Saxon Energy Acquires Kinnell
Saxon Energy Services Inc. said that a subsidiary, Saxon Drilling Canada Limited Partnership, has completed the previously announced purchase of all of the assets of Kinnell Drilling Ltd. and Kinnell Resource Consultants Ltd. (collectively "Kinnell"). The assets include seven drilling rigs, an operating base, and spare equipment. One of the rigs is in the process of being constructed and is expected to be completed at the vendor's expense on or about November 1, 2006. Senior management of Kinnell, John D. Inverarity and Jaysen Inverarity, have joined Saxon and are responsible for managing the day-to-day operations of the Canadian business.
This acquisition marks a significant expansion of Saxon's Canadian rig fleet, increasing its total rigs in the country to nine. Saxon now has a total rig count in North America of 29 (25 net), with a further seven drilling rigs contracted and under construction. While Saxon maintains an active fleet of 27 rigs in South America, presently working at 93% utilization, this Canadian rig acquisition reinforces the company's strategy of building a strong North American operating base.
Saxon also reported that in the second quarter, 5,615,545 of its common share purchase warrants--which had expiry dates of June 22, 2006, and June 30, 2006--were exercised for total proceeds to Saxon of CDN$20.8 million. Presently, the only Saxon warrants outstanding are 8,415,000 warrants due November 17, 2007, which have an exercise price of CDN$6.50 per common share.
Saxon financed the Kinnell asset acquisition. It is financing all previously announced rig construction out of its available cash flow, the proceeds of the warrants just exercised, and its recently expanded credit facilities.
Saxon is an emerging international oilfield services company operating a well-established drilling and well-servicing business, with a substantial presence in Canada, Colombia, Ecuador, Mexico, Peru, United States, and Venezuela. Saxon focuses on providing contract drilling and workover services to major and intermediate oil and gas companies and plans to grow revenue by both the acquisition of existing companies operating in its areas of interest and the construction of new technology rigs. Saxon's active fleet of rigs comprises 41 (net 37) drilling and 15 workover rigs, with a further seven drilling rigs contracted and under construction.
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