Western Energy Services Corp. Announces 2012 Capital Budget
December 13 2011 - 5:05PM
PR Newswire (Canada)
CALGARY, Dec. 15, 2011 /CNW/ - Western Energy Services Corp.
("Western" or the "Company") is pleased to announce its planned
2012 capital expenditure budget of approximately $80 million, which
includes $30 million in expansion capital and $50 million in
maintenance capital expenditures. Included in the capital
budget is $28 million of carry forward from the 2011 budget, of
which $17 million relates to expansion capital with the remaining
$11 million relating to maintenance capital. Western will
finance its 2012 capital expenditure budget from operating cash
flows, which will maintain our conservative balance sheet going
into 2012 and position the Company for further opportunities.
Western intends to spend approximately $67 million on its Canadian
contract drilling division, Horizon Drilling Inc. ("Horizon"),
which includes $25 million in expansion capital and $42 million in
maintenance capital expenditures. Included in the capital
budget is $25 million of carry forward from the 2011 budget, of
which $14 million relates to expansion capital with the remaining
$11 million relating to maintenance capital. Horizon's 2012
expansion capital of $11 million mainly relates to the construction
of a fit for purpose telescopic ELR double drilling rig expected to
be commissioned in the third quarter of 2012. Maintenance
capital in Horizon's 2012 budget includes: -- Rotational equipment
for approximately $12 million, including two rotational top drives,
which will help minimize Horizon's downtime; -- Drill pipe for
approximately $9 million to enhance our existing pipe inventory; --
The remaining maintenance capital of approximately $10 million
relates to items such as rig recertifications, 1300 hp replacement
mud pumps, new hydraulic catwalks, and infrastructure upgrades.
Horizon's carry forward from the 2011 budget includes $14 million
in expansion capital related to the completion of three previously
announced fit for purpose telescopic ELR double drilling rigs, two
of which are expected to be commissioned in the first quarter of
2012, with the third drilling rig expected to be commissioned in
the second quarter of 2012. In Western's United States contract
drilling division, Stoneham Drilling Corporation ("Stoneham"),
capital spending is expected to be approximately $9 million,
substantially all of which relates to maintenance capital and
includes: -- Rotational equipment for approximately $4 million,
including a rotational top drive, which will help minimize
Stoneham's downtime; -- Rig upgrades for approximately $2 million;
-- The remaining capital of approximately $3 million relates to
critical spare parts, rig recertifications, infrastructure
upgrades, and a portion related to expansion capital. The capital
program related to Horizon and Stoneham will complement the
drilling rig acquisitions successfully completed since the
recapitalization of Western in December 2009 and ensure ongoing
efficiency. Western intends to spend approximately $3 million on
its well servicing division, Matrix Well Servicing Inc. ("Matrix"),
substantially all of which relates to carry forward expansion
capital from the 2011 budget associated with the completion of
three previously announced next generation well servicing
rigs. After completing the construction of Matrix's first
series of well servicing rigs, the Company will complete a thorough
review of the rigs performance and incorporate value added
enhancements into the next series of rigs manufactured.
FORWARD-LOOKING STATEMENTS This press release contains certain
statements or disclosures relating to Western that are based on the
expectations of Western as well as assumptions made by and
information currently available to Western which may constitute
forward-looking information under applicable securities laws. All
such statements and disclosures, other than those of historical
fact, which address activities, events, outcomes, results or
developments that Western anticipates or expects may, or will occur
in the future (in whole or in part) should be considered
forward-looking information. In some cases, forward-looking
information can be identified by terms such as "forecast",
"future", "may", "will", "expect", "anticipate", "believe",
"potential", "enable", "plan", "continue", "contemplate",
"pro-forma", or other comparable terminology. In particular,
Western states that "its planned 2012 capital expenditure budget of
$80 million, which includes $30 million in expansion capital and
$50 million in maintenance capital expenditures. Included in
the capital budget is $28 million of carry forward from the 2011
budget, of which $17 million relates to expansion capital with the
remaining $11 million relating to maintenance capital.
Western will finance its 2012 capital expenditure budget from
operating cash flows, which will maintain our conservative balance
sheet going into 2012 and position the Company for further
opportunities." The press release then describes the components of
the anticipated capital expenditures. The foregoing assumes
that operating cash flow during 2012 will be sufficient to allow
for such planned capital expenditures. In addition, the
planned capital expenditures, especially expansion capital, assumes
an ongoing high level of demand for Western's drilling
services. There is a risk that Western could experience a
decline in its business or revenues which could have a negative
impact on those planned capital expenditures. Western is an
oilfield service company which provides contract drilling services
through its wholly owned subsidiaries Horizon Drilling Inc. in
Canada and Stoneham Drilling Corporation in the United
States. In addition, Western has commenced operations of its
wholly owned subsidiary Matrix Well Servicing Inc. with the first
of five next generation well servicing rigs now delivered. Western
Energy Services Corp. CONTACT: Dale E. Tremblay Alex MacAusland
Jeffrey K. Bowers Chief Executive Officer President and COO VP
Finance and CFO403.984.5929 403.984.5932
403.984.5933dtremblay@wesc.ca amacausland@wesc.ca
jbowers@wesc.caWestern Energy Services Corp.900, 606 - 4th Street
SW Calgary, AB T2P 1T1 Ph: 403.984.5916 Fax:403.984.5917
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