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SECURE Energy Services Inc. Reports 2010 Fourth Quarter and Year End Results

CALGARY, March 3, 2011 /CNW/ - Secure Energy Services Inc. ("Secure" or the "Corporation") (TSX:SES) today announced financial results for the three months and year ended December 31, 2010. The following should be read in conjunction with the management's discussion and analysis, the consolidated financial statements and notes of Secure which are available on SEDAR at


                                            Three Months Ended December 31, 
                                        2010           2009            2008 
($000's except share and per                                                
 share data)                                                                
Revenue                               32,858          7,520           3,844 
Operating margin (1)                  11,643          4,043           2,228 
EBITDA (1)                             7,788          2,759           1,063 
  Per share ($), basic                  0.12           0.07               0 
  Per share ($), diluted                0.12           0.06               0 
Net income (loss)                      1,951           (970)           (224)
  Per share ($), basic                  0.03          (0.02)             (0)
  Per share ($), diluted                0.03          (0.02)             (0)
Funds from operations (1)              9,059          2,704           1,253 
  Per share ($), basic                  0.14           0.06               0 
  Per share ($), diluted                0.14           0.06               0 
Capital Expenditures                  19,894          3,487          24,517 
Common Shares - end of                                                      
 period                           63,754,348     41,631,991      39,962,075 
Weighted average common                                                     
  basic                           63,730,396     41,624,234      31,954,775 
  diluted                         66,732,263     42,600,342      32,798,930 

                                                     Year Ended December 31,
                                        2010           2009            2008 
($000's except share and per                                               
 share data)                                                               
Revenue                               72,759         22,377           7,437 
Operating margin (1)                  32,142         12,295           4,554 
EBITDA (1)                            24,012          8,027             566 
  Per share ($), basic                  0.41           0.20               0 
  Per share ($), diluted                0.41           0.19               0 
Net income (loss)                      4,474         (2,758)         (1,529)
  Per share ($), basic                  0.07          (0.07)             (0)
  Per share ($), diluted                0.07          (0.07)             (0)
Funds from operations (1)             25,214          7,958           1,242 
  Per share ($), basic                  0.43           0.19               0 
  Per share ($), diluted                0.43           0.19               0 
Capital Expenditures                  51,993         22,686          65,078 
Common Shares - end of                                                     
 period                           63,754,348     41,631,991      39,962,075 
Weighted average common                                                    
  basic                           58,560,338     40,857,737      29,629,577 
  diluted                         59,163,845     41,788,605      30,252,502 
(1) These financial measures are Non-GAAP financial measures and do not have
any standardized meaning prescribed by Canadian generally accepted          
accounting principles("GAAP") and are therefore unlikely to be comparable to
measures presented by other reporting issuers. See the management's         
discussion and analysis available at for a reconciliation of  
the Non-GAAP financial measures.                                            


Secure's revenue and EBITDA grew dramatically in 2010 as facilities constructed in prior years started to mature within their respective markets. The growing trend towards horizontal drilling and multi-stage fracturing increased demand for the Corporation's services particularly at facilities located in unconventional oil and liquids rich gas producing areas. During 2010, Secure also added the new Dawson Creek full service terminal ("FST") to provide treatment and disposal options for customer's developing unconventional Montney shale gas and acquired the Pembina Area Landfill ("Pembina Landfill") to provide disposal services related to unconventional Cardium oil development. All of these factors contributed to higher revenue and EBITDA for 2010. Overall, the operating and financial highlights for the fourth quarter and year ended December 31, 2010 may be summarized as follows:


--  Record revenue of $32.9 million and $72.8 million for the three and
    twelve months ended December 31, 2010 compared to $7.5 million and $22.4
    million in the comparable periods of 2009. The 2010 fourth quarter
    proved to be the strongest quarter of the year. The fourth quarter
    benefited from the introduction of waste services at Dawson Creek in
    early November. As described above, the increase year to date is due to
    increased volume, the new Dawson facility and the Pembina Landfill
    acquisition in May of 2010 The Corporation's core processing, recovery
    and disposal revenue was $18.4 million and $54.2 million for the three
    and twelve months ended December 31, 2010 compared to $7.5 million and
    $18.5 million in the comparable periods of 2009. The Corporation's oil
    purchase/resale service revenue was $14.5 million and $18.5 million for
    the three and twelve months ended December 31, 2010 compared to nil in
    the comparable periods of 2009;

--  Record EBITDA of $7.8 million and $24.0 million for the three and twelve
    months ended December 31, 2010 compared to $2.8 million and $8.0 million
    in the same periods of 2009. For both the fourth quarter and year to
    date, the increases relate to higher activity levels in 2010 over 2009
    and increased market share. The increase is also related to the new
    facilities added during the year as described above. Excluding revenue
    and expenses from the oil purchase/resale services, the Corporation
    achieved an overall operating margin of 59% for the year ending December
    31, 2010;

--  Expanded facility network and services in 2010. 
    --  Expanded Cardium market exposure through the Pembina Landfill
        acquisition and the construction of Brazeau water disposal facility;
    --  Entered the Montney market with an FST in Dawson Creek, B.C.; 
    --  Increased unconventional liquids rich gas services by expanding into
        waste services at the Corporation's existing Obed and South Grande
        Prairie facility; 
    --  Commenced construction of Drayton Valley FST in the Cardium market; 

--  On December 1, 2010, Secure became a single shipper at its Fox Creek
    facility. There are three significant changes in the Corporation's
    operating and financial results by becoming a single shipper; 

    --  Oil purchase/resale services increased significantly in the month of
        December as all volume entering Fox Creek is purchased by Secure and
        sold back to customers in Edmonton; 

    --  Secure's accounts receivable and accounts payable increased
        significantly as commodity contracts are executed over the forecast
        period and commodity contracts are fulfilled on physically delivery.
        The majority of commodity contracts offset in subsequent payment

    --  Secure is required by Pembina Pipeline Corporation ("Pembina") to
        hold physical linefill inventory from the Fox Creek terminal to the
        Edmonton terminal, based on a percentage of volume shipped by Secure
        in the given month; Subsequent to December 31, 2010, Pembina
        announced that shippers on its Peace pipeline system would no longer
        be required to hold line fill inventory. The announcement will free
        up working capital of approximately $2 million entering into 2011; 

--  In the fourth quarter of 2010, Secure generated net income after taxes
    of $2.0 million, a significant improvement over the net loss after taxes
    of $1.0 million in the fourth quarter of 2009. For the year ended
    December 31, 2010, net income after taxes was $4.5 million, compared to
    the net loss after taxes of $2.8 million in 2009; 

--  During the fourth quarter, the Corporation expensed $1.3 million as a
    one time charge in business development expenses associated with
    Secure's Heritage landfill project. The project was to provide landfill
    disposal services to oil and gas customers located south of Dawson
    Creek, B.C. The Corporation was unable to obtain the necessary rezoning
    permits for the piece of property originally selected for the proposed
    landfill. Secure had to incur significant costs on the project prior to
    submitting the rezoning application. The Corporation determined in the
    fourth quarter of 2010 not to re-apply for zoning as this process would
    delay the project for an unreasonable period of time. During the fourth
    quarter, the Corporation made significant progress on a new landfill
    project in Alberta to service the same market area. Business development
    expenses in the fourth quarter of 2010 also include $0.6 million
    relating to research and development undertaken by Secure for
    environmental recycling process improvements and cost saving initiatives
    for customers; 

--  Overall, G&A as a percentage of the Corporations core revenue or
    processing, recovery and disposal services decreased to 9.1% for the
    year ended December 31, 2010 from 19.8% for the year ended December 31,
    2009. This decrease continues to reflect the efficiencies gained as the
    Corporation expands its network of facilities; 

--  Capital expenditures of $18.6 million in the fourth quarter related to
    the construction of the new Brazeau stand-alone water disposal "SWD"
    facility, waste expansion at the Obed FST and Dawson FST and the start 
    of construction on the new Drayton Valley FST. 


As we move forward, we will continue to evaluate our portfolio of opportunities to expand the Corporation through additional service lines, organic growth, and/or through strategic acquisitions. Secure has a total of $25 million related to 2010 carry over capital associated with the construction of the Drayton Valley FST, Brazeau SWD and waste expansion at the existing South Grande Prairie facility. Brazeau SWD and South Grande Prairie waste services are expected to be operational at the beginning of the second quarter. Construction on the Drayton Valley FST is well underway and it is expected to be completed during the third quarter of 2011. In addition, we dedicated approximately $30 million in 2011 for expansion and sustaining capital relating to increasing throughput capacity and the introduction of new services at the Corporation's existing facilities. We will increase capacity through additional disposal wells, pipeline connections, upgraded metering systems and additional truck unload infrastructure. The Corporation's available debt capacity and cash flow from operations moving in to 2011 will allow us the financial flexibility to deploy our capital strategy.

We expect activity levels experienced in the fourth quarter of 2010 in the oil and natural gas sector to continue into 2011. The Petroleum Services Association of Canada (PSAC) forecasts a total of 12,750 wells drilled in Canada for 2011, an increase over the expected 2010 final wells drilled of 12,158. In Alberta, PSAC is forecasting 8,390 wells drilled in 2011, an increase of three percent over 2010. Despite relatively low natural gas prices forecasted for 2011, natural gas producers will continue to realize the value of liquids-rich gas or natural gas liquids ("NGL's") in improving cash flow from natural gas wells. When prices are lower for natural gas, the sale of NGL's provide additional cash flow in determining whether an appropriate netback can be achieved on a specific well. Secure anticipates these NGL plays to continue into 2011, which promotes additional drilling and oilfield waste activity. In addition, higher levels of oilfield waste will also continue to increase as a result of advances in horizontal drilling and completion techniques. Drilling in Western Canada continues to steadily shift towards more horizontal drilling, and the horizontal wells have also become longer in total measured depth. The Daily Oil Bulletin (DOB) shows over 50% of wells drilled in Western Canada in 2009 were horizontal and directionally drilled - rising steadily from 21% in 2004. Total meters drilled in 2010 were 74% higher than 2009. The DOB has also reported that the average well depth has increased more than 35% from 2004-2009. Prices for crude oil have remained strong in 2010 and it is expected that oil wells drilled will outpace natural gas wells again in 2011. Overall, the strength of crude oil and NGL prices will continue to revitalize key market areas for 2011.

In 2011, we will continue to focus on strengthening our market position across all service lines and executing on our business strategy. We believe that our investment in developing a strong market position will continue to provide us with opportunities for growth. We expect the demand for our services to continue to grow based on a trend of greater outsourcing by oil and gas producers, and the increasing volume of byproducts requiring treatment and disposal from producing oil and gas wells. With the increase in volume, Secure is not only focusing on the treatment and disposal aspect in 2011, but also the opportunities for environmental recycling process improvements and cost saving initiatives for customers. Overall, we are excited about the opportunities ahead, and we look forward to the future of Secure.


Certain statements contained in this document constitute "forward-looking statements" within the meaning of securities laws, including the "safe harbor" provisions of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. 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 document. In particular, this document contains forward-looking statements pertaining to: general market conditions, the oil and natural gas industry, activity levels in the oil and gas sector, commodity prices for oil, NGLs and natural gas, expansion strategy, debt service, capital expenditures, completion of facilities, future capital needs, access to capital, acquisition strategy, anticipated completion of South Grande Prairie waste expansion, the Brazeau disposal well facility, and anticipated completion of the Drayton Valley full service terminal.

Forward-looking information concerning expected operating and economic conditions are based upon prior year results as well as assumptions that increases in market activity and growth will be consistent with industry activity and growth levels in similar phases of previous economic cycles. Forward-looking information concerning the availability of funding for future operations is based upon assumptions that 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 information concerning the relative future competitive position of the Corporation is based upon assumptions 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 to successfully market its services and drilling and production activity in the Western Canadian Sedimentary Basin will lead to sufficient demand for the Corporation's services, 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. Forward- looking information concerning the nature and timing of growth is 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 information 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. We caution readers 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 "Risk Factors" in the Corporation's annual information form "AIF" for the year ended December 31, 2010. Although forward-looking statements contained in this document 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 document 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.

For further information: SECURE Energy Services Inc., Rene Amirault, Chairman, President and CEO, (403) 984-6100, (403) 984-6101 (FAX) / SECURE Energy Services Inc., Nick Wieler, Chief Financial Officer, (403) 984-6100, (403) 984-6101 (FAX),