Estrella International Energy Services Ltd.
TSX VENTURE : EEN

Estrella International Energy Services Ltd.

May 01, 2012 11:49 ET

Estrella International Energy Services Ltd. Announces Filing of 2011 Annual Statements

TORONTO, ONTARIO--(Marketwire - May 1, 2012) -

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 that it has filed its Audited Consolidated Financial Statements and the related Management's Discussion and Analysis ("MD&A") for the year-ended December 31, 2011. Copies of these documents can be found on the SEDAR website at www.sedar.com.

Warren Levy, the Company's President and CEO commented, "2011 was a transitional year for Estrella. Early in the year, the Company raised approximately CDN$35M in convertible debt and equity offerings, which it used to acquire 49% interests in 2 Colombian entities, Petroland and Zigma. The acquisition of balance of Zigma was completed in early 2012. Highlights for the year included record revenues of approximately $58.7M, due in large part to our expanding Colombian rig fleet and our entry into the Bolivian market. These successes were offset by administrative challenges associated with the consolidation of the Company's Colombian operations, lower than expected rig utilization rates and rising inflation in Argentina. The Company exists the year well positioned to consolidate its position in Latin America and anticipates continued revenue growth. We are focused on improving rig utilization back to historic levels and in implementing strategies designed to reduce expenses as a percentage of operating revenues and driving pricing increases at or above the pace of local inflation. We have also made strong advances to grow our consulting and directional drilling businesses, and expect significant growth in both service lines in 2012."

Financial Highlights for the Year ended December 31, 2011 (all dollar amounts are US$ '000)

For the year ended December 31, 2011, Estrella's revenue increased by 75% to $58,785 ($33,577 in 2010). This increase in revenues was primarily driven by strong growth of the Company's drilling and service business, the consolidation its operations in Columbia, and a combination of renegotiated contractual terms and inflationary adjustments.

Rig utilization for the year was lower than expected, with a number of the rigs acquired in connection with acquisitions of STS in Q4 2010 and Zigma in 2011 being removed from service for maintenance and upgrades. Additionally utilization was impacted by the following factors: Rig 551, located in Argentina, came off contract in August 2011 and did not recommence operations until November 2011, Rig 552, located in Peru, was being mobilized for part of the year and completed only periodic operations, Rig 1201, located in Chile, was in a standby period between contracts for a portion of the year and Rig 1001 was delayed in starting operations due to delays obtaining diesel permits in Bolivia to operate.

The strong revenue growth was offset by oilfield expenses of $46,739 ($22,989 in 2010), general and administrative expenses of $13,241 ($6,834 in 2010) and interest expenses of $6,798 ($1,938 in 2010). In addition, the Company realized non-cash expenses totalling $19,703; these include depreciation of $13,188, a goodwill impairment of $5,694 and stock based compensation expenses of $821. As a result of the forgoing, the Company recorded a net loss for the year of $29,971 or ($0.2447) per common share.

The increased expenses were primarily driven by the expansion of the Company's Colombian operations which included costs related to the acquisition of Zigma, the Company's investment in Petroland and the acquisition and commencement of the operations of Rigs 552 and 1001. Also, in Argentina the Company's operations continue to be challenged by the rapid pace of inflation, which in many cases, is outstripping the pace of market pricing. Approximately $2,000 of the expenses for the year represent one-time expenses related to some of the factors mentioned above.

About Estrella

Estrella is an oil and natural gas, geothermal and mining service company with operations throughout Latin and South America. It provides conventional drilling services; directional drilling services; tools and equipment sales and rentals; work-over and finishing services; and consulting and engineering services. The Corporation is headquartered in Buenos Aires, Argentina and has operating locations in six countries Latin and South America.

Forward Looking Statements

This press release may contain forward-looking statements which reflect management's expectations regarding future growth, results of operations, performance and business prospects of Estrella. These forward-looking statements may relate to, among other things, forecasts or expectations regarding business outlook for Estrella; commodity prices for oil and natural gas; oil and natural gas demand and production growth; debt service requirements for Estrella; improvements in operating procedures and technology; capital expenditures by Estrella and the oil and gas industry; the business strategies of Estella's customers; future global economic conditions; and future results of operations; expectations regarding the Corporation's ability to raise capital; realization of the anticipated benefits of acquisitions and dispositions, revenue growth, future acquisitions, generation of cash flow, and may also include other statements that are predictive in nature, or that depend upon or refer to future events or conditions, and can generally be identified by words such as "may", "will", "expects", "anticipates", "intends", "plans", "believes", "estimates", "guidance" or similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These statements are not historical facts or guarantees of future performance, but instead represent management's current expectations, estimates and projections regarding future events.

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.

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