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Press Release

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									                                                                                             Press Release


                      Pason Reports its 2011 Second Quarter Results

FOR IMMEDIATE RELEASE


CALGARY, Alberta (August 8, 2011) Pason Systems Inc. (TSX: PSI) announced today its 2011 second
quarter results.



Performance Data
                                                               Three Months Ended June 30,                        Six Months Ended June 30,
                                                                                    (1)                                          (1)
                                                                 2011        2010           Change               2011     2010         Change
(000s, except per share data)                                        ($)            ($)           (%)               ($)          ($)        (%)

Revenue                                                        62,420         51,031               22          147,165    107,415           37
           (2)
EBITDA                                                         25,850         21,512               20           70,579     46,902           50
 As a % of revenue                                               41.4           42.2               (2)            48.0       43.7           10
 Per share – basic                                               0.31           0.26               20             0.86       0.58           48
 Per share – diluted                                             0.30           0.26               15             0.85       0.58           47
                                      (2)
Funds flow from operations                                     22,917         18,764               22           61,999     39,218           58
  Per share – basic                                              0.28           0.23               22             0.76       0.48           58
  Per share – diluted                                            0.27           0.23               17             0.75       0.48           56
Earnings                                                        8,217           6,156              33           25,974     14,047           85
  Per share – basic                                              0.10            0.08              25             0.32       0.17           88
  Per share – diluted                                            0.09            0.08              12             0.31       0.17           82
Capital expenditures                                           15,141           7,132            112            36,434     11,451          218
Working capital                                              116,032        122,762                (5)         116,032    122,762            (5)
Total assets                                                 405,437        368,866                10          405,437    368,866           10
Total long-term debt                                                  --             --             --              --           --           --
Shareholders’ equity                                         322,082        307,439                 5          322,082    307,439             5
Market capitalization                                      1,190,724        921,776                29    1,190,724        921,776           29
Common shares outstanding (#)
 Basic                                                         81,877         81,501                1           81,808     81,495             1
 Diluted                                                       82,699         81,501                1           82,573     81,495             1
Shares outstanding end of period (#)                           81,893         81,501                1           81,893     81,501             1
(1)   2010 comparative figures have been restated to conform to International Financial Reporting Standards.
(2)   EBITDA is defined as earnings before interest expense, income taxes, stock-based compensation expense and depreciation and amortization
      expense. Funds flow from operations is defined as earnings adjusted for depreciation and amortization expense, stock-based compensation
      expense, future income taxes and other non-cash items impacting operations as presented in the Consolidated Statements of Cash Flows.
      These definitions are not recognized measures under International Financial Reporting Standards, and accordingly, may not be comparable to
      measures used by other companies.
President’s Message
Operations Review
The oil and gas industry continues to actively pursue shale gas plays and new oil targets. This resulted in
increases in drilling activity throughout North America, which helped Pason announce record second
quarter revenue. Revenue was $62.4 million, up 22% from the $51.0 million recorded in 2010 while
EBITDA at $25.9 million improved by 20%. Cash flow was $22.9 million, up 22% from the prior year and
earnings continued to rebound from the slump of two years ago, with a second quarter result of $8.2
million versus $6.2 million last year. Earnings per share for the quarter was $0.09 up 12% from the
$0.08 earned in 2010.

As is always the case in the second quarter, which is a generally inactive quarter in Canada, Pason’s
results were dominated by activity in the United States. The U.S. business unit improved on its segment
profit, achieving $19.8 million for the quarter compared to the $14.0 million earned in 2010. The US rig
count has continued to slowly rise towards the peak of 2008 with currently about 1,850 active land rigs of
which Pason is installed on just under 1,100 rigs or about 58% of the US rig fleet. This calculated market
share is down slightly from the same time last year due partly to Pason now billing and tracking utilization
on an hourly basis, where industry days are still only available on a days basis. The remaining market share
not using Pason is highly motivated by software features available to the customers’ office workers. This
will obviously be a strong focus of Pason’s software development projects for the next few years. On the
rigs that Pason is installed, average daily revenue has climbed from about $400 a day last year to $460 in
this year’s second quarter. This increase is due to continuing progress in adding more Pason peripheral
products to our base electronic driller recorder installation. Auto drillers, hazardous gas and the new
remote directional drilling product showed the most improvement. Revenue per industry day, despite gains
in products per rigs, was at $259 versus $263 last year. This drop was due to the increasing value of the
Canadian dollar versus the U.S. dollar. In U.S. dollar terms revenue per industry day increased by 4%.

In Canada, second quarter drilling activity is virtually shut down due to spring thaw and road conditions
that hamper the movement of drilling rigs. In this quarter we hope to simply breakeven and not give up any
of our profit earned from the first quarter. We reported a loss of $1.3 million compared to a smaller loss of
$0.3 million in 2010. The loss is attributable to net expenses for our water business as well recording an
additional provision for inventory obsolescence. Our Canadian revenue was up 29% to $12.9 million from
the prior year which was a very strong result given just a reported 9% increase in industry activity. Clearly
our approximate 10% price increase in the fall of 2010 had some impact but the movement of the CAODC
to calculating industry activity based on hours probably understates the year over year improvement in
Canadian activity. It is encouraging that Canadian drilling activity did rise despite the flooding in
Saskatchewan which would indicate that the third quarter activity should be very strong. Revenue per
Industry day for the quarter was $773 compared to $652 last year.

International revenue increased to $7.5 million from $5.4 million last year primarily because we are now
reporting 100% of the revenue earned in Latin America as it is now fully owned by Pason. Profit improved
to $1.0 million compared to $0.3 million from last year. We continue to work towards strengthening our
sales and general management talent in a number of countries. We have seen good gains in Colombia and
Mexico recently, plus some recent opportunities for field tests of our equipment in two Middle East
countries.

Although the Canadian spring hampered the movement of our mobile water treatment plants, we did
continue to engage in extensive conversations with potential customers. The issue of cleaning and
recycling water from hydraulic fracturing is now a serious focus in most oil and gas companies but the
direction in which the Industry is moving towards is not favorable to Pason. We have always stated that if
the water treatment solution involved largely mobile plants that this would play to the strengths of Pason.
If, however, the desired solution took more of a fixed plant direction then that engineering and
procurement based solution requires different skills than offered by Pason. Unfortunately, during the
second quarter customer discussions moved markedly towards fixed plant solutions and as a result we have
decided not to increase our investment in this new product space. There is still a market for some mobile
plants to act as a pilot solution before the greater investment in a fixed plant is made. We expect these
opportunities to pay out the investment we have made to date in mobile plants. We do have a fixed plant in
Colorado that was built using the expertise acquired in the Auxsol acquisition. This plant is now operating
at breakeven and continues to attract more water volume.

At the end of July we agreed to purchase 3PS, a private Texas company, for cash consideration of USD$25
million. This company has used proprietary strain gauge technology to develop a revolutionary torque
sensor for assembling casing strings. We believe this technology can be highly valuable in drilling
applications. The drilling industry previously has had to work with just relative indicators of drilling torque.
This was adequate in the past but now that directional and horizontal wells are pushing the design limits
for drill pipe and rig power, it is extremely important to have an actual torque indicator if critical failures
are to be avoided. We believe the 3PS technology will provide a valuable addition to the rental suite of
products and sensors offered by Pason

In the United States, the rig count shows no signs of a decline and in Canada the CAODC is predicting a
busy third quarter and a fourth quarter that should rival the normally strongest first quarter. With our
infrastructure of field servicemen, product suite and ongoing R&D projects, we are well positioned to
capitalize on these opportunities.
On behalf of the Board of Directors,




Jim Hill
Chairman, President & Chief Executive Officer
August 4, 2011
Management’s Discussion and Analysis
The following discussion and analysis has been prepared by management as of August 4, 2011 and is a
review of the financial condition and results of operations of Pason Systems Inc. (“Pason” or “the
Company”) based on International Financial Reporting Standards (“IFRS”).

Certain information regarding the Company contained herein may constitute forward-looking statements
under applicable securities laws. Such statements are subject to known or unknown risks and
uncertainties that may cause actual results to differ materially from those anticipated or implied in the
forward-looking statements.

All financial measures presented in this quarterly report are expressed in Canadian dollars unless
otherwise indicated.


Overview of the 2011 Second Quarter

                                                                Three Months Ended June 30,                     Six Months Ended June 30,
                                                                                     (1)           (1)                           (1)           (1)
                                                                  2011        2010          2009              2011        2010          2009
(000s, except per share data)                                       ($)           ($)           ($)             ($)           ($)           ($)
Revenue                                                         62,420        51,031         22,251       147,165        107,415         76,426
             (2)
EBITDA                                                          25,850        21,512             994        70,579        46,902         24,769
      As a % of revenue                                            41.4          42.2             4.5          48.0          43.7           32.4
      Per share – basic                                            0.31          0.26           0.01           0.86          0.58           0.30
      Per share – diluted                                          0.30          0.26           0.01           0.85          0.58           0.30
                                    (2)
Funds flow from operations                                      22,917        18,764           3,058        61,999        39,218         21,743
      Per share – basic                                            0.28          0.23           0.04           0.76          0.48           0.27
      Per share – diluted                                          0.27          0.23           0.04           0.75          0.48           0.27
Earnings (loss)                                                  8,217          6,156        (8,706)        25,974        14,047         (3,790)
      Per share – basic                                            0.10          0.08          (0.11)          0.32          0.17          (0.05)
      Per share – diluted                                          0.09          0.08          (0.11)          0.31          0.17          (0.05)
Total assets                                                  405,437        368,866        392,754       405,437        368,866        392,754
Total long-term debt                                                  --             --             --            --             --             --
(1)     2010 comparative figures have been restated to conform to International Financial Reporting Standards. 2009 figures are presented in
        accordance with the Company’s previous accounting framework, Canadian generally accepted accounting principles.
(2)     EBITDA is defined as earnings before interest expense, income taxes, stock-based compensation expense and depreciation and amortization
        expense. Funds flow from operations is defined as earnings adjusted for depreciation and amortization expense, stock-based compensation
        expense, future income taxes and other non-cash items impacting operations as presented in the Consolidated Statements of Cash Flows.
        These definitions are not recognized measures under International Financial Reporting Standards, and accordingly, may not be comparable to
        measures used by other companies.
Overall Performance

                                                 Three Months Ended June 30,                      Six Months Ended June 30,
                                                   2011               2010       Change          2011         2010     Change
(000s)                                               ($)                ($)         (%)            ($)          ($)       (%)
Revenue
  Electronic Drilling Recorder                  25,987           21,087               23       59,418       41,844          42
  Pit Volume Totalizer                          11,042            9,471               17       26,414       19,747          34
  Communications                                  7,433           5,710               30       18,864       13,182          43
  Automatic Driller                               7,326           5,500               33       17,394       11,845          47
  Total Gas System                                3,589           3,140               14        8,913        7,267          23
  Hazardous Gas Alarm System                           991            602             65        2,467        1,377          79
  Mobilization                                    2,386           2,068               15        4,590        4,212           9
  Other                                           3,666           3,453                6        9,105        7,941          15
Total revenue                                   62,420           51,031               22    147,165        107,415          37



                                                 Canada                                            United States
                                 Three Months Ended          Six Months Ended        Three Months Ended       Six Months Ended
                                            June 30,                  June 30,                  June 30,               June 30,
                                    2011       2010           2011            2010      2011        2010       2011       2010

EDR rental days (#)               15,400     13,400          61,500      49,100       93,900      81,900     183,000   149,900
PVT rental days (#)               14,800     13,100          59,900      47,800       63,700      53,700     125,800    96,700



Electronic Drilling Recorder
Consistent with prior years, the Pason Electronic Drilling Recorder (“EDR”) remains the Company’s prime
product. The EDR provides a complete system of drilling data acquisition, data networking and drilling
management tools and reports at both the wellsite and customer offices. The EDR is the base product
from which all other rig site instrumentation products are linked. By linking these products, a number of
otherwise redundant elements such as data processing, display, storage, and networking are eliminated.
This ensures greater reliability and a more robust system of instrumentation for the customer. The EDR,
despite being the Company’s most mature product, still generated a 23% increase in revenue for the
second quarter of 2011 compared to 2010 and an increase of 42% on a year to date basis versus the
prior year. These increases are due to increased pricing in both Canada and the U.S. and expanding
demand by customers for EDR peripheral devices.

During the first six months of 2011, the EDR was installed on 93% of all active rigs in Canada and just
under 60% of the rigs in the U.S.
In Canada, until the start of 2011, industry days used to calculate market share were based upon a
twenty-four hour period. As a result, since the adoption of the Company’s new billing policy described
below, Canada was reporting slightly lower market share figures than was actually the case. Starting in
2011, the industry drilling day now recognizes these partial days and brings this method of activity
reporting in line with how the Company bills.

In the U.S. the opposite impact is occurring. The Company is tracking EDR rental days under the new
partial billing method but the industry days that are reported are still calculated on a twenty-four hour
basis. The Company’s calculated U.S. market share for 2011 was 58% but management believes this is
understated by almost three points because of the inconsistency between Pason’s method of tracking
rental days and how the industry calculates drilling days.

The method in which the Company bills its customers has impacted both the Canadian and U.S. market share
figures. Previously, the Company billed for an entire days worth of rentals regardless of whether the equipment
was activated for the entire twenty-four hour period or not. To address customer concerns, the Company
implemented a change to bill in increments, recognizing the fact that during the initial start up or tear down of a
rig the equipment is only utilized a portion of the day.

This partial billing process has been in place in Canada since 2009 and was rolled out to the U.S. market
beginning in 2011.

The Company believes that there was no underlying change to the Company’s relative competitive position in
either country.

Pit Volume Totalizer
The Pit Volume Totalizer (“PVT”) is Pason’s proprietary solution for the detection and early warning of “kicks”
that are caused by hydrocarbons entering the wellbore under high-pressure and expanding as they migrate to
the surface. Revenue increases for this product were in line with the rise in drilling days in North America, and
revenue was enhanced by further penetration in the U.S. During the first half of 2011, the PVT was installed on
98% of rigs with a Pason EDR in Canada and 69% in the U.S., compared to 97% and 64%, respectively, in
2010.

Communications
Pason’s communications rental revenue is derived from the Company’s automatic aiming satellite system.
This system provides high-speed wellsite communications for email and web application management tools.
Pason displays all data in standard forms on its Internet DataHub, although if customers require greater
analysis or desire to have the information transferred to another supplier’s database, data is available for
export from the Pason DataHub using WITSML (a specification for transferring data amongst oilfield service
companies, drilling contractors and operators). During 2010, the Company began complimenting its satellite
equipment with High Speed Packet Access (“HSPA”), a high speed wireless ground system that requires
lower capital cost, less service and lower cost per internet kilobyte, benefiting company margins. In Canada,
HSPA has been installed on 90% of the rigs, and on average 70% of these rigs will benefit by HSPA because
they have local cell coverage. The Company was providing communications services on most of the rigs with a
Pason EDR in both Canada and the U.S.

Total Gas System
The Pason Total Gas System (“TGAS”) measures the total hydrocarbon gases (C1 through C5) exiting the
wellbore, and then calculates the lag time to show the formation depth where the gases were produced. This
complex system provides a more accurate gas sample than competitor systems. Pason’s TGAS was installed
on 40% of Canadian and 17% of U.S. land rigs operating with a Pason EDR system in the first half of 2011.
The market penetration in both countries is an increase of approximately 2% points over 2010 levels.
Automatic Driller
Pason’s Automatic Driller (“ADR”) is used to maintain constant weight on the drill bit while a well is being
drilled. During the first six months of 2011, Pason’s ADR was installed on 75% of Canadian and 45% of U.S.
land rigs operating with a Pason EDR system compared to 75% and 34% respectively in 2010.

Hazardous Gas Alarm System
Pason’s Hazardous Gas Alarm System monitors both lower explosive limit gases (LEL) and H2S where both
readings and an alarm system are integrated with the EDR. During the first six months of 2011, Pason’s
Hazardous Gas Alarm System was installed on 18% of Canadian rigs, up from 15% for the same period in
2010, and 5% of U.S. land rigs operating with a Pason EDR system, an increase from 2% of U.S. land rigs in
the same period in 2010.
Discussion of Operations
United States Operations
                                               Three Months Ended June 30,            Six Months Ended June 30,
                                                2011       2010    Change            2011      2010     Change
(000s)                                             ($)       ($)       (%)             ($)        ($)      (%)
Revenue
  Electronic Drilling Recorder                19,547     16,507          18        38,700    27,304         42
  Pit Volume Totalizer                         7,677       6,674         15        15,297    11,571         32
  Communications                               4,810       3,565         35         8,989     5,752         56
  Automatic Driller                            5,126       3,726         38         9,954     6,158         62
  Total Gas System                             1,858       1,469         26         3,742     2,765         35
  Hazardous Gas Alarm System                     330          93        255          657        219        200
  Mobilization                                 1,674       1,414         18         3,206     3,263         (2)
  Other                                        1,027       2,213        (54)        2,065     3,551        (42)
Total revenue                                 42,049     35,661          18        82,610    60,583         36
Operating costs                               16,774     15,931           5        32,338    30,892          5
Depreciation and amortization                  5,449       5,694         (4)       10,737    10,441          3
Segment operating profit                      19,826     14,036          41        39,535    19,250        105

U.S. segment revenue increased by 18% in the second quarter of 2011 over the 2010 comparable period
(25% increase when measured in USD), which compared favourably with U.S. drilling industry days that
were up 22% over the second quarter of 2010. For the first six months of 2011, revenue increased 36%
versus 2010 results (44% increase when measured in USD), compared to an increase in U.S. drilling
industry days of 27%.

Performing better than the market increase is a result of the following factors:

          •   better pricing. Prices were increased by approximately 30% in the second quarter of 2010
              and have held steady since .The net impact of average weighted pricing, when comparing the
              first half of 2011 to the first half of 2010, was to increase revenue by approximately 15% in
              USD.
          •   more products on each rig. Revenue was increased by more products on each rig, primarily
              with gains in PVT and ADR rentals, which contributed to approximately a 5% revenue gain for
              the first six months of 2011.

The factors explained above resulted in second quarter revenue per industry day of $259 (USD$268) in
2011 compared to $263 (USD$257) in 2010 and $165 (USD$142) in 2009. The U.S. business unit
realized year to date revenue per industry day of $264 (USD$270) for 2011, compared to $239
(USD$230) for 2010 and $200 (USD$167) for 2009.

The majority of the decline in “Other” revenue relates to geological services which the Company no longer
provides.
Segment profit, as a percentage of revenue, was 47% for the second quarter of 2011, an improvement
over the 39% realized in 2010 and a loss of 25% in the second quarter of 2009.

For the first six months of 2011, segment profit, as a percentage of revenue, was 48%, a significant
improvement over the 32% generated in 2010 and the 1% realized in 2009.

The increase in operating costs from 2010 levels is mostly attributable to the following factors:

    •     an increase in rental service costs to support the increase in rig activity of $1.8 million for the
          quarter and $3.3 million year to date.

    •     increase in net operating expenses of Auxsol, the U.S. water treatment subsidiary, of $0.3 million
          for the quarter and $0.7 million year to date.

    •     the increases above were off-set by a reduction in costs due to the Company no longer providing
          manned geological services. This resulted in lower second quarter costs of $0.4 million and lower
          six month costs of $1.4 million.




Canadian Operations
                                                Three Months Ended June 30,        Six Months Ended June 30,
                                                 2011       2010    Change        2011      2010     Change
(000s)                                              ($)       ($)       (%)         ($)        ($)      (%)
Revenue
  Electronic Drilling Recorder                  4,066      2,381         71     16,263     11,367         43
  Pit Volume Totalizer                          2,350      1,696         39      9,264      6,586         41
  Communications                                2,429      2,000         21      9,633      7,216         33
  Automatic Driller                             1,586      1,305         22      6,258      5,004         25
  Total Gas System                              1,314        942         39      4,495      3,302         36
  Hazardous Gas Alarm System                      385        261         48      1,215        734         66
  Mobilization                                    106        208        (49)       372        482        (23)
  Other                                           683      1,190        (43)     2,508      1,896         32
Total revenue                                  12,919      9,983         29     50,008     36,587         37
Operating costs                                 7,478      5,172         45     18,234     11,940         53
Depreciation and amortization                   6,750      5,084         33     12,290     10,198         21
Segment operating (loss) profit                (1,309)      (273)      (379)    19,484     14,449         35

Canadian segment revenue rose 29% for the three months ended June 30, 2011, which was a significant
increase over the change in the number of Canadian drilling industry days of 9%. On a year to date basis,
revenue increased 37% compared to industry days increasing by 20%.
The improvement in revenue for both the second quarter and the first six months was due to:

    •   an increase in EDR rental days of 15% for the second quarter of 2011 and 25% for the first six
        months compared to the corresponding period in 2010 and ,

    •   improved pricing. Prices were reduced by approximately 20% in the second quarter of 2009 and
        did not rise again until a 10% price increase was applied in the fourth quarter of 2010. The net
        impact of average weighted pricing, when comparing the second quarter of 2011 to 2010, was an
        increase to revenue of approximately 14%. The year to date impact of the price increase was to
        raise revenue by approximately 10%.

The factors explained above resulted in second quarter revenue per industry day of $773 in 2011
compared to $652 in 2010 and $648 in 2009. For the first six months of 2011, revenue per industry day
was $771, compared to $671 in 2010 and $742 in 2009.

The segment loss for the second quarter of 2011 of $1.3 million is slightly larger than the $0.3 million loss
in 2010 but an improvement over the $4.8 million loss in 2009. The results for the second quarter of 2011
were impacted by the following items:

        •   increase in legal costs of $0.4 million, mostly attributable to the ADR litigation.
        •   $0.8 million of net expenses relating to water treatment, including $0.4 million in depreciation.
        •   increase in the inventory obsolescence reserve of $0.8 million, which is included in
            depreciation and amortization expense.
        •   repair cost increases of $0.4 million due to increased rig activity.


Segment profit, as a percent of revenue, was 39% for the first six months of 2011, approximately the
same percentage for 2010, and a significant improvement from the 15% realized in the first six months of
2009. The profit for the first half of the year was impacted by the following factors:

        •   legal costs increased by $1.8 million as the Canadian trial for the ADR litigation took place in
            2011.
        •   $1.5 million of net expenses relating to water treatment.
        •   repair cost increases of $1.1 million over the similar period in 2010.


After taking these costs into account, all other operating costs increased by approximately 4% over 2010
levels.
International Operations
                                                Three Months Ended June 30,        Six Months Ended June 30,
                                                 2011       2010    Change        2011      2010     Change
(000s)                                              ($)       ($)       (%)         ($)        ($)      (%)
Revenue
  Electronic Drilling Recorder                  2,374     2,199           8      4,455      3,173         40
  Pit Volume Totalizer                          1,015     1,101          (8)     1,853      1,590         17
  Communications                                  194       145          34       242         214         13
  Automatic Driller                               614       469          31      1,182        683         73
  Total Gas System                                417       729         (43)      676       1,200        (44)
  Hazardous Gas Alarm System                      276       248          11       595         424         40
  Mobilization                                    606       446          36      1,012        467        117
 Other                                          1,956        50      3,812      4,532      2,494          82
Total revenue                                   7,452     5,387         38     14,547     10,245          42
Operating costs                                 4,420     3,117          42      8,981      6,523         38
Depreciation and amortization                   2,048     1,990           3      4,165      3,477         20
Segment operating profit                          984       280        251       1,401        245        472

Revenue in the International operations improved 38% from the second quarter of 2010, while operating
profit increased by $0.7 million. For the first six months revenue increased by 42% while operating profit
increased by $1.2 million over the same period in 2010.

A number of factors influenced these results:

         •   at the close of 2010, the Company purchased the distribution rights and operating companies
             of its Latin American partner. This purchase increased both revenue and operating profit as
             the Company now benefits from 100% of the operating results. This increased segmented
             operating profit by approximately $0.8 million for the first six months of 2011.
         •   drilling activity in Mexico collapsed during the second half of 2010 and while the rig count is
             increasing in 2011 the operating profit is lower than the results achieved in 2010. Operating
             profit is down $0.8 million for the first six months of 2011 compared to the same period in
             2010.
         •   second quarter results have improved over 2010 levels as a result of increasing drilling
             activity in Australia. Activity has resumed, reaching levels not seen since the flooding in late
             2010. However equipment related expenses during the first half of the year resulted in a drop
             of approximately $0.7 million in profit for the first half of 2011 compared to 2010.
         •   our International segment includes Pason Offshore, which represents the offshore portion of
             the business acquired from Petron. The rental portion of this business unit was significantly
             impacted by the reduction in Gulf of Mexico drilling activity caused by the BP oil spill. This
             reduction in rental revenue has been more than off-set by an increase in sold systems to
             drilling contractors who insist on a purchased solution. In addition, the Company has
             benefited from cost savings initiatives implemented during the past twelve months. All of
             these factors, combined with lower depreciation and amortization charges as a result of the
             write-downs the division took in the fourth quarter of 2010, have combined to increase
             operating profit in Offshore by approximately $2.0 million for the first six months of 2011
             versus 2010 results.
Summary of Quarterly Results
                                           Sep 30,      Dec 31,      Mar 31,      Jun 30,      Sep 30,       Dec 31,       Mar 31,     Jun 30,
Three Months Ended(1)                        2009         2009         2010         2010         2010          2010          2011        2011
(000s, except per share data)                   ($)           ($)          ($)          ($)          ($)           ($)          ($)

Revenue                                     28,422       41,013       56,384       51,031       68,653        73,494        84,745      62,420
         (2)
EBITDA                                       8,261       13,620       25,390       21,512       34,606        36,016        44,729      25,850
  Per share – basic                           0.10          0.17         0.31         0.26         0.42         0.44          0.55         0.31
  Per share – diluted                         0.10          0.17         0.31         0.26         0.42         0.44          0.55         0.30
Funds flow from operations(2)                7,373       12,238       20,454       18,764       26,856        27,899        39,082      22,917
  Per share – basic                           0.09          0.15         0.25         0.23         0.33         0.34          0.48         0.28
  Per share – diluted                         0.09          0.15         0.25         0.23         0.33         0.34          0.48         0.27
(Loss) earnings                             (4,200)        2,480        7,891       6,156       11,901        10,525        17,757        8,217
  Per share – basic                          (0.05)         0.03         0.10         0.08         0.15         0.13          0.22          0.10
  Per share – diluted                        (0.05)         0.03         0.10         0.08         0.15         0.13          0.22          0.09
(1)   2010 comparative figures have been restated to conform to International Financial Reporting Standards. 2009 figures are presented in
      accordance with the Company’s previous accounting framework, Canadian generally accepted accounting principles.
(2)   EBITDA is defined as earnings before interest expense, income taxes, stock-based compensation expense and depreciation and amortization
      expense. Funds flow from operations is defined as earnings adjusted for depreciation and amortization expense, stock-based compensation
      expense, future income taxes and other non-cash items impacting operations as presented in the Consolidated Statements of Cash Flows.
      These definitions are not recognized measures under International Financial Reporting Standards, and accordingly, may not be comparable to
      measures used by other companies.


Variations in Pason’s quarterly financial results are due in part to the seasonality of the oil and gas
service industry in Canada, which is somewhat offset by the less seasonal nature of U.S. and
International operations. The first quarter is generally the strongest quarter for the Company due to
strong activity in Canada when location access is best during the winter. The second quarter is always
the slowest due to spring break up in Canada when many areas are not accessible due to ground
conditions, and therefore, do not permit the movement of heavy equipment. Activity generally increases
in the third quarter, depending on the year, as ground conditions have often improved and location
access becomes available; however, a rainy summer can have a significant adverse effect on drilling
activity. By the fourth quarter, often the Company’s second strongest quarter, access to most areas in
Canada become available with ground freezing. Consequently, the performance of the Company may
not be comparable quarter to consecutive quarter and should be considered on the basis of results for the
whole year, or by comparing results in a quarter with results in the same quarter for the previous year.
Current Quarter versus Q2 2010
The active rig count in both Canada and the U.S. improved over the second quarter of 2010, resulting in
gains in all of the Company’s key metrics. Revenue increased 22%, EBITDA and funds flow from
operations were up 20% and 22% respectively.

Net earnings increased to $8.2 million or $0.09 per share compared to $6.2 million or $0.08 per share in
the second quarter of 2010. The second quarter consolidated results were impacted by the following
items:

        •   increase in net expenses related to the water cleaning initiative of $1.1 million for the second
            quarter of 2011.
        •   stock-based compensation expense decreased by $1.8 million compared to the second
            quarter of 2010.
        •   as required by generally accepted accounting principles, gains and losses from foreign
            exchange changes relating to monetary assets and liabilities must be taken into earnings in
            the period in which they occurred. The strengthening Canadian dollar against the U.S dollar
            resulted in a foreign exchange loss of $1.1 million. The equivalent amount in the second
            quarter of 2010 was a gain of $1.3 million.
        •   corporate services costs primarily relate to personnel located in the corporate headquarters
            who directly support the Company’s field operations and perform other corporate functions.
            The increase in corporate operating expenses from 2010 of $0.9 million is mainly due to
            higher expenses as a result of more resources dedicated to the Company’s growth strategy.


Current Quarter versus Q1 2011
As expected, revenue and operating profit was lower in the second quarter of 2011 versus the first
quarter due to spring break-up in the Canadian operating area. The Canadian business unit realized a
loss of $1.3 million compared to a $20.8 million profit in the first quarter. Taking into account the drop in
rig activity, costs associated with the water initiative and an additional allowance against inventory, all key
metrics were in line with previous second quarter results.

The U.S. business unit operating profit of $19.8 million was almost identical to the results achieved in the
first quarter. Revenue was up 3.6% while operating profit, as a percentage of revenue, was 47% versus
48% in the previous quarter. The U.S. unit continues to invest in staff and infrastructure to realize on the
opportunity of increasing market share and product penetration in a changing operating environment.

The International business unit increased its operating profit by $0.5 million, as rig activity continues to
improve in most markets and the Company’s Offshore unit returns back to profitability.
Liquidity and Capital Resources
At June 30, 2011, the Company’s liquidity position and change over the prior year is detailed in the table
below.

                                                                Three Months Ended June 30,                       Six Months Ended June 30,
                                                                               (1)                                             (1)
                                                                 2011     2010      Change                       2011    2010       Change
(000s)                                                              ($)       ($)       (%)                        ($)        ($)      (%)
Cash                                                         114,933         121,598                  (5) 114,933        121,598           (5)
Working capital                                              116,032         122,762                  (5) 116,032        122,762           (5)
Funds flow from operations                                     22,917         18,764                  22       61,999         39,218       58
Capital expenditures                                           15,141           7,132            112           36,434         11,451     218
As a % of funds flow                                              66.1           38.0                 73         58.7           29.2     101
(1)   2010 comparative figures have been restated to conform to International Financial Reporting Standards.


The Company’s cash balance was down slightly from the prior year. The small reduction in cash is a
combination of higher cash flow from operations, off-set by increases in dividends, capital expenditures
and the repurchase of Latin American rights in 2010. The Company also benefited from greater exercise
of Company stock options, which totalled $2.1 million for the first half of 2011 compared to $0.2 million in
the first 6 months of 2010.


Contractual Obligations
                                                       Less than 1 year               1 – 3 years               Thereafter              Total
(000s)                                                                 ($)                      ($)                     ($)               ($)

Operating leases                                                    3,926                   5,268                   4,157              13,351



Contractual obligations relate to minimum future lease payments required primarily for operating leases
for certain facilities and vehicles.

During the first six months of 2011 the Company purchased 0.9 million stock options for a total cash
consideration of $ 3.1 million.

At June 30, 2011, the Company had no capital lease obligations, and other than the operating leases
detailed above, it has no off-balance sheet arrangements.

The Company has a $5.0 million committed revolving credit facility available. At June 30, 2011, no
amount had been drawn on the facility.

Disclosure of Outstanding Share and Options Data
As at August 4, 2011, there were 81.9 million common shares and 4.7 million options issued and
outstanding.
Accounting Changes
Convergence with International Financial Reporting
Standards
Canada’s Accounting Standards Board ratified a plan that resulted in Canadian GAAP being converged
with IFRS (“IFRS”) on January 1, 2011. The Company was required to report its financial results under
IFRS effective January 1, 2011, with quarterly comparatives for 2010. Management completed a detailed
assessment, with involvement and input from the Company’s Board of Directors (including the Audit
Committee) and its external auditors. The Company focused primarily on the areas with the highest
potential impact to the Company: including the choices under IFRS 1 (First Time Adoption), capital
assets, impairment of assets and stock-based compensation. The areas with the greatest impact were
the retroactive application of IFRS and stock-based compensation expense.
Second Quarter Conference Call
Pason will be conducting a conference call for interested analysts, brokers, investors and media
representatives to review its second quarter results at 9:00 a.m. (Calgary time) on Tuesday, August 9,
2011. The conference call dial-in number is 1-888-231-8191, conference ID # is 72041473. You can
access the 7-day replay by dialing 1-800-642-1687, password 72041473.

Pason is a leading international provider of specialized rental and sold oilfield instrumentation systems for
use on land and offshore rigs. The Company’s tightly integrated package of products and services,
including data acquisition, wellsite reporting software, remote communications and Internet information
management tools, maximizes rig uptime and minimizes operating costs.

Pason’s common shares trade on the Toronto Stock Exchange under the symbol PSI. Additional
information, including the Company’s Annual Report and Annual Information Form for the year ended
December 31, 2010, is available on SEDAR at www.sedar.com or on the Company’s website at
www.pason.com.
Condensed Consolidated Interim Balance Sheets
                                                                    June 30,    December 31,    January 1,
                                                                       2011            2010          2010
As at,
(000s) (unaudited)                                                        ($)             ($)          ($)

Assets
Current
  Cash and cash equivalents                                          114,933         110,400      109,849
  Trade and other receivables                                         71,736          79,880       39,102
  Prepaid expenses                                                     2,612           1,489        1,416
  Income taxes recoverable                                             2,484               --       2,928
  Total current assets                                               191,765         191,769      153,295
Non-current
  Property, plant and equipment                                      169,492         161,882      169,012
  Intangible assets                                                   38,891          38,588       27,195
  Deferred tax assets                                                  5,289           9,843        4,771
  Total non-current assets                                           213,672         210,313      200,978
Total assets                                                         405,437         402,082      354,273
Liabilities and equity
Current
  Trade payables, accruals and provisions                             49,296          51,398       29,780
  Income taxes payable                                                     --          9,021            --
  Stock-based compensation liability                                  11,696          11,645        3,994
  Dividend payable                                                    14,741          13,890       11,408
  Total current liabilities                                           75,733          85,954       45,182
Non-current
  Stock-based compensation liability                                   3,323           1,360        1,644
  Deferred tax liabilities                                             4,299           5,084        2,524
  Total non-current liabilities                                        7,622           6,444        4,168
Equity
  Share capital                                                       77,489          75,040       71,864
  Contributed surplus                                                 12,927          13,228       15,139
  Accumulated other comprehensive loss                                (7,031)         (6,048)           --
  Retained earnings                                                  238,697         227,464      217,920
  Total equity                                                       322,082         309,684      304,923
Total liabilities and equity                                         405,437         402,082      354,273




Certain 2010 comparative figures have been restated to conform to IFRS.
Condensed Consolidated Interim Statements of Operations

                                              Three Months Ended June 30,      Six Months Ended June 30,

                                                     2011           2010            2011           2010
(000s, except per share data) (unaudited)               ($)              ($)          ($)            ($)
Revenue
  Equipment rentals and other                       62,420        51,031         147,165        107,415
Operating expenses
  Rental services                                   25,442        22,440          52,215         45,973
  Local administration                               3,230         1,780           7,338          3,382
  Depreciation and amortization                     14,247        12,768          27,192         24,116
                                                    42,919        36,988          86,745         73,471
Operating profit                                    19,501        14,043          60,420         33,944
Other expenses
  Research and development                           3,789         4,433           7,648          8,282
  Corporate services                                 2,711         1,857           5,873          3,707
  Stock-based compensation (recovery)                 (230)        1,521           5,217          3,335
  Manufacturing and distribution                      268            301             656            512
  Foreign exchange and other                         1,130         (1,292)         2,856         (1,343)
                                                     7,668          6,820         22,250         14,493
Income before income taxes                          11,833          7,223         38,170         19,451
  Income taxes                                       3,616          1,067         12,196          5,404
Net income                                           8,217          6,156         25,974         14,047
Earnings per share
  Basic                                               0.10           0.08           0.32           0.17
  Diluted                                             0.09           0.08           0.31           0.17

Certain 2010 comparative figures have been restated to conform to IFRS
Condensed Consolidated Interim Statements of
Comprehensive Income

                                                Three Months Ended June 30,      Six Months Ended June 30,

                                                       2011              2010         2011           2010
(000s) (unaudited)                                        ($)              ($)          ($)            ($)
Net income                                             8,217         6,156          25,974         14,047
Other comprehensive income (loss)
  Foreign currency translation adjustment              2,247             4,298        (983)         1,144
Total comprehensive income                            10,464         10,454         24,991         15,191

Certain 2010 comparative figures have been restated to conform to IFRS
Condensed Consolidated Interim Statements of Changes in
Equity
                                                                        Accumulated
                                                                              Other
                                                 Share    Contributed Comprehensive    Retained      Total
                                                Capital      Surplus           Loss    Earnings     Equity
(000s) (unaudited)                                  ($)           ($)            ($)         ($)        ($)

Balance at January 1, 2010                      71,864        15,139              --   217,920     304,923
  Net income                                         --            --             --    14,047      14,047
  Dividends                                                                             (13,040)   (13,040)
  Other comprehensive income                         --            --         1,144           --     1,144
  Exercise of stock options                        165             --             --          --      165
  Options exercised that were previously
  expensed                                          21           (21)             --          --         --

  Stock-based compensation expense                   --         200               --          --      200
Balance at June 30, 2010                        72,050        15,318          1,144    218,927     307,439

  Dividends                                          --            --             --    (13,890)   (13,890)

  Net income                                         --            --             --    22,427      22,427
  Other comprehensive loss                           --            --        (7,192)          --    (7,192)
  Exercise of stock options                      2,571             --             --          --     2,571
  Options exercised that were previously
  expensed                                         419         (419)              --          --         --

  Stock-based compensation expense                   --       (1,671)             --          --    (1,671)
Balance at December 31, 2010                    75,040        13,228         (6,048)   227,464     309,684
  Net income                                         --            --             --    25,974      25,974
  Dividends                                                                             (14,741)   (14,741)
  Other comprehensive loss                           --            --          (983)          --     (983)
  Exercise of stock options                      2,142             --             --          --     2,142
  Options exercised that were previously
  expensed                                         307         (307)              --          --         --

  Stock-based compensation expense                   --            6              --          --         6
Balance at June 30, 2011                        77,489        12,927         (7,031)   238,697     322,082

Certain 2010 comparative figures have been restated to conform to IFRS.
Condensed Consolidated Interim Statements of Cash Flows

                                                                       Three Months Ended June 30,   Six Months Ended June 30,


                                                                          2011              2010          2011           2010
(000s) (unaudited)                                                          ($)               ($)           ($)            ($)
Cash flows from operating activities
  Net income                                                              8,217            6,156        25,974         14,047
Adjustment for non-cash items:
  Depreciation and amortization                                         14,247            12,768        27,192         24,116
  Stock-based compensation                                                (995)              711         2,873          1,739
  Deferred income taxes                                                  1,005               419         4,149            770
  Unrealized foreign exchange loss (gain)                                  443            (1,290)        1,811         (1,454)
                                                                        22,917            18,764        61,999         39,218
Movements in working capital
  Decrease (increase) in trade and other receivables                    12,223                290        6,831        (13,565)
  (Increase) decrease in prepaid expenses                               (1,552)               247       (1,094)           402
  Increase (decrease) in income taxes                                    1,045             (1,740)       5,131          2,634
  Increase in trade payables, accruals and provisions                    1,336              4,129          341          7,715
  Increase in stock-based compensation liability                           711              1,128        2,229          1,544
  Effects of exchange rate changes                                        (174)              (423)          799           749
                                                                        13,589             3,631        14,237           (521)
Cash generated from operating activities                                36,506            22,395        76,236         38,697
  Income tax paid                                                       (5,750)           (1,500)      (16,650)        (1,500)
Net cash from operating activities                                      30,756            20,895        59,586         37,197
Cash flows used in financing activities
  Proceeds from issuance of common shares under the option plan            700                11         2,142            165
  Purchase of stock options                                               (838)                --       (3,081)             --
  Payment of dividends                                                       --                --      (13,890)       (11,408)
Net cash used in financing activities                                     (138)               11       (14,829)       (11,243)
Cash flows used in investing activities
  Additions to property, plant and equipment                            (13,246)           (6,046)     (32,613)         (9,403)
  Deferred development costs, net of investment tax credits received     (1,895)           (1,086)      (3,821)         (2,048)
  Proceeds on disposal of property, plant and equipment                       --               10            --             22
  Business acquisitions, net of cash acquired                                 --                --           --        (2,829)
  Changes in non-cash working capital                                       (66)              (89)      (2,153)           (456)
Net cash used in investing activities                                   (15,207)           (7,211)     (38,587)       (14,714)
Effect of exchange rate changes on cash                                   (407)            1,689        (1,637)           509
Net increase in cash and cash equivalents                               15,004            15,384         4,533         11,749
Cash and cash equivalents, beginning of period                          99,929           106,214       110,400        109,849
Cash and cash equivalents, end of period                               114,933           121,598       114,933        121,598

Certain 2010 comparative figures have been restated to conform to IFRS.
Operating Segments
The Group has three reportable segments, as described below, which are the Group’s strategic
business units. The strategic business units offer the same services, but are managed separately.
For each of the strategic business units, the Group’s senior management reviews internal
management reports on a monthly basis.
Information regarding the results of each reportable segment is included below. Performance is
measured based on operating profit as included in the internal management reports. Operating
profit is used to measure performance as management believes that such information is the most
relevant in evaluating the results of certain segments relative to other entities that operate within
these industries. Inter-segment pricing is determined on an arm’s length basis.
The Company operates in three geographic segments: Canada, the United States and
Internationally (Latin America, Offshore and the Eastern Hemisphere). The amounts related to each
segment are as follows:



Three Months Ended June 30, 2011               Canada     United States   International      Total
                                                    ($)             ($)              ($)        ($)

Revenue                                         12,919          42,049            7,452     62,420
Operating costs                                  7,478          16,774            4,420     28,672
Depreciation and amortization                    6,750           5,449            2,048     14,247

Segment operating (loss) profit                 (1,309)         19,826              984     19,501
Research and development                                                                     3,789
Corporate services                                                                           2,711
Stock-based compensation                                                                     (230)
Manufacturing and distribution                                                                268
Foreign exchange and other                                                                   1,130
Income taxes                                                                                 3,616

Earnings                                                                                     8,217
Capital expenditures                             1,416          10,453            3,272     15,141
Goodwill                                                         5,503            2,600      8,103
Intangible assets                               19,147           5,288            6,353     30,788
Segment assets                                 130,433         179,336          56,776     366,545
Segment liabilities                             54,474          18,443          10,437      83,354



Three Months Ended June 30, 2010               Canada     United States    International     Total
                                                    ($)             ($)              ($)        ($)

Revenue                                          9,983          35,661            5,387     51,031
Operating costs                                  5,172          15,931            3,117     24,220
Depreciation and amortization                    5,084           5,694            1,990     12,768
Segment operating (loss) profit                  (273)          14,036              280     14,043
Research and development                                                                     4,433
Corporate services                                                                           1,857
Stock-based compensation                                                                     1,521
Manufacturing and distribution                                                                301
Foreign exchange and other                                                                  (1,292)
Income taxes                                                                                 1,067
Earnings                                                                                     6,156
Capital expenditures                              392            4,135            2,605      7,132
Goodwill                                             --          6,052                --     6,052
Intangible assets                               13,533           2,026            8,759     24,318
Segment assets                                 193,643         116,772          58,451     368,866
Segment liabilities                             45,323          10,314            5,790     61,427
Six Months Ended June 30, 2011   Canada    United States   International      Total
                                     ($)             ($)              ($)        ($)

Revenue                           50,008         82,610          14,547     147,165
Operating costs                   18,234         32,338            8,981     59,553
Depreciation and amortization     12,290         10,737            4,165     27,192

Segment operating profit          19,484         39,535            1,401     60,420
Research and development                                                      7,648
Corporate services                                                            5,873
Stock-based compensation                                                      5,217
Manufacturing and distribution                                                 656
Foreign exchange and other                                                    2,856
Income taxes                                                                 12,196

Earnings                                                                     25,974
Capital expenditures              10,200         19,892            6,342     36,434
Goodwill                                          5,503            2,600      8,103
Intangible assets                 19,147          5,288            6,353     30,788
Segment assets                   130,433        179,336          56,776     366,545
Segment liabilities               54,474         18,443          10,437      83,354



Six Months Ended June 30, 2010   Canada    United States    International     Total
                                     ($)             ($)              ($)        ($)

Revenue                           36,587         60,583          10,245     107,415
Operating costs                   11,940         30,892            6,523     49,355
Depreciation and amortization     10,198         10,441            3,477     24,116
Segment operating profit          14,449         19,250              245     33,944
Research and development                                                      8,282
Corporate services                                                            3,707
Stock-based compensation                                                      3,335
Manufacturing and distribution                                                 512
Foreign exchange and other                                                   (1,343)
Income taxes                                                                  5,404

Earnings                                                                     14,047
Capital expenditures               2,350          5,317            3,784     11,451
Goodwill                              --          6,052                --     6,052
Intangible assets                 13,533          2,026            8,759     24,318
Segment assets                   193,643        116,772          58,451     368,866
Segment liabilities               45,323         10,314            5,790     61,427
Pason Systems Inc.


Pason Systems Inc. is a leading provider of instrumentation systems to land-based and offshore drilling
rigs worldwide. The company’s rental solutions, which include data acquisition, wellsite reporting, remote
communications, and web-based information management, maximize rig uptime, improve work efficiency,
and minimize operating costs. Pason’s common shares trade on the Toronto Stock Exchange under the
symbol PSI.

For more information about Pason Systems Inc., visit the company’s website at www.pason.com or
contact:

        Jim Hill                                         David Elliott
        Chairman, President, and CEO                     Chief Financial Officer
        403-301-3401                                     403-301-3441
        jim.hill@pason.com                               david.elliott@pason.com

								
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