ST. ALBERT, Alberta, Feb. 5, 2007 (PRIME NEWSWIRE) -- Enterprise Oil Limited (TSX-V:EON) (Other OTC:ETOLF) is pleased to announce the signing of a letter of intent to purchase a mature and successful directional boring company (the "private company") with operations based in the Edmonton, Alberta area.
The private company currently generates sales revenue in excess of $12 million and is expected to increase Enterprise's EBITDA(1) by approximately $5.2 million for the forward 12 month period based on the private company's current financial results.
The purchase price of $12,000,000 will be funded by cash, 1,500,000 common shares of Enterprise Oil Limited and $1,000,000 in vendor take back financing to be paid over two years. At closing the balance sheet of the target company will be free of debt. Completion of this acquisition will be subject to a number of conditions, including but not limited to Stock Exchange approval and satisfactory due diligence by Enterprise which is to be completed by March 15, 2007.
Operating for over 30 years the private company generates most of its revenue from utility companies with approximately 20% from the energy services sector. Installation of underground power, telecommunications and natural gas lines are the core business of the company. As a result of the rapid growth Western Canada is experiencing, development of industrial, commercial and residential properties require full underground installation of services. The outlook for this sector is exceptional. The private company's customers include some of Canada's largest providers of telecommunications, cable TV, electricity, and natural gas services.
Enterprise's strategy is to continue to grow the private company in its core competencies while expanding their services to the energy services sector. Pipeline construction projects routinely require directional boring services when approaching roads, creeks, rivers and other environmentally sensitive areas. Enterprise believes that directional boring will play a much larger roll in the future of pipeline construction because of environmental awareness. Management views this acquisition as a key step in the company's strategic business plan.
President and CEO, Leonard D. Jaroszuk commented: "It is our intention to continue executing our growth strategy of acquiring highly profitable pipeline and pipeline complementary service companies operating in the most active regions of Alberta, and rapidly increasing their sales base. This acquisition will allow Enterprise to broaden its services for its customer base while diversifying our revenues from other fast growing core sectors."
Further to the release dated September 18, 2006 announcing a letter of intent to purchase a pipeline construction company operating in the west central Alberta region, both Enterprise and the vendor have agreed to delay the closing further into 2007 to allow for market conditions to improve.
Corporate update: Enterprise is anticipating record revenue growth for the second quarter of fiscal year 2007. Both subsidiaries have secured projects to ensure over 100% capacity and continue to develop strong customer loyalty ensuring continued growth and expansion.
Enterprise has granted, subject to regulatory approval, incentive stock options for the purchase of a total of 235,000 common shares of its capital to directors, employees and consultants of the Corporation. The options are exercisable at a price of $0.90 per share.
Enterprise Oil Limited is an energy services company operating in the pipeline construction industry. The Company's focus is small to medium diameter pipeline construction primarily on steel gathering systems up to 12" in diameter. The Company's strategy is to acquire small to mid-size pipeline construction and complementary service companies in central and northern Alberta, consolidating capital, management and human resources to support continued growth.
(1) EBITDA = earnings before interest, taxes, depreciation,
amortization.
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Forward-Looking Statements
This Company Press Release contains certain "forward-looking" statements and information relating to the Company that are based on the beliefs of the Company's management as well as assumptions made by and information currently available to the Company's management. Such statements reflect the current risks, uncertainties and assumptions related to certain factors including, without limitations, competitive factors, general economic conditions, customer relations, relationships with vendors and strategic partners, the interest rate environment, governmental regulation and supervision, seasonality, technological change, changes in industry practices, and one-time events. Should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein.
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