Western Lakota and Savanna to Merge

Savanna Energy Services Corp. and Western Lakota Energy Services Inc. report that their respective boards have unanimously approved and the companies have entered into an agreement to merge the two companies. The combined organization will be a Canadian-headquartered, North American oilfield services company with an enterprise value approaching $1.5 billion. Upon completion of the transaction the merged company will operate under the name "Savanna Energy Services Corp."

Under the terms of the agreement, the merger will be accomplished through a Plan of Arrangement under the Business Corporations Act of Alberta (the "Arrangement") whereby Western Lakota common shareholders will receive 0.64 of a common share of Savanna ("Savanna Share") for each common share of Western Lakota ("Western Lakota Share") held. On completion of the proposed transaction, Savanna shareholders will own approximately 51.5% and Western Lakota shareholders will own approximately 48.5% of the combined entity.

The proposed Arrangement is subject to approvals by at least two thirds of the holders of Western Lakota common shares and holders of Western Lakota options, the Court of Queen's Bench of Alberta, and appropriate regulatory and other authorities. The Western Lakota shareholders' meeting required to approve the Arrangement will be held, and the closing of the Arrangement is anticipated to be completed by, September, 2006. An information circular is expected to be mailed to Western Lakota shareholders in July, 2006.

The respective Boards of Directors of both Western Lakota and Savanna have unanimously approved the Arrangement and have concluded that the transaction is in the best interests of the Western Lakota and Savanna shareholders and option holders. The Board of Directors and senior management of Western Lakota have entered into agreements with Savanna to vote in favor of the Arrangement and unanimously recommend that Western Lakota shareholders and option holders vote in favor of the Arrangement.

The Arrangement Agreement prohibits both Western Lakota and Savanna from soliciting or initiating any discussion regarding any other business combination or sale of material assets, contains provisions to match competing unsolicited proposals and subject to certain conditions, provides for a $23 million reciprocal termination fee.

Mr. Elson McDougald, Western Lakota Chairman and Chief Executive Officer, will serve as Chairman and Mr. Ken Mullen will serve as President and Chief Executive Officer of the merged company. All senior management from both Western Lakota and Savanna will remain with the combined organization and each have agreed to waive all change of control, option vesting and severance terms under their respective employment option agreements and employment contracts. The Board of Directors of the combined company will consist of members from both of the existing Boards of Directors of Western Lakota and Savanna.

The merged company creates a new growth oriented North American contract drilling and oilfield services powerhouse with:

- A full service drilling capability combining proprietary hybrid shallow technology with state-of-the-art deeper drilling capabilities;

- Industry-dominant relationships and contracts with aboriginal partners throughout Canada;

- Industry leading shallow drilling capabilities based on patented hybrid drilling technology;

- A substantial organization focused on providing efficient high quality services to its customers utilizing one of the most modern fleets of equipment, with an average age of equipment in the combined company of less than 5 years;

- An operating base of 66 conventional and hybrid drilling rigs, 35 wireline units, 20 well servicing rigs, 8 casing/coring rigs and 5 coil service rigs;

- A forecasted exit 2006 calendar year operating base of 85 conventional and hybrid drilling rigs, 37 wireline units, 22 well servicing rigs, 18 casing/coring rigs and 8 coil service rigs;

- A complementary customer base coupled with non-overlapping operating assets, enabling the combined company to provide unparalleled cross-selling potential;

- The third largest enterprise value of all publicly listed and traded drilling companies in Canada;

- A superior operating and financial growth profile featuring expected lower cost of capital for the combined company and better liquidity for shareholders.

The value of this merger is driven by the tremendous opportunities the combination presents to both companies to expand on each of its strengths. The aboriginal relationships will facilitate the introduction of industry dominant hybrid drilling and well servicing to a whole new group of customers and regions. The availability of Western Lakota's deeper drilling expertise will accelerate and enhance the expansion of Savanna's current growth plans in the deeper contract drilling market. Finally, the combined company will have a U.S. base from which to develop and grow both a deeper and hybrid-shallow drilling presence in the United States market.

In an industry suffering from a shortage of top quartile senior management personnel, operations management personnel and field employees, the merged company will provide unparalleled career opportunities to existing and new employees. As well as capitalizing on the existing aboriginal training initiatives of Western Lakota and their substantial current aboriginal employment base, the merged company will also accelerate the introduction of this program across Savanna's hybrid drilling, well servicing and wireline businesses.

With a combined 2006 capital expansion program of $240 million and substantial growth plans, the merged company will ultimately reap the benefits of having one of the largest growth potentials of any oilfield service company in North America.

Peters & Co. Limited acted as financial advisors to the Board of Directors of Western Lakota and it is of the opinion, as of the date hereof, that the consideration to be received by the holders of Western Lakota Shares and Western Lakota options pursuant to the Arrangement Agreement is fair, from a financial point of view to the holders of Western Lakota Shares and Western Lakota options. RBC Capital Markets and FirstEnergy Capital Corp. acted as financial advisors to the Board of Directors of Savanna and the Special Committee of the Board of Directors of Savanna respectively. FirstEnergy Capital Corp. has also advised the Special Committee of the Board of Directors of Savanna, that it is of the opinion, as of the date hereof, that the consideration under the transaction is fair, from a financial point of view, to Savanna.

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