Aveda Transportation and Energy Services Inc. presented its corporate strategy and outlook in January 2017. The presentation discussed Aveda's history of growth through acquisitions and expansion across North America since 1994. It highlighted Aveda's leadership team and board of directors with extensive oilfield experience. The presentation also noted Aveda's track record of revenue and adjusted EBITDA growth despite a 40% decline in rig counts from 2015 to 2016, demonstrating resilience in the downturn.
2. The information contained in this corporate presentation (the "Presentation") is based on public information and Aveda Transportation and Energy Services Inc.'s ("Aveda" or the "Company")
information. This Presentation does not constitute, or form a part of, and should not be construed as any offer or invitation to sell, allot or issue, or any solicitation of any offer to purchase or
subscribe for, any securities, nor shall it (or any part of it or anything contained or referred to in it) or the fact of its distribution form the basis of, or be relied upon in connection with, or act as any
inducement in relation to a decision to purchase or subscribe for or to enter into, any contract or commitment whatsoever for securities in any jurisdiction.
The contents of this presentation are neither sufficient for, nor intended by the Company to be used in connection with, any decision relating to the purchase or sale of any existing or future
securities. The Company does not intend to provide financial, investment, tax, legal, or accounting advice. Persons considering the purchase or sale of any securities of the company should consult
with their own independent professional advisors. This document does not constitute an offer to sell or a solicitation of an offer to buy any of these securities within the United States. Any offer or
solicitation would only be made by means of offering documents (e.g., term sheet, offering memorandum, subscription agreement or similar documents) and only in jurisdictions where permitted by
law. In which case securities would only be offered to and purchased by eligible investors, and then only in reliance on an exemption from the registration requirement of the United States Securities
Act of 1933, as amended (the “U.S. Securities Act”) and exemptions from applicable state securities laws.
This Presentation contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable
Canadian securities laws. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of
words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words,
including negatives thereof, suggesting future outcomes. In particular, this Presentation contains forward-looking statements relating to: future growth; results of operations; operational and
financial performance; projected capital expenditures and commitments and the financing thereof; benefits derived from capital expenditures; expansion opportunities; increases in revenue;
equipment delivery and deployment dates; effect of and ability to complete rebranding; geographic allocation of equipment; customer commitments; ability to establish and maintain a working
relationship with third party suppliers; expectations regarding the ability of Aveda to raise capital and to increase its equipment fleet; benefits associated with financial results; activity levels;
business strategy; successful integration of structural changes; restructuring plans; organic growth potential; acquisition opportunities and benefits and availability of insurance coverage.
Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and
assumptions are based on information currently available to Aveda, including information obtained from third party industry analysts and other third party sources. In some instances, material
assumptions and material factors are presented elsewhere in this Presentation in connection with the forward-looking statements. Readers are cautioned that the following list of material factors
and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to: the performance of Aveda’s businesses, including current business and economic trends;
oil and natural gas commodity prices and production levels; capital expenditure programs and other expenditures by Aveda and its customers; the ability of Aveda to retain and hire qualified
personnel in Canada and the United States; the ability of Aveda to obtain parts, consumables, equipment, technology, and supplies in a timely manner to carry out its activities; the ability of Aveda
to maintain good working relationships with key suppliers; the ability of Aveda to market its services successfully to existing and new customers; the ability of Aveda to retain customers post-
acquisitions; the ability of Aveda to obtain timely financing on acceptable terms; currency exchange and interest rates; risks associated with foreign operations; changes under governmental
regulatory regimes and tax, environmental and other laws in Canada and the United States; and a stable competitive environment.
Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties, some of which are described herein. Such forward-looking statements
necessarily involve known and unknown risks and uncertainties, which may cause Aveda’s actual performance and financial results in future periods to differ materially from any projections of
future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified by Aveda’s annual
information form and management discussion and analysis for the year ended December 31, 2015 (the "MD&A") and contained herein under the heading "Risk Factors". Any forward-looking
statements are made as of the date hereof and, except as required by law, Aveda assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or
otherwise.
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DISCLAIMER
3. DISCLAIMER (CONT’D)DISCLAIMER (CONT’D)
Future-Oriented Financial Information
This Presentation also contains future-oriented financial information and financial outlook information (collectively, "FOFI") about prospective results of operations, future net revenue, share
capital, cash flows, and components thereof, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraphs including the risks set
out in the Company's MD&A and annual information form for the year ended December 31, 2015. FOFI contained in this Presentation was made as of the date of this Presentation and was provided
for the purpose of providing information about management's current expectations and plans relating to the future. The Company disclaims any intention or obligation to update or revise any
forward looking statements or FOFI contained in this Presentation, whether as a result of new information, future events or otherwise, unless required pursuant to applicable securities law. Readers
are cautioned that the forward looking statements and FOFI contained in this Presentation should not be used for purposes other than for which it is disclosed herein. The forward looking
statements and FOFI contained in this Presentation are expressly qualified by this cautionary statement.
The forward-looking statements contained in this Presentation are made as of the date on the front page and the Company assumes no obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. Certain information contained herein is
based on, or derived from, information provided by independent third-party sources. The Company believes that such information is accurate and that the sources from which it has been obtained
are reliable. The Company cannot guarantee the accuracy of such information, however, and has not independently verified the assumptions on which such information is based. The Company does
not assume any responsibility for the accuracy or completeness of such information.
Non-International Financial Reporting Standards Measures
This Presentation may contain the terms Adjusted EBITDA and working capital which are defined in the MD&A. These measures are commonly utilized in the oilfield services industry and are
considered informative for management and stakeholders. Neither working capital nor Adjusted EBITDA have a standardized meaning prescribed by international financial reporting standards
("IFRS") and therefore Aveda's calculations may not be comparable with the calculation of similar measures for other entities. Management uses Adjusted EBITDA to analyze the operating
performance of businesses. Adjusted EBITDA as presented is not intended to represent cash provided by operating activities, net earnings or other measures of financial performance calculated in
accordance with IFRS.
This Presentation does not constitute a recommendation regarding the securities of Aveda. No reliance may be placed for any purpose whatsoever on the completeness, accuracy or fairness of the
information or opinions contained in this Presentation nor is any responsibility or liability accepted for any errors or misstatements in, or omissions from, this Presentation or any direct or
consequential loss (howsoever arising) from any use of, or reliance on, this Presentation or otherwise in connection with it. No undertaking, representation, warranty or other assurance, express or
implied, is made or given by or on behalf of Aveda, or any of its respective directors, officers, partners, employees, agents, affiliates or advisers or any other person as to the accuracy, completeness
or fairness of the information or opinions contained in this Presentation and no responsibility or liability is accepted by any of them for any such information or opinions.
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4. OUR HISTORY
Founded in 1994 as Phoenix Oilfield Hauling Inc.
Went public on the TSX Venture Exchange in 2006. Renamed Aveda Transportation and
Energy Services (TSX-V: AVE)
Grew significantly through strategic acquisitions and organic expansion, making Aveda the
largest rig moving company in North America; most recently:
- 2012: Organic expansion into South Texas (Pleasanton, TX) and West Texas (Midland, TX);
Acquisition of Complete Energy Service Inc. rental assets in Alberta
- 2013: Organic expansion into Utica Shale region (NE USA); Acquisition of Belair Rentals assets
in Alberta
- 2014: Organic expansion into Mid-Continent (Oklahoma); Acquisitions of M&K rig moving and
rentals assets in North Dakota, and Precision Drilling’s rig moving assets in Texas
- 2015: Acquisition of Hodges Trucking Company, L.L.C.’s rig moving assets located across the
USA
- 2016: Increased footprint in Permian with addition of second terminal, and organic growth into
Florida highway trucking
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5. MANAGEMENT TEAM
Ronnie Witherspoon – President and CEO
Over 20 years of oilfield industry experience
Former President of Superior Well Services and Executive Vice President of Nabors Completion and Production
Services
Bharat Mahajan – VP, Finance and CFO
Former CFO of several oilfield service companies, including Wellpoint Systems Inc. and Norex Exploration
Services Inc.
Held several positions with Magna International overseeing various international growth initiatives
Tom Halliday – VP, USA Operations
Over 40 years of oilfield industry experience
Former rig manager for Shell and senior manager with Nabors and Baker Hughes
Les Ovelson – VP, Canada Operations
Over 25 years of oilfield industry experience
Former COO of ATK Oilfield Transportation and senior manager with KOS Oilfield Transportation
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6. BOARD OF DIRECTORS
David Werklund, Executive Chairman
Strong history of founding and growing companies both organically and through acquisitions
‒ Founder and Chairman of Tervita Corporation (previously named CCS Corporation); privatized in 2007 for C$3.5B (largest
trust privatization in Canadian history)
‒ Founder and Executive Chairman of Werklund Capital Corp.
‒ Co-Founder of Concord Well Servicing
2013 Calgary Business Hall of Fame Laureate
2005 Ernst & Young’s Canadian Entrepreneur of the Year
Stefan Erasmus
President of Werklund Capital Corporation
Former CFO for a public independent power
producer
Doug McCartney
Managing Partner, Burstall Winger Zammit LLP
Extensive experience in securities and corporate
finance and commercial law
Paul Shelley
Consultant for corporate finance, as well as
mergers, acquisitions and divestures
Former manager of special loans at RBC
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7. Track Record of Growth - Revenue Track Record of Growth – Adjusted EBITDA
Significant Adjusted EBITDA Improvement
Q3 2015 vs Q3 2016
Exposure to Resilient US Market/Strong Dollar
INVESTMENT HIGHLIGHTS
7
Rig count
DECREASE
40%
Adjusted EBITDA
INCREASE
$7M
(1)
(1) Active rigs within 100 miles of Aveda terminals
Q3
2016
Q3
2014
Q3
2015
9. WHAT ARE THE RIG OPERATORS SAYING
1Nabors Industries Ltd. Press Release October 25, 2016 | 2 Helmerich & Payne Inc. Press Release July 28, 2016 | 3Precision Drilling Corp Press Release October 21, 2016
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1
2
2
3
“After a challenging downturn, we are
experiencing SIGNIFICANT UTILIZATION
INCREASES in our Lower 48 market”
Anthony Petrello, Nabors Chairman, President, and CEO
“Even though oil prices have pulled back over
the past several weeks, it is encouraging to
still see signs of OPTIMISM in the market”
John Lindsay, Helmerich & Payne President and CEO
"Customer sentiment has SUBSTANTIALLY
IMPROVED.……This improved outlook is evident in the
conversations we are having with customers, but more importantly
in our ACTIVITY INCREASES, recent contract bookings and
IMPROVING PRICING environment”
Kevin Neveu, Precision Drilling President, and CEO
10. Capitalization Balance Sheet Summary
Share Price (September 10, 2014) $5.85 Operating Line Available ($MM)(1) $37.7
Share Price (January 5, 2017) $1.06 Property and Equipment per Balance Sheet ($MM)(1) $101.2
Tangible Asset Value per Share(1) $1.44 FMV of Property and Equipment ($MM)(4) $114.1
Shares Outstanding Diluted (MM)(1) 19.1 Working Capital ($MM)(1) $9.6
Shareholders’ Equity ($MM) (1) $28.1
Debt to Equity (1) 3:1
Market Capitalization ($MM)(6) $20.2
Loans and Borrowings ($MM) (1) (2) $47.8 Shareholder Summary
Long Term Note Payable ($MM) (1) (3) $35.4 Werklund Capital Corp(5) 40.3%
Enterprise Value ($MM) $103.4 Invesco Canada Ltd (5) 10.2%
(1) As of September 30, 2016.
(2) Loans and Borrowings due May 31, 2019. No covenant test as long as excess availability, including supressed availability is greater than $20M. Excess availability at September 30, 2016 is $37.7M.
(3) Long Term Note Payable due June 15, 2020. No principal repayment required until maturity date. Bears interest at 9% per annum.
(4) Independent appraisal report dated September 29, 2016.
(5) Publicly available information as at September 23, 2016.
(6) Closing price as at January 5, 2017.
CAPITALIZATION SNAPSHOT (TSX-V: AVE)
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11. Map Legend
Oil Focused
NGL Focused
(1) Active rigs on or about
December 23, 2016 (source:
Baker Hughes)
(2) Aveda’s research suggests that
each rig moves an average of 17
times per year at an average
cost of $75K. Based on the
North American rig count of
846, the estimated value of the
market is $1.1B
(3) US Corporate Office
(4) New Terminal added in Q3 2016
to serve Permian Basin
NORTH AMERICAN OPERATIONS
Permian
(202 Rigs)
Williston/
Bakken (32 Rigs)
WCSB (164 Rigs)
Eagle Ford
(45 Rigs)
Anadarko (79 Rigs)
Colorado (28 Rigs)
Expansion Opportunity
Houston, TX (3)Houston, TX (3)
Midland, TXMidland, TX
Pleasanton, TXPleasanton, TX
Oklahoma City, OKOklahoma City, OK
Calgary, ABCalgary, AB
Edson, ABEdson, AB
Leduc, ABLeduc, AB
Williston, NDWilliston, ND
There are 851 Active Rigs in North America(1) representing an estimated market size of $1.1B(2). Aveda’s
current terminal locations cover over 70% of the potential North American market
Marshall, TXMarshall, TX
Haynesville (34 Rigs)
Marcellus/Utica (51 Rigs)
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Pecos, TX (4)Pecos, TX (4)
LARGEST RIG MOVING COMPANY
IN NORTH AMERICA
Williamsport, PAWilliamsport, PA
Casper, WYCasper, WY
Uinta/Wamsutter
(19 Rigs)
12. BUSINESS UNIT OVERVIEW
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(1) Terminals in the Marcellus Basin were temporarily suspended in early 2016
(2) New terminal added in the Permian Basin in Q3 to increase exposure to growing market
(2)
Aveda has a diversified revenue base across all of the major US Basins which in aggregate account for
over 90% of the company’s revenue.
(1)
13. A company-wide philosophy based on over 20 years of rig moving experience (the best
people, working safely, using the best equipment = industry leading results)
THE “AVEDA WAY”
An Industry
Leader
An Industry
Leader
SAFETY
‒ Zero incident rate mentality (TRIR .69 at September 2016)
‒ Among the most advanced/developed safety
programsin the industry
PEOPLE
‒ One of the lowest turn-overratesin the industry
‒ Competitive wages, on-going development opportunities and
room for advancement attract top talent
EQUIPMENT
‒ Among the most modern fleets in the industry
‒ Strict maintenance policy
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14. Blue Chip Customer Base
OILFIELD HAULING OVERVIEW
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One of the largest and youngest
fleets in the industry:
1,332 pieces of equipment
6 years – average age of key
power units (tractors/bed
trucks/cranes)
15. Blue Chip Customer Base
OILFIELD RENTALS OVERVIEW
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Over 1,100 Pieces of
modern, well-maintained
equipment
17. KEY TAKEAWAYS
Well positioned to take advantage of the recovery
– Access to over 70% of growing North American rig count
– Exposure to resilient US market
• 92% of Q3 2016 revenue generated in US market
– Large footprint in the Permian Basin
• Recently added a second terminal
• 33% of Q3 2016 revenue generated in Permian
– Inflection point
• Revenue & Adjusted EBITDA on the rise
– Track record for growth
Strong management team
– 20 to 40 years of industry experience
– Deep rooted customer relationships
– David Werklund owns 40%
Focus on reducing leverage
– EBITDA contribution
– Public markets
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18. Bharat Mahajan, CPA, CA
VP Finance & Chief Financial Officer
Aveda Transportation and Energy Services
Suite 300, 435 – 4th Avenue SW
Calgary, AB T2P 3A8
(403) 264-5769
bharat.mahajan@avedaenergy.com
Ronnie Witherspoon
President & Chief Executive Officer
Aveda Transportation and Energy Services
Suite 1200, 333 N. Sam Houston Parkway E.
Houston, TX 77060
(832) 937-5334
ronnie.witherspoon@avedaenergy.com
CONTACT
Aveda Board Members:
David Werklund
Executive Chairman of Werklund
Capital Corporation
Stefan Erasmus
President, Werklund Capital
Corporation
Doug McCartney
Partner, Burstall Winger Zammit LLP
Paul Shelley
Independent Businessman
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