Savanna Energy Services Corp. has entered into a five year drilling and workover rig contract with Australia Pacific LNG Pty Limited ('APLNG') to initially deploy two hybrid drilling rigs from its Canadian fleet, and two built-for-purpose workover rigs to Queensland, Australia. Subject to the execution of definitive agreements, Savanna will also provide ancillary equipment and services to APLNG. The total value of the services to be provided to APLNG is expected to be in the range of $A220 million and creating in the neighborhood of 50 jobs locally. Both the drilling and workover rigs are contracted on a 365 day (24 hour) basis for an initial term of five years, with an extension option and an option to add further rigs as the project grows.

APLNG is a 50:50 coal seam gas ('CSG') to liquefied natural gas ('LNG') joint venture between Origin Energy Limited and ConocoPhillips.

APLNG Project Director Todd Creeger said the awarding of the rig contract was another milestone in the APLNG project and that the Savanna contract will provide for additional drilling and workover rigs to deliver the safest, most efficient and cost effective wells. Mr. Creeger also said 'Importantly, these new rigs reduce the environmental impact on the land as they require a much smaller footprint for each well.'

Savanna will modify two of its patented hybrid drilling rigs capable of drilling with coiled tubing or conventional drill pipe utilizing an integrated top drive. The modifications, though extensive, are targeted to address local transportation and operating conditions in Australia. The operating advantages and depth ratings of the hybrid rigs remain unchanged and are key to the intended operations of APLNG. The workover rigs to be supplied to APLNG will be new-builds, and are significantly different than our built-for-purpose Canadian and US fleets. The rigs are targeted to commence operations on location in Australia as follows: First hybrid and workover rigs - September 1, 2010 Second hybrid and workover rigs - December 1, 2010

All costs relating to mobilization of the rigs into Australia will initially be borne by Savanna, and recovered over the contract term. Given Australia's growing demand for CSG, these rigs are intended for permanent deployment in Australia. Based on CSG development plans in Australia overall, Savanna expects to further deploy additional hybrid rigs to the country. Savanna's management believes the hybrid technology it possesses is ideally suited to large scale development of Australia's substantial CSG resources.

This contract represents the first expansion of Savanna's hybrid drilling operations beyond North America. Savanna will continue to extend efforts in expanding our international presence moving forward. Savanna's hybrid platform has proven itself to be highly efficient as a shallow drilling vehicle, and Savanna is targeting its international expansion efforts on areas where these efficiencies can be fully accessed by its customers to improve the economics of their drilling costs. Stated Ken Mullen, President and CEO of Savanna, 'While domestic North American activity currently remains focused on deeper, unconventional plays, there remain substantial international opportunities to deploy Savanna's hybrid drilling technology in areas where deeper unconventional development is far less pervasive, and local natural gas and oil supply dynamics create a more stable activity and demand base for our equipment.'

Capital Program for 2010: Savanna is also pleased to outline its capital program for 2010 as well. The Company anticipates expending approximately $46 million on sustaining, maintenance and incremental capital, including the capital required for the deployment of the rigs under the APLNG contract. The increase in fleet size as a result of this capital program consists of the two new-build workover rigs under the APLNG contract.

Tags: Savanna Energy Services Corp.