TORONTO, ONTARIO--(Marketwired - June 19, 2014) - Canadian Oil Recovery and Remediation Enterprises Ltd. (TSX VENTURE:CVR) ("CORRE" or the "Company") is pleased to announce that SAR AS, the MENA operating partner of CORRE in SAR-CORRE MENA Limited ("SCM"), has been awarded a major multi-million dollar contract by the Kuwait Oil Company ("KOC") to treat oil based mud ("OBM") drill cuttings ("KOC Contract"). Eighteen companies were approved by KOC to bid for this drill cuttings treatment project.
The KOC Contract includes the mobilization and construction of a fully equipped permanent facility to treat 26,000 tons of drill cuttings per year as specified in the contract. This facility will be built using the proven drill cuttings treatment technology and process of SAR's world class facility currently operating in Averoy, Norway, which has the capacity to treat 50,000 tons of drill cuttings per year. The treatment capacity of the new facility can be increased if and when needed. The term of the KOC Contract is for 5 years with a one-year extension option during which 130,000-156,000 tons of drill cuttings are expected to be treated. The contract provides a 6 month mobilization period starting July 10th 2014. Accordingly, the permanent facility is expected commence operations on or before January 10th 2015.
The Company is unable to disclose the total contract amount at the present time in order to safeguard the confidentiality of its proprietary processing rate and its bidding prices for similar ongoing high value drill cuttings contracts in the Gulf. At the present time, the Company's operating partner is in the process of bidding for another major onshore drill cuttings treatment contract, and is also preparing to bid on an equally major drill cuttings contract located offshore. Notwithstanding this current limitation for competitive purposes, the Company is able to provide the following particulars pertaining to the KOC Contract:
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The estimated Capital Expenditures of the KOC Contract are approximately $8.5 million (45% of which will be CORRE's proportionate obligation in connection with its ownership interest in SCM);
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Upon completion of mobilization, a payment in the amount of $1.65 million will be due to SCM from KOC;
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Based upon Company management's review of contracts awarded in the MENA and other regions for drill cuttings tenders during the past 4 years, the estimated range of the service industry average operating cost under such agreements is between $120 and $275 per ton and SCM's costs will be within this range. The three primary factors affecting the actual cost of operators under such agreements are: a. volume (economies of scale may result in lower operational costs); b. the technology being employed (for example, direct thermal desorption, as compared to indirect thermal desorption); and c. total overhead costs; and
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Though the absolute contract value cannot be disclosed at this time, the Company is able to confirm that the total revenue payable under the KOC Contract exceeds $18 million dollars.
"With this contract, our MENA operating partner has positioned us as one of the primary contractors in the specialized service of treatment of drill cuttings in the MENA region. This represents a significant milestone in the development of our oil waste management and treatment services in the region and in our joint role with the local national oil companies as advocates for a clean and safe environment. With SAR as our partner and pre-qualified oil service provider, we continue to bid for more contracts and to increase our environmental remediation responsibilities using our optimized and approved technologies to treat oil-contaminated soil, recover oil and clean drill cuttings. Furthermore, SAR can now demonstrate the quality and effectiveness of its drill cuttings treatment services to KOC, a leading oil company in the Gulf region," said CORRE's Chairman and CEO John Lorenzo. "Finally, I would like to thank our shareholders and strategic allies for their patience and unfailing support."
About CORRE
CORRE is a Canadian-based oil services company which trades on the TSX Venture Exchange under the symbol CVR. CORRE provides full cycle oil waste management solutions to the petroleum industry. CORRE's customers are primarily in the upstream petroleum sector (oil production and drilling companies) and downstream petroleum sector (oil refinery, transportation and distribution companies). CORRE's operating lines include remediating oil-contaminated soil; treating sludge, oil based muds and drilling waste, oil recovery; automated oil storage tank cleaning, oil and gas engineering, and project management. CORRE provides its advanced environmental solutions through strategic operating partnerships with some of the most distinguished companies throughout the world.
Forward Looking Statements
Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, forward-looking information in this press release includes, but is not limited to, the potential future value of the KOC Contract, estimated operating costs and CAPEX and the potential for successfully obtaining additional contracts via the tendering processes discussed herein. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.
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