The transaction, which closed on October 14, 2005, has the Trust exercising its option to purchase 10 per cent of the outstanding shares of EDM/Sense, for a total cost of 16.5 million kroner, or approximately $3.0 million Canadian. EDM Engineering & Drilling Machinery AS and Sense Technology, both based in Norway, have operated as privately held, independent companies and have merged upon closing of the transaction.
High Arctic is financing the purchase from its cash reserves with an expected positive contribution to future cash flows as the business of the combined entity EDM/Sense unfolds. High Arctic currently uses EDM/Sense equipment in its operations and has an exclusive licence for use of that company's patented drilling technology.
"We are pleased to be strengthening our relationship with EDM/Sense. The new company combines their respective strengths and the transaction is good for High Arctic in at least two ways. First, the investment is attractive based on the current assets and financial position of the new company alone. Second, in an extremely competitive market, we are now in a position to ensure our access to the some of the most technically advanced equipment available," said Jed Wood, President and CEO of High Arctic.
The transaction follows up on High Arctic's recently announced agreement to purchase a total of 15 additional 250K Combination Drilling, Work over and Snubbing (CDWS) rigs from EDM/Sense, which manufactures the main working components of the rigs. Five rigs are currently under construction, with completed delivery scheduled for March 2006. An additional 10 rigs are scheduled for delivery between July 2006 and May 2007.
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