Fourth Quarter 2012 Operational Update
CanElson is also providing an update for operations in Canada and the US during the fourth quarter of 2012. In both geographic areas, CanElson has outperformed the industry as a whole amid subdued markets.
In Canada, CanElson achieved utilization rates that were 1.5 times better than current industry estimates for the fourth quarter. In the United States, CanElson has seen a 38% increase in operating days for the fourth quarter, relative to the same period in 2011, even though the US industry has seen an approximate 12% decline in the land drilling rig count year over year.
Results of operations for Canada and the United States during the fourth quarter are as follows:
Canada United States Three months ended Three months ended December 31, December 31, 2012 2011 % change 2012 2011 % change ------------------------------------------------------Operating days (spud to rig release) 1,300 1,436 -9% 1,068 772 38%Average gross rig fleet size 22.3 20.3 10% 13.9 10.0 39%----------------------------------------------------------------------------
The customer of CanElson's Mexico joint venture has signed its production sharing contract with PEMEX. Through its Mexico Joint Venture, CanElson expects that this new contract should provide it with an opportunity to expand the service offering and increase exposure to performance-related contract terms in 2013 and beyond.
Bi-Fuel Drilling Rigs Progress
CanElson's subsidiary CanGas Solutions continues to advance previously announced bi-fuel (natural gas and diesel fuel) drilling rig initiatives in Alberta and Saskatchewan. The objective of these initiatives is to displace as much diesel fuel as possible with lower-cost natural gas on CanElson drilling rigs, for the benefit of both CanElson and its contract-drilling customers.
In the fourth quarter of 2012 CanGas began delivery of compressed natural gas (CNG) by truck transport to fuel two bi-fuel CanElson drilling rigs in Alberta. The rigs are operated by CanElson under long-term contract to an oil and gas producer. CanGas is also delivering CNG by truck transport to several of CanElson's rigs in Saskatchewan. Conversion of CanElson's Saskatchewan fleet is ongoing. CanElson is using temporary gas compression facilities as a supply source while a permanent facility is developed under a previously disclosed agreement. The permanent facility is scheduled to become operational in 2013.
CanElson operates contract drilling rigs in Canada, the US and Mexico for oil and natural gas exploration and development companies. CanElson also assembles new drilling rigs at a facility in Nisku, Alberta, operates contract oil and gas service rigs in Mexico, and operates a CNG transportation and related services business. CanGas is a Calgary-based CNG transport company and a North American leader in the development and utilization of containerized natural gas transport. More information on CanElson can be found on its website: www.canelsondrilling.com.
This press release contains certain statements or disclosures relating to CanElson that are based on the expectations of CanElson as well as assumptions made by and information currently available to CanElson which may constitute forward-looking information under applicable securities laws. In particular, statements pertaining to receipt of a cash advance; the expected cost to construct rig #36; the expected location and timing of deployment of new rig build #35 and #36; the expected timing for assembly of Rig #37; the expectation that the partnership with FHQTC will provide an opportunity to gain further access to an expanded labour force while providing FHQTC an opportunity to participate in the economic benefits of a drilling rig business; the expectation that CanElson can execute a growth strategy that provides top decile returns in a socially responsible fashion; the expectation that CanElson should have an opportunity to expand its services in Mexico; and the timing for the permanent compression facility in Saskatchewan to become operational in, contain forward looking information or achievements that may be expressed or implied by such forward looking information. Many factors could cause the performance or achievement by CanElson to be materially different from any future results, performance or achievements that may be expressed or implied by such forward looking information. CanElson's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. CanElson disclaims any intention or obligation to publicly update or revise any forward looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.
CanElson Drilling Inc.
President and CEO
CanElson Drilling Inc.
Chief Financial Officer
CanElson Drilling Inc.
700, 808 - 4th Avenue SW
Calgary, Alberta T2P 3E8