Estrella International Energy Services Ltd.
TSX VENTURE : EEN

Estrella International Energy Services Ltd.

November 30, 2011 10:16 ET

Estrella International Energy Services Ltd.: Announces Filing of Third Quarter Financial Statements and Operational Update

BUENOS AIRES, ARGENTINA--(Marketwire - Nov. 30, 2011) -

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

Estrella International Energy Services Ltd. ("Estrella" or the "Company") (TSX VENTURE:EEN) is pleased to announce that it has filed its interim unaudited financial statements for its third quarter ended September 30, 2011.

Third Quarter 2011 Highlights

As previously announced, on September 6, 2011, the Company executed binding agreements to acquire 100% of the issued and outstanding shares of Petroland S.A.S. ("Petroland") and Zigma Petroleum Services S.A. ("Zigma"). Consequently, the assets and liabilities of Petroland and Zigma were consolidated on the Company´s balance sheet as of September 30, 2011 with their respected revenues to be added to the Company´s revenues starting in the fourth quarter of 2011.

For the third quarter ended September 30,2011: (all amounts in U.S. dollars in thousands)

  • Gross revenues increased by 73.5% compared to the same period last year to a record of $15,230. Revenues from Rig operations were $14,626, which represents an increase of 6% from the prior quarter and a 75% increase from the same quarter in 2010. The increase in revenues from the prior quarter was principally due to the start of operations in Bolivia and strong directional service activity in Chile. The increase year over year revenue can also be attributed to the consolidation of the operations of STS de Los Andes (acquired in Q4 2010).
  • Rig utilization rate was 75%, which is the lowest it has been since 2007. This lower rate is the due to a combination of factors, which include the following: a) a delay in start of rig operations in Bolivia due to delays in obtaining diesel permits. This delay was bureaucratic in nature and was outside of the control of Estrella; b) a gap between contracts for rig 551 contract in Argentina; c) Rigs STS 03 and STS 04 were taken offline during the period for maintenance; and d) the transfer of Rig 552 from the Peruvian jungle to new contract in Talara base.
  • Cash flow from operating activities was ($4,701), which represents an improvement of $2,202 from the prior quarter and a deterioration of $4,861 from the same quarter in 2010.
  • Gross margin (revenues less oilfield service expense as a percentage of revenue), was 19.2%, which represents a decrease of 12.8% from the prior quarter and decrease of 17.8% for the same quarter one year ago. The lower gross margin was principally impacted by the lower Rig utilization level.
  • The Company recorded a net loss of $8,114 ($0.0617 per common share), compared to a net loss of $258 ($0.0025 per common share) for the same quarter in 2010.

OPERATIONAL UPDATE

The Company is also pleased to announce that, further to its news release of November 1, 2011, mechanical repairs have been completed on Rig 1201 located in Chile, which suffered a mechanical incident on October 27, 2011. The Company is currently waiting on weather and final customer approval to recommence operations.

Warren Levy, Chief Executive Officer of the Company stated, "The Company is moving through a major transitional phase, completing final stages of the acquisitions of Petroland and Zigma and consolidating its operational footprint. In addition to the consolidation process, significant efforts are being focused on bringing the newly acquired Colombian rigs up to Estrella standards. Management is also looking to expand the financial contribution of the Company's directional drilling and consulting services, improving the Company's financial performance in Argentina and reduce the corporate SG&A. Management is also focused on negotiating contract extensions and price increases for its current rig fleet. Management's goal is to have over 80% of the rig fleet on term contracts by the end of the first quarter of 2012 and to have disposed of underperforming assets to ensure that the Company is uniquely well positioned for future growth."

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 of Estrella.

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

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