Savanna Energy Services Corp. Outlines 2015 Capital Program
In the context of the current commodity market downturn, and its anticipated negative impact on oilfield services in 2015, Savanna Energy Services Corp. (“Savanna” or the “Company”) is continuing to monitor its 2015 capital program. Savanna has established an initial capital budget for 2015 as follows:
(Millions of Canadian Dollars)
|Estimated maintenance capital for 2015
|2015 estimated capital costs re: Australia Drilling Rig Contract
Estimated maintenance capital for 2015 includes costs to complete construction of the Company’s new drilling and workover facility in Leduc, Alberta that is currently under construction. These costs are budgeted to be almost entirely offset by agreements in principle for the sale of field facilities that will become redundant upon completion of the new facility. The Company is currently evaluating several other non-operational or non-core asset dispositions to further mitigate the net cash capital outflows in 2015 as well. Although these remaining potential dispositions may or may not be completed, Savanna remains keenly focused on closely managing capital program outlays within available cashflow for 2015.
The previously announced, contracted, ultra-heavy AC double rig, and three contracted VELOX AC triple rigs, all targeted for initial field operations in Q1, 2015, remain on track, and on budget. Additionally, the five workover rigs and three flushby units previously announced for Australia will be field-ready in Q1, 2015 as well. All of these rigs are backed by multi-year take-or-pay contracts. These growth initiatives from 2014 should help cushion the overall market activity and price declines anticipated for 2015. Savanna estimates the capital required to complete 2014 growth initiatives will be $25 million during 2015.
While Savanna believes it has outlined a very conservative and disciplined capital program for 2015, the Company does retain capacity for further adjustments to maintenance capital expenditures in the face of lower than expected activity during the year. Savanna will continue to update the market regarding capital program adjustments as greater clarity regarding customer activity, and actual operating levels, become available.
Savanna is a leading North American and Australian contract drilling and oilfield services company providing a broad range of drilling, well servicing and related services with a focus on fit for purpose technologies and industry-leading aboriginal relationships.
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 expectation of when the ultra heavy double and the three VELOX triple drilling rigs are expected to be working in the field in North America and the delivery of three flushby and five workover rigs for Australia.
These statements are based on certain assumptions and analyses made by Savanna in light of its experience, as well as other factors it believes are appropriate in the circumstances including, without limitation: the progress of Savanna’s current and proposed 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.
Included herein is an estimate of cash capital expenditures for 2015. To the extent such estimates constitute future oriented financial information or a financial outlook, such future oriented financial information or financial outlook is included herein to provide readers with an understanding of the Company’s anticipated capital expenditures for 2015. Readers are cautioned that the information may not be appropriate for other purposes.
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.
For further information contact:
Savanna Energy Services Corp.
President and CEO
EVP, Finance and CFO
Tel: (403) 503-9990