Civeo Corporation 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.