SERVICE SECTOR / Telford Resosurces Acquisition Status
TELFORD RESOURCES LTD. HAS CONCLUDED FIRST PHASE OF DUE
DILIGENCE
1998-01-20
CALGARY, ALBERTA
Telford (Alberta Stock Exchange Listing - "TLF") reports that it has
concluded its first phase of due diligence on the various companies contained
in its November 20, 1997 press release. This process included reviews of
company assets and performance together with consultations with investment
industry analysts. As a result of these investigations, Telford has decided
to proceed on the acquisition of companies which are already operating and
are synergetic. Telford will not be proceeding with "conceptual" or
"startup" situations because they are not currently operating and would
therefore be dilutive at the share issue price of $0.50 per share.
Therefore, Telford will not proceed at this time with the following companies
that were included in the November 20, 1998 release: Oil Resources Ltd., Top
Gun Wireline and Broden Trucking. Telford may review these opportunities at
a later date on a cash basis, or at higher share issue prices.
Telford will proceed with the following acquisitions on the terms previously
disclosed:
Dominion Rathole Drilling Ltd:
Providing rathole drilling services in NE British Columbia and Northern
Alberta from an established base in Fort St. John, B.C. and now throughout
Alberta from its new base at Sylvan Lake, Alberta.
Alta Flights (Charters) Inc:
Providing personal transportation services throughout Western Canada from
established bases at the Edmonton and Calgary International Airports.
T.T.S. Industries (1993) Inc.:
Offering lease construction and cleanup, trucking, environmental services and
recently, pipeline construction by virtue of its newly established pipelining
division, all from its established base at Sylvan Lake, Alberta.
Weir Construction Ltd:
Offering lease construction, clean up and reclamation and related
environmental services from an established based in Medicine Hat, Alberta.
Hat Bit Supply Ltd:
Supplying the drilling industry with new and reconditioned drilling bits and
related supplies from established bases throughout Alberta and SE
Saskatchewan.
Dy-Drill Inc:
Providing coring services throughout the Western Canada oilpatch and more
recently, overseas by virtue of its newly formed international operations
division which is currently operating in Kazakhstan.
3 Drilling Ltd:
An oversight in the November 20, 1998 press release resulted in the omission
of the details of the acquisition of the shares of 3 Drilling:
The letter of intent with 3 Drilling contemplates the purchase by Telford of
100% of the outstanding shares of 3 Drilling for the sum of $900,000, payable
by the issuance of cash and shares to the shareholders of 3 Drilling. Those
shareholders may, at their option, elect to receive up to $500,000 in cash,
with the balance to be paid by the issuance of common shares of Telford at a
deemed price of $0.50 per share. For each common share received by the 3
Drilling shareholders, they will also receive one half share purchase
warrant. One warrant will entitle those shareholders to purchase one
additional common share of Telford at a price of $1.00 for a period of one
(1) year from the date of closing.
3 Drilling operates five "specialty" drilling rigs, three of which are
seismic/mining test hole rigs and two of which have been equipped for the
drilling and casing of surface holes prior to the moving on of conventional
drilling equipment. The latter two rigs yield savings to oil and gas
operators for several reasons, including the following:
1. the rigs are self-moving, and are operated by two man crews;
2. they provide the ability to run and cement surface pipe, resulting in
the saving of "big rig" waiting on cement time;
3. their ability to "feel out" surface drilling problems can avoid
substantial rig time expenses associated with typical surface hole problems,
those being lost circulation, gravel and boulders, washouts, etc.
The market for providing surface hole drilling is in its infancy. Management
feels that the opportunities for growth in this part of the industry will
exist for quite some time to come.
Consolidation Strategy
The acquisition of these companies is the first step of Telford's
consolidation strategy. At closing, expected to occur in April, 1998,
Telford will have established operating bases in Ft. St. John B.C., Sylvan
Lake and Medicine Hat. The Sylvan Lake and Ft. St. John bases will enable
Telford to service foothills natural gas exploration together with Northern
Alberta/B.C. natural gas and oil exploration which management feels will
comprise a significant percentage of future exploration growth. This first
step includes being able to offer each of the company's many services from
each of its operating bases. Phase two of Telford's consolidation strategy
will occur after closing, and involves acquiring similar/complimentary
companies into each of these operating bases.
Conditions
Closing of these transactions remains subject to fulfilling the previously
disclosed conditions, including The Alberta Stock Exchange approval, and
includes that certain revisions to the purchase price(s) may be made after
completion of due diligence reviews.
As previously disclosed, all of the principals of each of the companies
described above will continue in their current capacities, and have consented
to voluntary 3 year escrow of the common shares of Telford that they will
receive. |
