By The Canadian Press
CALGARY - Cathedral Energy Services Ltd. said Wednesday it has taken a step toward beginning operations in Venezuela.
The Calgary-based oilfield services company (TSX:CET.TO - News) announced it has executed a key agreement with a subsidiary of Petroleos de Venezuela S.A., the South American country's state-owned oil and natural gas corporation.
Cathedral owns a 40 per cent stake in a joint-venture company with its Venezuelan partner, called Vencana Servicios Petroleros S.A.
Wednesday's agreement provides for: the sale of some of Cathedral's existing land, equipment and other assets to Vencana; the addition of equipment to increase its directional drilling job capability from four jobs to 10 and the future expansion into other product lines, including production testing and wireline services.
As part of the asset sale to Vencana, Cathedral is to receive 60 per cent of the proceeds in cash from its partner.
Before Vencana can begin operations, more agreements need to be negotiated and executed.
"Significant progress has been made on the negotiation of these agreements but history has shown there have been significant delays in the execution of such agreements and accordingly Cathedral is uncertain when operations in Venezuela will commence," Cathedral said in a statement.
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