Leader Energy to Provide Cementing Services
Leader Energy Services Ltd. will be expanding its range of services to include cementing services. Cementing services are commonly employed when drilling a well and are often required during the producing life of a well. Primary cementing treatments are required during the initial drilling of an oil or gas well to support the production casing within the wellbore and also to isolate producing zones. Remedial cementing services are used occasionally during the life of a producing well.
Upon evaluating a set of critical success factors including competition, ability to penetrate the market, capital requirements, performance metrics and work force requirements, Company management and the board of directors determined that commissioning this expansion forms an integral part of the overall growth strategy for the Company. Given equipment and facility lead times the Company expects cementing services to be commercially available by mid-2006.
To facilitate this expansion, Leader has entered into a financing agreement to issue 6,557,400 common shares on a "bought deal" basis (the "Financing"). In addition, Westwind shall have an option to purchase up to a additional 1,639,400 common shares, exercisable prior to the closing of the Financing (the "Underwriters' Option"). The common shares will be issued on a private placement basis at a price of $3.05 per share. The aggregate gross proceeds of the Financing, if the Underwriter' Option is exercised in full, is $25,000,240. The Financing is being completed through a syndicate of underwriters led by Westwind Partners Inc.
The offering is scheduled to close on or about August 30, 2005 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the TSX Venture Exchange.
It is expected that the proceeds from this offering and the addition of $9 million of term debt from Leader's primary lender will be satisfactory to fund the expansion to cementing services. As a result of this financing, updated guidance for the Company's financial performance through the balance of 2005 will be provided concurrent with the release of second quarter results on or about August 29, 2005.
Leader Energy Services provides essential field services for oil and gas
well stimulation from three locations in Grande Prairie, Red Deer and
Hinton, Alberta. Leader supplies coiled tubing and flameless nitrogen
pumping services as well as other flameless equipment and services.