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Xtreme Announces Fourth Quarter and Fiscal Year 2011 Results and Conference Call Details

CALGARY, ALBERTA -- (Marketwire) -- 03/06/12 -- Xtreme Drilling and Coil Services (TSX:XDC) announces filing on SEDAR of the audited Consolidated Financial Statements and Notes to the audited Consolidated Financial Statements and Management's Discussion and Analysis for the twelve months ended December 31, 2011. These documents may be viewed at www.sedar.com and the Company's website www.xtremecoildrilling.com.

Xtreme has scheduled a conference call on Wednesday, March 07, 2012 beginning promptly at 9:00am MDT (10:00am CDT; 11:00am EDT) to discuss Xtreme's fourth quarter and fiscal year 2011 financial and operating results.

To participate in the conference call, please dial in approximately ten minutes before the start time in your time zone +1 866-226-1793 (North America Toll-Free) or +1 416-340-2218 (Alternate). An audio replay of the call will be available until Friday, March 25, 2012. To access the replay, call +1 905-694-9451 or +1 800-408-3053 and enter pass code 4699078.

Highlights - 2011 Full Year


--  revenue of $104 million; 
--  adjusted EBITDA of $21.9 million; 
--  operating margin of $29.2 million; 
--  operating days of 4,602; 
--  revenue per operating day of $22,600 and margin per operating day of
    $6,400 

Highlights - 2011 Fourth Quarter


--  revenue of $31.2 million; 
--  adjusted EBITDA of $6.1 million; 
--  operating margin of $6.9 million; 
--  operating days of 1,246; 

Highlights - Early 2012


--  One new XDR 500 rig commenced operations in late January. 
--  Three previously idled XDR 200 rigs commenced operations in mid-January
    in Canada. 
--  The first XSR coil service unit commenced operations in early February. 
--  The Company renegotiated three existing drilling contracts effective
    January 1 at a 35% price increase and a three year term on two rigs and
    two year term on the other rig. 
--  Contracted one XDR 400 with a new customer to commence operations in
    North Dakota after it completes its work with current customer in Texas.
--  On schedule to deliver five additional new build XDR 500 rigs in 2012 as
    follows: three in Q2, one in Q3 and one in Q4. 
--  Anticipate the remaining four XSR coil service units beginning
    operations through Q1 and Q2. 
--  Extension of contract for two XSR units in Saudi Arabia for an
    additional year. 

Excerpt from Management's Discussion and Analysis for the twelve months ended December 31, 2011

2012 Outlook

In 2012, the Company anticipates it will realize the economic benefits related to significant capital expenditures in 2011. Capital spending totaled $111 million for 2011 and is anticipated to be approximately $70 million in 2012. The first of six new XDR 500 drilling rigs began operations in January with the remaining scheduled to commence operations on long term contracts throughout 2012. In addition, five new XDR deep coil service units will go to work, with the first unit commencing operations in February.

The continued strength in unconventional drilling and completion has increased the demand for the Company's services. The geographic areas the Company operates in are dominated by drilling for oil and/or natural gas liquids. Management has strategically targeted the fleet towards these liquid rich areas as North American natural gas prices have remained extremely weak. Conversely, oil and natural gas liquids prices have remained quite strong. This is evidenced by the substantial decrease in the number of rigs drilling for natural gas, down 26% over the past 12 months compared to an increase of 84% in rigs targeting oil and liquids.

The target market for the new XSR deep coil service units, the Eagle Ford in South Texas, saw an increase in drilling rig count of 76% to 213 operating rigs from February 2011 to February 2012. Management focuses on operating rig count as this is a good leading indicator of demand for completions services, the primary focus of the XSR units. The new XSR units will initially target post frac clean outs with an ability to differentiate from competitors through longer reach and larger diameter coiled tubing.

The target markets for existing and new build XDR drilling rigs continue to be the Williston Basin of North Dakota and the Greater DJ Basin of Colorado. Similarly, the rig count has significantly increased in these areas, up 20% to 153 in the Williston Basin and up 43% to 40 operating rigs in the Greater DJ Basin. Day rates and terms of new drilling contracts have, as expected, remained strong in these areas.

Effective January 1, 2012, the Company was able to renegotiate three existing drilling contracts with its largest customer. Two of the rigs signed three year extensions at pricing that was 35% higher. The other renegotiated contract was for a two year term and also a 35% increase in pricing. It is anticipated that two additional rigs will renegotiate contracts at higher rates in 2012.

In January the Company initiated drilling operations in Canada with three XDR rigs working in Alberta. These rigs were moved to Canada in December of 2011 and were not working in the US market. This was due to the fact that they have lower depth capacity than is required for most US resource plays. However, they are well suited for the Canadian market where the wells are typically shallower. The Company believes that these rigs offer many technological advantages over existing rigs in the Canadian market and have the potential to work consistently. The Canadian market has also seen an increase in drilling that targets oil and natural gas liquids. The operating drilling rig count has increased by 10% from the year ago period to approximately 600 rigs. Spears and Associates project that total Canadian drilling and completion expenditures will increase by 15% in 2012 even with record low natural gas prices.

The Company continues to perform well with the two XSR units drilling re-entry horizontal wells in Saudi Arabia. In the first quarter of 2012 Xtreme executed a one year extension of this contract that will run through third quarter 2013.

In summary, the core drilling markets in the United States and Canada remain robust. Management expects that in 2012 the Company will realize significant increases in revenue, operating profits and net earnings as well as key metrics of operating margin per day, rig utilization and EBITDA. As of January 1, 2012, the Company had approximately 15,000 operating days under long term contract on the XDR or drilling side of the business. The drilling business provides a higher confidence in cash flows due to the take or pay and long term nature of the contracts. The XSR or coil service segment should provide significant lift to operating profits as it is anticipated that operating margins will be higher on this business as compared to the existing drilling business. This business has historically been a call out or spot market business. Long term contracts are not as common and as such utilization is not anticipated to be as high on the service business as compared to the drilling segment. In total, management believes that the portfolio of assets and services is complimentary and provides a segment that is stable and predictive (XDR) and a segment that is higher margin with a bit more volatility (XSR).


Consolidated Statement of Financial Position                             
(in thousands of Canadian dollars)                                       
                                                                         
                                             Dec 31,   Dec 31,    Jan 1, 
                                                2011      2010      2010 
                                           ------------------------------
Assets                                                                   
Current assets                                                           
 Cash and cash equivalents                     5,892     2,994    21,864 
 Accounts receivable                          45,353    37,083    28,807 
 Other receivables                             1,906     2,200     8,075 
 Prepaid expenses and other                    2,090     2,551     1,613 
 Income tax recoverable                          934     1,967         - 
 Inventory                                     5,863     5,402     4,592 
                                           ------------------------------
                                              62,038    52,197    64,951 
Non-current assets                                                       
Deferred tax asset                             7,566     4,265     4,525 
Property and equipment                       341,198   233,193   234,951 
Intangible assets                              4,523     4,793     4,909 
Goodwill                                           -         -     1,630 
                                           ------------------------------
Total Assets                                 415,325   294,448   310,966 
                                           ------------------------------
                                           ------------------------------
                                                                         
Liabilities and Shareholders' Equity                                     
Current liabilities                                                      
 Bank indebtedness                                 -     8,317         - 
 Accounts payable and accrued liabilities     26,175    10,097    14,139 
 Income tax payable                                -         -     2,222 
 Current portion of long-term debt               500    12,224    12,332 
                                           ------------------------------
                                              26,675    30,638    28,693 
Long-term liabilities                                                    
Long-term debt                                80,937    18,952    31,344 
                                           ------------------------------
Total Liabilities                            107,612    49,590    60,037 
                                           ------------------------------
                                           ------------------------------
                                                                         
Shareholders' equity                                                     
Share capital                                310,296   253,765   252,714 
Warrants reserve                                   -         -     1,630 
Share option reserve                          10,338     8,585     5,509 
Accumulated deficit                           (4,325)   (4,496)   (8,924)
Foreign currency translation reserve          (8,596)  (12,996)        - 
                                           ------------------------------
Total Shareholders' Equity                   307,713   244,858   250,929 
                                           ------------------------------
Total Liabilities and Shareholders' Equity   415,325   294,448   310,966 
                                           ------------------------------
                                           ------------------------------
                                                                         
Consolidated Statement of Income                                            
For the years ended December 31, 2011 and                                   
 2010                                                                       
(in thousands of Canadian dollars, except                                   
 share and per share data)                                                  
                                                                            
                                                       2011            2010 
----------------------------------------------------------------------------
Revenue                                             103,982          85,585 
                                                                            
Expenses                                                                    
 Operating expenses                                  74,742          50,191 
 General and administrative expenses                  9,622          13,260 
 Depreciation                                        11,991          10,064 
 Amortization of intangibles                            304             298 
 Stock-based compensation                             1,826           1,277 
 Impairment of goodwill                                   -           1,630 
 Impairment of equipment                                  -           2,528 
 Foreign exchange (gain) loss                         1,790            (976)
 Loss on sale of equipment                              159               5 
 Other income                                           (43)            (90)
 Interest expense                                     2,532           1,728 
----------------------------------------------------------------------------
Income before tax for the year                        1,059           5,670 
                                                                            
Tax expense (recovery)                                                      
 Current                                              2,571           1,212 
 Future                                              (1,683)             30 
----------------------------------------------------------------------------
Total tax expense                                       888           1,242 
                                                                            
Net income for the year                                 171           4,428 
----------------------------------------------------------------------------
                                                                            
Net income per common share                                                 
 - basic                                               0.00            0.08 
 - diluted                                             0.00            0.08 
                                                                            
Weighted average number of                                                  
common shares                                                               
 - basic                                         60,481,719      53,143,356 
 - diluted                                       61,298,859      53,902,512 

Consolidated Statement of Comprehensive Income (Loss) For the years ended December 31, 2011 and 2010

(in thousands of Canadian dollars)


                                                        2011           2010 
----------------------------------------------------------------------------
Net income for the year                                  171          4,428 
Other comprehensive income (loss)                                           
 Unrealized gain (loss) on translating                                      
  financial statements of foreign operations           4,400        (12,996)
                                             -------------------------------
                                                                            
Comprehensive income (loss) for the year               4,571         (8,568)
----------------------------------------------------------------------------
                                                                            
Consolidated Statement of Changes in Shareholders' Equity                   
For the years ended December 31, 2011 and 2010                              
(in thousands of                                                            
 Canadian dollars)                                                          
                                                                            
                                                           Foreign          
                                     Share                currency          
                  Share  Warrants   option Accumulated translation    Total 
                capital   reserve  reserve     deficit     reserve   equity 
----------------------------------------------------------------------------
 Balance at                                                                 
 January 1,                                                                 
 2010           252,714     1,630    5,509      (8,924)          -  250,929 
----------------------------------------------------------------------------
Net income for                                                              
 the year             -         -        -       4,428           -    4,428 
Other                                                                       
 comprehensive                                                              
 income (loss)                                                              
                                                                            
Currency                                                                    
 translation                                                                
 differences          -         -        -           -    (12,996)  (12,996)
----------------------------------------------------------------------------
Total                                                                       
 comprehensive                                                              
 loss                 -         -        -       4,428    (12,996)   (8,568)
----------------------------------------------------------------------------
                                                                            
Transactions                                                                
 with owners                                                                
                                                                            
                                                                            
Cancellation of                                                             
 warrants             -    (1,630)   1,630           -           -        - 
                                                                            
Purchase of own                                                             
 shares            (258)        -      112           -           -     (146)
                                                                            
Employee share                                                              
option scheme:                                                              
Value of                                                                    
 employees                                                                  
 services           140         -    1,475           -           -    1,615 
Proceeds from                                                               
 shares issued    1,169         -     (141)          -           -    1,028 
----------------------------------------------------------------------------
Total                                                                       
 transactions                                                               
 with owners    253,765         -    8,585           -           -  262,350 
----------------------------------------------------------------------------
Balance at                                                                  
 December 31,                                                               
 2010           253,765         -    8,585      (4,496)    (12,996) 244,858 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance at                                                                  
 January 1,                                                                 
 2011           253,765         -    8,585      (4,496)    (12,996) 244,858 
----------------------------------------------------------------------------
Net income for                                                              
 the year             -         -        -         171           -      171 
Other                                                                       
 comprehensive                                                              
income (loss)                                                               
Currency                                                                    
 translation                                                                
 differences          -         -        -           -       4,400    4,400 
----------------------------------------------------------------------------
Total                                                                       
 comprehensive                                                              
 income               -         -        -         171       4,400    4,571 
----------------------------------------------------------------------------
Employee share                                                              
option scheme:                                                              
Value of                                                                    
 employee                                                                   
 services           133         -    1,867           -           -    2,000 
Proceeds from                                                               
 shares                                                                     
Issued, net of                                                              
 share issue                                                                
 costs           56,398         -     (114)          -           -   56,284 
----------------------------------------------------------------------------
Total                                                                       
 transactions                                                               
 with owners    310,296         -   10,338           -           -  320,634 
----------------------------------------------------------------------------
Balance at                                                                  
 December 31,                                                               
 2011           310,296         -   10,338      (4,325)     (8,596) 307,713 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated Statement of Cash Flows                                        
For the years ended December 31, 2011 and                                   
 2010                                                                       
(in thousands of Canadian dollars)                                          
                                                       2011            2010 
----------------------------------------------------------------------------
Cash flow provided by (used in):                                            
Operating activities                                                        
Net income for the year                                 171           4,428 
Items not affecting cash:                                                   
 Depreciation and amortization                       12,295          10,362 
 Stock-based compensation                             1,826           1,277 
 Gain (loss) on sale of equipment                       159               5 
 Provision for doubtful accounts                       (310)            322 
 Loss on inventory write-down                             -             416 
 Interest expense                                     2,326           1,850 
 Amortization of debt issuance costs                    206               - 
 Impairment of goodwill                                   -           1,630 
 Impairment of equipment                                  -           2,528 
 Unrealized foreign exchange (gain) loss              1,790            (882)
 Deferred tax recovery                                1,683              30 
 Interest paid                                       (1,534)         (1,664)
 Changes in items of working capital                                        
                                                         15         (14,378)
----------------------------------------------------------------------------
Net cash generated from (used in) operating                                 
 activities                                          18,627           5,924 
----------------------------------------------------------------------------
Financing activities                                                        
Proceeds from shares issued                          55,615               - 
Proceeds from exercise of stock options                 783           1,182 
Share buy-back                                            -            (146)
Proceeds from long-term debt                        145,490           1,325 
Repayment of long-term debt                         (95,963)        (11,858)
Repayment of operating facility                      (8,317)          8,317 
Debt issuance cost                                   (1,070)                
----------------------------------------------------------------------------
Net cash generated from (used in) financing                                 
 activities                                          96,538          (1,180)
----------------------------------------------------------------------------
Investing activities                                                        
Proceeds from sale of equipment                         478           6,234 
Capital expenditures                               (106,702)        (27,977)
Increase in intangibles                                 (34)           (182)
Other                                                     -          (1,100)
----------------------------------------------------------------------------
Net cash generated from (used in) investing                                 
 activities                                        (106,258)        (23,025)
----------------------------------------------------------------------------
                                                                            
Effect of exchange rate changes on cash and                                 
 cash equivalents                                    (6,009)           (589)
----------------------------------------------------------------------------
                                                                            
Increase (decrease) in cash and cash                                        
 equivalents                                          2,898         (18,870)
                                                                            
Cash and cash equivalents - beginning of                                    
 year                                                 2,994          21,864 
----------------------------------------------------------------------------
 Cash and cash equivalents - end of year             5,892            2,994 
Adjusted EBITDA                                                             
For the three and twelve months ended December 31, 2011 and 2010            
(in thousands of Canadian dollars)                                          
                                   Three months ended   Twelve months ended 
                                   Dec 31,    Dec 31,    Dec 31,    Dec 31, 
                                      2011       2010       2011       2010 
----------------------------------------------------------------------------
Net income                          (1,092)       954        171      4.429 
Tax expense (recovery)               1,400       (270)       888      1,242 
Interest expense                       963        417      2,532      1,728 
Loss on sale of equipment              212          -        159          5 
Other income                            (1)       (66)       (43)       (91)
Impairment of equipment                  -          -          -      1,630 
Impairment of goodwill                   -          -          -      2,528 
Foreign exchange loss (gain)        (1,153)      (372)     1,790       (976)
Stock-based compensation               278        350      1,826      1,277 
Amortization of intangibles             76         78        303        298 
Depreciation of property and                                                
 equipment                           3,654      3,068     11,991     10,064 
----------------------------------------------------------------------------
                                     4,337      4,159     19,617     22,133 
----------------------------------------------------------------------------
Non-recurring items:                                                        
 Inventory adjustments               1,091          -      1,442          - 
 Other                                 716          -        829          - 
----------------------------------------------------------------------------
Adjusted EBITDA                      6,144      4,159     21,888     22,134 
----------------------------------------------------------------------------
Adjusted EBITDA per share ($)         0.09       0.08       0.36       0.42 
----------------------------------------------------------------------------

Reader Advisory

This news release, or documents incorporated herein, contains forward-looking statements ("FLS"). More particularly, this news release contains statements that may relate to contracting, marketing, financing, construction, modifications, deployment, operation, utilization of drilling rigs in the Company's current and future fleet, and any potential outcome relating to claims and litigation. Further, the FLS herein may relate to trade credit insurance carried by the Company to mitigate receivables collection risk. Although Xtreme believes expectations reflected in these FLS are reasonable, readers should not place undue reliance on them because Xtreme can give no assurance they will prove to be correct. There are many factors that could cause FLS not to be correct, including risks and uncertainties inherent in the Company's business.

These statements are based on certain factors and assumptions including, but not limited to: the assessment of current and projected future operations; ongoing and future strategic business alliances, negotiations and opportunities to enter new, extend or complete existing contracts; the availability and cost of financing; foreign currency exchange rates; timing and magnitude of capital expenditures; expenses and other variables affecting rig operation, modification and construction; the ability and commitment of vendors to provide rig component equipment, services and supplies, including labor, in a cost-effective and timely manner; the issuance of applied-for patents; changes in tax rates; and government regulations. Although Xtreme considers the assumptions used to prepare this news release reasonable, based on information available to management as of March 06, 2012, ultimately the assumptions may prove to be incorrect.

Forward-looking statements are also subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from management's current expectations. These factors include, but are not limited to: the cyclical nature of drilling market demand, foreign currency exchange rates, and commodity prices; access to credit and to equity markets; the availability of qualified personnel; vendor-provided rig components; and, competition for customers.

Management's assumptions considered the following: compliance with the terms of the Company's current and proposed new credit facility; ongoing access to key supplies and components required to continue operating and maintaining equipment, including fuel; continued successful performance of drilling and related equipment; expectations regarding gross margin; recruitment and retention of qualified personnel; continuation or extension of existing long-term or multi-well contracts; revenue expectations related to shorter-term drilling opportunities; willingness and ability of customers to remit amounts owing to Xtreme in accordance with normal industry practices; and management of accounts receivable in direct relation to revenue generation.

In preparing this news release, management considered the following risk factors: fluctuations in crude oil and natural gas prices, supply and demand; fluctuation in foreign currency exchange and interest rates; financial stability of Xtreme's customers; current and future applications for Xtreme's proprietary technology; competition from other drilling contractors; regulatory and economic conditions in regions where Xtreme operates; environmental constraints; changes to government legislation; international trade barriers or restrictions; and, where appropriate, global political and military events.

Financial outlook information contained in this news release about prospective results of operations, financial position or cash provided by operating activities is based on assumptions about future events, including economic conditions and proposed courses of action, and on management's assessment of relevant information currently available. Readers are cautioned such financial outlook information contained in this news release is not appropriate for purposes other than for which it is disclosed here. Readers should not place undue importance on FLS and should not rely on this information as of any other date. Except as required pursuant to applicable securities laws, Xtreme Coil disclaims any intention, and assumes no obligation, to update publicly or revise FLS to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such FLS or otherwise.

About Xtreme Coil

Xtreme Coil Drilling Corp. ("XDC" on the Toronto Stock Exchange) and its subsidiaries operate under the brand name Xtreme Drilling and Coil Services. Xtreme designs, builds, and operates a fleet of high specification drilling rigs and coiled tubing well service units featuring leading-edge proprietary technology including AC high capacity coil injectors, deep re-entry drilling capability, modular transportation systems and continuous integration of in-house advances in methodologies.

Currently Xtreme operates two service lines: drilling services (XDR) and well services (XSR) under contracts with oil and natural gas exploration and production companies and integrated oilfield service providers in Canada, the United States and Saudi Arabia. For more information about the Company, please visit www.xtremecoil.com.

Contacts:
Xtreme Coil Drilling Corp.
Matt Porter
Chief Financial Officer
281-994-4600
ir@xtremecoil.com

Xtreme Coil Drilling Corp.
16285 Park Ten Place, Suite 650
Houston, Texas 77084
281-994-4600
ir@xtremecoil.com
www.xtremecoil.com

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