Stoneham Drilling Trust

Stoneham Drilling Trust

November 17, 2005 08:50 ET

Stoneham Drilling Trust: Rig Construction Program and $42 Million Bought Deal Private Placement Financing

CALGARY, ALBERTA--(CCNMatthews - Nov. 17, 2005) -


Stoneham Drilling Trust (TSX:SDG.UN) ("Stoneham" or the "Trust") is pleased to announce its intention to construct an additional five drilling rigs for an aggregate cost of approximately $47.5 million. Rigs 14 and 15 will be new generation telescopic double drilling rigs designed to drill to depths of 3,500 plus metres. Rigs 16, 17 and 18 will be triple drilling rigs capable of drilling to depths of 4,000 to 5,000 metres. All of the drilling rigs will commence working for existing clients under term contracts upon their completion. The drilling rigs are expected to be delivered during the last half of 2006. The term contracts for all drilling rigs will contain a minimum number of drilling days and current market day rates.

Stoneham is also pleased to announce it has entered into a financing agreement with a syndicate of underwriters, led by FirstEnergy Capital Corp. and including Raymond James Ltd. and Peters & Co. Limited, under which the underwriters have agreed to purchase 1,866,700 trust units on a bought deal private placement basis, at a price of $22.50 per Trust Unit, for gross proceeds of approximately $42 million. Stonepoint Strategic Advisors Inc. acted as strategic advisor to the Trust.

The net proceeds of approximately $40 million from the private placement will be placed into general working capital of the Trust's operating subsidiary Stoneham Drilling L.P. and combined with additional borrowings to fund the construction of the new drilling rigs.

The offering is scheduled to close on or about December 8, 2005 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Toronto Stock Exchange. The 1,866,700 trust units represent 30.3% of the Trust's 6,156,561 currently issued and outstanding trust units (23.3% following the closing of the private placement). In accordance with the policies of the Toronto Stock Exchange, as a condition to closing the private placement, the Trust will seek the written consent to the private placement of holders of more than 50% of the trust units.

Stoneham is an income trust that provides contract drilling services to oil and natural gas exploration and production companies operating in western Canada. With its modern innovative fleet of nine telescopic drilling rigs and three additional rigs currently under construction, Stoneham is an industry leader in operational performance and rig utilization. Stoneham trades on the TSX under the symbol SDG.un. The Trust pays monthly cash distributions to unitholders.

This press release does not constitute an offer to sell the securities in the United States. The securities offered have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

This news release may contain forward-looking statements concerning the anticipated performance of Stoneham. Forward-looking statements are based on the estimates and opinions of management at the date the statements are made, and Stoneham undertakes no obligation to update forward looking statements if conditions or opinions should change.

The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.

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