Savanna Energy acquires rental businessadmin
Savanna Energy Services Corp. announce the signing of a definitive agreement to acquire the assets of a privately-held oilfield services rental company for aggregate cash proceeds of $20.0 million, subject to adjustments at closing. Closing is anticipated to occur no later than September 12, 2008.
The acquisition includes a substantial inventory of drilling and well servicing-related rental assets and support equipment, as well as a machining and pipe-inspection facility. The acquisition is intended to provide a platform for the development of a full-service rental division within Savanna for both Canada and the United States.
The operational focus for the purchased equipment is currently primarily in south central Alberta and southwest Saskatchewan.
All of the key management principles have agreed to remain with Savanna in their present roles, and all will execute independent employment and non-competition agreements. In addition, $2.5 million of the proceeds will be utilized by key management to acquire shares of Savanna in the open market over the next 90 days.
Savanna believes that the acquisition price reflects replacement value of the assets acquired, and that the transaction will be immediately accretive to both cashflow and earnings per share.
This transaction complements and augments Savanna’s growing position in the drilling and well servicing market in Canada, and it is Savanna’s intention to expand its Canadian presence and introduce US exposure in this business segment as soon as practicable.
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. Post this transaction, and committed capital expenditures previously announced, Savanna will operate 108 drilling rigs, 64 well servicing rigs, 8 coil service units and a broad drilling and workover rental fleet in Canada and the United States.