CALGARY, ALBERTA -- (Marketwire) -- 01/07/13 -- CanElson Drilling Inc. ("CanElson" or the "Company") (TSX: CDI) today provided an update on recent activities, including a new drilling rig commitment, a First Nations partnership agreement and strong performance compared with the Canadian and US oil services industry in the fourth quarter of 2012. CanElson also announced an update on progress with its bi-fuel drilling rigs initiative.
"We continue to expand our footprint in our core areas of operation," said Randy Hawkings, President and CEO. "Our recent activities demonstrate our ability to deploy and operate our drilling rigs at industry leading levels of efficiency while finding unique ways to work with other groups for our mutual benefit."
New Texas Drilling Rig
CanElson has entered into a two-year commitment and will receive a cash advance for a new drilling rig with a customer in the Permian Basin of West Texas. The new contract was obtained in part due to CanElson's commitment and approach to health and safety. The new rig (Rig #36) is expected to cost approximately $8 million. It will be assembled at CanElson's facility in Nisku, Alberta and is scheduled for delivery in March 2013.
As previously disclosed, CanElson is also assembling Rig #35 at Nisku under a long term contract with a West Texas producer. Rig #35 is scheduled for delivery in January 2013. When Rig #35 and Rig #36 are both deployed, CanElson will have 12 rigs in West Texas, double the number it had at end of January 2012, significantly strengthening the Company's position in the most active drilling basin in North America.
The Company's previously announced capital budget included provision for $4.5 million of long lead items for Rig #36. CanElson will now order long lead items for another new rig (Rig #37). Pending a signed contract, construction of Rig #37 is possible in Q2, 2013. CanElson continues to require commitments from operators prior to full assembly of additional rigs. As a result, CanElson will expand its previously announced capital program by approximately $8.0 million to complete rig #36 and purchase the long lead items for Rig #37.
First Nations Partnership
Through negotiations with File Hills Qu'Appelle Tribal Council ("FHQTC"), CanElson entered into a partnership with FHQTC Developments Limited Partnership. Each of CanElson and FHQTC Developments Limited Partnership own a 50% interest in a limited partnership that owns one existing CanElson drilling rig. CanElson will continue to operate the drilling rig as the General Partner.
CanElson believes this partnership will provide it with an opportunity to gain further access to an expanded labour force while also providing FHQTC with an opportunity to participate in the economic upside of the oil and gas drilling business in Saskatchewan. CanElson will pursue similar opportunities with other First Nations in situations where all parties involved can benefit.
"This partnership is an excellent business, training and employment opportunity for our community members," said Edmund Bellegarde, President of FHQTC.
During the past three years, CanElson has established various forms of partnership relationships and training initiatives to better support growth in all the countries in which it does business. It is CanElson's belief that it can execute a growth strategy that provides top decile returns in a socially responsible fashion.
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