Oilfield Services: Another Great Year Ahead

What you need to know: • We expect oilfield service stocks to continue to outperform in 2023 and beyond based on supportive oil price fundamentals, rising capex levels amongst E&Ps, and pricing power leading to margin expansion • Despite the sector’s strong fundamental tailwinds and the probability for a multi-year commodity supercycle, oilfield service companies are still trading at trough-level multiples Investment Thesis Supportive Oil Prices While we will not go in-depth on oil price funda

Reports In Line 2Q16

Ensign reported 2Q16 revenue of $176 mm and EBITDAS of $31 mm, both of which were in line with our estimates. The Company has announced Mr. Michael Gray will become CFO in 4Q16e, replacing Mr. Timothy Lemke. Mr. Gray joined Ensign in early 2015 as Corporate Controller after several years at CanElson Drilling Inc. The Company is continually reevaluating retrofits and new rig build opportunities. Ensign anticipates putting two new upgraded U.S. rigs into the field during 3Q16e or 4Q16e. Ensign sug

REPORTS IN LINE 2Q16, LOWERS 2016E CAPEX

Impact: Neutral. Ensign reported 2Q16 revenue of $176 mm which was in line with our estimate of $171 mm, but below consensus of $186 mm. EBITDAS of $31 mm was in line with our estimate and consensus which were $31 mm and $32 mm, respectively. The loss per share was $0.23, above our forecasted loss of $0.28 (which was the same as consensus). Ensign has lowered its 2016e capital program to $42.5 mm at the midpoint from $60 mm previously.

Strong 1Q16 Results Leads to Positive Estimates Revision

Ensign released 1Q16 results that were above our expectations. EBITDAS totaled $60 mm, whereas our forecast was $47 mm. Margins outperformed for the second quarter in a row.

1Q16 RESULTS BEAT ON STRONGERTHAN-EXPECTED ACTIVITY AND GROSS MARGINS

positive as results were above consensus.

1Q16e Preview and Commodity Update – All Is Quiet on the Western Front

We are updating our oilfield industry forecasts post the release of FirstEnergy’s new commodity price forecast for crude oil and natural gas on March 24, 2016. We have updated our 2016e Canadian well count/drilling days forecast to 3,209/37,335 from 3,800/43,325. In 2017e, we have left our forecast unchanged at 6,200 wells/70,200 days. In the U.S., our 2016e rig count forecast is now 482 (prior: 610) and 2017e is 675 (prior: 775). Data for 1Q16e came in weaker than our prior forecast anticipated

Posts Meaningful 4Q15 Beat

Ensign reported 4Q15 EBITDAS of $72 mm, well ahead of our forecast of $55 mm, despite revenue coming in line with our es mate. The Company suggested on its conference call that there was no early termination revenue, but that cost cutting initiatives are starting to manifest themselves in financial results. The Company has 23 contract drilling rigs on take-or-pay contracts for various durations. This represents 10% of Ensign’s corporate drilling fleet. In 1Q16e, an additional 10 rigs have been

POSTS MEANINGFUL 4Q15 BEAT

Impact: positive

Energy Services 4Q15e Preview and Updating Activity Outlook – Buckle Up

In conjunction with the new oil price forecast released by FirstEnergy on February 8, 2016, we have updated our 2016e Canadian well count/drilling days forecast to 3,800/43,325 from 4,950/54,853. In 2017e, we are now forecasting wells/drilling days of 6,200/70,200 from 7,900/86,600. In the U.S., our 2016e rig count forecast is now 610 (prior: 763) and 2017e is 775 (prior: 1,063).

Introducing 2017 Estimates

We have updated our 2016e WCSB drilling days forecast to ~54,900 days, which is 18% below our prior forecast and a 16% decline y/y. We are also rolling out our 2017e drilling days forecast, which is 86,600 days, or a 58% improvement from 2016e. In the context of the last 25 years, our 2017e forecast ranks 19th for active drilling days. Our 2016e U.S. rig count forecast has been reduced to 763 rigs from 888 rigs. In 2017e, we are forecasting a U.S. rig count of 1,063 rigs.

ENSIGN ENERGY SERVICES INC. (ESI) ANNOUNCES 2016E CAPEX PROGRAM AND MAINTAINS DIVIDEND

Ensign has announced a 2016e capital program of $60 mm, modestly lower than our current forecast of $65. We expect the funds will be focused on maintenance activities. There is potential for the capital program to move higher if activity improves. Moreover, the Company has a number of partially constructed ADR rigs that were part of the 2015 program. In 2016e, we estimate Ensign will generate $163 mm in FCF prior to dividends and changes in working capital.

FirstEnergy - DAILY RESEARCH SUMMARY

Canadian Natural Resources Limited (CNQ) Royalty Sale | PrairieSky Royalty Ltd. (PSK) Buying CNQ’s Royalty Assets and 3Q15 Results | Seven Generations Energy Ltd. (VII) Reports 3Q15 Financial Results Ahead of Expectations, Outlines 2016e Capital Budget of $1.10-$1.15 billion | Vermilion Energy Inc. (VET) Reports Third Quarter Results, Provides Preliminary 2016e Capital Spending Guidance | Yangarra Resources Ltd. (YGR) Announces 3Q15 Results In Line With Recently Revised Expectations | Tullow Oi

EBITDAS BELOW CONSENSUS; INTERNATIONAL OUTLOOK DETERIORATING.

Impact: Negative. We expect the stock to trade lower as 3Q15 EBITDAS (actual: $67 mm, Street: $73 mm) was below consensus and the International outlook was worse than anticipated.

Ensign Energy Services Inc. (ESI) 2Q15 EBITDAS Margins Above Expectations

Ensign reported 2Q15 EBITDAS of $70 mm, well above our forecast of $48 mm due to lower R&M spending and a one-time payment of $5 mm related to an International contract cancellation. We have increased our 2015e EBITDAS by 13% to $342 mm due to the incorporation of 2Q15 results and modestly increased margin assumptions for 2H15e. In 2016e, our EBITDAS forecast has been increased by 6% to $384 mm due to higher margin assumptions.

ENSIGN ENERGY SERVICES INC. (ESI) 2Q15 EBITDAS MARGINS ABOVE EXPECTATIONS

Impact: Positive

Jubilee Metals - Operational Update Q3 FY2024

Jubilee today reports its Q3 and third quarter operational results from its expanding operations in Zambia (copper) and South Africa (chrome and PGM). South Africa is on a growth trajectory with record chrome production of 409kt in the quarter (Q2 FY2024 381kt) and a monthly record in March of 145kt and production YTD of 1.13Mt (0.94Mt). Jubilee is well underway to its annual target capacity of 2,1Mt/yr especially with the new 300kt/yr chrome plant at Thutse expected to be operational in August

Trinity Exploration and Production - Reserves Reduction but Solid Core Business

Trinity has announced a c28% reduction to its 2P reserves following a YE23 review. Despite the decrease in the Company’s 2P reserves, Trinity’s core business remains robust, with a reserves/production ratio of >12.5 years at YE23. Whilst there is significant potential for growth within the current portfolio, this will be difficult to unlock from the current balance sheet and we believe further financing will be required. We update our target price to 76p (from 202p), a c85% premium to the curren

Morning Note – 16 April 2024

Valeura Energy (TSX: VLE): Three exploration wells deliver three discoveries

• The Nong Yao-13 exploration well in the new Nong Yao D area that was targeting multiple zones has encountered >30 feet of new oil play across several new shallow intervals which have not been produced elsewhere on the concession. These reservoirs are believed to be recurring across the Nong Yao D area. • The drilling result confirms that oil has successfully migrated into this area of the block (a factor that was seen to be a risk in the Nong Yao D area) and open the opportunity for further a

NextSource Materials - Initiation

NextSource is uniquely positioned to build a leading vertically integrated position, ex China, in the supply of Lithium-ion battery anode material which is essential for the Energy Transition. The company is commissioning phase 1 of its world-class Molo graphite mine in Madagascar and is in the final permitting process for its first Battery Anode Facility (BAF) to be located in Mauritius. The company is backed by Vision Blue, established by Sir Mick Davis, former CEO of Xstrata. On our calculat

I3 Energy (I3E LN) - Canada royalty assets sale

I3 has announced the sale of the majority of its royalty interests in Canada, for US$24.8m cash. This allows the company to fully repay amounts drawn on its debt facility and create a working capital surplus, giving I3 significant additional funding flexibility going forward

Morning Note – 15 April 2024

DEC FY23 Results Update

DEC reported FY23 results which were in line with expectations and announced the acquisition of joint venture assets from Oaktree along with an updated capital allocation framework.

Oil & Gas - Cavendish sector note

Chariot, Energean, Touchstone Exploration, Longboat Energy, Hartshead Resources, BP, Helix Exploration, PetroTal, Pantheon Resources, Caspian Sunrise, Petrofac, DNO ASA, Valeura Energy, Aker BP, Var Energi Source: FactSet, weekly change 08/04/24-12/04/24 Oil rose as Israel braced for a possible attack from Iran, a development that would threaten major disruptions in a region that accounts for a third of the world’s crude output. An assault is expected to come as soon as the next 48 hours, which

Union Jack Oil (UJO LN) - Wressle update

Union Jack has released an update on its Wressle asset, reporting maturing production from Wressle-1, alongside progress for significant further development activities on the field going forward.

SP Angel . Morning View . Copper prices hold higher as China processing fees fall below $0/t amid low feedstock availability

PROGRESSIVE: Pharos Energy: Delivering on operations and balance sheet

Pharos Energy reported FY23 results on 27 March. Group net production of 6,508 boepd (FY22: 7,166 boepd) was in line with guidance, assisted by successful development drilling in Vietnam and exploration successes in Egypt. Pharos’s strong cash generation resulted in a stronger balance sheet, with net debt reduced to US$6.6m (from US$28.9m at the end of 2022) and cash balances totalling US$32.6m. This left the group free to return more cash to shareholders, including a 10% increase in dividends,

Union Jack Oil+ (UJO, House Stock at 23p) - Wressle update

Hunting (HTG LN) - Q1 2024 trading update

Hunting has released its Q1 trading statement, reporting a strong period for OCTG and Subsea, steady growth in Advanced Manufacturing, and a softening in Perforating Systems.

Union Jack Oil* (UJO LN) - Wressle update and dividend plans

Union Jack announced an operational update on its onshore UK Wressle field and confirmed plans to announce the payment of a cash dividend to shareholders along with the FY23 results in May. Wressle continues to deliver material revenues to the Company, generating positive cash flow and providing it with sufficient cash resources to fund shareholder returns and invest in new development projects.