Savanna Energy Services Corp. Confirms 2008 Capital Budget And Announces 4th Quarter and Year-End 2007 Results Release Date



    TSX-SVY

    CALGARY, Feb. 12 /CNW/ - Savanna Energy Services Corp. ("Savanna Energy"
or the "Company") confirms a base capital program for 2008 of $10 Million,
representing the capital cost of maintaining the Company's drilling and well
servicing fleet. Incremental capital required to finance growth plans pursuant
to local and international expansion and acquisitions the Company may pursue,
as well as expansion through acquisition of land or buildings, will be in
addition to this amount.
    Savanna Energy also confirms the release of its 4th quarter and year-end
2007 results on Tuesday, March 11, 2008, after the close of markets. The
results will be available on the Company's web site after dissemination has
taken place over the news wire service.
    Ken Mullen, President and Chief Executive Officer, and Darcy Draudson,
Chief Financial Officer, will then host a conference call on Wednesday, March
12, 2008 at 8:00 A.M. Mountain Time (10:00 A.M. Eastern Time) to discuss the
Company's results for the 4th quarter and year end 2007.
    A preliminary review of the 4th quarter operating results is included in
this press release. In addition, the Company is continuing its process of
assessing the goodwill and intangibles it booked in 2006 related to the
acquisition of Western Lakota Energy Services Inc. ("Western Lakota"), and
does expect to recognize a write-down of goodwill and intangible assets in its
December 31, 2007 year-end statements. Comments on these factors are discussed
below:

    Canadian Operations
    -------------------
    Revenue for the quarter increased marginally from the comparable period
in 2006 as a result of an expanded equipment fleet. However, ongoing
industry-wide price discounting resulted in a lower gross margin contribution
than either the comparable period in 2006 or compared to Q3, 2007.
Additionally, coring and delineation drilling in northern areas did not
commence until very late in Q4, contrary to the early December commencement in
2006.

    U.S. Operations
    ---------------
    Operations for the quarter were positively impacted by the increased
equipment allocation to the U.S., increasing our fleet from 4 to 6 rigs during
the quarter. However, increasingly competitive day rates and some
unanticipated costs in relation to our footage contracts resulted in lower Q4,
2007 net contributions from these rigs than we had experienced previously.
Overall, Savanna still anticipates that the United States will constitute an
important expansion opportunity for the Company moving forward.

    Financial Matters
    -----------------
    There are a number of discrete financial matters affecting earnings for
both Q4, 2007 and for the full fiscal year which could materially impact Q4
and full year 2007 results. These factors include the following:

    
        1.    Sale of Ultraline Services Corporation;
        2.    Goodwill and intangible write-down;
        3.    Tax provisions; and
        4.    Stock-based compensation expense.
    

    The financial effect of the goodwill and intangible write-down, as well
as tax provision adjustments have not yet been finalized.
    The anticipated range of incremental effect of each of these items on Q4
and full year 2007 results is reflected in the table below, subject to the
following comments:
    The anticipated goodwill and intangible write-down range is between
$150 Million and $160 Million, leaving an aggregate goodwill and intangible
asset value on the balance sheet at December 31, 2007 of between $310 Million
and $320 Million. The write-down is of the goodwill and intangible balances
that arose from the merger of Savanna Energy and Western Lakota in 2006, an
all share transaction whereby the resulting entity was owned 51.5% by
pre-merger Savanna shareholders and 48.5% by prior Western Lakota
shareholders.
    Additionally, the Company's tax provision will include recoveries
relating to income tax rate reductions enacted during the fourth quarter of
2007, a change in the Company's expectation of when cash taxes will become
payable and a recovery relating to the impairment loss on intangible assets.
The reduction is expected to approximate $14-$16 Million.
    The final determination of the non-cash items discussed above could
significantly impact earnings per share for Q4, 2007 and full year 2007. As a
result, we have also provided a range of estimates of operating cashflow from
continuing operations before working capital adjustments. The Q4, 2006 and
year-end 2006 per share comparable amounts of $0.53 and $1.87 are consistent
with the anticipated per share ranges for Q4 and full year 2007 as set forth
in the table below, despite a much more challenging operating environment.

    
                     Anticipated Per Share Amounts - 2007

    -------------------------------------------------------------------------
                                  4th Quarter                    2007
                           From ($)        To ($)      From ($)        To ($)
    -------------------------------------------------------------------------
    Fully diluted earnings
     (loss) per share        (2.15)        (2.10)         0.90          0.95
    -------------------------------------------------------------------------
    Gain on sale of
     Ultraline Services
     Corporation                 -             -          2.38          2.38
    -------------------------------------------------------------------------
    Goodwill & intangible
     write-down               2.50          2.60          2.50          2.60
    -------------------------------------------------------------------------
    Income tax reduction      0.24          0.27          0.24          0.27
    -------------------------------------------------------------------------
    Stock-based
     compensation expense     0.03          0.03          0.10          0.10
    -------------------------------------------------------------------------
    Operating cashflow
     from continuing
     operations before
     working capital
     adjustment              $0.45         $0.50         $1.85         $1.90
    -------------------------------------------------------------------------
    

    If you wish to participate in Savanna Energy's Q4 and year-end 2007
conference call on March 12, 2008 at 8:00 AM Mountain (10:00 AM Eastern),
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 March 19, 2008 by dialing
1-800-937-6305 and entering passcode 110765.

    Headquartered in Calgary, Alberta, Savanna carries on operations in
Canada and the United States. Savanna is a leading drilling and well servicing
contractor continuing a modern proprietary equipment offering with industry
leading First Nations partnerships.

    This press release contains forward-looking statements. When used in this
press release, the words "anticipate", "expect" and similar expressions, are
intended to identify those forward-looking statements. The Corporation's
guidance herein is preliminary. These statements involve known and unknown
risks, uncertainties, and other factors that may cause actual results or
events to differ materially from those anticipated in such forward-looking
statements. Such statements reflect the Corporation's current views with
respect to certain events, and are subject to certain risks, uncertainties and
assumptions, including the finalization of audited results for the 2007 fiscal
year. Should one or more of these risks or uncertainties materialize, or
should assumptions underlying forward-looking statements prove incorrect,
actual results may vary materially from those described in this press release
as intended, anticipated, estimated, or expected.

    %SEDAR: 00019742E




For further information:

For further information: Savanna Energy Services Corp., Ken Mullen,
President and CEO, Tel: (403) 267-6726, Fax: (403) 267-6749,
kmullen@savannaenergy.com, www.savannaenergy.com; Darcy Draudson, Chief
Financial Officer, Tel: (403) 267-6727, Fax: (403) 267-6749,
ddraudson@savannaenergy.com, www.savannaenergy.com

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Savanna Energy Services Corp.

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