Ensign Energy Services Inc. Reports 2013 Second Quarter Results

CALGARY, Aug. 6, 2013 /CNW/ - 
Overview 
Ensign Energy Services Inc. ("Ensign" or the "Company") recorded revenue of 
$437.9 million for the second quarter of 2013, six percent lower than revenue 
of $463.9 million recorded in the second quarter of 2012. Revenue for the 
six months ended June 30, 2013 was $1,019.0 million, 11 percent lower than 
revenue of $1,141.5 million for the six months ended June 30, 2012. Net 
income for the second quarter of 2013 decreased 82 percent to $3.3 million 
($0.02 per common share) compared to net income of $18.7 million ($0.12 per 
common share) for the second quarter of 2012. Net income for the six months 
ended June 30, 2013 decreased 45 percent to $68.3 million ($0.45 per common 
share) compared to net income of $124.2 million ($0.81 per common share) for 
the first six months of 2012. Second quarter earnings were negatively 
impacted by $21.8 million of foreign exchange and other charges in the quarter 
primarily due to the effect of a weakening AUS dollar on US dollar debt in the 
Company's Australian operations. Excluding the impact of share-based 
compensation expense (recovery) and foreign exchange and other, adjusted net 
income for the second quarter of 2013 totaled $14.5 million ($0.09 per common 
share), 27 percent lower than adjusted net income of $19.8 million ($0.13 per 
common share) in the second quarter of 2012. For the six months ended June 
30, 2013 adjusted net income was $81.1 million ($0.53 per common share), 36 
percent lower than adjusted net income of $125.9 million ($0.82 per common 
share) for the six months ended June 30, 2012. Adjusted EBITDA, defined as 
"income before interest, income taxes, depreciation, share-based compensation 
expense (recovery) and foreign exchange and other", totaled $85.7 million 
($0.56 per common share) in the second quarter of 2013, four percent lower 
than adjusted EBITDA of $89.6 million ($0.59 per common share) in the second 
quarter of 2012. For the first six months of 2013 adjusted EBITDA was $250.1 
million ($1.64 per common share), 18 percent lower than adjusted EBITDA of 
$304.5 million ($1.99 per common share) for the first six months of 2012. 
Funds from operations increased two percent to $88.7 million ($0.58 per common 
share) in the second quarter of 2013 from $87.3 million ($0.57 per common 
share) in the second quarter of the prior year. For the six months ended 
June 30, 2013, funds from operations decreased 15 percent to $228.5 million 
($1.50 per common share) compared to $268.6 million ($1.76 per common share) 
for the six months ended June 30, 2012. 
Reduced operating activity in North America weakened operating and financial 
results for the three and six months ended June 30, 2013. Consistent with 
prior years, the second quarter reflects the seasonal impact of spring 
break-up weather conditions which restricted activity levels for the Company's 
Canadian operations. Additionally, second quarter operating and financial 
results were hampered by weakened demand for oilfield services and slightly 
lower revenue rates in the United States. As previously mentioned, second 
quarter financial results include the negative impact from a strengthening 
United States dollar on USD denominated debt in the Company's Australian 
operations. Increased activity in Latin America and the eastern hemisphere 
helped to partially offset these reductions. A slight increase of 
approximately one percent in the average United States dollar foreign exchange 
rate against the Canadian dollar during the six months ended June 30, 2013 
compared to the six months ended June 30, 2012, positively impacted United 
States and international financial results on translation to Canadian dollars. 
Gross margin decreased to $109.3 million (25.0 percent of revenue) for the 
second quarter of 2013 compared with gross margin of $110.2 million (23.8 
percent of revenue) for the second quarter of 2012. For the six months ended 
June 30, 2013 gross margin decreased to $293.2 million (28.8 percent of 
revenue) compared to $344.6 million (30.2 percent of revenue) for the six 
months ended June 30, 2012. Margins were negatively impacted by reduced 
operating activity in North America for the three and six months ended June 
30, 2013; however, positive operating and financial results from the Company's 
international operations partially offset weaker North American margins in the 
current quarter compared to the second quarter of the prior year. 
During the second quarter the Company expanded its existing oilfield rental 
business when it acquired rental equipment assets through the acquisition of 
substantially all of the assets of EGOC Enviro Group of Companies ("EGOC"). 
Additionally, the Company expanded its directional drilling business in Canada 
during the second quarter through the acquisition of substantially all of the 
assets of Departure Energy Services Inc. ("Departure"). Both of these 
acquisitions closed during the second quarter of 2013 and were completed 
utilizing the Company's existing cash balances. The use of funds for these 
acquisitions, combined with an active new build program that has delivered 
three new ADR(® )drilling rigs and three new well servicing rigs in the first 
six months of the year, resulted in a working capital deficit at June 30, 
2013, of $38.4 million compared to positive working capital of $13.9 million 
at December 31, 2012. The Company's ongoing new build program is expected to 
deliver an additional six new ADR(®) drilling rigs and four new well 
servicing rigs throughout the remainder of 2013 and into 2014. In addition to 
the above new builds, the Company is refurbishing and upgrading three drilling 
rigs into ADR(®)-style drilling rigs. 
FINANCIAL AND OPERATING HIGHLIGHTS 
($ thousands, except per share data and operating information) 


                     Three months ended June 30         Six months ended June 30
                     2013      2012   %             2013        2012   %
                                      Change                           Change

Revenue           437,874   463,878      (6)   1,019,016   1,141,549     (11)

Adjusted EBITDA    85,746    89,562      (4)     250,128     304,483     (18)
(1) 

Adjusted EBITDA                                                         
per share (1 )

  Basic             $0.56     $0.59      (5)       $1.64       $1.99     (18)

  Diluted           $0.56     $0.59      (5)       $1.63       $1.99     (18)

Adjusted net       14,484    19,810     (27)      81,101     125,888     (36)
income (2 )

Adjusted net
income per share                                                        
(2) 

  Basic             $0.09     $0.13     (31)       $0.53       $0.82     (35)

  Diluted           $0.09     $0.13     (31)       $0.53       $0.82     (35)

Net income          3,284    18,677     (82)      68,271     124,201     (45)

Net income per                                                          
share 

  Basic             $0.02     $0.12     (83)       $0.45       $0.81     (44)

  Diluted           $0.02     $0.12     (83)       $0.45       $0.81     (44)

Funds from         88,677    87,336        2     228,479     268,571     (15)
operations (3)

Funds from
operations per                                                          
share (3 )

  Basic             $0.58     $0.57        2       $1.50       $1.76     (15)

  Diluted           $0.58     $0.57        2       $1.49       $1.76     (15)

Weighted average
shares - basic    152,651   152,668        -     152,679     152,779        -
(000s) 

Weighted average
shares - diluted  153,404   152,668        -     153,363     152,890        -
(000s) 

Drilling                                                                

  Number of                                                             
  marketed rigs
    Canada (4 )       120       132      (9)         120         132      (9)
    United            117       114        3         117         114        3
    States 
    International      53        56      (5)          53          56      (5)
    (5) 

  Operating days                                                        
    Canada (4 )     1,598     2,281     (30)       6,927       9,712     (29)
    United          5,712     6,188      (8)      11,216      12,501     (10)
    States 
    International   2,805     2,845      (1)       5,517       5,642      (2)
    (5) 

Well Servicing                                                          

  Number of                                                             
  marketed rigs
    Canada             92       103     (11)          92         103     (11)
    United             44        41        7          44          41        7
    States 

  Operating hours                                                       
    Canada         25,343    30,691     (17)      60,480      70,826     (15)
    United         24,897    30,491     (18)      47,674      60,640     (21)
    States 



(1 )Adjusted EBITDA is defined as "income before interest expense,
income taxes, depreciation, share-based compensation (recovery) expense
and foreign exchange and other".  Management believes that in addition
to net income, Adjusted EBITDA and Adjusted EBITDA per share are useful
supplemental measures as they provide an indication of the results
generated by the Company's principal business activities prior to
consideration of how these activities are financed, how the results are
taxed in various jurisdictions, how the results are impacted by foreign
exchange or how the results are impacted by the accounting standards
associated with the Company's share-based compensation plans.  Adjusted
EBITDA and Adjusted EBITDA per share as defined above are not
recognized measures under International Financial Reporting Standards
and accordingly may not be comparable to measures used by other
companies.

(2) Adjusted net income is defined as "net income before share-based
compensation expense (recovery) and foreign exchange and other,
tax-effected using an income tax rate of 35 percent".  Adjusted net
income and Adjusted net income per share are useful supplemental
measures as they provide an indication of the results generated by the
Company's principal business activities prior to consideration of how
the results are impacted by foreign exchange and how the results are
impacted by the accounting standards associated with the Company's
share-based compensation plans, net of income taxes.  Adjusted net
income and Adjusted net income per share as defined above are not
recognized measures under International Financial Reporting Standards
and accordingly may not be comparable to measures used by other
companies.

(3) Funds from operations is defined as "cash provided by operating
activities before the change in non-cash working capital".  Funds from
operations and Funds from operations per share are measures that
provide 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.  Funds from operations
and Funds from operations per share are not measures that have any
standardized meaning prescribed by International Financial Reporting
Standards and accordingly may not be comparable to similar measures
used by other companies.

(4 )Excludes coring rigs.

(5) Includes workover rigs.

Second Quarter Highlights
    --  Revenue for the three months ended June 30, 2013 was $437.9
        million, down six percent from revenue for the three months
        ended June 30, 2012.  The reduction in revenue in the current
        quarter over the prior year second quarter is mainly due to
        reduced operating activity in North America, partially offset
        by stronger revenues from the Company's international segment.
    --  One new ADR(®) drilling rig was added to the Company's United
        States drilling fleet in the second quarter of 2013. The new
        build program also added one new well servicing rig in Canada
        in the second quarter.


--  Second quarter revenue by segment:
  o Canada - 20 percent;
  o United States - 50 percent; and
  o International - 30 percent. 


    --  Adjusted EBITDA for the second quarter of 2013 was $85.7
        million, a four percent decrease from adjusted EBITDA of $89.6
        million for the second quarter of 2012.  Funds from operations
        for the second quarter of 2013 increased two percent to $88.7
        million from $87.3 million in the second quarter of the prior
        year.
    --  Canadian drilling recorded 1,598 operating days in the second
        quarter of 2013, a 30 percent decrease from 2,281 operating
        days in the second quarter of 2012.  Canadian well servicing
        hours decreased by 17 percent in the second quarter of 2013
        compared to the second quarter of 2012.
    --  United States drilling recorded 5,712 operating days in the
        second quarter of 2013, an eight percent decrease from 6,188
        operating days in the second quarter of 2012.  United States
        well servicing hours decreased by 18 percent in the second
        quarter of 2013 compared to the second quarter of 2012.
    --  International drilling recorded 2,805 operating days in the
        second quarter of 2013, a one percent decrease from 2,845
        operating days recorded in the second quarter of 2012.
    --  The Company completed two acquisitions during the second
        quarter.  Rental equipment assets were added through the
        acquisition of substantially all of the assets of EGOC Enviro
        Group of Companies ("EGOC") and directional drilling equipment
        was added through the acquisition of substantially all of the
        assets of Departure Energy Services Inc. ("Departure").  Both
        acquisitions were paid for in cash.

Revenue and Oilfield Services Expense
                Three months ended June 30         Six months ended June 30

 ($ thousands)     2013      2012   %             2013        2012   %
                                    Change                           Change

Revenue                                                               

  Canada         85,453   108,818     (21)     341,441     433,670     (21)

  United States 219,843   244,366     (10)     420,313     493,799     (15)

  International 132,578   110,694       20     257,262     214,080       20
                                                                      
                437,874   463,878      (6)   1,019,016   1,141,549     (11)

Oilfield
services        328,570   353,631      (7)     725,771     796,974      (9)
expense
                                                                      
                109,304   110,247      (1)     293,245     344,575     (15)

Gross margin       25.0      23.8                 28.8        30.2    
(%) 



Revenue for the three months ended June 30, 2013 decreased six percent to 
$437.9 million compared to $463.9 million for the comparable period in 2012. 
Revenue for the six months ended June 30, 2013 decreased 11 percent to 
$1,019.0 million from revenue of $1,141.5 million recorded for the six months 
ended June 30, 2012. As a percentage of revenue, gross margin for the second 
quarter of 2013 increased to 25.0 percent (2012 - 23.8 percent) but decreased 
to 28.8 percent for the six months ended June 30, 2013 (2012 - 30.2 percent).

Revenue for the three and six months ended June 30, 2013 decreased compared to 
the corresponding periods of the prior year due to reduced demand for North 
American oilfield services. Ongoing concerns regarding the economics of oil 
and natural gas projects within North America, along with continuing general 
uncertainty in global economic conditions, had caused many operators to delay 
or reduce their capital programs, reducing demand for oilfield services. The 
Company's established global diversification has helped to somewhat mitigate 
these negative impacts to financial results as the Company's international 
operations continue to grow and improve.

Canadian Oilfield Services

Revenue decreased 21 percent to $85.5 million for the three months ended June 
30, 2013, from $108.8 million for the three months ended June 30, 2012. For 
the six months ended June 30, 2013, revenue decreased 21 percent to $341.4 
million compared to $433.7 million for the same period in 2012. Canadian 
revenues accounted for 20 percent of the Company's total revenue in the second 
quarter of 2013, compared with 23 percent in the second quarter of 2012, and 
during the six months ended June 30, 2013, Canadian revenues were 34 percent 
of total revenue (2012 - 38 percent).

The Company's Canadian operations recorded 1,598 drilling days in the second 
quarter of 2013, compared to 2,281 drilling days for the second quarter of 
2012, a decrease of 30 percent. For the six months ended June 30, 2013, the 
Company recorded 6,927 drilling days compared to 9,712 drilling days for the 
six months ended June 30, 2012, a decrease of 29 percent. Canadian well 
servicing hours decreased by 17 percent to 25,343 operating hours in the 
second quarter of 2013 compared with 30,691 operating hours in the 
corresponding period of 2012. For the six months ended June 30, 2013, well 
servicing hours decreased by 15 percent to 60,480 operating hours compared 
with 70,826 operating hours for the six months ended June 30, 2012.

Reduced revenue and operating activity in Canada in the three and six months 
ended June 30, 2013, compared to the prior year was primarily a result of a 
particularly wet spring break-up in 2013, restricting operating activity in 
Canada and overall reduced demand for Canadian oilfield services in 2013 
compared to 2012.

During the six months ended June 30, 2013, the Company added one newly 
constructed ADR(®) to its Canadian drilling rig fleet and three new well 
servicing rigs. Five inactive drilling rigs and 10 inactive well servicing 
rigs were decommissioned, all in the first quarter. The Company also 
disposed of its non-rig manufacturing facility located in Calgary, Alberta.

United States Oilfield Services

The Company's United States operations recorded revenue of $219.9 million in 
the second quarter of 2013, a 10 percent decrease from the $244.4 million 
recorded in the corresponding period of the prior year. During the six months 
ended June 30, 2013, revenue of $420.3 million was recorded, a decrease of 15 
percent from the $493.8 million recorded for the six months ended June 30, 
2012. The Company's United States operations accounted for 50 percent of the 
Company's revenue in the second quarter of 2013 (2012 - 53 percent) and 41 
percent of total revenue in the six months ended June 30, 2013 (2012 - 43 
percent). Drilling rig operating days decreased by eight percent to 5,712 
drilling days in the second quarter of 2013 from 6,188 drilling days in the 
second quarter of 2012. For the six months ended June 30, 2013, drilling 
days decreased by 10 percent to 11,216 drilling days from 12,501 drilling days 
in the six months ended June 30, 2012. Well servicing activity decreased by 
18 percent in the second quarter of 2013 to 24,897 operating hours from 30,491 
operating hours in the second quarter of 2012. For the six months ended June 
30, 2013 well servicing activity decreased 21 percent to 47,674 operating 
hours from 60,640 operating hours in the first six months of 2012.

Similar to Canada, United States operating and financial results reflect 
reduced demand for United States oilfield services in the three and six months 
ended June 30, 2013, when compared to the same periods of 2012. In addition 
the decreased demand put downward pressure on revenue rates and margins in the 
current quarter compared to the second quarter of the prior year.

During the six months ended June 30, 2013 the Company added two new ADR(®) 
drilling rigs to its United States fleet, decommissioned six inactive drilling 
rigs and disposed of two well servicing rigs.

A strengthening United States dollar against the Canadian dollar in the first 
six months of 2013 had a positive impact on the translation of the Company's 
United States financial results to Canadian dollars. In the first six months 
of 2013 the average United States dollar exchange rate increased by 
approximately one percent to 1.02 when compared to the same period of the 
prior year.

International Oilfield Services

The Company's international operations recorded revenue of $132.6 million in 
the second quarter of 2013, a 20 percent increase over the $110.7 million 
recorded in the corresponding period of the prior year. Similarly, 
international revenues for the six months ended June 30, 2013, increased by 20 
percent to $257.3 million from $214.1 million recorded for the six months 
ended June 30, 2012. International operations contributed 30 percent of the 
Company's revenue in the second quarter of 2013 (2012 - 24 percent) and 25 
percent of the Company's revenue in the first half of 2013 (2012 - 19 
percent). International operating days for the three months ended June 30, 
2013 totaled 2,805 drilling days compared with 2,845 drilling days in 2012, a 
decrease of one percent. For the six months ended June 30, 2013, 
international operating days totaled 5,517 drilling days compared with 5,642 
drilling days for the six months ended June 30, 2012, a decrease of two 
percent.

Growth of the Company's international revenue in the first half of the year 
was the result of two new ADR's being added to the Company's international 
fleet and the relocation of an existing drilling rig from the United States to 
the international market late in 2012. These additions more than offset the 
expected reduction in 2013 drilling days due to the impact from the completion 
of the Company's drilling contracts in Mexico in 2012. Similar to the 
Company's United States operations, international operations benefited from 
the strengthening of the United States dollar relative to the Canadian dollar 
when translating financial results into Canadian dollars for reporting 
purposes in the first six months of 2013 compared to the first six months of 
the prior year.

During the six months ended June 30, 2013 the Company decommissioned one 
inactive drilling rig from its international fleet.

Depreciation
                Three months ended June       Six months ended June 30
                                     30

($               2013     2012   %           2013      2012   % Change
thousands)                       Change

Depreciation   55,419   50,440       10   112,609   108,599          4





The Company uses the unit of production method of calculating depreciation for 
the majority of its property and equipment. Depreciation expense totalled 
$55.4 million for the second quarter of 2013 compared with $50.4 million for 
the second quarter of 2012, an increase of 10 percent. Depreciation expense 
for the first six months of 2013 was $112.6 million, an increase of four 
percent over the $108.6 million recorded for the first six months of 2012. 
Increased depreciation reflects higher-valued equipment being added to the 
Company's global fleet throughout the latter half of 2012 and into the first 
six months of 2013.

General and Administrative Expense
                  Three months ended June     Six months ended June 30
                                       30

($ thousands)    2013     2012   % Change     2013     2012   % Change

General and    23,558   20,685         14   43,117   40,092          8
administrative

% of revenue      5.4      4.5                 4.2      3.5    



General and administrative expense increased 14 percent to $23.6 million (5.4 
percent of revenue) for the second quarter of 2013 compared with $20.7 million 
(4.5 percent of revenue) for the second quarter of 2012. For the six months 
ended June 30, 2013, general and administrative expense totaled $43.1 million 
(4.2 percent of revenue) compared with $40.1 million (3.5 percent of revenue) 
recorded for the six months ended June 30, 2012, an increase of eight percent. 
The overall increase in general and administrative expense in the current 
periods reflects the negative translational impact of a stronger United States 
dollar on United States and international administrative expenses and 
increased costs to support growing international operations.

Share-Based Compensation (Recovery) Expense
                 Three months ended June       Six months ended June 30
                                      30

($ thousands)    2013      2012   %          2013       2012   % Change
                                  Change

Share-based                           39    1,826    (6,216)      (129)
compensation  (4,570)   (3,294)

Share-based compensation (recovery) expense arises from the Black-Scholes 
valuation accounting associated with the Company's share-based compensation 
plans, whereby the liability associated with share-based compensation is 
adjusted for the effect of granting and vesting of employee stock options and 
changes in the underlying price of the Company's common shares.

For the three months ended June 30, 2013, share-based compensation (recovery) 
expense was a recovery of $4.6 million compared with a recovery of $3.3 
million recorded in the second quarter of 2012. For the six months ended June 
30, 2013, share-based compensation was an expense of $1.8 million compared 
with a recovery of $6.2 million for the six months ended June 30, 2012. 
The change in share-based compensation expense in the three and six months 
ended June 30, 2013, compared to the same periods of 2012 was a result of the 
change in the fair value of share-based compensation liability primarily 
resulting from movements in the price of the Company's common shares. The 
closing price of the Company's common shares was $16.28 at June 30, 2013 
($14.00 at June 30, 2012), compared with $17.32 at March 31, 2013 ($14.91 at 
March 31, 2012) and $15.37 at December 31, 2012 ($16.25 at December 31, 2011).

Interest Expense
              Three months ended June 30       Six months ended June 30

($               2013      2012   %            2013       2012   %
thousands)                        Change                         Change

Interest      4,538     5,624      (19)     8,659       9,878      (12)
expense 

Interest        (543)               341      (711)      (220)       223
income                   (123) 
               3,995     5,501     (27)      7,948     9,658       (18)

Interest is incurred on the Company's $10.0 million Canadian-based revolving 
credit facility, the $400.0 million global revolving credit facility and the 
USD $300.0 million senior unsecured notes issued in February 2012. The 
amortization of deferred financing costs associated with the issuance of the 
Company's long-term debt was included in interest expense in both quarters.

The decrease in interest expense in the three and six months ended June 30, 
2013, compared to the same periods of the prior year is due to interest 
incurred in the prior year on the USD $100.0 million remaining balance of the 
short-term acquisition loan which was repaid in full during the second quarter 
of 2012.

Foreign Exchange and Other
             Three months ended June 30        Six months ended June 30

($            2013      2012   % Change       2013      2012   % Change
thousands)

Foreign
exchange    21,800     5,037        333     17,912     8,811        103
and other 

Included in this amount is the impact of the conversion of the Australian 
operations from Australian dollars to United States dollars. The increase in 
foreign exchange loss in the three and six months ended June 30, 2013, 
compared to the same periods of 2012 is mainly due to the Australian currency 
weakening by approximately 12 percent against the United States dollar in the 
first six months of 2013 causing a foreign currency loss on translation of the 
Company's USD denominated debt into Australian dollars.

Income Taxes
             Three months ended June 30         Six months ended June 30

($            2013        2012   %             2013        2012   %
thousands)                       Change                           Change

Current
income     (679)        (519)       31       23,526     31,222      (25)
tax  

Deferred
income       6,497     13,720      (53)     18,036     28,208       (36)
tax  
            5,818       13,201               41,562     59,430      (30)
                                  (56) 

Effective
income tax  63.9          41.4                37.8         32.4         
rate (%)  

The effective income tax rate for the three months ended June 30, 2013 was 
63.9 percent compared with 41.4 percent for the three months ended June 30, 
2012. The effective income tax rate for the six months ended June 30, 2013 was 
37.8 percent compared with 32.4 percent for the six months ended June 30, 
2012. The increase in the effective income tax rate in the current quarter 
and first half of 2013 is due to a higher proportion of taxable income earned 
in high tax rate jurisdictions outside of Canada, further increased by the 
impact of foreign exchange translation losses for which the effective tax rate 
varies from statutory rates.

Financial Position

The following chart outlines significant changes in the consolidated statement 
of financial position from December 31, 2012 to June 30, 2013:

($ thousands)                Change        Explanation 

Cash and cash                79,531        See consolidated
equivalents                                statements of cash flows.
                                            

Accounts receivable        (50,501)        Decrease was due to
                                           reduced operating activity
                                           in North America in
                                          
                                           the second quarter of 2013
                                           compared to the fourth
                                           quarter of 2012. 
                                            

Inventories and other      (16,932)        Decrease due to normal
                                           course use of consumables
                                           offset by additional
                                           inventory. 
                                            

Property and equipment      177,287        Increase was due to
                                           additions to fixed assets
                                           from the current new build
                                           construction program;
                                           the acquisitions of the
                                           EGOC and Departure assets
                                           during the second quarter;
                                           and a strengthening of
                                           the USD quarter-end
                                           foreign exchange rate on
                                           the consolidation of the
                                           Company's foreign
                                           subsidiaries, offset by
                                           depreciation.
                                            

Accounts payable and       (15,791)        Decrease was due to
accruals                                   reduced operating activity
                                           in North America in the
                                           second quarter of 2013
                                           compared
                                           to the fourth quarter of
                                           2012, offset by increased
                                           purchases related to the
                                           current new build
                                           construction program.
                                            

Operating lines of           93,882        Increase was due to
credit                                     additional draws during
                                           the period on the global
                                           revolving credit facility
                                           and the impact
                                           of foreign exchange
                                           fluctuations on the
                                           consolidation of USD
                                           denominated debt held by
                                           the Company's foreign
                                           subsidiaries, offset by
                                           repayments during the
                                           period.
                                            

Income taxes payable       (12,586)        Decrease was due to tax
                                           instalments and refunds,
                                           net of the current income
                                           tax provision for the
                                           period.
                                            

Long-term debt               16,951        Increase is due to foreign
                                           exchange fluctuations on
                                           the USD denominated
                                           long-term debt. 
                                            

Deferred income taxes        18,969        Increase primarily due to
                                           tax depreciation of assets
                                           added during the first
                                           half of 2013.
                                            

Shareholders' equity         87,879        Increase was due to net
                                           income for the period and
                                           the impact of foreign
                                           exchange rate fluctuations
                                           on net
                                           assets of foreign
                                           subsidiaries, offset by
                                           the amount of dividends
                                           declared in the period.
                                            



Funds from Operations and Working Capital
                 Three months ended June 30        Six months ended June 30

($                 2013       2012        %       2013        2012        %
thousands)                           Change                          Change

Funds from     88,677     87,336         2     228,479     268,571     (15)
operations  

Funds from
operations      $0.58      $0.57         2       $1.50     $ 1.76      (15)
per share 

Working
capital      (38,429)     13,861      (377)                13,861     (377)
(deficit)                                     (38,429)
(1)  

(1) Comparative figure as of December 31, 2012.

During the three months ended June 30, 2013, the Company generated funds from 
operations of $88.7 million ($0.58 per common share) compared with funds from 
operations of $87.3 million ($0.57 per common share) for the three months 
ended June 30, 2012, an increase of two percent. For the six months ended June 
30, 2013, the Company generated funds from operations of $228.5 million ($1.50 
per common share), a decrease of 15 percent from funds from operations of 
$268.6 million ($1.76 per common share) generated in the first half of 2012. 
This decrease reflects lower activity levels in the Company's North American 
operations in the current year versus the comparable period in 2012.

At June 30, 2013, the Company had a working capital deficit of $38.4 million, 
compared to positive working capital of $13.9 million at December 31, 2012. 
The Company's working capital resources were used in the current quarter to 
fund the acquisitions of the assets of EGOC and Departure, as well as the 
ongoing new build program. The Company expects funds generated by 
operations, combined with current and future credit facilities, to fully 
support current operating and capital requirements. Existing revolving 
credit facilities provide for total borrowing of $410.0 million, of which 
$70.0 million was available at June 30, 2013.

Investing Activities
                   Three months ended June 30           Six months ended June 30

($ thousands)       2013        2012   %              2013         2012   %
                                       Change                             Change

Acquisitions    (76,408)          -       -      (76,408)            -         -

Purchase of                                                            
property and  (83,605)     (76,055)       10     (146,362)   (156,609)       (7)
equipment 

Net change in
non-cash        (4,974)     (1,140)      336       (4,489)                  (67)
working                                                      (13,449)  
capital 

Cash used in                                              
investing     (164,987)    (77,195)      114    (227,259)     (170,058)       34
activities 

Purchases of property and equipment during the second quarter of 2013 totaled 
$83.6 million (2012 - $76.1 million). Purchases of property and equipment 
during the first half of 2013 totaled $146.4 million (2012 - $156.6 
million). The purchase of property and equipment for the three and six 
months ended June 30, 2013 relate predominantly to expenditures made pursuant 
to the Company's ongoing new build program.

During the second quarter of 2013 the Company acquired the rental assets of 
EGOC and the directional drilling assets of Departure. These acquisitions 
increase the Company's presence in the rental and directional drilling markets 
in Western Canada.

Financing Activities
                   Three months ended June 30        Six months ended June 30

($                2013         2012   %             2013        2012   %
thousands)                            Change                           Change

Net increase
in operating    5,646       75,666      (93)      78,199     69,681        12
lines of
credit  

Issue of
senior             -            -           -        -       300,000         
unsecured                                                               (100)
notes 

Repayment of        -                  (100)          -                      
term loan                (103,279)                         (403,279)    (100)

Issue of
capital           256            -         -       1,494        43      3,374
stock  

Purchase of                                                         
shares held   (4,848)       (6,887)      (30)   (5,358)    (7,520)       (29)
in trust  

Deferred
financing           -            -          -        -      (2,156)     (100)
costs 

Dividends                 (16,088)         5                                5
             (16,864)                           (33,727)   (32,175) 

Net change
in non-cash    (3,076)        (21)     14,548      (119)        995     (112)
working
capital

Cash (used
in) provided (18,886)     (50,609)      (63)     40,489                 (154)
by financing                                               (74,411) 
activities  

The Company's available operating lines of credit consist of a $400.0 million 
global revolving credit facility (the "Global Facility") and a $10.0 million 
Canadian based revolving credit facility (the "Canadian Facility"). The Global 
Facility is available to the Company and certain of its wholly-owned 
subsidiaries, and may be drawn in Canadian, United States or Australian 
dollars, up to the equivalent value of $400.0 million Canadian dollars. The 
amount available under the Canadian Facility is $10.0 million or the 
equivalent United States dollars.

Net draws of the operating lines of credit were mainly used to fund the 
ongoing new build program, which added three new ADR(®) drilling rigs to the 
Company's fleet in the first half of 2013; one in Canada and two in the United 
States as well as three new well servicing rigs, all in Canada. As of June 
30, 2013, the operating lines of credit are primarily being used to fund the 
completion of the most recent new build program and to support international 
operations.

In February 2012, the Company completed the private placement of USD $300.0 
million of senior unsecured notes, with the proceeds from the issuance being 
used to repay a portion of the USD $400.0 million unsecured term loan with the 
remaining balance repaid in full in the second quarter of 2012.

On June 21, 2013 the Company received approval from the Toronto Stock Exchange 
to acquire for cancellation up to three percent of the Company's issued and 
outstanding common shares under a Normal Course Issuer Bid (the "Bid"). The 
Company may purchase up to 4,599,367 common shares for cancellation. The Bid 
commenced on June 25, 2013, and will terminate on June 24, 2014, or such 
earlier time as the Bid is completed or terminated at the option of the 
Company. As at June 30, 2013, no common shares have been purchased and 
cancelled pursuant to the Bid.

The Company previously had a Bid that commenced on June 18, 2012, and 
terminated on June 17, 2013, under which no common shares were purchased and 
cancelled.

The Board of Directors of the Company has declared a third quarter dividend of 
$0.11 per common share to be payable October 4, 2013, to all Common 
Shareholders of record as of September 20, 2013. The dividend is pursuant to 
the quarterly dividend policy adopted by the Company. Pursuant to subsection 
89(1) of the Canadian Income Tax Act ("ITA"), the dividend being paid is 
designated as an eligible dividend, as defined in subsection 89(1) of the ITA.

New Builds

During the six months ended June 30, 2013, the Company commissioned two new 
ADR(®) drilling rigs in the United States; and one new ADR(®) drilling rig 
and three new well servicing rigs in Canada.

The remaining new build estimated delivery schedule, by geographic area, is as 
follows:
                                                   Estimated Delivery Date
                   Q3-2013     Q4-2013     Q1-2014     Q2-2014     Q3-2014      Total

ADRs                                                                           

  Canada                  1          -            -         1             -         2

  United                  1           1           -         -             -         2
  States   

  International          -            2           -         -             -         2

Total                     2           3           -         1             -         6

Well Servicing                                                                 

  Canada                  3           -           -         -             1         4

  United                  -           -           -        -             -          -
  States  

Total                    3            -           -         -             1         4

In addition to the above new builds, the Company is refurbishing and upgrading 
three drilling rigs into ADR(®)-style drilling rigs. One drilling rig is 
being refurbished for the Canadian market, with an estimated delivery date in 
the first quarter of 2014. The two remaining drilling rigs are being 
refurbished for the international market, one of the drilling rigs is 
scheduled for delivery in the third quarter of 2013 and the other drilling rig 
is scheduled for delivery in the fourth quarter of 2013. All of the major 
refurbishments are supported by long-term contracts.

Outlook

The North American economy continues to show signs of improvement which should 
improve the prospects for crude oil and natural gas, and lead to higher 
development activity levels in the coming years. While North American and 
international crude oil pricing differentials have recently narrowed, North 
America is still in need of additional transportation infrastructure to 
efficiently move crude oil and natural gas to established markets. Until 
North American infrastructure needs are effectively addressed and the global 
economy strengthens, commodity prices will remain volatile and result in 
uncertain levels of demand for oilfield services, particularly in Canada and 
the United States.

Seasonal factors had an unusually negative impact on the Company's Canadian 
operations in the second quarter of 2013, representing the lowest activity 
level in several years. Consistent with the upward revision in the recent well 
forecast by the Canadian Association of Oilwell Drilling Contractors, 
prospects for increased activity in the Company's Canadian operations in the 
second half of 2013 are encouraging; activity levels are expected to rebound 
to levels similar with those experienced in the second half of 2012. 
Additionally, the rental equipment and directional drilling assets acquired 
during the second quarter will begin contributing in the second half of 
2013. One new ADR(® )drilling rig and three new well servicing rigs were 
added during the first half of the year; and three additional ADR(®) drilling 
rigs and four well servicing rigs are currently being refurbished or under 
construction by the Company for the Canadian market.

The Company's United States operations continued to be negatively impacted by 
industry adjustments to new resource plays and related technology, regional 
shifts between natural gas and crude oil drilling, and transportation 
constraints. Current expectations call for improved demand for oilfield 
services in the United States in the second half of 2013, a reversal from the 
year-over-year decrease in first half activity levels. Plans for new 
equipment in the Company's United States operations include two new ADR(®) 
drilling rigs under term contracts for delivery later this year. Two new 
ADR(®) drilling rigs were added during the first half of 2013.

The Company's international operations experienced continued growth during the 
second quarter. Latin American operations continue to face the usual political 
and currency challenges; and eastern hemisphere operations continue to 
develop. Prospects remain positive for future growth in the Company's 
international operations, despite some regional uncertainties. The ongoing new 
build program includes four ADR(®) drilling rigs currently being refurbished 
or under construction for the international market.

Risks and Uncertainties

This document contains forward-looking statements based upon current 
expectations that involve a number of business risks and uncertainties. The 
factors that could cause results to differ materially include, but are not 
limited to, political and economic conditions, crude oil and natural gas 
prices, foreign currency fluctuations, weather conditions and the ability of 
oil and natural gas companies to raise capital or other unforeseen conditions 
which could impact on the use of the services supplied by the Company.

Conference Call

A conference call will be held to discuss the Company's second quarter 2013 
results at 2:00 p.m. MST (4:00 p.m. EST) on Tuesday, August 6, 2013. The 
conference call number is (647) 427-7450 (in Toronto) or 1-888-231-8191 
(outside Toronto). A taped recording will be available until August 13, 2013 
by dialing 1-416-849-0833 (in Toronto) or 1-855-859-2056 (outside Toronto) and 
entering the reservation number 20553551. A live broadcast may be accessed 
through the Company's web site at www.ensignenergy.com.

Ensign Energy Services Inc. is an international oilfield services contractor 
and is listed on the Toronto Stock Exchange under the trading symbol ESI.

Ensign Energy Services Inc.
Consolidated Statements of Financial Position 
As at
                                             June 30      December 31
                                                2013             2012

(Unaudited, in thousands of Canadian                       
dollars)   
                                                           

Assets                                                               

Current Assets                                                       

  Cash and cash equivalents             $    112,739   $       33,208

  Accounts receivable                        372,659          423,160

  Income taxes receivable                      1,389                -

  Inventories and other                       59,413           76,345
                                                                     
                                             546,200          532,713
                                                                     

Property and equipment                     2,710,530        2,533,243

Note receivable                                5,151            5,021
                                        $  3,261,881   $    3,070,977
                                                                     

Liabilities                                                          

Current Liabilities                                                  

  Accounts payable and accruals         $    228,821   $      244,612

  Operating lines of credit                  325,872          231,990

  Income taxes payable                             -           11,197

  Dividends payable                           16,864           16,853

  Share-based compensation                    13,072           14,200
                                                                     
                                             584,629          518,852
                                                                     

Long-term debt                               313,540          296,589

Share-based compensation                       5,447            4,119

Deferred income taxes                        412,428          393,459
                                                                     
                                           1,316,044        1,213,019
                                                                     

Shareholders' Equity                                                 
                                                                     

  Share capital                              163,764          164,670

  Contributed surplus                          5,687            4,811

  Foreign currency translation reserve        37,358         (16,007)

  Retained earnings                        1,739,028        1,704,484
                                                                     
                                           1,945,837        1,857,958
                                                                     
                                        $  3,261,881   $    3,070,977



Ensign Energy Services Inc.
Consolidated Statements of Income 
For the three and six months ended June 30
                                                               

(Unaudited, in
thousands of
Canadian dollars,                                                      
except per share
data)
                       Three months ended              Six months ended
                       June 30     June 30        June 30       June 30
                          2013        2012           2013          2012
                                                               

Revenue              $ 437,874   $ 463,878    $ 1,019,016   $ 1,141,549

Expenses                                                               

  Oilfield             328,570     353,631        725,771       796,974
  services 

  Depreciation          55,419      50,440        112,609       108,599

  General and           23,558      20,685         43,117        40,092
  administrative

  Share-based          (4,570)     (3,294)          1,826       (6,216)
  compensation

  Foreign exchange      21,800       5,037         17,912         8,811
  and other
                                                                       
                       424,777     426,499        901,235       948,260
                                                                       

Income before
interest and income     13,097      37,379        117,781       193,289
taxes 
                                                                       

  Interest income          543         123            711           220

  Interest expense     (4,538)     (5,624)        (8,659)       (9,878)
                                                                       

Income before            9,102      31,878        109,833       183,631
income taxes
                                                                       

Income taxes                                                           

  Current tax            (679)       (519)         23,526        31,222

  Deferred tax           6,497      13,720         18,036        28,208
                                                                       
                         5,818      13,201         41,562        59,430
                                                                       

Net income           $   3,284   $  18,677   $     68,271   $   124,201
                                                                       
                                                               

Net income per                                                         
share 

  Basic             $    $0.02   $   $0.12   $      $0.45   $     $0.81

  Diluted           $    $0.02   $   $0.12   $      $0.45   $     $0.81





.

Ensign Energy Services Inc.
Consolidated Statements of Cash Flows
For the three and six months ended June 30
                                                                 

(Unaudited, in
thousands of
Canadian                                          
dollars, except
per share data)
                         Three months ended              Six months ended
                     June 30        June 30        June 30        June 30
                        2013           2012           2013           2012

Cash provided                                                            
by (used in)
                                                                 

Operating                                                                
activities

Net income      $      3,284   $     18,677   $     68,271   $    124,201

Items not                                                                
affecting cash

  Depreciation        55,419         50,440        112,609        108,599

  Share-based
  compensation,      (2,776)        (1,195)          4,060        (2,941)
  net of cash
  paid

  Unrealized
  foreign             26,171          4,876         25,341          9,075
  exchange and
  other

  Accretion on
  long-term               82            818            162          1,429
  debt 

  Deferred             6,497         13,720         18,036         28,208
  income tax 

Net change in
non-cash              77,251         72,300         44,293         25,243
working
capital 
                                                                         
                     165,928        159,636        272,772        293,814
                                                                         

Investing                                                                
activities

Purchase of
property and        (83,605)       (76,055)      (146,362)      (156,609)
equipment

Acquisitions        (76,408)             -        (76,408)              -

Net change in
non-cash             (4,974)        (1,140)        (4,489)       (13,449)
working
capital 
                                                                         
                   (164,987)       (77,195)      (227,259)      (170,058)
                                                                         

Financing                                                                
activities

Net increase in
operating lines        5,646         75,666         78,199         69,681
of credit 

Issue of senior           -              -               -        300,000
unsecured notes

Repayment of              -       (103,279)              -      (403,279)
term loan

Issue of                 256             -           1,494             43
capital stock

Purchase of
shares held in       (4,848)        (6,887)        (5,358)        (7,520)
trust 

Deferred                  -              -               -        (2,156)
financing costs

Dividends           (16,864)       (16,088)       (33,727)       (32,175)

Net change in
non-cash             (3,076)           (21)          (119)            995
working
capital 
                                                                         
                    (18,886)       (50,609)         40,489       (74,411)
                                                                         

Net (decrease)
increase in         (17,945)         31,832         86,002         49,345
cash and cash
equivalents

  Effects of
  foreign
  exchange on        (7,995)        (1,123)        (6,471)          1,619
  cash and 
  cash
  equivalents 

Cash and cash                                                            
equivalents

  Beginning of       138,679         22,868         33,208          2,613
  period

  End of period  $   112,739   $     53,577    $   112,739   $     53,577
                                                                         
                                                                         

Supplemental                                                             
information

  Interest paid  $     7,312   $      5,061   $      7,419   $      7,495

  Income taxes   $     3,135   $     16,541   $     34,723   $     26,965
  paid















SOURCE  Ensign Energy Services Inc. 
Glenn Dagenais, Executive Vice President Finance and Chief Financial  Officer, 
(403) 262-1361. 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/August2013/06/c4130.html 
CO: Ensign Energy Services Inc.
ST: Alberta
NI: OIL ERN CONF  
-0- Aug/06/2013 09:54 GMT