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…
2015 Outlook and Capital Plan 5 Industry slowdown expected due to low oil and natural gas prices Essentials response: Conservative 2015 capital budget Focus on cost management Continued emphasis on maintaining low debt 2015…
Investing in High Demand Equipment 6 Capital Spending (millions) 2013A 2014F 2015B Growth 32 32 13 Maintenance/infrastructure 15 14 8 Total 47 46 21 2014A 2015B New Assets Additions Additions In-service(1) Masted coil tubing…
Fracturing Market: The Opportunity 7 The 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 Fracturing…
Masted Coil Tubing: Our Response 8 Gen III/IV build program (2013 to 2016 expected delivery): Equipment expected in-service by Q1/16: 3 Gen III rigs / 6 Gen IV rigs Equipment deferred: 1 Gen III rig / 2 Gen IV rigs Increased reel…
Masted Coil Tubing: Evolution 9 Gen II/III/IV Specifications Size Gen II Gen III Gen IV Number of rigs 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 (ground to…
Essential Provides Full Service Completions 10 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…
Completion of Horizontal Wells 11 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 12 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 13 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 14 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 15 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 16 CANADA U.S.A. Coverage Across Key Oil and Gas Basins
EBITDAS 18 100 80 Millions 60 40 74 74 66 69 57 20 29 10 0 2009 2010 2011 2012 2013 2014E(1) 2015E(1) Actual Analyst Consensus (1) 2014 and 2015 is analyst consensus at Jan 8/15; Essential is covered by 9…
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 2015 EBITDAS Capacity 57 million 40 million (Analyst Consensus Jan 8/15) (Nov 5/14) 2015 Capital Program - 21 million Dividend - 15 million Share Buyback Dividend and Capex…
Corporate Data 21 Jan 8/15 Trading price 1.49 Market capitalization 187 million Enterprise value (based on Nov 5/14 debt) 247 million Dividend yield 8.1% Replacement cost 3.05 EV/2014 EBITDAS (analyst consensus)(1) 3.6x EV/2015 EBITDAS…
Key Takeaways 22 Growth Prospects Long-reach horizontal wells, LNG, production work-overs Capital program focused on masted coil tubing rigs suitable for long- reach horizontal wells Downhole tools and rentals new tools and U.S.…
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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