CanElson Announces That Its Mexican Joint Venture has Acquired Two
CALGARY, ALBERTA -- (Marketwire) -- 01/15/13 -- CanElson Drilling
Inc. ("CanElson" or the "Company") (TSX:CDI) announces that its
Mexican Joint Venture, Diavaz CanElson de Mexico, S.A. de C.V.
("DCM") has acquired two existing telescoping double drilling rigs
("tele-doubles") for US$5.6 million.
"The acquisition of these two rigs is a significant step forward for
our Mexican joint venture," said Randy Hawkings, President and CEO of
CanElson. "We expect this will increase profitability and improve
payouts compared with DCM's current practice of using a
sub-contracted drilling rig in Mexico."
The two tele-doubles are already in southern Mexico and will be moved
to Tampico, a city in the eastern part of the country. In Tampico the
rigs will undergo refurbishment to fit-for-purpose small-footprint
plug-n-play configuration, complete with built-in managed pressure
drilling and snubbing capability. When the refurbishment is
completed, the rigs will be similar to the other highly standardized
rigs in CanElson's North American fleet.
Cost, with refurbishing, compares favourably with new tele-doubles
The refurbishment of each tele-double is expected to cost about
US$2.5 million resulting in a total exp
ected cost per rig of US$5.3
million. This compares favourably with the cost of approximately $8
million to assemble new tele-doubles.
DCM intends to finance these capital investment activities using a
combination of existing working capital and external funding as
needed. DCM's Mexican engineering team, which has been training with
CanElson, will supervise the upgrades.
Rigs to commence drilling in Q2 2013
During the second quarter of 2013, upon completion of the
re-configuration, CanElson expects that the tele-doubles will
commence drilling in the Ebano Panuco fields, located near the
Central Gulf of Mexico. While the tele-doubles are being refurbished,
DCM's drilling operations will continue through use of one
sub-contracted drilling rig.
DCM expects to finalize a 5-year contract for one of the tele-doubles
with its customer DS Servicios Petroleros, S.A. de C.V. ("DS")
imminently. Discussions regarding the contract terms for the second
tele-double are ongoing.
DS recently signed a 30-year production-sharing contract with PEMEX,
Mexico's state-owned petroleum company, to operate the Ebano heavy
oil block near Tampico, Mexico. CanElson anticipates increased
profitability and excellent payouts for DCM-owned tele-doubles
drilling on a performance basis with Mexican crews, as compared with
sub-contracting third-party drilling rigs.
Established Operations at DCM
DCM has established a profitable operation and has substantially
improved its drilling operations since the joint venture was formed
in 2009. Among other things, DCM has:
-- Reduced well drilling times by more than 50% through performance-based
drilling management, and
-- Developed a base of local Mexican engineers and management expertise
through a strategy of transferring CanElson's Canadian drilling
optimization practices and technology.
During its first 38 months of operations DCM has grown an initial
US$3.9 million of partner equity investment into US$6.2 million of
DCM was formed in 2009 as a joint venture between CanElson and D&S
Petroleum, S.A. de C.V., a subsidiary of Grupo Diavaz, S.A. de C.V.
("Diavaz"). Diavaz, a Mexican headquartered service company, is
celebrating 40 years of providing oil and gas services in Mexico,
primarily focused on servicing PEMEX.
CanElson operates contract drilling rigs in Canada, the US and Mexico
for oil and natural gas exploration and development companies.
CanElson also assembles new drilling rigs at a facility in Nisku,
Alberta, operates contract oil and gas service rigs in Mexico, and
operates a CNG transportation and related services business. CanGas
is a Calgary-based CNG transport company and a North American leader
in the development and utilization of containerized natural gas
transport. More information on CanElson can be found on its website:
This press release contains certain statements or disclosures
relating to CanElson that are based on the expectations of CanElson
as well as assumptions made by and information currently available to
CanElson which may constitute forward-looking information under
applicable securities laws. In particular, statements pertaining to
the intention to move the tele-doubles to Tampico and refurbish them;
the estimated refurbishment cost of the two tele-doubles; DCM's
intentions for financing the purchase and refurbishment of the two
tele-doubles; expected timing of when the tele-doubles will commence
drilling; expected timing for execution of drilling contracts with
DS; and expected increased profitability and excellent payouts from
owning the two tele-doubles, contain forward-looking information or
achievements that may be expressed or implied by such forward-looking
information. Many factors could cause the performance or achievement
by CanElson to be materially different from any future results,
performance or achievements that may be expressed or implied by such
forward-looking information. CanElson's Annual Information Form and
other documents filed with securities regulatory authorities
(accessible through the SEDAR website www.sedar.com) describe the
risks, material assumptions and other fa
ctors that could influence
actual results and which are incorporated herein by reference.
CanElson disclaims any intention or obligation to publicly update or
revise any forward-looking information, whether as a result of new
information, future events or otherwise, except as may be expressly
required by applicable securities laws.
CanElson Drilling Inc.
President and CEO
CanElson Drilling Inc.
Chief Financial Officer
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