Blast Energy Services Defends Its Drilling Contracts
22 September 2006 - 8:12AM
PR Newswire (US)
HOUSTON, Sept. 21 /PRNewswire-FirstCall/ -- Blast Energy Services
(OTC:BESV) (BULLETIN BOARD: BESV) , through its wholly owned
subsidiary Eagle Domestic Drilling Operations LLC ("Eagle"), has
terminated its two IADC* day-work drilling contracts with Hallwood
Petroleum ("Hallwood") due to breach of contract and non-payment by
Hallwood. Blast has provided three business days notice of
termination as required under the contracts and also plans to file
suit in Oklahoma alleging breach of contract by Hallwood, among
other claims. "We will defend our rights under the IADC* contracts
because we expect our customers to live up to their contractual
obligations," said David M. Adams President & Co-CEO of Blast
Energy Services, Inc. "We are in a period of very short supply of
conventional drilling rigs in our industry and anticipate putting
these rigs back to work as soon as possible." On August 25, 2006,
Blast was assigned five IADC* drilling service contracts with the
acquisition of Eagle. Hallwood had accepted the drilling
capabilities of the two rigs and commenced drilling operations with
them in February and June of this year. Blast is also having
discussions with its second drilling customer with respect to their
expectations under the contracts for three drilling rigs. Blast has
begun to market those three rigs to potential customers on a best
efforts basis. When Blast acquired Eagle, it acquired three rigs
operating under contract; two rigs nearing final construction; and
one rig to be built in the fourth quarter. Five of the six rigs
acquired were under term contracts all of which had substantially
the same major terms and conditions. Termination provisions call
for reimbursement of revenues on the basis of $18,500 per day for
the full remaining term for three of the contracts and
reimbursement of 540 days of operation for two of the contracts if
terminated prior to commencement. This calculates to potential
liquidated damages of approximately $10 million per rig, assuming
the damages are paid in full over the term of the contract. The
Eagle rigs have all recently been refurbished or are being built
with new drilling components, including motors, pumps and
electrical generators and are designed to mechanically drill wells
to a minimum depth of 10,000 to 12,000 feet. Blast is actively
marketing its drilling rigs and has three rigs ready to contract
today. Management expects at this time that the three additional
rigs under construction will be ready for delivery during the
upcoming months of October, November and January respectively.
Accordingly, Blast management reaffirms its projection that Eagle
would be capable of generating annual 2007 revenues of $39 million
with an annual EBITDA of approximately $19 million, assuming the
rigs are operational under new contracts. With the acquisition,
Blast management expects the Company to be both profitable and cash
flow positive during 2007. As reported earlier, management further
expects the acquisition to be accretive to both earnings per share
and cash flow per share. Shares outstanding at Blast are currently
67 million. Blast also reported in a recent 8-K filing that its
Pro-forma Balance Sheet at June 30, 2007 included $36 million of
shareholders equity and $74 million of total assets. *IADC is the
abbreviation for the International Association of Drilling
Contractors. 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. Our new major business,
effective August 2006, is conventional land rig drilling onshore
USA with its own fleet of drill rigs and crews. 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, Inc. CONTACT: John MacDonald of
Blast Energy Services, Inc., +1-281-453-2888, or +1-713-725-9244,
or Web site: http://www.blastenergyservices.com/
Copyright