                            31
                        2012              2011      2012         2011

Gross margin        $  7,301  $         20,812  $ 38,491  $    56,409

Add non-cash items
included in cost                                                     
of sales:

  Depreciation         5,071             3,712    18,479       14,884

  Share-based             72               136       287          381
  compensation
                                                                     

Adjusted gross      $ 12,444  $         24,660  $ 57,257  $    71,674
margin
                                                                     

Adjusted gross         27.8%             35.0%     28.2%        32.5%
margin %



EBITDAS
                                                                 
                     Three months ended December Year Ended December 31
                                              31
                         2012              2011        2012       2011 

Earnings from
continuing            $  2,034  $         16,656  $   20,381  $  37,102
operations before
income taxes

Add (deduct):                                                          

  Gain on disposal
  of property and
  equipment from             -                 -           -        448
  discontinued
  operations

  Depreciation
  included in cost       5,071             3,712      18,479     14,884
  of sales

  Depreciation
  included in
  selling, general         164                56         642        174
  and administrative
  expenses

  Share-based
  compensation              72               136         287        381
  included in cost
  of sales

  Share-based
  compensation                                                         
  included in
  selling, general
    and
    administrative         284               335       1,054      1,440
    expenses

  Unrealized foreign
  exchange (gain)
  loss on                  156             (515)        (77)      (221)
  intercompany
  balances

  Finance costs            464               589       2,041      1,877

  Share of loss from        51                 -          51          -
  associate
                                                                       

EBITDAS               $  8,296  $         20,969  $   42,858  $  56,085
                                                                       

Funds from
continuing                                                       
operations
                                                                 
                                                                 
                     Three months ended December Year ended December 31
                                              31
                          2012              2011        2012       2011

Cash flow from        $  4,094  $          9,969  $   60,811  $  28,139
operating activities

Add (deduct):                                                          

  Changes in
  non-cash operating     2,694             8,870    (27,724)     21,857
  working capital

  Income taxes paid        551               186       3,350      1,377

  Current tax            (753)           (1,211)     (3,167)    (1,362)
  expense
                                                                       

Funds from
continuing            $  6,586  $         17,814  $   33,270  $  50,011
operations

Cathedral Energy Services Ltd. (the "Company" or "Cathedral") is incorporated 
under the Business Corporations Act (Alberta) (the "Act"). The Company is 
publicly traded on the Toronto Stock Exchange under the symbol "CET". The 
Company together with its wholly owned subsidiary, Cathedral Energy Services 
Inc., is engaged in the business of providing selected oilfield services to 
oil and natural gas companies in western Canada and selected oil and natural 
gas basins in the U.S. The Company is in the process of establishing 
operations in Venezuela for providing directional drilling services through a 
joint venture with Petroleros de Venezuela, S.A. ("PDVSA"), the state owned 
oil and gas corporation of the Bolivarian Republic of Venezuela. The Company 
strives to provide its clients with value added technologies and solutions to 
meet their drilling and production testing requirements. For more 
information, visit www.cathedralenergyservices.com.











Mark L. Bentsen, President and Chief Executive Officer or P. Scott  
MacFarlane, Chief Financial Officer

Cathedral Energy Services Ltd., 6030 3 Street S.E., Calgary, Alberta T2H  1K2

Telephone: 403.265.2560Fax: 
403.262.4682www.cathedralenergyservices.com

SOURCE: Cathedral Energy Services Ltd.

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/March2013/06/c2134.html

CO: Cathedral Energy Services Ltd.
ST: Alberta
NI: OIL ERN DIV 

-0- Mar/06/2013 21:15 GMT