Investor Presentation Peters & Co. 2015 Energy Conference September 16, 2015
Essential Investment Considerations 3 Disciplined cost structure Top-tier balance sheet (debt/EBITDAS 0.5x) Experienced management team Industry leading equipment with meaningful market share Relatively low valuation A…
Success During the Industry Downturn 4 Industry slowdown Lower E&P capital spending due to low oil and Pricing pressure on services natural gas prices Extent and duration of downturn is highly uncertain Essentials response -…
Cost Management - Engrained in Our Culture 5 Compensation reductions Wage and salary reductions: from boardroom to roughneck Elimination / reduction of many benefits and incentives Discretionary spending reductions Non-critical…
Disciplined Capital Spending 6 2015: 21 million - 13 million growth and 8 million maintenance Progress payments for Gen III and Gen IV masted coil tubing rigs 2016: 4 million required to complete the Gen IV build program…
Investing in Leading-Edge Masted Coil Tubing 7 Capital Spending (millions) 2014A 2015B Growth 32 13 Maintenance/infrastructure 14 8 Total 46 21 2014A 2015B New Assets Additions Additions In-service(2) Masted coil tubing rigs Gen…
Top-Tier Balance Sheet 8 Essential went into the downturn with a strong balance sheet Maintaining this strength requires a strict focus on cash outflow: Cost management Disciplined capital spending Dividend strategy currently at…
Balanced Capital Deployment 9 Unused Credit 2015 EBITDAS Capacity 25 million 73 million (Analyst Consensus Sep 8/15) (Jun 30/15) 2015 Capital Program - 21 million Annualized Dividend - 7.6 million (0.015/share/qtr)
Bank Covenants 10 Credit Facility: 100 million with a syndicate of four lenders May 31/17 maturity 35 million accordion (subject to lenders consent) Covenant Jun 30/15 Threshold Debt/EBITDAS(1) 3.0x 0.5x Debt to capitalization…
EBITDAS 11 100 80 Millions 60 40 74 74 66 68 20 41 29 25 10 0 2009 2010 2011 2012 2013 2014 2015E(1) 2016E(1) Actual Analyst Consensus (1) 2015 and 2016 is analyst consensus at Sep 8/15 (9 analysts)
A Focused Story 12 Coil Tubing Largest masted coil tubing fleet in Canada Innovative fleet leading edge High barriers to entry in masted coil market Completion Downhole Tools (Tryton) and Top 5 in Canada Conventional and…
Coil Well Service: Performing Well in Downturn 13 Impact of Downturn: Pricing down 10 - 15% Utilization down but less than industry well completions Competitive Advantage: Unique equipment industry leading Integration with our…
Masted Coil: Completions and Work-Overs 14 The number of long-reach horizontal wells increases the demand for Essentials masted coil tubing rigs In the well completion phase, masted coil tubing rigs are used for: Pre-Fracturing…
Downhole Tools & Rentals 15 Impact of Downturn: Pricing down 15% - 20% Aggressive competition Competitive Advantage: Long history Technical business significant barriers to entry High quality service Highly variable cost…
Service Rigs: The Industry Work Horse 16 Impact of Downturn: Pricing down 15% Utilization below prior year Intense competition - commoditized business Competitive Advantage: High quality fleet Broad WCSB presence Outlook: Over…
Corporate Data 17 Sep 8/15 Trading price 0.78 Market capitalization 98 million Enterprise value (based on Aug 5/15 debt) 129 million Dividend yield 7.7% EV/2015 EBITDAS (analyst consensus)(1) 5.2x EV/2016 EBITDAS (analyst consensus)(1)…
APPENDIX
Masted Coil Tubing Depths 19 Gen II/III/IV Specifications Size Gen II Gen III Gen IV Number of rigs at Jun 30/15 14 3 2 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…
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