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Canada NewsWire
Sep 15, 2010


CALGARY, Sept. 15 /CNW/ - Cathedral Energy Services Ltd. (the "Company" or "Cathedral" / TSX: CET) is pleased to announce that its wholly-owned subsidiary, Directional Plus International Ltd. ("DPI"), has entered into a Joint Venture and Strategic Alliance Agreement ("Agreement") with PDVSA Servicios Petroleros, S.A. ("PDVSA Servicios Petroleros"), a wholly-owned subsidiary of Petróleos de Venezuela S.A. ("PDVSA"), the state-owned oil and natural gas corporation of the Bolivarian Republic of Venezuela. The execution of this Agreement is considered by Cathedral management to be an important step towards commencing operations in Venezuela.

The Agreement provides for the formation of a joint stock company, Vencana Servicios Petroleros, S.A. ("Vencana"), in which PDVSA Servicios Petroleros will own 60% of the capital stock and DPI will own the remaining 40%. Vencana's mandate will be the supply of oilfield services in Venezuela to the oil and natural gas industry and is expected to initially commence with the provision of directional drilling services; it is the intent for the services provided by Vencana to expand as mutually agreed between PDVSA Servicios Petroleros and DPI. As part of the Agreement, it is expected that DPI will lease directional drilling equipment to Vencana and PDVSA will provide Vencana with work in line with the operating capacity of Vencana.

In due course, it is expected by Cathedral management that DPI will be providing Vencana with additional directional drilling tools in the form of positive pulse Measurement-While-Drilling ("MWD") systems and resistivity (Logging-While-Drilling - "LWD") tools (this equipment is included in the previously announced Cathedral 2010 capital budget). Prior to commencing operations through Vencana, Cathedral is expected to have an investment in Venezuela in the amount of $13.3 million. In addition, DPI has agreed to guarantee a Vencana operating loan facility up to 5.0 million Bolivars (equivalent of approximately $1.2 million Cdn.). Vencana will be establishing the operating loan facility for a short term to finance start-up working capital requirements.


This news release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words suggesting future outcomes. In particular, this news release contains forward-looking statements relating to the intent of the joint stock company, equipment leasing by DPI to Vencana, work provided by PDVSA, delivery of equipment, expected investment in Venezuela and expected duration of the loan guarantee. The Company believes the expectations reflected in such forward-looking statement are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.

Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to the Company, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and material factors are presented elsewhere in this news release in connection with the forward-looking statements. You are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to:

    -   the performance of the Company's businesses, including current
        business and economic trends;
    -   oil and natural gas commodity prices and production levels;
    -   capital expenditure programs and other expenditures by the Company
        and its customers:
    -   the ability of the Company to retain and hire qualified personnel;
    -   the ability of the Company to obtain parts, consumables, equipment,
        technology, and supplies in a timely manner to carry out its
    -   the ability of the Company to maintain good working relationships
        with key suppliers;
    -   the ability of the Company to market its services successfully to
        existing and new customers;
    -   the ability of the Company to obtain timely financing on acceptable
    -   currency exchange and interest rates;
    -   risks associated with foreign operations including Venezuela;
    -   risks associated with the completion of remaining conditions of the
        Agreement required prior to the commencement of Venezuela operations
        some of which are out of the control of Cathedral;
    -   risks associated with PDVSA awarding work to Vencana;
    -   changes under governmental regulatory regimes and tax, environmental
        and other laws in Canada, United States and Venezuela; and
    -   a stable competitive environment.

Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in this news release and in the Company's Annual Information Form under the heading "Risk Factors". Any forward-looking statements are made as of the date hereof and, except as required by law, the Company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.

All forward-looking statements contained in this news release are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements is available in the Company's current Annual Information Form and Annual Report which have been filed with Canadian provincial securities commissions and are available on

%SEDAR: 00000484E

For further information: Mark L. Bentsen, President and Chief Executive Officer or P. Scott MacFarlane, Chief Financial Officer; Cathedral Energy Services Ltd., 1700, 715 - 5th Avenue S.W., Calgary, Alberta, T2P 2X6, Telephone: 403.265.2560, Fax: 403.262.4682,

Cathedral opens a 36,000 square foot full service operation facility in Oklahoma City, Oklahoma and Estevan, Saskatchewan operations migrate to Emerald Park, Saskatchewan.