Canadian Sub-Surface Energy Services Corp.

Canadian Sub-Surface Energy Services Corp.

February 28, 2007 09:00 ET

Canadian Sub-Surface Energy Services Announces Approved Capex Budget for 2007

CALGARY, ALBERTA--(CCNMatthews - Feb. 28, 2007) - The Board of Directors of Canadian Sub-Surface Energy Services Corp. (TSX:CSE) ("CanSub" or the "Company") have approved a capital expenditure budget for 2007 of $10.1 million, which together with approximately $4.5 million of approved capital expenditures carried over from 2006, will aggregate to a total capital program of approximately $14.6 million for 2007. The $10.1 million amount for 2007 is comprised of 5 wireline units, 3 swabbing units, costs to refurbish some of CanSub's older equipment, infrastructure for the Company's new facilities in northern Alberta and auxiliary equipment. A portion of the auxiliary equipment will be used to replace equipment currently being rented from third parties. The aggregate 2007 capital budget will be funded by cash flow and credit facilities available to the Company.

Given the current uncertainty in industry conditions and expected industry activity for 2007, CanSub management believes it is prudent to proceed with a conservative capital expenditure program at this time. Management will continue to monitor industry activity throughout 2007 and adjust the capital budget accordingly.

The $4.5 million of carried over capital expenditures from 2006 relates primarily to 7 wireline units that were budgeted to be delivered by year end 2006, which, due to manufacturing delays beyond the Company's control, were delayed to 2007. The following schedule provides a summary of CanSub's current equipment fleet:

# of Wireline # of Swabbing # of Production
Units Units Testing Packages
Operating fleet at
December 31, 2006 35 8 61
Carry over units from
2006 put into operation
between January 1 to
February 28, 2007 5 - -
Operating Fleet at
February 28, 2007 40 8 61
Carry over units
from 2006 scheduled for
delivery during
remainder of 2007 2 - -
Budgeted 2007 units
scheduled for delivery
during remainder of 2007 5 3 -
Planned fleet size at
December 31, 2007 47 11 61

The Company's Board of Directors have also approved the re-pricing of approximately 400,000 stock options that have been issued primarily to CanSub's field personnel. Most of these employees are from the 4 businesses acquired during May 2006. These options, which had original exercise prices between $4.49 and $7.80, were all re-priced to $4.20, which was the price of the Company's shares issued as part of the go-public transaction in February of 2006. In the view of CanSub's management, personnel at the field level are an integral part of the Company and the reduced exercise price places a greater value on their options. The re-pricing did not include any of the stock options held by CanSub senior management, officers, directors or any other insiders of the Company. The Company currently has approximately 1.6 million stock options outstanding, substantially all of which will have an exercise price of $4.20 after giving effect to the re-pricing.

CanSub is a Calgary-based oilfield services company operating out of 12 field locations in the Western Canadian Sedimentary Basin. The Company provides cased-hole wireline, production testing, well optimization and swabbing services to junior, intermediate and senior oil and gas exploration and production companies.

This news release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect the views of Canadian Sub-Surface Energy Services Corp. with respect to future events and are subject to such risks and uncertainties. Many factors could cause our actual results to differ materially from the statements made including those factors detailed from time to time in filings made by the Company with Canadian securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated or expected. Canadian Sub-Surface Energy Services Corp. does not intend and does not assume any obligation to update these forward-looking statements.

Contact Information

  • Canadian Sub-Surface Energy Services Corp.
    Brad Gabel
    President & CEO
    (403) 262-3247
    Canadian Sub-Surface Energy Services Corp.
    Chris Martin
    Vice President, Finance & CFO
    (403) 262-3247