Cabo Drilling Corp. Announces 2016 First Quarter Results

1st QUARTER HIGHLIGHTS

The Company reports:

• Revenue for the first quarter fiscal 2016 ("Q1 FY2016") of $3.64 million compared to $3.88 million in the first quarter fiscal 2015 ("Q1 FY2015").
• Gross margin percentage for the quarter was 9.4% (with depreciation included in direct costs), compared with 10.6% in for the corresponding period last year.
• EBITDA of $38,180 for the quarter compared to $43,948 in Q1 FY2015, resulting in EBITDA per share of $0.00 for the quarter compared to $0.00 in Q1 FY2015.
• Net after tax loss for the quarter was $625,214 or a loss of $0.01 per share (loss of $0.01 per share diluted), compared to net after tax loss of $770,061 or a loss of $0.01 per share (loss of $0.01 per share diluted) for the corresponding period last year.
• Cash from operations, before changes in non-cash working capital items, was negative $106,732 for the three months ending September 30, 2015, compared to negative $10,146 for the first three months of fiscal 2015.

"Cabo Drilling generated revenues of $3.64 million during the first quarter of fiscal 2016," stated Mr. Versfelt, Cabo's President & CEO. "This represents a 6% decrease compared to the $3.88 million recorded in the first three months of fiscal 2015."

"Gross margin, adjusted to include depreciation, was 9.4% or $342,912 in the first quarter of fiscal 2016, as compared to 10.6% in the first three months of fiscal 2015," stated Mr. Versfelt. "In accordance with IFRS, depreciation expenses of $462,311 are included in direct costs for the quarter ended September 30, 2015, as compared to $542,400 in the first quarter of fiscal 2015. Adjusted gross margin, when depreciation expense is excluded from direct costs, is 22.1% in the first quarter of fiscal 2016, as compared to 24.6% in first quarter of fiscal 2015."

"General and administration costs decreased by 15% to $807,297 when compared to the $951,341 in fiscal 2015. The decrease is a direct result of restructuring activities that began in fiscal 2013 and continued into fiscal 2016," commented Mr. Versfelt.

"Total liabilities increased by $321,350 during the first three months of fiscal 2016 to $12.50 million at September 30, 2015," Mr. Versfelt noted. "At September 30, 2015, the Company has $26,506,000 in tax losses expiring primarily between 2025-2035."

"Effective July 7, 2015, the Company entered into the infrastructure services industry, with its purchase of WorldWide EnviroChem Corporation. As a result of this transaction, Cabo will hold the exclusive rights to distribute the proprietary RoadMaster and BondMaster product lines used in road building and waterproofing of underground and water exposed concrete, to road contractors, precast concrete manufacturers, concrete contractors and ready-mix suppliers throughout North, Central and South America, excluding Chile, but including the Caribbean, plus Southern Africa, including South Africa, Namibia, Botswana, Zambia and Malawi," explained Mr. Versfelt.

Mr. Versfelt noted that "the Company has engaged financial advisors to assist in refinancing or replacing $2.705 million in debentures and a $1.4 million equipment loan, plus interest, the repayments of which were due in May, 2015. The Company is in arrears on its debenture and equipment loan interest payments. The Company is currently in second stage discussions for no less than $6.0 million in debt financing to replace the $1.4 million lender and the debenture loans. It is also exploring additional finance opportunities in Central America and Canada to continue the restructuring of the Company's debenture debt."

"The Company reports positive EBITDA of $38,180 during the first quarter of fiscal 2016, compared to $43,948 during the first three months of fiscal 2015" stated Mr. Versfelt.

Mr. Versfelt observed that "54% of fiscal 2016 revenues came from gold related projects, 42% from copper, and the remaining 4% from other base metals."

"Our safety record is one of the best in the industry and our client relationships are very good," commented John Versfelt. "With a continued focus on excellent safety, high environmental stewardship and improved productivity, plus the improved availability of good to excellent drilling personnel, should result in better projects and better margins, with high safety standards and high quality clients, in Canada, Europe and Latin America."

Consolidated Quarterly Financial Results

Revenue for the quarter ending September 30, 2015, decreased $244,176, or 6%, to $3.64 million, compared to $3.88 million in the first quarter of fiscal 2015. Latin America division revenues increased by 70% as a result of additional services offered to the clients in Panama. This increase was offset by a reduction in revenues from Europe due to political uncertainty on a project in Greece. Management expects continued growth in the Latin American and Europe divisions during the balance of fiscal 2016. The Canadian and USA divisions recorded a 10% increase in revenues from $1.81 million in the first quarter of fiscal 2015 to $2.01 million during the first quarter of fiscal 2016, primarily due to higher drill utilization in the Ontario division.

Surface drilling revenues decreased 4%, from $ 2.74 million in the first three months of fiscal 2015 to $2.63 million in the first three months of fiscal 2016. Underground drilling revenues were stable with an increase in underground revenues from the Canadian division offset by decreased activity in the Europe division. In Panama, other services provided the primary revenue.

Direct costs for the quarter ended September 30, 2015, were $3.30 million compared to $3.47 million in the quarter ending September 30, 2014, as adjusted to include depreciation in accordance with IFRS. The decrease is a direct result of the decreased activity. Gross margins, under IFRS reporting, for the quarter ended September 30, 2015, were 9.4% compared to 10.6% during the quarter ended September 30, 2014. Adjusted gross margin to exclude deprecation for the first quarter of fiscal 2016 is 22.1% as compared to 24.6% in the first quarter of fiscal 2015.

General and administrative expenses decreased by $144,044 from $951,341 in the first quarter of fiscal 2015 to $807,297 in the first quarter of fiscal 2016. The decrease is a direct result of reduced administration staff, lower insurance and professional fees and lower office costs in all divisions. Further staffing reductions were made subsequent to the quarter end. These reductions will result in a continued improvement to the bottom line in the following quarters and will enhance the cash flow and EBITDA numbers.

Net loss for the first quarter of fiscal 2016 is $625,214 compared to a net loss of $770,061 in the comparable period in fiscal 2015.

The drilling services business is always challenging, but the challenges that the industry is experiencing today are the worst in over fifty years. We are not expecting a dramatic turnaround in the industry for the next year, but we are budgeting for some improvement similar to 2002/2003 levels. The business conditions in 2012 - 2015 have caused cash flow challenges for drilling services companies, many of whom, including Cabo, have had to work with their lenders to obtain loan payment extensions and renegotiate terms and conditions with existing financial companies, while seeking new financing facilities. Provided that the Company can obtain financing stability, we are trusting that our demonstrated business values and a continued focus on enhanced business services and low costs, will encourage growth with new clients, as the mining markets improve. In the meantime, the Company is expanding its mining sector business into the infrastructure sector. This will, over time, include offering drill and blast, geotechnical services, tree cutting and clearing services, and other services in road building, for the general contracting sector, the pipeline sector, the hydropower sector and the oil & gas sector.

About Cabo Drilling Corp. (TSX VENTURE:CBE)

Cabo Drilling Corp. is a drilling services company headquartered in New Westminster, British Columbia, Canada. The Company provides mining specialty drilling services through its divisions in Kirkland Lake, Ontario, Canada, with branches in Surrey, British Columbia and Springdale, Newfoundland; as well as Cabo Drilling (America) Inc. of the United States; Cabo Drilling (Panama) Corp. of Panama, Republic of Panama; Cabo Drilling Panama-Pacifico Corp. of Panama, Republic of Panama doing business as Cabo Drilling Colombia Corp.; Balkan States Drilling SH.P.K. of Tirana, Albania; and Cabo Drilling (International) Inc. The Company's common shares trade on the Frankfurt Exchange under the symbol: DHL and on the TSX Venture Exchange under the symbol: CBE.

ON BEHALF OF THE BOARD

John A. Versfelt, Chairman, President and CEO

Further information about the Company can be found on the Cabo Drilling website (http://www.cabo.ca) and SEDAR (www.sedar.com) or by contacting Ms. Jolene Timmer, Corporate Communications or Mr. John A. Versfelt, Chairman, President & CEO at 604-527-4201.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, potential mineral recovery processes and other business transactions timing. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.