OILFIELD SERVICE QUARTERLY UPDATE Q3 2018

Transcription

1 OILFIELD SERVICE QUARTERLY UPDATE Q3 2018

2 INDUSTRY OVERVIEW M&A TRANSACTIONS & PERFORMANCE CANADIAN OILFIELD SERVICES & EQUIPMENT M&A TRANSACTIONS Transaction Value ($USD millions) $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $ M 35M 106M 191M 393M 516M 86M 30M Q Q1 Q2 Q Q4 Q1 Q2 Q Q4 Q1 Q Q M 29M 144M 985M Transaction Volume (Number of Deals) Transaction Value ($USD billions) $25 $20 $15 $10 $5 AMERICAN OILFIELD SERVICES & EQUIPMENT M&A TRANSACTIONS B 8.1B 8.5B 4.4B 9.9B 4.1B 3.2B 4.0B 4.0B 4.7B 19.7B 3.3B Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Transaction Volume (Number of Deals) Transaction value Transaction volume Source: Capital IQ. Data as of September 30th, Note: OFS transactions include companies with head offices in other countries. MAJOR THIRD QUARTER HEADLINES Kinder Morgan Canada Limited: On August 31, 2018 Kinder Morgan Canada Limited closed the sale of the Trans Mountain Pipeline to the Government of Canada for $4.5 billion. Other assets included in the deal are: 2.9 million bbls of regulated tanks Puget Sound Pipeline Kamloops / Sumas / Burnaby Terminals Westridge Marine Terminal On August 30, 2018 the Federal Court of Appeal overturned the construction permits for the $7.4 billion project, a result of not carrying out a duty to consult with affected First Nations. LNG Approval: On October 1, 2018 project partners Shell (40%), Petronas (25%), PetroChina Co. (15%), Mitsubishi (15%) and Korea Gas Corp. (5%), announced a final investment decision to commence immediate construction on the $40 billion LNG Canada project in Kitimat, BC. This would be Canada s largest infrastructure project ever. Page 2

3 INDUSTRY OVERVIEW M&A TRANSACTIONS & PERFORMANCE Transaction Value ($USD billions) $18 $16 $14 $12 $10 $8 $6 $4 $2 CANADIAN EXPLORATION AND PRODUCTION M&A TRANSACTIONS B 2.7B 2.7B 2.5B 3.9B 16.3B 1.7B 3.1B 1.2B 0.2B 3.7B 1.3B Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Transaction Volume (Number of Deals) Transaction Value ($USD billions) $35 $30 $25 $20 $15 $10 $5 AMERICAN EXPLORATION AND PRODUCTION M&A TRANSACTIONS B 4.0B 12.3B 22.4B 18.4B 17.2B 5.7B 8.4B B 18.3B 3.1B 30.5B Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Transaction value Transaction volume Transaction Volume (Number of Deals) Source: Capital IQ. Data as of September 30th, Note: OFS transactions include companies with head offices in other countries. SELECT TAKEOVER ACTIVITY In Q3 2018, several unsolicited bids were made in both the E&P and oilfield service sectors. Canadian takeover bid regulations were amended back in May 9, 2016 extending the time shareholders were required to respond on takeover notices from 35 to 105 days. Precision Drilling Corp. emerges as white knight for Trinidad Drilling Ltd. after unsolicited hostile takeover bid by Ensign Energy Services Inc.: Further details provided on pages 6 and 7. At the time off announcement, Precision was trading at 9.0x EV/EBITDA in comparison to Trinidad s multiple of 8.3x. Velvet Energy Ltd. Acquiring Iron Bridge Resources: September 10, 2018 Velvet Energy Ltd. increased their previous offer made in May 2018 for Iron Bridge Resources Inc. from $0.75 per share to $0.845 per share. Total cash consideration payable by Velvet, including the assumption of estimated net debt of $9 million and net proceeds from dilutive securities, is approximately $142 million. This represents a 13% premium to Velvet s original offer and a 78% premium to Iron Bridge s share price as of May 11, Husky Energy Inc. makes unsolicited bid for MEG Energy Corporation: September 30, 2018 Husky made an unsolicited bid to purchase all outstanding shares of MEG Energy for $11 per common share or of a Husky share for each MEG share. The offer remains open until January 16, On October 17, 2018 MEG s Boardof Directors recommended shareholders reject the bid. Page 3

4 MNP INSIGHTS DUTY TO CONSULT On August 30th, 2018 the Federal Court of Appeal overturned approval of the Trans Mountain Pipeline expansion project, citing the federal government s failure to adequately fulfil its Duty to Consult with First Nations groups. The Duty to Consult is emerging as one of the most important issues in the Canadian economy right now. As a leading expert in the field, MNP would like to explain what Duty to Consult is and why it is important to understand as an oilfield service provider: WHAT IS DUTY TO CONSULT? The Constitution Act, 1982 outlines and commits to protection of fundamental rights for all Canadians; it defines the principles that Canadians agree to uphold. Since 1982, Canada agreed to protect a special set of rights for a distinct group of Canadians: The existing aboriginal and treaty rights of the aboriginal peoples of Canada The Duty to Consult includes an obligation of the Crown to address impacts or concerns that are identified during the consultation process. In other words, once Aboriginal peoples have expressed an issue or concern about an impact to their existing right, the Crown must take reasonable steps to address those issues. WHEN DOES DUTY TO CONSULT OCCUR? WHO S INVOLVED IN THE PROCESS? The Duty to Consult is triggered when Crown conduct, such as an approval of a natural resource development project, has the potential to negatively affect Aboriginal and treaty rights (also known as Section 35 rights ). There are usually three parties are involved in a Duty to Consult process: the industry proponent proposing a project, a public regulatory authority considering a project approval and Aboriginal Nation(s) with Section 35 rights potentially affected by the project. Nearly every square inch of Canada is subject to Section 35 rights, oftentimes with multiple Aboriginal Nations having overlapping Section 35 rights in the same area. Virtually every natural resource development project in Canada will involve the Duty to Consult, often requiring project proponents to consult with Aboriginal Nations. BENEFITS OF UNDERSTANDING THE DUTY TO CONSULT PROCESS: Adds credibility, which increases the likelihood of becoming a preferred vendor Improves understanding of value chain and how the process affects and motivates other decisionmakers Provides better understanding of the procurement process, which rewards an educated party with more efficient planningand allocation of resources. BENEFITS OF WORKING WITH MNP S INDIGENOUS SERVICE EXPERTS Insight into: MNP is a trusted advisor to more than 200 Indigenous Nations and organizations across Canada MNP understands the different laws and regulations Indigenous Nations and organization may be subject to MNP can advise on how to improve relationships with Indigenous Nations MNP can help companies understand the special rights held by Indigenous peoples which may be confusing. To find out more please contact: Tracy Campbell Partner, Consulting, Indigenous Services E: tracy.campbell@mnp.ca T: Germaine Conacher Partner, Consulting, Indigenous Services E: germaine.concacher@mnp.ca T: Page 4

5 MNP INSIGHTS DUTY BILL C69 TO CONSULT On February 8, 2018 the Minister of Environment and Climate Change introduced Bill C69. This bill would enact the Impact Assessment and Canadian Energy Regulator Acts and amend the Navigation Protection Act. The bill has proposed amendments to numerous other pieces of legislation and would create a new Impact Assessment Act with two new bodies the Impact Assessment Agency of Canada and the Canadian Energy Regulator and would replace the National Energy Board (NEB) as well as the Environmental Impact Assessment Agency (EIAA). The bill gives sweeping new powers and allows far broader consultation with groups deemed affected by a proposed project. The effects that are to be considered go beyond environmental impacts and Treaty obligations, including but not limited to environmental, health, social and economic determinants, as well as the impacts on indigenous title and right. This legislation places proposed timelines on consultation deadlines for the consideration of impacts before a review. This legislation has received all three readings in the House of Commons and was passed by the House in June The House voted strictly on partisan lines with 156 Liberal votes in favour and 121 Opposition parties members voting against. The bill has received the first of three readings in the Senate and is currently before the Senate Standing Committee on Natural Resources for Special Hearings and Study. Many people who are concerned with the implications of the bill have or will appear before the Senate Committee studying the bill. The Senate has not given a timeframe as to if and / or when it will pass the bill in the Senate or whether or not there will be amendments. Should the Senate make substantive amendments, the bill would then be passed back to the House to concur or reject the amendments made by the Senate. It is not clear how long this legislative process will take, as there is significant political and public concern with Bill C69. To find out more please contact: Lanny Westersund E: lanny.westersund@mnp.ca T: Page 5

6 INDUSTRY OVERVIEW SELECT RECENT M&A TRANSACTIONS Acquired Closed Jul 12, 2018 TEV $18.2M TEV/EBITDA Undisclosed TEV/Revenue Undisclosed The 270 pieces of equipment acquired from Three Star Trucking Ltd. helps Vertex Resource Group Ltd. become one of the largest environmental service fleets serving Saskatchewan, the Montney and the Duvernay resource plays of Alberta and British Columbia. Enables Vertex to expand its customer base, service offerings and geographic markets. Bolsters Vertex executive team with the addition of Three Star s experienced management group. Acquired Closed Aug 1, 2018 TEV $77M TEV/EBITDA Undisclosed TEV/Revenue Undisclosed Based in Winkler, Manitoba, FB Industries Inc. is a leading manufacturer and marketer of silobased frac sand management systems. Under the terms of the transaction, HiCrush Partners LP issued 1.28 million common units and $45 million for FB. With the acquisition of FB Industries, Hi Crush will be the only provider of both silo and container solutions in the frac sand logistics industry, providing customers the flexibility to choose the solution that best fits their specific wellsite needs. CEO, HiCrush Capital Partners LP, Robert E. Rasmus Unsolicited bid Announced Aug 13, 2018 TEV $947M TEV/EBITDA 8.5x TEV/Revenue 1.7x On August 13, 2018 Ensign Energy Services made a hostile takeover bid for Trinidad Drilling Ltd. for $1.68 per common share. Ensign, who owns 9.8% of Trinidad's shares, would acquire the remaining 90.2% in the deal. On September 13, 2018 Trinidad s Board stated the offer is undervalued and recommended shareholder rejection. Acquired Closed Aug 20, 2018 TEV $9.4M TEV/EBITDA Undisclosed TEV/Revenue Undisclosed With offices in Colorado and North Dakota, the acquisition of PowerStroke will assist High Arctic in expanding it s service offering to the United States. Increases High Arctic's service rig count to 58 and makes the company the largest snubbing operator in Canada. We are particularly excited about our ability to help build upon the success Powerstroke has had with its offering of services in the United States. CEO, High Arctic Energy Services, J. Cameron Bailey Source: Capital IQ and the respective company websites Note: Unless otherwise denoted, all figures are in $CAD. Page 6

7 INDUSTRY OVERVIEW SELECT RECENT M&A TRANSACTIONS Acquired Closed Sept 11, 2018 TEV $209M TEV/EBITDA Undisclosed TEV/Revenue Undisclosed AKITA issued million Class A nonvoting shares of AKITA and $45 million in consideration for all of Xtreme s common shares. Provides an opportunity to scale operations both domestically and in U.S markets. Increases AKITA s operational and customer network across all major North American resource basins. Provides $8 million in annual synergies and efficiencies. Acquired Closed Sept 18, 2018 TEV Undisclosed TEV/EBITDA Undisclosed TEV/Revenue Undisclosed "By acquiring Oildex, we immediately expand our E&P and oilfield services base and reach across the energy value chain with Oildex's full suite of financial automation solutions for automating invoicing, payments, field tickets and data exchange. Oildex is a leader in managing relations between operators and their valued mineral rights owners, which enables us to accelerate our growth priority in the large mineral owner market. Our common core customer base and approaches to platforms in the cloud spark an immediate synergy. CEO and President, Drillinginfo, Jeff Hughes Acquired AFX Materials & Fabrication Ltd. Closed Sept 24, 2018 TEV $2.5M TEV/EBITDA Undisclosed TEV/Revenue Undisclosed AFX Materials & Fabrication Ltd. manufactures wear resistant chromium carbide overlay and structural steel components. Increases manufacturing capacity of ClearStream s Wear Technology business by 30 percent. Establishes foothold in abrasion and corrosion resistant market segments. Provides access toexisting AFX s client base. Superior offer Source: Capital IQ and the respective company websites Note: Unless otherwise denoted, all figures are in $CAD. Announced Oct 5, 2018 TEV $1.03B TEV/EBITDA 9.4x TEV/Revenue 1.9x Precision Drilling Corporation announced it would acquire Trinidad in an all share transaction. Trinidad shareholders will receive shares of Precision for each outstanding Trinidad share, equaling $2.11 per Trinidad share, representing a premium of 25% to Ensign s offer. The combined entity would have 152 rigs in Canada, 170 in the United States and 26 rigs in Mexico and the Middle East. In addition, Precision has estimated immediate cost synergies of $30 million will be realized through the acquisition. Ensign has not increased its bid but Precision is entitled to a $20 million break fee if the transaction does not close. Page 7

8 INDUSTRY OVERVIEW MACRO ECONOMIC INDICATORS OIL & GAS LAND SALES ALBERTA, BRITISH COLUMBIA AND SASKATCHEWAN 4,000 $3,000 Hectares Sold ( 000s) 3,500 3,000 2,500 2,000 1,500 1, $2,500 $2,000 $1,500 $1,000 $500 Avg$/Ha YTD BC Land Sales SK Land Sales AB Land Sales AB Avg$/Ha SK Avg$/Ha BC Avg$/Ha $ TOTAL RIG COUNT CANADA VS. UNITED STATES 2,000 1,800 1,600 Q3 Activity 1,400 Total Rigs 1,200 1, Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17 Oct17 Jan18 Apr18 Jul18 Canada United States *Source: Government of Alberta, BC and SK; Data as of September 30, Page 8

9 INDUSTRY OVERVIEW MACRO ECONOMIC INDICATORS $120 WEST TEXAS INTERMEDIATE VS WESTERN CANADIAN SELECT Q3 Results $100 $US/bbl $80 $60 $40 $20 $0 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 WCS WTI Spread WTI / WCS DIFFERENTIALS By the end of Q3 2018, WCS s discount to WTI widened to over US$42 a barrel, the largest differential since November 2013, according to Bloomberg. The differential widened as a result of supply from Suncor Energy Inc. s Fort Hills mine causing pipelines to reach near capacity; pipeline utilization averaged 97 percent for the week ending September 28, according to Genscape. INFRASTRUCTURE HIGHLIGHTS In the face of pipelines reaching capacity and new projects such as the Trans Mountain LP expansion being delayed, there has been a sharp increase in crudebyrail shipments in Western Canada. Despite this increase, the pickup in oil transported by railway has not been fast enough, with new contracts taking time to fully come into effect. Gibson Energy Inc. announced it would construct two additional 500,000 bbl tanks at the Hardisty Terminal. USD Partners LP began expansion of the Hardisty crude by rail terminal to add a 120 carunit train, increasing loading capacity by 75,000 bbls/day to 225,000 bbls/day. The ramp up will begin to have an impact in Q *Sources: BNNBloomberg, Reuters, the Government of Alberta and OilPrice.com Data as of September 30th, Company websites Page 9

10 INDUSTRY OVERVIEW MACRO ECONOMIC INDICATORS 4,000 CANADIAN OILFIELD SERVICES & EQUIPMENT PRIVATE PLACEMENTS, PUBLIC OFFERINGS AND SHELF REGISTRATIONS 70 Transaction Value ($CAD millions) 3,500 3,000 2,500 2,000 1,500 1, M M M MM M 150 M 150 M 600 M 150 M M 318 M 1000 M 1004 M M 498 M 239 M Precision Drilling Corporation Shawcor Ltd. CES Energy Solutions Corp. Trinidad Drilling Ltd. Mullen Group Ltd. All other players Transaction volume Transaction Volume (Number of Deals) OFS Capital Raised Access to capital remains challenging for oilfield service players. 350 CANADIAN EXPLORATION & PRODUCTION PRIVATE PLACEMENTS, PUBLIC OFFERINGS AND SHELF REGISTRATIONS Transaction Value in ($CAD billions) B B B 13.4 B 13.0B B 10 B 4.8B 6 B 5.2B 19.9 B 3.7B 3.5 B 4.5 B 7.0 B 7 B 1.5 B Transaction Volume (Number of Deals) Cenovus Energy Inc. Canadian Natural Resources Limited Suncor Energy Inc. Husky Energy Inc. All other players Transaction volume E&P Capital Raised While the majority of capital raised in 2018 so far has been directed towards Husky and Suncor, companies such as Encana and NuVista Energy Ltd. have been active during the year in raising smaller amounts of capital. Source: Capital IQ. Data as of September 30 th, Note: Data does not contain share buybacks. Page 10

11 INDUSTRY OVERVIEW EXPERT THOUGHTS We asked a few industry participants for their thoughts on the sector: Iggy Domagalski, CEO, Tundra Process Solutions Ltd. What was the most positive change in the last twelve months for your business? Increased activity in Grande Prairie, the Permian basin and Latin America. Also, adjusting our business model to offer new commoditytype products. What was the most negative change in the last twelve months for your business? Continued margin pressure and government uncertainty surrounding tariffs, carbon tax and pipelines. What is your outlook for the next twelve months? Somewhat positive outlook with increased international activity and some internal investment beginning to pay off. Ryan Smith, Director of Finance & Business Development, Komat Drilling Ltd. What was the most positive change in the last twelve months for your business? Komat invested in its own batch cementing equipment and is moving up the value chain. Offering a turnkey surface presetting solution has made it more efficient and economical to our clients. We reinvented ourselves and saw our utilization triple for the same time period. Investing capital throughout the last 12months has been done with extreme caution and planning to ensure it meets our required rates of return. So far, it has paid off with our customer list expanding and winning new contracts while being profitable. What was the most negative change in the last twelve months for your business? Escalating costs with minimal opportunity to raise prices. Due to the extended downturn, we have had problems attracting experienced labour for our crews. The inconsistent client demand for our services also makes it tough to forecast crew availability. Secondly, our cost of diesel has increased significantly without the ability to flow this cost through to customers and this is hurting our margins. There are significant costs associated with preparing equipment for service after sitting for extended periods of time. Before we send equipment out, it has to be serviced again; and this costs money prior to any receipt of payment for our services. The cashflow demands have been intense and working capital requirements have proven significant in the last 12months. What is your outlook for the next twelve months? We have been fortunate to secure some new contracts that we feel are significant and should prove profitable throughout the winter drilling season. However, our client base is significantly exposed to WCS pricing. Differentials hitting alltime highs is affecting capital plans which will impact our workloads. We are cautiously optimistic that the trend will continue to improve throughout We are bullish on oil prices and hope that some egress improvements will help to revive WCS pricing. Page 11

12 INDUSTRY OVERVIEW EXPERT THOUGHTS Terry A. Stephenson, CEO & President, Vertex Resource Group Ltd. What was the most positive change in the last twelve months for your business? Further service and geographic expansion within Saskatchewan and Manitoba, where more favorable operating environments exist, has allowed us to better meet the needs of current customers and attract new clients and opportunities. What was the most negative change in the last twelve months for your business? Lack of new investment due to the increased risk associated with current government policies within Canada, especially within the energy sector in Alberta, continues to stump project growth. Funds are being funneled towards other jurisdiction with more attractive investment opportunities. This is evident by no meaningful equity raises occurring within the Canadian energy sector in the last twelve months. In addition, the inability for certain major capital projects, including Trans Mountain, to begin construction has reduced investor confidence. Until major capital projects can be completed and favourable government policies are implemented, there will remain uncertainty in the market resulting in depressed conditions. What is your outlook for the next twelve months? The need for further consolidation amongst service companies to survive within Canada continues to provide opportunities to expand our geographic footprint and service offering to better meet the needs of current and future clients who are able to continue to operate within this depressed environment. We remain cautiously optimistic with commodity prices and expect to see improvements over a longer term, 24 months or more, that will likely result in rebounds in capital and maintenance expenditures. With this improvement, we expect to see increased project opportunities resulting in new project awards as we continue to position ourselves to participate early in the development and planning stages of these projects. Anonymous CEO, Directional Drilling Sector What was the most positive change in the last twelve months for your business? Saskatchewan remains a business and energyfriendly environment as differentials are not as much of a factor as in other regions. What was the most negative change in the last twelve months for your business? Still too much capacity in the directional drilling space. Industry is losing some very experienced people. Fewer companies are focused on wildcatting and investing in discovering new pools. Day rates still under pressure making it difficult for some service companies to reinvest in the newest and best technologies that would ultimately help the clients. Need to see the competitiveness gaps tighten with the U.S. in order for capital to be attracted back to the region and the industry. What is your outlook for the next twelve months? Seeing companies look at bypassed pay in existing fields. Natural gas could have some potential. Page 12

13 PUBLIC COMPARABLE ANALYSIS PERFORMANCE ANALYSIS 80% OILFIELD SERVICE GROUP SHARE PRICES 60% 59.6% 40% 20% 0% 20% 40% 1.1% 3.6% 17.9% 18.3% 24.7% 27.4% Oil and Gas Drilling Oil and Gas Field Services Oil and Gas Machinery and Equipment Integrated Oilfield Services Oil and Gas Storage and Transportation Camp Accomodations Oil and Gas Software Solutions 21.0x 19.0x OILFIELD SERVICE GROUP TEV/EBITDA Historical EV/EBITDA * 17.0x 16.8x 15.0x 13.0x 11.0x 9.0x 7.0x 13.6x 12.4x 9.5x 9.4x 8.4x 7.3x 5.0x Oil and Gas Drilling Oil and Gas Field Services Oil and Gas Machinery and Equipment Integrated Oilfield Services Oil and Gas Storage and Transportation Camp Accomodations Oil and Gas Software Solutions Source: Capital IQ. Data as of September 30th, Above noted oilfield service peer groups are market capitalization weighted indexes, inclusive of the constituents listed on page 15. Page 13

14 PUBLIC COMPARABLE ANALYSIS GROWTH, MARGINS & MULTIPLES LTM REVENUE GROWTH Software Solutions 7% 22% NTM REVENUE GROWTH Software Solutions 19% 7% Camp Accomodation 19% Camp Accomodation 10% Storage and Transportation 36% Storage and Transportation 4% Integrated Oilfield Services 44% Integrated Oilfield Services 4% Machinery and Equipment 27% Machinery and Equipment 13% Field Services 19% Field Services 8% Drilling 14% Drilling 10% 10% 0% 10% 20% 30% 40% 50% LTM EBITDA MARGIN 15% Software Solutions 10% 10%5% 0% 5% 10%15%20%25% NTM EBITDA MARGIN 22% Software Solutions 42% Camp Accomodation 15% Camp Accomodation 19% Storage and Transportation 28% Storage and Transportation 36% Integrated Oilfield Services 14% Integrated Oilfield Services 14% Machinery and Equipment 12% Machinery and Equipment 14% Field Services 10% Field Services 14% Drilling 13% Drilling 18% 0% 5% 10% 15% 20% 25% 30% 0% 10% 20% 30% 40% 50% Software Solutions LTM EV/EBITDA 11.9x 10.4 x NTM EV/EBITDA 6.2x Software Solutions 6.5x Camp Accomodation 18.7x Camp Accomodation 9.3x Storage and Transportation 12.9x Storage and Transportation 11.3x Integrated Oilfield Services 4.7x Integrated Oilfield Services 4.7x Machinery and Equipment 8.5x Machinery and Equipment 6.0x Field Services 7.5x Field Services 0.0x Drilling 9.0x Drilling 5.5x 0.0x 5.0x 10.0x 15.0x 20.0x 0.0x 5.0x 10.0x 15.0x Source: Capital IQ. Data as of September 30th, Above noted oilfield service peer groups are market capitalization weighted indexes, including the constituents listed on page 15. LTM refers to last twelve months. NTM refers to next twelve months. Figures above are based on median peer group metrics. Page 14

15 PUBLIC COMPARABLE ANALYSIS PERFORMANCE ANALYSIS We have selected a group of publicly traded oil and gas entities for this highlevel analysis. These public companies help act as a proxy for the industry, and provide strong industry context. (Figures In $USD Millions, except percentages and ratios) Market Capitalization Enterprise Value LTM Operating Figures NTM Consensus Estimates Valuation Revenue Growth EBITDA EBITDA Margin Revenue Growth EBITDA Margin NTM EV/EBITDA LTM EV/EBITDA LTM EV/REV Company Revenue Oil and Gas Drilling Precision Drilling Corporation $1,014 $2,283 $1, % $ % 17.4% 25.0% 6.9x 9.2x 2.1x Ensign Energy Services Inc. $757 $1,336 $ % $ % 5.3% 22.6% 6.6x 8.3x 1.7x Trinidad Drilling Ltd. $391 $761 $ % $ % 18.7% 26.4% 5.4x 8.9x 1.8x AKITA Drilling Ltd. $181 $176 $ % ($7) (9.9%) 183.5% 15.3% 7.3x NM 2.9x PHX Energy Services Corp. $142 $148 $ % $19 8.7% 10.5% 14.7% 5.0x 9.0x 0.7x Western Energy Services Corp. $58 $220 $ % $ % 2.3% 17.5% 5.5x 9.0x 1.2x Cathedral Energy Services Ltd. $28 $30 $ % $2 1.7% 8.2% 9.6% 2.5x 20.8x 0.3x Median $181 $220 $ % $ % 10.5% 17.5% 5.5x 9.0x 1.7x Mean $367 $708 $ % $ % 35.1% 18.7% 5.6x 10.9x 1.5x Oil and Gas Field Services Mullen Group Ltd. $1,245 $1,593 $ % $ % 8.4% 15.7% 9.7x 12.3x 1.8x Calfrac Well Services Ltd. $484 $1,271 $1, % $ % 2.8% 14.3% 5.4x 6.4x 0.8x STEP Energy Services Ltd. $298 $516 $ % $ % 13.3% 17.8% 3.3x 4.7x 0.9x Macro Enterprises Inc. $81 $59 $59 (1.7%) ($3) (4.2%) 340.9% 8.5% 2.6x NM 1.0x Essential Energy Services Ltd. $57 $72 $ % $14 9.8% (2.1%) 13.1% 3.2x 5.1x 0.5x Aveda Transportation and Energy Services Inc. $47 $104 $ % $13 7.8% N/A N/A 0.0x 7.9x 0.6x Vertex Resource Group Ltd. $43 $95 $ % $ % N/A N/A 0.0x 7.0x 0.9x MATRRIX Energy Technologies Inc. $25 $23 $ % $0 1.4% N/A N/A 0.0x 129.5x 1.8x ENTREC Corporation $17 $138 $ % $10 7.8% N/A N/A 0.0x 15.9x 1.1x ClearStream Energy Services Inc. $3 $190 $ % $5 1.8% N/A N/A 0.0x 34.8x 0.6x Dalmac Energy Inc. $1 $11 $15 4.0% $2 12.2% N/A N/A 0.0x 5.9x 0.7x Median $47 $104 $ % $13 9.8% 8.4% 14.3% 0.0x 7.5x 0.9x Mean $209 $370 $ % $48 8.6% 72.7% 13.9% 2.2x 23.0x 1.0x Oil and Gas Machinery and Equipment Enerflex Ltd. $1,133 $1,273 $1, % $ % 6.9% 14.5% 6.3x 8.5x 1.1x CES Energy Solutions Corp. $880 $1,198 $ % $ % 9.3% 14.8% 7.9x 11.5x 1.4x Total Energy Services Inc. $387 $606 $ % $ % 16.4% 14.3% 5.6x 6.8x 1.0x McCoy Global Inc. $24 $18 $ % ($4) (10.7%) 26.7% 11.7% 4.0x NM 0.6x Median $634 $902 $ % $ % 12.9% 14.4% 6.0x 8.5x 1.0x Mean $606 $774 $ % $92 7.2% 14.8% 13.8% 6.0x 9.0x 1.0x Integrated Oilfield Services Secure Energy Services Inc. $1,060 $1,325 $2, % $ % 8.6% 6.7% 8.2x 11.3x 0.6x Trican Well Service Ltd. $578 $625 $ % $ % (15.8%) 12.9% 5.0x 4.7x 0.7x High Arctic Energy Services Inc $165 $142 $160 (6.3%) $ % (4.5%) 18.8% 4.3x 3.7x 0.9x Strad Energy Services Ltd. $73 $78 $89 (1.9%) $ % 18.9% 24.9% 3.1x 4.2x 0.9x CWC Energy Services Corp. $68 $97 $ % $ % (4.6%) 14.0% 5.3x 7.1x 0.9x Hyduke Energy Services Inc. $2 $8 $ % ($7) (20.7%) N/A N/A 0.0x NM 0.2x Median $119 $120 $ % $ % (4.5%) 14.0% 4.7x 4.7x 0.8x Mean $324 $379 $ % $54 9.8% 0.5% 15.5% 4.3x 6.2x 0.7x Oil and Gas Storage and Transportation Enbridge Inc. $55,599 $120,437 $36, % $9, % (8.1%) 28.8% 12.3x 13.7x 3.4x TransCanada Corporation $36,932 $76,597 $10,360 (0.7%) $6, % 2.6% 63.9% 11.4x 12.6x 7.4x Pembina Pipeline Corporation $17,179 $24,815 $5, % $1, % (4.0%) 39.8% 11.3x 15.4x 4.9x Inter Pipeline Ltd. $6,740 $10,873 $1, % $ % (5.6%) 50.8% 11.2x 11.6x 5.8x Keyera Corp. $5,576 $7,086 $3, % $ % 9.3% 16.5% 11.6x 13.2x 2.3x Gibson Energy Inc. $2,277 $3,235 $5, % $ % 4.3% 5.4% 10.5x 15.1x 0.6x Kinder Morgan Canada Limited $1,378 $3,467 $ % $ % (39.9%) 50.6% 15.0x 12.0x 6.5x Tidewater Midstream and Infrastructure Ltd. $352 $533 $ % $ % (4.6%) 32.0% 8.2x 11.3x 2.6x Median $6,158 $8,979 $4, % $ % (4.3%) 35.9% 11.3x 12.9x 4.2x Mean $15,754 $30,880 $8, % $2, % (5.8%) 36.0% 11.4x 13.1x 4.2x Camp Accomodations Civeo Corporation $697 $1,175 $ % $ % 9.6% 19.0% 10.9x 18.7x 2.7x Horizon North Logistics Inc. $375 $401 $ % $21 7.7% 29.1% 13.2% 9.3x 22.5x 1.5x Black Diamond Group Limited $143 $210 $ % $ % 5.2% 21.7% 7.4x 8.0x 1.7x Median $375 $401 $ % $ % 9.6% 19.0% 9.3x 18.7x 1.7x Mean $405 $595 $ % $ % 14.6% 17.9% 9.2x 16.4x 2.0x Oil and Gas Software Solutions Pason Systems Inc. $1,295 $1,158 $ % $ % 5.5% 49.1% 10.6x 15.3x 5.5x Computer Modelling Group Ltd. $524 $478 $55 (3.8%) $ % 2.8% 42.0% 18.3x 22.2x 8.5x ION Geophysical Corporation $218 $292 $163 (6.7%) $ % 31.7% 31.5% 4.6x 8.5x 1.6x Dawson Geophysical Company $142 $104 $ % $14 8.5% 19.4% 7.2% 8.4x 5.9x 0.6x Pulse Seismic Inc. $96 $82 $9 (73.2%) $4 46.1% 55.6% 66.7% 6.5x 3.0x 2.5x Critical Control Energy Services Corp. $3 $13 $21 (9.0%) $1 2.5% N/A N/A 0.0x 23.8x 0.6x Divestco Inc. $3 $10 $7 (49.1%) ($3) (42.3%) N/A N/A 0.0x NM 1.4x Median $142 $104 $55 (6.7%) $ % 19.4% 42.0% 6.5x 11.9x 1.6x Mean $326 $305 $92 (14.9%) $ % 23.0% 39.3% 6.9x 13.1x 3.0x Source: Capital IQ. Data as of September 30th, LTM refers to last twelve months. NTM refers to next twelve months. Page 15

16 OILFIELD SERVICES TEAM TRANSACTION LEADERSHIP Brett Franklin, CPA, CA President, MNPCF E: T: Wilma Braat, CFA, MBA Managing Director E: T: Mike Reynolds, CFA Managing Director E: T: Mark Regehr, CFA Managing Director E: T: Tom Minogue, CPA, CA Managing Director E: T: Dale Antonsen, CPA, CA Managing Director E: T: DUE DILIGENCE LEADERSHIP Johnny Earl Managing Director E: T: Page 16

17 MNPCF CLOSED DEALS OIL & GAS Page 17

18 MNPCF CLOSED DEALS PREVIOUS 12 MONTHS NATIONWIDE Page 18