Turnkey E&P Inc.

Turnkey E&P Inc.

October 26, 2009 12:36 ET

Turnkey E&P Inc. Announces Two Year Rig Rental Contract Subject to Bankruptcy Court Approval

HOUSTON, TEXAS--(Marketwire - Oct. 26, 2009) - Turnkey E&P Inc. ("Turnkey") (NEX:TKY.H), today announced that its wholly-owned U.S. subsidiary, Turnkey E & P Corporation, which is currently in Chapter 11 bankruptcy protection, has entered into a two-year contract to rent its four drilling rigs to an established Mexican Oil and Gas drilling and operating company currently under contract with Pemex for the development and operation of certain Mexican oil fields. The lessee will rent the rigs on a bare rental basis at $5,000 per calendar day commencing on the delivery date of each rig. Total gross revenue over the contract term will be approximately $14.6 million. Turnkey's four rigs will be delivered after a pre-mobilization reconditioning program estimated to cost $1.8 million. The lessee will be responsible for all rig operating costs during the term of the lease except for certain defined structural repairs which may be required in the first six months after delivery of each rig. The lessee will deposit a letter of credit to cover estimated repatriation costs prior to taking delivery of the rigs .During the term of the Rig Lease Agreement, Turnkey will have the right to lease back the rigs for $16,000 per day including operating and personnel costs.

The lessee has the option to purchase each rig for a period of one year from delivery date for $7.5 million less a credit for 35% of rental payments made to date.

The contract is subject to the approval of the Bankruptcy Court and Turnkey's secured and unsecured creditors. Cash flow from the contract, net of administration costs, will be applied to reducing Turnkey's secured and unsecured obligations.

This release and Turnkey's website referenced in this release contain forward-looking statements including expectations of future production and components of cash flow and earnings. Investors are cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Turnkey. These risks include, but are not limited to; the risks associated with the oil and gas industry, commodity prices and exchange rate changes. Industry related risks could include, but are not limited to; operational risks in exploration, development and production, delays or changes in plans, risks associated to the uncertainty of reserve estimates, health and safety risks including, without limitation, blowouts and spills, and the uncertainty of estimates and projections of production, costs and expenses. The risks outlined above should not be construed as exhaustive. Investors are cautioned not to place undue reliance on any forward-looking information. Turnkey undertakes no obligation to update or revise any forward-looking statements.

Contact Information

  • Turnkey E&P Inc.
    R. M. (Bob) Tessari
    President and Chief Executive Officer
    (281) 248-8822