Western Energy Services Corp. · TSX:WRG
Western Energy Services — Investor Presentation (January 2016)
24 slides from Western Energy Services's investor presentation, January 2016
Slide 1: Investor Presentation
Investor Presentation January 2016
Slide 2: Disclaimer
Disclaimer 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 co
Slide 3: Company Snapshot
Company Snapshot Contract Drilling Western Energy Services (WRG) Fleet of 57 drilling rigs Share Price1 $3.68 • 52 based in Canada 52-week high/low $7.90 / $2.86 • 5 based in the United Shares outstanding2 80 million States Market capitalization $296 million Well Servicing Enterprise value $504 mill
Slide 4: Returning Cash to Shareholders
Returning Cash to Shareholders Dividend History 80 25% Quarterly dividend of $0.05/share 70 Cumulative Dividend ($ millions) 20% 60 – Annualized yield of 5.4% (as of TTM Payout Ratio 50 15% January 4, 2016) 40 – Over $68 million in dividends paid 30 10% since dividend was implemented in 20 5% Q3 201
Slide 5: Business Highlights
Business Highlights Modern, Seven pad highly drilling rigs capable in fleet drilling rig fleet High quality Eight fleet with slant average age service of 6 years rigs 123 total rigs Rental assets managed and Innovative serviced by 3 rental locations pressure product solutions control specialists 5
Slide 6: Canadian Drilling Rig Market Trends
Canadian Drilling Rig Market Trends Unconventional drilling and completion techniques, including pad drilling, continue to Canadian Industry Drilling drive utilization Rigs by Class – Industry 763 Customers continue to focus on drilling Duvernay Class efficiencies, capacity and rig features 157 21%
Slide 7: Montney and Duvernay Class Focused Fleet Tailored to Customer Needs
Montney and Duvernay Class Focused Fleet Tailored to Customer Needs Western’s Rig Fleet by Class Industry Rig Fleet by Classification Duvernay Class 100% 13 15% Cardium 23% 90% 19% 19% 23% 23% Class 25 80% 39% 44% 9% 70% 29% 10% Montney Class 33% 60% 19 33% 14% 50% Western's % of Industry 40% 81% 72
Slide 8: Superior Utilization for Montney and Duvernay Class Rigs
Superior Utilization for Montney and Duvernay Class Rigs Montney class and Duvernay class Industry Rig Class Utilization rigs are the most sought after in 90% Canada 80% – These rig classes continue to 70% generate above industry average utilization 60% • ~1,400 bps Montney premium1 50% • ~2,100 bps
Slide 9: Premium Drilling and Well Servicing Utilization
Premium Drilling and Well Servicing Utilization Western’s drilling and well servicing rig fleets have traditionally realized above average utilization, while balancing utilization and pricing considerations Canadian Drilling Rig Utilization Rates Canadian Service Rig Utilization Rates 100% 70% 90% 6
Slide 10: Western's Customer Base
Western’s Customer Base Consolidated YTD Revenues - 2015 Western has a diversified revenue stream comprised Canadian Natural Resources of over 250 customers 11% – Clients include a wide- Progress Other 9% array of public, private 38% and multinational Enerplus 6% companies Husky 6% ARC 6% Baytex 2%
Slide 11: Operating Highlights
Operating Highlights Third Quarter Year to Date Sept 30 Operating Highlights 2015 2014 %∆ 2015 2014 %∆ Contract Drilling Canadian Operations Rig fleet (end of period) 52 49 6% 52 49 6% Operating Revenue per Revenue Day (CDN$) 21,135 24,887 (15%) 23,815 25,852 (8%) Drilling rig utilization - Revenue
Slide 12: Conservative Financial Position
Conservative Financial Position Cash balance – $72 million of working capital (as at September 30, 2015) Net Debt to trailing 12 month adjusted EBITDA 2.0 to 1 (at September 30, 2015) – Onside with all covenants – No scheduled long-term debt repayments until January 2019 Revolving and Operating Faci
Slide 13: Balance Sheet Overview
Balance Sheet Overview Consolidated Balance Sheet ('000s) Sept 30, 2015 December 31, 2014 Cash and other current assets $ 102,201 $ 158,823 Property and equipment 843,670 827,306 Goodwill and other 1,266 70,989 Total assets $ 947,137 $ 1,057,118 Current liabilities $ 30,466 $ 80,487 Long term debt a
Slide 14: Financial Highlights
Financial Highlights Third Quarter Nine Months Ended Sept 30 Year Ended December 31 Financial Highlights (000s CDN$) 2015 2014 %∆ 2015 2014 %∆ 2014 2013 2012 2011 Operating Revenue 44,350 117,960 (62%) 176,027 344,939 (49%) 474,120 353,124 282,856 237,428 Gross Margin 14,285 50,570 (72%) 72,579 149,
Slide 15: 2016 Budgeted Capital Expenditures
2016 Budgeted Capital Expenditures $18 Million Budgeted Capital Spending Capital Spending By Segment $14 $12 $12 $10 Production $ Millions $8 Services 35% $6 $6 $4 Contract Drilling 65% $2 $0 Maintenance Capital Expansion Capital 2016 Budget Western will continue to manage its operations in a discip
Slide 16: Performance Driven Culture
Performance Driven Culture Well Managed Service Company Strategic thinking embedded in every decision Best-in-class People and Equipment From start to finish, every project, every person, is selected to support our performance driven focus Capacity for Opportunistic Growth Strong balance sheet and t
Slide 17: Appendix
Western ENERGY SERVICES CORP. Appendix
Slide 18: Canadian Drilling Industry Statistics
Canadian Drilling Industry Statistics Operating Days Horizontal Wells Drilled 158,427 180,000 YTD Full-Year 8,384 145,272 9,000 7,822 160,000 134,835 7,724 131,021 7,214 124,613 8,000 7,168 7,048 121,023 120,221 119,300 140,000 6,660 6,500 7,000 120,000 6,000 4,955 100,000 78,005 4,497 5,000 4,191 6
Slide 19: Historical Canadian Well Data
Historical Canadian Well Data Average Well Length by Province YTD 2015 Average Well Length AB SK BC MB WCSB 4,500 4,500 4,000 3,829 4,000 3,500 3,321 Average Well Length (Metres per Well) 3,203 Average Well Length (Metres) 3,500 3,000 3,000 2,500 2,247 2,238 2,196 2,500 2,000 2,000 1,500 1,500 1,000
Slide 20: 2015 Drilling Stats
2015 Drilling Stats YTD Utilization YTD Metres Drilled per Rig 35% 20,000 31% 18,720 30% 18,000 27% 27% 16,000 15,428 25% 24% 14,101 14,000 13,403 13,033 21% 20% 11,651 Metres per Rig 20% 12,000 10,000 15% 8,000 10% 6,000 4,000 5% 2,000 0% 0 Trinidad Western Nabors Precision Savanna Ensign Trinidad
Slide 21: Provincial Well Licenses Issued
Provincial Well Licenses Issued 2005 to 2015 YTD 2015 vs. YTD 2014 AB SK BC MB WCSB YTD 2014 YTD 2015 30,000 8,000 7,000 25,000 6,000 20,000 Licenses Issued 5,000 Licenses Issued 15,000 (47%) 4,000 10,000 3,000 (33%) 2,000 5,000 (20%) 1,000 0 (54%) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2
Slide 22: YTD 2015 Metres Drilled by Province
YTD 2015 Metres Drilled by Province Western Trinidad Savanna Precision Ensign AB SK BC MB 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 Source: June Warren-Nickle's Energy Group Note: Year-to-date through September 2015 22
Slide 23: Drilling Rig Contractors Market Share
Drilling Rig Contractors Market Share YTD 2014 Market Share YTD 2015 Market Share Closing Rig Count 25% 200 180 20% 160 Market Share (Operating Days) 140 15% 120 Rig Count 100 10% 80 60 5% 40 20 0% 0 Precision Trinidad Ensign Nabors Savanna Western Akita Source:CAODC Note: Year-to-date through Novem
Slide 24: Alex R.N. MacAusland, Jeffrey K. Bowers
Alex R.N. MacAusland Jeffrey K. Bowers President & CEO Senior VP Finance & CFO Western Energy Services Corp. 1700, 215 – 9th Avenue SW Calgary, Alberta T2P 1K3 Telephone: (403) 984-5916 www.wesc.ca 24
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