Civeo Corporation has renewed its contract with Imperial Oil Resources Limited to continue providing rooms and hospitality services at its Wapasu Lodge in its Canada-based oil sands for a duration of 12 years. The renewal is scheduled to take effect on Nov. 1 and will run through Oct. 31, 2034, a press release reported.
“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 long-standing relationship,” Bradley J. Dodson, Civeo's president and CEO, said in the press release. “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.”
The terms of the take-or-pay contract include a minimum daily occupancy that helps balance rate reductions with cost savings. The renewal also includes approximately C$500 million of guaranteed take-or-pay revenues, and “significant upside in excess of take-or-pay based on current occupancy levels,” a recent press release states.
In collaboration with the contract award, the company hopes to deploy approximately C$5 million in capital this year, all of which will be allocated to make improvements and renovations to the Wapasu Lodge.
In light of the contract renewal and supporting capital improvements, the company recently raised its capital expenditure guidance to $24-$29 million.