Savanna Energy Takes First Step Outside North America
Canadian oil drilling contractor Savanna Energy Services Corp. will venture off the shores of North America. The company has entered into a five-year drilling and workover rig contract with Australia Pacific LNG Pty Ltd. (APLNG) to initially deploy two hybrid drilling rigs from its Canadian fleet and two built-for-purpose workover rigs to Queensland, Australia.
According to the agreement, Savanna will also provide ancillary equipment and services to APLNG. The total value of the services is expected to be in the range of $220 million (AUS) and creating in the neighborhood of 50 jobs locally. Both the drilling and workover rigs are contracted on a 365-day (24-hour) basis for an initial term of five years, with an extension option and an option to add further rigs as the project grows.
This contract represents the first expansion of Savanna’s hybrid drilling operations beyond North America. Savanna, which is based in Calgary, Alberta, will continue efforts to expand its international presence in the future.
Savanna’s hybrid platform has proven itself to be highly efficient as a shallow drilling vehicle, and the company is targeting its international expansion efforts on areas where these efficiencies can be fully accessed by its customers to improve drilling costs.
“While domestic North American activity currently remains focused on deeper, unconventional plays, there remain substantial international opportunities to deploy Savanna’s hybrid drilling technology in areas where deeper unconventional development is far less pervasive, and local natural gas and oil supply dynamics create a more stable activity and demand base for our equipment,” says Ken Mullen, president and CEO of Savanna.
APLNG is a 50-50 coal seam gas (CSG) to liquefied natural gas (LNG) joint venture between Origin Energy Ltd. and ConocoPhillips.
The cost of deploying the drilling rigs to Australia will fall under Savanna’s 2010 capital program. The company anticipates expending approximately $46 million on sustaining, maintenance and incremental capital. The increase in fleet size as a result of this capital program consists of the two new-build workover rigs under the APLNG contract.
Upon completion of the capital program, and subject to any additional rig manufacture, acquisition or transfer, Savanna will operate two drilling rigs in Australia, four in Mexico, 17 in the United States and 86 in Canada (including four surface setting and five coring rigs). The company will also operate two workover rigs in Australia, eight in the United States and 66 (plus eight coil service units) in Canada.
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