Savanna Energy Services Corp. has contracted to move four drilling rigs into Mexico under contract.
Savanna has entered into a contract with a large U.S. based, multi-service provider to deploy four existing rigs from its Canadian/U.S. fleet into the Chicontepec region in central eastern Mexico. The rigs are contracted to work at a utilization rate of 100% for an initial term of 18 months, with an extension option.
The rigs to be supplied under this agreement are mid-depth telescoping double drilling rigs, representing the core conventional platform within Savanna. The rigs will require minor modifications to allow them to work effectively in the Chicontepec region, such modifications and additional equipment expected to total less than $6 Million. The rigs are expected to be operational in Mexico by mid-August, 2009. All costs relating to mobilization of the rigs into Mexico from the U.S./Mexico border will be borne by the operator. Similarly, demobilization of the rigs, if any, will result in delivery of the rigs to the U.S. as well. Given Savanna’s intention to expand both its U.S. and international operations, this flexibility will be advantageous. This represents the first expansion of Savanna’s drilling operations beyond Canada and the United States, however it is anticipated by the Company that they will continue to expand their international presence moving forward.
Of the four rigs that are mobilizing to Mexico, two will be relocated from the current U.S. fleet, and two will be delivered from the previously announced four rig new-build program. With the execution of this contract, Savanna now operates four rigs in Mexico, 14 in the U.S., 87 in Canada, and will be accepting delivery of two additional new-builds by Q3, 2009, resulting in a total fleet of 107 drilling rigs.