A Focused Story 3 Coil Tubing: the largest coil tubing well service fleet in Canada Downhole Tools: innovative business with strong organic growth Service Rigs: high-quality, geographically dispersed fleet Oil and liquids-rich…
Where Earnings are Generated 4 Q1/13 Revenue Q1/13 Gross Margin (% of Total Revenue) (% of Total Gross Margin) Service Rigs Downhole Tools Downhole 34 MM & Rentals Tools & 37 MM Rentals Well 13 MM Servicing 27MM Coil Well…
The Essential Differentiators 5 Essential people: experienced personnel and empowering culture Safety: HSE performance superior to industry norms Size and focus: dedicated completions and production well service company…
Strategic Growth Opportunities 6 Near-term and longer-term opportunities Innovative masted coil tubing builds Organic expansion into the U.S. SAGD completions and well maintenance work Private service rig acquisitions…
Canadian Market Share 7 Canadian Equipment Count Estimated Market Position Industry Essential Coil tubing rigs deep 85(1) 25 1 Downhole tools - - Top 5 Service rigs 1,117(2) 56 8 (1) Estimated by Essential at May/13; Essential has…
Oil and Horizontal Wells 8 Canada Increasing Oil and Horizontal Wells 100% 80% 60% 40% 20% 0% 2007 2008 2009 2010 2011 2012 2013 YTD % Oil (1) % Horizontal (2) (1) Oil wells drilled as a % of total wells on a completion…
Operating Locations in the WCSB 9
Investing in High Demand Equipment 10 Capital Spending (millions) 2012 2013(1) Growth 38 32 Maintenance/infrastructure 14 13 Total 52 45 2012 2013(1) New Assets Additions Additions In-service Deep coil tubing 1 4 Q3(2)/Q4(2) Deep…
Coil Well Service 11 Equipment Count 40 Average age of fleet: Deep coil: 4 years (from 30 construction or last Level 4) N2 pumpers: 3 years Fluid Pumpers: 1 year 20 30 27 25 10 18 18 15 15 13 10 0 Deep Coil N2 Pumpers…
Innovation 12 Coil Reel Trailer (2012) Reached record depth in 2013 at 5,595 m using 2 5/8 coil Fully mobile; innovative design Prototype for the Gen IV masted coil tubing rig Can carry up to 6,400 m of 2 5/8 coil
Masted Coil Tubing Evolution 13 Generation III/IV masted coil Larger reel capacity for longer and larger diameter coil Two Gen III and two Gen IV rigs in-service in 2013 (Q3/Q4) Size Current Fleet Gen III Gen IV 2 coil 5,500 m…
Gen IV Coil Rig Layout 14 Mast/ Injector Control Room CT Reel Rig Generator Wellheads Picker Unit
Completion of Horizontal Wells 15 Coil Tubing Service Rig Safe, efficient Safe alternative to coil tubing Works while well is flowing and under Use of kill fluid to service a well pressure Deals with a wide variety of well…
Downhole Tools & Rentals 16 Multi-stage fracturing (Tryton MSFS) tools for completion of horizontal wells Conventional tools with an oil focus for production and completion work Broad target market and customer base Growing…
Tryton Tools 17 Business Model Low capital intensity (15 million of inventory) High barriers to entry (people, technology, customer trust) Strong return on investment Growth history primarily organic
Growth and Innovation 18 Tryton MSFS Introduced in Q2/09 with consecutive years of strong organic growth New Innovative Products Single element tool - cost effective alternative for customers completing long reach horizontal…
Service Rigs 19 Oil well focus, including SAGD Completions, workovers, abandonments Keys to success: safety, crew quality, location, equipment Average age of fleet: 6 years (from construction or last Level 4 recertification)…
Service Rigs - Growth 20 Growth focused on SAGD wells 3 rigs working for oilsands customers; 3 under construction (2013) Completions and maintenance work 24 hour operations (crews in camps) Accommodates dual tubing strings…
EBITDA 22 100 80 Millions 60 91 40 82 74 74 20 29 10 0 2009 2010 2011 2012 2013E(1) 2014E(1) Actual Analyst Consensus (1) 2013 and 2014 is analyst consensus at Jun 14/13; Essential is covered by 13 analysts
Strong Balance Sheet 23 Long-term Debt Mar 31/13 Debt outstanding (millions) 36 Debt to EBITDA 0.5x Working capital in excess of debt (millions) 41 Substantial room on debt covenants Yes Credit Facility: 100 million May 30/14…
Corporate Data 24 Jun 14/13 Trading price 2.70 Market capitalization 335 million Enterprise value (based on Mar 31/13 debt) 371 million Shares outstanding 124 million 52-week range 1.75 - 2.71 52-week average daily volume approx.…
Key Takeaways 25 Growth: Largest coil tubing well service fleet in Canada meeting the growing demand to complete and produce longer, deeper and more complex wells Innovative downhole tool business; U.S. expansion Low debt - a…
TSX:ESN Garnet Amundson 1100, 250 2nd Street SW President & Chief Executive Officer Calgary, Alberta T2P 0C1 (403) 513-7272 Karen Perasalo serviceessentialenergy.ca Investor Relations www.essentialenergy.ca
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