CALGARY, ALBERTA--(Marketwired - July 9, 2014) - Ceiba Energy Services Inc. ("Ceiba" or the "Company") (TSX VENTURE:CEB) is pleased to announce that the Company entered into new agreements with Astra Energy Canada Inc. ("Astra") which replace the current agreements.
On December 23, 2011, Ceiba entered into three agreements (the "Agreements") with Astra Energy Canada Inc., an international physical energy trading organization. These Agreements, the Facilities Agreement, the Marketing Agreement and the Storage Agreement allowed for Ceiba to build or acquire a number of additional processing, terminalling, storage, custom treating and blending facilities in specifically targeted locations in the Western Canadian Sedimentary Basin that are marketed to producers by Astra Energy Canada Midstream Services Inc. ("Astra Midstream"). The Marketing Agreement provided for a fee receivable by Ceiba of 50% of Astra Midstream operating margins from the storage, blending, purchasing and sales of all oil from Ceiba's facilities. The Facility Agreement provided for a fee payable by Ceiba of 50% of Ceiba's operating profits, less certain other adjustments, from the rollup of Ceiba's facilities. The original Agreements contained a 10-year term plus two 5-year renewals at Astra's option.
The new Astra agreements ("New Agreements") were finalized on July 9, 2014 and are effective as of April 1, 2014. The New Agreements simplify the Company's relationship with Astra, eliminate the administration required for the previous Agreements and provide greater flexibility for Ceiba to execute its growth strategy of developing waste processing facilities. Under the New Agreements, the former Facilities, Marketing and Storage Agreements are terminated and both parties released from future obligations.
Under the New Agreements, Astra remains Ceiba's exclusive crude oil marketer for Ceiba's current and future treatment and disposal facilities. Ceiba receives 100% of its sales oil revenue less a 5% marketing fee. Ceiba will work directly with its customers for all inbound products. This marketing arrangement terminates April 1, 2015 and will automatically renew for 90-day periods unless terminated by either party with 35-day notice. With respect to the early termination of the former agreements, Ceiba agrees to pay Astra a gross overriding royalty of 2% of revenues for the first five years and 1% of revenue for the three consecutive years.
Ceiba will continue to operate its terminal and storage facility at Kinsella and Astra will continue to market all oil processed through the facility. Ceiba and Astra will share operating income from Kinsella equally.
Management believes that the New Agreements appropriately adjust the Company's relationship with Astra in a manner that better aligns the risks and rewards associated with the Company's near term and long term growth plans while allowing both companies to leverage each of their core competencies to provide effective service for Ceiba's customers.
About Ceiba Energy Services Inc.
Ceiba provides specialized services to the energy sector, specifically to companies involved in the exploration, extraction and production of oil and natural gas in under serviced market space throughout Western Canada. Ceiba develops and constructs facilities in proximity to its customers to provide treatment of crude oil emulsion, terminalling, storage and marketing of oil and disposal of production water.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or the accuracy of this release.
Certain statements made herein may constitute forward-looking statements. These statements relate to future events or the future economic performance of Ceiba and carry known and unknown risks, uncertainties and other factors that may appreciably affect their results, economic performance or accomplishments when considered in light of the content or implications to statements made by Ceiba. Actual events or results could be significantly different. Accordingly, investors should not place undue reliance on forward-looking statements. Ceiba does not intend and undertakes no obligation to update these forward-looking statements, except as required under applicable securities laws.