Cdn Oilfield Technologies & Solutions Corp.

Cdn Oilfield Technologies & Solutions Corp.

February 01, 2012 09:00 ET

Cdn Oilfield Technologies & Solutions Corp.: Joint Venture Projects Secured

CALGARY, ALBERTA--(Marketwire - Feb. 1, 2012) - Cdn Oilfield Technologies & Solutions Corp. (TSX VENTURE:OTS) -

The corporation is pleased to announce that its Mexican subsidiary ("COTS") has signed a definitive agreement to execute a number of joint venture projects in southern Mexico.

COTS has been appointed project manager under the terms of a joint venture agreement ("JV") with a major Mexican construction company (the "Contractor") under contract to Schlumberger who is in turn operating under a master contract to Pemex to supply pre-infrastructure services, access roads and bridges for a new drilling platform. Under the terms of the agreement with Schlumberger, the Contractor is responsible for the supply of materials, equipment, labor and other related construction services.

The master contract between Schlumberger and Pemex has a remaining budget of approximately USD $47 million and expires in the year 2015. The contract is renewable upon agreement between the parties.

Highlights of the JV:

  1. COTS will be responsible for the management and supervision of all phases of the projects, including financial management;
  1. The JV has received work orders for 4 separate projects totalling $93 million pesos (approx. USD $7 million) in gross revenue. The primary project is known as Terra 114;
  1. The primary project is expected to be completed in approximately 130 days with the remaining 3 projects being executed sooner. Net profits from all 4 projects will be shared on a 50-50 basis between COTS and the Contractor;
  1. COTS has advanced USD $750,000.00 for costs associated with the projects to date with an estimated overall cost of USD $4.0 million dollars to complete the current projects. Remaining funding is currently under review with partial funding coming from receivables in Mexico;
  1. COTS has negotiated direct assignment of proceeds from Schlumberger. All revenues for work completed will be deposited directly to COTS' bank account. Expense and supplier payments will be made under a supervised arrangement between the parties;
  1. Estimates for work completed will be made at the end of each month with payment 30 to 45 days thereafter. This process will continue throughout the life of the contract; and
  1. Additionally, a payment bond is being issued in favour of COTS for a revolving credit line to guarantee USD $2.5 million dollars by a prominent insurer in Mexico (Sofimex) with chattel security of USD $2.5 million dollars posted by the Contractor for the bond for satisfactory completion of work in accordance with the terms specified by Pemex and Schlumberger. The payment bond is being set in the context of a billing payment cycle (30 days) and will be reduced as payments are received by COTS.

Phil D'Angelo states: "This is an exciting project and a major undertaking for the company. Being the project manager responsible for all phases of the projects instills a high level of confidence from our working partners. We are guaranteed payment by one of the largest service companies in the world and we have a payment bond in place as added security. COTS has already deployed more than 70 people to the project with over 60 major pieces of construction equipment. Land is being cleared and trucks will be hauling over 300,000 metric tons of sand (approximately 20,000 truckloads) to build infrastructure. Additionally, the Contractor will build 4 bridges and construct a drilling platform that will provide infrastructure for 6 drilling rigs. Upon success of this project the company will be in a position to secure additional projects under a similar model. These short term projects will award COTS rapid revenue growth and offer future stability for the company."

Reader Advisory

Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, forward-looking information in this press release includes, but is not limited to, anticipated sales of the company and completion of installation projects . Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.

Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: general economic conditions in Canada and Mexico and globally; industry conditions, governmental regulation, including environmental regulation; unanticipated operating events or performance; failure to obtain industry partner and other third party consents and approvals, if and when required; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; competition for, among other things, capital, skilled personnel and supplies; changes in tax laws; and the other industry and geographic specific risk factors. Investors are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking information contained in this news release is expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Investors are cautioned not to place undue reliance on forward-looking information.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state of the United States or any other jurisdiction outside of Canada in which such offer, solicitation or sale would be unlawful. The securities have not been registered under the U.S. Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act of 1933 and applicable state securities laws.

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