Investor Presentation
AltaCorp – ATB Investor Conference
January 2019
January 2019 Investor Presentation / Cathedral Energy Services 2
Forward Looking Statements
Certain statements in this presentation including (i) statements that contain words such as “anticipate”, “could”, “expect”, “seek”,
“may”, “intend”, “will”, “believe”, “should”, “project”, “forecast”, “plan” and similar expressions suggesting future outcomes, including
the negatives thereof, (ii) statements that are based on current expectations and estimates about the markets in which the
Cathedral operates and (iii) statements of belief, intentions and expectations about developments, results and events that will or
may occur in the future, constitute “forward-looking statements” and are based on certain assumptions and analysis made by
Cathedral. Forward-looking statements in this presentation include, but are not limited to, high performance directional drilling
services, deliver Better Performance Every Day, proprietary technology, partnership approach with our customers, CLAW motor
developments, focused on new motor models, performance advantages of motors, FUSION MWD developments, efficiency gains,
grow U.S. market share, growth opportunities in U.S. market, focus on U.S. market, pushing price increases, capacity constrained
in U.S. market, any reference to capital expenditures including the amount, nature and timing thereof, executing on operational
improvements, price increases and alternative pricing structures, customers being educated on operating limits, upgrading
equipment, continued focus on commercializing our proprietary technologies, demand for higher performance equipment,
executing on margin improvement opportunities, new capex facilitating revenue and growth opportunities, continued focus on
improving and growing the business, strong balance sheet facilitates future growth opportunities, favorable valuation and financial
metrics relative to industry peers, oil and natural gas prices and demand; and any other statements involving such matters. Such
forward-looking statements are subject to important risks and uncertainties, which are difficult to predict and that may affect
Cathedral’s operations, including, but not limited to: the impact of general economic conditions in Canada and the United States;
industry conditions, including the adoption of new environmental, safety and other laws and regulations and changes in how they
are interpreted and enforced; volatility of oil and natural gas prices; oil and natural gas product supply and demand; risks inherent
in Cathedral’s ability to generate sufficient cash flow from operations to meet its current and future obligations; increased
competition; the lack of availability of qualified personnel or labor unrest; fluctuation in foreign exchange or interest rates; stock
market volatility; opportunities available to or pursued by Cathedral and other factors, many of which are beyond the control of
Cathedral. Cathedral’s actual results, performance or achievements could differ materially from those expressed in, or implied by,
these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-
looking statements will transpire or occur, or if any of them do transpire or occur, what benefits Cathedral will derive from there.
Subject to applicable law, Cathedral disclaims any intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
All forward-looking statements contained in this document are expressly qualified by this cautionary statement. Further information
about the factors affecting forward-looking statements is available in Cathedral’s current Annual Information Form and Annual
Report which have been filed with Canadian provincial securities commissions and are available on www.sedar.com
January 2019 Investor Presentation / Cathedral Energy Services 3
Cathedral Overview
Established 1998
High performance directional drilling
services that deliver
“Better Performance Every Day”
Proprietary technology
Partnership approach with our
customers to help them achieve higher
drilling performance and lower project
costs
North American footprint - 80% of
revenue is U.S. based
January 2019 Investor Presentation / Cathedral Energy Services 4
Cathedral Snapshot
TSX: CET
TTM Financial Performance1
Market Statistics
Recent share price $0.75
52 week high / low $1.84 / $0.66
Shares outstanding (basic) 49.5 million
Valuation Metrics
Current market value $37 million
Enterprise value2 $39 million
Tangible book value per share $2.03
TTM EV/EBITDA multiple 2.8x
Ownership
Insiders 5.6%
Institutions ~40%
Notes: 1. Revenue and EBITDAS are for the 12 months ended Sept 30, 2018
2. Term Debt = $7.0 million, Cash = $4.8 million as at Sept 30, 2018
$156 MillionRevenue
$14 MillionEBITDAS
January 2019 Investor Presentation / Cathedral Energy Services 5
Geographical Focus
January 2019 Investor Presentation / Cathedral Energy Services 6
How we deliver “Better Performance Every Day”
Proprietary MWD
and Motor Platforms
• Experience
• Culture
• Training programs
• Health and Safety Program
Catalyst™ Engineering Services
Financial strength,
equipment fleet,
geographical footprint
Collaborate with our
customers to facilitate
improved drilling
performanceFUSION™ MWD
nDURANCE®
Motors
January 2019 Investor Presentation / Cathedral Energy Services 7
CLAW™ Motor Developments
Focused on new models that deliver specific
performance characteristics targeted at today’s
active programs in higher flow, deeper drilling
environments:
• Higher Rig Flow
• Higher Speed
• Higher Torque
Performance Advantages:
• More torque than standard industry motors
• Able to accommodate higher flow rates
and differential pressure.
• Suitable for drilling single-run wells
(surface shoe to TD)
• Able to leverage higher rig pump rates
January 2019 Investor Presentation / Cathedral Energy Services 8
FUSION™ MWD Developments
FUSION EM – optimized
design and materials enables
longer runs in aggressive
drilling fluids
FUSION EMc2 – integrates a mud-
driven downhole generator which
enables EM to continuously operate
at high power levels without fear of
depleting batteries, losing power
and having to trip • Higher power central data processing
unit (“brain”)
• Ruggedized chassis, latch connectors,
threaded barrel (“backbone”)
• Plug-and-play sensors and telemetry
options
FUSION RP – higher torque
rotary valve reduces industry-
wide jamming tendency and
enables pulse transmission in
higher flow, deeper
applications
FUSION LP – direct
actuated main shaft
capable of generating
large pulses detectable
throughout deeper
drilling operations
January 2019 Investor Presentation / Cathedral Energy Services 9
Recent U.S. Performance Achievements
PERMIAN:Cathedral's new 7" Claw 400 (HS)
delivering new levels of
performance in the Permian. 4,841
ft. drilled in 24hr and 20
continuous stands without any
slides in Wolfcamp formation.
2018
One run 11,467' curve and lateral
drilled with the 7" nDURANCE
CLAW in 156 drilling hrs with a TD
at 20,102 ft.
2018
One run curve and lateral drilled to
18,958 ft. with FUSION EMc2 High
Output Telemetry in the Permian.
2018
Another 7" CLAW success, drilling
to 4,489 ft. in 24 hours in the
Wolfcamp.
2018
Another successful run with the
nDURANCE 7" CLAW, drilling a
one run curve and lateral (11,366
ft. interval) with a TD at 19,696 ft.
in Spraberry.
2018
ROCKIES:RECORD RUN: The fastest well
recorded in the North Piceance,
6 day well spud to release.
2018
Our new 7.25" motor delivers
15% improvement in the
Niobrara, drilling a 8.5"
monobore to 12,070 ft. setting a
24 hr drilling record.
2018
MID CON:Utilizing the 5" CLAW, Cathedral
drills a 4,909 ft. lateral in 53.25
hrs with a TD of 12,640 ft. -- a
new level of performance in the
challenging Mississippi Lime.
2018
Cathedral's first successful one
run lateral to TD utilizing the
proprietary CLAW 250 (XT)
motor in Kingfisher County.
2018
Record for faster conventional
lateral in Meramec with our
nDURANCE Claw 250 (XT). 2
mile lateral in 67.75 drilling
hours.
2018
January 2019 Investor Presentation / Cathedral Energy Services 10
2018 YTD Overview
Following a strong 2017, Cathedral had a challenging first half of
2018
– Escalating costs (repairs, transport and labor)
– Customer and job mix impacted margins
– Extraordinary events in U.S. impacted Q2
Based on corrective actions taken in early Q2, Q3 financial results
improved
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3
EBIT
DAS
% o
f Rev
enue
Reve
nue
Revenue and EBITDAS(CAD)
US Rev Can Rev EBITDAS % of Revenue
January 2019 Investor Presentation / Cathedral Energy Services 11
2018 YTD Results
$118 MillionRevenue
$8.6 Million
EBITDAS
2018 – Q3 YTD Financial Performance
$7.0 Million
TERM DEBT
Day Rates Flattening
$4.8 Million
CASH
Targeted 2018 CapEx of $19 Million
Net CapEx after Lost in Hole Equipment Proceeds estimated at $6.5 million
-
2,000
4,000
6,000
8,000
10,000
12,000
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
2018Q2
2018Q3
DD Revenue Day Rates
Cdn DR (CND) US DR (USD)
-
500
1,000
1,500
2,000
2,500
3,000
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
2018Q2
2018Q3
DD Activity Days
Canada US
U.S. Activity Levels Improving
January 2019 Investor Presentation / Cathedral Energy Services 12
2018 Q3 Highlights
Closed Washington PA facility
– Efficiency gains by moving PA infrastructure to more active U.S. districts
– U.S. Northeast activity to be supported out of OKC
YTD CapEx of $13 million
– To end of October had deployed 92 – 7” / 7.25” Claw motors in U.S.
market
Technology
– Rolled out Cathedral Linear Pulse MWD tool
• High LCM tolerance and capable of higher pulse transmission speeds
– Continued design upgrades on FUSION EM and Dual Telemetry
platforms
• Enhanced vibration damping, High Torque rotary pulser, downhole power
generator, shorter string length
– Motor RPM sensor
• To augment downhole analytics capabilities
January 2019 Investor Presentation / Cathedral Energy Services 13
Summary
Growth opportunities in U.S. market we can capitalize on based on
our differentiated technology
Executing on margin improvement opportunities
New CapEx facilitating revenue and growth opportunities
Strong balance sheet facilitates future growth opportunities
Favorable valuation and financial metrics relative to industry peers
January 2019 Investor Presentation / Cathedral Energy Services 14
Contact Information
Scott MacFarlane, President and CEO
– Direct: 403.444.3534
– Email: [email protected] /or/
January 2019 Investor Presentation / Cathedral Energy Services 15
Thank you