Calmena sells its Canadian drilling rigs
Canelson pays $15M for assets
A financially troubled Calgary drilling company that had a fatal accident on a rig in northwestern Alberta last month is selling all of its Canadian rigs.
Calmena Energy Services Inc. said Monday it had agreed to the $15-million sale of an electric telescopic double pad drilling rig, two single rigs, spare equipment and land and a building in Leduc (just south of Edmonton) to CanElson Drilling Inc. of Calgary.
The sale would include the rig on which a 32-year-old employee was working when he was killed in a fall.
Calmena reported June 27 the accident occurred while it was drilling a surface hole on a lease about 40 kilometres east of Dawson Creek, B.C., for customer Calgary intermediate Birchcliff Energy Ltd.
A stop work order on the rig was lifted July 12, Alberta Occupational Health and Safety reported Monday while an investigation into the incident is continuing.
In its news release Monday, Calmena said the sale was being made in conjunction with the strategic alternatives process it launched in January to improve shareholder value by repairing its balance sheet. Its shares closed down a penny Monday at 10 cents, well below their 52-week high of 24.5 cents in September.
CanElson closed at $5.89, one cent less than its 52-week high set 10 days ago.
In April, Calmena announced it had agreed to sell its wireline technologies division centred in Red Deer and Grande Prairie to Keane Group Holdings, LLC, for $12 million in cash.
On Monday, it noted that it had also completed two separate sales of drilling assets in the quarter ended June 30 for combined proceeds of $3.4 million, $1.4 million in cash and $2 million in settlement of other payables.
It said cash proceeds from the sales are being used to reduce corporate indebtedness and its review process is continuing.
Calmena was recapitalized and renamed in 2009 and received a new management team including Precision Drilling founder Hank Swartout as chairman and former Precision executive John King as president and chief executive.
Through acquisitions after recapitalization, the company expanded its rig fleet and moved into Mexico, Libya and Colombia.
King did not immediately return a request for comment.
In a separate news release Monday, CanElson said it found the deal that closes Wednesday to be attractive because the Calmena rigs are contracted and have fully trained crews.
“With the addition of the rigs including retaining the dedicated and experienced field personnel, the acquisition expands the company’s service offering to provide additional pad drilling services and horizontal oil drilling with new customers,” said Randy Hawkings, president and CEO, adding the acquisition is “very accretive.”
Kevin Lo, an analyst for FirstEnergy Capital, said in a note to investors the purchase is positive for CanElson.
He said the electric telescopic double rig is a step outside the mechanical doubles that CanElson is known for but the fleet diversification and favourable price more than make up for lack of experience with the technology.
“Electric AC teledoubles continue to be one of the most demanded rigs in the WCSB (Western Canadian Sedimentary Basin),” he wrote. “The single rigs have worked in heavy oil which is another busy market.”
CanElson provided a second-quarter operational update that showed Canadian drilling days at 272, down 35 per cent from the same period of 2012, while U.S. operating days rose to 1,157, up 40 per cent.
Its average number of U.S. rigs in the quarter grew to 16.2 from 11.9 while the Canadian count was up one to 22.
Lo noted drilling days in both cases were lower than expected, blaming the miss on weaker-than-expected activity levels in North Dakota and Canada. He added that work delayed in the second quarter will likely resume in the third.