Savanna Acquires Well Servicing and Rental Business
Savanna Energy Services Corp. has acquired the assets of a privately held well servicing company, along with the shares of a related well servicing and rental business, for aggregate proceeds of $67.8 million—consisting of $50.8 million in cash and $17 million in Savanna common shares. The Savanna common shares issued pursuant to the transaction will be placed in escrow and released over a three-year period.
The combined acquisitions include 20 service rigs plus associated field locations, boilers and support equipment, as well as 1 additional service rig under construction. The acquisition increases Savanna's current well servicing fleet by 83% to 44 rigs.
The operational focus for the purchased equipment is primarily in east central Alberta and west central Saskatchewan, areas in which Savanna does not currently operate. The majority of the fleet of service rigs was built in the last 4 years, and the purchase includes a manufacturing, maintenance and repair facility and personnel that will be used to support the entire go-forward Savanna well-servicing fleet.
All of the principles have agreed to remain with Savanna in their present roles, and all have executed independent three-year employment and non-competition agreements.
Based on normalized 2006 estimated results, the acquisition is valued at less than 4 times earnings before interest, income taxes, depreciation and amortization ("EBITDA").
Post this transaction, Savanna's well servicing fleet will consist of 44 rigs, with 8 rigs scheduled for manufacture and delivery in 2007.
This transaction reinforces Savanna's growing position in the well servicing market in a production-oriented area of the basin, and adds significant additional scale to the core well servicing business to complement Savanna's strong existing drilling presence.
Savanna Energy Services Corp. is a leading North American contract drilling and oilfield services company providing a broad range of drilling, well servicing and related services with a focus on fit for purpose technologies for the North American market and industry-leading aboriginal relationships. Post this transaction Savanna will operate 87 drilling rigs, 44 well servicing rigs and 8 coil service units in Canada and the United States.
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