Estrella International Energy Services Ltd.
TSX VENTURE : EEN

Estrella International Energy Services Ltd.

May 01, 2013 10:41 ET

Estrella International Energy Services Ltd. Announces Filing of 2012 Annual Statements

TORONTO, ONTARIO--(Marketwired - May 1, 2013) -

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, 2012. Copies of these documents can be found on the SEDAR website at www.sedar.com.

Warren Levy, the Company's President and CEO commented, "2012 was a challenging year for the Company. Consolidation of our acquisitions in Colombia, and the redeployment of the fleet onto long term contracts has taken longer than we had hoped. We have made major strides during the year in Colombia, and around the region, and we now have 9 of our 19 rigs on long term contracts, and an additional 3 on shorter contracts. During the year, we have stabilized the balance sheet and worked hard to place the Company on a stable footing for the years to come. This is being achieved through reduction in debt levels, focusing on long term contracts, operational and safety excellence and the focus on growth in our directional alliance with Scientific Drilling. 2013 looks to be a much stronger year for the Company.

Highlights for the year include a fundamental improvement in safety and operational integrity statistics. Positioning four of five rigs in Argentina on multiyear contracts is a key improvement. In addition to shutting down a legacy money losing business in southern Argentina. Entering the high profile "Vaca Muerta" shale gas operations with YPF has repositioned the operations and profitability of the Company in that country. Completing major upgrades of a number of rigs in Colombia during 2012, including our 1000 HP drilling rig (#1002) is also important to our long term profitability."

Financial Highlights for the Year ended December 31, 2012 (all dollar amounts are US$ '000)

For the year ended December 31, 2012, Estrella's revenue increased by 7% to $62,654 ($58,785 in 2011). This increase in revenues was primarily driven by revenue growth from the Consulting and Directional Drilling Services business which was offset by a small decrease in revenues from the Drilling business based on lower rig utilization

Rig utilization for the year was lower than expected. In January 2012, a region wide strike in the Barrancabermeja area of Colombia affected the operations of the Company (see Company's press release dated January 16, 2012). After the strike ended Estrella was left with 6 rigs idle that had been continuously working prior to the strike and received 3 additional rigs from Petroland of which two were also idle after the strike. The redeployment of these rigs after the strike is taking longer than expected. Additionally there was lower utilization of rig 1201 and rig 1001 due to the mobilization to Argentina and which had a corresponding effect on the revenues.

The revenue growth was offset by oilfield expenses of $57,606 ($46,739 in 2011), general and administrative expenses of $11,708 ($14,062 in 2011) and interest expenses of $8,961 ($6,798 in 2011). In addition, the Company realized non-cash expenses totalling $16,041; these include depreciation of $13,359, a goodwill impairment of $2,682. As a result of the forgoing, the Company recorded a net loss for the year of $28,997 or ($0.1453) per common share.

The increase in oilfield services expenses year over year and on a quarterly basis is principally driven by expenses attributable to the integrated remote project assigned to rig 552, the full year 2012 operation in Bolivia, the start of directional drilling in Argentina and also the start of operation of rig 1201 in Argentina.

Rights Offering Update

On April 22, 2013, the Company filed a final long form prospectus ("Prospectus") with the securities commissions in the provinces of British Columbia, Alberta and Ontario, which qualified the distribution of rights ("Rights") to the shareholders of the Company ("Rights Offering"). The Rights are exercisable into 500,000,000 common shares at a subscription price CDN$0.05 per share for aggregate gross proceeds of up to CDN$25,000,000 to the Company. In connection with the Rights Offering, Ringo Holding L.P., the controlling shareholder of the Company, has agreed to exercise its pro-rata share of the Rights issued to it to ensure that the Company raises minimum gross proceeds of CDN$13,913,000. Ringo Holding may additionally exercise the Additional Subscription Privilege (as defined in the Prospectus). The expiry date of the Rights Offering is June 8, 2013.

About Estrella

Estrella is an oil and natural gas, geothermal and mining service company with operations throughout Latin America. It provides conventional drilling services; directional drilling services; tools and equipment sales and rentals; work-over 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.

Contact Information

  • Estrella International Energy Services Ltd.
    Warren Levy
    Chief Executive Officer
    +54 (11) 5217-5250

    Estrella International Energy Services Ltd.
    Javier Vedoya
    Chief Financial Officer
    +54 (11) 5217-5250
    +54 (11) 5217-5280 (FAX)
    info@estrellasp.com
    www.estrellasp.com