INVESTOR PRESENTATION September 2019 FORWARD LOOKING STATEMENTS - - PDF document

INVESTOR PRESENTATION

September 2019

FORWARD LOOKING STATEMENTS

This document contains statements that constitute forward-looking statements within the meaning of applicable securities legislation. These forward-looking statements include, among others, the Company’s prospects, expected revenues, expenses, profits, expected developments and strategies for its operations, and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of

• perations or performance. These forward-looking statements are identified by their use of terms and phrases such

as “anticipate,” “achieve”, “achievable,” “believe,” “estimate,” “expect,” “intend”, “plan”, “planned”, and other similar terms and phrases. Forward-looking statements are based on current expectations, estimates, projections and assumptions that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks and uncertainties include: fluctuating prices for crude oil and natural gas; changes in drilling activity; general global economic, political and business conditions; weather conditions; regulatory changes; and availability of products, qualified personnel, manufacturing capacity and raw materials. If any of these uncertainties materialize, or if assumptions are incorrect, actual results may vary materially from those expected.

2

AGENDA

Investment Summary Near Term Market Outlook Canadian Industry Overview and Trican’s Competitive Positioning Company Overview and Ongoing Business Transformation

3

TRICAN OVERVIEW

• Focused in Canada, Trican has

a highly trained workforce dedicated to safety and

• perational excellence who

provide a comprehensive array

• f specialized products and

services using equipment required for the exploration and development of oil and gas reserves

• Trican has been servicing wells

in western Canada for more than 22 years

• Trican service lines cover 60%

to 70% of a typical well cost.

Customer Full Cycle Technical Expertise

Engineering Support Reservoir Expertise Laboratory Services

Drilling Cycle

Cementing Services

Completion Cycle

Fracturing Coil Tubing Fluid Management

Production Cycle

Coil Tubing Acidizing Pipeline Services Industrial Services Chemical Services Remedial Cementing

WHAT WE DO

5

BUSINESS TRANSFORMATION: 2015 AND ONGOING EFFORTS

• The 2014 oil supply glut, required Trican

take decisive action

• The Company’s actions have positioned

Trican to weather and take advantage of near-term North American energy market turbulence

Restructure Refocus Right Size Returns

6

TRICAN STRENGTH: FINANCIAL STRENGTH & RESILIENCY

• Company has deleveraged by more than $700

million and improved asset coverage relative to 2015 cyclical low

• Monetizing stranded capital by selling

permanently idled assets

• $nil debt less cash at June 30, 2019
• Financial position allows opportunistic evaluation
• f investment opportunities in volatile North

American energy market

• Lowered fixed costs and increased proportion of

variable costs to make the company more resilient during a down cycle

• Continue to evaluate prudent options to diversify
• ur revenue streams and cash flow resiliency of

through the cycles

7

$0 $200 $400 $600 $800 $1,000 $1,200 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Canadian Results ($millions)

Revenue Adjusted EBITDA $ $100 $200 $300 $400 $500 $600 $700 $800

• 0.10

0.20 0.30 0.40 0.50 0.60 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

Total Debt (millions) Debt / Tangible Capital

Debt / Tangible Capital

Total Debt (RHS) Debt / Tangible Capital (LHS)

See non-GAAP measure Adjusted EBITDA as more fully described in Trican’s MD&A.

TRICAN STRENGTH: DIVERSIFIED SERVICE LINES

Market Leading Positions

• Canadian market leader in fracturing services (based
• n market share)
• Canadian market leader in cementing services

(based on market share)

• Supporting service lines: coil tubing, nitrogen, acid,

water management services, pipeline and industrial services Strong Financial Position

• 2018 revenue of $900 million
• H1 2019 revenue of $356 million
• Market capitalization $289 million (September 5, 2019)
• Cash exceeded debt by $12 million at June 30, 2019

Trailing 12 Month Revenues: Service Line Breakdown

Hydraulic Fracturing, 69% Cementing, 16% Coil Services, 6% Fluid Management, 4% Industrial Services, 1% Other, 4%

TRICAN STRENGTH: DRIVING EFFICIENCY IN THE CANADIAN MARKET

• Deliver exceptional customer service
• Drive efficiency in our business to lower our costs and the cost to our

customers

• Integrate small service lines with larger business lines to improve

cost structure and customer efficiency

• Reduce product chemistry costs resulting in lower well costs for our

customers

• Ongoing innovations
• Large natural gas dual fuel fleet (149,000 HHP) in western Canada

to help reduce well costs and GHGs

• Introducing new technology to reduce tractors on location which will

provide fuel savings, result in less engine hours, and reduce GHGs

• Implemented large bore treating iron, reducing repair and

maintenance costs

• Implementing equipment monitoring technology that will reduce

repairs and extend equipment life through data management

• Developed new cement blends to lower costs to customers
• Lowered Fracturing product costs through implementation of new

fluid systems

9

TRICAN STRENGTH: RIGHT FRACTURING FLEET

• Large dual fuel fleet to offer fuel

savings: 149,000 HHP of natural gas bi-fuel pumps

• Largest fleet of continuous duty pumps;

most efficient style of fracturing pump, designed for higher well service intensity plays:

• Equipment is well maintained, hot

stacked and requires no capex to activate

• Allows Trican to continue to efficiently
• perate in the highest service intensity

resource plays: Montney, Duvernay and Deep Basin (estimated to account for ~ 80% of the required HHP demand in Canada)

Fracturing Fleet Type of Pump Pump (#) HHP % of Fleet Continuous Duty 2,700 / 3,000 HHP 126 344,700 58% Mid Tier 2,500 HHP 95 237,500 40% Legacy 2,250 HHP 5 11,250 2% Total Fracturing Fleet 226 593,450

See MD&A for definition of Fracturing Fleet terms; Dual fuel HHP includes delivery of 10 retrofitted pumps for September / October

10

TRICAN STRENGTH: ALIGNING COST STRUCTURE TO NEW CANADIAN MARKET

• To align our business to the new post 2015

Canadian market dynamics and lower average well counts:

• Merged with Canyon, ~ $55 million of

Synergies

• Modernized system infrastructure to support

further business optimization

• Since 2017, sold $45 million of excess

property and equipment at values approximating net book value

• Realized $25 million cost reductions since

late 2018

11

TRICAN STRENGTH: ALIGNING COST STRUCTURE TO NEW CANADIAN MARKET

• To align our business to the new post 2015 Canadian market dynamics and lower average well counts:
• Implementing cost reductions of an additional $15 million in Q4 to align with the current Canadian well count of ~

5,000 wells

• Closed two cement locations in late June and consolidating locations in Red Deer, Grande Prairie and Nisku
• Reduced fracturing crews to approximately 8 fleets from 10.5 last year
• Reduced cement trucks to 22 from 26 to better align with reduced average drilling rig count (cement activity aligns with rig

count)

• Added 2 coil units to improve leverage on coil fixed cost structure
• Targeting $12 million additional cost savings through lean initiatives in the next 6 months

12

Dec-15 5.5 Dec-16 4.4 Dec-17 6.5 Dec-18 8.2 1-Jul 9.4 2 4 6 8 10 12 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 1-Mar 1-Jun

Field and Shared Service / SG&A Employee

Field & Shared Service / G&A Yearly Avg Field & Shared Service / G&A

• Expon. (Field & Shared Service / G&A)

TRICAN STRENGTH: FRACTURING COMPETITIVE LANDSCAPE IMPROVING

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* Smaller crews not suitable for all higher intensity plays Source: Competitor company reports, internal company data, and internal estimates

• Canadian competitive landscape much better than U.S. market
• Supply is dropping which will balance market quicker than

anticipated

• Equipment capacity down approximately 275,000 HP since Q1;

continues to drop

• Trican and industry will not staff additional capacity until prices

improve

• Estimated industry demand of ~1,000,000 HHP average in Q319
• Approximately 70 to 75% utilization
• Approximately 980,000 HHP overcapacity in the basin (unstaffed)

and 237,000 HHP overcapacity (staffed)

• Roughly 6 larger staffed fleets
• Roughly 18 larger total fleets
• Roughly 50 additional rigs in deeper plays uses all capacity in basin

(~30% increase in activity)

• An increase in the average rig count by approximately 25 rigs

would absorb all excess staffed equipment (6 fracturing crews)

Hydraulic Horsepower (HHP) Capacity Active Crewed Fleets Trican 593,450 347,000 8 Competitor A 306,000 190,000 5 Competitor B 298,000 170,000 6 Competitor C 190,000 175,000 3 Competitor D 250,000 140,000 3 Competitor E 263,000 175,000 5 Competitor F* 80,000 75,000 4 Competitor G* 50,000 50,000 4 2,030,450 1,322,000 38

TRICAN STRENGTH: AVAILABLE CAPACITY

• Existing idle equipment provides opportunity for

incremental returns upon a market recovery

• Substantial leverage on existing infrastructure

and fixed cost structure upon recovery

• Assets are well-maintained and not scavenged
• Can be activated by adding staff with little capital
• Approximately 6 fracturing crews parked

(240,000 HP)

14

Service Line Total Equipment Active, Manned Idled Fracturing (HHP) 593,450 347,000 246,000 Cementing (trucks) 62 22 40 Coil Tubing (units) 23 9 14

• Trican has reduced its fleet size in response to market decline

TRICAN STRENGTHS: FINDING WAYS TO RETURN MONEY TO SHAREHOLDERS

• Trican is focused on delivering the top

quartile ROIC in our sector

• Since 2006, Trican has returned $372

million to shareholders

• The Company remains focused on finding

ways to return funds to shareholders

• Continue to execute buybacks under

current NCIB

• Current market dynamics support share

repurchases as the best way to return money to shareholders

• Repurchased approximately 19% of the

Company’s shares since October 2017

• 25,000

50,000 75,000 100,000 2006 2008 2010 2012 2014 2016 2018

• 100,000

200,000 300,000 400,000

Dividends and Share Repurchases, 2006 - 2019

Cumulative Dividend (RHS) Cumulative NCIB (RHS) Annual (LHS) Cumulative (RHS)

15

BUSINESS TRANSFORMATION: OUR STRATEGIC PRIORITIES REMAIN INTACT To achieve top quartile ROIC in our sector

• Maintain market leading position in Fracturing and Cementing service lines
• Strengthen auxiliary service lines (Coiled Tubing)
• Activate parked equipment (if return hurdles can be met)
• Growth in existing or complimentary, less capital intensive, less cyclical services lines
• Disciplined investment into future growth – ensure ROIC hurdle rates are met
• Return value to shareholders through share buyback program
• Sell excess and permanently stranded capital equipment, return funds to the balance sheet
• Reduce costs for ourselves and our clients through efficiency improvements and scale

Strengthen Existing Business Growth Share- holder Return Cost Control & Efficiency Gains

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Having safe, efficient, customer- focused operations is always priority #1. Beyond safety and

• perational performance, our

strategic priorities remain intact:

CANADIAN INDUSTRY & TRICAN COMPETITIVE POSITIONING

CANADIAN INDUSTRY: THE NEW CANADIAN MARKET SIZE

• Since the 2014 oil price decline, the industry has seen a market shift in the number of wells drilled in western Canada
• The well count has stabilized at ~ 5,000 to 6,500 wells
• The decline in well count has been offset by an increase in well intensity
• An increase in the average rig count by approximately 24 rigs would absorb all excess staffed equipment (6 crews)
• An increase in the average rig count by ~ 50 rigs in high intensity plays would absorb all currently excess and idled

fracturing capacity in Canada (approximately 18 crews)

5000 10000 15000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E

Canadian Well Count

Well Count Market Shift – New Frac Market Equilibrium ~ Well Count Market Shift – Old Frac Market Equilibrium ~ 10,000 wells

100 200 300 400 500 2010 2012 2014 2016 2018

12 Month Trailing Average Canadian Rig Count

Source: Baker Hughes GE Rig Count Source: Petroleum Services Association of Canada and Internal Estimates

18

CANADIAN INDUSTRY: INCREASED WELL SERVICE INTENSITY

• 2018 well count 38% below 2014 levels
• 2019 well count expected to be 24% below 2018 levels
• 7,000 – 8,000 wells today equates to 2014 well count levels in terms of fracturing equipment demand
• We expect well service intensity to remain flat in 2019 to 2018 levels;
• Tonnes of proppant placed per meter grew by approximately 25% in 2018 relative to 2017
• 1.5 tonnes / metre in 2018 vs. 1.2 tonnes / metre in 2017
• Leading edge 2.0 tonnes / metre
• 2018 data weighted to higher well service intensity wells

Source: Canadian Discovery Source: GMP First Energy, internal 2019E

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10,853 10,924 5,376 3,963 6,959 6,781 5,200

• 2,000

4,000 6,000 8,000 10,000 12,000 2013 2014 2015 2016 2017 2018E 2019E

WCSB - Wells Drilled

616 777 1,285 1,335 1,841 3,004 2,557

• 500

1,000 1,500 2,000 2,500 3,000 3,500 2013 2014 2015 2016 2017 2018 2019

WCSB - Tonnes / Well

TRICAN: MARKET COVERAGE

Horn River Shale Montney Shale Bakken Shale Cardium Tight Oil Viking Tight Oil Lower Shaunavon Tight Oil

GRANDE PRAIRIE WHITECOURT HINTON FORT ST. JOHN NISKU RED DEER BROOKS ESTEVAN

British Columbia Alberta Saskatchewan Deep Basin Duvernay Shale

CALGARY

Manitoba Spearfish

MEDICINE HAT

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Market Leading Positions

• Canadian market leader in fracturing

services (crewed HHP)

• Canadian market leader in cementing

services (based on rig count)

• Supporting service lines: coil tubing,

nitrogen, acid, water management services, pipeline and industrial services

• Trican service line offerings cover

approximately 60% to 70% of resource well AFE costs

TRICAN: CEMENT SERVICES

• Drilling rig count provides:
• A general indication of operational activity
• Cement operations track very closely with the

drilling rig activity

• Lower rig count has reduced cement truck

requirements, but longer laterals and increased cement requirements has counter- acted this requirement

• Cement service landscape is concentrated

amongst four primary players

• Trican has maintained a steady market share

in this service line over the past decade

• Positive return on capital service line

100 200 300 400 500 2010 2012 2014 2016 2018

12 Month Trailing Average Canadian Rig Count

Source: Baker Hughes GE Rig Count

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TRICAN: GROWING COILED TUBING

• Adding scale to improve operating results
• Added 3 units to market in the last year

now running 9 units

• Have 14 more units to add back into the

market with little capital investment required

• Pricing stable in this service line

22

TRICAN: INNOVATION

• Scale allows targeted investment into internally developed

IP and new technologies for reduced product costs

• Patented MVPTM fracturing fluids that suspend proppants

and increase production

• Nano surfactants to improve water flowback
• Introducing new technology to reduce tractors on location

which will provide fuel savings, result in less engine hours, and reduce GHGs

23

• Implementing equipment monitoring technology that will reduce repairs and extend equipment life through

data management

• Developed lower cost cement blends
• Continually lowering product costs

Low industry activity cycle cash flow management: Current Cycle

• Petroleum Services Association of Canada forecasts ~ 5,000 wells for 2019
• Under this scenario, the Company expects approximate break-even Free Cash Flow2
• We continue to work on business optimization to improve low industry cycle Free Cash Flow2 capability

Assets generated $183 million in adjusted EBITDA1 in 2017: Recent Cycle

• ~ 6,500 wells
• ~ average fracturing crew count of ~ 9.5 crews
• Excludes 5 months of acquired company results (Canyon acquired June 2017)

Trican will continue to evaluate asset divestiture opportunities or

• pportunities to generate returns on idle assets in other markets:

Other Financial Levers

• Since 2017, Trican has realized $45 million of proceeds from asset sales

TRICAN STRENGTH: FINANCIAL MANAGEMENT AND CAPABILITIES

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1 See non-GAAP measures as more fully described in Trican’s MD&A. 2 See non-GAAP measures as more fully described in Appendix 2 of this presentation.

NEAR-TERM OUTLOOK & INVESTMENT SUMMARY

OUTLOOK: Q3 2019

• Approximately 30% year over year decline in

industry activity anticipated

• Weather related delays and lower commodity prices

(primarily AECO natural gas) in the quarter has deferred work to Q4

• Cementing business following the rig count during

the quarter:

• Anticipate the Q3 rig count to ~ 30% below last year
• Choppy utilization in Q3 lowers financial results
• Primary focus in Q3 remains business optimization

and right sizing equipment fleet to maintain high utilization

26

OUTLOOK: Q4 2019

• Industry activity similar to Q4 2018
• Trican Q4 fracturing activity higher sequentially and year over

year; planned work volume has increased as customers have pushed Q3 work into Q4

• October and November fully booked for fracturing while

December will have normal seasonal slow-down

• Anticipate cementing to remain at current levels with normal

December slow-down

• Coiled tubing activity higher year over year as 2 additional

units activated

• Stable pricing anticipated
• Q4 will benefit from lower costs from right-sizing efforts in Q3

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WHY INVEST IN TRICAN

• Low debt level mitigates downside risk
• Company valued at historic low price

to tangible book value

• Fracturing horsepower valued below

what Trican sold 12-19-year-old equipment for ($160 / HHP)

• Ability to ride out the downturn with

significant torque upon recovery in the industry

0.0x 0.2x 0.4x 0.6x 0.8x 1.0x 1.2x 1.4x 1.6x 1.8x 2.0x

• 0.20

0.40 0.60 0.80 1.00 1.20

Price to Tangible Book Value Debt / Tangible Equity

Price to Tangible Book Value vs. Leverage Profile

Debt to Tangible Equity (LHS) Price to Tangible Book (RHS)

INVESTMENT SUMMARY

RETURNS

• ROIC and capital

discipline focused

• Business

improvement and cost reductions for sustainable cash flow generation

• Positioned to

return money to shareholders

STRENGTH

• Largest Canadian

pressure pumping company with broad service offering

• Strong, loyal

customer base

• Nil debt, positions

Trican to withstand near-term weakness

• Strong asset

coverage

OPPORTUNITY

• Equipment capacity

provides opportunity for incremental returns upon a market recovery

• Financial position for
• pportunistic growth
• Low capex required

to grow business

• Very little customer

growth required to balance market

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APPENDICES

APPENDIX 1: SOCIAL AND ENVIRONMENTAL POLICIES

Safety

• Our frontline workers face dangers that are

not typical in most office workplace environments; therefore it is imperative we remain committed to safety.

• A common measure for our safety

performance is Lost Time Injury Rate (LTIR)

• During the past 12 Months, our LTIR rate

has dropped by nearly 50%

People Development

• Since 2017 we have invested over 200,000

hours of training time into our people

• To provide a safe and productive work

environment that results in quality service is training our people

• A majority of our operational people are

required to be trained as Class 1 driver trainers

• Trican’s driver trainer program has allowed

us to maintain our driver trainer status despite significantly increased regulations

• Investment into our lean six sigma

efficiency program will see a number of our people positioned to receive their green

• belt. Our people and our shareholders will

see the benefit of our lean initiatives

Environment

• Trican and its customers are subject to

strict environmental regulation and compliance.

• We have a system of governance to ensure

compliance of environmental rules and regulations

• Beyond standard regulatory compliance,

Trican is committed to finding economically and environmentally responsible ways to reduce our environmental footprint

• Trican has the largest fleet of dual fuel

fracturing pumps. Dual fuel fracturing pumps provide several benefits to our customers and the environment, including 27% reduced GHGs (source: U.S. EIA)

• Investment into tractor-less operations will

reduce engine idle times, fuel consumption and therefore GHGs

Our Annual Information Form provides more detail on our policies and governance surrounding social and environmental matters. Our primary initiatives in these areas are as follows:

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APPENDIX 2: NON-GAAP MEASURE: Free Cash Flow

• Free Cash Flow does not have any standardized meaning as prescribed by

IFRS and therefore, is considered non-GAAP measures and may not be comparable to similar measures presented by other issuers.

• Free Cash Flow is a non-GAAP term and has been reconciled to “Cash Flow

From Operating Activities” for applicable financial periods, being the most directly comparable measure calculated in accordance with IFRS. Management relies on Free Cash Flow as an additional performance measure used as indicators of our ability to service and repay debt, make investments and return capital to investors, through stock repurchases. A surplus of Free Cash Flow provides management with information to determine if funds might be available for incremental financing activities, including repurchase of shares and / or repayment of debt. A deficit of free cash flow indicates management may require

• ther sources of cash to maintain the existing capital structure, including new

loans and borrowings or asset divestitures. Changes in non-cash working capital are excluded from the calculation as these changes are less reflective of the current periods “Results From Operating Activities”

• Free Cash Flow, which is a non-GAAP financial measure, is defined as “Cash

Flow From Operating Activities” (as stated in our Consolidated Statement of Cash Flows) reduced by capital expenditures and adjusted for changes in non- cash working capital.

Six Months Ended June 30, 2019 $ Millions Cash Flow From Operating Activities $64.3 Change in non-cash working capital ($54.9) Purchase of property and equipment ($18.9) Free Cash Flow ($9.5)

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INVESTOR PRESENTATION

September 2019