INVESTOR PRESENTATION January 2019
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 constitute forward-looking information under applicable securities laws. All such statements and disclosures, other than those of historical fact, which address activities, events, outcomes, results or developments that Western anticipates or expects may, or will occur in the future (in whole or in part) should be considered forward-looking information. In some cases, forward-looking information can be identified by terms such as “forecast”, “future”, “may”, “will”, “expect”, “anticipate”, “estimate”, “continue”, “potential”, “intend”, “generate”, “pro-forma”, or other comparable terminology. Forward-looking information contained in this presentation is included in, among other things, predictions of the Canadian drilling market, the 2019 Budgeted Capital Expenditures, market trends, commodity pricing, utilization of rigs in Canada and the US, potential movement of rigs, pricing for services, marketability, customer needs and demand. Completing those anticipated expenditures assumes that Western’s cash flow will be sufficient and is subject to known and unknown risks, uncertainties and other factors that could influence Western’s actual results and cause actual results to differ materially from those stated, anticipated or implied in the forward-looking information. Readers are cautioned not to place undue reliance on the forward-looking information, as no assurance can be provided as to future results, levels of activity or achievements. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in more detail in Western’s Annual Information Form and other documents available at www.sedar.com. and include risks associated with the oil and gas industry and demand for drilling rigs and oil and gas services. Past performance of Western referred to in this presentation is shown for illustrative purposes only, does not guarantee future results of Western and is not meant to forecast, imply or guarantee the future performance of Western, which will vary. The forward-looking information is made as of the date of this presentation and Western does not undertake any obligation to update or revise any of the included forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable law. The forward-looking information contained in this presentation is expressly qualified by this cautionary statement. 2
Capital Structure Overview Share Summary Share price (January 3, 2019) $0.50 52-week low $0.34 52-week high $1.43 All-time high $11.70 Shares outstanding 92.3 million Options + treasury settled RSU 9.0 million Warrants (@ $1.77/share) 7.1 million Shares outstanding - fully diluted 108.4 million Book value $3.88/share Price / book value 13% Insider ownership - fully diluted 25% Capital Structure Market capitalization - basic $46 million Net debt $222 million Enterprise value $267 million 3
Western’s Competitive Position Rig Count by Class 25 19 57 Drilling Rigs 57 Drilling Rigs 13 Cardium Montney Duvernay Registered Rigs - 49 YTD Operating Days Western Western 8% Significant Canadian Significant Canadian 10% Market Share Market Share Industry Industry 92% 90% 9M 2018 Average Metres per Well 4,065 Drilling Longer Wells Drilling Longer Wells 2,605 Western Industry Western operates 123 rigs plus a specialized oilfield rentals business Western operates 123 rigs plus a specialized oilfield rentals business Notes: Market share by registered rigs as of January 2019. YTD operating days per CAODC through November 2018. Industry well length per IHS. 4
Business Highlights • 66 modern well servicing rigs • Operating bases in: Estevan, Red Deer, Slave Lake, • 57 modern drilling rigs Lloydminster and Grande Prairie ‒ 25 Cardium Class 1) • Levered to production work ‒ 19 Montney Class 2) ‒ 13 Duvernay Class 3) • Variety of rig configurations to meet customer demand • Pressure control rental ‒ Rigs ideally suited for deep specialists applications (Montney/Deep – BOPs, frac heads, etc. Basin/ND Bakken) to shallow • Locations in Grande Prairie and applications (Saskatchewan Viking) Red Deer to best serve customers 1) Cardium class rig: Defined as any contract drilling rig which has a total hookload less than or equal to 399,999 lbs (or 177,999 daN) 2) Montney class rig: Defined as any contract drilling rig which has a total hookload between 400,000 lbs (or 178,000 daN) and 499,999 lbs (or 221,999 daN) 3) Duvernay class rig: Defined as any contract drilling rig which has a total hookload equal to or greater than 500,000 lbs (or 222,000 daN) 5
Canadian Drilling Market WCSB Drilling Rig Utilization • 590 industry drilling rigs 5-year Range 2018 5-year Average ‒ Down 30% from December 2012 80% peak of 841 rigs 70% ‒ Western’s Canadian rig count increased by 14% over the same 60% period • Above 5-year average activity 50% Utilization (%) diminished with widening- 40% differentials and subsequent government mandated 30% production curtailment 20% ‒ E&P customers continue to adjust spending plans given macro 10% picture 0% 1 5 9 13 17 21 25 29 33 37 41 45 49 Week (#) Source: Canadian Association of Oilwell Drilling Contractors 6
In-Demand Fleet Canadian Market Share by Rig Count Canadian Market Share by Operating Days Canadian Utilization Drilling Mrkt. YTD Mrkt. YTD Rigs Share 2018 Share 2018 Company #1 134 22% Company #1 15,474 25% Company #5 37% Company #2 80 13% Company #3 7,700 13% Western 36% Company #3 68 11% Western 6,011 10% Company #1 34% Company #4 54 9% Company #2 5,180 8% Company #3 34% Company #5 5,205 9% Company #6 32% Western 50 8% Company #5 43 7% Company #4 4,930 8% Company #4 27% Company #6 23 4% Company #6 2,620 4% Company #2 19% • Higher share of operating days than rig count would indicate ‒ Focus on providing best-in-class equipment, safety and service • Western continues to broaden its customer base, providing the equipment demanded by the most active WCSB operators Source: Canadian Association of Oilwell Drilling Contractors. Rig count per CAODC as at November 2018. Operating days and utilization through November 2018 Incudes Western plus six largest Canadian drilling companies by rig count 7
Continued Drilling Performance • Western increasing well WCSB Well Length length while improving Western Industry 4,500 drilling rate 4,065 4,000 Metres/Well 3,500 • Strong performance is key differentiator 3,000 2,605 ‒ Western leads industry 2,500 peers in utilization 9M 2018 WCSB Metres/Day • Fleet make-up allows Western Industry Western to respond to 340 more efficient drilling 320 320 Metres/day ‒ Lower capability industry 300 rigs may no longer 287 compete 280 260 9M 2018 Source: Canadian Association of Oilwell Drilling Contractors and JWN DataCentral 8
Diversified Drilling Requirements 2018e Industry Days Rig Type Single Triple 28% 31% Double 41% Pad Rig Pad 22% Non-pad 78% Province Manitoba Sask. 1% 17% BC 8% Alberta 74% Source: CAODC, Governments of Alberta, B.C. and Saskatchewan Map per Peters & Co. 9
Stable Drilling Rig Count • Since acquiring its first drilling rigs in 2010, Western has significantly grown its fleet ‒ Now the fifth largest drilling contractor in Canada • Fleet remains highly marketable in Western Canada and the US • Through the downturn, Western decommissioned only 1 drilling rig ‒ Allowed for cost-effective rig modification to increase competitiveness of Cardium class fleet • Continue to achieve industry leading utilization, despite significant industry delistings/retirements Western Drilling Rig Count 57 57 56 56 55 51 49 43 22 2010 2011 2012 2013 2014 2015 2016 2017 2018 10
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