Estrella International Energy Services Ltd. Announces Filing of Q2 Financial Statements and Finalization of Relationship With...

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRES 

Estrella International Energy Services Ltd. ("Estrella" or the "Company") (TSX
VENTURE:EEN) announces that it has filed its Interim Condensed Consolidated
Financial Statements and the related Management's Discussion and Analysis
("MD&A") for the three and six month period ended June 30, 2012. Copies of these
documents can be found on the SEDAR website at www.sedar.com. In this press
release all dollar amounts are in US$ '000 unless otherwise specified. 


Financial Highlights for the Quarter Ended June 30, 2012

During the quarter the Company recorded its highest quarterly revenues ever of
$16,868 ($14,210 in 2011), this notwithstanding that the Company's rig
utilization rate was 49% (82% in 2011), which is much lower than historical
averages. The rig utilization rate continues to be impacted by the Company's
operations in Colombia which are recovering from a region wide strike in
Barranca Bermeja in January 2012. 


The revenues for were offset by general and administrative expenses of $2,761
($2,857 in 2011), depreciation of $2,859 ($3,748 in 2011), interest expense of
$2,338 ($1,979 in 2011) and oilfield expenses of $13,903 ($9,659 in 2011). For
the quarter ended June 30, 2012, the Company also recorded other income of
$1,186 ($424 during 2011). The net loss was $3,802 ($9,424 in 2011). The Company
recorded a positive EBITDA of $204 ($1,693 in 2011), for the first time since Q2
2011. 


Subsequent Events

Private Placement 

Subsequent to the quarter end, the Company completed a private placement
("Private Placement") with Ringo Holding L.P., a subsidiary of Southern Cross
Latin America Private Equity Fund IV, L.P. (the "Purchaser"), for gross proceeds
of $25,000 to the Company. Following completion of the transaction the Purchaser
held 55.7% of the Company. Please see the Company's press release dated August
10, 2012, a copy of which is available on SEDAR, for more information concerning
this transaction. 


Debt Reduction 

The Company is committed to reducing its overall indebtedness. Since November
2011 the Company has prepaid $4,300 of its senior debt facility with Credit
Suisse (the "Credit Facility"), with a further $1,875 paid as part of normal
amortization in February 2012. On August 13, 2012, the Company used a portion of
the proceeds of the Private Placement to repay $10,000 outstanding indebtedness
on the Credit Facility. 


In connection with the $10,000 repayment the Company entered into an amended
credit agreement with Credit Suisse which (i) modified the existing credit
agreement to reduce administrative fees; (ii) modified the amortization schedule
such that Estrella will repay the remaining indebtedness in seven quarterly
instalments of $2,000 beginning on May 31, 2014; and (iii) freed up certain
collateral currently pledged under the credit agreement in an effort to reduce
administrative costs. In addition, the 3,072,000 Common Share purchase warrants
which were issued to the Credit Suisse in connection with the Credit Facility
were returned to the Company for cancellation.  


The Company also used a portion of the proceeds of the Private Placement to
repay CDN$3,941 worth of other existing indebtedness.  


Finalization of Relationship with Petroland 

Subsequent to the quarter end, Estrella reached a final settlement with the
shareholders of Petroland S.A.S. ("Petroland"). Under that agreement, in
exchange for the monies paid to the sellers by Estrella ($1.1 Million) for their
shares and the monies invested in Petroland by Estrella to support its
operations ($4.1 Million), Estrella was to receive three 550 HP
drilling/workover rigs. Estrella also agreed to assume the leasing debt
outstanding on two of the transferred rigs ($1.7 million) and purchase certain
additional peripheral assets from Petroland at an estimated book value of $1
Million. Subject to customary adjustments, upon completion of these
transactions, Estrella would have no further obligations to Petroland or is
shareholders. 


On August 8, 2012, the transactions specified above were completed and rigs
PL01, PL20 and PL21 were formally transferred to Estrella and renumbered 554,
555 and 556 in accordance with Estrella's numbering conventions. Estrella has no
further involvement in or relationship with Petroland or its shareholders. 


About Estrella

Estrella is an oil and natural gas, geothermal and mining service company with
operations throughout Latin and South America. It provides conventional drilling
services; directional drilling services; tools and equipment sales and rentals;
work-over and finishing services; and consulting and engineering services. The
Corporation is headquartered in Buenos Aires, Argentina and has operating
locations in six countries Latin and South America. 


Forward Looking Statements 

This press release may contain forward-looking statements which reflect
management's expectations regarding future growth, results of operations,
performance and business prospects of Estrella. These forward-looking statements
may relate to, among other things, forecasts or expectations regarding business
outlook for Estrella; commodity prices for oil and natural gas; oil and natural
gas demand and production growth; debt service requirements for Estrella;
improvements in operating procedures and technology; capital expenditures by
Estrella and the oil and gas industry; the business strategies of Estella's
customers; future global economic conditions; and future results of operations;
expectations regarding the Corporation's ability to raise capital; realization
of the anticipated benefits of acquisitions and dispositions, revenue growth,
future acquisitions, generation of cash flow, and may also include other
statements that are predictive in nature, or that depend upon or refer to future
events or conditions, and can generally be identified by words such as "may",
"will", "expects", "anticipates", "intends", "plans", "believes", "estimates",
"guidance" or similar expressions. In addition, any statements that refer to
expectations, projections or other characterizations of future events or
circumstances are forward-looking statements. These statements are not
historical facts or guarantees of future performance, but instead represent
management's current expectations, estimates and projections regarding future
events. 


The reader is cautioned that assumptions used in the preparation of any
forward-looking information may prove to be incorrect. Events or circumstances,
such as future availability of capital on favourable terms, may cause actual
results to differ materially from those predicted, as a result of numerous known
and unknown risks, uncertainties, and other factors, many of which are beyond
the control of Estrella. The reader is cautioned not to place undue reliance on
any forward-looking information. Such information, although considered
reasonable by management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated. Forward-looking
statements contained in this press release are expressly qualified by this
cautionary statement. The forward-looking statements contained in this press
release are made as of the date of this press release, and Estrella does not
undertake any obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by securities law. 


THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR
DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES,
AND DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO SELL
ANY OF THE SECURITIES DESCRIBED HEREIN IN THE UNITED STATES. THESE SECURITIES
HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR
SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED OR EXEMPT
THEREFROM.