Calgary β CWC Energy Services Corp. is adjusting to the reality of volatile oil prices with a reduced 2015 capital expenditure budget of just $14.6 million.
The Calgary-based contract drilling and well servicing company is also starting 2015 off with an optional dividend reinvestment plan (DRIP) and a stock dividend program (SDP) for investors given the uncertainty in oil markets.
βThe 2015 capital expenditure budget demonstrates CWCs commitment to maintaining a premier drilling and well servicing rig fleet while ensuring that shareholders continue to generate a return on investment through either a cash or stock dividend,β said the company in a Dec. 23 news release.
βCWC will continue to evaluate and expand its operations in a disciplined manner and make any required adjustments to its capital expenditure program as market conditions improve.β
The companyβs 2014 capital expenditure budget of $45.6 million which included a $17.8 million carryover into 2015 has been amended to the new 2015 capital expenditure budget.
The new smaller budget for 2015 will allocate $9.1 million to growth capital and $5.5 million in maintenance capital. Growth capital will primarily be directed at completing two new slant service rigs and supporting equipment to expand CWCβs growth in heavy oil and SAGD wells with delivery expected in the first quarter.
The company will also upgrade its drilling Rig 2 to expand its capabilities to depths of 4,500 metres with completion expected in the third quarter of the year.
CWC will also continue to the build its new telescopic double drilling rig 10 but at a slower pace than previously announced with a completion date beyond 2015.
Maintenance capital will primarily be directed at drilling rig recertification costs and upgrades or additions to field equipment for the service rig and coil tubing divisions and information technology infrastructure.
CWC intends to finance its 2015 capital expenditure budget from operating cash flows.
The new DRIP allows CWC investors to reinvest their cash dividends into additional common shares of CWC priced at 95 per cent of the prevailing market price.
Eligible shareholders may elect to participate in the DRIP or the SDP commencing with the first dividend paid on Jan. 15 to shareholders of record on Dec. 31, 2014.
While it is similar to the DRIP, the SDP is expected to have certain favorable income tax attributes for Canadian investors. The SDP provides eligible shareholders the option to receive dividends in the form of common shares at 95 per cent of the prevailing market price with no additional brokerage fees or commissions.
