Xtreme Drilling and Coil Services

Xtreme Drilling and Coil Services

April 03, 2012 17:51 ET

Xtreme Drilling and Coil Services Operations Update

XSR Takes 2 5/8" Coil to New Horizontal Milestone

CALGARY, ALBERTA--(Marketwire - April 3, 2012) - Xtreme Drilling and Coil Services (TSX:XDC) provides below a first quarter operational update along with an update on XSR deployment, an update on the current credit facility, and announces the date for its Q1 2012 earnings release and conference call.

First Quarter Update

During the first quarter of 2012, Xtreme mobilized two new-build XDR 500 drilling rigs to Colorado and North Dakota to commence operations. As previously announced three XDR 200 rigs were mobilized to Canada in Q4 2011 and worked to breakup in the first quarter. Additionally, the Company placed the first two new-build XSR extended reach coiled tubing units in the Eagle Ford shale, one in February and one in late March.

The Company estimates approximately 1,437 operating days for the first quarter, resulting in 79 percent utilization of the combined XDR and XSR rig fleet. On March 31, 2012, 13 XDR rigs were working and 3 XSR rigs were operating, one in the US and two in Saudi Arabia. The remaining four new‐build XDR 500 drilling rigs should mobilize to the field as follows: two in the second quarter, one in the third quarter and one in the fourth quarter of this year. The three remaining new-build XSR units are scheduled to be deployed throughout the second quarter of 2012.

XSR Update

In February the Company commenced operations with the first of five planned extended reach XSR coiled tubing units. As previously announced, these units are differentiated in the current coiled tubing market due to the fact they utilize a 200,000 lb. AC driven injector head to deploy up to 23,500 ft. of 2 5/8" coiled tubing along with a proprietary electronic PLC control system which increases precision and measurability allowing for more accurate control of weight on bit, differential pressure and rate of penetration, resulting in a substantial reduction in motor stalls and mill times.

Through the first two months of operation, the first unit completed 19 jobs and the second unit completed 2 jobs. The XSR units began working on wells with average lateral lengths of 4,000-5,000 ft. and 6,000-7,000 ft.; with the longest reaching a well with a lateral length of 9,700 ft. and a total measured depth of 19,880 ft. This is the longest lateral length achieved with 2 5/8" coil to date.

The data from these initial wells has been encouraging as the two XSR units averaged 1 motor stall per 21 plugs milled and an average mill time per plug of 11 minutes. Additionally, the average lateral length achieved as compared to a 2" coiled tubing unit is approximately 40% longer. These results represent a significant increase in efficiency and performance versus current market coiled tubing options.

Xtreme continues to work through XSR pump manufacturing delays. One of the solutions has been to source pumps from a second manufacturer and complete commissioning internally. In addition, rental pumps were secured in the first quarter, which allowed the first two units to begin operations, but negatively impacted the profitability in the XSR business for the quarter. As the Company takes expected delivery of pumps over the next 90 days it is anticipated that profit margins will significantly improve.

Credit Facility Update

Xtreme has completed discussions with its lenders resulting in the March 30, 2012 execution of a first amending agreement to its credit agreement with a syndicate of financial institutions led by HSBC Bank Canada. This amendment modifies the funded debt to EBITDA covenant ratios for the first and second quarters of 2012. The remaining terms of the credit agreement are substantially unchanged.

2012 First Quarter Results and Conference Call

The Company expects to announce 2012 first quarter financial and operating results after market close on Wednesday, May 9, 2012 with a follow‐up conference call planned for Thursday, May 10, 2012 at 9:00am MDT, 10:00am CDT. Dial-in numbers and access details will be announced prior to the conference call.

Corporate Presentation

Management will present at the Global Hunter Securities Land Driller Day in Chicago on Wednesday April 4, 2012. The presentation from this conference will be posted at www.xtremecoil.com.

About Xtreme

Xtreme Coil Drilling Corp. ("XDC" on the Toronto Stock Exchange) and its subsidiaries operate under the brand name Xtreme Drilling and Coil Services. Xtreme owns and operates a fleet of proprietary, high specification drilling rigs and coiled tubing well servicing units featuring the Company's patented designs. Xtreme offers oil and natural gas operators outstanding performance and efficiency through this leading edge technology. For more information about the Company, please visit www.xtremecoil.com.

Reader Advisory

This news release contains forward-looking statements within the meaning of applicable securities laws. More particularly, this news release contains statements that may relate to new operations, contracting, marketing, construction, modifications or upgrades, deployment, operation and utilization of assets in the Company's current and future fleet and expected future operations as well as estimates of operating days and rig utilization. Although Xtreme believes the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Xtreme can give no assurance they will prove to be correct. There are many factors that could cause forward-looking statements not to be correct, including risks and uncertainties inherent in Xtreme's business. The forward-looking statements contained in this news release are made as of the date hereof and Xtreme undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Contact Information

  • Xtreme Coil Drilling Corp.
    Matt Porter
    Chief Financial Officer

    Xtreme Coil Drilling Corp.
    16285 Park Ten Place, Suite 650
    Houston, Texas 77084