rig-n-dig august 2012

1Rig-n-Dig • savannaenergy.com

August 2012 S

In This IssuePhotos from Derek’s vacationQuarter Two ResultsEmployee ProfileWhat’s Happening?Photo Competition Entries

2 Rig-n-Dig • August 2012

With many recent changes happening at Savanna, this is a great opportunity to discuss change itself and how it can make us feel. All of us love change that makes things better, but few of us embrace organizational change because it often disrupts the status quo. With organizational change, es-pecially in the form of new or depart-ing employees, most of the time we assume these changes must be reflec-tive of “bad things” or “something missing”. In reality, it is seldom true that organizational change is actually bad. In fact, in most instances this change is at least neutral, and in fact usually improves the organization in the long run through new ideas and approaches.

Within an organization, the most ef-fective way to ensure positive person-nel changes occur is through proper job progression channels. In a strong organization this must also be coupled with a conscious effort to identify suc-cessors, and mentor and train these prospective candidates in as many as-pects of the position as possible. Last month’s comments by Dwayne LaMon-tagne, Chief Development Officer for Savanna, on sustainability certainly are reflective of this. In order for Savanna to remain sustainable, which is a key value of the Company, we must not only anticipate, but actually embrace the movement of employees within the organization.

At Savanna our commitment to job progression starts at the green lease-hand position. New employees are giv-en significant training and information upon joining Savanna and once they’re ready to hit the field, are paired with a rig manager and crew charged not only with continuing basic orienta-tion and training on the job, but also with becoming mentors. In the past we relied on much of this happening naturally, but recently Savanna has formalized the process on several rigs in order to highlight its importance and focus the mentor on the impor-tance of the task. This mentoring process is repeated in every position within Savanna, field or office. It is

not perfect, but we believe it is essen-tial to improving an employee’s ability to advance in the Company, and also helps us retain people by giving them better “line of sight” regarding their potential career progression.

We believe Savanna employees have a right to know where their job can lead, and we are working hard to provide that support. With this in mind we have piloted a very success-ful advanced progression program in our well servicing group called SEAT (Savanna Employee Advancement Training). Identifying “stars” or “high-potential” employees who are ready to advance on the rig, SEAT training helps candidates fill in any gaps in their skill sets. Utilizing experienced trainers and Savanna’s own facilities this is done in a very short period of time through focused, hands-on training. When employees leave SEAT they are fully prepared for a higher position on the rig. The success of this program has been very strong, and we anticipate expanding it beyond well servicing in the near future.

While I have highlighted field employ-ee progression, similar less formalized progression occurs throughout Savanna at every level. The processes are ef-fectively the same, and start with Sa-vanna’s strong preference to promote from within. In our view, the best employee we can attract is one we al-ready have. In that regard, we ensure all new job openings, or job openings arising from employee promotion or departure, are advertised internally and externally. Savanna managers at all levels are well aware of this policy and very supportive of it. Managers never like to lose key people to other parts of the organization, but clearly recognize this as a better solution than the employee seeking advance-ment outside the Savanna family.

There are occasions where outside opportunities for our people cannot be matched within Savanna. While this is unfortunate, we put a great deal of effort into understanding why the employee is leaving, and addressing any structures, processes or situations

inside Savanna that may have influ-enced the departure. Exit interviews are conducted with every departing employee who is willing to do so, and the results of those interviews are taken extremely seriously. Sometimes departures have nothing to do with Savanna, and the employee is actually quite sad at leaving the organization. However, frequently the departure is a result of things that Savanna is either doing, or not doing, for our employ-ees. Sometimes it is as simple as a personality conflict, while in other cases the vision and values that un-derpin Savanna do not match those of the individual. In any event, Savanna places great value on our people and strives to retain as many as possible for as long as possible. This is a foun-dation for Savanna’s future growth.

We have almost 3000 employees and have grown very quickly from a small operator to a very large company. The demands on our operations and managers grow in complexity every day as a result of this, and in some cases those changes do not fit with the career expectations or aspirations of our people. This inevitably results in organizational change. By recognizing and understanding change as natural, it’s easier to understand the reasons for it. At Savanna, through embracing change, we will continue to progress as a company for the benefit of all our stakeholders. Organizational change is inevitable and healthy; managing and controlling change effectively can be a huge factor in making Savanna a leader in the industry. We are focused on doing exactly that.

Message from Management

Change.This month’s message, from President and CEO Ken Mullen, focuses on the exciting but often overwhelming idea of organizational change.

Ken Mullen, President and CEO of Savanna Energy Services Corp.


Savanna Energy Services Corp.’s second quarter results were released August 8, 2012. Although there were some negative effects in the past three months from wet weather and an extended spring break-up in Canada, Savanna continued to grow.

Revenue, operating margins and earnings before finance expenses, income taxes, depreciation, amortization and shore-based compensation (EBITDAS) all increased significantly in this quarter compared to Q2 2011.

EBITDAS saw the greatest increase at $14.4 million, up from $12.7 million in 2011. This total marked the highest EBITDAS for a second quarter in the history of the company and brought the 2012 total EBITDAS as of June 30, 2012 to $86.8 million.

Savanna’s VP, Finance & Chief Financial Officer Darcy Draudson says that the increase in revenue for the

second quarter is primarily due to the company’s equipment fleet additions over the last year. These additions include 33 services rigs, 6 TDS-3000TM retrofit rigs and 2 ultra-heavy telescoping doubles in North America, as well as 2 drilling rigs and 1 service rig to our Australian fleet.

The second quarter also meant retiring of one pipe-arm single drilling rig and two service rigs. The first of these was found to be inconsistent with Savanna’s core drilling rig platform, and the latter required repair that was in excess of recoverable amounts.

Savanna’s drilling division experienced great amounts of growth throughout the second quarter. The industry in Canada so far in 2012 has focused on developing oil and liquid-rich products, resulting in a particularly strong first half of the year for Savanna due to a strong position in these areas.

Thanks to improvements in the capacity of their drilling rig fleet, the division also had a 10% increase in the number of operating days. Add to this

the 11% increase in average day rates, and the drilling division pulled off a 3.5 million or 20% increase in operating margins since the same time last year.

An increase was also seen in the utilization, day rates and operating margins for Savanna’s shallow rigs in Canada for the first half of 2012 in comparison to the same time period in 2011.

The oilfield services division was affected more by the wet weather than Savanna’s other businesses in Q2 in both Canada and Australia. Despite a 37% increase in operating hours and an increase in revenue by 52%, this led to a decrease in operating margins.

“Overall, though, it was a solid quarter,” Draudson reflects, “with the increased equipment expecting to provide improving results for the rest of the year and into 2013.”

Savanna’s full Q2 2012 report, including it’s management, discussion and analysis is available on our website (www.savannaenergy.com) under investor relations.

Q2 Results

Rig-n-Dig • August 2012800, 311 6th Avenue SWCalgary, Alberta T2P 3H2Phone: 403 503 9990Fax: 403 267 [email protected]

Savanna Energy Services Corp. is listedon the Toronto Stock Exchange (TSX:SVY)For current stock information,visit tsx.com or savannaenergy.com

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: Chesley Ryder 403 718 2885 [email protected]

Managing Editor: John Bayko 403 781 9999 [email protected]

In This IssueMessage from Mgt. page 2Quarter 2 Results page 3Employee Q & A page 4What’s Happening? page 5Employee Profile page 8Rig-n-Dig Photo Contest page 9Obituary page 10

Last Page page 11

Savanna’s second quarter sees record EBITDAS

Q2 2011

Q2 2012

Drilling Revenue

Drilling Operating

Margin

Oilfield Revenue

Oilfield Operating

Margin

Overall Revenue

Overall Operating

Margin

EBITDAS

125

100

7550

25A

mou

nt i

n m

illi

ons

Results comparison

Total Revenue


Savanna Australia’s Jason Shephard

Q: How long have you been working at Savanna?A: Since October of last year, so about 20 months.

Q: Where are you from?A: I’m just a local guy, I’ve lived in the (Toowoomba) area for 7 or 8 years.

Q: How did you get into the industry?A: A lot of my close mates were working in the industry. It (the drilling industry in Australia) is something that’s never easy to get into. It took me a long time of applying and I had to get some tickets and qualifications—you know, there’re things you can do yourself and companies recognize when you are taking the initiative to get into the industry—and I’ve never looked back since I’ve been here.

Q: How did you end up at Savanna?A: I was working at a drilling company for about the past 5 years, and then they were bought out by another company. I worked for them for a while before getting lucky enough to come over to Savanna, and I’ve pretty much loved every minute I’ve been here!

Q: You were in a work accident recently. Can you tell me how that happened?A: I injured my thumb on the hydraulic elevators. I had just cut one of the boys out for a meal break and was on the rig floor shutting the elevators. There was a safety latch that wasn’t shutting properly. At the time I went to double check it and the hydraulic latch was activated at the same time I was checking it and my thumb happened to be in the wrong spot at the wrong time. But these things happen, and when you’ve been in the industry a few years like I have been and you’ve never had anything go wrong I think you become a little bit complacent. I had always worked with manual elevators where it’s natural to shut them and hit the safety latch to make sure it’s engaged. I was just unlucky, but I’ve learned a lot from it and I’m just happy to have both of my thumbs intact!

Q: I’m sorry to hear that. How is your thumb doing now?A: I’m going into surgery soon. I’ll know more then but at this point I’ve still got a plate left in there and can’t bend the actual thumb so it’s a little bit restricted. They’ve pretty much gotten to the point where the bones can fully grow and they will hopefully be strong enough by the time I go to for surgery. Then they will pull the plate out and release one of the tendons so that should free it up and then hopefully the process from there is not too much longer. But I like to think—you know I’m pretty positive and I’m looking it as positively as I possibly can—you know I’d like to think I’ll be back well and fully by the end of the year.

Q: So the CSG projects are getting pretty big around here. Do you see yourself building a career in the industry?A: Oh definitely. The last company I worked for, I worked there for 5 years, but it was at a small company trying to get big – a little bit too big I think too soon, so they lost a lot of guys. I think that’s what Savanna has as a benefit over a lot of the other companies here: the rigs not only have state of the art equipment but the people working on them have done this work before so it’s managed very well and that helps them to get long contracts. Those contracts mean you have a bright future, and that can attract a lot of people, it was certainly one of the main things that attracted me. I see myself definitely being here and going drilling (being set up as a Driller).

Q: What advice would you give to others looking to get into the industry in Australia?A: Well, it’s not easy, especially with the certifications you now have to have, but I’d say you are better off doing some of those off your own back (at your own expense) rather than walking into a company and saying look, these are the qualifications I’ve got and if you haven’t worked for a drill company before but you have those tickets then they will say let’s give this guy a go, he’s really taken the initiative. Actually, that’s probably the biggest thing because there is so much more that the companies want these days that if you’re not prepared to do a little bit off your own back then you’re going to find it harder to get into the industry. You’ve just got to show a bit of initiative yourself.

Q: What do you like to do when you are not working?A: I’m a huge fan of fishing, I’ve done that since I was a little kid. Within two-and-a-half hours from here there are 5 or 6 good lakes for fishing. The Aussie bass are the number one species around here. Ialso don’t mind getting out to the ocean and stuff, if it’s the right time of year it’s quite fun. But my boat is set up for the freshwater stuff so that’s what I do mainly. I also love camping and hunting as well when I get the chance—pigs and roos and stuff.

Q: Do you play sports?A: I love me footy. I grew up in the desert pretty much but I supported the West Coast Eagles because my dad played for the Eagles in the South Australian League (one league below the AFL). Yes, I’m a huge fan of all sports. I played pretty much all sports growing up and when I was a kid, and I still did pretty much right up until I went on the rig, but obviously when you change your lifestyle and go to work you’ve got to sacrifice a few things.

Jason Shephard is one of Savanna’s many dedicated employees working in our field office in Toowoomba. Find out about his hobbies, history in the field, and what he loves about working at Savanna in our interview.


What’s Happening?

What’s Happening near Haughton, Louisanna?

Haughton Head Office

The crew on rig 648 has been working on a 14,000 foot horizontal well running on a corkscrew type path around two existing wells. They set 9 and 3/8” casing at 2,300 feet, drilled out with 8 and ¾ casing to down to 9,100 feet. At 9,100 feet the hole kicked out vertically to 10,100 feet where they set 7” casing and drilled down to 14,200 feet where they set 4.5”.

Rig 648 has three C15 Cat Generators to run the drawworks and two 3516 1300 HP pump houses. It runs typically runs water-based mud and has been in the Haynesville shale area since last August (2011). A typically well will take Rig 648 27 to 30 days.

This was a “cool” day as the temperature in Haughton was only in the mid-90s F. This crew is used to working in 105+ temperatures with the additional heat the rig puts out!!

The crew (from L to R): Jeremy “Rat” McDuff; Cordell Phillips (Field Superintendent); Joe Ladner; Heath Newton (Rig Manager); Casey “Whompus” Lewder; Matt “Big 12” Huckaby; and Wayne “Hector” Meshell.

Cordell Phillips and Heath Newton

Kelli Madden, Bruce Ivey and Stacy TaylorCordell Philips and Robert TaylorAustin Vaughn and Philip Dawson


What’s Happening?

Five year rings

Rig #19 Crew

This month, employees recieved their thank you gift for a five year commitment to Savanna. Congratulation to these dedicated individuals!

Anita Collett

Apolonia Santa Maria Beth Prins

Apolonia and Saba sport their new rings!

Crew from Rig #19 (from L to R): Andrew Lewis, Ian Norris, Larry Lainey, Kayla Zaretzki, Chad Mullan

Lloyd Heidinger

Steve Turner

Nick Clements

Miranda MurphySaba Asgedom


What’s Happening?

Derek’s vacation

Peter Mcnamara’s Adventure Congratulations Janine!

Our friend Derek the Derrick has been a world traveller this month! Here are some photos of his trip to Germany and Italy with Megan Steele:

Peter went to Ontario with his family and tried out Canada’s fastest zipline!

Please join Janine and her husband Thomas in welcoming Kylie Maree Tannahill. She was born on Monday, August 13 at 5:09pm weighing 7lbs 7oz. Congratulations to the Tannahill family!

Are you headed on a vacation? Why not take our mascott along, snap some shots and send them in to the Rig-n-Dig at [email protected]

Here is Derek at the summit of Mt. Elbrus (5642m above sea level!) with Patricia Cooper:


Savanna Australia’s Jim Bakanec

From a small town in Saskatchewan to a Training/Development and Assessment Manager in Australia, Jim Bakanec has made a successful career for himself.

Jim has worked in the oil and gas industry for 33 years in Alberta, Saskatchewan, British Columbia as well as the North West Territories.

He started at Savanna in 2003 as a Rig Manager. By 2008 he was recruited to start running the Training Centre in Blackfalds, Alberta and, at the end of the winter season in 2011, got involved with the Savanna Australia project as Rig manager on #406, Savanna’s first Australian Hybrid Coil Drilling Rig. Less than six months later, he was promoted to his current position.

Although Jim admits there are some tough times that come with the lifestyle involved with rig work, he says it is thanks to a tremendous support system that he is able to thrive in it, and because of those people that he has the motivation to work through the tough times.

“I think the best part would be the quality of life that the wages have allowed me to give to my wife Sherry, as well as my three children and now grandchildren, and not to forget to mention the many relationships that I have formed through the years with my workmates.”

In terms of his current position, Jim says it is safe to say he is able to bring more than a quarter of a century of experience as a trainer in Safety and Operations to the table for Savanna, but what is equally as important is the training philosophy he brings to his position.

This philosophy is that all workers bring certain skillsets and attributes to the table, and these need to be recognized and appreciated because they can help with the training processes.

“I would hope that we could all agree that the secret ingredient to ensure a successful outcome in regards to all of our workers is simply the desire to be successful in our roles,” he says. “This desire needs to be protected, nurtured and maintained.”

There are challenges in making sure this philosophy is strived towards. Especially in Queensland where Jim says it is difficult to get a team to a point where they all meet the legislative requirements in accordance to the State of Queensland Competency Standards for the Petroleum and

Gas Drilling Industry. The training department is taxed with the task of getting everyone through their certification levels, which involves making time for testing, interviewing, observing, training and compiling information.

This, of course, takes place on top of the training and assessment needs for all of the higher positions to keep them up to date with their requirements.

“The greatest challenge for me is to make myself available in the field and the office to support all of these processes,” Jim says.

Though often it is a challenge, he says that seeing the growth in his crew is rewarding.

“After an individual’s training cycles have been completed and a qualification is in place, to then observe these individuals working or leading their teams safely and efficiently, and to know that I helped to make that happen – wow, what a feeling!”

By ensuring that feeling is met through aligning his training with Savanna’s visions and values, he says that “success for all is inevitable.”

In the coming months and years, Jim hopes to continue creating teams that are certified, professional, experienced and qualified so that Savanna can evolve to become a leader in the Australian Oil and Gas industry.

I believe that success for all is inevitable.

“ ”


Savanna Photo Contest

So far we have recieved some excellent entries for this year’s weather-themed photo contest. If you haven’t yet entered your winning photo, don’t worry you still have one more month! The contest is open until September 30, 2012. Send your photos to [email protected] to enter to win some great prizes!

Rainbow at Lac St. Anne; submitted by Debbie Bettridge

Sunshine in Langdon, AB; submitted by Danielle Ball

Sunset on PEI; submitted by Elise MacPherson

Sunset on PEI 2; submitted by Elise MacPherson

Lightning; submited by Kyle Fors

Ranch by Longview; submitted by Ellise MacPherson

Nova Scotia - Eastern Passage; submitted by Mavis Hsu

Breaking down flare and degasser line 633 way; submitted by George Phillips

Winter scene; submitted by Joyce Telford

After the rain; submitted by Joyce Telford

SD 406 in Queensland Australia; submitted by Kevin Reindl


CLARKE, John Anthony. September 23, 1945 - August 3, 2012

It is with great sadness that John and Jennifer Clarke announce the death of their father John Clarke on Friday August 3, 2012. He was surrounded by the people he loved and he passed peacefully at the Peter Lougheed hospital in Calgary. John amazed family, friends and colleagues with his courage and inner strength in dealing with his physical challenges right up until the last day of his life. He was born in Willesley Castle in the town of Matlock Bath, England during the final days of the Second World War before moving to Calgary, Canada with his parents John and Betty in 1946. In the early ‘70s John and his family began raising Appaloosas and Quarter Horses on their acreage in Keoma, Alberta with their company Clarke’s Quarter Horses. At the same time he began his long and distinguished career in the oil industry with Clarke’s Power Tongs. He finished his illustrious work life as a Public Relations Consultant with Savanna Energy in Calgary, and it was a position he enjoyed tremendously. John moved with Wendy Clarke to Chestermere, Alberta in the late ‘90s where he contributed exceptionally to the Chestermere community. He was a man well loved and respected by all those individuals he worked and played with throughout his personal and professional life. John is survived by his son John Clarke Jr. (Kathy); his daughter Jennifer Clarke-Arora (Vin), his stepdaughter Nicole Murphy (Jarrett); all his wonderful grandchildren; his parents John and Betty and his siblings Susan (Robert); Peter (Joni) and Denise (Chris). A celebratory memorial of John Clarke’s extraordinary life is planned for a later date. In lieu of flowers, a charitable donation can be made to the Calgary Drop-In Centre.

From the Calgary Herald Aug 7, 2012.

Savanna and the Alberta oil and gas community lost a great character in August 2012. On August 3, John Clarke, former Contracts Representative for D&D Oilfield Rentals, passed away. John worked for D&D out of the Savanna Calgary offices for nearly two years before his career was abruptly ended when he was struck by a car outside the Calgary head office in 2010.

As his obituary above relates, John had a long and storied life as an Albertan and he was well known for his endearing personality and unbelievable perseverance. Prior to the car accident that ended his time at Savanna, John had battled and beaten kidney disease (he had been on dialysis for several years in his early thirties) as well as survived a bout with tuberculosis that claimed one of his legs. In spite of such physical hardships, John nevertheless went on to build successful companies, raise a family, help out the less-than-fortunate, and make many, many enduring friendships along the way.

Anyone who met John during his time at Savanna will remember how he used to deftly wheel around the hallways on his scooter at high speeds, saying hello to anyone and everyone. He always had a smile on his face and as his obituary mentions, never failed to tell anyone who would listen that working for Savanna was the “best job I’ve ever had”. John loved coming into the office each day and his respect for Ken Mullen and the rest of the executive team had him praising Savanna long after he was forced to stop working here.

Following the accident in 2010 John was hospitalized, and although he put up yet another fierce battle of the type he was well known for, he couldn’t find enough comfort to allow him to fully rest and recover. Characteristically, he made it out of the hospital several times over the past two or so years, and back to his home in Chestermere, but he would ultimately be in a facility care bed more often than not until his death in August. John will be truly missed by all those who had the pleasure of working with him and getting to know him as the great character he was.

Photo courtesy of the Clarke family.


Last Page

Note from the editor

During Janine’s absense, I will be taking over the Rig-n-Dig. Over the next year I look forward to learning more about this company and everyone who is a part of it through this. Please don’t hesitate to contact me if you have an awesome photo or story that you would like to share be-cause I would love to hear all about it! Thank you in advance for this awesome experience.

-Chesley

Air Drilling: The use of compressed air instead of mud as a drilling fluid to remove the cuttings.

Flarestack: Burns unwanted gas from the well.

Perforate: To run a wireline in the well with a ‘gun’ that contains explosive charges to create holes in the casing.

101RIG TERMINOLOGY

How often do you read the Rig-n-Dig?Every month, of course! [10 votes]Whenever I get the chance [3 votes]Rarely... [0 votes]What’s the Rig-n-Dig?? [0 votes]

Guess the rig part!Find out if you’re right by checking Savanna’s Facebook or Twitter pages after September 14.

SOCIAL MEDIAUPDATE

As a result of continuous growth, Savanna Energy Services is seeking a proactive and energetic individual for the role of HSE Field Superintendent for our Savanna Drilling division located in Nisku, AB.

Under direction of the HSE Manager, this position ensures that operations are conducted in a safe and effi cient manner.

Savanna offers comprehensive benefi ts, a competitive salary and an RRSP program with employer matched contributions.

The successful candidate will have:• rig experience working as a Derrickhand and above• strong communication and collaboration skills• acute attention to detail• experience and knowledge of Health Safety and

Environment considered an asset

If you are keen to pursue a challenging and rewarding opportunity, please apply online at www.savannaenergy.com/careers or send your resume to [email protected]

S

S


Follow us on Twitter

@UnitedWayCgy

Connect with us on Facebook

/CalgaryUnitedWay

Visit our website

calgaryunitedway.org

Comment on our blog

calgarysocialvoice.com

Photo credit, second from bottom: Urban Exposure Project Participant Keisha Russell

THAT’S WHAT ALBERTA’S 9,000 ANNUAL HIGH SCHOOL DROP OUTS (3,000 IN

CALGARY ALONE) COST SOCIETY EVERY YEAR IN UNEMPLOYMENT, LOST TAX

REVENUE, SOCIAL ASSISTANCE, JUDICIAL SYSTEM AND HEALTHCARE COSTS.

$142M

DID YOU KNOW?The conservative cost for a single drop out in Canada is estimated to be $15,850* per year,

each year, for the rest of their lives.

*Source: Canadian Council on Learning, 2008.

THANKS TO YOUIn 2011, United Way-funded programs and initiatives in Calgary and area were able to support 8,527 youth to complete high school, setting them up to be successful and independent adults.

It’s your city. Change starts here.

rig-n-dig august 2012

Documents

savanna employees

new employees

organizational change

seat training

ing employees

employees ability

movement of employees

highpotential employees