Energy Stocks; Pure Energy Services Ltd. (TSX:PSV) Announces Sale of Drilling Division
CALGARY, ALBERTA--(http://www.investorideas.com/ energy stocks blog ) - Sept. 23, 2010 - Pure Energy Services Ltd. (TSX:PSV) ("Pure" or the "Company") announced that it has entered into a definitive agreement (the "Agreement") to sell its drilling rig assets and operations (the "drilling division") to a private investment group (the "Purchaser") for an aggregate purchase price of $34 million, subject to certain customary post-closing adjustments (the "Sale Transaction"). The Sale Transaction is expected to close on October 1, 2010. At closing, Pure will receive a cash payment of $31.5 million from the Purchaser, with the balance of $2.5 million scheduled to be paid in full by the Purchaser prior to March 1, 2011. The net proceeds of $33.5 million (after accounting for related selling costs) will be utilized to reduce the Company's bank indebtedness.
Over the past sixteen months, the Company has made significant progress in meeting its previously stated objectives of focusing on its core wireline and testing businesses and reducing debt. During that time the following non-core businesses and assets have been sold: the USA fracturing division, the "Motorworks" performance drilling division, the drilling rig division and various redundant operating facilities and equipment. The acquisition of Canadian Sub-Surface ("CanSub") during June 2009 combined with the acquisition of a competitor's USA wireline operations during April 2010 have served to significantly strengthen the wireline and well testing operations in both Canada and the USA. As a result of the integration of CanSub, Pure has significantly reduced its cost structure in all areas, including senior management, other general and administrative expenses and field operations.
After completion of the sale of the drilling division, Pure will have significantly improved its balance sheet, providing the Company the financial flexibility to:
Pure is an oilfield services company headquartered in Calgary, Alberta that provides wireline and well testing completion services to oil and gas exploration and development entities in the Western Canadian Sedimentary Basin and in the United States (through its wholly-owned subsidiary, Pure Energy Services (USA), Inc.) Pure's western Canadian client base is serviced from 14 field stations throughout northeastern British Columbia, Alberta and southeast Saskatchewan. The United States operations are headquartered in Denver, Colorado with field stations in North Dakota, Wyoming, Colorado and Pennsylvania.
Cautionary Statement Regarding Forward-looking Statements and Information
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements.
In particular and without limitation, this press release contains forward looking statements and information pertaining to the following: completion of the Sale Transaction and the operations, business strategy, future development and growth opportunities, capital expenditures, prospects and asset base of Pure Energy after the completion of the Sale Transaction; the disposition of assets and reduction of indebtedness using the proceeds thereof. Although Pure Energy and believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Pure Energy can give no assurance that they will prove to be correct.
The forward-looking statements and information contained in this document reflect several major factors, expectations and assumptions of Pure Energy, including without limitation, that after the completion of the Sale Transaction Pure Energy will continue to conduct its operations in a manner substantially consistent with its past operations; the general continuance of current or, if applicable, assumed industry conditions; the continuance of existing (and in certain circumstances, the implementation of proposed) taxation, royalty and regulatory regimes; certain commodity prices and other cost assumptions; certain conditions regarding natural gas storage in North America; the availability of adequate debt and/or equity financing and cash flow from operations to fund Pure Energy's capital and operating requirements as needed; and the extent of its liabilities. Many of these factors, expectations and assumptions are based on Pure Energy management's knowledge and experience in the industry and on public disclosure of industry participants and analysts relating to anticipated exploration and development programs of oil and gas producers, the effect of changes to regulatory, taxation and royalty regimes, expected active rig counts and industry equipment utilization in the Western Canadian Sedimentary Basin (the "WCSB") and the Rocky Mountain region, North Dakota and the Appalachian Basin of the United States and other matters. Pure Energy believe that the material factors, expectations and assumptions reflected in the forward-looking statements and information are reasonable; however, no assurances can be given that these factors, expectations and assumptions will prove to be correct.
Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: general economic conditions in Canada and the United States; changes in the level of capital expenditures made by oil and natural gas producers and the resultant effect on demand for oilfield services during drilling and completion of oil and natural gas wells; volatility in market prices for oil and natural gas and the effect of this volatility on the demand for oilfield services generally; risks inherent in the ability of Pure Energy to generate sufficient cash flow from operations to meet its current and future obligations; increases in debt service charges; the ability to access external sources of debt and equity capital; changes in legislation and the regulatory environment, including uncertainties with respect to implementing binding targets for reductions of emissions; uncertainties in weather and temperature affecting the duration of the oilfield service periods and the activities that can be completed; competition; sourcing, pricing and availability of raw materials, consumables, component parts, equipment, suppliers, facilities, and skilled management, technical and field personnel; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; ability to integrate technological advances and match advances of competition; credit risk to which the combined company will be exposed in the conduct of its business; and changes to the royalty regimes applicable to entities operating in the WCSB or the United States Rocky Mountain region.
There are risks also inherent in the nature of the proposed Sale Transaction, including: failure to satisfy the conditions of the Agreement; and failure to obtain the required regulatory and other third party approvals on a timely basis or at all.
This news release also contains forward-looking statements and information concerning the anticipated completion of the Sale Transaction. Pure Energy have provided these anticipated times in reliance on certain assumptions that they believe are reasonable at this time, including assumptions as to the timing of receipt of the necessary regulatory and third party approvals and the time necessary to satisfy the conditions to the closing of the Sale Transaction. These dates may change for a number of reasons, including the inability to secure necessary regulatory or third party approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the Sale Transaction. Accordingly, readers should not place undue reliance on the forward- looking statements and information contained in this press release concerning these times. Readers are cautioned that the foregoing list of factors is not exhaustive.
Additional information on these and other factors that could affect Pure Energy's operations or financial results are included the annual information forms and management's discussion and analysis of Pure Energy which may be accessed through the corporate profile of Pure Energy on the SEDAR website (www.sedar.com). The forward-looking statements and information contained in this press release are made as of the date hereof and Pure Energy undertake 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.
Over the past sixteen months, the Company has made significant progress in meeting its previously stated objectives of focusing on its core wireline and testing businesses and reducing debt. During that time the following non-core businesses and assets have been sold: the USA fracturing division, the "Motorworks" performance drilling division, the drilling rig division and various redundant operating facilities and equipment. The acquisition of Canadian Sub-Surface ("CanSub") during June 2009 combined with the acquisition of a competitor's USA wireline operations during April 2010 have served to significantly strengthen the wireline and well testing operations in both Canada and the USA. As a result of the integration of CanSub, Pure has significantly reduced its cost structure in all areas, including senior management, other general and administrative expenses and field operations.
After completion of the sale of the drilling division, Pure will have significantly improved its balance sheet, providing the Company the financial flexibility to:
- continue to strengthen its existing well testing and wireline operations, including the addition of high pressure equipment to service the growing demand for services in unconventional resource plays in Canada and the USA;
- continue to expand its technology base including the advancement of the Company's recently announced downhole fiber optic technology; and
- establish new, strategic operating areas and pursue new business opportunities that are synergistic to the existing service lines.
Pure is an oilfield services company headquartered in Calgary, Alberta that provides wireline and well testing completion services to oil and gas exploration and development entities in the Western Canadian Sedimentary Basin and in the United States (through its wholly-owned subsidiary, Pure Energy Services (USA), Inc.) Pure's western Canadian client base is serviced from 14 field stations throughout northeastern British Columbia, Alberta and southeast Saskatchewan. The United States operations are headquartered in Denver, Colorado with field stations in North Dakota, Wyoming, Colorado and Pennsylvania.
Cautionary Statement Regarding Forward-looking Statements and Information
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements.
In particular and without limitation, this press release contains forward looking statements and information pertaining to the following: completion of the Sale Transaction and the operations, business strategy, future development and growth opportunities, capital expenditures, prospects and asset base of Pure Energy after the completion of the Sale Transaction; the disposition of assets and reduction of indebtedness using the proceeds thereof. Although Pure Energy and believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Pure Energy can give no assurance that they will prove to be correct.
The forward-looking statements and information contained in this document reflect several major factors, expectations and assumptions of Pure Energy, including without limitation, that after the completion of the Sale Transaction Pure Energy will continue to conduct its operations in a manner substantially consistent with its past operations; the general continuance of current or, if applicable, assumed industry conditions; the continuance of existing (and in certain circumstances, the implementation of proposed) taxation, royalty and regulatory regimes; certain commodity prices and other cost assumptions; certain conditions regarding natural gas storage in North America; the availability of adequate debt and/or equity financing and cash flow from operations to fund Pure Energy's capital and operating requirements as needed; and the extent of its liabilities. Many of these factors, expectations and assumptions are based on Pure Energy management's knowledge and experience in the industry and on public disclosure of industry participants and analysts relating to anticipated exploration and development programs of oil and gas producers, the effect of changes to regulatory, taxation and royalty regimes, expected active rig counts and industry equipment utilization in the Western Canadian Sedimentary Basin (the "WCSB") and the Rocky Mountain region, North Dakota and the Appalachian Basin of the United States and other matters. Pure Energy believe that the material factors, expectations and assumptions reflected in the forward-looking statements and information are reasonable; however, no assurances can be given that these factors, expectations and assumptions will prove to be correct.
Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: general economic conditions in Canada and the United States; changes in the level of capital expenditures made by oil and natural gas producers and the resultant effect on demand for oilfield services during drilling and completion of oil and natural gas wells; volatility in market prices for oil and natural gas and the effect of this volatility on the demand for oilfield services generally; risks inherent in the ability of Pure Energy to generate sufficient cash flow from operations to meet its current and future obligations; increases in debt service charges; the ability to access external sources of debt and equity capital; changes in legislation and the regulatory environment, including uncertainties with respect to implementing binding targets for reductions of emissions; uncertainties in weather and temperature affecting the duration of the oilfield service periods and the activities that can be completed; competition; sourcing, pricing and availability of raw materials, consumables, component parts, equipment, suppliers, facilities, and skilled management, technical and field personnel; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; ability to integrate technological advances and match advances of competition; credit risk to which the combined company will be exposed in the conduct of its business; and changes to the royalty regimes applicable to entities operating in the WCSB or the United States Rocky Mountain region.
There are risks also inherent in the nature of the proposed Sale Transaction, including: failure to satisfy the conditions of the Agreement; and failure to obtain the required regulatory and other third party approvals on a timely basis or at all.
This news release also contains forward-looking statements and information concerning the anticipated completion of the Sale Transaction. Pure Energy have provided these anticipated times in reliance on certain assumptions that they believe are reasonable at this time, including assumptions as to the timing of receipt of the necessary regulatory and third party approvals and the time necessary to satisfy the conditions to the closing of the Sale Transaction. These dates may change for a number of reasons, including the inability to secure necessary regulatory or third party approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the Sale Transaction. Accordingly, readers should not place undue reliance on the forward- looking statements and information contained in this press release concerning these times. Readers are cautioned that the foregoing list of factors is not exhaustive.
Additional information on these and other factors that could affect Pure Energy's operations or financial results are included the annual information forms and management's discussion and analysis of Pure Energy which may be accessed through the corporate profile of Pure Energy on the SEDAR website (www.sedar.com). The forward-looking statements and information contained in this press release are made as of the date hereof and Pure Energy undertake 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.
For more information, please contact
Pure Energy Services Ltd.
Kevin Delaney
Chief Executive Officer
(403) 262-4000
or
Pure Energy Services Ltd.
Chris Martin
Chief Financial Officer
(403) 262-4000
Pure Energy Services Ltd.
Kevin Delaney
Chief Executive Officer
(403) 262-4000
or
Pure Energy Services Ltd.
Chris Martin
Chief Financial Officer
(403) 262-4000
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