Western Energy Services Corp. · TSX:WRG
Western Energy Services — Investor Presentation (June 2018)
24 slides from Western Energy Services's investor presentation, Jun 5, 2018
Slide 1: Investor Presentation June 2018
INVESTOR PRESENTATION June 2018
Slide 2: Forward-Looking Information
Forward-Looking Information This presentation may contain certain statements or disclosures relating to Western Energy Services Corp. (“Western”) that are based on the expectations of its management as well as assumptions made by and information currently available to Western which may constitute fo
Slide 3: Capital Structure Overview
Capital Structure Overview Share Summary Share price (May 31, 2018) $1.15 52-week low $0.96 52-week high $2.18 All-time high $11.70 Shares outstanding 92.2 million Options + treasury settled RSU 6.5 million Warrants (@ $1.77/share) 7.1 million Shares outstanding - fully diluted 105.7 million Book va
Slide 4: Western's Competitive Position
Western’s Competitive Position Rig Count by Type 37 56 Drilling Rigs 9 10 Singles Doubles Triples Registered Rigs - 50 Q1 Operating Days Western Western 8% Significant Canadian 10% Market Share Industry Industry 92% 90% Q1 2018 Average Metres per Well 3,807 Drilling Longer Wells 2,869 Western Indust
Slide 5: Business Highlights
Business Highlights • 66 modern well servicing rigs • Operating bases in: Estevan, • 56 modern drilling rigs Red Deer, Slave Lake, ‒ 24 Cardium Class1) Lloydminster and Grande Prairie ‒ 19 Montney Class2) • Levered to production work ‒ 13 Duvernay Class3) • Variety of rig configurations to meet cust
Slide 6: Canadian Drilling Market
Canadian Drilling Market WCSB Drilling Rig Utilization • 620 industry drilling rigs 5-year Range 2018 5-year Average 80% ‒ Down 26% from December 2012 peak of 841 rigs 70% ‒ Western’s Canadian rig count increased by 14% over the same 60% period • Pricing improvement 50% traditionally lags demand Uti
Slide 7: In-Demand Fleet
In-Demand Fleet Canadian Market Share by Rig Count Canadian Market Share by Operating Days Canadian Utilization Drilling Mrkt. Q1 Mrkt. Q1 Rigs Share 2018 Share 2018 Company #1 135 21.8% Company #1 5,664 24.8% Western 52% Company #2 81 13.1% Company #3 2,635 11.5% Company #6 47% Company #3 70 11.3%
Slide 8: Continued Drilling Performance
Continued Drilling Performance WCSB Well Length • Western increasing 4,000 Western Industry well length while 3,807 improving drilling rate 33% Metres/Well 3,500 longer than industry • Strong performance is 3,000 2,869 key differentiator 2,500 ‒ Western leads Q1 2018 industry peers in utilization WC
Slide 9: Diversified Drilling Requirements
Diversified Drilling Requirements Q1 2018 Industry Days Rig Type Triple Single 26% 32% Double 42% Pad Rig Pad 20% Non-pad 80% Province Sask. 17% BC 8% Alberta 75% Source: CAODC, Governments of Alberta, B.C. and Saskatchewan Map per Peters & Co. 9
Slide 10: Stable Drilling Rig Count
Stable Drilling Rig Count • Since acquiring its first drilling rigs in 2010, Western has significantly grown its fleet ‒ Now the fifth largest drilling contractor in Canada with the highest relative exposure • Fleet remains highly marketable in Western Canada and North Dakota • Through the downturn,
Slide 11: Competitive Technology
Competitive Technology Western’s drilling rig fleet is designed to meet the technological needs of our customers Automated Drilling Digital Pump 7,500 psi Pumps Dual-Fuel Systems Control Controls Double and triple rigs Mechanical rigs fitted fitted with high Substitutes natural Drawworks control to
Slide 12: Commodity Price Improvement
Commodity Price Improvement WTI - US$/bbl Crude Oil 75.00 • Oil prices have increased significantly over 65.00 the past year US$/bbl 55.00 • Heavy oil differentials are marginally wider 45.00 than average, though WCS realized prices 35.00 are higher given improvement in WTI 25.00 Differential - US$/
Slide 13: Significant Operating Leverage
Significant Operating Leverage Horizon Revenue per Billable Day • Contract drilling operating costs predominantly variable ‒ 28,000 27,104 No cost pressure to date ‒ Largest input cost governed by CAODC 26,000 • Material upside to be generated through day rate increases ‒ Term contracts atypical in
Slide 14: Balance Sheet Highlights
Balance Sheet Highlights Capitalization Highlights March 31, 2018 Cash $ 2,209 Property and equipment 643,253 Second Lien Facility 215,000 Revolving Facility 14,000 Operating Facility 1,881 230,881 Shareholders' equity 382,714 Credit Facility Covenants Covenant @ March 31, 2018 Senior Debt (excludin
Slide 15: Credit Facility Details
Credit Facility Details Current Facility Previous Facility Change Revolving Facility $70 million $50 million Increased $20 million Operating Facility $10 million $10 million Unchanged Credit Facilities $80 million $60 million Increased $20 million Senior Debt to EBITDA 3.0:1.0 or less 3.0:1.0 or les
Slide 16: Well Maintained Fleet
Well Maintained Fleet Historical Capital Expenditures $125 • Through 2014, Western invested $109 $100 $95 in its fleet with 17 new build rigs Annual ($ million) and upgrades on existing rigs, $75 resulting in a fleet that meets the $50 current demands of E&P $25 $34 $20 $18 customers $5 $0 • Taking
Slide 17: 2018 Budgeted Capital Expenditures
2018 Budgeted Capital Expenditures $20 million Budgeted Capital Spending Capital Spending by Segment $15 $12.0 $12 Production Services 25% $9 $8.0 $ Millions $9.1 $6 $3 Contract Drilling $2.9 75% $1.8 $0 Maintenance Capital Expansion Capital Q1 2018 Remaining Management continually monitors customer
Slide 18: Why Western?
Why Western? • Ideally suited rigs for long horizontal wells and shorter wells as required for the diverse plays in Canada • To maximize efficiencies based on well requirements, offer: Pad rigs Diversified Fleet AC rigs Triple rigs Double rigs Single rigs • Convey appropriate technologies
Slide 19: Appendix
APPENDIX Western
Slide 20: Financial Highlights
Financial Highlights First Quarter Year Ended December 31 Financial Highlights (000s CDN$) 2018 2017 %∆ 2017 2016 2015 2014 2013 2012 Operating Revenue(1) 72,965 78,153 (7%) 218,988 116,907 216,485 474,120 353,124 282,856 Utilization (2) 52% 54% (4%) 37% 17% 26% 58% 55% 54% Employees (3) na na na 99
Slide 21: Operating Highlights
Operating Highlights First Quarter Year Ended Dec 31 Operating Highlights 2018 2017 %∆ 2017 2016 2015 2014 2013 2012 Contract Drilling Canadian Operations Rig fleet (end of period) 50 51 (2%) 50 51 52 49 47 44 Operating Revenue per Billable Day (C$) 19,004 17,198 (1) 11% 17,558 (1) 16,984 (2) 23,458
Slide 22: Canadian Drilling Rig Market
Canadian Drilling Rig Market Canadian Industry Drilling Rigs by Class - 620 Industry Rig Fleet by Classification Duvernay Class Cardium 16% 12% 146 Class 22% 24% 29% 335 32% 54% 38% 18% 38% Montney 12% Class 139 22% 71% Western’s Canadian Rig Fleet by Class 56% 60% 46% 50% Duvernay Class Cardium 8 C
Slide 23: History of Western
History of Western December 2009 Announced new management team and recapitalization of $7 mm February 2010 February 2010 Raised $75 mm in equity Acquired 8 rigs from Horizon and 3 rigs from Cedar Creek for $84 mm August 2010 Acquired 4 rigs with purchase of Impact December 2010 Added 7 rigs with Pan
Slide 24: 1700, 215 – 9th Avenue SW Calgary, Alberta T2P 1K3 T: (403) 984-5916 www.wesc.ca
Alex R.N. MacAusland President and Chief Executive Officer Jeffrey K. Bowers Sr. Vice President, Finance and Chief Financial Officer 1700, 215 – 9th Avenue SW Calgary, Alberta T2P 1K3 T: (403) 984-5916 www.wesc.ca
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