CanElson Drilling Inc.
TSX : CDI

CanElson Drilling Inc.

May 23, 2013 09:43 ET

CanElson Drilling Inc. Announces $25 Million Bought Deal Financing

CALGARY, ALBERTA--(Marketwired - May 23, 2013) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA

CanElson Drilling Inc. ("CanElson" or the "Company") (TSX:CDI) today announced that it has entered into an agreement with a syndicate of Underwriters pursuant to which the Underwriters have agreed to purchase on a bought deal basis 5.2 million common shares at a price of $4.85 per Common Share (the "Issue Price") for aggregate gross proceeds of approximately $25.2 million (the "Offering").

"The proceeds of the Offering will provide CanElson with significant flexibility to respond in an efficient manner to customer requests as well as to capitalize on potential acquisition opportunities while retaining a prudent capital structure," said Randy Hawkings, President and Chief Executive Officer. "We expect to achieve returns on the new capital that are consistent with our Canadian industry-leading returns on existing capital."

Proceeds will be employed for previously announced capital program, for anticipated incremental capital investment opportunities, and for general corporate purposes. Incremental opportunities are based on inquiries from potentially new and existing customers and involve demand for rig additions beyond the current capital expenditure budget.

Such new opportunities could involve regional expansion in west Texas and in the deep basin of Alberta and B.C., and incremental investment into Mexico. In West Texas and Mexico, producers are primarily focused on developing oil reserves. In the deep basin of Alberta and BC producers are primarily focused on developing natural gas reserves.

Details of the Financing

The Offering is being co-led by FirstEnergy Capital Corp. and Peters & Co. Limited and includes AltaCorp Capital Inc., Paradigm Capital Inc. and National Bank Financial Inc. (the "Underwriters").

CanElson has granted the Underwriters an option (the "Over-Allotment Option") to purchase up to an additional 0.8 million Common Shares at the Issue Price to cover over-allotments, if any, for additional gross proceeds of approximately $3.8 million. The Over-Allotment Option is exercisable in whole or in part at any time until 30 days after the closing of the Offering. Prior to this Offering, CanElson had approximately 76,378,032 common shares outstanding.

Pursuant to the Offering, the Common Shares will be offered in all provinces of Canada, except Quebec, by way of a short form prospectus and by way of private placement in the United States pursuant to exemptions from the registration requirements pursuant to Rule 144A and/or Regulation D of the United States Securities Act of 1933.

Closing of the Offering is expected to occur on or about June 13, 2013. The Financing is subject to certain customary conditions including, but not limited to, the receipt of all necessary approvals including the approval of the TSX.

Details of the Current Capital Program

As previously announced on May 9, 2013, CanElson's drilling services remaining 2013 capital program is anticipated to be $56.2 million (total 2013: $82.1 million), before taking into account incremental opportunities. Major components of the remaining capital program include:

(1) Approximately $31.5 million for the construction and completion of three tele-doubles with top drives, or approximately $10.5 million per tele-double (relating to rigs #37, #38, and #39),
(2) Approximately $9.9 million of long lead items for one tele-double (rig #44) and other growth capital; and
(3) Approximately $14.8 million for spares, shop upgrades and maintenance capital.

About CanElson

The primary business of CanElson is operating land-based contract drilling rigs in Canada, the US and Mexico for oil and natural gas exploration and development companies. The Company also operates a compressed natural and raw gas transportation related services business through our wholly owned subsidiary, CanGas Solutions Inc.

More information on CanElson can be found on its website: www.canelsondrilling.com.

Forward-Looking Information

This press release contains certain statements or disclosures relating to CanElson that are based on the expectations of CanElson as well as assumptions made by and information currently available to CanElson which may constitute forward-looking information under applicable securities laws. In particular, this press release contains forward-looking information related to: our expectation that rates of return will be consistent with our Canadian industry-leading rates of return; CanElson's expectation to further expand its capital investment activities beyond the previously announced 2013 capital program to service incremental demand; the closing date of the Offering; the anticipated use of net proceeds; and CanElson's intentions to construct drilling rigs and the cost thereof. Such forward looking information involves material assumptions and known and unknown risks and uncertainties, certain of which are beyond CanElson's control. Many factors could cause the performance or achievement by CanElson to be materially different from any future results, performance or achievements that may be expressed or implied by such forward looking information. CanElson's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website at www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. CanElson disclaims any intention or obligation to publicly update or revise any forward looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction. This news release is not an offer for sale within the United States of any Common Shares or other securities of CanElson. Any offering of securities of CanElson will not be registered under the U.S. Securities Act and may not be offered or sold in the United States absent registration under U.S. securities laws or an applicable exemption from registration under such laws. These securities may not be sold in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state.

Contact Information

  • CanElson Drilling Inc.
    Randy Hawkings
    President and Chief Executive Officer
    403-266-3922

    CanElson Drilling Inc.
    Robert Skilnick
    Chief Financial Officer
    403-266-3922

    CanElson Drilling Inc.
    700, 808 - 4th Avenue SW
    Calgary, Alberta T2P 3E8
    www.canelsondrilling.com