CALGARY,
AB, June 22, 2022 /CNW/ - Cathedral
Energy Services Ltd. (TSX: CET) ("Cathedral" or the
"Company") today announced the acquisition of the operating
assets of Compass Directional Services Ltd. ("Compass") for
$9.5 million, (the
"Transaction"). Compass is a privately-owned, Canadian
directional drilling business operating in the Western Canadian
Sedimentary Basin, with a focus on the high-activity Montney and Deep Basin plays.
"Compass' services and technology tucks in well with our
Canadian operations, adding skilled people, high-quality assets,
and significantly expanding our exposure to the key Montney and Deep Basin plays," said
Tom Connors, Cathedral's President
and CEO. "Importantly, the Compass acquisition strengthens our
competitive position by adding a complementary customer base in
both operating areas. Going forward, industry conditions remain
attractive for further consolidation opportunities in North America."
Compass has been operating since 1998 and has a strong track
record of safe, high-performing operations, with a Canadian market
share of approximately 5%. In a time of tight global supply chains
for key equipment, Compass adds an immediate 15-job capacity to
Cathedral and anticipates operating at peak capacity in the third
quarter this year. Cathedral expects the cash flow generated from
the Transaction to pay back the Company's initial investment in
approximately 2.5 years, which is in line with other recent
acquisitions.
Furthermore, looking to the back half of 2022, Cathedral had
already planned to deploy Rotary Steerable System (RSS) tools in
Canada. The addition of Compass'
well-established customer base in the Montney and Deep Basin - areas of high demand
for RSS tools - will provide Cathedral with a valuable platform for
the expansion of the service in Canada and will help accelerate growth in RSS
market share over time.
As part of the Transaction, Cathedral has retained key Compass
personnel under employment contracts to ensure a seamless customer
service experience, successful integration and long-term alignment
with Cathedral's strategy.
The Transaction was funded by: (i) $4.0
million in cash; and (ii) the issuance of 7,643,139 common
shares of Cathedral to Compass with a deemed price of $0.72 per common share (the "Acquisition
Shares"). Approximately 82% of the issued shares will be
subject to contractual restrictions with portions vesting at
various periods over two years. Approximately 18% of the issued
shares are subject to contractual restrictions over a longer period
lasting four years.
ABOUT CATHEDRAL
Cathedral Energy Services Ltd., based in Calgary, Alberta is incorporated under the
Business Corporations Act (Alberta) and operates in the U.S. under
Cathedral Energy Services Inc. Cathedral is publicly-traded on the
Toronto Stock Exchange under the symbol "CET". Cathedral is a
trusted partner to North American energy companies requiring high
performance directional drilling services. We work in partnership
with our customers to tailor our equipment and expertise to meet
their specific geographical and technical needs. Our experience,
technologies and responsive personnel enable our customers to
achieve higher efficiencies and lower project costs. For more
information, visit www.cathedralenergyservices.com
FORWARD-LOOKING
INFORMATION
This press release contains statements and information that may
constitute "forward-looking information" within the meaning of
applicable securities legislation, including statements identified
by the use of words such as "will", "expects", "positions",
"believe", "potential" and similar words, including negatives
thereof, or other similar expressions concerning matters that are
not historical facts. Forward-looking information in this news
release includes, but is not limited to, statements regarding:
industry conditions in North American energy markets; anticipated
benefits of the Transaction, including complementary technology and
regional opportunities and demand for such services, Cathedral's
ability to meet such demand; anticipated successful integration of
the Compass assets and personnel; and Cathedral's business plans
and strategies for growth. Such forward-looking information is
based on various assumptions that may prove to be incorrect,
including, but not limited to, assumptions with respect to: the
benefits from the Transaction; anticipated market share and job
capacity of Compass; the integration of the Compass business into
Cathedral's business; conditions in North American oil and gas
markets generally; the ability of the Company to successfully
implement its strategic plans and initiatives and whether such
strategic plans and initiatives will yield the expected benefits.
Although the Company believes that such assumptions are reasonable,
the Company can give no assurance that such forward-looking
statements will prove to be correct or that any of the events
anticipated by such forward-looking statements will occur, or if
any of them do so, what benefits the Company will derive there
from. Actual results could differ materially due to a number of
factors and risks including, but not limited to: the risk that
Cathedral will not be able to integrate the Compass business as
anticipated or at all; the risk that the integrated business will
not yield operational or financial benefits as anticipated or at
all; the risk that demand for Cathedral's services, including for
new technologies, will not be as anticipated; conditions in the oil
and gas and financial markets in Canada and the
United States; the risk that Cathedral will not be able to
identify and/or close on additional consolidation opportunities in
Canada and/or the U.S.; the
ability of management to execute and fund its business strategy;
and the impact of general economic conditions in Canada and the
United States. Additional information regarding risks and
uncertainties of the Company's business are contained under the
heading "Risk Factors" in the Company's annual information form for
the financial year ended December 31,
2021 and the Company's other public filings which are
available under the Company's profile on SEDAR at www.sedar.com.
The forward-looking information included in this news release is
made as of the date of this news release and the Company does not
undertake an obligation to publicly update such forward-looking
information to reflect new information, future events or otherwise,
except as required by applicable law.
This press release also contains financial outlook information
("FOFI") about prospective results of operations and cash flows,
which are subject to the same assumptions, risk factors,
limitations, and qualifications as set forth in the above
paragraphs. FOFI contained in this press release was made as of the
date of this press release to provide information about
management's current expectations and plans relating to the
future. Readers are cautioned that such information may not
appropriate for any other purpose. Cathedral disclaims any
intention or obligation to update or revise any FOFI contained in
this press release, whether as a result of new information, future
events or otherwise, except as required by applicable
law.
SOURCE Cathedral Energy Services Ltd.