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Savanna Energy Services Corp. Announces Initial Capital Program and Strategic Focus for 2014

Savanna Energy Services Corp. Announces Initial Capital Program and Strategic 
Focus for 2014 
CALGARY, ALBERTA -- (Marketwired) -- 11/21/13 --  
Outline of Initial 2014 Capital Program 
Savanna Energy Services Corp. ("Savanna" or "the Company") (TSX:SVY)
has approved an initial capital budget providing for growth and
expansion. The strategic focus of the Company in 2014 is centered on:
expanding its footprint in Australia, entering the triple drilling
rig market in North America, and improving the utilization of its
North American service rig fleet. Savanna's planned capital
commitment for 2014, including the final build and rig up costs of
two workover rigs for Australia and deferred long-lead rig components
carried forward from 2013, is as follows:  


 
                                                                            
----------------------------------------------------------------------------
(Stated in thousands of dollars)                                        2014
----------------------------------------------------------------------------
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Construction of three workover rigs for Australia, completion of            
 two others initiated in 2013, and related trucking equipment         40,200
Initiation of triple drilling rig build program - two rigs            28,000
Upgrade and transfer of Canadian service rigs to North Dakota          2,600
Maintenance, recertifications, upgrades, drill pipe, and                    
 infrastructure                                                       52,000
Field operating facilities                                            22,800
----------------------------------------------------------------------------
                                                                     145,600
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
The Company has designed, and will commission and operate, equipment
aligned with its strategic focus. The timing and scale of the capital
program also reflects Savanna's commitment to sustain its current
monthly dividend. The Board of Directors reviews the Company's
dividend policy quarterly, and is satisfied with current dividend
levels. Savanna currently has ample liquidity to undertake this
capital program. In conjunction with the recently completed $50
million note offering, Savanna has approximately $69 million drawn on
its total available operating credit facilities of $200 million. In
addition, as part of its revolving credit facility, Savanna has an
available $50 million accordion, which it can request as an increase
to the total available facility.  
WORKOVER RIGS FOR AUSTRALIA 
As previously announced, Savanna was recently awarded long-term
contracts for three high-specification workover rigs for Australia.
These contracts were in addition to a drilling rig contract and
another two workover rig contracts awarded earlier in 2013, all of
which were awarded outside of the tendering process. Overall, Savanna
will add five workover rigs in 2014 to its current fleet of four
workover rigs in Australia in addition to the Company's fifth
drilling rig, which should commence operations before the end of
2013. Savanna's Australian operations have delivered strong financial
results to date in 2013, and with a minimum 75% increase in equipment
in 2014, Savanna is well positioned to continue generating improved
returns from this division. Savanna is seeing ongoing demand for its
drilling, workover, trucking and rental equipment in Australia, and
the Company remains very optimistic on its future prospects in the
region. There are several active and pending tenders outstanding for
additional equipment, and Savanna will further update its capital
program based on the results of these tenders, if, as, or when they
are announced.  
INITIATION OF TRIPLE DRILLING RIG BUILD PROGRAM 
While Savanna operates a fleet well suited to current and projected
high activity areas of all markets it serves, the Company is
committed to increasing its drilling rig depth and operating capacity
in order to continue expanding the Company's product offering for its
customers. Savanna is pursuing contract opportunities for deep triple
drilling rigs in Canada and the U.S., with both existing and new
customers with promising traction. As a result, Savanna is initiating
a two-rig triple build program. The capital commitment outlined above
includes certain long-lead rig components deferred from 2013 and will
focus primarily on components interchangeable with other rigs in
Savanna's drilling fleet.  
SERVICE RIGS FOR NORTH DAKOTA 
Savanna has consistently achieved strong operating results from its
service rigs in North Dakota, and is intent on expanding this
division. This success has been driven by the high level of
completion activity for new wells, and increasingly by maintenance of
existing production. In light of the increased focus on oil-based
activity in the region, the level of maintenance on existing wells
continues to grow. This growth matches Savanna's long-term
expectation for all oil-focused areas throughout North America, with
the earlier increase in oil-directed drilling in North Dakota simply
providing support for this market outlook. Our expectations for a
similar trend in Canada remain high, however near-term utilization
levels in Canada are likely to remain challenged. As a result,
Savanna is planning to transfer up to six additional underutilized
rigs from Canada into North Dakota in 2014. This will bring the North
Dakota fleet to 20 rigs. While crewing of these rigs will take time,
Savanna is confident it can achieve greater returns on these assets
in North Dakota than in Canada. 
MAINTENANCE, RECERTIFICATIONS, UPGRADES, DRILL PIPE, AND
INFRASTRUCTURE 
Savanna operates a modern drilling and service rig fleet, and is
committed to maintaining its equipment to a high quality standard.
That said, maintenance and recertification capital expenditures are
directly linked to activity levels and Savanna will continue to
monitor near-term industry activity and align these expenditures with
activity expectations. In addition to required maintenance and
recertification expenses, Savanna is continuing to invest capital to
enhance the capacity of some of its drilling rigs to improve
operational efficiencies and satisfy customer demand.  
FIELD OPERATING FACILITIES 
One of Savanna's key initiatives in 2013 was to consolidate and
optimize its field location infrastructure. Based on this, Savanna
initiated the development of a facility capable of more efficiently
handling the combined demands of maintaining Savanna's larger fleet,
as well as final assembly and commissioning of new rigs. Land was
recently purchased to facilitate the construction of such a field
operating facility. The commitments outlined in the 2014 capital
program for the construction of this and other field locations, is
Savanna's expectation of the total cost of construction, although the
actual timing of completion is not likely to be in 2014. As
construction of this facility is completed, Savanna intends to
consolidate various operations under one roof. Savanna will then
begin the process of selling redundant field locations. In addition,
upon completion of these facilities, Savanna will explore
alternatives to optimize their value within its credit structure.  
Update on 2013 Capital Program  
Savanna is expecting capital expenditures of $64 million in the
fourth quarter of 2013, which is in-line with previously announced
budgeted amounts and expectations. The $64 million will be directed
towards maintenance capital, recertifications, upgrades, drill pipe,
and infrastructure, as well as finalizing a new-build international
specification hybrid drilling rig, continuing construction of two
international specification workover rigs, ordering long-lead rig
components, and the purchase of land for new field operating
facilities.  
Although the timing of the land purchase was not originally
contemplated as a 2013 capital expenditure, Savanna does not expect
to exceed its previously announced capital commitment. Savanna
continually monitors industry activity levels and aligns its
discretionary maintenance capital with near-term activity
expectations. Based on Q4 2013 activity levels, Savanna does not
expect maintenance capital expenditures to be as high as originally
anticipated. In addition, Savanna expects some of the final build and
rig up costs of the two workover rigs above to move into 2014.
Lastly, based on delays in the award of rig tenders Savanna has
participated in, the expected capital spend on certain long-lead rig
components has also been deferred into 2014. 
Cautionary Statement Regarding Forward-Looking Information and
Statements 
Certain statements and information contained in this press release
may constitute forward-looking information within the meaning of
applicable Canadian securities legislation and "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995. The use of any of the words
"expect", "anticipate", "continue", "estimate", "objective",
"ongoing", "may", "will", "project", "should", "believe", "plans",
"intends", "might" and similar expressions are intended to identify
forward-looking information or statements. In particular, but without
limiting the foregoing, this press release contains forward-looking
information and statements pertaining to the following: the strategic
focus for 2014, the pursuing of contracts in respect of speculative
deep triple drilling rig constructions, the management of costs in
respect of the build and commissioning of triple drilling rigs and
Australia workover rigs; the timing of commencement of operations of
the Company's fifth drilling rig in Australia, the continued
maintenance of existing wells in North Dakota and the increase of
workover activity in the area going forward; the management of costs
and sale of redundant field locations related to expansion and
consolidation of field locations; and the sustainability of the
Company's current monthly dividend in the future.  
These statements are based on certain assumptions and analysis made
by Savanna in light of its experience as well as other factors it
believes are appropriate in the circumstances including, without
limitation: the status of current negotiations with its customers,
the progress of Savanna's current capital projects and current
customer advice on deployment for specific customer programs.
However, whether actual results or events will conform to Savanna's
expectations and predictions is subject to a number of known and
unknown risks and uncertainties which could cause actual results and
events to differ materially from Savanna's expectations including,
without limitation: fluctuations in the price and demand for oil and
natural gas; fluctuations in the level of oil and natural gas
exploration and development activities; fluctuations in the demand
for well servicing and contract drilling; the effects of weather
conditions on operations and facilities; the existence of competitive
operating risks inherent in well servicing and contract drilling;
general economic, market or business conditions; changes in laws or
regulations, including taxation, environmental and currency
regulations; the lack of availability of qualified personnel or
management; the other risk factors set forth under the heading "Risks
and Uncertainties" in Savanna's Annual Report and under the heading
"Risk Factors" in Savanna's Annual Information Form; and other
unforeseen conditions.   
In addition, the amount of future cash dividends, if any, will be
subject to the discretion of the Board of Directors and may vary
depending on a variety of factors, including fluctuations in
operating costs and earnings, working capital and capital expenditure
requirements, debt service requirements, foreign exchange rates, the
satisfaction of solvency tests imposed by the Business Corporations
Act (Alberta) for the declaration and payment of dividends and other
conditions existing from time to time.  
All of the forward-looking information and statements made in this
press release are qualified by this cautionary statement and there
can be no assurance that the actual results or events anticipated by
Savanna will be realized or, even if substantially realized, that
they will have the expected effects on Savanna or its business or
operations. Except as may be required by law, Savanna assumes no
obligation to update publicly any such forward looking information
and statements, whether as a result of new information, future
events, or otherwise.  
Included in this press release is an estimate of Savanna's 2014
capital expenditures. To the extent such estimate constitutes future
oriented financial information or a financial outlook (as defined by
applicable securities legislation), such future oriented financial
information or financial outlook was approved by management on
November 21, 2013 and is included herein to provide readers with an
understanding of the Company's anticipated capital expenditures for
2014. Readers are cautioned that the information may not be
appropriate for other purposes. 
Savanna is a Canadian-based drilling and oilfield services provider
with operations in Canada, the United States and Australia, focused
on providing fit for purpose equipment and technologies.
Contacts:
Savanna Energy Services Corp.
Ken Mullen
President and Chief Executive Officer
(403) 503-9990 
Savanna Energy Services Corp.
Darcy Draudson
EVP Finance and Chief Financial Officer
(403) 503-9990
www.savannaenergy.com