Savanna Announces Record Quarterly Results

by NationTalk on May 9, 2007851 Views

CALGARY, May 8 – Savanna is pleased to report record results for its first quarter ended March 31, 2007.

Financial Highlights
(Stated in thousands of dollars, except per share amounts) Operational Highlights

– Effective January 31, 2007, the Company closed the sale of its wireline division, Ultraline Services Corporation (“Ultraline”), for net proceeds of $209 million including a working capital adjustment. The net book value of Savanna’s interest in Ultraline and the related assets that were sold on January 31, 2007 was $36.7 million, resulting in a gain of $172 million ($141 million net of tax). This transaction represented a tremendous financial metric on this division’s asset and profitability base, and allowed Savanna to eliminate 85% of its long-term debt outstanding at December 31, 2006.

– On February 16, 2007, Savanna purchased the assets of Accell Well Services Ltd. (“Accell”) and all of the outstanding shares of Bear Steam Ltd. (“Bear Steam”) for total consideration of $67.9 million. Total consideration was comprised of $50.8 million of cash and 920 thousand common shares of Savanna priced at $18.47 per share, net of acquisition costs of $0.1 million. The acquisition added an additional 20 service rigs and 22 boilers to Savanna’s well servicing fleet.

– During the quarter, Savanna operated five drilling rigs, including one hybrid drilling rig, in the United States.

– Savanna exited the first quarter with 84 drilling rigs and 44 service rigs.

– The well servicing division achieved a 63% increase in revenues in the first quarter of 2007 as a result of an 89% increase in fleet size and a 5% increase in hourly rates over 2006 levels. These factors more than offset the reduction in utilization rates experienced by the division and the oil and gas industry overall. The well servicing division increased the average number of rigs in service from 18 to 34 during the quarter and exited the quarter with 44 rigs.

– The drilling division achieved utilization rates that were 6% higher than industry average and increased aggregate revenue by 127% and operating margins by 150% relative to 2006 due to an increase in drilling day rates and an increase in the average number of rigs deployed during the quarter from 31 to 79 (net), exiting the quarter with 84 rigs.

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