September 16, 2010
Cathedral Energy Services Ltd. (TSX: CET) has announced that its wholly-owned subsidiary, Directional Plus International Ltd. (DPI), has entered into a joint venture and strategic alliance agreement with PDVSA Servicios Petroleros, S.A., 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 toward commencing operations in Venezuela.
The agreement provides for the formation of a joint stock company, Vencana Servicios Petroleros, S.A. , in which PDVSA Servicios Petroleros will own 60 percent of the capital stock and DPI will own the remaining 40 percent. 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. 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 CAN). Vencana will be establishing the operating loan facility for a short term to finance start-up working capital requirements.