HOUSTON, July 10 /PRNewswire-FirstCall/ -- Allis-Chalmers Energy Inc. (NYSE:ALY) today announced that DLS Drilling Logistic & Services Corporation, its wholly-owned subsidiary based in Buenos Aires, Argentina, has reached a preliminary agreement in principle with its most significant customer, Pan American Energy LLC, to supply and operate 17 additional rigs (3 drilling and 14 service rigs) for operation in the Cerro Dragon area in southern Argentina. Pan American is a joint venture owned 60% by British Petroleum and 40% by Bridas Corporation, and is one of the major exploration and production companies in South America, with gross production in excess of 230,000 barrels of crude per day.
DLS currently has a contract with Pan American in the Golfo San Jorge area under which it provides 31 rigs, consisting of 9 drilling and 22 service rigs. DLS expects to supply the additional rigs to Pan American pursuant to an anticipated amendment to their strategic alliance agreement, which would also be extended for a new five year term. Allis-Chalmers expects to invest approximately $80 million in new equipment under this amended agreement. Financing is anticipated primarily from DLS's cash flow from operations and DLS's credit facilities.
The equipment is expected to be delivered in stages throughout 2007 and 2008 with the first of the 14 service rigs to be delivered in October 2007 and the 3 drilling rigs anticipated to be delivered in the fourth quarter of 2008. On a preliminary basis, Allis-Chalmers estimates that the additional rigs would contribute revenues of approximately $200 million over the five year term of the contract amendment.
Micki Hidayatallah, Allis-Chalmers' Chairman and Chief Executive Officer, stated, "We are excited about the opportunity to expand our mutually beneficial relationship with Pan American, our largest customer in Argentina. We look forward to continuing to build on our relationships in this region and we appreciate the confidence Pan American has shown in us by expanding our association." Through DLS, Allis-Chalmers provides drilling, completion and work over services in Argentina and Bolivia, and other services such as drilling and completion fluids. DLS currently operates a fleet of 52 rigs, including 21 drilling rigs, 18 work over rigs and 13 pulling rigs.
About Allis-Chalmers Allis-Chalmers Energy Inc. is a Houston based multi-faceted oilfield services company. It provides services and equipment to oil and natural gas exploration and production companies, domestically in Texas, Louisiana, New Mexico, Colorado, Oklahoma, Mississippi, Utah, Wyoming, Arkansas, Alabama, West Virginia, offshore in the Gulf of Mexico, and internationally primarily in Argentina and Mexico. Allis-Chalmers provides rental services, international drilling, directional drilling, tubular services, underbalanced drilling, and production services. For more information, visit Allis-Chalmers' website at http://www.alchenergy.com/ or request future press releases via email at http://www.b2i.us/irpass.asp?BzID=1233&to=ea&s=0.
Forward-Looking Statements This press release contains forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) regarding Allis-Chalmers' business, financial condition, results of operations and prospects. Words such as expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this press release.
Although forward-looking statements in this press release reflect the good faith judgment of management, such statements can only be based on facts and factors currently known to management. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, but are not limited to, demand for oil and natural gas drilling services in the areas and markets in which Allis-Chalmers operates, competition, obsolescence of products and services, the ability to obtain financing to support operations, environmental and other casualty risks, and the effect of government regulation. Further information about the risks and uncertainties that may affect Allis-Chalmers are set forth in our company's most recent filings on Form 10-K (including without limitation in the "Risk Factors" section) and in its other SEC filings and publicly available documents. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Allis-Chalmers undertakes no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this press release.
Contact: Jeffrey Freedman, VP IR
Allis-Chalmers Energy
713-369-0550 Lisa Elliott, Sr. VP
DRG&E/ 713-529-6600
DATASOURCE: Allis-Chalmers Energy Inc.
CONTACT: Jeffrey Freedman, VP IR of Allis-Chalmers Energy, +1-713-369-0550; or Lisa Elliott, Sr. VP of DRG&E, +1-713-529-6600, for Allis-Chalmers Energy Web site: http://www.alchenergy.com/
|