CORPORATE PRESENTATION APRIL 11, 2017

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Transcription:

CORPORATE PRESENTATION APRIL 11, 2017

DISCLAIMER The information contained in this corporate presentation (the "Presentation") is based on public information and Aveda Transportation and Energy Services Inc.'s ("Aveda" or the "Company") information. The information contained in this Presentation does not purport to be all-inclusive or to contain all information that prospective investors may require. The information contained in this Presentation is not intended to provide financial, tax, legal or accounting advice. Prospective investors are encouraged to conduct their own analysis and reviews of the Company, including the merits and the risks involved, and of the information contained in this Presentation. Without limitation, prospective investors should read the Company s entire audited financial statements and management s discussion and analysis for 2016 and consider the advice of their financial, legal, accounting, tax and other advisors and such other factors they consider appropriate in investigating and analyzing the Company. Forward Looking Statements This Presentation contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words, including negatives thereof, suggesting future outcomes. Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to Aveda, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and material factors are presented elsewhere in this Presentation in connection with the forward-looking statements. Readers are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to: the performance of Aveda s businesses, including current business and economic trends; oil and natural gas commodity prices and production levels; capital expenditure programs and other expenditures by Aveda and its customers; the ability of Aveda to retain and hire qualified personnel in Canada and the United States; the ability of Aveda to obtain parts, consumables, equipment, technology, and supplies in a timely manner to carry out its activities; the ability of Aveda to maintain good working relationships with key suppliers; the ability of Aveda to market its services successfully to existing and new customers; the ability of Aveda to retain customers postacquisitions; the ability of Aveda to obtain timely financing on acceptable terms and the receipt of regulatory approval for proposed financings; currency exchange and interest rates; risks associated with foreign operations; changes under governmental regulatory regimes and tax, environmental and other laws in Canada and the United States; and a stable competitive environment. Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties, some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Aveda s actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified by Aveda s annual information form and management discussion and analysis for the year ended December 31, 2016 (the "MD&A") and contained in the short form prospectus thereto filed on SEDAR at www.sedar.com. Any forward-looking statements are made as of the date hereof and, except as required by law, Aveda assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise. 2

DISCLAIMER (CONT D) DISCLAIMER (CONT D) The forward-looking statements contained in this Presentation are made as of the date on the front page and the Company assumes no obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. Certain information contained herein is based on, or derived from, information provided by independent third-party sources. The Company believes that such information is accurate and that the sources from which it has been obtained are reliable. The Company cannot guarantee the accuracy of such information, however, and has not independently verified the assumptions on which such information is based. The Company does not assume any responsibility for the accuracy or completeness of such information. Non-International Financial Reporting Standards Measures This Presentation may contain the terms Adjusted EBITDA and working capital which are defined in the MD&A. These measures are commonly utilized in the oilfield services industry and are considered informative for management and stakeholders. Neither working capital nor Adjusted EBITDA have a standardized meaning prescribed by international financial reporting standards ("IFRS") and therefore Aveda's calculations may not be comparable with the calculation of similar measures for other entities. Management uses Adjusted EBITDA to analyze the operating performance of businesses. Adjusted EBITDA as presented is not intended to represent cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS. 3

OUR HISTORY Founded in 1994 as Phoenix Oilfield Hauling Inc. Went public on the TSX Venture Exchange in 2006. Renamed Aveda Transportation and Energy Services (TSX-V: AVE) Grew significantly through strategic acquisitions and organic expansion, making Aveda the largest rig moving company in North America; most recently: - 2012: Organic expansion into South Texas (Pleasanton, TX) and West Texas (Midland, TX); Acquisition of Complete Energy Service Inc. rental assets in Alberta - 2013: Organic expansion into Utica Shale region (NE USA); Acquisition of Belair Rentals assets in Alberta - 2014: Organic expansion into Mid-Continent (Oklahoma); Acquisitions of M&K rig moving and rentals assets in North Dakota, and Precision Drilling s rig moving assets in Texas - 2015: Acquisition of Hodges Trucking Company, L.L.C. s rig moving assets located across the USA - 2016: Increased footprint in Permian with addition of second terminal 4

MANAGEMENT TEAM Ronnie Witherspoon President and CEO Over 20 years of oilfield industry experience Former President of Superior Well Services and Executive Vice President of Nabors Completion and Production Services Bharat Mahajan VP, Finance and CFO Former CFO of several oilfield service companies, including Wellpoint Systems Inc. and Norex Exploration Services Inc. Held several positions with Magna International overseeing various international growth initiatives Tom Halliday VP, USA Operations Over 40 years of oilfield industry experience Former rig manager for Shell and senior manager with Nabors and Baker Hughes Les Ovelson VP, Canada Operations Over 25 years of oilfield industry experience Former COO of ATK Oilfield Transportation and senior manager with KOS Oilfield Transportation 5

BOARD OF DIRECTORS David Werklund, Executive Chairman Strong history of founding and growing companies both organically and through acquisitions Founder and Chairman of Tervita Corporation (previously named CCS Corporation); privatized in 2007 for C$3.5B (largest trust privatization in Canadian history) Founder and Executive Chairman of Werklund Capital Corp. Co-Founder of Concord Well Servicing 2013 Calgary Business Hall of Fame Laureate 2005 Ernst & Young s Canadian Entrepreneur of the Year Stefan Erasmus Doug McCartney President of Werklund Capital Corporation Managing Partner, Burstall Winger Zammit LLP Former CFO for a public independent power producer Extensive experience in securities and corporate finance and commercial law Paul Shelley Consultant for corporate finance, as well as mergers, acquisitions and divestures Former manager of special loans at RBC 6

INVESTMENT HIGHLIGHTS Track Record of Growth Revenue Track Record of Growth Adjusted EBITDA Significant Adjusted EBITDA Improvement H2 2015 vs H2 2016 Exposure to Resilient US Market/Strong Dollar (1) Active rigs within 100 miles of Aveda terminals 7

INDUSTRY TURNAROUND (1) (2) (3) Active rigs within 100 miles of Aveda terminal. Baker Hughes rig count as at March 17, 2017. EIA.gov website (U.S. Energy Information Administration). 8

WHAT ARE THE RIG OPERATORS SAYING After a challenging downturn, we are experiencing SIGNIFICANT UTILIZATION INCREASES in our Lower 48 market 1 Even though oil prices have pulled back over the past several weeks, it is encouraging to 2 still see signs of OPTIMISM in the market Anthony Petrello, Nabors Chairman, President, and CEO John Lindsay, Helmerich & Payne President and CEO "Customer sentiment has SUBSTANTIALLY IMPROVED. This improved outlook is evident in the conversations we are having with customers, but more importantly in our ACTIVITY INCREASES, recent contract bookings and IMPROVING PRICING environment 3 2 Kevin Neveu, Precision Drilling President, and CEO 1Nabors Industries Ltd. Press Release October 25, 2016 2 Helmerich & Payne Inc. Press Release July 28, 2016 3Precision Drilling Corp Press Release October 21, 2016 9

CAPITALIZATION SNAPSHOT (TSX-V: AVE) Balance Sheet Summary Capitalization Historical High Share Price (September 10, 2014) $5.85 Operating Line Available ($MM)(1) $36.1 Current Share Price (March 24, 2017) $0.60 Property and Equipment per Balance Sheet ($MM)(1) $97.6 Tangible Asset Value per Share(1) $0.71 FMV of Property and Equipment ($MM)(4) Shares Outstanding (MM)(1) 57.2 Shareholders Equity ($MM) (1) $40.9 Debt to Equity (1) 1.6:1 Market Capitalization ($MM)(1) $34.3 Loans and Borrowings ($MM) (1) (2) $32.0 Long Term Note Payable ($MM) (1) (3) $35.9 Enterprise Value ($MM) (1) (2) (3) (4) (5) $102.2 $115.1 Working Capital ($MM)(1) $8.2 Shareholder Summary Werklund Capital Corporation and Werklund Ventures Ltd. 25.0% MM Asset Management Inc. 14.6% Invesco Canada Ltd (5) Calculated by the Corporation as of February 28, 2017. Loans and Borrowings due May 31, 2019. No covenant test as long as excess availability, including supressed availability is greater than $14M. Excess availability at February 28, 2017 is $36.1M. Long Term Note Payable due June 15, 2020. No principal repayment required until maturity date. Bears interest at 9% per annum. Independent appraisal report dated March 31, 2017 by Gordon Brothers Asset Advisors, LLC (dba Gordon Brothers-AccuVal). As further described in the management information circular of Aveda dated September 23, 2016 and filed on SEDAR on October 11, 2016. 3.4% 10

NORTH AMERICAN OPERATIONS There are 1,045 Active Rigs in North America(1) representing an estimated market size of $1.3B(2). Aveda s current terminal locations cover over 75% of the potential North American market Edson, AB (1) (2) Leduc, AB WCSB (270 Rigs) Williston, ND Calgary, AB Uinta/Wamsutter (19 Rigs) Casper, WY Colorado (25 Rigs) Expansion Opportunity Williston/ Bakken (42 Rigs) Marcellus/Utica (64 Rigs) Williamsport, PA Anadarko (59 Rigs) Map Legend Oklahoma City, OK Midland, TX Oil Focused Permian (308 Rigs) Pecos, TX (4) (3) (4) Active rigs on or about March 17, 2017(source: Baker Hughes) Aveda s research suggests that each rig moves an average of 17 times per year at an average cost of $75K. Based on the North American rig count of 1045, the estimated value of the market is $1.3B US Corporate Office New Terminal added in Q3 2016 to serve Permian Basin Haynesville (37 Rigs) Marshall, TX Houston, TX (3) Eagle Ford (70 Rigs) NGL Focused Pleasanton, TX LARGEST RIG MOVING COMPANY IN NORTH AMERICA 11

BUSINESS UNIT OVERVIEW Aveda has a diversified revenue base across all of the major US Basins which in aggregate account for over 90% of the company s revenue. (1) (2) Terminals in the Marcellus Basin were temporarily suspended in early 2016 New terminal added in the Permian Basin in Q3 to increase exposure to growing market 12

THE AVEDA WAY A company-wide philosophy based on over 20 years of rig moving experience (the best people, working safely, using the best equipment = industry leading results) PEOPLE One of the lowest turn-over rates in the industry Competitive wages, on-going development opportunities and room for advancement attract top talent SAFETY Zero incident rate mentality (TRIR.69 at September 2016) Among the most advanced/developed safety programs in the industry An Industry Leader EQUIPMENT Among the most modern fleets in the industry Strict maintenance policy 13

OILFIELD HAULING OVERVIEW Blue Chip Customer Base 14

OILFIELD RENTALS OVERVIEW Blue Chip Customer Base 15

COMPANY PERFORMANCE 2 (1) (2) Baker Hughes rig count as at March 17, 2017. Estimated revenue for March 2017. 16

KEY TAKEAWAYS Well positioned to take advantage of the recovery Access to over 75% of growing North American rig count Exposure to resilient US market 92% of Q4 2016 revenue generated in US market Large footprint in the Permian Basin Recently added a second terminal 36% of Q4 2016 revenue generated in Permian Inflection point Revenue & Adjusted EBITDA on the rise Track record for growth Strong management team 20 to 40 years of industry experience Deep rooted customer relationships David Werklund owns 25% Focus on reducing leverage EBITDA contribution Public markets 17

CONTACT Bharat Mahajan, CPA, CA VP Finance & Chief Financial Officer Aveda Transportation and Energy Services Suite 300, 435 4th Avenue SW Calgary, AB T2P 3A8 (403) 264-5769 bharat.mahajan@avedaenergy.com Ronnie Witherspoon President & Chief Executive Officer Aveda Transportation and Energy Services Suite 1200, 333 N. Sam Houston Parkway E. Houston, TX 77060 (832) 937-5334 ronnie.witherspoon@avedaenergy.com Aveda Board Members: David Werklund Executive Chairman of Werklund Capital Corporation Stefan Erasmus President, Werklund Capital Corporation Doug McCartney Managing Partner, Burstall Winger Zammit LLP Paul Shelley Independent Businessman 18