Savanna Energy Services Corp.

Savanna Energy Services Corp.

March 26, 2015 20:31 ET

Savanna Energy Services Corp. Announces the Elimination of Dividend and Operational Update

CALGARY, ALBERTA--(Marketwired - March 26, 2015) - The Board of Directors of Savanna Energy Services Corp. (TSX:SVY) ("Savanna" or "the Company") has decided to eliminate the quarterly dividend of $0.03 per share on Savanna's common shares after payment of the previously declared dividend to shareholders of record on March 31, 2015 and payable on April 15, 2015.

Operationally, the first quarter has been unfolding as expected. Operating days in Canadian and US drilling, as well as operating hours in Canadian well servicing, are expected to be 40-50% lower than in Q1 2014, while U.S. well servicing operating hours should remain relatively flat compared to Q1 2014.

In Australia, one drilling rig came off contract in mid-February while the remaining four drilling rigs, nine workover rigs and three flushby units remain on contracts with expiries ranging between late 2015 and late 2017.

Savanna remains focused on managing its balance sheet and costs in all aspects of its business and leveraging its assets to maintain and gain market share. In addition to large cuts in capital spending, we are aggressively reducing operating and administrative expenses to efficiently manage the level of assets and equipment Savanna currently believes will be utilized for the remainder of 2015, while maintaining the ability to ramp up utilization as demand for Savanna's services increases. The following is an update on some of the key initiatives in this regard:

  • Non-rig related salaried positions have been reduced by 38% from where they were at the end of 2014.
  • The organizational structure is being flattened to reduce layers of management that were not required and is being further restructured for the current environment.
  • Closure of four field locations and plans to consolidate two other locations as we continue to lower the Company's cost structure.
  • Unutilized equipment is being shared across operational divisions to increase utilization and decrease operating expenses and maintenance capital.
  • Evaluating the sale of certain non-core assets.

Savanna's net 2015 capital program estimate remains at $45.8 million and will continue to be evaluated in light of further changes to anticipated activity levels as 2015 unfolds.

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: actual operating activity to date in Q1 2015, 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