Civeo Announces a 12-Year Contract Renewal in Canada

Rhea-AI Summary

Civeo Corporation (NYSE:CVEO) has secured a 12-year contract renewal with Imperial Oil Resources Limited for hospitality services at Wapasu Lodge in the Canadian oil sands, effective November 1, 2022, through October 31, 2034. The agreement guarantees approximately C$500 million in revenues with a take-or-pay structure. Civeo plans to invest C$5 million in lodge improvements and has raised its 2022 capital expenditure guidance to US$24-$29 million. This renewal underscores Civeo's long-term partnership with Imperial and is aimed at maximizing operational efficiency amidst current market conditions.

Positive

• Secured a 12-year, take-or-pay contract with Imperial Oil, guaranteeing approximately C$500 million in revenues.
• Plans to invest C$5 million in improvements to Wapasu Lodge.
• Raised its capital expenditure guidance for 2022 to US$24-$29 million.

Negative

• None.

HOUSTON & CALGARY, Alberta--(BUSINESS WIRE)-- Civeo Corporation ("Civeo" or the "Company") (NYSE:CVEO) today announced that the Company has been awarded a contract renewal to continue providing rooms and hospitality services at its Wapasu Lodge in the Canadian oil sands for Imperial Oil Resources Limited.

The highlights of the contract award include a 12-year, take-or-pay contract inclusive of daily minimum occupancies that balance rate reductions with a range of planned cost savings initiatives. The new agreement commences November 1, 2022 and will terminate on October 31, 2034. It includes approximately C$500 million of guaranteed take-or-pay revenues, as well as significant upside in excess of take-or-pay based on current occupancy levels.

Bradley J. Dodson, Civeo's President and Chief Executive Officer, stated, “Serving Imperial’s Kearl operation at our Wapasu Lodge has been a cornerstone of our Canadian business dating back to 2009. Imperial remains a highly valued customer, and we are excited to extend this longstanding relationship. Civeo is committed to ensuring the cost efficiency of our customers’ producing assets, and this contract renewal represents an excellent collaboration between two long-term partners to maximize value in the current operating environment in a mutually beneficial way.”

In conjunction with this contract award, Civeo expects to deploy approximately C$5 million in capital, primarily in 2022, which will include renovations and improvements to Wapasu Lodge. Due to this contract renewal and the supporting capital improvements, Civeo is raising its full year 2022 capital expenditure guidance to US$24-US$29 million.

About Civeo

Civeo Corporation is a leading provider of hospitality services with prominent market positions in the Canadian oil sands and the Australian natural resource regions. Civeo offers comprehensive solutions for lodging hundreds or thousands of workers with its long-term and temporary accommodations and provides food services, housekeeping, facility management, laundry, water and wastewater treatment, power generation, communications systems, security and logistics services. Civeo currently operates a total of 27 lodges and villages in Canada, Australia and the U.S., with an aggregate of over 28,000 rooms. Civeo is publicly traded under the symbol CVEO on the New York Stock Exchange. For more information, please visit Civeo's website at www.civeo.com.

Forward Looking Statements

This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. The forward-looking statements herein include, among others, the statements regarding Civeo’s future plans and outlook, including capital expenditure guidance, and potential upside with respect to the Imperial contract. The forward-looking statements included herein are based on then current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Such risks and uncertainties include, among other things, risks associated with global health concerns and pandemics, including the COVID-19 pandemic, any increases in or severity of COVID-19 cases (including due to existing or new variants) and the risk that room occupancy may decline if our customers are limited or restricted in the availability of personnel who may become ill or be subjected to quarantine, risks associated with the general nature of the accommodations industry, risks associated with the level of supply and demand for oil, coal, iron ore and other minerals, including the level of activity, spending and developments in the Canadian oil sands, the level of demand for coal and other natural resources from, and investments and opportunities in, Australia, and fluctuations or sharp declines in the current and future prices of oil, natural gas, coal, iron ore and other minerals, risks associated with failure by our customers to reach positive final investment decisions on, or otherwise not complete, projects with respect to which we have been awarded contracts, which may cause those customers to terminate or postpone contracts, risks associated with currency exchange rates, risks associated with the company’s ability to integrate acquisitions, risks associated with labor shortages, risks associated with the development of new projects, including whether such projects will continue in the future, risks associated with the trading price of the company’s common shares, availability and cost of capital, risks associated with general global economic conditions, global weather conditions, natural disasters and security threats and changes to government and environmental regulations, including climate change, and other factors discussed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Civeo’s most recent annual report on Form 10-K and other reports the company may file from time to time with the U.S. Securities and Exchange Commission. Each forward-looking statement contained herein speaks only as of the date of this release. Except as required by law, Civeo expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220718005683/en/

Investor Relations and Civeo Corporate Contact:

Carolyn J. Stone

Civeo Corporation

Senior Vice President & Chief Financial Officer

713-510-2400

Media and Civeo Canada Contact:

Allan D. Schoening

President, Civeo Canada

780-440-7831

Source: Civeo Corporation

FAQ

What is the duration of the new contract for Civeo Corporation with Imperial Oil?

The new contract is a 12-year agreement that runs from November 1, 2022, to October 31, 2034.

How much guaranteed revenue is Civeo expecting from the new contract?

Civeo is expecting approximately C$500 million in guaranteed take-or-pay revenues from the contract.

What capital expenditure guidance has Civeo raised for 2022?

Civeo has raised its capital expenditure guidance for 2022 to between US$24 million and US$29 million.

What services will Civeo provide under the contract with Imperial Oil?

Civeo will continue to provide rooms and hospitality services at Wapasu Lodge.