AltaCorp/ATB Institutional Investor Conference January 10, 2017 TSXV: CWC

Transcription

1 AltaCorp/ATB Institutional Investor Conference January 10,

2 Forward Looking Statements Certain statements contained in this presentation, including statements which may contain words such as could, should, expect, estimate, believe, likely, will or statements relating to oil and gas service industry activity estimates, estimates of drilling activity, oil and natural gas supply and demand estimates, estimates of Canadian wells required to maintain production, realization of the benefits from the Ironhand transaction, potential acquisition opportunities in the current market, expectations with respect to the potential relaxation of financial covenants in the Company s credit facility and similar facts and similar expressions and statements relating to matters that are not historical facts, are forward-looking statements. Such forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of CWC to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such factors include fluctuations in the market for oil and gas and related products and services; competition; our ability to integrate and manage acquired businesses; new products and services developed by CWC; the demand for services provided by CWC; changes in laws and regulations, including royalties and environmental, to which CWC or its customers are subject; CWC s ability to attract and retain key personnel and other factors affecting both the oil and gas business and oilfield services

3 Company Snapshot Shares Outstanding - Basic million Share Price December 30, 2016 $0.195 Market Capitalization $76.4 million Total Debt November 30, 2016 $35.4 million Enterprise Value $111.8 million 2017 EBITDAS (Analyst Estimate) $11.0 million 2017 EV / EBITDAS Multiple (Analyst Estimate) 10.2x Tangible Net Book Value November 30, 2016 $170.6 million Tangible Net Book Value per Share - Basic $0.44 Price to Tangible Net Book Value 0.45x Insiders Ownership % 79% 52 Week High / Low $0.245 / $0.085 Average Daily Volume ,155 shares 3 3

4 Share Price Performance % 85% 70% CWC Energy Services Corp Precision Drilling Corp. Ensign Energy Services Inc. Trinidad Drilling Ltd. Western Energy Services Corp. Savanna Energy Services Corp. AKITA Drilling Ltd. Essential Energy Services Ltd. Total Energy Services Inc. YTD Change 70% 38% 40% 58% (20%) 67% 30% 46% 9% CWC 55% 40% 25% 10% -5% -20% -35% -50% CWC s share price has improved by 70% in 2016 greater than peers -65% Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec

5 What We Do? Contract Drilling Production Services 9 Drilling Rigs 74 Service Rigs 9 Coil Tubing 2014 ACTUAL 2017 ESTIMATE REVENUE EBITDAS REVENUE EBITDAS 32% 38% 18% 22% 15% 68% 62% 82% 78% 85% Production Services Contract Drilling 5 5

6 Contract Drilling 9 telescopic double drilling rigs, 1 installed with a pad rig walking system Average age of 7 years, one of the youngest fleets in the WCSB Depths from 3,200 to 5,000 metres, sweet spot of Canadian drilling activity 5 Cardium class rigs (< 177,999 dan), 3 Montney class rigs (178,000 to 221,999 dan) and 1 Duvernay class rig (> 222,000 dan). Ideally suited for the most active horizontal drilling depths in the WCSB In January 2017, CWC Ironhand Drilling has 8 of 9 drilling rigs working (89%) Rig 8 Rig

7 Drilling Rig Count Weekly Drilling Rig Count Source: Raymond James. Canadian Energy Midweek (December 14, 2016) 7 7

8 Drilling Rig Competitor Analysis 70% Competitor Utilization Trend 60% US$61/bbl WTI 50% 40% US$29/bbl WTI CWC Affected by unusual wet weather conditions 30% 20% 10% 0% Changed drilling mgmt team and became more aggressive on pricing Source: CAODC CWC Horizon Akita Nabors Trinidad Savanna Precision Ensign Chinook CWC continues to achieve strong utilization levels in our drilling rig division 8 8

9 Drilling Rig Current Market CWC has the right type of drilling rigs to meet the needs of our E&P customers for the current and future market as evident by our high utilization relative to our peers. Hot drilling rigs will be favoured over cold stacked rigs. CWC currently has 8 of our 9 drilling rigs working (89%) A tightening labour market has already materialized potentially leading to increased pricing for our services in future quarters

10 Well Services - Service Rigs 74 service rigs (41 singles, 27 doubles, 6 slants). 66 are active, 8 are parked. 2 nd largest service rig fleet in WCSB with average age of 9 years. Depths from 1,500 to 5,000 meters. Maintenance, workovers & abandonment focused vs. completions. Today 47 of 66 rigs are working (71%) with the ability to crew 52 rigs (79%)

11 Service Rig Competitor Analysis 50% Competitor Utilization Trend CWC 40% 30% 20% 10% Changed strategy from defending margins to more aggressive pricing 0% Jan '15 Feb '15 Mar '15 Apr '15 May '15 June '15 Jul '15 Aug '15 Sep '15 Oct '15 Nov '15 Dec '15 Jan '16 Feb '16 Mar '16 Apr '16 May '16 Jun '16 July '16 Aug '16 Sept '16 Oct '16 Nov '16 Source: CAODC C&J Energy Services CWC Well Services Eagle Well Servicing Ensign Well Servicing Essential Well Service Precision Well Servicing Savanna Well Servicing Concord Well Servicing CWC continues to achieve strong utilization levels in our service rig division

12 Service Rig Current Market CWC has the highest utilization of all public service rig contractors in 2016 and getting busier as we start As commodity prices improve, E&P customers are spending on maintenance and workovers of producing wells. We have been fortunate to be able to find experienced crews by demonstrating to them that we can keep them busy based on having the highest utilization rates in the industry. Should the tight labour market persist for several quarters, we should see an increase in hourly rates for our service rigs

13 Financial Results & Position ($millions) 2018 Analyst Estimate 2017 Analyst Estimate 2016 Analyst Estimate Revenue $102.0 $94.0 $73.0 $81.3 $143.7 EBITDAS 1 $16.0 $11.0 $8.0 $12.0 $34.1 Funds from Operations 1 $16.0 $11.0 $8.0 $12.0 $33.2 Net Income (loss) $(2.0) $(5.0) $(8.0) $(29.1) $(13.5) Long-Term Debt $26.0 $31.0 $33.0 $52.2 $65.7 Net Debt 1 $14.0 $19.0 $23.0 $40.4 $45.1 Cash Dividend nil nil nil $2.5 $14.5 Cash Dividend Payout Ratio (Cash Dividend/FFO) n/a n/a n/a 21% 44% 1 Refer to the Reconciliation of Non-IFRS Measures in the Management s Discussion and Analysis filed at

14 Capital Expenditures Summary ($millions) 2017 Budget 2016 Forecast 2015 Actual 2014 Actual Maintenance/Infrastructure $5.4 $2.2 $4.7 $7.2 Growth Organic $0.5 $0.2 $4.5 $21.6 Growth M&A n/a nil nil $128.7 Total $5.9 $2.4 $9.2 $157.5 Maintenance Capex: Recertifications, upgrades and additions to field equipment for drilling rigs, service rigs, coil tubing and IT infrastructure

15 Sources & Uses of Cash ($millions) EBITDAS (analyst estimate) $ 11.0 $ 8.0 Less interest expense (2.0) (2.2) Less capital expenditures (5.9) (2.4) Free cash flow $ 3.1 $ 3.4 Free cash flow will be used to pay down debt in 2016 &

16 Strategy Protect the Balance Sheet by continuing to pay down debt from free cash flow Ensure we price our drilling and service rigs rates competitively with well financed E&P customers such that we have the highest utilization possible to give our rigs the best chance for future opportunities Continue to generate positive EBITDAS and cash flows by managing our variable and fixed costs accordingly to what we are able to generate in revenue as a price taker for our services Explore acquisition or mergers that would give CWC shareholders and E&P customers more opportunities and services while trying to achieve lower long-term business and return risk

17 CWC Energy Services Corp. Suite 610, 205 5th Avenue SW Calgary, AB T2P 2V7 Phone: (403) Fax: (403) Duncan Au, CPA, CA, CFA President & Chief Executive Officer Craig Flint, CPA, CA Chief Financial Officer 17