Pure Energy Services Ltd.
TSX : PSV

Pure Energy Services Ltd.

October 12, 2007 18:16 ET

Pure Energy Announces Letter of Understanding for Revised Sand Supply Agreement

CALGARY, ALBERTA--(Marketwire - Oct. 12, 2007) - Pure Energy Services Ltd. ("Pure Energy") (TSX:PSV) announced today that it has been advised of certain ownership and operational changes to Legacy Resources Company LLC ("Legacy"). Pure Energy has been advised that letters of intent have been entered into between a third party purchaser (the "Purchaser") and Legacy's current ownership group for the acquisition of Legacy.

Pure Energy's wholly-owned subsidiary, Pure Energy Services (USA), Inc. ("Pure USA") has previously negotiated a sand supply agreement with Legacy to supply 20/40 proppant ("Fracturing Sand") for use in Pure USA's fracturing operations in the U.S. Rocky Mountain region. In addition to the letters of intent with the Legacy owners, the Purchaser has entered into a letter of understanding (the "LOU") with Pure USA that revises some of the terms of the sand supply agreement.

The Purchaser is a private equity firm with extensive holdings in real estate developments and associated businesses in the United States. The Purchaser currently owns and operates mining operations in the United States and has personnel experienced in aggregates and sand mining operations. The Purchaser is currently completing its due diligence and finalizing the purchase and sale agreements in order to complete the transaction. It is anticipated that the transaction will close on or before November 10, 2007.

Pure Energy has been advised that under the terms of the proposed transaction, the Purchaser will, in addition to acquiring the entire equity interest in Legacy, commit sufficient funds to Legacy for the reconstruction of Legacy's facilities which is required to address the design and processing issues currently hindering the full production of 20/40 sand.

Pure Energy has been advised that the Purchaser has contracted with a third party engineering consulting firm which specializes in mining operations to manage the redesign and reconstruction of Legacy's operations. Pure Energy has also been advised that the consulting firm has developed a redesign of Legacy's operations, which would allow for Legacy's operations to operate economically and efficiently. Pure Energy understands that the third party engineering consulting firm will be providing performance guarantees for the completion of the redesign and reconstruction of the facilities.

Under the terms of the LOU, Pure USA will be repaid $5.15175 million (USD), representing the outstanding balance of its loan to Legacy on the closing of the acquisition of Legacy by the Purchaser. Under the terms of Pure USA's sand supply agreement, as revised by the terms of the LOU, Pure USA will receive sufficient quantities of fracturing sand to meet its current anticipated fracturing sand requirements for the term of the agreement.

The LOU also commits the Purchaser and Legacy to deliver certain volumes of fracturing sand to Pure USA before and during the reconstruction process.

Pure Energy is an oilfield services company that provides completion and drilling related services to oil and gas exploration and development entities in the Western Canadian Sedimentary Basin ("WCSB") and, through Pure USA, in the U.S. Rocky Mountain region. Pure Energy currently provides logging and perforating, production testing, multiline, drilling, drilling rental and pressure transient analysis services to customers in the WCSB, and also provides production testing, logging and perforating, and fracturing services to customers in the Rocky Mountain region.

Certain statements in this press release, including expectations regarding the actions of the New Manager and design changes to the Facility, may constitute "forward-looking information" which involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Pure Energy, the Facility, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. When used in this press release, such information uses such words as "may", "would", "could", "will", "intend", "expect", "believe", "plan", "anticipate", "estimate" and other similar terminology. This information reflects Pure Energy's current expectations regarding future events and operating performance and speaks only as of the date of this press release. Forward-looking information involves significant risks and uncertainties, should not be read as a guarantee of future performance or results, and will not necessarily be an accurate indication of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, including, but not limited to, the factors discussed below. Although the forward-looking information contained in this press release is based upon what management of Pure Energy believes are reasonable assumptions, Pure Energy cannot assure investors that actual results will be consistent with this forward-looking information. This forward-looking information is provided as of the date of this press release, and, subject to applicable securities laws, Pure Energy assumes no obligation to update or revise such information to reflect new events or circumstances.

Contact Information

  • Pure Energy Services Ltd.
    Kevin Delaney
    President and CEO
    (403) 262-4000
    (403) 262-4005 (FAX)
    Email: kdelaney@pure-energy.ca
    or
    Pure Energy Services Ltd.
    Michael Baldwin
    Chief Financial Officer
    (403) 262-4000
    (403) 262-4005 (FAX)
    Email: mbaldwin@pure-energy.ca
    or
    Pure Energy Services Ltd.
    #300, 1010 - 1st Street S.W.
    Calgary, Alberta T2R 1K4
    Website: www.pure-energy.ca