CanElson Drilling Inc.
TSX VENTURE : CDI

CanElson Drilling Inc.

January 31, 2011 07:30 ET

CanElson Drilling Inc. Closes Eagle Drilling Services Ltd. Acquisition, and Expands Bank Credit Facility

CALGARY, ALBERTA--(Marketwire - Jan. 31, 2011) - CanElson Drilling Inc. ("CanElson" or the "Corporation") (TSX VENTURE:CDI) is pleased to announce that it has closed the previously announced acquisition of Eagle Drilling Services Ltd. ("Eagle"), a private corporation which owns and operates drilling rigs in the Bakken area of south east Saskatchewan and south west Manitoba (the "Acquisition").

CanElson has taken up and paid for 9,323 Eagle shares that were tendered to CanElson's Offer to Purchase dated January 13, 2011 (the "CanElson Offer") representing 100% of Eagle's outstanding shares. An aggregate of 9,879,501 common shares of CanElson were issued and $19,700,000 of cash paid to the shareholders of Eagle pursuant to the CanElson Offer. CanElson now has 60,181,335 common shares issued and outstanding and approximately $46 million of gross bank debt after completion of the Acquisition.

President Randy Hawkings states, "We are pleased to add Eagle's top quality crews, operations personnel and modern drilling rig fleet to our group and they will form a key component of CanElson's future growth plans for expansion in Saskatchewan, Manitoba and North Dakota. Eagle's rig fleet aligns with CanElson's existing western Canadian platform drilling rig fleet focused on the service to resource play operators requiring drilling equipment with the ability to drill deep horizontal wells."

With the addition of the 8 Eagle rigs to CanElson's existing Canadian fleet, 100% of CanElson's owned drilling rig fleet is ultra-heavy, small footprint telescopic double drilling rigs rated greater than 3500 meters with an average age of less than 3 years designed for horizontal and resource play drilling. By the end of the first quarter, CanElson will operate a combined rig fleet of 27 (net owned 23) rigs.

EXPANSION OF CREDIT FACILITY

With the closing of the Acquisition, CanElson is also pleased to announce that it has increased its available credit facilities from $40.0 million to approximately $73.4 million. The credit facilities consist of: a $5 million operating facility; due on demand; a $13.4 million 3 year term leasing arrangement; and a $55 million committed 364 day extendible revolving credit facility. The $55 million committed facility, which unless otherwise extended on June 30, 2011, the outstanding balance shall be payable in equal repayments of 1/36th of the outstanding balance monthly for two years, with the remaining outstanding balance payable in full at maturity.

APPOINTMENT OF OFFICER

With the closing of the Acquisition, CanElson is also pleased to announce the appointment of Derrick Big Eagle, a founder of Eagle, as Vice President, Business Development. Mr. Big Eagle has over 25 years of drilling experience in south east Saskatchewan and was instrumental in growing Eagle over the last five years. Mr. Big Eagle has been granted 150,000 stock options at an exercise price of $4.76 per share. The options will vest as to one-third one year from the date of grant, one-third two years from the date of grant and one-third three years from the date of grant with each respective one-third expiring on the date that the subsequent one-third vests such that the final one-third of the options expires four years from the date of grant.

The total number of options outstanding is 3,100,266 with a weighted average exercise price of approximately $3.45 per share.

ABOUT CANELSON

CanElson is an Alberta, Canada corporation that is currently engaged in the manufacture, sale, acquisition and operation of drilling and service rigs for the oil and gas industry. The Corporation currently operates in the western Canadian Sedimentary Basin, the Permian Basin of west Texas and the Ebano-Panuco-Cacalilao fields of Mexico.

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. All such statements and disclosures, other than those of historical fact, which address activities, events, outcomes, results or developments that CanElson anticipates or expects may, or will occur in the future (in whole or in part) should be considered forward-looking information. In some cases, forward-looking information can be identified by terms such as "forecast", "future", "may", "will", "expect", "anticipate", "believe", "potential", "enable", "plan", "continue", "contemplate", "pro-forma", or other comparable terminology.

In particular, this press release makes reference to the fact that the Eagle acquisition will form a key component of CanElson's future growth plans for expansion in Saskatchewan, Manitoba and North Dakota and the number of drilling rigs CanElson will operate by area at the end of Q1 2011, of which statements are forward looking information. CanElson's actual achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking information will transpire or occur, or occur on such dates, or if any of them do so, what benefits CanElson will derive therefrom. Such forward looking information involves material assumptions and known and unknown risks and uncertainties, certain of which are beyond CanElson's control. Such assumptions, risks and uncertainties include, without limitation, those associated with, loss of markets and or the lack of qualified personnel.

The forward-looking information is made as at the date of this press release and CanElson does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • CanElson Drilling Inc.
    Randy Hawkings
    President and CEO
    (403) 266-3922
    or
    CanElson Drilling Inc.
    Robert Skilnick
    Chief Financial Officer
    (403) 266-3922
    or
    CanElson Drilling Inc.
    515, 808 - 4th Avenue SW
    Calgary, Alberta T2P 3E8