Energy Services UpdateQ4 | Q4 2016 2017
Deloitte’s Oil Industry Valuation Snapshot Industry and Gas Price Transactions Activity Update Forecast
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Contents
Oil and Gas Price Forecast Lessons From Private Equity Industry Activity Update Page 4 Page 8 Page 18
Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory 4 8 services. Deloitte LLP, an Ontario limited liability partnership, is the Canadian member firm of Deloitte Touche Tohmatsu Deloitte’s Oil and Gas Lessons From Limited. Price Forecast Private Equity Event
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Industry Deloitte Activity Contacts Update
2 Energy Services Update | Q4 2017
Introduction
For more information, or if you have any questions, please contact:
Jason Ding Managing Director THE DATA IS IN for the Q4 2017 Energy Services Update. Edmonton This update examines the current M&A environment, Deloitte Corporate Finance transaction-based valuation multiples and key trends. Mobile 780 803 8677 This quarter’s featured article is from Deloitte Resource [email protected] Evaluation and Advisory’s report "Deloitte’s Oil And Gas Kevin Becker Price Forecast December 31, 2017" and provides a forward Executive Director view of the oil and gas market. Calgary and Vancouver Deloitte Corporate Finance Mobile 778 989 8773 Deloitte Corporate Finance distinguishes itself by bringing [email protected] deep industry experience and access to buyers anywhere in the world through a global network and exposure to a diverse range of capital providers. Our multi-disciplinary global team combines industry-specific knowledge with practical and valuable experience. Our corporate finance professionals provide strategic advice and specialized assistance with divestitures, acquisitions and capital raising to a broad base of clients.
3 Energy Services Update | Q4 2017
Deloitte’s Oil And Gas Price Forecast – December 2017
4 Energy Services Update | Q4 2017
Deloitte’s Oil and Gas Price Forecast – Q4 2017
Authors: Deloitte’s Resource Evaluation and Advisory group
“The rearview mirror is always clearer than the windshield.” - Warren Buffet
The past year has seen relatively Currently, tight oil plays represent have increased over the last stable oil prices, with relative almost half of US crude oil quarter as increasing supply from optimism for the future as OPEC production, with a flurry of oil sands projects has sparked extended its current production development in the Permian and concerns over transportation cuts until the end of 2018 and Eagle Ford basins leading the way. bottlenecks. However, as the US global oil demand growth remains continues to ramp up light oil strong. Both factors are key steps Long term, WTI prices should be production, and similar quality towards rebalancing the global buoyed by the increased ability of heavy oil imports from Venezuela crude oil market and reducing the US to export light sweet crude and Mexico decline, the demand world crude inventories. Over the oil to large consumer markets such for Canadian heavy crude should last quarter, crude oil prices rose as Asia. US crude oil exports to continue to grow, barring any on news of continued compliance Asia rose in 2017 and accounted changes to current crude slates by OPEC participating nations and for approximately 33 percent of all and refinery configurations in the the expectation the cuts would crude oil export volumes, making US Gulf Coast region. If Canada continue into 2018; however, the Asia the second-largest destination can increase its market share and differential between Brent and WTI for US crude. It is expected the access US heavy oil refining prices has widened over the last current differential will narrow as capacity, we expect the price year to over $6 USD/bbl, as Brent US exports continue to increase to differential between WCS and WTI prices have grown more than WTI. take advantage of higher prices to taper or at least be waterborne prices. moderate when compared to the WTI price growth has been historical differential. dampened by increased oil Overall, annual crude oil import production in the United States volumes in the US are similar to Considering the increase in crude (US), which has resulted in those in 2016. Canadian exports to oil prices over the last two transportation constraints and the US remain immobile while quarters and the increased heavy continental oversupply. Rig counts heavy oil competitors Mexico and oil price differential, Deloitte has in the US have risen throughout Venezuela continue to decrease forecast WTI to be USD 55.00/bbl the year, leading to near-record oil their supply to the US. Canadian in 2018 and WCS to be production rates in 2017. heavy crude oil differentials to WTI C$46.40/bbl.
5 Source: US Energy Information Administration Energy Services Update | Q4 2017
Deloitte’s Oil and Gas Price Forecast – Q4 2017 continued
On the natural gas side, Canadian In addition to infrastructure issues Henry Hub prices reflect US prices were extremely volatile in in Canada, AECO prices have also optionality to export markets as 2017, with the differential to Henry been affected by increased US prices have remained relatively Hub fluctuating substantially over natural gas production through stable throughout 2017. Natural the year, often to great effect on a both shale gas plays and solution gas export volumes from Canada day-by-day basis. The summer gas from tight oil fields. Currently, to the US were flat in 2017, months saw large discrepancies 22 percent of US shale gas demonstrating that the US does between AECO and Henry Hub production (11 percent of total gas not require additional volumes prices as Canadian producers felt production) is attributed to solution from Canada to meet domestic the effects of midstream gas from the Permian, Eagle Ford, demand. infrastructure maintenance and Bakken tight oil drilling. This projects amid steady natural gas equates to over 10 Bcf/d of gas Canada’s limited ability to access production. AECO prices witnessed from oil plays that affect the new markets, combined with traces of recovery in Q4 2017 due supply-and-demand balance. With increased US natural gas to the resumption of transportation increased domestic supply, the US production, results in low AECO systems to full capacity operations. can export additional volumes to pricing as the US continues to However, it is expected 2018 Mexico by pipeline and abroad expand its transportation prices may have similar price through LNG facilities. The US infrastructure and export markets. volatility in the summer months as grew its natural gas export market more maintenance projects are by 31% in 2017, with the majority Considering natural gas pricing planned. Historical price of pipeline export volumes directed seasonality and increased fluctuations over the last 10 years to Mexico, and an increase in LNG production in the US, Deloitte has show AECO prices were on average export volumes more than three forecast AECO to be C$2.00/Mcf 20 percent higher in winter months times 2016 average volumes. and Henry Hub to be USD 2.80/Mcf than summer months. Deloitte has in 2018. accounted for this seasonal price fluctuation when forecasting AECO prices for 2018.
6 Source: US Energy Information Administration Energy Services Update | Q4 2017
Deloitte’s Oil and Gas Price Forecast – Q4 2017 continued
Trends to Watch In 2018:
• Q1 2017 saw a surge in • Light oil development, • Producers will continue to drilling activity, which led to particularly in target liquid-rich gas plays crew shortages and cost Saskatchewan and in the Deep Basin. escalations. More of the same southeast Alberta, should Condensate prices are can be expected in 2018 as continue at a consistent increasing as the domestic producers take advantage of pace. Expansion of enhanced condensate supply does not stable, growing prices. Drilling oil recovery operations will meet increased demand for and completion costs will likely most likely be an area of expanding bitumen production. rise as competition for rigs increased production volumes It is expected the demand for increases. in certain conventional plays condensate will rise due to such as the Viking and Midale increased bitumen capacity • Uncertainty of AECO pricing formations. from oil sands expansion in a volatile environment projects. In addition, if may hinder Canadian dry • Total bitumen production proposed crude oil pipeline gas producers from moving may for the first time projects move forward, forward with their exceed 3 MMbl/d. increased diluent will be development plans. Incremental production of required to transport heavy oil. Producers may be quick to shut existing in-situ operations and Partial upgrading potential and in production if there are expansion projects are increased transport capacity by similar maintenance outages to scheduled to come on-stream train would slow the demand those that occurred in summer in 2018. The new Sturgeon for diluent; however, rail 2017. Companies will also likely refinery, Alberta’s first new transport is more costly than hedge significant volumes to refinery to be built in 30 years, pipelines and partial upgrading protect against price volatility. is scheduled to begin is relatively new to the operations in spring 2018 with industry. an upgrading capacity of 50,000 bbl/d.
Click here to view the entire forecast
7 Source: US Energy Information Administration Energy Services Update | Q4 2017
Lessons From Private Equity Event
8 Energy Services Update | Q4 2017
Lessons From Private Equity Event
Deloitte is hosting a “Lessons From Private Equity” event in Edmonton on February 28, 2018, following a similar event in Calgary that was hosted last year.
Deloitte has interviewed top Jamie Avey and Jason Ding in Top PE firms have a disciplined Private Equity (PE) firms in Deloitte’s Corporate Finance and framework of strategies and Alberta to gain greater insight M&A Advisory practice will tactics that allow them to into value creation strategies for moderate an informative panel increase the value of a private private companies. discussion which will host the company and then exit for a Please join us for breakfast, following panelists: significant return on investment. networking and a panel As a business owner, it is discussion on Wednesday, • Gord Boersma, Vice President, important to understand these February 28, 2018, where we Investments – Mosaic Capital perspectives to create the right will discuss lessons learned from Corporation strategy and structure at your PE including the key ingredients • Alan Lever, Partner – company that will enhance value for success and how to develop a Torquest Partners regardless of your investment sustainable framework for your • Paul Shaw, Vice President, horizon or succession plans. private business. Private Equity – Regimen We look forward to seeing you Partners on February 28! • David Sparrow, Managing Director – Forbes Bros. Capital Ltd. • Al Stanley, CEO – Universal Rail Systems Ltd.
Event details: Click here to register When: Wednesday Registration: 7:00 – 7:30am for the event February 28, 2018 Breakfast: 7:30 – 8:00am Where: Varscona Hotel 8208 106 Street NW, Presentation Edmonton, AB and Q&A: 8:00 – 9:00am
9 Energy Services Update | Q4 2017
Industry Transactions
10 Energy Services Update | Q4 2017
Industry Transactions
The North American energy Of the 26 transactions that closed In addition to the transactions that services industry had closed 26 in the quarter, 12 disclosed closed in Q4 2017, which are transactions in Q4, up from 22 in transaction values, which ranged highlighted on the following page, Q3, and the highest in one quarter from $0.2 million to $3.0 billion, a significant transaction which has seen since Q4 2014. Total for a combined $8.6 billion. been announced in 2018 is the transaction value was also up, Two transactions were greater acquisition of Energy Transfer from $2.0 billion in Q3 to $7.8 than $1 billion – one at $2.3Bn and Partners LP’s CDM Resource billion in Q4. In 2017, total one at 3.0Bn. The only transaction Management by Austin-based USA transaction value was down that involved a Canadian company Compression Partners (USACP) for slightly, from $26.2 billion in 2016 and disclosed a transaction value approximately USD 1.7 billion. to $25.3 billion in 2017. This is was the acquisition of C&J’s Through this acquisition, USACP primarily due to the fact that 2016 Production Services Canada group will roughly double their fleet and included the landmark $22 billion by Calgary-based CWC Energy expand its footprint to all major Cameron/Schlumberger Services for approximately $38 basins in the US, including the transaction which closed in April million. Eagle Ford, the Gulf Coast, and the 2016. If we exclude that massive Rockies. While the price per transaction, transaction value was horsepower was higher than up considerably – from $4.2Bn in USACP’s existing valuation, the 2016 to $25.2Bn in 2017. EV/EBITDA multiple was lower than USACP’s, implying that CDM’s assets are better at generating earnings than USACP’s existing assets.
11 Energy Services Update | Q4 2017
Industry Transactions continued
Select North American transactions include:
October 6, 2017 October 30, 2017 October 30, 2017 Ensco plc (“Ensco”) acquired Global Infrastructure Partners C&J Energy Services (“C&J) Atwood Oceanics, Inc. (“Atwood”) (“GIP”) purchased Medallion completed two transactions in for USD 2.2 billion to create a Gathering and Processing October, the first an acquisition of powerhouse ocean drilling rig (“Medallion”) for USD 1.8 billion. O-Tex Pumping (“O-Tex”) for company. The combined company’s Medallion is the largest privately- USD 245.4 million, and the second fleet consists of 27 floating rigs held crude oil transportation a divestiture of their C&J (semisubmersibles and drillships), system in the Midland Basin of Production Services Canada asset of which 23 are ultra- West Texas, with over 800 miles of (“Canada”) for $37.5 million. deepwaterdrilling rigs that are pipeline, approximately 670,000 Through the acquisition of O-Tex, capable of drilling in water depths dedicated acres, and total areas of the US’s fourth largest provider of of 7,500 feet or greater. The mutual interest approaching four oilfield cementing services, C&J combined fleet also comprises 38 million acres. Medallion is widely continued to strengthen its position jackuprigs, for a combined total of regarded as the leading source of as a leading oilfield services 65 drilling rigs. crude oil transportation in the provider with a best-in-class well Midland Basin. construction, intervention and completions platform. Simultaneously, C&J sold Canada to CWC Energy Services, allowing C&J to focus their efforts on the US.
26 transactions accounted for $7.8 billion in North American Energy Services M&A activity in the fourth quarter of 2017.
North American Energy Equipment and Services M&A Activity
20.0x 60 47 47 43 42 48 15.0x 38 33 36 26 26 10.0x 22 24 22 22 24 22 23 19 21 21 20 16 18 18 17 24 14 13 14 14 12 12 closed 10 9 9 11 11 9 5.0x 8 7 6 8 3 12
Average EV/EBITDA Average 0.0x 5.6x 8.5x 4.3x 7.5x 8.4x 7.8x 7.6x 4.6x 19.7x 4.5x 4.1x 0.0x 8.9x 0.0x 0.0x 16.1x 12.5x 206.5x 5.3x
0.0x 0 transactions of Number Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2013 2014 2015 2016 2017 Average disclosed EV/EBITDA Number of closed transactions Closed transactions with disclosed values
12 Energy Services Update | Q4 2017
Valuation Snapshot
13 Energy Services Update | Q4 2017
Valuation Snapshot
The forecast consensus median Drilling and Drilling Services Median EV/NTM EBITDA EV/NTM EBITDA multiple (“multiple”) 16.0x for Drilling and Drilling Services 14.0x companies increased to 8.5x in Q4 12.0x
2017, significantly higher than Q3’s 10.0x
7.9x, and another step up from Q2’s 8.0x low of 6.4x. Q4 2017 multiples are 6.0x now a full turn above than their five- 4.0x year rolling average of 7.4x. Steady 2.0x strengthening in oil prices during the 0.0x second half of the year likely led to Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 the increase in share prices while 2013 2014 2015 2016 2017 analyst NTM EBITDA forecasts Median EV / NTM EBITDA Rolling five-year average decreased slightly on average, resulting in a higher multiple.
Drilling and Drilling Services (all values in CAD mm)
EV multiples Enterprise LTM NTM LTM NTM Company value (EV) EBITDA EBITDA EBITDA EBITDA
Precision Drilling Corporation 2,763 278 323 9.9x 8.6x
Ensign Energy Services Inc. 1,716 194 227 8.9x 7.6x
Pason Systems Inc. 1,387 69 112 20.2x 12.4x
Total Energy Services Inc. 1,016 51 122 20.1x 8.3x
Trinidad Drilling Ltd. 953 83 132 11.5x 7.2x
Western Energy Services Corp. 344 27 36 12.9x 9.5x
High Arctic Energy Services Inc 190 64 46 3.0x 4.2x
PHX Energy Services Corp. 157 7 34 22.5x 4.6x
Xtreme Drilling Corp. 148 (1) 15 NM 9.8x
AKITA Drilling Ltd. 128 (4) 10 NM 13.5x
Cathedral Energy Services Ltd. 84 10 14 8.1x 6.2x
McCoy Global Inc. 32 (9) 2 NM 14.4x Adjusted average 10.2x 8.8x Adjusted median 9.9x 8.5x
14 Energy Services Update | Q4 2017
Valuation Snapshot continued
During Q4 2017, Production and Production and Well Services Median EV/NTM EBITDA
Well Services companies’ median 16.0x EV/NTM EBITDA decreased to 7.7x, 14.0x 0.5x lower than the previous 12.0x quarter. The steady decline in 10.0x multiples began in Q2 2016 when 8.0x our dataset reached a high of 14.5x, and has now fallen well-below the 6.0x five-year rolling average of 8.9x. 4.0x While analyst consensus NTM 2.0x EBITDA estimates continued to 0.0x Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 improve in Q4 2017, EVs remained stable quarter-over-quarter, which 2013 2014 2015 2016 2017 continues to decrease the multiples. Median EV / NTM EBITDA Rolling five-year average
Production and Well Services (all values in CAD mm)
EV multiples Enterprise LTM NTM LTM NTM Company value (EV) EBITDA EBITDA EBITDA EBITDA
CES Energy Solutions Corp. 2,158 111 184 19.4x 11.7x
ShawCor Ltd. 1,967 190 180 10.3x 10.9x
Calfrac Well Services Ltd. 1,749 92 265 18.9x 6.6x
Secure Energy Services Inc. 1,700 118 177 14.4x 9.6x
Trican Well Service Ltd. 1,556 107 253 14.6x 6.2x
Newalta Corporation 434 45 50 9.6x 8.7x
CWC Energy Services Corp. 138 11 - 12.4x NM
Strad Energy Services Ltd. 124 24 32 5.1x 3.9x
Essential Energy Services Ltd. 124 14 34 8.8x 3.7x Adjusted average 10.8x 7.7x Adjusted median 10.3x 7.7x
Driven by oil prices that continue to strengthen, well completion activity is likely expected to be higher during the next 12 months than the last 12 months, leading to a positive EBITDA impact. As a result, median EV/NTM EBITDA (7.7x) is lower compared to LTM EBITDA (10.3x).
15 Energy Services Update | Q4 2017
Valuation Snapshot continued
Continuing the year’s see-saw, Transportation and Logistics Median EV/NTM EBITDA
Transportation and Logistics’ 16.0x
EV/NTM EBITDA multiples fell back 14.0x to 8.1x, from Q1’s 9.1x, Q2’s 8.1x, 12.0x and Q3’s 9.1x. The multiple still 10.0x remains higher than the five-year 8.0x rolling average of 7.8x. 6.0x Transportation and Logistics’ 4.0x median EV/NTM EBITDA multiples 2.0x within our dataset have tended to 0.0x lay within a relatively tight range Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 from 6x - 8x and seem to have 2013 2014 2015 2016 2017 returned towards historical Median EV / NTM EBITDA Rolling five-year average normalcy once again.
Transportation and Logistics (all values in CAD mm)
EV multiples Enterprise LTM NTM LTM NTM Company value (EV) EBITDA EBITDA EBITDA EBITDA
TFI International Inc. 4,463 508 560 8.8x 8.0x
Gibson Energy Inc. 3,695 262 332 14.1x 11.1x
Mullen Group Ltd. 2,047 169 190 12.1x 10.8x
Civeo Corporation 792 82 96 9.6x 8.2x
Horizon North Logistics Inc. 280 26 42 10.6x 6.7x
Black Diamond Group Limited 254 29 33 8.8x 7.6x Adjusted average 10.7x 8.7x Adjusted median 10.1x 8.1x
The Transportation and Logistics sub-sector has historically been less volatile than the other energy services sub-sectors. The sub-sector this year has bounced between 8.1x-9.1x, which is higher than the historical range of 6.1x-8.0x.
16 Energy Services Update | Q4 2017
Valuation Snapshot continued
The Oilfield and Facility Oilfield and Facility Construction Median EV/NTM EBITDA
Construction sub-sector median 16.0x EV/NTM EBITDA multiple has 14.0x generally remained within a 12.0x relatively narrow range. We note 10.0x that despite the narrow range of 8.0x the group median, individual companies within our sample vary 6.0x considerably from 4.0x to 10.1x 4.0x EV/NTM EBITDA. Quarter over 2.0x quarter, the median EV/NTM 0.0x Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 EBITDA remains relatively stable 2013 2014 2015 2016 2017 (Q4 2017 of 6.3x compared to Q3 2017 of 6.4x) and equal to the Median EV / NTM EBITDA Rolling five-year average five-year rolling average of 6.3x.
Oilfield and Facility Construction (all values in CAD mm)
EV multiples Enterprise LTM NTM LTM NTM Company value (EV) EBITDA EBITDA EBITDA EBITDA
Aecon Group Inc. 1,675 151 195 11.1x 8.6x
Enerflex Ltd. 1,563 195 263 8.0x 6.0x
Bird Construction Inc. 403 25 40 16.0x 10.1x
North American Energy Partners Inc. 270 54 68 5.0x 4.0x
Stuart Olson Inc. 258 22 41 11.7x 6.3x Adjusted average 8.9x 7.0x Adjusted median 9.6x 6.3x
In Q4 2017, oilfield and facility construction company median multiples remained relatively flat at 6.3x EV/NTM EBITDA. The sub-sector’s valuation is at the five-year rolling average of 6.3x, and it remains within the historical range of 4.6x - 7.0x.
17 Energy Services Update | Q4 2017
Industry Activity Update
18 Energy Services Update | Q4 2017
Industry Activity Update
This is a deconstruction of the broader energy services sector into specific sub-sectors, demonstrating monthly returns between January 1, 2017 and December 31, 2017.
The sub-sector returns are based With many oil and gas price While only two of the eight on stock prices, weighted by forecasts remaining relatively flat subsectors referred to in the market capitalization, and is in the near term, adaptation to graph below have experienced adjusted for dividends. regulatory restraints for E&P and positive returns in 2017, all The graph below illustrates the midstream companies ongoing, subsectors are beginning to trend importance of understanding sub- and the sector generally being out upwards. Even the drilling sub- sector fundamentals, as of favor to investors, companies sector, which had been down each performance has differed are visibly adapting to a new month from January through considerably between the various environment that is no longer August, saw the freefall end. groups. Simply put, sub-sectors perceived as temporary. Though the fall saw a recovery in matter within the larger energy value, the end of the year was services industry. mostly flat for oilfield services providers.
2017 Sub-sector Returns (Dec 31, 2016 – Dec 31, 2017)
30%
Exploration and 20% Geophysical 15.2%
Oilfield and Facility Construction 10.7% 10% Drilling Equipment (6.7%)
0% Transportation and Logistics (6.7%)
Production and Completion (12.7%) (10%) Supermajors (15.7%)
(20%) Enviro. and Waste Management (26.3%)
Drilling (34.6%) (30%)
(40%)
(50%) Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 19 Energy Services Update | Q4 2017
Industry Activity Update continued
Historically, the fourth quarter represents a period of sustained Western Canada Drilling Rig Utilization activity as rigs are able to 80% continue to operate on the firm ground after the previous spring 70% thaw. Q4 2017 saw utilization well 60% above 2016’s levels as general sentiment on oil and gas pricing 50%
continued to become more 40% positive. Average drilling rig utilization for the year was 30%, 30%
which is up from 18% for 2016. 20% The Canadian Association of Oilwell Drilling Contractors 10% (CAODC) is forecasting the 0% average rig utilization for 2018 to Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec be 32% - materially in line with what was seen in 2017.
Total Western Canada well Western Canada Well Completion completions were 1,745 in Q4 1,400 2017, compared to 804 wells completed in Q4 2016 and 1,675 1,200 in Q3 2017 (up 117% and 4% respectively). The ratio of oil wells 1,000
drilled to total wells drilled has 800 gone up, from 71% in 2016 to 75% in 2017. As seen above, 600 relative optimism in oil pricing has brought more drilling rigs online 400 compared to 2016. CAODC’s 2018 200 forecast of 6,138 wells drilled is materially in line with what was 0 seen with 2017’s 6,080 wells Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec drilled. This level of activity seems to be the new normal as oil price forecasts hover in the $50-$65 per bbl range.
20 Energy Services Update | Q4 2017
Western Canada Land Sales
$450 $4,500
$400 $4,000
$350 $3,500
$300 $3,000
$250 $2,500
$200 $2,000 $ / Hectare
Bonuses (CADmillions) $150 $1,500
$100 $1,000
$50 $500
$ $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2013 2014 2015 2016 2017
BC Total Saskatchewan Total Alberta Total
BC $ / Hectare Saskatchewan $ / Hectare Alberta $ / Hectare
Land sales continued their robust On a per-hectare basis across Companies are clearly looking to climb through 2017, reaching Western Canada, the average expand, and the company that highs in quarterly bonuses paid price paid decreased 30% to purchased the most AB land (and not seen since 2015. This $382/hectare as compared to spent the most money) in the continues the steady climb since the previous quarter’s quarter was Stomp Energy, the beginning of 2016. The $543/hectare, but up 30% from purchasing 43,810 hectares for a largest land sales were in a year prior (Q4 2016). In AB, total of $33 million. Pro West Alberta’s petroleum and natural prices per hectare are at highs Land Services paid the most per gas regions, specifically in the not seen since Q3 2014, at hectare, at $6,180/hectare for the Plains and Northern regions. $424/hectare, up 364% since 3,584 hectares ($22 million). the low of $92/hectare seen in Q2 2015.
Total hectares sold in W. Canada were up 51% in 2017 compared to 2016. Total bonus paid in W. Canada was up 289% in 2017 compared to 2016. As a result, bonus per hectare was up 258% in 2017 compared to 2016.
21 Energy Services Update | Q4 2017
Abbreviations
Abbreviation Definition $ Canadian dollars USD U.S. dollars EV Enterprise value EBITDA Earnings before interest, tax, depreciation and amortization LTM Last twelve months NTM Next twelve months QoQ Quarter over quarter - change from last quarter to this one YTD Year to date S&P TSX Standard & Poor's Toronto Stock Exchange Index WCS Western Canadian Select (Alberta heavy oil price) WTI West Texas Intermediate (oil price) Bbl Barrel (of oil) Ha Hectares
22 Energy Services Update | Q4 2017
Contacts
Deloitte Corporate Finance professionals
Robert Olsen Andrew Luetchford David Lam President Senior Managing Director Senior Managing Director National Leader Debt and Capital Advisory Leader Western Canada Leader [email protected] [email protected] [email protected] 416 726 4614 416 601 5227 604 219 3878
Jason Ding Brian Heald Kevin Becker Managing Director Managing Director Executive Director Edmonton Leader Calgary Oil and Gas Leader Calgary Energy Services Leader [email protected] [email protected] [email protected] 780 803 8677 403 267 0508 778 989 8773
Alyson Quan Tim Lynn Adam Froese Vice President Analyst Analyst Edmonton Edmonton Edmonton [email protected] [email protected] [email protected] 780 421 3638 780 686 9753 780 421 3765
Global Energy Services Corporate Finance professionals
Eric Andreozzi Paul Childers Shaun Reynolds Senior Vice President Senior Vice President Vice President & Director Charlotte, NC Brisbane, AU Aberdeen, UK [email protected] [email protected] [email protected] 704 333 0518 +61 7 3308 7205 +44 1224 84 7319
Chad Potter James Miller Kong Meng Yap Assistant Director Vice President Director London, UK Charlotte, NC Kuala Lumpur, Malaysia [email protected] [email protected] [email protected] +44 20 7007 8952 704 731 8230 +60 3 7610 8858
Canadian oil and gas professionals
Jeff Lyons Chris Lee Marc Joiner Partner Managing Partner, Alberta Deloitte Private leader, Prairies Financial Advisory [email protected] [email protected] [email protected] 403 267 1751 403 503 1346 403 267 1708
Andrew Botterill Jamie Avey Paul Zonneveld Partner Partner Partner, Enterprise Risk Leader Resource Evaluation and Advisory Transaction Services Energy and Resources [email protected] [email protected] [email protected] 403 648 3239 403 503 1353 403 503 1356
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