Cover photo

Ensign Rig 122, pictured here deployed in Colorado, is part of our growing global fleet of proprietary, market-leading Automated Drill Rigs (“ADR®”). Through our diverse geographical footprint, advanced technology and systems, and wide range of service offerings, Ensign is poised for continued growth.

2 Leading 32 Management’s Discussion and 85 Additional Information 4 Delivering Analysis 85 Share Trading Summary 56 6 Growing Operating Divisions Summary 86 10 Year Financial Information 58 7 Financial Highlights Corporate Governance 88 Operating Management 60 8 Operating Highlights Management’s Report 90 Corporate and Field Offices 61 10 Letter to Shareholders Auditors’ Report 93 Board of Directors 62 17 Operations Review Consolidated Financial 94 Corporate Information Statements 25 Our Sustainability Priority 67 Notes to the Consolidated Financial Statements

This is Ensign Ensign Energy Services Inc. is an industry leader in the delivery of oilfield services in Canada, the United States and internationally.

We are one of the world’s leading land-based drillers and well servicing providers for crude oil, natural gas and geothermal wells and are highly skilled in directional drilling.

Since Ensign’s inception in 1987, we have accumulated an extensive equipment fleet characterized by flexibility and mobility for meeting the challenging demands of our customers.

We have also contributed to advancements in drilling and well servicing through the innovative use of technology, and have an established reputation for the highest safety standards and environmental stewardship.

With headquarters in Calgary, Alberta, Canada, Ensign’s shares are listed on the Toronto Stock Exchange under the trading symbol “ESI”. Leading. Ensign is growing by delivering market-leading drilling technology and a wide range of other oilfield services that Delivering. create value for our customers – helping them improve Growing. wellsite efficiencies and reduce costs. Ensign has several other key competitive advantages to support the Company’s growth, including: • our financial strength; • the diversity of our operations geographically; and • the experience and skill of our employees. These differentiators set Ensign apart from our competitors and deliver strong results for our customers and our shareholders. Leading. Delivering. Growing.

OUR TECHNOLOGICAL LEADERSHIP is a major driver for our business. Our customers demand and deserve efficiency and our market-leading Automated Drill Rig (“ADR®”) delivers for them. The ADR® is purpose-built, fast, flexible, scalable, versatile, automated and safe. It is changing the way the world drills through faster rig-ups and moves – all while leaving a smaller environmental footprint and being ideally suited for resource plays. Moreover, approximately 75 percent of our worldwide drilling rig fleet today is long-reach horizontal capable, and Ensign is now one of the largest integrated directional drilling groups in Canada.

We are in the process of designing the first 2000-horsepower ADR®, and in 2014 we are building our first Automated Service Rig (“ASR™”). Based on our ADR®, the ASR™ is being designed specifically to service well bores under pressure.

We intend to work continually to improve the way wells are drilled and serviced, thereby reducing well costs, enhancing safety and creating value for our customers.

In 2013, we deployed a rig in Kurdistan for the first time.

Leading. Delivering. Growing. Preparing to recommission Rig 928 in Libya.

ENSIGN IS WELL POSITIONED to deliver our services anywhere in the world 546.2 661.0 Revenue ($ millions) and respond quickly to our customers’ changing needs. 890.8 Geographically, our global reach today extends throughout Canada and the United States and to South America, the Middle East, Africa and the Australasia region. We are a leading provider of oilfield solutions in

2,195 many of the world’s most prolific and growing crude oil and natural gas 2,715 Employees resource plays. 3,390 We offer a wide spectrum of oilfield services – contract drilling; directional drilling; underbalanced drilling and managed pressure drilling; well servicing; rental equipment; production testing; and

54 wireline services. Moreover, we have experience operating in all 121 Drilling Rigs climatic conditions – arctic to equatorial; deserts to rainforests. 117 In addition to our geographical reach, our customers also appreciate the experience and expertise of Ensign’s 8,300 well-trained employees who work to the highest safety standards. Everywhere we operate in the world, our employees work hard and smart to deliver the world-class 45 Service Rigs 95 oilfield services that our customers have come to expect from us.

Canada

United States

International Canada

United States Kurdistan

Libya Oman

Venezuela Australia Gabon New Zealand

Argentina

Contract Drilling

2013 Rig Count by Horsepower Class Total 500 750 1,000 1,500 2,000+ Canada: Conventional 82 34 37 11 – – ADR® 39 7 9 19 4 – United States: Conventional 58 8 18 16 6 10 ADR® 59 2 9 12 29 7 International: Conventional (1) 36612765 ADR® 181863– Total Drilling Rigs 292 58 93 71 48 22 Coring Rigs 29 23 6 – – – Total 321 81 99 71 48 22 (1) Includes workover rigs.

Service Rig Classifications

Slant Mobile Mobile Medium and Total Single Single Double Heavy Double Canada 95 22 52 15 6 United States 45 2 – – 43 Total 140 24 52 15 49 Revenue Net Income ($ millions) ($ millions) 2500 250

2000 200

1500 150 Leading. 1000 100 Delivering. 500 50 0 0 Growing. 09* 10 11 12 13 09* 10 11 12 13

*Not restated for International Financial Reporting Standards (“IFRS”).

ENSIGN HAS A STRONG CAPITAL STRUCTURE that provides stability as well as flexibility for new growth opportunities – organic or acquisitions – anywhere in the world that meet our disciplined investment criteria. For example, through two strategic acquisitions in 2013, we more than doubled our presence in directional drilling in Canada and doubled our oilfield equipment rental assets in Canada.

Our financial strength also supports our well-established dividend program. We have increased our dividend payout to shareholders every year since we first began paying dividends in 1995; and in November 2013, Ensign’s Board of Directors increased the quarterly dividend rate by 6.8 percent to $0.1175 per common share.

We have increased the dividend by a compound annual growth rate of 17 percent since we first introduced it in 1995.

Annual Dividend Per Share

$0.5000

$0.4000

$0.3000

$0.2000

$0.1000

$0

04 05 06 07 08 09 10 11 12 13

Dividend rates reflect the 3-for-1 stock split effective May 2001 and the 2-for-1 stock split effective May 2006. Funds From Operations Funds From Operations Gross Margin Net Income Per Share Per Share ($ millions) ($ millions) ($) ($) 600 800 1.50 4.00

1.20 450 600 3.00

0.90 300 400 2.00 0.60

150 200 1.00 0.30

0 0 0 0 09* 10 11 12 13 09* 10 11 12 13 09* 10 11 12 13 09* 10 11 12 13

*Not restated for IFRS.

Financial Highlights

For the years ended December 31 ($ thousands, except per share data) 2013 2012 Change % Change Revenue 2,098,011 2,197,321 (99,310) (5) Adjusted EBITDA (1) 485,712 560,975 (75,263) (13) Adjusted EBITDA per share (1) Basic $3.18 $3.67 $(0.49) (13) Diluted $3.16 $3.67 $(0.51) (14) Adjusted net income (1) 143,909 219,504 (75,595) (34) Adjusted net income per share (1) Basic $0.94 $1.44 $(0.50) (35) Diluted $0.94 $1.43 $(0.49) (34) Net income 128,865 217,522 (88,657) (41) Net income per share Basic $0.84 $1.42 $(0.58) (41) Diluted $0.84 $1.42 $(0.58) (41) Funds from operations (1) 435,611 506,355 (70,744) (14) Funds from operations per share (1) Basic $2.85 $3.32 $(0.47) (14) Diluted $2.84 $3.31 $(0.47) (14) Weighted average shares – basic (000s) 152,693 152,664 29 – Weighted average shares – diluted (000s) 153,620 152,995 625 – (1) Adjusted EBITDA, Adjusted EBITDA per share, Adjusted net income, Adjusted net income per share, Funds from operations and Funds from operations per share are not measures that have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and, accordingly, may not be comparable to similar measures used by other companies. Non- GAAP measures are defined on page 32.

7 Operating Highlights 8 rigs. workover Includes (2) rigs. coring Excludes (1) Drilling Highlights Operating elServicing Well ubro aktdrigs marketed of Number prtn days Operating ubro aktdrigs marketed of Number rligrguiiainrate utilization rig Drilling elsriiguiiainrate utilization servicing Well hours Operating Canada Canada Canada Canada Canada International States United International States United ntdStates United ntdStates United Canada States United ntdStates United International (1) (1) (1) (2) (2) (2) (%) (%) 105,260 121,159 11,384 14,183 22,955 58.4 32.3 35.8 54.0 64.2 117 121 2013 54 95 45 2,6 1,0)(14) (14) (16,506) (19,819) 121,766 140,978 E 162(2)(2) (23) (228) (4,215) 11,612 18,398 426(,7)(5) (1,271) 24,226 n sig 69153 (17) 1.5 (6.5) 56.9 38.8 81(.)(6) (2.3) 38.1 74(.)(6) (3.4) 57.4 81(39 (18) (13.9) 78.1 02Cag Change % Change 2012 2 4 (3) (2) (4) (3) 121 124 n 4–– – 54 9()(4) (4) 99 6()(2) (1) 46 E n rySrie I Services ergy n c. 03Ana Report Annual 2013

Letter to Shareholders 10 (“ADR Rig Drill Automated leading market- Ensign’s complements capabilities our drilling in directional increase This Canada. in integrated groups largest drilling the directional of one become has in and systems America) drilling North directional 75 than systems more drilling (and directional Canada 48 in has now Ensign result, a As management team. senior experienced and skilled highly but their systems also drilling directional 29 Departure’s only not we gained acquisition, this Through drilling. directional in leader technical a (“Departure”), Inc. of Services assets Energy the Departure of all substantially acquired in we drilling when directional Canada in presence our doubled than more We areas. two in strategically us help will believe we acquisitions that two made we balances, cash existing utilizing Company’s 2013, the In advantage. strategic clear a Company the will provide that opportunities acquisition for lookout are the we on time, always same the At organically. grow is to today positioned Ensign strongly offerings, service of range wide and systems, and technology advanced footprint, geographical growth. diverse solid our of Through path a on firmly stays and skilled priority; a a and workforce safety makes customers; our to services technologically superior provides shareholders; our for returns solid and delivers results that one – leading provider a services as oilfield position international its maintains Company the ensure that help 2013 will in goals strategic important several achieved Ensign Shareholders, Fellow Dear Shareholders to Letter infcn rwhi t iud-ihntrlgsplays. gas natural liquids-rich its in for growth poised significant region a Columbia, British northwestern northeastern in and base Alberta rental strong a us provided acquisition also The has Canada. western in matting rental largest of the suppliers of one become has and waste market oilfield management the entered now has the Ensign of equipment, addition EGOC the With (“EGOC”). of Companies assets of the Group of Enviro all substantially of purchase our in through assets Canada rental equipment oilfield Ensign’s doubled also We are today world the around wells. drill horizontal/directional we wells the In of plays. majority resource a gas fact, natural and oil American North of in form drilling predominant the are as wells wellsite, directional the and at horizontal customers our to value more even provide ® )fetadalw sto us allows and fleet ”) ADR 0yasao n edilteewlsi aeand safe a in wells these drill we and ago, years 10 eorfrtAtmtdSrieRg(“ASR Rig Service will Automated rig first servicing our well be new The rigs. drilling existing of retrofits iiedgot eodfryast oeb tyn oue on focused staying by come to years our for maintain record to growth able dividend be will we believe We per share. $0.1175 common to percent 6.8 we dividend 2013, quarterly November the in increased and 2012; fiscal over percent share, 5.3 common up per $0.4475 of dividends the total 2013, declared In Company percent. 17 of rate a growth for annual 1995, compound September in dividend a the paying since began year Company fiscal each in dividend have annual We the downs. increased and ups cycle annually business dividend all its through growing and of record track long a has success. Ensign and growth continued Ensign’s to key is This cost-saving solutions. advancing by and customers innovation our technical for in value leader create a be to there. continue stopping to not plan are We we However, world. of the majority in the plays for resource suited well are long-reach rigs is Our today capable. fleet horizontal rig our of majority the top and integrated drives have ADRs our of minimizes Many that impact. footprint environmental a and industry the in fastest time the move with versatile, and highly mobile are automated, ADRs efficient, Our safe, them. for value our create to they attracted because are ADRs customers Our fleet ADRs. drilling are active world our the of around majority the and ADRs are drilling fleet total rig our of percent 40 approximately Today, ADR technology. and competencies core further Ensign’s a both as of this endorsement view We pressure. under bores well service ADR ASR Ensign’s The on customer. based major is a for contract term a under building et1 ots eepc odlvra diinl1 new 12 additional an deliver to expect we the months, Over 12 rigs. next drilling existing four retrofitted and rigs servicing omsindfv e ADR new we five program, commissioned build new ongoing our through envelope. 2013, technology In the push to continue we and safety-conscience environment, a in costs and well technology reduce of that application practices the in way the lead to been always has pedigree Ensign’s manner. sensitive environmentally just took it time the half in wells drill can Ensign our Today, change world. to continues industry drilling the in Technology ® rligrg,oenwwl evcn i n 0major 10 and rig servicing well new one rigs, drilling E n sig n ® E n n sseiial eindto designed specifically is and rySrie I Services ergy ® rligrg,svnnwwell new seven rigs, drilling ™ ) hc eare we which ”), n c. 03Ana Report Annual 2013 ® ™ Automated drill Rig 122 – Colorado pipe handling on an ADR®.

the five pillars of our strategy – financial discipline; Rising costs for labor and repairs and maintenance expenditures opportunistic growth; diverse operations; customer focus; and squeezed margins during the year and, as a result, adjusted commitment to safety. EBITDA (defined as income before interest, income taxes, A Mixed Year depreciation, share-based compensation and foreign exchange Reduced levels of demand for oilfield services in North America and other) declined 13 percent to $485.7 million ($3.18 per that began in late 2012 resulted in reduced revenue for Ensign in common share), compared with $561.0 million ($3.67 per Canada and the United States in 2013 compared with the common share) in 2012. In response to reduced margins in our previous year. However, growth of the Company’s international business, we stepped up our focus on things we can control to operations helped to somewhat offset the reductions in North ensure that Ensign is ‘right-sized’ for the current market America, as did additions to the rig fleet during 2013 and conditions. contributions in the second half of the year from the Net income declined 41 percent to $128.9 million ($0.84 per aforementioned second quarter acquisitions of the Departure common share), compared with $217.5 million ($1.42 per directional drilling equipment and EGOC rental assets. common share) in the prior year. Even in this challenging business environment, Ensign had its Funds from operations decreased 14 percent to $435.6 million second best year in terms of revenue, which decreased by five ($2.85 per share) in 2013, compared with $506.4 million percent in 2013 to $2,098.0 million, compared with the record ($3.32 per share) in 2012. $2,197.3 million achieved in 2012. For the second straight year, Net capital expenditures, excluding acquisitions, totaled our United States division was the largest contributor to revenue $342.2 million in 2013, compared with $306.7 million in 2012. at 42 percent (2012 – 43 percent), while Canada accounted for The bulk of our growth capital went towards our new build 32 percent (2012 – 35 percent) and international operations program, which, as previously mentioned, added five new ADRs, increased to 26 percent (2012 – 22 percent). seven new well servicing rigs and four major retrofits to existing

Ensign Energy Services Inc. 2013 Annual Report 11 Letter to Shareholders 12 At dynamics. market changing to response in to rigs rigs drilling drilling deeper shallow from fleet to drilling continue Canadian We our 2014. transition in market Canadian the for additional rigs three drilling upgrading and refurbishing in are Canada we in and rigs 2013 ADRs. drilling new existing more two four retrofitted add we will addition, we In 2014 in and 2013, drilling in Canadian fleet our rig to ADRs constructed newly two added We 2013. of the quarter in second Departure and EGOC respectively, of, the assets of operating all substantially of acquisition our through capabilities drilling directional and the rentals of oilfield expansion Canadian the Company’s of impact positive was the activity by field offset in partially reduction This year. prior the percent with 14 compared decreased hours servicing well 2013 while in 2012, percent over 23 decreased Canada in days drilling Ensign’s expenditures. services oilfield gas related natural increase to companies production for and incentive exploration little providing languish, to continued prices Canada gas in natural improved, conditions field as liquids resumed gas drilling natural and oil crude While the equipment. of Company’s mobility hindered conditions weather as restricted activity further operating quarter second the during break-up particularly spring a wet Also, future. uncertain an of over face caution the continued in services oilfield for demand as reduced 2013 customers throughout weak generally was market Canadian The Canada performance Geographical requirements. capital and the operating support Company’s fully to facilities, credit future and with current combined operations, by The generated 2012. funds of expects end Company the at million $13.9 of positive capital with working compared 2013, 31, December of at deficit million capital $71.1 working a had Company the year, throughout the payments dividend and program Company’s build the new of current funding the and acquisitions these a of As result balances. cash existing Company’s the utilizing were completed acquisitions these of Both million. of $76.4 price approximately purchase combined a for Departure and of EGOC acquisitions equipment the of completed quarter Company second the the 2013, during addition, In 2013. in rigs drilling uig21 scueoladntrlgspie remained prices gas natural and oil crude as 2013 steady during were operations international Ensign’s for levels Activity International rigs. servicing well 45 of and (59 ADRs) rigs them drilling 117 included fleet equipment our States 2013, United 31, are December and At states contracts. 48 take-or-pay lower by the supported in plays resource key in the mobilized of being several are market States been United have the we to ADRs adding two The complete rigs. to drilling plan existing and to fleet retrofits the major to ADRs new 2015 six early add and will 2014 we in and rig, and drilling 2013 existing in one fleet retrofitted equipment States United our to rig servicing uig21 o elyeti ev i ly,adi 04we ASR 2014 aforementioned in the and add plays, will oil heavy rigs in servicing deployment well for new 2013 six during added we side, services well the On as well as rigs. , coring ADRs 29 39 including rigs, drilling 121 was of fleet comprised rig drilling Canadian our 2013, 31, December eaddtrenwADR new three added We prior the with year. compared percent 14 declined while hours 2012, servicing over well 2013 in Ensign’s percent year, five the decreased to days start drilling slow a of consequence a States. as United Primarily southern the in plays crude resource active gas very natural and and large oil the in position strong a providing Company impact, the positive and significant a have is to rigs, continuing drilling electric capacity deeper Inc., 30 Companies, of Rowan comprised of fleet drilling land the of in 2011 acquisition Ensign’s Moreover, areas. those our in increasing operations by demand customer follow our to and is States strategy United contiguous the the of in all plays in resource foothold major strong a has division States United Our prices. commodity improving of environment an oilfield despite for services demand their increase not did production generally and companies exploration as margins and rates decrease revenue resultant in the and services oilfield by for 2013 demand in reduced weakened were results operating States United Our States United Canada. in rigs servicing well 95 operate now E n sig n E ® n rligrg n n e well new one and rigs drilling rySrie I Services ergy ™ oorCnda le.We fleet. Canadian our to n c. 03Ana Report Annual 2013 Leading. Ensign leads the way in the application of technology and practices Delivering. that reduce well costs in a safety-conscious environment. Growing. etrt Shareholders to Letter

attractive in many of the areas serviced by the Company and, important feature of our international operations as there is still accordingly, we saw stronger demand for oilfield services in significant geopolitical risk in many of the international areas in certain international markets. which we operate. Total drilling days for the division remained fairly consistent and Focus on Efficiency decreased just two percent in 2013 over 2012. The addition of Given the cyclical nature of the crude oil and natural gas two new ADRs to our international fleet in late 2012 and the industry we serve, we are constantly focused on managing costs relocation of three existing drilling rigs to the international and improving the efficiency of Ensign’s operations and systems. market from North America, two in 2012 and one in 2013, One recent initiative is the Ensign Asset Management System, helped to strengthen the international division’s performance which – upon completion will provide a database of all of our during the year. Offsetting the increase to international drilling assets that, among other benefits, will help us to reduce days from these additions was the expected reduction in drilling operating costs and manage preventive maintenance routines days due to the completion of the Company’s drilling contracts in around the world. Mexico late in 2012. Another is our Ensign Global Network (EGN) initiative, through Although our Latin American operations continue to face which we will be managing our worldwide communication and political and currency challenges, we redeployed one rig to data transmission network by establishing Ensign’s own private, Argentina in 2012 and will redeploy another there in 2014. Both purpose-built network. This initiative enables us to improve rigs are under long-term contract with a major international communications and exchange performance data with our oil company. In Venezuela, the Company’s contracts are due to wellsites around the world, which in turn will enable us to expire over the next 12 months and, due to the current political manage our rigs and equipment more efficiently. unrest in that country, the Company cannot provide assurance Through these and other initiatives, we will continue to upgrade that the contracts will be renewed or that they will be renewed our systems and processes to improve our efficiencies and give on financial terms acceptable to the Company. us a competitive advantage. We deployed one drilling rig under contract to Kurdistan in 2013 Focus on Safety and will deploy a second drilling rig to that market in 2014. We Improving our safety performance is a constant focus for us and currently believe there is potential to turn Kurdistan into a fairly is our number one priority. We are pleased to report that we significant operating base in the future. continue to make very good progress through our Driving to In 2014, we will add two new ADRs to our international fleet. Zero – Injuries and Incidents safety program. We are also refurbishing and upgrading five existing drilling rigs In 2013, the Ensign team achieved their lowest-ever rates of in 2014 for the international market. Three of those rigs are recordable incidents and lost-time injuries. While this being deployed to Australia. Ensign is the largest and fastest accomplishment can be attributed to the dedication of our growing drilling contractor in Australia and the country personnel and the investment the Company continues to make in continues to be our largest market internationally. training, leadership and equipment design, we never take anything We exited 2013 with a fleet of 54 drilling and workover rigs in for granted. Through ongoing and new programs, policies and the international market, including 18 ADRs, deployed in eight facilities, we constantly strive to raise our performance and build a countries. This established geographic diversification is an corporate culture where no incident is acceptable.

Ensign Energy Services Inc. 2013 Annual Report 13 Well servicingRig350–DJBasin, Colorado Rig 20 – Alberta

In 2013, we opened our new, world-class training facility in Outlook Nisku, Alberta. There and in our other training centres around Through 2014 and beyond, we expect to expand our level of the world, we are training both current work crews and business in our key markets and work to improve margins entry-level crews to improve competency and safety. through cost control and consolidation. As operations continue Also in 2013, we began the roll out of our enterprise-wide to focus on resource plays, we see many opportunities for Global Skills Standard (“GSS”) system, through which we are growth throughout the world for our ADR® technology. There capturing data about the training, performance and experience are a number of potential Canadian natural gas liquids projects of rig-crew members around the world. Our goal is to ensure that continue to generate interest in the northwest part of the that, through consistent training programs, our crews reach a Western Canada Sedimentary Basin. Additionally, the Montney, common, high standard of competency that is applicable in any Horn River and Duvernay areas are expected to benefit from any jurisdiction in the world. GSS will help us ensure that globally potential liquefied natural gas (LNG) export projects touted for we will always have best-in-class crews – well trained, efficient Canada’s future. Ensign currently has 11 drilling rigs operating and safety-conscious. in those key areas and all of the new build drilling rigs currently In addition, during 2013 we continued the roll out of our under construction and one existing drilling rig being refurbished enterprise-wide Global Risk Management System, through for Canada are contracted for these areas. which we are improving our reporting and management of key Health, Safety and Environment issues throughout the Company. Our employees are provided the information they need to improve health and safety training, management and communication.

14 Ensign Energy Services Inc. 2013 Annual Report Leading. With our operations continuing to focus on resource plays, we see Delivering. many opportunities for growth throughout the world for our ADR® Growing. technology. etrt Shareholders to Letter Acknowledgements As a global leader in oilfield services and technology, Ensign is We wish to thank Ensign’s 8,300 employees for their on the clear path of delivering value-added services to our outstanding work during 2013 and their continuing, customers and growing the Company for the benefit of our wholehearted commitment to achieving our safety goals and to shareholders and other stakeholders. This has been our focus delivering best-in-class services to our customers. for over 25 years, and we plan to stay on this path in the We are also grateful to our fellow Board members for their years ahead. support and guidance throughout the year.

N. Murray Edwards Robert H. Geddes Chairman President and Chief Operating Officer

March 13, 2014

Ensign Energy Services Inc. 2013 Annual Report 15

Operations Review Canada prtosReview Operations Overview Ensign’s Canadian well servicing division recorded 121,159 Ensign is Canada’s second largest land-based drilling contractor, operating hours (35.8 percent utilization) in 2013, compared with fourth largest well servicing contractor and one of the largest 140,978 operating hours (38.1 percent utilization) in 2012. providers of directional drilling services. Activity levels in Canada were weakened by reduced demand for We provide energy companies engaged in crude oil, natural gas oilfield services in 2013 compared to 2012. Operators delayed or and oil sands exploration and production with a wide range of reduced their capital programs in 2013 in reaction to uncertain oilfield services, including: land-based contract drilling; global economic conditions and concerns regarding the directional drilling; coring drilling services; well servicing; economics of oil and natural gas projects. The 2013 results also underbalanced drilling; managed pressure drilling; oilfield reflect a particularly wet spring break-up in the second quarter rentals; wireline services; and production testing. of 2013, when weather conditions hindered mobility of the Our geographical reach extends across the Western Canada Company’s equipment. Our 2013 utilization levels were Sedimentary Basin (“WCSB”) – from southwest Manitoba, particularly negatively impacted by the sharp decrease in the throughout Saskatchewan and Alberta to northeastern British drilling of shallow natural gas wells, historically a strong market Columbia, the Northwest Territories and the Yukon. niche for Ensign. The major resource plays in the WCSB are key operating areas Fleet size for us. These include: the Bakken formation in Saskatchewan In Canada, we exited 2013 with a fleet of 121 drilling rigs (39 of and the Cardium and Duvernay formations in Alberta where we them ADRs), 95 well servicing rigs and 29 coring rigs. In the first have a significant drilling presence and are also a major provider quarter of 2013, we decommissioned five inactive drilling rigs of well servicing services and oilfield equipment rentals; the and 10 inactive well servicing rigs. Montney and Horn River formations in northeastern British During 2013, we continued to increase our deeper drilling Columbia where we provide drilling and well servicing services capabilities in Canada with the addition of two newly in support of natural gas development of these resource plays; constructed ADRs and the retrofit of two existing drilling rigs. and Canada’s oil sands in northern Alberta, where we provide We will also add four new deeper capacity ADRs to our coring drilling services in support of oil sands development and Canadian drilling fleet in 2014 and we are refurbishing and slant drilling and well servicing services for oil sands producers’ upgrading three existing drilling rigs for the Canadian market steam-assisted gravity drainage (“SAGD”) applications. throughout 2014. In addition, we constructed six new well 2013 Highlights servicing rigs for deployment in heavy oil plays and commenced Revenues the construction of an Automated Service Rig (“ASRTM”) under a Revenue generated by Ensign’s Canadian oilfield services term contract with a major customer. The first of its kind in division totaled $661.0 million in 2013, a decrease of 15 percent Canada, the ASRTM is based on Ensign’s ADR® and will have the from the $774.4 million recorded in the prior year. Our Canadian capability to service well bores under pressure. business segment accounted for 32 percent of Ensign’s Growth consolidated revenue in 2013, compared with 35 percent in the In 2013, we expanded our existing directional drilling business in prior year. Canada through the acquisition of substantially all of the assets of Operating Days/Utilization Departure Energy Services Inc., a technical leader in directional The Canadian drilling division recorded 14,183 operating days drilling. As a result of this acquisition, Ensign now has 48 (32.3 percent utilization) in 2013, which represents a 23 percent directional drilling systems in Canada. We also expanded our decrease from the 18,398 operating days (38.8 percent existing oilfield rental business through the acquisition of utilization) in 2012. substantially all of the assets of EGOC Enviro Group of Companies,

Ensign Energy Services Inc. 2013 Annual Report 17 Rig 361 – Alberta Our goal is to attract, develop and retain the highest caliber employees.

which has given us a strong operating base for rentals in the There are a number of potential Canadian natural gas liquids northeast British Columbia/northwest Alberta region. With the projects that continue to generate interest in the northwest addition of the EGOC equipment, Ensign has entered the part of the WCSB. Additionally, the Montney, Horn River and oilfield waste management market and has also become one of Duvernay areas are expected to benefit from any potential LNG the largest suppliers of rental matting in western Canada. export projects touted for Canada’s future. We currently have 11 drilling rigs operating in these key areas and all of the drilling rigs currently under construction and one existing drilling rig being refurbished for Canada are contracted for these areas.

Canadian Drilling – Canadian Drilling – Wells Drilled – Metres Drilled – Utilization Operating Days Canada Canada (percent) (thousands) (thousands) 50 25 4000 4000

40 20 3000 3000

30 15 2000 2000 20 10

1000 1000 10 5

0 0 0 0 09 10 11 12 13 09 10 11 12 13 09 10 11 12 13 09 10 11 12 13 Horn River

Montney Oil sands Cardium prtosReview Operations Bakken

Fleet Size (as at Operating Primary December 31, Divisions Canada Services Geographic Area 2013) Contract Drilling Ensign Drilling Partnership Ensign Canadian Drilling A leading provider of specialized drilling The whole WCSB: Alberta, 115 drilling rigs services to crude oil and natural gas Saskatchewan, northeastern exploration and production companies British Columbia and southwest Manitoba Encore Coring and Drilling A leading provider of coring and drilling The whole WCSB and the 6 drilling rigs; 29 services supporting oil sands, coal bed Yukon specialty coring/ methane, shallow gas, and mineral drilling rigs projects Directional Ensign Drilling Partnership Drilling Ensign Departure A leading provider of directional drilling The whole WCSB 48 directional Directional Services services drilling kits Well Servicing Rockwell Servicing All facets of well servicing including Most of the WCSB 95 well servicing Partnership completions, abandonments, production rigs workovers and bottom hole pump changes Underbalanced Enhanced Petroleum Drilling, Managed Services Partnership Pressure Drilling Enhanced Drill Systems The largest supplier of underbalanced The whole WCSB 16 underbalanced and Rental drilling and managed pressure drilling drilling and managed Equipment services in the WCSB pressure drilling units Chandel Equipment Oilfield equipment rentals The whole WCSB A product mix Rentals designed around the drilling and completions components of the Canadian oilfield services industry, including rental matting and oilfield waste management Production Opsco Energy Industries Ltd. A leading provider of production testing Most of the WCSB 46 production Testing and and wireline (slickline and braided line) testing units; Wireline Services completion services to crude oil and 22 wireline trucks natural gas exploration and production companies

Ensign Energy Services Inc. 2013 Annual Report 19 Operations Review 20 40 60 80 0 a il ntecnietlUie tts h oa il of field Jonah the States; United continental the in natural field largest gas the be to estimated Texas Louisiana, east northwestern in and formation shale of Haynesville terms the in potential; Ford and Eagle size and Bakken the rival (Permian may Texas which west Basin), in play oil shale Wolfcamp recent the in years; discoveries hydrocarbon be onshore to largest proven the has of which one Texas, south in formation oil; Ford crude Eagle recoverable the of accumulation large very a Montana, has and which Dakota North in formation Bakken the Ensign, including: for operations of areas geographic States important United are continental the in plays resource major Numerous plays. resource formation Texas Marcellus and the region, Mountain Rocky the in testing services production provides Ltd. (USA) Industries Energy Opsco entities. these through servicing operations well and drilling directional growing also our We operate region. States United southern region, the Mountain and Rocky California the in position dominant United a the with in States, contractors drilling land-based largest the comprise of LLC one Drilling Southern US Ensign and Drilling Inc., States (California) United Ensign Inc., Drilling States United Ensign Overview States United Review Operations 09 10 (per Utilization United StatesDrilling– c ent) 11 13 12 11 10 15 20 25 0 5 09 10 (thous Operating Days United StatesDrilling– a nds) 11 13 12 11 Eagle Ford Permian Granite Monterey S Piceance Jonah Niobrara an JoaquinBasin W ash tlzto)rcre n2012. in percent recorded (57.4 utilization) days operating 24,226 the five from a decrease represents percent which utilization), percent (54.0 2013 in operating days 22,955 generated division drilling States United The Days/Utilization Operating year. prior the in percent compared 43 2013, with in revenue consolidated Ensign’s for of accounted percent segment 42 States United The 2012. in million from $944.6 percent six down million, $890.8 services totaled oilfield division States United Ensign’s from revenue 2013, In Revenues Highlights 2013 gas. natural and oil crude contain of to reserves believed recoverable is large that California in Basin Joaquin San and the Virginia; and Virginia West Maryland, State, Ohio, York Pennsylvania, New of parts through extends Appalachian that northern Basin the in located region gas a natural formation, growing Marcellus the Colorado; in play shale promising Niobrara the in Basin Denver-Julesburg the of gas; reserves natural substantial contain to estimated is that Wyoming 1000 1500 2000 2500 500 0 09 10 United States Wells Drilled– 11 13 12 11 1000 2000 3000 4000 5000 0 09 10 (thous United States Metres Drilled– a nds) 11 13 12 11 Haynesville Tuscaloosa Marcellus W oodford Barnett Bakken Utica Our United States well servicing operations recorded 105,260 to our United States fleet and we are retrofitting two existing well servicing hours (64.2 percent utilization) in 2013, a decrease drilling rigs to meet the requirements for efficiently drilling of 14 percent over the 121,766 well servicing hours (78.1 percent resource plays. utilization) in 2012. Growth United States operating results were weakened in 2013 by As detailed in the Overview section above, our United States reduced demand for oilfield services, particularly at the start of division has a strong foothold in all the major resource plays in the year. Operators in certain regions cut back activity levels late the contiguous United States and our strategy is to increase our prtosReview Operations in 2012 and early in 2013 amid concerns of industry uncertainty operations in those plays. Moreover, Ensign’s acquisition in and rising costs. Many of the affected drilling and well servicing 2011 of the land drilling fleet of Rowan Companies, Inc. rigs returned to work later in the year. We continue to make comprised of 30 deeper capacity electric drilling rigs is investments to ensure that Ensign drilling rigs continue to meet continuing to have a significant and positive impact, raising customer requirements. Ensign’s profile with more producers in the important United Fleet size States market and providing the Company with a strong position In the United States, we exited 2013 with a fleet of 117 drilling in the large and very active crude oil and natural gas resource rigs (59 of them ADRs) and 45 well servicing rigs. plays in the southern United States. During 2013, we transferred one United States-based drilling rig The ADRs we have been adding to the United States market to our international fleet, decommissioned six inactive drilling through our continuing new build program are being mobilized rigs and disposed of two well servicing rigs. We added three into several of the resource plays supported by “take-or-pay” new ADR® drilling rigs and one new well servicing rig through contracts. We are also continuing to extend the reach of our our continuing new build program, and completed one major directional drilling services and our well servicing offering in the retrofit to an existing drilling rig in our United States equipment United States. fleet in 2013. In 2014 and early 2015 we will add six new ADRs

Fleet Size (as at Operating Primary December 31, Divisions United States Services Geographic Area 2013) Contract Drilling Ensign United States A leading drilling contractor operating in the Montana, Wyoming, 51 drilling rigs and Drilling Inc. (“Ensign Rocky Mountain region, including directional Colorado, Utah, North Dakota, 29 directional Rockies”) drilling South Dakota, Nebraska, drilling packages Pennsylvania and Michigan Ensign United States One of the largest drilling contractors California and Nevada 27 drilling rigs Drilling (California) Inc. operating in California, including directional (“Ensign California”) drilling Ensign US Southern Drilling A premier drilling contractor operating in the Texas, Louisiana, Mississippi, 39 drilling rigs LLC (“Ensign US Southern”) southern United States Arkansas, Alabama and Oklahoma Well Servicing Ensign Rockies All facets of well servicing including Rocky Mountain region 17 well Ensign Well Services completions, abandonments, production servicing rigs workovers and bottom hole pump changes

Ensign California All facets of well servicing including California 28 well Ensign Well Services completions, abandonments, production servicing rigs workovers and bottom hole pump changes Rental Ensign Rockies Oilfield equipment rentals Rocky Mountain region Ancillary Equipment Rocky Mountain equipment used in Oilfield Rentals drilling operations Ensign California Oilfield equipment rentals California Ancillary West Coast Oilfield equipment used in Rentals drilling operations Production Opsco Energy Industries Production testing and wireline services Rocky Mountain region, 50 production Testing and (USA) Ltd. Pennsylvania and Texas testing units; Wireline Services 2 wireline trucks

Ensign Energy Services Inc. 2013 Annual Report 21 Operations Review 22 Services International Services Workover Drilling/ Contract Divisions Operating remained services oilfield for 2013 demand in the Ensign accordingly, by and, serviced areas international the of attractive many remained in prices gas natural and oil crude International mix geographic year. shifting the the during to due up was revenue were but Days down, 2012. in utilization) percent 11,612 (56.9 the days from operating decrease percent two slight a utilization), represents percent which (58.4 2013 in 11,384 totaled days Operating Days/Utilization Operating year. prior the in percent 22 with in compared revenue 2013, consolidated Ensign’s of percent 26 segment for international accounted The 2012. in million with $478.3 compared of 2013, revenue in million $546.2 to percent 14 rose division services oilfield international Ensign’s from Revenue Revenues Highlights risk. of 2013 levels the manage to us help country, scale to and country experience from vary risk geopolitical of levels As diversification. geographic oilfield established international our the is in market success services our to key a that believe We Argentina. and Venezuela in operations our oversees in Texas, based Houston, is which Inc., Services Energy International Ensign in based Australia. is Adelaide, EESIL Africa. and East Middle the in Australasia, operations our oversees and wells, hydrocarbon geothermal of and forms all of drilling the in specializes (“EESIL”) Limited International Services Energy Ensign Overview International Review Operations evcsInc. Services Energy International Ensign Limited International Services Energy Ensign aua a producers and gas oil natural for servicing well deep to wells; shallow hydrocarbon of forms all of Drilling producers gas natural and oil for servicing well deep to shallow wells; and geothermal hydrocarbon of forms all of Drilling xadt te at fteworld. the of parts other to to opportunities expand new attractive for looking also market while strong position, a have already we existing where our markets in international presence our strengthening on focus are to We continuing Venezuela. and Libya Argentina, as such areas of challenges regional some despite operations, Ensign’s international in growth future for positive remain Prospects Growth the market. for international rigs drilling existing five also upgrading are and We refurbishing fleet. international our add to will ADRs we new 2014, two In fleet. States United to our rig from drilling Australia retrofitted one transferred and 2013 in international fleet our from rig drilling inactive one decommissioned We in ADRs. rigs 18 workover including and market, drilling international 54 the of fleet a with 2013 exited We size Fleet 2012. in Mexico in of contracts completion drilling the Ensign’s to due days the drilling by in offset reduction partially expected was 2013 during fleet and international 2012 our late to in rigs relocated and new of from addition days the drilling international to increase The overall. steady retn n eeul 8drilling/ 18 Venezuela and Argentina Africa and East Middle the Asia, Southeast Zealand, New Australia, Area Geographic Primary E n sig n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 okvrrigs workover rigs workover drilling/ 36 2013) 31, December at (as Size Fleet International Drilling – International Drilling – Wells Drilled – Metres Drilled – Utilization Operating Days International International (percent) (thousands) (thousands) 80 12 1200 1200

60 9 900 900

40 6 600 600

20 3 300 300

0 0 0 0 09 10 11 12 13 09 10 11 12 13 09 10 11 12 13 09 10 11 12 13

Our Sustainability Priority u utiaiiyPriority Sustainability Our We aim to ensure that Ensign will be a sustainable company standards. As a global oilfield services provider, Ensign has that will benefit all of our stakeholders, including our implemented comprehensive anti-bribery and anti-corruption shareholders, customers, employees and the communities in policies, controls and training programs that reiterate our which we operate around the world. commitment to full compliance with applicable laws by the Vision, Mission, Values Company and all of our personnel and third parties. Enhanced Our vision, mission and core values form the foundation of our foreign-agent due diligence and additional employee training Company-wide corporate social responsibility practices. programs are some recent initiatives, as part of Ensign’s ongoing commitment to continuous improvement in all aspects Our Vision: To grow through collaborative learning, exploring of our business. the potential of our people and technology, and creating excellence in who we are, second to none. Health, Safety and Environment Policy Our goal is to protect our people, the public, our property, and Our Mission: To strive for global excellence in providing the environment in which we work and live. It is a commitment services to the energy industry worldwide; to distinguish that is in the best interests of our customers, our employees, ourselves through listening, learning and understanding industry and all other stakeholders. A full text of the Company’s Health, challenges; to capitalize on strategic and opportunistic Safety and Environment (“HSE”) Policy is available on the possibilities; to provide services that are attractive and fair to Company’s website at our customers and earn their loyalty while also providing value http://www.ensignenergy.com/hse/Pages/default.aspx. to our shareholders; and to create a workplace that protects worker health and safety with due respect for the environment, HSE Management System and promote an atmosphere to grow employee learning Ensign’s HSE Management System dual purpose is to: and opportunity in a way that is fulfilling, recognized and 1. Establish an international standard for the way we manage, fairly rewarded. practice, and monitor our HSE programs; and Our Values: Our non-negotiable and timeless core values are 2. Bring our global safety programs under one, company- “integrity, teamwork and learning”. wide umbrella. Our motto – “Performance Excellence – Second to None” – Our HSE Management System is based on the International Oil sums up our vision, mission and core values. We strive to & Gas Producers model, which has many similarities to ISO achieve excellence – second to none – through our economic, standards, and helps us to realize the HSE aspects of our vision, environmental and social performance, which includes mission and values. workplace health and safety. Our HSE Management System provides the framework and Code of Integrity, Business Ethics and Conduct processes to examine the risks to our employees, the public, our A formal Code of Integrity, Business Ethics and Conduct (“Code property, and the environment in which we operate and of Conduct”) has been developed by the Company and adopted determine what actions we need to take to control these risks. by the Board of Directors of Ensign Energy Services Inc. to Through these efforts, Ensign aims to protect our employees; be ensure that the Company worldwide adheres to ethical the preferred contractor for customers and the favored employer standards, obeys all applicable laws and that its directors, in the oilfield services sector; and lower our costs associated officers, employees, contractors and consultants clearly with HSE incidents through effective and transparent HSE understand what is required of them in that regard. The full text management. of the Code of Conduct is available on our website at: Ensign strives for continuous improvement in every area of our http://www.ensignenergy.com/Documents/Code_of_Conduct.pdf HSE efforts including our standards, systems, programs, safety Ensign and all of its domestic and foreign subsidiaries are performance, management leadership, and employees’ committed to conducting their businesses in accordance with all awareness, knowledge, commitment, and involvement. This is our applicable laws, rules and regulations and the highest ethical promise to our employees, shareholders and the public worldwide.

Ensign Energy Services Inc. 2013 Annual Report 25 Our Sustainability Priority 26 the HSE. in of obligations area community and industry we legal, that our ensuring out (v) carry and issues; HSE to emerging respect monitoring with (iv) trends us; to pertaining of reviews findings or or report results any the and compliance HSE performance to our respect on with Board the to reporting and reviewing HSE; (iii) regarding systems control internal our reviewing (ii) HSE; to pertaining practices and standards policies, fundamental of implementation and development for the Board approval the to recommending and reporting reviewing, (i) includes: mandate Committee’s HSE and The issues initiatives. HSE to respect with practices and policies, standards our of supervision and oversight for is responsible directors, independent three of Committee, comprised HSE is The which matters. HSE global to relation in oversight specific provides Committee”) and (“HSE Safety Committee Health, Environment Board’s The Company. the of stewardship for the responsibility overall exercises Directors of Board Ensign’s Governance HSE processes. and procedures issues, HSE on communication enabling improved sites, and rig reporting our standardized of majority the at to available Access is tools. GRMS management safety and health of range wide a and management; compliance management; audit change; of management management; environmental actions; corrective and investigation reporting, management, including: incident-related processes, of number a streamlining and are improving we system, software management risk HSE an enterprise-wide (“GRMS”), System Management Risk Global our Through target. on stay we third-party ensure external to an auditor using years three every audit HSE a formal conducts division Ensign each Additionally, this area. in important performance its improving that continually ensure is to Company Directors the of Board the of a Committee has HSE Ensign separate below, noted on As item review. agenda monthly an divisional is every issue HSE significant and any Directors of of status Board the Company’s the of meetings all standing for a item is HSE staff. HSE dedicated through and performance compliance HSE its monitors regularly Company The edn uoae rl i (“ADR Rig market- Drill sophisticated, Automated highly leading our of transfer the as such transfer technology for opportunities create operations area. diverse geographic Second, one just on dependent our not First, are reasons. revenues several for asset an is footprint geographic operations Diverse shareholders. the our in of is interests approach best this rather taking leaders that be believe to We try followers. we than and sake growth’s not for do growth We for box”. look the outside “thinking and patience is on strategy based Ensign’s acquisitions, making to comes it When acquisitions. through growth opportunistic and growth organic growth Opportunistic margins. our optimize to to ways continue for will look We costs. its managing on and focuses structure continually capital stable a has Ensign of Company. sustainability the the ensure to and essential cyclical is is discipline serve, financial we industry gas natural and oil crude discipline Financial oteUie tts utai,teMdl atadArc.We Africa. and East Middle the Australia, States, United the to future. the into well strength economic our sustain will to pillars help five these believes Ensign safety. to commitment and focus; customer operations; diverse discipline; growth; financial opportunistic are: strategy our of pillars five The Performance Economic

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n DIVERSE OPERATIONS ninsgot sarsl fboth of result a is growth Ensign’s : rySrie I Services ergy

CUSTOMER FOCUS ® )tcnlg rmCanada from technology ”) COMMITMENT TO SAFETY n c. 03Ana Report Annual 2013 on thefivepilla by stayingfocused fo We a ou r r ou st r r r e buildingvalue ategy. sha r eholde r s of r s Leading. Ensign’s goal is to be at the forefront of environmental awareness and Delivering. solutions for the benefit of our customers and other stakeholders. Growing. u utiaiiyPriority Sustainability Our believe this substantially benefits our customers and Our impacts shareholders. Third, diverse operations benefit our Our potential impacts occur in the manufacture, transport employees, creating greater opportunities for them, as well as and operation of our drilling rigs and other oilfield stimulating knowledge sharing in areas such as safety and services equipment. operational efficiency. The environmental risks associated with Ensign’s operations Customer focus: We strive for Ensign to be the contractor are low. Except for lubricants, Ensign does not handle of choice in all segments of our business. We work closely toxic substances. with our customers in developing oilfield services to meet While on a well site, the environmental responsibility generally their continually changing technical requirements and to falls on our customer, the operating oil and gas company. Ensign improve performance. is typically one of many subcontractors on such sites. Ensign’s Commitment to safety: Our HSE Management System crews are trained in well control that meets and often exceeds forms the foundation of our safety culture along with our the practices required by regulation or the industry. long-standing “Driving to Zero – Injuries and Incidents” vision. Our performance We believe that a consistent approach will help achieve our goal We are pleased to report that there have not been any serious of continuously improving our health, safety and environmental environmental incidents in the Company’s history. performance across the Company and in every jurisdiction where Diesel fuel we operate. This benefits all our stakeholders. We back up this Ensign’s shops and yards have various quantities of diesel fuel commitment with Ensign’s Health, Safety and Environment stored in equipment tanks. These sites are monitored and Policy, which is available on the Company’s website at checked on an ongoing basis, and equipment is strategically http://www.ensignenergy.com/hse/Pages/default.aspx. located with environmental and safety concerns in mind. Environmental Performance Reducing engine emissions Our Commitment Wherever possible, we select engines that consume less fuel for Ensign’s goal is to be at the forefront of environmental a given power output level. For several years, Ensign has awareness and solutions for the benefit of our customers and pursued a program of replacing older, less-efficient engines other stakeholders. used on our equipment with newer engines. The engines we As technological leaders, we strive to use environmentally now purchase represent the latest technology for achieving fuel friendly procedures and materials when providing our services efficiency and reduced emissions. and we continue to work to reduce, reuse, recycle and reclaim We are committed to purchasing new engines that meet the materials used in our operations. current North American emissions standards and meet or exceed We deal with all incidents that could affect the environment on the emissions standards in various other host countries. a timely basis to ensure that they are properly contained. Using alternativefuels Comprehensive emergency response plans are in place in all of We work with our customers to develop the use of our divisions to address environmental concerns. alternative fuels. We take this responsibility very seriously. We view it as a In several drilling projects in North America, we are using LNG responsibility to current and future generations. or natural gas sourced from the field to power our equipment. Reducing our environmental footprint Doing so reduces emissions from land rigs by up to 30 percent By using fewer material resources, Ensign aims to reduce both as compared with conventional rig fuel sources. In addition, the our environmental footprint and input costs.

Ensign Energy Services Inc. 2013 Annual Report 27 Our Sustainability Priority 28 wellsites. number of the reducing by impacts surface decrease significantly which wells, multi-bore and to drilling people directional its conduct trains and equipment its constructs also Ensign rig. the move and amount drill the to lowers required turns fuel in of which rig, the of weight thus the system, lowering drive the in components lower mechanical we physical and the demand; this power-input using rig’s By the string. reduce drill we the system, of down rigs push our or of hoisting many the on for system hydraulic For a well. using a are complete we and example, drill to needed energy the and reduce time that overall systems drilling incorporate also rigs newer Our emissions. reduces further of which fraction designs, a older in of up time rig the and move rigs drilling compact more These operate. environment we physical which the in in vegetation and terrain the less on in impact resulting footprint, our smaller means a rigs require drilling wellsites new customers’ our of size smaller and layout The pollutants. minimize and emissions reduce paints to lead-free and compounds) organic (volatile low-VOCs we use practical, Whenever process. manufacturing the by produced ADR proprietary our as such rigs, drilling new Our efficiency drilling Increasing of fuels. use alternative the through them to and available savings reductions cost emissions the about customers our fleet inform our we throughout worldwide, technology this of application the further To and fuel. cost-effective burning a clean United gas, and natural Canadian on our running in were rigs fleet the States of 22 2014, 13, March of site. As rig the to fuel of emissions transport fuel the fossil from reduces resulting field the from sourced gas of use aeilo u e is hc eue h msin n CO and emissions the reduces which rigs, new construction our less on use material we that means design rig smaller A operate and efficiently. smaller more generally are they because levels several on impacts environmental reduce ourselves, assemble and design ® ,whichwe 2 oki en in Work qualified by contractors. sites third-party our from removed and of disposed is properly equipment obsolete and monitored storage regularly Our are steel. locations scrap and oils recycle wherever shops and, our locations possible, our of all in recycling practice We Recycling declines. demand power be when can down engines shut and required longer no means are which engines demand”, dedicated of “pooling the allow “electric” that of rigs number drilling a includes fleet rig drilling global Our flaring the eliminate hydrocarbons. or of reduce and line production the into emissions back testing production recycle to designed testing is production equipment our addition, In up. clean site and eliminate preparation cases, some in and, reduce fluid that drilling systems closed incorporate operations drilling our of Many n plsaeadesdqikyadcnando site. on contained and and quickly monitored addressed are are well spills a any of servicing or drilling in the products during any use that ensure to waste manages Ensign However, companies. gas and oil operating the customers, responsibility our the of are typically issues quality and supply Water waste handling and usage Water staff. safety and supervisors by senior monitored continually is this waste and and practices environmental management good follow to crews our train We reporting. their and under plans fall overall we companies, gas and oil a to As subcontractor possible. where eliminated or minimized planned are the operation of impacts negative potential to any customers that our ensure with closely work we instances, such In areas. sensitive environmentally in works occasionally Ensign v rnetlysensiti ironmentally E n sig n E n rySrie I Services ergy v areas e n c. 03Ana Report Annual 2013 We train our workers to make safety both on andoffthejoban everyday priority.

We have developed the Ensign Closed Loop Mud System responsibility for adhering to and promoting the culture of safety (“CLMS”), which recycles fresh water used in the drilling we have developed. process. This recycled water-based drilling fluid is pumped into DrivingtoZero a vertical cone tank where the water and solids separate. The Our Driving to Zero vision – which aims for zero solids are then pumped into a centrifuge to separate any safety incidents, zero injuries, and zero days off remaining water. All the water from both steps is captured and work due to injury – has helped us achieve improvements in our reused, while the solids are transferred to a holding tank and safety performance. To support our vision, Ensign expects its cleaned. After the CLMS process, the solids are clean enough divisions to meet or exceed the injury rate trends of their for farmers to spread on their land. Our CLMS eliminates the industry peers. Our long-term objective is to see continued need for a large holding pit in the ground and, overall, reduces safety improvement and have our operating divisions achieve the environmental impact and costs of drill sites. injury rates recognized as best in class by major operators. Social Performance In 2013, the Ensign team achieved their lowest-ever rates of Ensign is engaged in numerous initiatives to build and reinforce recordable incidents and lost-time injuries. During the period our health and safety culture and contribute positively to the 2004 to 2013, the Company as a whole has achieved a reduction communities in which we work. of approximately 76 percent in the frequency of total recordable Health and Safety incidents and a reduction of approximately 71 percent in the Ensign is committed to building and maintaining a best-in-class frequency of injuries that resulted in workers losing time from safety culture, through safety and training programs designed to work. We are continually working to reduce our injury rates, improve safety performance, raise awareness of the importance achieving a year-over-year reduction in total recordable of safety in our operations, and minimize the impact of our incidents of approximately 34 percent in 2013. operations on the environment. In addition, incentives tied to Employee training safety performance are in place at virtually all levels of the As a global oilfield services company, we train our workers to Company in order to ensure that each employee takes make safety both on and off the job an everyday priority.

Ensign Energy Services Inc. 2013 Annual Report 29 Our Sustainability Priority

Injury Frequency (200,000 man hours) 0 1 2 3 4 5 6 7 8 a evcscompa services improveme prtn n forAR,cmlt ihata ADR actual with complete ADRs, our of one operating 30 i I scenarios. multiple drilling of simulation video interactive and panels control state-of- a ADR developed the-art have we safety, rig rig address and and competency hands crew derrick and drillers new train help To safety-conscious. and – efficient crews trained, best-in-class well have always us will help we will globally GSS that world. ensure the in jurisdiction any that in competency applicable of is standard high common, a reach that crews so our training behavioral and technical receive of they levels ensure equivalent to world the around members rig-crew experience of and performance training, the about data are capturing we which through Global system, enterprise-wide (“GSS”) an Standard of Skills out roll the began we 2013, In practices. observation work daily and safety meetings, pre-job daily coaching, safety training, prevention injury personal programs, analysis reinforced safety is job and through employment constantly of day first the on starts Training u ADR our n n Ensign’s Enterprise-wideSafetyPerformance-20042013 n cide 201 f h o a job the off d 0 4 3 n ,E sa ts ® n 50 70 91 11 10 09 08 07 06 05 sig iuaosrpiaeteata xeineof experience actual the replicate simulators n n ® dlost-timei tofo Lost TimeInju Total Re n iuao.Oeaigmc ieafih simulator, flight a like much Operating simulator. civdislws-vrrtso recordable of rates lowest-ever its achieved n n ,w trai we y, u vrdypriority. everyday aeyperforma safety r c o r dable In r y F n j u r n equen is esrv o co for strive We ries. c o ident F u okr omk aeybt o both safety make to workers r c y r equen n e a ce, c y n sagoa oilfield global a as d n ti nu o ® u s 12 13 n o hrte htaecmitdt oiiechange. positive to committed are that charities look for We worldwide. communities our not- in and organizations charities for-profit different many support We a ways. in of contributing number actively means citizen corporate good a Being work. they and where live communities the in participate and support charities to local world the around employees our encourage We communities to Commitment safety. own one’s taking for and responsibility hazards, workplace for lookout the on work, being at responsibilities and rights safe, legal be one’s to understanding needed questions the all to asking prepared safe, work be to coming of importance the emphasized which we through Safety”, Own to theme Workers common Frontline the “Empowering under worldwide meetings held we 2013, In job. their to new or are time who first those the for together working crews among group, particularly this within occur injuries and Company’s incidents the recordable of Most workforce. our the in form group – largest customers our and with rigs regularly our interact on who work employees who crews the – workers frontline Our and customers subcontractors. workers, frontline our awareness with raise issues to safety field about the in sites job Ensign’s visit Company-wide, executives year senior a twice held is which Down, Safety Stand During safety. workers’ to to commitment designed our initiative reinforce global a is Down Stand Safety Ensign’s Down Stand Safety public. the and our employees protect thereby and inspections and from collision rates reduce ticketing to programs fleet their are on divisions diligently our working and globally, vehicles safety. 2,000 driver over be has to Ensign continues Ensign for focus of area Another level. higher a entry-level to and crews crews work current Nisku, both in training facility for training Alberta, world-class new, a opened we 2013, In E n sig n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 New Training Centre Supports Ensign’s ‘Learning’ Priority

One of Ensign’s core values is “Learning”, and our The state-of-the-art facility features all the newest corporate vision is “to grow through collaborative classroom technology, as well as a full-size training rig learning, exploring the potential of our people and located just 200 metres from the training centre. technology, and creating excellence in who we are, A typical two-day training session for new recruits second to none”. includes four hours of safety orientation, four hours of Moreover, Ensign’s motto is “Performance Excellence equipment orientation on the training rig, and then eight Second to None”, and one of the key ways we are living hours of hands-on training on the training rig during which up to our motto is through the continuous improvement of trainees run drill pipe into and out of a 70-metre test well. oilfield services delivered utilizing equipment We provide a range of other training programs at the incorporating the latest technology. Sustaining this level of centre, including Crew Safety Orientation, Driller and Rig improvement has created a need to train employees more Manager Leadership Training, and other administrative often and better than ever. training as required. Our goal is to ensure that, through consistent training Ensign remains strongly committed to providing the best programs, our crews reach a common, high standard of and most effective employee training programs possible. competency that is applicable in any jurisdiction in the We will continue to build on our existing programs in the world and that globally we will always have best-in-class years ahead to support our safety goals and our crews – well trained, efficient and safety-conscious. leadership position in the oilfield services industry, as well To further address rig crew competency and rig safety, in as to ensure that we are delivering excellent performance the spring of 2013 we opened a world-class training for our customers. facility in Nisku, Alberta, where we are training both current work crews and entry-level crews to a higher level. Management’s Discussion and Analysis ro otescn ure f21 h opn nlddfrinecag n te ntecluaino BTAadAjse net 32 Adjusted and EBITDA of activities. business calculation principal Company’s the the in from results other the of and measure exchange useful more o foreign a and provide included IFRS and exchange Company industry by foreign the the prescribed with excluding meaning comparability 2013 that standardized of believes any quarter Management have income. second not do the u measures measures to These similar Prior to share. comparable per be operations not may from EBITD accordingly, Funds and Adjusted and EBITDA, operations Adjusted from to to Funds as references given contains be MD&A can This assurances no change. made, Measures opinions are Non-GAAP or statements estimates Company’s forward-looking require the such as or Except date circumstances achievements. should the and statements on activity of t it levels to that results, available future believes information Company on the based reasonable Although factors unknown statements. or Uncertainties forward-looking Unpredictable and on exhaustive. “Risks not the is factors to important refer information political additional by For Comp affected the available. pa be, and then a factors, information may on other all considering upon factor future interdependent one are the any factors of in such impact incorre as times The prove statements. assumptions at forward-looking Company’s the and the protection in of been, environmental any regulations have should and and or services agencies laws materialize, its local governmental for and or regional demand governments national, of by levels and and developments operations Company’s Compa the The of adequacy the costs); expenses. and operating and safety and (including capital them on with initiatives comply compani oilfie to acquired Company’s required of operations the expenditures and the of business operation the integrating the it of in and success inherent Company ability the unrest; difficulties pay of civil other to ability and competit services; customers and uncertainty of and political Company’s impact supplies business; strategy; the equipment, conducts business of other Company its the and ability implement results, which the to in actual Company and regions the and services the cr of countries Company’s regarding cause the the in assumptions could conditions of and economic prices that of rates; market volatility factors or and balances; expressed other for achievements receivable inc and or demand accounts performance factors impact uncertainties results, things, Such future risks, other any statements. unknown from among forward-looking different and materially such be known by to to Company implied the subject of statem achievements are such or date and performance the contained, of occur. as are will only based they speak are est they which which expectations, operates, upon current Company expectations on the or based initiatives are plans, statements the an forward-looking that The risks assurance no certain information be to and can subject 2014 there for are as Venezuela, program statements and regarding build performance new section future in the Instruments” of regarding provided guarantees “Financial sections Retrofits” information the Major in and the Builds provided to, “New and limited Activities” “Financing not “Outlook”, costs, but operating levels, including, Disclos activity outlook. MD&A, operating an or regarding utilization statements equipment or “e outcome “outlook”, future “guidance”, suggesting “conti “goal”, “target”, “forecast”, “project”, “estimate”, “objective”, “plan”, legislati securities “expect”, applicable of “anticipate”, meaning the within fo constitute statements”) document 31, this December in ended statements year Certain 2014. the Statements 31, for March Forward-Looking Form to Regarding Information prior Advisory Annual SEDAR Company’s on otherwise The filed unless be www.sedar.com. International dollars to at with expected Canadian SEDAR is in on accordance in 2013 available expressed information, in is are Additional prepared 2012, 2014. MD&A been 31, 13, this March December have in dated presented information is measures MD&A comparative This financial and indicated. All statements (“IFRS”). financial Standards Reporting consolidated Financial the and www.sedar.com. consolidat at MD&A audited SEDAR This on the available with are which Energy conjunction 2013, 31, in Ensign December read for be (“MD&A”) should Analysis “Company”) and Discussion Management’s This Analysis and Discussion Management’s wr-okn ttmnso nomto (colle information or statements rward-looking e yohrcmais o-APmaue r eie below. defined are measures Non-GAAP companies. other by sed u” cud,“ned,“a” ptnil,“rdc” sol” “will”, “should”, “predict”, “potential”, “may”, “intend”, “could”, nue”, ue mn tes eea cnmcadbsns odtoswihwill, which conditions business and economic general others: among lude, eto fti DA edr r atoe httefrgigls of list foregoing the that cautioned are Readers MD&A. this of section ” n owr-okn ttmnscnb dniidb h od “believe”, words the by identified be can statements Forward-looking on. aia xedtrsadohrftr udnepoie hogotthis throughout provided guidance future other and expenditures capital ylw h opn sue oolgto oudt forward-looking update to obligation no assumes Company the law, by d n’ oreo cinwuddpn pnisassmn ftefuture the of assessment its upon depend would action of course any’s h edrsol o lc nu eineo hs forward-looking these on reliance undue place not should reader the d h Otok eto eadn h eea ulo o 04 the 2014, for outlook general the regarding section “Outlook” the nswr aeo so h aeo h eoto oueti which in document or report the of date the of as or made were ents niomna asadrgltosadteipc fciaechange climate of impact the and regulations and laws environmental fr” ses,“ceue rohrepesoso iia nature similar a of expressions other or “schedule” “seeks”, ffort”, yspoiinfrtxs n te icmtne fetn revenues affecting circumstances other and taxes; for provision ny’s mtsadpoetosaotteCmayadteidsr nwhich in industry the and Company the about projections and imates o icse nti eotcudas aemtra des effects adverse material have also could report this in discussed not t culrslsmyvr nmtra epcsfo hs projected those from respects material in vary may results actual ct, dsrie qimn;aalblt n oto iacn;tmn and timing financing; of cost and availability equipment; services ld e hr,Ajse e noe dutdnticm e share, per income net Adjusted income, net Adjusted share, per A hrfo dutdEID n dutdnticm ilincrease will income net Adjusted and EBITDA Adjusted from ther labor of cost and availability lawsuits; of defense Company’s the ion; s cin ygvrmna uhrte;gvrmn euain and regulations government authorities; governmental by actions es; osiue owr-okn sta forward-looking constitutes tclrfradloigsaeeti o eemnbewt certainty with determinable not is statement forward-looking rticular d i n aua a rcs lcutosi urnyadinterest and currency in fluctuations prices; gas natural and oil ude eepcain ovydb h owr-okn ttmnsare statements forward-looking the by conveyed expectations he uha hne ntxs oate n te mut aal to payable amounts other and royalties taxes, in changes as such dfnnilsaeet n h oe hrt o h erended year the for thereto notes the and statements financial ed ldn h opn’ nulIfrainFr o h erended year the for Form Information Annual Company’s the cluding usdaist opeetercptlporm;oeaighazards operating programs; capital their complete to subsidiaries s r eae oepce uuecmoiypiig eeu rates, revenue pricing, commodity future expected to related ure euain.Sol n rmr fteersso uncertainties or risks these of more or one Should regulations. evcsIc n l fissbiire n atesis(the partnerships and subsidiaries its of all and Inc. Services E n sig tvl eerdt eena “forward-looking as herein to referred ctively n E n rySrie I Services ergy eet.Teesaeet r not are statements These tements. n c. 03Ana Report Annual 2013 Overview and Selected Annual Information Analysis and Discussion Management’s ($ thousands, except per share data) 2013 2012 Change % change 2011 Change % change Revenue 2,098,011 2,197,321 (99,310) (5) 1,890,372 306,949 16 Adjusted EBITDA 1 485,712 560,975 (75,263) (13) 497,188 63,787 13 Adjusted EBITDA per share 1 Basic $3.18 $3.67 $(0.49) (13) $3.25 $0.42 13 Diluted $3.16 $3.67 $(0.51) (14) $3.25 $0.42 13 Adjusted net income 2 143,909 219,504 (75,595) (34) 213,506 5,998 3 Adjusted net income per share 2 Basic $0.94 $1.44 $(0.50) (35) $1.40 $0.04 3 Diluted $0.94 $1.43 $(0.49) (34) $1.39 $0.04 3 Net income 128,865 217,522 (88,657) (41) 212,393 5,129 2 Net income per share Basic $0.84 $1.42 $(0.58) (41) $1.39 $0.03 2 Diluted $0.84 $1.42 $(0.58) (41) $1.39 $0.03 2 Funds from operations 3 435,611 506,355 (70,744) (14) 473,099 33,256 7 Funds from operations per share 3 Basic $2.85 $3.32 $(0.47) (14) $3.09 $0.23 7 Diluted $2.84 $3.31 $(0.47) (14) $3.09 $0.22 7 Total assets 3,387,678 3,070,977 316,701 10 3,048,113 22,864 1 Long-term financial liabilities 317,407 296,589 20,818 7 405,953 (109,364) (27) Cash dividends per share $0.4475 $0.4250 $0.02 5 $0.3900 $0.0350 9

Certain prior year amounts have been restated to reflect current year presentation. 1 Adjusted EBITDA is defined as “income before interest expense, income taxes, depreciation, share-based compensation expense (recovery) and foreign exchange and other”. Management believes that in addition to net income, Adjusted EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Company’s principal business activities prior to consideration of how these activities are financed, how the results are taxed in various jurisdictions, how the results are impacted by foreign exchange or how the results are impacted by the accounting standards associated with the Company’s share-based compensation plans. ($ thousands) 2013 2012 2011 Income before income taxes 197,067 319,537 311,610 Interest expense 18,795 18,666 6,586 Interest income (1,320) (504) (647) Depreciation 248,026 220,227 177,927 Share-based compensation 2,049 (3,397) 6,555 Foreign exchange and other 21,095 6,446 (4,843) Adjusted EBITDA 485,712 560,975 497,188 2 Adjusted net income is defined as “net income before share-based compensation expense (recovery) and foreign exchange and other, tax-effected using an income tax rate of 35 percent”. Adjusted net income is a useful supplemental measure as it provides an indication of the results generated by the Company’s principal business activities prior to consideration of how the results are impacted by foreign exchange and how the results are impacted by the accounting standards associated with the Company’s share-based compensation plans, net of income taxes. ($ thousands) 2013 2012 2011 Net Income 128,865 217,522 212,393 Share-based compensation, net of income taxes 1,332 (2,208) 4,261 Foreign exchange and other, net of income taxes 13,712 4,190 (3,148) Adjusted net income 143,909 219,504 213,506

Ensign Energy Services Inc. 2013 Annual Report 33 Management’s Discussion and Analysis h opn’ lbleupetfethle omtgt h vrl eraet ciiylvl.I 03the 34 2013 In levels. activity to decrease overall the (“ADR the in to Rigs additions mitigate growth operates, Drill Company to Automated by the new helped where offset five areas fleet somewhat the added of equipment Company was some lower global in and in services Company’s year oilfield resulted for the prior America demand from in North the decrease in Funds a to services Despite 2012. compared oilfield 31, year for December current demand operations. international Reduced ended the Company’s year. year in share-based prior results the the ended of financial for in million year impact $435.6 share) recorded income the to net common share) percent tax-effected adjusted for per 14 than common income decreased lower the per percent 2013 net 34 for Excluding ($1.44 share), operations adjusted common million 2012. other, per $219.5 ($0.94 and million in of $143.9 exchange totaled recorded foreign 2013 $217.5 from 31, and share) decrease December percent (recovery) 41 common a expense share), common per compensation per ($0.84 ($1.42 million $128.9 th was million for 2013 share) 31, common December per ended year ($3.67 per million ($3.18 $561.0 million of $485.7 EBITDA were rev 2013 for 2012 EBITDA, over may adjusted decrease as percent and December five ended a past year history, of the Company’s the levels for anticipated in revenue and Company’s countries The opportunities 2012 bidding to other with on addition Compared several depending 2013 In in future Venezuela. the operated and in New Oman has regions demand. future Nevada, other Zealand, Company California, to New the of equipment Libya, states relocate locations, Kurdistan, the international Gabon, as Argentina, operates well these Company Australia, as the an in regions States, Pennsylvania United Nebraska, southern operates Dakota, the and South In Dakota, Mountain Yukon. North Saskatchewan the Rocky Mexico, Alberta, and the Columbia, Territories British in Northwest of the predominantly provinces include western and four Manitoba the and span operations Canadian oil Company’s servicing, The well services. and the testing drilling Canada, production man in include and and industry Company services gas underbalanced wireline the natural drilling, by and directional oil provided crude coring, services the sands Oilfield to internationally. services oilfield and providing States of United business the in is Company The Operations of Nature operating by provided “cash as defined is operations from Funds 3 he nteUie ttsmre hog h e ul rga.Alo h el osrce Dsaesbetto subject are ADRs constructed newly the of All program. build new the through market States United the in three eeaefnst iac t prtos aaeetuiie th infor expenditures. utilizes additional capital Management and provides operations. activities its that finance measure to a funds generate is operations from Funds o-ahitems: Non-cash Income Net thousands) ($ ud rmoperations from Funds eerdicm tax income Deferred Depreciation crto nln-emdebt long-term on Accretion other and exchange foreign Unrealized paid cash of net compensation, Share-based ® 1 03ws$,9. ilo,tescn ihs nthe in highest second the million, $2,098.0 was 2013 31, )t t rligrgfet w nteCnda aktand market Canadian the in two fleet: rig drilling its to ”) gdpesr rlig qimn etl,transportation, rentals, equipment drilling, pressure aged neo 2173mlin prtn anns expressed earnings, Operating million. $2,197.3 of enue smauet sesteCmaysaiiyt iac operating finance to ability Company’s the assess to measure is ereddDcme 1 02 e noefrthe for income Net 2012. 31, December ended year e $.5prcmo hr)fo 564mlin($3.32 million $506.4 from share) common per ($2.85 omnsae,a1 ecn eraefo adjusted from decrease percent 13 a share), common ainrgrigteCmayslqiiyadisaiiyto ability its and liquidity Company’s the regarding mation ciiisbfr h hnei o-ahwrigcapital”. working non-cash in change the before activities ihgn nentoal,teCmaycurrently Company the Internationally, Michigan. d 248,026 128,865 435,611 26,869 25,031 6,492 2013 328 E n sig n E n rySrie I Services ergy 2,2 177,927 212,393 220,227 217,522 0,5 473,099 506,355 68672,335 56,826 ,3 (2,488) 11,778 5,838 4,363 ,7 1,154 1,579 022011 2012 n c. 03Ana Report Annual 2013 long-term contracts. The new build program also added seven new well servicing rigs: six in Canada and one in the Analysis and Discussion Management’s United States. In addition, the Company expanded its existing directional drilling business in Canada through the acquisition of substantially all of the assets of Departure Energy Services Inc. (“Departure”) and expanded its existing oilfield rental business in Canada through the acquisition of substantially all of the assets of EGOC Enviro Group of Companies (“EGOC”), both in the second quarter of 2013. During 2013, an additional drilling rig was relocated to the international market from the Company’s United States fleet. North American customers reduced their demand for oilfield services in late 2012 and into the start of 2013 in reaction to uncertain global economic conditions and concerns regarding the economics of oil and natural gas projects. The reduced demand for North American oilfield services negatively impacted operating and financial results in 2013 compared to 2012. In addition, Canadian oilfield services were hindered in 2013 by a particularly wet spring break-up that impeded the movement of the Company’s equipment. Results from the Company’s international operations were stronger in 2013 compared to 2012, mainly due to increased demand in the eastern hemisphere and the strategic growth of the Company’s fleet to meet rising levels of demand for oilfield services. International and United States financial results were positively impacted by the strengthening of the average United States dollar foreign exchange rate on translation to Canadian dollars. During 2013, the average United States dollar foreign exchange rate increased by approximately three percent against the Canadian dollar when compared to 2012. Consistent with prior years, the Company increased its dividend in the fourth quarter of 2013 to a quarterly dividend rate of $0.1175 per common share, a 6.8 percent increase from the previous quarterly dividend rate of $0.1100 per common share. The Company first started paying a dividend in 1995 and has increased its annual dividend at a 17 percent compound annual growth rate from 1995 to the current year. The Company exited 2013 with a working capital deficit of $71.1 million compared to positive working capital of $13.9 million at December 31, 2012. The working capital deficit position was due to existing cash resources being utilized in 2013 to fund the second quarter acquisitions of the assets of Departure and EGOC mentioned above, as well as funding the current new build and major retrofit program. The Company’s revolving credit facilities provide for available borrowings of $70.7 million at December 31, 2013 compared to $164.3 million at December 31, 2012. 2012 Compared with 2011 The Company recorded record financial results in 2012 with the highest revenue and funds from operation in the Company’s history. These record levels were mainly attributed to the positive impact from the first full year of operations from Ensign US Southern, acquired in September 2011, the growth of the Company’s global fleet through the continuing new build program and stronger activity levels in international operations. Financial results in 2012 exceeded those in 2011; however, results were negatively impacted by a slowdown in North American oilfield services towards the latter half of 2012. In 2012 the Company repaid the USD $400.0 million term loan, incurred to finance the acquisition of Ensign US Southern, through the issuance of USD $300.0 million of senior unsecured notes (the “Notes”), an expanded global revolving credit facility (the “Global Facility”) and funds generated from operations. Available borrowing increased to $164.3 million at December 31, 2012 compared to $10.1 million at December 31, 2011 through the expansion of the Company’s revolving credit facilities.

Ensign Energy Services Inc. 2013 Annual Report 35 Management’s Discussion and Analysis elsriigoeaighours operating servicing Well elsriigutilization servicing Well n21,icre tr-pcsstwrsteedo 03 uhepniue eaieyipce 2013 impacted negatively expenditures Such 2013. of end the early work towards begin to costs expected are start-up negatively which margins. incurred, rigs, gross incurred international as Increased several expensed 2012. addition 2014, generally in In are percent year. in 29.2 which current from expenditures, the percent maintenance in 27.4 major margins to impacted higher 2013 and in labor decreased revenue for of costs percentage a as margin Gross Company the which 2012. in to compared areas 2013 the Ameri in of of D North 2012 many totaling in year. 31, in economics history firm December gas current remained Company’s ended natural and year the the oil the in in in for uncertainty set highest results level second financial record oilfie the American the weakening North from was for percent demand 2013 Reduced five million. 31, of $2,197.3 decrease December a ended million, year $2,098.0 the for Revenue 36 percent 15 a 2013, 31, December De ended ended year year the the in for recorded Canada million in $774.4 million from $661.0 decrease of revenue recorded Company The rigs. coring to transfers Includes rigs. coring 2 Excludes 1 rigs Drilling Services Oilfield Canadian percentage margin Gross margin Gross expense services Oilfield Revenue thousands) Expense ($ Services Oilfield and Revenue rligrgutilization rig Drilling elsriigrigs servicing Well rligoeaigdays operating Drilling nigbalance Ending pnn balance Opening International States United Canada pnn balance Opening nigbalance Ending Decommissions/Disposals Transfers Additions Additions Decommissions/Disposals 1 2 (%) 1 1 (%) (%) 1,524,173 2,098,011 mn ntecretya a aprdb continuing by hampered was year current the in emand 573,838 546,236 890,767 661,008 121,159 14,183 27.4 2013 35.8 32.3 dsrie htbgnlt n21 otne no2013, into continued 2012 in late began that services ld prts rdcn eeal togrfnnilresults financial stronger generally producing operates, a oee,dmn o nentoa ifedservices oilfield international for demand However, ca. 2013 124 121 ebr3,21.Cnd cone o 2pretof percent 32 for accounted Canada 2012. 31, cember (10) 95 99 (5) 2 6 – ,5,0 3,3)(2) (5) (31,336) (99,310) 1,555,509 2,197,321 4,1 6,7)(11) 14 (67,974) (6) (15) 641,812 67,939 (53,813) (113,436) 478,297 944,580 774,444 4,7 1,1)(14) (19,819) 140,978 838(,1)(23) (4,215) 18,398 E 29.2 02Cag change % Change 2012 81(.)(6) (2.3) (17) 38.1 (6.5) 38.8 n 02Cag change % Change 2012 131 103 2 3 (2) (3) 124 (10) sig 9()(4) (4) 99 (4) (3) 6 – n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 the Company’s revenue in the year ended December 31, 2013 (2012 – 35 percent). The Company recorded 14,183 Analysis and Discussion Management’s operating days in 2013, a 23 percent decrease from 18,398 operating days in the previous year. Canadian well servicing hours decreased by 14 percent in the year ended December 31, 2013 from the prior year. Unfavorable price differentials for Canadian commodities and continued industry uncertainty weakened demand for the Company’s Canadian oilfield services in 2013 compared to 2012. Additionally, the Company’s Canadian operations were hampered in 2013 as the industry continued its transition from shallow to deeper and longer reach drilling. The resulting impact to activity levels, combined with a particularly wet spring break-up in the current year, reduced operating and financial results for the year ended December 31, 2013 compared to the year ended December 31, 2012. These negative impacts were somewhat offset by the positive impact from the expansion of the Company’s Canadian oilfield rentals and directional drilling equipment fleets in the second quarter of 2013. The Company decommissioned or disposed of five inactive drilling rigs and 10 inactive well servicing rigs during 2013 and added two new build ADRs and six new well servicing rigs to the Company’s Canadian equipment fleet in 2013. The Company continues to transition its Canadian drilling fleet from shallow drilling rigs to deeper drilling rigs in response to changing market dynamics. In January 2013, the Company disposed of its non-rig manufacturing facility located in Calgary, Alberta. United States Oilfield Services 2013 2012 Change % change Drilling rigs Opening balance 121 117 Additions 3 5 Transfers (1) 5 Decommissions/Disposals (6) (6) Ending balance 117 121 (4) (3) Drilling operating days 22,955 24,226 (1,271) (5) Drilling rig utilization (%) 54.0 57.4 (3.4) (6) Well servicing rigs Opening balance 46 36 Additions 1 12 Decommissions/Disposals (2) (2) Ending balance 45 46 (1) (2) Well servicing operating hours 105,260 121,766 (16,506) (14) Well servicing utilization (%) 64.2 78.1 (13.9) (18)

The Company’s United States operations recorded revenue of $890.8 million for the year ended December 31, 2013, down six percent from revenue of $944.6 million for the year ended December 31, 2012. The United States segment accounted for 42 percent of the Company’s revenue in 2013 (2012 – 43 percent) and was the largest contributor to the Company’s consolidated revenues in 2013, consistent with the prior year. Drilling rig operating days decreased by five percent from 24,226 operating days in 2012 to 22,955 operating days in 2013. Well servicing activity expressed in operating hours decreased by 14 percent in 2013 compared with 2012. Activity levels were down in the United States for the majority of 2013 compared to the prior year as the demand for oilfield services by the Company’s customers continued to be held back in certain regions through much of the year and did not start to show signs of recovery until later in the year. As a result, revenue rates were held down for the start of 2013 but gradually increased throughout the year as demand began to pick up. Overall, this led to

Ensign Energy Services Inc. 2013 Annual Report 37 Management’s Discussion and Analysis 38 Departure. and EGOC from assets of acquisitions quarter second the of C impacts compared the the to 2013 addition to 31, in added 2013 December 2012. and being ended 2012 31, equipment year December higher-valued the ended to year for attributable the million for $248.0 million to $220.2 percent with 13 increased expense Depreciation Depreciation thousands) ($ Depreciation utilization rig Drilling days operating Drilling rigs workover inactive and Drilling six of disposed or fleet, decommissioned States Services United and Oilfield its fleet International to rigs. equipment rig servicing well servicing international inactive well its two new and to one rigs and drilling rig ADRs drilling build new one percent three transferred three added as Company approximately 2013 the increased throughout 2013, ended rate fleet During States exchange year United foreign the the 2012. dollar to to to compared States additions 2013 compared United and during 2012 average 2013 to The 31, compared below. year December described current ended the the in year was dollar decrease the Canadian this offsetting for Partially 2012. results 31, financial December and operating reduced teghnn fteUie ttsdla eaiet h aaindla n21 hncmae otepiryear. prior the to compared when 2013 in dollar Canadian the to relative dollar States United improved the of were strengthening operations Comp international the Company’s from results the of translation the with Consistent Risk. to Credit year under MD&A current this the of particu during section America, Despi Instruments” relocated Latin relocated fleet. in was were challenges rig rigs States experience drilling drilling to The United existing continues additional new Company’s year. two An Two and the prior Kurdistan. America. 2012 from in the North in deployed from Australia to late rig market fleet compared drilling equipment international one year Australian the of the the current to start-up to increase the the added with to in were 2013 helped ADRs operations in build operations late international international operations for Company’s its day expanded the Company per in 2013 rates and revenue 2012. 2012 in average recorded in days made operating 11,612 investments from Strategic from percent two increase i of Company’s percent decrease The a 14 percent). 2013, a 22 in days – 2013, contribut (2012 31, segment 2013 December 31, international December ended The ended year 2012. the in for million million $478.3 $546.2 totaled revenue International nigbalance Ending balance Opening Decommissions/Disposals Transfers Additions (%) 248,026 11,384 n’ ntdSae prtos h prtn eut from results operating the operations, States United any’s ntasainit aaindlasb h he percent three the by dollars Canadian into translation on esrnt ncranitrainlaes h Company the areas, international certain in strength te 58.4 al nVnzea sfrhrdsusdi h “Financial the in discussed further as Venezuela, in larly 2013 2013 d2 ecn fteCmaysrvnei h year the in revenue Company’s the of percent 26 ed ihrdpeito xes n21 vr21 was 2012 over 2013 in expense depreciation Higher 54 54 (1) teghnn fteUie ttsdla gis the against dollar States United the of strengthening 1 maysgoa le hogottelte afof half latter the throughout fleet global ompany’s – trainloeain eodd1,8 operating 11,384 recorded operations nternational 2,2 77913 27,799 220,227 162(2)(2) (228) 11,612 E 69153 1.5 56.9 n 02Cag change % Change 2012 02Cag change % Change 2012 sig 4–– – 54 59 (4) (3) 2 n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 General and Administrative Expense Analysis and Discussion Management’s ($ thousands) 2013 2012 Change % change General and administrative 88,126 80,837 7,289 9 % of revenue 4.2 3.7

General and administrative expense totaled $88.1 million (4.2 percent of revenue) for the year ended December 31, 2013 compared with $80.8 million (3.7 percent of revenue) for the year ended December 31, 2012, an increase of nine percent. The increase in general and administrative expense reflects the negative translational impact of a stronger United States dollar on United States and international administrative expenses in the current year and increased costs to support growing international operations. Share-Based Compensation Expense (Recovery) ($ thousands) 2013 2012 Change % change Share-based compensation 2,049 (3,397) 5,446 (160)

Share-based compensation expense (recovery) arises from the Black-Scholes valuation accounting associated with the Company’s share-based compensation plans, whereby the liability associated with share-based compensation is adjusted for the effect of granting and vesting of employee stock options and changes in the underlying price of the Company’s common shares. For 2013, share-based compensation was an expense of $2.0 million compared with a recovery of $3.4 million for the year ended December 31, 2012. The increase in share-based compensation expense for the year ended December 31, 2013 arises from the change in the fair value of share-based compensation liability primarily due to an increase in the price of the Company’s common shares during the year. The closing price of the Company’s common shares was $16.73 at December 31, 2013, compared with $15.37 at December 31, 2012. Interest Expense ($ thousands) 2013 2012 Change % change Interest expense 18,795 18,666 129 1 Interest income (1,320) (504) (816) 162 17,475 18,162 (687) (4)

Interest is incurred on the Company’s $10.0 million Canadian-based revolving credit facility (the “Canadian Facility”), the $400.0 million Global Facility and the USD $300.0 million Notes issued in February 2012. The amortization of deferred financing costs associated with the issuance of the Company’s long-term debt is included in interest expense for the years ended December 31, 2013 and 2012. Interest expense in 2013 compared to 2012 was mainly consistent, increasing only one percent. Interest income was higher in 2013 compared to 2012 as a result of higher average balances of interest-earning cash and cash equivalents in 2013 compared to 2012.

Ensign Energy Services Inc. 2013 Annual Report 39 Management’s Discussion and Analysis 40 2013 profits. 31, pre-tax December in ended decrease the year to the attributable partnerships for primarily Company’s is portion the year expense to prior tax the related is income with year tax compared deferred the income when for decreased of expense The deferral tax the Canada. total of in the elimination to operating compared phased rates. when the statutory expense from well to tax varies as attributable income rate 2013, primarily current tax February the effective in of the Venezuela compared proportion which in when increased for occurred 2013, The losses that in translation devaluation rate exchange currency foreign effective the of overall of impact the impact the tax in as the increase incom to The due effective 2012. is 31, the 2012, December with 2013, ended year 31, the December for percent ended year the For rate tax income Effective tax income Deferred tax on income Current loss currency dollar foreign thousands) Australian ($ a currencies. the from world causing other 2013 Taxes to operations Income dollar Au compared 31, when Australian into States 2012 December debt to the United compared ended denominated 2013 of the in USD year strengthened conversion against Company’s the the the percent During of of 16 translation dollars. approximately impact States by the United weakened and to dollars i dollars movements Canadian Australian currency than foreign other are currencies amount this in Included other and exchange Foreign thousands) ($ Other and Exchange Foreign (%) 68,202 25,031 43,171 21,095 34.6 2013 2013 h opn’ usdaiswihhv functional have which subsidiaries Company’s the n taindlas ngnrlteUie ttsdollar States United the general In dollars. stralian a aews3. ecn oprdwt 31.9 with compared percent 34.6 was rate tax e 0,1 3,1)(33) (33,813) 102,015 686(175 (56) (4) (31,795) (2,018) 56,826 45,189 ,4 469227 14,649 6,446 E n 31.9 02Cag change % Change 2012 change % Change 2012 sig n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 Financial Position Analysis and Discussion Management’s The following chart outlines significant changes in the consolidated statement of financial position from December 31, 2012 to December 31, 2013: ($ thousands) Change Explanation Cash and cash 45,650 See consolidated statements of cash flows. equivalents Accounts receivable 17,630 Increase reflects foreign exchange fluctuations on the consolidation of the Company’s foreign subsidiaries and was offset by a decrease in Canadian operating activity in the fourth quarter of 2013 compared to the fourth quarter of 2012. Inventories and other (9,498) Decrease was due to normal course use of consumables offset by additional inventory. Property and equipment 255,088 Increase was due to additions to fixed assets from the current new build construction program; the acquisitions of the EGOC and Departure assets during the second quarter; and a strengthening of the USD year-end foreign exchange rate on the consolidation of the Company’s foreign subsidiaries, offset by depreciation. Note receivable (741) Decrease was due to the reclassification of the current portion to accounts receivable offset by accretion of interest income during 2013. Accounts payable and 62,535 Increase reflects foreign exchange fluctuations on the consolidation accruals of the Company’s foreign subsidiaries and timing of payments to external vendors during the year. Operating lines of credit 94,535 Increase was due to additional draws during the year on the global revolving credit facility and the impact of foreign exchange fluctuations on the consolidation of the USD denominated debt held by the Company’s foreign subsidiaries, offset by repayments during the year. Share-based (804) Decrease was due to options which expired at the end of the current compensation year, offset by an increase in the price of the Company’s common shares as at December 31, 2013 compared with December 31, 2012. Income taxes payable (19,769) Decrease was due to tax instalments net of the current income tax provision for the year. Dividends payable 1,166 Increase was due to a 6.8 percent increase in the quarterly dividend rate in the fourth quarter of 2013 compared to the dividend rate in the fourth quarter of 2012. Long-term debt 20,818 Increase was due to foreign exchange fluctuations on the USD denominated long-term debt. Deferred income taxes 45,037 Increase primarily due to accelerated tax depreciation of assets added during the current year. Shareholders’ equity 104,611 Increase due to net income for the year and the impact of foreign exchange rate fluctuations on net assets of foreign subsidiaries, offset by the amount of dividends declared in the year.

Ensign Energy Services Inc. 2013 Annual Report 41 Management’s Discussion and Analysis ilo) h ucae fpoet n qimn eaepiaiyt xedtrsmd usatt the to pursuant made build new the expenditures of result to a as primarily 2013 in relate additions Significant equipment program. retrofit include: and major program and property any build new complete of ongoing not Company’s purchases did ended The Company year the The million). for Canada. equipment and western property drilling of in Company’s directional Purchases markets the the increased drilling and acquisitions directional EGOC 2012. These in of and facilities. acquisitions assets significant credit rental rental and the the balances in cash acquired presence existing Company with the Departure 2013 of of assets quarter second the During activities investing in used Cash capital working non-cash in change Net which of million, $410.0 2013. of 31, borrowings operating December total at current for expects as support available provide Company’s fully Company was facilities to the The million credit facilities, funding year. $70.7 revolving credit to the future Existing addition throughout and requirements. in payments current capital with Departure, dividend and combined and and operations, of EGOC program by quarter of retrofit generated second assets major funds the the and in utilized of build was acquisitions new capital the current working Company’s for The year 2012. current 31, when the December a at 2013 was million in capital $13.9 working of services MD&A. Company’s capital this oilfield the of operations 2013, American section from 31, Uncertainties” funds December North percent and generate At “Risks to for 14 the ability in Company’s demand of outlined the reduced are impact decrease periods may to future in that a in operations factors due from 2013, significant funds mainly The in for 2012. is decrease to share) The compared 2012 2012. common in to generated per compared share) common ($2.85 2013 per ($3.32 million million $506.4 $435.6 to totaled compared operations from Funds 42 Ⅲ Ⅲ Ⅲ Ⅲ Acquisitions equipment and property of Purchase thousands) ($ Activities Investing capital Working share per operations from Funds operations from Funds Capital thousands) ($ Working and Operations from Funds osrcino n e elsriigrgi h ntdSae tidquarter). (third States United each the in in one rig and servicing quarters; well third new and one first of the of Construction and each quarters); in fourth (two and Canada second in the rigs of servicing well new six of Construction ADR new three of Completion ADR new two of Completion hr quarters); third ® rligrg nCnd oei h is ure n n ntetidquarter); third the in one and quarter first the in (one Canada in rigs drilling ® rligrg nteUie tts(n nec ftefrt eodand second first, the of each in (one States United the in rigs drilling (400,788) (342,225) 435,611 (76,408) (71,146) 17,845 eebr3,21 oae 322mlin(02–$306.7 – (2012 million $342.2 totaled 2013 31, December $2.85 2013 2013 eii f$11mlincmae opstv working positive to compared million $71.1 of deficit 3179 7,5)25 (79,059) (321,729) 3669 3,3)12 (35,536) (306,689) 0,5 7,4)(14) (70,744) 506,355 1,4)3,8 (219) 32,885 (15,040) 381(507 (613) (85,007) 13,861 33 (.7 (14) $(0.47) $3.32 E n 02Cag change % Change 2012 change % Change 2012 sig 7,0)– (76,408) – n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 Financing Activities Analysis and Discussion Management’s ($ thousands) 2013 2012 Change % change Net increase (decrease) in operating lines of credit 76,285 (1,398) 77,683 (5,557) Issue of senior unsecured notes – 300,000 (300,000) (100) Repayment of term loan – (403,279) 403,279 100 Issue of capital stock 2,002 43 1,959 4,556 Purchase of shares held in trust (6,497) (8,579) 2,082 (24) Deferred financing costs – (2,156) 2,156 (100) Dividends (68,614) (65,116) (3,498) 5 Net change in non-cash working capital 1,912 3,500 (1,588) (45) Cash provided by (used in) financing activities 5,088 (176,985) 182,073 (103)

The Company’s available operating lines of credit consist of a $400.0 million Global Facility and a $10.0 million Canadian Facility. The Global Facility is available to the Company and certain of its wholly owned subsidiaries, and may be drawn in Canadian, United States or Australian dollars, up to the equivalent value of $400.0 million Canadian dollars. The amount available under the Canadian Facility is $10.0 million or the equivalent in United States dollars. The change in the operating lines of credit for the year ended December 31, 2013 reflects funding for the ongoing new build and major retrofit program which is anticipated to deliver an additional 12 new ADR® drilling rigs, one new well servicing rig and 10 major retrofits of existing drilling rigs throughout 2014 and early 2015. As of December 31, 2013, the operating lines of credit are primarily being used to fund the Company’s new build and major retrofit program and to support growth in international operations. In February 2012, the Company completed the private placement of USD $300.0 million of senior unsecured notes, with the proceeds from the issuance being used to repay a portion of the USD $400.0 million unsecured term loan with the remaining balance repaid in full in the second quarter of 2012. On June 21, 2013 the Company received approval from the Toronto Stock Exchange to acquire for cancellation up to three percent of the Company’s issued and outstanding common shares under a Normal Course Issuer Bid (the “Bid”). The Company may purchase up to 4,599,367 common shares for cancellation. The Bid commenced on June 25, 2013, and will terminate on June 24, 2014, or such earlier time as the Bid is completed or terminated at the option of the Company. As at December 31, 2013, no common shares have been purchased and cancelled pursuant to the Bid. The Company previously had a Bid that commenced on June 18, 2012, and terminated on June 17, 2013, under which no common shares were purchased and cancelled. During the year ended December 31, 2013, the Company declared dividends of $0.4475 per common share, an increase of five percent over dividends of $0.4250 per common share declared in 2012. The Company received $2.0 million from the issuance of common shares in connection with exercises pursuant to the employee stock option program in 2013 compared to nominal receipts for stock option exercises in 2012. Subsequent to December 31, 2013, the Company declared a dividend for the first quarter of 2014. A quarterly dividend of $0.1175 per common share is payable April 4, 2014 to all Common Shareholders of record as of March 25, 2014. The dividend is pursuant to the quarterly dividend policy adopted by the Company. Pursuant to subsection 89(1) of the Canadian Income Tax Act (“ITA”), the dividend being paid is designated as an eligible dividend, as defined in subsection 89(1) of the ITA.

Ensign Energy Services Inc. 2013 Annual Report 43 Management’s Discussion and Analysis r esta n er auiyifrainrgrigteCmaysln-emdb sdsrbdaoeunder 44 above described is debt long-term Company’s payable the dividends regarding and information credit Maturity of Obligations. year. lines Contractual operating one accruals, than and less facilities payable $969.1 credit are accounts sufficient totaled of secures maturities and 2013 anticipa contractual basis exceed 31, annual remaining that an December requirements on at financing flows meet cash which 2012. forecasting to 31, liabilities, by December liquidity at financial manages as its Company million $790.0 The on from million risk $179.1 liquidity of increase to an million, subject or is all Company collecting in The successful be will Company Risk the Liquidity that assurance no balance. be outstanding can such there of and any contracts is perfo such there work renew Venezuela, to for in able million unrest be addi political $38.5 will In current Company approximately all. the the at of of that or result receivable assurance Company a no the as to be and acceptable can months terms there 12 on and next is the there over requiring Venezuela, expire in to estimate unrest due pro are an it contracts operations, is existing international These which contracts. Company’s accounts, the of doubtful part results. for actual As from allowance materially differ its may ar and reviews judgment old regularly significant estimate, days and best 90 than maintains management’s greater Company were mi in that $13.1 had customers of which, Company multiple accounts the of doubtful with balances 2013, for million) up 31, allowance $6.4 December the an follow at - monitors which As (2012 and also for basis. million Company ongoing $33.6 monitoring The an of required. on ongoing receivables as balances terms trade receivable resources, credit accounts of of credit restriction age or dedicated and tightening amount through and 2012. liens 31, risk well December owing, 31, at credit balances as December million manages at $428.2 which from Company balances, million receivable $16.9 The note of and increase receivable an accounts million, on $445.1 risk totaled 2013 credit as to classified subject is are Company debt The long-term and Risk payable Credit dividends credit, cost. of amortized cost. lines amortized at at liabilities operating assets financial accruals, financial as and classified are payable receivable Accounts note below: and presented receivable is accounts recognized equivalents, has cash Company and the Cash instruments financial of measurement and classification The Instruments Financial interest. related Excludes 1 credit of lines follows: Operating as is 2013, 31, December thousands) of ($ as obligations future contractual on leases. total impact office Company’s an and the have facilities of will credit summary that debt, A commitments long-term to various primarily into relate enters commitments Company These the operations. business, of course normal the In Obligations Contractual ogtr debt Long-term fielae ,5 ,5 9 6 5,973 460 198 2,458 2,857 leases Office 1 1 2,2 326,525 – – – 326,525 2,8 ,5 0,5 1,8 651,578 213,180 106,558 2,458 329,382 esthan Less er13Yas45Years 4-5 Years 1-3 Year 1 0,6 1,2 319,080 212,720 106,360 – – in sa eebr3,21,teCmayhdntaccounts net had Company the 2013, 31, December at as tion, e nenlygnrtdfns sa eebr3,21,the 2013, 31, December at As funds. generated internally ted emducletbea tDcme 1 03 The 2013. 31, December at as uncollectible deemed e mdi eeul n gi,det h urn political current the to due again, and Venezuela in rmed ie ifedsrie nVnzeaprun olong-term to pursuant Venezuela in services oilfield vides lo 21 12mlin a enrcre opoiefor provide to recorded been has million) $1.2 - (2012 llion E n sig n E n rySrie I Services ergy er Total Years 5 After n c. 03Ana Report Annual 2013 New Builds and Major Retrofits Analysis and Discussion Management’s During the year ended December 31, 2013, the Company commissioned three new ADR® drilling rigs, one new well servicing rig and retrofitted one drilling rig in the United States; two new ADR® drilling rigs, six new well servicing rigs and retrofitted two drilling rigs in Canada; and retrofitted one drilling rig transferred from the United States to Australia. The Company continues to build new ADR® drilling rigs and upgrade existing drilling rigs to meet the increasing technical demands of its customers. In Canada the Company is continuing to transition from shallow drilling to deeper drilling, building new ADRs and upgrading existing drilling rigs for deeper resource plays in the northwest part of the Western Canada Sedimentary Basin. In the United States the Company builds new ADRs for specific resource plays and has been upgrading existing drilling rigs for pad drilling operations in the southern United States. Internationally, the Company has been increasing its capabilities, through a combination of new ADRs and major retrofits of existing drilling rigs, to meet the requirements of specific markets. The estimated delivery schedule for new ADRs, major retrofits of existing drilling rigs and new well servicing rigs, by geographic area currently under construction at December 31, 2013 is as follows: Estimated Delivery Date Q1-2014 Q2-2014 Q3-2014 Q4-2014 Q1-2015 Total New Build ADRs: Canada – – 2 2 – 4 United States 1 – – 3 2 6 International 2 ––––2 Major Retrofits to Drilling Rigs: Canada 1 – 2 – – 3 United States – – – 1 1 2 International 2 1 2 – – 5 Total 6166322 Well Servicing Rigs: Canada – – – 1 – 1 United States –––––– International –––––– Total – – – 1 – 1

Ensign Energy Services Inc. 2013 Annual Report 45 Management’s Discussion and Analysis $tosns xetprsaedata) share per except thousands, ($ ud rmoeain 1,5 2,2 736181,235 105,524 87,336 18,677 121,229 44,832 106,078 116,555 48,489 46 19,810 677,671 presentation. year 214,921 current reflect to restated been have amounts 45,248 period 463,878 prior Certain 89,562 525,666 48,367 share per operations from 132,577 Funds operations from 530,106 Funds 123,915 share per income Net income Net share per income net Adjusted income net Adjusted share per EBITDA Adjusted EBITDA Adjusted Revenue share per EBITDA Adjusted EBITDA Adjusted Revenue Results Quarterly Summary dutdntincome net Adjusted dutdnticm e share per income net Adjusted e income Net e noeprshare per income Net ud rmoperations from Funds ud rmoeain e share per operations from Funds iue 07 07 05 $1.18 $1.19 $0.57 $0.57 $0.69 $0.69 $0.79 $0.80 $0.12 $0.12 $0.69 $0.69 $0.76 $0.76 $0.29 $0.29 $0.13 $0.13 $1.40 $1.41 $0.32 $0.32 $0.30 $0.30 $0.59 $0.59 $0.32 $0.32 $0.87 $0.87 $0.81 $0.81 Diluted Basic Diluted Basic Diluted Basic Diluted Basic Basic Diluted Basic Diluted Basic Diluted Basic Diluted 112,461 536,044 101,209 27,947 26,895 Q4-2013 $0.74 $0.73 $0.18 $0.18 $0.18 $0.18 $0.66 $0.66 421 321 221 Q1-2012 Q2-2012 Q3-2012 Q4-2012 2,2 576164,382 581,142 85,746 437,874 123,123 542,951 0,2 867139,802 88,677 105,923 4811,8 66,617 14,484 34,861 36932464,987 3,284 33,699 321 221 Q1-2013 Q2-2013 Q3-2013 08 05 $1.08 $0.56 $0.81 08 05 $1.07 $0.56 $0.80 02 00 $0.44 $0.09 $0.23 02 00 $0.43 $0.09 $0.23 02 00 $0.43 $0.02 $0.22 02 00 $0.42 $0.02 $0.22 06 05 $0.92 $0.58 $0.69 06 05 $0.91 $0.58 $0.69 E n sig n 2013 2012 E n rySrie I Services ergy n c. 03Ana Report Annual 2013 The seasonal operating environment in Canada impacts the Company’s quarterly results. Financial and operating Analysis and Discussion Management’s results for the Company’s Canadian oilfield services division are generally strongest during the first and fourth quarters when the Company’s customers conduct the majority of their drilling programs. Utilization rates typically decline during the second quarter as spring break-up weather conditions hinder mobility of the Company’s equipment. As the Company expands its operations in the United States and internationally, the seasonal effects on results of operating in Canada will be mitigated. The comparability of the Company’s financial results on a quarter-over-quarter basis is impacted by the Black- Scholes valuation accounting associated with the Company’s share-based compensation plans, which can fluctuate significantly from quarter to quarter as a result of changes in the valuation inputs, as well as changes in foreign currencies against the functional currencies of the Company’s operating entities. Management utilizes Adjusted EBITDA and Adjusted net income to assess results from the Company’s principal business activities prior to the impact of share-based compensation and foreign exchange and other. An assessment or comparison of the Company’s quarterly results at any given time requires consideration of crude oil and natural gas commodity prices. Commodity prices ultimately drive the level of exploration and development activities carried out by the Company’s customers and the resultant demand for the oilfield services provided by the Company. The variability noted in the Company’s quarterly results for 2013 reflect reduced activity levels in North America as the decrease in demand that started late in 2012 continued into 2013. Reduced demand was a result of North American customers delaying or reducing their drilling programs in the face of general economic uncertainty and unfavorable price differentials for Canadian commodities. Partially offsetting these reductions to 2013 financial results were the positive impacts from the expansion of the Company’s oilfield rentals and directional drilling capabilities in the second quarter of 2013 and generally stronger financial results from international operations in the eastern hemisphere throughout the current year compared to 2012.

Ensign Energy Services Inc. 2013 Annual Report 47 Management’s Discussion and Analysis elsriigrguiiainrate utilization rig servicing Well elServicing Well Drilling diluted – shares average Weighted nldswroe rigs. workover Includes rigs. coring 2 Excludes 1 basic – shares average Weighted share per operations from Funds operations from Funds share per income Net income Net share per income net Adjusted income net Adjusted share per EBITDA Adjusted EBITDA Adjusted Revenue Analysis Quarter Fourth $tosns xetprsaedt n operating and data information) share per except thousands, ($ 48 Diluted Basic Diluted Basic Diluted Basic Diluted Basic prtn hours Operating rigs marketed of Number ubro aktdrigs marketed of Number rligrguiiainrate utilization rig Drilling prtn days Operating International ntdStates United Canada States United Canada Canada ntdStates United Canada International States United ntdStates United Canada Canada International States United 1 1 1 2 2 2 (%) (%) (000s) (000s) 153,613 152,809 101,209 112,461 536,044 30,057 30,324 26,895 27,947 5,778 $0.66 $0.66 $0.18 $0.18 $0.18 $0.18 $0.73 $0.74 2,888 3,457 2013 58.1 53.7 31.1 72.6 34.7 121 117 45 95 54 he otseddDcme 31 December ended months Three 5,2 9 – – 692 192 152,921 152,617 1,5 1,4)(13) (15,346) 116,555 1 (9) (11,454) 5,938 123,915 530,106 8071907 (13) 1,960 (4,730) 28,097 35,054 849(154 (45) (42) (21,594) 48,489 (20,420) 48,367 ,5 2 4 223 5,555 07 (.0 (13) (13) (44) $(0.10) (44) $(0.10) $0.76 (44) $(0.14) $0.76 (44) $(0.14) $0.32 (10) $(0.14) $0.32 (9) $(0.14) $0.32 $(0.08) $0.32 $(0.07) $0.81 $0.81 ,1 12 (4) (16) (122) (678) 3,010 4,135 99(.)(3) 7 (14) (1.8) 3.5 (5.1) 59.9 50.2 36.2 64629 (10) 6.2 (3.8) 66.4 38.5 02Cag change % Change 2012 2 3 (2) (3) 124 2 4 (3) (4) 121 E 6()(2) (4) (1) (4) 46 99 4–– – 54 n sig n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 Revenue and Oilfield Services Expense Analysis and Discussion Management’s Three months ended December 31 ($ thousands) 2013 2012 Change % change Revenue Canada 158,488 176,693 (18,205) (10) United States 235,829 213,667 22,162 10 International 141,727 139,746 1,981 1 536,044 530,106 5,938 1 Oilfield services expense 399,856 384,553 15,303 4 Gross margin 136,188 145,553 (9,365) (6) Gross margin percentage (%) 25.4 27.5

The Company recorded revenue of $536.0 million for the three months ended December 31, 2013, a one percent increase from the $530.1 million recorded in the three months ended December 31, 2012. Drilling operating days totaled 12,123, a five percent decrease over the previous year. Demand for North American oilfield services began to show signs of recovery late in 2013, particularly in the United States, with revenue rates returning to levels more comparable with 2012 however Canada still remained at slightly reduced demand levels. United States results for the current year fourth quarter also reflect the additions to the fleet from the new build program. Throughout 2013, three new ADRs and one new well servicing rig were added to the United States fleet which helped to bring operating and financial results up in the fourth quarter of 2013 when compared to the fourth quarter of 2012. Revenues for international oilfield services were mainly consistent in the fourth quarter of 2013 compared to the fourth quarter of 2012 and both international and United States oilfield services results benefited in the current year fourth quarter from the strengthening of the United States dollar against the Canadian dollar on translation to Canadian dollars when compared to the prior year fourth quarter. As a percentage of revenue, gross margin for the fourth quarter of 2013 decreased to 25.4 percent from 27.5 percent for the fourth quarter of 2012. Higher costs associated with ongoing maintenance programs in the current year fourth quarter compared to the prior year negatively impacted margins as these costs are generally expensed as incurred. In addition several international rigs incurred start-up costs in the current year fourth quarter and are expected to begin work in 2014. Depreciation expense totaled $69.2 million for the fourth quarter of 2013 compared with $54.0 million for the fourth quarter of 2012. Increased depreciation reflects higher-valued equipment being added to the Company’s global fleet throughout 2013 and the impact of the current year second quarter acquisitions of assets from EGOC and Departure. General and administrative expense increased 10 percent to $23.7 million (4.4 percent of revenue) for the fourth quarter of 2013 compared with $21.6 million (4.1 percent of revenue) for the fourth quarter of 2012. The increase in general and administrative expenses in the fourth quarter reflects the overall growth of the Company’s international operations and includes the negative translational impact of a stronger United States dollar on United States and international administrative expenses. Outstanding Share Data The following common shares and stock options were outstanding as of March 13, 2014:

Number Amount ($thousands) Common Shares 152,905,353 170,535

Outstanding Exercisable Stock options 8,083,300 3,141,600

Ensign Energy Services Inc. 2013 Annual Report 49 Management’s Discussion and Analysis uigteya.TeCmaycmltdoemjrdiln i erfti 03 n scntutn w e ADRs new two 2014. constructing in is market and international the 2013; for in rigs operations retrofit drilling commence rig existing markets drilling to international retrofits major major into one five repositioned completed and the or Company oper Overall, The added levels. year. recently the risk the rigs heightened during drilling in such as manage 2014, improvements to in attempt countries. operations an continued American in Latin areas anticipates and these eastern African on Company certain focus being in in to risks regions continues particularly and Company key concerns The 2013, geopolitical many regional remain throughout are in prices operations well services international gas oilfield perform natural for and over to in delivery demand oil continued for fleet Crude rigs drilling regions. operations drilling States hemisphere existing international United to its retrofits Company’s to major The two retrofit and rig ADRs drilling months. new one 12 six demand next completed customer constructing the increased and currently of is ADRs support and In new year. 2013; three prior the added of to levels. Company flows compared as activity 2014 the cash encouraging in drilling Accordi been the improvements rich trends. has record to companies permitting liquids will improvements production operations well gas and recent the natural exploration positive but States and by United drilling, oil supported from gas crude are guidance prices natural benefit spending gas 2014 in should natural Initial current companies increase drilling Canada, active production meaningful with to onshore As and a due the quarters. exploration of by drive year couple indicated to prior last (as the expected levels the over utilization not stable to industry relatively compared and ke been have summer 2013 Company’s count) the in rig the in slower recover of modestly out some to started began by and levels operations infrastructure activity the of favorable services of on rationalization oilfield flows depend States will cash United plays, the The levels, resource activity oil on service certain crude oilfield effect delineate in related expenditures to positive and developments. oilfield regulatory the resources expenditures a continued Canadian in current of Canada fund have development than in to Further will wells help other plays. gas to prices liquids natural expected gas drilling gas is natural for and and natural demand companies of in production levels and improvements increased has exploration retrofits generate year Recent will rig this that term. America drilling level North two rela near of a and and much at levels throughout ADRs be winter consumption to deeper retrofits colder gas appear major new a natural three While two and for fleet. the ADRs Canadian positive capacity to its been deeper that for addition new market rigs four In services drilling constructing months. oilfield existing currently Canadian to is 15 the Company to the in 12 2013, shift in last the completed of the recognition in in in Canadi occurred categories particularly the has depth capacity, in deeper industry competitiveness to 11,102 excess its fleet – and improve equipment (2013 levels To year activity operati 2013. prior flat Canadian in the of Company’s rates from environment the unchanged this categories, essentially In depth was wells). shallower 2013 of 11,043 future. during levels the – Canada planned in 2012 current in point wells; fund drilled some at help wells expenditures will of in flows number increases cash in The result Improved likely flows. will cash and corporate expenditures sustainability services their for oilfield for look positive plan undoubtedly are investment will nature, their companies in altering production before and prices exploration commodity as prices of services commodity oilfield gas for natural conditions demand and weather extra oil ba winter per Crude American USD$100 range. North above mcf and trading per tensions oil political crude global in resulted recent have Additionally, g prices. the gas in natural recovery and apparent the that believes Management Outlook 50 rladntrlgsi h S$.0prmft USD$5.00 to mcf per USD$4.50 the in gas natural and rrel e omdt rcs h rc fntrlgsde not does gas natural of price the prices, commodity ted ;hwvr ihrcmoiypie,ee ftemporary if even prices, commodity higher however, s; oa cnm rvdsraoal upr o rd oil crude for support reasonable provides economy lobal evdb h opn.Tmeigti piimin optimism this Tempering Company. the by served tteelvl ontapa ob tmltn o of lot a stimulating be to appear not do levels these at gy h opn sotmsi htisUie States United its that optimistic is Company the ngly, nmre h opn scniun otasto its transition to continuing is Company the market an utmr.Hwvr eadfrolil services oilfield for demand However, customers. y n eoddaya-vrya euto nutilization in reduction year-over-year a recorded ons tn n iaca eut rmisinternational its from results financial and ating trciei oeg akt,pstvl impacting positively markets, foreign in attractive E n sig n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 Critical Accounting Estimates Analysis and Discussion Management’s Management is required to make judgments, assumptions and estimates in applying its accounting policies and practices, which have a significant impact on the financial results of the Company. These significant accounting policies involve critical accounting estimates due to complex judgments and assumptions. These estimates, judgments and assumptions are based on the circumstances that exist at the reporting date and may affect the reported amounts of income and expenses during the reporting periods and the carrying amounts of assets, liabilities, accruals, provisions, contingent liabilities, other financial obligations, as well as the determination of fair values. Property and Equipment The estimated useful life, residual value and depreciation methods selected are the Company’s best estimate of such and are based on industry practice, historical experience and other applicable factors. These assumptions and estimates are subject to change as more experience is obtained or as general market conditions change, both of which could impact the operations of the Company’s property and equipment. Impairments For impairment testing, the assessment of facts and circumstances is a subjective process that often involves a number of estimates and is subject to interpretation. An impairment is recognized if the carrying value exceeds the recoverable amount for a cash-generating unit (“CGU”). Property and equipment are aggregated into CGUs based on their ability to generate largely independent cash flows. The testing of assets or CGUs for impairment, as well as the assessment of potential impairment reversals, requires that the Company estimate an asset’s or CGU’s recoverable amount. The estimate of a recoverable amount requires a number of assumptions and estimates, including expected market prices, market supply and demand, margins and discount rates. These assumptions and estimates are subject to change as new information becomes available and changes in any of the assumptions could result in an impairment of an asset’s or CGU’s carrying value. Share-based Compensation Measurement inputs include share price on measurement date, exercise price, expected volatility, expected life, expected dividends and the risk-free interest rate. Significant estimates and assumptions are used in determining the expected volatility based on weighted average historic volatility adjusted for changes expected due to publicly available information, weighted average expected life and expected forfeitures, based on historical experience and general option holder behavior. Changes to the input assumptions could have a significant impact on the share- based compensation liability. Income Taxes The Company follows the liability method of accounting for income taxes. Under this method, deferred income taxes are recorded for the effect of any temporary difference between the accounting and income tax basis of an asset or liability, using the substantively enacted income tax rates. Current income taxes for the current and prior periods are measured at the amount expected to be recoverable from or payable to the taxation authorities based on the income tax rates enacted or substantively enacted at the end of the reporting period. The deferred income tax assets and liabilities are adjusted to reflect changes in enacted or substantively enacted income tax rates that are expected to apply, with the corresponding adjustment recognized in net income or in shareholders’ equity depending on the item to which the adjustment relates. Tax interpretations, regulations and legislation in the various jurisdictions in which the Company and its subsidiaries operate are subject to change. As such, income taxes are subject to measurement uncertainty and the interpretations can impact net income through the income tax expense arising from the changes in deferred income tax assets or liabilities.

Ensign Energy Services Inc. 2013 Annual Report 51 Management’s Discussion and Analysis eonzdo eesdadfi au escsso ipsli ae napeetvletcnqe A 6wsapplied was 36 c IAS Company’s technique. value the present a standard. to this on impact to based be amendments is no to disposal required was of is costs There CGU less incl each retrospectively. value of fair disclosure, amount and recoverable expanded reversed the or requires when recognized clarify also 36 IAS and to Amendments disclosed 2013. amendm May adopted in early issued Company was the above, the to to addition liabilities, In financial consolidated and Company’s sta assets financial the financial consolidated of Company’s offsetting positi the users of financial to effect, enable of potential statement will or consolidated that Company’s effect, information the the of evaluate disclosure to the statements require financial 7 7”) IFRS (“IFRS to Disclosure to Amendments Instruments: paid Financial or – asset, 7 standard. an IFRS this adopting sell of to result a received as app be statements was financial would 13 consolidated IFRS that market measurement. price IFRS value between fair the all transaction about across orderly is disclosures use an value for in fair requirements liability that disclosure a and clarifies transfer measurement standard value new fair for The standard standards. comprehensive 13”) a (“IFRS is Measurement 13 IFRS Value an Fair with, – 13 associated IFRS risks and C the of, to standard. impact nature this no adopting the was of There address associates, entities. other arrangements, that in joint requirements interests The entity’s as disclosure vehicles. such additional sheet entities, balance significant other off introduces in and interests vehicles 12”) for purpose (“IFRS requirements special Entities disclosure Other establishes in 12 Interests IFRS of Disclosure its – from IFRS 12 returns investee. IFRS variable the to, over influence rights Com its the has through to standard. or impact returns this no exposed, those adopting was affect is There to it retrospectively. ability applied when the was investee has 10 and an investee consolidate the to with entity involvement an 10”) requires (“IFRS 10 Statements IFRS Financial Consolidated Company: is the – following to 10 The relevant 2013. are IFRS 1, that January standards new effective the standards of revised summary and brief new a mandatory following the adopted Company The Policies b Accounting in must Changes that entity. each factors for currency of functional appropriate number the on determine a based includes currency This functional operates. determines Company The periods. future in Currency accounts doubtful Functional for allowance the to adjustments in e result future may of recei estimates including accounts det uncertainty, Assessing and accounts is experience. judgment of uncollectible past allowance recoverability for and losses the The trends estimated assesses warrant. for economic and allowance circumstances an balances establishes receivable as Company The accounts accounts basis. on ongoing risk an on credit balances to receivable subject is Company The Accounts Doubtful for Allowance 52 eet sarsl faotn hsstandard. this adopting of result a as tements dn h icutrt sdwe nipimn osis loss impairment an when used rate discount the uding n FS7wsapidrtopciey hr a oimpact no was There retrospectively. applied was 7 IFRS on. et.Cagsi icmtne neligteeestimates these underlying circumstances in Changes vents. osdrdb h opn nuigisjdmn to judgment its using in Company the by considered e h rmr cnmcevrneti hc h entity the which in environment economic primary the idpopciey hr a oipc oteCompany’s the to impact no was There prospectively. lied atcpns ttemaueetdt.I loestablishes also It date. measurement the at participants, noiae iaca ttmnsa euto adopting of result a as statements financial onsolidated rie ae ncsoe rdtwrhns,current credit-worthiness, customer on based ermined nst A 6–Ipimn fAst “A 6)which 36”) (“IAS Assets of Impairment – 36 IAS to ents tnadcrisfradeitn icoue n also and disclosures existing forward carries standard mayscnoiae iaca ttmnsa result a as statements financial consolidated ompany’s ayscnoiae iaca ttmnsa eutof result a as statements financial consolidated pany’s al aacsfrrcvrblt novssignificant involves recoverability for balances vable E n sig n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 Recent Accounting Pronouncements Analysis and Discussion Management’s The IASB issued annual improvements to IFRSs in December 2013. The following is a brief summary of the amendment that may be relevant to the Company, which is effective for annual periods beginning on or after July 1, 2014 and has not yet been adopted by the Company. IFRS 8 – Operating Segments (“IFRS 8”) Amendments to IFRS 8 require the disclosure of judgments made by management in applying the aggregation criteria to operating segments. The Company is currently assessing the disclosure requirements of this amendment in comparison with existing disclosures. Disclosure Controls and Procedures and Internal Controls over Financial Reporting The Company’s management, including the President and Chief Operating Officer, and Executive Vice President Finance and Chief Financial Officer, has reviewed and evaluated the design and operation of both the Company’s disclosure controls and procedures and the Company’s internal controls over financial reporting (as defined in National Instrument 52-109 issued by the Canadian securities regulators) as of December 31, 2013. Management has concluded that, as at December 31, 2013, the Company’s disclosure controls and procedures were effective and management has also concluded that, as at December 31, 2013, the Company’s internal controls over financial reporting were effective. There have been no changes in the Company’s internal controls over financial reporting that occurred during the period beginning on October 1, 2013 and ended on December 31, 2013 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting. Risks and Uncertainties Crude Oil and Natural Gas Prices The most significant factors affecting the business of the Company are crude oil and natural gas commodity prices. Commodity price levels affect the capital programs of energy exploration and production companies, as the price they receive for the crude oil and natural gas they produce has a direct impact on the cash flow available to them and subsequent demand for oilfield services provided by the Company. Crude oil and natural gas prices have been volatile in recent years and may continue to be so as weather conditions, government regulations, political and economic environments, pipeline capacity, storage levels and other factors outside of the Company’s control continue to influence commodity prices. Demand for the Company’s services in the future will continue to be influenced by commodity prices and the resultant impact on the cash flow of its customers, and may not be reflective of historical activity levels. Competition and Industry Conditions The oilfield services industry is, and will continue to be, highly competitive. Contract drilling companies compete primarily on a regional basis and competition may vary significantly from region to region at any particular time. Most drilling and workover contracts are awarded on the basis of competitive bids, which result in price competition. Many drilling, workover and well servicing rigs can be moved from one region to another in response to changes in levels of activity, which can result in an oversupply of rigs in an area. In many markets in which the Company operates, the supply of rigs exceeds the demand for rigs, resulting in further price competition. Certain competitors are present in more than one of the regions in which the Company operates, although no one competitor operates in all of these areas. In Canada, the Company competes with several firms of varying size. In the United States there are many competitors with national, regional or local rig operations. Internationally, there are several competitors at each location where the Company operates and some of those international competitors may be better positioned in certain markets, allowing them to compete more effectively. There is no assurance that the Company will be able to continue to compete successfully or that the level of competition and pressure on pricing will not affect the Company’s margins.

Ensign Energy Services Inc. 2013 Annual Report 53 Management’s Discussion and Analysis eiin gis h opn ol aea des feto h opn’ iaca odto rresults or condition accordingly financial and Company’s material the be on may effect actions adverse or an tort, suits have employment, such include could operations. may in Company of that claimed proceedings the Amounts legal against and suits. litigation decisions action to class subject is and Company the commercial the of time, flows to cash time the regulatory From Company. on other Proceedings the effect by Legal adverse and provided an and environmental services have Litigation oilfield to increased also for order may demand with in changes, dampen complying regime expenditures may oilfield and royalty capital of customers as providing or and Company’s costs such costs with future, The Existing operating the associated regulations. additional regulations. in incur costs changes new environmental to any the required including with be increase the gas, may comply may and Company natural operations the regulations its and as and governing services, oil regulations legislation crude and by environmental laws of reported numerous expected to development results subject and the are customers exploration at of its 0.98 and equivalent Company and dollar Regulations The and 2012 Canadian Laws 31, the in Changes impact December will at rates 0.96 subsidiaries. exchange with foreign conversion future compared the rate in to exchange 1.12 dollar relation Fluctuations approximately States in Australia/United risk was The and exchange 2011. 2013, dollars. 2012 31, foreign December Australian 31, 31, has to December Company December debt at the denominated 0.99 at addition, dollar with States In dollar compared to States United 1.06 2011. relates Canada/United of approximately 31, risk The was December exchange dollars. 2013, countries foreign at Canadian 31, principal to in 1.02 December The activity Operations at Company. denominated the dollars. rate dollar to States exchange Canadian risk United in exchange of foreign conversion presented in the are result be Canada statements of will financial Company outside the the consolidated insurance by year Company’s carried of each The insurance level of and its Exposure level people, Exchange believes the Foreign that and Company assurance the liabilities. equipment no potential Although its all be cover adequacy. can to to there for sufficient risk adequate, insurance cost- the be and of to cover available level coverage Where to industry. the services insurance reviews oilfield carries the Company in Company inherent the risks to effective, subject are the operations on Company’s impacts The adverse Insurance material Company and have the Risks could that and Operating risks assurance Such provisions no results. risks. be operating termination operation can to and foreign early condition there seeks mitigating financial and include the Company’s in Company is ideally by effective there the fully imposed However, that risks, be force protection. be services will these Company’s to deprivation, drilling the mitigate restrictions for contract for To other clauses nationalization, contracts organizations. other or and service operations sanctions or economic long-term expropriation governments Company’s and negotiate other revenue, the trade or of for to government loss terrorist potential Risks Canadian strikes, the to, unrest, and arrangements. limited labor events commercial not risks and/or majeure are are civil complex There in regimes, jurisdictions. but and regulations these government include, in to uncertainty unstable typically, vary subject as can regulatory and, industry such are stable gas threats, operations operations natural of generally foreign and Company’s number are oil in a the the regimes inherent for in Internationally, regulatory support internationally and activity. States jurisdictions and industry United various America energy and North Canadian of of The supportive much areas. throughout drilling services onshore oilfield provides Company The Operations Foreign 54 E n sig n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 Access to Credit Facilities and Debt Capital Markets Analysis and Discussion Management’s The Company and its customers require reasonable access to credit facilities and debt capital markets as an important source of liquidity. Global economic events, outside the control of the Company or its customers, may restrict or reduce the access to credit facilities and debt capital markets. Tightening credit markets may reduce the funds available to the Company’s customers for paying accounts receivable balances and may also result in reduced levels of demand for the Company’s services. Additionally, the Company relies on access to credit facilities, along with its reserves of cash and cash flow from operating activities, to meet its obligations and finance operating activities. The Company believes it has adequate bank credit facilities to provide liquidity. New Build and Major Retrofit Schedule Delays As customer demand for oilfield service equipment increases, from time to time, the Company may undertake to increase its fleet through upgrades to rigs or through new construction. These projects are subject to risks of delay inherent in any large construction project resulting from numerous factors, including but not limited to shortages of equipment, materials or skilled labor; and unscheduled delays in the delivery of ordered materials and equipment. Project delays may affect the Company’s ability to meet contractual commitments as well as the timely commencement of operations of the Company’s drilling and well servicing rigs following delivery. Workforce The Company’s operations are dependent on attracting, developing and maintaining a skilled workforce. During periods of peak activity levels, the Company may be faced with a lack of personnel to operate its equipment. The Company is also faced with the challenge of retaining its most experienced employees during periods of low utilization, while maintaining a cost structure that varies with activity levels. To mitigate these risks, the Company has developed an employee recruitment and training program, and continues to focus on creating a work environment that is safe for its employees. Seasonality and Weather The Company’s Canadian oilfield services operations are impacted by weather conditions that hinder the Company’s ability to move heavy equipment. The timing and duration of “spring break-up”, during which time the Company is prohibited from moving heavy equipment on secondary roads, restricts movement of equipment in and out of certain areas, thereby negatively impacting equipment utilization levels. Further, the Company’s activities in certain areas in northern Canada are restricted to winter months when the ground is frozen solid enough to support the Company’s equipment. This seasonality is reflected in the Company’s operating results, as rig utilization is normally at its lowest during the second and third quarters of the year. The Company continues to mitigate the impact of Canadian weather conditions through expansion into markets not subject to the same seasonality and by working with customers in planning the timing of their drilling programs. In addition, volatility in the weather across all areas of the Company’s operations can create additional risk and unpredictability in equipment utilization rates and operating results. Reliance on Key Management Personnel The success and growth of the Company is dependent upon its key management personnel. The loss of services of such persons could have a material adverse effect on the business and operations of the Company. No assurance can be provided that the Company will be able to retain key management members. Technology As a result of growing technical demands of resource plays, the Company’s ability to meet customer demands is dependent on continuous improvement to the performance and efficiency of existing oilfield services equipment. There can be no assurance that competitors will not achieve technological advantages over the Company.

Ensign Energy Services Inc. 2013 Annual Report 55 Operating Divisions Summary 56 Oilfie Mountain Rocky four Inc., has (U.S.A.) Company Rentals the Equipment above, noted divisions the to addition In days. operating rig coring Excludes rigs. (2) drilling and coring Includes (1) Summary Divisions Operating iiinGorpi oeae21 2012 2013 Coverage Geographic Partnership Drilling Ensign Division ninUie ttsDiln n.Uie ttsRcyMuti ein North region, Mountain Rocky States United Inc. Drilling States United Ensign pc nryIdsre Ltd. Industries Energy Opsco evcsPartnership Services Petroleum Enhanced okelSriigPrnrhpWsenCnd elsriigrigs servicing well – Canada Western Partnership Servicing Rockwell nind eeul ..Venezuela C.A. Venezuela de Ensign nentoa iie fia retn,adteMdl East Middle the and Argentina, Africa, Asia, Southeast Zealand, New Australia, Limited International Services Energy Ensign Ltd. Mississippi, (USA) Louisiana, Industries Texas, Energy Opsco LLC Drilling Southern US Ensign Clfri)Ic aionaadNevada and California Inc. (California) Drilling States United Ensign ninCnda rligWsenCanada Western Drilling Canadian Ensign rdcinTsigUisWsenCanada Western Units Testing Production ieieUisWsenCanada Western Units Wireline nacdDilSsesWsenCnd neblne rligunits drilling underbalanced – Canada Western Systems Drill Enhanced ninDprueDirectional Departure Ensign noeCrn n Drilling and Coring Encore ieieUisUie ttsRcyMuti region Mountain Rocky States United region, Mountain Rocky States United Units Testing Production Units Wireline ninWl evcsCalifornia Services Well Ensign ninWl evcsUie ttsRcyMuti region Mountain Rocky States United Services Well Ensign ietoa rligKt ntdSae ok onanregion Mountain Rocky States United Kits Drilling Directional evcsWsenCanada Western Services 1 (2) (1) aoa ot aoa ersa Pennsylvania Nebraska, Dakota, South Dakota, etr aaaadteYukon the and Canada Western enyvnaadTexas and Pennsylvania Oklahoma and Alabama Arkansas, n Michigan and dRnasadWs os ifedRentals). Oilfield Coast West and Rentals ld qimn etldvsos(C divisions rental equipment E n sig n adlEupetRnas Chandel Rentals, Equipment handel E n rySrie I Services ergy n 115 c. 51 46 22 16 95 48 35 46 50 39 28 27 17 29 le Size Fleet 03Ana Report Annual 2013 8 2 118 56 48 25 17 99 20 37 46 34 40 32 25 14 32 8 1 prtn iiin Summary Divisions Operating Wells Drilled Metres Drilled Operating Days/Hours Utilization % 2013 2012 2013 2012 2013 2012 2013 2012

1,924 2,275 2,914,808 3,371,935 13,719 17,746 32.8 39.5 109 169 57,581 109,372 464 652 21.2 26.4

NA NA NA NA NA NA NA NA NA NA NA NA 121,159 140,978 35.8 38.1

NA NA NA NA NA NA NA NA

NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA

698 985 2,665,874 3,124,904 10,561 12,119 55.7 59.4 NA NA NA NA NA NA NA NA NA NA NA NA 29,625 30,744 58.0 61.8

1,172 1,021 1,035,013 939,083 6,130 5,747 67.4 64.5 NA NA NA NA 75,636 91,022 67.0 85.7

325 215 1,011,714 899,424 6,264 6,360 43.4 49.3

NA NA NA NA NA NA NA NA

NA NA NA NA NA NA NA NA

945 789 966,580 961,402 8,735 8,522 52.7 54.0 57 74 73,943 120,223 2,649 2,675 90.7 91.4

Ensign Energy Services Inc. 2013 Annual Report 57 Corporate Governance 58 corporate Corporation’s the concerning reports approval, for Board the to recommending and Reviewing 2. boards of number the on limitations including policies, and the guidelines governance with corporate Ensign’s Board Reviewing Direc 1. of the evaluation the assisting includes: (v) this Directors; for Specifically Direct the of for responsible appointment remuneration the is of (iii) corpor Board; to Committee the approach to Ensign’s Nominations appointment (i) of: and monitoring and Governance development Corporate The Committee Nominations recommends, and Committee Governance Corporate The procedures. and systems accounting and reporting financial Company’s and practices; The and 5. procedures controls, accounting internal Company’s The 4. auditor; financial independent the required of audit; other independence annual The and 3. Company’s the statements of scope financial and nature Company’s The 2. the of disclosure and review preparation, The 1. in Board of: the oversight assist including to reporting, established financial been has Committee Audit The Directors and of Governance Committee Corporate Board Audit Audit, The areas: management. four Company’s following Envir directors. the and independent and the of Porter of Safety in Health, Selby members committees and Mr. also Compensation, Board Edwards, Nominations, are to Murray who members N. members appoints Mr. Board annually market directors. and only Chairman, nine ensuring Vice the of Chairman, budget, are Ensign’s composed Geddes, currently operating H. is Robert annual Mr. Directors of Company’s Board the The re approves properly are and thinking, divisions. strategic operating reviews as well Directors of as approval of conditions, of execution the the Board and governing authority of requirements The delegation the the Company. operations, the prescribe Company’s of the behalf that of on procedures course documents the established in out has for carried compensation Directors transactions of of approval performance. President, Board management’s Company’s and The the President’s the of of appointment monitoring the and re includes executives senior This overall Company. exercises the Directors of affairs of Board Company’s The Governance Corporate oennepatcsa eurdudrapial euiislw n h ue faysokecag nwhich on exchange stock any of trading. rules for the listed and are laws securities securities Company’s applicable the under required as practices changes governance and succession and retirement and tenure, Director; director a to of respect occupation with primary policies the and in sit may Directors which on containing releases disclosure mandatory other and statements financial audited the information. financial approval, Board for materials; disclosure lce ntesottr ol fec fteCompany’s the of each of goals short-term the in flected r ocmite fteBad i)terecommendation the (iv) Board; the of committees to ors pniiiyfrtemngmn n uevso fthe of supervision and management the for sponsibility net l fteecmite r opie entirely comprised are committees these of All onment. os v)Drco dcto;ad(i)rltdmatters. related (vii) and education; Director (vi) tors; rsdn n he prtn fie respectively, Officer Operating Chief and President t oenne i)tenmnto fDrcosfor Directors of nomination the (ii) governance; ate ufligisrsosblt o vrih fEnsign’s of oversight for responsibility its fulfilling E n sig n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 Compensation Committee Governance Corporate The Compensation Committee is responsible for assisting the Board in discharging its oversight responsibility regarding (i) Ensign’s compensation philosophy; and (ii) the retention of key senior management employees with the skills and expertise needed to enable Ensign to achieve its goals and strategies at fair and competitive compensation, including appropriate performance incentives. In particular, the Compensation Committee is mandated to do the following: 1. Review compensation payable to the President and Chief Operating Officer of the Corporation and other executives; 2. Oversee the development, implementation and administration of Ensign’s compensation plans; 3. Review Ensign’s succession planning and implementation progress; and 4. Review executive and director compensation disclosure to be made in the proxy circular prepared in connection with the Corporation’s annual meeting of shareholders. Health, Safety and Environment Committee The Health, Safety and Environment Committee is responsible for oversight and supervision of the policies, standards and practices of Ensign with respect to health, safety and the environment (“HSE”). Specific responsibilities include: 1. Reviewing, reporting and making recommendations to the Board, on the development and implementation of policies, standards and practices in the areas of HSE; 2. Assisting Directors to meet their responsibilities in respect of Ensign in carrying out its legal, industry and community obligations pertaining to the areas of HSE; and 3. Assisting Directors to meet their responsibilities in respect of Ensign maintaining management systems to implement HSE policies and monitor compliance. Additional details regarding the Company‘s corporate governance may be found in the “Statement of Corporate Governance Practices” included in the Information Circular for the Company‘s upcoming Annual Meeting of Shareholders to be held on May 14, 2014.

Ensign Energy Services Inc. 2013 Annual Report 59 Management’s Report 60 2014 13, March Officer Financial Chief and Finance President Vice Executive Dagenais Glenn Officer Operating Chief and President Geddes H. Robert external financial Company’s consolidated the The Directors. and of Directors. Board management of the Board with to the them meets by on approved reports Directors, been and have independent statements International statements financial of with consolidated the conformity comprised review in is to statements, to auditors which financial procedures Committee, consolidated and the Audit records of The accounting fairness the Company’s to the as Standards. of opinion Reporting by tests Financial are an appointed are necessary express transactions auditors to approved the external them Company’s properly perform The enable that statements. independently financial ensure They reliable the to in shareholders. result of controls and the operations basis accounting ongoing timely the the internal a for on of International of responsibilities recorded system broader accurately with responsibility management’s a accordance of maintains the part in Management integral are an Company. prepared is report appropriate. been statements where financial annual judgments, have of and the estimates Preparation statements best management’s financial in using applied, consolidated contained consistently Standards The information Reporting Financial Company. other the and of statements management financial consolidated The Report Management’s E n sig n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 Auditors’ Report

To the Shareholders of Ensign Energy Services Inc. Report Auditors’

We have audited the accompanying consolidated financial statements of Ensign Energy Services Inc. and its subsidiaries, which comprise the consolidated statements of financial position as at December 31, 2013 and December 31, 2012 and the consolidated statements of income, comprehensive income, changes in equity and cash flows for the years then ended, and the related notes, which comprise a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Ensign Energy Services Inc. and its subsidiaries as at December 31, 2013 and December 31, 2012 and their financial performance and their cash flows for the years then ended in accordance with International Financial Reporting Standards.

Chartered Accountants March 13, 2014

Calgary, Alberta

Ensign Energy Services Inc. 2013 Annual Report 61 Consolidated Statements of Financial Position urn Liabilities Current Liabilities rpryadequipment and Property otnece n commitments and Contingencies hrhles Equity Shareholders’ compensation Share-based oereceivable Note ogtr debt Long-term onShodrJmsB Howe B. James Director 62 Director and Committee Audit the of Chairman Schroeder John Directors of Board the by Approved taxes income Deferred Assets Current Assets dollars) Canadian of thousands (in at As Position Financial of Statements Consolidated e copnigntst h osldtdfnnilstatements. financial consolidated the to notes accompanying See conspybeadaccruals and payable Accounts consreceivable Accounts prtn ie fcredit of lines Operating other and Inventories receivable taxes Income eandearnings Retained oeg urnytasainreserve translation currency Foreign surplus Contributed capital Share compensation Share-based payable Dividends payable taxes Income ahadcs equivalents cash and Cash Nt 9) (Note Nt 6) (Note Nt 11) (Note Nt 10) (Note Nt 5) (Note Nt 13) (Note Nt 8) (Note Nt 18) (Note Nt 13) (Note Nt 21) (Note Nt 7) (Note E n sig n E n rySrie I Services ergy 3,387,678 $ 78,858 $ 307,147 $ 3,387,678 $ eebr31 December 1,962,569 1,764,735 1,425,109 2,788,331 595,067 440,790 168,155 438,496 317,407 326,525 666,213 66,847 25,065 18,019 14,522 8,572 4,614 4,280 2,993 2013 n – c. 03Ana Report Annual 2013 3,070,977 $ 33,208 $ 244,612 $ 3,070,977 $ eebr31 December 1,857,958 1,704,484 1,213,019 2,533,243 532,713 423,160 164,670 393,459 296,589 231,990 518,852 (16,007) 76,345 16,853 11,197 14,200 4,811 5,021 4,119 2012 – Consolidated Statements of Income

For the years ended December 31 2013 2012 Income of Statements Consolidated (in thousands of Canadian dollars, except per share data) Revenue $ 2,098,011 $ 2,197,321 Expenses Oilfield services 1,524,173 1,555,509 Depreciation 248,026 220,227 General and administrative 88,126 80,837 Share-based compensation 2,049 (3,397) Foreign exchange and other 21,095 6,446 1,883,469 1,859,622 Income before interest and income taxes 214,542 337,699 Interest income 1,320 504 Interest expense (18,795) (18,666) Income before income taxes 197,067 319,537 Income taxes (Note 10) Current tax 43,171 45,189 Deferred tax 25,031 56,826 68,202 102,015 Net income $ 128,865 $ 217,522 Net income per share (Note 12) Basic $ 0.84 $ 1.42 Diluted $ 0.84 $ 1.42

See accompanying notes to the consolidated financial statements.

Ensign Energy Services Inc. 2013 Annual Report 63 Consolidated Statements of Comprehensive Income opeesv noe$169,937 $ income Comprehensive loss or profit to reclassified subsequently be may that Item (loss) income comprehensive Other 64 statements. financial consolidated the to notes accompanying See Income Net dollars) Canadian of thousands (in 31 December ended years the For Income Comprehensive of Statements Consolidated oeg urnytasainadjustment translation currency Foreign E n sig n E n rySrie I Services ergy 128,865 $ 41,072 2013 n c. 03Ana Report Annual 2013 200,483 $ 217,522 $ (17,039) 2012 Consolidated Statements of Changes in Equity

Foreign Currency Share Contributed Translation Retained Total For the years ended December 31 Capital Surplus Reserve Earnings Equity osldtdSaeet fCagsi Equity in Changes of Statements Consolidated (in thousands of Canadian dollars) Balance, January 1, 2013 $ 164,670 $ 4,811 $ (16,007) $ 1,704,484 $ 1,857,958 Net income – – – 128,865 128,865 Other comprehensive loss – – 41,072 – 41,072 Total comprehensive income – – 41,072 128,865 169,937

Dividends – – – (68,614) (68,614) Shares issued under employee stock option plan 2,418 – – – 2,418 Share-based compensation – 7,367 – – 7,367 Shares vested previously held in trust 7,564 (7,564) – – – Purchase of shares held in trust (6,497) – – – (6,497) Balance December 31, 2013 $ 168,155 $ 4,614 $ 25,065 $ 1,764,735 $ 1,962,569

Balance, January 1, 2012 $ 166,864 $ 3,448 $ 1,032 $ 1,552,078 $ 1,723,422 Net income – – – 217,522 217,522 Other comprehensive loss – – (17,039) – (17,039) Total comprehensive income – – (17,039) 217,522 200,483

Dividends – – – (65,116) (65,116) Shares issued under employee stock option plan 51 – – – 51 Share-based compensation – 7,697 – – 7,697 Shares vested previously held in trust 6,334 (6,334) – – – Purchase of shares held in trust (8,579) – – – (8,579) Balance December 31, 2012 $ 164,670 $ 4,811 $ (16,007) $ 1,704,484 $ 1,857,958

See accompanying notes to the consolidated financial statements.

Ensign Energy Services Inc. 2013 Annual Report 65 Consolidated Statements of Cash Flows tm o fetn cash affecting not Items e hnei o-ahwrigcapital working non-cash in change Net su fcptlstock capital of Issue loan term of Repayment Acquisitions equipment and property of Purchase activities Investing e nrae(erae noeaiglnso credit of lines operating in (decrease) increase Net activities Financing e hnei o-ahwrigcapital working non-cash in change Net e hnei o-ahwrigcapital working non-cash in change Net ahadcs qiaet n fya 78,858 $ 33,208 66 56,937 (11,287) statements. financial consolidated the to notes accompanying See information Supplemental year of end – equivalents cash year and of Cash beginning – equivalents cash and Cash equivalents cash and cash on exchange foreign of Effects equivalents cash and cash in increase Net trust in held shares of Purchase income Net activities Operating in) (used by provided Cash dollars) Canadian of thousands (in 31 December ended years the For Flows Cash of Statements Consolidated eerdfnnigcosts financing Deferred Dividends su fsno neue notes unsecured senior of Issue noetxspaid taxes Income Depreciation crto nln-emdebt long-term on Accretion other and exchange foreign Unrealized paid cash of net compensation, Share-based eerdicm tax income Deferred neetpaid Interest Nt 11) (Note Nt 4) (Note Nt 11) (Note Nt 9) (Note Nt 9) (Note Nt 11) (Note Nt 9) (Note Nt 18) (Note 18) (Note 18) (Note E n sig n E n rySrie I Services ergy 62,940 $ 17,452 $ 128,865 $ (342,225) (400,788) 248,026 452,637 (68,614) (76,408) 26,869 25,031 17,026 17,845 76,285 (6,497) 6,492 5,088 1,912 2,002 328 2013 n – – – c. 03Ana Report Annual 2013 45,486 $ 16,162 $ 217,522 $ 33,208 $ (403,279) (306,689) (321,729) (176,985) 220,227 300,000 527,321 (15,040) (65,116) 56,826 20,966 28,607 (8,579) (2,156) (1,398) 4,363 5,838 1,579 2,613 1,988 3,500 2012 43 – Notes to the Consolidated Financial Statements For the years ended December 31, 2013 and 2012 (in thousands of Canadian dollars, except share and per share data)

1. Nature of business Statements Financial Consolidated the to Notes Ensign Energy Services Inc. is incorporated under the laws of the Province of Alberta, Canada. The address of its registered office is 1000, 400 – 5th Avenue S.W., Calgary, Alberta, Canada, T2P 0L6. Ensign Energy Services Inc. and its subsidiaries and partnerships (the “Company”) provide oilfield services to the crude oil and natural gas industry in Canada, the United States and internationally. 2. Basis of presentation The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

These consolidated financial statements were approved by the Company’s Board of Directors on March 13, 2014, after review by the Company’s Audit Committee. 3. Significant accounting policies (a) Measurement basis These consolidated financial statements have been prepared on an historical cost basis, except as discussed in the significant accounting policies, below. (b) Basis of consolidation These consolidated financial statements include the accounts of Ensign Energy Services Inc. and its subsidiaries and partnerships, substantially all of which are wholly owned, which it controls. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Intercompany balances and transactions, including unrealized gains or losses between subsidiaries and partnerships are eliminated on consolidation. (c) Cash and cash equivalents Cash and cash equivalents consists of cash and cash equivalents with maturities of three months or less or cashable on demand without penalty. (d) Inventories Inventories, comprised of spare rig parts and consumables, are recorded at the lower of cost and net realizable value. Cost is determined on a specific item basis. (e) Property and equipment Property and equipment is initially recorded at cost. Costs associated with equipment upgrades that result in increased capabilities or performance enhancements of property and equipment are capitalized. Costs incurred to repair or maintain property and equipment are expensed as incurred. Property and equipment is subsequently carried at cost less accumulated depreciation and impairment and is derecognized on disposal or when there is no future economic benefit expected from its use or disposal. Gains or losses on derecognition of property and equipment are recognized in net income.

Depreciation is based on the estimated useful lives of the assets as follows: Asset Class Expected Life Method Residual Oilfield services equipment Drilling rigs and related 2,500 – 5,000 operating days Unit-of-production 20% Well servicing rigs 24,000 operating hours Unit-of-production 20% Oil sands coring rigs 680 – 1,370 operating days Unit-of-production 20% Heavy oilfield service equipment 3 – 15 years Straight-line Up to 25% Drill pipe 1,500 operating days Unit-of-production – Buildings 20 years Straight-line – Automotive equipment 3 years Straight-line 15% Office furniture and shop equipment 5 – 15 years Straight-line –

Ensign Energy Services Inc. 2013 Annual Report 67 Notes to the Consolidated Financial Statements 68 mut h eoeal muto nasto G stegetro t arvlels ot osl n value-in-use. and sell to costs less value fair its flows. recoverable of cash its greater future to discounted the down risk-adjusted is written estimated of is CGU amount CGU or the or as asset asset the determined an the If is estimated. amount, Value-in-use of is recoverable amount (“CGU”) the and recoverable unit exceeds cash-generating The monitored, CGU or or amount. routinely asset asset the the are of of amount impairment. value environment recoverable possible carrying the indicates business exist, that impairment occurred and of carrying has event indicators operations its an If that if Company’s determine indicate to circumstances The made in are recoverable. assessments changes and or be judgment events are not when assumptions impairment may The available. for becomes values. value reviewed information residual new is as equipment and change and to lives subject Property useful are and to assets related similar with assumptions experience on includes based depreciation of calculation The rmtetasaina eredecag ae fmntr sesadlaiiisdnmntdi urnisohrta an than other income. currencies of in statement denominated consolidated liabilities the and and in transactions recognized assets currency are monetary foreign dates currency of of functional the rates settlement operation’s at exchange the year-end prevailing from at rates resulting translation losses exchange the and the from gains using exchange currency Foreign functional resulting transactions. changes the the All into of expenses. translated all and are for revenues transactions (loss). date for currency income year-end comprehensive year Foreign the other the at in during effect recognized exchange are in adjustments of rate different translation rates exchange these currency average the currency. from functional at using functional a and dollars Company’s Canadian have liabilities, to and subsidiaries the translated assets international is are and and which States dollars dollars United Canadian Canadian from Company’s the in of presented statements are Financial statements are financial Company consolidated the by The translation received currency payments Foreign termination early (h) met. the term, are exceed requirements specified contractual costs the all estimated when to revenue the prior as recognized terminated time are the that at contracts recorded contract For is are total contracts contracts estimated such and uncompleted from date on to Revenue revenue. any, contract price, incurred service. if fixed costs the losses, a upon performing Anticipated for based encountered costs. performed method problems percentage-of-completion are the the services or using oilfield required recognized whereby time contracts the turnkey of under regardless services provides post- performed also significant are for Company services provisions include The when include that not recognized do customer is terms a Revenue contract rates. with obligations. Customer delivery assured. job contracts service reasonably or or is hourly collectability orders daily, when service only upon upon and based based prices sold determinable generally or are fixed services oilfield from Revenue recognition at Revenue The recognized incurred. the are (g) as recognition as expensed for date. measured conditions are acquisition the the costs is instruments at meet the Acquisition-related equity values combination that acquiree. by and fair liabilities business the their assumed, contingent businesses or of the and incurred control liabilities and of liabilities assets, for given, subsidiaries identifiable cost exchange assets acquiree’s in of The of exchange Company obtained. acquisition of the date is the by the business issued at for value the account fair of the to of control aggregate used date is the accounting at Company of method acquisition The combinations Business (f) E n sig n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 (i) Borrowing costs Statements Financial Consolidated the to Notes Interest and borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of those assets. Qualifying assets are those which take a substantial period of time to prepare for their intended use. Capitalization ceases when substantially all activities necessary to prepare the qualifying asset for its intended use are complete. All other interest is recognized in the consolidated statement of income in the period in which it is incurred. (j) Income taxes The Company follows the liability method of accounting for income taxes. Under this method, income tax liabilities and assets are recognized for the estimated tax consequences attributable to differences between the amounts reported in the consolidated financial statements and their respective tax bases, using enacted or substantively enacted income tax rates. The effect of a change in income tax rates on deferred income tax liabilities and assets is recognized in income in the period in which the change is substantively enacted.

Deferred tax assets are recognized to the extent that future taxable income will be available against which temporary differences can be utilized. (k) Share-based compensation The Company has an employee share option plan or equivalent that provides all option holders the right to elect to receive either common shares or a direct cash payment in exchange for the options exercised. These options are accounted for as a compound financial instrument, which requires the fair value of the liability component to be determined first and the residual value, if any, allocated to the equity component. The fair value of the settlement option under cash and shares is the same; therefore these options are accounted for as cash-settled awards.

The Company has other cash-settled share-based compensation plans. Cash-settled share-based compensation plans are recognized as compensation expense over the vesting period using fair values with a corresponding increase or decrease in liabilities. The liability is remeasured at each reporting date and at the settlement date. Any changes in the fair value of the liability are recognized as share-based compensation expense in the statement of income. The fair value is determined using the Black-Scholes option pricing model.

The Company has share savings and share bonus plans for employees, as well as a program whereby a portion of the retainer paid to Directors is in the form of common shares of the Company. Contributions to these plans are recorded as general and administrative expense over the vesting period. In all cases, any common shares acquired for such plans are purchased in the open market and administered through trusts until the shares are vested. The share purchase price is considered the fair value. (l) Financial instruments Financial assets and liabilities are recognized on the date the Company becomes party to the contractual provisions of the instrument. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or the Company transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability. Financial liabilities are derecognized when the Company’s contractual obligations are discharged, cancelled or expire.

Financial assets and liabilities are measured at fair value on initial recognition of the instrument. Measurement in subsequent periods depends on whether the financial assets or liabilities are classified as amortized cost or as fair value through profit or loss (“FVTPL”).

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, other than financial assets and financial liabilities at FVTPL, are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in net income.

Ensign Energy Services Inc. 2013 Annual Report 69 Notes to the Consolidated Financial Statements 70 xetdlf,epce iied,adrs-reitrs ae infcn siae n supin r sdin 13. expense. Note and used in liability to included compensation are is due share-based and compensation impact expected assumptions share-based experience will regarding historical changes assumptions Information on and input for based to forfeitures, adjusted estimates Changes expected behavior. volatility and option-holder Significant historic life general expected average average rate. average weighted weighted weighted interest information, volatility, on available based expected publicly risk-free volatility price, and expected exercise the dividends, date, determining measurement expected on life, price using expected share made include are inputs assets Measurement of impairment regarding of for Information rates. 5. used evaluation discount Note are and the in margins, included and in is demand, inflows equipment and used and cash supply property market flows independent prices, largely cash market of and future forecasts identifiable management’s of separately Estimates on assessing testing. based addition, CGUs impairment In into available. grouped becomes information are new based Assets as is change assumption assumptions. to The and subject estimates values. requires residual is impairment and and for lives assets useful similar to with related experience assumptions on includes depreciation of calculation The determined is allowance allowance the regarding The 20. Information Note accounts. in experience. included past uncollectible is and accounts for trends doubtful losses economic for current estimated credit-worthiness, for customer on allowance based an establishes Company The otuigteefcieitrs ehd neetepneta sntcptlzdi nlddi e income. amortized net at in measured included subsequently is capitalized are not FVTPL is as that designated expense not Interest method. are interest and effective trading the for using held cost not are that liabilities Financial uuecs lw.We hr sojcieeiec h maretwl o ervre h mutoiial hre to charged asset. originally financial impaired amount the the of reversed amount cash be carrying estimated future not the the will estimated against surrounding impairment off uncertainty the the written is assets, evidence is there financial allowance objective a when the the used is as is there of that, account When recognition evidence allowance flows. initial objective An the cash affected. the is future at been there after basis have when occurred asset account impaired that the individual be of events an flows to more on considered or impairment are one for assets of assessed Financial result period. are reporting cost each amortized of at end measured fair are at measured that income. and assets net FVTPL in Financial as recognized classified value are fair measurement in cost changes all amortized to with for specified is value qualifying on objective those rise, whose give than interest. asset and other model financial principal assets business the of Financial a of payments within terms solely contractual are held the that is and flows it flows cash cash if to contractual dates, cost collect amortized to at order in measured assets and hold classified is asset financial A assets Financial hr-ae compensation Share-based equipment and Property be to believed are that determining events in accounts used future doubtful assumptions for and of Allowance estimates expectations critical liabilities: most and including assets the of are factors, value expenses. following the and The other are circumstances. income and and the evaluated liabilities, under continually experience are reasonable assets, assumptions historical of and judgments amounts on Estimates, estimates. reported make based those to the from management differ affect requires could that results IFRS Actual with assumptions accordance and in statements judgments financial estimates, consolidated Company’s the estimates of accounting Preparation and judgments Critical (m) income income. net comprehensive in other recognized in recorded value are fair which in risk FVTPL. credit changes as to all designated attributable with is value value fair it in or fair changes trading at of for measured exception held the are either with is FVTPL liability as financial classified the liabilities when Financial FVTPL as classified are liabilities Financial liabilities Financial E n sig n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 Income taxes Statements Financial Consolidated the to Notes The Company is subject to income taxes in a number of tax jurisdictions. The amount expected to be settled and the actual outcome and tax rates can change over time, depending on the facts and circumstances. Changes to these assumptions will impact income tax and the deferred tax provision. Information regarding income taxes is included in Note 10.

Critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are as follows: Functional currency The Company determines functional currency based on the primary economic environment in which the entity operates. This includes a number of factors that must be considered by the Company in using its judgment to determine the appropriate functional currency for each entity. Impairments Assessing for indicators of possible impairment requires judgment in the assessment of facts and circumstances and is a subjective process that often involves a number of estimates and is subject to interpretation. Deferred income tax assets The recognition of deferred tax assets is based on judgments about future taxable profits. (n) Change in accounting policies The Company adopted the following mandatory new and revised standards effective January 1, 2013. The following is a brief summary of the new standards that are relevant to the Company: IFRS 10 – Consolidated Financial Statements (“IFRS 10”) IFRS 10 requires an entity to consolidate an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its influence over the investee. IFRS 10 was applied retrospectively. There was no impact to the Company’s consolidated financial statements as a result of adopting this standard. IFRS 12 – Disclosure of Interests in Other Entities (“IFRS 12”) IFRS 12 establishes disclosure requirements for interests in other entities, such as joint arrangements, associates, special purpose vehicles and off balance sheet vehicles. The standard carries forward existing disclosures and also introduces significant additional disclosure requirements that address the nature of, and risks associated with, an entity’s interests in other entities. There was no impact to the Company’s consolidated financial statements as a result of adopting this standard. IFRS 13 – Fair Value Measurement (“IFRS 13”) IFRS 13 is a comprehensive standard for fair value measurement and disclosure requirements for use across all IFRS standards. The new standard clarifies that fair value is the price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market participants, at the measurement date. It also establishes disclosures about fair value measurement. IFRS 13 was applied prospectively. There was no impact to the Company’s consolidated financial statements as a result of adopting this standard. IFRS 7 – Financial Instruments: Disclosure (“IFRS 7”) Amendments to IFRS 7 require the disclosure of information that will enable users of the Company’s consolidated financial statements to evaluate the effect, or potential effect, of offsetting financial assets and financial liabilities, to the Company’s consolidated statement of financial position. IFRS 7 was applied retrospectively. There was no impact to the Company’s consolidated financial statements as a result of adopting this standard.

Ensign Energy Services Inc. 2013 Annual Report 71 Notes to the Consolidated Financial Statements .Acquisitions 4. 72 hr a oipc oteCmayscnoiae iaca ttmnsa euto dpigaedet to amendments adopting of result a as statements financial retrospectively. consolidated applied was be Company’s 36 IAS to the technique. required value to is present standard. recognized a CGU impact this on is each based loss no is of which impairment disposal was an amount 36”) of when recoverable costs (“IAS There used less Assets the rate value of when discount fair the and Impairment clarify reversed including – 36 or disclosure, 36 expanded IAS IAS requires to also to Amendments and amendments 2013. disclosed adopted May early in Company issued the was above, the to addition In okn aia 3,502 $ 42,432 $ 38,930 – 33,976 $ $ 33,976 EGOC 2012. 31, December ended year the during acquisitions business significant any complete not did Company The consideration cash Total equipment and Property capital Working acquisition: at assets follows: net as of determined value was Fair acquisitions above the of price for purchase (“Departure”) the Inc. of Services allocation Energy Canada. The Departure western of in assets services the drilling of directional all provides substantially Departure for acquired cash. (“EGOC”) Company Companies the of 2013 Group 24, Enviro May Canada. EGOC On western of in assets services the equipment of rental all provides substantially EGOC acquired cash. Company the 2013 30, April On comparison in amendment to this criteria of aggregation requirements the disclosure applying the in disclosures. assessing management existing currently by with is made Company judgments of The disclosure segments. the operating require not 8 has 8”) IFRS and 2014 (“IFRS to 1, Amendments Segments July Operating after – or amendment on 8 the beginning IFRS periods of annual summary for brief Company. effective the a is by is adopted which following been Company, The yet the 2013. to December relevant in be IFRSs may to that improvements annual issued IASB The pronouncements accounting Recent (o) E n sig n E n rySrie I Services ergy eatr Total Departure n c. 03Ana Report Annual 2013 76,408 $ 3,502 $ 72,906 5. Property and equipment Statements Financial Consolidated the to Notes Rigs and Related Automotive and Land and Equipment Other Equipment Buildings Total Cost: Balance at December 31, 2011 3,233,604 101,996 42,833 3,378,433 Additions 288,175 17,951 1,702 307,828 Disposals (35,858) (1,405) – (37,263) Effects of foreign exchange (41,222) (926) (347) (42,495) Balance at December 31, 2012 3,444,699 117,616 44,188 3,606,503 Additions 404,592 18,572 19,164 442,328 Disposals (17,095) (18,733) (8,197) (44,025) Effects of foreign exchange 109,123 3,315 940 113,378 Balance at December 31, 2013 $ 3,941,319 $ 120,770 $ 56,095 $ 4,118,184

Accumulated depreciation and impairments: Balance at December 31, 2011 (830,567) (57,007) (11,241) (898,815) Depreciation (196,424) (12,939) (1,762) (211,125) Disposals 23,070 3,046 – 26,116 Effects of foreign exchange 10,008 505 51 10,564

Balance at December 31, 2012 (993,913) (66,395) (12,952) (1,073,260) Depreciation (227,965) (13,818) (1,838) (243,621) Disposals 12,402 11,560 2,702 26,664 Effects of foreign exchange (37,425) (2,027) (184) (39,636)

Balance at December 31, 2013 $ (1,246,901) $ (70,680) $ (12,272) $ (1,329,853)

Net book value: At December 31, 2012 2,450,786 51,221 31,236 2,533,243 At December 31, 2013 $ 2,694,418 $ 50,090 $ 43,823 $ 2,788,331

Property and equipment includes equipment under construction of $220,346 (2012 – $180,027) that has not yet been subject to depreciation.

6. Note receivable

In December 2009, the Company disposed of certain camp assets for proceeds of cash and a non-interest bearing promissory note in the amount of $9,850. The note is secured by a first charge on certain of the disposed assets and has minimum repayments of $1,000 per year with the balance due on December 4, 2015. The discounted carrying value of the note as at December 31, 2013 was $5,280 (2012 – $6,021) of which the current portion of $1,000 (2012 – $1,000) is included in accounts receivable.

Ensign Energy Services Inc. 2013 Annual Report 73 Notes to the Consolidated Financial Statements .Ln-emdebt Long-term 9. credit of lines Operating 8. accruals and payable Accounts 7. 74 te liabilities Other neetpayable Interest payroll Accrued liabilities Accrued payables Trade nmrie eerdfnnigcosts financing deferred Unamortized notes unsecured Senior acceptance bankers’ or 1.50% plus rates interest Prime Facility Canadian acceptance bankers’ or 0.85% plus rates interest Prime Facility Global h tlzdblneo h aainFclt tpieitrs ae ls15 ecn rbnes cetnerates/LIBOR acceptance bankers’ or percent 1.50 on plus unsecured. incurred rates is bank is Facility interest Interest Canadian prime or dollars. The at States percent. Facility credit United 2.50 Canadian equivalent plus of the the or of letters $10,000 balance $2,921 is utilized and outstanding Facility the $8,383) Canadian – any the (2012 under available by credit amount of The reduced letters in guarantees. is outstanding bank in $9,870 Facility outstanding had $5,339) Company Global – the (2012 $400,000 2013, in 31, the December drawn rates/LIBOR At under acceptance be guarantees. bankers’ available may or percent and amount 0.85 subsidiaries, plus The incurred unsecured. rates is owned is interest Interest Facility prime wholly dollars. Global at Canadian The its Facility $400,000 percent. Global 1.85 of of plus the value certain of equivalent balance the and utilized to Company the up on dollars, the $250,000 Australian or to from States available available United amount Canadian, is the Facility increasing credit Global Facility, revolving Global The 31, based existing December ended its Canadian $400,000) year amended – $10,000) the for Company (2012 – Facility $400,000. the $400,000 Global to (2012 the 2012, a $10,000 to May of changes a significant In consist no and 2013. credit were Facility”) There of Facility”). “Global lines “Canadian (the (the operating facility available facility Company’s credit the revolving 2013, global 31, December at As rnh ,deFbur 2 02 4.54% 2022, 22, February due C, 3.97% Tranche 2019, 22, February due B, Tranche 3.43% 2017, 22, February due A, Tranche ae LBRpu 2.50% plus /LIBOR rates $226,550) USD – 2012 $307,000, in USD Denominated – (2013 1.85% plus rates/LIBOR E n sig n E n rySrie I Services ergy eebr31 December 31 December eebr31 December 307,147 $ 153,668 $ 106,360 $ 326,525 $ 317,407 $ 326,525 $ 106,360 106,360 19,726 64,189 68,506 (1,673) 1,058 2013 2013 2013 – n c. 03Ana Report Annual 2013 eebr31 December 31 December eebr31 December 244,612 $ 124,702 $ 99,490 $ 225,395 $ 296,589 $ 231,990 $ 58,661 57,518 99,490 99,490 (1,881) 2,741 6,595 2012 2012 2012 990 On February 22, 2012, the Company completed the private placement of USD $300.0 million of senior unsecured notes Statements Financial Consolidated the to Notes (the “Notes”) with the terms noted above. Interest on the Notes is payable semi-annually on May 31st and November 30th each year, commencing on May 31, 2012 with final interest payments due on expiry of the Notes. These Notes are unsecured, rank equally with the Company’s Global Facility and have been guaranteed by the Parent company and certain of the Company’s subsidiaries located in Canada, the United States and Australia.

Interest accrued on the Notes at December 31, 2013 was $1,058 (2012 – $990) and has been included in accounts payable and accruals on the consolidated statement of financial position. The Company incurred financing costs associated with the Notes that are being deferred and amortized using the effective interest method.

The proceeds from the issuance of the Notes were applied toward the repayment of the USD $400.0 million unsecured term loan.

10. Income taxes

Analysis of deferred tax liability: December 31 December 31 2013 2012 Property and equipment $ 475,487 $ 403,646 Partnership timing differences 22,524 29,549 Share-based compensation (4,229) (3,297) Non-capital losses (40,339) (21,748) Other (14,947) (14,691) Net deferred tax liability $ 438,496 $ 393,459

Deferred tax asset Deferred tax asset recovered within 12 months $–$ (1,981) Deferred tax asset recovered after 12 months (142) (8,314) $ (142) $ (10,295) Deferred tax liability Deferred tax liability recovered within 12 months $–$– Deferred tax liability recovered after 12 months 438,638 403,754 $ 438,638 $ 403,754 Net deferred tax liability $ 438,496 $ 393,459

At December 31, 2013, the Company had deferred tax assets arising from non-capital losses expiring in the following years: December 31 December 31 2013 2012 2016 $73 $ 376 2022 103 – 2032 25,235 19,391 2033 14,471 – No expiry 457 1,981 $ 40,339 $ 21,748

Ensign Energy Services Inc. 2013 Annual Report 75 Notes to the Consolidated Financial Statements 1 hr capital Share 11. 76 h rvso o noetxsi ifrn rmteepce rvso o noetxsuigcmie aainfederal Canadian combined using reasons: taxes following income the for for provision rates these expected tax that the income expected from provincial is different and it is or taxes entity income of for relevant distribution provision the the The control on future. not foreseeable payable does the become Company in would the remitted either that be that will taxes earnings extent other the and – to withholding (2012 only 2013 for earnings 31, made these December been at has $833,417 provision to amounted A investments $841,895). equity-accounted and subsidiaries by retained Earnings h aainIcm a c “T”,tedvdn en adi eintda neiil iied sdfndin defined as dividend, eligible an as designated of is 89(1) paid subsection to being Pursuant dividend Company. the the by been ITA. (“ITA”), a the not adopted of Act has declared policy 89(1) dividend Tax Company subsection dividend The quarterly $18,019. the Income approximately the 2013, or Canadian to 31, share the pursuant common December per is to $0.1175 and Subsequent of $0.4475 for 2014 share). being provided of $65,116), common quarter – per first (2012 the $0.425 $68,614 for of – dividend dividends (2012 declared Company share the common 2013, per 31, December ended year the During Dividends (c) plan option stock employee under Issued balance Opening outstanding and paid fully Issued, (b) series in issuable value, par no shares, preferred Unlimited value par no shares, common Unlimited expected. as 2013 to 2012 from consistent is rate tax statutory The from: (decrease) Increase expense tax income Expected taxes income before Income a Authorized (a) hne nuvse hrshl ntrust in held shares unvested in Changes h oa muto netdsae edi rs o hr-ae opnainpasa tDcme 1 03was 2013 31, December at as plans compensation share-based for trust in held 629,655). – shares (2012 unvested 576,230 of amount total The balance Closing aecag mato eerdtaxes deferred on impact change Rate Other years prior from Adjustments expenses operations Non-deductible foreign on rate tax effective Higher rate tax Income 5,8,4 164,670 $ 152,583,441 5,7,6 168,155 $ 152,772,866 ubrof Number Common 3,0 2,418 136,000 3451,067 53,425 Shares Amount E n sig 2013 n E n rySrie I Services ergy eebr31 December 5,9,8 166,864 $ 152,797,982 5,8,4 164,670 $ 152,583,441 197,067 $ 68,202 $ ubrof Number 2751 (2,245) (217,541) Common 12,819 50,055 25.4% 2,410 2,032 hrsAmount Shares ,0 51 3,000 2013 778 108 n c. 03Ana Report Annual 2013 eebr31 December 319,537 $ 102,015 $ 21,701 81,482 (1,024) (1,750) 25.5% 1,127 2012 2012 479 (d) Normal Course Issuer Bid Statements Financial Consolidated the to Notes On June 21, 2013 the Company received approval from the Toronto Stock Exchange to acquire for cancellation up to three percent of the Company’s issued and outstanding common shares under a Normal Course Issuer Bid (the “Bid”). The Company may purchase up to 4,599,367 common shares for cancellation. The Bid commenced on June 25, 2013 and will terminate on June 24, 2014 or such earlier time as the Bid is completed or terminated at the option of the Company. As at December 31, 2013, no common shares have been purchased and cancelled pursuant to the Bid.

The Company previously had a Bid that commenced on June 18, 2012 and terminated on June 17, 2013, under which no common shares were purchased and cancelled.

12. Net income per share

Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period.

Diluted net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period adjusted for conversion of all potentially dilutive common shares. Diluted net income is calculated using the treasury share method, which assumes that all outstanding share options are exercised, if dilutive, and the assumed proceeds are used to purchase the Company’s common shares at the average market price during the period. December 31 December 31 2013 2012 Net income attributable to common shareholders: Basic and diluted $ 128,865 $ 217,522

Weighted average number of common shares outstanding: Basic 152,693,280 152,664,447 Potentially dilutive share-based compensation plans 927,092 330,538 Diluted 153,620,372 152,994,985

Share options of 4,296,200 (2012 – 7,004,800) were excluded from the calculation of diluted weighted average number of common shares outstanding as they were anti-dilutive.

13. Share-based compensation

The Company has a number of share-based compensation plans for employees and directors. For the year ended December 31, 2013, the total expense for share-based compensation plans was $9,725 (2012 – $4,756) of which $7,676 (2012 – $8,153) has been included in general and administrative expense. Of this total, $7,366 related to equity-settled plans (2012 – $7,816) and $2,359 related to cash-settled plans (2012 – recovery of $3,060).

The total liability for cash-settled plans at December 31, 2013 was $17,515 (2012 – $18,319). The total intrinsic value of the liability for vested benefits at December 31, 2013 was $7,569 (2012 – $3,048). Share option plan The Company has an employee share option plan that provides all option holders the right to elect to receive either common shares or a direct cash payment in exchange for the options exercised. The Company may grant options to its employees for up to 14,885,900 (2012 – 15,021,900) common shares. The options’ exercise price equals the market price of the Company’s common shares on the date of grant. Share options granted vest evenly over a period of five years.

Ensign Energy Services Inc. 2013 Annual Report 77 Notes to the Consolidated Financial Statements 78 o pin xrie n21,tewihe vrg hr rc ttedt feecs a 1.1(02–$60)per 2013: $16.00) 31, – December (2012 at $17.41 outstanding options was the exercise lists of table date following The the at price share average weighted share. the common 2013, in exercised options For 31 December – Exercisable 31 December – Outstanding Expired Forfeited ofiuerate Forfeiture umr fteCmayssaeoto lna tDcme 1 03ad21,adtecagsdrn h years the during changes the and 2012, and 2013 31, December at as below: plan presented option is share ended, then Company’s the of summary A 1.8t 1.01916030 72 9,0 17.20 15.55 Company the of price share 15.09 the years. 791,100 five in of period increase a 98,800 the over evenly on 14.00 vest cash based plan a $ the determined to under employees Grants is date. the payment exercise entitle and cash that date employees grant 17.20 the 1,490,000 between certain of to amount (“SARs”) rights The 975,600 appreciation 16.06 payment. share granted has Company The 15.09 rights appreciation Share 3.00 14.00 $ 4.78 1.00 2.00 1,941,600 2,590,500 were: 31, December life at Expected as 1,971,900 options share employee of value fair 1,804,700 the estimate to used assumptions The $17.20 to $16.68 $16.67 to $15.21 $15.20 to $14.29 $14.28 to $11.33 Price Exercise cash for Exercised shares common for Exercised Granted 1 January – Outstanding xetddividend Expected rate interest Risk-free Volatility (percent) (years) (percent) (percent) (percent) Outstanding ,0,0 .6$1.533550$15.28 $ 3,355,500 15.65 $ 2.86 8,308,700 Options 18170 21.89 (1,831,700) ,5,0 15.28 $ 15.65 $ 3,355,500 8,308,700 ,7,0 16.13 16.74 $ 2,279,000 9,323,600 ubrof Number 4120 17.15 (481,200) 8500 14.75 14.72 (845,000) (136,000) Options Remaining i years) (in Share Average Vesting Weighted Average Exercise Weighted Average Exercise E Price 2013 n sig Price n E n rySrie I Services ergy 20910 19.74 (2,009,100) ,2,0 17.42 $ 16.74 $ 4,525,000 9,323,600 ,9,0 17.14 17.29 $ 2,393,500 9,569,800 ubrof Number 5940 17.38 (579,400) Exercisable 4,0)14.55 (48,200) Options 300 14.00 (3,000) Share Options 27.3 2013 2.8 1.3 4.7 2.6 n c. 03Ana Report Annual 2013 Weighted Weighted Average Average Exercise Exercise Price Price 33.0 2012 2012 2.9 1.2 4.4 2.5 A summary of the Company’s SARs plan as of December 31, 2013 and 2012, and the changes during the years then Statements Financial Consolidated the to Notes ended, is presented below: 2013 2012 Weighted Weighted Number of Average Exercise Number of Average Exercise SARs Price SARs Price Outstanding – January 1 550,500 $ 15.57 304,500 $ 14.19 Granted 308,000 16.13 264,500 17.12 Exercised (32,100) 14.50 (600) 14.00 Forfeited (26,900) 15.88 (17,900) 15.06 Outstanding – December 31 799,500 $ 15.82 550,500 $ 15.57 Exercisable – December 31 242,800 $ 15.36 172,800 $ 15.09

For SARs exercised in 2013, the weighted average share price at the date of exercise was $17.61 (2012 - $16.04) per common share.

The following table lists the SARs outstanding at December 31, 2013: Average Vesting SARs Remaining (in Weighted Average Weighted Average Exercise Price Outstanding years) Exercise Price SARs Exercisable Exercise Price $14.00 to $15.32 252,000 1.88 $ 14.18 148,600 $ 14.22 $15.33 to $16.13 316,500 4.97 16.11 2,100 15.51 $16.14 to $17.20 231,000 3.00 17.20 92,100 17.20 799,500 3.43 $ 15.82 242,800 $ 15.36

14. Segmented information

The Company determines its operating segments based on internal information regularly reviewed by management to allocate resources and assess performance. The Company operates in three geographic areas within one operating segment. Oilfield services are provided in Canada, the United States and internationally. The amounts related to each geographic area are as follows: December 31 December 31 Revenue 2013 2012 Canada $ 661,008 $ 774,444 United States 890,767 944,580 International 546,236 478,297 $ 2,098,011 $ 2,197,321

Revenues are attributed to geographical areas based on the location in which the services are rendered.

Ensign Energy Services Inc. 2013 Annual Report 79 Notes to the Consolidated Financial Statements 6 e aaeetcompensation management Key 16. nature by Expenses 15. 80 h emn rsnaino rpryadeupeti ae ntegorpia oaino h assets. the of location geographical the on based is equipment and property of presentation segment The oa aaeetcompensation management Total compensation Share-based taxes income and interest before expenses Total the within $240,609) – (2012 $225,117 net of equipment, and revenue Property earned customer. single Company a from the areas 2013, geographic international 31, and States December United ended year the During e aaeetpronlicueteCmaysdrcosadnmdeeuieofcr.Cmesto o key for compensation Short-term Compensation officers. executive named and directors following: Company’s the of the consists personnel include management personnel management Key other and exchange Foreign services and supplies materials, Purchased Depreciation costs employee Total compensation Share-based benefits and wages Salaries, International States United Canada E n sig n E n rySrie I Services ergy 2,788,331 $ 1,883,469 $ 944,188 $ 863,444 $ eebr31 December eebr31 December eebr31 December 1,355,712 488,431 741,179 248,026 873,169 8,998 $ 8,015 $ 21,095 9,725 2013 2013 2013 983 n c. 03Ana Report Annual 2013 2,533,243 $ 1,859,622 $ 863,751 $ 864,485 $ eebr31 December eebr31 December eebr31 December 1,228,289 5,887 $ 7,369 $ 441,203 763,708 220,227 869,241 (1,482) 6,446 4,756 2012 2012 2012 17. Significant subsidiaries and partnerships Statements Financial Consolidated the to Notes

The following table lists the Company’s principal operating partnerships and subsidiaries, the jurisdiction of formation, incorporation or continuance of such partnerships and subsidiaries and the percentage of shares owned, directly or indirectly, by the Company as of December 31, 2013: Jurisdiction of Percentage Ownership of Formation Shares Beneficially Owned Incorporation or or Controlled Directly or Name of Subsidiary Continuance Indirectly by the Company Enhanced Petroleum Services Partnership Alberta 100 Ensign Argentina S.A. Argentina 100 Ensign de Venezuela C.A. Venezuela 100 Ensign Drilling Partnership Alberta 100 Ensign Energy Services International Limited Australia 100 Ensign United States Drilling Inc. Colorado 100 Ensign United States Drilling (California) Inc. California 100 Ensign US Financial (Delaware) LP Delaware 100 Ensign US Southern Drilling LLC Delaware 100 OFS Canada Inc. Alberta 100 OFS Global Inc. Nevada 100 Opsco Energy Industries Ltd. Alberta 100 Opsco Energy Industries (USA) Ltd. Montana 100 Rockwell Servicing Partnership Alberta 100

18. Supplemental disclosure of cash flow information (a) Non-cash working capital December 31 December 31 2013 2012 Net change in non-cash working capital Accounts receivable $ (5,947) $ 47,146 Inventories and other 3,866 1,474 Accounts payable and accruals 58,909 (42,054) Note receivable 741 1,740 Income taxes payable (21,952) 354 Dividends payable 1,166 766 $ 36,783 $ 9,426 Relating to: Operating activities $ 17,026 $ 20,966 Investing activities 17,845 (15,040) Financing activities 1,912 3,500 $ 36,783 $ 9,426 (b) Cash and cash equivalents December 31 December 31 2013 2012 Cash $ 64,634 $ 25,690 Cash equivalents 14,224 7,518 $ 78,858 $ 33,208

Ensign Energy Services Inc. 2013 Annual Report 81 Notes to the Consolidated Financial Statements 0 iaca instruments Financial 20. strategy management Capital 19. 82 opinei uuepros sa eebr3,21,teCmayi ncmlac ihaldb covenants. debt all with compliance impact in may is activities Company these the projects how 2013, and 31, assess basis December to at ongoing payments As an dividend periods. and on future levels requirements in expenditure compliance these capital with flows, compliance long- cash its and and operating monitors expense credit future interest Company of consolidated The lines earnings, operating indebtedness. equity, its of shareholders’ $231,990), incorporate with level – that associated covenants (2012 requirements financial capital $326,525 including imposed debt, totaled deemed $1,857,958). externally term credit – to if (2012 of subject $1,962,569 financing lines is totaled support Company equity operating equity to or shareholders’ The the credit and or spending $296,589) of of capital borrowings – lines balance (2012 its operating long-term the $317,407 its adjust totaled 2013, additional debt of time 31, long-term consider terms to December the may time at revise Company from As may or necessary. may The borrowings, Company initiatives. its the debt. of growth structure, long-term level future and capital the credit manage its of to adjust lines policy operating or dividend equity, maintain shareholders’ to include order to structure In capital its in with strategy considers associated management Company capital challenges The its the to of adjustments conditions. future cognizant and economic make be returns changing may of to positive and light deliver industry continues commodity-based to Company cyclical, and The a discipline, shareholders. in financial operating its exercise to to streams are dividend capital stable managing when objectives Company’s The fsno neue oe a ae nLvl2ipt n a siae sn h ikfe neetrtson rates interest free risk the using estimated was and premiums. risk inputs market and 2 risk on credit value Level estimated fair based for estimated on adjusted The not maturities, inputs. based similar are 1 of Level was instruments liabilities on debt notes based and government was assets unsecured receivable note financial senior bearing non-interest 3 of the Level of (as value to directly in fair either reference estimated liability values The or by fair asset determined the The for are observable prices). are 1 data. from in that market liabilities Level prices observable (derived and quoted in assets 1 indirectly financial Level included of or than values liabilities other prices) Fair inputs and measure liabilities. on and to based assets assets are used are identical financial 2 inputs for position Level the markets of financial active with values in of associated prices statement fair judgment quoted consolidated of unadjusted The level the value. the in reflects fair value that fair their hierarchy note at three-level the disclosed a of or using values recorded categorized fair liabilities estimated cash and The future assets maturities. discounted values. and Financial carrying of risks their similar use approximates notes with the unsecured determined instruments including senior been similar and methods, have receivable for valuation notes rates unsecured appropriate current senior and using and information flows receivable market note bearing available non-interest on instruments. accruals the financial based and of these payable of values accounts maturity fair credit, short-term estimated the of to The lines due operating value receivable, carrying accounts their approximates equivalents, payable cash dividends and and cash of value financial fair as The classified are debt long-term values and Fair payable dividends credit, cost. cost. of amortized amortized at lines at liabilities operating assets financial accruals, as and classified payable are receivable Accounts note and receivable accounts equivalents, cash below: and presented Cash is instruments financial of measurement and classification The instruments financial of Categories E n sig n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 Credit risk Statements Financial Consolidated the to Notes Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises principally from the Company’s accounts receivable balances owing from customers operating primarily in the oil and natural gas industry in Canada, the United States and internationally. The carrying amount of accounts receivable and the note receivable represents the maximum credit exposure as at December 31, 2013.

The Company assesses the credit worthiness of its customers on an ongoing basis and establishes credit limits for each customer based on external credit reports and other publicly available information, internal analysis and historical experience with the customer. Credit limits are approved by senior management and are reviewed on a regular basis or when changing economic circumstances dictate. The Company manages credit risk through dedicated credit resources, ongoing monitoring and follow up of balances owing, well liens, and tightening or restriction of credit terms as required. The Company also monitors the amount and age of accounts receivable balances on an ongoing basis. As at December 31, 2013, the Company had trade receivables of $33,610 (2012 – $6,371) with multiple customers that were greater than 90 days old for which an allowance for doubtful accounts of $13,091 (2012 – $1,178) has been recorded to provide for balances which, in management’s best estimate, are deemed uncollectible as at December 31, 2013. The allowance for doubtful accounts is an estimate requiring significant judgment and may differ materially from actual results. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they are due. The Company manages liquidity by forecasting cash flows on an annual basis and secures sufficient credit facilities to meet financing requirements that exceed anticipated internally generated funds. As at December 31, 2013, the remaining contractual maturities of accounts payable and accruals, operating lines of credit and dividends payable are less than one year. Maturity information regarding the principal and interest on the Company’s long-term debt is as follows: Less than After 1 Year 1-3 Years 4-5 Years 5 Years Total Senior unsecured notes $ 12,699 25,399 125,293 229,268 $ 392,659

Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Company’s net income or the value of its financial instruments. Interest rate risk The Company is exposed to interest rate risk with respect to its operating lines of credit which bears interest at floating market rates. For the year ended December 31, 2013, if interest rates applicable to its operating lines of credit had been 0.25 percent higher or lower, with all other variables held constant, income before income taxes would have been $698 lower or higher. Foreign currency exchange rate risk The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the United States dollar. The principal foreign exchange risk relates to the conversion of the Company’s foreign subsidiaries from their functional currencies to Canadian dollars. At December 31, 2013, had the Canadian dollar weakened or strengthened by $0.01 against the United States dollar, with all other variables held constant, the Company’s foreign currency translation reserve would have been approximately $9,524 higher or lower and income before income taxes would have been $699 higher or lower.

Ensign Energy Services Inc. 2013 Annual Report 83 Notes to the Consolidated Financial Statements 2 ro eramounts year Prior 22. commitments and Contingencies 21. 84 ontrpeetteipc facag ntevral nteoeaigrslso h opn ae sawhole. a as taken Company the and of above results noted operating items the the on to variable applied the variable in specified change the a in of changes impact the of represent impact the not the been against do to have limited $0.01 would are by taxes sensitivities income strengthened above before The or income Company’s weakened the dollar constant, debt lower. Australia held denominated or variables the higher dollar other $1,447 States had all United 2013, with of dollar, conversion 31, States the December United to At relation in dollars. risk Australian exchange to foreign has Company the addition In eti ro eraonsi h osldtdsaeeto ahfo aebe elsiidt ofr ocurrent to conform to reclassified been have flow cash of statement consolidated the in presentation. year amounts year ultimate prior the believes Certain and business its statements. financial of consolidated course its normal on impact the material in no lawsuits have will and expense. matters disputes an these as various from recognized reflect arising to were liability to party $5,415) – a term (2012 is lease $6,490 Company of the payments The throughout lease 2013, increased 31, are December years, ended payments ten year Lease to the two For date. of that period after a for lease run the typically rentals. leases renew market The to leases. option operating under an offices with of number a leases Company The years 5 than years Later 5 than later not year 1 than Later follows: year as 1 payments than bonds. minimum later insurance future Not of these with importation from leases, arise temporary office will for the liabilities commitments of material has any Company respect that The in anticipated agencies not is government It certain country. to that into bonds equipment insurance provided has Company The E n sig n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 2,857 $ 2,656 460 Additional Information

The Company Information Additional

Ensign Energy Services Inc. was incorporated on March 31, 1987 pursuant to the provisions of the Business Corporations Act (Alberta). Pursuant to a prospectus, on December 15, 1987, the Company became a reporting issuer in the Province of Alberta.

Recent Acquisitions September 2011 Acquired in the United States: Land drilling fleet of Rowan Companies, Inc. comprised of 30 deeper capacity electric land drilling rigs, which operate in the southern United States. April 2013 Acquired in Canada: Substantially all of the assets of EGOC Enviro Group of Companies, which provides rental oilfield equipment in western Canada. May 2013 Acquired in Canada: Substantially all of the assets of Departure Energy Services Inc., which provides directional drilling services in western Canada.

Share Trading Summary for the three months ended High ($) Low ($) Close ($) Volume Value ($) 2013 March 31 18.35 15.47 17.32 15,575,333 263,073,063 June 30 17.45 15.19 16.28 14,588,970 242,490,166 September 30 18.44 16.06 17.64 7,821,939 137,954,838 December 31 18.14 15.92 16.73 9,970,761 166,305,776 Total 47,957,003 809,823,843 for the three months ended High ($) Low ($) Close ($) Volume Value ($) 2012 March 31 17.91 14.49 14.91 17,703,365 287,258,256 June 30 15.44 12.89 14.00 15,036,948 209,782,324 September 30 15.98 13.63 15.10 11,176,223 167,044,981 December 31 16.06 13.78 15.37 13,138,648 196,456,844 Total 57,055,184 860,542,405

Ensign Energy Services Inc. 2013 Annual Report 85 10 Year Financial Information lsn hr rc eebr31 December – price share Closing basic – outstanding shares common average Weighted equity to debt Long-term equity shareholders’ average on Return hrhles equity Shareholders’ ogtr et e fcretportion current of net debt, Long-term (deficit) capital Working Acquisitions ud rmoeain e share per operations from Funds e aia xedtrs xldn acquisitions excluding expenditures, capital Net e noeprshare per income Net ud rmoperations from Funds e income Net Depreciation dutdEBITDA Adjusted revenue of % margin Gross rs margin Gross 86 presentation. year current reflect to restated been 2006. have May amounts effective year split prior stock Certain outst 2-for-1 shares the common and average 2001 weighted May the effective and data share per All IFRS. for restated Not ** IFRS. under Restated * Revenue Information Financial Year 10 Basic Diluted Basic Diluted nighv enrsae orfette3fr1soksplit stock 3-for-1 the reflect to restated been have anding 152,693,280 1,962,569 2,098,011 317,407 342,225 435,611 128,865 248,026 485,712 573,838 (71,146) $16.73 76,408 27.4% 0.16:1 E $2.85 $2.84 $0.84 $0.84 6.7% n sig 2013 n E n rySrie I Services ergy 5,6,4 152,865,133 152,664,447 ,5,5 1,723,422 1,857,958 ,9,2 1,890,372 2,197,321 9,8 405,953 296,589 0,8 386,833 306,689 0,5 473,099 506,355 1,2 212,393 217,522 2,2 177,927 220,227 6,7 497,188 560,975 4,1 567,446 641,812 1.7$16.25 $15.37 381(10,233) 13,861 21 13.0% 12.1% 92 30.0% 29.2% .610.24:1 0.16:1 33 $3.09 $3.32 33 $3.09 $3.31 14 $1.39 $1.42 14 $1.39 $1.42 022011 2012 n 497,352 – c. 03Ana Report Annual 2013 0Ya iaca Information Financial Year 10 2010* 2009** 2008** 2007** 2006** 2005** 2004** 1,355,683 1,137,575 1,705,579 1,577,601 1,807,230 1,520,724 1,059,494

370,860 356,554 559,695 523,267 646,017 489,312 282,806

27.4% 31.3% 32.8% 33.2% 35.7% 32.2% 26.7%

310,011 305,670 498,139 472,493 593,550 445,033 249,480

132,980 111,015 125,809 92,636 80,921 74,917 50,956

119,308 125,436 259,959 249,765 341,284 169,665 118,849

$0.78 $0.82 $1.70 $1.64 $2.25 $1.12 $0.79

$0.78 $0.82 $1.68 $1.62 $2.18 $1.09 $0.77

288,513 259,239 402,407 297,311 421,713 336,726 189,438

$1.89 $1.69 $2.63 $1.95 $2.78 $2.23 $1.26

$1.88 $1.69 $2.61 $1.93 $2.70 $2.16 $1.23

255,463 132,573 274,323 271,984 325,483 247,696 138,091

– 52,573 – – – 79,021 –

84,516 107,894 107,024 60,272 63,162 (11,878) 14,209

– – 20,000 – – – –

1,548,155 1,530,797 1,551,151 1,244,206 1,107,605 771,902 649,740

7.7% 8.1% 18.6% 21.2% 36.3% 23.9% 19.6%

NA NA 0.01:1 NA NA NA NA

152,834,798 153,154,557 153,094,863 152,517,446 151,774,629 151,202,388 150,793,628

$15.03 $15.00 $13.22 $15.25 $18.39 $23.46 $12.55

Ensign Energy Services Inc. 2013 Annual Report 87 Operating Management 88 ADR President Vice Senior Kipp Wayne Engineering Infrastructure – Manager Tolton Ron Systems Business – Manager Schroter Kirk Services Information – Manager Plosz Stephen Technology Information of Director Paton Murray Technology Information Counsel Legal Prevatt Chantel Controller Assistant Kachanoski Danielle Insurance and Risk Manager, Jerome Marion Resources Field – Global Director Hames Cindy Assets Capital Director Yu Mark Reporting Management Director Russell Trevor Projects Special and Compliance Director Reid Kimberley Communications and Development Learning, Global Director Dawkins-Wood Gail Management Risk HSE-Global Manager, General Friesen Curtis Management Chain Supply and Manufacturing Global President Vice Trask Jon Resources Human Global President Vice Robinson Cathy Technology Wellsite President Vice Mutch Randy Corporate Management Operating iePeietEngineering President Vice McBeth Rod Projects ® eeomn n Capital and Development aainWl Services Well Canadian President, Vice Senior Toth Bryan Servicing Rockwell Nisku – Projects Capital Manager General Smith Andrew Houston – Projects Capital Manager General Hanson Wayne Manufacturing Manager Operations Knievel Mike Manager General Visotto Tony Services Directional Ensign Manager Operation Swan Wilf Manager General Thiessen Glenn Services Drilling President Vice Senior Connors Tom Drilling and Coring Encore Rockies – Manager Operations Haggart Scott Plains – Manager Operations Duk Curtis Marketing and Sales Manager, Tucker Kevin Marketing and Sales Director, Werbowesky Chad HSE Director Raimondo Robert Operations President Vice Maser Darryl Projects Capital President Vice Currier Roch Drilling Canadian President, Vice Senior Zanusso Bob Drilling Canadian lblAssets Global Maintenance Preventive Director, Grewal Sukhdeep iePeiet ADR President, Vice Pettapiece Ron ® Development E n sig tto aae,Lloydminster Manager, Station Snider Roger Prairie Grande Manager, Station House Don Estevan Manager, Station Malischewski Chad Deer Red and Nisku Manager, Station Shihinski Abe Manager Area Northwest Ball Cameron Manager Area Southeast Hallwachs Jeff Manager General Kidd William e Deer Red – Rentals Equipment Chandel Manager, Station Borchers Wilson Devon Prairie, Grande River, Peace – Rentals Equipment Chandel Manager, Area Brown Lee Systems Drill Enhanced Manager, General Finley Robin Rentals Equipment Chandel Manager, General Darrow Jason Systems Drill Enhanced President, Vice Senior Connors Tom Rentals Equipment Chandel President, Vice Senior Toth Bryan Services Petroleum Enhanced Wireline Manager, Operations Kleisinger Don Testing Production Manager, Operations Canadian Gallant Ron Testing Production Manager, General Reschke Randy President Vice Dear Bob President Vice Senior Connors Tom Industries Energy Opsco n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 prtn Management Operating Kevin Lauritsen Luis Bonsembiante Bill Brentzell Station Manager, Financial Controller General Manager – Projects Chandel Equipment Rentals – Ensign Well Services Adam Watts Oxbow Area Manager, Coal Seam Methane James Duff Bill Roper and Well Servicing Division, Australia Vice President, Well Services Operations Manager, Peter Koutsoukos Enhanced Drill Systems Graham Klaiber Oil & Gas Division Manager – Adelaide District Manager, California Region Ensign United States Drilling Chad Mitchell (Northern) Tim Robel Oil & Gas Division Manager – Perth District Manager, Andrew Dolman Tom Schledwitz Rocky Mountain Region Senior Vice President, United States Financial Controller Northern Operations Opsco Energy Industries (USA) International Oilfield Larry Swisher Chad Brown Services – West Vice President, Operations General Manager Michael Nuss Jacob Cellmer Jim McCathron Senior Vice President Vice President, Marketing Operations Manager Paul Thompson Stephen Auger, Jr. Tuss Erickson Area Manager – Latin America Director, Area Manager, Appalachia Ricardo Lopez Olaciregui Health, Safety and Environment Chris Mortimer General Manager – Argentina Steve Hunt Area Manager, South Texas Financial Controller Eduardo Carbia International Oilfield Operations Manager – Argentina Ensign United States Drilling Services – East Shaun Doupe (Rocky Mountain Region) Gene Gaz Operations Manager – Venezuela John Stoddard Senior Vice President, Luis Bonsembiante Vice President, International East Operations Financial Controller Directional Support Services John Bushell Don Erickson Vice President, International East Senior Area Manager Contract and Marketing Hugh Giberson Doug Lane Area Manager Operations Manager – Australia Bob Heil Geoff Pickford Area Manager Operations Manager – Middle East and North Africa Ensign United States Drilling Gerry West (California Region) Operations Manager – Southeast Asia, Larry Lorenz New Zealand, and Gabon Vice President, Operations Kevin Franklin Ensign United States Drilling Country Manager – Libya (Southern) Mike Gow Country Manager – Gabon Michael Nuss Senior Vice President Michael Grace Country Manager – Oman Daniel Patterson Vice President Adrian Nicolescu Country Manager – Kurdistan Mike Pierce Senior Marketing Director James Reo Country Manager – New Zealand Troy Blackburn Area Manager

Ensign Energy Services Inc. 2013 Annual Report 89 Corporate and Field Offices 90 980-3913 (780) Facsimile: 980-3900 (780) Telephone: 0B3 T9E AB Leduc, Street 39th – 8009 #106, Office Operations Services Directional Departure Ensign 955-5804 (780) Facsimile: 955-7885 (780) Telephone: 7Z1 T9E Alberta Nisku, St. 8th – 2105 Facility Manufacturing 533-6335 (866) Free: Toll 483-2937 (306) Facsimile: 483-5132 (306) Telephone: 2B0 S0C SK Oxbow, 659 Box 18 Highway #1 Saskatchewan Oxbow, – Office Operations Regional 955-6160 (780) Facsimile: (888)-367-4460 Free: Toll 955-6168 (780) Telephone: 7W6 T9E AB Nisku, Street 5th – 2000 Centre Training and Recruitment 955-7208 (780) Facsimile: 955-8808 (780) Telephone: 7X3 T9E AB Nisku, Street 5th – 2000 Office Head Operations Drilling Canadian Ensign 262-8215 (403) Facsimile: 262-1361 (403) Telephone: 0L6 T2P AB SW Calgary, Avenue 5th – 400 1000, Engineering/Manufacturing/ Services • Directional Departure Ensign Drilling • and Coring Encore • Drilling Canadian Ensign • Office Head Partnership Drilling Ensign 262-8215 (403) Facsimile: 262-1361 (403) Telephone: 0L6 T2P AB SW Calgary, Avenue 5th – 400 1000, Office Head Corporate Inc. Services Energy Ensign Operations Canadian Offices Field and Corporate Procurement olFe:(8)866-3835 (888) Free: Toll 624-4186 (780) Facsimile: 624-4613 (780) Telephone: 1S8 T8S AB River, Peace Street 90th Alberta 9123 River, Peace – Office Regional 533-6335 (866) Free: Toll 483-2815 (306) Facsimile: 483-2515 (306) : Telephone 2B0 S0C SK Oxbow, 1079 Box East, 18 Hwy Avenue Prospect 865 Saskatchewan Oxbow, – Office Regional 357-9329 (780) Facsimile: 518-4907 (780) Telephone: 0A1 T8V AB Prairie, Grande St. 95th – 14420 Alberta Prairie, Grande – Office Regional 778-6184 (780) Facsimile: 723-1593 (780) Telephone: 2B3 T45 AB Edson, subdivision Mizera RR-170 53304 #14, Alberta Edson, – Office Regional 987-0169 (780) Facsimile: 987-0059 (780) Telephone: 1Y1 T9G AB Devon, 264 RR 50372 Alberta Devon, – Office Regional Rentals Equipment Chandel 264-9376 (403) Facsimile: 260-5416 (403) Telephone: 0L6 T2P AB SW Calgary, Avenue 5th – 400 1000, Rentals Equipment Chandel • Systems Drill Enhanced • Office Head Partnership Services Petroleum Enhanced 443-5446 (888) Fax: Free Toll 445-2963 (877) Free: Toll 243-6158 (403) Facsimile: 287-0123 (403) Telephone: 5N2 T2G AB Calgary, SE Crescent Highfield 1345 Office Operations Drilling and Coring Encore E n sig olFe:(7)677-6500 (877) Free: Toll 346-3099 (403) Facsimile: 314-1637 (403) Telephone: 2B3 T4S AB Deer, Red 2A Hwy. 39139 – 5398 Park Industrial Alberta Blindman Deer, Red – Office Regional Systems Drill Enhanced olFe:(877)478-6101 Free: Toll 778-6184 (780) Facsimile: 778-6101 (780) Telephone: 1P2 T7S AB Whitecourt, Avenue 45th – 5907 Alberta Whitecourt, – Office Regional 677-6500 (877) Free: Toll 346-3099 (403) Facsimile: 314-1564 (403) Telephone: 2B3 T4S AB Deer, Red 2A Hwy. 39139 – 5398 Park Industrial Alberta Blindman Deer, Red – Office Regional asml:(8)539-1993 (780) Facsimile: 539-6736 (780) Telephone: 7B6 T8V AB Prairie, Grande Street 97th – 14011 Prairie Grande – Office Regional 634-3238 (306) Facsimile: 634-5522 (306) Telephone: 2A5 S4A SK Estevan, 549 Box Saskatchewan Estevan, – Office Regional 362-6069 (403) Facsimile: 362-3346 (403) Telephone: 0J0 T0J AB Brooks, 697 Box Alberta Brooks, – Office Regional 826-4305 (780) Facsimile: 826-6464 (780) Telephone: 0B0 T0A AB 355 Ardmore, Box 28 Hwy 440, R.R. Alberta Ardmore, – Office Regional 262-0026 (403) Facsimile: 265-6361 (403) Telephone: 0L6 T2P AB SW Calgary, Avenue 5th – 400 1000, Office Head Partnership Servicing Rockwell n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 oprt n il Offices Field and Corporate Regional Office – Regional Office (Wireline) – Well Services Operations Office – Lloydminster, Alberta Rainbow Lake, Alberta LaSalle, Colorado 6302 – 53rd Avenue #10 Del Rio Street 24020 WCR 46 Lloydminster, AB T9V 2E2 Rainbow Lake, AB T0H 2Y0 LaSalle, CO 80645 USA Telephone: (780) 875-5278 Telephone: (780) 956-2766 Telephone: (303) 659-3109 or Facsimile: (780) 875-6402 Facsimile: (780) 956-2769 (970) 284-6006 Facsimile: (303) 659-6842 Regional Office – Nisku, Alberta United States Operations 2105 – 8th Street Ensign United States Drilling Nisku, AB T9E 7Z1 Ensign United States Drilling Inc. (California) Inc. Telephone: (780) 955-7066 Regional Head Office – Regional Office – California Facsimile: (780) 955-7811 Northern US 7001 Charity Avenue Regional Office – Red Deer, Alberta 1700 Broadway, Suite 777 Bakersfield, CA 93308 USA 4205 Hewlett Drive Hwy 2A Denver, CO 80290 USA Telephone: (661) 589-0111 Red Deer, AB T4S 2A8 Telephone: (303) 292-1206 Toll Free: (800) 443-5925 Telephone: (403) 346-6175 Toll Free: (866) 866-8739 Facsimile: (661) 589-0283 Facsimile: (403) 343-6061 Toll Free Fax: (800) 886-3898 Drilling Operations Office – Opsco Energy Industries Ltd. Drilling Operations Office – Woodland, California Head Office Casper, Wyoming 13975 County Road 97F 1000, 400 – 5th Avenue SW 2100 Seven Mile Road Woodland, CA 95695 USA Calgary, AB T2P 0L6 Casper, WY 82604 USA Telephone: (530) 668-1295 Telephone: (403) 262-1361 Telephone: (307) 234-2299 or 3563 Facsimile: (530) 668-1254 Facsimile: (307) 234-2226 Facsimile: (403) 262-8215 Well Services Operations Office – Regional Office (Production Testing) – Drilling Operations Office – Bakersfield, California Dawson Creek, British Columbia Williston, North Dakota 3701 Fruitvale Ave. 8302 Trading Post Road 5075 – 141st Street N. Bakersfield, CA 93308 USA Dawson Creek, BC. V1G 4G3 Williston, ND 58801 USA Telephone: (661) 387-8400 Telephone: (250) 782-7296 Telephone: (701) 572-0131 Facsimile: (661) 387-8028 Facsimile: (250) 782-9308 Facsimile: (701) 572-0447 Message Center: (701) 774-0331 Ensign US Southern Drilling LLC Regional Office (Wireline) – Regional Head Office – Southern US Oilfield Rentals Field Office – Fort St. John, British Columbia 450 Gears Rd., Suite 777 LaSalle, Colorado 8708 – 101st Street Houston, TX 77065 USA 200 S 2nd Street, Unit 2 Fort St. John, BC V1J 5K5 Telephone: (281) 872-7770 LaSalle, CO 80645 USA Telephone: (250) 785-3698 Facsimile: (281) 872-4700 Facsimile: (250) 785-0461 Telephone: (970) 284-6685 or (970) 284-0968 Operations Office – Houston, Texas Regional Office (Wireline & Facsimile: (970) 284-6682 9300 Telephone Road Production Testing) – Grande Prairie Houston, Texas Trucking Operations Office – 14011 – 97th Street Telephone: (832) 431-4700 Watford City, North Dakota Grande Prairie, AB T8V 7B6 Facsimile: (832) 460-3460 Telephone: (780) 539-0449 (Wireline) 301 3rd Avenue SW Facsimile: (780) 532-1555 (Wireline) PO Box 567 Opsco Energy Industries Telephone: (780) 539-0703 Watford City, ND 58854 USA (USA) Ltd. Telephone: (307) 259-7704 (Production Testing) Regional Head Office Facsimile: (780) 532-8447 Trucking Operations Office – 1700 Broadway, Suite 777 (Production Testing) LaSalle, Colorado Denver, CO 80290 USA Regional Office (Production Testing) – 18287 County Road 394 Telephone: (855) 256-7726 Onoway, Alberta LaSalle, CO 80645 USA Toll Free Fax: (877) 275-5918 55114 Road 24 Telephone: (970) 284-6977 Operations Office – Casper, Wyoming Loomis Drop Off Facsimile: (970) 284-6970 130 West Collins Onoway, AB T0E 1V0 Casper, WY 82601 USA Telephone: (780) 967-5446 Telephone: (307) 265-4470 Facsimile: (780) 967-3547 Facsimile: (307) 537-3864

Ensign Energy Services Inc. 2013 Annual Report 91 Corporate and Field Offices 92 2663 369 21 218 011 3212 Facsimile: 369 21 218 011 Telephone: GSPLAJ Tripoli 30555 Box PO Milad Elousta Bir Tajoura Libya – Office Operations 03674 21 66 964 Tel: Iraq 36 Region, Suite Kurdistan Floor Erbil, 8th E, Building City, Naz Kurdistan – Office Operations 558044 241 011 Facsimile: 558481 241 011 Telephone: Gabon Gamba 305 BP Gabon – Office Operations 1800 4699 7 61 011 1888 Facsimile: 4699 7 61 011 Telephone: Australia 4350 QLD Toowoomba, Street Greenwattle 461 Australia – Office Operations 8300 9380 8 61 011 8321 Facsimile: 9380 8 61 011 Telephone: Australia 6008 WA Subiaco, Street Hay 531 Centre Business Subiaco Australia – Office Operations 0272 8252 8 61 011 3011 Facsimile: 8255 8 61 011 Telephone: Australia 5113 SA North Edinburgh Road Westport 17 – 15 Division East International – Office Head Regional Limited International Services Energy Ensign Operations International 505-1180 (570) Facsimile: 601-4079 (570) Telephone: USA 17701 PA 501 Williamsport, Suite Street, Third West 205 Pennsylvania Williamsport, – Office Operations 569-4242 (830) Telephone: 78064 TX. Pleasanton, Road Pullin 155 Texas – Office Operations esg etr 71 774-0331 (701) Center: 4122 Message 442 299 54 011 7048 Facsimile: 448 299 54 011 Telephone: 8300 S.A. Argentina, 24 Capital y Neuquen 16,17,23 Lotes – 3 Manzana Neuquen Industrial Parque Argentina Nequen, – Office Operations 5388 4816 11 54 011 0067 Facsimile: 4816 11 54 011 Telephone: S.A. Argentina, Aires Buenos de Autónoma Ciudad C1010AAR 9 Piso 836 Cerrito S.A. Argentina Ensign 5004 500 283 58 011 5000 Facsimile: 500 283 58 011 Telephone: 6050 S.A. Venezuela, Anzoategui Edo. Tigre, El Nuevo Pueblo Sector S/N Nro. Ensign España Av. C.A. Venezuela de Ensign 872-4700 (281) Facsimile: 872-7770 (281) Telephone: USA 77065 TX Houston, 777 Suite Rd., Gears 450 Division America Latin – Office Head Regional Inc. Services Energy International Ensign 1840 2457 968 011 Facsimile: 1886 2457 968 011 Telephone: Oman of Sultanate A’Shati J. 134 Code Postal 137 Box PO Oman – Office Operations 1865 6755 64 011 Facsimile: 1261 6755 64 011 Telephone: Zealand New Plymouth, New Block Bell Drive Havilland De 250 Zealand New – Office Operations E n sig asml:(8)955-7208 (780) Facsimile: 955-8808 (780) Telephone: 7X3 T9E AB Nisku, Street 5th – 2000 Inc. Canada OFS 875-8666 (281) Facsimile: 872-7770 (281) Telephone: 77013 Texas Houston, Rd. Oates 5308 Inc. Global OFS Manufacturing n E n rySrie I Services ergy n c. 03Ana Report Annual 2013 Board of Directors

N. Murray Edwards Robert H. Geddes James B. Howa 1, 3 President, Edco Financial President and COO, President, Bragg Creek Holdings Ltd. Ensign Energy Services Inc. Financial Consultants Ltd. Board member since October 1989 Board member since March 2007 Board member since June 1987

Len Kangas 2, 4 Selby Porter John Schroeder 1, 3 Independent Businessman Vice Chairman, Independent Businessman Board member since June 1990 Ensign Energy Services Inc. Board member since June 1990 Board member since June 1994

Kenneth J. Skirka 2, 4 Gail Surkan 2, 3 Barth Whitham 1, 4 Independent Businessman Independent Businesswoman President and CEO, Board member since May 2003 Board member since March 2006 Enduring Resources LLC Board member since March 2007

Committee Members 1 Audit 2 Corporate Governance and Nominations 3 Compensation 4 Health, Safety and Environment Corporate Information 94 Secretary Corporate and Counsel General Davies Suzanne Controller Corporate Lumsden Noel Environment and Safety Health, President Vice Wilman Rob Finance President Vice Lemke Timothy Officer Financial Chief and Finance President Vice Executive Dagenais Glenn Operations International and States United President Vice Executive Kautz Ed Officer Operating Chief and President Geddes H. Robert Chairman Vice Porter Selby Chairman Edwards Murray N. Management Corporate Information Corporate ybl ESI Symbol: Exchange Stock Toronto Listing Exchange Stock Canada of Bank Royal Canada Bank HSBC Bankers www.ensignenergy.com [email protected] Website: Email: 262-8215 (403) Facsimile: 262-1361 (403) Telephone: 0L6 T2P AB Calgary, S.W. Avenue 5th – 400 1000, Office Head E n sig indadreturned. and signed be proxy of form the we request unable, if but attend, to invited are shareholders All Alberta. Calgary, S.W., Avenue 5th – 319 the Club, at Petroleum MDT Calgary pm 3 at 2014, 14, May Wednesday, on held be will Shareholders of Meeting Annual Inc.’s Services Energy Ensign Meeting General Annual of Notice Canada of Company Trust Computershare Agent Transfer LLP Palmer & Duckworth Burnet, Counsel Legal LLP PricewaterhouseCoopers Auditors n E n rySrie I Services ergy rne nCnd yR Donnelley RR by Canada in Printed Inc. Design Grant Mike Design: Inc. Communications Fraser Writing: n c. 03Ana Report Annual 2013 www.ensignenergy.com