Savanna Energy Services Corp.

Savanna Energy Services Corp.

March 02, 2015 22:37 ET

Savanna Energy Services Corp. Agrees to Cancel New Build Australian Contracts

CALGARY, ALBERTA--(Marketwired - March 2, 2015) - Savanna Energy Services Corp. (TSX:SVY) - In light of the significant uncertainty in respect of commodity pricing and activity levels for all of Savanna's services, Savanna and an Australian customer have mutually agreed to cancel construction of the 4 TDS drilling rigs previously contracted in Q4 2014, resulting in the reduction of $34.5 million from Savanna's 2015 capital budget and a further $25 million from its 2016 capital commitments.

Savanna's estimated capital commitment for 2015 is updated as follows:

(Stated in millions of dollars)
Estimated capital required to complete 2014 growth initiatives 16.4
Estimated capital required to complete 2014 new field operating facilities 18.5
Maintenance capital for 2015 22.3
Proceeds on sale of field operating facilities received to date in 2015 (11.5 )
Net capital program spend 45.7

In addition, the Company determined to consolidate a number of its field operating facilities. The $16 million aggregate net book value of the land and buildings associated with these locations were classified as held for sale at December 31, 2014. To date in 2015, total proceeds of $11.5 million were received for two of the properties and the remaining locations continue to be actively marketed.

Savanna will continue to evaluate its 2015 capital program in light of further changes to anticipated activity levels as 2015 unfolds.

Savanna is a leading North American contract drilling and oilfield services company providing a broad range of drilling, well servicing and related services with a focus on fit for purpose technologies and industry-leading aboriginal relationships.

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. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "might" and similar expressions are intended to identify forward-looking information or statements.

These statements are based on certain assumptions and analyses made by Savanna in light of its experience, as well as other factors it believes are appropriate in the circumstances including, without limitation: the progress of Savanna's current and proposed capital projects and current customer advice on deployment for specific customer programs. However, whether actual results or events 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 and events to differ materially from Savanna's expectations including, without limitation: fluctuations in the price and demand for oil and natural gas; fluctuations in the level of oil and natural gas exploration and development activities; fluctuations in the demand for well servicing and contract drilling; the effects of weather conditions on operations and facilities; the existence of competitive operating risks inherent in well servicing and contract drilling; general economic, market or business conditions; changes in laws or regulations, including taxation, environmental and currency regulations; the lack of availability of qualified personnel or management; the other risk factors set forth under the heading "Risks and Uncertainties" in Savanna's Annual Report and under the heading "Risk Factors" in Savanna's Annual Information Form; and other unforeseen conditions.

Included herein is an estimate of cash capital expenditures for 2015. To the extent such estimates constitute future oriented financial information or a financial outlook, such future oriented financial information or financial outlook is included herein to provide readers with an understanding of the Company's anticipated capital expenditures for 2015. Readers are cautioned that the information may not be appropriate for other purposes.

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 events anticipated by Savanna will be realized or, even if substantially realized, that they will have the expected 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.
    Dwayne LaMontagne
    Interim President and CEO
    (403) 503-9990

    Savanna Energy Services Corp.
    Darcy Draudson
    Executive Vice-President, Finance and CFO
    (403) 503-9990