Service & Supply | Oilfield Services | Capital Markets | Capital Expenditure

Savanna Energy Services Retains Conservative Capex

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In the context of the current commodity market downturn, and its anticipated negative impact on oilfield services in 2015, Savanna Energy Services Corp. is continuing to monitor its 2015 capital program.

Savanna has established an initial capital budget for 2015 as follows:



Estimated maintenance capital for 2015 includes costs to complete construction of the Company's new drilling and workover facility in Leduc, Alberta that is currently under construction. These costs are budgeted to be almost entirely offset by agreements in principle for the sale of field facilities that will become redundant upon completion of the new facility. The Company is currently evaluating several other non-operational or non-core asset dispositions to further mitigate the net cash capital outflows in 2015 as well. Although these remaining potential dispositions may or may not be completed, Savanna remains keenly focused on closely managing capital program outlays within available cashflow for 2015.

The previously announced, contracted, ultra-heavy AC double rig, and three contracted VELOX AC triple rigs, all targeted for initial field operations in Q1, 2015, remain on track, and on budget. Additionally, the five workover rigs and three flushby units previously announced for Australia will be field-ready in Q1, 2015 as well. All of these rigs are backed by multi-year take-or-pay contracts. These growth initiatives from 2014 should help cushion the overall market activity and price declines anticipated for 2015.

Savanna estimates the capital required to complete 2014 growth initiatives will be $25 million during 2015.

While Savanna believes it has outlined a very conservative and disciplined capital program for 2015, the Company does retain capacity for further adjustments to maintenance capital expenditures in the face of lower than expected activity during the year. Savanna will continue to update the market regarding capital program adjustments as greater clarity regarding customer activity, and actual operating levels, become available.