Savanna Energy Services Corp.

Savanna Energy Services Corp.

October 14, 2010 17:00 ET

Savanna Announces Base 2011 Capex Budget

CALGARY, ALBERTA--(Marketwire - Oct. 14, 2010) - Savanna Energy Services Corp's ("Savanna") (TSX:SVY) Board of Directors has approved a base 2011 Capital budget of $89 million. The primary capital focus of Savanna remains revitalization of its hybrid drilling fleet. Customer response to the new TDS3000 drilling platform, which utilizes many key components and ancillary systems currently part of the hybrid CT1500 platform, has been very positive. The first two TDS3000 rigs have been contracted, and the rigs will commence operations during Q4 2010. Based on anticipated additional demand for these rigs Savanna has committed to the manufacture of 6 additional TDS3000 rigs in 2011. In addition, the Company has committed to the retrofit of 2 additional hybrid drilling rigs and 1 additional workover rig for Australia. Expansion of the rental fleet, top drive inventory (4 units), and the retrofit and transfer of 3 workover rigs from Canada to our North Dakota workover base round out the committed incremental expansion capital for 2011 at this time.

Maintenance capital, including replacement drillpipe, spare equipment (primarily pumps), rig recertifications, corporate capital requirements, and maintenance capital will aggregate approximately $36 million, although the magnitude of this component of the capital plan for 2011 is directly affected by overall activity levels.

Upon completion of this capital program, Savanna will have reduced its hybrid CT1500 operating fleet to 26 rigs from 38, expanded it's TDS3000 fleet to 8 rigs, and increased its operating hybrid drilling fleet in Australia to 4 rigs. In addition, an incremental workover rig will have been added to our Australian operating fleet.

Additionally, Savanna renewed its revolving debt facility for the following year effective September 23, 2010. Under that facility Savanna has access to a maximum of $175 million based on several trailing quarterly covenants. The primary covenant is a trailing Debt:EBITDAS Covenant. Based on anticipated cashflow, EBITDAS and capital expenditure timing, Savanna does not anticipate requiring any additional outstanding financing to complete the projected capital program, and will retain sufficient available debt capacity to expand the capital program should specific circumstances or general market conditions so dictate.

Savanna is a Canadian-based drilling and well servicing provider with operations in Canada, the United States and Australia focused on providing fit for purpose equipment and services.

Cautionary Statement Regarding Forward-Looking Information and Statements

Certain statements and information contained in this press release may constitute forward-looking information within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Specifically, this press release contains statements regarding Savanna's expectation of rig redeployment and impact on Savanna's capital expansion program and funding of same. These statements are based on certain assumptions and analysis made by Savanna in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results, performance or achievements will conform to Savanna's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from Savanna's expectations. Consequently, all of the forward-looking information and statements made in this press release are qualified by this cautionary statement and there can be no assurance that the actual results or developments anticipated by Savanna will be realized or, even if substantially realized, that they will have the expected consequences to or effects on Savanna or its business or operations. Except as may be required by law, Savanna assumes no obligation to update publicly any such forward-looking information and statements, whether as a result of new information, future events, or otherwise.

Contact Information

  • Savanna Energy Services Corp.
    Ken Mullen
    President & Chief Executive Officer
    (403) 503-9990
    (403) 267-6749 (FAX)
    Savanna Energy Services Corp.
    Darcy Draudson
    V.P. Finance and Chief Financial Officer
    (403) 503-9990
    (403) 267-6749 (FAX)