Ensign Energy Services Inc. Reports 2013 Third Quarter Results

CALGARY, Nov. 11, 2013 /CNW/ –

Overview

Ensign Energy Services Inc. (“Ensign” or the “Company”) recorded revenue
of $543.0 million for the third quarter of 2013, an increase of three
percent over revenue of $525.7 million recorded in the third quarter of
2012.  Revenue for the nine months ended September 30, 2013 was
$1,562.0 million, six percent lower than revenue of $1,667.2 million
for the nine months ended September 30, 2012.  Net income for the third
quarter of 2013 decreased 25 percent to $33.7 million ($0.22 per common
share) compared to net income of $44.8 million ($0.29 per common share)
for the third quarter of 2012.  Net income for the nine months ended
September 30, 2013 decreased 40 percent to $102.0 million ($0.67 per
common share) compared to net income of $169.0 million ($1.11 per
common share) for the first nine months of 2012.  Included in the
year-to-date third quarter earnings is the negative impact of $15.4
million foreign exchange and other loss, primarily due to the effect of
a weakening AUS dollar on US dollar debt in the Company’s Australian
operations.  Excluding the tax-effected impact of share-based
compensation expense (recovery) and foreign exchange and other,
adjusted net income for the third quarter of 2013 totaled $34.9 million
($0.23 per common share), 23 percent lower than adjusted net income of
$45.2 million ($0.30 per common share) in the third quarter of 2012. 
For the nine months ended September 30, 2013 adjusted net income was
$116.0 million ($0.76 per common share), 32 percent lower than adjusted
net income of $171.1 million ($1.12 per common share) for the nine
months ended September 30, 2012.  Adjusted EBITDA, defined as “income
before interest, income taxes, depreciation, share-based compensation
expense (recovery) and foreign exchange and other”, totaled $123.1
million ($0.81 per common share) in the third quarter of 2013, seven
percent lower than adjusted EBITDA of $132.6 million ($0.87 per common
share) in the third quarter of 2012.  For the first nine months of 2013
adjusted EBITDA was $373.3 million ($2.45 per common share), 15 percent
lower than adjusted EBITDA of $437.1 million ($2.86 per common share)
for the first nine months of 2012.  Funds from operations decreased 13
percent to $105.9 million ($0.69 per common share) in the third quarter
of 2013 from $121.2 million ($0.80 per common share) in the third
quarter of the prior year.  For the nine months ended September 30,
2013, funds from operations decreased 14 percent to $334.4 million
($2.19 per common share) compared to $389.8 million ($2.55 per common
share) for the nine months ended September 30, 2012.

Operating activity for the current quarter in North America continued to
be at lower levels when compared to the third quarter of the prior
year, consistent with the first half of 2013.   Although activity
levels began to show signs of recovery late in the third quarter of the
current year, operating and financial results reflect the weakened
demand for North American oilfield services when compared to the same
periods of the prior year.  As mentioned above, financial results for
the nine months ended September 30, 2013 include the negative impact
from a strengthening United States dollar on USD denominated debt in
the Company’s Australian operations.  Increased activity in the
Company’s international operations, along with the positive
translational impact from an increase in the average United States
dollar foreign exchange rate, helped to partially offset these
reductions.  During the nine months ended September 30, 2013 the
average United States dollar foreign exchange rate increased by
approximately two percent against the Canadian dollar compared to the
nine months ended September 30, 2012, positively impacting United
States and international financial results on translation to Canadian
dollars.

Gross margin decreased five percent in the third quarter of 2013 to
$144.4 million (26.6 percent of revenue) compared with gross margin of
$151.7 million (28.9 percent of revenue) for the third quarter of
2012.  For the nine months ended September 30, 2013 gross margin
decreased to $437.7 million (28.0 percent of revenue) compared to
$496.3 million (29.8 percent of revenue) for the nine months ended
September 30, 2012.  Reduced operating activity in North America and a
greater proportion of operating activity being generated by lower
margin international operations in the three and nine months ended
September 30, 2013 compared to the same periods of 2012 resulted in
lower consolidated gross margin percentages in the current year
compared to the prior year.

During the second quarter of 2013, the Company expanded its existing
oilfield rental business when it acquired rental equipment assets
through the acquisition of substantially all of the assets of EGOC
Enviro Group of Companies (“EGOC”).  Additionally, in the second
quarter of the current year the Company expanded its directional
drilling business in Canada through the acquisition of substantially
all of the assets of Departure Energy Services Inc. (“Departure”). 
Both of these acquisitions were completed utilizing the Company’s
existing cash balances.  The funding of these acquisitions, combined
with funding the Company’s active new build program, resulted in a
working capital deficit at September 30, 2013, of $34.4 million
compared to positive working capital of $13.9 million at December 31,
2012.  The Company’s ongoing new build program has delivered five new
ADR^® drilling rigs and six new well servicing rigs in the first nine months
of the year and is expected to deliver an additional five new ADR^® drilling rigs and two new well servicing rigs throughout the remainder
of 2013 and into 2014.  In addition to the above new builds, the
Company is refurbishing and upgrading four drilling rigs into ADR^®-style drilling rigs.

Third Quarter Highlights

• Revenue for the three months ended September 30, 2013 was $543.0
  million, up three percent from revenue for the three months ended
  September 30, 2012.  The increase in revenue in the current year’s
  third quarter over the third quarter of the prior year was mainly due
  to increased activity and revenue rates in the Company’s international
  operations.
• Two new ADR^® drilling rigs were added to the Company’s fleet in the third quarter of
  2013; one to the Canadian drilling fleet and one to the United States
  drilling fleet. The new build program also added three new well
  servicing rigs in the third quarter; two in Canada and one in the
  United States.
• Third quarter revenue by geographic area:
• Canada – 30 percent;
• United States – 43 percent; and
• International – 27 percent.
• Adjusted EBITDA for the third quarter of 2013 was $123.1 million, a
  seven percent decrease from adjusted EBITDA of $132.6 million for the
  third quarter of 2012.  Funds from operations for the third quarter of
  2013 decreased 13 percent to $105.9 million from $121.2 million in the
  third quarter of the prior year.
• Canadian drilling recorded 3,799 operating days in the third quarter of
  2013, a 17 percent decrease from 4,551 operating days in the third
  quarter of 2012.  Canadian well servicing hours decreased by 14 percent
  in the third quarter of 2013 compared to the third quarter of 2012.
• United States drilling recorded 5,961 operating days in the third
  quarter of 2013, a three percent decrease from 6,170 operating days in
  the third quarter of 2012.  United States well servicing hours
  decreased by 17 percent in the third quarter of 2013 compared to the
  third quarter of 2012.
• International drilling recorded 2,979 operating days in the third
  quarter of 2013, a one percent increase from 2,960 operating days
  recorded in the third quarter of 2012.
• The Board of Directors of the Company has declared a fourth quarter
  dividend of $0.1175 per common share representing a 6.8 percent
  increase over the previous quarterly dividend rate of $0.1100 per
  common share.  The dividend has increased by a compound annual growth
  rate of 17 percent since the Company first started to pay a dividend in
  1995.

Revenue and Oilfield Services Expense

Revenue for the three months ended September 30, 2013 increased three
percent to $543.0 million compared to $525.7 million for the comparable
period in 2012.  Revenue for the nine months ended September 30, 2013
decreased six percent to $1,562.0 million from revenue of $1,667.2
million recorded for the nine months ended September 30, 2012.  As a
percentage of revenue, gross margin for the third quarter of 2013
decreased to 26.6 percent (2012 – 28.9 percent) and decreased to 28.0
percent for the nine months ended September 30, 2013 (2012 – 29.8
percent).

Reduced levels of demand for oilfield services in North America, which
began late in 2012, resulted in reduced revenue in Canada and the
United States in 2013 compared to 2012 and reflects operators having
delayed or reduced their capital programs in 2013 in reaction to
current global economic conditions and concerns regarding the economics
of oil and natural gas projects within North America.  Growth of the
Company’s international operations has helped to somewhat offset the
reductions in the North American operations throughout 2013.

Canadian Oilfield Services

Revenue decreased two percent to $161.1 million for the three months
ended September 30, 2013, from $164.1 million for the three months
ended September 30, 2012. For the nine months ended September 30, 2013,
revenue decreased 16 percent to $502.5 million compared to $597.8
million for the same period in 2012. Canadian revenues accounted for 30
percent of the Company’s total revenue in the third quarter of 2013
(2012 – 31 percent) and during the nine months ended September 30,
2013, Canadian revenues were 32 percent of total revenue (2012 – 36
percent).

The Company’s Canadian operations recorded 3,799 drilling days in the
third quarter of 2013, compared to 4,551 drilling days in the third
quarter of 2012, a decrease of 17 percent.  For the nine months ended
September 30, 2013, the Company recorded 10,726 drilling days compared
to 14,263 drilling days for the nine months ended September 30, 2012, a
decrease of 25 percent.  Canadian well servicing hours decreased by 14
percent to 30,355 operating hours in the third quarter of 2013 compared
with 35,098 operating hours in the corresponding period of 2012.  For
the nine months ended September 30, 2013, well servicing hours
decreased by 14 percent to 90,835 operating hours compared with 105,924
operating hours for the nine months ended September 30, 2012.

Activity levels in Canada continued to be weakened by reduced demand for
oilfield services in 2013 compared to 2012.  Year-to-date Canadian
results also reflect a particularly wet spring break-up in the second
quarter of 2013, when weather conditions hindered mobility of the
Company’s equipment.  The reduced field activity was partially offset
by the positive impact from the expansion of the Company’s oilfield
rentals and directional drilling capabilities in the second quarter of
2013.

During the nine months ended September 30, 2013, the Company added two
newly constructed ADR’s to its Canadian drilling rig fleet and five new
well servicing rigs.  Five inactive drilling rigs and 10 inactive well
servicing rigs were decommissioned, all in the first quarter.  The
Company also disposed of its non-rig manufacturing facility located in
Calgary, Alberta in January, 2013.

United States Oilfield Services

The Company’s United States operations recorded revenue of $234.6
million in the third quarter of 2013, a one percent decrease from the
$237.1 million recorded in the corresponding period of the prior year.
During the nine months ended September 30, 2013, revenue of $654.9
million was recorded, a decrease of 10 percent from the $730.9 million
recorded for the nine months ended September 30, 2012. The Company’s
United States operations accounted for 43 percent of the Company’s
revenue in the third quarter of 2013 (2012 – 45 percent) and 42 percent
of total revenue in the nine months ended September 30, 2013 (2012 – 44
percent).  Drilling rig operating days decreased by three percent to
5,961 drilling days in the third quarter of 2013 from 6,170 drilling
days in the third quarter of 2012.  For the nine months ended September
30, 2013, drilling days decreased by eight percent to 17,177 drilling
days from 18,671 drilling days for the nine months ended September 30,
2012.  Well servicing activity decreased by 17 percent in the third
quarter of 2013 to 27,529 operating hours from 33,029 operating hours
in the third quarter of 2012.  For the nine months ended September 30,
2013 well servicing activity decreased 20 percent to 75,203 operating
hours from 93,669 operating hours for the first nine months of 2012.

Similar to Canada and consistent with the second quarter of 2013, United
States operating and financial results were weakened by reduced demand
for United States oilfield services and the resultant decrease in
revenue rates and margins in the three and nine months ended September
30, 2013, when compared to the same periods of 2012.

During the nine months ended September 30, 2013 the Company added three
new ADR^® drilling rigs and one new well servicing rig to its United States
fleet.  In addition one drilling rig was transferred to the Company’s
international fleet, six inactive drilling rigs were decommissioned and
two well servicing rigs were disposed.

A strengthening United States dollar against the Canadian dollar in the
first nine months of 2013 had a positive impact on the translation of
the Company’s United States financial results to Canadian dollars.  In
the first nine months of 2013 the average United States dollar exchange
rate increased by approximately two percent to 1.02 when compared to
the same period of the prior year.

International Oilfield Services

The Company’s international operations recorded revenue of $147.2
million in the third quarter of 2013, an 18 percent increase over the
$124.5 million recorded in the corresponding period of the prior year.
Similarly, international revenues for the nine months ended September
30, 2013, increased by 19 percent to $404.5 million from $338.6 million
recorded for the nine months ended September 30, 2012. International
operations contributed 27 percent of the Company’s revenue in the third
quarter of 2013 (2012 – 24 percent) and 26 percent of the Company’s
revenue in the first nine months of 2013 (2012 – 20 percent).
International operating days for the three months ended September 30,
2013 totaled 2,979 drilling days compared with 2,960 drilling days for
the three months ended September 30, 2012, an increase of one percent. 
For the nine months ended September 30, 2013, international operating
days totaled 8,496 drilling days compared with 8,602 drilling days for
the nine months ended September 30, 2012, a decrease of one percent.

The increase in the Company’s international revenue during the three and
nine months ended September 30, 2013 was mainly due to additions to the
international fleet in 2012 and 2013 and stronger demand for oilfield
services in certain international markets.  Late in 2012 two new ADR’s
were added to the international fleet through the continuing new build
program and one existing drilling rig was relocated to the
international market from the United States.  Similarly, during the
current quarter an additional drilling rig was relocated to the
international market from the Company’s United States fleet.  These
additions to the international fleet resulted in increased average
revenue rates per day for international operations for the three and
nine months ended September 30, 2013 compared to the same periods of
2012.  The increase to international drilling days for the three and
nine months ended September 30, 2013 as a result of these additions was
partially offset by the expected reduction due to the completion of the
Company’s drilling contracts in Mexico in 2012.

The Company’s international operations also benefited from the
strengthening of the United States dollar relative to the Canadian
dollar when translating financial results into Canadian dollars for
reporting purposes in the first nine months of 2013 compared to the
first nine months of the prior year.

During the nine months ended September 30, 2013 the Company
decommissioned one inactive drilling rig from its international fleet
and added one drilling rig from its existing United States fleet as
mentioned above.

Depreciation

The Company uses the unit of production method of calculating
depreciation for the majority of its property and equipment. 
Depreciation expense totaled $66.3 million for the third quarter of
2013 compared with $57.6 million for the third quarter of 2012, an
increase of 15 percent.  Depreciation expense for the first nine months
of 2013 was $178.9 million, an increase of eight percent over the
$166.2 million recorded for the first nine months of 2012.  Increased
depreciation reflects higher-valued equipment being added to the
Company’s global fleet throughout the latter half of 2012 and into the
first nine months of 2013 in addition to the impacts of the second
quarter acquisitions of assets from EGOC and Departure.

General and Administrative Expense

General and administrative expense increased 11 percent to $21.3 million
(3.9 percent of revenue) for the third quarter of 2013 compared with
$19.1 million (3.6 percent of revenue) for the third quarter of 2012.
For the nine months ended September 30, 2013, general and
administrative expense totaled $64.4 million (4.1 percent of revenue)
compared with $59.2 million (3.6 percent of revenue) recorded for the
nine months ended September 30, 2012, an increase of nine percent. The
overall increase in general and administrative expense in the current
periods reflects the negative translational impact of a stronger United
States dollar on United States and international administrative
expenses and increased costs to support growing international
operations.

Share-Based Compensation Expense (Recovery)

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 the three months ended September 30, 2013, share-based compensation
expense (recovery) was an expense of $4.3 million compared with an
expense of $3.7 million recorded in the third quarter of 2012. For the
nine months ended September 30, 2013, share-based compensation was an
expense of $6.1 million compared with a recovery of $2.6 million for
the nine months ended September 30, 2012.   The increase in share-based
compensation expense in the three and nine months ended September 30,
2013, compared to the same periods of 2012 was a result of the change
in the fair value of share-based compensation liability primarily
resulting from movements in the price of the Company’s common shares. 
The closing price of the Company’s common shares was $17.64 at
September 30, 2013 ($15.10 at September 30, 2012), compared with $16.28
at June 30, 2013 ($14.00 at June 30, 2012), $17.32 at March 31, 2013
($14.91 at March 31, 2012) and $15.37 at December 31, 2012 ($16.25 at
December 31, 2011).

Interest Expense

Interest is incurred on the Company’s $10.0 million Canadian-based
revolving credit facility, the $400.0 million global revolving credit
facility and the USD $300.0 million senior unsecured notes issued in
February 2012.  The amortization of deferred financing costs associated
with the issuance of the Company’s long-term debt was included in
interest expense in both the three and nine months ended September 30,
2013 and 2012.

The decrease in interest expense in the nine months ended September 30,
2013, compared to the same period of the prior year was mainly due to
interest incurred in the prior year on the USD $100.0 million remaining
balance of the short-term acquisition loan which was repaid in full
during the second quarter of 2012.

Foreign Exchange and Other ((Gain)/Loss)

Included in this amount is the impact of the conversion of the
Australian operations from Australian dollars to United States
dollars.  The change in foreign exchange (gain) loss in the three and
nine months ended September 30, 2013, compared to same periods of 2012
was mainly due to movements in the Australian currency.  During the
nine months ended September 30, 2013 the Australian dollar weakened by
approximately 10 percent against the United States dollar causing a
foreign currency loss on translation of the Company’s USD denominated
debt into Australian dollars.  The Australian dollar strengthened
somewhat against the United States dollar during the three months ended
September 30, 2013 resulting in a foreign currency gain in the current
quarter.

Income Taxes

The effective income tax rate for the three months ended September 30,
2013 was 33.4 percent compared with 35.5 percent for the three months
ended September 30, 2012. The effective income tax rate for the nine
months ended September 30, 2013 was 36.5 percent compared with 33.2
percent for the nine months ended September 30, 2012. The increase in
the effective income tax rate for the nine months ended September 30,
2013 was due to a higher proportion of taxable income earned in higher
tax rate jurisdictions outside of Canada, with the additional impact of
foreign exchange translation losses affecting the effective rate in the
first half of 2013.

Financial Position

The following chart outlines significant changes in the consolidated
statement of financial position from December 31, 2012 to September 30,
2013:

Funds from Operations and Working Capital

During the three months ended September 30, 2013, the Company generated
funds from operations of $105.9 million ($0.69 per common share)
compared with funds from operations of $121.2 million ($0.80 per common
share) for the three months ended September 30, 2012, a decrease of 13
percent. For the nine months ended September 30, 2013, the Company
generated funds from operations of $334.4 million ($2.19 per common
share), a decrease of 14 percent from funds from operations of $389.8
million ($2.55 per common share) generated in the first nine months
ending of 2012. Reduced operating activity in North America was the
main reason for the decrease in funds from operations for the three and
nine months ended September 30, 2013 compared to the same periods in
2012.

At September 30, 2013, the Company had a working capital deficit of
$34.4 million, compared to positive working capital of $13.9 million at
December 31, 2012.  The second quarter acquisitions of the assets of
EGOC and Departure utilized the Company’s working capital resources and
this, in addition to funding of the Company’s current new build
program, resulted in a working capital deficit at September 30, 2013. 
The Company expects funds generated by operations, combined with
current and future credit facilities, to fully support current
operating and capital requirements.  Existing revolving credit
facilities provide for total borrowing of $410.0 million, of which
$77.3 million was available at September 30, 2013.

Investing Activities

Purchases of property and equipment during the third quarter of 2013
totaled $89.0 million (2012 – $69.8 million).  Purchases of property
and equipment during the first nine months of 2013 totaled $235.3
million (2012 – $226.4 million).  The purchase of property and
equipment for the three and nine months ended September 30, 2013 relate
predominantly to expenditures made pursuant to the Company’s ongoing
new build program.

During the second quarter of 2013 the Company acquired the rental assets
of EGOC and the directional drilling assets of Departure. These
acquisitions increased the Company’s presence in the rental and
directional drilling markets in Western Canada.

Financing Activities

The Company’s available operating lines of credit consist of a $400.0
million global revolving credit facility (the “Global Facility”) and a
$10.0 million Canadian based revolving credit facility (the “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 United States dollars.

Net draws of the operating lines of credit for the nine months ended
September 30, 2013 were mainly used to fund the ongoing new build
program, which added five new ADR^® drilling rigs to the Company’s fleet in the first nine months of 2013
(two in Canada and three in the United States) as well as six new well
servicing rigs (five in Canada and one in the United States).  As of
September 30, 2013, the operating lines of credit are primarily being
used to fund the completion of the most recent new build program and to
support 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 September
30, 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 nine months ended September 30, 2013 the Company received
$2.0 million from the issuance of common shares in connection with the
employee stock option program compared to a nominal amount received
during the nine months ended September 30, 2012.

The Board of Directors of the Company has declared a fourth quarter
dividend of $0.1175 per common share, a 6.8 percent increase over the
previous quarterly dividend rate of $0.1100 per common share.  The
Company has increased its dividend rate every year since it first
started to pay a dividend in 1995.  Dividends have been increased at a
compound annual growth rate of 17 percent.  The fourth quarter dividend
is payable January 6, 2014, to all Common Shareholders of record as of
December 20, 2013.  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.

New Builds

During the nine months ended September 30, 2013, the Company
commissioned three new ADR^® drilling rigs and one new well servicing rig in the United States; and
two new ADR^® drilling rigs and five new well servicing rigs in Canada.

The remaining new build estimated delivery schedule, by geographic area,
is as follows:

In addition to the above new builds, the Company is refurbishing and
upgrading four drilling rigs into ADR^®-style drilling rigs.  One drilling rig is being refurbished for the
Canadian market, with an estimated delivery date in the first quarter
of 2014.  The three remaining drilling rigs are being refurbished for
the international market, one of the drilling rigs is scheduled for
delivery in the fourth quarter of 2013, one drilling rig is scheduled
for delivery in the first quarter of 2014 and the other drilling rig is
scheduled for delivery in the second quarter of 2014.  All of the major
refurbishments are supported by contracts.

Outlook

Global economic indicators generally continue to improve, albeit at
rates less than previously forecast.  Muted economic growth,
particularly in the United States, has resulted in reduced levels of
demand for oilfield services in spite of general improvements in crude
oil and natural gas commodity prices.  The WTI crude oil price of
USD$102.33 per barrel on September 30, 2013 was up 11 percent compared
to USD$92.19 per barrel on September 30, 2012.  Similarly, the Henry
Hub natural gas price improved 14 percent to USD$3.49 per mmbtu at the
end of the third quarter of 2013 compared to USD$3.06 per mmbtu at the
end of the third quarter of 2012.  Canadian natural gas prices did not
fare as well, with the AECO natural gas price closing at $1.92 per mcf
at September 30, 2013 down 11 percent compared to $2.16 per mcf at
September 30, 2012.  The overall improved levels of commodity prices,
particularly in the United States, have not resulted in increased
capital expenditures on oilfield services as measured by the active
drilling and well servicing rig levels in 2013 compared to 2012.

Canadian oilfield services industry activity levels as measured by total
drilling operating days for the third quarter of 2013 were essentially
flat with the number of drilling operating days recorded by the
industry in the third quarter of the prior year. Earlier expectations
were that third quarter oilfield services activity levels would rebound
significantly from the second quarter seasonal lows due to strong crude
oil prices throughout much of the third quarter.  While crude oil
drilling resumed later in the quarter as field conditions improved,
natural gas prices in Canada continued to languish, providing little
incentive for the exploration and production companies to increase
natural gas related oilfield services expenditures.  However, there are
a number of potential Canadian natural gas liquids projects that
continue to generate interest in the northwest part of the Western
Canadian Sedimentary Basin.  Additionally, the Montney, Horn River and
Duvernay areas are expected to benefit from any potential LNG export
projects touted for Canada’s future.  The Company currently has 11
drilling rigs operating in these key areas and all of the drilling rigs
currently under construction or being refurbished for Canada are
contracted for these areas.  With respect to the next two quarters, the
current expectations are that the upcoming winter drilling season will
mirror that of last year.

The Company’s United States operations continue to improve after a slow
start to 2013.  Some areas have fared better than others owing to
strong prices and demand for crude oil and natural gas liquids.  As
mentioned above, current activity levels as reflected in the industry
drilling rig count continue to underwhelm as exploration and production
companies have not generally increased oilfield services demand in an
environment of improving commodity prices.  The hope is that there will
be increased levels of demand in the near term as operators become more
comfortable with general economic conditions and increase their 2014
budgets after realizing stronger levels of cash flow in 2013. The
Company is currently constructing one new drilling rig for the United
States and expects activity and financial results to improve slightly
over the next couple of quarters.

The third quarter activity levels for the Company’s international
operations continued with the gains of the first half of 2013. 
International crude oil and natural gas prices remain attractive in
many of the areas serviced by the Company and, accordingly, the demand
for oilfield services has remained steady.  The active international
drilling rig count was 1,284 drilling rigs at September 30, 2013, up
two percent compared to 1,254 active drilling rigs at September 30,
2012.  The Company’s established geographic diversification is
important in international operations as there is still significant
geopolitical risk in many of the international areas.  The Company is
currently building two drilling rigs and refurbishing three drilling
rigs for the international market under term contracts.   Accordingly,
subject to any unexpected negative events in any of the international
areas serviced by the Company, international operations are expected to
continue to show modest growth in the next two quarters.

Risks and Uncertainties

This document contains forward-looking statements based upon current
expectations that involve a number of business risks and
uncertainties.  The factors that could cause results to differ
materially include, but are not limited to, political and economic
conditions, crude oil and natural gas prices, foreign currency
fluctuations, weather conditions, the Company’s defense of lawsuits and
the ability of oil and natural gas companies to pay accounts receivable
balances and raise capital or other unforeseen conditions which could
impact on the use of the services supplied by the Company.

Conference Call

A conference call will be held to discuss the Company’s third quarter
2013 results at 2:00 p.m. MST (4:00 p.m. EST) on Monday, November 11,
2013.  The conference call number is (647) 427-7450 (in Toronto) or
1-888-231-8191 (outside Toronto).  A taped recording will be available
until November 18, 2013 by dialing 1-416-849-0833 (in Toronto) or
1-855-859-2056 (outside Toronto) and entering the reservation number
20605551.  A live broadcast may be accessed through the Company’s web
site at www.ensignenergy.com.

Ensign Energy Services Inc. is an international oilfield services
contractor and is listed on the Toronto Stock Exchange under the
trading symbol ESI.

SOURCE Ensign Energy Services Inc.

Glenn Dagenais, Executive Vice President Finance and Chief Financial Officer, (403) 262-1361.