Blast Energy Services Provides Company Update
October 06 2005 - 12:56PM
PR Newswire (US)
HOUSTON, Oct. 6 /PRNewswire-FirstCall/ -- Construction of the Blast
Energy Services' (OTC:BESV) (BULLETIN BOARD: BESV) initial abrasive
fluid jetting rig continues to progress. Currently, Alberta Energy
Holding (AEH), the Company's rig construction contractor and
technology provider, is finalizing the fabrication of the formation
access tool and the coiled tubing module. Additional resources have
recently been added by AEH to expedite the final construction and
integration processes. Blast now expects to commence testing at the
end of the month, which should allow the rig to be deployed and
begin generating revenue in the latter part of November 2005. "We
have experienced some slippage in the construction timetable," said
David Adams, President and Co-CEO. "However, with additional
Alberta contractors on hand, I believe we can mitigate any further
delays and stay on track to begin revenue generation in November."
The Company has invested approximately 85% toward the $1.2 million
estimated cost of construction and parts for Blast Rig #1, using
proven coiled tubing technology as the base platform. The
capabilities of this next generation rig should allow Blast to
expand their market opportunities to a wider range of well
services, including specialty casing cutting, long reach
perforating, lateral jetting, and specialty completions. After the
Blast Rig #1 establishes market acceptance and based upon a normal
weekday, daylight operations schedule and current rates for
specialized well perforation and completion services, the rig is
estimated to have the capacity to generate more than $6 million in
annual revenues. Also, following a successful deployment of Rig #1,
the Company intends to begin construction of additional rigs with
similar abrasive cutting capabilities as the market demands. At the
end of September, the Company received the final installment in the
previously announced $1.0 million arrangement to fund the
completion of the Blast Rig #1. Under the terms of the loan
agreement with Berg McAfee Companies, LLC, a major shareholder,
cash revenues from the initial rig will be shared on the basis of
allocating 90 percent to the Company and 10 percent to Berg McAfee
for a ten-year period following repayment. After ten years, the
Company will receive all of the revenue from the rig. The loan,
which has a senior and subordinated structure, carries a combined
interest rate of 7.4 percent and is due September 15, 2006. Berg
McAfee also has the option to fund an additional three rigs under
these commercial terms. Additionally, related to the Technology
Assignment Agreement announced in March 2005, Maxim Energy has
missed two scheduled $400,000 principal payments and has been
avoiding default provisions by paying a series of late charges. To
date, Maxim has paid $535,000 toward principal reduction and
$350,000 in late fees on an original cash commitment of $1.3
million. However, as a result of their missing the June and
September deadlines, Blast has failed to pay the judgment rendered
in the Gryphon lawsuit but intends to enter into discussions with
them to reschedule the payment. Following mediation talks held
early in 2005, Blast entered into an Agreed Judgment with Gryphon
Master Fund as to all breach of contract claims related to the
Company's delay in registering common stock acquired by Gryphon in
October 2003. Under the terms of the Agreed Judgment, Blast was
obligated to pay liquidated damages of $500,000 to Gryphon on or
before September 30, 2005. Meanwhile, Blast's satellite business
has more than doubled its revenues during the first half of 2005
versus the same period last year and activity levels in the third
quarter indicate that this turnaround should continue. We are
currently supporting our customers in the Gulf of Mexico and along
the Gulf Coast affected by the hurricanes and where we have over
100 installations. Blast has installed satellite units in the U.S.,
the Gulf of Mexico and Africa for customers such as BP,
Exxon/Mobil, GE, Dynegy, Halliburton, Apache and Noble Energy. The
Satellite Division is generating a positive gross margin from an
annual revenue rate of more than $1 million. Revenues are expected
to increase from both new and existing customers interested in our
ability to provide broadband satellite services for data, voice and
internet service from remote operations throughout the world. About
Blast Energy Services, Inc. Blast Energy Services, Inc. is a
publicly traded company based in Houston. Our mission is to
substantially improve the economics of existing oil and gas
operations through the application of our worldwide licensed and
proprietary technologies. Using specially fabricated mobile
drilling rigs we intend to operate a commercially viable energy
service business, including: specialty casing cutting, perforation,
fracturing services and lateral drilling with the potential to
penetrate through well casing and into reservoir formations to
stimulate oil and gas production. This service should provide oil
and gas producers with an attractive, lower cost alternative to
existing well stimulation or horizontal drilling services.
Additionally, we are providing satellite services to oil and gas
producers. This service allows them to monitor and control well
head, pipeline or drilling operations through low- cost broadband
data and voice services from remote operations where conventional
land based communication networks do not exist or are too costly to
install. Please visit our website:
http://www.blastenergyservices.com/ . Safe Harbor Statement Any
statements made in this news release other than those of historical
fact, about an action, event or development, are forward looking
statements. Forward looking statements involve known and unknown
risks and uncertainties, which may cause the Company's actual
results in future periods to be materially different from any
future performance that may be suggested in this release. Such
factors may include risk factors including but not limited to: the
ability to raise necessary capital to fund growth, adequate
liquidity to manage operations and debt obligations, the
introduction of new services, commercial acceptance and viability
of new services, fluctuations in customer demand and commitments,
pricing and competition, reliance upon lenders, contractors and
vendors, the ability of Blast Energy Services' customers to pay for
our services, together with such other risk factors as may be
included in the Company's filings on Form SB-2 and its periodic
filings on Form 10-KSB, 10-QSB, and other current reports.
DATASOURCE: Blast Energy Services, Inc. CONTACT: John MacDonald of
Blast Energy Services, Inc., +1-281-453-2888, or +1-713-725-9244,
or Web site: http://www.blastenergyservices.com/
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