Western Lakota Signs Agreement to Acquire Four Rigs
Western Lakota Energy Services Inc. has signed an agreement to purchase four surface casing/core drilling rigs and related spare equipment from a drilling company which operates primarily in Alberta. The current management of these rigs has agreed to join the management team of Western Lakota. The completion of the proposed transaction is subject to approval of Western Lakota's board of directors and the Toronto Stock Exchange. Closing is targeted for June 27, 2005.
Revenue of the four rigs for the most recent 12 month period is approximately $12.0 million and the earnings before interest, tax, depreciation and amortization (EBITDA) are calculated at approximately $3.6 million. All of the rigs are currently contracted and fully crewed.
The purchase price of $12.63 million, which is equivalent to 3.5 times trailing EBITDA, will be paid by the issuance of 392,157 common shares of Western Lakota Energy Services Inc. at a deemed issue price of $6.63 per share and $10.03 million in cash. The cash portion of the purchase price is expected to be paid from a new bank credit facility and with $6.03 million from cash generated from operations.
"Customer demand for our business model of Aboriginal involvement and quality operations will provide potential for substantial growth in the surface casing and core drilling sector of the industry," said Elson McDougald, President and Chief Executive Officer of Western Lakota. "This acquisition puts Western Lakota in a unique position to take advantage of this growth opportunity with current and new Aboriginal partners."
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