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January 25, 2012

CanElson Drilling has Patent Pending to Fuel Mobile Equipment With Stranded or Flared Natural Gas

CALGARY, ALBERTA–(Marketwire – Jan. 25, 2012) – CanElson Drilling Inc. (“CanElson” or the “Company”) (TSX:CDI) announced today that it has a patent pending for the fueling of mobile equipment with stranded or flared natural gas. Stranded gas is defined as natural gas that is not being moved from the well to market due to a lack of infrastructure. CanElson has tested and evaluated the technology to utilize trucked Compressed Natural Gas (“CNG”) on its mechanical drilling rigs. Initial tests have been very positive and indicate strong economics to support the next phase of development which includes implementing the technology on four of the Company’s drilling rigs located in the Saskatchewan Bakken resource play during the second quarter of 2012. This next phase of development will implement the delivery of gas directly to the drilling rigs using mobile Gas Transport Modules (“GTM’s”). In the third and fourth quarters CanElson expects to expand the utilization of the technology into North Dakota and the Permian Basin of west Texas.

Bi-Fuel is a proven technology, consisting of CNG injected into the inlet air of a diesel engine. The natural gas can replace up to 60 – 70% of the diesel fuel when the engine is under load. Further savings are possible in winter because a rig boiler can be fired on 100% CNG, and there are other mobile diesel engine applications (e.g. fracture stimulation equipment). Using heating value, the current diesel equivalent value of CNG is approximately $30 per thousand cubic feet (mcf). By displacing a portion of diesel fuel use from its drilling rigs with CNG, there is a significant economic and environmental opportunity for the Company as well as its customers and the communities where the rigs work.

President and CEO Randy Hawkings says: “This is an exciting and unique opportunity for the Company to provide cost effective solutions for our customers while increasing the Corporation’s profitability and reducing the environmental footprint of our operations.”

CanElson is an Alberta, Canada corporation that is engaged in the manufacture, acquisition, operation and sale of drilling rigs into business relationships involving the Corporation for the oil and gas industry. The Corporation currently operates in the western Canadian sedimentary basin (the “WCSB”), the United States and Mexico. The Corporation’s WCSB operations are currently focused in Alberta, Saskatchewan and Manitoba. The United States operations are currently focused in the Permian Basin of West Texas and North Dakota. The Corporation’s Mexico operations are conducted through a joint venture Company, Diavaz CanElson de Mexico, S.A. de C.V. (“DCM” or the “Joint Venture”), of which CanElson holds a 50% ownership interest, and is currently focused in the Ebano-Panuco-Cacalilao fields of the Misantla-Tampico Basin of Mexico. At the date of this press release, CanElson was operating 35 rigs: 21 drilling rigs in the WCSB, 6 (net: 5) drilling rigs in Texas, 4 drilling rigs in North Dakota, 2 (net: 1) drilling rigs and 2 (net: 1) service rigs in the Misantla-Tampico Basin of Mexico. The Corporation’s owned drilling rig fleet had an average age of less than 5 years, an average total vertical depth rating of 4,000 metres and all rigs are capable of drilling horizontal and resource play wells.


This press release contains certain statements or disclosures relating to CanElson that are based on the expectations of CanElson as well as assumptions made by and information currently available to CanElson which may constitute forward-looking information under applicable securities laws. In particular, this press release contains statements pertaining to implementing the technology on four of the Company’s drilling rigs located in the Saskatchewan Bakken resource play during the second quarter of 2012; expanding utilization of the technology into North Dakota and the Permian Basin of west Texas in the third and fourth quarters of 2012; and possible winter operating cost savings, all of which statements contain forward looking information. Many factors could cause the performance or achievement by CanElson to be materially different from any future results, performance or achievements that may be expressed or implied by such forward looking information. CanElson’s Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. CanElson disclaims any intention or obligation to publicly update or revise any forward looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

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