Cathedral Energy Services Income Trust Approves Capital Budgets
Cathedral Energy Services Income Trust has approved an updated 2008 capital budget of $51.4 million (previous approved budget was $39.9 million) and a 2009 capital budget of $17.0 million. Included in the 2008 and 2009 capital expenditures are maintenance capital items in the amount of $745,000 and $1,500,000, respectively. The 2008 and 2009 capital expenditures will be financed by way of a combination of the Trust's credit facilities and cash flow from operations.
In summary, the major items within the total 2008 capital budget are: i) 20 Electro-Magnetic Measurement-While-Drilling ("EM-MWD") systems: ii) expansion of the mud motor and collar fleet to accommodate increased
directional drilling capacity as well as to reduce rental expense for such equipment; iii) 11 production testing units as well as progress payments on units to be received in 2009; iv) specialty wireline tools; and v) facility
acquisition costs. The Trust expects to end 2008 with 98 MWD systems (37 in U.S.), 28 wireline units (5 in U.S.) and 30 production testing units (8 in U.S.).
The major items with the 2009 capital budget are: i) an upgrade of the fleet of EM-MWD systems to our third generation; ii) addition of 11 MWD systems; iii) expansion of the mud motor and collar fleet to accommodate
increased directional drilling capabilities; iv) addition of 7 production testing units for the U.S. market; and v) facility renovation costs.
The Trust continues to make progress towards commencing commercial activities in Venezuela. In contemplation of providing services, the Trust is mobilizing directional drilling equipment for operations in Venezuela. The movement of this equipment to Venezuela will bring our investment in facilities and equipment in Venezuela to approximately $7.3 million.
Cathedral's third generation ("G3") EM system has been commercially released. The G3 tool utilizes enhanced formation impedance matching techniques coupled with advanced data encoding and decoding methods that has allowed for substantially improved transmission depth and signal detection. The G3 system has allowed Cathedral to penetrate traditionally non EM markets (i.e. south east Saskatchewan) as well as to enhance performance in traditional markets. The new system not only improves data transmission depths, but also reduces operational costs in a given application over the existing G1/G2 EM systems.