Saxon Expands Drilling Fleet in Mexico
Saxon Energy Services' Mexican joint venture, Drillers Technology de Mexico, S.A. de C.V., of which Saxon owns 51%, has signed a contract with Dowell Schlumberger de Mexico S.A. de C.V. for the provision of an additional three drilling rigs to work on integrated projects for Pemex in Mexico under a three year contract.
The addition of these three new Advanced Technology Double rigs will add to the existing fleet of seven rigs currently operating in Mexico, bringing DTM's rig fleet count in Mexico to a total of ten owned rigs and two leased rigs. The three new rigs are currently under construction and are expected to commence drilling activities in the third quarter of 2007.
The addition of these three rigs will further strengthen DTM's position in Mexico, making it the largest international drilling contractor in Mexico. Dale Tremblay, CEO of Saxon, said "Our strategic partnership with Schlumberger is an exciting avenue for growth for the Corporation, ensuring a long term presence for Saxon in the Mexican market".
In conjunction with this contract, Saxon has upsized and amended its secured credit facilities with its syndicate of lenders led by Standard Bank Plc. Saxon has increased the borrowing capacity of the revolving credit facility ("Revolver") from $65.0 million to $100.0 million and extended the term of the Revolver from 364 days to two years. In addition, amounts borrowed under the Revolver now bear interest at one or three month LIBOR plus 1.50% to 2.63% dependent upon certain financial ratios. As of the date of this release Saxon had drawn $45.0 million under the Revolver.
Saxon also upsized the capacity under its term debt facility ("Term") by an additional $20.0 million and has 60 days from June 22, 2007 to draw the additional funds. Once drawn, the balance owed by Saxon under the Term will be $68.1 million. In addition, Saxon has negotiated a principal repayment holiday for the Term to May 2008, at which time Saxon will restart principal repayments in 11 quarterly installments of $6.2 million. Furthermore, amounts borrowed under the Term now bear interest at three month LIBOR plus 2.00% to 2.88% dependent upon certain financial ratios.
Saxon will use the additional funds drawn under the Term to finance its share of the three rig contract in Mexico discussed previously, while the additional capacity available under the Revolver will provide Saxon increased flexibility to pursue expansion opportunities as they arise.
Saxon is an 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, national and international 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 owned rigs is comprised of 42 (net 38) drilling and nine workover rigs, with a further eight (net 6.5) drilling rigs contracted and under construction.
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