CALGARY, AB, July 23, 2021 /CNW/ - Cathedral Energy Services
Ltd. (TSX: CET) ("Cathedral") and Precision Drilling Corporation
(TSX: PD) (NYSE: PDS) ("Precision") are pleased to announce the
closing of Cathedral's acquisition of Precision's directional
drilling business (the "Transaction") for a purchase price of
$6,350,000. The Transaction
includes operating assets and personnel of Precision's directional
drilling business (including its operations facility in
Nisku, Alberta), along with an
additional $3 million cash investment
by Precision to support growth and expansion of Cathedral,
including continuing the buildout of RapidFireTM
measurement-while-drilling guidance systems and
nDuranceTM drilling motors. Additionally, the
Transaction is expected to enhance margins as expenses related to
rental equipment used by Precision are replaced with proprietary
Cathedral tools.
As part of the Transaction, Cathedral and Precision have entered
into a strategic marketing alliance (the "Alliance"), which is
expected to produce new U.S. and Canadian customer opportunities
for Cathedral as well as potential integrated service offerings for
customers. The Alliance is expected to support both parties'
technology initiatives and lead the future of directional drilling.
Precision's market leading AlphaTM digital
technologies (AlphaApps, AlphaAutomation and AlphaAnalytics) are
focused on automation and drilling performance and pair well with
Cathedral's premium downhole equipment and directional drilling
expertise.
The parties have also entered into an investor rights agreement
pursuant to which, among other things, Precision was granted the
right to nominate a member to Cathedral's board of directors and
certain customary participation rights in respect of future sales
of securities by Cathedral. Precision will maintain such rights for
so long as it continues to hold 10% or more of Cathedral's common
shares (calculated on a partially diluted basis giving effect to
the exercise or conversion of any convertible securities which may
be held by Precision).
Precision nominee Shuja Goraya,
who is currently employed by Precision as their Chief Technology
Officer, has been appointed to the Cathedral board of
directors. Based in Houston,
Texas, Mr. Goraya has a Bachelor of Engineering degree and
has worked for over 25 years in the energy services sector, most
recently with Schlumberger Limited. Mr. Goraya's technical
expertise and extensive directional drilling background will be a
strong complement to Cathedral's board.
The purchase price was satisfied through the issuance by
Cathedral to Precision of 13,400,000 common shares of Cathedral
(the "Consideration Shares") along with warrants to purchase an
additional 2,000,000 common shares of Cathedral at a price of
$0.60 per common share within a
two-year period after closing. In addition to a 4-month statutory
hold period on the Consideration Shares, the parties have agreed to
contractual restrictions on resale as follows: 25% of the
Consideration Shares are restricted until January 22, 2022; a further 25% of the
Consideration Shares are restricted until July 22, 2022; and a further 50% of the
Consideration Shares are restricted until July 22, 2023, subject to certain exceptions.
As stated by Tom Connors,
Cathedral President & CEO, "This strategic combination and
alliance with Precision initiates some necessary consolidation and
cements our position as one of the larger directional drilling
contractors in the Canadian market space. It further provides for a
strong platform for growth into the future as we harness the
combined strength of Precision's brand, market presence,
operational footprint, and AlphaTM suite of digital
technologies with the proprietary technology, focused experience
and expertise of Cathedral. As the industry continues to
evolve and drive efficiency through technology we are also excited
about the capacity and potential, through this partnership, to
develop directional specific apps and technology that further
differentiate our offering and help set our performance apart in
the marketplace. Additionally, the integrated service and
technological offering enabled by this partnership has the
potential to provide a greener future for the provision of
directional drilling services as we advance the development and
delivery of a reduced footprint in the field through reliable
"remote" products and technology." On the addition of Mr. Goraya to
the board, Mr. Connors added, "Mr. Goraya is well known and highly
regarded in the industry, we are excited to welcome his perspective
and experience to our board and look forward to his contribution to
the further growth and evolution of Cathedral."
President and Chief Executive Officer of Precision, Kevin Neveu, noted "Our investment and strategic
partnership with Cathedral allow for the combined strengths of both
entities to further advance directional specific technologies and
provide a differentiated service offering. The combination of
Cathedral's people, technology, and industry-specific focus with
our operating platform and AlphaTM suite of digital
technologies will drive further value for our customers as we
continue to push efficiency benchmarks within the industry."
Precision did not hold any securities of Cathedral prior to the
transaction. Post-closing, Precision owns approximately 17.5%
of Cathedral's issued and outstanding common shares on a
non-diluted basis and approximately 19.6% on a partially diluted
basis giving effect to the exercise of the warrants. Precision may
increase or decrease its investment, directly or indirectly, in
Cathedral from time to time, depending on market conditions or any
other relevant factors.
FORWARD-LOOKING INFORMATION
This news release contains statements and information that, to
the extent that they are not historical fact, may constitute
"forward-looking information" within the meaning of applicable
securities legislation. Forward-looking information is typically,
but not always, identified by the use of words such as "proposed",
"expected", "will" 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: the expected
benefits of the strategic marketing alliance, use of cash received
as part of the transaction, expected market share growth and
expanded offering to Precision's former directional drilling
customers and other statements relating to the expected operation
of and benefit from the assets and business purchased in the
Transaction going forward. Such forward-looking information
is based on various assumptions and factors that may prove to be
incorrect, including, but not limited to, factors and assumptions
with respect to: the ability of Cathedral to integrate the acquired
business into Cathedral's business; and the ability of Cathedral
and Precision to successfully implement their strategic plans and
initiatives and whether such strategic plans and initiatives will
yield the expected benefits. Although Cathedral and Precision
believe that the assumptions and factors on which such
forward-looking information is based are reasonable, undue reliance
should not be placed on the forward-looking information because
Cathedral and Precision can give no assurance that it will prove to
be correct or that any of the events anticipated by such
forward-looking information will transpire or occur, or if any of
them do so, what benefits Cathedral and Precision will derive there
from. Actual results could differ materially from those currently
anticipated due to a number of factors and risks including, but not
limited to: conditions in the oil and gas market; fluctuations in
market conditions, including in securities markets; economic
factors; and the impact of general economic conditions and the
COVID-19 pandemic in Canada and
the United States. Additional
information regarding risks and uncertainties relating to
Cathedral's business are contained under the heading "Risk Factors"
in the Company's annual information form for the financial year
ended December 31, 2020 and
Cathedral's other public filings, copies of which are available
under Cathedral's profile on SEDAR at www.sedar.com. Additional
information regarding risks and uncertainties relating to
Precision's business are contained under the heading "Risk Factors"
in Precision's annual information form for the financial year ended
December 31, 2020 and Precision's
other public filings, copies of which are available under
Precision'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 Cathedral and Precision do
not undertake an obligation to publicly update such forward-looking
information to reflect new information, subsequent events or
otherwise, except as required by applicable law.
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.
ABOUT PRECISION
Precision is a leading provider of safe and High Performance,
High Value services to the oil and gas industry. Precision provides
customers with access to an extensive fleet of Super Series
drilling rigs supported by an industry leading technology platform
that offers innovative drilling solutions to deliver efficient,
predictable and repeatable results through service differentiation.
Precision also offers well service rigs, camps and rental equipment
all backed by a comprehensive mix of technical support services and
skilled, experienced personnel. Precision is headquartered in
Calgary, Alberta, Canada.
Precision is listed on the Toronto Stock Exchange under the trading
symbol "PD" and on the New York Stock Exchange under the trading
symbol "PDS".
For a copy of the early warning report filed by Precision
under applicable Canadian securities legislation in connection with
its acquisition of Cathedral securities, please go to Cathedral's
profile on the SEDAR website (www.sedar.com) or contact Precision
as set forth above.
SOURCE Cathedral Energy Services Ltd.