A Focused Story 3 Canadas largest public pure play well service company Completion and production focus Sale of Rod Rig assets (non-core) for 6.1 million on October 8, 2014 Coil Tubing Downhole Tools Service Rigs 1 in Canada Top…
Where Earnings are Generated 4 YTD Q3/14 Revenue YTD Q3/14 Gross Margin (% of Total Revenue) (% of Total Gross Margin) Downhole Downhole Tools Tools & & Rentals Rentals Service Rigs 29 MM 85 MM 71 MM Coil Well Well…
Servicing the Life of a Well 5 Primary Focus Drilling Completion Production Work-over Abandonment Rentals Coil tubing Coil tubing Coil tubing Coil tubing Service rigs Service rigs Service rigs Service rigs Tools Tools Tools…
Growing Fracturing Market: The Opportunity 6 The growing number of long-reach horizontal wells increases the demand for deeper coil tubing rigs In the well completion phase, masted coil tubing rigs are used for: Pre-Fracturing…
Masted Coil Tubing: Our Response 7 Gen III/IV build program (2013 to 2016 expected delivery): Equipment: 4 Gen III rigs / 8 Gen IV rigs Expected total cost: 63 million Spending to-date: 35 million Increased reel capacity - longer…
Masted Coil Tubing: Evolution 8 Gen II/III/IV Specifications Size Gen II Gen III Gen IV Number of rigs 14 2 1 2 coil 5,500 m 8,400 m 11,200 m 2 3/8 coil 3,500 m 6,300 m 7,900 m 2 5/8 coil 2,900 m 4,900 m 6,400 m Mast height (ground to…
Essential Provides Full Service Completions 9 Essential equipment on-site: 1 Gen III and 1 Gen II masted coil tubing rig (milling out multi-stage frac balls and seats) 2 fluid pumpers, 2 nitrogen pumpers, 1 chemical van (supporting…
Completion of Horizontal Wells 10 Coil Tubing Service Rig Works while well is flowing and Use of kill fluid to service a well under pressure Deals with a wide variety of well Continuous coil - no threaded bore applications…
Production Work-overs 11 The growing number of horizontal wells are expected to increase the demand for service rigs for work-over services Typically oil-focused An ever building inventory of older, high decline wells will be…
Downhole Tools & Rentals 12 Proven Downhole Tools Business Model: High return on low capital investment 28 million of tools inventory 125 employees Technical business; significant barriers to entry Growth Driven by: Exposure to…
Downhole Tools 13 MSFS Tools used for Horizontal Completions: Ball & Seat technology forms the core of Essentials MSFS tool offering but customers are also seeking new completion techniques Viking sliding sleeve coil-actuated…
Downhole Tools 14 Keys to Success: Experienced tool hands (requires diverse rig experience) Service and relationships High quality tool design quality control assembly, testing and installation Ball & seat and new tools to meet…
Operating Areas 15 CANADA U.S.A. Coverage Across Key Oil and Gas Basins
EBITDAS 17 100 80 Millions 60 40 83 74 74 70 66 20 29 10 0 2009 2010 2011 2012 2013 2014E(1) 2015E(1) Actual Analyst Consensus (1) 2014 and 2015 is analyst consensus at Nov 7/14; Essential is covered by 9…
Investing in High Demand Equipment 18 Capital Spending (millions) 2012 2013 2014 Growth 38 32 33 Maintenance/infrastructure 14 15 14 Total 52 47 47 2013 2014 New Assets Additions Additions In-service Masted coil tubing rigs…
Financial Strength 19 Debt Outstanding Debt / EBITDAS 60 million 0.9x (Nov 5/14) (Debt at Nov 5/14; EBITDAS TTM to Sep 30/14) Credit Facility: 100 million with a syndicate of four lenders May 31/17 maturity 35 million…
Balanced Capital Deployment 20 Unused Credit EBITDAS Capacity 70 million 40 million (Analyst Consensus Nov 7/14) (Nov 5/14) 2014 Capital Program - 47 million Dividend - 15 million Share Buyback Dividend and Capex Supported…
Corporate Data 21 Nov 7/14 Trading price 1.99 Market capitalization 251 million Enterprise value (based on Nov 5/14 debt) 310 million Dividend yield 6.0% Replacement cost 3.05 EV/2014 EBITDAS (analyst consensus)(1) 4.4x EV/2015 EBITDAS…
Key Takeaways 22 Growth Prospects Long-reach horizontal wells, LNG, production work-overs Capital program focused on 12 new masted coil tubing rigs suitable for long-reach horizontal wells (35 million of the 63 million capital…
23 APPENDIX
Industry Growth Opportunities 24 Innovative Cost Equipment Effective and Solutions Processes Deep, Long-reach LNG Horizontal Export Wells Production Work-overs Trained, Safety Experienced Crews Industry Demand Drives…
Industry Trends: Long-Reach Horizontal Wells 25 Deeper wells in the Bakken, Montney, Duvernay and Horn River require longer and larger diameter coil tubing Multi-stage fracturing tools for horizontal completions The need for…
Well Drilling Comparison 26 Deeper Wells: Longer and Larger Diameter Coil Tubing
Completion of LNG Wells 27 Coil Tubing: Gen II/III/IV masted coil tubing rigs are well-suited to complete and maintain LNG-related wells. There is a relatively small fleet of coil tubing rigs in the industry suitable to work on…
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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