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Western Energy Services Corp. Releases Fourth Quarter and Year End 2017 Financial and Operating Results

CALGARY , Feb. 21, 2018 /CNW/ - Western Energy Services Corp. ("Western" or the "Company") (WRG.TO) announces the release of its fourth quarter and year end 2017 financial and operating results. Additional information relating to the Company, including the Company's financial statements and management's discussion and analysis as at and for the years ended December 31, 2017 and 2016 will be available on SEDAR at www.sedar.com. Non-International Financial Reporting Standards ("Non-IFRS") measures and abbreviations for standard industry terms are included in this press release.  All amounts are denominated in Canadian dollars (CDN$) unless otherwise identified.

Fourth Quarter 2017 Operating Results:

  • Operating Revenue in the fourth quarter of 2017 benefited from the improved economic conditions and resulted in higher customer spending and a corresponding increase in demand for Western's services.  Fourth quarter Operating Revenue increased by $17.7 million (or 42%) to $59.3 million in 2017 as compared to $41.6 million in the same period of the prior year.  In the contract drilling segment, Operating Revenue totalled $45.9 million in the fourth quarter of 2017 as compared to $29.0 million in the fourth quarter of 2016, an increase of $16.9 million (or 58%); while in the production services segment, Operating Revenue totalled $13.4 million for the three months ended December 31, 2017 as compared to $12.7 million in the same period of the prior year, an increase of $0.7 million (or 5%).  Higher utilization in the contract drilling segment in the fourth quarter of 2017, and improved pricing in Canada , positively impacted Operating Revenue in the contract drilling and production services segments as described below:

These factors, combined with improved market conditions, resulted in higher demand for the Company's drilling rigs and a 13% improvement in Operating Revenue per Billable Day in the fourth quarter of 2017, as compared to the same period in the prior year;

  • Fourth quarter Adjusted EBITDA improved by $6.6 million (or 187%) to $10.1 million in 2017 as compared to $3.5 million in the fourth quarter of 2016.  The year over year change in Adjusted EBITDA is due to increased activity in the contract drilling segment and improved pricing in Canada , which was partially offset by lower pricing in the United States and decreased well servicing activity.      
  • Administrative expenses, excluding depreciation and stock based compensation, increased by $0.8 million (or 16%) to $5.8 million , as compared to $5.0 million in the fourth quarter of 2016, mainly due to higher employee related costs.
  • The Company incurred a net loss of $5.0 million in the fourth quarter of 2017 ( $0.06 per basic common share) as compared to a net loss of $14.5 million in the same period in 2016 ( $0.20 per basic common share).  The change can be attributed to the following:
  • Fourth quarter 2017 capital expenditures of $5.9 million included $3.0 million of expansion capital and $2.9 million of maintenance capital.  In total, capital spending in the fourth quarter of 2017 increased by $3.2 million from the $2.7 million incurred in the fourth quarter of 2016.  The Company incurred expansion capital mainly related to drilling rig upgrades and the purchase of oilfield rental equipment in the fourth quarter of 2017, as well as necessary maintenance capital related to the higher activity in the period.


2017 Operating Results:

  • Operating Revenue in 2017 benefited from improved market conditions and higher customer spending which resulted in a corresponding increase in demand for Western's services.  In 2017, Operating Revenue increased by $102.1 million (or 87%) to $219.0 million as compared to $116.9 million in 2016.  In the contract drilling segment, Operating Revenue totalled $166.7 million in 2017, an increase of $87.8 million (or 111%), as compared to $78.9 million in 2016, and included $6.4 million in shortfall commitment revenue in 2017, as compared to $1.8 million in shortfall commitment revenue in 2016; while in the production services segment, Operating Revenue totalled $52.5 million , an increase of $14.4 million (or 38%) as compared to $38.1 million in 2016.  Higher utilization in all divisions and higher pricing in Canada in 2017 as compared to 2016, impacted Operating Revenue in the contract drilling and production services segments as described below:

These factors, combined with improved market conditions, resulted in higher demand for the Company's drilling rigs in 2017.  Additionally, Western continued to increase its market share in 2017.  Western's 50 drilling rigs in Canada represent approximately 8% of the rigs registered with the CAODC, however Western's total operating days in 2017, represented 10% of the total industry Operating Days reported by the CAODC.  The factors noted above led to improved Operating Revenue per Billable Day in 2017 particularly in the latter part of the year, resulting in a 3% year over year improvement as compared to 2016.

  • Adjusted EBITDA increased by $29.9 million (or 518%) to $35.7 million in 2017 as compared to $5.8 million in 2016.  The year over year increase in Adjusted EBITDA is due to higher activity across all divisions, a $4.6 million increase in shortfall commitment revenue in 2017, and the Company's ability to safely and efficiently reactivate equipment and crews without incurring significant costs, including rigs that had been idle for an extended period of time.  These factors were aided by improved pricing in Canada , which was partially offset by lower pricing in the United States .  
  • Administrative expenses in 2017, excluding depreciation and stock based compensation, increased by $2.6 million (or 13%) to $22.6 million as compared to $20.0 million in 2016.  The increase in administrative expenses is mainly due to higher employee related costs, coupled with one time professional fees incurred in the period.
  • The Company incurred a net loss of $37.4 million for the year ended December 31, 2017 ( $0.48 per basic common share) as compared to a net loss of $62.0 million for the year ended December 31, 2016 ( $0.84 per basic common share).  The decrease in net loss can be attributed to the following:

Offsetting the above mentioned items are the following: 

  • Capital expenditures of $18.1 million for the year ended December 31, 2017 included $9.4 million of expansion capital and $8.7 million of maintenance capital.  In total, capital spending for 2017 increased by $13.4 million from the $4.7 million incurred in 2016.  The Company incurred expansion capital mainly related to drilling rig upgrades in 2017, which have contributed to the increase in cash flow from operating activities in the year, as well as necessary maintenance capital related to the higher activity in the period.
  • On October 17, 2017 the Company closed the following financing transactions:
  • Subsequent to December 31, 2017 , on January 31, 2018 the Company completed the one time draw of $215.0 million on its Second Lien Facility.  The proceeds from the Second Lien Facility draw, along with cash on hand and funds available under the Credit Facilities were used to redeem the Senior Notes at their par value of $265.0 million on February 1, 2018 .


Selected Financial Information

(stated in thousands, except share and per share amounts)


                     Three months ended December 31

                Year ended December 31

Financial Highlights

2017

2016

Change

2017

2016

Change

Revenue

66,515

45,126

47%

238,175

124,438

91%

Operating Revenue(1)

59,255

41,649

42%

218,988

116,907

87%

Gross Margin(1)

15,886

8,507

87%

58,310

25,762

126%

Gross Margin as a percentage of Operating Revenue

27%

20%

35%

27%

22%

23%

Adjusted EBITDA(1)

10,067

3,506

187%

35,695

5,775

518%

Adjusted EBITDA as a percentage of Operating Revenue

17%

8%

113%

16%

5%

220%

Cash flow from operating activities

(800)

(1,327)

(40%)

24,641

16,631

48%

Capital expenditures

5,912

2,724

117%

18,132

4,719

284%

Net loss

(4,974)

(14,509)

(66%)

(37,445)

(61,973)

(40%)


-basic net loss per share

(0.06)

(0.20)

(70%)

(0.48)

(0.84)

(43%)


-diluted net loss per share

(0.06)

(0.20)

(70%)

(0.48)

(0.84)

(43%)

Weighted average number of shares








-basic

88,812,216

73,795,896

20%

77,601,827

73,703,437

5%


-diluted

88,812,216

73,795,896

20%

77,601,827

73,703,437

5%

Outstanding common shares as at period end

92,175,598

73,795,944

25%

92,175,598

73,795,944

25%

(1)  See "Non-IFRS measures" included in this press release.

 


Three months ended December 31

Year ended December 31

Operating Highlights(1)

2017

2016

               Change

2017

2016

 Change

Contract Drilling







Canadian Operations:







Contract drilling rig fleet:








-Average active rig count

21.6

16.2

33%

20.6

10.0

106%


-End of period

50

51

(2%)

50

51

(2%)

Operating Revenue per Billable Day

18,807

16,657

13%

17,558(3)

16,984(4)

3%

Operating Revenue per Operating Day

21,100

18,811

12%

19,446(3)

19,058(4)

2%

Operating Days

1,774

1,317

35%

6,801

3,276

108%

Drilling rig utilization - Billable Days

43%

32%

34%

41%

20%

105%

Drilling rig utilization - Operating Days

38%

28%

36%

37%

17%

118%

CAODC industry average utilization(2)

28%

25%

12%

29%

17%

71%








United States Operations:







Contract drilling rig fleet:








-Average active rig count

4.0

1.7

135%

3.1

1.4

121%


-End of period

6

5

20%

6

5

20%

Operating Revenue per Billable Day (US$)

18,038

20,197

(11%)

19,198

21,805

(12%)

Operating Revenue per Operating Day (US$)

21,265

23,440

(9%)

22,338

25,166

(11%)

Operating Days

313

134

134%

969

440

120%

Drilling rig utilization - Billable Days

75%

34%

121%

61%

28%

118%

Drilling rig utilization - Operating Days

63%

29%

117%

52%

24%

117%








Production Services







Well servicing rig fleet:








-Average active rig count

17.0

17.6

(3%)

17.2

12.9

33%


-End of period

66

66

-

66

66

-

Service rig Operating Revenue per Service Hour

708

638

11%

673

643

5%

Service Hours

15,650

16,182

(3%)

62,946

47,305

33%

Service rig utilization

26%

27%

(4%)

26%

20%

30%

(1)

See "Non-IFRS measures" included in this press release.

(2)

Source: The Canadian Association of Oilwell Drilling Contractors ("CAODC"). The CAODC industry average is based on Operating Days divided by total available days.

(3)

Excludes shortfall commitment revenue from take or pay contracts of $6.4 million for the year ended December 31, 2017.

(4)

Excludes shortfall commitment revenue from take or pay contracts of $1.8 million for the year ended December 31, 2016.

 





Financial Position at (stated in thousands)

December 31, 2017

December 31, 2016

Change

Working capital

62,866

51,118

23%

Property and equipment

652,828

708,567

(8%)

Total assets

760,504

793,525

(4%)

Long term debt

265,219

264,070

-

 

Western is an oilfield service company focused on three core business lines: contract drilling, well servicing and oilfield rental equipment services.  Western provides contract drilling services through its division, Horizon Drilling ("Horizon") in Canada , and its wholly owned subsidiary, Stoneham Drilling Corporation ("Stoneham") in the United States ("US").  Western provides well servicing and oilfield rental equipment services in Canada through its wholly owned subsidiary Western Production Services Corp. ("Western Production Services").  Western Production Services' division, Eagle Well Servicing ("Eagle") provides well servicing operations, while its division, Aero Rental Services ("Aero") provides oilfield rental equipment services.  Financial and operating results for Horizon and Stoneham are included in Western's contract drilling segment, while financial and operating results for Eagle and Aero are included in Western's production services segment.       

Western has a drilling rig fleet of 56 rigs specifically suited for drilling horizontal wells of increased complexity.  Western is currently the fifth largest drilling contractor in Canada , based on the CAODC registered rigs, with a fleet of 50 rigs operating through Horizon.  Of the Canadian fleet, 23 are classified as Cardium class rigs, 19 as Montney class rigs and eight as Duvernay class rigs.  As compared to the Cardium class rigs, the Montney class rigs have a larger hookload, while the Duvernay class rigs have the largest hookload allowing the rig to support more drill pipe downhole.  Additionally, Western has six drilling rigs operating through Stoneham , including five Duvernay class triple drilling rigs. Western is also the fifth largest well servicing company in Canada with a fleet of 66 rigs operating through Eagle. Western's oilfield rental equipment division, which operates through Aero, provides oilfield rental equipment for hydraulic fracturing services, well completions and production work, coil tubing and drilling services.

Crude oil and natural gas prices impact the cash flow of Western's customers, which in turn impacts the demand for Western's services.  The following table summarizes average crude oil and natural gas prices, as well as average foreign exchange rates for the three months ended December 31, 2017 and 2016 and for the years ended December 31, 2017 and 2016.





Three months ended December 31

Year ended December 31


2017

2016

Change

2017

2016

Change

Average crude oil and natural gas prices(1)(2)







Crude Oil







West Texas Intermediate (US$/bbl)

55.28

49.16

12%

50.81

43.37

17%

Western Canadian Select (CDN$/bbl)

49.10

45.84

7%

49.49

39.27

26%

Natural Gas







30 day Spot AECO (CDN$/mcf)

1.67

3.11

(46%)

2.23

2.18

2%

Average foreign exchange rates(2)







US dollar to Canadian dollar

1.27

1.33

(5%)

1.30

1.32

(2%)

(1)

See "Abbreviations" included in this press release.

(2)

Source: Bloomberg

 

West Texas Intermediate ("WTI") on average improved in the fourth quarter of 2017 as compared to the third quarter of 2017, increasing by 15%, and was 12% higher compared to the same period in the prior year.  For Western's Canadian customers, the impact of the weaker US dollar when translating WTI into Canadian dollars, resulted in only a 7% increase for the three months ended December 31, 2017 , as compared to the same period in the prior year.  Canadian heavy crude pricing improved in the fourth quarter of 2017, as Western Canadian Select ("WCS") on average increased by 4% as compared to the third quarter of 2017, and by 7% as compared to the same period of the prior year.  The prices for condensate and natural gas liquids ("NGL") in Canada also improved in the fourth quarter of 2017, as compared to the same period in the prior year.  For the year ended December 31, 2017 , WTI was 17% higher than the prior year, WCS on average increased by 26% in 2017 as compared to 2016, and the price for condensate and NGLs in Canada also improved year over year.  When translating WTI into the Canadian dollar equivalent for the year ended December 31, 2017 , the weaker US dollar resulted in a 15% increase as compared to the year ended December 31 , 2016.  Canadian natural gas prices, such as AECO, declined quarter over quarter, decreasing on average by 1% from the third quarter of 2017 to the fourth quarter of 2017 and decreasing by 46% compared to the fourth quarter of 2016.  Additionally, for the year ending December 31, 2017 , AECO increased by 2% as compared to 2016.

Improved market conditions in 2017, particularly the improved crude oil and condensate prices, has led to a corresponding increase in the demand for oilfield services in both Canada and the United States.  The CAODC reported that for drilling in Canada , the total number of Operating Days in the Western Canadian Sedimentary Basin ("WCSB") increased approximately 54% in 2017 as compared to 2016.  Similarly, as reported by Baker Hughes, a GE Company, the average number of active drilling rigs in the United States increased approximately 71% in 2017 as compared to 2016.

Outlook

Currently, 37 of Western's drilling rigs are operating.  Four of Western's 56 drilling rigs (or 7%) are under long term take or pay contracts, with one expected to expire in 2018, two expected to expire in 2019 and one expected to expire in 2020.  These contracts each typically generate between 250 and 350 Billable Days per year.

Western's capital budget for 2018 remains unchanged and is expected to total $20 million , including capital spending carry forward for 2017 of approximately $2 million , with $8 million allocated for expansion capital and $12 million for maintenance capital.  Western believes the 2018 capital budget provides a prudent use of cash resources and will allow it to maintain its premier drilling and well servicing rig fleets, while remaining responsive to customer requirements.  Western will continue to manage its operations in a disciplined manner and make any required adjustments to its capital program as customer demand changes.  

Since hitting 10 year lows in the first quarter of 2016, crude oil prices, while remaining well below previous highs, have improved.  As such, North American drilling rig counts recovered in 2017 and the Company is expecting stable year over year activity levels in 2018.  Improving gross margin continues to be a priority for the Company and, as has been demonstrated over the last three quarters, Western is working to implement higher rates with each rig that is awarded work.  Prices for Western's services remain below historical levels and will continue to impact Adjusted EBITDA and cash flow from operating activities in the near term.  However, Western's variable cost structure and a prudent capital budget will aid in preserving balance sheet strength.  As at December 31, 2017 , in addition to $48.8 million in cash and cash equivalents, Western had $80.0 million of available credit under its Credit Facilities, which do not mature until December 17 , 2020.  Western repaid the $265.0 million in outstanding Senior Notes at par in the first quarter of 2018 with proceeds from the $215.0 million Second Lien Facility, along with cash on hand and funds available under the Credit Facilities.  Completing these financing transactions has lowered Western's total debt and leverage metrics, decreased Western's effective interest rates and extended the maturity on all of Western's long term debt.  Additionally, Western will save approximately $5.3 million annually in cash interest expense, due to the decreased total debt level and lower interest rate on the Second Lien Facility, as compared to the Senior Notes. 

Oilfield service activity in Canada will be affected by the development of resource plays in Alberta and northeast British Columbia which will be impacted by pipeline construction, increased environmental regulations including the implementation of a carbon tax in Alberta , and decreased foreign investment into Canada. Currently, the largest challenges facing the oilfield service industry are continued customer spending constraints as a result of lower commodity prices and the increasing challenge of staffing field crews, particularly in the well servicing division.  Western's view is that its modern drilling and well servicing rig fleets, reputation, and disciplined cash management provide a competitive advantage which will enable the Company to manage through the current slowdown in oilfield service activity.

2017 Fourth Quarter and Year End Financial and Operating Results Conference Call and Webcast

Western has scheduled a conference call and webcast to begin promptly at 9:00 a.m. MT (11:00 a.m. ET) on Thursday, February 22, 2018 .

The conference call dial-in number is 1-888-231-8191.

A live webcast of the conference call will be accessible on Western's website at www.wesc.ca by selecting "Investors", then "Webcasts".  Shortly after the live webcast, an archived version will be available for approximately 14 days.

An archived recording of the conference call will also be available approximately two hours after the completion of the call until March 8, 2018 by dialing 1-855-859-2056, passcode 6578818.

Non-IFRS Measures

Western uses certain measures in this press release which do not have any standardized meaning as prescribed by International Financial Reporting Standards ("IFRS").  These measures, which are derived from information reported in the consolidated financial statements, may not be comparable to similar measures presented by other reporting issuers.  These measures have been described and presented in this press release in order to provide shareholders and potential investors with additional information regarding the Company. These Non-IFRS measures are identified and defined as follows:

Operating Revenue

Management believes that in addition to revenue, Operating Revenue is a useful supplemental measure as it provides an indication of the revenue generated by Western's principal operating activities, excluding flow through third party charges such as rig fuel, which at the customer's request may be paid for initially by Western, then recharged in its entirety to Western's customers.

Gross Margin

Management believes that in addition to net income, Gross Margin is a useful supplemental measure as it provides an indication of the results generated by Western's principal operating activities prior to considering administrative expenses, depreciation and amortization, stock based compensation, how those activities are financed, the impact of foreign exchange, how the results are taxed, how funds are invested, and how non-cash items and one-time gains and losses affect results.

The following table provides a reconciliation of revenue under IFRS, as disclosed in the consolidated statements of operations and comprehensive income, to Operating Revenue and Gross Margin:





Three months ended December 31

Year ended December 31

(stated in thousands)

2017

2016

2017

2016

Operating Revenue






Drilling

45,906

28,965

166,660

78,887


Production services

13,362

12,710

52,456

38,064


Less: inter-company eliminations

(13)

(26)

(128)

(44)


59,255

41,649

218,988

116,907

Third party charges

7,260

3,477

19,187

7,531

Revenue

66,515

45,126

238,175

124,438

Less: operating expenses

(66,933)

(53,308)

(245,352)

(157,212)

Add:






Depreciation – operating

16,238

16,551

65,227

57,903


Stock based compensation – operating

66

138

260

633

Gross Margin

15,886

8,507

58,310

25,762

 

Adjusted EBITDA

Management believes that in addition to net income, earnings before interest and finance costs, taxes, depreciation and amortization, other non-cash items and one-time gains and losses ("Adjusted EBITDA") is a useful supplemental measure as it provides an indication of the results generated by the Company's principal operating segments similar to Gross Margin but also factors in the cash administrative expenses incurred in the period.

Operating Earnings

Management believes that in addition to net income, Operating Earnings is a useful supplemental measure as it provides an indication of the results generated by the Company's principal operating segments similar to Adjusted EBITDA but also factors in the depreciation expense incurred in the period.

The following table provides a reconciliation of net loss under IFRS, as disclosed in the consolidated statements of operations and comprehensive income, to earnings before interest and finance costs, taxes, depreciation and amortization ("EBITDA"), Adjusted EBITDA and Operating Loss:





Three months ended December 31

Year ended December 31

(stated in thousands)

2017

2016

2017

2016

Net loss

(4,974)

(14,509)

(37,445)

(61,973)

Add:






Finance costs

5,598

5,478

21,950

22,522


Income tax recovery

(6,842)

(5,183)

(18,555)

(21,955)


Depreciation – operating

16,238

16,551

65,227

57,903


Depreciation – administrative

284

365

1,213

1,569

EBITDA

10,304

2,702

32,390

(1,934)

Add:






Stock based compensation – operating

66

138

260

633


Stock based compensation – administrative

397

484

1,689

3,135


Loss on asset decommissioning

-

265

-

5,490


Other items

(700)

(83)

1,356

(1,549)

Adjusted EBITDA

10,067

3,506

35,695

5,775

Subtract:






Depreciation – operating

(16,238)

(16,551)

(65,227)

(57,903)


Depreciation – administrative

(284)

(365)

(1,213)

(1,569)

Operating Loss

(6,455)

(13,410)

(30,745)

(53,697)

 

Net Debt

The following table provides a reconciliation of long term debt under IFRS, as disclosed in the consolidated balance sheets to Net Debt:

(stated in thousands)

December 31, 2017

December 31, 2016

Long term debt

265,219

264,070

Current portion of long term debt

475

684

Less: cash and cash equivalents

(48,825)

(44,597)

Net Debt

216,869

220,157

 

Defined Terms:

Average active rig count (contract drilling): Calculated as drilling rig utilization – Billable Days multiplied by the average number of drilling rigs in the Company's fleet for the period.

Average active rig count (production services): Calculated as service rig utilization multiplied by the average number of service rigs in the Company's fleet for the period.

Billable Days: Defined as Operating Days plus rig mobilization days.

Drilling rig utilization Operating Days (or "Drilling Rig Utilization"):  Calculated based on Operating Days divided by total available days.

Drilling rig utilization Billable Days:  Calculated based on Billable Days divided by total available days.

Operating Days: Defined as contract drilling days, calculated on a spud to rig release basis.

Service Hours: Defined as well servicing hours completed.

Service rig utilization: Calculated based on Service Hours divided by available hours, being 10 hours per day, per well servicing rig, 365 days per year in 2017 (2016:366 days).

Contract Drilling Rig Classifications:

Cardium class rig: Defined as any contract drilling rig which has a total hookload less than or equal to 399,999 lbs (or 177,999 daN). 

Montney class rig: Defined as any contract drilling rig which has a total hookload between 400,000 lbs (or 178,000 daN) and 499,999 lbs (or 221,999 daN).

Duvernay class rig: Defined as any contract drilling rig which has a total hookload equal to or greater than 500,000 lbs (or 222,000 daN).

Abbreviations:

  • Barrel ("bbl");
  • Basis point ("bps"):  A 1% change equals 100 basis points and a 0.01% change is equal to one basis point;
  • Canadian Association of Oilwell Drilling Contractors ("CAODC");
  • DecaNewton ("daN");
  • International Financial Reporting Standards ("IFRS");
  • Natural Gas Liquids ("NGL");
  • Pounds ("lbs");
  • Thousand cubic feet ("mcf");
  • West Texas Intermediate ("WTI"); and
  • Western Canadian Sedimentary Basin ("WCSB").


Forward-Looking Statements and Information
This press release contains certain statements or disclosures relating to Western that are based on the expectations of Western as well as assumptions made by and information currently available to Western which may constitute forward-looking information under applicable securities laws.  All information and statements contained herein that are not clearly historical in nature constitute forward-looking information, and the words "may", "will", "should", "could", "expect", "intend", "anticipate", "believe", "estimate", "propose", "plan", "predict", "potential", "continue", or the negative of these terms or other comparable terminology are generally intended to identify forward-looking information.  Such information represents the Corporation's internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital expenditures, anticipated future debt levels and revenues or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance.  This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information.

In particular, forward-looking information in this press release includes, but is not limited to, statements relating to commodity pricing; the future demand for and utilization of the Company's services and equipment; the pricing for the Company's services and equipment; the terms of existing and future drilling contracts in Canada and the US and the revenue resulting therefrom (including the number of Operating Days typically generated from the Company's contracts); the Company's expansion and maintenance capital plans for 2018; the Company's liquidity needs including the ability of current capital resources to cover Western's financial obligations and the 2018 capital budget; the use and availability of the Company's Credit Facilities; pricing for Western's services and impact on Adjusted EBITDA; the Company's ability to maintain certain covenants under its Credit Facilities; the future declaration of dividends; expectations as to the increase in crude oil transportation capacity through pipeline development; the potential impact of changes to environmental laws and regulations and the implementation of a carbon tax in Alberta ; the expectation of continued foreign investment into the Canadian crude oil and natural gas industry; expectations relating to producer spending, and the Company's ability to find and maintain enough field crew members and the Company's change to its depreciation assumptions.

The material assumptions in making the forward-looking statements in this press release include, but are not limited to, assumptions relating to, demand levels and pricing for oilfield services; demand for crude oil and natural gas and the price and volatility of crude oil and natural gas; pressures on commodity pricing; the continued business relationships between the Company and its significant customers; crude oil transport and pipeline approval and development; the Company's ability to finance its operations; the effects of seasonal and weather conditions on operations and facilities; the competitive environment to which the various business segments are, or may be, exposed in all aspects of their business; the ability of the Company's various business segments to access equipment (including spare parts and new technologies); changes in laws or regulations; currency exchange fluctuations; the ability of the Company to attract and retain skilled labour and qualified management; the ability to retain and attract significant customers; and general business, economic and market conditions.

Although Western believes that the expectations and assumptions on which such forward-looking statements and information are based on are reasonable, undue reliance should not be placed on the forward-looking statements and information as Western cannot give any assurance that they will prove to be correct.  Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties.  Actual results could differ materially from those currently anticipated due to a number of factors and risks.  These include, but are not limited to, the risk that the demand for oilfield services will not continue to improve for the remainder of 2018 and that commodity prices will remain low, and other general industry, economic, market and business conditions.  Readers are cautioned that the foregoing list of risks, uncertainties and assumptions are not exhaustive.  Additional information on these and other risk factors that could affect Western's operations and financial results are included in Western's annual information form which may be accessed through the SEDAR website at www.sedar.com.  The forward-looking statements and information contained in this press release are made as of the date hereof and Western does not undertake any obligation to update publicly or revise any forward-looking statements and information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

SOURCE Western Energy Services Corp.


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