Pure Energy Services Ltd.

Pure Energy Services Ltd.

January 14, 2010 08:30 ET

Pure Energy Services Ltd. Announces 2010 Capital Expenditure Budget and Operational Update

CALGARY, ALBERTA--(Marketwire - Jan. 14, 2010) - Pure Energy Services Ltd. ("Pure" or the "Company") (TSX:PSV) announced today that its Board of Directors has approved an initial capital expenditure budget for 2010 of approximately $6 million. The budgeted expenditures, which are spread amongst the Company's three operating segments (Canadian Completions Services, USA Completions Services and Drilling Services), will be evaluated throughout the year, and may be adjusted to match industry activity levels.

Pure continues to transition its Completions Services focus in both western Canada and the USA on deeper natural gas and high pressure oil and natural gas plays. In western Canada, the Company has one of the largest fleets of high pressure Well Testing and Wireline equipment available to service the higher activity areas of northeastern British Columbia, northern Alberta and southeast Saskatchewan, as well as the emerging Pembina/Cardium play in west Central Alberta. Pure's Canadian Well Testing fleet of 79 units includes 29 units capable of working in high pressure environments, while 25 of Pure's 71 Wireline units are capable of performing high pressure work. During the second half of 2009, the Company continued to change the mix of its Canadian equipment fleet by selling three low pressure Well Testing units and nine older Wireline units and utilizing these proceeds to acquire additional high pressure equipment.

In the USA, drilling rig counts have increased significantly over the past six months in two of Pure's four operating hubs - North Dakota (Bakken play) and Pennsylvania (Marcellus play in the Appalachian Basin). Although activity levels currently remain flat in the other two USA operating hubs of Colorado and Wyoming (which service the Rocky Mountain region), an established client base in these areas has kept equipment utilization rates at consistent levels. During 2010, the Company plans on transferring five additional Well Testing units to the USA from Canada, most of which are slated to go to North Dakota and Pennsylvania. After these transfers, and giving effect to the buildout of two new Well Testing units, Pure plans to have 46 Testing units working in the USA by the end of 2010.

During 2010, Pure also plans to expand its Wireline presence in the USA by leveraging off of the Company's successful Well Testing business. The Company plans on establishing a new Wireline operating hub in North Dakota (two units by the end of Q1 2010) which will primarily perform logging and perforating services. An additional two Wireline units are also planned to be transferred from Canada to existing USA operating locations, bringing the total USA Wireline fleet to 10 units by year end 2010.

The Company's Drilling division (operating exclusively in western Canada) has experienced better than expected utilization rates for the end of 2009 and during the initial part of January as a result of increased oil drilling activity. In the initial two weeks of January, eight of the Company's ten drilling rigs have been engaged in oil drilling projects in central and southern Alberta.

Although Pure is cautiously optimistic about 2010 given the winter activity levels experienced in western Canada during late 2009 and into early 2010, pressure still remains on pricing for services and related margins. However, as a result of the significant reduction in equipment capacity and crews in western Canada over the past year, industry experts are anticipating an improvement in the supply/demand balance for equipment and resulting improved pricing later in 2010. In the USA, Pure continues to move equipment to the higher activity regions with the objective of optimizing equipment utilization rates to meet customer demand.

Forward-looking Statements

This document contains certain forward-looking statements and other information that are based on the Company's current expectations, estimates, projections and assumptions made by management in light of its experience and perception of historical trends, current conditions, anticipated future developments and other factors believed by management to be relevant.

All statements and other information contained in this document that address expectations or projections about the future are future-looking statements. Some of the forward-looking statements may be identified by words such as "may", "would", "could", "will", "intends", "expects", "believes", "plans", "anticipates", "estimates", "continues", "maintains", "projects", "indicates", "outlook", "proposed", "objective" and other similar expressions. These statements speak only as of the date of this document. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications 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 statements, including, but not limited to, the factors discussed below and under "Risks and uncertainties" discussed in the Company's MD&A of the audited December 31, 2008 financial statements and the most recent Annual Information Form, Information Circular, quarterly reports, material change reports and news releases. The Company cannot assure investors that actual results will be consistent with the forward-looking statements and readers are cautioned not to place undue reliance on them. The forward-looking statements are provided as of the date of this document and, except as required pursuant to applicable securities laws and regulations, the Company assumes no obligation to update or revise such statements to reflect new events or circumstances.

The forward-looking statements and information contained in this document reflect several major factors, expectations and assumptions of the Company, including without limitation, that the Company will continue to conduct its operations in a manner substantially consistent with past operations; the general continuance of current or, if applicable, assumed industry conditions; the continuance of existing (and in certain circumstances, the implementation of proposed) taxation, royalty and regulatory regimes; certain commodity prices and other cost assumptions; certain conditions regarding natural gas storage in North America; and the continued availability of adequate debt and/or equity financing and cash flow from the Company's operations to fund its capital and operating requirements as needed and the extent of its liabilities. Many of these factors, expectations and assumptions are based on management's knowledge and experience in the industry and on public disclosure of industry participants and analysts relating to anticipated exploration and development programs of oil and natural gas producers, the effect of changes to regulatory, taxation and royalty regimes, expected active rig counts and industry equipment utilization in the WCSB, the US Rocky Mountain region and the Appalachian Basin (Pennsylvania) and other matters. The Company believes that the material factors, expectations and assumptions reflected in the forward-looking statements and information are reasonable; however, no assurances can be given that these factors, expectations and assumptions will prove to be correct.

In particular, this document contains forward-looking information pertaining to the following: the number of Well Testing units and Wireline units comprising the Company's fleets in Canada and the USA and the location of those units in Canada and the USA; increases in demand for, and pricing of, the Company's services; capital additions to the Company's equipment fleet; ability to move equipment within operating locations; supply and demand for oilfield services and industry activity levels; oil and natural gas prices; oil and natural gas drilling activity; expectations regarding market prices and costs; and expansion of services and operations in new and existing markets in Canada and the USA.

The Company's actual results could differ materially from those anticipated in such forward-looking statements as a result of the risk factors set forth below and elsewhere in this document: general economic conditions in Canada and the USA; changes in the level of capital expenditures made by oil and natural gas producers and the resultant effect on demand for oilfield services during drilling and completion of oil and natural gas wells; volatility in market prices for oil and natural gas and the effect of this volatility on the demand for oilfield services generally; risks inherent in the Company's ability to generate sufficient cash flow from operations to meet its current and future obligations; increases in debt service charges; the Company's ability to access external sources of debt and equity capital; changes in legislation and the regulatory environment, including uncertainties with respect to implementing binding targets for reductions of emissions; uncertainties in weather and temperature affecting the duration of the oilfield service periods and the activities that can be completed; competition; sourcing, pricing and availability of raw materials, consumables, component parts, equipment, suppliers, facilities, and skilled management, technical and field personnel; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; ability to integrate technological advances and match advances of competition; credit risk to which the Company is exposed in the conduct of its business; and changes to the royalty regimes applicable to entities operating in the WCSB, the Rocky Mountain region or the Appalachian Basin (Pennsylvania).

Contact Information

  • Pure Energy Services Ltd.
    Kevin Delaney
    Chief Executive Officer
    (403) 262-4000
    (403) 262-4005 (FAX)
    Pure Energy Services Ltd.
    Chris Martin
    Chief Financial Officer
    (403) 262-4000
    (403) 262-4005 (FAX)
    Pure Energy Services Ltd.
    10th Floor, 333 - 11th Avenue S.W.
    Calgary, AB T2R 1L9