Octane Energy Services Inc.

November 28, 2002

Release Date: November 28, 2002
Octane Announces Third Quarter Results
13:42 EST Thursday, November 28, 2002

CALGARY, Nov. 28 /CNW/ – Octane Energy Services Ltd. (TSX Venture Exchange: OES) today announced its financial results for the third quarter ended September 30, 2002. The financial results include the consolidated results from Octane’s subsidiaries, Hughes Oilfield Construction Inc., K-TEK Construction Ltd. and Octane Energy Services Corp.

During the third quarter of 2002, oil and gas commodity prices remained high compared to historical levels and cash flow levels remained strong for most oil and gas producers. However, concerns about the stability of commodity prices, an increase in the number of royalty trusts which distribute the majority of their cash flow back to unit holders, consolidation by large producers that invest capital world wide and wet weather conditions in certain areas of western Canada during August and September all contributed to reduced activity levels for the segments of the oilfield service industry in which Octane operates. Nevertheless, during the quarter, Octane saw continued improvement in its financial results from the first and second quarters of this year and was able to record positive earnings before interest, taxes, depreciation and amortization (EBITDA).

Overall, consolidated revenues for the quarter increased to $7.9 million compared to $5.5 million during the second quarter of 2002 and $7.6 million during the third quarter 2001. This increase in activity reflects the acquisition of K-Tek Construction in January, 2002, which was offset by reduced activity in Octane’s remaining operations compared to the prior year. Steps taken earlier in the year resulted in improved field margins in Octane’s pipeline and facilities segment from the first six months of the year. During the quarter, the overall gross margin improved to $964,265 (12.3%) from $360,316 (2.3%) during the first six months of 2002, but was down from the $1,668,943 (21.9%) achieved during the third quarter of 2001. For the three month period ended September 30, 2002, Octane recorded a net loss of $383,318 ($0.03 per share) compared to net earnings of $324,334 ($0.03 per share) recorded during the same quarter in the prior year. EBITDA improved to $52,326 during the third quarter of 2002 compared to ($1,652,978) during the first six months of 2002, but was down from the $880,639 achieved during the third quarter of 2001.

On a year to date basis, Octane’s results reflect the difficult operating environment and lower gross margins achieved by the company earlier this year. As the year has progressed, Octane has continued to improve its job efficiencies, reduce its monthly operating and overhead expenses and standardize its bidding practices. While it is expected that these steps will contribute to further improvements in Octane’s financial results during the fourth quarter of 2002 and first quarter of 2003, the results for the nine months ended September 30, 2002 continue to be impacted by the difficulties experienced earlier in the year. For the first nine months of 2002, consolidated revenue remained relatively consistent at $23.5 million compared to $23.9 million during the same period in 2001. However, the revenues contributed from Octane’s higher margin oilfield construction business located in east central Alberta and its facilities operations were significantly reduced from the prior year and the company generated lower gross margins from its remaining operations. As a result, EBITDA decreased to ($1,600,651) during the nine months ended September 30, 2002 compared to $1,277,621 during the nine months ended September 30, 2001.

During this period, Octane generated a net loss of $2,101,559 compared to net earnings of $277,099 during the first nine months of 2001.

During the third quarter of 2002, Octane completed the previously announced $1.25 million financing with Golden Opportunities Fund Inc., which was comprised of a five year convertible debenture in the principal amount of $1 million and $250,000 of convertible preferred shares. This financing, combined with the term debt facility completed with GE Capital Equipment Financing Inc. earlier in the year significantly improved the overall financial condition of Octane by extending its previously existing term debt facilities over a five year period and providing additional funds to improve the company’s working capital position. As at September 30, 2002, Octane reduced its working capital deficit (excluding the current portion of long term debt and capital lease obligations) to $165,700 compared to a working capital deficit (excluding the current portion of long term debt and capital lease obligations) of $2,381,581 as at March 31, 2002.

In August, 2002 the TSX Venture Exchange approved an application by Octane to implement a normal course issuer bid to purchase up to 758,476 of its issued and outstanding common shares. 2,000 shares were purchased under this plan by Octane during the third quarter of 2002 at a price of $0.25.

3 months to Sep. 30 Year ago

Revenue 7,863,000 7,635,000
Net profit (383,000) 324,000
Net profit/share (0.03) 0.03
Avg. shares 15,145,000 12,845,000

9 months to Sep. 30 Year ago

Revenue 23,478,000 23,925,000
Net profit (2,102,000) 277,000
Net profit/share (0.14) 0.02
Avg. shares 15,143,000 12,886,000

Outlook

Octane’s has established a reputation as a leading provider of oilfield, pipeline and facilities construction services to oil and gas exploration and production companies. The Company has continued to secure an ongoing flow of work from a broad base of customers, including many of the most senior companies in the industry, as a result of its stringent quality control programs, excellent safety record and qualified base of employees. These factors have enabled Octane to execute contracts of increasing size, scope and duration, which result in a more stabilized revenue flow and work force. Management believes that its ability to successfully execute at the field level, together with a disciplined approach to contract bidding, are essential to the Company’s ability to maintain and enhance its business over the long term.

For the remainder of 2002, Octane will continue its efforts to increase field profitability, maintain service quality and enhance its relationship with key customers. During the fourth quarter, as part of its continuing efforts to improve field efficiencies and operational performance, Octane retained a company specializing in productivity improvement to initiate a comprehensive program involving Octane’s officers, managers and employees to increase productivity through improved project management and refine the Company’s management operating system to provide more detailed and timely measurement of key performance indicators. This program will involve a significant investment in and input from the Company’s field personnel and should contribute to ongoing improvements in bidding discipline, operating efficiencies, project visibility, field margins and long-term financial performance.

During the fourth quarter 2002 to date, Octane has seen gradually increasing levels of activity compared to the third quarter. Nevertheless, industry activity levels are lower than in prior periods when the underlying commodity prices were strong. To date, it remains difficult to forecast the capital expenditure patterns of the senior producers. Octane intends to focus on maximizing operational performance during the busier winter drilling season, ensuring job profitability, prudently managing and reducing its overall debt levels and seeking opportunities to further establish itself as a strong competitor in its industry segment.

About Octane

Octane is a growth oriented oilfield services company that provides oilfield, pipeline and facilities construction services as well as environmental reclamation and remediation services. The Company employs up to 300 persons at its operations strategically located across western Canada. The common shares of Octane are listed for trading on the TSX Venture Exchange under the symbol “OES”.

%SEDAR: 00011275E

For further information: Myron Tetreault, Chairman, President and CEO at (403) 509-3931 or Jeff Newman, VP Finance and CFO at (403) 509-3932