Secure Announces Second Quarter 2013 Results and Increases Capital Expenditure Program by $40 Million

Secure Announces Second Quarter 2013 Results and Increases Capital Expenditure 
Program by $40 Million 
CALGARY, ALBERTA -- (Marketwired) -- 08/13/13 -- Secure Energy
Services Inc. ("Secure" or the "Corporation") (TSX:SES) today
announced financial and operational results for the three and six
months ended June 30, 2013. The following should be read in
conjunction with the management's discussion and analysis ("MD&A"),
the condensed consolidated interim financial statements and notes of
Secure which are available on SEDAR at www.sedar.com. 
SECOND QUARTER AND YEAR TO DATE 2013 FINANCIAL AND OPERATIONAL
HIGHLIGHTS 


 
                      Three Months Ended             Six Months Ended       
                           June 30,                      June 30,           
($000's except                                                              
 share and per                              %                             % 
 share data)           2013       2012 change        2013       2012 change 
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Revenue                                                                     
 (excludes oil                                                              
 purchase and                                                               
 resale)             85,530     68,906     24     232,652    184,333     26 
Oil purchase                                                                
 and resale         252,323    154,756     63     428,179    317,042     35 
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Total revenue       337,853    223,662     51     660,831    501,375     32 
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EBITDA (1)           14,158     13,789      3      53,862     46,348     16 
  Per share                                                                 
   ($), basic          0.13       0.15    (13)       0.51       0.51      - 
  Per share                                                                 
   ($), diluted        0.13       0.15    (13)       0.50       0.49      2 
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Net earnings                                                                
 (loss)              (2,375)     1,087   (318)     15,382     16,064     (4)
  Per share                                                                 
   ($), basic         (0.02)      0.01   (300)       0.15       0.18    (17)
  Per share                                                                 
   ($), diluted       (0.02)      0.01   (300)       0.14       0.17    (18)
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Capital                                                                     
 Expenditures        42,677     48,631    (12)     84,945     84,464      1 
Total assets        824,413    618,736     33     824,413    618,736     33 
Long term                                                                   
 borrowings         144,420    135,109      7     144,420    135,109      7 
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Common Shares -                                                             
 end of period  107,120,360 91,805,351     17 107,120,360 91,805,351     17 
Weighted                                                                    
 average common                                                             
 shares                                                                     
  basic         106,824,753 91,527,556     17 105,785,632 91,092,801     16 
  diluted       106,824,753 94,210,135     13 108,539,612 94,194,889     15 
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(1) Refer to "Non GAAP measures and operational definitions"                

 
Revenue (excluding oil purchase and resale) for the three and six
months ended June 30, 2013 increased 24% and 26% compared to the
respective prior year periods while earnings before interest, taxes,
depreciation and amortization ("EBITDA") improved 3% and 16% for the
three and six months ended June 30, 2013 compared to the same periods
in 2012. Financial results were influenced by a later spring break-up
and by a wet June throughout the Western Canadian Sedimentary Basin
("WCSB") and North Dakota. Canadian industry activity declined
quarter over quarter; wells drilled, rig count and meters drilled
decreased 15%, 10% and 1% respectively. 
Secure completed the acquisition of Frontline Integrated Services
Ltd. ("Frontline") on April 1, 2013 and announced the acquisition of
Target Rentals Ltd. ("Target") on July 2, 2013. These acquisitions
expand the value chain of services the Corporation offers its
customers. In addition to the acquisition of Frontline and Target,
growth and expansion capital expenditures incurred during the three
and six months ended June 30, 2013 totaled $36.2 million and $77.7
million respectively. The Corporation continues to seize market
opportunities by executing organic growth initiatives. In order to
capitalize on these continued opportunities, the Corporation has
increased its capital expenditure program from $155.0 million to
$195.0 million. The increased capital program is intended to add new
PRD facilities, expand current facilities, develop new technologies
for water and oil recycling, purchase long lead items for 2014
capital projects and for business development activities focused on
future opportunities. 


 
--  ESTABLISHED ON SITE DIVISION 
    
    --  The Corporation completed the acquisition of Frontline in the
        beginning of the second quarter. Frontline's customer offerings
        align with the environmental services group, previously included in
        the DS division, and the integrated water services group, previously
        included in the PRD division. Therefore, effective April 1, 2013,
        the On Site division was created combining these three operations.
        The combined operation improves customer service by ensuring the
        combined business units offer environmental solutions that integrate
        project management, on site equipment and treatment and disposal
        facilities. The division will offer customers a fully integrated
        service to manage environmental liabilities, waste collection,
        pipeline protection and maintenance, emergency response support,
        environmental equipment and environmental consulting / project
        management; 
        
--  REVENUE INCREASES 
    
    --  Revenue for the three and six months ended June 30, 2013 (excluding
        oil purchase and resale) increased 24% to $85.5 million from $68.9
        million and 26% to $232.7 million from $184.3 million as compared to
        the three and six months ended June 30, 2012 respectively. 
        
        --  PRD division revenue (excluding oil purchase/resale) for the
         
   three months and six months ended June 30, 2013 increased 48%
            and 40% over the prior year comparative periods. Second quarter
            revenue increased due to new facility additions and expansions
            subsequent to the second quarter of 2012. Crude oil marketing
            revenue increased 64% and 240% for the three and six months
            ended June 30, 2013 as compared to the same periods of 2012 as a
            result of increased oil throughput and capitalization on market
            spread differential opportunities; 
            
        --  DS division revenue for the three and six months ended June 30,
            2013 increased 1% and 15% over the comparative prior year
            periods. The second quarter of 2013 experienced a wet spring
            which limited field activity. DS Canadian market share in the
            second quarter of 2013 increased by seven percentage points to
            34% over the second quarter of 2012, this was partially offset
            by a lower average revenue per operating day; and 
            
        --   OS division revenue for the three and six months ended June 30,
            2013 increased 114% and 87% over the prior year comparative
            periods, due to the Frontline acquisition. 
            
    --  Oil purchase and resale revenue in the PRD division for the three
        and six months ended June 30, 2013 increased 63% to $252.3 million
        from $154.8 million and 35% to $428.2 million from $317.0 million as
        compared to the three and six months ended June 30, 2012
        respectively. The increase resulted from high crude oil marketing
        activity at existing facilities and from the Drayton Valley,
        Silverdale and Dawson FST's being fully operational in the first
        quarter of 2013 whereas they were in start-up in the first quarter
        of 2012. Overall demand increased quarter over quarter. 
        
--  EBITDA OF $14.2 MILLION IN THE SECOND QUARTER AND $53.9 MILLION YEAR-TO-
    DATE 
    
    --  For the three and six months ended June 30, 2013 EBITDA increased 3%
        to $14.2 million from $13.8 million and 16% to $53.9 million from
        $46.3 million as compared to the three and six months ended June 30,
        2012. EBITDA increases in the PRD division for the second quarter
        were offset by lower EBITDA in the DS and OS divisions as a result
        of lower drilling activity from a wet spring in the WCSB and North
        Dakota. In the current quarter, the PRD division incurred
        commissioning expenses associated with the start-up of the Judy
        Creek and Rocky FST's. Both the PRD and DS divisions continued to
        heavily invest in business development, including research and
        development activities, to prepare for 2014 projects. The OS
        division incurred expenses to mobilize equipment and hire staff to
        start projects in the second quarter and manage increases in
        activity expected in the third and fourth quarters of 2013. 
        
    --  Net loss for the second quarter of 2013 was $2.4 million compared to
        net earnings of $1.1 million in the second quarter of 2012. Net
        earnings decreased quarter over quarter due to: 
        
        --  OS division results were impacted by wet weather that prevented
            projects from starting up in the second quarter. Additional
            expenses were incurred to mobilize equipment and staff for the
            expected increases in activity for the second half of this year;
            
        --  Increased general and administrative expenses in the second
            quarter of 2013 compared to the second quarter of 2012 due to
            establishment of the OS division, set up of an office in Denver
            and higher business development expenses in order to support the
            increased capital expenditure programs related to organic and
            acquisition opportunities; and 
            
        --  Lower activity resulting from wet weather conditions experienced
            this quarter as compared to the second quarter of 2012. Wet
            weather decreases customer activity as projects are delayed
            until road access is restored. 
            
--  DIVERSIFICATION INTO NEW MARKETS AND NEW AREAS 
    
    --  Organic expansion and growth capital totaled $77.7 million for the
        six months ended June 30, 2013 and include 2012 carryover capital
        related to the Judy Creek and Rocky FST's. Total assets as of June
        30, 2013 were $824.4 million compared to $618.7 million as of June
        30, 2012. Major expenditures for the six months ended June 30, 2013
        included: 
        
        --  Completion and commissioning of the Judy Creek and Rocky FST's; 
            
        --  Construction commenced on the following new facilities: 
            
            --  Kaybob SWD; the facility is expected to become operational
                in the third quarter; 
                
            --  Edson temporary SWD, which opened in the first quarter, to
                become an FST. The facility is expected to be operational
                early 2014; 
                
            --  Keene and Stanley SWD facilities in North Dakota; the
                facilities are expected to be operational by the end of the
                year 
                
        --  Preliminary construction commenced on the 13 Mile landfill in
            North Dakota, the majority of the capital spend will occur in
            the third quarter of 2013. The landfill is expected to be
            complete by the end of the year; 
            
        --  Pre-engineering commenced on the new Saddle Hills landfill.
            Construction is expected to begin in the third quarter of 2013; 
            
        --  Expansion at the Drayton Valley and Fox Creek FST's with second
            treaters being added; and 
            
        --  Various long lead purchases for 2013 and 2014 PRD capital
            projects and rental equipment for the DS division. Both the PRD
            and DS divisions continue to heavily invest in business
            development, including research and development activities, to
            prepare for 2014 projects. 
            
--  SOLID BALANCE SHEET 
    
    --  Secure's debt to EBITDA ratio was 1.57 as of June 30, 2013; well
        under the Corporation's credit facility covenant of 3.00; and 
        
    --  Positive working capital of $60.5 million and available borrowings
        of $133.0 million. 
        
--  BRAZEAU SWD 
    
    --  The Brazeau SWD facility was struck by lightning during the second
        quarter. The facility is currently closed until the repairs are
        completed which is expected to be sometime in the fourth quarter of
        this year. The estimated net book value of the damage to the
        facility is $2.7 million and is expected to be fully reimbursed by
        insurance coverage up to the replacement value of $4.4 million for
        all of the repair related costs. 
        
--  SUBSEQUENT EVENT 
    
    --  On July 2, 2013 the Corporation, through its wholly owned subsidiary
        Marquis Alliance Energy Group Inc., announced the closing of the
        agreement to acquire all the issued and outstanding shares of Target
        Energy Rentals Ltd. ("Target") for an aggregate purchase price,
        including assumed debt, of $39.8 million. The purchase price was
        paid with $21.0 million in cash and the issuance of 1,367,047 common
        shares of Secure.
        
        Target was a privately owned oilfield service company headquartered
        in Grande Prairie, Alberta and offers equipment rental and support
        services in both the drilling and completions sectors. Their core
        service is the supply of a patented dual containment fluid storage
        tank system for oil based drilling fluid applications.
        
        The addition of Target's market leading dual containment fluid
        storage tank system strengthens Secure's integrated service offering
        while supporting and expanding the existing drilling fluids and
        rental business of the Corporation's DS division. The "Target Tank"
        system provides custome
rs with a safe, environmentally responsible,
        cost effective solution to storing oil based drilling fluids and
        other sensitive fluids at the drill site. 
 
PRD DIVISION OPERATING HIGHLIGHTS                                           
                                                                            
                           Three Months Ended          Six Months Ended     
                                June 30,                   June 30,         
                                                %                          %
($000's)                   2013      2012  Change     2013      2012  Change
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Revenue                                                                     
  Processing, recovery                                                      
   and disposal                                                             
   services (a)          35,967    24,247      48   80,318    57,480      40
  Oil purchase and                                                          
   resale service       252,323   154,756      63  428,179   317,042      35
                       -----------------------------------------------------
  Total PRD division                                                        
   revenue              288,290   179,003      61  508,497   374,522      36
                       -----------------------------------------------------
                                                                            
                                                                            
Operating Expenses                                                          
  Processing, recovery                                                      
   and disposal                                                             
   services (b)          15,413    11,006      40   30,314    22,428      35
  Oil purchase and                                                          
   resale service       252,323   154,756      63  428,179   317,042      35
  Depreciation,                                                             
   depletion, and                                                           
   amortization           9,838     6,287      56   18,855    12,816      47
                       -----------------------------------------------------
  Total PRD division                                                        
   operating expenses   277,574   172,049      61  477,348   352,286      36
General and                                                                 
 administrative           5,746     2,342     145   10,705     4,961     116
                       -----------------------------------------------------
Total PRD division                                                          
 expenses               283,320   174,391      62  488,053   357,247      37
                                                                            
Operating Margin (1)                                                        
 (a-b)                   20,554    13,241      55   50,004    35,052      43
Operating Margin as a                                                       
 % of revenue (a)            57%       55%      4       62%       61%      2
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(1) Refer to "Non GAAP measures and operational definitions"                

 
Highlights for the PRD division included: 


 
--  Revenue from processing, recovery and disposal for the three months
    ended June 30, 2013 increased 48% to $36.0 million from $24.2 million
    for the three months ended June 30, 2012. Revenue from processing,
    recovery and disposal for the six months ended June 30, 2013 increased
    40% to $80.3 million from $57.5 million for the six months ended June
    30, 2012. The 48% increase for the three months ended June 30, 2013 and
    the 40% increase for the six months ended June 30, 2013 relate to the
    following: 
    
    --  New facility additions and expansions subsequent to the second
        quarter of 2012 which include: the addition of three SWD facilities
        in the US; the completion of Fox Creek landfill in December 2012;
        the completion of the new Edson temporary water injection facility
        in January 2013; the commissioning of the Rocky and Judy Creek FST's
        in the second quarter of 2013 ("new facilities and expansions"); and
        
    --  Increased demand for the Corporation's products and services. 
        
--  Revenue from processing activity was higher for both the three and six
    months ended June 30, 2013 as processing volumes increased by 57% and
    42% respectively, over the comparable periods in 2012. In addition,
    disposal volumes increased by 48% and 42% respectively. The majority of
    the increase in disposal volume resulted from the addition of the three
    PRD facilities in the US subsequent to the second quarter of 2012. The
    remainder of the increases in revenue from both processing and disposal
    for the three and six months ended June 30, 2013 relate to higher
    volumes received at the Corporation's existing facilities (excluding
    volumes from new facilities added after the second quarter of 2012). A
    significant portion of the increase relates to the addition of the new
    US SWD facilities (DRD Saltwater Disposal LLC ("DRD") acquisition and
    the completion of Crosby SWD) in North Dakota in the second half of
    2012. 
    
--  Revenue from the sale of oil recovered through waste processing, crude
    oil handling, marketing and terminalling increased by 70% and 48% for
    the three and six months ended June 30, 2013 compared to the same
    periods in 2012. The amount of recovery revenue increased as a result of
    increased processing volumes from the addition of new facilities and
    expansions subsequent to the second quarter of 2012. A large portion of
    the 70% increase in recovery revenue for the three months ended June 30,
    2013 is a result of the Corporation's ability to capitalize on crude oil
    marketing opportunities at its FST's. Crude oil marketing revenue
    increased by 64% and 240% for the three and six months ended June 30,
    2013 compared to the same periods of 2012. Increased oil throughput at
    the Corporation's pipeline connected FST's in conjunction with the
    Corporation's ability to capitalize on market spread differential
    opportunities (including maximizing crude oil marketing opportunities
    available by shipping crude oil via rail) throughout the quarter and
    year to date has led to the significant increases in revenue from this
    service line as compared to the same periods of 2012. In a
ddition, the
    Corporation's Dawson FST was fully operational in 2013, whereas it was
    in the startup phase in the 2012 comparable periods. 
    
--  Operating expenses from PRD services for the three and six months ended
    June 30, 2013 increased 40% and 35% respectively, as compared to the
    same periods in 2012. The increase in operating expenses for the three
    and six months ended June 30, 2013 compared to the same respective
    periods in 2012 relate to the new facilities and expansions added
    organically, the acquisition of DRD in July 2012, and the increases in
    both processing and disposal volumes at the Corporation's existing
    facilities. Additional expenses were incurred in the second quarter of
    2013 related to commissioning of the Judy Creek and Rocky FST's. Revenue
    for the three and six months ended June 30, 2013 increased 48% and 40%,
    respectively, which is consistent with the 40% and 35% increases in
    operating expenses over the comparable periods of 2012. 
    
--  Operating margin as a percentage of revenue from PRD services was 57%
    for the three months ended June 30, 2013 compared to 55% for the same
    period of 2012. Operating margin as a percentage of revenue was 62% for
    the six months ended June 30, 2013 compared to 61% for the same period
    in 2012. The 2% impact to operating margin for the three months ended
    June 30, 2013 and the 1% impact to operating margins for the six months
    ended June 30, 2013 is a result of improvements in operating
    efficiencies, increases in crude oil marketing activities at the
    Corporation's pipeline connected FST's and from volumes managed by rail.
    
--  General and administrative ("G&A") expenses for the three months ended
    June 30, 2013 increased 145% to $5.7 million from $2.3 million in the
    comparative period in 2012. G&A expenses for the six months ended June
    30, 2013 increased 116% to $10.7 million from $5.0 million in the
    comparative period in 2012
. Wages and salaries increased 158% and 143%
    for the three and six months ended June 30, 2013, respectively.
    Additional employees were hired to support expanded operations as well
    as to further growth opportunities. The division continued to heavily
    invest in business development to prepare for 2014 projects. 
    
 
DS DIVISION OPERATING                                                       
 HIGHLIGHTS                                                                 
                                                                            
                         Three Months Ended           Six Months Ended      
                              June 30,                    June 30,          
                                              %                           % 
($000's)                 2013      2012  Change      2013      2012  Change 
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Revenue                                                                     
  Drilling services                                                         
   (a)                 40,998    40,663       1   134,251   117,180      15 
                                                                            
Operating expenses                                                          
  Driling services                                                          
   (b)                 33,412    32,003       4   104,165    89,740      16 
  Depreciation and                                                          
   amortization         3,803     2,898      31     7,474     5,656      32 
                     -------------------------------------------------------
  Total DS division                                                         
   operating                                                                
   expenses            37,215    34,901       7   111,639    95,396      17 
General and                                                                 
 administrative         4,812     5,169      (7)   10,962    10,930       - 
                     -------------------------------------------------------
Total DS division                                                           
 expenses              42,027    40,070       5   122,601   106,326      15 
                                                                            
Operating Margin (1)                                                        
 (a-b)                  7,586     8,660     (12)   30,086    27,440      10 
Operating Margin %                                                          
 (1)                       19%       21%    (10)       22%       23%     (4)
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(1) Refer to "Non GAAP measures and operational definitions"                

 
Highlights for the DS division included: 


 
--  Revenue from the DS Division for the three months ended June 30, 2013
    increased 1% to $41.0 million from $40.7 million for the three months
    ended June 30, 2012. Revenue for the six months ended June 30, 2013
    increased 15% to $134.3 million from $117.2 million for the six months
    ended June 30, 2012. Overall DS revenue was relatively flat from the
    second quarter of 2012 to the second quarter of 2013 as the combined 5%
    increase in the drilling fluids service line revenue was offset by the
    41% decrease in revenue for the equipment rentals service line due to
    lower US revenue as a result of a decrease in rig activity in North
    Dakota, and a more competitive environment that resulted in lower
    pricing. Major drivers for the drilling fluids service line revenue
    increase of 5% are due to a higher proportion of SAGD activity,
    increased US based revenue, the addition of Imperial Drilling Fluids
    Engineering ("IDF") in the third quarter of 2012 and increased volumes
    of oil based drilling fluids. For the six months ended June 30, 2013,
    drilling fluids service revenue increased 17% from the six months ended
    June 30, 2012. The same factors increasing revenue in the second quarter
    comparative periods apply to the six month period increase. 
    
--  WCSB market share for the three and six months ended June 30, 2013
    increased by seven percentage points to 34% from 27% and increased four
    percentage points to 32% from 28% as compared to the three and six
    months ended June 30, 2012. The CAODC average monthly rig count for
    Western Canada provides the basis for market share calculations.
    Operating rig days for the second quarter of 2013 were 4,697 compared to
    4,396 for the second quarter of 2012. 
    
--  Revenue per operating day for the three and six months ended June 30,
    2013 decreased 5% to $6,690 from $7,073 and increased 11% to $6,036 from
    $5,437 as compared to the three and six months ended June 30, 2012. The
    drop in revenue per day for the second quarter of 2013 compared to the
    second quarter of 2012 was due to a reduction in the number of lost
    circulation events in 2013 versus 2012. Mitigating the reduction in lost
    circulation events were increases in SAGD activity (more complex wells
    requiring more costly drilling fluids). The increase in revenue per
    operating day for the six months ended June 30, 2013 compared to the six
    months ended June 30, 2012 was due to an increase in the proportion of
    SAGD wells relative to the six month period in 2012. 
    
--  For the three months ended June 30, 2013 operating margin was $7.6
    million or 19% of revenue compared to $8.7 million or 21% of revenue for
    the three months ended June 30, 2012. Equipment rentals margins were
    impacted by lower utilization rates while drilling fluids service line
    operating margins remained consistent on a quarter over quarter basis. 
    
--  G&A expense for the three months ended June 30, 2013 decreased 7% to
    $4.8 million from $5.2 million in the comparable period of 2012. As a
    percentage of revenue, G&A expenses were 12% for the second quarter of
    2013 compared to 13% for the second quarter of 2012 and are in line with
    management expectations. The division continued to heavily invest in
    research and development activities to prepare for 2014 projects. 
 
OS DIVISION OPERATING HIGHLIGHTS                                            
                                                                            
                         Three Months Ended           Six Months Ended      
                              June 30,                    June 30,          
                                              %                           % 
($000's)                 2013      2012  Change      2013      2012  Change 
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Revenue                                                                     
  Onsite services                                                           
   (a)                  8,565     3,996     114    18,083     9,673      87 
                                                                            
Operating expenses                                                          
  Onsite services                                                           
   (b)                  8,425     2,708     211    15,936     6,075     162 
  Depreciation and                                                          
   amortization         1,149        79   1,354     1,354       127     966 
                     -------------------------------------------------------
  Total OS di
vision                                                         
   operating                                                                
   expenses             9,574     2,787     243    17,290     6,202     179 
General and                                                                 
 administrative         1,548       941      65     2,653     1,908      39 
                     -------------------------------------------------------
Total OS division                                                           
 expenses              11,122     3,728     198    19,943     8,110     146 
                                                                            
Operating Margin (1)                                                        
 (a-b)                    140     1,288     (89)    2,147     3,598     (40)
Operating Margin %                                                          
 (1)                        2%       32%    (94)       12%       37%    (68)
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(1) Refer to "Non GAAP measures and operational definitions"                

 
Highlights for the OS division included: 


 
--  Revenue for the three and six months ended June 30, 2013 increased 114%
    to $8.6 million from $4.0 million and 87% to $18.1 million from $9.7
    million compared to the three and six months ended June 30, 2012
    respectively. Increases in the quarter and year-to-date are due to the
    acquisition of Frontline effective April 1, 2013 and from increases in
    environmental services. Environmental services revenue increased in part
    due to increased third party pass through revenue generated from
    remediation projects. An extremely wet spring lowered field activity in
    the WCSB resulting in lower activity levels in all service lines in the
    division. 
    
--  Operating expenses for the three and six months ended June 30, 2013
    increased 211% to $8.4 million from $2.7 million and 162% to $15.9
    million from $6.1 million compared to the three and six months ended
    June 30, 2012 respectively. Operating expense increases in the quarter
    and year-to-date are due to the acquisition of Frontline effective April
    1, 2013. Second quarter 2013 operating expenses in Frontline include
    certain costs to prepare for higher activity levels in the third and
    fourth quarter therefore reducing margins to breakeven levels. A number
    of projects expected to start in the second quarter were delayed due to
    the wet weather conditions experienced in June. 
    
--  G&A expenses for the three and six months ended June 30, 2013 of $1.5
    million and $2.7 million increased compared to $0.9 million and $1.9
    million for the three and six month periods ending June 30, 2012. G&A
    expenses increased due to the Frontline acquisition, increases in
    environmental services through the startup of the "CleanSite" business
    in the third quarter of 2012, and expenses incurred to mobilize
    equipment and hire staff to start projects in the second quarter, and
    manage increases in activity expected in the third and fourth quarters
    of 2013. 

 
INCREASE IN 2013 CAPITAL PROGRAM 
Secure's board of directors has approved the addition of $40 million
to Secure's 2013 organic capital budget, increasing the budget from
approximately $155.0 million to approximately $195.0 million. The
2013 capital expenditure program consists of the following: 
PRD division 


 
--  2012 carry over capital of Rocky and Judy Creek FST's ($15 million); 
    
--  Growth capital consisting of seven new PRD facilities in 2013 ($115
    Million): 
    
    --  Three FST's (Edson, Kindersley and Keene); 
        
    --  Two SWD's (Kaybob and Stanley); and 
        
    --  Two Landfills (Saddle Hills and 13 Mile) 
        
--  Expansion capital ($37 million) consisting of: 
    
    --  Landfill cells at Fox Creek, SGP, Pembina and Willesden Green; 
        
    --  Second treaters at Fox Creek and Drayton valley; 
        
    --  Additional disposal wells at both 13 Mile and Obed; 
        
    --  Oil and water recycling initiatives; and 
        
    --  Various operational upgrades 
        
--  Sustaining capital ($3M); and 
    
--  Long leads ($10 million) for 2014 projects 

 
DS and Onsite divisions 


 
--  $15 million for various rental and site equipment

 
OUTLOOK 
Oil and gas industry fundamentals during the second quarter have
improved from the fourth quarter of 2012 and the first quarter of
2013. Commodity prices have increased, heavy oil differentials
between world and North American pricing have narrowed and oil
transportation bottlenecks have been partially relieved. Expectations
are that oil and gas producer capital spending will slowly increase
over the next few quarters which in turn will improve activity for
oil and gas service providers. In additions, several projects that
were delayed by the wet spring are expected to be completed in the
second half of the year. Despite the less than optimal field
conditions in the second quarter, meters drilled in Canada held
relatively constant decreasing by only 1% in the second quarter of
2013 compared to the second quarter of 2012. The number of WCSB
horizontal wells licensed in the first half of the year increased to
71% of the total wells licensed in 2013; this is a 5 percentage point
increase over the first half of 2012. The relative steady number of
meters drilled and continued emphasis on horizontal drilling are
positive indicators for the Corporation as it is anticipated these
factors create demand for the Corporation's products and services.
Secure is well positioned to take advantage of the expected industry
upswing through its expanded geographic and service offerings. 
The acquisition of Frontline this quarter and the recently announced
purchase of Target, brings new growth platforms that complement the
Corporation's existing PRD and DS divisions. The management teams of
Frontline and Target are experienced with proven capabilities to
manage growth. The financial strength of Secure will provide the
capital necessary to grow the new operations. The Corporation is
excited to apply the environmental and integrated water capabilities
existing within Secure to the new groups to expand the value chain of
services provided to our customers. 
Capital expenditures for the six months ended June 30, 2013 of $84.9
million are reflective of the continued execution of the
Corporation's strategy. Capital expenditures on new facilities such
as the Kindersley FST, the conversion of the Edson SWD to an FST and
construction of the Corporation's first landfill in the US are
expected to enhance financial and operational performance going
forward. The list of organic opportunities contains several other
projects that reflect the ability of Secure to take advantage of
market potential that exists today. The Corporation is increasing the
2013 capital expenditure budget from the previously announced total
of $155.0 million to $195.0 million to start these projects. The
added capital will be deployed in Canada and the US primarily for new
growth and expansion projects and long lead items for 2014 projects.
The Corporation is well positioned to fund its expanded 2013 capital
program with available debt capacity from its credit facilities and
cash flow from operations. 
Managing growth in a prudent manner ensures the Corporation's strong
balance sheet is maintained. Secure has a focused strategy of
constructing and expanding facilities and services in key
under-serviced capacity constrained markets. A solid balance sheet
provides the leverage and flexibility to execute this strategy. It
also provides the strength to ensure the dividend program that began
in May continues to generate returns to shareholders while continuing
to provide Secure the ability to invest in growth and exp
ansion
opportunities. 
FINANCIAL STATEMENTS AND MD&A 
The condensed consolidated financial statements and MD&A of Secure
for the three and six months ended June 30, 2013 are available
immediately on Secure's website at www.secure-energy.ca. The
condensed consolidated financial statements and MD&A will be
available tomorrow on SEDAR at www.sedar.com. 
FORWARD-LOOKING STATEMENTS 
Certain statements contained in this news release constitute
"forward-looking statements" and/or "forward-looking information"
within the meaning of applicable securities laws (collectively
referred to as forward-looking statements). When used in this
document, the words "may", "would", "could", "will", "intend",
"plan", "anticipate", "believe", "estimate", "expect", and similar
expressions, as they relate to Secure, or its management, are
intended to identify forward-looking statements. Such statements
reflect the current views of Secure with respect to future events and
operating performance and speak only as of the date of this news
release. In particular, this news release contains forward-looking
statements pertaining to: general market conditions; the oil and
natural gas industry; activity levels in the oil and gas sector,
including drilling levels; commodity prices for oil, natural gas
liquids ("NGLs") and natural gas; the increase in the first six
months of 2013 operating days; demand for the Corporation's services;
expansion strategy; the amounts of the PRD, DS and OS divisions' 2013
expanded capital budgets and the intended use thereof; debt service;
capital expenditures; completion of facilities; future capital needs;
access to capital; acquisition strategy; the Corporation's capital
spending on the new Rocky Mountain House and Judy Creek, Alberta full
service terminals; capital spending on the Kindersley, Saskatchewan
FST; capital spending on the Kaybob, Alberta SWD; expansion of the
new Edson, Alberta SWD to a FST; the construction of landfills at
Saddle Hills and Fox Creek, Alberta; the construction of the landfill
at 13 Mile in North Dakota; and capital spending on the Keene and
Stanley water disposal facilities in North Dakota; oil purchase and
resale revenue; and the closing of the acquisition of Target Rentals
Ltd. 
Forward-looking statements concerning expected operating and economic
conditions are based upon prior year results as well as the
assumption that increases in market activity and growth will be
consistent with industry activity in Canada, United States, and
internationally and growth levels in similar phases of previous
economic cycles. Forward-looking statements concerning the
availability of funding for future operations are based upon the
assumption that the sources of funding which the Corporation has
relied upon in the past will continue to be available to the
Corporation on terms favorable to the Corporation and that future
economic and operating conditions will not limit the Corporation's
access to debt and equity markets. Forward-looking statements
concerning the relative future competitive position of the
Corporation are based upon the assumption that economic and operating
conditions, including commodity prices, crude oil and natural gas
storage levels, interest rates, the regulatory framework regarding
oil and natural gas royalties, environmental regulatory matters, the
ability of the Corporation and its subsidiary to successfully market
their services and drilling and production activity in North America
will lead to sufficient demand for the Corporation's services and its
subsidiary's services including demand for oilfield services for
drilling and completion of oil and natural gas wells, that the
current business environment will remain substantially unchanged, and
that present and anticipated programs and expansion plans of other
organizations operating in the energy service industry will result in
increased demand for the Corporation's services and its subsidiary's
services. Forward-looking statements concerning the nature and timing
of growth are based on past factors affecting the growth of the
Corporation, past sources of growth and expectations relating to
future economic and operating conditions. Forward-looking statements
in respect of the costs anticipated to be associated with the
acquisition and maintenance of equipment and property are based upon
assumptions that future acquisition and maintenance costs will not
significantly increase from past acquisition and maintenance costs. 
Forward-looking statements involve significant risks and
uncertainties, should not be read as guarantees of future performance
or results, and will not necessarily be accurate indications of
whether such results will be achieved. Readers are cautioned not to
place undue reliance on these statements as a number of factors could
cause actual results to differ materially from the results discussed
in these forward-looking statements, including but not limited to
those factors referred to and under the heading "Business Risks" and
under the heading "Risk Factors" in the Corporation's annual
information form ("AIF") for the year ended December 31, 2012.
Although forward-looking statements contained in this news release
are based upon what the Corporation believes are reasonable
assumptions, the Corporation cannot assure investors that actual
results will be consistent with these forward-looking statements. The
forward-looking statements in this news release are expressly
qualified by this cautionary statement. Unless otherwise required by
law, Secure does not intend, or assume any obligation, to update
these forward-looking statements. 
Non GAAP Measures and Operational Definitions 


 
(1) The Corporation uses accounting principles that are generally accepted  
    in Canada (the issuer's "GAAP"), which includes, International Financial
    Reporting Standards ("IFRS"). These financial measures are Non-GAAP     
    financial measures and do not have any standardized meaning prescribed  
    by IFRS. These non-GAAP measures used by the Corporation may not be     
    comparable to a similar measures presented by other reporting issuers.  
    See the management's discussion and analysis available at               
    WWW.SEDAR.COMfor a reconciliation of the Non-GAAP financial measures and
    operational definitions. These non-GAAP financial measures and          
    operational definitions are included because management uses the        
    information to analyze operating performance, leverage and liquidity.   
    Therefore, these non-GAAP financial measures and operational definitions
    should not be considered in isolation or as a substitute for measures of
    performance prepared in accordance with GAAP.                           

Contacts:
Secure Energy Services Inc.
Rene Amirault
Chairman, President and Chief Executive Officer
(403) 984-6100
(403) 984-6101 (FAX) 
Secure Energy Services Inc.
Allen Gransch
Chief Financial Officer
(403) 984-6100
(403) 984-6101 (FAX)
www.secure-energy.ca
 
 
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