Norex Exploration Services Inc.

Norex Exploration Services Inc.

October 22, 2007 09:00 ET

Norex Announces Major Contract Award and Launch of 3-Component Technology

CALGARY, ALBERTA--(Marketwire - Oct. 22, 2007) - Norex Exploration Services Inc. (TSX:NRX) ("Norex" or the "Company") today announced it has been awarded a $6.3 million contract for the provision of seismic data acquisition services to a major oilsands customer in northern Alberta. These services will be provided in the first quarter of 2008.

"The award of this contract is evidence of our technical and operational capabilities in the provision of oilsands seismic services. With a number of oilsands contracts either awarded or in the process of being negotiated for the upcoming winter season, we continue to build upon our leadership position in the seismic data acquisition industry", commented Paul Crilly, President and CEO of Norex.

On a separate note, Norex also announced today that it has launched its next generation seismic recording services. Utilizing ARAM Systems Ltd.'s leading technology, Norex is offering three component ("3C") technology for full wave seismic recording services to its clients across North America. 3C technology allows clients to acquire shear wave seismic data in addition to the pressure wave data currently captured and processed for seismic imaging. The inherent value of shear wave data continues to increase. For example, it enhances geophysicists' ability to discern the existence of oil versus water in reservoirs.

Given the uncertainty in western Canada regarding industry activity, the Company is providing guidance on its 2007 third quarter and expected fourth quarter activity levels.

Supported by awarded work as of the date of this news release, Norex expects to field an average of eight crews in the fourth quarter of 2007. This crew count is only marginally lower than the fourth quarter of 2006, with the majority of its crews operating in the United States or central and eastern Canada. The Company cautions that its field crews can be delayed or impacted by weather conditions and various permits required by its clients to complete their programs. In addition, the potential ramifications of the Alberta government's oil and gas royalty review could lead to a delay or cancellation of work that has been awarded in Alberta.

Third quarter 2007 results will reflect continued low activity levels in the seismic industry in western Canada. While Norex's United States and eastern Canada operations were active in the quarter, these operations did not offset the lower activity levels in western Canada. The Company expects to report positive EBITDA, however, in its third quarter. Norex will be booking a one-time $0.3 million after-tax charge to income in the third quarter for the costs of its discontinued purchase of a South American seismic acquisition company.

Based on awarded contracts, including the major oilsands contract announced today, the Company is guardedly optimistic about its activity levels in the first quarter of 2008 primarily due to progress made in expanding its operations in the United States.

Norex has not historically provided guidance on its anticipated financial or operational results, and except for this announcement, does not currently intend to provide additional guidance in the future.

Forward-looking Statements

Certain information set forth in this news release, including management's assessment of the Company's future plans and operations, contains forward-looking statements, which are based on the Company's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "expects", "anticipates", "believes", "projects", "intends", "continues", "estimates", "objective", "ongoing", "may", "will", "should", "might", "plans" and similar expressions.

These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. The Company provides seismic data acquisition services and is exposed to a number of risks and uncertainties that are common to companies in the same business. These risks and uncertainties include demand for the Company's services which is affected by, among other things, the speculative nature of resource exploration and development activities, changes in commodity prices, general economic, market and business conditions; competition for capital and skilled personnel and shortages thereof; the competitive nature of the seismic industry; the ability to keep pace with constantly changing technology; uncertainty in various factors in the oil and gas industry, including the ability to comply with current and future health, safety, environmental and other laws; the general risk inherent to seismic data acquisition activities; risks relating to expansion including pressure on operational and technical resources; risks relating to the reliance on key officers, employees and consultants, including an unexpected loss or departure of any one of them; cancellation of work previously awarded to the Company; the possibility of a conflict of interest arising for the directors and officers of Norex who are participants in other sectors of the oil and gas industry; risks relating to having shareholders who are able to exert influence over the affairs of Norex; the possibility of the need for future financing, which may not be available on favourable terms; the volatility of the trading market for the shares of Norex; actions by governmental or regulatory authorities including increasing taxes and changes in other regulations; and the occurrence of unexpected events involved in resource exploration including, but not limited to, adverse weather conditions and wind. Adverse weather or field operating conditions can also negatively impact field productivity and, as a result, the Company's overall profitability. Certain jobs awarded to the Company are on a "turnkey" pricing basis where the Company bears the risk of lost productivity, increased input and/or subcontractor costs. As a result, factors reducing field productivity and any in increases in the Company's input costs could have a material affect on the Company's profitability.

The forward-looking information and statements included in this press release are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on current expectations, estimates and projections that involved a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements.

The information contained in this press release should not be considered all-inclusive as it excludes changes that may occur in general economic, political and environmental conditions. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond its control. Investors are cautioned against attributing undue certainty to forward-looking statements. The forward-looking information and statements contained in this press release speak only as of the date of each respective document and, subject to its obligations under applicable law, the Company does not intend, and does not assume any obligation, to update these forward looking statements if conditions or opinions should change.

Norex, and its divisions Conquest Seismic Services and US subsidiary, Conquest Seismic Services, Inc., provide premium 2D, 3D, 4D and 3C land-based seismic data acquisition services in Canada and the United States. Norex is the largest operator of ARAMARIES® recording equipment in Canada and provides state-of-the-art technology to the North American oil and gas industry. Norex trades on the TSX under the symbol "NRX".

Contact Information

  • Norex Exploration Services Inc.
    Mr. Paul Crilly, CA
    President and CEO
    (403) 216-5929
    Norex Exploration Services Inc.
    Mr. Rob Morin, CA
    Vice-President Finance and CFO
    (403) 216-5923