Pure Energy Services Ltd.

Pure Energy Services Ltd.

August 07, 2009 00:30 ET

Pure Energy Services Ltd. Announces Sale of Fracturing Division

CALGARY, ALBERTA--(Marketwire - Aug. 7, 2009) - Pure Energy Services Ltd. (TSX:PSV) ("Pure") announces that it has entered into a definitive agreement (the "Agreement") to sell its Colorado-based well fracturing division to Calfrac Well Services Ltd. ("Calfrac") for a purchase price of $42.8 million, subject to certain post-closing adjustments (the "Sale Transaction"). The purchase price is comprised of $39.1 million in cash and $3.7 million of debt being assumed by Calfrac.

Mr. Kevin Delaney, the CEO of Pure, noted "Our ability to complete this transaction in a currently depressed market is a testament to the competitive successes, operating capabilities and high quality equipment of our well fracturing division. Pure devoted considerable effort to building this business, and we are proud of what we have achieved. The sale of these assets is aligned with our increased focus on our core wireline and production testing operations for Pure's well completions business services, which was substantiated upon our recent merger with Canadian Sub-Surface Energy Services. The ability to immediately reduce our debt and provide capital resources which can be used to invest in areas which are core to our future growth and provide higher long-term returns were key factors in our decision. We sincerely thank all of the employees of the fracturing division for their contributions, and wish them well in the future as they continue to grow this business with Calfrac."

Closing of the agreement is expected on August 14, 2009. $3.0 million of the purchase price will be held in escrow until approximately August 28, 2009, subject to the final inspection of the equipment by Calfrac for material operating deficiencies.

The proceeds from the sale of the Fracturing Division will be used to reduce corporate indebtedness, which is currently approximately $79.0 million in total debt. Pure will have significantly improved financial flexibility upon the completion of the sale, as it expects to be able to reduce aggregate indebtedness by approximately $39.0 million, net of post-closing adjustments, the satisfaction of contract termination obligations, the sale of inventories, and closing costs. Upon completion of the Sale Transaction, Pure will be released from its sand purchase agreement and its on-going obligations thereunder.

The sale of the well fracturing division will result in an impairment charge of approximately $11.8 million on an after-tax basis, which will be recorded in the June 30, 2009 interim financial statements of Pure.

Peters & Co. Limited acted as financial advisor to Pure in respect the Sale Transaction.

Pure Energy Services Ltd. 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 Energy Services (USA), Inc., in the Rocky Mountain and Pennsylvania regions of the United States.

Cautionary Statement Regarding Forward-looking Statements and Information

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements.

In particular and without limitation, this press release contains forward looking statements and information pertaining to the following: completion of the Sale Transaction and the operations, business strategy, future development and growth opportunities, capital expenditures, prospects and asset base of Pure Energy after the completion of the Sale Transaction; the disposition of assets and reduction of indebtedness using the proceeds thereof. Although Pure Energy and believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Pure Energy can give no assurance that they will prove to be correct.

The forward-looking statements and information contained in this document reflect several major factors, expectations and assumptions of Pure Energy, including without limitation, that after the completion of the Sale Transaction Pure Energy will continue to conduct its operations in a manner substantially consistent with its 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; the availability of adequate debt and/or equity financing and cash flow from operations to fund Pure Energy's capital and operating requirements as needed; and the extent of its liabilities. Many of these factors, expectations and assumptions are based on Pure Energy 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 gas producers, the effect of changes to regulatory, taxation and royalty regimes, expected active rig counts and industry equipment utilization in the Western Canadian Sedimentary Basin (the "WCSB") and the United States Rocky Mountain region and other matters. Pure Energy believe 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.

Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: general economic conditions in Canada and the United States; 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 ability of Pure Energy to generate sufficient cash flow from operations to meet its current and future obligations; increases in debt service charges; the 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 combined company will be exposed in the conduct of its business; and changes to the royalty regimes applicable to entities operating in the WCSB or the United States Rocky Mountain region.

There are risks also inherent in the nature of the proposed combination, including: failure to satisfy the conditions of the Agreement; material operating deficiencies being identified in the Assets resulting in a decrease in the portion of the purchase price held in escrow; and failure to obtain the required regulatory and other third party approvals on a timely basis or at all.

This news release also contains forward-looking statements and information concerning the anticipated completion of the Sale Transaction. Pure Energy have provided these anticipated times in reliance on certain assumptions that they believe are reasonable at this time, including assumptions as to the timing of receipt of the necessary regulatory and third party approvals and the time necessary to satisfy the conditions to the closing of the Sale Transaction. These dates may change for a number of reasons, including the inability to secure necessary regulatory or third party approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the Sale Transaction. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release concerning these times. Readers are cautioned that the foregoing list of factors is not exhaustive.

Additional information on these and other factors that could affect Pure Energy's operations or financial results are included the annual information forms and management's discussion and analysis of Pure Energy which may be accessed through the corporate profile of Pure Energy on the SEDAR website (www.sedar.com). The forward-looking statements and information contained in this press release are made as of the date hereof and Pure Energy undertake no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Contact Information

  • Pure Energy Services Ltd.
    Kevin Delaney
    Chief Executive Officer
    (403) 262-4000
    Pure Energy Services Ltd.
    Brian Peters
    Chief Financial Officer
    (403) 262-4000