Estrella International Energy Services Ltd.
TSX VENTURE : EEN

Estrella International Energy Services Ltd.

December 10, 2010 15:50 ET

Estrella International Energy Services Ltd. Announces an Operational Update

CALGARY, ALBERTA--(Marketwire - Dec. 10, 2010) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRES

Estrella International Energy Services Ltd. ("Estrella" or the "Company") (TSX VENTURE:EEN) announces its operational update for December 2010, the purchase of an additional 1000 HP drilling rig, the extension of existing contracts and an update on the status of current rig operations.

Operational Update

  • Estrella has completed the purchase of a 1000 HP fully automated drilling rig for a purchase price of approximately US$10.5 Million, inclusive of peripheral equipment and spares. This will be known as Rig 1001 in the Estrella fleet. The rig was constructed by MD Cowan in the United States in 2008. The rig completed a small number of wells in the geothermal sector in California before being offered for sale to Estrella. Funds from the previously announced Credit Suisse credit facility were utilized to complete this purchase. 
  • PlusPetrol has awarded Estrella a seven month contract for the new 1000 HP rig in Bolivia. Estrella has formed an operating subsidiary in Bolivia, and Rig 1001 will be shipped immediately to Bolivia, and is expected to start work on this contract in the first quarter of 2011. On completing this initial contract, the rig will either continue to operate in Bolivia, or may be redeployed to Chile to work on geothermal projects.
  • The contract for Rig 551 was extended for a further six months, with an optional two month additional extension, carrying the contract through Oct 2011. This rig will now complete over three and a half years of continual activity on the original contract that the rig was built for. The extension was completed on the same commercial terms.
  • Estrella has renegotiated increased rates on rigs 101 and 102 in Argentina to reflect increased labor and operational costs in the region. The increase has been applied retroactively to Sept 1st. 
  • Rig 552 has suffered early stage logistics issues with the startup in Peru. The rig successfully started operations in November, and then had to be temporarily removed from service for a series of minor upgrades to be completed to allow the rig to efficiently operate. After a short delay, the rig has restarted successfully.
  • Rig 1201 completed the geothermal contract in Chile well ahead of schedule. The rig completed the fourth well in under 90 days, significantly ahead of the expected time. The rig showed excellent operational performance, and improved drilling times on every well. The rig is expected to mobilize onto a new geothermal contract in the first quarter of 2011. The rig will earn a reduced standby rate until the mobilization commences.
  • The refit of Rig 351 is expected to be completed before year end with all remaining required components now being in country in Peru.
  • The delay in deployment of rigs 351 and 552 and the early contract termination of Rig 1201 coupled with the costs associated with the acquisition of STS and the closing of the Credit Suisse financing facility is expected to negatively impact Estrella financial performance during Q4, partially offset by the consolidation of the previously announced acquisition of STS of Colombia.

Warren Levy, Chairman and CEO of Estrella commented: "We believe that the strategic position in geothermal in Chile will provide long term value to the company. The sector is still an emerging niche, but it is expected to grow substantially over the coming year. We are very pleased with the extension of the contract for rig 551 and the new contract in Bolivia, and while Q4 saw a lower Rig utilization than usual for the reasons mentioned above, we are confident that 2011 will see the rigs performing at our historic higher utilization rates. Collectively, I am confident that the coming year will see significant growth for the company around the region and see us continue to make substantial strides in our expansion plans."

Statements in this press release may contain forward-looking information. Any statements in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expects" and similar expressions. Forward-looking statements in this press release include, but are not limited to, statements with respect to the future business plans and services and final Exchange approval of the Merger.

The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances, such as future availability of capital on favourable terms, may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Estrella. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement. The forward-looking statements contained in this press release are made as of the date of this press release, and Estrella does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities law.

THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO SELL ANY OF THE SECURITIES DESCRIBED HEREIN IN THE UNITED STATES. THESE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM.

Neither the TSX Venture Exchange nor its Regulation Services 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

  • Estrella International Energy Services Ltd.
    Christian Bauwens
    Chief Financial Officer
    +54 (11) 5217-5250
    or
    Estrella International Energy Services Ltd.
    Warren Levy
    Chairman & Chief Executive Officer
    +54 (11) 5217-5250
    +54 (11) 5217-5280 (FAX)
    info@estrellasp.com
    www.estrellasp.com