Rig & refurbishing operations
Revenues from rig operations totaled $0.6 million in the second quarter of 2008, which was all from drilling contracts and completion operations, which was the same as the revenue from rig operations in the second quarter of 2007. GVPS did not realize operating revenue in the second quarter of 2008 due to taking our rigs out of service to conduct comprehensive inspections and API certifications to enable universal industry utilization of our fleet for third party revenue generation. The operating loss in the second quarter of 2008 was $1.5 million, compared to an operating loss of $0.5 million in the second quarter of 2007, or an increase in the loss of $1.0 million. $0.9 million of this loss was due to the write down of the rig and rig related equipment that was sold.
GVPS was established in 2006 in response to a then acute shortage of contractor supplied production rig services in California. GVPS enabled TVOG to significantly accelerate production via well work and newly drilled wells than afforded by existing rig contractor rig availability. However, since 2006 the California rig supply has caught up to market demand. GVPS began to consider alliances with various production service firms to increase rig availability for an increasing number of TVOG active and idle wells. In June 2008, GVPS agreed to sell all of its production and drilling rigs and down hole tools to Excalibur Well Services, Inc. in exchange for cash and a highly attractive, preferred client status for well servicing. The sale was completed in July 2008 for a price of $4.8 million. GVPS recognized an impairment loss of $0.9 million in the second quarter to write down the value of the assets being sold to the sales price.
Yorkville / Cornell Tracking Board #board-9964
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