Rig-n-Dig March 2013

March 2013

In This Issue Q4 & 2012 Results Savanna Wins Award for Aboriginal Relations North Dakota Beckons What’s Happening?

Rig-n-Dig • savannaenergy.com

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Message from Ken Mullen, President and CEO 2012 Rollercoaster

Ken Mullen’s message from Savanna’s 2012 Annual Report.

2012 was a tumultuous year for the industry and Savanna, which both tested and strengthened our conviction to following our strategy. In Q1, we experienced some of the strongest demand and activity of the last few years. This was once again followed by an extended break-up in Canada.

Our U.S. operations continued to generate high activity and Australia progressed with utilization and rig delivery. Industry activity heading into Q3 and Q4 looked positive everywhere.

Unfortunately, oil prices began to retreat in the second half of the year and this, coupled with stubbornly low natural gas prices, significantly curtailed our customer cashflows and demand for our services. Initially this was isolated to Canada, but did spread to the U.S. in Q4. Fortunately, Australia continued to increase overall activity; however, this was punctuated by regulatory, customer and operational delays along the way.

Committed to Our Strategy With such uncertainty, we could easily have pulled back on Savanna’s strategy of expansion and diversification, but we chose not to. While this negatively impacted our results in the second half of 2012, we firmly believe this decision sets the stage for longer-term growth and profitability in 2013 and beyond.

Revitalize. Diversify. Expand.

In pursuit of our vision to become a global energy services leader, we have completed several important steps to revitalize, diversify and expand our operations: Rig Revitalization: In 2012, we introduced our 15th TDS-3000TM drilling rig — the last in a three-year plan to convert half of our shallow CT-1500 fleet to the highly sought after TDS-3000TM platform. Currently all of these rigs are contracted, with 12 operating in Canada and three in the U.S. We also exported our shallow drilling expertise to Australia and uncovered a profitable niche in the coring drilling market in Canada for the remainder of the CT-1500 fleet.

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Revenue Diversification: We have focused on diversifying our revenue stream geographically by growing in non-Canadian markets while continuing to grow Savanna overall. Between 2006 and 2012, our non-Canadian revenues grew from less than 5% to 38%, and are poised to grow further in the U.S. and Australia in 2013.

Service Expansion: It has been Savanna’s stated intention to grow our oilfield services business to more closely match the scale of our drilling and workover rigs. In 2008, we added a small rental business to the mix, and in 2012, we successfully expanded this service line both organically and through acquisitions.

2013 Priorities To be sustainable long term, we must expand our customer base. Savanna has invested significantly to develop processes and systems needed for multinational and government-backed customers. These systems are typically maintained only by the largest of our competitors, and so the cost has been significant for us. Yet the rewards are showing. Coupled with strategic geographic and product execution, these systems have enabled Savanna to grow revenue from multinational customers from nil in 2010 to a projected 25% in 2013, with the bulk from the U.S. and Australia.

Executing our strategy and developing core long-term systems is essential to future growth. But we must provide a strong balance of cost control and efficiency that was missing in 2012, particularly in light of industry volatility. Managing costs will be a core focus in 2013 and beyond. We are also reinforcing our commitment to improve our safety performance – first, because it’s the right thing to do and second, because it’s required to operate in the multinational arena.

Our stakeholders have demonstrated incredible faith and patience over the past several years as we essentially rebuilt Savanna. We do not take that faith and patience for granted, and we are focused on doing whatever is required to ensure our stakeholders are properly rewarded.

Q4 Results

2012

Even though 2012 was a tumultuous year for the oilfield services industry in North America, Savanna achieved improved results, increasing EBITDAS 11% in 2012 as compared to 2011.

Many of the challenges this year, especially in the final quarter, came from customer uncertainty, decrease in demand, and the delay of expected projects from 2012 to Q1 2013.

However, through these challenges, Savanna was able to complete seven key milestones:

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Completed its TDS-3000TM drilling rig conversion program: 12 delivered to Canada and 3 to the USA.

Delivery of 4 CT-1500’s and 4 workover rigs to Australia

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4 Strong Q1 for hybrid drilling fleet

800, 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

March 2013

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 cryder@savannaenergy.com Managing Editor: John Bayko 403 781 9999 jbayko@savannaenergy.com

Message from Management Q4 & 2012 Results Summary Aboriginal Relations Recognition Rig 654 Makes Safety Fun Intro to Savanna Knowledge Base What’s Happening?

Australia Last Page

Maintain US activity and renew contracts

7 Tender activity in Australia for 2013/2014

Continued financial flexibility, dividend of $0.03/month

Quarter 4 In a difficult Q4 2012, Savanna suffered a slight decrease in revenue as compared to Q4 2011, recieving $168.2 million, a loss of 7%. Breaking that down, here are the numbers for Savanna’s regions for Q4 2012 as compared to the same time period in 2011:

Rig-n-Dig

In This Issue

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3

D&D acquisition of Deranway

page 2 page 3 page 4 page 6 page 6 page 8 page 10 page 14

$0.9 mil $22.7 mil

$46.2 mil

23%

165%

$99.3 mil

So far in 2013, the industry in North America has seen a slow start but it is hopeful that it will return to similar levels as Q1 2012 shortly. As well, the hope is that the increased presence that Savanna holds in the US and Australia will offset the inevitable spring break up in Canada.

“In 2013, we are positioned to deliver improved results and prove that our investments can and will pay off.”

- Ken Mullen, President and CEO

Rig-n-Dig • savannaenergy.com

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Savanna Recognized for Aboriginal Relations On March 8, 2013 Savanna Energy Services Corp. was presented with the Aboriginal Relations — Best Practice Award of Distinction by the Alberta Chambers of Commerce.

The award is given to a non-Aboriginal business that demonstrates outstanding achievements in Aboriginal relations, including economic development, employment and training, and Aboriginal community support.

Ken Mullen, President and CEO, says he is proud of the business and employment relationships the company has built with Aboriginal communities.

“These ventures have contributed to Savanna’s success over the years are clear proof that strong community, strong cooperation, and good business can create success in the same arena.”

The award was presented at a the Alberta Business Awards of Distinction Gala in Edmonton.

Savanna would like to extend a heartfelt thank you to our employees for their contributions to the positive relationships with First Nation communities as well as our customers for supporting the company’s partnership model. Furthermore, Savanna acknowledges, and looks forward to continuing the valuable, long-term relationships with our Partners:

Dene Tha’ First Nation

Sturgeon Lake Cree Nation

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Heart Lake First Nation

Saddle Lake Cree Nation

Duncan’s First Nation

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Cold Lake First Nations

Alexis Nakota Sioux Nation

Blood Tribe (Kainaiwa Resources Inc.)

A Look at Savanna’s Business Development Team Savanna’s Business Development group is based out of Calgary’s corporate office.

The purpose and focus of the department is to collaborate with other groups within Savanna to source, prospect for, evaluate and execute initiatives concerning growth opportunities. These growth opportunities could be organic or non-organic, in existing or new markets. Business Development provides insights and support for optimal business decision making processes.

The major functions of the group are: Strategic Marketing

Mergers & Acquistions

Through working with operations, marketing and management, we help to establish a link between these departments and provide an outlook for strategic marketing initiatives.

Through this, we will look to provide a focused plan for Savanna’s growth into new markets or with new customers.

Business Development analyse acquisition opportunities to expand into new markets, and also to evaluate new business lines that we are not presently in and which fit with Savanna’s overall corporate strategy. A few of the major accomplishments in this regard are the purchase of Performance Well Servicing and Silverstar Well Servicing in 2011 and Deranway Enterprises in 2012, all of which helped Savanna to grow its existing fleet of rigs and equipment while helping us move into new areas.

Industry Research Business Development also provides industry research to help our marketing and management teams keep abreast of what is happening in our industry. A ‘Strategic Outlook Report’ is prepared bi-annually which takes an in-depth look at the oil and gas plays in North America and Australia and provides analysis on how activities and forecasts in these areas could affect Savanna. We will monitor our competitors and customers on an ongoing basis and will report quarterly on their activities.

Business Development also participates in the tender process for larger, longer term contract work in Canada and internationally.

It can take anywhere from a few weeks to a few months to put these bids together; which generally incorporate every aspect of Savanna’s business. Almost every department in Savanna is involved in this process in one way or another including TSG, Human Resources, Finance, HSE, etc.

Aboriginal Partnerships For over a decade, Savanna has operated drilling and services rigs in partnership with Aboriginal communities throughout Alberta. The company’s first 50/50 rig partnership was created in 2001 with the Dene Tha’ First Nation, with its most recent partnership made with the Alexis Nakota Sioux Nation. These rig partnerships have benefitted Savanna in the implementation of its vision and values and benefitted Aboriginal partners through the creation of investment, training and employment opportunities.

We meet with our partners on a quarterly basis to review: operations, marketing, safety, finance, employment and training initiatives. Rig tours are important to our partners as well as, it instills a sense of pride and ownership as they observe their business enterprise in action.

If there is anything you think we could help you with please give us a call.

Business Development members include: Dwayne LaMontagne, EVP & Chief Development Officer Brian Cardinal, Business Development & Partner Relations Manager James McArthur, Business Development Team Lead Tweela Nepoose, Partner Relations Coordinator Michelle Hennebery, Research Analyst Aaron Morrill, Business Development Student

Rig-n-Dig • savannaenergy.com

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Rig 645 Makes Safety Fun Brian Weatherly – Rig Manager Raliegh Walker – Motorman Dale Carr – Floorhand Ricky Edwards – Floorhand Hunter Adams – Derrickhand Josh Brister – Driller Shawn Hall - Rig Manager

As of December 27, 2012, Rig 645 working out of Haughton, PA went two full years without any recordable incidents.

Shawn Hall, who was the rig manager on 645 for more than two years, says he was always told that a good job is a safe job.

“We’re all out there to provide for our families, so if we can’t go home to them in the same way that we came then there’s no point,” he says.

“If we can be safe then the guys are happy, I’m happy, and Savanna is happy as well.”

In order to ensure everyone stays safe, Hall says he worked to help everyone on the crew have the chance to share their views on safety.

“You can learn just as much from a new guy as someone who’s been

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Rig-n-Dig • March 2013

working in the oilfield for 30 years or more, so I give everyone the chance to share their stories,” he says.

Brian Weatherly, current rig manager on 645 and who previously worked as a driller on 645 as well, says that through this, each of the guys has the opportunity to point the others in the right direction and learn from one another.

“It’s important to watch each others’ backs and have good communication when you’re working out here,” Weatherly explains.

In this way, Hall also tries to make talking about safety more enjoyable, and ensures that in each meeting he gives the guys a chance to have a laugh.

“I like to do safety in a fun way,” he says. “I’m a leader but I’m also a team player. I too have to think about the safest way to do things.”

Now, Hall has transitioned to another rig in the area to diversify his knowledge and share his views on safety.

“I wanted to broaden my experiences. After working with Savanna for six years I wanted to try something new.”

He has now transitioned to a top drive rig from a teledouble.

Aaron Ivey, HSE Field Superintendent for 645, says he commends Hall’s efforts.

“That’s huge when you have people in a company who want to learn and get that knowledge.”

With the new crew, Hall is currently working to develop the same kind of relationships he had with the group back on 645 so that he can continue to learn and share ideas about safety.

Introducing the Savanna Knowledge Base

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Savanna Knowledge Base

The Application Support Team at Savanna is excited to present the Savanna Knowledge Base, and the completion of their pilot project: Savanna Well Servicing Canada’s Spira Training Manuals.

“The Knowledge Base is a central place where we want to collect technical user documents related to the applications we support,” says Richard Beaulieu, TASSQ Team Lead.

As a first step to fully populating the knowledge base, the Canadian Well Servicing Training Manuals have been added.

“The knowledge base was built using the technology offered on Savnet, with a Wikipedia look and feel in mind,” Beaulieu says.

“All of the users can go to Spira on the knolwedge base and learn how to operate the software in their role.”

This could include contract administrators, rig managers, accounts receievable, accounts payable, or any other role involved with Spira in Well Servicing Canada.

As well, certain aspects of the knowledge base will allow more efficient learning.

Beaulieu specifically mentions the glossary, which is just one of the ways this program will standardize learning throughout the company and help people to communicate more efficiently Additionally, operations information, application information, IT information, Windows 7 assist, Microsoft 2010 and more are now available under the knowledge base site on Savnet.

Karen Kirkeby, Quality Assurance Specialist, says that accountability is key when it comes to the knowledge base.

“We want people to use the site and be involved in improving and building upon it,” she says. “It’s an ongoing project.

Without help it’s not going to go anywhere which is not what we want.”

The hope is to add Canada Drilling, Australia Drilling, Australia Well Servicing, and any other applications as they would like to proceed.

“The goal is to provide all of the information you need to learn more about your role in whatever application you are in, in a central, portable format that can be easily updated and environmentally friendly.”

- Richard Beaulieu How do I access the knowledge base?

From Savnet’s home page (http://sesc-vmsp2010/Pages/welcome.aspx) click on the IT tab in the top navigation.

Underneath of IT Announcements choose Savanna Knowledge Base.

How do I request changes/updates to be made?

Please submit these to Application Support (applicationsupport@savannaenergy.com).

There is a link on the Savanna Knowledge Base home page.

Rig-n-Dig • savannaenergy.com

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What’s Happening?

10 year gift!

5 year rings!

Mick Transtrom; presented by Ryan Watt Gill Davidge; presented by Ken Bell

Congratulations to Tyrel (Rig 432) and Kyla Armstrong on the arrival of their beautiful new baby boy, Marek

Happy Birthday Kevin Voeller & Dion James!

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Colin Trieber; presented by Ryan Watt

Congratulations to Joanna Bailey, Corporate Accountant, on becoming a Certified General Accountant!

Beth Hindle’s last day at Savanna

What’s Happening?

615 crew (from L to R): Denton Johnston, Jarrett Adshade, Sam Kelleher, Cameron Yolland, Matt Johnson, Tony Renzetti and Jeff Williams

High school students from Saddle Lake Cree Nation visit Rig 615 that is owned by their community

Rig Manager James Winters from Savanna Rig 433, helps serve up a homemade meal of roast beef with all the fixings. The meal, brought out to the rig courtesy of Motorhand Kelliane Burnett’s mom, was enjoyed by all crew members

Rig-n-Dig • savannaenergy.com

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Australia After almost 2 years in our current digs we are moving to Toowong Tower, Level 3, 9 Sherwood Road Toowong QLD 4066.

Answer to last month’s OZ IQ Test! How did you do?

What has been termed “un-Australian”? a) b) c) d)

Not eating lamb Blocking access to footy sites at work Serving mid-strength beer at the cricket All of the above

Check out this month’s question!

There are now more than 200 million can toads in Australia. How many were introduced to the country in 1935? a) b) c) d)

102 500 million 12 3500

Congratulations to all our staff who have completed their IWCF and Certificates!

Name Dan St Thomas Paul Baker Justin Shipowich Mike Kuiper Daniel Coleman Stephen Liviniuk Hartt O’Hearn Eldon Sutter Steve Lawton Jason Orchard Jamie Collier Brad Williams Andrew Du Frocq Freddie Sawyer Scott Ferrier Mat Dayman Name Josh James Kevin Reindl Jason Walter Ryan Thompson Bernie Belchior Mick Porter Jason Argue Scott Johnson Mark Sinclair Jeff Fraser

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Rig 409 407 407 409 408 406 406 409 407 408

Rig Spare WS Spare WS Spare WS 66 66 66 Spare WS 64 409 66 64 65 67 67 66 408

Position Rig Manager Driller Rig Manager Night Pusher Driller Driller Driller Driller Assistant Driller Derrickhand Derrickhand Driller Derrickhand Derrickhand Derrickhand Night Pusher

Position Assistant Driller Night Pusher Driller Driller Rig Manager Driller Driller Assistant Driller Night Pusher Night Pusher

Cert Level Cert III Cert III, IV & Dip Cert III Cert II & III Cert II & III Cert IV Cert IV Cert II Cert III Cert II, III, IV & Dip

Rig-n-Dig • March 2013

Check out what it currently looks like! John Hughes our IT Support scoping out the place. Next Rig-n-Dig we will show you the finished product.

Australia Meet & Greet — Anita Hindle, HR Team Lead, Toowoomba

Q: Where is home or where are you from originally?

A: I was born in Toowoomba, grew up on a farm on the Darling Downs, moved to Central NSW, Brisbane and Adelaide and now back in Toowoomba. My family resides here so that’s what drew me back.

Q: Any prior experience in oil and gas?

A: Yes – I spent 9 months with Saxon Energy Services in Toowoomba managing the HR team out of Toowoomba office recruiting 350 new employees.

They are very similar to Savanna being Calgary based and like for like industry so the transition has been pretty smooth.

Q: What about the opportunity to work for Savanna appeals to you?

A: We are part of a growing industry. That means we need to be dynamic and innovative. We need the right people in the right jobs at the right time and that’s what I love about HR. As we continue to grow and expand I see a large number of opportunities to streamline process within a governance framework allowing individuals to be empowered and accountable for delivery of value added outcomes. I also see this role as an opportunity to bring depth and breadth of my experience to the team, bringing in a broader business customer centric experience congruent with our values.

Q: How did you come to arrive at Savanna?

A: I met Claudia de Beer through a mutual colleague on Linked in. We met for a coffee and an informal chat.

We are very similar in our thinking on HR systems, teams and continual improvement. So when the opportunity arose to join the HR team I was elated.

Q: Any hobbies or interesting facts we should know about you?

When I get time I love to play golf and gardening with my husband.

Our twin seven year olds keep me very active and busy on the weekends. We are building a house so that’s reinforced my skills around project management and budgeting.

Finally I love to learn by talking with others and higher education. I completed my MBA in 2011 and love putting the theory into practice on a daily basis.

Rig-n-Dig • savannaenergy.com

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Australia Personnel Profile Philip Walton – HSE Director Australia Philip joins Savanna with experience in the chemical and upstream industries in Europe and Australia. After relocating from the UK to Brisbane in 2005, Philip has worked as an HSE Professional for a private consultancy and for multinational organisations in the oil and gas industry.

After originally studying chemistry as an undergraduate in the UK, Philip has completed postgraduate Master’s degree studies in Clean Chemical Technology, Occupational Health and Safety, and Emergency Management. With continued professional development, Philip has become certified as a Chartered Chemist and Chartered Safety Professional.

Philip will be based in Brisbane with Savanna and will be managing a team who will operate out of the Toowoomba office, providing HSE services to the business for rigs and trucking currently operating in Queensland for Origin Energy, Santos and Arrow Energy.

In last month’s Rig-n-Dig, Dwayne LaMontagne, Executive VP & CEO at Savanna, mentioned the company’s goal of creating a safety culture that we can all be a part of.

Part of that goal was to ask each and every Savanna Australia employee, on a voluntary basis, to come up with their own Personal HSE Commitment statement.

Over two thirds of our Australian employees, including rig crews, truckers, people in the shop and offices, contributed and prepared safety statements of their own.

Don Goldade, Oliver Pearl, Phil Walton

Oliver Pearl won an iPad for having the strongest HSE commitment statement. Congratulations Oli and thank you!

Congratulations to David Bennett as well for winning the iPad draw out of everyone who completed the statement.

Don Goldade, David Bennett, Phil Walton

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Rig-n-Dig • March 2013

North Dakota Beckons With one Well Servicing office already in place in North Dakota, Savanna is hoping to expand D&D Oilfield Rentals in the same way in that state.

“We entered the service rig market only a few years ago and built it to an excellent business. Our plan is to do the same with rentals,” says John Cooper, Savanna’s Executive VP, Operations & COO. North Dakota is now the second largest oil producing state in the nation, according to the North Dakota Petroleum Council (NDPC). 98% of that oil comes from the Bakken Play.

“The oil and gas industry has really boosted the state’s economy,” Tessa Sandstrom of the NDPC says.

“In recent years the available rig technologies have been able to increase production time and cost effectiveness which has provided opportunities for companies to offer a variety of services needed for that to continue.”

Cooper says that Savanna has been able to experience the opportunities available in North Dakota.

“North Dakota is a very strong growth area for Savanna,” he explains, referring to the success of Savanna Well Servicing’s Dickinson, ND location.

“Customers there want safe, reliable, and efficient services, and we are able to exceed the expectations with our well servicing rigs.”

Source: North Dakota Petroleum Council

With the recent acquisition of Deranway, D&D has added over 200 well site trailers to its rentals inventory and is looking to explore all areas in which these assets, as well as their existing equipment inventory, could help meet the state’s demand.

North Dakota is an attractive and high growth area, but regardless of where they are operating, D&D is excited to offer its customers an expanded inventory of equipment to coincide with its tradition of exceptional customer service.

D&D Oilfield Rentals www.ddoil.net info@ddoil.net

Redcliff, AB (Head Office) 403-548-2700 877-548-2700 Calgary, AB (Sales) 403-267-6737 Lloydminster, AB 780-875-5171 888-875-5171 Nisku, AB 780-955-1929 Acheson, AB 780-960-4703 Swift Current, SK 306-750-1675 Weyburn, SK 306-842-0659

Rig-n-Dig • savannaenergy.com

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Our goal is a healthier you.

One of our goals this year is to provide resources that will encourage employees to take a proactive approach in improving and maintaining a healthy lifestyle.

This month we encourage you to add this free e-AP app from Homewood Solutions to your mobile device for easy access to a wide variety of work, health, and wellness topics, interactive checklists and tools, video and audio podcasts, e-services and e-counselling which are all available to you and your dependants at a touch.

This app is designed to help you take a proactive approach to your own health as well as the well being of your family.

Key features include: • A wellness library • Streaming video and audio podcasts • Interactive tools • Social media integration • Secure access to e-services • Mobile scheduling • Fully secure and confidential access

Search “Homewood Solutions” at the Apple App store, Google Play, or the Human Solutions website from your iPhone, iPod Touch, iPad or Android Device today and download the app!* *currently not available for Blackberry devices

In February’s Rig-n-Dig we brought you Why is a good night’s sleep so important and in March, Want more energy?

Each month, as we continue to bring you messages on practical solutions to achieve a healthy status, extra resources will be added to the Employee portal for your convenience.

How do I get to the E-portal? savanna Go to savannaenergy.com and scroll down to the bottom of the page.

safety7

Or type in: http://www.savannaenergy. com/default.asp?id=2 Click on “Employee Portal”

Enter the username and password above to access health and wellness resources, forms, the Employee store and much more!

Contact our Benefits Administrators Group Benefits — Drilling & RRSP Adiel Rautenbach at 403-267-6779 or arautenbach@savannaenergy.com Group Benefits — Well Servicing, D&D Rentals, Corporate and Rotators Application for Short Term Disability, Long Term Disability or Life Claim Sylvia Sargeant at 403-214-5950 or ssargeant@savannaenergy.com

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fit e n e B an t i d a n a The CDepartmen

101 rig terminology

Last Page

Social Media

Update

Did you know that Savanna is on Google+? Check it out today!

Chicksan: Flexible section of pipe with one or more swivels: used to make pump line more flexible and change direction.

Junk Box: Trailer or skid used to carry rig equipment (BOP, tongs, elevators, etc.)

Sandline: A long cable used when swabbing or for raising and lowering the tongs

JOKEs:

SAIL

CRUISES FROM

$844

PER PERSON

SAILINGS BETWEEN

AUGUST 16 - DECEMBER 22, 2013

• GREEK ISLES • ALASKA • NORTHERN EUROPE • CANADA/ NEW ENGLAND • CARIBBEAN

TO BOOK CALL 877.864.4562 Rig-n-Dig • savannaenergy.com

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Kevin Papke, as part of Summits for Seniors, completed summiting 50 mountains in his 50th year and raised over $130,000 for the Bethany Care Centre. Congratulations Kevin!

“Thank you to Savanna and my family for supporting me and allowing me to spend so much of my time and energy on this endeavor. I had a lot of fun and I look forward to climbing for fun now!” - Kevin Papke

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Rig-n-Dig • March 2013