Savanna Energy Services Corp. announces Q2 2008 results and expanded capital program



    TSX - SVY

    CALGARY, Aug. 5 /CNW/ - Savanna Energy Services Corp. ("Savanna" or "the
Company") is an oilfield services company operating in Western Canada and the
U.S. The Company's overall business is conducted through two major divisions:
contract drilling and well servicing.

    
    FINANCIAL HIGHLIGHTS

    The following is a summary of selected financial information of the
Company:

    (Stated in thousands of dollars, except per share amounts)

    -------------------------------------------------------------------------
                      Three Months Ended            Six Months Ended
    June 30               2008      2007   Change     2008      2007  Change
                             $         $                 $         $
    -------------------------------------------------------------------------
    Operating results
    Revenue             48,990    39,097      25%  198,150   177,914     11%
    Operating expenses  43,365    30,271      43%  138,461   106,670     30%
    Operating margin(1)  5,625     8,826     (36%)  59,689    71,244    (16%)
    Net earnings (loss)
     from continuing
     operations         (7,050)   (3,493)    102%   18,867    28,087    (33%)
      Per share: basic   (0.12)    (0.06)    100%     0.32      0.48    (33%)
      Per share: diluted (0.12)    (0.06)    100%     0.32      0.48    (33%)
    Net earnings (loss)
     from discontinued
     operations, net of
     tax                     -      (157)       -        -   140,755       -
      Per share: basic       -         -        -        -      2.40       -
      Per share: diluted     -         -        -        -      2.39       -
    Net earnings (loss) (7,050)   (3,650)     93%   18,867   168,842    (89%)
      Per share: basic   (0.12)    (0.06)    100%     0.32      2.87    (89%)
      Per share: diluted (0.12)    (0.06)    100%     0.32      2.87    (89%)
    -------------------------------------------------------------------------
    Cash Flows
    Operating cash flows
     from continuing
     operations before
     changes in
     working capital(1)   (613)    4,534    (114%)  47,393    53,610    (12%)
    Purchase of property
     and equipment     (69,905)  (25,497)    174%  (86,724)  (68,699)    26%
    Dividends           (1,485)        -        -   (2,967)        -       -
    -------------------------------------------------------------------------
                                                   June 30, December
    Financial Position                                2008  31, 2007
    Working capital(1)                              36,618    25,971     41%
    Property and equipment                         817,364   746,063     10%
    Total assets                                 1,234,165 1,180,092      5%
    Long-term debt                                 125,423    58,218    115%
    -------------------------------------------------------------------------


    OPERATIONAL HIGHLIGHTS

    -   In June 2008, Savanna expanded its presence in the U.S. through the
        acquisition of 5 drilling rigs and related equipment. The rigs are
        currently working in the Haynesville area of Texas and Louisiana.
        Coupled with the 2 rigs that moved into West Texas in May and June
        respectively, Savanna exited the second quarter with a U.S. drilling
        rig fleet of 14 rigs.

    -   The Company's expansion of its well servicing division into the U.S.
        is progressing faster than was originally anticipated with 4 rigs
        beginning work in June 2008; the remaining 2 are expected to be put
        into service early in the third quarter of 2008.

    -   Savanna's presence in South Saskatchewan has also expanded. The
        Company exited the quarter with 6 drilling rigs and 8 well servicing
        rigs dedicated to the market.


    EQUIPMENT FLEET
    Savanna's equipment fleet has expanded in 2008 through internal growth
    and acquisitions.

    -------------------------------------------------------------------------
    As at June 30                                     2008      2007  Change
    -------------------------------------------------------------------------
    Drilling Rigs
    Heavy and ultra-heavy telescoping doubles           45        38       7
    Hybrid drilling                                     46        39       7
    Triples                                              2         -       2
    Pipe-arm single                                      1         1       -
    Conventional shallow/surface/coring                 10        10       -
    -------------------------------------------------------------------------
    Total drilling rigs (gross)                        104        88      16
    Total drilling rigs (net)(*)                       100      83.5    16.5
    -------------------------------------------------------------------------

    Service Rigs
    Service rigs                                        60        45      15
    Coil tubing service units                            8         8       -
    -------------------------------------------------------------------------
    Total service rigs (gross)                          68        53      15
    Total service rigs (net)(*)                       65.5      50.5      15
    -------------------------------------------------------------------------
    (*) 8 drilling rigs and 5 service rigs (2007 - 9 drilling rigs and 5 coil
        tubing service units) were owned in 50/50 limited partnerships at
        June 30, 2008.

    Of the 6 service rigs the Company had committed to construct, 4 were put
into service in June 2008 with the remaining 2 expected to be completed in the
third quarter of 2008.
    In response to expectations of strong demand for 2009, Savanna has
determined to expand our capital construction program for 2008 by $54.5
million.  This capital expansion will be used to fund the construction of 4
additional drilling rigs and 2 additional double service rigs, as well as
additional drill pipe and other equipment to support the existing fleet.  The
drilling rigs will be heavy-duty doubles capable of deployment into any of the
basins in Canada or the United States in which Savanna currently operates. 
The service rigs will be supplied to our Carlyle, Saskatchewan base,
increasing our service rig fleet in that province to 10 rigs (from zero in Q2
2007).  These capital expenditures will be funded from cash flows generated
from operations and/or existing debt facilities, and all equipment should be
in the field by Q3 2009.
    This capital expansion will enhance Savanna's capabilities in the deeper
directional and horizontal natural gas and oil drilling plays presently
unfolding throughout North America.  In combination with previously announced
capital programs and acquisitions, the Savanna drilling rig fleet will grow by
a minimum of 12 rigs, to 108, or by 12% from January 1, 2008 to the completion
of the capital program in 2009.  Coupled with previously announced service rig
construction, Savanna's well servicing fleet will increase by a minimum of 8
rigs, to 72, or by 13% over the same time frame.
    Including previously announced capital programs and acquisitions,
Savanna's acquisition and capital committed to date in 2008 now aggregates
just over $150 million dollars.  The Company continues to actively evaluate
additional expansion opportunities.

    CONTRACT DRILLING
    DRILLING SERVICES

    (Stated in thousands of dollars, except revenue per operating day)

    -------------------------------------------------------------------------
                      Three Months Ended            Six Months Ended
    June 30               2008      2007   Change     2008      2007  Change
    -------------------------------------------------------------------------
    Revenue           $ 37,240  $ 28,982    28%  $ 159,549  $ 146,639     9%
    Operating
     expenses         $ 34,147  $ 22,942    49%  $ 112,843  $  87,856    28%
    Operating
     margin(1)        $  3,093  $  6,040   (49%) $  46,706  $  58,783   (21%)
    Number of
     operating days(*)   1,816     1,288    41%      7,444      6,266    19%
    Revenue per
     operating day    $ 20,506  $ 22,502    (9%) $  21,433  $  23,402    (8%)
    Number of spud to
     release days(*)(+)  1,624     1,078    51%      6,098      5,116    19%
    Wells drilled(+)       291       360   (19%)     1,740      2,067   (16%)
    Total meters
     drilled(+)        386,161   440,895   (12%) 1,659,410  1,773,900    (6%)
    Utilization(+)         21%       17%    24%        40%        40%     0%
    Industry average
     utilization (+/-)     19%       17%    12%        37%        38%    (3%)
    -------------------------------------------------------------------------
    (*) The number of operating days and number of spud to release days are
        all on a net basis which means only Savanna's proportionate share of
        any rigs held in limited partnerships have been included.

    (+) Savanna reports its rig utilization based on spud to release time for
        the rigs and excludes moving, rig up and tear down time, even though
        revenue is earned during this time. Savanna's rig utilization, spud
        to release days, wells drilled and total meters drilled exclude
        coring delineation rigs as the operating environment is not
        comparable to the Company's other drilling rigs. However, these rigs
        are included in total fleet numbers.

    (+/-) Source of industry figures: Canadian Association of Oilwell
          Drilling Contractors (CAODC).
    

    The drilling division was able to increase revenue and operating days in
the second quarter of 2008 compared to the same period in the prior year as a
result of increasing the average number of rigs deployed by 14 net rigs and
the number of rigs operating in the U.S. However, the division was still
affected by the overall decrease in activity levels in the oil and gas
industry in 2008, as evidenced by a 9% reduction in day rates in Q2 2008
compared to Q2 2007. Furthermore, wet weather throughout the quarter led to an
extended break-up this year, which had a particularly negative affect on the
more mobile hybrid drilling fleet.
    In addition to pricing pressure, increasing operating costs also
contributed to the reduction in operating margin for the quarter ended
June 30, 2008 relative to the same quarter in 2007. The increased operating
costs are a result of both labour cost increases and repairs and maintenance.
Labour increased as personnel were retained through spring break-up in
anticipation of a busy second half of 2008. Similarly, repairs and maintenance
occurred on a larger portion of the fleet this year while the rigs were idle
during break-up compared to Q2 of 2007 again in anticipation of a busier
second half of the year.
    On a year-to-date basis, downward pricing pressure and increasing
operating costs, particularly labour, continue to reduce operating margins.
Despite all of these factors, Savanna's drilling division consistently
achieves higher than industry average utilization rates and the first six
months of 2008 were no exception as the division operated 3% above industry
utilization levels.
    During the first half of 2008, Savanna averaged a deployed fleet of 95
net rigs (2007 - 81) and exited the quarter operating a fleet of 100 net rigs
(2007 - 83.5 net rigs).


    
    WELL SERVICING

    OILFIELD SERVICES

    (Stated in thousands of dollars, except revenue per hour)

    -------------------------------------------------------------------------
                      Three Months Ended            Six Months Ended
    June 30               2008      2007   Change     2008      2007  Change
    -------------------------------------------------------------------------
    Revenue           $ 11,437  $  7,745    48%  $  36,352  $  28,204    29%
    Operating
     expenses         $  9,218  $  7,329    26%  $  24,118  $  18,814    28%
    Operating
     margin(1)        $  2,219  $    416   433%  $  12,234  $   9,390    30%
    Number of hours     15,262     9,551    60%     44,837     33,065    36%
    Revenue per hour  $    749  $    811    (8%) $     811  $     853    (5%)
    Utilization(*)(+)      31%       21%    49%        46%        41%    13%
    -------------------------------------------------------------------------
    (*) Utilization is based on standard hours of 3,650 per rig per year.
        Industry average utilization figures, specific to well servicing, are
        not available.

    (+) The utilization rate excludes the coiled tubing service units since
        these units are not comparable in size or operations to the
        division's service rigs.
    

    The well servicing division achieved an increase in revenue and number of
hours in the second quarter of 2008 compared to the same period in the prior
year due to an increase in the average fleet size to 62 rigs (an increase of
12 rigs). However, the division was still affected by the overall decrease in
activity levels in the oil and gas industry in 2008, as evidenced by an 8%
reduction in hourly rates in Q2 2008 compared to Q2 2007.
    In a period when rising costs have had a significant effect on the
Company's results, the well servicing division actually saw an overall
increase in operating margins. The lower operating costs relate to a decrease
in repairs and maintenance which in Q2 2007 included significant overhaul
costs on certain equipment. Despite the reduced operating costs, operating
margins for Q2 2008 are still lower on a percentage of revenue basis when
compared to operating margins for both the six months ended June 30, 2008 and
2007. As with the drilling division, the lower margin percentage in Q2 2008
compared with the six months ended June 30, 2008 and 2007 is due primarily to
pricing decreases and labour costs which have increased as personnel were
retained through spring break-up in anticipation of a busy second half of
2008.
    On a year-to-date basis, downward pricing pressure has continued;
however, operating margins remain relatively consistent with the first six
months of 2007. The Company is optimistic that its expanded service rig fleet
can be fully crewed through the second half of 2008 to take advantage of a
potential increase in activity levels.
    During the first half of 2008, the well servicing division operated an
average of 57 (54.5 net) service rigs, 8 coiled tubing service units and 34
boilers, compared to the same period in 2007 where the division operated an
average of 44 service rigs, 8 (5.5 net) coiled tubing service units, and 23
boilers. The well servicing division exited the quarter with 60 (57.5 net)
service rigs, 8 coiled tubing service units, and 34 boilers.

    QUARTERLY RESULTS

    The quarterly results of Savanna are markedly affected by weather
patterns throughout its operating area in Canada. Historically, the first
quarter of the calendar year is very active, followed by a much slower second
quarter. As a result of this, the variation on a quarterly basis, particularly
in the first and second quarters, can be dramatic year-over-year independent
of other demand factors. The following is a summary of selected financial
information of the Company for the last eight completed quarters. All prior
period amounts have been restated to reflect the discontinuation of wireline
operations.


    
    SUMMARY OF QUARTERLY RESULTS

    (Stated in thousands of dollars, except per share amounts)

    -------------------------------------------------------------------------
                                                 Three Months Ended
    -------------------------------------------------------------------------
                                     Jun-30     Mar-31     Dec-31    Sept-30
                                       2008       2008       2007       2007
                                          $          $          $          $
    -------------------------------------------------------------------------
    Revenue                          48,990    149,160    101,804     93,735
    Operating expenses               43,365     95,097     68,156     58,111
    Operating margin(1)               5,625     54,063     33,648     35,624
    Operating margin %(1)               11%        36%        33%        38%
    Net earnings (loss)
     from continuing operations      (7,050)    25,917   (125,639)    12,581
      Per share: basic                (0.12)      0.44      (2.11)      0.21
      Per diluted share               (0.12)      0.44      (2.11)      0.21
    Net earnings (loss)              (7,050)    25,917   (125,639)    12,581
      Per share: basic                (0.12)      0.44      (2.11)      0.21
      Per diluted share               (0.12)      0.44      (2.11)      0.21
    Total assets                  1,234,165  1,243,562  1,180,092  1,298,935
    Long-term debt                  125,423    119,428     58,218     44,510
    -------------------------------------------------------------------------


    (Stated in thousands of dollars, except per share amounts)

    -------------------------------------------------------------------------
                                                 Three Months Ended
    -------------------------------------------------------------------------
                                     Jun-30     Mar-31     Dec-31    Sept-30
                                       2007       2007       2006       2006
                                          $          $          $          $
    -------------------------------------------------------------------------
    Revenue                          39,097    138,817     97,371     70,042
    Operating expenses               30,271     76,400     58,381     41,476
    Operating margin(1)               8,826     62,417     38,990     28,566
    Operating margin %(1)               23%        45%        40%        41%
    Net earnings (loss)
     from continuing operations      (3,493)    31,580     18,138     12,466
      Per share: basic                (0.06)      0.54       0.31       0.31
      Per diluted share               (0.06)      0.54       0.31       0.30
    Net earnings (loss)              (3,650)   172,492     19,812     14,825
      Per share: basic                (0.06)      2.95       0.34       0.37
      Per diluted share               (0.06)      2.94       0.34       0.36
    Total assets                  1,242,724  1,290,303  1,205,939  1,156,048
    Long-term debt                   27,034     34,527    155,052    126,051
    -------------------------------------------------------------------------
    Notes:

    (1) Operating margin, operating cash flows from continuing operations
        before changes in non-cash working capital, and working capital are
        not recognized measures under Canadian generally accepted accounting
        principles (GAAP), and are unlikely to be comparable to similar
        measures presented by other companies. Management believes that, in
        addition to net earnings, the measures described above are useful as
        they provide an indication of the results generated by the Company's
        principal business activities prior to consideration of how those
        activities are financed and how the results are taxed in various
        jurisdictions.

        -  Operating margin is defined as revenue less operating expenses.
        -  Operating margin percent is defined as revenue less operating
           expenses divided by revenue.
        -  Operating cash flows from continuing operations before changes in
           working capital is defined as cash flows from continuing operating
           activities before changes in non-cash working capital.
        -  Working capital is defined as total current assets less total
           current liabilities excluding the current portions of long-term
           debt.


    CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
    AND COMPREHENSIVE INCOME (LOSS)

    (Stated in thousands of dollars, except per share amounts) (Unaudited)

    -------------------------------------------------------------------------
                                     Three Months Ended     Six Months Ended
    June 30                             2008       2007      2008       2007
                                           $          $         $          $
    -------------------------------------------------------------------------
    Revenue
    Sales and services                48,990     39,097   198,150    177,914
    -------------------------------------------------------------------------
    Expenses
      Operating                       43,365     30,271   138,461    106,670
      General and administrative       5,167      4,127     8,924      8,650
      Stock-based compensation           931      1,628     1,967      2,725
      Depreciation and amortization    7,089      5,975    18,685     15,232
      Interest on long-term debt       1,442        626     2,964      1,946
      Foreign exchange (gain) loss
       and other expenses               (190)       520       (82)       381
    -------------------------------------------------------------------------
                                      57,804     43,147   170,919    135,604
    -------------------------------------------------------------------------
    Earnings (loss) from continuing
     operations before income taxes   (8,814)    (4,050)   27,231     42,310
    -------------------------------------------------------------------------
    Income taxes
      Current                              7     (3,164)      889      4,433
      Future                          (1,771)     2,713     7,475      9,138
    -------------------------------------------------------------------------
                                      (1,764)      (451)    8,364     13,571
    -------------------------------------------------------------------------
    Net earnings (loss) from
     continuing operations before
     non-controlling interest         (7,050)    (3,599)   18,867     28,739
    Non-controlling interest               -        106         -       (652)
    -------------------------------------------------------------------------
    Net earnings (loss) from
     continuing operations            (7,050)    (3,493)   18,867     28,087

    Net earnings from discontinued
     operations, net of tax of $33,161     -       (157)        -    140,755
    -------------------------------------------------------------------------
    Net earnings (loss) and
     comprehensive income (loss)      (7,050)    (3,650)   18,867    168,842
    -------------------------------------------------------------------------
    Net earnings per share
      Basic - net earnings (loss)
       from continuing operations      (0.12)     (0.06)     0.32       0.48
      Diluted - net earnings (loss)
       from continuing operations      (0.12)     (0.06)     0.32       0.48
      Basic - net earnings from
       discontinued operations             -          -         -       2.40
      Diluted - net earnings from
       discontinued operations             -          -         -       2.39
      Basic - net earnings (loss) -
       per share                       (0.12)     (0.06)     0.32       2.87
      Diluted - net earnings (loss) -
       per share                       (0.12)     (0.06)     0.32       2.87
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
    (Stated in thousands of dollars) (Unaudited)
    -------------------------------------------------------------------------
                                     Three Months Ended     Six Months Ended
    June 30                             2008       2007      2008       2007
                                           $          $         $          $
    -------------------------------------------------------------------------
    Retained earnings, beginning
     of period                       192,010    287,257   167,575    114,765
    Dividends                         (1,485)         -    (2,967)         -
    Net earnings (loss)               (7,050)    (3,650)   18,867    168,842
    -------------------------------------------------------------------------
    Retained earnings, end
     of period                       183,475    283,607   183,475    283,607
    -------------------------------------------------------------------------



    CONSOLIDATED BALANCE SHEETS
    (Stated in thousands of dollars) (Unaudited)

    -------------------------------------------------------------------------
                                                                    December
                                                          June 30         31
                                                             2008       2007
                                                                $          $
    -------------------------------------------------------------------------
    ASSETS
    Current
      Cash                                                  3,694      3,094
      Accounts receivable                                  71,848     95,386
      Income taxes receivable                                  80          -
      Inventory                                             5,761      8,529
      Prepaid expenses and deposits                         1,532      1,032
    -------------------------------------------------------------------------
                                                           82,915    108,041
    Notes receivable                                        7,350      6,000
    Property and equipment                                817,364    746,063
    Goodwill                                              309,625    309,625
    Intangibles and other assets                           16,911     10,363
    -------------------------------------------------------------------------
                                                        1,234,165  1,180,092
    -------------------------------------------------------------------------

    LIABILITIES
    Current
      Bank indebtedness                                    15,202     10,713
      Operating loans                                         427        313
      Accounts payable and accrued liabilities             29,183     44,465
      Dividends payable                                     1,485      1,488
      Income taxes payable                                      -     25,091
      Current portion of long-term debt                    24,605     15,168
    -------------------------------------------------------------------------
                                                           70,902     97,238
    Deferred net revenue                                    1,647      1,647
    Long-term debt                                        100,818     43,050
    Future income taxes                                    69,654     62,180
    -------------------------------------------------------------------------
                                                          243,021    204,115
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share capital                                         795,456    797,156
    Contributed surplus                                    12,213     11,246
    Retained earnings                                     183,475    167,575
    -------------------------------------------------------------------------
                                                          991,144    975,977
    -------------------------------------------------------------------------
                                                        1,234,165  1,180,092
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Stated in thousands of dollars) (Unaudited)

    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
    June 30                            2008       2007       2008       2007
                                          $          $          $          $
    -------------------------------------------------------------------------
    Cash flows from operating
     activities
      Net earnings (loss) from
       continuing operations         (7,050)    (3,493)    18,867     28,087
      Items not affecting cash:
        Stock-based compensation        931      1,628      1,967      2,725
        Depreciation and
         amortization                 7,089      5,975     18,685     15,232
        Future income taxes          (1,771)     2,713      7,475      9,138
        Non-controlling interest          -       (106)         -        652
        Settlement of deferred
         drilling advances                -     (2,197)         -     (2,197)
        Amortization of other assets    252          -        439          -
        Unrealized foreign exchange
         gain                          (254)         -       (254)         -
        Loss (gain) on disposal of
         assets                         190         14        214        (27)
    -------------------------------------------------------------------------
                                       (613)     4,534     47,393     53,610
      Change in non-cash working
       capital from continuing
       operations                    66,377     50,187    (17,882)    17,280
    -------------------------------------------------------------------------
      Cash flows from continuing
       operations                    65,764     54,721     29,511     70,890
    -------------------------------------------------------------------------
      Net earnings from discontinued
       operations                         -          -          -        330
      Items not affecting cash                                         1,295
    -------------------------------------------------------------------------
                                          -          -          -      1,625
      Change in non-cash working
       capital from discontinued
       operations                         -          -          -      4,630
    -------------------------------------------------------------------------
      Cash flows from discontinued
       operations                         -          -          -      6,255
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
      Total cash flows from operating
       activities                    65,764     54,721     29,511     77,145
    -------------------------------------------------------------------------

    Cash flows from financing
     activities
      Shares issued on exercise of
       stock options                  1,586      1,164      1,865      1,779
      Shares repurchased                  -          -     (4,137)         -
      Advances on operating loans,
       net of repayments                427       (386)       115       (237)
      Repayment of deferred drilling
       advance                            -     (2,264)         -     (2,264)
      Issuance of long-term debt     60,351          -    130,351      7,250
      Repayment of long-term debt   (54,103)    (7,703)   (62,893)  (135,775)
      Dividends                      (1,485)         -     (2,967)         -
      Change in working capital
       related to financing
       activities                         3          -         (4)         -
    -------------------------------------------------------------------------
      Cash flows from continuing
       financing activities           6,779     (9,189)    62,330   (129,247)
    -------------------------------------------------------------------------

      Cash paid on acquisition and
       cancellation of options            -          -          -       (520)
    -------------------------------------------------------------------------
      Cash flows from discontinued
       financing activities               -          -          -       (520)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
      Total cash flows from
       financing activities           6,779     (9,189)    62,330   (129,767)
    -------------------------------------------------------------------------

    Cash flows from investing
     activities
      Purchase of property and
       equipment                    (69,905)   (25,497)   (86,724)   (68,699)
      Proceeds on disposal of assets    869         71        988        241
      Cash paid on acquisitions,
       net of cash acquired               -     (2,984)    (3,504)   (53,718)
      Change in working capital
       related to investing
       activities                     1,412     (7,733)     1,070     (5,703)
      Purchase of intangibles and
       other assets                  (7,227)         -     (7,560)         -
    -------------------------------------------------------------------------
      Cash flows from continuing
       investing activities         (74,851)   (36,143)   (95,730)  (127,879)
    -------------------------------------------------------------------------

      Purchase of property and
       equipment                          -          -          -       (148)
      Cash received on sale of
       discontinued operations,
       net of costs                       -       (188)         -    207,899
    -------------------------------------------------------------------------
      Cash flows from discontinued
       investing activities               -       (188)         -    207,751
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
      Total cash flows from
       investing activities         (74,851)   (36,331)   (95,730)    79,872
    -------------------------------------------------------------------------

    Increase (decrease) in cash,
     net of bank indebtedness        (2,308)     9,201     (3,889)    27,250
    Cash, net of bank indebtedness,
     beginning of period             (9,200)     1,048     (7,619)   (17,001)
    -------------------------------------------------------------------------
    Cash, net of bank indebtedness,
     end of period                  (11,508)    10,249    (11,508)    10,249
    -------------------------------------------------------------------------
    

    Cautionary Statement Regarding Forward-Looking Information and Statements

    Certain statements and information contained in this press release
including statements that contain words such as "could", "should", "can",
"anticipate", "expect", "believe", "will", "may","likely", "estimate",
"predict", "potential", "continue", "maintain", "retain", "grow", and similar
expressions and statements relating to matters that are not historical facts
may constitute "forward-looking information" within the meaning of applicable
Canadian securities legislation and "forward-looking statements" within the
meaning of the United States Private Securities Litigation Reform Act of 1995.
    These statements are based on certain assumptions and analysis made by
the Company in light of its experience and its perception of historical
trends, current conditions and expected future developments, as well as other
factors it believes are appropriate in the circumstances. In particular, the
Company's expectation of strong demand for its equipment for 2009, the
development of the deeper directional and horizontal natural gas and oil
drilling plays in Canada and the United States, and the anticipated expansion
of its drilling and well servicing operations as a result are premised on the
sustainability of current commodity price levels, coupled with limited current
supply and strong demand for such commodities, providing a stronger catalyst
for increased oilfield services. These factors may positively influence cash
flows of the Company's customers which may translate into increased drilling
activity and the reduction of pricing pressure for Savanna services. Whether
actual results, performance or achievements will conform to the Company's
expectations and predictions is subject to a number of known and unknown risks
and uncertainties which could cause actual results to differ materially from
the Company's expectations.  Such risks and uncertainties include, but are not
limited to: fluctuations in the price and demand for oil and natural gas;
fluctuations in the level of oil and natural gas exploration and development
activities; fluctuations in the demand for well servicing and contract
drilling; the effects of weather conditions on operations and facilities; the
existence of competitive operating risks inherent in well servicing and
contract drilling; general economic, market or business conditions; changes in
laws or regulations, including taxation, environmental and currency
regulations; the lack of availability of qualified personnel or management;
and other unforeseen conditions which could impact on the use of services
supplied by the Company.
    Consequently, all of the forward-looking information and statements made
in this press release are qualified by this cautionary statement and there can
be no assurance that the actual results or developments anticipated by the
Company will be realized or, even if substantially realized, that they will
have the expected consequences to or effects on the Company or its business or
operations. Except as may be required by law, the Company assumes no
obligation to update publicly any such forward-looking information and
statements, whether as a result of new information, future events, or
otherwise.

    OTHER

    Savanna will host a conference call for analysts, investors and
interested parties on Wednesday, August 6, 2008 at 9 a.m. Mountain Time
(11 a.m. Eastern Time) to discuss the Company's 2008 second quarter results.
The call will be hosted by Ken Mullen, Savanna's President and Chief Executive
Officer and Darcy Draudson, Chief Financial Officer.
    If you wish to participate in this conference call, please call
1-888-892-3255 (for participants in North America). Please call at least 10
minutes ahead of time.
    A replay of the call will be available until August 13, 2008 by dialing
1-800-937-6305 and entering passcode 110557.

    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.

    %SEDAR: 00019742E




For further information:

For further information: Ken Mullen, President and Chief Executive
Officer, Telephone: (403) 503-9990, Fax: (403) 267-6749

Organization Profile

Savanna Energy Services Corp.

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