Pure Energy Services Ltd.
TSX : PSV

Pure Energy Services Ltd.

June 17, 2010 19:04 ET

Pure Energy Services Ltd. Announces New USA Credit Facilities and Corporate Update

CALGARY, ALBERTA--(Marketwire - June 17, 2010) - Pure Energy Services Ltd. ("Pure" or the "Company") (TSX:PSV) announced today that the Company's wholly- owned USA subsidiary, Pure Energy Services (USA), Inc. ("Pure USA") has obtained aggregate credit facilities of USD $15 million from San Francisco-based Bank of the West. The facilities are comprised of the following: a) a USD $12 million term loan repayable over 5 years which is secured by equipment owned by Pure USA; b) a USD $2.5 million operating loan secured primarily by accounts receivable and inventory of Pure USA; and c) a USD $0.5 million credit card facility.

Pure USA will utilize the term loan funding to acquire equipment that is currently being leased from the Company. The USD $12 million in proceeds received by Pure will be used to immediately reduce its outstanding debt with the Company's Canadian lender, resulting in no change in Pure's total debt position. As a result of this transaction, the Canadian lender has reduced the aggregate available credit facilities from CDN $65 million to $50 million – a reduction which was previously scheduled to occur by March 31, 2011. Going forward, Pure will continue to have approximately $65 million in total available credit facilities but these will now be split as to CDN $50 million from the Canadian lender and USD $15 million from Bank of the West.

Pure USA's business continues to see robust activity levels for wireline and testing services in certain of its core operating areas, particularly in North Dakota and Pennsylvania where drilling rig counts continue to increase. Activity levels in the Colorado and Wyoming regions have remained steady. Pure USA's equipment fleet has significantly expanded during 2010 in response to increased demand for services. During April, 10 wireline units were acquired from a competitor (9 of which will be operating in the USA), increasing the USA wireline fleet to 17 units. The well testing fleet is now comprised of 40 units, with 4 units being added since January from previously announced capital expenditures and transfers from the Canadian fleet.

In western Canada, activity levels have significantly improved over the prior year as evidenced by the drilling rig count which is currently running at approximately 280 rigs in operation as compared to approximately 150 rigs running at this time last year. Although Pure's Canadian operations are just now ramping up after the seasonal spring break-up and current wet weather, the Company's management is encouraged by the surge in customer demand for wireline, well testing and drilling services. The increased activity reflects, to a large extent, the significant amount of work being done in many of the emerging resource plays, where technological advances in multi stage fracturing and horizontal drilling have significantly enhanced the recovery of oil and natural gas. Pure is well positioned to handle this work given that a significant portion of the Company's wireline and well testing fleet is capable of operating in the high pressure environments typically characteristic of these resource plays.

Pure also announced today that a resolution has been reached on litigation that was commenced in July 2008 against Canadian Sub-Surface Energy Services Corp. ("CanSub"), in which a claim had been made against CanSub relating to alleged damages resulting from the hiring of certain former employees of the plaintiff. Pure became a party to this litigation as a result of its acquisition of, and subsequent amalgamation with, CanSub. The parties to the litigation have agreed not to publicly disclose the terms of the resolution; such terms having no impact on the financial position of Pure.

Pure 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 and, through its wholly-owned subsidiary Pure USA, in the Rocky Mountain region, North Dakota and the Appalachian Basin of the USA. Further information regarding Pure and its operations, including its public disclosure documents and corporate presentation, is available on its website at www.pure-energy.ca.

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, 2009 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 North Dakota and US Rocky Mountain regions 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 the USA; increases in demand for, and pricing of, the Company's services in its operating areas and in Canada and the USA generally; 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; expansion of services and operations in new and existing markets in Canada and the USA; the focus by the Company's customers on emerging resource plays in its areas of operations; the ability of the Company to meet and address its customers' technical and operational requirements for services performed with respect to the emerging resource plays; and the limits available under the Company's existing available credit facilities.

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
    kdelaney@pure-energy.ca
    or
    Pure Energy Services Ltd.
    Chris Martin
    Chief Financial Officer
    (403) 262-4000
    cmartin@pure-energy.ca
    or
    Pure Energy Services Ltd.
    Address: 10th Floor, 333 - 11th Avenue S.W.
    Calgary, AB T2R 1L9
    (403) 262-4000
    (403) 262-4005 (FAX)