Ensign Energy Services Inc. Reports 2014 Third Quarter Results

CALGARY, Nov. 10, 2014 /CNW/ –

Overview

Revenue for the third quarter of 2014 for Ensign Energy Services Inc.
(“Ensign” or the “Company”) was $583.3 million, seven percent higher
than revenue of $543.0 million recorded in the third quarter of 2013. 
Revenue for the nine months ended September 30, 2014 was $1,719.1
million, 10 percent higher than revenue of $1,562.0 million for the
nine months ended September 30, 2013.  Adjusted EBITDA, defined as
“income before interest, income taxes, depreciation, share-based
compensation expense (recovery) and foreign exchange and other”,
totaled $137.3 million ($0.90 per common share) in the third quarter of
2014, 12 percent higher than adjusted EBITDA of $123.1 million ($0.81
per common share) in the third quarter of 2013.  For the first nine
months of 2014, adjusted EBITDA was $394.5 million ($2.58 per common
share), six percent higher than adjusted EBITDA of $373.3 million
($2.45 per common share) for the first nine months of 2013.  Net income
for the third quarter of 2014 decreased 21 percent to $26.5 million
($0.17 per common share) compared to net income of $33.7 million ($0.22
per common share) for the third quarter of 2013.  Net income for the
nine months ended September 30, 2014 was consistent at $102.2 million
($0.67 per common share) compared to net income of $102.0 million
($0.67 per common share) for the first nine months of 2013.  Included
in the current quarter earnings was the negative impact of a $22.1
million foreign exchange and other loss, primarily due to the effect of
a weakening Australian dollar on United States dollar debt in the
Company’s Australian operations.  The foreign exchange and other loss
for the nine months ended September 30, 2014 was $11.1 million. 
Excluding the tax-effected impact of share-based compensation expense
(recovery) and foreign exchange and other, adjusted net income for the
third quarter of 2014 totaled $36.1 million ($0.24 per common share),
three percent higher than adjusted net income of $34.9 million ($0.23
per common share) in the third quarter of 2013.  For the nine months
ended September 30, 2014 adjusted net income was $104.4 million ($0.68
per common share), 10 percent lower than adjusted net income of $116.0
million ($0.76 per common share) for the nine months ended September
30, 2013.  Funds from operations increased 25 percent to $132.2 million
($0.87 per common share) in the third quarter of 2014 from $105.9
million ($0.69 per common share) in the third quarter of the prior
year.  For the nine months ended September 30, 2014, funds from
operations increased by eight percent to $359.6 million ($2.35 per
common share) compared to $334.4 million ($2.19 per common share) for
the nine months ended September 30, 2013.

Gross margin increased to $162.7 million (27.9 percent of revenue) for
the third quarter of 2014 compared with gross margin of $144.4 million
(26.6 percent of revenue) for the third quarter of 2013.  For the nine
months ended September 30, 2014 gross margin increased to $465.8
million (27.1 percent of revenue) compared to $437.7 million (28.0
percent of revenue) for the nine months ended September 30, 2013. 
Third quarter margins improved as the level of required maintenance and
start-up expenditures associated with additional equipment preparing
for work later in 2014 reduced compared to the level of expenditures in
the first half of 2014.

Working capital at September 30, 2014 was $202.2 million, compared to a
deficit of $71.1 million at December 31, 2013.  During the second
quarter of 2014 the Company increased the amount available on its
existing global revolving credit facility (the “Global Facility”) from
$400.0 million to $600.0 million.  The expanded Global Facility has a
three year term and will support the Company’s recently expanded new
build and major retrofit program.  Available borrowings at September
30, 2014 were $173.6 million compared to $70.7 million at December 31,
2013.  Working capital resources were mainly utilized in the first nine
months of 2014 to support the ongoing new build and major retrofit
program that delivered three new ADR^® drilling rigs and completed four major retrofits to existing drilling
rigs during the first nine months of 2014.

FINANCIAL AND OPERATING HIGHLIGHTS
($ thousands, except per share data and operating information)

Third Quarter Highlights

• Revenue for the three months ended September 30, 2014 was $583.3
  million, up seven percent from revenue for the three months ended
  September 30, 2013.  The increase in revenue was mainly due to
  equipment fleet upgrades and stronger demand in the United States and
  international operations.
• Third quarter revenue by segment:
• Canada – 28 percent;
• United States – 45 percent; and
• International – 27 percent.
• Canadian drilling recorded 3,780 operating days in the third quarter of
  2014, a one percent decrease from 3,799 operating days in the third
  quarter of 2013.  Canadian well servicing hours were consistent in the
  third quarter of 2014 compared to the third quarter of 2013.
• United States drilling recorded 6,054 operating days in the third
  quarter of 2014, a two percent increase from 5,961 operating days in
  the third quarter of 2013.  United States well servicing hours
  increased by 16 percent in the third quarter of 2014 compared to the
  third quarter of 2013.
• International drilling recorded 2,710 operating days in the third
  quarter of 2014, a nine percent decrease from 2,979 operating days
  recorded in the third quarter of 2013.
• Adjusted EBITDA for the third quarter of 2014 was $137.3 million, a 12
  percent increase from adjusted EBITDA of $123.1 million for the third
  quarter of 2013.  Funds from operations for the third quarter of 2014
  increased 25 percent to $132.2 million from $105.9 million in the third
  quarter of the prior year.
• Two new well servicing rigs were added to the Company’s equipment fleet;
  one in Canada and one in the United States during the third quarter of
  2014.  The new build and major retrofit program completed one major
  retrofit of a drilling rig transferred from Canada to Australia.

Revenue and Oilfield Services Expense

Revenue for the three months ended September 30, 2014 increased seven
percent to $583.3 million compared to $543.0 million for the comparable
period in 2013.  Revenue for the nine months ended September 30, 2014
increased 10 percent to $1,719.1 million from revenue of $1,562.0
million recorded for the nine months ended September 30, 2013.  As a
percentage of revenue, gross margin for the third quarter of 2014
increased to 27.9 percent (2013 – 26.6 percent) and decreased to 27.1
percent for the nine months ended September 30, 2014 (2013 – 28.0
percent).  The gross margin percentage increase in the third quarter of
the current year resulted from reduced repairs and maintenance
expenditures as much of these expenditures were front-end loaded in the
current year.

For the three months ended September 30, 2014 revenue strengthened for
the United States and international operations compared to the three
months ended September 30, 2013 and Canada held consistent.  Similarly
for the nine months ended September 30, 2014, when compared to the same
period in the prior year, revenue generated in Canada was down only
slightly, and United States and international revenue improved. 
Equipment fleet upgrades and stronger demand led to the increased
revenue.  Further, United States and international financial results
were improved on translation to Canadian dollars by a seven percent
increase in the average United States exchange rate against the
Canadian dollar for the nine months ended September 30, 2014 compared
to the same period of the prior year.

Canadian Oilfield Services

Revenue was consistent at $161.7 million for the three months ended
September 30, 2014, compared with $161.1 million for the three months
ended September 30, 2013. For the nine months ended September 30, 2014,
revenue decreased one percent to $498.9 million compared to $502.5
million for the same period in 2013. Canadian revenues accounted for 28
percent of the Company’s total revenue in the third quarter of 2014,
compared with 30 percent in the third quarter of 2013, and during the
nine months ended September 30, 2014, Canadian revenues were 29 percent
of total revenue (2013 – 32 percent).

The Company’s Canadian operations recorded 3,780 drilling days in the
third quarter of 2014, compared to 3,799 drilling days for the third
quarter of 2013, a decrease of one percent.  For the nine months ended
September 30, 2014, the Company recorded 10,807 drilling days compared
to 10,726 drilling days for the nine months ended September 30, 2013,
an increase of one percent.  Canadian well servicing hours remained
consistent at 30,353 operating hours in the third quarter of 2014
compared with 30,355 operating hours in the corresponding period of
2013.  For the nine months ended September 30, 2014, well servicing
hours increased by three percent to 93,736 operating hours compared
with 90,835 operating hours for the nine months ended September 30,
2013.

Revenue and operating days were mainly consistent in Canada in the
current year third quarter compared to the prior year period.  The 2013
second quarter acquisitions of assets from EGOC Enviro Group of
Companies Ltd. (“EGOC”) and Departure Energy Services Inc.
(“Departure”) helped to improve year-to-date financial results for the
nine months ended September 30, 2014 compared to the same period of the
prior year, however, reduced demand at the start of the current year,
particularly for the oil sands coring division, offset this increase.

During the nine months ended September 30, 2014, the Company’s Canadian
operations added one retrofitted drilling rig transferred from the
United States fleet to the Canadian fleet; added one new well servicing
rig; decommissioned 14 inactive drilling rigs and four inactive well
servicing rigs; and transferred two drilling rigs to the oil sands
coring fleet and three retrofitted drilling rigs to Australia.

United States Oilfield Services

The Company’s United States operations recorded revenue of $260.1
million in the third quarter of 2014, an 11 percent increase from the
$234.6 million recorded in the corresponding period of the prior year.
During the nine months ended September 30, 2014, revenue of $754.6
million was recorded, an increase of 15 percent from the $654.9 million
recorded for the nine months ended September 30, 2013. The Company’s
United States operations accounted for 45 percent of the Company’s
revenue in the third quarter of 2014 (2013 – 43 percent) and 44 percent
of total revenue in the nine months ended September 30, 2014 (2013 – 42
percent).  Drilling rig operating days increased by two percent to
6,054 drilling days in the third quarter of 2014 from 5,961 drilling
days in the third quarter of 2013.  For the nine months ended September
30, 2014, drilling days increased by three percent to 17,717 drilling
days from 17,177 drilling days in the nine months ended September 30,
2013.  Well servicing activity increased by 16 percent in the third
quarter of 2014 to 32,033 operating hours from 27,529 operating hours
in the third quarter of 2013.  For the nine months ended September 30,
2014 well servicing activity increased 22 percent to 91,493 operating
hours from 75,203 operating hours in the first nine months of 2013.

Growth in demand for oilfield services resulted in stronger operating
and financial results in the United States operations for the three and
nine months ended September 30, 2014 compared to the same periods of
the prior year.  As a result of new equipment added to the Company’s
United States fleet throughout 2013 and into 2014, revenue rates also
improved in both the three and nine months ended September 30 of the
current year compared to the same periods of the prior year.  Financial
results from the United States were positively impacted on translation
to Canadian dollars by the strengthening of the United States dollar
against the Canadian dollar in the first nine months of 2014 compared
to the first nine months of 2013.  For the nine months ended September
30, 2014 the average United States dollar exchange rate increased by
approximately seven percent to 1.09 when compared to the same period of
the prior year.

An additional ADR^® was added to the United States fleet in the first quarter of 2014 and
one new well servicing rig was added in the third quarter of 2014.  The
Company’s United States operations also decommissioned or disposed of
seven inactive drilling rigs and two well servicing rigs and
transferred one drilling rig to Canada in the first nine months of
2014.

International Oilfield Services

The Company’s international operations recorded revenue of $161.5
million in the third quarter of 2014, a 10 percent increase over the
$147.2 million recorded in the corresponding period of the prior year.
Similarly, international revenues for the nine months ended September
30, 2014, increased by 15 percent to $465.6 million from $404.5 million
recorded for the nine months ended September 30, 2013. International
operations contributed 27 percent of the Company’s revenue in the third
quarter of 2014 (2013 – 27 percent) and 27 percent of the Company’s
revenue in the first nine months of 2014 (2013 – 26 percent).
International operating days for the three months ended September 30,
2014 totaled 2,710 drilling days compared with 2,979 drilling days in
2013, a decrease of nine percent.  For the nine months ended September
30, 2014, international operating days totaled 8,690 drilling days
compared with 8,496 drilling days for the nine months ended September
30, 2013, an increase of two percent.

Increased revenue from the Company’s international operations was mainly
a result of contributions from new build and retrofitted drilling rigs
added to the international drilling rig fleet over the past nine
months.  In the first nine months of 2014, three retrofitted drilling
rigs were transferred from the Canadian fleet to Australia and two new
build ADRs were added in Australia.  Challenges in the Middle East and
North Africa experienced during the current year third quarter offset
much of the increases from the drilling rigs recently added to the
international fleet.  Operations in Libya were suspended in the third
quarter of 2014 due to an escalation of civil unrest within the
country.  The Company currently expects operations in Libya to resume
in the near future.

Similar to the Company’s United States operations, the translation of
the financial results for the international operations were positively
impacted by the strengthening of the United States dollar versus the
Canadian dollar on translation into Canadian dollars for reporting
purposes in the first nine months of 2014 compared to the first nine
months of the prior year.

Depreciation

Depreciation expense totaled $77.1 million for the third quarter of 2014
compared with $66.3 million for the third quarter of 2013, an increase
of 16 percent.  Depreciation expense for the first nine months of 2014
was $219.6 million, an increase of 23 percent over the $178.9 million
recorded for the first nine months of 2013.  Increased depreciation
reflects a mix of higher-valued equipment being utilized in the first
nine months of 2014, new and retrofitted equipment being added to the
Company’s global fleet throughout the latter half of 2013 and into 2014
and the impact of the 2013 second quarter acquisitions of assets from
EGOC and Departure.  In addition, a seven percent increase in the
average United States dollar exchange rate against the Canadian dollar
increased United States and international depreciation in the three and
nine months ended September 30, 2014 compared to the same periods of
the prior year.

General and Administrative Expense

General and administrative expense increased 20 percent to $25.5 million
(4.4 percent of revenue) for the third quarter of 2014 compared with
$21.3 million (3.9 percent of revenue) for the third quarter of 2013.
For the nine months ended September 30, 2014, general and
administrative expense totaled $71.3 million (4.1 percent of revenue)
compared with $64.4 million (4.1 percent of revenue) recorded for the
nine months ended September 30, 2013, an increase of 11 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 (Recovery) Expense

Share-based compensation (recovery) expense 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, 2014, share-based compensation
(recovery) expense was a recovery of $7.4 million compared with an
expense of $4.3 million recorded in the third quarter of 2013. For the
nine months ended September 30, 2014, share-based compensation was a
recovery of $7.7 million compared with an expense of $6.1 million for
the nine months ended September 30, 2013.   The change in share-based
compensation expense in the three and nine months ended September 30,
2014, compared to the same periods of 2013 was a result of the change
in the fair value of the 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 $14.71 at
September 30, 2014 ($17.64 at September 30, 2013), compared with $16.57
at June 30, 2014 ($16.28 at June 30, 2013), $16.34 at March 31, 2014
($17.32 at March 31, 2013) and $16.73 at December 31, 2013 ($15.37 at
December 31, 2012).

Interest Expense

Interest is incurred on the Company’s $10.0 million Canadian-based
revolving credit facility (the “Canadian Facility”), the expanded
$600.0 million Global Facility and the United States dollar $300.0
million senior unsecured notes (the “Notes”) issued in February 2012. 
The amortization of deferred financing costs associated with the
issuance of the Notes was included in interest expense in both
quarters.

Interest expense in the three and nine months ended September 30, 2014
increased over interest expense in the comparable periods of 2013 due
to increased draws on the expanded Global Facility and the negative
translational impact of a stronger United States dollar on United
States and international interest expense in the current year.  During
the second quarter of 2014, the Company amended its existing Global
Facility, increasing the amount available to $600.0 million from $400.0
million.  The amended Global Facility has a term of three years.

Foreign Exchange and Other (Loss/(Gain))

Included in this amount are foreign currency movements, mainly in the
Company’s subsidiaries that have functional currencies other than
Canadian dollars.  During the three months ended September 30, 2014,
the Australian dollar weakened by approximately seven percent against
the United States dollar causing a foreign currency loss on translation
of the Company’s United States dollar denominated debt into Australian
dollars.  During the nine months ended September 30, 2014, the
Australian dollar weakened by approximately two percent against the
United States dollar.

Income Taxes

The effective income tax rate for the three months ended September 30,
2014 was 34.5 percent compared with 33.4 percent for the three months
ended September 30, 2013. The effective income tax rate for the nine
months ended September 30, 2014 was 34.5 percent compared with 36.5
percent for the nine months ended September 30, 2013.  The increase in
the effective income tax rate in the current quarter when compared with
the corresponding quarter in 2013 was due to the impact of foreign
exchange translation losses for which the effective tax rate varies
from statutory rates, offset by a higher proportion of taxable income
earned in Canada.

Financial Position

The following chart outlines significant changes in the consolidated
statement of financial position from December 31, 2013 to September 30,
2014:

Funds from Operations and Working Capital

During the three months ended September 30, 2014, the Company generated
funds from operations of $132.2 million ($0.87 per common share)
compared with funds from operations of $105.9 million ($0.69 per common
share) for the three months ended September 30, 2013, an increase of 25
percent. For the nine months ended September 30, 2014, the Company
generated funds from operations of $359.6 million ($2.35 per common
share), an eight percent increase over funds from operations of $334.4
million ($2.19 per common share) generated in the first nine months of
2013. This increase in the three and nine months ended September 30,
2014 compared to the same periods of the prior year was a result of
increased demand in the United States, contributions from the upgrades
to the Company’s global equipment fleet over the past few quarters
through the new build and major retrofit program and a strengthening in
the United States dollar against the Canadian dollar, positively
impacting United States and international operating results on
translation to Canadian dollars.

At September 30, 2014, the Company had working capital of $202.2
million, compared to a deficit of $71.1 million at December 31, 2013. 
The Company’s working capital resources were used in the current
quarter to fund the ongoing new build and major retrofits construction
program that as at September 30, 2014 is anticipated to deliver an
additional 34 new build ADR^® drilling rigs and seven major retrofits to existing drilling rigs.  The
Company expects funds generated by operations, combined with current
and future credit facilities, to fully support current operating and
capital requirements.  The newly expanded revolving credit facilities
provide for total borrowing of $610.0 million, of which $173.6 million
was available at September 30, 2014.

Investing Activities

Purchases of property and equipment during the third quarter of 2014
totaled $168.0 million (2013 – $89.0 million).  Purchases of property
and equipment during the first nine months of 2014 totaled $425.7
million (2013 – $235.3 million).  The purchase of property and
equipment relates predominantly to expenditures made pursuant to the
Company’s ongoing new build and major retrofit program.

During the second quarter of 2013 the Company acquired the rental assets
of EGOC and the directional drilling assets of Departure.

Financing Activities

The Company’s available debt facilities consist of an expanded $600.0
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 $600.0 million
Canadian dollars.  The amount available under the Canadian Facility is
$10.0 million or the equivalent in United States dollars.

During the second quarter of 2014, the Company amended its existing
Global Facility, increasing the amount available from $400.0 million to
$600.0 million and extending the term for three years.  Net draws of
the Global Facility for the three and nine months ended September 30,
2014 were mainly used to fund the ongoing new build and major retrofit
program that added three new ADR^® drilling rigs to the Company’s global fleet in the first nine months of
2014, one in the United States and two in Australia; as well as
completed four major retrofits to existing drilling rigs, one in Canada
and three in Australia.  As of September 30, 2014, the Global Facility
is primarily being used to fund the Company’s current new build and
major retrofit program and to support international operations.

On September 25, 2014 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 4,600,477
common shares for cancellation.  The Bid commenced on September 29,
2014 and will terminate on September 28, 2015 or such earlier time as
the Bid is completed or terminated at the option of the Company.  As at
September 30, 2014, no common shares have been purchased and cancelled
pursuant to the Bid.  Subsequent to September 30, 2014, to date 119,700
common shares were purchased at an average price of $13.19 and
cancelled pursuant to the Bid.

The Company previously had a Bid that commenced on June 25, 2013 and
terminated on June 24, 2014, under which no common shares were
purchased and cancelled.

During the first quarter of 2014, the Company secured a $20.0 million
uncommitted facility, solely for issuing letters of credit, primarily
used for bidding on contracts in the normal course of business.  As at
September 30, 2014 no amounts were drawn on the facility.

New Builds and Major Retrofits

During the nine months ended September 30, 2014, the Company
commissioned one new ADR^® drilling rig in the United States; retrofitted one drilling rig
transferred from the United States to Canada; commissioned two new ADR^® drilling rigs in Australia; and retrofitted three drilling rigs
transferred from Canada to Australia.

In response to contracts and advanced bid activity for Ensign’s higher
technology drilling rigs, the Company currently plans to construct 34
new build ADRs that will be delivered into its fleet through to the
middle of 2016.  Concurrent with the delivery of 10 of these new
builds, designated as ADR^®-850 ultra-deep tele-double drilling rigs, 10 existing Canadian drilling
rigs will be decommissioned.

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 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.  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.  In addition, the Company is in discussions with numerous
customers for the possible supply of a number of additional new
drilling rigs that may be constructed and delivered into operations,
beyond these 34 new ADR^® drilling rigs currently set for delivery.

The estimated delivery schedule for new ADRs and major retrofits of
existing drilling rigs currently under construction at September 30,
2014, and as approved by the Company’s Board of Directors, is as
follows:

The delivery schedule is monitored continuously and the Company may
modify its plans based on the changing demands of its customers.  The
Company is currently reviewing its new build program in the wake of
recent reductions in the price for crude oil and the impact this may
have on the demand for new oilfield service equipment in certain
markets.

Outlook

The spot prices for crude oil and natural gas have deteriorated
substantially since the start of the third quarter of 2014.  Data
sourced from the United States Energy Information Administration
(“EIA”) indicates that the spot price for crude oil decreased
approximately 26 percent from a WTI spot price of USD$106.07 per barrel
on June 30, 2014 to USD$78.77 per barrel on November 3, 2014.  The EIA
data also shows that the spot price for natural gas decreased
approximately 13 percent from a Henry Hub natural gas spot price of
USD$4.39 per million Btu on June 30, 2014 to USD$3.82 per million Btu
on November 3, 2014.  There are many geo-political factors that might
contribute to possible energy supply disruptions in the near future,
but these global issues appear to be trumped by supply and demand
fundamentals.  The market currently perceives that the growth in crude
oil and natural gas supply is exceeding the growth in global demand for
energy in the face of tepid economic performance in many parts of the
world.

Reduced crude oil and natural gas commodity prices have a direct
negative effect on cash flows and project economics for oil and natural
gas exploration and production companies and ultimately affect the
demand for oilfield services.  While continued relative weakness in
North American natural gas prices is not a good thing for the industry,
it is not totally unexpected given the apparent abundance of supply
from the many resource plays and the difficulty exporting the product
out of North America.  However, the recent reduction in crude oil
prices is of particular concern as the majority of the oilfield
services activity in recent years continues to be directed at crude oil
and liquids-rich projects, particularly in North America.  The Company
has not yet experienced any reduction in demand for oilfield services
due to the recent reduction in commodity prices, but it is prudent to
stay vigilant and prepare for reduced activity levels should commodity
prices deteriorate further.

Against an increasingly uncertain background, utilization in the
Company’s Canadian operations has been improving over the past several
quarters as the focus continues on the reconfiguration of the Canadian
fleet for deeper, long-reach oil and liquids-rich resource play
development. Subject to the aforementioned potential negative effects
from a lower commodity price environment, the Company currently
anticipates continued improvement in operating and financial
performance from the Canadian operations as up to 18 new build drilling
rigs and two major retrofits to existing drilling rigs are scheduled to
be added over the next two years.  Further, the Company is encouraged
by recent announcements with respect to the future of proposed LNG
export facilities on the west coast of Canada.  The Company expects to
benefit from the increased demand for oilfield services that will be
required for the efficient development of western Canadian resource
plays associated with such future LNG projects.

The operating and financial results from the Company’s United States
operations have continued to improve; however, the current uncertainty
in commodity prices will likely result in a renewed focus on costs and
specific project economics by the exploration and production companies
served by the Company.  The Company’s fleet of technologically advanced
equipment should provide the efficiencies needed to ensure a high level
of utilization going forward, at least through the next several
quarters.  The majority of the Company’s current ADR^® 1500S new build program continues to be aimed at resource plays in the
United States and 16 new build drilling rigs and three major retrofits
to existing drilling rigs are expected to be delivered over the next
two years.

An advantage of established geographic diversification is that the
Company is not fully dependent on the North American market and its
attendant regional issues.  The international market generally takes a
longer term approach to resource development and the demand for
oilfield services does not react as quickly to changes in commodity
prices, positive or negative.  Accordingly, the Company expects that
its international operations will continue with its upward trend in
operating and financial results in a steady and measured manner. 
Currently, two major retrofits to existing drillings rigs are expected
to be delivered over the next three months.  There will continue to be
challenges unique to particular regions, but the Company’s operating
experience makes it well equipped to manage through such challenges.

Recent Developments

The Company is pleased to announce the appointment of Mr. Cary A.
Moomjian Jr. to its Board of Directors, effective November 5, 2014. 
Mr. Moomjian has over 35 years of experience as a senior legal and
commercial advisor in the contract drilling industry.  His industry
career, which includes service as a Senior Vice President – Contracts
Administration & Business Development for Santa Fe Drilling Co. and
Vice President and General Counsel for Santa Fe International
Corporation, culminated as Vice President, General Counsel and
Corporate Secretary for Ensco plc., a London, England-based global
offshore drilling contractor listed on the New York Stock Exchange.
Since 2012 he has had a consulting and legal practice in the Dallas,
Texas area. He obtained a law degree from Duke University School of Law
in 1972.

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
2014 results at 2:00 p.m. MST (4:00 p.m. EST) on Monday, November 10,
2014.  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 17, 2014 by dialing 1-416-849-0833 (in Toronto) or
1-855-859-2056 (outside Toronto) and entering the reservation number
36091828.  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.