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CALGARY, ALBERTA–(Marketwire – May 9, 2013) – CanElson Drilling Inc. (TSX:CDI) today announces strong financial results for the first quarter ending March 31, 2013, plans additional rig builds and declares first quarter dividend.

FIRST QUARTER 2013 SUMMARY (Compared with a year earlier)

• Services revenue $72.3 million, up 16% from $62.5 million
• EBITDA $27.4 million, consistent with 2012 of $27.4 million
• Income attributable to shareholders of the Corporation $13.3 million, down 15% from $15.6 million
• EPS (diluted) $0.17, down 19% from $0.21
• Weighted average diluted shares outstanding 76.8 million, up 4% from 74.0 million
• First quarter dividend of $0.06 per share, up 20% from previous quarterly rate of $0.05
• United States segment revenue $29.1 million, up 14% from $25.5 million, representing 40% of total service revenue for the quarter, up from 36%

CanElson maintained the same high Canadian utilization rate (spud to rig release days) in the first quarter of 2013 and increased the rate of industry outperformance. At a 73% utilization rate for Q1 2013, CanElson outperformed the industry by 1.24 times, compared to 1.09 times for the first quarter of 2012.

In the USA, CanElson had a utilization rate of 86%, up 3% compared to the first quarter of 2012. The total corporate utilization rate increased to 78% from 76% in Q1 2012.

ADDITIONAL RIG BUILDS

Given the demand for our existing drilling rig fleet, relative industry outperformance and based on customer requests we are finalizing additional rig contracts, resulting in additional 2013 tele-double drilling rig construction and deployment as follows:

• Rig #37: Expected to be delivered Q3 2013
• Rig #38: Expected to be delivered Q4 2013
• Rig #39: Expected to be delivered Q4 2013
• Rig #44: Long lead items will be procured in Q3 and Q4 of 2013

“During the quarter we generated growth in our operational activity levels while the industry saw contraction. We believe that key factors in this success include the extensive drilling and operational experience of our people and our modern purpose built equipment.” stated Randy Hawkings, President and CEO of CanElson. “Our top decile financial and operating results combined with our disciplined use of leverage have positioned us with the flexibility to increase our dividend by 20% and add three new rig builds and long lead items for a fourth drilling rig to our 2013 capital program.”

OUTLOOK

Drilling Services

Once again, in the first quarter of 2013 CanElson outperformed the drilling services industry in both Canada and the US amid continued subdued markets. We believe that our strategy has uniquely positioned us to sustain relatively strong profitability during the full drilling industry cycle. The key drivers for our relative industry strength, profitability, and top decile financial results are:

1. Strategically diversified operations in oil-weighted regions within two balanced geographical segments, which provide diversity of earnings and less seasonality while maintaining focus and operational efficiency
2. Standardized deep, modern rigs (average age of approximately 4.5 years and average vertical rating of greater than 4,000 metres) allowing us to outperform peers when considering the total costs of safely drilling wells
3. A problem-solving culture as evidenced by our ability to service our customers with performance drilling and innovative cost saving initiatives such as our natural gas fuel and flare gas initiative with CanGas
4. A history of developing mutually-beneficial partnerships and strong client relationships with First Nations organizations, oil and gas operators and the joint venture which leverages the established Mexican footprint of Diavaz CanElson de Mexico, S.A. de C.V. (“DCM”)
5. Prudent financial management, which allows the company to be opportunistic at any point in the cycle
6. Operational excellence based on a culture of safety, as reflected by superior drilling industry safety performance relative to benchmarks from third party sources such as provincial and state workers compensation boards and private insurance providers

At the time of this press release 93% of the drilling rig fleet is committed for after spring break up based on current customer requests and 33% of the rigs have long-term commitments with an average term slightly greater than one and a half years.

Canada and North Dakota

Our customers in Canada and North Dakota are cautious with respect to their capital spending programs as a result of the current volatility in oil and natural gas commodity prices, increased price differentials, reduced access to capital, transportation challenges, and global macro-economic concerns. Consequently, we expect typical seasonal utilization through the remainder of the year including a normal seasonal decrease in revenues for Q2 and Q3 of 2013. There may also be some seasonal revenue rate pressure as less efficient competitor drilling contractors try to obtain work with low revenue rates during the spring and summer drilling seasons. We expect to maintain our competitive edge and to continue to exceed average industry utilization levels due to our strong relationships, modern drilling rig fleet, cost reduction initiatives (e.g. CanGas) and long term contracts with customers.

Texas

CanElson has 28% of its fleet focused on oil directed drilling in the Permian Basin in Texas. CanElson continues to grow its fully contracted fleet in this basin even though the industry-wide rig count in this area has recently declined due to some of the same macro-economic industry trends described above. We anticipate that the current revenue rates for CanElson’s Texas rigs will continue for the balance of the year. We also expect to achieve capacity utilization in excess of 90% for 2013 with downtime caused only by rig move intervals and planned re-certifications of some drilling equipment.

Mexico

In Mexico, DCM is retrofitting and modernizing two recently acquired tele-doubles at an estimated total investment of approximately $6.5 million per rig. We are expecting to deploy one of the new rigs in Q2 and the other in Q3 of 2013. Although the timing for deployment is approximately one month behind our initially anticipated start date, the process has allowed us to further develop the local knowledge of DCM drilling management in rig assembly and design, which we expect DCM to leverage in the future.

We have demonstrated our ability to successfully do business in Mexico. We believe our performance in the region and our alignment with an experienced and strong local partner (Grupo Diavaz, with 40 years of experience serving PEMEX) provides an excellent opportunity for our joint venture DCM to expand its range of services, including potentially expanding its drilling rig fleet beyond the two rigs currently anticipated for deployment in Q2 and Q3 of 2013.

As previously disclosed, DCM’s customer is transitioning to a production sharing style of contract with PEMEX. Therefore, DCM is experiencing a temporary lull in activity and we expect this to continue during the transition period. We are anticipating that PEMEX and our customer will have completed this transition period by the time the newly acquired rigs are retrofitted and deployed.

CanGas Solutions Inc.

During 2013, we expect to continue investment in our fleet of truck-hauled CNG delivery trailers and to convert the primary diesel engines in our drilling rigs to bi-fuel capacity based on customer requests.

Capital Availability and Capital Program

CanElson is well capitalized to take advantage of strategic opportunities with net debt (debt less cash) at March 31, 2013 of only $17.5 million and $98.4 million available on our existing credit facilities. Funds flow continues to be strong and will fully support our quarterly dividend rate of $0.06 per share as well as a significant portion of the expected 2013 capital expenditures with the remaining amount funded through undrawn loans and borrowings facilities.

Excluding $0.25 million of anticipated remaining capitalized development costs for the new triple rig design, CanElson’s total 2013 capital program is expected to be as follows:

(i) Refer to the MD&A dated February 28, 2013, noting that the numbers have been reduced for the capital expenditures relating to DCM as it is now accounted for using the equity method (see Financial Statements and MD&A reference below).

Our modern standardized fleet allows us to minimize capital expenditures on maintenance and spare equipment. As in the past, construction of any additional drilling rigs is pending receipt of long-term contracts. The 2013 total expected capital expenditures of $82.1 million has been increased by $36.4 million from the previously announced anticipated capital program at $45.7 million. The increase includes $31.5 million for the completion of three additional rigs and additional long lead components for a fourth rig, including top drives, based on anticipation of finalizing long-term commitments. The remainder of the incremental capital relates to additional recertification costs and incremental spare equipment. During the first quarter of 2013, our expansion capital expenditures represented over half of the capital expenditures required for the completion and deployment of Rig #35 and #36 and long lead items for Rig #37.

The remaining anticipated costs to complete 2013 capital projects are allocated as follows:

Drilling Services

$56.2 million capital program allocated as follows:

1. $39.1 million for the construction and completion of three tele-doubles with top drives (relating to rigs #37, #38, and #39), long lead items for one tele-double (rig #44) and $2.3 million on other growth capital; and
2. Approximately $14.8 million for spares, shop upgrades and maintenance capital.

CanGas

$9.6 million capital program allocated as follows:

1. Convert primary diesel engines on our drilling rigs to bi-fuel capability to enable operation on a mixture of natural gas and diesel fuel;
2. Expand our fleet of truck-hauled natural gas delivery trailers, compression and conditioning equipment to meet both current and anticipated demand;
3. Collect and leverage operating data to facilitate greater diesel fuel displacement and better manage costs; and
4. Further research and development associated with our proprietary raw gas conditioning technology to employ portable small-scale field facilities to condition raw natural gas for use as fuel.

2013 Primary Objectives

Looking to the end of 2013, CanElson’s primary objectives are to maintain and strengthen its industry leading position by consistently providing operational excellence and drilling efficiencies to its customers. With this focus we will be well positioned to obtain strong customer commitments and capitalize on new opportunities. Subject to obtaining customer commitments, we intend to carry out the following activities that will enhance our competitive positioning:

• Continue to expand our standard tele-double fleet
• Expand our service offering in Mexico
• Continue with strategic conversion of the diesel engines in our rig fleet to bi-fuel capacity
• Continue to form innovative long-term business relationships

Achieving these objectives will present new opportunities for CanElson, its customers and shareholders.

DIVIDEND

On May 8, 2013, the Board of Directors declared a first quarter dividend of $0.06 per share for the three month period ended March 31, 2013, payable on June 7, 2013 to shareholders of record at the close of business on May 29, 2013. The dividend is an eligible dividend for Canadian tax purposes.

(Tabular amounts are stated in thousands of Canadian dollars, except per share amounts and rig operating days)

FINANCIAL STATEMENTS AND MD&A

This is the Corporation’s first reporting period adopting IFRS 11 accounting for Joint Arrangements. In accordance with IFRS 11 the transition date was January 1, 2013 with retroactive application to January 1, 2012 and, accordingly, the comparative information for 2012 has been restated to conform to the requirements of IFRS 11. The application of IFRS 11 has changed the classification and subsequent accounting of the Corporation’s investment in DCM, which was classified as a jointly controlled entity and previously accounted for using the proportionate consolidation method. Applying IFRS 11 requires that the Corporation apply equity accounting for its 50% interest in DCM. Additional information about the adoption of this standard and the Corporation’s IFRSs accounting policies is discussed in the Accounting Policies and Critical Estimates section of the MD&A as well as in the notes to the March 31, 2013 condensed consolidated financial statements and the audited December 31, 2012 consolidated financial statements.

CanElson’s complete unaudited interim financial results and Management’s Discussion and Analysis (MD&A) for the first quarter ended March 31, 2013 have been filed on SEDAR and posted to the company’s website at this link: http://www.canelsondrilling.com/investor-relations/financial-reports

FORWARD-LOOKING INFORMATION

This press release contains certain statements or disclosures relating to CanElson that are based on the expectations of CanElson as well as assumptions made by and information currently available to CanElson which may constitute forward-looking information under applicable securities laws. In particular, this press release contains forward-looking information related to: intention to construct three additional rigs in 2013; our belief that our strategy positions us to sustain profitability during the full drilling industry cycle; expected typical seasonal utilization and revenue rate effects through the remainder of the year; in Canada and North Dakota expectation to continue to exceed average industry utilization levels; in Texas current revenue rate anticipated to continue and to achieve capacity utilization in excess of 90% for the remainder of 2013; expected deployment of rigs in Mexico in Q2 and Q3 of 2013 and estimated cost of these rigs; our belief that our performance in the region and our alignment with an experienced local partner provides an opportunity for DCM to expand its drilling services in the region; the temporary lull in our activity will be limited only until the newly acquired rigs are re-deployed; our expectation to continue investment in the fleet of truck-hauled CNG delivery trailers and to convert the primary diesel engines in our drilling rigs to bi-fuel capacity; expected 2013 capital programs and anticipated cost to complete 2013 capital program; and our primary objectives. Such forward looking information involves material assumptions and known and unknown risks and uncertainties, certain of which are beyond CanElson’s control. Many factors could cause the performance or achievement by CanElson to be materially different from any future results, performance or achievements that may be expressed or implied by such forward looking information. CanElson’s Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website at www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. CanElson disclaims any intention or obligation to publicly update or revise any forward looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

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