Tesco Corporation Reports Record Revenues for Q4 2007

Trading Symbol: "TESO" on NASDAQ "TEO" on TSX

HOUSTON, Feb. 24 /PRNewswire-FirstCall/ - Tesco Corporation ("TESCO" or
the "Company") today reported net income for the quarter ended December 31,
2007 of $6.6 million, or $0.18 per diluted share. This compares to net income
of $10.5 million, or $0.29 per diluted share, for the fourth quarter of 2006,
and net income of $10.8 million(1), or $0.29 per diluted share for the third
quarter of 2007. Net income for the fourth quarter of 2007 included a loss of
$1.2 million related to the expiration of the Turnkey E&P warrants. Net income
for the year ended December 31, 2007 was $32.3 million, or $0.86 per diluted
share, compared to net income of $30.5 million, or $0.83 per diluted share for
2006.
Revenue was a quarterly record of $124.4 million for the period ended
December 31, 2007 compared to revenue of $114.3 million for the comparable
period in 2006 and $113.9 million in the third quarter of 2007. Revenue was
$462.4 million for the year ended December 31, 2007 compared to $386.2 million
in 2006.

Summary of Results
(in millions of U.S. $, except per share amounts)
U.S. GAAP - Unaudited

-------------------------------------------------
Year Ended
Quarter 4 Quarter 3 December 31,
--------- --------- ------------
2007 2006 2007 2007 2006
---- ---- ---- ---- ----
-------------------------------------------------
Revenues $124.4 $114.3 $113.9 $462.4 $386.2
-------------------------------------------------

-------------------------------------------------
Operating Income 13.3 19.3 8.6 48.5 60.9
-------------------------------------------------

-------------------------------------------------
Net Income 6.6 10.5 10.8 32.3 30.5
-------------------------------------------------

-------------------------------------------------
EPS (diluted) $ 0.18 $ 0.29 $ 0.29 $ 0.86 $ 0.83
-------------------------------------------------

-------------------------------------------------
Adjusted EBITDA(x)
(as defined) $ 18.9 $ 26.4 $ 18.1 $ 79.2 $ 85.0
-------------------------------------------------

(x) See explanation of Non-GAAP measure below

Commentary

Julio Quintana, TESCO's Chief Executive Officer, commented, "Sequentially
our Quarter 4 represented a significant improvement in operating income over
Quarter 3 of 2007 mainly due to higher margins in our Casing Services segment
helped by a meaningful increase in CASING DRILLING(R) revenues. Quarter 4 2007
represented the highest quarterly revenue level for CASING DRILLING(R) in
2007. Also, our increased sales effort focused on Top Drives yielded positive
results as we finished the year with a backlog of 38 new Top Drive units, up
from 30 units as of September 30."
Segment Information
(in millions of U.S. $)
Unaudited

-------------------------------------------------
Year Ended
Quarter 4 Quarter 3 December 31,
--------- --------- ------------
2007 2006 2007(2) 2007 2006
---- ---- ------- ---- ----
-------------------------------------------------
Revenues:
---------
-------------------------------------------------
Top Drives:
-------------------------------------------------
Sales $ 33.9 $ 29.8 $ 29.2 $127.6 $ 81.5
-------------------------------------------------
Aftermarket Support 15.5 9.1 13.7 51.8 35.8
-------------------------------------------------
Rental 28.3 27.9 29.1 109.7 101.9
------- ------- ------- ------- -------
-------------------------------------------------
77.7 66.8 72.0 289.1 219.2
------- ------- ------- ------- -------
-------------------------------------------------
Casing Services:
-------------------------------------------------
Conventional 29.0 29.2 27.3 108.2 105.4
-------------------------------------------------
Proprietary 11.4 12.4 11.0 50.5 37.9
-------------------------------------------------
CASING DRILLING(R)(3) 6.3 5.9 3.6 14.6 23.7
------- ------- ------- ------- -------
-------------------------------------------------
46.7 47.5 41.9 173.3 167.0
------- ------- ------- ------- -------
-------------------------------------------------
Total Revenues $124.4 $114.3 $113.9 $462.4 $386.2
------- ------- ------- ------- -------
------- ------- ------- ------- -------
-------------------------------------------------
Operating Income:
-----------------
-------------------------------------------------
Top Drives $ 17.3 $ 22.7 $ 15.2 $ 68.9 $ 64.9
-------------------------------------------------
Casing Services 6.4 7.7 2.9 21.4 28.4
-------------------------------------------------
Research and
Engineering (3.5) (2.2) (3.5) (12.0) (6.0)
-------------------------------------------------
Corporate/Unallocated (6.9) (8.9) (6.0) (29.8) (26.4)
------- ------- ------- ------- -------
-------------------------------------------------
Total Operating Income $ 13.3 $ 19.3 $ 8.6 $ 48.5 $ 60.9
------- ------- ------- ------- -------
------- ------- ------- ------- -------
-------------------------------------------------

Q4 2007 Financial and Operating Highlights

Top Drives Segment
------------------
- Top Drive sales for Q4 2007 were 29 units (20 new and 9 from the
rental fleet). This compares to 25 units sold in Q3 2007 (23 new and
2 from the rental fleet) and 30 units sold in Q4 2006 (29 new and
1 from the rental fleet). Our fourth quarter new unit sales were
sequentially lower primarily due to fewer units produced for
customers during Q4 2007 due to the level of manufacturing
capacity that was devoted to building rental units in response to
strong rental market demand.

- At December 31, 2007, Top Drive backlog amounted to 38 units, with a
total value of $39 million, versus 30 units at September 30, 2007,
with a total value of $39 million. This compares to backlog of
68 units at December 31, 2006. In addition to the 38 new units in
backlog, we have firm orders for another 6 units to be sold from our
rental fleet. Our backlog at year-end includes an order to supply
14 EMI 400 Top Drive drilling systems to a major drilling contractor.
The order also includes equipping eight of these 14 rigs with TESCO's
proprietary Casing Drive System(TM) (CDS(TM)).

- During Q4 2007 we delivered 12 units to our rental fleet, which
stands at 110 units at year-end 2007 and is up from 104 units at the
end of September 2007 and down from 115 units at December 31, 2006.
Subject to market conditions, during 2008 we intend to increase our
rental fleet by approximately 10 units primarily outside North
America. Additionally, subject to market conditions, we intend to
revitalize our Top Drive rental fleet by selling certain used units
and replacing them with newer models.

- Operating days for the Top Drive rental fleet decreased to 5,978 in
Q4 2007 compared to 6,138 in Q3 2007 and 5,984 in Q4 2006. The
decrease in Q4 2007 compared to Q3 2007 was primarily due to units
being removed from the rental fleet in Q4 2007 in preparation for
sale prior to new rental units being mobilized and added to the
rental fleet.

- Our Top Drive margins increased $2.1 million in Q4 2007 compared to
Q3 2007 as a result of the sale of more used units and the reversal
of $1.6 million in warranty reserves recorded in 2005 and 2006,
partially offset by fewer new unit sales and a margin decrease in our
rental activities. In Q3 2007 we also reversed $0.6 million in
certain warranty reserves recorded in 2006.

Casing Services Segment
-----------------------
- Revenues from the Casing Services segment for Q4 2007 were
$46.7 million, an increase of $4.8 million from Q3 2007 primarily
related to increased project activities associated with CASING
DRILLING(R). Our Tubular Services revenues for both conventional and
proprietary activities increased slightly in Q4 2007 compared to
Q3 2007. CASING DRILLING(R) set a new quarterly record for non-rig
services at $6.3 million. Included in our Q4 2007 CASING DRILLING(R)
revenues was $1.0 million for mobilization efforts for an offshore
project in Norway which has been indefinitely suspended.

- We performed a total of 348 proprietary casing running jobs in
Q4 2007 compared to 325 in Q3 2007 and 345 in Q4 2006.

- Operating Income in our Casing Services segment for Q4 2007 was
$6.4 million, an increase of $3.5 million from Q3 2007, and was
primarily driven by lower operating costs and improved margins in our
tubular services business and higher revenue levels in our CASING
DRILLING(R) operations which significantly reduced the losses in this
business.

Other Segments and Expenses
---------------------------
- Selling, General and Administrative (SG&A) costs for Q4 2007 amounted
to $6.9 million, compared to $6.0 million for Q3 2007. This increase
was primarily due to higher incentive costs.

- Research and Engineering (R&E) costs for Q4 2007 totaled $3.5 million
the same as Q3 2007.

- Other Expense, excluding net interest expense, for Q4 2007 totaled
$3.1 million, compared to Other Income of $0.7 million for Q3 2007.
Other Expense for Q4 2007 includes a loss of $1.2 million related to
the expiration of the Turnkey E&P warrants and approximately
$1.8 million of foreign exchange losses incurred by our Canadian
operations due to their holding of U.S. dollar receivables and the
weakening U.S. dollar during the period. Other Income for Q3 2007
included the reversal of $1.4 million of accrued interest and
penalties related to the favorable resolution of a Mexico tax claim.

Financial Condition
-------------------
- At December 31, 2007 cash and cash equivalents increased from
$7.2 million at September 30, 2007 to $23.1 million while debt
increased during the same period from $65.0 million at September 30,
2007 to $80.8 million. This represents a net debt to book
capitalization of 16%(4) at December 31, 2007. Net debt(5) at
December 31, 2007 was $57.7 million compared to $57.9 million at
September 30, 2007.

- Total capital expenditures were $27.3 million in Q4 2007 and
$65.0 million for 2007. We project our capital expenditures for 2008
to be approximately $80 to $90 million. The planned increase is
directly related to our strategy to increase the size of our rental
fleet to approximately 120 units by the end of 2008 and replace
rental units expected to be sold from the fleet.

----------------------------
(1) Net income for the third quarter of 2007 included $6.2 million of
after-tax benefits for various tax and contingency matters disclosed
in the Company's Quarterly Report on Form 10-Q for the third quarter
of 2007.
(2) Certain reclassifications between the Casing Services and the Top
Drive segment have been made to prior 2007 quarters to be consistent
with the presentation for the three months ended December 31, 2007.
(3) CASING DRILLING(R) revenues for the three month period and the year
ended December 31, 2006 included $0.3 and $9.0 million, respectively,
in revenues associated with contract drilling services which were
discontinued in late 2006.
(4) Net debt to book capitalization is calculated by dividing financial
debt less cash, by the sum of financial debt less cash plus
shareholders' equity.
(5) Net debt is calculated by subtracting cash and cash equivalents from
total financial debt.

2007 Financial and Operating Highlights

Top Drives Segment
------------------
- Top Drive sales for 2007 were 122 units (102 new and 20 from the
rental fleet). This compares to 94 units sold in 2006 (86 new and
8 from the rental fleet).

- Operating days for the Top Drive rental fleet decreased to 23,086 in
2007 compared to 23,873 in 2006. This decrease was primarily due to
fleet down time during the year as we reallocated units outside North
America in response to market demand and units being removed from the
rental fleet in preparation for sale prior to new rental units being
mobilized and added to the rental fleet.

- Our Top Drive Operating Income increased to $68.9 million, an
increase of $4.0 million as compared to 2006, due to increased sales
activities that were offset by increased manufacturing costs,
primarily driven by the weakening U.S. dollar and costs related to
the reallocation of our rental fleet outside of North America.

Casing Services Segment
-----------------------
- 2007 revenues in our Casing Services segment were $173.2 million, an
increase of $6.3 million over 2006, primarily in our conventional and
proprietary Casing Services businesses. CASING DRILLING(R) revenues
were $14.6 million in 2007, a decrease of $9.1 million from 2006,
primarily due to our discontinuation of providing contract drilling
services in 2006. Contract CASING DRILLING(R) revenues in 2006 were
$9.0 million.

- For 2007, we completed 1,406 proprietary casing running jobs compared
to 1,130 in 2006.

- During Q4 2007, we acquired a conventional casing running and tubular
business in Canada bringing a total of four businesses acquired in
2007 that provide conventional casing running and tubular services.
One of these companies is based in Colorado and services the Rockies
region, including the Piceance basin and the remaining three
companies are based in Alberta, Canada and service the northwest
Alberta and northeast British Columbia regions. The combined purchase
price of these acquisitions was approximately $21.5 million. These
acquisitions were funded by our Revolving Credit Facility. The
acquired companies, which closed in the second half of the year,
contributed $5.4 million in revenues for 2007. These acquired
companies should provide expansion opportunities for our proprietary
CDS(TM) for casing running as well as further opportunities to expand
our CASING DRILLING(R) offering.

- Operating Income for 2007 from the Casing Services segment was
$21.4 million, a decrease of $7.0 million from 2006, primarily due to
higher infrastructure costs associated with the building of our
CASING DRILLING(R) business and the combination of competition and
labor inflationary pressures which negatively impacted margins in our
conventional Tubular Services business in North America.

Other Segments and Expenses
---------------------------
- R&E costs for 2007 totaled $12.0 million as compared to $6.0 million
in 2006. This increase was due to increased activities related to the
design, development and testing of a new generation of Top Drive
units introduced to the market in the summer of 2007, as well as
increased activities involving our Tubular Services and CASING
DRILLING(R) businesses.

- SG&A costs for 2007 totaled $29.8 million compared to $26.4 million
in 2006. This increase was primarily due to the professional fees
incurred in the first quarter of 2007 as a result of the various
issues and events related to the delayed filing of our initial Annual
Report on Form 10-K, the increased auditing fees associated with our
initial year of testing our internal controls pursuant to Section 404
of the Sarbanes Oxley Act, costs related to our transition from a
foreign private issuer to a domestic reporting issuer, costs
associated with the restatements of our quarterly results for the
second and third quarters of 2006 and the costs associated with the
Company's self-initiated review of the its stock option granting
practices and related accounting.

- Our effective tax rate for 2007 was 24% compared to 44% in 2006. The
2007 effective tax rate reflects a total of $4.5 million of favorable
items identified during 2007 as a result of filing our U.S., Canadian
and other 2006 tax returns which were not considered in determining
our 2006 income tax provisions. In addition the company recorded a
benefit of $0.7 million related to the favorable outcome of a prior
year Mexican tax matter. The 2007 and 2006 effective tax rates
include charges of $1.7 and $1.6 million, respectively, related to a
reduction in deferred tax assets attributable to Canadian tax law
changes which incrementally reduced the statutory tax rates for both
Canadian federal and provincial (Alberta) taxes.

Evaluation of Disclosure Controls

Management has concluded that we maintained effective internal control
over financial reporting as of December 31, 2007. As disclosed in our Annual
Report on Form 10-K for the year ended December 31, 2006 and in our Quarterly
Reports on Form 10-Q for each of the first three quarters of 2007,
management's assessment of our internal controls over financial reporting
identified material weaknesses in our internal controls. During 2007, we made
significant progress in implementing the remediation plans that we established
to address these material weaknesses which resulted in the successful
remediation of the above referenced material weaknesses in internal controls
as of December 31, 2007 and our management's determination that our internal
controls were effective as of December 31, 2007.
Conference Call
The Company will conduct a conference call to discuss its results for the
fourth quarter of 2007 tomorrow (Monday, February 25, 2008) at 10:00 a.m. CST.
Individuals who wish to participate in the conference call should dial
US/Canada (866) 433-0163 or International (706) 679-3976 approximately ten
minutes prior to the scheduled start of the call. The conference ID for this
call is 35858321. The conference call will also be webcast live and available
for replay at the Company's web site, www.tescocorp.com. Listeners may access
the call through the "Conference Calls" link in the Investor Relations section
of the site. The conference call and all questions and answers will be
recorded and made available until March 25, 2008. To listen to the recording,
call (800) 642-1687 or (706) 645-9291 and enter conference ID 35858321.
Tesco Corporation is a global leader in the design, manufacture and
service of technology based solutions for the upstream energy industry. The
Company's strategy is to change the way people drill wells by delivering safer
and more efficient solutions that add real value by reducing the costs of
drilling for and producing oil and gas.

Non-GAAP Measures - Adjusted EBITDA (as defined below)

-------------------------------------------------
(in millions of U.S. $) Year Ended
----------------------- Quarter 4 Quarter 3 December 31,
--------- --------- ------------
2007 2006 2007 2007 2006
---- ---- ---- ---- ----
-------------------------------------------------
Net Income $ 6.6 $ 10.5 $ 10.8 $ 32.3 $ 30.5
-------------------------------------------------
Income Taxes 2.2 8.1 (2.0) 10.2 23.3
-------------------------------------------------
Depreciation and
Amortization 6.9 5.4 7.3 27.0 22.5
-------------------------------------------------
Net Interest expense 1.4 0.9 0.4 3.2 3.2
-------------------------------------------------
Stock Compensation
Expense - non-cash 1.8 1.5 1.6 6.5 5.7
-------------------------------------------------
Cumulative Change in
accounting method - - - - (0.2)
-------------------------------------------------
Adjusted EBITDA $ 18.9 $ 26.4 $ 18.1 $ 79.2 $ 85.0
-------------------------------------------------

Our management evaluates Company performance based on non-GAAP measures,
of which a primary performance measure is EBITDA. EBITDA consists of earnings
(net income or loss) available to common stockholders before interest expense,
income tax expense, non-cash stock compensation, non-cash impairments,
depreciation and amortization and other non-cash items. This measure may not
be comparable to similarly titled measures employed by other companies and is
not a measure of performance calculated in accordance with GAAP. EBITDA should
not be considered in isolation or as substitutes for operating income, net
income or loss, cash flows provided by operating, investing and financing
activities, or other income or cash flow statement data prepared in accordance
with GAAP.
We believe EBITDA is useful to an investor in evaluating our operating
performance because:
- it is widely used by investors in our industry to measure a company's
operating performance without regard to items such as net interest
expense, depreciation and amortization, which can vary substantially
from company to company depending upon accounting methods and book
value of assets, financing methods, capital structure and the method
by which assets were acquired;

- it helps investors more meaningfully evaluate and compare the results
of our operations from period to period by removing the impact of our
capital structure (primarily interest) and asset base (primarily
depreciation and amortization) and actions that do not affect
liquidity (stock compensation expense) from our operating results;
and

- it helps investors identify items that are within our operational
control. Depreciation and amortization charges, while a component of
operating income, are fixed at the time of the asset purchase in
accordance with the depreciable lives of the related asset and as
such are not a directly controllable period operating charge.

Our management uses EBITDA:

- as a measure of operating performance because it assists us in
comparing our performance on a consistent basis as it removes the
impact of our capital structure and asset base from our operating
results;

- as one method we use to evaluate potential acquisitions;

- in presentations to our Board of Directors to enable them to have the
same consistent measurement basis of operating performance used by
management;

- to assess compliance with financial ratios and covenants included in
our credit agreements; and

- in communications with investors, analysts, lenders, and others
concerning our financial performance.

Caution Regarding Forward-Looking Information; Risk Factors

This press release contains forward-looking statements within the meaning
of Canadian and United States securities laws, including the United States
Private Securities Litigation Reform Act of 1995. From time to time, our
public filings, press releases and other communications (such as conference
calls and presentations) will contain forward-looking statements.
Forward-looking information is often, but not always identified by the use of
words such as "anticipate", "believe", "expect", "plan", "intend", "forecast",
"target", "project", "may", "will", "should", "could", "estimate", "predict"
or similar words suggesting future outcomes or language suggesting an outlook.
Forward-looking statements in this press release include, but are not limited
to, statements with respect to expectations of our prospects, future revenues,
earnings, activities and technical results.
Forward-looking statements and information are based on current beliefs as
well as assumptions made by, and information currently available to, us
concerning anticipated financial performance, business prospects, strategies
and regulatory developments. Although management considers these assumptions
to be reasonable based on information currently available to it, they may
prove to be incorrect. The forward-looking statements in this press release
are made as of the date it was issued and we do not undertake any obligation
to update publicly or to revise any of the included forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by applicable law.
By their very nature, forward-looking statements involve inherent risks
and uncertainties, both general and specific, and risks that outcomes implied
by forward-looking statements will not be achieved. We caution readers not to
place undue reliance on these statements as a number of important factors
could cause the actual results to differ materially from the beliefs, plans,
objectives, expectations and anticipations, estimates and intentions expressed
in such forward-looking statements.
These risks and uncertainties include, but are not limited to, the impact
of changes in oil and natural gas prices and worldwide and domestic economic
conditions on drilling activity and demand for and pricing of our products and
services, other risks inherent in the drilling services industry (e.g.
operational risks, potential delays or changes in customers' exploration or
development projects or capital expenditures, the uncertainty of estimates and
projections relating to levels of rental activities, uncertainty of estimates
and projections of costs and expenses, risks in conducting foreign operations,
the consolidation of our customers, and intense competition in our industry),
risks, including litigation, associated with our intellectual property and
with the performance of our technology. These risks and uncertainties may
cause our actual results, levels of activity, performance or achievements to
be materially different from those expressed or implied by any forward-looking
statements. When relying on our forward-looking statements to make decisions,
investors and others should carefully consider the foregoing factors and other
uncertainties and potential events.
Copies of our Canadian public filings are available at www.tescocorp.com
and on SEDAR at www.sedar.com. Our U.S. public filings are available at
www.sec.gov and at www.tescocorp.com.
The risks included here are not exhaustive. Refer to "Part I, Item 1A -
Risk Factors" in our annual report on Form 10-K for the year ended December
31, 2006, for further discussion regarding our exposure to risks.
Additionally, new risk factors emerge from time to time and it is not possible
for us to predict all such factors, nor to assess the impact such factors
might have on our business or the extent to which any factor or combination of
factors may cause actual results to differ materially from those contained in
any forward-looking statements. Given these risks and uncertainties, investors
should not place undue reliance on forward-looking statements as a prediction
of actual results.

TESCO CORPORATION
(Millions of U.S. Dollars, except share and per share information)

COMPARATIVE CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three Months For the Year
Ended December 31, Ended December 31,
------------------------- -------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(unaudited)

REVENUE $ 124.4 $ 114.3 $ 462.4 $ 386.2

OPERATING EXPENSES
Cost of Sales and
Services 96.8 80.7 357.9 283.2
Selling, General and
Administrative 10.8 12.1 44.0 36.1
Research and Engineering 3.5 2.2 12.0 6.0
------------ ------------ ------------ ------------
111.1 95.0 413.9 325.3
------------ ------------ ------------ ------------
OPERATING INCOME 13.3 19.3 48.5 60.9
Interest Expense, net 1.4 0.9 3.2 3.2
Other (Income)
Expense, net 3.1 (0.2) 2.8 4.1
------------ ------------ ------------ ------------
INCOME BEFORE
INCOME TAXES 8.8 18.6 42.5 53.6
Income taxes 2.2 8.1 10.2 23.3
------------ ------------ ------------ ------------
NET INCOME BEFORE
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 6.6 10.5 32.3 30.3
Cumulative Effect of
Accounting Change,
net - - - 0.2
------------ ------------ ------------ ------------
NET INCOME $ 6.6 $ 10.5 $ 32.3 $ 30.5
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings per share:
Basic $ 0.18 $ 0.29 $ 0.88 $ 0.85
Diluted $ 0.18 $ 0.29 $ 0.86 $ 0.83
Weighted average
number of shares:
Basic 36,842,042 35,995,353 36,604,338 35,847,266
Diluted 37,474,760 36,545,812 37,403,932 36,593,409

COMPARATIVE CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, December 31,
2007 2006
------------ ------------
(unaudited)
ASSETS
Cash and Cash
Equivalents $ 23.1 $ 14.9
Accounts
Receivables, net 87.9 80.4
Inventories 117.4 85.4
Other Current Assets 24.8 18.2
------------ ------------
Current Assets 253.2 198.9
Property, Plant and
Equipment, net 169.8 132.3
Goodwill 29.8 16.6
Other Assets 23.9 24.4
------------ ------------
$ 476.7 $ 372.2
------------ ------------
------------ ------------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Maturities
of Long Term Debt $ 10.0 $ 10.0
Accounts Payable 49.7 27.8
Accrued and Other
Current Liabilities 31.1 49.3
------------ ------------
Current Liabilities 90.8 87.1
Long Term Debt 70.8 34.5
Deferred Income Taxes 10.2 11.2
Shareholders' Equity 304.9 239.4
------------ ------------
$ 476.7 $ 372.2
------------ ------------
------------ ------------

SOURCE Tesco Corporation

Julio Quintana, (713) 359-7000; Anthony Tripodo, (713) 359-7000, Tesco
Corporation