Rig-n-Dig November 2011
Movember 2011
In This Issue Employee Profile: Flora Santos Movember What’s Happening?
S
Message from Management
To 2012 & Beyond Savanna’s President and CEO, Ken Mullen, discusses Savanna’s core achievements to date, current opportunities and plans for 2012. It seems as though the fall has flown by this year. Field activity has been the highest in several years, with all of our rentals, well servicing and drilling operations generating activity much higher than we normally expect in the third quarter. This is continuing into the fourth quarter as well. Of course, our continued expansion in the United States and Australia provides a much more consistent operating environment (droughts, hurricanes and floods aside) over the full calendar year. This activity shows every indication of carrying on into the winter and beyond—also a very positive sign. Outside the field we have been strongly occupied with a number of undertakings as well. In addition to the ongoing demands on their time, our HSE group has been focused on reviewing, upgrading and re-publishing our HSE documentation. Countless hours have been spent by key HSE personnel from every region in which Savanna operates to ensure the processes, warnings and recommended practices are consistent in all operating areas. To the extent necessary, local differences in the same functions have been addressed as well. It is our firm belief that this approach will ultimately result in a very usable, portable and effective source of information for all of our personnel. It will also open the door to Savanna working for an even broader range of customers than currently, in existing and potentially new countries of operation. This huge undertaking remains a work-in-progress, but is advancing quickly through HSE and operations groups alike, and represents only one of several HSE objectives for 2011-12. The recent re-introduction of a safety award
program is also a core accomplishment of the group. The current structure will no-doubt be improved going forward to incentivize specific safety-focused actions, but the core program is working well for the time being. The above is reflective of the overall changes Savanna has been going through over the last few years. For better or worse (I certainly believe better!), Savanna is continuing to grow. Remember, our vision is to be a global leader in energy services; achieving this requires the continued search for new opportunities within existing areas of operations and new frontiers alike. The sheer size of the company mandates a shift to more common and standardized systems and processes. The growing scale and operating platform also is creating significant opportunities for advancement for our people, allowing our tremendous young people to progress in the organization. This is a key foundation to support manageable and consistent growth for the future as well. We have substantial process work underway in respect of HR (HRMS, online benefit plans, modified RRSP plans, streamlined recruiting, and crew coordination), IT (Savanna employee portal on the web, better employee time and attendance tracking), TSG (purchasing, procurement, better and quicker equipment build and design, improved repair and maintenance processes), Communications (employee portal, social media implementation, improved information delivery to rigs and field), and too many others to mention. The plan is to build a foundation to support the next phase of growth and development of Savanna. These efforts do
We are blessed “ as an organization
to possess a legion of talented and creative people
www.savannaenergy.com
“
2
November 2011
Ken Mullen, President and CEO of Savanna Energy Services Corp.
1800, 311 6th Avenue SW Calgary, Alberta T2P 3H2 phone 403 503 9990 fax 403 267 6749 info@savannaenergy.com Savanna Energy Services Corp. is listed on the Toronto Stock Exchange (TSX:SVY) For current stock information, visit tsx.com or savannaenergy.com
Rig-n-Dig
November 2011
Rig-n-Dig is published by Savanna Energy Services Corp. as an information vehicle for our employees and for our community. Suggestions and contributions are welcome and encouraged. Editor/Publisher: Janine Tannahill 403 267 6739 jtannahill@savannaenergy.com Managing Editor: John Bayko 403 781 9999 jbayko@savannaenergy.com
In This Issue:
Message from Mgt. Q3 Report Employee Profile Movember What’ Happening? Charity & HSE Contests Last Page
page 2 page 4 page 5 page 6 page 7 page 11 page 12
Message from Management not come for free, but we firmly support their advancement, and are even more excited about the potential they will open up for the future. Senior management, operations management, and core support management have been spending significant time and energy focusing on how to best position Savanna for the next several years of projected growth. It is very easy to become overwhelmed with ideas and opportunities to advance almost every aspect of the company, so as much effort is expended in focusing the many opportunities as on implementing those that are chosen. We are blessed as an organization to possess a legion of talented and creative people, resulting in a deep list of possibilities, and the comfort of knowing that the people we have can execute on them. Flying in the face of all this opportunity and potential is the depression and uncertainty of the world economic situation. European countries are facing substantial difficulties as their economies face the same challenges that North America dealt with in 2008. The US economic recovery is struggling to maintain forward traction as it pulls out of the recession, which is putting a strain on the export-focused economies of Asia and India. As a result of slowing demand
for their products, Asia and India are placing pressures on commodity-driven economies like Australia and Canada, both of which may face the prospect of slowing demand for the resources they develop and export. With all these moving parts it is really no surprise that the “experts” (whoever they are) and the stock markets (everywhere) are more volatile than they have ever been. At Savanna, we are very focused on ensuring a balance between our longterm opportunities, and the dark clouds on the horizon that could overwhelm us if we overextend ourselves and the economic storm sweeps across our industry. Faced with these opposing forces we have determined to take a conservative approach to our capital growth in 2012. After spending almost $250 million in 2011 to add equipment and complete key acquisitions, in 2012 Savanna has committed to an initial spend of just over $100 million. This budget provides for maintenance of our existing $1 billion of capital assets, while allowing improvements and additions to that base as well. The capital is initially focused on the rollout of five TDS-3000™ drilling rigs in the first half of 2012 (bringing the TDS3000™ fleet to 15 rigs), as well as providing needed capital to replace a number of pumptrucks in our well servicing group in
By early 2012 “ we believe we
will have a very good idea of what the remainder of 2012 and beyond will hold for our industry
Canada that are in need of replacement. In addition, we have allocated some core expansion capital to our rental group. The overall funds designated do not even come close to satisfying the requests from our operating groups, all of which are eager to satisfy the multitude of opportunities they have before them. The aggregate capital request was over two times what has been allocated, and all of those opportunities have excellent merit. It is a classic case of “not right now”, certainly not a case of “never”. By early 2012 we believe we will have a very good idea of what the remainder of 2012 and beyond will hold for our industry, and the economy overall. If the signals remain as positive at that time as they do today, it is a certainty that we will add to the capital expansion pool for the second half of 2012. In the interim, Savanna has a very strong balance sheet that will allow us to pursue opportunities that may surface in the face of an industry slowdown, or to fund contracted capital builds. Again, continued growth of our business is a question of “when” not “if ”. Growth and expansion can be unnerving as people are pushed into new areas, duties, or generally outside their comfort-zone. However, if properly managed, growth and expansion present far more opportunities than challenges, and are the lifeblood of a sustainable organization. Balancing our commitment to our people with ensuring Savanna’s sustainability is never easy, but rest assured it occupies a great deal of management focus and energy, and is extremely exciting as well.
November 2011
Rig-n-Dig
3
“
Q3 Report
Q3 Report Savanna’s third quarter was again strong due to increased operating days, strategic fleet changes, and many exciting key initiatives. The third quarter (Q3) of 2011 again proved to be strong for Savanna Energy Services Corp. An increase in demand (compared to 2010) for drilling and completion services in natural gas and unconventional oil plays, as well as strong oil prices, both greatly improved Savanna’s activity in North America. Savanna’s strategically placed equipment, continued rig retrofits, and service rig fleet increase also contributed to the strong quarter through an increase in operating days, hours and rates. Net earnings for Q3 increased from $12.5 million in Q3 2010 to $14.4 million. These earnings represent the highest overall third quarter earnings since 2006. Operating days for Savanna’s drilling fleet (both hybrid and conventional) increased by 22 per cent compared to Q3 2010. This is a huge achievement considering fleet size did not changed drastically. Coupled with increased day rates, revenue for the drilling fleet increased 43 per cent from Q3 2010. Utilization of Savanna’s conventional drilling rigs in North America was 80 per cent, indicating continued strong demand for our high specification deep rated rigs. Operation of four TDS-3000™ rigs during Q3 accounted for eight per cent of Savanna’s overall operating margin for Q3 2011. Savanna’s Australian drilling operations also commenced during Q3, contributing $1.1 million in revenue during September with the number of wells drilled exceeding the expectations of Savanna’s Australian customer. Savanna’s well servicing division also experienced an increase in operating hours and margins. These increases were mainly due to the addition of 33 service rigs to Savanna’s Canadian fleet during June and July; however, utilization rates remained consistent indicating a strong need for well servicing equipment. Utilization of the well servicing fleet was 56 per cent, which equaled Q3 2008 rates—the highest third quarter rate since 2006. Activity levels in
the US and Australia also remained solid, with higher operating results achieved by both the US well servicing fleet and Savanna’s oilfield rentals division. Key initiatives during Savanna’s third quarter include: • Material contribution from Savanna’s four operational TDS-3000™ drilling rigs • Commencement of operations for Savanna’s two highspecification 1200 horsepower AC electric double drilling rigs • Securing of a long-term contract for a high-capacity workover/drilling rig for a new customer in Australia • Successful integration of both Performance Services Ltd. and Silverstar Well Servicing Ltd. into Savanna’s Canadian well servicing division During Q3 of 2011, Savanna’s well servicing fleet grew by almost 50 per cent with the integration of Silverstar and Performance under the Savanna brand. From the integration, Savanna acquired 18 double rigs and 15 singles. In addition, the construction of a new service rig was completed with the rig being deployed to our North Dakota location, and construction of a third service rig for Australia was also completed. This third rig for Australia has been received and licensed and is expected to begin work in December; however, Savanna has not stopped there. With the construction of a fourth drilling/service rig for Australia now under way, it is hoped this rig will begin work on a three year contract in July of 2012. On the drilling side of things, Savanna completed the construction and deployment of two deep double drilling rigs in the Marcellus shale gas play in Pennsylvania, US. Early results from these rigs are encouraging. No TDS-3000™ rigs were added to Savanna’s fleet; however, two additional TDS-3000™ were put to work in early Q4. Further conversions of these rigs are planned for the future. In addition, Savanna received two
new portable top drives during Q3. With another ten top drives on the way (pending manufacturing capacity), Savanna hopes to have 100 per cent of their Canadian drilling fleet equipped with top drives. Further equipment plans for Q4 of 2011 include the construction of two more service rigs, the retrofit of a conventional double drilling rig and the retrofit of three service rigs. Moving forward, activity levels for 2012 remain uncertain in light of the current worldwide economic situation. Factors including access to capital by our customers, and decreased oil and natural gas prices, may reduce available capital and result in slower oilfield activity. Savanna’s President and Chief Executive Officer, Ken Mullen, remains positive stating: “Although this risk exists, we have to date not been informed of any planned reduction in activity by any of our customers…Given the quality of Savanna’s fleet, the experience and dedication of our personnel, the strength of our balance sheet, and the long-term fundamental demand for the commodities we help produce, we are confident of both Savanna’s market positioning, as well as overall oilfield services market fundamentals. Savanna is very well positioned to meet whatever opportunities or challenges arise in 2012 and beyond.” Savanna’s capital plan for 2012 is conservative but will include specific expansion initiatives such as: • Retrofitting a minimum of five additional TDS-3000™ rigs • Construction of a high-capacity workover/drilling rig for Australia • Additional support equipment for our well servicing division • Expansion of our oilfield rentals operation • Maintenance of capital reflective of 2012 activity levels
Employee Profile
Good Luck Flora After working at Savanna for ten years, Flora Santos has decided to move in a new direction. Looking back over her years, Santos is forever greatful for the opportunities she has been given. Starting her career with Savanna Energy Services Corp. in November 2001, Flora Santos, Corporate Payroll, Benefits and Compensation Analyst, has worked in payroll and benefits for almost 35 years. Santos started working for Plains Energy in May 1998 along side Ken Mullen, George Chow, Darcy Draudson and Chris Oddy, and then moved to Precision Drilling during their acquisition of Plains. Santos spent approximately three years working for Plains and Precision before deciding to contact Chris Oddy to ask for a job. By this time, Savanna Energy Services Corp. had been established and there was no hesitation by Oddy and the team to hire Santos. From there, the rest is pretty much history. Santos was “two hundred per cent happy” to be working with her former managers again and has been with Savanna from day one. Santos is a little lady with one very big personality. When asked what challenges she has faced during her career, Santos mentions getting phone calls from people who have been paid incorrectly. She says they would swear and yell and she wasn’t really prepared for it, but now she says “I just say the same thing back to them and then we become friends.” Santos is able to build strong rapport with employees by dealing with any problems right away and by laying everything on the line—Santos isn’t one to ‘beat around the bush’. She is passionate about her job and does all she can to help when people have questions or concerns. The initial months working at Savanna were a very exciting time. Santos recalls how everyone pitched in and did whatever was necessary to run the business. “Anybody who heard the phone ring would answer it if the receptionist was busy— even Ken and Darcy!” says Santos. “When I didn’t have time [to complete payroll] Lori [Connell, Corporate Secretary] would take my place and vice versa.” During a move to a larger office, Santos and Connell even worked the weekend to get the job done. Santos says this was her favourite
4
www.savannaenergy.com
time at Savanna and fondly remembers being given a spa day as appreciation for helping with the move. Over the years, Santos has seen the company grow and evolve. Technology has also advanced a lot during the last decade. Santos remembers using spreadsheets and doing a lot of the payroll manually. As the company has grown, so too has HR software, going from Quickbook to Microsoft Business Solution—and now Savanna is on the cusp of introducing HRMS (Human Resource Management System) which will combine all HR systems into one, eliminating many manual processes. “Before, we didn’t have HR functions in the computer,” Santos recalls. “Now I think we’re up-to-date with modern technology and we are really competing with other energy service companies.” Santos has also seen the affect the internet has had on business and the growth and improvements made in Savanna’s rig technology. Santos has worked with upper management for over ten years now and has built a very unique relationship with them. Always joking with Mullen and Chow, Santos says Savanna’s upper management has always made her feel welcome. “They don’t treat you any less and that is the beauty of this company—it is why I have worked for them for so long.” Santos and Chow even have their own nicknames for each other—“I call him Master Chow and he calls me Big Boss because I was the oldest [out of the initial Savanna employees], but I’m not really the Big Boss,” she chuckles. After being with the company since the beginning, Santos has made the hard decision to move on. “It took me ten months to make the decision,” she says, “and it’s been the hardest decision I have had to make since working in payroll and benefits.” Sad to be leaving the company, Santos feels it is time for a change but will always look back on her time at Savanna with fond memories. She says it’s the people, especially the upper management November 2011
Flora Santos, Corporate Payroll, Benefits and Compensation Analyst
team, that she will miss most. “It is hard for me to say goodbye to them (upper management) because they are really great people.” Like family to her, Santos says she will always be grateful and will never forget the support she has received during her years with Savanna. Flora’s last day with Savanna is November 30 and we wish her all the best in her new endeavors.
10 quick questions with Flora 1. Favourite holiday destination or place you would like to visit? Hawaii 2. Favourite pastime? Gardening 3. Favourite food? Seafood 4. The best movie you have seen? The Sound of Music 5. Describe your ideal date/evening out: Sitting on a lounge chair, drinking a cocktail, listening to a piano, and of course, having a cigarette (I like to smoke) 6. What would you like for Christmas? Peace on Earth 7. Do you like country music or are you more of a rock music kinda gal? Rock music 8. What was your most embarrassing moment? Can’t think of anything 9. Where were you born? San Jose, Philippines 10. Finish the following sentence: If I could be invisible for a day, I would…go ballroom dancing and sing my heart out
What’s Happening?
It’s Moustache Season! November sees the sprouting, grooming and careful crafting of thousands of moustaches around the world. Movember, as it is known, is about raising awareness and funds all in the name of men’s health—specifically prostate cancer. Movember began in Melbourne, Australia and has now grown to include more than 1.1 million ‘Mo Bros’ and ‘Mo Sistas’ across Australia, New Zealand, the US, Canada, the UK, Finland, the Netherlands, Spain, South Africa and Ireland. This year there are a number of ‘Mo Teams’ from Savanna participating. We don’t have photos of every ‘Mo on the Go’, but some of the ‘Mo Bros’ participating include: Savanna Rig 615 Matthew Johnson (captain), Brian Milett, Craig Benner, Nathan Pilon, Nick Johnson, Neil Suggett, Greg Greenlee, Gary Kring, Roddy Saarinen, James Kelleher, Andre Roberge, Tony Renzetti, Doyle Dosch, Bernie Belchoir, Jeremy Wingrad, Ryan Roos, Ron Baumann, Scotty Keating, Ryan Knelsen, Sam Kelleher and James Spencer.
The crews from Rig 615
Savanna Rig 644 Ashley Genge (captain), Pete Barreno, Kenneth Brown, Paul Lujan, Jose Ramirez, Jose Solis, Josh Marcum, Pedro Retana, Terold Wilkino and Kelly McLellen. Savanna Rig 64 Daniel McCoy (captain), Daniel Stafrace, Kyle Beattie, Greg Desjarlais, Daniel Rolls, Paul Reilly, Jason Laun, Andrew Jensen and Kevin Pressey. Savanna Rig 65 Dwayne Carnell Savanna Rig 406 Jeremy Schloss (captain), David McKim, Stuart George, Jason Shepherdson and Trevor Hein. Savanna Head Office Terry Khu (captain), Dwayne LaMontagne, Trevor Vance, Junaid Malik, Aman Pandher, Norm Lyons, TJ Wald and Joe Gibeau.
November 2011
Rig-n-Dig
5
What’s Happening?
What’s Happening? Oh Deer!
Bruce Lambert, Rig Manager for Rig 640E, shot this deer on his property near Little Smoky, Alberta—just north of Fox Creek. He had the deer cut and wrapped and says the meat tastes excellent. He is also in the process of making a European mount out of the head, which is a mount with no fur—just the bones. Bruce has been with Savanna for just over seven years and is currently working in West Virginia.
Rig 406
This is a photo of the crew from Rig 406 near Toowoomba, Australia. The crew is pictured with Ian Beck and Trevor Hein from Origin. [Disclaimer: Facial hair is allowed to be worn by crews working in Australia]
Rig 129
Savanna Well Servicing Rig 129 has been hard at work doing re-entries for Husky Energy. Currently located in the Vermilion area near Lloydminster, Alberta, the rig has been there for about a month working 24/7. The photos were sent in by Rig Manager, Scott Huseby.
6
www.savannaenergy.com
November 2011
What’s Happening? Congratulations
Congratulations to Nathan Greener, Communications Specialist, on his recent graduation from Mount Royal University in Calgary. Nathan received his Broadcasting diploma and was also honoured with the Bryan Strilchuk Memorial Scholarship and the CTV Globemedia Excellence in Broadcasting Scholarship. Congratulations to Sean Herdman, Derrickhand on Rig 441, for being awarded scholarships from Red Deer College and the Apprenticeship Board. Sean is completing the Rig Technician Apprenticeship program at Red Deer College and received top marks in his course. From Coaldale, Alberta, Sean has been based in Saskatchewan and travels back to Red Deer every so often for school. He has been with Savanna for almost four years and says he plans to pay some bills with his scholarship money.
Sean Herdman (right) at his award ceremony at Red Deer College
Welcome to the World
Congratulations to Dawn Tran, Business Analyst, and her husband Ken on the birth of their baby girl Olivia Tran Trinh. Olivia was born September 24; just a couple of days after Dawn went on maternity leave.
Nathan Greener (right) on his graduation day
Savanna’s Christmas Tree
Marshall Brown, Motorman for Rig 648, took this photo of the derrick whilst working in Louisiana, US.
November 2011
Rig-n-Dig
7
What’s Happening? Five Year Rings
A number of five year rings were given out this month. Congratulations to all recipients!
Antonia Fonteneles, Billings Analyst Bogdan Kawala, Network Administrator
Dawn Paquette, Contracts Administrator SWS
Philip Tzeng, Server Administrator Tweela Nepoose, Partner Relations Coordinator
Steve Ross, Director Information Technology & CIO
Julie Ridsdale, Equipment & Inventory Analyst
Darlene Hutchinson, Corporate Services Coordinator
Adiel Rautenbach, Benefits Administrator Drilling MIA Terry Melnyk, Director of Corporate Planning & Taxation
8
www.savannaenergy.com
November 2011
What’s Happening?
Frank Yee, Help Desk Team Lead Cameron Torell, Senior Infrastructure Administrator
Stacy Brooks, Admin Assistant/ HR (with Gordon Wills, Operations Manager)
Ten Year Watch
Brad Kingston, VP and General Manager for Savanna Well Servicing, was presented with a watch in honour of his ten years of employment with Savanna.
Toy Drive
Savanna’s Edmonton office has been busy collecting toys for the kids at the Stollery Hospital in Edmonton. The driving force behind the toy drive has been George Shields, SWS Crew Coordination Supervisor; however, it has been a huge group effort from all of Savanna’s Alberta and Saskatchewan field locations and personnel. With flyers and collection boxes sent out to the local communities, donations have been flowing in and there has been great support from employees, contractors and the media. All the support given is greatly appreciated and George sends a special thanks to everyone who has helped make the toy drive a success so far. The toy drive will be running between December 1 to 15 with drop off locations at Savanna’s offices in Brooks, Clairmont, Carlyle, Lacombe, Nisku and Edmonton. For more information, contact George Shields at (780) 278-7840 or gsheilds@savannaenergy.com.
Left to right: Kelly Labelle, George Shields, Emily Hargrave, Jessica Dow, Christina Andruchow and Brittany Burton. Missing from photo is Trudy Atwell
November 2011
Rig-n-Dig
9
Contests
The HOPE Calendar Kristi Osmond, HSE Superintendent for Savanna Well Servicing, is on a mission—to help raise money for women and their families affected by breast cancer. As a photographer, Kristi has donated 120 plus hours of her time and skills to take personal and inspirational photos of women who have survived breast cancer. Her photos will be used to create a calendar—The HOPE Calendar. All the proceeds from the sale of the calendar will go directly to the families of women undergoing treatment for breast cancer. Donations will be made in the form of vouchers for food and house cleaning services. As women in the central Alberta area must travel to either Calgary or Edmonton for treatment, vouchers will also be given for travel expenses. All the women featured in the calendar are breast cancer survivors from the central Alberta area. Calendars are now available for purchase for $20. If you would like to purchase a calendar or would like more information, please contact Kristi at (403) 304-0221 or search on Facebook for ‘The Hope Calendar’. Kristi is also looking for models for next year’s calendar. Right: A shot from the calendar
Above & right: Kristi in action
B R IN g I N G S A FE F t Y H o Me Savanna is creating a 2012 Safety Calendar and we want to know what safety means to you. Draw us a picture of what safety means to you and you could win a $200 gift card. Three winners from each category will be chosen to be featured in the calendar and to receive a $200 gift card. This contest is open to all Savanna employees and their families. Age Categories 3-6 years 7-12 years 13-17 years Adults
10
www.savannaenergy.com
November 2011
Entry Deadline 16 December
Winners will be chosen by the Savanna Executive Team.
Please send entries to Chantal Bouchard E-mail: cbouchard@savannaenergy.com Mail: Savanna Energy Services Corp., Suite 800, 311-6th Avenue SW, Calgary Alberta T2P 3H2, Canada
Last Page
Find the Hazards Contest
How many hazards can you identify in the photo? Identify as many hazards as you can and send your list to jtannahill@savannaenergy.com or complete the ‘Spot the Hazards’ survey on Savanna’s Facebook page (http://www.facebook.com/SavannaEnergy). You could win $200 worth of Savanna merchandise! Don’t forget to include your name and Rig number (if applicable) in your e-mail. The competition is open to all Savanna employees. All entries must be received by 5:00pm MST on December 31 to be valid.
Congratulations to Ernie Langridge from Rig 655E for winning October’s ‘Find the Hazard Contest’ & Darcy Knorr from Savanna Drilling’s Nisku office for winning November’s ‘Find the Hazard Contest’. November 2011
Rig-n-Dig
11
S Savanna Well Servicing The Stollery Children’s Hospital in Edmonton is dedicated to the treatment and care of sick children from northern and central Alberta, Saskatchewan and Manitoba. The children at the Stollery are always in need of community support, but never more so than at Christmas time. Between December 1 and 15, Savanna Well Servicing will be collecting toy donations for children at the Stollery. Any and all gift donations (unwrapped) and gift cards are greatly appreciated. Much needed gifts include plastic mobiles and rattles (no fabric), Hot Wheels, Thomas the Train, DVDs (rated G through to 14A), E rated video games (for Xbox360, Playstation 3 and Gameboy Advance), markers, journals, craft kits, and colouring books. Donation drop off points are located at the following Savanna Well Servicing locations.
Brooks 290 Aquaduct Drive 403 501 2947
Lacombe 3402 53 Avenue 403 782 0719
Clairmont 7401 96th Street 780 402 8678
Nisku 1711 9th Street 780 955 7027
Carlyle Highway 9 North 306 453 2616
South Edmonton 9753 51 Avenue 780 434 6064
For more information, please contact George Shields at 780 278 7840 or gshields@savannaevergy.com