Blast Energy Services Acquires Land Rig Drilling Company
28 August 2006 - 10:30PM
PR Newswire (US)
HOUSTON, Aug. 28 /PRNewswire-FirstCall/ -- Blast Energy Services
(OTC:BESV) (BULLETIN BOARD: BESV) has completed the acquisition of
Eagle Domestic Drilling Operations, LLC ("Eagle") for a nominal $50
million in cash and 1.5 million shares of Blast common stock. Blast
is purchasing this Texas-based drilling rig contractor from the
members of a privately held company. The acquisition of Eagle was
financed using $35 million from a Senior Debt Facility from Laurus
Master Fund Ltd. and a $15 million private placement of common
equity. Through the acquisition of Eagle, Blast will immediately
gain three operating drilling rigs, which are currently generating
revenue and positive cash flow and an additional two rigs under
final construction that are scheduled for field deployment in
October. Blast has also contracted with an affiliate of the selling
group for consulting services, which includes the building of a
sixth rig scheduled for delivery in late 2006. "This transaction
completes the transformation of Blast into a viable operating
company in the energy service sector," said John O'Keefe and David
Adams, Co-CEOs of Blast Energy Services, Inc. "The new business
significantly improves our balance sheet and provides a profitable
platform from which to grow the company and allows greater
flexibility in the development of our abrasive jetting and
satellite business lines. We will now focus on the integration of
the existing Eagle drilling operations into Blast and the
deployment of the three additional rigs under construction on a
timely basis." In addition to the physical rig assets, Eagle has
five of the six rigs signed to two-year, term drilling contracts
with two major Texas based independent oil & gas companies.
These customers have contracted the rigs to operate in the prolific
Barnett Shale play in Texas and the emerging Fayetteville Shale
play in Arkansas. In additional to the drilling rig crews being
transferred to Blast, Richard D. Thornton, the VP of Operations for
Eagle, will be joining the Blast senior management team in the same
capacity. Based upon the existing two-year contracts and once the
sixth rig has been put into operation, Blast management is
projecting that Eagle will be capable of generating annual revenues
of $39 million with an annual EBITDA of approximately $19 million.
With this acquisition, Blast management expects the Company to be
both profitable and cash flow positive during 2007. Despite the
issuance of stock and warrants in the acquisition and related
financing terms, management further expects the overall result to
be accretive to both earnings per share and cash flow per share.
Financing terms for the acquisition include a three-year Senior
Debt facility for $40.6 million from Laurus Master Fund, Ltd, $35
million of which was used to close the acquisition. The facility
carries interest rates of prime plus 2.5% and 30% warrant coverage.
Blast has also entered into a private placement with members of the
selling group to purchase 15 million shares of common stock at
$1.00 per share. This placement includes 33% warrant coverage. The
private placement was directly negotiated between the parties and
the debt financing was privately arranged by a broker for cash fees
and limited warrant coverage. In related news, the Company's
prototype abrasive fluid jetting (AFJ) rig has completed its latest
field tests at the Many, Louisiana location. Blast is now in
discussions with the Department of Energy to deploy the Blast Rig
#1 to the Rocky Mountain Testing Facility in Wyoming to further
test and evaluate the rig's cutting and jetting capabilities.
Meanwhile, Alberta Energy Partners, our AFJ technology partner,
will be making modifications to the down hole equipment and nozzle
design to access reservoir formations laterally. About Blast Energy
Services, Inc. Blast Energy Services, Inc. is a publicly traded
company based in Houston. Our mission is to substantially improve
the economics of existing oil and gas operations through the
application of our worldwide licensed and proprietary technologies.
Using specially fabricated mobile drilling rigs we intend to
operate a commercially viable energy service business, including:
specialty casing cutting, perforation, fracturing services and
lateral drilling with the potential to penetrate through well
casing and into reservoir formations to stimulate oil and gas
production. This service should provide oil and gas producers with
an attractive, lower cost alternative to existing well stimulation
or horizontal drilling services. Additionally, we are providing
satellite services to oil and gas producers. This service allows
them to monitor and control well head, pipeline or drilling
operations through low-cost broadband data and voice services from
remote operations where conventional land based communication
networks do not exist or are too costly to install. Please visit
our website: http://www.blastenergyservices.com/. Safe Harbor
Statement Any statements made in this news release other than those
of historical fact, about an action, event or development, are
forward looking statements. Forward looking statements involve
known and unknown risks and uncertainties, which may cause the
Company's actual results in future periods to be materially
different from any future performance that may be suggested in this
release. Such factors may include risk factors including but not
limited to: the ability to integrate and successfully operate the
newly acquired company, the ability to raise necessary capital to
fund growth, adequate liquidity to manage operations and debt
obligations, the introduction of new services, commercial
acceptance and viability of new services, fluctuations in customer
demand and commitments, pricing and competition, reliance upon
lenders, contractors and vendors, the ability of Blast Energy
Services' customers to pay for our services, together with such
other risk factors as may be included in the Company's filings on
Form SB-2 and its periodic filings on Form 10-KSB, 10-QSB, and
other current reports. DATASOURCE: Blast Energy Services CONTACT:
John MacDonald of Blast Energy Services, Inc., +1-281-453-2888, or
+1-713-725-9244, Web site: http://www.blastenergyservices.com/
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