Where Earnings are Generated 3 Q1/14 Revenue Q1/14 Gross Margin (% of Total Revenue) (% of Total Gross Margin) Service Rigs Downhole Tools Downhole 32 MM & Rentals Tools & 30 MM Well Rentals 9 MM Servicing Coil Well 20 MM…
Well Servicing Q1/14 Results 5 Utilization Q1/14 Q1/13 Masted deep coil tubing 109% 148% Conventional deep coil tubing 35% 62% Service rigs 66% 69% Coil Tubing: Revenue: Slow start to the quarter, periods of cold, competition…
DT&R Q1/14 Results 6 Millions Q1/14 Q1/13 Revenue - conventional tools and rentals 18 15 Revenue - Tryton MSFS 12 22 Total revenue 30 37 Gross margin 30% 35% Conventional Tools and Rentals: Good quarter revenue increased from…
New Gen IV Rig 7 New Generation IV masted deep coil tubing rig May 7/14
A Focused Story 8 Canadas largest public pure play well service company Completion and production focus Coil Tubing Downhole Tools Service Rigs 1 in Canada Top 5 in Canada 8 in Canada Innovative fleet Conventional and…
Industry Growth Opportunities 9 Innovative Cost Equipment Effective and Solutions Processes Deep, Long-reach LNG Horizontal Export Wells Production Workovers Trained, Safety Experienced Crews Lead to our Growth…
Growth Opportunities 10 Deep LNG Production Organic U.S. Horizontal Development Workovers Expansion Wells Coil tubing Coil tubing Coil tubing Downhole Downhole Downhole Downhole tools tools tools tools Service rigs…
Strong Balance Sheet 11 Debt Outstanding Debt / EBITDA 47 MM 0.9x (May 6/14) (EBITDA TTM to Mar 31/14) Credit Facility: 100 million May 30/14 maturity (renewal discussions underway) 35 million accordion (subject to lenders…
Operating Areas 12 Coverage across the key Canadian basins
Deep Horizontal Wells: Industry 13 Deeper wells in the Duvernay, Horn River, Montney and Bakken require longer and larger diameter coil tubing Multi-stage fracturing tools for horizontal completions The need for maintenance is…
Well Drilling Comparison 14 Industry Trend: deeper wells - longer and larger diameter coil tubing
Deep Coil Tubing: Our Opportunity 15 New Generation III/IV Rigs Increased reel capacity - longer and larger diameter coil Unique safety features Reel trailer (prototype for Gen IV) reached record depth at 5,988 m using 2 5/8…
Masted Deep Coil Tubing: Evolution 16 Gen II/III/IV Specifications Gen II Size Gen III Gen IV (Current Fleet) 2 coil 5,500 m 8,400 m 11,200 m 2 3/8 coil 3,500 m 5,700 m 7,900 m 2 5/8 coil 2,900 m 4,900 m 6,400 m Mast height (ground to…
Gen IV Coil Rig Layout 17 Mast/ Injector Control Room CT Reel Rig Generator Wellheads Picker Unit
Completion of Horizontal Wells 18 Coil Tubing Service Rig Works while well is flowing and under Use of kill fluid to service a well pressure Deals with a wide variety of well bore Continuous coil - no threaded applications…
LNG Development 19 Development of reserves in the Montney, Horn River and Duvernay basins for LNG is expected to increase the demand for oilfield services Complex wells - long reach horizontals, larger diameter casing, high…
SAGD Opportunity 20 Currently 3 service rigs working for SAGD customers Approximately 60 service rigs of the 1,100 in the WCSB are focused on SAGD Completions and maintenance work Ancillary rental equipment: 13 5/8 BOPs…
Downhole Tools 21 Proven Canadian business model: High return on low capital investment 19 million of inventory; pickup trucks 100 employees Technical business; significant barriers to entry Growth driven by: Production work…
Downhole Tools 22 Multi-stage fracturing (Tryton MSFS) for horizontal well completions Keys to success: Experienced tool hands (requires diverse rig experience) Service and relationships High quality tool design quality control…
Downhole Tools: U.S. Expansion 23 Started operations in Q3/13 with three field offices US5.1 million acquisition in Apr/14 of Sams Packer & Supply complements Essentials organic growth in the U.S.
EBITDA 24 100 80 Millions 60 90 40 74 74 66 68 20 29 10 0 2009 2010 2011 2012 2013 2014E(1) 2015E(1) Actual Analyst Consensus (1) 2014 and 2015 is analyst consensus at May 8/14; Essential is covered by 9…
Investing in High Demand Equipment 25 Capital Spending (millions) 2012 2013 2014(1) Growth 38 32 36 Maintenance/infrastructure 14 15 17 Total 52 47 53 2013 2014(1) New Assets Additions Additions In-service Masted deep coil…
Balanced Capital Deployment 26 Unused Credit EBITDA Capacity 55 million 53 million (TTM to Mar 31/14) (May 6/14) 2014 Capital Program - 53 million Dividend - 15 million (annualized) Share Buyback
Corporate Data 27 May 7/14 Trading price 2.76 Market capitalization 347 million Enterprise value (based on May 6/14 debt) 394 million Dividend yield 4.3% Replacement cost(1) 2.70 EV/2014 EBITDA (analyst consensus)(2) 5.8x EV/2015…
Key Takeaways 28 Growth Prospects Deep horizontal wells, LNG, production workovers and organic U.S. expansion Financial Capacity to Facilitate Growth Low debt Return to Shareholders Dividend paying 4.3% yield Share buyback…
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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