Revenues

In first quarter (Q1) 2009, the increase in revenues over Q1 2008 was mostly the result of Canyon’s increased market penetration into the northern areas of the Western Canadian Sedimentary basin, resulting in the completion of larger jobs for customers. As a result, average overall revenue per job increased by 29% to CAD47,959 in Q1 2009 from CAD37,303 for the prior year’s comparable quarter.

Operating Expenses

Operating expenses increased by 22% to CAD18.3 million in Q1 2009 from CAD15 million in Q1 2008. This increase is due to higher variable costs attributable to completing larger jobs for customers, as well as higher fixed operating costs as Canyon Services Group expanded operations in 2008 to satisfy increased activity levels. Canyon Services Group opened operating bases in Grande Prairie and Medicine Hat in 2008. In March 2009, the company implemented significant, company-wide cost reductions that will result in significant annual operating and administration savings for the balance of 2009.

Selling, General and Administrative Expenses

Selling, general and administrative expenses remained unchanged at CAD1.9 million in Q1 2009 compared to Q1 2008. Selling, general and administrative expense includes non-cash stock-based compensation expense of CAD0.2 million in Q1 2009, unchanged from the prior year’s comparable quarter.

EBITDA:

In Q1 2009, EBITDA (before stock option expense) has increased significantly to CAD4 million from CAD1.7 million in Q1 2008, due to the increase in revenues. The Q1 2009 amount of CAD4 million consists of income before income taxes of CAD1.4 million, plus depreciation and amortization of CAD2.3 million, plus interest on long-term debt and other interest of CAD0.1 million, plus stock option expense of CAD0.2 million.

The comparable Q1 2008 amount of CAD1.7 million consists of loss before income taxes of (CAD1.3) million, plus depreciation and amortization of CAD2.4 million, plus interest on long-term debt and other interest of CAD0.4 million, plus stock option expense of CAD0.2 million.

Interest Expense

Interest on long-term debt and other interest was CAD0.1 million for Q1 2009, compared to CAD0.4 million for Q1 2008. The decrease is mostly due to lower debt levels and interest rates in Q1 2009.

Depreciation Expense

Depreciation expense was recorded at CAD2.3 million in Q1 2009, down slightly from the CAD2.4 million recorded in Q1 2008.

Income Tax Expense

At the expected combined income tax rate of 29%, income before income taxes for Q1 2009 of CAD1.4 million would have resulted in income tax expense of about CAD0.4 million. The future income tax expense was increased by CAD0.1 million as a result of the effect of stock based compensation and other non-deductible expenses, with an offsetting decrease of CAD0.1 million as a result of a benefit from income tax rate reductions.