Western Lakota Energy Services Inc.

Western Lakota Energy Services Inc.

May 06, 2005 12:07 ET

Western Lakota Announces Closing of Acquisition of Six Drilling Rigs and Issue of Common Shares to Holders of Subscription Receipts

CALGARY, ALBERTA--(CCNMatthews - May 6, 2005) - Western Lakota Energy Services Inc. (WLE - TSX
Venture), is pleased to announce the closing of the previously announced acquisition of the drilling
assets of Hemsing Drilling Ltd. ("Hemsing"), including six telescoping double drilling rigs and all
related spare equipment. These new generation rigs, which are currently operating throughout
Alberta, range in depth capacity from 2,500 to 3,200 metres. The addition of these six drilling rigs
brings Western Lakota's current fleet to 22 rigs (14.5 net rigs).

Estimated revenue of the six rigs for the year ended April 30, 2005 is approximately $29.0 million
and the estimated earnings before interest, tax, depreciation and amortization (EBITDA) is calculated
at approximately $12.0 million. During this twelve-month period the utilization of these rigs was 76%
compared to 53% achieved by industry. All of the rigs are currently contracted and Western Lakota is
prepared to fulfill these contracts. Substantially all of the Hemsing field employees have agreed to
employment terms with Western Lakota.

The purchase price of the acquisition, which was equivalent to 3.6 times estimated forward EBITDA,
was paid in cash from the following sources:

- $23.8 million net proceeds from a private placement of subscription receipts which closed on
May 5, 2005;
- $15.5 million from the GE Canada Commercial Finance credit facility; and
- the remainder from cash generated from operations.

Upon completion of the acquisition the transfer register for the subscription receipts will close
effective May 6, 2005 and common shares of Western Lakota will be issued to holders of subscription
receipts for no additional consideration, and without any further action on the part of the holder,
by May 13, 2005.

In conjunction with the closing of this transaction, Western Lakota and GE Canada Commercial Finance
revised the previously announced $30 million credit facility to $39.5 million, with $15.5 million
allocated to the purchase of the six Hemsing rigs and $24 million to be used to finance the
previously announced construction of eight new drilling rigs.

One of Canada's fastest-growing drilling contractors, Western Lakota currently operates 22 rigs,
including the six rigs purchased from Hemsing, and plans to build its fleet to 30 rigs by the end
of 2005, increasing the Company's net ownership to 22.5 rigs. Western Lakota continues to provide
one of the newest fleets of safe and efficient drilling rigs in Canada while delivering strong
results for shareholders, customers and partners.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Western Lakota Energy Services Inc.
    Elson McDougald
    President and C.E.O.
    (403) 214-5953
    Email: elson@westernlakota.com
    Website: www.westernlakota.com
    Western Lakota Energy Services Inc.
    1050, 400 - 5th Avenue SW,
    Calgary, Alberta T2P 0L6
    (403) 214-5970
    (403) 214-5955 (FAX)