Savanna Energy Services Corp.

Savanna Energy Services Corp.

January 15, 2015 17:01 ET

Savanna Energy Services Corp. Reduces 2015 Capital Program and Dividend

CALGARY, ALBERTA--(Marketwired - Jan. 15, 2015) - In light of the significant uncertainty in respect of commodity pricing and activity levels for all of Savanna Energy Services Corp.'s (TSX:SVY) ("Savanna" or "the Company") services, Savanna has adopted a conservative capital spending program for 2015. This is intended to protect Savanna's balance sheet and net asset value.

Accordingly, Savanna's previously announced 2015 capital program has been revised as follows:

(Millions of Canadian Dollars)
Announced Revised
Estimated maintenance capital for 2015 40 24
Estimated 2015 capital costs re: Australia Drilling Rig Contract 40 35
Estimated capital required to complete 2014 growth initiatives 25 16
Total Estimated Capital Program for 2015 105 75

These reductions represent a $30 million, or 29% reduction from the capital program previously announced. However, Savanna will continue to evaluate the 2015 capital program in light of further changes to anticipated activity levels as 2015 unfolds.

Additionally, Savanna's management and board have also reassessed the level of the Company's dividend in the context of unfolding market conditions. In this regard, until such time as Savanna's management and Board see a sustainable recovery in world crude oil prices and oilfield services activity, Savanna has determined to reduce the Company's dividend from $0.03 per share per month ($0.36 per share per year) to $0.03 per share per quarter ($0.12 per share per year). The Company has also determined to suspend its Dividend Reinvestment Plan with respect to dividends paid after January 15, 2015.

The first quarterly dividend of $0.03 per share will have a record date of March 31, 2015 and the payment date will be April 15, 2015. This dividend is an eligible dividend for Canadian income tax purposes. This adjustment will not impact the dividend declared on December 15, 2014 and payable to shareholders on January 15, 2015.

Savanna's December 31, 2014 consolidated total debt position, net of cash, was approximately $342 million Canadian Dollars. This total debt amount includes approximately $11 million of unrealized foreign exchange on US Dollar denominated debt as well as $13 million in gross partnership debt, of which Savanna's proportionate share is approximately 50%.

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.
    Ken Mullen
    President and CEO
    (403) 503-9990

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