Mr. Duncan Au reports

CWC ENERGY SERVICES CORP. ANNOUNCES ACQUISITION OF 3 HIGH-SPEC AC TRIPLE DRILLING RIGS FURTHER EXPANDING ITS U.S. PRESENCE

CWC Energy Services Corp.'s wholly owned subsidiary, CWC Energy Services (USA) Corp., has closed the acquisition of three high-spec AC triple drilling rigs and critical spare components, including all related and ancillary equipment and inventory, for total cash consideration of $7.4-million (U.S.) (approximately $9.6-million (Canadian)). The acquisition further expands CWC's presence in the United States, increasing the company's active drilling fleet to 22 drilling rigs composed of seven conventional heavy double drilling rigs in Canada and eight AC triple, five DC triple and two conventional heavy double drilling rigs in the U.S.

Duncan Au, president and chief executive officer of CWC, stated: "The acquisition of these three high-spec AC triple drilling rigs will build upon CWC's growing presence in the U.S. by expanding our 12 active drilling rigs in the U.S. to 15 active drilling rigs. These high-spec AC triple drilling rigs will build upon our platform for meaningful shareholder value creation and growth opportunities by servicing our existing and future [exploration and production] customers with the most relevant fleet of environmentally friendly, high-spec drilling equipment for the longer depths and horizontal reaches of select U.S. basins, utilizing the highest-quality people in the industry, delivering the highest-quality service to our customers."

In conjunction with the purchase of these three AC triple drilling rigs, the board of directors has approved an expansion of the 2022 capital expenditures budget by an additional $8.3-million to a total of $18.2-million to complete upgrades and Level 4 recertifications on the three acquired drilling rigs to properly put them back into active service.

Acquisition highlights and strategic benefits

The three 1,500-horsepower AC triple drilling rigs have depth ratings to 22,000 feet (6,700 metres) and come complete with top drives and pad rig walking systems. CWC intends on operating the acquired drilling rigs in Montana, North Dakota, Wyoming, Utah, Colorado, New Mexico and Texas.

At an acquisition price of $7.4-million (U.S.) (approximately $9.6-million (Canadian)) plus upgrades and Level 4 recertification costs of $8.3-million for a total investment (TI) of $17.9-million (Canadian), CWC is acquiring the drilling rig assets at the following highly accretive acquisition metrics.

TI/three drilling rigs including critical spare parts:  $5.96-million per drilling rig

2023 estimated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1):  $7.3-million

TI/2023 estimated adjusted EBITDA:  2.4 times

The acquisition will provide CWC with many strategic benefits, including:

• Increasing the U.S. drilling rig fleet to 15 active drilling rigs composed of 13 high-spec triple drilling rigs and two conventional heavy double drilling rigs, 10 of which will have pad rig walking systems;
• Significantly reduce its operational business risk in Canada by geographically diversifying its revenue stream into the U.S. with 58 per cent of estimated 2023 revenue to be generated from Canada and 42 per cent from the U.S.;
• More balanced business segments with 44 per cent of estimated 2023 revenue generated from Canadian production services, 42 per cent from U.S. contract drilling and 14 per cent from Canadian contract drilling.

The acquisition was financed from the company's credit facilities with CWC's existing banking syndicate.

(1) CWC management's internal full-year run rate estimate after giving consideration to drilling rig move costs and selling, general and administrative expenses.

Expanded credit facilities

CWC has informed its syndicated lenders that the company will be exercising its accordion feature to expand its credit facilities from $62.75-million (Canadian) and $5.75-million (U.S.) to $58.21-million (Canadian) and $17.0-million (U.S.). The expanded credit facilities are expected to provide financial security and flexibility to July 31, 2025. The existing credit facilities were used to complete the acquisition, and the expanded credit facilities will subsequently be available to complete the planned upgrades and Level 4 recertifications on the three acquired drilling rigs, as well as assist the company in completing further acquisitions, to finance further capital expenditures and for general working capital purposes.

About CWC Energy Services Corp.

CWC is a premier contract drilling and well servicing company operating in Canada and the United States with a complementary suite of oil field services including drilling rigs and service rigs. The company's corporate office is located in Calgary, Alta., with operational locations in Nisku, Grande Prairie, Slave Lake, Sylvan Lake, Drayton Valley, Lloydminster, Provost and Brooks, Alta., and U.S. offices in Denver, Colo., and Casper, Wyo. The company's shares trade on the TSX Venture Exchange under the symbol CWC.

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