Enseco Energy Services Corp.

Enseco Energy Services Corp.

March 02, 2009 08:00 ET

Enseco Energy Services Corp. Exchanges Its Cased Hole Wireline Assets for the Canadian Production Testing Assets of a Multinational Oilfield Service Company

CALGARY, ALBERTA--(Marketwire - March 2, 2009) - Enseco Energy Services Corp. (TSX VENTURE:ENS) ("Enseco") is pleased to announce that it has entered into a contract to exchange its Cased Hole Wireline Assets for the Canadian Production Testing Assets of a Multinational Oilfield Service Company effective March 1, 2009.

Mr. David Hawkins President and CEO of Enseco states:

"This is a significant transaction for Enseco. This asset exchange will allow Enseco to achieve significant economies of scale and operating mass in its Production Testing business going forward. It also allows Enseco to make a significant move into new areas of the Production Testing business such as In-line testing and High Pressure Critical Sour testing that Enseco has had limited exposure to due to our current equipment base. These new areas of the Production Testing business are less competitive due to higher barriers to entry than the General P-tank business that Enseco currently competes in. The new Production Testing Assets will be rolled into Enseco's existing infrastructure with minimal overhead cost increases allowing for greater economies of scale.

This transaction removes a business line from Enseco that did not have economies of scale and operating mass, and strategically streamlines Enseco's business lines. The impact from the recent change in the Alberta Royalty structure combined with the reduction in commodity prices, has significantly reduced the capital spending in Alberta by our customers. This business line also had the highest fixed cost structure of all of Enseco's business lines which did not allow costs to fall in line with the reductions in revenues experienced by this business unit. This has been reflected in the operating results of this division. For the three and nine months ended December 31, 2008 the Cased Hole Wireline business experienced net losses of $854 thousand and $2.5 million respectively. For the three and nine months ended December 31, 2008 the Cased Hole Wireline business had negative cash flow from operations of $520 thousand and $1.4 million respectively."

Following this transaction Enseco will be one of the premiere and largest Production Testing Services providers in Canada, this will enable Enseco to compete in the foothills market on par with the traditional foothills suppliers. In addition to Enseco's existing equipment, we will now be able to provide complete full sour service packages (14Mpa separators/2000psi), product content (Inline) testing package (14Mpa separator/2000psi). Additional support equipment includes; hot oil circulating systems, 55 metre (180ft) flare stacks, flanged flow lines (7Mpa/10,000psi), fluid storage, and line heaters 879kw (3mmbtu/hr) to 147kw (1/2mmbtu/hr). At peak capacity Enseco production testing will be able to provide experienced field and support personnel to serve over fifty locations in the western Canadian basin.

Enseco is an emerging supplier of energy related services operating throughout the Western Canadian Sedimentary Basin with operational centres in Red Deer, Whitecourt, Edmonton, Beaverlodge, Grande Prairie, Midale and Fort St. John; North Dakota with an operation center in Minot; as well as corporate and sales offices located in Calgary. Enseco is led by an experienced management team currently offering well swabbing, production testing, open hole logging, and directional drilling services with a focus on continued value creation through accretive acquisitions and organic growth.

This press release contains forward-looking statements subject to various risk factors and uncertainties, which may cause the actual results, performances or achievements of Enseco to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, fluctuations in the market for oil and gas and related products and services, political and economic conditions, the demand for services provided by Enseco, industry competition and Enseco's ability to attract and retain both customers and key personnel.

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

Contact Information

  • Enseco Energy Services Corp.
    David A. Hawkins
    President and CEO
    (403) 806-0088
    Enseco Energy Services Corp.
    Aly Khan Musani
    Senior Vice President and CFO
    (403) 806-0088