A Focused Story 3 Coil Tubing: 1 in Canada; innovative fleet Downhole Tools: top 5 in Canada; conventional and multi-stage packers Service Rigs: 8 in Canada; high-quality fleet
Customer Needs 4 Innovative Cost Equipment Effective and Solutions Processes Deep, Complex LNG Horizontal Export Capability SAGD Trained, Safety Experienced Crews drive our Innovative Business Model
Innovative Business Model 5 Deep coil tubing reel trailer (2012) Gen III / IV coil tubing rigs (2013) Integrated coil and pumping teams SAGD custom service rig packages Tool solutions to meet changing needs and our…
Growth Opportunities 6 Deep Coil Tool Tubing Rigs SAGD LNG Potential Business Horizontal Completions Deep, Organic U.S. Completions and High-pressure Expansion and Maintenance Well Workovers Work Completions facilitated by…
Strong Balance Sheet 7 Debt Outstanding Debt / EBITDA 29 MM 0.4x (Aug 7/13) Strong Balance Sheet to realize on growth opportunities
8 Growth Opportunities
Deep Coil Tubing 9 Ideal for deep, complex horizontal well bores
Deep Coil Tubing: Innovation 10 New Generation III/IV Rigs Increased reel capacity - longer and larger diameter coil Higher mast Unique safety features Reel trailer (prototype for Gen IV) reached record depth at 5,988 m using 2…
Gen IV Coil Rig Layout 11 Mast/ Injector Control Room CT Reel Rig Generator Wellheads Picker Unit
SAGD Service Rig Work 12
SAGD: Industry Perspective 13 In situ production (using SAGD) is projected to continue to grow Approximately 60 service rigs of the 1,100 in the WCSB are focused on SAGD Source: Energy Resources Conservation Board ST98-102…
SAGD: Essentials Opportunity 14 Currently 3 service rigs working for SAGD customers; 3 more available by the end of 2013 Completions and maintenance work; 24 hour operations Ancillary rental equipment: o 13 5/8 BOPs o Automated…
LNG Development 15
LNG Development: Industry Perspective 16 Development of reserves in the Montney, Horn River and Duvernay basins = demand for oilfield services to complete the wells Complex wells: o Long reach horizontals o Larger diameter…
LNG: Essentials Opportunity 17 Essential has customer experience with and trust of many of the supermajors The new deep coil tubing rigs are well-suited to complete and maintain these wells There are currently few deep coil…
Downhole Tools 18 Multi-stage fracturing (Tryton MSFS) for horizontal well completions dual and single element Varying number of stages as the industry evolves Conventional tools for production and completion work High return;…
Downhole Tools: U.S. Expansion 19 Expanding into the U.S.; measured growth Proven technology Moderate initial investment risk; upside potential
20 Essential Today
Current Business Focus 21 As SAGD and LNG projects develop, Essential focuses on existing customer needs: Masted deep coil tubing for horizontal completions and workovers with strong demand in the Bakken, Cardium and Montney Service…
Where Earnings are Generated 22 YTD Q2/13 Revenue YTD Q2/13 Gross Margin (% of Total Revenue) (% of Total Gross Margin) Downhole Tools & Downhole Tools Rentals & Rentals Service Rigs 52 MM 17 MM 48 MM Well Coil Well…
EBITDA 23 100 80 Millions 60 93 40 79 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 Aug 28/13; Essential is covered by 10 analysts
Investing in High Demand Equipment 24 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 rigs 1 4 Q3/Q4(3) Deep…
Balanced Capital Deployment 25 Unused Credit EBITDA Capacity 70 million (TTM to Q2/13) 71 million (Aug 7/13) 2013 Capital Program - 45 million Dividend - 15 million (annualized) Share Buyback
Key Takeaways 26 Business Innovation Masted deep coil and tool innovations to meet changing demand Growth Prospects Deep, complex wells; SAGD; LNG; tool expansion into the U.S. Financial Capacity to Facilitate Growth Low debt…
Corporate Data 27 Aug 28/13 Trading price 2.57 Market capitalization 322 million Enterprise value (based on Aug 7/13 debt) 351 million Dividend yield 4.7% Replacement cost per share(1) 2.55 EV/2013 EBITDA (analyst consensus)(2) 4.4x…
Garnet Amundson 1100, 250 2nd Street SW President & Chief Executive Officer Calgary, Alberta T2P 0C1 (403) 513-7272 Karen Perasalo serviceessentialenergy.ca Investor Relations TSX:ESN www.essentialenergy.ca
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