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Savanna Energy Services Corp.

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Presentation on theme: "Savanna Energy Services Corp."— Presentation transcript:

1 Savanna Energy Services Corp.
November 2016 TSX: SVY

2 Forward Looking Information
This document contains statements that constitute forward-looking statements within the meaning of applicable securities legislation. These forward looking statement include, among others, the company’s prospects, expected revenues, expenses, profits, expected developments and strategies for its operations, and other expectations beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. These forward-looking statement are identified by their use of terms and phrases such as “anticipate”, “achieve”, “achievable”, believe”, “estimate”, “expect”, “intend”, “plan”, “planned”, and other similar terms and phrases. Forward-looking statements are based on current expectations, estimates, projections and assumptions that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks and uncertainties include: fluctuating prices for crude oil and natural gas; changes in drilling activity; general global economic, political and business conditions; weather conditions; regulatory changes; and availability of products, qualified personnel, manufacturing capacity and raw materials. If any of these uncertainties materialize, or if assumptions are incorrect, actual results may vary from those expected. Statement contained in this document should be considered in conjunction with the disclaimer set out in the Q Press Release, the Q interim financial statements and MD&A, the annual audited consolidated financial statements and MD&A of the Company for the fiscal year ended December 31, 2015 as well as the disclosures surrounding non-IFRS measures contained therein.

3 Corporate Overview Equipment Fleet: Main Office Locations: TSX: SVY
Common Shares Outstanding(1) 90.3 million Common Share Trading Price(1) $1.46 52-week Trading Range(1) $0.97-$1.98 Market Capitalization(1) $128.2 million Property and Equipment(2) $703.7 million Book Value per Share(2) $5.09 Equipment Fleet: DIVISION COUNTRY EQUIPMENT Drilling Canada 68 Rigs USA 28 Rigs Australia 5 Rigs Well Servicing 57 Rigs 18 Rigs 12 Rigs Rentals CA/USA/AUS 5,000+ pieces Main Office Locations: DIVISION COUNTRY LOCATION Headquarters Canada Calgary, AB Operations Leduc, AB United States Odessa, TX Australia Toowoomba, QL (1) As at November 16, 2016 (2) As at September 30, 2016

4 2015/16 Structural Changes & Initiatives
Organizational structure flattened Consolidated operating locations / sold real estate All proceeds from divested real estate have been used to reduce debt ($32 million or 116% of book value) Salary and wage roll backs of all non-rig employees Reduced field wages where possible Significant capital spend reductions Unutilized equipment shared across operational divisions to decrease operating expenses and maintenance capital Idle rental fleet assets being provided at no cost to maintain day rates and margins Cancelled dividend in April 2015

5 Progress on 2016 Key Initiatives
Reduction in total debt, net of cash to $247 million as of September 30, 2016 (reduction from $345 million at the end of 2014) Reduction of the total available senior secured revolving credit facility from $250 million to $150 million (with amended covenants) Reduction in non-rig related salaried positions by greater than 50% from 2015 levels Annualized field office and G&A costs (excl. severance) reduced by over $70 million relative to 2014 exit run-rate, and nearly $17 million relative to the significantly reduced 2015 exit run-rate R&M as a % of revenue in first 3 quarters of 2016 remains relatively in-line compared to same period in 2015 Maintenance capital continues to be limited to necessary maintenance, replacement, and rig re-certification requirements, as well as rig upgrades or reactivations dictated by customer activity Process and systems improvement project underway To be completed by end of Q1-2017

6 Defense to Offense Savanna is deploying capital to put stacked rigs back to work in the Permian Basin Our new management team in Odessa has put five of these rigs back to work as of November 16, 2016 The work has been a combination of daywork and turnkey The capital spend to-date has not been substantial as upgrade requirements have been minimal As more rigs are reactivated and/or upgrades are required, costs could increase

7 Diversification Benefits
2016 YTD Revenue Distribution (1) Multiple countries Multiple business lines – drilling, well servicing & rentals Multiple equipment types (1) Based on financials at September 30, 2016

8 North American Drilling Rig Fleet by Depth Rating
Equipment Fleet North American Drilling Rig Fleet by Depth Rating This is a newer fleet with over $880 million invested in new equipment since 2009 In addition to the 4 new-build rigs added in the 4000m plus depth range in 2014 Savanna’s drilling rig fleet in North America has also been upgraded and enhanced since 2009 in terms of: rig hookload, pump and drawworks capacity, and the number of rigs with top drives.

9 Equipment Fleet Australia
Savanna’s investment in Australia is roughly equivalent to 8 Tier One rigs. New, highly mobile hybrid CT-1500 drilling rigs ideally suited for coal seam gas drilling in Queensland. New, high-specification service rigs capable of working in any of the basins in Australia. Not at all like North American service rigs: PLC controlled rigs that employ many leading technical features including working floor Human Machine Interface, auto drill, top drives, safety redundancies such as dual encoders, and remote access allowing technicians to troubleshoot problems from around the world via satellite The average cost per service rig is $8.1 million Trucking operations to complement both service lines and mitigate risk of less mature trucking infrastructure in Queensland.

10 Equipment Fleet Canada
Diverse Canadian drilling fleet that can work in all but the deepest basins in Western Canada. Entire Canadian drilling fleet equipped with top drives CT-1500s have become preferred rigs for oil sands coring and delineation Top drive singles that perform very well in active basins such as the Viking A telescoping double fleet that consistently performs at or better than CAODC averages in the relevant depth ranges 7 AC telescoping double drilling rigs with higher hookload, pump and drawworks capacity Canadian service rig fleet that competes very well against any other service rig fleet in Western Canada. Rental assets that can be packaged with both drilling and well servicing rigs.

11 Equipment Fleet U.S. High specification, top drive equipped AC drilling rigs in the U.S. 1 AC triple drilling rig and 2 AC telescoping double drilling rigs built for the Marcellus 2 AC triple drilling rigs, one in Colorado and one in the Permian 4 AC telescoping double drilling rigs that have worked in Texas, Pennsylvania, and Colorado A versatile fleet of mechanical drilling rigs, including singles, doubles and triples Savanna has begun to reactivate mechanical drilling rigs in the Permian basin where there is demand for these rigs Service rig fleet with a long track record of top tier customers, performance, safety, and financial results in the Bakken Key focus in reactivating and upgrading Permian rigs

12 Capex Program ($ millions)
2016 Capital Program Savanna’s 2016 capital spend will be limited to maintenance capital and system upgrades. Originally this was not expected to exceed $15 million, however with the increased activity in the Permian and WCS basins additional capital is required. Capex Program ($ millions) Initiatives Budget Incurred 2016 Maintenance & System Upgrades $15 - $20 12.4 Proceeds on sale of assets (8.8) Net Capital Program 3.6 All amounts as at September 30, 2016

13 Financial Highlights Financial Highlights ($000s) Three months ended
Sept 30 2016 2015 Change OPERATING RESULTS Revenue 71,063 98,011 (27%) Operating margin 16,678 33,025 (49%) Operating margin % 23% 34% Adjusted EBITDAS (adjusted for severance expenses) 11,224 25,272 (56%) Attributable to shareholders of the Company 11,186 25,196 Per share: diluted 0.12 0.28 Net loss (11,935) (10,187) (17%) (11,065) (8,755) (26%) (0.12) (0.10) (1) As of September 30, 2016

14 Financial Highlights Financial Highlights ($000s) Nine months ended
Sept 30 2016 2015 Change OPERATING RESULTS Revenue 219,705 345,290 (36%) Operating margin 59,161 113,159 (48%) Operating margin % 27% 33% Adjusted EBITDAS (adjusted for severance expenses) 42,526 88,427 (52%) Attributable to shareholders of the Company 41,966 87,124 Per share: diluted 0.46 0.97 Net loss (38,717) (11,267) nm (37,136) (9,249) (0.41) (0.10) As of September 30, 2016 nm – calculation not meaningful

15 Total Debt Balance Sheet ($millions) Senior Notes, due May 2018 $170
Authorized Drawn Sept 30/16 Dec 31/15 Dec 31/14 Senior Notes, due May 2018 $170 $175 Revolving Credit Facilities $150 $78 $98 $161 Partnership & Other Financing $14 $5 $8 Total Debt $334 $253 $281 $351 Cash $6 Total Debt Net of Cash $247 $275 $345

16 Debt to EBITDA Covenant
Savanna’s Total Funded Debt to twelve-month trailing EBITDA ratio moved from 2.54:1 at December 31, 2015 to 3.26:1 as of September 30, The covenant ratios for 2016 and 2017 are as follows: For the quarter ending September 30, :1 For the quarter ending December 31, :1 For the quarter ending March 31, :1 For the quarter ending June 30, :1 For the quarter ending September 30, :1 For the quarter ending December 31, :1 Thereafter :1

17 Competitor Comparison
EV / EBITDA YoY Change - Debt / EBITDA 2014 2015 2016E(1) WRG 3.8 7.4 66.5 PD 4.3 6.7 14.9 ESI 4.2 5.1 11.0 TDG 4.7 6.4 7.6 SVY 4.0 7.1 2014 2015 2016E(1) ’15/’16 Change WRG 1.5 4.7 45.1 858% PD 2.3 4.4 8.9 101% SVY 2.2 2.8 4.6 64% TDG 2.1 3.9 (12%) ESI 1.4 2.5 4.0 62% (1) Based on analyst estimates from IPREO on October 31, 2016

18 SAVANNA ENERGY SERVICES CORP.
Suite 800, 311-6th Avenue S.W. Calgary, Alberta, Canada T2P 3H2 Telephone: Facsimile: TSX: SVY


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