Dalmac Energy Gains Net Earnings of $247,920 for Q2

John Babic, President and CEO of Dalmac Energy Inc. announces net earnings of $247,920 for the second quarter ended October 31, 2007.

Revenue for Q2'08 increased by $1.0 million or 45% to $3.2 million from the $2.2 million reported in the same period last year. The current year to date revenue increased $1.3 million or 31% to $5.7 million from the $4.4 million reported in the previous year. Net income for Q2'08 increased by $505,428 or 196% to $247,920 from a loss of $257,508 reported in Q2'07. The YTD'08 income also increased by $414,661 or 114% to $50,417 from a loss of $364,244 as reported in YTD'07. In Q2'08 the Corporation had a recovery of expenses of $243,593 derived from a review of GST input credits not claimed in previous periods. This review is ongoing and further adjustments may be made.

The Q2'08 income from operations increased by $351,773 or 112% to $36,892 from a loss of $314,881 as reported in Q2'07. The year to date income from operations increased by $324,300 or 61% to a loss of $207,935 compared to a loss of $532,235 reported in YTD'07. The EBITDA(1) for Q2'08 increased by $0.7 million or 7025% to $0.8 million from a loss of $10,079 reported at Q2'07. The year to date EBITDA increased $0.7 million to $1.0 million from the $0.1 million reported in YTD'07. Most of these increases occurred in Q2'08 and where commensurate with increased production activity generated by new equipment purchases and the acquisitions made during the first half of the current fiscal year.

The gross margin in Q2'08 increased by $0.6 million or 119% to $1.1 million from the $0.5 million reported in Q2'07. Gross margin as a percentage, for Q2'08 increased by 12% to 35% from the 23% reported in Q2'07. The year to date gross margin, increased by $0.8 million or 75% to $1.9 million from the $1.1 million reported at the same period last year. The increase in the gross profit margin resulted from improved controls over direct operating costs and by optimizing utilization of company assets. This is borne out by the fact that in Q2'08 revenue increased by 45% over the previous year while gross margin increased by 119%. The year to date revenue increased by 17% and gross margin increased by 75% as compared to the same period last year.

The activity levels for oil and gas drilling & service industry continues to remain uncertain for the short term. Drilling activity levels are very much dependent on price movements of natural gas. While the above conditions are expected to continue over the near future, Dalmac anticipates that the decreased drilling activity will eventually help decrease the North American gas storage levels, which will then in turn stimulate the demand for drilling services in the WCSB. Additionally, during periods of reduced drilling activity, producers are also more likely to focus efforts on stimulating and working over existing wells in order to maximize production and cash flows, which in turn will serve to stimulate increased activity levels for the Corporation. Dalmac is encouraged by the indications of demand for its services.

While the general drilling activity levels are lower than in the previous year, the Corporation continues to maintain good relationships with its customer base and has balanced its exposure to drilling versus production work. The latter is less affected by reduced capital spending and drilling activity.

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