An oilfield equipment and services company with its operational headquarters in Red Deer has announced plans for a $30-million rights offering of shares.
Central Alberta Well Services Corp. (TSXV:CWC.A) is also selling two service rig packages for $5.4 million.
The company said on Wednesday that it will file a prospectus with securities regulators for the rights offering that would allow Class A and B shareholders to acquire more shares. Tricap Partners II L.P., the major shareholder of Central Alberta Well Services, will act as standby purchaser for the offering.
Money raised from the rights offering will be used to reduce long-term debt that matures in January, said the company. Proceeds from the rig sale have already been received, it added, and will be used to fund capital spending commitments.
“The purchaser will be relocating the equipment outside of Canada and, pursuant to the terms of the sale, is restricted from returning this equipment to Canada for a three year period.”
Central Alberta Well Services also released the financial results for its second quarter, ended June 30.
Revenues were $6.6 million, down from $12.8 million for the same period in 2008.
“The decrease was directly attributable to decreased utilization rates as a result of the current economic downturn, particularly within the well services segment,” said the company.
Central Alberta Well Services reported a net loss of $5.6 million, before tax, for the quarter. That compares with a net loss of $3 million for the corresponding period in 2008.
“The outlook for the remainder of 2009 continues to remain uncertain as oil prices remain volatile and gas prices remain depressed,” it said.
In addition to Red Deer, Central Alberta Well Services has operations in Calgary, Provost, Brooks and Grande Prairie. Its services include well-servicing, coil-tubing, snubbing, nitrogen, well-testing and oilfield equipment rentals.