Cathedral Energy Services Announces Initial 2013 Capital Budget
/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/
CALGARY, Dec. 5, 2012 /CNW/ - Cathedral Energy Services Ltd. (the "Company" or "Cathedral" / TSX: CET) is expecting to exit 2012 with a fleet of 136 (2011 - 125) Measurement-While-Drilling ("MWD") systems and 69 (2011 - 62) frac flowback units. Based upon customer feedback and bookings to date, Cathedral is expecting to experience a significant increase in operating activities from those experienced in 2012 Q3 and Q4. The equipment acquired to date, provides a solid base of equipment to service the Company's activity levels in 2013.
The Company's Board of Directors have approved an initial 2013 capital budget of $22 million which includes $10 million of growth capital expenditures and $12 million of maintenance capital expenditures.
The Directional Drilling division is expected to incur $7 million of growth capital expenditures and $12 million of maintenance capital expenditures. Growth capital expenditures will include the addition of mud motors and drill collars for the expected expansion of Company's Houston and Oklahoma City operation bases and the commencement of the build-out of the Company's At-Bit Technology system. The At-Bit Technology system allows for MWD measurements that are sourced from directly behind the drill bit. This reduces directional drilling risk in critical hole sections and helps to accurately land well bores. Maintenance capital expenditures is expected to allow for: 1) expanded rollout of the Company's enhanced Fusion MWD platform electronics; 2) addition of mud pulse transmitters to the fleet to allow for expanded Fusion MWD platform capabilities; 3) continued conversion to Cathedral's proprietary mud motor bearing section; and 4) expansion of mud motor power section fleet to accommodate extended repair times and new configurations requested by customers.
The Production Testing division anticipates incurring $3 million of growth capital expenditures by way of adding 3 frac flowback units and related ancillary equipment. This equipment is expected to be utilized in the Company's expansion of its Production Testing division into the Eagleford (Texas) resource play.
Cathedral intends to finance its initial 2013 capital budget from cash flow from operations and, if necessary, its existing credit facility.
Cathedral believes its continuous improvement in technologies, service delivery and cost efficiencies will differentiate it from its competitors, now and in the future.
It is management's expectation to maintain Cathedral's per share dividend at its current rate of $0.075 per quarter or $0.30 per year.
The Company continues to actively repurchase its common shares pursuant to a Normal Course Issuer Bid. To date, the Company has repurchased 673,077 common shares at an average cost of $5.29 per common share.
FORWARD LOOKING STATEMENTS
This news release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words suggesting future outcomes. In particular, this news release contains forward-looking statements relating to, among other things: projected capital expenditures and the financing thereof; areas of further growth; activity levels; U.S. expansion and expected dividend level. The Company believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.
Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to the Company, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and material factors are presented elsewhere in this news release in connection with the forward-looking statements. You are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to:
-- the performance of the Company's businesses, including current business and economic trends; -- oil and natural gas commodity prices and production levels; -- capital expenditure programs and other expenditures by the Company and its customers; -- the ability of the Company to retain and hire qualified personnel; -- the ability of the Company to obtain parts, consumables, equipment, technology, and supplies in a timely manner to carry out its activities; -- the ability of the Company to maintain good working relationships with key suppliers; -- the ability of the Company to market its services successfully to existing and new customers; -- the ability of the Company to obtain timely financing on acceptable terms; -- currency exchange and interest rates; -- risks associated with foreign operations including Venezuela; -- the ability of the Company to realize the benefit of its conversion from an income trust to a corporation; -- risks associated with finalizing ancillary joint venture agreements that are required prior to the commencement of operations of the Venezuela joint venture; -- risks associated with Venezuela joint venture company being awarded work by the Venezuela state run oil and natural gas corporation; -- changes under governmental regulatory regimes and tax, environmental and other laws in Canada, United States ("U.S.") and Venezuela; and -- a stable competitive environment. Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in this news release and in the Company's Annual Information Form under the heading "Risk Factors". Any forward-looking statements are made as of the date hereof and, except as required by law, the Company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise. All forward-looking statements contained in this news release are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements is available in the Company's current Annual Information Form and Annual Report which have been filed with Canadian provincial securities commissions and are available on www.sedar.com. Cathedral Energy Services Ltd. (the "Company"/"Cathedral") and its wholly owned subsidiary, Cathedral Energy Services Inc., are engaged in the business of providing selected oilfield services to oil and natural gas companies in western Canada and selected oil and natural gas basins in the United States. The Company is in the process of establishing operations in Venezuela for providing directional drilling services through its wholly owned subsidiaries Directional Plus International Ltd. and Directional Plus de Venezuela, C.A. The Company's operating activities are divided into directional drilling and production testing business units. The Company's shares trade on the TSX under the symbol: CET. For more information, visit www.cathedralenergyservices.com. Requests for further information should be directed to: Mark L. Bentsen, President and Chief Executive Officer or P. Scott MacFarlane, Chief Financial Officer Cathedral Energy Services Ltd., 6030 - 3rd Street S.E., Calgary, Alberta T2H 1K2 Telephone: 403.265.2560 Fax: 403.262.4682 www.cathedralenergyservices.com SOURCE: Cathedral Energy Services Ltd. To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/December2012/05/c6580.html CO: Cathedral Energy Services Ltd. ST: Alberta NI: OIL -0- Dec/05/2012 21:14 GMT