Cathedral Energy Services Ltd. reports results for 2013 Q2 and 2013 Q3 dividend

Cathedral Energy Services Ltd. reports results for 2013 Q2 and 2013 Q3 dividend 
/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/ 
CALGARY, Aug. 13, 2013 /CNW/ - Cathedral Energy Services Ltd. (the "Company" 
or "Cathedral" / TSX: CET) announces its consolidated financial results for 
the three and six months ended June 30, 2013 and 2012. Dollars in 000's 
except per share amounts. 
This news release contains "forward-looking statements" within the meaning of 
applicable Canadian securities laws. For a full disclosure of 
forward-looking statements and the risks to which they are subject, see 
"Forward-Looking Statements" later in this news release. 
2013 Q2 KEY TAKEAWAYS 


    --  $0.075/ share dividend for 2013 Q2 paid in July 2013 and
        approved a $0.075/share dividend for 2013 Q3;
    --  Expanded U.S. production testing with 3 new high pressure units
        for a total of 33 U.S. units. During 2013, the Company entered
        the Texas market and now has a fleet of 7 units in the region;
    --  2013 Q2 set a record for U.S. production testing revenue. This
        is the second consecutive quarter of record revenues for U.S.
        production testing;
    --  Continued growth in U.S. directional drilling activity;
    --  Combined U.S. revenues have increased 10% on a year-to-date
        basis;
    --  Successfully drilled several wells in an Oklahoma basin with
        the Company's proprietary Fusion EM/MWD platform ("Fusion MWD
        platform") in formations where other services providers have
        not had success with EM technology.  This is expected to open
        new opportunities for long-term work;
    --  Canadian operations were reduced due to weather and customer
        delays; and
    --  The Company's international subsidiaries completed signing of
        all required agreements with Vencana Servicios Petroleros, S.A.
        ("Vencana") in which the Company has 40% ownership.

2013 Q2 FINANCIAL SUMMARY
                                                                      
                      Three months ended
                                 June 30      Six months ended June 30
                      2013          2012       2013               2012

Revenues          $ 45,639  $     40,699  $  99,713  $         108,528

Adjusted gross
margin % ((1))       22.0%         19.1%      23.4%              28.4%

EBITDAS ((1))     $  5,342  $      2,068  $  13,934  $          24,024

  Diluted per
  share           $   0.15  $       0.05  $    0.38  $            0.63

EBITDAS ((1) )as
% of revenues        11.7%          5.1%      14.0%              22.1%

Funds from
operations ((1))  $  3,576  $      1,148  $  11,083  $          18,645

  Diluted per
  share           $   0.10  $       0.03  $    0.30  $            0.49

Net earnings      $  (309)  $    (3,222)  $   1,750  $           9,406

  Basic per
  share           $ (0.01)  $     (0.09)  $    0.05  $            0.25

  Diluted per
  share           $ (0.01)  $     (0.09)  $    0.05  $            0.25

Dividends
declared per
share             $  0.075  $      0.075  $   0.150  $           0.150

Property and
equipment
additions (cash)  $  6,476  $      6,542  $  13,174  $          18,487

Weighted average
shares
outstanding                                                           

  Basic (000s)      35,854        37,485     36,307             37,420

  Diluted (000s)    35,898        37,744     36,361             37,911
                                                                      
                                            June 30        December 31
                                               2013               2012

Working capital                           $  23,686  $          29,173

Total assets                              $ 230,572  $         224,080

Loans and
borrowings
excluding
current portion                           $  51,345  $          46,151

Total
shareholders'
equity                                    $ 132,464  $         137,932
                                                                      

((1) see
"NON-GAAP
MEASUREMENTS")                                                        



OVERVIEW

The Company completed 2013 Q2 with quarterly revenues of $45,639 and 
year-to-date revenues of $99,713 compared to 2012 Q2 revenues of $40,699 and 
2012 year-to-date revenues of $108,528. Year-to-date revenues have decreased 
8% from 2012. The 2013 Q2 revenues were comprised of 60% (2012 Q2 - 65%) 
from the directional drilling division, 28% (2012 Q2 - 35%) from the 
production testing division and 12% (2012 Q2 - nil) from international 
operations.

2013 Q2 EBITDAS were $5,342 ($0.15 per share diluted) which represents a 
$3,274 increase from 2012 Q2 EBITDAS of $2,068 ($0.05 per share diluted). 
For the three months ended June 30, 2013, the Company's loss was $309 ($0.01 
per share diluted) as compared to a loss $3,222 ($0.09 per share diluted) in 
2012. The quarter-over-quarter increase in EBITDAS is due to 2013 Q2 
including international resale of equipment to Cathedral's Venezuela joint 
venture, increased operating levels in both U.S. divisions, offset by a 
decline in Canadian operating levels. 2013 year-to-date EBITDAS was $13,934 
($0.38 per share diluted) which represents a $10,090 or 42% decrease from 
$24,024 ($0.63 per share diluted) in 2012. On a 2013 year-to-date basis, the 
Company's net income was $1,750 ($0.05 per share diluted) as compared to a 
$9,406 ($0.25 per share diluted) in 2012.

OUTLOOK

The investment in the U.S. continues to be the focus of the Company. This 
investment is beginning to bear fruit as both the Texas and new Oklahoma 
regions are seeing increased activity levels. This along with the success of 
Cathedral's Fusion MWD platform and "nDurance" mud motors is leading to 
positive events happening in all of Cathedral's U.S. operating regions.

Cathedral continues to see delays in Canadian field operations as weather has 
been an issue that has carried on since late Q2. The rig count continues to 
lag that of last year. The access to capital has continued to be an issue 
for most Canadian oil and natural gas operators, although Canadian oil 
differentials have tightened.

The Company continues to move forward with its Venezuelan joint venture. The 
Company's subsidiaries have now signed all required agreements prior to 
commencement of operations. Over the last few months there has been a 
renewed urgency to move things forward with the Venezuelan national oil 
company and its subsidiaries. The Company's Directional Plus International 
Ltd. subsidiary is now focused on delivering the remaining required equipment 
to initiate operations.

Cathedral has signed a non-binding letter of intent for the sale and leaseback 
of its Calgary 6030 Campus and its Nisku, Alberta motor repair facility. The 
net proceeds are expected to be approximately $22,000 and will be used to 
reduce debt. The sale is expected to close in September 2013.

Cathedral has renewed its normal course issuer bid as it believes that the 
trading price of its common shares does not accurately reflect the value of 
the Company and it will assist in stabilizing the trading price and to provide 
liquidity in the market for its shareholders.

The Company has expanded its 2013 capital program by an additional $5,000. 
This will allow the Company to continue its expansion in the Texas, Oklahoma 
and Rocky Mountain regions of the U.S.

2013 CAPITAL PROGRAM

For the six months ended June 30, 2013 the Company has invested an additional 
$13,174 (2012 - $18,487) in property and equipment. The main 2013 capital 
additions were upgrades and replacement of downhole tools, the addition of 3 
retrievable positive pulse systems, 3 high pressure production testing units 
and auxiliary production testing equipment. In 2013, $5,956 of the additions 
related to growth capital, with the remaining $7,218 for maintenance, upgrade 
and replacement capital. . The net property and equipment additions 
(additions net of proceeds on the disposal of property and equipment) to date 
in 2013 were $10,556 (2012 - $12,099).

The following is a summary of major equipment owned by the Company:
                                                                    
                                         June 30 December 31 June 30
                                            2013        2012    2012

Directional drilling - MWD systems ((1))     134         136     129

Production testing units                      72          69      67

(1) The Company has 15 Geolink MWD systems that have been excluded
from the June 30, 2013 figures as they are held for sale. As at June
30 and December 31, 2012 there were 10 Geolink MWD systems that were
excluded.

Cathedral's 2013 capital budget has increased by $5,000 for U.S. drilling 
expansion. The budget has increased from the initially announced amount of 
$22,000 to $27,000.

The additional $5,000 is for additional capital for the drilling division are 
addition of mud motors, drill collars and power sections for the expected 
expansion of Company's U.S. Rocky Mountain, Houston and Oklahoma City 
operation bases.

The maintenance capital remains unchanged at $12,000.

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

RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30
                                                                                   
                        Three months ended June 30, 2013      Three months ended June 30,
                                                                                     2012
              Directional Production       Resale          Directional Production        

Revenues         drilling    testing   and Rental  Total      drilling    testing   Total

Canada              $           $     $                $    $   10,522        $         $
                    8,650      4,066            - 12,716                    6,368  16,890

United States      18,835      8,914            - 27,749        15,988      7,821  23,809

International           -          -        5,174  5,174             -          -       -

Total          $   27,485          $   $    5,174      $    $   26,510  $  14,189      $ 
                              12,980              45,639                           40,699



Revenues 2013 Q2 revenues were $45,639 which represented an increase 
of $4,940 or 12% from 2012 Q2 revenues of $40,699. The increase was 
attributed to international and U.S. operations which were offset by declines 
in Canada operations.

Canadian directional drilling revenues decreased from $10,522 in 2012 Q2 to 
$8,650 in 2013 Q2; an 18% decrease. This decrease was the result of: i) a 
15% decrease in activity days from 801 in 2012 Q2 to 679 in 2013 Q2; and ii) a 
3% decrease in the average day rate from $13,136 in 2012 Q2 to $12,739 in 2013 
Q2. Canadian activity days decreased due to a number of factors including: 
i) a decline in industry activity due to oil take away restrictions; marginal 
natural gas prices and a general lack of access to equity markets; ii) a 
decline in work for a significant client that carried over from 2013 Q1: and 
iii), a slow start after the spring break-up and further delays due to weather 
in June that pushed start dates for certain jobs in to 2013 Q3.

U.S. directional drilling revenues increased from $15,988 in 2012 Q2 to 
$18,835 in 2013 Q2; an 18% increase. This increase was the result of: i) a 
7% increase in activity days from 1,493 in 2012 Q2 to 1,602 in 2013 Q2; and 
ii) a 10% increase in the average day rate from $10,709 in 2012 Q2 to $11,757 
in 2013 Q2 (when converted to Canadian dollars). The increase in U.S. 
activity days were due to increased traction in the Texas and Oklahoma 
markets, offset by reduced drilling in the Rocky Mountain and Pennsylvania 
areas within the existing client base. The increased average day rate was 
mainly due to higher rates that were achieved in the Rocky Mountain and Texas 
regions.

Canadian production testing revenues decreased from $6,368 in 2012 Q2 to 
$4,066 in 2013 Q2; a 36% decrease. The Canadian operations were affected by 
a general industry wide decline in wells completed in 2013 Q2 versus 2012 Q2 
and client specific delays in completion work that has been deferred into 2013 
Q3.

U.S. production testing revenues increased from $7,821 in 2012 Q2 to $8,914 in 
2013 Q2; a 14% increase. This increase is attributable to having 3 
additional units in 2013 Q2 versus 2012 Q2 and expansion into the Eagleford 
(Texas) market.

Gross margin and adjusted gross margin  The gross margin for 2013 Q2 was 
11.5% compared to 7.8% in 2012 Q2. Adjusted gross margin for 2013 Q2 was 
$10,018 (22.0%) compared to $7,792 (19.1%) for 2012 Q2. The increase in 
adjusted gross margin of 2.9% was due in part to the impact of international 
operations. Excluding international operations, adjusted gross margin for 
2013 Q2 was 19.8% which is marginally higher than the adjusted gross margin in 
2012 Q2.

In the Canadian and U.S. drilling markets, there have been declines in the 
total per day revenue rates which have a negative effect on the gross margin 
realized. The Canadian testing division saw increased labour costs due to 
increased use of senior field personnel while the U.S. testing division saw a 
slight decline in labour costs. The increased labour costs were offset by 
decreases in repairs and battery costs, for the overall slight increase in 
North American margin.

Depreciation allocated to cost of sales increased from $4,530 in 2012 Q2 to 
$4,709 in 2013 Q2 due to capital additions in the period from 2012 Q2 to 2013 
Q2. Depreciation included in cost of sales as a percentage of revenue was 
10.3% for 2013 Q2 and 11.1% in 2012 Q2.

Selling, general and administrative expenses ("SG&A") SG&A expenses 
were $6,151 in 2013 Q2; an increase of $108 compared with $6,043 in 2012 Q2. 
As a percentage of revenue, these costs were 13% in 2013 Q2 and 15% in 2012 
Q2. Non-cash expenses total $293 for 2013 Q2 and $405 for 2012 Q2. SG&A 
net of these non-cash items were $5,858 in 2013 Q2 and $5,638 in 2012 Q2, an 
increase of $220.

Wages increased $351; this increase was primarily related to staff additions 
for research and development department and staff positions added to 
accommodate current and future U.S. growth; net of decreases in variable 
compensation. The staffing costs included in SG&A relate to executives, 
sales, accounting, human resources, payroll, safety, research and development 
and related support staff. The remaining net decrease of $131 relates to 
various changes none of which are individually significant.

Gain on disposal of property and equipment During 2013 Q2 the Company 
had a gain on disposal of property and equipment of $1,125, compared to $28 in 
2012 Q2. The Company's gains are mainly due to recoveries of lost-in-hole 
equipment costs including previously expensed depreciation on the related 
assets. The timing of lost-in-hole recoveries is not in the control of the 
Company and therefore can fluctuate significantly from quarter-to-quarter.

Foreign exchange loss  The Company's foreign exchange loss of $315 in 
2012 Q2 has declined to a loss of $273 in 2013 Q2 due to the fluctuations in 
the Canadian dollar compared to U.S. dollars and Venezuelan bolivars. The 
Company's foreign operations are denominated in a currency other than the 
Canadian dollar and therefore, upon consolidation gains and losses due to 
fluctuations in the foreign currency exchange rates are recorded in other 
comprehensive income ("OCI") on the balance sheet as a component of equity. 
However, gains and losses in the Canadian entity on U.S. denominated 
intercompany balances continue to be recognized in the statement of income. 
Included in the 2013 Q2 foreign currency loss are unrealized losses of $330 
(2012 Q2 - $201) related to intercompany balances.

Finance costs  Finance costs consist of interest expenses on operating 
loans, loans and borrowings and bank charges of $648 for 2013 Q2 versus $513 
for 2012 Q2. The increase in finance costs relate to increases in interest 
rates as well as increased utilization of the Company's operating loan.

Income tax For 2013 Q2, the Company had an income tax recovery of $372 
compared to $428 in 2012 Q2. The effective tax rate was 55% for 2013 Q2 and 
12% for 2012 Q2. Income tax expense is booked based upon expected annualized 
effective rates. Annually, Q2 typical results in Canadian operations 
experiencing a loss for the quarter due to "spring breakup" which has 
significantly reduced activity levels. In 2013 Q2 such losses were offset by 
International income which has a nominal effective tax rate and when combined 
with a U.S. effective tax rate that is higher than in Canada, resulted in the 
effective 2013 Q2 tax rate of 55%.

RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30
                                                                                     
                            Six months ended June 30, 2013     Six months ended June 30, 2012
              Directional Production         Resale          Directional Production          

Revenues         drilling    testing     and Rental  Total      drilling    testing     Total

Canada         $   32,244        $    $                  $    $   44,034          $      $   
                              11,832              - 44,076                   18,753    62,787

United States      33,344     17,119              - 50,463        30,895     14,846    45,741

International           -          -          5,174  5,174             -          -         -

Total          $   65,588          $     $    5,174      $    $   74,929        $           $
                              28,951                99,713                   33,599   108,528



Revenues 2013 revenues were $99,713 which represented a decrease of 
$8,815 or 8% from 2012 revenues of $108,528. The increase was attributed to 
international and U.S. operations which were offset by declines in Canada 
operations.

Canadian directional drilling revenues decreased from $44,034 in 2012 to 
$32,244 in 2013; a 27% decrease. This decrease was the result of: i) a 21% 
decrease in activity days from 3,514 in 2012 to 2,781 in 2013; and ii) a 7% 
decrease in the average day rate from $12,531 in 2012 to $11,594 in 2013. 
Canadian activity days decreased due to a number of factors including: i) a 
decline in industry activity due to oil take away restrictions, marginal 
natural gas prices and a general lack of access to equity markets; ii) a 
decline in work for a significant client; and iii) a slow start after the 
spring break-up and further delays due to weather in June that pushed start 
dates for certain jobs in to 2013 Q3. There were new clients added, but 
these were not enough to offset the decreased work on existing clients.

U.S. directional drilling revenues increased from $30,895 in 2012 to $33,344 
in 2013; an 8% increase. This increase was the result of: i) an1% increase 
in activity days from 2,915 in 2012 to 2,931 in 2013; and ii) a 7% increase in 
the average day rate from $10,599 in 2012 to $11,376 in 2013 (when converted 
to Canadian dollars). The increase in U.S. activity days were due to 
increased traction in the Texas and Oklahoma markets, offset by reduced 
drilling in the Rocky Mountain and Pennsylvania areas within the existing 
client base. The increased average day rate is increase was due to increases 
that were achieved in the Rocky Mountain and Texas regions, net of declines in 
the northeast.

Canadian production testing revenues decreased from $18,753 in 2012 to $11,832 
in 2013; a 37% decrease. The Canadian operations were affected by a general 
industry wide decline in wells completed and client specific delays in 
completion work that has resulted in such work being delayed until 2013 Q3.

U.S. production testing revenues increased from $14,846 in 2012 to $17,119 in 
2013; a 15% increase. This increase is attributable to having 3 additional 
units in 2013 versus 2012 and expansion into the Eagleford (Texas) market.

Gross margin and adjusted gross marginThe gross margin for 2013 was 13.9% 
compared to 20.2% in 2012. Adjusted gross margin for 2013 was $23,376 
(23.4%) compared to $30,856 (28.4%) for 2012. The decrease in adjusted gross 
margin of 5.0% was offset in part to the impact of international operations. 
Excluding international operations, adjusted gross margin for 2013 was 22.6%.

In the Canadian and U.S. drilling markets, there have been declines in the 
total per day revenue rates which have a negative effect on the gross margin 
realized. The Canadian production testing division saw increased labour 
costs due to increased use of senior field personnel while the U.S. production 
testing division saw a slight decline in labour costs. In addition there 
were increases in costs for accommodation of field staff and increases in 
non-field wages. The increase in non-field wages relates to the continued 
build out of personnel in the Houston, Texas facility and staff for the newly 
established facility in Oklahoma City, Oklahoma. The Company is expecting 
increased levels of activity from the markets covered by these facilities. 
Despite Cathedral's highly variable field cost structure, non-field salaries 
are of a fixed nature and therefore when the Company's revenue declines as 
which was experienced in the Canadian market, such costs become a higher 
percentage of revenues.

Depreciation allocated to cost of sales increased from $8,794 in 2012 to 
$9,374 in 2013 due to capital additions in the period from July 2012 to June 
2013. Depreciation included in cost of sales as a percentage of revenue was 
9.4% for 2013 and 8.1% in 2012.

Selling, general and administrative expenses ("SG&A") SG&A expenses 
were $11,722 in 2013; an increase of $238 compared with $11,484 in 2012. As 
a percentage of revenue, these costs were 12% in 2013 and 11% in 2012. 
Non-cash expenses total $661 for 2013 and $829 for 2012. SG&A net of these 
non-cash items were $11,061 in 2013 and $10,655 in 2012, an increase of $406.

In 2013 Q1, there was a recovery of international SG&A offset by one-time 
costs for severance. The recovery of international SG&A was from the 
Company's joint venture partner in Vencana Servicios Petroleros, S.A. 
("Vencana"), of which Cathedral owns 40%, for amounts previously expended by 
the Company on the start-up of Vencana. These costs had been previously 
expensed by Cathedral. The Company is currently in negotiations with its 
joint venture partner for the re-imbursement of additional costs. If we 
remove these items from SG&A, net of non-cash items, adjusted SG&A was $11,644 
in 2013 compared to $10,655 in 2012 Q1, an increase of $989.

Wages increased $2,088; this increase was primarily related to staff additions 
for research and development department and staff positions added to 
accommodate current and future U.S. growth, net of decreases in variable 
compensation. The staffing costs included in SG&A relate to executives, 
sales, accounting, human resources, payroll, safety, research and development 
and related support staff. The remaining net decrease of $244 relates to 
various changes none of which are individually significant.

Gain on disposal of property and equipment During 2013 the Company had 
a gain on disposal of property and equipment of $1,630, compared to $3,732 in 
2012. Included in the 2012 gain of $3,732 was $2,034 related to the sale of 
property and equipment by Cathedral's subsidiaries to Vencana. The Vencana 
related portion of the gain includes the portion of the gain related to the 
joint venture partner's share. The Company's remaining gains are mainly due 
to recoveries of lost-in-hole equipment costs including previously expensed 
depreciation on the related assets. The timing of lost-in-hole recoveries is 
not in the control of the Company and therefore can fluctuate significantly 
from quarter-to-quarter.

Foreign exchange loss  The Company's foreign exchange loss of $54 in 
2012 has increased to a loss of $553 in 2013 due to the fluctuations in the 
Canadian dollar compared to U.S. dollars and Venezuelan bolivars. The 
Company's foreign operations are denominated in a currency other than the 
Canadian dollar and therefore, upon consolidation gains and losses due to 
fluctuations in the foreign currency exchange rates are recorded in other 
comprehensive income ("OCI") on the balance sheet as a component of equity. 
However, gains and losses in the Canadian entity on U.S. denominated 
intercompany balances continue to be recognized in the statement of income. 
Included in the 2013 foreign currency loss are unrealized losses of $542 (2012 
- $145) related to intercompany balances.

Finance costs  Finance costs consist of interest expenses on operating 
loans, loans and borrowings and bank charges of $1,128 for 2013 versus $1,086 
for 2012. The increase in finance costs relate to increases in interest 
rates as well as increased utilization of the Company's operating loan.

Income tax For 2013, the Company had an income tax expense of $356 
compared to $3,593 in 2012. The effective tax rate was 17% for 2013 and 28% 
2012. Income tax expense is booked based upon expected annualized effective 
rates. Annually, Q2 typically results in Canadian operations experiencing a 
loss for the quarter due to "spring breakup" which has significantly reduced 
activity levels. In 2013 Q2 such losses were offset by International income 
which has a nominal effective tax rate and when combined with a U.S. effective 
tax rate that is higher than in Canada, resulted in the effective 2013 
year-to-date tax rate of 17%.

LIQUIDITY AND CAPITAL RESOURCES

On an annualized basis the Company's principal source of liquidity is cash 
generated from operations.  In addition, the Company has the ability to 
fund liquidity requirements through its credit facility and the issuance of 
debt and/or equity. For the six months ended June 30, 2013, the Company had 
funds from operations of $11,083 (2012 - $18,645). The decline in funds from 
operations is due to the Company's reduced levels of Canadian source revenues 
on a year-over-year basis.

At June 30, 2013 the Company had a working capital position of $23,686 
(December 31, 2012 - $29,173) and a working capital ratio of 1.52 to 1 
(December 31, 2012 - 1.75 to 1).

The following table outlines the current credit facility:
                                                           
                                               June 30    December 31
                                                  2013           2012

Available credit facility                   $   75,000  $      75,000

Drawings on credit facility:                                         

  Operating loan                                13,133            880

  Revolving term loan                           50,000         45,000

Total drawn facility                        $   63,133  $      45,880

Borrowing capacity (see NON-GAAP            $   11,867  $      29,120
MEASUREMENTS)

Net debt (see NON-GAAP MEASUREMENTS):                                

  Loans and borrowings, net of current      $   51,345  $      46,151
  portion

  Working capital:                                                   
    Current assets                          $   69,463  $      68,142
    Current liabilities                       (45,777)       (38,969)

  Working capital                           $   23,686  $      29,173

Net debt                                    $   27,659  $      16,978



The Company's credit facility includes a $35,000 accordion feature which is 
subject to approval of the Company's bank. As at June 30, 2013, the Company 
is in compliance with all covenants under its credit facility. During 2013 
Q2, the credit facility was renewed with new expiry date of June 30, 2014.

NORMAL COURSE ISSUER BID

In 2013 Q2, the Company repurchased and cancelled an additional 416,521 common 
shares at a cost of $1,730 or an average cost of $4.15 per common share. A 
total of 1,838,075 of common share at a cost of $8,395 or an average cost of 
$4.57 per common share were repurchased under the Company's Normal Course 
Issuer Bid that expired on June 19, 2013. The Normal Course Issuer Bid was 
renewed and has an expiry date of July 7, 2014. At August 13, 2013, the 
Company has 35,824,877 common shares and 3,288,733 share options outstanding.

DIVIDENDS

It is the intent of the Company to pay quarterly dividends to shareholders. 
The Board of Directors will review the amount of dividends on a quarterly 
basis with due consideration to current performance, historical and future 
trends in the business, the expected sustainability of those trends and 
enacted tax legislation which will affect future taxes payable as well as 
required long-term debt repayments, maintenance capital expenditures required 
to sustain performance and future growth capital expenditures. The Directors 
have approved a 2013 Q3 dividend in the amount of $0.075 per share which will 
have a date of record of September 30, 2013 and a payment date of October 15, 
2013.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION June 30, 2013 and 
December 31, 2012
Dollars in '000s
(unaudited)
                                                         
                                            June 30      December 31 
                                               2013             2012 

 Assets                                                              
                                                                     

 Current assets:                                                     

  Cash and cash equivalents              $     5,723  $         8,470

  Trade receivables                           39,530           36,094

  Current taxes recoverable                      897              153

  Prepaid expenses                             9,039           10,419

  Inventories                                 14,274           13,006

 Total current assets                         69,463           68,142

 Property and equipment                      137,579          135,093

 Intangible assets                               589              719

 Deferred tax assets                          10,147            9,379

 Investment in associate                       6,946            4,899

 Goodwill                                      5,848            5,848

 Total non-current assets                    161,109          155,938

 Total assets                            $   230,572  $       224,080
                                                                     

 Liabilities and Shareholders' Equity                                

 Current liabilities:                                                

  Operating loan                         $    13,133  $           880

  Trade and other payables                    21,030           21,773

  Dividends payable                            2,687            2,768

  Loans and borrowings                           662              711

  Deferred revenue                             8,265           12,837

 Total current liabilities                    45,777           38,969

 Loans and borrowings                         51,345           46,151

 Deferred tax liabilities                        986            1,028

 Total non-current liabilities                52,331           47,179

 Total liabilities                            98,108           86,148
                                                                     

 Shareholders' equity:                                               

  Share capital                               72,244           74,408

  Contributed surplus                          9,322            8,863

  Accumulated other comprehensive loss         (541)          (2,679)

  Retained earnings                           51,439           57,340

 Total shareholders' equity                  132,464          137,932

 Total liabilities and shareholders'     $   230,572  $       224,080
equity 



CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Three and six months ended June 30, 2013 and 2012
Dollars in '000s except per share amounts
(unaudited)
                                                         
                      Three months ended       Six months ended June
                                June 30                          30 
                       2013         2012        2013            2012
                                                      

 Revenues        $   45,639  $    40,699  $   99,713  $      108,528

 Cost of                                                            
sales: 

  Direct costs     (35,621)     (32,907)    (76,337)        (77,672)

  Depreciation      (4,709)      (4,530)     (9,374)         (8,794)

  Share-based          (43)         (69)       (119)           (171)
  compensation 

 Total cost of     (40,373)     (37,506)    (85,830)        (86,637)
sales 

 Gross margin         5,266        3,193      13,883          21,891

 Selling,
general and                                                         
administrative
expenses: 

  Direct costs      (5,858)      (5,638)    (11,061)        (10,655)

  Depreciation        (159)        (159)       (316)           (315)

  Share-based         (134)        (246)       (345)           (514)
  compensation 

 Total selling,
general and         (6,151)      (6,043)    (11,722)        (11,484)
administrative
expenses 
                      (885)      (2,850)       2,161          10,407

 Gain on
disposal of           1,125           28       1,630           3,732
property and
equipment 

 Earnings
(loss) from             240      (2,822)       3,791          14,139
operating
activities 

 Foreign              (273)        (315)       (553)            (54)
exchange loss 

 Finance costs        (648)        (513)     (1,128)         (1,086)

 Share of loss            -            -         (4)               -
from associate 

 Earnings
(loss) before         (681)      (3,650)       2,106          12,999
income taxes 

 Income tax
recovery                                                            
(expense): 

  Current             (641)        (892)     (1,221)         (1,647)
  expense 

  Deferred
  recovery            1,013        1,320         865         (1,946)
  (expense) 

 Total income
tax recovery            372          428       (356)         (3,593)
(expense) 

 Net earnings         (309)      (3,222)       1,750           9,406
(loss) 

 Other
comprehensive                                                       
income: 

  Foreign
  currency
  translation         1,433          940       2,138             293
  differences
  for foreign
  operations 

 Total
comprehensive    $    1,124  $   (2,282)  $    3,888  $        9,699
income (loss) 
                                                                    

 Net earnings
(loss) per                                                          
share 

  Basic          $   (0.01)  $    (0.09)  $     0.05  $         0.25

  Diluted        $   (0.01)  $    (0.09)  $     0.05  $         0.25



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended June 30, 2013 and 2012
Dollars in '000s
(unaudited)
                                                                
                                                       2013        2012

 Cash provided by (used in):                                           

 Operating activities:                                                 

  Net earnings from continuing operations        $    1,750  $    9,406

  Items not involving cash:                                            
    Depreciation                                      9,690       9,109
    Total income tax expense                            356       3,593
    Unrealized foreign exchange loss on                 542         145
    intercompany balances 
    Finance costs                                     1,128       1,086
    Share-based compensation                            464         685
    Gain on disposal of property and equipment      (1,630)     (3,732)
    Share of loss from associate                          4           -

  Cash flow from continuing operations               12,304      20,292

  Changes in non-cash operating working             (7,628)      41,950
  capital 

  Income taxes paid                                 (1,948)     (3,013)

 Cash flow from operating activities                  2,728      59,229

 Investing activities:                                                 

  Property and equipment additions                 (13,174)    (18,487)

  Intangible asset additions                              -       (677)

  Proceeds on disposal of property and                2,618       6,388
  equipment 

  Investment in associate                           (1,580)           -

  Changes in non-cash investing working                (56)         503
  capital 

 Cash flow used ininvesting activities             (12,192)    (12,273)

 Financing activities:                                                 

  Change in operating loan                           12,272    (12,888)

  Interest paid                                     (1,220)     (1,094)

  Advances of loans and borrowings                    5,000           -

  Repayments on loans and borrowings                  (278)       (251)

  Proceeds on exercise of share options                  25         786

  Repurchase of common shares                       (4,434)        (50)

  Dividends paid                                    (5,492)     (5,048)

 Cash flow from (used in) financing activities        5,873    (18,545)

 Effect of exchange rate on changes in cash and         844         144
cash equivalents 

 Change in cash and cash equivalents                (2,747)      28,555

 Cash and cash equivalents, beginning of              8,470       2,902
period 

 Cash and cash equivalents, end of period        $    5,723  $   31,457



FORWARD LOOKING STATEMENTS

This news release contains certain forward-looking statements and 
forward-looking information (collectively referred to herein as 
"forward-looking statements") within the meaning of applicable Canadian 
securities laws. All statements other than statements of present or 
historical fact are forward-looking statements. Forward-looking statements 
are often, but not always, identified by the use of words such as 
"anticipate", "achieve", "believe", "plan", "intend", "objective", 
"continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", 
"project", "should" or similar words suggesting future outcomes. In 
particular, this news release contains forward-looking statements relating to, 
among other things: capital expenditures are expected to be financed by way of 
cash flow from operations and the Company's credit facility; development and 
deployment of new technologies; expected growth in the U.S. market on a 
quarter-over-quarter basis for the remainder of the year in both operating 
divisions; components of expected 2013 capital budget and financing thereof; 
timing of payment of purchase commitments; expected activity levels; future 
expansion; that no further agreements are required to be signed prior to 
commencement of operations in Venezuela; intent to pay quarterly dividends; 
sources to fund liquidity requirements; and reduction in debt levels from the 
sale and leaseback transaction. The Company believes the expectations 
reflected in such forward-looking statements are reasonable as of the date 
hereof but no assurance can be given that these expectations will prove to be 
correct and such forward-looking statements should not be unduly relied upon.

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

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

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

NON-GAAP MEASUREMENTS

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

The specific measures being referred to include the following:

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

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

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

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

v)"Growth property and equipment additions" or "Growth capital" - is capital 
spending which is intended to result in incremental revenues. Growth capital 
is considered to be a key measure as it represents the total expenditures on 
property and equipment expected to add incremental revenues and funds flow to 
the Company;

vi)"Maintenance property and equipment additions" or "Maintenance capital" - 
is capital spending incurred in order to refurbish or replace previously 
acquired other than "replacement property and equipment additions" described 
below. Such additions do not provide incremental revenues. Maintenance capital 
is a key component in understanding the sustainability of the Company's 
business as cash resources retained within Cathedral must be sufficient to 
meet maintenance capital needs to replenish the assets for future cash 
generation;

vii)"Replacement property and equipment additions" or "Replacement capital" 
- is capital spending incurred in order to replace equipment that is lost 
downhole. Cathedral recovers lost-in-hole costs including previously 
expensed depreciation on the related assets form customers. Such additions 
do not provide incremental revenues. The identification of replacement 
property and equipment additions is considered important as such additions are 
financed by way of proceeds on disposal of property and equipment (see 
discussion within the news release on "gain on disposal of property and 
equipment);

viii)"Net property and equipment additions" - is property and equipment 
additions expenditures less proceeds on the disposal of property and 
equipment. Cathedral uses net property and equipment additions to assess net 
cash flows related to the financing of Cathedral's property and equipment 
additions;

ix)"Borrowing capacity" - is total available credit facility less drawings 
on credit facilities;

x)"Net debt" - is loans and borrowing less working capital. Management 
uses net debt as a metric to shows the Company's overall debt level.

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

  Adjusted gross                                        
  margin
                      Three months ended      Six months ended June 30
                                 June 30
                      2013          2012       2013               2012

Gross margin      $  5,266  $      3,193  $  13,883  $          21,891

Add non-cash
items included                                                        
in cost of
sales:

  Depreciation       4,709         4,530      9,374              8,794

  Share-based           43            69        119                171
  compensation

Adjusted gross    $ 10,018  $      7,792  $  23,376  $          30,856
margin

Adjusted gross       22.0%         19.1%      23.4%              28.4%
margin %
                                                        

  EBITDAS                                               
                      Three months ended      Six months ended June 30
                                 June 30
                      2013          2012       2013               2012

Earnings (loss)
before income     $  (681)  $    (3,650)  $   2,106  $          12,999
taxes

Add (deduct):                                                         

  Depreciation
  included in        4,709         4,530      9,374              8,794
  cost of sales

  Depreciation
  included in
  selling,             159           159        316                315
  general and
  administrative
  expenses

  Share-based
  compensation          43            69        119                171
  included in
  cost of sales

  Share-based
  compensation
  included in
  selling,             134           246        345                514
  general and
  administrative
  expenses

  Unrealized
  foreign
  exchange loss        330           201        542                145
  on
  intercompany
  balances

  Finance costs        648           513      1,128              1,086

  Share of loss          -             -          4                  -
  from associate

EBITDAS           $  5,342  $      2,068  $  13,934  $          24,024
                                                        

Funds from                                              
operations
                                              Six months ended June 30
                                               2013               2012

Cash flow from operating                  $   2,728  $          59,229
activities

Add (deduct):                                                         

  Changes in non-cash                         7,628           (41,950)
operating working capital

  Income taxes paid                           1,948              3,013

  Current tax expense                       (1,221)            (1,647)

Funds from operations                     $  11,083  $          18,645

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



SOURCE  Cathedral Energy Services Ltd. 
Requests for further information should be directed to: 
Mark L. Bentsen, President and Chief Executive Officer or P. Scott  
MacFarlane, Chief Financial Officer 
Cathedral Energy Services Ltd., 6030 3 Street S.E., Calgary, Alberta T2H  1K2 
Telephone: 403.265.2560Fax: 
403.262.4682www.cathedralenergyservices.com 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/August2013/13/c5184.html 
CO: Cathedral Energy Services Ltd.
ST: Alberta
NI: OIL ERN DIV  
-0- Aug/13/2013 20:15 GMT