Tesco Announces Conditional Sale of Drilling Assets
|Thursday, August 25, 2005
Tesco Corporation has agreed to the sale of its four CASING DRILLING(R) rigs to Turnkey E & P Inc. (Turnkey), a privately held Alberta, Canada company. Additionally, Tesco and Turnkey will enter into a Preferred Supplier Agreement in North America for the provision of Tesco services. At closing, Tesco will receive US$35 million in cash, plus warrants to purchase approximately 5% of Turnkey. Turnkey was recently formed to utilize Tesco's proprietary technology to take exploitation and production risk, as well as drill wells on a turnkey basis. The sale of the rigs is contingent on Turnkey successfully raising sufficient capital to complete the transaction by November 15, 2005. Whether Turnkey will be able to satisfy the financing condition depends upon several factors, including the state of the financial markets.
Julio Quintana, Tesco's President said, "Tesco's proprietary CASING DRILLING(R) technology continues to gain industry acceptance and we look forward to Turnkey being a key customer of Tesco. Our relationship with Turnkey will allow Tesco to continue to reap the rewards of our CASING DRILLING(R) technology through the rental of our downhole tools and sale of accessory products. The rigs being sold were originally built to introduce Tesco's CASING DRILLING(R) technology, but being in the asset-intensive rig ownership business is not a part of Tesco's long-term strategy. We believe the cash generated from the rig sale can be better deployed to increase Tesco's return on capital employed. Additionally, Bob Tessari, Tesco's Chief Executive Officer until August 31, 2005 and Vice Chair and Chief Technology Officer thereafter, has at Turnkey's request, agreed to serve on the Turnkey Board of Directors."