News Press Releases

Intercept Energy Services Reports Third Quarter 2014 Results and Engages Investor Relations Firm

December 1, 2014

(via Thenewswire.ca)

Edmonton, Canada / TNW-ACCESSWIRE / December 1, 2014 / Intercept Energy Services Inc. ("IES" or the "Corporation") (TSX-V: IES / OTCBB: IESCF), a leading Oilfield Services Firm ("OFS") specializing in frac water heating, unconventional energy extraction, oilfield equipment, oilfield waste disposal and recovery of reusable products from waste, today reported financial results for the third quarter ended September 30, 2014, as well as the engagement of an investor relations firm.

ThirdQuarter 2014Highlights

-Gross revenues were higher by 121 percent to $0.8 million compared to $0.3 million for the same quarter last year and were higher by 86 percent to $2.6 million compared to $1.4 million on a year-to-date basis, due to an increase in the number of Heating Units in operation in 2014 and the entry into the US during the first quarter of 2014.

=Corporation successfully negotiated and extinguished its royalty obligation in exchange for two million common shares of the Corporation at a fair value of $51,062. This resulted in recognizing a one-time gain on extinguishment of royalty obligation during the current quarter of $2.9 million.

-Corporation successfully refinanced its capital lease facility during the current quarter which resulted in repaying its existing capital lease obligation due to a major Canadian bank in full of $1.5 million and establishing a $2.5 million new capital lease facility repayable over five years.

-Corporation successfully paid down part of its $1 million notes payable revolving credit facility included in loans and borrowings, and the balance at the end September 30, 2014 was $0.5 million. An additional $0.2 million was drawn from this credit facility subsequent to third quarter for general working capital purposes.

-The Corporation had a total of 5 Heating Units operating in 2014 compared to only 2 Heating Units during the same period last year.

-During the first half of 2014 the Corporation successfully entered into the US and there were 3 Heating Unit working by the end of September 30, 2014 in the US. These were the first Heating Units working in the US and the Corporation is working on increasing the number of Heating Units in the US by the end of 2014.

-Net loss before other items for the quarter ended September 30, 2014 was $0.5 million compared to a net loss before other items of $0.6 million, or a decrease in loss of 17 percent for the same quarter last year. The net loss before other items was $1.6 million compared to $1.4 million, or an increase in loss of 16 percent on a year-to-date basis compared to the same period last year, mainly due to an increase in overall operation costs.

Net income for the quarter ended September 30, 2014 was $2.2 million compared to a net loss of $0.7 million for the same quarter last year. The net income was $0.9 million compared to a net loss of $1.5 million on a year-to-date basis compared to the same period last year, mainly due to the one-time gain in the current quarter of $2.9 million on extinguishment of royalty obligation.

Commenting on third quarter 2014 results, Mr. Swapan Kakumanu, IES, Chief Financial Officer stated, "Our third quarter financial results show a greater quarter-over-quarter improvement on revenue growth compared to the same quarters of previous years. By successfully resolving the royalty liability obligation and refinancing the capital leases during the third quarter, the Corporation has a more flexible and stronger balance sheet to work with."

"We are currently evaluating and identifying new opportunities for the Corporation that will enable us to expand our operations throughout North America," commented Mr. Keith Morlock, President and Chief Operating Officer of IES. "I am currently working with the Board and our Management Team to develop a strategy of growth, profitability and diversification which is expected to provide a foundation for increased revenues and a positive bottom line."

Engagement of QualityStocks Investor Relations Services

Based in Scottsdale, Arizona, QualityStocks has assisted more than 300 public companies with their efforts to broaden influence, attract growth capital and improve shareholder value. In addition to providing corporate guidance and strategic support to IES, QualityStocks will use its network of partners, daily and weekly newsletters, social media channels, blog and other outreach tools to heighten the Corporation's awareness and keep current and potential shareholders up-to-date on company news, progress and even industry trends that may affect the company's position.

"Company growth and market penetration are obviously leading objectives in the IES plan. In addition to these commitments we want to make sure our shareholders are in the loop on our operations, objectives and progress," stated Mr. Morlock. "By partnering with QualityStocks, we plan to leverage new communication and marketing strategies that will support each facet of our business plan and fully support corporate value and expansion."

"Our campaigns encompass a wide range of powerful avenues, networks and strategies to help each client raise their visibility and communication initiatives," stated QualityStocks Managing Director Michael McCarthy. "We're honored to partner with Intercept Energy as it expands its footprint in the lucrative oil and gas industry by providing a much needed and innovative solution to address the challenges of fracking."

Third quarter financial results summary is as follows:

INTERCEPT ENERGY SERVICES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian dollars - Unaudited)

	Notes	September 30, 2014	December 31, 2013 (Audited)

ASSETS

Current assets
Cash		$ 154,812	$ 8,845
Trade and other receivables		635,349	734,272
Prepaids and deposits		51,981	22,292
Inventory		11,816	-
Total current assets		853,958	765,409

Non-current assets
Equipment		3,591,965	4,014,068
Total non-current assets		3,591,965	4,014,068
TOTAL ASSETS		$ 4,445,923	$ 4,779,477

LIABILITIES

Current liabilities
Trade and other payables		$ 1,001,586	$ 969,223
Loans and borrowings		485,889	651,666
Current portion of finance lease obligations		327,626	1,833,960
Current portion of royalty obligations		-	453,245
Current portion of derivative liability		40,163	40,163
Total current liabilities		1,855,264	3,948,257

Non-current liabilities
Loans and borrowings		334,513	313,039
Finance lease obligations		2,122,887	-
Royalty obligations		-	2,064,601
Derivative liability		65,138	88,305
Total long term liabilities		2,522,538	2,465,945
TOTAL LIABILITIES		4,377,802	6,414,202

SHAREHOLDERS' EQUITY (DEFICIENCY)
Share capital		11,464,730	11,117,213
Contributed surplus		6,101,411	5,646,571
Subscription advances		30,000	-
Deficit		(17,528,020)	(18,398,509)
TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY)		68,121	(1,634,725)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)		$ 4,445,923	$ 4,779,477

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

(Expressed in Canadian dollars - Unaudited)

		Three Months Ended	Three Months Ended	Nine Months Ended	Nine Months Ended
	Notes	September 30, 2014	September 30, 2013	September 30, 2014	September 30, 2013
REVENUE
Rental income		$ 753,043	$ 341,232	$ 2,619,579	$1,407,093
		753,043	341,232	2,619,579	1,407,093

EXPENSES
Consulting fees		152,224	240,948	348,282	549,997
Depreciation		172,423	156,051	515,704	336,180
Equipment maintenance and rental		31,076	73,546	213,855	133,836
Fuel and sundry direct operating costs		164,349	17,004	910,762	242,364
Occupancy costs		26,174	(61,753)	109,084	(108,411)
Office and sundry		75,910	44,119	179,065	145,641
Professional fees		61,321	44,331	272,137	173,707
Royalties		59,001	53,027	346,608	207,164
Salaries and wages		304,519	193,150	1,002,980	564,773
Share based compensation		199,151	166,653	242,805	365,479
Travel, marketing and conferences		48,241	44,317	117,370	202,930
Foreign exchange loss (gain)		(21,054)	-	(12,440)	-
		1,273,335	971,393	4,246,212	2,813,660

Loss before other items		(520,292)	(630,161)	(1,626,633)	(1,406,567)

OTHER ITEMS
Interest income		-	225	-	675
Amortization of deferred gain on sale leaseback		-	-	-	1,070
Gain on extinguishment of royalty obligation		2,870,848	-	2,870,848	-
Gain (loss) on derivative liability		15,968	-	667	-
Finance expense		(156,593)	(29,548)	(374,393)	(55,133)
		2,730,223	(29,323)	2,497,122	(53,388)
Net income (loss) and comprehensive income (loss) for the period		$ 2,209,931	$ (659,484)	$ 870,489	$(1,459,955)
Basic and diluted income (loss) per common share		$ 0.02	$ (0.01)	$ 0.01	$ (0.02)

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)

(Expressed in Canadian dollars - Unaudited)

	Share Capital Number of shares	Amount	Contributed surplus	Subscription advances	Deficit	Total

Balance at December 31, 2012 (restated note 20)	80,966,462	$ 9,293,446	$ 4,855,250	$ 10,000	$(15,364,528)	$(1,205,832)

Private placements	21,599,999	1,535,000	-	(10,000)	-	1,525,000
Share issue costs	-	(97,541)	7,291	-	-	(90,250)
Options exercised	300,000	54,000	(24,000)	-	-	30,000
Share based compensation	-	-	365,479	-	-	365,479
Net income (loss) and comprehensive loss for the period	-	-	-	-	(1,459,955)	(1,459,955)
Balance at September 30, 2013	102,866,461	10,784,905	5,204,020	-	(16,824,483)	(835,558)

Balance at December 31, 2013	109,289,795	11,117,213	5,646,571	-	(18,398,509)	(1,634,725)

Private placements	9,670,000	483,500	-	-	-	483,500
Subscription advances	-	-	-	30,000	-	30,000
Share issue costs	-	(9,630)	4,130	-	-	(5,500)
Warrants	-	(207,905)	207,905	-	-	-
Bonus shares issued	900,000	30,490	-	-	-	30,490
Shares issued on extinguishment of royalty obligation	2,000,000	51,062	-	-	-	51,062
Share based compensation	-	-	242,805	-	-	242,805
Net income (loss) and comprehensive loss for the period	-	-	-	-	870,489	870,489
Balance at September 30, 2014	121,859,795	11,464,730	6,101,411	30,000	(17,528,020)	68,121

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Canadian dollars - Unaudited)

	Nine months ended September 30, 2014	Nine months ended September 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) and comprehensive income (loss) for the period	$ 870,489	$ (1,459,955)
Items not affecting cash:
Amortization of deferred gain on sale leaseback	-	(1,070)
Depreciation	515,704	336,180
Accretion	21,474	3,068
Share-based payments	242,805	365,479
Gain on extinguishment of royalty liability	(2,870,848)	-

Changes in non-cash working capital items:
Trade and other receivables	98,923	(62,336)
Prepaids and deposits	(29,689)	(197,423)
Inventory	(11,816)	-
Income taxes recoverable	-	1,292
Trade and other payables	436,427	63,793
	(726,531)	(950,972)
CASH FLOWS FROM INVESTING ACTIVITIES
Loans receivable	-	(37,999)
Acquisition of equipment (Note 7)	(43,601)	(1,112,683)
	(43,601)	(1,150,682)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of shares	483,500	1,555,000
Share issue costs	(5,500)	(90,250)
Subscription advances	30,000	-
Loans and borrowings	477,920	199,672
Loans and borrowings repayments	(613,207)	-
Derivative liability	(23,167)	-
Finance leases	2,500,000	898,110
Finance leases - paid	(1,933,447)	(12,690)
	916,099	2,549,842
Change in cash for the period	145,967	448,188
Cash, beginning of period	8,845	40,887
Cash, end of period	$ 154,812	$ 489,075

About Intercept Energy Services Inc. ("IES")

Intercept Energy Services Inc. employs innovative and proprietary technology to provide the highest efficiency heated water, used by oil and gas exploration and production companies; in the fracturing process in Canada and the United States. Through the utilization of HE Heaters(TM), IES is able to reduce fuel consumption and emissions, enhances safety and productivity, enable extreme cold weather operations with significantly lower operating costs that result in a direct competitive advantage for its customers. For more information, visit http://Intercept es.com

About QualityStocks

QualityStocks is committed to connecting subscribers with companies that have huge potential to succeed in the short and long-term future. It is part of our mission statement to help the investment community discover emerging companies that offer excellent growth potential. We offer several ways for investors to learn more about investing in these companies as well as find and evaluate them.

To receive the latest updates on our clients and stocks we're watching, sign up for the QualityStocks Newsletter at http://Signup.QualityStocks.net

Contacts:

Mr. Keith Morlock Mr. Swapan Kakumanu

President & Chief Operating Officer Chief Financial Officer

1.877.975.0558 1.877.975.0558

kmorlock@Interceptes.com skakumanu@Interceptes.com

QualityStocks

Scottsdale, Arizona

www.QualityStocks.com

480.374.1336

editor@QualityStocks.net

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or the accuracy of this release.

6

Forward-looking statements
Certain information regarding IES in this news release, including management's assessment of its future development plans and access to various external sources of capital, may constitute forward looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with heating technology and oilfield services operations, general risks associated with oil and gas exploration, development, production, marketing and disposal of waste, loss of markets, environmental risks, competition from other service providers, delays resulting from inability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect IES's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website ( www.sedar.com ). The forward-looking statements or information contained in this news release are made as of the date hereof and IES does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

TheNewsWire

December 1, 2014 - 9:25 AM EST

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