Estrella International Energy Services Ltd.
TSX VENTURE : EEN

Estrella International Energy Services Ltd.

March 14, 2011 09:00 ET

Estrella International Energy Services Ltd. Announces Closing of the Acquisition of a 49% Interest in Petroland SAS and Zigma Colombia Petroleum Services S.A.

CALGARY, ALBERTA--(Marketwire - March 14, 2011) -

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

Estrella International Energy Services Ltd. (TSX VENTURE:EEN) ("Estrella" or the "Company") is pleased to announce that it has closed its previously announced acquisition of a 49% interest in Petroland SAS ("Petroland") and Zigma Colombia Petroleum Services S.A. ("Zigma") (collectively the "Acquisition"). Each of Petroland and Zigma are oil and gas services companies based in Colombia.

The Company has purchased 49% of the issued and outstanding shares of each of Petroland and Zigma for an aggregate purchase price of approximately US$10.5 Million (the "Purchase Price"). The Purchase Price was paid in cash from the proceeds of a private placement financing of subscription receipts of the Company which closed on January 24, 2011.

Also in connection with the closing of the Acquisition, each subscription receipt issued in connection with the January 24, 2011 financing was automatically converted into one unit ("Unit") at a price of $100,000 per Unit (the "Offering Price"). Each Unit consists of: (a) $100,000 par value of one 5-year convertible subordinated unsecured debentures maturing on December 15, 2015, and bearing a coupon interest rate of 12% per annum, payable semi-annually in arrears in cash or common shares (the "Convertible Debentures"); and (b) one common share purchase warrant (the "Warrant") entitling the holder to acquire 12,500 common shares of Estrella ("Warrant Shares") at $0.80 per share, exercisable for a period of 5 years from the date of issuance.

In connection with the Acquisition, the Company was granted an option to acquire an additional 11% of the issued and outstanding shares (the "First Option") and the final 40% of the issued and outstanding shares (the "Second Option") of each of Petroland and Zigma. The Purchase price for the First Option is approximately US$2.3 Million and shall be exercisable up to five (5) Business Days prior to December 31, 2011. If Estrella decides to exercise the First Option, it will automatically exercise the Second Option for which the purchase price will be based on the actual earnings of Petroland and Zigma for the 2011 fiscal year. Closing of the Second Option is expected to occur in the first quarter of 2012. Estrella may elect to pay any portion, up to the entire Second Option of 40% of the value of the Acquisition in common shares of Estrella stock.

Petroland is a well established company, with a primary operations base in BarrancaBermeja, Colombia. The company has six workover rigs and one drilling rig, all of which are currently operating on contracts. Zigma is a company with a reemerging presence in the Llanos basin which operates three drilling and two workover rigs. Three of these rigs are currently operating on contract. With the addition of these rigs Estrella has seventeen rigs in Colombia. Both companies are headquartered in Bogota and are managed by the same senior management team who will continue with the company going forward.

Statements in this press release may contain forward-looking information, including statements regarding future financing and acquisition opportunities and receiving final Exchange approval. 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