Drillers Technology to Send Additional Rigs to Mexico
Drillers Technology Corp. and Dowell Schlumberger de Mexico have formed a corporate joint venture, Drillers Technology de Mexico S.A. de C.V. to facilitate drilling operations in Mexico. The Joint Venture will be owned 51% by Drillers Technology and 49% by Dowell Schlumberger. The venture participants will share proportionately in Joint Venture earning and contribute as to their share of capital expenditures.
Drillers Technology de Mexico has committed to provide three drilling rigs to be deployed to drill an estimated 200 wells in the Chicontepec area of Mexico. The Chicontepec drilling program is contracted to commence May 2003 and is estimated to take four years to complete.
The Joint Venture will subcontract the three new rigs to Dowell Schlumberger, who is the lead contractor to PEMEX. The three rigs are to be used for a 200 well, pad-drilling program, drilling vertical and directional wells ranging from 2,000 meters to 2,800 meters. Strong days rates in concert with high rig utilization is expected to generate consistent cash flows to Drillers Technology Corp. through its share of Joint Venture earnings. The Chicontepec area is located approximately 250 kilometers northeast of Mexico City.
The three new rigs to be provided to the Joint Venture for the Chicontepec contract are being constructed by Drillers Technology Corp. in Canada. They are to be delivered in May 2003 to meet contract demands. Each rig is projected to cost approximately $7.0 million, of which Drillers Technology share of construction costs is 51%. The rigs will incorporate top drive technology and be capable of being skidded from location to location and are designed to provide casing drilling.
The Corporation's two drilling rigs and ancillary equipment currently contracted to Schlumberger in the Burgos area of Mexico will be sold to the joint venture at fair market value, for cash representing 49% of the value and a joint venture interest for the remaining 51%. The rigs will continue to drill for Schlumberger under the terms of its existing contract.
In addition to the 51% interest in five rigs held through the Mexican joint venture, Drillers Technology has seven wholly owned drilling rigs. The Corporation has contracted one rig to Tesco Corporation to be moved to a multi-well casing drilling program in Mexico, one rig has been contracted through a lease to Kuukpik Drilling to be deployed in a multi-well platform drilling program in Alaska, and five rigs are contracted to winter drilling programs located in western Canada.