ENSIGN ENERGY SERVICES INC.
2018 ANNUAL REPORT
TABLE OF CONTENTS
MANAGEMENT’S DISCUSSION AND ANALYSIS ............................................................................... 1
MANAGEMENT’S REPORT ............................................................................................................ 23
INDEPENDENT AUDITOR’S REPORT .............................................................................................. 24
CONSOLIDATED FINANCIAL STATEMENTS .................................................................................... 27
SHARE TRADING SUMMARY ......................................................................................................... 63
10 YEAR FINANCIAL INFORMATION .............................................................................................. 64
CORPORATE INFORMATION ......................................................................................................... 66
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
This Management’s Discussion and Analysis (“MD&A”) for Ensign Energy Services Inc. and all of its subsidiaries and
partnerships (“Ensign” or the “Company”) should be read in conjunction with the audited consolidated financial
statements and notes thereto for the year ended December 31, 2018, which are available on SEDAR at www.sedar.com.
This MD&A and the audited consolidated financial statements and comparative information have been prepared in
accordance with International Financial Reporting Standards (“IFRS”). All financial measures presented in this MD&A
are expressed in Canadian dollars unless otherwise indicated and are stated in thousands, except for: per share amounts,
number of drilling rigs and operating days. This MD&A is dated March 7, 2019. Additional information, including the
Company's Annual Information Form for the year ended December 31, 2017, is available on SEDAR at www.sedar.com.
The Company's Annual Information Form for the year ended December 31, 2018 is expected to be filed on SEDAR prior
to March 31, 2019.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this document constitute forward-looking statements or information (collectively referred to herein
as “forward-looking statements”) within the meaning of applicable securities legislation. Forward-looking statements can
be identified by the words “believe”, “anticipate”, “expect”, “plan”, “estimate”, “target”, “continue”, “could”, “intend”, “may”,
“potential”, “predict”, “should”, “will”, “objective”, “project”, “forecast”, “goal”, “guidance”, “outlook”, “effort”, “seeks”,
“schedule” or other expressions of a similar nature suggesting future outcome or statements regarding an outlook.
Disclosure related to expected future energy commodity pricing or trends, revenue rates, equipment utilization or
operating activity levels, international operations, operating costs, annualized operating synergies as a result of the
Trinidad Acquisition (as defined below), completion of the repayment of the Trinidad Notes (as defined below), capital
expenditures and other future guidance provided throughout this MD&A, including, but not limited to, information provided
in the “Funds Flow From Operations and Working Capital” section regarding the Company’s expectation that funds
generated by operations combined with current and future credit facilities will support current operating and capital
requirements, information provided in the “New Builds and Major Retrofits” section regarding the new build program,
information provided in the "Financial Instruments" section regarding Venezuela and information provided in the “Outlook”
section regarding the general outlook for 2019, constitute forward-looking statements. These statements are not
guarantees of future performance and are subject to certain risks. The reader should not place undue reliance on these
forward-looking statements as there can be no assurance that the plans, initiatives or expectations upon which they are
based will occur.
The forward-looking statements are based on current expectations, estimates and projections about the Company and
the industry in which the Company operates, which speak only as of the date such statements were made or as of the
date of the report or document in which they are contained, and are subject to known and unknown risks, uncertainties
and other factors that could cause the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such factors include, among others: general economic and business conditions which will, among other things, impact
demand for and market prices of the Company’s services and the ability of the Company’s customers to pay accounts
receivable balances; volatility of and assumptions regarding oil and natural gas prices; fluctuations in currency and
interest rates; economic conditions in the countries and regions in which the Company conducts business; political
uncertainty and civil unrest; ability of the Company to implement its business strategy; impact of competition; the
Company’s defense of lawsuits; availability and cost of labor and other equipment, supplies and services; ability of the
Company and its subsidiaries to complete their capital programs; operating hazards and other difficulties inherent in the
operation of the Company’s oilfield services equipment; availability and cost of financing; timing and success of integrating
the business and operations of acquired companies; actions by governmental authorities; government regulations and
the expenditures required to comply with them (including safety and environmental laws and regulations and the impact
of climate change initiatives on capital and operating costs); the adequacy of the Company’s provision for taxes; and
other circumstances that may affect revenues and expenses.
The Company’s operations and levels of demand for its services have been, and at times in the future may be, affected
by political developments and by national, regional and local laws and regulations such as changes in taxes, royalties
and other amounts payable to governments or governmental agencies and environmental protection regulations. Should
one or more of these risks or uncertainties materialize, or should any of the Company’s assumptions prove incorrect,
actual results may vary in material respects from those projected in the forward-looking statements. The impact of any
one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
1
upon other factors, and the Company’s course of action may depend upon its assessment of the future considering all
information then available.
For additional information refer to the “Risks and Uncertainties” section of this MD&A. Readers are cautioned that the
foregoing list of important factors is not exhaustive. Unpredictable or unknown factors not discussed in this report could
also have material adverse effects on forward-looking statements or results of operations. Although the Company believes
that the expectations conveyed by the forward-looking statements are reasonable based on information available to it
on the date such forward-looking statements are made, no assurances can be given as to future results, levels of activity
and achievements. Except as required by law, the Company assumes no obligation to update forward-looking statements
should circumstances or the Company’s estimates or opinions change.
NON-GAAP MEASURES
This MD&A contains references to Adjusted EBITDA, Adjusted EBITDA per share, Funds flow from operations, Funds
flow from operations per share and Revenue net of third party. These measures do not have any standardized meaning
prescribed by IFRS and accordingly, may not be comparable to similar measures used by other companies. The non-
GAAP measures included in this MD&A should not be considered as an alternative to, or more meaningful than, the
IFRS measure from which they are derived or to which they are compared. The definition and method of calculation of
the non-GAAP measures included in this MD&A are included in the "Overview and Selected Annual Information" section.
OVERVIEW AND SELECTED ANNUAL INFORMATION
(in thousands of Canadian dollars, except per share data and operating information)
2018
2017
Change
% change
2016
Change
% change
1,156,357
1,000,650
1,021,913
255,677
873,864
201,784
155,707
148,049
53,893
Revenue
Revenue, net of third party 1
Adjusted EBITDA 2
Adjusted EBITDA per share 2
Basic
Diluted
Net income (loss) attributable to
shareholders
Net income (loss) per share
Basic
Diluted
Cash provided by operating
activities
Funds flow from operations 3
Funds flow from operations per
share 3
Basic
Diluted
Total assets
$
$
$
$
$
$
1.63
1.63
58,302
0.37
0.37
152,133
225,939
1.44
1.44
$
$
$
$
$
$
1.29
1.29
(37,644)
(0.24)
(0.24)
135,147
141,438
0.90
0.90
$
$
$
$
$
$
3,894,108
2,958,465
Long term financial liabilities
1,726,653
739,933
Dividends per share
$
0.48
$
0.48
16
17
27
26
26
859,702
755,857
185,173
140,948
118,007
16,611
$
$
1.21
1.21
$
$
0.08
0.08
0.34
0.34
95,946
nm
(150,522)
112,878
0.61
0.61
16,986
84,501
0.54
0.54
935,643
986,720
—
nm
nm
13
60
60
60
32
nm
$
$
$
$
(0.99)
(0.98)
$
$
0.75
0.74
165,336
170,651
(30,189)
(29,213)
1.12
1.11
$
$
(0.22)
(0.21)
3,214,395
(255,930)
717,459
22,474
— $
0.48
—
16
16
9
7
7
75
76
76
(18)
(17)
(20)
(19)
(8)
3
—
nm - calculation not meaningful
1 Revenue, net of third party is defined as "gross revenue less third party reimbursable items". Management believes
that, in addition to revenue, Revenue, net of third party is a useful supplemental measure to indicate the Company's
operating activity levels.
2 Adjusted EBITDA is defined as “(loss) income before interest, income taxes, depreciation, asset decommissioning
and write-downs, share-based compensation and foreign exchange, gain on bargain purchase, restructuring costs
and other”. Management believes that, in addition to net (loss) income, Adjusted EBITDA is a useful supplemental
measure as it provides an indication of the results generated by the Company’s principal business activities prior to
consideration of how these activities are financed, how the results are taxed in various jurisdictions, how the results
are impacted by foreign exchange or how the results are impacted by the accounting standards associated with the
Company’s share-based compensation plans. Adjusted EBITDA also takes into account the Company’s portion of the
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
2
principal activities of the joint venture arrangements by removing the loss (gain) from investments in joint ventures
and including adjusted EBITDA from investments in joint ventures.
($ thousands)
Income (loss) before income taxes
Interest expense
Depreciation
Gain on bargain purchase
Share-based compensation
Foreign exchange and other
Gain from investments in joint ventures
Restructuring cost
Adjusted EBITDA from investments in joint ventures
2018
6,484
52,416
415,036
(200,672)
707
(19,001)
(874)
1,492
89
2017
(187,796)
41,210
325,811
—
656
21,903
—
—
—
2016
(204,545)
30,471
349,947
—
10,287
(987)
—
—
—
Adjusted EBITDA
255,677
201,784
185,173
Adjusted EBITDA from investment in joint ventures is calculated below:
($ thousands)
Gain from investment in joint ventures
TDI fair value adjustment
Depreciation and amortization
Foreign exchange
Finance cost
Loss on sale of assets
Income taxes
Preferred shares valuation
Adjusted EBITDA
2018
874
—
1,125
(39)
54
395
14
(2,334)
89
2017
2016
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3 Funds flow from operations are defined as “cash provided by operating activities before the change in non-cash
working capital”. Management believes that, in addition to net loss, Funds flow from operations constitute a measure
that provides additional information regarding the Company’s liquidity and its ability to generate funds to finance its
operations. Management utilizes this measure to assess the Company’s ability to finance operating activities and
capital expenditures.
($ thousands)
Net income (loss)
Items not affecting cash
Depreciation
Share-based compensation, net of cash paid
Gain from joint ventures
Unrealized foreign exchange and other
Accretion on long-term debt
Deferred income tax
Gain on bargain purchase
Funds flow from operations
2018
58,664
2017
(37,644)
415,036
325,811
707
(874)
5,571
731
(53,224)
(200,672)
225,939
145
—
(918)
1,843
(147,799)
—
141,438
2016
(150,522)
349,947
10,287
—
(6,864)
316
(32,513)
—
170,651
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
3
NATURE OF OPERATIONS
The Company is in the business of providing oilfield services to the oil and natural gas industry in Canada, the United
States and internationally. Oilfield services provided by the Company include drilling and well servicing, oil sands coring,
directional drilling, underbalanced and managed pressure drilling, equipment rentals, transportation, wireline services
and production testing services.
The Company’s Canadian operations span the four western provinces of British Columbia, Alberta, Saskatchewan and
Manitoba and include the Northwest Territories and the Yukon. In the United States, the Company operates predominantly
in the Rocky Mountain and southern regions, as well as the states of California, New Mexico, North Dakota, Pennsylvania
and South Dakota. Internationally, the Company currently operates in Australia, Argentina, Bahrain, Kurdistan, Kuwait,
Mexico, Oman, United Arab Emirates, and Venezuela. In addition to these international locations, the Company has
operated in several other countries in the past and may relocate equipment to other regions in the future depending on
bidding opportunities and anticipated levels of future demand.
2018 COMPARED WITH 2017
Revenue for the year ended December 31, 2018 was $1,156.4 million, an increase of 16 percent from 2017 revenue of
$1,000.7 million. Revenue, net of third party, for the year ended December 31, 2018 was $1,021.9 million, an increase
of 17 percent from Revenue, net of third party, for the year ended December 31, 2017 of $873.9 million. Adjusted EBITDA
for 2018, totaled $255.7 million which includes $15.1 million from Trinidad Drilling Ltd. for the month of December 2018
($1.63 per common share), 27 percent higher than Adjusted EBITDA of $201.8 million ($1.29 per common share) for
2017.
Net income attributed to shareholders for the year ended December 31, 2018 was $58.3 million ($0.37 per common
share), compared to net loss attributed to shareholders of $37.6 million ($0.24 per common share) for the year ended
December 31, 2017. Funds flow from operations increased 60 percent to $225.9 million ($1.44 per common share) in
2018 compared to $141.4 million ($0.90 per common share) in the prior year.
During the fourth quarter of 2018, the Company acquired 89.3 percent of Trinidad Drilling Ltd. ("Trinidad"), the largest
acquisition in the Company's history (the "Trinidad Acquisition"), adding 68 drilling rigs in Canada, 66 in the United
States and one internationally. The Trinidad Acquisition also expands the Company’s geographic footprint with the
addition of three new countries of operation (Bahrain, Kuwait and Mexico) with the joint venture described below, expands
the Company’s existing customer base, and provides the Company additional exposure to the United States market in
particular. Results for the fourth quarter and year ended December 31, 2018 were materially impacted by the Trinidad
Acquisition. The acquisition includes a 60 percent interest in Trinidad Drilling International ("TDI"), which is a joint venture
with a wholly-owned subsidiary of Halliburton Company. For further information on the Trinidad Acquisition, please refer
to the "Trinidad Drilling Acquisition" section of this MD&A.
The Company's improved operating and financial results for 2018 resulted from increased demand for oilfield services
caused by price recovery of crude oil and natural gas commodity prices during the year as well as the Trinidad Acquisition
in the fourth quarter of 2018. Operating and financial results were lower in Canada in 2018 compared to 2017, mainly
due to geopolitical factors and the lack of transportation infrastructure to transport oil and natural gas to other markets.
The Company decommissioned three well servicing rigs in Canada and transferred one ADR® drilling rig from Canada
to the United States in 2018. The Company also decommissioned one drilling rig and two well servicing rigs in the United
States and added three new-build well servicing rigs in the United States in 2018.
The Company declared total dividends of $0.48 per common share in 2018.
The Company exited 2018 with a working capital deficit of $156.2 million, compared to a working capital deficit of $342.2
million as at December 31, 2017. The change in working capital year-over-year was largely due to the financing obtained
from a new Credit Facility (as defined below) in the fourth quarter of 2018, which was partially offset by the Ensign Notes
(as defined below) that were optionally repaid on January 10, 2019. The Company’s bank credit facilities provided unused
and available borrowings of $401.5 million at December 31, 2018, compared to $11.2 million at December 31, 2017, up
by $390.3 million, primarily due to a higher current principal amount under the Credit Facility and additional available
borrowing as a consequence of the Trinidad Acquisition.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
4
2017 COMPARED WITH 2016
The Company's increased operating and financial results for the 2017 fiscal year resulted from increased demand for
oilfield services caused by modest price recovery of crude oil and natural gas commodity prices. Volatile energy commodity
prices significantly impacted cash flows of the Company’s customers and, as a result, the expected levels of future
demand for oilfield services, particularly in North America. Financial results from the Company’s United States and
international operations were adversely impacted by translation to Canadian dollars due to the weakening of the United
States dollar relative to the Canadian dollar. For the year ended December 31, 2017, a two percent decrease in the
Canadian/United States dollar exchange rate negatively impacted revenues and margins generated outside Canada.
REVENUE AND OILFIELD SERVICES EXPENSE
($ thousands)
Revenue
Canada
United States
International
Total revenue
Revenue, net of third party
Oilfield services expense
Gross margin
2018
2017
Change
% change
241,034
641,558
273,765
262,793
459,496
278,361
1,156,357
1,000,650
1,021,913
855,824
300,533
873,864
759,700
240,950
(21,759)
182,062
(4,596)
155,707
148,049
96,124
59,583
1.8
(8)
40
(2)
16
17
13
25
6.5
Gross margin as a percentage of Revenue, net of third
party
29.4
27.6
Revenue for the year ended December 31, 2018 totaled $1,156.4 million, a 16 percent increase from the year ended
December 31, 2017 of $1,000.7 million. The increase in revenue largely result from the increased demand for oilfield
services in the United States, resulting in higher equipment utilization rates and additions to revenue from the Trinidad
Acquisition.
Revenue, net of third party, for the year ended December 31, 2018 totaled $1,021.9 million, an increase of 17 percent
from the previous year of $873.9 million. As a percentage of Revenue, net of third party, gross margin for the year ended
December 31, 2018 was 29.4 percent (2017 - 27.6 percent) as a result of a recovery in energy prices. Moreover, the
Company has increased revenue rates along with maintaining effective cost controls.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
5
CANADIAN OILFIELD SERVICES
Revenue ($ thousands)
Marketed drilling rigs1,2
Opening balance
Additions
Acquisition of Trinidad Drilling Ltd.
Transfers, net
Placed into reserve
Placed into marketed fleet
Decommissions/Disposals
Ending balance
Drilling operating days1
Drilling rig utilization (%)1
Well servicing rigs
Opening balance
Decommissions/Disposals
Ending balance
Well servicing operating hours
Well servicing utilization (%)
1Excludes coring rig fleet.
2Total rigs: 137, (2017 - 70)
2018
2017
Change
% change
$
241,034
$
262,793
$
(21,759)
(8)
58
—
68
(1)
(1)
1
—
125
6,002
21.9
65
(3)
62
57,068
25.2
57
2
—
—
—
(1)
58
6,860
26.8
65
—
65
70,556
29.7
67
(858)
(4.9)
(3)
(13,488)
(4.5)
116
(13)
(18)
—
(19)
(15)
The Company recorded revenue of $241.0 million in Canada for the year ended December 31, 2018, a decrease of
eight percent from $262.8 million recorded for the year ended December 31, 2017. During the year ended December 31,
2018, Canadian total revenues were 21 percent, of the total Company's revenue compared with 26 percent in the prior
year.
For the year ended December 31, 2018, the Company recorded 6,002 drilling days in Canada, compared to 6,860 drilling
days for the year ended December 31, 2017, a decrease of 13 percent. Well servicing hours decreased by 19 percent
to 57,068 operating hours compared with 70,556 operating hours for the year ended December 31, 2017.
Despite, the moderate increase in oil and natural gas commodity prices, demand for the Company's oilfield services
was lower compared to prior year mainly due to commodity pricing differentials caused by limited access to other markets
for Canadian oil and natural gas, due to a lack of transportation infrastructure in Western Canada.
During 2018, the Company transferred one ADR® drilling rig from Canada to the United States and decommissioned
three well servicing rigs. During fourth quarter, 2018 the Company through the Trinidad Acquisition, added 68 drilling
rigs to its Canadian fleet.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
6
UNITED STATES OILFIELD SERVICES
Revenue ($ thousands)
Marketed drilling rigs1
Opening balance
Additions
Acquisition of Trinidad Drilling Ltd.
Transfers, net
Placed into reserve
Decommissions/Disposals
Ending balance
Drilling operating days
Drilling rig utilization (%)
Well servicing rigs
Opening balance
Additions
Decommissions/Disposals
Ending balance
Well servicing operating hours
Well servicing utilization (%)
1Total rigs: 151, (2017 - 85)
2018
2017
Change
% change
$
641,558
$
459,496
$
182,062
40
70
—
66
1
(3)
(1)
133
14,173
43.4
45
3
(2)
46
112,224
70.1
69
1
—
—
—
—
70
10,944
35.6
44
1
—
45
90,281
55.6
63
3,229
7.8
1
21,943
14.5
90
30
22
2
24
26
For the year ended December 31, 2018, revenue of $641.6 million was recorded in the United States, an increase of
40 percent from the $459.5 million recorded in the prior year. The Company's United States operations accounted for
55 percent of the Company's revenue in 2018 fiscal year (2017 - 46 percent) and were the largest contributor to the
Company's consolidated revenues in 2018, consistent with the prior year.
In the United States, drilling operating days increased by 30 percent from 10,944 operating days in 2017 to 14,173
operating days in 2018. For the year ended December 31, 2018, well servicing activity increased 24 percent to 112,224
operating hours from 90,281 operating hours in 2017.
Overall operating and financial results for the Company’s United States operations were positively impacted by a
significant increase in demand for oilfield services, due primarily to renewed optimism regarding oil and natural gas
commodity prices, as well as the Trinidad Acquisition during the fourth quarter of 2018. Revenue rates in the United
States have modestly rebounded with operating activity.
During 2018, the Company transferred one ADR® drilling rig from Canada to the United States and deployed three new
well servicing rigs to the United States fleet. The Company also decommissioned one drilling rig and two well servicing
rigs. During fourth quarter, 2018 the Company, through the Trinidad Acquisition, added 66 drilling rigs to the United
States fleet and placed three drilling rigs into reserve.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
7
INTERNATIONAL OILFIELD SERVICES
Revenue ($ thousands)
Marketed drilling and workover rigs 1
Opening balance
Acquisition of Trinidad Drilling Ltd.
Transfers
Placed into reserve
Ending balance
Drilling operating days
Drilling rig utilization (%)
1Total rigs: 47, (2017 - 46)
2018
273,765
2017
278,361
Change
(4,596)
% change
(2)
44
1
—
(1)
44
6,061
36.1
46
—
—
(2)
44
6,106
36.4
—
(45)
(0.3)
—
(1)
(1)
The Company's international revenues for the year ended December 31, 2018, decreased two percent to $273.8 million
from $278.4 million recorded in the year ended December 31, 2017. The Company's international operations contributed
24 percent of the Company's revenue in 2018 (2017 - 28 percent).
International operating days totaled 6,061 compared to 6,106 drilling days for the year ended December 31, 2017, a
decrease of 1 percent compared to the year prior.
The Company's international operations expanded in 2018 through the 60 percent TDI joint venture, acquired pursuant
to the Trinidad Acquisition and discussed below. One additional international drilling rig was acquired through the Trinidad
Acquisition and one of the Company's international drilling rigs was placed into reserve. The possible impact to the
Company of the challenges in Venezuela are discussed further in the “Financial Instruments” section of this MD&A under
Credit Risk, and also in the “Risks and Uncertainties – Foreign Operations” section of this MD&A.
DEPRECIATION
($ thousands)
Depreciation
2018
415,036
2017
325,811
Change
89,225
% change
27
Depreciation expense for the year increased by 27 percent to $415.0 million compared with $325.8 million for the year
ended 2017. In the first quarter of 2018, the Company reviewed the useful life estimates for all rigs and related equipment
and determined that using a straight-line method (versus unit of production) would more accurately reflect the future
economic benefits related to these assets. These adjustments were applied prospectively and, as such, have increased
depreciation expenses for the year ended December 31, 2018 when compared to the year ended December 31, 2017.
Furthermore, the increase is also partially attributed to the acquisition of Trinidad's fixed asset base.
As a result of certain external impairment indicators existing in the market, the Company completed impairment tests in
all of its cash generating units (each a "CGU"). The Company did not note any impairments for any CGUs based on the
following key assumptions: weighted average pre-tax discount rate of 10 percent to 14 percent based on cost of capital
and debt, asset and country risk, together with past experience; annual inflationary growth after five years and limited
to the assets' lives; and cash flow projections consistent with market conditions and estimated rig salvage values of 10
percent. A six percent change in the discount rate, a 19 percent change in cash flow projections, or a changing in the
terminal growth rate to zero, independent of each other, would not have resulted in any impairments.
GENERAL AND ADMINISTRATIVE EXPENSE
($ thousands)
General and administrative
% of revenue
2018
46,437
4.0
2017
39,166
3.9
Change
7,271
% change
19
For the year ended December 31, 2018, general and administrative expense totaled $46.4 million (4.0 percent of revenue)
compared to $39.2 million (3.9 percent of revenue) for the year ended December 31, 2017, an increase of 19 percent.
The increase was due primarily to the Trinidad Acquisition and includes $1.5 million of non-recurring acquisition and
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
8
integration costs relating to such acquisition. Management continues to focus on managing costs, but expects further
restructuring costs to be incurred into 2019.
JOINT VENTURE OILFIELD SERVICES
Revenue ($ thousands)
Marketed drilling and workover rigs
Opening balance
Acquisition of Trinidad Drilling Ltd.
Decommissions
Ending balance
Drilling operating days
Drilling rig utilization (%)
nm - calculation not meaningful
2018
3,643
—
5
—
5
47
30.3%
2017
—
—
—
—
—
—
—
Change
3,643
% change
—
5
47
30.3%
nm
nm
nm
Pursuant to the Trinidad Acquisition, Ensign acquired a 60% ownership in TDI, a joint venture with a wholly-owned
subsidiary of Halliburton Company, which operates rigs in Bahrain, Mexico and Kuwait. TDI has five drilling rigs. For the
period November 30, 2018 to December 31, 2018, Ensign portion of TDI's income was $1,094.
INTEREST EXPENSE
($ thousands)
Interest Expense
2018
52,416
2017
41,210
Change
11,206
% change
27
Interest is incurred on the Company's $1.25 billion revolving credit facility (the “Credit Facility”), a $200 million existing
Trinidad credit facility (the "Trinidad Facility") and USD $350 million of Trinidad's senior notes due February 2025 (the
"Trinidad Notes") assumed through the Trinidad Acquisition, and the USD $200 million in senior guaranteed notes (the
“Ensign Notes”) due February 2019 and 2022. The amortization of deferred financing costs associated with the issuance
of the Ensign Notes is included in interest expense.
Interest expense increased by 26 percent for the year ended December 31, 2018 compared to the same period in 2017
as a result of increased borrowings and interest rates. In January and February 2019, the Company: (i) utilized a portion
of the Credit Facility to redeem the Ensign Notes, including the principal, make whole and accrued interest; (ii) entered
into USD $700 million senior loan facility (the “Senior Loan”); utilized a portion of the proceeds of the Senior Loan to
repurchase 99.93% of the Trinidad Notes and pay related consent fees (the remaining 0.07% of which will be repurchased
in March 2019) and to repay the Trinidad Facility; and (iii) reduced the outstanding balance of the Credit Facility to below
$900 million utilizing a portion of the Senior Loan.
FOREIGN EXCHANGE AND OTHER
($ thousands)
Foreign exchange and other
nm - calculation not meaningful
2018
(19,001)
2017
21,903
Change
(40,904)
% change
nm
Included in this amount is the impact of foreign currency fluctuations in the Company’s subsidiaries that have functional
currencies other than the Canadian dollar.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
9
INCOME TAXES
($ thousands)
Current income tax
Deferred income tax
Total income tax
Effective income tax rate (%)
nm - calculation not meaningful
2018
1,044
(53,224)
(52,180)
26.9
2017
(2,353)
(147,799)
(150,152)
80.0
Change
% change
3,397
94,575
97,972
nm
(64)
(65)
The effective income tax rate for the year ended December 31, 2018 was 26.9 percent compared with 80.0 percent for
the year ended December 31, 2017. The effective tax rate was significantly lower than the effective tax rate of 2017 due
mainly to the impact of US Tax Reform and its effect on the US deferred income tax liability in 2017.
TRINIDAD DRILLING ACQUISITION
During the fourth quarter of 2018, Ensign Holdings Inc. ("Holdings"), a wholly -owned subsidiary of Ensign, completed
the acquisition of 89.3 percent of the issued and outstanding common shares of Trinidad, a publicly traded oilfield service
company, through series of transactions for a total consideration $410.2 million. The strategic business combination was
completed to increase its presence in the North American and international markets. On February 15, 2019 Holdings
acquired the remaining 10.7 percent of the common shares of Trinidad and amalgamated with Trinidad, following which
Trinidad was delisted from the Toronto Stock Exchange and ceased to be a reporting issuer (or equivalent) in all
jurisdictions in which Trinidad was a reporting issuer.
The acquisition was accounted for as a business combination using the acquisition method whereby the net assets and
liabilities assumed are recorded at fair value. The preliminary purchase price allocation is based on management's best
estimates of the fair value of Trinidad's assets and liabilities as at the Effective Acquisition Date of November 30, 2018,
although future adjustments to estimates may be required.
If new information obtained within one year from the acquisition date about facts and circumstances that existed as at
the Effective Acquisition Date and which reasonably requires adjustments to above amounts, or any additions to provisions
that existed at the Effective Acquisition Date, then the accounting at acquisition will be revised.
FUNDS FLOW FROM OPERATIONS AND WORKING CAPITAL
($ thousands, except per share data)
Funds flow from operations
Funds flow from operations per share
2018
225,939
$1.44
2017
141,438
$0.90
Working capital
(156,223)
(342,199)
Change
84,501
0.54
185,976
% change
60
60
(54)
For the year ended December 31, 2018, the Company generated Funds flow from operations of $225.9 million ($1.44
per common share) an increase of 60 percent from $141.4 million ($0.90 per common share) for the year ended
December 31, 2017. The increase in Funds flow from operations in 2018 compared to 2017 is primarily due to higher
operating results and the Trinidad Acquisition. The significant factors that may impact the Company's ability to generate
Funds flow from operations in future periods are outlined in the "Risks and Uncertainties" section of this MD&A.
As at December 31, 2018, the Company’s working capital was a deficit of $156.2 million, compared to a working capital
deficit of $342.2 million at December 31, 2017. The change in working capital in 2018 was mainly related to refinancing
the Credit Facility, which is due November 2021. The increase was partially offset by the financial statement
reclassification of the Ensign Notes ($200 million USD were redeemed in January 2019) maturing within the next 12
months to current liabilities. 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 borrowings of $1.5 billion and, of which $401.5 million was undrawn and available at December 31, 2018.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
10
INVESTING ACTIVITIES
($ thousands)
Purchase of property and equipment
Proceeds from disposals of property and equipment
Acquisition of Trinidad Drilling Ltd. (net)
Contributions to joint venture
Net change in non-cash working capital
Cash used in investing activities
nm - calculation not meaningful
2018
(80,044)
6,748
(294,264)
(26,144)
17,734
(375,970)
2017
(123,763)
6,051
—
—
(2,667)
(120,379)
Change
43,719
697
(294,264)
(26,144)
20,401
(255,591)
% change
(35)
12
nm
nm
nm
nm
In the fourth quarter, the Company acquired an 89.3 percent interest in Trinidad for net cash consideration of $320.3
million and made a $26.1 million contribution to TDI. Net purchases of property and equipment during the fiscal year
ending 2018 totaled $73.3 million (2017 - $117.7 million). The purchase of property and equipment relates predominantly
to expenditures made pursuant to the Company’s new build and major retrofit program, and for maintenance capital
costs incurred during the year. The Company completed construction of a total of three well servicing rigs for the United
States during 2018.
FINANCING ACTIVITIES
($ thousands)
Proceeds from long-term debt
Repayments of long-term debt
Purchase of shares held in trust
Subordinate convertible debenture
Dividends
Net change in non-cash working capital
Cash used in financing activities
nm - calculation not meaningful
2018
490,886
(182,391)
(1,047)
37,000
(75,396)
11,609
280,661
2017
171,976
(129,787)
(1,103)
—
(52,577)
(482)
(11,973)
Change
318,910
(52,604)
56
37,000
(22,819)
12,091
292,634
% change
nm
41
(5)
nm
43
nm
nm
The Company made a net withdrawal on the Credit Facility of $308.5 million during the year ended December 31, 2018,
increasing the outstanding long-term debt balance. As of December 31, 2018, the Credit Facility is primarily being used
to fund capital expenditures and the Trinidad Acquisition.
During the first quarter of 2018, the Company issued a non-brokered private placement of unsecured, subordinated
convertible debentures (the "Debentures") for gross proceeds of $37.0 million. The Debentures bear interest from the
date of closing at 7.0% per annum, payable semi-annually in arrears, on April 1 and October 1 each year. The Debentures
will mature on January 31, 2022.
If, on and after April 1, 2021, the closing price of the Company's common shares ("Common Shares") on the Toronto
Stock Exchange exceeds 125% of the Conversion Price for at least 30 consecutive trading days, the Debentures may
be redeemed by the Company for cash, in whole or in part from time to time, on not more than 90 days and not less
than 60 days prior notice, at a redemption price equal to the outstanding principal amount of the Debentures plus accrued
and unpaid interest thereon (if any), up to, but excluding, the date of redemption.
The liability component of the Debentures was recognized initially at the fair value and revalued quarterly using a similar
liability that does not have an equity conversion option, which was calculated based on an estimated market interest
rate of 8.25%.
The difference between the principal amount of the Debentures and the fair value of the liability component was recognized
in shareholders’ equity.
CONTRACTUAL OBLIGATIONS
In the normal course of business, the Company enters into various commitments that will have an impact on future
operations. These commitments relate primarily to credit facilities, senior unsecured notes and facility leases.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
11
A summary of the Company’s total contractual obligations as of December 31, 2018, is as follows:
($ thousands)
Less than 1 Year
1-3 Years
4-5 Years
After 5 Years
Total
Ensign Notes - senior unsecured notes
due 2019 and 2022
Trinidad Notes - senior notes due 2025
Drawings on credit facilities
Debentures
Capital Leases
Facility leases
FINANCIAL INSTRUMENTS
278,614
31,638
39,991
2,590
2,647
9,052
—
94,914
1,019,504
40,445
6,676
13,326
364,532
1,174,865
—
63,275
—
—
—
466
63,741
—
514,570
—
—
—
—
278,614
704,397
1,059,495
43,035
9,323
22,844
514,570
2,117,708
The classification and measurement of financial instruments the Company has recognized is presented below:
Cash and cash equivalents and accounts receivable are classified as financial assets at amortized cost. Accounts payable
and accruals, operating lines of credit, dividends payable and long-term debt are classified as financial liabilities at
amortized cost.
Credit Risk
The Company is subject to credit risk on accounts receivable balances, which at December 31, 2018 totaled $351.6
million, an increase of $119.4 million from $232.2 million as at December 31, 2017. Varying levels of oil and natural gas
commodity prices negatively impact the cash flow of the Company's customers and, consequently, increases the
collection risk of accounts receivable balances.
The Company assesses the credit worthiness of its customers on an ongoing basis and establishes credit limits for each
customer based on external credit reports and other publicly available information, internal analysis and historical
experience with the customer. Credit limits are approved by senior management and are reviewed on a regular basis
or when changing economic circumstances dictate. The Company manages credit risk through dedicated credit
resources, ongoing monitoring and follow up of balances owing, well liens, and tightening or restriction of credit terms
as required. The Company also monitors the amount and age of accounts receivable balances on an ongoing basis. As
at December 31, 2018, the Company had trade receivables of $20.2 million (2017 - $25.8 million) with multiple customers
that were greater than 90 days old for which an allowance for doubtful accounts of $16.9 million (2017 - $4.2 million)
has been recorded to provide for balances which, in management’s best estimate, are deemed uncollectible as at
December 31, 2018. The allowance for doubtful accounts is an estimate requiring significant judgment and may differ
materially from actual results.
As part of the Company’s international operations, it provides oilfield services in Venezuela pursuant to contractual
arrangements. As at December 31, 2018, the Company had net accounts receivable of approximately $12.9 million net
of allowance for doubtful accounts for work performed in Venezuela, and in recent months a number of payments have
been received by the Company (2017 - $28.6 million). Though the Company has a history of collecting accounts receivable
in Venezuela, due to the recent decline in the price of oil, continuing political unrest in the country and expansion of
sanctions by the US government, there can be no assurance that the Company will be successful in collecting all of
such accounts receivable outstanding. As a result the Company has provided a further $11.2 million provision onto its
already discounted accounts receivable balance.
Liquidity Risk
The Company is subject to liquidity risk on its financial liabilities, which at December 31, 2018 totaled $2,020.7 million,
an increase of $760.7 million from $1,259.9 million as at December 31, 2017.
The Company manages liquidity by forecasting cash flows on an annual basis and secures sufficient credit facilities to
meet financing requirements that exceed anticipated internally generated funds. As at December 31, 2018, the remaining
contractual maturities of accounts payable and accruals and dividends payable are less than one year. Maturity
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
12
information regarding the Company’s bank credit facilities and long-term debt is described in the "Contractual Obligations"
section of this MD&A.
As at December 31, 2018, the Company had undrawn and available bank credit facilities of $401.5 million (2017 – $11.2
million).
NEW BUILDS AND MAJOR RETROFITS
During the year ended December 31, 2018, the Company added three new-build well servicing rigs in the United States.
The Company decommissioned three well servicing rigs in Canada, one drilling rig and two well servicing rigs in the
United States during 2018. One new-build well servicing rig will be added early 2019 in the United States. The Company
continues to selectively add new ADR® drilling rigs to meet the increasing technical demands of its customers.
SUMMARY QUARTERLY RESULTS
($ thousands, except per share data)
Q4-2018 Q3-2018 Q2-2018 Q1-2018 Q4-2017 Q3-2017 Q2-2017 Q1-2017
Revenue
Revenue, net of third party 1
Adjusted EBITDA 1
Adjusted EBITDA per share 1
Basic
Diluted
Net (loss) income attributable to
shareholders
Net (loss) income per share
Basic
Diluted
Cash provided by operating activities
Funds flow from operations 1
Funds flow from operations per share 1
Basic
Diluted
Total debt, net of cash
346,136
288,700
263,061
258,460
270,013
247,121
232,232
251,284
308,651
254,424
231,871
226,967
241,987
211,299
211,687
208,891
81,678
68,641
53,064
52,294
54,820
52,600
44,276
50,088
$0.52
$0.52
$0.44
$0.44
$0.34
$0.34
$0.33
$0.33
$0.34
$0.35
$0.34
$0.33
$0.29
$0.29
$0.32
$0.32
154,472
(32,791)
(36,697)
(26,682)
46,488
(36,526)
(33,814)
(13,792)
$0.98
$0.98
61,037
63,834
$(0.21)
$(0.23)
$(0.17)
$(0.21)
$(0.23)
$(0.17)
51,792
60,390
19,306
47,808
19,998
53,907
$0.30
$0.30
38,124
12,244
$(0.23)
$(0.22)
$(0.09)
$(0.23)
$(0.22)
$(0.09)
32,791
39,616
44,687
44,769
19,545
44,809
$0.41
$0.41
$0.38
$0.38
$0.31
$0.31
$0.34
$0.34
$0.07
$0.07
$0.25
$0.25
$0.29
$0.29
$0.29
$0.29
730,520
748,609
726,636
707,559
700,011
714,357
709,062
1,641,83
0
1 See definition of "Non-GAAP Measures" in the "Overview and Selected Annual Information" section of this MD&A.
Variability in the Company’s quarterly results is driven primarily by the seasonal operating environment in Canada and
fluctuations in oil and natural gas commodity prices. Financial and operating results for the Company’s Canadian oilfield
services division are generally strongest during the first and fourth quarters, when the Company’s customers conduct
the majority of their drilling programs. Utilization rates typically decline during the second quarter as spring break-up
weather conditions hinder mobility of the Company’s equipment in Canada. Oil and natural gas commodity prices
ultimately drive the level of exploration and development activities carried out by the Company’s customers and the
resultant demand for the oilfield services provided by the Company.
The quarterly results may also be impacted by the Black-Scholes valuation accounting associated with the Company’s
share-based compensation and Performance Share Unit plans respectively, which can fluctuate significantly from quarter
to quarter as a result of changes in the valuation inputs, as well as changes in foreign currencies against the functional
currencies of the Company’s operating entities.
In addition to the seasonality noted above, the variability noted in the Company’s quarterly results reflect continued
varying levels of demand for oilfield services and theTrinidad Acquisition. Such demand for oilfield services was positively
influenced by more favorable oil and natural gas commodity prices for 2018 along with the Trinidad Acquisition.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
13
FOURTH QUARTER ANALYSIS
(in thousands of Canadian dollars, except per share data and
operating information)
Revenue
Revenue, net of third party 1
Adjusted EBITDA 1
Adjusted EBITDA per share 1
Basic
Diluted
Net (loss) income attributable to shareholders
Net (loss) income per share
Basic
Diluted
Cash provided by operating activities
Funds flow from operations 1
Funds flow from operations per share 1
Basic
Diluted
Weighted average shares - basic (000s)
Weighted average shares - diluted (000s)
Drilling
Operating days
Canada 2
United States
International 3
Drilling rig utilization (%)
Canada 2
United States
International 3
Well Servicing
Operating hours
Canada
United States
Well servicing rig utilization rate (%)
Canada
United States
2018
346,136
308,651
81,678
$0.52
$0.52
154,472
$0.98
$0.98
61,037
63,834
$0.41
$0.41
156,794
156,976
2018
1,691
4,711
1,588
19.7
47.9
37.5
2018
12,377
30,747
21.7
73.7
Three months ended December 31
Change
2017
% change
270,013
241,987
69,252
$0.34
$0.35
46,488
$0.30
$0.30
38,124
12,244
$0.07
$0.07
156,794
156,976
76,123
66,664
12,426
$0.18
$0.17
107,984
$0.68
$0.68
22,913
51,590
$0.34
$0.34
—
—
28
28
18
53
49
nm
nm
nm
60
nm
nm
nm
—
—
2017
Change
% change
1,649
3,066
1,547
25.3
39.4
36.4
2017
16,947
23,644
28.3
57.1
42
1,645
41
(5.6)
8.5
1.1
(4,570)
7,103
(6.6)
16.6
3
54
3
(22)
22
3
% change
(27)
30
(23)
29
nm - calculation not meaningful
Comparative amounts do not reflect Trinidad Drilling Ltd.
1
See definition of "Non-GAAP Measures" in the "Overview and Selected Annual Information" section of this MD&A. Certain prior period amounts have
been restated to reflect current year presentation.
2 Excludes coring rigs.
3Includes workover rigs.
4As part of the Trinidad Acquisition, effective November 30, 2018, Ensign acquired 60% ownership of a joint venture operating under the name Trinidad
Drilling International.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
14
REVENUE AND OILFIELD SERVICES EXPENSE
($ thousands)
Revenue
Canada
United States
International
Total revenue
Revenue, net of third party
Oilfield services expense
Gross margin
2018
2017
Change
% change
65,565
209,890
70,681
346,136
308,651
251,907
94,229
64,260
129,188
76,565
270,013
241,987
206,750
63,263
1,305
80,702
(5,884)
76,123
66,664
45,157
30,966
2
62
(8)
28
28
22
49
Gross margin as a percentage of Revenue, net of third
party
30.5
26.1
The Company recorded revenue of $346.1 million for the three months ended December 31, 2018, a 28 percent increase
from the $270.0 million recorded in the three months ended December 31, 2017. Drilling operating days for the fourth
quarter of 2018 totaled 7,990 days, a 28 percent increase from the prior year of 6,262 drilling operating days. The
recovery of oil and natural gas commodity prices in 2018 and the Trinidad Acquisition during fourth quarter positively
impacted the demand for the Company's oilfield services.
As a percentage of revenue, net of third party, gross margin increased for the fourth quarter of 2018 to 30.5 percent
from 26.1 percent for the fourth quarter of 2017. The increase in gross margin in the fourth quarter of 2018 compared
to the prior year is due to revenue rate increases in reaction to increased levels of demand for oilfield services allowing
for pricing increases and in addition the Trinidad Acquisition.
Depreciation expense totaled $113.6 million for the fourth quarter of 2018 compared with $91.7 million for the fourth
quarter of 2017. The increase was due to the increase in property, plant and equipment attributed to the Trinidad
Acquisition as well as the change in accounting policy in 2018.
General and administrative expense increased 67 percent to $14.1 million (4.1 percent of revenue) for the fourth quarter
of 2018 compared with $8.4 million (3.1 percent of revenue) for the fourth quarter of 2017. The increase in general and
administrative expense in the fourth quarter of 2018 compared to the prior year is primarily due the Trinidad Acquisition
and includes $1.6 million of non-recurring acquisition and integration costs during the fourth quarter. Management
continues to focus on costs and will be working to realize synergies from the Trinidad Acquisition.
OUTSTANDING SHARE DATA
The following Common Shares and stock options were outstanding as of March 7, 2019:
Common shares
Stock options
OUTLOOK
Industry Overview
Number
157,000,293
$
Outstanding
5,911,350
Amount ($)
207,404
Exercisable
2,820,140
The oilfield services industry continues to experience volatility. The benchmark price of West Texas Intermediate
experienced a significant decrease in Q4, 2018 with prices rebounding in the first two months of 2019. The price volatility
has caused some oil and gas producers to reduce capital spending or to adopt a cautious tone. The Company has
responded with a prudent net capital spending budget of $102 million consisting of maintenance capital only. The
Company is continuing to focus on costs and is expecting annualized synergies of $40 million from the Trinidad Acquisition.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
15
Canadian Activity
The Canadian market continues to be volatile, with the differential for light and heavy Canadian oil improving since Q4,
2018. The improvement of pricing has created more cash flow for Canadian producers which could result in increased
activity in the summer and fall of 2019. Takeaway capacity is still the largest concern weighing on the Canadian market
and, until this issue is resolved, pricing volatility is expected to continue.
Of our 125 marketed Canadian rigs, approximately 53 percent are engaged in contracts, with 41 percent of the contracts
having term that is six months or greater.
United States Activity
The drilling rig count in the United States has been relatively flat and is expected to remain steady for the remainder of
the year. Day rates have increased modestly year over year, with the expectation that future increases will abate until
the drilling rig count begins to increase.
Of our 133 marketed United States drilling rigs, approximately 64 percent are contracted, with 55 percent of the contracts
having term that is six months or greater.
International Activity
The Company expects modest growth in Australia with additional drilling rigs being contracted in Q4 2018 that will begin
working in 2019. Our Latin American operations are expected to see a decrease in activity due to the January 2019
expansion of sanctions against Venezuela by the United States. Activity in the Middle East is expected to remain consistent
with 2018 activity levels during 2019.
Our 50 marketed international rigs, approximately 46 percent are contracted, with 78 percent of the contracts having
term that is six months or greater.
2019 Capital Expenditures and Debt Reduction
The Company has budgeted net capital expenditures for 2019 of approximately $102 million for the combined entity.
The disciplined capital plan focuses on certifications and preventative maintenance for its combined global high/super
spec drilling rig fleet, other service lines, and select upgrade projects. In addition to a disciplined capital plan, The
Company will focus on debt reduction throughout 2019 and beyond, with an initial reduction target of $100 million in
2019 (before asset dispositions such as duplicate operating facility locations).
Trinidad Acquisition Update
The acquisition of Trinidad has allowed the Company to substantially increase the size of the Company’s global operations
and geographic footprint, in particular within active U.S. shale basins such as the Permian, and new international
jurisdictions such as Kuwait and Bahrain. The acquisition is expected to be accretive to the Company’s cash flow per
share on a debt-adjusted basis and is expected to provide approximately $40 million in annual cost saving synergies
relating to the elimination of duplicate public company costs, facility overlap and staff efficiencies. This number does not
include potential revenue and purchasing efficiencies which could further add to the accretive nature of the acquisition,
increase our liquidity and allow the Company to proactively reduce debt on a go-forward basis.
The integration of Trinidad’s high/super-spec drilling rig fleet continues to progress as planned and management is very
impressed with the equipment and people that they have seen in the field. We continue to focus on ensuring that during
this integration that the Company's people are safe and operations and customers are not impacted. Customer feedback
has been positive and this acquisition will allow the Company to take a market share leadership position in key markets
and drive stronger financial results on a go-forward basis, which in combination with the Company's financial flexibility
and agreed-to incremental customer funded upgrades, the Company has a platform for additional growth and financial
strength."
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
16
Subsequent Events
Subsequent to December 31, 2018, the Company:
•
On January 10, 2019 the Company utilized the Credit Facility to redeem in full the USD $200,000 senior guaranteed
notes (Tranche B &C) due February 2019 and 2022. The total price for the redemption was USD $205.100, which
included the principal, make whole and accrued interest.
•
•
•
•
•
•
•
•
•
On February 14, 2019 the Company entered into a five year USD $700,000 senior loan facility (the “Senior
Loan”) at prevailing market rates for this type of loan.
On February 14, 2019 a portion of the proceeds of the Senior Loan was utilized to repurchase 99.93% of the
outstanding USD $350,000 of Trinidad Notes due February 2025 and to pay related consent fees. The total cost
for the repurchase of the Trinidad Notes was USD $366,500. The Trinidad Notes were tendered, and the consent
fees were paid, pursuant to Trinidad’s change of control offer to purchase and solicitation of consents announced
on December 27, 2018. The Trinidad Notes were repurchased at 101% plus accrued and unpaid interest. Consenting
noteholders also received 0.5% as a consent fee for their consent to certain amendments to the indenture governing
the Trinidad Notes, among other things eliminating or modifying substantially all of the restrictive covenants. The
remaining 0.07% of the Trinidad Notes which were not tendered in the offer will be repurchased prior to the end of
March 2019.
On February 14, 2019 the Company reduced the Credit Facility available amount from $1,250,000 to $900,000
million and a portion of the proceeds of the Senior Loan was utilized to reduce the outstanding balance of the Credit
Facility to less than $900,000.
On February 14, 2019 the Company repaid the existing Trinidad Facility utilizing a portion of the proceeds from the
Senior Loan.
On February 15, 2019 Trinidad and Holdings completed an amalgamation (the “Amalgamation”) to form an
amalgamated corporation named “Trinidad Drilling Ltd.” (“Amalco”). The amalgamation was approved at a special
meeting of Trinidad Shareholders held on January 31, 2019. Pursuant to the terms of an amalgamation agreement
(the “Amalgamation Agreement”) dated January 4, 2019 between Trinidad and Holdings, Trinidad Shareholders
(other than Holdings) received one redeemable preferred share of Amalco (each, a “Redeemable Preferred Share”)
for each Trinidad common share upon completion of the Amalgamation. The Redeemable Preferred Shares were
immediately redeemed for $1.68 in cash per Redeemable Preferred Share (the “Redemption Consideration”).
The Redemption Consideration was the same as the consideration that was available to Trinidad Shareholders
under Holding’s Offer for all the issued and outstanding Trinidad Shares, which expired on December 21, 2018.
Effective as of February 15, 2019, Amalco became an indirect wholly-owned subsidiary of Ensign.
The Trinidad Shares were delisted from trading on the Toronto Stock Exchange effective as of the close of trading
on February 19, 2019.
On February 25, 2019, Trinidad ceased to be a reporting issuer with the applicable securities regulatory authorities
in each of the jurisdictions in which Trinidad was a reporting issuer (or equivalent).
Declared a dividend for the first quarter of 2019 of $0.12 per common share or approximately $18,877, payable on
or about April 4, 2019 to the shareholders of record at the close of business on March 25, 2019. The dividend has
not been provided for and 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.
The Company has re-implemented its dividend reinvestment plan ("the DRIP"). The DRIP has been updated from
the prior version operated by Ensign (the "Original DRIP") that was suspended in August 2017. The substantive
features of the Original DRIP have not been changed except to reflect certain tax changes and to limit a participant’s
ability to terminate their participation in the plan to once per year.
CRITICAL ACCOUNTING ESTIMATES
Management is required to make judgments, assumptions and estimates in applying its accounting policies and practices,
which have a significant impact on the financial results of the Company. These significant accounting policies involve
critical accounting estimates due to complex judgments and assumptions. These estimates, judgments and assumptions
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
17
are based on the circumstances that exist at the reporting date and may affect the reported amounts of income and
expenses during the reporting periods and the carrying amounts of assets, liabilities, accruals, provisions, contingent
liabilities, other financial obligations, as well as the determination of fair values.
Joint arrangements
The Company assesses the values of these instruments by using a discounted cash flow model. This calculation requires
the use of estimates, including: future drilling activity and utilization of the drilling rigs, future equipment deployment
milestones, prices, operating costs, discount rates, timing of new property and equipment and other assumptions.
Purchase price allocation
The measurement of each business combination requires management estimation in determining the fair values of
assets and liabilities acquired as well as the fair value of any intangible assets identified. Management is required to
estimate future cash flows, discount rates and market conditions at the Effective Acquisition Date of the Trinidad
Acquisition, in order to determine the fair value of certain assets.
Property and Equipment
The estimated useful life, residual value and depreciation methods selected are the Company’s best estimate of such
and are based on industry practice, historical experience and other applicable factors. These assumptions and estimates
are subject to change as more experience is obtained or as general market conditions change, both of which could
impact the operations of the Company’s property and equipment.
Impairment
For impairment testing, the assessment of facts and circumstances is a subjective process that often involves a number
of estimates and is subject to interpretation. An impairment is recognized if the carrying value exceeds the recoverable
amount for a CGU. Property and equipment are aggregated into CGUs based on their ability to generate separately
identifiable and largely independent cash flows. The testing of assets or CGUs for impairment, as well as the assessment
of potential impairment reversals, requires that the Company estimate an asset’s or CGU’s recoverable amount. The
estimate of a recoverable amount requires a number of assumptions and estimates, including expected market prices,
market supply and demand, margins and discount rates. These assumptions and estimates are subject to change as
new information becomes available and changes in any of the assumptions could result in an impairment of an asset’s
or CGU’s carrying value.
Share-based Compensation
Measurement inputs include share price on measurement date, exercise price, expected volatility, expected life, expected
dividends and the risk-free interest rate. Significant estimates and assumptions are used in determining the expected
volatility based on weighted average historic volatility adjusted for changes expected due to publicly available information,
weighted average expected life and expected forfeitures, based on historical experience and general option holder
behavior. Changes to the input assumptions could have a significant impact on the share-based compensation liability
and expense.
Income Taxes
The Company follows the liability method of accounting for income taxes. Under this method, deferred income taxes
are recorded for the effect of any temporary difference between the accounting and income tax basis of an asset or
liability, using the substantively enacted income tax rates. Current income taxes for the current and prior periods are
measured at the amount expected to be recoverable from or payable to the taxation authorities based on the income
tax rates enacted or substantively enacted at the end of the reporting period. The deferred income tax assets and liabilities
are adjusted to reflect changes in enacted or substantively enacted income tax rates that are expected to apply, with
the corresponding adjustment recognized in net income or in shareholders’ equity depending on the item to which the
adjustment relates.
Tax interpretations, regulations and legislation in the various jurisdictions in which the Company and its subsidiaries
operate are subject to change. As such, income taxes are subject to measurement uncertainty and the interpretations
can impact net income through the income tax expense arising from the changes in deferred income tax assets or
liabilities.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
18
Allowance for Doubtful Accounts
The Company is subject to credit risk on accounts receivable balances and assesses the recoverability of accounts
receivable balances on an ongoing basis. The Company establishes an allowance for estimated losses for uncollectible
accounts as circumstances warrant. The allowance is determined based on customer credit risk characteristics and the
days past due. Assessing accounts receivable balances for recoverability involves significant judgment and uncertainty,
including estimates of future events. Changes in circumstances underlying these estimates may result in adjustments
to the allowance for doubtful accounts in future periods.
Functional Currency
The Company determines functional currency based on the primary economic environment in which the entity operates.
This includes a number of factors that must be considered by the Company in using its judgment to determine the
appropriate functional currency for each entity.
CHANGE IN ACCOUNTING POLICY
The Company adopted the following mandatory new standards effective January 1, 2018. The following is a brief summary
of the new standards that are relevant to the Company:
IFRS 9 - Financial Instruments:
The IASB issued the final version of IFRS 9 Financial Instruments, which is effective for annual periods beginning on or
after January 1, 2018. IFRS 9, as amended, addresses the classification, measurement and derecognition of financial
assets and financial liabilities, introduces a substantially reformed approach to hedge accounting and a new impairment
model for financial assets. The Company has adopted the standard retrospectively from January 1, 2018, with the
transition provisions permitted under the standard. Differences in the carrying amount of financial assets and financial
liabilities resulting from the adoption of IFRS 9 are recognized in the opening balance as of January 1, 2018. Comparative
prior year periods are not restated.
IFRS 15 - Revenue from Contracts with Customers:
Effective January 1, 2018, upon adoption of IFRS 15 Revenue from Contracts with Customers, the Company recognizes
revenue for services rendered when the performance obligations have been completed, as control of the services transfer
to the customer, when the services performed have been accepted by the customer, and collectability is reasonably
assured. The consideration for services rendered is measured at the fair value of the consideration received and allocated
based on their standalone selling prices. The standalone selling prices are determined based on the agreed upon list
prices at which the Company sells its services in separate transactions. Payment terms with customers vary by country
and contract. Standard payment terms are 30 days from invoice date.
The Company does not expect to have any revenue contracts where the period between the transfer of the promised
goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company
does not adjust any of the transaction prices for the time value of money. The Company does not incur material costs
to obtain contracts with customers and consequently, does not recognize any contract assets. The Company does not
have any contract liabilities associated with its customer contracts. The adoption of IFRS 15 did not result in any changes
in the timing of revenue recognition for the Company’s goods and services.
RECENT ACCOUNTING PRONOUNCEMENTS
On January 13, 2016 the IASB issued IFRS 16 - Leases ("IFRS 16") which has been adopted by the Company on
January 1, 2019 using the modified retrospective method. Under the modified retrospective method, comparative financial
information is not restated and continues to be reported under the accounting standards in effect for those periods.
Under the principles of the new standard, the Company will recognize lease liabilities related to its lease commitments.
These lease liabilities will be measured at the present value of the remaining lease payments, discounted using the
Company's incremental borrowing rate as at January 1, 2019. The associated right of use ("ROU) assets will be measured
at the lease liability amount on January 1, 2019 resulting in no adjustment to the opening balance of retained earnings.
The Company intends to use the following practical expedients permitted under the new standard:
(i) Lease with a remaining lease term of less than twelve months as at January 1, 2019 as a sort term leases;
(ii) Leases of low dollar value will continue to be expensed as incurred;
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
19
(iii) The Company will not apply any grandfathering practical expedients.
The Company is in process of completing its assessment and expects to book a right to use assets and corresponding
liability when the standard comes in effect.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING
As of December 31, 2018, the Company's management evaluated the effectiveness of its disclosure controls and
procedures as defined in the rules of the Canadian Securities Administrators. This evaluation is performed under the
supervision of, and with the participation of, the President and Chief Operating Officer and the Chief Financial Officer.
The President and Chief Operating Officer and the Chief Financial Officer have concluded that the Company’s Disclosure
Controls and Procedures are effective as of December 31, 2018.
The President and Chief Operating Officer and Chief Financial Officer do not expect that the Company’s disclosure
controls and procedures will prevent or detect all errors, misstatements and fraud but they are designed to provide
reasonable assurance of achieving these objectives. A control system, no matter how well designed or operated, can
only provide reasonable, not absolute, assurance that the corresponding objectives are met.
As of December 31, 2018, the management of the Company evaluated the Company's effectiveness of internal controls
over financial reporting, as defined in the rules of the Canadian Securities Administrators. This evaluation is performed
under the supervision of, and with the participation of, the President and Chief Operating Officer and Chief Financial
Officer. The President and Chief Operating Officer and Chief Financial Officer concluded that the Company's internal
control over financial reporting was effective as of December 31, 2018.
Internal control over financial reporting, no matter how well designed, has inherent limitations and can provide only
reasonable assurance with respect to financial statement preparation and may not prevent or detect all misstatements.
Management has limited the scope on the design of disclosure controls and procedures and internal control over financial
reporting of the Company to exclude the controls, policies and procedures of Trinidad. Trinidad’s balance sheet is included
in the December 31, 2018, consolidated financial statements of the Company. The scope limitation is in accordance with
Section 3.3 of National Instrument 52-109, which allows an issuer to limit its design of internal control over financial
reporting and disclosure controls and procedures to exclude the controls, policies and procedures of a company acquired
not more than 365 days before the end of the financial period to which the certificate relates. The Company intends to
complete the design of disclosure controls and procedures and internal control over financial reporting of Trinidad by
September 30, 2019.
RISKS AND UNCERTAINTIES
Oil and Natural Gas Prices
The most significant factors affecting the business of the Company are oil and natural gas commodity prices. Commodity
price levels affect the capital programs of energy exploration and production companies, as the price they receive for
the oil and natural gas they produce has a direct impact on the cash flow available to them and the subsequent demand
for oilfield services provided by the Company. Oil and natural gas prices have been volatile in recent years and may
continue to be so, as supply/demand fundamentals, weather conditions, government regulations, political and economic
environments, pipeline capacity, storage levels and other factors outside of the Company’s control continue to influence
commodity prices. Demand for the Company’s services in the future will continue to be influenced by oil and natural gas
commodity prices and the resultant impact on the cash flow of its customers, and may not be reflective of historical
activity levels.
Competition and Industry Conditions
The oilfield services industry is, and will continue to be, highly competitive. Contract drilling companies compete primarily
on a regional basis and competition may vary significantly from region to region at any particular time. Most drilling and
workover contracts are awarded on the basis of competitive bids, which results in price competition. Many drilling,
workover and well servicing rigs can be moved from one region to another in response to changes in levels of activity,
which can result in an oversupply of rigs in an area. In many markets in which the Company operates, the supply of rigs
exceeds the demand for rigs, resulting in further price competition. Certain competitors are present in more than one of
the regions in which the Company operates, although no one competitor operates in all of these areas. In Canada, the
Company competes with several firms of varying size. In the United States there are many competitors with national,
regional or local rig operations. Internationally, there are several competitors in each country where the Company operates
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
20
and some of those international competitors may be better positioned in certain markets, allowing them to compete more
effectively. There is no assurance that the Company will be able to continue to compete successfully or that the level of
competition and pressure on pricing will not affect the Company’s margins.
Access to Credit Facilities and Debt Capital Markets
The Company and its customers require reasonable access to credit facilities and debt capital markets as an important
source of liquidity. Global economic events, outside the control of the Company or its customers, may restrict or reduce
the access to credit facilities and debt capital markets. Tightening credit markets may reduce the funds available to the
Company’s customers for paying accounts receivable balances and may also result in reduced levels of demand for the
Company’s services. Additionally, the Company relies on access to credit facilities, along with its reserves of cash and
cash flow from operating activities, to meet its obligations and finance operating activities. The Company believes it has
adequate bank credit facilities to provide liquidity.
Changes in Laws and Regulations
The Company and its customers are subject to numerous laws and regulations governing its operations and the
exploration and development of oil and natural gas, including environmental regulations. Existing and expected
environmental legislation and regulations may increase the costs associated with providing oilfield services, as the
Company may be required to incur additional operating costs or capital expenditures in order to comply with any new
regulations. The costs of complying with increased environmental and other regulatory changes in the future, such as
royalty regime changes, changes to taxation regimes and changes to international trade agreements, may also have
an adverse effect on the cash flows of the Company’s customers and may dampen demand for oilfield services provided
by the Company.
Foreign Operations
The Company provides oilfield services throughout much of North America and internationally in a number of onshore
drilling areas. The Canadian, United States, and Australian regulatory regimes are generally stable and, typically,
supportive of energy industry activity. Internationally, the Company's operations are subject to regulations in various
jurisdictions and support for the oil and natural gas industry can vary in these jurisdictions. There are risks inherent in
foreign operations such as unstable government regimes, civil and/or labor unrest, strikes, terrorist threats, regulatory
uncertainty and complex commercial arrangements. Risks to the Company's operations include, but are not limited to,
loss of revenue, expropriation and nationalization, restrictions on repatriation of income or capital, currency exchange
restrictions, contract deprivation, force majeure events and the potential for trade and economic sanctions or other
restrictions to be imposed by the Canadian government or other governments or organizations. To mitigate these risks,
the Company seeks to negotiate long-term service contracts for drilling services that ideally include early termination
provisions and other clauses for the Company's protection. However, there is, and there can be, no assurance that the
Company will be fully effective in mitigating foreign operation risks. Such risks could have material adverse impacts on
the Company's financial condition and operating results.
Foreign Exchange Exposure
The Company’s consolidated financial statements are presented in Canadian dollars. Operations in countries outside
of Canada result in foreign exchange risk to the Company. The principal foreign exchange risk relates to the conversion
of United States dollar-denominated activity to Canadian dollars. The United States/Canadian dollar exchange rate at
December 31, 2018 was approximately 1.36 compared with 1.26 at December 31, 2017 and 1.34 at December 31, 2016.
Fluctuations in the future period's exchange rates will impact the Canadian dollar equivalent of the results reported by
foreign subsidiaries.
Litigation and Legal Proceedings
From time to time, the Company is subject to litigation and legal proceedings that may include employment, tort,
commercial and class action suits. Amounts claimed in such suits or actions may be material and accordingly decisions
against the Company could have an adverse effect on the Company’s financial condition or results of operations.
Operating Risks and Insurance
The Company’s operations are subject to risks inherent in the oilfield services industry. Where available and cost-
effective, the Company carries insurance to cover the risk to its equipment and people, and each year the Company
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
21
reviews the level of insurance for adequacy. Although the Company believes its level of insurance coverage to be
adequate, there can be no assurance that the level of insurance carried by the Company will be sufficient to cover all
potential liabilities.
Technology
As a result of growing technical demands of resource plays, the Company’s ability to meet customer demands is
dependent on continuous improvement to the performance and efficiency of existing oilfield services equipment. There
can be no assurance that competitors will not achieve technological advantages over the Company.
Reliance on Key Management Personnel
The success and growth of the Company is dependent upon its key management personnel. The loss of services of
such persons could have a material adverse effect on the business and operations of the Company. No assurance can
be provided that the Company will be able to retain or attract key management members.
Workforce
The Company’s operations are dependent on attracting, developing and maintaining a skilled workforce. During periods
of peak activity levels, the Company may be faced with a lack of personnel to operate its equipment. The Company is
also faced with the challenge of retaining its most experienced employees during periods of low utilization, while
maintaining a cost structure that varies with activity levels. To mitigate these risks, the Company has developed an
employee recruitment and training program, and continues to focus on creating a work environment that is safe for its
employees.
Seasonality and Weather
The Company’s Canadian oilfield services operations are impacted by weather conditions that hinder the Company’s
ability to move heavy equipment. The timing and duration of “spring break-up”, during which time the Company is
prohibited from moving heavy equipment on secondary roads, restricts movement of equipment in and out of certain
areas, thereby negatively impacting equipment utilization levels. Further, the Company’s activities in certain areas in
northern Canada are restricted to winter months when the ground is frozen solid enough to support the Company’s
equipment. This seasonality is reflected in the Company’s operating results, as rig utilization is normally at its lowest
during the second and third quarters of the year. The Company continues to mitigate the impact of Canadian weather
conditions through expansion into markets not subject to the same seasonality and by working with customers in planning
the timing of their drilling programs. In addition, volatility in the weather across all areas of the Company’s operations
can create additional risk and unpredictability in equipment utilization rates and operating results.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
22
MANAGEMENT'S REPORT
The consolidated financial statements and other information contained in the annual report are the responsibility of the
management of the Company. The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards consistently applied, using management’s best estimates and judgments,
where appropriate.
Preparation of financial statements is an integral part of management’s broader responsibilities for the ongoing operations
of the Company. Management maintains a system of internal accounting controls to ensure that properly approved
transactions are accurately recorded on a timely basis and result in reliable financial statements. The Company’s external
auditors are appointed by the shareholders. They independently perform the necessary tests of the Company’s accounting
records and procedures to enable them to express an opinion as to the fairness of the consolidated financial statements,
in conformity with International Financial Reporting Standards.
The Audit Committee, which is comprised of independent directors, meets with management and the Company’s external
auditors to review the consolidated financial statements and reports on them to the Board of Directors. The consolidated
financial statements have been approved by the Board of Directors.
"Signed"
Robert H. Geddes
President and Chief Operating Officer
"Signed"
Michael Gray
Chief Financial Officer
March 7, 2019
President and Chief Operating Officer
"Signed"
Michael Gray
Chief Financial Officer
March 1, 2018
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
23
(cid:47)(cid:84)(cid:74)(cid:75)(cid:86)(cid:75)(cid:84)(cid:74)(cid:75)(cid:84)(cid:90)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:85)(cid:88)(cid:120)(cid:89)(cid:5)(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:5)
(cid:58)(cid:85)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:57)(cid:78)(cid:71)(cid:88)(cid:75)(cid:78)(cid:85)(cid:82)(cid:74)(cid:75)(cid:88)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:43)(cid:84)(cid:89)(cid:79)(cid:77)(cid:84)(cid:5)(cid:43)(cid:84)(cid:75)(cid:88)(cid:77)(cid:95)(cid:5)(cid:57)(cid:75)(cid:88)(cid:92)(cid:79)(cid:73)(cid:75)(cid:89)(cid:5)(cid:47)(cid:84)(cid:73)(cid:19)(cid:5)
(cid:53)(cid:91)(cid:88)(cid:5)(cid:85)(cid:86)(cid:79)(cid:84)(cid:79)(cid:85)(cid:84)(cid:5)
(cid:47)(cid:84)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:85)(cid:86)(cid:79)(cid:84)(cid:79)(cid:85)(cid:84)(cid:17)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:73)(cid:73)(cid:85)(cid:83)(cid:86)(cid:71)(cid:84)(cid:95)(cid:79)(cid:84)(cid:77)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:86)(cid:88)(cid:75)(cid:89)(cid:75)(cid:84)(cid:90)(cid:5)(cid:76)(cid:71)(cid:79)(cid:88)(cid:82)(cid:95)(cid:17)(cid:5)(cid:79)(cid:84)(cid:5)(cid:71)(cid:82)(cid:82)(cid:5)(cid:83)(cid:71)(cid:90)(cid:75)(cid:88)(cid:79)(cid:71)(cid:82)(cid:5)(cid:88)(cid:75)(cid:89)(cid:86)(cid:75)(cid:73)(cid:90)(cid:89)(cid:17)(cid:5)
(cid:90)(cid:78)(cid:75)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:86)(cid:85)(cid:89)(cid:79)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:85)(cid:76)(cid:5)(cid:43)(cid:84)(cid:89)(cid:79)(cid:77)(cid:84)(cid:5)(cid:43)(cid:84)(cid:75)(cid:88)(cid:77)(cid:95)(cid:5)(cid:57)(cid:75)(cid:88)(cid:92)(cid:79)(cid:73)(cid:75)(cid:89)(cid:5)(cid:47)(cid:84)(cid:73)(cid:19)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:79)(cid:90)(cid:89)(cid:5)(cid:89)(cid:91)(cid:72)(cid:89)(cid:79)(cid:74)(cid:79)(cid:71)(cid:88)(cid:79)(cid:75)(cid:89)(cid:5)(cid:13)(cid:90)(cid:85)(cid:77)(cid:75)(cid:90)(cid:78)(cid:75)(cid:88)(cid:17)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:41)(cid:85)(cid:83)(cid:86)(cid:71)(cid:84)(cid:95)(cid:14)(cid:5)(cid:71)(cid:89)(cid:5)(cid:71)(cid:90)(cid:5)
(cid:42)(cid:75)(cid:73)(cid:75)(cid:83)(cid:72)(cid:75)(cid:88)(cid:5)(cid:24)(cid:22)(cid:17)(cid:5)(cid:23)(cid:21)(cid:22)(cid:29)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:23)(cid:21)(cid:22)(cid:28)(cid:17)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:79)(cid:90)(cid:89)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:86)(cid:75)(cid:88)(cid:76)(cid:85)(cid:88)(cid:83)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:79)(cid:90)(cid:89)(cid:5)(cid:73)(cid:71)(cid:89)(cid:78)(cid:5)(cid:76)(cid:82)(cid:85)(cid:93)(cid:89)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:95)(cid:75)(cid:71)(cid:88)(cid:89)(cid:5)(cid:90)(cid:78)(cid:75)(cid:84)(cid:5)(cid:75)(cid:84)(cid:74)(cid:75)(cid:74)(cid:5)(cid:79)(cid:84)(cid:5)
(cid:71)(cid:73)(cid:73)(cid:85)(cid:88)(cid:74)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:47)(cid:84)(cid:90)(cid:75)(cid:88)(cid:84)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:71)(cid:82)(cid:5)(cid:44)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:56)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)(cid:57)(cid:90)(cid:71)(cid:84)(cid:74)(cid:71)(cid:88)(cid:74)(cid:89)(cid:5)(cid:13)(cid:47)(cid:44)(cid:56)(cid:57)(cid:14)(cid:19)(cid:5)
(cid:61)(cid:78)(cid:71)(cid:90)(cid:5)(cid:93)(cid:75)(cid:5)(cid:78)(cid:71)(cid:92)(cid:75)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:75)(cid:74)(cid:5)
(cid:58)(cid:78)(cid:75)(cid:5)(cid:41)(cid:85)(cid:83)(cid:86)(cid:71)(cid:84)(cid:95)(cid:120)(cid:89)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:73)(cid:85)(cid:83)(cid:86)(cid:88)(cid:79)(cid:89)(cid:75)(cid:32)(cid:5)
(cid:6)
(cid:6)
(cid:6)
(cid:6)
(cid:6)
(cid:6)
(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:86)(cid:85)(cid:89)(cid:79)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:71)(cid:89)(cid:5)(cid:71)(cid:90)(cid:5)(cid:42)(cid:75)(cid:73)(cid:75)(cid:83)(cid:72)(cid:75)(cid:88)(cid:5)(cid:24)(cid:22)(cid:17)(cid:5)(cid:23)(cid:21)(cid:22)(cid:29)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:23)(cid:21)(cid:22)(cid:28)(cid:33)(cid:5)
(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:79)(cid:84)(cid:73)(cid:85)(cid:83)(cid:75)(cid:5)(cid:13)(cid:82)(cid:85)(cid:89)(cid:89)(cid:14)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:95)(cid:75)(cid:71)(cid:88)(cid:89)(cid:5)(cid:90)(cid:78)(cid:75)(cid:84)(cid:5)(cid:75)(cid:84)(cid:74)(cid:75)(cid:74)(cid:33)(cid:5)
(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:73)(cid:85)(cid:83)(cid:86)(cid:88)(cid:75)(cid:78)(cid:75)(cid:84)(cid:89)(cid:79)(cid:92)(cid:75)(cid:5)(cid:79)(cid:84)(cid:73)(cid:85)(cid:83)(cid:75)(cid:5)(cid:13)(cid:82)(cid:85)(cid:89)(cid:89)(cid:14)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:95)(cid:75)(cid:71)(cid:88)(cid:89)(cid:5)(cid:90)(cid:78)(cid:75)(cid:84)(cid:5)(cid:75)(cid:84)(cid:74)(cid:75)(cid:74)(cid:33)(cid:5)
(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:73)(cid:78)(cid:71)(cid:84)(cid:77)(cid:75)(cid:89)(cid:5)(cid:79)(cid:84)(cid:5)(cid:75)(cid:87)(cid:91)(cid:79)(cid:90)(cid:95)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:95)(cid:75)(cid:71)(cid:88)(cid:89)(cid:5)(cid:90)(cid:78)(cid:75)(cid:84)(cid:5)(cid:75)(cid:84)(cid:74)(cid:75)(cid:74)(cid:33)(cid:5)
(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:73)(cid:71)(cid:89)(cid:78)(cid:5)(cid:76)(cid:82)(cid:85)(cid:93)(cid:89)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:95)(cid:75)(cid:71)(cid:88)(cid:89)(cid:5)(cid:90)(cid:78)(cid:75)(cid:84)(cid:5)(cid:75)(cid:84)(cid:74)(cid:75)(cid:74)(cid:33)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)
(cid:90)(cid:78)(cid:75)(cid:5)(cid:84)(cid:85)(cid:90)(cid:75)(cid:89)(cid:5)(cid:90)(cid:85)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:17)(cid:5)(cid:93)(cid:78)(cid:79)(cid:73)(cid:78)(cid:5)(cid:79)(cid:84)(cid:73)(cid:82)(cid:91)(cid:74)(cid:75)(cid:5)(cid:71)(cid:5)(cid:89)(cid:91)(cid:83)(cid:83)(cid:71)(cid:88)(cid:95)(cid:5)(cid:85)(cid:76)(cid:5)(cid:89)(cid:79)(cid:77)(cid:84)(cid:79)(cid:76)(cid:79)(cid:73)(cid:71)(cid:84)(cid:90)(cid:5)
(cid:71)(cid:73)(cid:73)(cid:85)(cid:91)(cid:84)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)(cid:86)(cid:85)(cid:82)(cid:79)(cid:73)(cid:79)(cid:75)(cid:89)(cid:19)(cid:5)
(cid:40)(cid:71)(cid:89)(cid:79)(cid:89)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:85)(cid:86)(cid:79)(cid:84)(cid:79)(cid:85)(cid:84)(cid:5)
(cid:61)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:74)(cid:91)(cid:73)(cid:90)(cid:75)(cid:74)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:79)(cid:84)(cid:5)(cid:71)(cid:73)(cid:73)(cid:85)(cid:88)(cid:74)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:41)(cid:71)(cid:84)(cid:71)(cid:74)(cid:79)(cid:71)(cid:84)(cid:5)(cid:77)(cid:75)(cid:84)(cid:75)(cid:88)(cid:71)(cid:82)(cid:82)(cid:95)(cid:5)(cid:71)(cid:73)(cid:73)(cid:75)(cid:86)(cid:90)(cid:75)(cid:74)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)(cid:89)(cid:90)(cid:71)(cid:84)(cid:74)(cid:71)(cid:88)(cid:74)(cid:89)(cid:19)(cid:5)(cid:53)(cid:91)(cid:88)(cid:5)
(cid:88)(cid:75)(cid:89)(cid:86)(cid:85)(cid:84)(cid:89)(cid:79)(cid:72)(cid:79)(cid:82)(cid:79)(cid:90)(cid:79)(cid:75)(cid:89)(cid:5)(cid:91)(cid:84)(cid:74)(cid:75)(cid:88)(cid:5)(cid:90)(cid:78)(cid:85)(cid:89)(cid:75)(cid:5)(cid:89)(cid:90)(cid:71)(cid:84)(cid:74)(cid:71)(cid:88)(cid:74)(cid:89)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)(cid:76)(cid:91)(cid:88)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:74)(cid:75)(cid:89)(cid:73)(cid:88)(cid:79)(cid:72)(cid:75)(cid:74)(cid:5)(cid:79)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:39)(cid:91)(cid:74)(cid:79)(cid:90)(cid:85)(cid:88)(cid:120)(cid:89)(cid:5)(cid:88)(cid:75)(cid:89)(cid:86)(cid:85)(cid:84)(cid:89)(cid:79)(cid:72)(cid:79)(cid:82)(cid:79)(cid:90)(cid:79)(cid:75)(cid:89)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)
(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:89)(cid:75)(cid:73)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:85)(cid:76)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:19)(cid:5)
(cid:61)(cid:75)(cid:5)(cid:72)(cid:75)(cid:82)(cid:79)(cid:75)(cid:92)(cid:75)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:75)(cid:92)(cid:79)(cid:74)(cid:75)(cid:84)(cid:73)(cid:75)(cid:5)(cid:93)(cid:75)(cid:5)(cid:78)(cid:71)(cid:92)(cid:75)(cid:5)(cid:85)(cid:72)(cid:90)(cid:71)(cid:79)(cid:84)(cid:75)(cid:74)(cid:5)(cid:79)(cid:89)(cid:5)(cid:89)(cid:91)(cid:76)(cid:76)(cid:79)(cid:73)(cid:79)(cid:75)(cid:84)(cid:90)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:71)(cid:86)(cid:86)(cid:88)(cid:85)(cid:86)(cid:88)(cid:79)(cid:71)(cid:90)(cid:75)(cid:5)(cid:90)(cid:85)(cid:5)(cid:86)(cid:88)(cid:85)(cid:92)(cid:79)(cid:74)(cid:75)(cid:5)(cid:71)(cid:5)(cid:72)(cid:71)(cid:89)(cid:79)(cid:89)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)
(cid:85)(cid:86)(cid:79)(cid:84)(cid:79)(cid:85)(cid:84)(cid:19)(cid:5)
(cid:47)(cid:84)(cid:74)(cid:75)(cid:86)(cid:75)(cid:84)(cid:74)(cid:75)(cid:84)(cid:73)(cid:75)(cid:5)
(cid:61)(cid:75)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)(cid:79)(cid:84)(cid:74)(cid:75)(cid:86)(cid:75)(cid:84)(cid:74)(cid:75)(cid:84)(cid:90)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:41)(cid:85)(cid:83)(cid:86)(cid:71)(cid:84)(cid:95)(cid:5)(cid:79)(cid:84)(cid:5)(cid:71)(cid:73)(cid:73)(cid:85)(cid:88)(cid:74)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:75)(cid:90)(cid:78)(cid:79)(cid:73)(cid:71)(cid:82)(cid:5)(cid:88)(cid:75)(cid:87)(cid:91)(cid:79)(cid:88)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)(cid:88)(cid:75)(cid:82)(cid:75)(cid:92)(cid:71)(cid:84)(cid:90)(cid:5)(cid:90)(cid:85)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)
(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:79)(cid:84)(cid:5)(cid:41)(cid:71)(cid:84)(cid:71)(cid:74)(cid:71)(cid:19)(cid:5)(cid:61)(cid:75)(cid:5)(cid:78)(cid:71)(cid:92)(cid:75)(cid:5)(cid:76)(cid:91)(cid:82)(cid:76)(cid:79)(cid:82)(cid:82)(cid:75)(cid:74)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:85)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:75)(cid:90)(cid:78)(cid:79)(cid:73)(cid:71)(cid:82)(cid:5)
(cid:88)(cid:75)(cid:89)(cid:86)(cid:85)(cid:84)(cid:89)(cid:79)(cid:72)(cid:79)(cid:82)(cid:79)(cid:90)(cid:79)(cid:75)(cid:89)(cid:5)(cid:79)(cid:84)(cid:5)(cid:71)(cid:73)(cid:73)(cid:85)(cid:88)(cid:74)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:90)(cid:78)(cid:75)(cid:89)(cid:75)(cid:5)(cid:88)(cid:75)(cid:87)(cid:91)(cid:79)(cid:88)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:19)(cid:5)
(cid:53)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:79)(cid:84)(cid:76)(cid:85)(cid:88)(cid:83)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)
(cid:51)(cid:71)(cid:84)(cid:71)(cid:77)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:79)(cid:89)(cid:5)(cid:88)(cid:75)(cid:89)(cid:86)(cid:85)(cid:84)(cid:89)(cid:79)(cid:72)(cid:82)(cid:75)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:85)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:79)(cid:84)(cid:76)(cid:85)(cid:88)(cid:83)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:19)(cid:5)(cid:58)(cid:78)(cid:75)(cid:5)(cid:85)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:79)(cid:84)(cid:76)(cid:85)(cid:88)(cid:83)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:73)(cid:85)(cid:83)(cid:86)(cid:88)(cid:79)(cid:89)(cid:75)(cid:89)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:51)(cid:71)(cid:84)(cid:71)(cid:77)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:12)(cid:89)(cid:5)
(cid:42)(cid:79)(cid:89)(cid:73)(cid:91)(cid:89)(cid:89)(cid:79)(cid:85)(cid:84)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:39)(cid:84)(cid:71)(cid:82)(cid:95)(cid:89)(cid:79)(cid:89)(cid:17)(cid:5)(cid:93)(cid:78)(cid:79)(cid:73)(cid:78)(cid:5)(cid:93)(cid:75)(cid:5)(cid:85)(cid:72)(cid:90)(cid:71)(cid:79)(cid:84)(cid:75)(cid:74)(cid:5)(cid:86)(cid:88)(cid:79)(cid:85)(cid:88)(cid:5)(cid:90)(cid:85)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:74)(cid:71)(cid:90)(cid:75)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:79)(cid:89)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:85)(cid:88)(cid:120)(cid:89)(cid:5)(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:79)(cid:84)(cid:76)(cid:85)(cid:88)(cid:83)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:17)(cid:5)
(cid:85)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:90)(cid:78)(cid:71)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:85)(cid:88)(cid:12)(cid:89)(cid:5)(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:5)(cid:90)(cid:78)(cid:75)(cid:88)(cid:75)(cid:85)(cid:84)(cid:17)(cid:5)(cid:79)(cid:84)(cid:73)(cid:82)(cid:91)(cid:74)(cid:75)(cid:74)(cid:5)(cid:79)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:84)(cid:84)(cid:91)(cid:71)(cid:82)(cid:5)
(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:17)(cid:5)(cid:93)(cid:78)(cid:79)(cid:73)(cid:78)(cid:5)(cid:79)(cid:89)(cid:5)(cid:75)(cid:94)(cid:86)(cid:75)(cid:73)(cid:90)(cid:75)(cid:74)(cid:5)(cid:90)(cid:85)(cid:5)(cid:72)(cid:75)(cid:5)(cid:83)(cid:71)(cid:74)(cid:75)(cid:5)(cid:71)(cid:92)(cid:71)(cid:79)(cid:82)(cid:71)(cid:72)(cid:82)(cid:75)(cid:5)(cid:90)(cid:85)(cid:5)(cid:91)(cid:89)(cid:5)(cid:71)(cid:76)(cid:90)(cid:75)(cid:88)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:74)(cid:71)(cid:90)(cid:75)(cid:19)(cid:5)
(cid:54)(cid:88)(cid:79)(cid:73)(cid:75)(cid:93)(cid:71)(cid:90)(cid:75)(cid:88)(cid:78)(cid:85)(cid:91)(cid:89)(cid:75)(cid:41)(cid:85)(cid:85)(cid:86)(cid:75)(cid:88)(cid:89)(cid:5)(cid:50)(cid:50)(cid:54)(cid:5)
(cid:22)(cid:22)(cid:22)(cid:18)(cid:26)(cid:90)(cid:78)(cid:5)(cid:39)(cid:92)(cid:75)(cid:84)(cid:91)(cid:75)(cid:5)(cid:57)(cid:61)(cid:17)(cid:5)(cid:57)(cid:91)(cid:79)(cid:90)(cid:75)(cid:5)(cid:24)(cid:22)(cid:21)(cid:21)(cid:17)(cid:5)(cid:41)(cid:71)(cid:82)(cid:77)(cid:71)(cid:88)(cid:95)(cid:17)(cid:5)(cid:39)(cid:82)(cid:72)(cid:75)(cid:88)(cid:90)(cid:71)(cid:17)(cid:5)(cid:41)(cid:71)(cid:84)(cid:71)(cid:74)(cid:71)(cid:5)(cid:58)(cid:23)(cid:54)(cid:5)(cid:26)(cid:50)(cid:24)(cid:5)
(cid:58)(cid:32)(cid:5)(cid:16)(cid:22)(cid:5)(cid:25)(cid:21)(cid:24)(cid:5)(cid:26)(cid:21)(cid:31)(cid:5)(cid:28)(cid:26)(cid:21)(cid:21)(cid:17)(cid:5)(cid:44)(cid:32)(cid:5)(cid:16)(cid:22)(cid:5)(cid:25)(cid:21)(cid:24)(cid:5)(cid:28)(cid:29)(cid:22)(cid:5)(cid:22)(cid:29)(cid:23)(cid:26)(cid:5)
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
24
(cid:53)(cid:91)(cid:88)(cid:5)(cid:85)(cid:86)(cid:79)(cid:84)(cid:79)(cid:85)(cid:84)(cid:5)(cid:85)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:74)(cid:85)(cid:75)(cid:89)(cid:5)(cid:84)(cid:85)(cid:90)(cid:5)(cid:73)(cid:85)(cid:92)(cid:75)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:85)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:79)(cid:84)(cid:76)(cid:85)(cid:88)(cid:83)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:93)(cid:75)(cid:5)(cid:74)(cid:85)(cid:5)(cid:84)(cid:85)(cid:90)(cid:5)
(cid:71)(cid:84)(cid:74)(cid:5)(cid:93)(cid:79)(cid:82)(cid:82)(cid:5)(cid:84)(cid:85)(cid:90)(cid:5)(cid:75)(cid:94)(cid:86)(cid:88)(cid:75)(cid:89)(cid:89)(cid:5)(cid:71)(cid:84)(cid:5)(cid:85)(cid:86)(cid:79)(cid:84)(cid:79)(cid:85)(cid:84)(cid:5)(cid:85)(cid:88)(cid:5)(cid:71)(cid:84)(cid:95)(cid:5)(cid:76)(cid:85)(cid:88)(cid:83)(cid:5)(cid:85)(cid:76)(cid:5)(cid:71)(cid:89)(cid:89)(cid:91)(cid:88)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:73)(cid:82)(cid:91)(cid:89)(cid:79)(cid:85)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:88)(cid:75)(cid:85)(cid:84)(cid:19)(cid:5)
(cid:47)(cid:84)(cid:5)(cid:73)(cid:85)(cid:84)(cid:84)(cid:75)(cid:73)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:17)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:88)(cid:75)(cid:89)(cid:86)(cid:85)(cid:84)(cid:89)(cid:79)(cid:72)(cid:79)(cid:82)(cid:79)(cid:90)(cid:95)(cid:5)(cid:79)(cid:89)(cid:5)(cid:90)(cid:85)(cid:5)(cid:88)(cid:75)(cid:71)(cid:74)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)
(cid:85)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:79)(cid:84)(cid:76)(cid:85)(cid:88)(cid:83)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:79)(cid:74)(cid:75)(cid:84)(cid:90)(cid:79)(cid:76)(cid:79)(cid:75)(cid:74)(cid:5)(cid:71)(cid:72)(cid:85)(cid:92)(cid:75)(cid:5)(cid:71)(cid:84)(cid:74)(cid:17)(cid:5)(cid:79)(cid:84)(cid:5)(cid:74)(cid:85)(cid:79)(cid:84)(cid:77)(cid:5)(cid:89)(cid:85)(cid:17)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:79)(cid:74)(cid:75)(cid:88)(cid:5)(cid:93)(cid:78)(cid:75)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:85)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:79)(cid:84)(cid:76)(cid:85)(cid:88)(cid:83)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:79)(cid:89)(cid:5)(cid:83)(cid:71)(cid:90)(cid:75)(cid:88)(cid:79)(cid:71)(cid:82)(cid:82)(cid:95)(cid:5)
(cid:79)(cid:84)(cid:73)(cid:85)(cid:84)(cid:89)(cid:79)(cid:89)(cid:90)(cid:75)(cid:84)(cid:90)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:85)(cid:88)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:81)(cid:84)(cid:85)(cid:93)(cid:82)(cid:75)(cid:74)(cid:77)(cid:75)(cid:5)(cid:85)(cid:72)(cid:90)(cid:71)(cid:79)(cid:84)(cid:75)(cid:74)(cid:5)(cid:79)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:17)(cid:5)(cid:85)(cid:88)(cid:5)
(cid:85)(cid:90)(cid:78)(cid:75)(cid:88)(cid:93)(cid:79)(cid:89)(cid:75)(cid:5)(cid:71)(cid:86)(cid:86)(cid:75)(cid:71)(cid:88)(cid:89)(cid:5)(cid:90)(cid:85)(cid:5)(cid:72)(cid:75)(cid:5)(cid:83)(cid:71)(cid:90)(cid:75)(cid:88)(cid:79)(cid:71)(cid:82)(cid:82)(cid:95)(cid:5)(cid:83)(cid:79)(cid:89)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:74)(cid:19)(cid:5)
(cid:47)(cid:76)(cid:17)(cid:5)(cid:72)(cid:71)(cid:89)(cid:75)(cid:74)(cid:5)(cid:85)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:93)(cid:85)(cid:88)(cid:81)(cid:5)(cid:93)(cid:75)(cid:5)(cid:78)(cid:71)(cid:92)(cid:75)(cid:5)(cid:86)(cid:75)(cid:88)(cid:76)(cid:85)(cid:88)(cid:83)(cid:75)(cid:74)(cid:5)(cid:85)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:85)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:79)(cid:84)(cid:76)(cid:85)(cid:88)(cid:83)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:93)(cid:75)(cid:5)(cid:85)(cid:72)(cid:90)(cid:71)(cid:79)(cid:84)(cid:75)(cid:74)(cid:5)(cid:86)(cid:88)(cid:79)(cid:85)(cid:88)(cid:5)(cid:90)(cid:85)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:74)(cid:71)(cid:90)(cid:75)(cid:5)(cid:85)(cid:76)(cid:5)
(cid:90)(cid:78)(cid:79)(cid:89)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:85)(cid:88)(cid:120)(cid:89)(cid:5)(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:17)(cid:5)(cid:93)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:73)(cid:82)(cid:91)(cid:74)(cid:75)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:90)(cid:78)(cid:75)(cid:88)(cid:75)(cid:5)(cid:79)(cid:89)(cid:5)(cid:71)(cid:5)(cid:83)(cid:71)(cid:90)(cid:75)(cid:88)(cid:79)(cid:71)(cid:82)(cid:5)(cid:83)(cid:79)(cid:89)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:79)(cid:89)(cid:5)(cid:85)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:79)(cid:84)(cid:76)(cid:85)(cid:88)(cid:83)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:17)(cid:5)(cid:93)(cid:75)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)
(cid:88)(cid:75)(cid:87)(cid:91)(cid:79)(cid:88)(cid:75)(cid:74)(cid:5)(cid:90)(cid:85)(cid:5)(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:76)(cid:71)(cid:73)(cid:90)(cid:19)(cid:5)(cid:61)(cid:75)(cid:5)(cid:78)(cid:71)(cid:92)(cid:75)(cid:5)(cid:84)(cid:85)(cid:90)(cid:78)(cid:79)(cid:84)(cid:77)(cid:5)(cid:90)(cid:85)(cid:5)(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:5)(cid:79)(cid:84)(cid:5)(cid:90)(cid:78)(cid:79)(cid:89)(cid:5)(cid:88)(cid:75)(cid:77)(cid:71)(cid:88)(cid:74)(cid:19)(cid:5)(cid:61)(cid:78)(cid:75)(cid:84)(cid:5)(cid:93)(cid:75)(cid:5)(cid:88)(cid:75)(cid:71)(cid:74)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:79)(cid:84)(cid:76)(cid:85)(cid:88)(cid:83)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:17)(cid:5)(cid:85)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)
(cid:90)(cid:78)(cid:71)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:85)(cid:88)(cid:12)(cid:89)(cid:5)(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:5)(cid:90)(cid:78)(cid:75)(cid:88)(cid:75)(cid:85)(cid:84)(cid:17)(cid:5)(cid:79)(cid:84)(cid:73)(cid:82)(cid:91)(cid:74)(cid:75)(cid:74)(cid:5)(cid:79)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:84)(cid:84)(cid:91)(cid:71)(cid:82)(cid:5)(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:17)(cid:5)
(cid:79)(cid:76)(cid:5)(cid:93)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:73)(cid:82)(cid:91)(cid:74)(cid:75)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:90)(cid:78)(cid:75)(cid:88)(cid:75)(cid:5)(cid:79)(cid:89)(cid:5)(cid:71)(cid:5)(cid:83)(cid:71)(cid:90)(cid:75)(cid:88)(cid:79)(cid:71)(cid:82)(cid:5)(cid:83)(cid:79)(cid:89)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:90)(cid:78)(cid:75)(cid:88)(cid:75)(cid:79)(cid:84)(cid:17)(cid:5)(cid:93)(cid:75)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)(cid:88)(cid:75)(cid:87)(cid:91)(cid:79)(cid:88)(cid:75)(cid:74)(cid:5)(cid:90)(cid:85)(cid:5)(cid:73)(cid:85)(cid:83)(cid:83)(cid:91)(cid:84)(cid:79)(cid:73)(cid:71)(cid:90)(cid:75)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:83)(cid:71)(cid:90)(cid:90)(cid:75)(cid:88)(cid:5)(cid:90)(cid:85)(cid:5)
(cid:90)(cid:78)(cid:85)(cid:89)(cid:75)(cid:5)(cid:73)(cid:78)(cid:71)(cid:88)(cid:77)(cid:75)(cid:74)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:77)(cid:85)(cid:92)(cid:75)(cid:88)(cid:84)(cid:71)(cid:84)(cid:73)(cid:75)(cid:19)(cid:5)
(cid:56)(cid:75)(cid:89)(cid:86)(cid:85)(cid:84)(cid:89)(cid:79)(cid:72)(cid:79)(cid:82)(cid:79)(cid:90)(cid:79)(cid:75)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:83)(cid:71)(cid:84)(cid:71)(cid:77)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:90)(cid:78)(cid:85)(cid:89)(cid:75)(cid:5)(cid:73)(cid:78)(cid:71)(cid:88)(cid:77)(cid:75)(cid:74)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:77)(cid:85)(cid:92)(cid:75)(cid:88)(cid:84)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)
(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)
(cid:51)(cid:71)(cid:84)(cid:71)(cid:77)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:79)(cid:89)(cid:5)(cid:88)(cid:75)(cid:89)(cid:86)(cid:85)(cid:84)(cid:89)(cid:79)(cid:72)(cid:82)(cid:75)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:86)(cid:88)(cid:75)(cid:86)(cid:71)(cid:88)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:76)(cid:71)(cid:79)(cid:88)(cid:5)(cid:86)(cid:88)(cid:75)(cid:89)(cid:75)(cid:84)(cid:90)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)
(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:79)(cid:84)(cid:5)(cid:71)(cid:73)(cid:73)(cid:85)(cid:88)(cid:74)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:47)(cid:44)(cid:56)(cid:57)(cid:17)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:89)(cid:91)(cid:73)(cid:78)(cid:5)(cid:79)(cid:84)(cid:90)(cid:75)(cid:88)(cid:84)(cid:71)(cid:82)(cid:5)(cid:73)(cid:85)(cid:84)(cid:90)(cid:88)(cid:85)(cid:82)(cid:5)(cid:71)(cid:89)(cid:5)(cid:83)(cid:71)(cid:84)(cid:71)(cid:77)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:74)(cid:75)(cid:90)(cid:75)(cid:88)(cid:83)(cid:79)(cid:84)(cid:75)(cid:89)(cid:5)(cid:79)(cid:89)(cid:5)(cid:84)(cid:75)(cid:73)(cid:75)(cid:89)(cid:89)(cid:71)(cid:88)(cid:95)(cid:5)
(cid:90)(cid:85)(cid:5)(cid:75)(cid:84)(cid:71)(cid:72)(cid:82)(cid:75)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:86)(cid:88)(cid:75)(cid:86)(cid:71)(cid:88)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:85)(cid:76)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)(cid:76)(cid:88)(cid:75)(cid:75)(cid:5)(cid:76)(cid:88)(cid:85)(cid:83)(cid:5)(cid:83)(cid:71)(cid:90)(cid:75)(cid:88)(cid:79)(cid:71)(cid:82)(cid:5)(cid:83)(cid:79)(cid:89)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:17)(cid:5)
(cid:93)(cid:78)(cid:75)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:74)(cid:91)(cid:75)(cid:5)(cid:90)(cid:85)(cid:5)(cid:76)(cid:88)(cid:71)(cid:91)(cid:74)(cid:5)(cid:85)(cid:88)(cid:5)(cid:75)(cid:88)(cid:88)(cid:85)(cid:88)(cid:19)(cid:5)
(cid:47)(cid:84)(cid:5)(cid:86)(cid:88)(cid:75)(cid:86)(cid:71)(cid:88)(cid:79)(cid:84)(cid:77)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:17)(cid:5)(cid:83)(cid:71)(cid:84)(cid:71)(cid:77)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:79)(cid:89)(cid:5)(cid:88)(cid:75)(cid:89)(cid:86)(cid:85)(cid:84)(cid:89)(cid:79)(cid:72)(cid:82)(cid:75)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:71)(cid:89)(cid:89)(cid:75)(cid:89)(cid:89)(cid:79)(cid:84)(cid:77)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)
(cid:41)(cid:85)(cid:83)(cid:86)(cid:71)(cid:84)(cid:95)(cid:120)(cid:89)(cid:5)(cid:71)(cid:72)(cid:79)(cid:82)(cid:79)(cid:90)(cid:95)(cid:5)(cid:90)(cid:85)(cid:5)(cid:73)(cid:85)(cid:84)(cid:90)(cid:79)(cid:84)(cid:91)(cid:75)(cid:5)(cid:71)(cid:89)(cid:5)(cid:71)(cid:5)(cid:77)(cid:85)(cid:79)(cid:84)(cid:77)(cid:5)(cid:73)(cid:85)(cid:84)(cid:73)(cid:75)(cid:88)(cid:84)(cid:17)(cid:5)(cid:74)(cid:79)(cid:89)(cid:73)(cid:82)(cid:85)(cid:89)(cid:79)(cid:84)(cid:77)(cid:17)(cid:5)(cid:71)(cid:89)(cid:5)(cid:71)(cid:86)(cid:86)(cid:82)(cid:79)(cid:73)(cid:71)(cid:72)(cid:82)(cid:75)(cid:17)(cid:5)(cid:83)(cid:71)(cid:90)(cid:90)(cid:75)(cid:88)(cid:89)(cid:5)(cid:88)(cid:75)(cid:82)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:90)(cid:85)(cid:5)(cid:77)(cid:85)(cid:79)(cid:84)(cid:77)(cid:5)
(cid:73)(cid:85)(cid:84)(cid:73)(cid:75)(cid:88)(cid:84)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:91)(cid:89)(cid:79)(cid:84)(cid:77)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:77)(cid:85)(cid:79)(cid:84)(cid:77)(cid:5)(cid:73)(cid:85)(cid:84)(cid:73)(cid:75)(cid:88)(cid:84)(cid:5)(cid:72)(cid:71)(cid:89)(cid:79)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:71)(cid:73)(cid:73)(cid:85)(cid:91)(cid:84)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)(cid:91)(cid:84)(cid:82)(cid:75)(cid:89)(cid:89)(cid:5)(cid:83)(cid:71)(cid:84)(cid:71)(cid:77)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:75)(cid:79)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:79)(cid:84)(cid:90)(cid:75)(cid:84)(cid:74)(cid:89)(cid:5)(cid:90)(cid:85)(cid:5)(cid:82)(cid:79)(cid:87)(cid:91)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:5)
(cid:90)(cid:78)(cid:75)(cid:5)(cid:41)(cid:85)(cid:83)(cid:86)(cid:71)(cid:84)(cid:95)(cid:5)(cid:85)(cid:88)(cid:5)(cid:90)(cid:85)(cid:5)(cid:73)(cid:75)(cid:71)(cid:89)(cid:75)(cid:5)(cid:85)(cid:86)(cid:75)(cid:88)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:89)(cid:17)(cid:5)(cid:85)(cid:88)(cid:5)(cid:78)(cid:71)(cid:89)(cid:5)(cid:84)(cid:85)(cid:5)(cid:88)(cid:75)(cid:71)(cid:82)(cid:79)(cid:89)(cid:90)(cid:79)(cid:73)(cid:5)(cid:71)(cid:82)(cid:90)(cid:75)(cid:88)(cid:84)(cid:71)(cid:90)(cid:79)(cid:92)(cid:75)(cid:5)(cid:72)(cid:91)(cid:90)(cid:5)(cid:90)(cid:85)(cid:5)(cid:74)(cid:85)(cid:5)(cid:89)(cid:85)(cid:19)(cid:5)
(cid:58)(cid:78)(cid:85)(cid:89)(cid:75)(cid:5)(cid:73)(cid:78)(cid:71)(cid:88)(cid:77)(cid:75)(cid:74)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:77)(cid:85)(cid:92)(cid:75)(cid:88)(cid:84)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)(cid:88)(cid:75)(cid:89)(cid:86)(cid:85)(cid:84)(cid:89)(cid:79)(cid:72)(cid:82)(cid:75)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:85)(cid:92)(cid:75)(cid:88)(cid:89)(cid:75)(cid:75)(cid:79)(cid:84)(cid:77)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:41)(cid:85)(cid:83)(cid:86)(cid:71)(cid:84)(cid:95)(cid:120)(cid:89)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)(cid:86)(cid:88)(cid:85)(cid:73)(cid:75)(cid:89)(cid:89)(cid:19)(cid:5)(cid:5)
(cid:39)(cid:91)(cid:74)(cid:79)(cid:90)(cid:85)(cid:88)(cid:120)(cid:89)(cid:5)(cid:88)(cid:75)(cid:89)(cid:86)(cid:85)(cid:84)(cid:89)(cid:79)(cid:72)(cid:79)(cid:82)(cid:79)(cid:90)(cid:79)(cid:75)(cid:89)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)
(cid:53)(cid:91)(cid:88)(cid:5)(cid:85)(cid:72)(cid:80)(cid:75)(cid:73)(cid:90)(cid:79)(cid:92)(cid:75)(cid:89)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)(cid:90)(cid:85)(cid:5)(cid:85)(cid:72)(cid:90)(cid:71)(cid:79)(cid:84)(cid:5)(cid:88)(cid:75)(cid:71)(cid:89)(cid:85)(cid:84)(cid:71)(cid:72)(cid:82)(cid:75)(cid:5)(cid:71)(cid:89)(cid:89)(cid:91)(cid:88)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:71)(cid:72)(cid:85)(cid:91)(cid:90)(cid:5)(cid:93)(cid:78)(cid:75)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:71)(cid:89)(cid:5)
(cid:71)(cid:5)(cid:93)(cid:78)(cid:85)(cid:82)(cid:75)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)(cid:76)(cid:88)(cid:75)(cid:75)(cid:5)(cid:76)(cid:88)(cid:85)(cid:83)(cid:5)(cid:83)(cid:71)(cid:90)(cid:75)(cid:88)(cid:79)(cid:71)(cid:82)(cid:5)(cid:83)(cid:79)(cid:89)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:17)(cid:5)(cid:93)(cid:78)(cid:75)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:74)(cid:91)(cid:75)(cid:5)(cid:90)(cid:85)(cid:5)(cid:76)(cid:88)(cid:71)(cid:91)(cid:74)(cid:5)(cid:85)(cid:88)(cid:5)(cid:75)(cid:88)(cid:88)(cid:85)(cid:88)(cid:17)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:90)(cid:85)(cid:5)(cid:79)(cid:89)(cid:89)(cid:91)(cid:75)(cid:5)(cid:71)(cid:84)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:85)(cid:88)(cid:120)(cid:89)(cid:5)
(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:79)(cid:84)(cid:73)(cid:82)(cid:91)(cid:74)(cid:75)(cid:89)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:85)(cid:86)(cid:79)(cid:84)(cid:79)(cid:85)(cid:84)(cid:19)(cid:5)(cid:56)(cid:75)(cid:71)(cid:89)(cid:85)(cid:84)(cid:71)(cid:72)(cid:82)(cid:75)(cid:5)(cid:71)(cid:89)(cid:89)(cid:91)(cid:88)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:79)(cid:89)(cid:5)(cid:71)(cid:5)(cid:78)(cid:79)(cid:77)(cid:78)(cid:5)(cid:82)(cid:75)(cid:92)(cid:75)(cid:82)(cid:5)(cid:85)(cid:76)(cid:5)(cid:71)(cid:89)(cid:89)(cid:91)(cid:88)(cid:71)(cid:84)(cid:73)(cid:75)(cid:17)(cid:5)(cid:72)(cid:91)(cid:90)(cid:5)(cid:79)(cid:89)(cid:5)(cid:84)(cid:85)(cid:90)(cid:5)(cid:71)(cid:5)(cid:77)(cid:91)(cid:71)(cid:88)(cid:71)(cid:84)(cid:90)(cid:75)(cid:75)(cid:5)
(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:71)(cid:84)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:73)(cid:85)(cid:84)(cid:74)(cid:91)(cid:73)(cid:90)(cid:75)(cid:74)(cid:5)(cid:79)(cid:84)(cid:5)(cid:71)(cid:73)(cid:73)(cid:85)(cid:88)(cid:74)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:41)(cid:71)(cid:84)(cid:71)(cid:74)(cid:79)(cid:71)(cid:84)(cid:5)(cid:77)(cid:75)(cid:84)(cid:75)(cid:88)(cid:71)(cid:82)(cid:82)(cid:95)(cid:5)(cid:71)(cid:73)(cid:73)(cid:75)(cid:86)(cid:90)(cid:75)(cid:74)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)(cid:89)(cid:90)(cid:71)(cid:84)(cid:74)(cid:71)(cid:88)(cid:74)(cid:89)(cid:5)(cid:93)(cid:79)(cid:82)(cid:82)(cid:5)(cid:71)(cid:82)(cid:93)(cid:71)(cid:95)(cid:89)(cid:5)
(cid:74)(cid:75)(cid:90)(cid:75)(cid:73)(cid:90)(cid:5)(cid:71)(cid:5)(cid:83)(cid:71)(cid:90)(cid:75)(cid:88)(cid:79)(cid:71)(cid:82)(cid:5)(cid:83)(cid:79)(cid:89)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:93)(cid:78)(cid:75)(cid:84)(cid:5)(cid:79)(cid:90)(cid:5)(cid:75)(cid:94)(cid:79)(cid:89)(cid:90)(cid:89)(cid:19)(cid:5)(cid:51)(cid:79)(cid:89)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:73)(cid:71)(cid:84)(cid:5)(cid:71)(cid:88)(cid:79)(cid:89)(cid:75)(cid:5)(cid:76)(cid:88)(cid:85)(cid:83)(cid:5)(cid:76)(cid:88)(cid:71)(cid:91)(cid:74)(cid:5)(cid:85)(cid:88)(cid:5)(cid:75)(cid:88)(cid:88)(cid:85)(cid:88)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)
(cid:73)(cid:85)(cid:84)(cid:89)(cid:79)(cid:74)(cid:75)(cid:88)(cid:75)(cid:74)(cid:5)(cid:83)(cid:71)(cid:90)(cid:75)(cid:88)(cid:79)(cid:71)(cid:82)(cid:5)(cid:79)(cid:76)(cid:17)(cid:5)(cid:79)(cid:84)(cid:74)(cid:79)(cid:92)(cid:79)(cid:74)(cid:91)(cid:71)(cid:82)(cid:82)(cid:95)(cid:5)(cid:85)(cid:88)(cid:5)(cid:79)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:77)(cid:77)(cid:88)(cid:75)(cid:77)(cid:71)(cid:90)(cid:75)(cid:17)(cid:5)(cid:90)(cid:78)(cid:75)(cid:95)(cid:5)(cid:73)(cid:85)(cid:91)(cid:82)(cid:74)(cid:5)(cid:88)(cid:75)(cid:71)(cid:89)(cid:85)(cid:84)(cid:71)(cid:72)(cid:82)(cid:95)(cid:5)(cid:72)(cid:75)(cid:5)(cid:75)(cid:94)(cid:86)(cid:75)(cid:73)(cid:90)(cid:75)(cid:74)(cid:5)(cid:90)(cid:85)(cid:5)(cid:79)(cid:84)(cid:76)(cid:82)(cid:91)(cid:75)(cid:84)(cid:73)(cid:75)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)
(cid:75)(cid:73)(cid:85)(cid:84)(cid:85)(cid:83)(cid:79)(cid:73)(cid:5)(cid:74)(cid:75)(cid:73)(cid:79)(cid:89)(cid:79)(cid:85)(cid:84)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:91)(cid:89)(cid:75)(cid:88)(cid:89)(cid:5)(cid:90)(cid:71)(cid:81)(cid:75)(cid:84)(cid:5)(cid:85)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:72)(cid:71)(cid:89)(cid:79)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:89)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:19)(cid:5)
(cid:39)(cid:89)(cid:5)(cid:86)(cid:71)(cid:88)(cid:90)(cid:5)(cid:85)(cid:76)(cid:5)(cid:71)(cid:84)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:79)(cid:84)(cid:5)(cid:71)(cid:73)(cid:73)(cid:85)(cid:88)(cid:74)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:41)(cid:71)(cid:84)(cid:71)(cid:74)(cid:79)(cid:71)(cid:84)(cid:5)(cid:77)(cid:75)(cid:84)(cid:75)(cid:88)(cid:71)(cid:82)(cid:82)(cid:95)(cid:5)(cid:71)(cid:73)(cid:73)(cid:75)(cid:86)(cid:90)(cid:75)(cid:74)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)(cid:89)(cid:90)(cid:71)(cid:84)(cid:74)(cid:71)(cid:88)(cid:74)(cid:89)(cid:17)(cid:5)(cid:93)(cid:75)(cid:5)(cid:75)(cid:94)(cid:75)(cid:88)(cid:73)(cid:79)(cid:89)(cid:75)(cid:5)
(cid:86)(cid:88)(cid:85)(cid:76)(cid:75)(cid:89)(cid:89)(cid:79)(cid:85)(cid:84)(cid:71)(cid:82)(cid:5)(cid:80)(cid:91)(cid:74)(cid:77)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:83)(cid:71)(cid:79)(cid:84)(cid:90)(cid:71)(cid:79)(cid:84)(cid:5)(cid:86)(cid:88)(cid:85)(cid:76)(cid:75)(cid:89)(cid:89)(cid:79)(cid:85)(cid:84)(cid:71)(cid:82)(cid:5)(cid:89)(cid:81)(cid:75)(cid:86)(cid:90)(cid:79)(cid:73)(cid:79)(cid:89)(cid:83)(cid:5)(cid:90)(cid:78)(cid:88)(cid:85)(cid:91)(cid:77)(cid:78)(cid:85)(cid:91)(cid:90)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:19)(cid:5)(cid:61)(cid:75)(cid:5)(cid:71)(cid:82)(cid:89)(cid:85)(cid:32)(cid:5)
(cid:6)
(cid:47)(cid:74)(cid:75)(cid:84)(cid:90)(cid:79)(cid:76)(cid:95)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:71)(cid:89)(cid:89)(cid:75)(cid:89)(cid:89)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:88)(cid:79)(cid:89)(cid:81)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:83)(cid:71)(cid:90)(cid:75)(cid:88)(cid:79)(cid:71)(cid:82)(cid:5)(cid:83)(cid:79)(cid:89)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:17)(cid:5)
(cid:93)(cid:78)(cid:75)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:74)(cid:91)(cid:75)(cid:5)(cid:90)(cid:85)(cid:5)(cid:76)(cid:88)(cid:71)(cid:91)(cid:74)(cid:5)(cid:85)(cid:88)(cid:5)(cid:75)(cid:88)(cid:88)(cid:85)(cid:88)(cid:17)(cid:5)(cid:74)(cid:75)(cid:89)(cid:79)(cid:77)(cid:84)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:86)(cid:75)(cid:88)(cid:76)(cid:85)(cid:88)(cid:83)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:86)(cid:88)(cid:85)(cid:73)(cid:75)(cid:74)(cid:91)(cid:88)(cid:75)(cid:89)(cid:5)(cid:88)(cid:75)(cid:89)(cid:86)(cid:85)(cid:84)(cid:89)(cid:79)(cid:92)(cid:75)(cid:5)(cid:90)(cid:85)(cid:5)(cid:90)(cid:78)(cid:85)(cid:89)(cid:75)(cid:5)(cid:88)(cid:79)(cid:89)(cid:81)(cid:89)(cid:17)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
25
(cid:85)(cid:72)(cid:90)(cid:71)(cid:79)(cid:84)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:75)(cid:92)(cid:79)(cid:74)(cid:75)(cid:84)(cid:73)(cid:75)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:79)(cid:89)(cid:5)(cid:89)(cid:91)(cid:76)(cid:76)(cid:79)(cid:73)(cid:79)(cid:75)(cid:84)(cid:90)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:71)(cid:86)(cid:86)(cid:88)(cid:85)(cid:86)(cid:88)(cid:79)(cid:71)(cid:90)(cid:75)(cid:5)(cid:90)(cid:85)(cid:5)(cid:86)(cid:88)(cid:85)(cid:92)(cid:79)(cid:74)(cid:75)(cid:5)(cid:71)(cid:5)(cid:72)(cid:71)(cid:89)(cid:79)(cid:89)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:85)(cid:86)(cid:79)(cid:84)(cid:79)(cid:85)(cid:84)(cid:19)(cid:5)(cid:58)(cid:78)(cid:75)(cid:5)(cid:88)(cid:79)(cid:89)(cid:81)(cid:5)
(cid:85)(cid:76)(cid:5)(cid:84)(cid:85)(cid:90)(cid:5)(cid:74)(cid:75)(cid:90)(cid:75)(cid:73)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)(cid:71)(cid:5)(cid:83)(cid:71)(cid:90)(cid:75)(cid:88)(cid:79)(cid:71)(cid:82)(cid:5)(cid:83)(cid:79)(cid:89)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:88)(cid:75)(cid:89)(cid:91)(cid:82)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)(cid:76)(cid:88)(cid:85)(cid:83)(cid:5)(cid:76)(cid:88)(cid:71)(cid:91)(cid:74)(cid:5)(cid:79)(cid:89)(cid:5)(cid:78)(cid:79)(cid:77)(cid:78)(cid:75)(cid:88)(cid:5)(cid:90)(cid:78)(cid:71)(cid:84)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:85)(cid:84)(cid:75)(cid:5)(cid:88)(cid:75)(cid:89)(cid:91)(cid:82)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)(cid:76)(cid:88)(cid:85)(cid:83)(cid:5)
(cid:75)(cid:88)(cid:88)(cid:85)(cid:88)(cid:17)(cid:5)(cid:71)(cid:89)(cid:5)(cid:76)(cid:88)(cid:71)(cid:91)(cid:74)(cid:5)(cid:83)(cid:71)(cid:95)(cid:5)(cid:79)(cid:84)(cid:92)(cid:85)(cid:82)(cid:92)(cid:75)(cid:5)(cid:73)(cid:85)(cid:82)(cid:82)(cid:91)(cid:89)(cid:79)(cid:85)(cid:84)(cid:17)(cid:5)(cid:76)(cid:85)(cid:88)(cid:77)(cid:75)(cid:88)(cid:95)(cid:17)(cid:5)(cid:79)(cid:84)(cid:90)(cid:75)(cid:84)(cid:90)(cid:79)(cid:85)(cid:84)(cid:71)(cid:82)(cid:5)(cid:85)(cid:83)(cid:79)(cid:89)(cid:89)(cid:79)(cid:85)(cid:84)(cid:89)(cid:17)(cid:5)(cid:83)(cid:79)(cid:89)(cid:88)(cid:75)(cid:86)(cid:88)(cid:75)(cid:89)(cid:75)(cid:84)(cid:90)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:89)(cid:17)(cid:5)(cid:85)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)
(cid:85)(cid:92)(cid:75)(cid:88)(cid:88)(cid:79)(cid:74)(cid:75)(cid:5)(cid:85)(cid:76)(cid:5)(cid:79)(cid:84)(cid:90)(cid:75)(cid:88)(cid:84)(cid:71)(cid:82)(cid:5)(cid:73)(cid:85)(cid:84)(cid:90)(cid:88)(cid:85)(cid:82)(cid:19)(cid:5)
(cid:53)(cid:72)(cid:90)(cid:71)(cid:79)(cid:84)(cid:5)(cid:71)(cid:84)(cid:5)(cid:91)(cid:84)(cid:74)(cid:75)(cid:88)(cid:89)(cid:90)(cid:71)(cid:84)(cid:74)(cid:79)(cid:84)(cid:77)(cid:5)(cid:85)(cid:76)(cid:5)(cid:79)(cid:84)(cid:90)(cid:75)(cid:88)(cid:84)(cid:71)(cid:82)(cid:5)(cid:73)(cid:85)(cid:84)(cid:90)(cid:88)(cid:85)(cid:82)(cid:5)(cid:88)(cid:75)(cid:82)(cid:75)(cid:92)(cid:71)(cid:84)(cid:90)(cid:5)(cid:90)(cid:85)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:79)(cid:84)(cid:5)(cid:85)(cid:88)(cid:74)(cid:75)(cid:88)(cid:5)(cid:90)(cid:85)(cid:5)(cid:74)(cid:75)(cid:89)(cid:79)(cid:77)(cid:84)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)
(cid:86)(cid:88)(cid:85)(cid:73)(cid:75)(cid:74)(cid:91)(cid:88)(cid:75)(cid:89)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)(cid:71)(cid:86)(cid:86)(cid:88)(cid:85)(cid:86)(cid:88)(cid:79)(cid:71)(cid:90)(cid:75)(cid:5)(cid:79)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:79)(cid:88)(cid:73)(cid:91)(cid:83)(cid:89)(cid:90)(cid:71)(cid:84)(cid:73)(cid:75)(cid:89)(cid:17)(cid:5)(cid:72)(cid:91)(cid:90)(cid:5)(cid:84)(cid:85)(cid:90)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:86)(cid:91)(cid:88)(cid:86)(cid:85)(cid:89)(cid:75)(cid:5)(cid:85)(cid:76)(cid:5)(cid:75)(cid:94)(cid:86)(cid:88)(cid:75)(cid:89)(cid:89)(cid:79)(cid:84)(cid:77)(cid:5)(cid:71)(cid:84)(cid:5)
(cid:85)(cid:86)(cid:79)(cid:84)(cid:79)(cid:85)(cid:84)(cid:5)(cid:85)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:75)(cid:76)(cid:76)(cid:75)(cid:73)(cid:90)(cid:79)(cid:92)(cid:75)(cid:84)(cid:75)(cid:89)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:41)(cid:85)(cid:83)(cid:86)(cid:71)(cid:84)(cid:95)(cid:120)(cid:89)(cid:5)(cid:79)(cid:84)(cid:90)(cid:75)(cid:88)(cid:84)(cid:71)(cid:82)(cid:5)(cid:73)(cid:85)(cid:84)(cid:90)(cid:88)(cid:85)(cid:82)(cid:19)(cid:5)
(cid:43)(cid:92)(cid:71)(cid:82)(cid:91)(cid:71)(cid:90)(cid:75)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:86)(cid:86)(cid:88)(cid:85)(cid:86)(cid:88)(cid:79)(cid:71)(cid:90)(cid:75)(cid:84)(cid:75)(cid:89)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:71)(cid:73)(cid:73)(cid:85)(cid:91)(cid:84)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)(cid:86)(cid:85)(cid:82)(cid:79)(cid:73)(cid:79)(cid:75)(cid:89)(cid:5)(cid:91)(cid:89)(cid:75)(cid:74)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:88)(cid:75)(cid:71)(cid:89)(cid:85)(cid:84)(cid:71)(cid:72)(cid:82)(cid:75)(cid:84)(cid:75)(cid:89)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:71)(cid:73)(cid:73)(cid:85)(cid:91)(cid:84)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)
(cid:75)(cid:89)(cid:90)(cid:79)(cid:83)(cid:71)(cid:90)(cid:75)(cid:89)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:88)(cid:75)(cid:82)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:74)(cid:79)(cid:89)(cid:73)(cid:82)(cid:85)(cid:89)(cid:91)(cid:88)(cid:75)(cid:89)(cid:5)(cid:83)(cid:71)(cid:74)(cid:75)(cid:5)(cid:72)(cid:95)(cid:5)(cid:83)(cid:71)(cid:84)(cid:71)(cid:77)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:19)(cid:5)
(cid:41)(cid:85)(cid:84)(cid:73)(cid:82)(cid:91)(cid:74)(cid:75)(cid:5)(cid:85)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:86)(cid:86)(cid:88)(cid:85)(cid:86)(cid:88)(cid:79)(cid:71)(cid:90)(cid:75)(cid:84)(cid:75)(cid:89)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:83)(cid:71)(cid:84)(cid:71)(cid:77)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:120)(cid:89)(cid:5)(cid:91)(cid:89)(cid:75)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:77)(cid:85)(cid:79)(cid:84)(cid:77)(cid:5)(cid:73)(cid:85)(cid:84)(cid:73)(cid:75)(cid:88)(cid:84)(cid:5)(cid:72)(cid:71)(cid:89)(cid:79)(cid:89)(cid:5)(cid:85)(cid:76)(cid:5)(cid:71)(cid:73)(cid:73)(cid:85)(cid:91)(cid:84)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)(cid:71)(cid:84)(cid:74)(cid:17)(cid:5)
(cid:72)(cid:71)(cid:89)(cid:75)(cid:74)(cid:5)(cid:85)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:75)(cid:92)(cid:79)(cid:74)(cid:75)(cid:84)(cid:73)(cid:75)(cid:5)(cid:85)(cid:72)(cid:90)(cid:71)(cid:79)(cid:84)(cid:75)(cid:74)(cid:17)(cid:5)(cid:93)(cid:78)(cid:75)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:71)(cid:5)(cid:83)(cid:71)(cid:90)(cid:75)(cid:88)(cid:79)(cid:71)(cid:82)(cid:5)(cid:91)(cid:84)(cid:73)(cid:75)(cid:88)(cid:90)(cid:71)(cid:79)(cid:84)(cid:90)(cid:95)(cid:5)(cid:75)(cid:94)(cid:79)(cid:89)(cid:90)(cid:89)(cid:5)(cid:88)(cid:75)(cid:82)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:90)(cid:85)(cid:5)(cid:75)(cid:92)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:85)(cid:88)(cid:5)
(cid:73)(cid:85)(cid:84)(cid:74)(cid:79)(cid:90)(cid:79)(cid:85)(cid:84)(cid:89)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:83)(cid:71)(cid:95)(cid:5)(cid:73)(cid:71)(cid:89)(cid:90)(cid:5)(cid:89)(cid:79)(cid:77)(cid:84)(cid:79)(cid:76)(cid:79)(cid:73)(cid:71)(cid:84)(cid:90)(cid:5)(cid:74)(cid:85)(cid:91)(cid:72)(cid:90)(cid:5)(cid:85)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:41)(cid:85)(cid:83)(cid:86)(cid:71)(cid:84)(cid:95)(cid:120)(cid:89)(cid:5)(cid:71)(cid:72)(cid:79)(cid:82)(cid:79)(cid:90)(cid:95)(cid:5)(cid:90)(cid:85)(cid:5)(cid:73)(cid:85)(cid:84)(cid:90)(cid:79)(cid:84)(cid:91)(cid:75)(cid:5)(cid:71)(cid:89)(cid:5)(cid:71)(cid:5)(cid:77)(cid:85)(cid:79)(cid:84)(cid:77)(cid:5)(cid:73)(cid:85)(cid:84)(cid:73)(cid:75)(cid:88)(cid:84)(cid:19)(cid:5)
(cid:47)(cid:76)(cid:5)(cid:93)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:73)(cid:82)(cid:91)(cid:74)(cid:75)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:71)(cid:5)(cid:83)(cid:71)(cid:90)(cid:75)(cid:88)(cid:79)(cid:71)(cid:82)(cid:5)(cid:91)(cid:84)(cid:73)(cid:75)(cid:88)(cid:90)(cid:71)(cid:79)(cid:84)(cid:90)(cid:95)(cid:5)(cid:75)(cid:94)(cid:79)(cid:89)(cid:90)(cid:89)(cid:17)(cid:5)(cid:93)(cid:75)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)(cid:88)(cid:75)(cid:87)(cid:91)(cid:79)(cid:88)(cid:75)(cid:74)(cid:5)(cid:90)(cid:85)(cid:5)(cid:74)(cid:88)(cid:71)(cid:93)(cid:5)(cid:71)(cid:90)(cid:90)(cid:75)(cid:84)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:79)(cid:84)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:85)(cid:88)(cid:120)(cid:89)(cid:5)
(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:5)(cid:90)(cid:85)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:88)(cid:75)(cid:82)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:74)(cid:79)(cid:89)(cid:73)(cid:82)(cid:85)(cid:89)(cid:91)(cid:88)(cid:75)(cid:89)(cid:5)(cid:79)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:85)(cid:88)(cid:17)(cid:5)(cid:79)(cid:76)(cid:5)(cid:89)(cid:91)(cid:73)(cid:78)(cid:5)(cid:74)(cid:79)(cid:89)(cid:73)(cid:82)(cid:85)(cid:89)(cid:91)(cid:88)(cid:75)(cid:89)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)
(cid:79)(cid:84)(cid:71)(cid:74)(cid:75)(cid:87)(cid:91)(cid:71)(cid:90)(cid:75)(cid:17)(cid:5)(cid:90)(cid:85)(cid:5)(cid:83)(cid:85)(cid:74)(cid:79)(cid:76)(cid:95)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:85)(cid:86)(cid:79)(cid:84)(cid:79)(cid:85)(cid:84)(cid:19)(cid:5)(cid:53)(cid:91)(cid:88)(cid:5)(cid:73)(cid:85)(cid:84)(cid:73)(cid:82)(cid:91)(cid:89)(cid:79)(cid:85)(cid:84)(cid:89)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)(cid:72)(cid:71)(cid:89)(cid:75)(cid:74)(cid:5)(cid:85)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:75)(cid:92)(cid:79)(cid:74)(cid:75)(cid:84)(cid:73)(cid:75)(cid:5)(cid:85)(cid:72)(cid:90)(cid:71)(cid:79)(cid:84)(cid:75)(cid:74)(cid:5)(cid:91)(cid:86)(cid:5)(cid:90)(cid:85)(cid:5)
(cid:90)(cid:78)(cid:75)(cid:5)(cid:74)(cid:71)(cid:90)(cid:75)(cid:5)(cid:85)(cid:76)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:85)(cid:88)(cid:120)(cid:89)(cid:5)(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:19)(cid:5)(cid:46)(cid:85)(cid:93)(cid:75)(cid:92)(cid:75)(cid:88)(cid:17)(cid:5)(cid:76)(cid:91)(cid:90)(cid:91)(cid:88)(cid:75)(cid:5)(cid:75)(cid:92)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:85)(cid:88)(cid:5)(cid:73)(cid:85)(cid:84)(cid:74)(cid:79)(cid:90)(cid:79)(cid:85)(cid:84)(cid:89)(cid:5)(cid:83)(cid:71)(cid:95)(cid:5)(cid:73)(cid:71)(cid:91)(cid:89)(cid:75)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:41)(cid:85)(cid:83)(cid:86)(cid:71)(cid:84)(cid:95)(cid:5)(cid:90)(cid:85)(cid:5)
(cid:73)(cid:75)(cid:71)(cid:89)(cid:75)(cid:5)(cid:90)(cid:85)(cid:5)(cid:73)(cid:85)(cid:84)(cid:90)(cid:79)(cid:84)(cid:91)(cid:75)(cid:5)(cid:71)(cid:89)(cid:5)(cid:71)(cid:5)(cid:77)(cid:85)(cid:79)(cid:84)(cid:77)(cid:5)(cid:73)(cid:85)(cid:84)(cid:73)(cid:75)(cid:88)(cid:84)(cid:19)(cid:5)(cid:5)
(cid:43)(cid:92)(cid:71)(cid:82)(cid:91)(cid:71)(cid:90)(cid:75)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:85)(cid:92)(cid:75)(cid:88)(cid:71)(cid:82)(cid:82)(cid:5)(cid:86)(cid:88)(cid:75)(cid:89)(cid:75)(cid:84)(cid:90)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:17)(cid:5)(cid:89)(cid:90)(cid:88)(cid:91)(cid:73)(cid:90)(cid:91)(cid:88)(cid:75)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:73)(cid:85)(cid:84)(cid:90)(cid:75)(cid:84)(cid:90)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:17)(cid:5)
(cid:79)(cid:84)(cid:73)(cid:82)(cid:91)(cid:74)(cid:79)(cid:84)(cid:77)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:74)(cid:79)(cid:89)(cid:73)(cid:82)(cid:85)(cid:89)(cid:91)(cid:88)(cid:75)(cid:89)(cid:17)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:93)(cid:78)(cid:75)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:88)(cid:75)(cid:86)(cid:88)(cid:75)(cid:89)(cid:75)(cid:84)(cid:90)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)
(cid:91)(cid:84)(cid:74)(cid:75)(cid:88)(cid:82)(cid:95)(cid:79)(cid:84)(cid:77)(cid:5)(cid:90)(cid:88)(cid:71)(cid:84)(cid:89)(cid:71)(cid:73)(cid:90)(cid:79)(cid:85)(cid:84)(cid:89)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:75)(cid:92)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:79)(cid:84)(cid:5)(cid:71)(cid:5)(cid:83)(cid:71)(cid:84)(cid:84)(cid:75)(cid:88)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:71)(cid:73)(cid:78)(cid:79)(cid:75)(cid:92)(cid:75)(cid:89)(cid:5)(cid:76)(cid:71)(cid:79)(cid:88)(cid:5)(cid:86)(cid:88)(cid:75)(cid:89)(cid:75)(cid:84)(cid:90)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:19)(cid:5)
(cid:53)(cid:72)(cid:90)(cid:71)(cid:79)(cid:84)(cid:5)(cid:89)(cid:91)(cid:76)(cid:76)(cid:79)(cid:73)(cid:79)(cid:75)(cid:84)(cid:90)(cid:5)(cid:71)(cid:86)(cid:86)(cid:88)(cid:85)(cid:86)(cid:88)(cid:79)(cid:71)(cid:90)(cid:75)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:75)(cid:92)(cid:79)(cid:74)(cid:75)(cid:84)(cid:73)(cid:75)(cid:5)(cid:88)(cid:75)(cid:77)(cid:71)(cid:88)(cid:74)(cid:79)(cid:84)(cid:77)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)(cid:79)(cid:84)(cid:76)(cid:85)(cid:88)(cid:83)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:75)(cid:84)(cid:90)(cid:79)(cid:90)(cid:79)(cid:75)(cid:89)(cid:5)(cid:85)(cid:88)(cid:5)
(cid:72)(cid:91)(cid:89)(cid:79)(cid:84)(cid:75)(cid:89)(cid:89)(cid:5)(cid:71)(cid:73)(cid:90)(cid:79)(cid:92)(cid:79)(cid:90)(cid:79)(cid:75)(cid:89)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:79)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:41)(cid:85)(cid:83)(cid:86)(cid:71)(cid:84)(cid:95)(cid:5)(cid:90)(cid:85)(cid:5)(cid:75)(cid:94)(cid:86)(cid:88)(cid:75)(cid:89)(cid:89)(cid:5)(cid:71)(cid:84)(cid:5)(cid:85)(cid:86)(cid:79)(cid:84)(cid:79)(cid:85)(cid:84)(cid:5)(cid:85)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:73)(cid:85)(cid:84)(cid:89)(cid:85)(cid:82)(cid:79)(cid:74)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)(cid:76)(cid:79)(cid:84)(cid:71)(cid:84)(cid:73)(cid:79)(cid:71)(cid:82)(cid:5)
(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:19)(cid:5)(cid:61)(cid:75)(cid:5)(cid:71)(cid:88)(cid:75)(cid:5)(cid:88)(cid:75)(cid:89)(cid:86)(cid:85)(cid:84)(cid:89)(cid:79)(cid:72)(cid:82)(cid:75)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:74)(cid:79)(cid:88)(cid:75)(cid:73)(cid:90)(cid:79)(cid:85)(cid:84)(cid:17)(cid:5)(cid:89)(cid:91)(cid:86)(cid:75)(cid:88)(cid:92)(cid:79)(cid:89)(cid:79)(cid:85)(cid:84)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:86)(cid:75)(cid:88)(cid:76)(cid:85)(cid:88)(cid:83)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:77)(cid:88)(cid:85)(cid:91)(cid:86)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:19)(cid:5)
(cid:61)(cid:75)(cid:5)(cid:88)(cid:75)(cid:83)(cid:71)(cid:79)(cid:84)(cid:5)(cid:89)(cid:85)(cid:82)(cid:75)(cid:82)(cid:95)(cid:5)(cid:88)(cid:75)(cid:89)(cid:86)(cid:85)(cid:84)(cid:89)(cid:79)(cid:72)(cid:82)(cid:75)(cid:5)(cid:76)(cid:85)(cid:88)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:85)(cid:86)(cid:79)(cid:84)(cid:79)(cid:85)(cid:84)(cid:19)(cid:5)
(cid:6)
(cid:6)
(cid:6)
(cid:6)
(cid:6)
(cid:61)(cid:75)(cid:5)(cid:73)(cid:85)(cid:83)(cid:83)(cid:91)(cid:84)(cid:79)(cid:73)(cid:71)(cid:90)(cid:75)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:90)(cid:78)(cid:85)(cid:89)(cid:75)(cid:5)(cid:73)(cid:78)(cid:71)(cid:88)(cid:77)(cid:75)(cid:74)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:77)(cid:85)(cid:92)(cid:75)(cid:88)(cid:84)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:88)(cid:75)(cid:77)(cid:71)(cid:88)(cid:74)(cid:79)(cid:84)(cid:77)(cid:17)(cid:5)(cid:71)(cid:83)(cid:85)(cid:84)(cid:77)(cid:5)(cid:85)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)(cid:83)(cid:71)(cid:90)(cid:90)(cid:75)(cid:88)(cid:89)(cid:17)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:86)(cid:82)(cid:71)(cid:84)(cid:84)(cid:75)(cid:74)(cid:5)(cid:89)(cid:73)(cid:85)(cid:86)(cid:75)(cid:5)
(cid:71)(cid:84)(cid:74)(cid:5)(cid:90)(cid:79)(cid:83)(cid:79)(cid:84)(cid:77)(cid:5)(cid:85)(cid:76)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:89)(cid:79)(cid:77)(cid:84)(cid:79)(cid:76)(cid:79)(cid:73)(cid:71)(cid:84)(cid:90)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:76)(cid:79)(cid:84)(cid:74)(cid:79)(cid:84)(cid:77)(cid:89)(cid:17)(cid:5)(cid:79)(cid:84)(cid:73)(cid:82)(cid:91)(cid:74)(cid:79)(cid:84)(cid:77)(cid:5)(cid:71)(cid:84)(cid:95)(cid:5)(cid:89)(cid:79)(cid:77)(cid:84)(cid:79)(cid:76)(cid:79)(cid:73)(cid:71)(cid:84)(cid:90)(cid:5)(cid:74)(cid:75)(cid:76)(cid:79)(cid:73)(cid:79)(cid:75)(cid:84)(cid:73)(cid:79)(cid:75)(cid:89)(cid:5)(cid:79)(cid:84)(cid:5)(cid:79)(cid:84)(cid:90)(cid:75)(cid:88)(cid:84)(cid:71)(cid:82)(cid:5)
(cid:73)(cid:85)(cid:84)(cid:90)(cid:88)(cid:85)(cid:82)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:93)(cid:75)(cid:5)(cid:79)(cid:74)(cid:75)(cid:84)(cid:90)(cid:79)(cid:76)(cid:95)(cid:5)(cid:74)(cid:91)(cid:88)(cid:79)(cid:84)(cid:77)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:19)(cid:5)(cid:5)
(cid:61)(cid:75)(cid:5)(cid:71)(cid:82)(cid:89)(cid:85)(cid:5)(cid:86)(cid:88)(cid:85)(cid:92)(cid:79)(cid:74)(cid:75)(cid:5)(cid:90)(cid:78)(cid:85)(cid:89)(cid:75)(cid:5)(cid:73)(cid:78)(cid:71)(cid:88)(cid:77)(cid:75)(cid:74)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:77)(cid:85)(cid:92)(cid:75)(cid:88)(cid:84)(cid:71)(cid:84)(cid:73)(cid:75)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:71)(cid:5)(cid:89)(cid:90)(cid:71)(cid:90)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:93)(cid:75)(cid:5)(cid:78)(cid:71)(cid:92)(cid:75)(cid:5)(cid:73)(cid:85)(cid:83)(cid:86)(cid:82)(cid:79)(cid:75)(cid:74)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:88)(cid:75)(cid:82)(cid:75)(cid:92)(cid:71)(cid:84)(cid:90)(cid:5)
(cid:75)(cid:90)(cid:78)(cid:79)(cid:73)(cid:71)(cid:82)(cid:5)(cid:88)(cid:75)(cid:87)(cid:91)(cid:79)(cid:88)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:89)(cid:5)(cid:88)(cid:75)(cid:77)(cid:71)(cid:88)(cid:74)(cid:79)(cid:84)(cid:77)(cid:5)(cid:79)(cid:84)(cid:74)(cid:75)(cid:86)(cid:75)(cid:84)(cid:74)(cid:75)(cid:84)(cid:73)(cid:75)(cid:17)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:90)(cid:85)(cid:5)(cid:73)(cid:85)(cid:83)(cid:83)(cid:91)(cid:84)(cid:79)(cid:73)(cid:71)(cid:90)(cid:75)(cid:5)(cid:93)(cid:79)(cid:90)(cid:78)(cid:5)(cid:90)(cid:78)(cid:75)(cid:83)(cid:5)(cid:71)(cid:82)(cid:82)(cid:5)(cid:88)(cid:75)(cid:82)(cid:71)(cid:90)(cid:79)(cid:85)(cid:84)(cid:89)(cid:78)(cid:79)(cid:86)(cid:89)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:85)(cid:90)(cid:78)(cid:75)(cid:88)(cid:5)
(cid:83)(cid:71)(cid:90)(cid:90)(cid:75)(cid:88)(cid:89)(cid:5)(cid:90)(cid:78)(cid:71)(cid:90)(cid:5)(cid:83)(cid:71)(cid:95)(cid:5)(cid:88)(cid:75)(cid:71)(cid:89)(cid:85)(cid:84)(cid:71)(cid:72)(cid:82)(cid:95)(cid:5)(cid:72)(cid:75)(cid:5)(cid:90)(cid:78)(cid:85)(cid:91)(cid:77)(cid:78)(cid:90)(cid:5)(cid:90)(cid:85)(cid:5)(cid:72)(cid:75)(cid:71)(cid:88)(cid:5)(cid:85)(cid:84)(cid:5)(cid:85)(cid:91)(cid:88)(cid:5)(cid:79)(cid:84)(cid:74)(cid:75)(cid:86)(cid:75)(cid:84)(cid:74)(cid:75)(cid:84)(cid:73)(cid:75)(cid:17)(cid:5)(cid:71)(cid:84)(cid:74)(cid:5)(cid:93)(cid:78)(cid:75)(cid:88)(cid:75)(cid:5)(cid:71)(cid:86)(cid:86)(cid:82)(cid:79)(cid:73)(cid:71)(cid:72)(cid:82)(cid:75)(cid:17)(cid:5)(cid:88)(cid:75)(cid:82)(cid:71)(cid:90)(cid:75)(cid:74)(cid:5)
(cid:89)(cid:71)(cid:76)(cid:75)(cid:77)(cid:91)(cid:71)(cid:88)(cid:74)(cid:89)(cid:19)(cid:5)
(cid:58)(cid:78)(cid:75)(cid:5)(cid:75)(cid:84)(cid:77)(cid:71)(cid:77)(cid:75)(cid:83)(cid:75)(cid:84)(cid:90)(cid:5)(cid:86)(cid:71)(cid:88)(cid:90)(cid:84)(cid:75)(cid:88)(cid:5)(cid:85)(cid:84)(cid:5)(cid:90)(cid:78)(cid:75)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:5)(cid:88)(cid:75)(cid:89)(cid:91)(cid:82)(cid:90)(cid:79)(cid:84)(cid:77)(cid:5)(cid:79)(cid:84)(cid:5)(cid:90)(cid:78)(cid:79)(cid:89)(cid:5)(cid:79)(cid:84)(cid:74)(cid:75)(cid:86)(cid:75)(cid:84)(cid:74)(cid:75)(cid:84)(cid:90)(cid:5)(cid:71)(cid:91)(cid:74)(cid:79)(cid:90)(cid:85)(cid:88)(cid:120)(cid:89)(cid:5)(cid:88)(cid:75)(cid:86)(cid:85)(cid:88)(cid:90)(cid:5)(cid:79)(cid:89)(cid:5)(cid:56)(cid:75)(cid:95)(cid:84)(cid:85)(cid:82)(cid:74)(cid:5)(cid:58)(cid:75)(cid:90)(cid:96)(cid:82)(cid:71)(cid:76)(cid:76)(cid:19)(cid:5)
(cid:41)(cid:78)(cid:71)(cid:88)(cid:90)(cid:75)(cid:88)(cid:75)(cid:74)(cid:5)(cid:54)(cid:88)(cid:85)(cid:76)(cid:75)(cid:89)(cid:89)(cid:79)(cid:85)(cid:84)(cid:71)(cid:82)(cid:5)(cid:39)(cid:73)(cid:73)(cid:85)(cid:91)(cid:84)(cid:90)(cid:71)(cid:84)(cid:90)(cid:89)(cid:5)
(cid:41)(cid:71)(cid:82)(cid:77)(cid:71)(cid:88)(cid:95)(cid:17)(cid:5)(cid:39)(cid:82)(cid:72)(cid:75)(cid:88)(cid:90)(cid:71)(cid:5)
(cid:51)(cid:71)(cid:88)(cid:73)(cid:78)(cid:5)(cid:28)(cid:17)(cid:5)(cid:23)(cid:21)(cid:22)(cid:31)(cid:5)
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
26
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at
(in thousands of Canadian dollars)
Assets
Current Assets
Cash and cash equivalents (Note 6)
Accounts receivable
Inventories, investments, prepaid and other
Asset held for sale (Note 5)
Income taxes receivable
Total current assets
Property and equipment (Note 7)
Investment in joint ventures (Note 8)
Total assets
Liabilities
Current Liabilities
Accounts payable and accruals (Note 9)
Dividends payable
Share-based compensation (Note 10)
Income taxes payable
Current portion of long-term debt (Note 11)
Total current liabilities
Long-term debt (Note 11)
Share-based compensation (Note 10)
Deferred income taxes (Note 12)
Non-controlling interest (Note 13)
Total liabilities
Shareholders' Equity
Share capital (Note 14)
Contributed surplus
Equity component of convertible debenture (Note 11)
Foreign currency translation reserve
Minority interest
Retained earnings
Total shareholders' equity
December 31
2018
December 31
2017
$
84,823
$
351,596
58,175
18,806
1,994
515,394
3,201,704
177,010
32,374
232,155
92,424
—
3,546
360,499
2,597,966
—
$
3,894,108
$
2,958,465
$
271,374
$
190,152
18,849
975
3,807
376,612
671,617
1,350,041
3,033
72,727
6,007
18,849
3,021
3,419
487,257
702,698
252,676
2,708
311,007
—
2,103,425
1,269,089
206,328
206,042
1,013
3,193
315,095
72,078
1,192,976
1,790,683
1,126
—
237,885
—
1,244,323
1,689,376
Total liabilities and shareholders' equity
$
3,894,108
$
2,958,465
Contingencies and commitments (Note 23)
See accompanying notes to the consolidated financial statements.
Approved by the Board of Directors:
Approved by the Board of Directors:
"Signed"
John Schroeder
"Signed"
James B. Howe
Chairman of the Audit Committee and Director
Director
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
27
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
For the years ended December 31
(in thousands of Canadian dollars, except per share data)
Revenue (Note 17)
Expenses
Oilfield services
Depreciation (Note 7)
General and administrative
Share-based compensation (Note 10)
Foreign exchange and other
Total expenses
2018
2017
$
1,156,357
$
1,000,650
855,824
415,036
46,437
707
(19,001)
759,700
325,811
39,166
656
21,903
1,299,003
1,147,236
Loss before interest and income taxes and gain on bargain purchase
(142,646)
(146,586)
Gain from investment in joint ventures (Note 8)
Gain on bargain purchase (Note 5)
Interest expense
Income (loss) before income taxes
Income taxes (Note 12)
Current tax
Deferred tax
Total income taxes
Net income (loss)
Net income (loss) attributable to:
Shareholders of Ensign
Minority interests
Net income (loss) per share (Note 16)
Basic
Diluted
See accompanying notes to the consolidated financial statements.
(874)
(200,672)
52,416
6,484
1,044
(53,224)
(52,180)
—
—
41,210
(187,796)
(2,353)
(147,799)
(150,152)
$
58,664
$
(37,644)
58,302
362
58,664
(37,644)
—
(37,644)
$
$
0.37
0.37
$
$
(0.24)
(0.24)
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
28
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the years ended December 31
(in thousands of Canadian dollars)
Net income (loss)
Other comprehensive income (loss)
Item that may be subsequently reclassified to profit or loss
Foreign currency translation adjustment
Comprehensive income (loss)
Total comprehensive income (loss) attributable to:
Shareholders of Ensign
Minority interests
See accompanying notes to the consolidated financial statements.
2018
2017
$
58,664
$
(37,644)
78,240
(54,662)
$
136,904
$
(92,306)
135,512
1,392
(54,662)
—
$
136,904
$
(54,662)
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
29
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands of Canadian dollars)
Balance at December 31, 2017
as originally presented
Change in accounting policy
(Note 3)
Balance, January, 2018
Net income
Other comprehensive income
Total comprehensive income
Minority interest assumed on
acquisition (Note 5)
Recognition of net assets
attributable to minority interest
Dividends
Convertible Debenture (Note 11)
Share-based compensation
Shares vested previously held in
trust
Purchase of shares held in trust
Balance December 31, 2018
Balance January 1, 2017
Net loss
Other comprehensive loss
Total comprehensive loss
Dividends
Share
Capital
Contributed
Surplus
Equity
Component
of
Convertible
Debenture
Foreign
Currency
Translation
Reserve
Minority
Interest
Retained
Earnings Total Equity
$
206,042 $
1,126 $
— $
237,885 $
— $ 1,244,323 $ 1,689,376
—
206,042
—
1,126
—
—
—
—
—
—
—
—
1,333
(1,047)
—
—
—
—
—
—
—
1,220
(1,333)
—
—
—
—
—
—
—
—
—
3,193
—
—
—
—
—
(12,781) $
(12,781)
237,885
— 1,231,542
1,676,595
—
77,210
77,210
362
1,030
1,392
58,302
—
58,664
78,240
58,302
136,904
—
—
—
—
—
—
—
49,214
—
49,214
21,472
(21,472)
—
—
—
—
—
—
(75,396)
(75,396)
—
—
—
—
3,193
1,220
—
(1,047)
$
$
206,328 $
1,013 $
3,193 $
315,095 $
72,078 $ 1,192,976 $ 1,790,683
180,666 $
1,524 $
— $
292,547 $
— $ 1,357,752 $ 1,832,489
—
—
—
23,208
—
—
—
—
—
—
—
—
—
—
—
—
(54,662)
(54,662)
—
—
—
—
—
—
—
—
—
—
—
(37,644)
(37,644)
—
(54,662)
(37,644)
(92,306)
(75,785)
(52,577)
—
—
—
2,873
—
(1,103)
Share-based compensation
—
2,873
Shares vested previously held in
trust
Purchase of shares held in trust
3,271
(1,103)
(3,271)
—
Balance December 31, 2017
$
206,042 $
1,126 $
— $
237,885 $
— $ 1,244,323 $ 1,689,376
See accompanying notes to the consolidated financial statements.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
30
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31
(in thousands of Canadian dollars)
Cash provided by (used in)
Operating activities
Net income (loss)
Items not affecting cash
Depreciation
Share-based compensation, net of cash paid
Gain from joint ventures
Unrealized foreign exchange and other
Accretion on long-term debt
Deferred income tax
Gain on bargain purchase (Note 5)
Funds flow from operations
Net change in non-cash working capital (Note 6)
Cash provided by operating activities
Investing activities
Purchase of property and equipment
Proceeds from disposals of property and equipment
Acquisition of Trinidad Drilling Ltd. (net of cash)
Contributions to joint venture (Note 8)
Net change in non-cash working capital (Note 6)
Cash used in investing activities
Financing activities
Proceeds from long-term debt
Repayments of long-term debt
Purchase of shares held in trust (Note 14)
Subordinate convertible debenture
Dividends (Note 14)
Net change in non-cash working capital (Note 6)
Cash provided by (used in) financing activities
Net increase in cash and cash equivalents
Effects of foreign exchange on cash and cash equivalents
Cash and cash equivalents
Beginning of year
End of year
Supplemental information
Interest paid
Income taxes paid (recovered)
See accompanying notes to the consolidated financial statements.
2018
2017
$
58,664
$
(37,644)
415,036
325,811
707
(874)
5,571
731
(53,224)
(200,672)
225,939
(73,806)
152,133
(80,044)
6,748
(294,264)
(26,144)
17,734
145
—
(918)
1,843
(147,799)
—
141,438
(6,291)
135,147
(123,763)
6,051
—
—
(2,667)
(375,970)
(120,379)
490,886
(182,391)
(1,047)
37,000
(75,396)
11,609
280,661
56,824
(4,375)
32,374
84,823
39,784
896
$
$
$
$
$
$
171,976
(129,787)
(1,103)
—
(52,577)
(482)
(11,973)
2,795
(258)
29,837
32,374
37,161
(19,688)
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and 2017
(in thousands of Canadian dollars, except share and per share data)
1.
NATURE OF BUSINESS
Ensign Energy Services Inc. is incorporated under the laws of the Province of Alberta, Canada. The address of its
registered office is 400 – 5th Avenue S.W., Suite 1000, Calgary, Alberta, Canada, T2P 0L6. Ensign Energy Services
Inc. and its subsidiaries and partnerships (the “Company”) provide oilfield services to the oil and natural gas industry
in Canada, the United States and internationally.
2.
BASIS OF PRESENTATION
The consolidated financial statements of the Company have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
These consolidated financial statements were approved by the Company’s Board of Directors on March 7, 2019,
after review by the Company’s Audit Committee.
3.
SIGNIFICANT ACCOUNTING POLICIES
(a) Measurement basis
These consolidated financial statements have been prepared on an historical cost basis, except as discussed
in the significant accounting policies below.
(b) New and amended standards
The Company has applied the following standards and amendments for the first time for their annual reporting
period commencing January 1, 2018:
(i) IFRS 9 Financial Instruments
(ii) IFRS 15 Revenue from Contracts with Customers
The Company had to change its accounting policies and make certain retrospective adjustments following the
adoption of IFRS 9. As discussed in this note below.
(c) Basis of consolidation
These consolidated financial statements include the accounts of Ensign Energy Services Inc. and its subsidiaries
and partnerships, substantially all of which are wholly owned and controlled. The Company controls an entity
when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability
to affect those returns through its power over the entity. Intercompany balances and transactions, including
unrealized gains or losses between subsidiaries and partnerships are eliminated on consolidation.
(d) Non-controlling interest
(i) Minority interest
Minority interests arises from business combinations in which the acquisition of less than a 100 percent interests
are initially measured at fair value or at the minority interest's proportionate share of the acquiree's identifiable
assets. With respect to Trinidad Drilling Ltd. ("Trinidad") and the acquisition of Trinidad by the Company
("Trinidad Acquisition"), all minority interests were valued using the fair value method.
Subsequent to the Trinidad Acquisition, the carrying amount of minority interests is increased or decreased by
the minority interest's share of subsequent changes in net (loss) income and comprehensive (loss) income, as
well as dividends or cash disbursements made to the minority interest. Total comprehensive income is distributed
to minority interests even if the result is the minority interest becoming a debit balance.
For non-wholly owned subsidiaries, interests held by external parties that the Company consolidates are shown
as minority interest. Minority interests in the net (loss) income of the Company's non-wholly owned subsidiaries
are included in total net (loss) income. Minority interests in other comprehensive (loss) income of the Company's
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
32
non-wholly owned subsidiaries are included in total other comprehensive (loss) income. An exception to this
occurs where the non-wholly owned subsidiary's shares are required to be redeemed on conditions outside the
control of the Company, in which case minority interest in the subsidiary is removed from net (loss) income and
comprehensive (loss) income and is presented as a liability. The minority interest related to Trinidad's minority
interests are presented as equity.
(i) Non-controlling interest
Midland C Ranch, LLC ("Midland"), CanElson 120601 Drilling Limited Partnership #1 ("LP1") and CanElson
120601 Drilling Limited Partnership #2 ("LP2") were acquired as part of the Trinidad Acquisition. The Company
controls the relevant activities of these entities through services performed by virtue of contractual arrangements.
Consequently, the Company consolidates its investments in these entities. Non-controlling interest represents
the interest of non-controlling units held by third parties. The non-controlling interests in Midland, LP1 and LP2
are presented as a liability because their shares are required to be redeemed for cash on a fixed or determinable
date.
(e) Joint arrangements
A joint arrangement is an arrangement in which two or more parties have joint control and must act together to
direct the activities that significantly affect the returns of the arrangement. Under IFRS 11 - Joint arrangements,
the Company classifies its interest in joint arrangements as either joint operations or joint venture. When making
this assessment, the Company considers structure and contractual terms of the arrangement, as well as the
legal form of any separate vehicles, in addition to all other relevant facts and circumstances.
Joint operations are recognized on proportionate consolidation basis by including the Company's share of
assets, liabilities, revenues and expenses and other comprehensive income in each of the respective
consolidated accounts. Joint venture are recognized using equity method of accounting. The Company's share
of individual assets and liabilities are recognized as investments in the joint ventures account on the consolidated
statements of financial position, and revenue and expenses are recognized with net earnings as a (gain) loss
from investment in joint ventures account on the consolidated statements of operations and comprehensive
income.
Effective November 30, 2018 and pursuant to the Trinidad Acquisition, the Company acquired a joint venture
arrangement with a wholly-owned subsidiary of Halliburton Company. The joint venture entity conducts business
under the name Trinidad Drilling International ("TDI") through separately incorporated companies. Trinidad owns
60 percent of the shares of TDI and each of the joint parties have equal voting rights. The Company considers
the investment in TDI to be a financial asset at fair value through profit or loss, and recognizes changes in fair
value of the investment in the statements of operations and comprehensive income (loss) as gain (loss) from
joint ventures.
The Company participates in other joint ventures that are considered immaterial for reporting purposes. In all
cases, the joint venture partners have joint control over the relevant activities of the joint venture, and such are
accounted for in these consolidated financial statements using the equity method of accounting.
(f) Cash and cash equivalents
Cash and cash equivalents consists of cash and cash equivalents with maturities of three months or less or
convertible to cash on demand without penalty.
(g)
Inventories
Inventories, comprised of spare equipment parts and consumables, are recorded at the lower of cost and net
realizable value. Cost is determined on a specific item basis.
(h) Asset held for sale
Non-current assets, and disposal groups, are classified as assets held for sale when the carrying amount is to
be recovered principally through a sales transaction rather than through continued use. This condition is
regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate
sale in its present condition. Management must be committed to the sale and it should be expected to be
completed within one year from the date of classification. Non-current assets and disposal groups classified
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
33
as held for sale are measured at the lower of the carrying value amount and fair value less cost to sell. Assets
held for sale are not depreciated.
If an asset classified as an asset held for sale no longer meets the criteria required, whereby the completion
of the sale within one year from the classification date is no longer relevant, or the Company has changed their
plans of selling the asset, the asset is re-classified back to property and equipment. The value of the asset is
then adjusted to the lower of either the carrying amount before the asset was classified as an asset held for
sale, adjusted for depreciation and any other adjustments that would have taken place, or its recoverable
amount at the date of the subsequent decision not to sell.
(i) Property and equipment
Property and equipment is initially recorded at cost. Costs associated with equipment upgrades that result in
increased capabilities or performance enhancements of property and equipment are capitalized. Costs incurred
to repair or maintain property and equipment are expensed as incurred. Property and equipment is subsequently
carried at cost less accumulated depreciation and write-downs and is derecognized on disposal or when there
is no future economic benefit expected from its use or disposal. Gains or losses on derecognition of property
and equipment are recognized in net income.
Depreciation is based on the estimated useful lives of the assets as follows:
Asset Class
Oilfield services equipment
Power
Drill pipe
Top drives
Mud pumps
Blow out preventer
Dynamic
Structure
Service rig equipment
Heavy oilfield service equipment
Drilling rig spare equipment
Buildings
Automotive equipment
Office furniture
Expected Life Method
Residual
5 years
6 years
10 years
10 years
10 years
10 years
20 years
20 years
Straight-line
Straight-line
Straight-line
Straight-line
Straight-line
Straight-line
Straight-line
Straight-line
3- 15 years
Straight-line
1- 10 years
Straight-line
20 years
Straight-line
3 years
Straight-line
5- 10 years
Straight-line
10%
10%
10%
10%
10%
10%
10%
10%
10%
—%
—%
10%
—%
The calculation of depreciation includes assumptions related to useful lives and residual values. The
assumptions are based on experience with similar assets and are subject to change as new information becomes
available. During the first quarter of 2018, Ensign undertook a review of its depreciation methodology for all
rigs and related equipment. As a result, as of January 1, 2018, the Company determined that using a straight-
line method (versus unit of production) and a lower salvage value would more accurately reflect the future
economic benefits related to these assets. These adjustments were applied prospectively and caused an
increase in depreciation for year ended December 31, 2018 of $78,938.
Property and equipment is reviewed for impairment when events or changes in circumstances indicate that its
carrying value may not be recoverable. The Company’s operations and business environment are routinely
monitored, and judgment and assessments are made to determine if an event has occurred that indicates
possible impairment.
If indicators of impairment exist, the recoverable amount of the asset or cash-generating unit (“CGU”) is
estimated. If the carrying value of the asset or CGU exceeds the recoverable amount, the asset or CGU is
written down to its recoverable amount. The recoverable amount of an asset or CGU is the greater of its fair
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
34
value less costs to dispose and value-in-use. Value-in-use is determined as the amount of estimated risk-
adjusted discounted future cash flows.
(j) Business combinations
The acquisition method of accounting is used to account for the acquisition of subsidiaries and businesses by
the Company at the date control of the business is obtained. The cost of the business combination is measured
as the aggregate of the fair value at the date of exchange of assets given, liabilities incurred or assumed, and
equity instruments issued by the Company in exchange for control of the acquiree. Acquisition-related costs
are expensed as incurred. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition are recognized at their fair values at the acquisition date.
(k) Revenue recognition
Effective January 1, 2018, the Company adopted IFRS 15 - Revenue from Contracts with Customers using the
modified retrospective method with the cumulative effect of adopting this standard as an adjustment to the
opening balances of retained earnings. The Company did not adjust the opening balances of retained earnings
as at January 1, 2018, given that the adoption of IFRS 15 did not result in any changes in the timing of revenue
recognition for the Company’s goods and services.
Revenue from oilfield services is generally earned based upon service orders or contracts with a customer that
include fixed or determinable prices based upon daily, hourly or job rates. Revenue is recognized when services
are performed and have been accepted by the customer, and collectability is reasonably assured. The
consideration for services rendered is measured at the fair value of the consideration received and allocated
based on their standalone selling prices. The standalone selling prices are determined based on the agreed
upon list prices at which the Company sells its services in separate transactions. Payment terms with customers
vary by country and contract. Standard payment terms are 30 days from invoice date. Customer contract terms
do not include provisions for significant post-service delivery obligations.
The Company does not expect to have any revenue contracts where the period between the transfer of the
promised goods or services to the customer and payment by the customer exceeds one year. As a consequence,
the Company does not adjust any of the transaction prices for the time value of money. The Company does
not incur material costs to obtain contracts with customers and consequently, does not recognize any contract
assets. The Company does not have any contract liabilities associated with its customer contracts. The adoption
of IFRS 15 did not result in any changes in the timing of revenue recognition for the Company’s goods and
services.
Accounting policy applied until December 31 2017
Revenue from oilfield services is generally earned based upon service orders or contracts with a customer that
include fixed or determinable prices based upon daily, hourly or job rates. Revenue is recognized when services
are performed and only when collectability is reasonably assured. Customer contract terms do not include
provisions for significant post-service delivery obligations.
The Company also provides services under turnkey contracts whereby oilfield services are performed for a
fixed price, regardless of the time required or the problems encountered performing the service. Revenue from
such contracts is recognized using the percentage-of-completion method based upon costs incurred to date
and estimated total contract costs. Anticipated losses, if any, on uncompleted contracts are recorded at the
time the estimated costs exceed the contract revenue.
For contracts that are terminated prior to the specified term, early termination payments received by the Company
are recognized as revenue when all contractual requirements are met.
(l) Foreign currency translation
The consolidated financial statements are presented in Canadian dollars which is the Company’s functional
currency. Financial statements of the Company’s United States and international subsidiaries have a functional
currency different from Canadian dollars and are translated to Canadian dollars using the exchange rate in
effect at the year-end date for all assets and liabilities, and at average rates of exchange during the year for
revenues and expenses. All changes resulting from these translation adjustments are recognized in other
comprehensive (loss) income.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
35
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign
currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in currencies other than an operation’s functional currency are recognized in the consolidated
statement of (loss) income.
(m) Borrowing costs
Interest and borrowing costs that are directly attributable to the acquisition, construction or production of
qualifying assets are capitalized as part of the cost of those assets. Qualifying assets are those which take a
substantial period of time to prepare for their intended use. Capitalization ceases when substantially all activities
necessary to prepare the qualifying asset for its intended use are complete. All other interest is recognized in
the consolidated statement of (loss) income in the period in which it is incurred.
(n)
Income taxes
The Company follows the liability method of accounting for income taxes. Under this method, income tax liabilities
and assets are recognized for the estimated tax consequences attributable to differences between the amounts
reported in the consolidated financial statements and their respective tax bases, using enacted or substantively
enacted income tax rates. The effect of a change in income tax rates on deferred income tax liabilities and
assets is recognized in income in the period in which the change is substantively enacted.
Deferred tax assets are recognized to the extent that future taxable income will be available against which
temporary differences can be utilized.
(o) Share-based compensation
The Company has an employee share option plan or equivalent that provides all option holders the right to
elect to receive either common shares ("Common Shares") or a direct cash payment in exchange for the
options exercised. These options are accounted for as a compound financial instrument, which requires the
fair value of the liability component to be determined first and the residual value, if any, allocated to the equity
component. The fair value of the settlement option under cash and shares is the same; therefore these options
are accounted for as cash-settled awards.
The Company has other cash-settled share-based compensation plans. Cash-settled share-based
compensation plans are recognized as compensation expense over the vesting period using fair values with a
corresponding increase or decrease in liabilities. The liability is remeasured at each reporting date and at the
settlement date. Any changes in the fair value of the liability are recognized as share-based compensation
expense in the statement of income. The fair value is determined using the Black-Scholes option pricing model.
The Company has established a Performance Share Units (PSU) incentive plan measured at the fair value
when granted using the volume weighted average of the Company's stock price for the ten day period preceding
the reporting date, as well as certain performance factors assessed by management and subject to a two percent
cap based on certain financial performance metrics. The fair value is re-measured at each reporting date.
The Company has share savings and share bonus plans for employees, as well as a program whereby a portion
of the retainer paid to Directors is in the form of Common Shares of the Company. In all cases, any Common
Shares acquired for such plans are purchased in the open market and administered through trusts until the
shares are vested. The share purchase price is considered the fair value.
(p) Financial instruments
The IASB issued the final version of IFRS 9 Financial Instruments, which is effective for annual periods
beginning on or after January 1, 2018. IFRS 9, as amended, addresses the classification, measurement
and derecognition of financial assets and financial liabilities, introduces a substantially reformed approach to
hedge accounting and a new impairment model for financial assets. The Company has adopted the standard
retrospectively from January 1, 2018, with the transition provisions permitted under the standard. Differences
in the carrying amount of financial assets and financial liabilities resulting from the adoption of IFRS 9 are
recognized in the opening balance as of January 1, 2018. Comparative prior year periods are not restated.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
36
The allowances for doubtful accounts as at December 31, 2017 reconciles to the opening allowances for doubtful
accounts on January 1, 2018 as follows:
Allowance for
doubtful
accounts
$
4,165
11,234
1,547
12,781
16,946
Closing allowance for doubtful accounts as at December 31, 2017
Loss related to Venezuela
Loss related to other receivables
Total amounts restated through opening retained earnings
Opening allowance for doubtful accounts as at January 1, 2018 - calculated under IFRS 9
$
To measure the expected credit losses, trade receivables and contract assets have been grouped based on
shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress
and have substantially the same risk characteristics as the trade receivables for the same types of contracts.
The Company has therefore concluded that the expected loss rates for trade receivables are a reasonable
approximation of the loss rates for the contract assets.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is
no reasonable expectation of recovery include, amongst others, the failure of a customer to engage in a
repayment plan with the Company, and a failure to make contractual payments for a period of greater than 120
days past due.
As a result of the above noted adoption of accounting policies, the Company's residual undiscounted accounts
receivable related to the Company's operations in Venezuela was provisioned for.
(i) Classification
Beginning January 1, 2018, the Company classifies its financial assets in the following measurement categories:
i. Those to be measured subsequently at fair value (either through other comprehensive income, or through
profit or loss), and
ii. Those to be measured at amortized cost.
The classification depends on the Company’s business model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive
income. The Company reclassifies financial assets when and only when its business model for managing those
assets changes.
(ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus transaction costs that are
directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair
value through profit or loss are expensed in profit or loss. Subsequent measurement of financial assets depends
on the Company’s business model for managing the asset and the cash flow characteristics of the asset.
There are three measurement categories into which the Company classifies its financial assets:
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at amortized cost. Interest income from these financial
assets is included in finance income using the effective interest rate method. Any gain or loss arising
on derecognition is recognized directly in profit or loss and presented together with foreign exchange gains
and losses. Impairment losses are presented as separate line item in profit or loss.
Fair value through other comprehensive income: Assets that are held for collection of contractual cash flows
and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and
interest, are measured at fair value through other comprehensive income. Movements in the carrying amount
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
37
are taken through other comprehensive income, except for the recognition of impairment gains or losses,
interest revenue and foreign exchange gains and losses which are recognized in profit or loss. When the
financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive
income is reclassified from equity to profit or loss and recognized in other gains and losses. Interest income
from these financial assets is included in finance income using the effective interest rate method. Foreign
exchange gains and losses are presented in other gains or losses and impairment expenses are presented as
separate line item in profit or loss.
Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or fair value through
other comprehensive income are measured at fair value through profit or less. A gain or loss on a financial
asset that is subsequently measured at fair value through profit or loss is recognized in profit or loss and
presented net within other gains or losses in the period in which it arises.
Accounting policy applied until December 31 2017
The Company has applied IFRS 9 retrospectively, but has elected not to restate comparative information. As
a result, the comparative information provided continues to be accounted for in accordance with the Company's
previous accounting policy.
All financial instruments are measured at fair value upon initial recognition of the transaction. Measurement in
subsequent periods is dependent on whether the instrument is classified as a “financial asset or financial liability
at fair value through profit or loss”, “available-for-sale financial assets”, “held-to-maturity investments”, “loans
and receivables”, or “other financial liabilities”. The Company derecognizes a financial asset when the
contractual right to the cash flows from the asset expires, or it transfers the right to receive the contractual cash
flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the
financial asset are transferred. The Company derecognizes a financial liability when its contractual obligations
are discharged, cancelled or expired. Financial assets and liabilities are offset and the net amount presented
in the balance sheet when the Company has a legal right to offset the amounts and intends either to settle on
a net basis or to realize the asset and settle the liability simultaneously.
The Company has the following non-derivative financial assets:
(i) Financial assets at fair value through profit or loss:
Cash and cash equivalents are held for trading within the fair value through profit or loss category. Financial
assets at fair value through profit or loss are measured at fair value, and changes therein are recognized in
net income.
(ii) Loans and receivables:
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active
market. Such assets are recognized initially at fair value, adjusted for any directly attributable transaction costs.
Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective
interest method, less any impairment losses. The Company’s trade and other receivables are categorized as
loans and receivables.
(iii) Available for sale:
From time to time, the Company may have certain equity investments in certain entities and the fair value is
determined using Level 1 of the three-level hierarchy. Investments that have a quoted price in an active market
are measured at fair value with changes in fair value recognized in other comprehensive income. When the
investment is ultimately sold, any gains or losses are recognized in net income and any unrealized gains or
losses previously recognized in other comprehensive income are reversed.
The Company has the following non-derivative financial liabilities:
(i) Other financial liabilities:
Trade and other payables, finance lease obligations, senior unsecured notes and bank credit facilities are
classified as “other financial liabilities”. Other financial liabilities are recognized initially at fair value, net of
any directly attributable transaction costs. Other financial liabilities, including the Ensign Notes (as defined
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
38
below) and the Trinidad Notes (as defined below), are subsequently measured at amortized cost using the
effective interest method. Transaction costs incurred with respect to the credit facilities are deferred and
amortized using the straight-line method over the term of the facility. The asset is recognized in other assets
on the balance sheet while the amortization is included in finance costs within net income.
(ii) Equity instruments:
Common Shares are classified as equity. Incremental costs directly attributable to the issue of Common
Shares are recognized as a deduction from equity, net of any tax effects.
(q) Critical judgments and accounting estimates
Preparation of the Company’s consolidated financial statements in accordance with IFRS requires management
to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, income
and expenses. Actual results could differ from those estimates. Estimates, judgments and assumptions are
continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
The following are the most critical estimates and assumptions used in determining the value of assets and
liabilities:
Allowance for doubtful accounts
The Company establishes an allowance for estimated losses for uncollectible accounts. The allowance is
determined based on customer credit-worthiness, current economic trends and past experience. Information
regarding the allowance for doubtful accounts is included in Note 22.
Property and equipment
The calculation of depreciation includes assumptions related to useful lives and residual values. Assumptions
are based on experience with similar assets and is subject to change as new information becomes available.
In addition, assessing for impairment requires estimates and assumptions.
Assets are grouped into CGUs based on separately identifiable and largely independent cash inflows and are
used for impairment testing. Estimates of future cash flows used in the evaluation of impairment of assets are
made using management’s forecasts of market prices, market supply and demand, margins, and discount rates.
Information regarding property and equipment is included in Note 7.
Share-based compensation
Measurement inputs include share price on measurement date, exercise price, expected volatility, weighted
average expected life, expected dividends, and risk-free interest rate. Significant estimates and assumptions
are used in determining the expected volatility based on weighted average historic volatility adjusted for changes
expected due to publicly available information, weighted average expected life and expected forfeitures, based
on historical experience and general option-holder behavior. Changes to input assumptions will impact share-
based compensation liability and expense. Information regarding share-based compensation is included in
Note 10.
Income taxes
The Company is subject to income taxes in a number of tax jurisdictions. The amount expected to be settled
and the actual outcome and tax rates can change over time, depending on the facts and circumstances. Changes
to these assumptions will impact income tax and the deferred tax provision. Information regarding income taxes
is included in Note 12.
Critical judgments in applying accounting policies that have the most significant effect on the amounts recognized
in the consolidated financial statements are as follows:
Functional currency
The Company determines functional currency based on the primary economic environment in which the entity
operates. This includes a number of factors that must be considered by the Company in using its judgment to
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
39
determine the appropriate functional currency for each entity. These factors include currency of revenue
contracts and currency that mainly influences operating, financing and investing activities. Information regarding
the specific functional currencies by Subsidiaries and Partnerships is included in Note 22.
Impairments
Assessing for indicators of possible impairment requires judgment in the assessment of facts and circumstances
and is a subjective process that often involves a number of estimates and is subject to interpretation. Information
regarding impairment is included in Note 7.
Deferred income tax assets
The recognition of deferred tax assets is based on judgments about future taxable profits.
Joint arrangements
The Company assesses the values of these instruments by using a discounted cash flow model. This calculation
requires the use of estimates, including: future drilling activity and utilization of the drilling rigs, future equipment
deployment milestones, prices, operating costs, discount rates, timing of new property and equipment and
other assumptions.
Purchase price allocation
The measurement of each business combination requires management estimation in determining the fair values
of assets and liabilities acquired as well as the fair value of any intangible assets identified. Management is
required to estimate future cash flows, discount rates and market conditions at the date of the acquisition in
order to determine the fair value of certain assets.
(r) Recent accounting pronouncements
On January 13, 2016 the IASB issued IFRS 16 - Leases ("IFRS 16") which has been adopted by the Company
on January 1, 2019 using the modified retrospective method. Under the modified retrospective method,
comparative financial information is not restated and continues to be reported under the accounting standards
in effect for those periods. Under the principles of the new standard, the Company will recognize lease liabilities
related to its lease commitments. These lease liabilities will be measured at the present value of the remaining
lease payments, discounted using the Company's incremental borrowing rate as at January 1, 2019. The
associated right of use ("ROU) assets will be measured at the lease liability amount on January 1, 2019 resulting
in no adjustment to the opening balance of retained earnings. The Company intends to use the following practical
expedients permitted under the new standard:
(i) Lease with a remaining lease term of less than twelve months as at January 1, 2019 as a sort term leases;
(ii) Leases of low dollar value will continue to be expensed as incurred;
(iii) The Company will not apply any grandfathering practical expedients.
The Company is in process of completing its assessment and expects to book a right to use assets and
corresponding liability when the standard comes in effect.
4. FOREIGN OPERATIONS
The Company provides oilfield services throughout much of North America and internationally in a number of
onshore drilling areas. The Company expanded its foreign operations to Bahrain, Mexico, the United Arab Emirates
and Kuwait through the Trinidad Acquisition. The Company’s foreign operations, with the general exception of
operations in the United States and Australia, are subject to a number of risks and uncertainties such as unstable
government regimes, civil and/or labor unrest, strikes, terrorist threats, regulatory uncertainty and complex
commercial arrangements.
The Company’s operations in Venezuela and Argentina are subject to certain restrictions with respect to the transfer
of funds into or out of such countries; however, such restrictions are not considered significant to the Company at
this time due to the relatively small size of the operations and certain contractual provisions that have been put in
place designed to protect the Company. As such the Company is exposed to significant foreign exchange risks.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
40
5. BUSINESS COMBINATIONS
Effective November 30, 2018 (the "Effective Date") the Company completed the acquisition of 56.4 percent of the
issued and outstanding common shares of Trinidad Drilling Ltd. (Trinidad), a publicly traded oilfield service company.
Following the acquisition of 56.4 percent of Trinidad, the Company extended the period for the tender of additional
Trinidad shares and acquired 89.3 percent through a series of transactions for total consideration of $410,197.
The strategic business combination was completed to increase the Company's presence in the North American
drilling market and certain international markets.
The Trinidad Acquisition was funded from the Company's cash resources and new Credit Facility as described
in Note 12.
The preliminary allocation of the purchase price for the Trinidad Acquisition is determined as follows:
Net assets acquired
Accounts receivable
Prepaid expenses
Assets held for sale
Property and equipment
Investment in joint ventures
Future income tax
Accounts payable
Deferred revenue
Long term debt
Non-controlling interests liability
Gain on bargain purchase
Net assets acquired
Minority interest
Consideration net of cash received1
1 Cash of $89,856 was acquired as part of Trinidad Acquisition
The purchase price consideration as at the Effective Acquisition Date is as follows:
Cash consideration paid in 2017
Cash consideration paid in 2018
Fair value adjustment
Total consideration
132,317
4,789
18,806
794,464
144,776
199,374
(124,911)
(1,909)
(591,818)
(5,661)
(200,672)
369,555
49,214
320,341
24,302
384,120
1,775
410,197
The Company has recognized the gain of $200,672 on bargain purchase in Consolidated Statements of
Comprehensive Income (Loss) ,which is largely related to the recording of the deferred tax assets at an undiscounted
amount versus fair value in the acquisition.
The fair value of acquired trade receivables is $132,317. The gross contractual amount for trade receivables due
is $135,043 of which $2,726 is expected to be uncollectible.
During the fourth quarter of 2018, the Company acquired control of certain Trinidad assets including land, buildings
and other under-utilized equipment which continue to be held for sale. The Company's management is committed
to the sale and assesses that all criteria are met in order to continue to classify the assets as held for sale.
The Company recognizes minority interests in an acquired entity either at fair value or at the minority interest's
proportionate share of the acquired entity's net identifiable assets. This decision is made on an acquisition-by-
acquisition basis. For minority interests in Trinidad, the Company elected to recognize the minority interest at its
proportionate share of the acquired net identifiable assets.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
41
The acquired Trinidad business contributed revenues of $49,766 and net profit of $3,386 to the Company for the
period December 1 to December 31, 2018. If acquisition had occurred on January 1, 2018, it is estimated that the
consolidated pro-forma revenue and loss for the year ended December 31, 2018 would be $1,724,648 and $563,787
respectively. Included in the loss was an impairment of property and equipment and goodwill and intangibles of
$564,874 recorded by Trinidad during Q3, 2018.
The Trinidad Acquisition was accounted for as a business combination using the acquisition method whereby the
net assets and liabilities assumed are recorded at fair value. The preliminary purchase price allocation is based
on management's best estimates of fair values of Trinidad's assets and liabilities as at the Effective Acquisition
Date, although future adjustments to estimates may be required.
If new information obtained within one year from the Effective Acquisition Date regarding facts and circumstances
that existed at the Effective Acquisition Date that identify adjustments to the above amounts, or any additions to
provisions that existed at the Effective Acquisition Date, then the accounting at acquisition will be revised.
6.
CASH AND CASH EQUIVALENTS
(a) Cash and cash equivalents
Cash
Restricted cash
Total cash and cash equivalents
(b) Non-cash working capital
Net change in non-cash working capital
Accounts receivable
Inventories, investments and other
Accounts payable and accruals
Income taxes receivable
Dividends payable
Relating to:
Operating activities
Investing activities
Financing activities
December 31
2018
December 31
2017
$
$
75,709
9,114
84,823
$
$
32,374
—
32,374
December 31
2018
December 31
2017
$
19,535
$
(21,623)
39,373
(45,186)
(58,185)
—
(44,463)
$
(73,806)
$
17,734
11,609
(44,463)
$
(43,900)
39,483
17,042
(442)
(9,440)
(6,291)
(2,667)
(482)
(9,440)
$
$
$
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
42
7.
PROPERTY AND EQUIPMENT
Cost:
Balance at December 31, 2016
$
4,971,813 $
122,703 $
72,045 $
5,166,561
Rig and related
equipment
Automotive and
other equipment
Land and
buildings
Total
Additions
Disposals
Effects of foreign exchange
112,790
(50,268)
(131,816)
10,031
443
(4,319)
Balance at December 31, 2017
4,902,519
128,858
Acquisition
Additions
Disposals
Asset decommissioning
Effects of foreign exchange
Balance at December 31, 2018
Accumulated depreciation and write-downs
Balance at December 31, 2016
Depreciation
Disposals
Effects of foreign exchange
Balance at December 31, 2017
Depreciation
Disposals
Asset decommissioning
Effects of foreign exchange
Balance at December 31, 2018
Net book value:
At December 31, 2017
At December 31, 2018
942
(823)
(2,697)
69,467
26,000
596
(1,571)
—
3,029
123,763
(50,648)
(138,832)
5,100,844
794,464
89,851
(17,796)
(8,016)
255,191
768,464
77,318
(10,201)
(8,016)
246,779
—
11,937
(6,024)
—
5,383
$
$
$
$
$
5,976,863 $
140,154 $
97,521 $
6,214,538
(2,137,169) $
(94,078) $
(22,161) $
(2,253,408)
(308,869)
39,286
34,720
(2,372,032)
(399,086)
7,920
7,299
(108,655)
(13,559)
(1,934)
3,970
(105,601)
(13,618)
4,910
—
(4,312)
(3,994)
(326,422)
231
679
37,583
39,369
(25,245)
(2,502,878)
(2,505)
(415,209)
606
—
13,436
7,299
(2,515)
(115,482)
(2,864,554) $
(118,621) $
(29,659) $
(3,012,834)
2,530,487 $
3,112,309 $
23,257 $
21,533 $
44,222 $
2,597,966
67,862 $
3,201,704
Property and equipment includes equipment under construction of $32,277 (2017 - $34,980) that has not yet been
subject to depreciation. During the year, the Company added three well servicing rigs and decommissioned one
drilling rig that had been fully depreciated. The Company also had $9,808 of capital leases additions during the
year (2017 - $nil).
The adverse economic effects arising from the sustained low oil and natural gas prices are considered indicators
of possible impairment of the Company's assets, and accordingly an asset impairment test was performed by
Management. The Company completed impairment tests in each of its CGU's using five year cash flow projections
with a terminal value and concluded that no impairment charges were required for any CGU's as at December 31,
2018. The impairment tests were based on the following key assumptions:
•
•
•
a weighted average pre-tax discount rate of 10% to 14% based on the cost of the Company's capital and
debt, asset and country risk, together with past experience;
cash flow projections based on a 5% growth rate,
a terminal growth rate of 2%.
The Company performed a sensitivity analysis and noted no material impact in any CGU under any of the following
situations:
•
•
•
discount rates 1.8% higher or lower;
cash flows 19% higher or lower; and
a terminal growth rate 0%,
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
43
8.
INVESTMENT IN JOINT VENTURES
Joint venture loss (gain) reconciliation
Trinidad Drilling International gain from investment
Trinidad Drilling International fair value adjustment
Other joint arrangements net loss from investments
Gain from investment in joint ventures
Joint venture investment reconciliation
Trinidad Drilling International investment balance
Other joint arrangements net loss from investments
Investment in joint ventures
December 31,
2018
$
(1,096)
—
222
(874)
December 31,
2018
$
$
177,223
(213)
177,010
Effective November 30, 2018, through the Trinidad Acquisition, the Company acquired the TDI joint venture
arrangement with a wholly-owned subsidiary of Halliburton Company, to operate rigs in Bahrain, Kuwait, Saudi
Arabia, United Arab Emirates and Mexico. The joint venture conducts business under the name Trinidad Drilling
International through separately incorporated companies. Trinidad owns 60% of the shares of TDI and each of the
joint parties have equal voting rights. The investment is held through common shares and mandatory redeemable
preferred shares ("MRPS") classified as liabilities. The investment is treated as a financial asset and is fair valued
through profit or loss and recognizes changes in fair value of the investment in the consolidated statements of
income (loss) and comprehensive income (loss) as gain from investment in joint venture.
Continuity of investment in TDI
Acquisition of Trinidad Drilling Ltd.
Contributions to joint venture
Gain from investment in joint venture
Change in loan in joint venture
Elimination of downstream transactions
Effect of foreign exchange
Ending balance
December 31,
2018
$
144,776
26,144
1,096
528
(48)
4,727
$
177,223
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
44
(a) Summarized financial information for TDI
Summarized statements of operations for TDI:
(in thousands of Canadian dollars)
Revenue
Oilfield service revenue
Other revenue
Expenses
Operating expenses
Third party costs
General and administrative
Depreciation and amortization
Foreign Exchange
Finance cost
Loss on sale of assets
Preferred share valuation
Income before income tax
Current income taxes
Deferred income taxes
Net income
December 31, 2018
TDI
Ensign 60%
Share
3,281
244
3,525
2,002
244
762
1,875
(65)
90
658
(3,890)
1,849
23
—
1,969
146
2,115
1,201
146
457
1,125
(39)
54
395
(2,334)
1,110
14
$
1,826
$
1,096
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
45
Summarized statement of financial position for TDI:
Amounts are presented at 100% of the value included in the statements of financial position for TDI.
As at
(in thousands of Canadian dollars)
Assets
Current Assets
Cash and cash equivalents
Accounts receivable
Inventories and other
Total current assets
Property and equipment
Deferred income taxes
Total assets
Liabilities
Current Liabilities
Accounts payable and accruals
Total current liabilities
Preferred shares
Notes payables to joint venture partners
Total liabilities
Shareholders' Equity
Common Shares
Contributed surplus
Foreign currency translation reserve
Retained earnings
Total shareholders' equity
December 31
2018
$
54,380
16,146
6,309
76,835
268,010
5,915
$
350,760
$
14,052
14,052
274,534
27,053
315,639
23,508
102,500
6,437
(97,324)
35,121
Total liabilities and shareholders' equity
$
350,760
Related party transactions
The related party transaction exchange amounts are determined depending on the nature of the transaction, and
negotiations by both parties. They generally fall into two categories: shared services and sale of existing equipment.
• Shared services - TDI, and the shareholders of TDI, signed a shared-services agreement that outlines the costs
that will be reimbursed and the rates based on an employee time allocation assessment.
• Sale of pre-existing equipment -This equipment is sold at a gain/loss on sale to the Company based on third-
party valuations.
The joint shareholders of TDI have loaned funds, via promissory notes, to fund the importation of drilling rigs into
Saudi Arabia. The funds are recoverable through operations in TDI within five years from date of advance and
earn interest at 4.25% and mature in December 2020. As at December 31, 2018, the loan payable to the joint
venture shareholders is $27,053, of which $16,232 is payable to the Company.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
46
Fair value of investment in TDI joint venture
The Company assesses the fair value of the investment using a discounted future cash flow model that compares
the estimated future cash flows to the net book value of the asset at the period end date. The model incorporates
the following assumptions:
1. A weighted average pre-tax discount rate of 14.0%, which considered industry average cost of capital, past
experience, asset specific risk and anticipated debt to equity levels.
2. Five year forecasted cash flows, taking into consideration current industry conditions, actual 2018 operating
results and past experience.
3. A terminal value was used for each of the 2018 fair value assessments assuming 1.5% annual growth rate and
a 1.5% terminal growth rate for cash flows through the remainder of the segment’s life.
9.
ACCOUNTS PAYABLE AND ACCRUALS
Trade payables
Accrued liabilities
Accrued payroll
Interest payable
Deferred revenue
Other liabilities
10. SHARE-BASED COMPENSATION
Share option plan
December 31
2018
December 31
2017
$
117,783
$
110,789
60,025
45,800
24,383
16,859
6,524
8,302
47,582
892
14,579
8,008
$
271,374
$
190,152
The Company has an employee share option plan that provides all option holders the right to elect to receive either
Common Shares or a direct cash payment in exchange for the options exercised. The Company may grant options
to its employees for up to 14,886,400 (2017 - 14,886,400) Common Shares. The options’ exercise price equals the
market price of the Common Shares on the date of grant. Share options granted vest evenly over a period of five
years.
The total intrinsic value of the liability for vested benefits at December 31, 2018 was $1,320 (2017 - $2,278).
A summary of the Company’s share option plan as of December 31, 2018 and 2017 and the changes during the
years then ended, is presented below:
Outstanding – January 1
Granted
Exercised
Forfeited
Expired
Outstanding - December 31
Exercisable - December 31
Number of
Share Options
6,724,900
$
1,358,700
(4,200)
(946,400)
(1,094,800)
6,038,200
2,861,040
$
$
2018
Weighted
Average
Exercise Price
9.67
5.60
5.80
9.81
16.13
7.56
8.33
Number of
Share Options
5,037,700
$
2,064,750
(2,100)
(342,850)
(32,600)
6,724,900
3,032,400
$
$
2017
Weighted
Average
Exercise Price
10.74
7.18
7.30
9.88
15.51
9.67
11.35
The weighted average share price at the date of exercise of options in 2018 was $5.80 per Common Share (2017
- $7.30).
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
47
The following table lists the options outstanding at December 31, 2018:
Exercise Price
$5.60 to $6.66
$6.67 to $7.64
$7.65 to $10.37
Outstanding
Options
Average Vesting
Remaining (in
years)
Weighted
Average
Exercise Price
Options
Exercisable
Weighted
Average
Exercise Price
2,113,400
1,563,500
2,361,300
6,038,200
4.00
$
2.00
1.85
2.64
$
5.76
7.30
9.36
7.56
428,440
$
940,300
1,492,300
2,861,040
$
5.76
7.30
9.72
8.33
The assumptions used to estimate the fair value of employee share options as at December 31, 2018 were:
Remaining expected life (years)
Volatility (percent)
Forfeiture rate (percent)
Risk-free interest rate (percent)
Expected dividend (percent)
December 31
2018
December 31
2017
2.4
40.0
6.7
1.9
10.0
2.6
40.0
6.6
1.7
7.4
The expected volatility is determined based on weighted average historic prices for the Company’s Common Shares.
The forfeiture rate is estimated based on historical experience and general option holder behavior.
Share Appreciation Rights (SARs)
The Company has granted share appreciation rights (“SARs”) to certain employees that entitle the employees to
a cash payment. The amount of the cash payment is determined based on the increase in the share price of the
Company between grant date and exercise date. Grants under the plan vest evenly over a period of five years.
A summary of the Company’s SARs plan as of December 31, 2018 and 2017 and the changes during the years
ended, is presented below:
Outstanding – January 1
Granted
Exercised
Forfeited
Expired
Outstanding - December 31, 2018
Exercisable - December 31, 2018
2018
Weighted
Average
Exercise Price
9.39
5.60
5.60
10.18
16.13
7.28
8.07
Number of
SARs
612,700
$
150,000
(800)
(40,600)
(104,500)
616,800
263,600
$
$
2017
Weighted
Average
Exercise Price
10.97
6.97
—
10.83
15.51
9.39
11.58
Number of
SARs
477,100
$
241,000
—
(101,400)
(4,000)
612,700
242,600
$
$
The weighted average share price at the date of exercise of SARs in 2018 was $5.60 per common share. No SARs
were exercised in 2017.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
48
The following table lists the SARs outstanding at December 31, 2018:
Exercise Price
$5.60 to $7.00
$7.01 to $9.00
$9.01 to $10.37
SARs
Outstanding
Average Vesting
Remaining (in
years)
Weighted
Average
Exercise Price
SARs
Exercisable
Weighted
Average
Exercise Price
265,200
248,100
103,500
616,800
4.00
$
2.40
1.00
2.85
$
5.79
7.58
10.37
7.28
52,400
$
128,400
82,800
263,600
$
5.80
7.51
10.37
8.07
Performance Share Units (PSUs)
The Company grants Performance Share Units (PSUs) to certain officers and employees of the Company to
participate in the growth and development of the Company and to promote further alignment of interests between
employees and the shareholders. PSUs are subject to the Company's performance metrics assessed by
management with a three year performance period. Each PSU granted permits the holder to receive a cash payment
equal to the fair market value of a share as of the maturity date, adjusted for a performance multiplier.
A summary of the activity under this share based incentive plan is presented below:
Outstanding – January 1, 2018
Granted
Granted through dividend payment
Forfeited
Outstanding - December 31, 2018
11. BANK CREDIT FACILITIES AND LONG-TERM DEBT
Drawings on the Bank Facilities
Ensign Notes - Senior unsecured notes
Tranche B, due February 22, 2019, 3.97%
Tranche C, due February 22, 2022, 4.54%
Trinidad Notes - Senior unsecured notes, February 2025, 6.63%
Subordinate Convertible Debenture, January 22, 2022, 7.00%
Capital Lease Commitments
Unamortized deferred financing costs
Total
Less: current portion
Total long-term debt
Bank credit facilities:
Outstanding
694,983
771,917
98,703
(292,488)
1,273,115
December 31
2018
December 31
2017
$
946,531
$
488,677
136,444
136,444
477,554
34,538
9,689
(14,547)
$
$
1,726,653
(376,612)
1,350,041
$
$
125,730
125,730
—
—
1,436
(1,640)
739,933
(487,257)
252,676
As at December 31, 2018, the Company’s available bank credit facilities consists of a $1,250,000 (2017 - $500,000)
global revolving credit facility (the “Credit Facility”) and the Trinidad's existing credit facility (the "Trinidad Facility").
The Credit Facility is available to the Company and certain of its wholly-owned subsidiaries, and may be drawn in
Canadian or United States dollars, up to the equivalent value of $1,250,000 Canadian dollars.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
49
Interest is incurred on the utilized balance of the Credit Facility based on the election of one of the following options
when funds are drawn:
a. The bank's Canadian prime lending rate plus 0.50% to 3.00%
b. The US base or US prime rate
c. The commitment rate of 0.375% to 1.00%
d. The BA rate plus 1.50% to 4.00%
e. The LIBOR and letters of credit
The Credit Facility matures November 26, 2021, unless extended and is unsecured. No principal payments are
due until then.
The Credit Facility has the following covenant requirements:
• The Consolidated Debt to Consolidated EBITDA Ratio shall not exceed 5.50:1.00 as at the end of the Fiscal
Quarters ending on December 31, 2018 and March 31, 2019, 5:25:1.00 at the end of the Fiscal Quarters ending
June 30, 2019 and September 30, 2019, and 5.00:1.00 at any time thereafter;
•
The Consolidated EBITDA to Consolidated Interest Expense as at the end of any Fiscal Quarter shall not be
less than 2.50:1.00; and
• The Consolidated Senior Debt (being the Company's bank debt and outstanding Ensign Notes which were
redeemed and paid in full on January 10, 2019) to Consolidated EBITDA Ratio shall not exceed 3.00:1.00 as
at the end of the Fiscal Quarters ending December 31, 2018 and March 31, 2019, 2.75:1.00 at the end of the
Fiscal Quarters ending June 30, 2019 and September 30, 2019, and 2.50:1.00 at any time thereafter.
As at December 31, 2018 the Company was in compliance with all covenants related to the Credit Facility.
Consolidated EBITDA is defined under the Credit Facility as net income from continuing operations for the 12
month period then ended determined in accordance with IFRS before interest expense, depreciation, amortization
and accretion expenses, all provisions for taxes, all non-cash expenses and non-cash income, the amount of any
stock-based compensation; and extraordinary gains and losses.
As at December 31, 2018, the Company had $55,977 (2017 - $10,530) outstanding collateralized letters of credit,
used in the normal course of business.
Senior unsecured notes:
On February 22, 2012, the Company completed the private placement of USD $200,000 of senior unsecured notes
(the "Ensign Notes") with the terms noted above. Interest on the Ensign Notes is payable semi-annually on May
31st and November 30th of each year, with final interest payments due on expiry. The Ensign Notes are unsecured,
ranked equally with the Credit Facility and guaranteed by Ensign Energy Services Inc. and certain of the Company’s
subsidiaries located in Canada, the United States and Australia.
Interest accrued on the Ensign Notes at December 31, 2018 was $1,000 (2017 - $892) and has been included in
accounts payable and accruals on the consolidated statement of financial position. The Company incurred financing
costs associated with the Ensign Notes that are being deferred and amortized using the effective interest method.
On December 6, 2018, Ensign provided a notice of redemption to all holders of its Ensign Notes, with a redemption
effective date of January 10, 2019. Due to this redemption, Ensign did not calculate the financial covenants and
classified the senior unsecured notes to current liabilities.
Subordinate convertible debenture:
During the first quarter of 2018, the Company issued a non-brokered private placement of unsecured, subordinated
convertible debentures (the "Debentures") for gross proceeds of $37,000. The Debentures bear interest from the
date of closing at 7.0% per annum, payable semi-annually in arrears, on April 1 and October 1 each year. The
Debentures will mature on January 31, 2022.
If, on and after April 1, 2021, the closing price of the Company's Common Shares on the Toronto Stock Exchange
exceeds 125% of the Conversion Price for at least 30 consecutive trading days, the Debentures may be redeemed
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
50
by the Company for cash, in whole or in part from time to time, on not more than 90 days and not less than 60 days
prior notice, at a redemption price equal to the outstanding principal amount of the Debentures plus accrued and
unpaid interest thereon (if any), up to, but excluding, the date of redemption.
The liability component of the Debentures was recognized initially at the fair value and revalued quarterly using a
similar liability that does not have an equity conversion option, which was calculated based on an estimated market
interest rate of 8.25%.
The difference between the principal amount of the Debentures and the fair value of the liability component was
recognized in shareholders’ equity.
Acquisition
In the fourth quarter of 2018, the Company acquired control of Trinidad pursuant to the Trinidad Acquisition. As
part of the acquisition, the Company assumed $591,818 of long term debt, the particulars of which are as follows:
(i) The Trinidad Facility
$127,109 drawn on the Trinidad's existing credit facility (the "Trinidad Facility"). On November 27, 2018, Trinidad
notified the lenders that the acquisition of Trinidad by Ensign constitutes the occurrence of a change of control
under the credit agreement and therefore the Trinidad Facility was classified as a current liability and additional
borrowings was not permitted. Subsequent to year end on January 8, 2019, Ensign received consent from the
lenders to keep the Trinidad Facility outstanding and the size of the facility was reduced to an aggregate of $125,000
from the original $100,000 Canadian revolving facility and $100,000 US revolving facility, including $10,000
Canadian dollar overdraft and a $10,000 US dollar bank overdraft. The Trinidad Facility requires quarterly interest
payments based on Bankers Acceptance and LIBOR rates and a maturity of December 12, 2020. Subsequent
year end the Trinidad Facility was repaid in full on February 14, 2019. Due to this repayment, Ensign did not
calculate the financial covenants and classified the senior unsecured notes to current liabilities.
(ii) The Trinidad Notes
USD $350,000 (CAD $464,709) million of senior unsecured notes ("Trinidad Notes"). The Trinidad Notes mature
in February 2025, bear interest at 6.625% per annum, which is payable semi-annually in February and August.
The Company has the option to redeem all or part of the Trinidad Notes at a redemption price equal to the principal
plus accrued interest.
On December 6, 2018, Ensign provided a notice of redemption to all holders of its outstanding Trinidad Notes,
with a redemption effective date of January 10, 2019. Due to this redemption, Ensign did not calculate the financial
covenants and classified the senior unsecured notes to current liabilities.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
51
12.
INCOME TAXES
Analysis of deferred tax liability:
Property and equipment
Share-based compensation
Non-capital losses
Other
Net deferred tax liability
Deferred Tax:
Deferred tax asset recovered within 12 months
Deferred tax asset recovered after 12 months
Deferred tax liability recovered within 12 months
Deferred tax liability recovered after 12 months
December 31
2018
December 31
2017
$
501,508
$
427,893
$
$
(963)
(370,439)
(57,379)
(803)
(109,808)
(6,275)
72,727
$
311,007
(19,618)
$
(11,291)
(411,632)
(109,808)
2,470
501,507
4,213
427,893
Net deferred tax liability
$
72,727
$
311,007
Movement of deferred tax liability:
Opening deferred tax liability
Deferred tax recovery
Acquisition of Trinidad Drilling Ltd.
Foreign exchange impact
Net deferred tax liability
December 31,
2018
December 31,
2017
$
311,007
$
483,703
(53,224)
(147,799)
(200,672)
15,616
—
(24,897)
$
72,727
$
311,007
The provision for income taxes is different from the expected provision for income taxes using combined Canadian
federal and provincial income tax rates for the following reasons:
For the years ended
Income (loss) before income taxes
Gain on bargain purchase
Income tax rate
Expected income tax expense
Increase (decrease) from:
Higher effective tax rate on foreign operations
Non-deductible expenses
Adjustments from prior years
Functional currency translation adjustment and true up
Rate change impact on deferred taxes
Income tax expense
December 31
2018
December 31
2017
$
6,484
$
(187,796)
(200,672)
(194,188)
—
—
27.0%
26.9%
(52,431)
(50,517)
(1,818)
(1,083)
—
2,139
1,013
(9,848)
3,624
7,442
7,107
(107,960)
$
(52,180)
$
(150,152)
The statutory rate for 2018 increased slightly over that of 2017 due to the increase in the British Columbia and
Saskatchewan tax rates, effective January 1, 2018 for both provinces.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
52
13. NON-CONTROLLING INTERESTS
The non-controlling interests relate to Midland C Ranch Holdings, LLC (Midland), CanElson 120601 Drilling Limited
Partnership #1 (LP1), and CanElson 120601 Drilling Limited Partnership #2 (LP2) which were acquired as part of
Trinidad Acquisition. The following table summarizes the information relating to the non-controlling interest:
As at December 31, 2018
Acquired interest at November 30, 2018
Total comprehensive income attributable to non-controlling interest
Change in fair value of liability
Foreign currency translation adjustment
Balance as at December 31, 2018
$
$
Total NCI
5,661
180
—
166
6,007
Summarized statements of financial position for non-controlling interests
As at December 31, 2018
Non-controlling interests ownership percentage
Current assets
Non-current assets
LP1
50%
2,078
2,787
LP2
45.6%
1,099
1,925
Midland
Total
50%
5,995
5,523
9,172
10,235
Current liabilities
1,250
3,100
2,601
6,951
Summarized statement of operations and comprehensive income (loss) for non-controlling interests
For the year ended December 31, 2018
Non-controlling interests ownership percentage
Revenue
Net (loss)
LP1
50%
—
LP2
45.6%
—
(111)
(161)
Net (loss) attributable to non-controlling interests
Total comprehensive income (loss) attributable to non-
controlling interests
(55)
(55)
(75)
(75)
Midland
Total
50%
1,249
(18)
(9)
310
1,249
(290)
(139)
180
Fair value of non-controlling interest
The Company completed a valuation assessment of the non-controlling interest liability as part of business
combination. See Note 5 for more details.
14. SHARE CAPITAL
(a) Authorized
Unlimited common shares, no par value
Unlimited preferred shares, no par value, issuable in series
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
53
(b)
Issued, fully paid and outstanding
Opening balance – January 1
Shares issue as part of the dividend reinvestment plan
Changes in unvested shares held in trust
Number of
Common
Shares
156,753,209 $
—
107,847
2018
Amount
206,042
—
286
Number of
Common
Shares
153,594,857 $
2,933,708
224,644
2017
Amount
180,666
23,208
2,168
Closing balance - December 31
156,861,056 $
206,328
156,753,209 $
206,042
The total number of unvested shares held in trust for share-based compensation plans as at December 31, 2018
was 213,425 (December 31, 2017 – 321,272).
(c) Dividends
During the year ended December 31, 2018, the Company declared dividends of $75,396 (2017 - $75,785), being
$0.48 per common share (2017 - $0.48 per common share).
15. MINORITY INTERESTS
Set out below is summarized financial information for the Company's minority interest.
As at December 31, 2018
Minority interests ownership percentage
Current assets
Non-current assets
Current liabilities
Summarized statement of operations and comprehensive (loss) for minority interests:
For the year ended December 31, 2018
Minority interests ownership percentage
Revenue
Net income
Net income attributable to minority interest
Total comprehensive income attributable to minority interest
16. NET INCOME (LOSS) PER SHARE
Trinidad Drilling Ltd.
10.7%
176,587
986,030
101,610
Trinidad Drilling Ltd.
10.7%
49,766
3,386
362
1,392
$
$
$
$
Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of
common shares outstanding during the period.
Diluted net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of
Common Shares outstanding during the period adjusted for conversion of all potentially dilutive Common Shares.
Diluted net income (loss) is calculated using the treasury share method, which assumes that all outstanding share
options are exercised, if dilutive, and the assumed proceeds are used to purchase the Common Shares at the
average market price during the period.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
54
Net income (loss) attributable to common shareholders:
Basic and diluted
$
58,302
$
(37,644)
Weighted average number of Common Shares outstanding:
Basic
Potentially dilutive share-based compensation plans
Diluted
156,862,920
156,545,624
178,800
182,153
157,041,720
156,727,777
December 31
2018
December 31
2017
Share options of 3,923,750 (2017 – 4,890,600) were excluded from the calculation of diluted weighted average
number of Common Shares outstanding as they were anti-dilutive.
17. SEGMENTED INFORMATION
The Company determines its operating segments based on internal information regularly reviewed by management
to allocate resources and assess performance. Oilfield services are provided in Canada, the United States and
internationally. The amounts related to each geographic area are as follows:
As at and for the year ended December 31, 2018
Canada
United States
International
Revenue
Depreciation and amortization
Income (loss) before interest and income taxes
Total assets
Total liabilities
Purchase of property & equipment, net
As at and for the year ended December 31, 2017
Revenue
Depreciation and amortization
Loss before interest and income taxes
Total assets
Total liabilities
Purchase of property & equipment, net
For the years ended December 31
Rig rental revenue
Service revenue
Total revenue
241,034
118,521
123,781
907,011
1,404,756
14,355
Canada
262,793
110,808
(78,377)
980,476
561,809
21,459
641,558
204,412
(47,323)
2,161,721
582,818
49,082
273,765
92,103
(17,558)
825,376
115,851
9,859
United States
International
459,496
158,157
(61,818)
1,326,988
486,653
83,158
278,361
56,846
(6,391)
651,001
220,627
13,095
Total
1,156,357
415,036
58,900
3,894,108
2,103,425
73,296
Total
1,000,650
325,811
(146,586)
2,958,465
1,269,089
117,712
2018
2017
682,716
$
560,364
473,641
440,286
1,156,357
$
1,000,650
$
$
There are no material differences in the basis of accounting or the measurement of (loss) income, assets and
liabilities between the Company and reported segment information, except that certain inter-company liabilities and
equity are offset with the assets of the appropriate related segment. Revenues and expenses are attributed to
geographical areas based on the location in which the services are rendered. The segment presentation of assets
and liabilities is based on the geographical location of the assets.
During the year ended December 31, 2018 the Company had no customers that represented 10 percent or more
of the Company's revenue. During the year ended December 31, 2017, the Company had one customer that
represented more than 10 percent of the Company's revenue.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
55
18. EXPENSES BY NATURE
Salaries, wages and benefits
Share-based compensation
Total employee costs
Depreciation
Purchased materials, supplies and services
Foreign exchange and other
December 31
2018
December 31
2017
$
588,563
$
524,291
707
589,270
415,036
313,698
(19,001)
656
524,947
325,811
274,575
21,903
Total expenses before interest and income taxes
$
1,299,003
$
1,147,236
19. KEY MANAGEMENT COMPENSATION AND RELATED PARTY TRANSACTIONS
Key management personnel comprises of the Company’s directors and named executive officers. Compensation
for key management personnel consists of the following:
Short-term compensation
Share-based compensation
Total management compensation
December 31
2018
December 31
2017
$
$
2,744
717
3,461
$
$
2,349
1,407
3,756
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
56
20. SIGNIFICANT SUBSIDIARIES AND PARTNERSHIPS
The following table lists the Company’s principal operating partnerships and subsidiaries, the functional currency,
the jurisdiction of formation, incorporation or continuance of such partnerships and subsidiaries and the percentage
of shares owned, directly or indirectly, by the Company as of December 31, 2018:
Name of Subsidiary
Ensign Drilling Inc.
Ensign Argentina S.A.
Ensign de Venezuela C.A.
Ensign Energy Services Pty Limited
Ensign Australia Pty Limited
Ensign International Energy Services LLC
Tristate (Barbados) Holdings Inc.
Ensign Testing Services (U.S.A.) Inc.
Ensign United States Drilling Inc.
Ensign United States Drilling (California) Inc.
Ensign US Financial (Delaware) LP
Ensign US Southern Drilling LLC
OFS Canada Inc.
OFS Global Inc.
Ensign Well Servicing Inc.
Ensign Testing Services Inc.
Trinidad Drilling Ltd.
Trinidad Drilling USA Ltd.
Trinidad Drilling LP
Jurisdiction of
Formation
Incorporation
or
Continuance
Functional
Currency
Percentage Ownership of
Shares Beneficially Owned or
Controlled Directly or Indirectly
by the Company
2018
2017
CAD
USD
USD
USD
AUD
USD
USD
USD
USD
USD
USD
USD
CAD
USD
CAD
CAD
CAD
USD
USD
Canada
Argentina
Venezuela
Australia
Australia
Oman
Barbados
United States
United States
United States
United States
United States
Canada
Canada
Canada
Canada
Canada
United States
United States
100
100
100
100
100
100
100
100
100
100
100
100
100
100
—
—
89
89
89
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
—
—
—
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
57
21. CAPITAL MANAGEMENT STRATEGY
The Company’s objectives when managing capital are to exercise financial discipline, and to deliver positive returns
and stable dividend streams to its shareholders. The Company continues to be cognizant of the challenges
associated with operating in a cyclical, commodity-based industry and may make future adjustments to its capital
management strategy in light of changing economic conditions.
The Company considers its capital structure to include shareholders’ equity, bank credit facilities, convertible
debentures and senior unsecured notes. In order to maintain or adjust its capital structure, the Company may from
time to time adjust its capital spending or dividend policy to manage the level of its borrowings, or may revise the
terms of its bank credit facilities to support future growth initiatives. The Company may consider additional long-
term borrowings or equity financing if deemed necessary. As at December 31, 2018, the bank credit facilities'
drawings totaled $946,531 (2017 - $488,677), senior unsecured notes totaled $750,442 (2017 - $249,820) and
shareholders’ equity totaled $1,790,683 (2017 - $1,689,376).
The Company is subject to externally imposed capital requirements associated with its bank credit facilities and
senior unsecured notes, including financial covenants that incorporate shareholders’ equity, earnings, consolidated
interest expense and level of indebtedness. The Company monitors its compliance with these requirements on an
ongoing basis and projects future operating cash flows, capital expenditure levels and dividend payments to assess
how these activities may impact compliance in future periods.
22. FINANCIAL INSTRUMENTS
Categories of financial instruments
The classification and measurement of financial instruments is presented below:
Cash and cash equivalents and accounts receivable are classified as financial assets at amortized cost.
Accounts payable and accruals, dividends payable and long-term debt are classified as financial liabilities at
amortized cost.
Fair values
The fair value of cash and cash equivalents, accounts receivable, accounts payable and accruals and dividends
payable approximates their carrying value due to the short-term maturity of these financial instruments. The fair
value of the drawings on the bank credit facilities approximates its carrying value.
The estimated fair value of the senior unsecured notes has been determined based on available market information
and appropriate valuation methods, including the use of discounted future cash flows using current rates for similar
instruments with similar risks and maturities. The estimated fair value of the senior unsecured notes approximates
its carrying value.
Financial assets and liabilities recorded or disclosed at fair value in the consolidated statement of financial position
are categorized using a three-level hierarchy that reflects the level of judgment associated with the inputs used to
measure their fair value. The fair values of financial assets and liabilities included in Level 1 are determined by
reference to unadjusted quoted prices in active markets for identical assets and liabilities. Fair values of financial
assets and liabilities in Level 2 are based on inputs other than Level 1 quoted prices that are observable for the
asset or liability either directly (as prices) or indirectly (derived from prices). The fair values in Level 3 financial
assets and liabilities are not based on observable market data.
The estimated fair value of senior unsecured notes was based on Level 2 inputs and was estimated using the risk
free interest rates on government debt instruments of similar maturities, adjusted for estimated credit risk and
market risk premiums.
The estimated fair value of the investment in joint ventures is a Level 3 in the value of hierarchy. Inputs to the
change in the fail value of the investment in joint venture are disclosed in Note 8.
The fair value of non-controlling interest is based on Level 3 inputs and is not based on observable market.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
58
The following table summarizes the carrying value of the certain Company's financial assets and liabilities as
compared to their respective fair values:
As at
December 31, 2018
December 31, 2017
(in thousands of Canadian dollars)
Fair value Carrying value
Fair Value
Carrying value
Financial assets at fair value for profit or loss:
Investment in TDI joint venture
177,010
177,010
—
—
Financial liabilities at fair value through profit
or loss:
Ensign Notes - senior unsecured notes due 2019
and 2022
Trinidad Notes - senior notes dues 2025
Debenture
Non-controlling interests liability
Credit risk
278,614
482,682
34,538
6,007
278,614
482,682
34,538
6,007
251,460
251,460
—
—
—
—
—
—
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails
to meet its contractual obligations. Credit risk arises principally from the Company’s accounts receivable balances
owing from customers operating primarily in the oil and natural gas industry in Canada, the United States and
internationally. The carrying amount of accounts receivable represents the maximum credit exposure as at
December 31, 2018.
The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowances for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk
characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a
period of 36 months before December 31, 2018 or January 1, 2018 respectively and the corresponding historical
credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-
looking information on macroeconomic factors affecting the ability of the customer to settle the receivables.
On that basis, the loss allowance as at December 31, 2018 and January 1, 2018 (on adoption of IFRS 9) was
determined as follows for trade receivables:
As at December 31, 2018
Expected loss rate
Current
0.5%
More than 30
days past due
More than 60
days past due
More than 90
days past due
2.0%
8.2%
43.2%
Gross carrying amount
167,105
104,662
Loss allowances
836
2,093
26,207
2,149
25,682
11,105
January 1, 2018
Expected loss rate
Gross carrying amount
Loss allowances
Current
2.0%
107,308
2,146
More that 30
days past due
More that 60
days past due
More that 90
days past due
5.0%
12.5%
55.3%
67,904
3,395
8,641
1,080
18,671
10,325
Total
323,656
16,183
Total
202,524
16,946
As part of the Company’s international operations, it provides oilfield services in Venezuela pursuant to contractual
arrangements. As at December 31, 2018, the Company had accounts receivable of approximately $21,478 million
for work performed in Venezuela, and in recent months a number of payments have been received by the Company.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
59
Though the Company has a history of collecting accounts receivable in Venezuela, due to the continuing political
unrest in the country there can be no assurance that the Company will be successful in collecting all of such
accounts receivable outstanding. As a result the Company has provided a further $11,234 million provision onto
its already discounted accounts receivable balance.
The opening loss allowance for trade receivables as at December 31, 2018 reconciled in Note 3 (p).
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of debtor to engage in a repayment plan
with the Company, and failure to make contractual payments for a period of greater than 120 days past due.
Impairment losses on trade receivables are presented as net losses within operating profit. Subsequent recoveries
of amounts previously written off are credited against the same line item.
Previous accounting policy for impairment for trade receivables
The Company assesses the credit worthiness of its customers on an ongoing basis and establishes credit limits
for each customer based on external credit reports and other publicly available information, internal analysis and
historical experience with the customer. Credit limits are approved by senior management and are reviewed on a
regular basis or when changing economic circumstances dictate. The Company manages credit risk through
dedicated credit resources, ongoing monitoring and follow up of balances owing, well liens, and tightening or
restriction of credit terms as required. The Company also monitors the amount and age of accounts receivable
balances on an ongoing basis.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they are due. The
Company manages liquidity by forecasting cash flows on an annual basis and secures sufficient credit facilities to
meet financing requirements that exceed anticipated internally generated funds. As at December 31, 2018, the
remaining contractual maturities of accounts payable and accruals and dividends payable are less than one year.
Maturity information regarding the principal and interest on the Company’s long-term debt are as follows:
As at December 31
Less than 1 Year
1-3 Years
4-5 Years
Total
Ensign Notes - senior unsecured notes due
2019 and 2022
Trinidad Notes - senior unsecured notes due
2025
Bank facilities1
Debenture
Total
$
278,614
$
— $
— $
278,614
31,638
39,991
2,590
94,914
1,019,504
40,445
63,275
$
189,827
— $
— $
1,059,495
43,035
$
352,833
$
1,154,863
$
63,275
$
1,570,971
1 Interest on the bank credit facilities is calculated based on the amount drawn at December 31, 2018 and the applicable bankers’ acceptance/
LIBOR interest rates outstanding as at December 31, 2018. USD denominated balances are converted using the foreign exchange rate as of
December 31, 2018.
Market risk
Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect
the Company’s net income or the value of its financial instruments.
Interest rate risk
The Company is exposed to interest rate risk with respect to its bank credit facilities which bear interest at floating
market rates. For the year ended December 31, 2018, if interest rates applicable to its bank credit facilities had
been 0.25 percent higher or lower, with all other variables held constant, income before income taxes would have
been $3,966 lower or higher.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
60
Foreign currency exchange rate risk
Foreign currency risk can only arise on financial instruments that are denominated in a currency other than the
functional currency in which they are measured. The Company is not exposed to foreign exchange risk as the
Company does not have financial instruments that are not denominated in its functional currency. Translation
related risks are therefore not included in the assessment of the entity’s exposure to currency risks.
Translation exposures arise from financial and non-financial items held by an entity (for example, a subsidiary)
with a functional currency different from the Company’s presentation currency. However, foreign currency
denominated inter-company receivables and payables which do not form part of a net investment in a foreign
operation would be included in the sensitivity analysis for foreign currency risks, because even though the balances
eliminate in the consolidated balance sheet, the effect on profit or loss of their revaluation under IAS 21 is not fully
eliminated.
23. CONTINGENCIES AND COMMITMENTS
The Company has provided insurance bonds to certain government agencies in respect of the temporary importation
of equipment into that country. It is not anticipated that any material liabilities will arise from these insurance bonds.
The Company has commitments for facility leases, with future minimum payments as follows:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
$
9,052
13,792
—
The Company leases a number of facilities under operating leases. The leases typically run for a period of two to
ten years, with an option to renew the lease after that date. Lease payments are increased throughout the lease
term to reflect market rates.
For the year ended December 31, 2018, lease payments of $3,783 (2017 - $4,888) were recognized as an expense.
The Company is a party to various disputes and lawsuits in the normal course of its business and believes the
ultimate liability arising from these matters will have no material impact on its consolidated financial statements.
24. SUBSEQUENT EVENTS
Subsequent to December 31, 2018, the Company:
•
On January 10, 2019 the Company utilized the Credit Facility to redeem in full the USD $200,000 senior
guaranteed notes (Tranche B &C) due February 2019 and 2022. The total price for the redemption was USD
$205,100, which included the principal, make whole and accrued interest.
•
•
•
On February 14, 2019 the Company entered into a five year USD $700,000 senior loan facility (the “Senior
Loan”) at prevailing market rates for this type loan.
On February 14, 2019 a portion of the proceeds of the Senior Loan was utilized to repurchase 99.93% of the
outstanding USD $350,000 of Trinidad Notes due February 2025 and to pay related consent fees. The total
cost for the repurchase of the Trinidad Notes was USD $366,500. The Trinidad Notes were tendered, and the
consent fees were paid, pursuant to Trinidad’s change of control offer to purchase and solicitation of consents
announced on December 27, 2018. The Trinidad Notes were repurchased at 101% plus accrued and unpaid
interest. Consenting noteholders also received 0.5% as a consent fee for their consent to certain amendments
to the indenture governing the Trinidad Notes, among other things eliminating or modifying substantially all of
the restrictive covenants. The remaining 0.07% of the Trinidad Notes which were not tendered in the offer will
be repurchased prior to the end of March 2019.
On February 14, 2019 the Company reduced the Credit Facility available amount from $1,250,000 to $900,000
million and a portion of the proceeds of the Senior Loan was utilized to reduce the outstanding balance of the
Credit Facility to less than $900,000.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
61
•
•
•
•
•
•
On February 14, 2019 the Company repaid the existing Trinidad Facility utilizing a portion of the proceeds from
the Senior Loan.
On February 15, 2019 Trinidad and Holdings completed an amalgamation (the “Amalgamation”) to form an
amalgamated corporation named “Trinidad Drilling Ltd.” (“Amalco”). The amalgamation was approved at a
special meeting of Trinidad Shareholders held on January 31, 2019. Pursuant to the terms of an amalgamation
agreement (the “Amalgamation Agreement”) dated January 4, 2019 between Trinidad and Holdings, Trinidad
Shareholders (other than Holdings) received one redeemable preferred share of Amalco (each, a “Redeemable
Preferred Share”) for each Trinidad common share upon completion of the Amalgamation. The Redeemable
Preferred Shares were immediately redeemed for $1.68 in cash per Redeemable Preferred Share (the
“Redemption Consideration”). The Redemption Consideration was the same as the consideration that was
available to Trinidad Shareholders under Holding’s Offer for all the issued and outstanding Trinidad Shares,
which expired on December 21, 2018. Effective as of February 15, 2019, Amalco became an indirect wholly-
owned subsidiary of Ensign.
The Trinidad Shares were delisted from trading on the Toronto Stock Exchange effective as of the close of
trading on February 19, 2019.
On February 25, 2019, Trinidad ceased to be a reporting issuer with the applicable securities regulatory
authorities in each of the jurisdictions in which Trinidad was a reporting issuer (or equivalent).
Declared a dividend for the first quarter of 2019 of $0.12 per common share or approximately $18,877, payable
on or about April 4, 2019 to the shareholders of record at the close of business on March 25, 2019. The dividend
has not been provided for and is pursuant to the quarterly dividend policy adopted by the Company. Pursuant
to subsection 89(1) of the Canadian Income Tax Act (“ITA”), the dividend being paid is designated as an eligible
dividend, as defined in subsection 89(1) of the ITA.
The Company has re-implemented its dividend reinvestment plan ("the DRIP"). The DRIP has been updated
from the prior version operated by Ensign (the "Original DRIP") that was suspended in August 2017. The
substantive features of the Original DRIP have not been changed except to reflect certain tax changes and to
limit a participant’s ability to terminate their participation in the plan to once per year.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
62
Share Trading Summary
For the three months ended (Unaudited)
High ($)
Low ($)
Close ($)
Volume
Value ($)
2018
March 31
June 30
September 30
December 31
Total
7.83
6.55
7.20
6.51
5.61
5.56
5.29
4.14
6.04
5.87
6.23
4.79
23,422,300
157,503,889
15,172,200
91,109,848
8,356,300
51,778,506
14,162,900
72,049,229
61,113,700
372,441,472
For the three months ended (Unaudited)
High ($)
Low ($)
Close ($)
Volume
Value ($)
2017
March 31
June 30
September 30
December 31
Total
9.81
8.26
7.56
6.98
7.43
6.27
6.09
5.95
7.97
6.93
7.05
6.47
24,600,100
216,304,588
22,972,300
165,293,284
11,395,900
75,766,121
11,341,600
71,825,426
70,309,900
529,189,419
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
63
10 Year Financial information
(Unaudited - $ thousands, except per share data)
2018
2017
2016
2015
2014
Revenue
Gross margin
1,156,357
1,000,650
859,702
1,390,978
2,321,765
300,533
240,950
237,676
395,953
635,370
Gross margin % of revenue
26.0%
24.1 %
27.6 %
28.5 %
27.4%
Adjusted EBITDA
Depreciation
Net income (loss)
Net income (loss) per share
Basic
Diluted
255,677
415,036
201,784
325,811
185,173
349,947
329,010
335,513
58,664
(37,644)
(150,522)
(104,049)
(cid:7)0.37
(cid:7)0.37
$(0.24)
$(0.24)
$(0.99)
$(0.98)
$(0.68)
$(0.68)
542,262
298,854
71,120
$0.47
$0.46
Funds from operations
225,939
141,438
170,651
296,273
491,886
Funds from operations per share
Basic
Diluted
Net capital expenditures, excluding
acquisitions
Acquisitions1
$1.44
$1.44
73,296
320.341
Working capital (deficit)
(156,223)
(342,199)
Long-term debt, net of current portion
1,350,041
252,676
$0.90
$0.90
$1.12
$1.11
$1.94
$1.94
$3.22
$3.21
117,712
29,120
159,033
582,999
—
—
(11,153)
583,269
—
144,239
794,109
—
189,698
786,327
Shareholders' equity
1,790,683
1,689,376
1,832,489
2,086,596
2,045,237
Return on average shareholders' equity
Long-term debt to equity
Weighted avg. common shares outstanding -
basic
3.3%
0.75:1
(2.2)%
0.15:1
(8.2)%
0.32:1
(5.0)%
0.38:1
3.5%
0.38:1
156,862,920
156,545,624
152,759,973
152,476,615
152,710,636
Closing share price - December 31
$4.79
$6.47
$9.38
$7.38
$10.20
1 Consideration paid net of cash was $294,264 in 2018 and(cid:3)$24,302 in 2017. Fair value adjustment of $1,775 was recorded in 2018.
*Restated under IFRS
**Not restated for IFRS
All per share data and the weighted average common shares outstanding have been restated to reflect the 3-for-1 stock split effective May 2001 and(cid:3)
the 2-for-1 stock split effective May 2006.
Certain prior year amounts have been restated to reflect current year presentation.
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
64
10 Year Financial information
(Unaudited - $ thousands, except per share data)
2013
2012
2011
2010*
2009**
Revenue
Gross margin
2,098,011
2,197,321
1,890,372
1,355,683
1,137,575
573,838
641,812
567,446
370,860
356,554
Gross margin % of revenue
27.4%
29.2%
30.0%
27.4%
31.3%
Adjusted EBITDA
Depreciation
Net income (loss)
Net income (loss) per share
Basic
Diluted
485,712
248,026
128,865
$0.84
$0.84
560,975
220,227
217,522
$1.42
$1.42
497,188
177,927
212,393
$1.39
$1.39
310,011
132,980
119,308
$0.78
$0.78
305,670
111,015
125,436
$0.82
$0.82
Funds from operations
435,611
506,355
473,099
288,513
259,239
Funds from operations per share
Basic
Diluted
Net capital expenditures, excluding
acquisitions
Acquisitions
Working capital (deficit)
Long-term debt, net of current portion
$2.85
$2.84
342,225
76,408
(71,146)
317,407
$3.32
$3.31
$3.09
$3.09
$1.89
$1.88
$1.69
$1.69
306,689
386,833
255,463
132,573
—
497,352
—
52,573
13,861
296,589
(10,233)
405,953
84,516
107,894
—
—
Shareholders' equity
1,962,569
1,857,958
1,723,422
1,548,155
1,530,797
Return on average shareholders' equity
Long-term debt to equity
Weighted avg. common shares outstanding -
basic
6.7%
0.16:1
12.1%
0.16:1
13.0%
0.24:1
7.7%
NA
8.1%
NA
152,693,280
152,664,447
152,865,133
152,834,798
153,154,557
Closing share price - December 31
$16.73
$15.37
$16.25
$15.03
$15.00
*Restated under IFRS
**Not restated for IFRS
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
65
CORPORATE INFORMATION
BOARD OF DIRECTORS
CORPORATE MANAGEMENT
HEAD OFFICE
N. MURRAY EDWARDS
N. MURRAY EDWARDS
400 - 5th Avenue S.W., Suite 1000
Corporate Director and Investor
Chairman
ROBERT H. GEDDES
President and COO,
ROBERT H. GEDDES
President and Chief Operating
Ensign Energy Services Inc.
Officer
GARY CASSWELL (2,4)
Independent Businessman
JAMES B. HOWE (1,3)
President, Bragg Creek Financial
Consultants Ltd.
LEN KANGAS (2,4)
Independent Businessman
CARY A. MOOMJIAN, JR (2,3)
President,
CAM OilServ Advisors LLC
JOHN SCHROEDER (1,3)
Independent Businessman
GAIL SURKAN (2,3)
Independent Businesswoman
BARTH WHITHAM (1,4)
President and CEO,
Enduring Resources LLC
Calgary, Alberta T2P 0L6
Telephone: (403)-262-1361
Facsimile: (403)-262-8215
Email: info@ensignenergy.com
Website: www.ensignenergy.com
BANKERS
HSBC Bank Canada
STOCK EXCHANGE LISTING
Toronto Stock Exchange
MICHAEL GRAY
Chief Financial Officer
TOM CONNORS
Executive Vice President - Canada/
MICHAEL NUSS
Executive Vice President, U.S.
Symbol: ESI
AUDITORS
BRENT CONWAY
PricewaterhouseCoopers LLP
TRANSFER AGENT
Computershare Trust Company
of Canada
Executive Vice President,
International
TREVOR RUSSELL
Vice President, Finance
AHMED IQBAL
Corporate Controller
ROBERT RAIMONDO
Vice President, Health, Safety
and Environment
CATHY ROBINSON
Vice President, Global Human
Resources
SUZANNE DAVIES
Vice President Legal and Corporate
Secretary
COMMITTEE MEMBERS
1 Audit
2 Corporate Governance, Nominations and Risk
3 Compensation
4 Health, Safety and Environment
ENSIGN ENERGY SERVICES INC. | 2018 ANNUAL REPORT
66
www.ensignenergy.com