/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/
CALGARY, Feb. 22, 2012 /CNW/ - Cathedral Energy Services Ltd. (the "Company" or "Cathedral" /TSX: CET) is pleased to announce it has executed a key agreement towards commencement of operations in Venezuela through a joint venture company, Vencana Servicios Petroleros, S.A. ("Vencana") that is 40% owned by Cathedral. The Asset Transfer and Credit Capitalization Agreement (the "Agreement") provides for:
|1)||the sale by Cathedral's subsidiaries to Vencana certain existing assets located in Maturin, Venezuela including land and building associated with an operations facility, mud motors, drill collars, office and shop equipment and inventory;|
|2)||adding additional equipment to increase directional drilling job capability from 4 concurrent jobs to 10; and|
|3)||the future expansion into other product lines including production testing and wireline services.|
The operating model within the Agreement is structured such that Vencana will own the operating assets excluding Measurement-While-Drilling ("MWD") equipment which will be leased to Vencana by a Cathedral subsidiary.
As part of the sale of assets to Vencana, Cathedral is to receive 60% of the proceeds in cash from its joint venture partner, a wholly-owned subsidiary of Petróleos de Venezuela S.A. ("PDVSA"), the state-owned oil and natural gas corporation of the Bolivarian Republic of Venezuela and the remaining 40% will be Cathedral's contribution to the joint venture.
The process of increasing directional drilling job capability from 4 concurrent jobs to 10 is expected to occur over a year from the commencement of performing directional drilling operations by Vencana. This process will include Vencana purchasing additional mud motors and drill collars from Cathedral and Cathedral providing additional MWD equipment.
The Agreement includes various payment milestones for PDVSA's subsidiary. Delays in payment by PDVSA's subsidiary will result in a deferral of the underlying intentions of the Agreement.
Prior to Vencana commencing operations additional auxiliary agreements between Vencana and Cathedral's subsidiaries need to be negotiated and executed. Auxiliary agreements include the lease of MWD equipment and supply of personal, repair parts and repair services. Significant progress has been made on the negotiation of these agreements but history has shown there have been significant delays in the execution of such agreements and accordingly Cathedral is uncertain when operations in Venezuela will commence.
FORWARD LOOKING STATEMENTS
This news release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words suggesting future outcomes. In particular, this news release contains forward-looking statements relating to, among other things: increased job capability and timing thereof, underlying intentions of agreements, payment milestones, potential for delays and commencement of operations. The Company believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.
Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to the Company, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and material factors are presented elsewhere in this news release in connection with the forward-looking statements. You are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to:
|●||the performance of the Company's businesses, including current business and economic trends;|
|●||oil and natural gas commodity prices and production levels;|
|●||capital expenditure programs and other expenditures by the Company and its customers;|
|●||the ability of the Company to retain and hire qualified personnel;|
|●||the ability of the Company to obtain parts, consumables, equipment, technology, and supplies in a timely manner to carry out its activities;|
|●||the ability of the Company to maintain good working relationships with key suppliers;|
|●||the ability of the Company to market its services successfully to existing and new customers;|
|●||the ability of the Company to obtain timely financing on acceptable terms;|
|●||currency exchange and interest rates;|
|●||risks associated with foreign operations including Venezuela;|
|●||the ability of the Company to realize the benefit of its conversion from an income trust to a corporation;|
|●||risks associated with finalizing ancillary joint venture agreements that are required prior to the commencement of operations of the Venezuela joint venture;|
|●||risks associated with Venezuela joint venture company being awarded work by the Venezuela state run oil and natural gas corporation;|
|●||changes under governmental regulatory regimes and tax, environmental and other laws in Canada, United States ("U.S.") and Venezuela; and|
|●||a stable competitive environment.|
Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in this news release and in the Company's Annual Information Form under the heading "Risk Factors". Any forward-looking statements are made as of the date hereof and, except as required by law, the Company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.
All forward-looking statements contained in this news release are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements is available in the Company's current Annual Information Form and Annual Report which have been filed with Canadian provincial securities commissions and are available on www.sedar.com.
Cathedral Energy Services Ltd. (the "Company"/"Cathedral") and its wholly owned subsidiary, Cathedral Energy Services Inc., are engaged in the business of providing selected oilfield services to oil and natural gas companies in western Canada and selected oil and natural gas basins in the United States. The Company is in the process of establishing operations in Venezuela for providing directional drilling services through its wholly owned subsidiaries Directional Plus International Ltd. and Directional Plus de Venezuela, C.A. The Company's operating activities are divided into directional drilling and production testing business units. The Company's shares trade on the TSX under the symbol: CET. For more information, visit www.cathedralenergyservices.com.
For further information:
Requests for further information should be directed to:
Mark L. Bentsen, President and Chief Executive Officer or P. Scott MacFarlane, Chief Financial Officer
Cathedral Energy Services Ltd., 6030 - 3rd Street S.E., Calgary, Alberta T2H 1K2
Telephone: 403.265.2560 Fax: 403.262.4682 www.cathedralenergyservices.com