Rig-n-Dig March 2011

Rig-n-Dig March 2011

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In This Issue Year End Report D & D Profile Update on Australia What’s Happening?

Message from Management

Message from Management Break-up…what’s break-up? As field employees in Canada edge closer to Spring break-up, employees in the US are continuing work as normal. Steve Van Howe, Vice President of US Operations, discusses the difference between operations in the cold north and the warmer south.

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to determine each divisions’ performance.

We tried to keep this as simple as possible and arrived at three measures for 2011: Profit, Utilization and TRIF. These three measures along with the Vision and Values are at the core of what each of us do to make Savanna a better company and attractive to our customers. Keeping our rigs running, making money and staying safe allow for numerous benefits including consistent scheduling of the crews, stability in future work loads and assurance that we will deliver results.

I anticipate that the performance of the US operation will remain strong in 2011 as the fleet was repositioned to strong market natural gas Demand for and oil producing basins during our high quality 2010. Demand for equipment and our high quality equipment and experienced experienced personnel personnel have enabled us to have enabled establish longer us to establish term contracts while building longer term collaborative relationships with contracts our exiting clients and adding new customers. The expected growth in both the drilling and well servicing business will continue to provide opportunities for our employees and enable us to meet the long term objectives of Savanna.

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As most of Savanna is coming out of a very busy winter drilling season and preparing for a well deserved Spring Break-Up, the US operations will not be slowing down any time soon. Most of the operating areas in the US do not experience road bans, extreme thawing or other regulatory limitations on our ability to work year round. This is both a blessing and a challenge as equipment re-certifications, employee training and work schedules must be balanced to limit the amount of down time experienced.

The US operations within Savanna have experienced a number of recent organizational changes as well as increases to our fleet size. We added six drilling rigs in 2010 with the addition of three rigs from Canada and three rigs from Mexico.

We also will be delivering two new rigs to the Marcellus area of Pennsylvania in the summer of 2011, bringing the total number of drilling rigs in the US to 24.

The well servicing operation in North Dakota added one rig in early 2011 and plans are in place to add two additional rigs in 2011 for a total of 11. This increase in equipment has necessitated the addition of a number of key personnel including a US Operations Manager, Tom Morris, US HSE Manager, Todd Carstairs and several superintendent positions. In addition, a new shop has been established in Waynesburg, PA to service this expanding area and we will move our Odessa, TX operations into a new facility in July.

Another key initiative undertaken in 2010 was to better define the strategy of Savanna as well as each of the operating divisions. The operating divisions then boiled this strategy down into key metrics that will be measured against our forecasts

March 2011

Steve Van Howe, Vice President of US Operations.

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 March 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. Year End Report After the Floods What’s Happening Aust.?

What’s Happening?

Canadian Benefits New HR Policy Information D & D Profile Last Page

page 2 page 3 page 4 page 6 page 7 page 8 page 9 page 10 page 11

Quarterly Report

Q4 & Year-End Report December 31 saw the end of the financial year for Savanna Energy Services Corp. Q4 2010 was an encouraging end to the fiscal year as Savanna realized another increase in revenue and operating days in both the drilling and oilfield services divisions compared to Q3 of 2010 and Q4 of 2009.

Traditionally a busier quarter for Savanna, Q4 2010 saw an almost 50 per cent increase in operating days for the drilling division compared to Q4 of 2009.

Operating hours for the oilfield services division also increased, thus reflecting the improvements in the North American oil and gas industry.

Looking back over the 2010 financial year, the following initiatives were undertaken and completed by Savanna: • The sale of Savanna’s fleet of eight coil tubing units and related equipment; • The sale of four serface-setting rigs, reducing Savanna’s surface/coring fleet to five rigs; • The sale of Savanna’s machining and pipe inspection facility; • Relocation of three drilling rigs and one service rig from Canada to the US; • Relocation of four drilling rigs from Mexico to the US and Canada; • The construction and commencement of service operations near Toowoomba, Queensland; • The retrofit of two hybrid drilling rigs for deployment in Australia; • The retrofit of two hybrid drilling rigs as TDS-3000™ drilling rigs; • The retrofit of two conventional double drilling rigs for deployment in the US; • The retrofit of one service rig for deployment in the US; • The purchase of four new portable top drives; and • The expansion of the rental fleet.

In the final quarter two new service rigs were commissioned and began operations near Toowoomba, Queensland. Both were in operation when the massive January floods swept through the area. Both rigs were extensively damaged and are now undergoing repairs. It is hoped these rigs

will be operational again by late March or early April 2011.

Also during Q4, the first of Savanna’s two hybrid drilling rigs arrived in Australia. Commissioned and ready to go, Rig 406 is waiting for weather and road conditions to improve before being put to work. Again, operations are expected to commence by the end of March or early April, 2011. The second of the hybrid rigs is expected to arrive in Australia soon and begin work late in Q2 or early Q3 of 2011. Still in the works for Australia is the retrofit of two additional hybrid rigs and the construction of a third service rig—all anticipated to be available for the Australian market in Q3 2011.

Q4 also saw the deployment and utilization of Savanna’s first two TDS3000™ rigs. So far, customer feedback, operating results and financial results have all been encouraging. These two new high specification deep double drilling rigs are the first of eight TDS-3000™ rigs to be retrofitted by Savanna. Retrofitting of the remaining six TDS-3000s™ will continue throughout 2011. At the moment four of the six have already been contracted and Savanna expects the final two rigs will be contracted before they are ready for the field. All in all, Savanna’s plan to convert part of its domestic shallow drilling fleet to TDS-3000™ conventional singles is well on track. While revitalization of the hybrid fleet is a priority for Savanna, the expansion of its deeper conventional fleet remains a core growth driver.

rigs for deployment in the US (expected completion Q3); • The purchase of four new portable top drives (expected completion Q2); and • The completion of one new flush-by service rig (expected completion Q2).

Other key initiatives for Savanna over the next few years include: • Retrofitting no less than 12 hybrid drilling rigs (subject to economics); • Executing and expanding Australia operations by a minimum of two drilling and two service rigs (subject to contract); • Continued nurturing of international opportunities; • Establishing a technical services function to support technological development and cost effective construction and purchasing; • Executing on the strategy to grow the rental division domestically and internationally; • Improving staff development, training and safety execution; and • Maximizing operational efficiencies.

Based on Savanna’s capital program and the carry-over of outstanding projects, Savanna hopes to complete the following in 2011: • Construction of one new service rig for deployment in Australia (expected completion Q2); • The retrofit of two hybrid drilling rigs for deployment in Australia (expected completion Q2); • The retrofit of six hybrid drilling rigs as TDS-3000™ drilling rigs (expected completion Q3); • The completion of two new high specification deep double drilling

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Australia After the Floods

Australia After the Floods Almost four months after the devastating floods in Queensland, Australia, the clean-up is underway and Savanna has begun the restoration of Rig 64. Rig 65 had been pulled off of the flood site earlier in the month, but Rig 64 remained pending the development of a safe plan to recover all the equipment.

Not only was time needed for the flood waters to subside and the ground to dry out, but a lengthy and detailed plan had to be put together by Savanna and Origin, the Australian operator, to ensure the recovery was executed safely. Once onsite, the extent of flood damage could be evaluated.

Here are some photos of the site:

The flood waters carried fuel tanks over 600

Warped by being submerged in the water, crews

metres into the bush.

had a hard time pushing the safety rails into the trailer unit.

The crew found the remains of a cow that was caught in the steps of the trailer.

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March 2011

The camp site, approximately four kilometres from the lease, did not suffer any extensive damage.

Australia After the Floods Before and after shots of Rig 64.

The water damage is clearly evident in the cabin (below) and on the buildings (left). The height of the water can be seen on the once brand new paint of the two buildings in the back.

Before

Stuart George, a member of Savanna Australia’s HSE team is 6’ 5” tall and the red pipe behind him is almost the same height. The flood waters were above the red pipe in the background.

Before

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What’s Happening?

What’s Happening Australia?

The Gatekeeper–signing everyone in and out of the site and making sure the cows don’t escape.

Paul Puzey, Preventative Maintenance Manager for Savanna in Australia, looking busy and hard at work.

Marc Donnelly, Transport Supervisor, standing in front of a prickly pear (a species of cactus). Not a native plant of Australia, the prickly pear was introduced in the 19th century as a natural agricultural fence but has now become an aggressive and invasive plant. Prickly pears naturally grow in the southern US, Central America, the Caribbean and northern parts of South America.

Savanna’s latest addition to its Australian fleet—Drilling Rig 406—just waiting for certifications before starting work.

Murray Redding standing in a crop of cotton plants.

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What’s Happening?

What’s Happening?

Five Year Rings

Congratulations to Bruce Lambert (below) for receiving his Five Year Ring. Pictured with Brian Jensen in Savanna’s new office in Waynesburg, PA. Congratulations to Jeff Lane (right), Rig Manager of Rig 429, for receiving his five Year Ring. Jeff is pictured with Ken Bell.

A Little What Frost?

These photos of Rig 16 covered in hoar frost, were taken during the last week of March. Rig 16 called their Field Supervisor to say they had “a little hoar frost” on the rig—”just a little” would be an understatement. Rig 16 has been working in the Swan Hills, AB area.

If you have similar photos to these or photos of extreme weather conditions, then please send them to the Rig-n-Dig! jtannahill@savannaenergy.com.

Need to go Shopping?

Photos courtesy of Rig 16

It may not feel like it in Alberta at the moment, but spring is just around the corner (or autumn/fall if you’re in Australia) and now is a great time to buy a spring jacket!

An order for Savanna merchandise will be placed around April 20, so get your orders to Office Services (fax 403 503-0654; e-mail office. services@savannaenergy.com) pronto!

All items are available for ordering and the catalogue and order form are available on Savnet.

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Canadian Benefits at a Glance

Best Doctors Best Doctors was founded in 1989 by a group of Professors of Medicine affiliated with the renowned Harvard University’s School of Medicine. These Professors observed that many patients were visiting the United States for complex medical treatment. They believed a patient shouldn’t have to leave home, their own doctor, or even their own healthcare system, in order to receive the best medical treatment. Hence they created a unique database of specialized medical experts and information: Best Doctors. Since then, Best Doctors has evolved into a company with a developed set of services.

Best Doctors is the world leader in connecting people with the best medical care available. Their database includes over 50,000 top specialists and doctors in more than 32 countries. Each doctor and specialist has been nominated by their peers as being the best in their field. Best Doctors neither pays the specialists or doctors, nor can specialists and doctors pay to be included in the database.

As part of your group healthcare plan through Savanna, you are eligible to use the services and programs offered through Best Doctors.

Best Doctors provides services via these programs: 1) FindBestDoc: Allows you to find the best specialist to meet your needs.

2) Best Doctors Elite Diagnostic Imaging Service: Provides rapid access to diagnostics sooner than through the current health care system. For example,

having access to diagnostic tests within 72 hours of an appointment being booked (a physician’s prescription for diagnostic tests is required) or having the Radiologist’s report within 28 hours of test completion.

3) InterConsultation: An in-depth review of your medical files to determine a diagnosis, confirm the right diagnosis and the right treatment options.

4) Best Doctors 360 includes the following services: a) Best Doctors HealthGuide—a database of medical programs, services and answers needed to navigate the healthcare system, such as wait times, finding a local family doctor, drug funding programs, access to clinical trials, nutrition, wellness and health assessment. b) Best Doctors Community— provides information such as public and private home care, respite resources, volunteer drivers to take you to medical appointments, pet and babysitting services, elder care, meals on wheels and more.

5) FindBestCare: Provides Care Management while receiving medical care outside of Canada. Best Doctors will assist with reservations & accommodations arrangement for you and your family.

How Do I access the Best Doctors services?

To utilize Best Doctors services, you can call Best Doctors directly at 1-888-4192378. You must provide your full name, Group plan number (328620) and your Great-West Life ID number at the time of the call.

Why should I call Best Doctors?

• To find a specialist or doctor; • To obtain a second opinion when diagnosed with a serious medical condition or if an invasive treatment has been planned for you; • To find a diagnosis if you are feeling sick and your doctor can not determine what is wrong with you; or • If you feel your treatment plan prescribed by your physician isn’t working.

Through Best Doctors, you and your local doctors or specialists will have immediate access to the latest technologies, worldclass specialist opinions and clinical guidance. Best Doctors’ services can go as far as having the Harvard medical team identify the best qualified expert(s) to make a final determination about your diagnosis and treatment—either confirming or changing your diagnosis and treatment. In the past twenty years, Best Doctors has changed 22 per cent of diagnoses, modified 61 per cent of treatment plans and helped members avoid invasive procedures in 67 per cent of reviewed cases.

Where can I find more information about Best Doctors?

Comprehensive information and videos on Best Doctors services are available at www. bestdoctorscanada.com/overview or on Savnet under the People tab.

t fi e n e B n a i d The Caneapartment D

If you have any questions, please contact your Benefit Administrator: Corporate: Flora Santos, 403.267.6772, fsantos@savannaenergy.com Savanna Well Servicing and D & D Rentals: Sylvia Sargeant, 403.214.5950, ssargeant@savannaenergy.com Savanna Drilling: Adiel Rautenbach, 403.267.6779, awrautenbach@savannaenergy.com

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The HR Page

Charitable Support Policy This year marks Savanna Energy Services 10th Anniversary. As part of the celebrations, Savanna would like to give back to the people and the communities that have made it a successful leader in energy services. Savanna is committed to its employees and its many communities and would like to support employees who generously volunteer their time to local charities. In light of our anniversary, Savanna has implemented the Charitable Support Policy.

The Charitable Support Policy has been created to “provide charitable support by way of donations or sponsorship to recognised charities and/or organisations”.

Part of Savanna’s core values includes building collaborative partnerships between both its employees and the community; therefore, Savanna would like

to support its employees who volunteer within the community. For any employee who donates a minimum of 40 hours to a single charity, Savanna will donate $500 directly to that charity in recognition of the employee. This new policy is available to all Savanna employees in every geographic location Savanna operates.

If you have donated a minimum of 40 hours to a single charity and would like to apply on behalf of your chosen charity for the $500 donation from Savanna, then you should complete and submit Savanna’s Charitable Hours Consent Form, which is available on Savnet under ‘Forms’.

Please note that time volunteered from 01 January 2011 on wards will only be considered.

If you would like to request sponsorship or a donation from Savanna

for a particular charity or organisation, then you may do so by completing and submitting Savanna’s Request for Charitable Donation Form also located on Savnet under ‘Forms’. Please ensure before completing this form that you are familiar with Savanna’s Charitable Support Policy.

Savanna’s Charitable Support Policy can be found on Savnet under the ‘People’ tab (right hand side under Savanna Policies & Processes).

Savanna’s Charitable Hours Consent Form and Request for Charitable Donation Form can be found on Savnet under ‘Forms’, ‘Human Resources’.

If you have any questions on this new policy, please contact either Venesa Zunti (vzunti@savannaenergy.com) or Darlene Hutchinson (dhutchinson@ savannaenergy.com).

Employee Referral Bonus Program December 2010 saw the commencement of Savanna’s Employee Referral Bonus Program. This program creates the opportunity for current Savanna employees to refer friends and family for employment with Savanna. Since December, over 120 referrals for both field and corporate positions have been processed. All new referrals are required to meet the conditions of the position they are applying for before they can be officially hired.

The benefit of having a company referral program is two-fold. First of all, it helps Savanna grow as a company and assists the recruitment process; while second, it benefits current employees by allowing them to refer people who they believe would be a good fit with Savanna’s culture, vision and values. Current employees have an understanding of Savanna’s working culture and therefore make excellent ambassadors and recruiters of new employees. Who best to decide who you work with other than you?

Of the referrals received to date, approximately 80 per cent have been for field positions. All other referrals have been corporate based. Generally people have referred others for positions in their

division. This means field employees are generally referring people for field positions and corporate employees are referring people for corporate positions.

Stacey Tetz, Human Resources Assistant, says “the field guys have been doing a great job with referrals—keep them coming!”

The number of field referrals (which is at 80 per cent) indicates the calibre of staff Savanna has working in the field. People are obviously enjoying their jobs and want their friends and family to work with them. Tetz says, “people are thinking about Savanna’s culture and vision and values— they are thinking about who they want to work with.”

There are also other financial benefits to employees referring friends and family.

For any hired and lasting referral, the person who submitted the referral can earn $500*. If an employee refers someone for a designated “Hot Job” and the person is hired then the person who submitted the referral can earn $1000*. Part of the deal is the new employee must work at Savanna for three months (for Corporate) or complete 250 hours (for Field) before the referrer can receive their bonus. So for employees who referred successful candidates during December, they are

now receiving their bonuses. Tetz says “now that people are getting paid, more [existing] employees are making referrals.”

She says it has been a slow process to get to this point, due to administration and reaching the required work hours.

At the moment, the Employee Referral Bonus Program is up and running in both Canada and the US. Employees from all divisions and all locations are encouraged to refer people for positions at Savanna.

So if you know someone who you feel would be an asset to Savanna, then it is time to refer them. Employee Referral Submission forms are available on Savnet (under ‘Forms’). These are to be filled out, attached to a copy of the resume of the person you wish to refer and then sent to a Recruiter (Stacey Tetz or Camille Nieva for Canadian positions; Diana Tucker for US positions) or e-mailed to savannacareers@ savannaenergy.com.

If you have any questions regarding the Employee Referral Bonus Program, then please contact Stacey Tetz, stetz@ savannaenergy.com, Camille Nieva, cnieva@savannaenergy.com or Diana Tucker, dtucker@savannaenergy.com. *conditions apply

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D & D Profile

The Kenny G of D & D Owned by Savanna Energy Services, D & D Oilfield Rentals offers an extensive range of oilfield equipment rentals. In operation since 1985, Ken Goldade discusses the future for D & D. Following on from last month’s profile on Greg Fehr, Sales Representative for D & D Oilfield Rentals, this month’s Rig-n-Dig is profiling Ken Goldade, General Manager for D & D. Goldade joined the team at D & D in 2008 but has worked in the oil and gas industry since 1975. He began his career as a roughneck and worked his way up to Rig Manager and Field Superintendent.

Prior to joining D & D, Goldade worked as a drilling and completions consultant and was an owner of Durango Drilling operating five single drilling rigs.

Goldade’s position as General Manager involves overseeing the operations of all four D & D rental locations—Redcliff, Lloydminster, Swift Current and Weyburn.

He is also responsible for monitoring the needs of the oil and gas industry in order to improve and evolve the inventory offered by D & D. Goldade also provides input for the direction of the company. It is

hoped that within the next couple of years, D & D will have doubled its current line of equipment and expanded its locations to include the Nisku/Leduc area and possibly North Dakota or Montana in the US. As part of his position with D` & D Oilfield Rentals, Goldade travels to Savanna’s Head Office in Calgary approximately two to three times per month. He also travels to different locations within British Columbia, Alberta, Saskatchewan, Montana and North Dakota; however, Medicine Hat, Alberta is home for Goldade.

D & D Oilfield Rentals was first established in 1985 by Deranway Enterprises and Don Krell and has since become an established and recognised oilfield equipment rental company. D & D’s line up of tools and equipment is driven by the needs of the industry. As stated by Goldade, “D & D spends a great deal of time and effort creating a one stop shop,

CONTACT: Calgary, AB - 1.403.267.6737 Medicine Hat, AB - 1.877.548.2700 Lloydminster, AB - 1.888.875.5171 Weyburn, SK - 1.306.577.3324 Swift Current, SK - 1.306.750.1675 info@ddoil.net www.ddoil.net

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Ken Goldade, General Manager of D & D Oilfield Rentals.

so it makes it very easy to get any and all rentals and services from the one place.

Our staff get to know the requirements of the rigs and hopefully can make equipment readily available and more user friendly when possible.”

So what is it that keeps Goldade inspired in his work? “Coming to work every day knowing that the employees we have in place are as happy to be here as I am,” says Goldade. He also enjoys their ability as a group to redesign or invent new equipment or services for the oil industry.

Last Page

Sudoku Puzzle

Puzzle 1 (Medium, difficulty rating 0.55)

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Happy 10th Birthday Savanna!

On March 22 2001, Savanna Energy Services Corp. was established. With only four employees in 2001, Savanna has grown to approximately 2,700 employees today when running 100 per cent. Operating within three countries, Savanna has grown through the amalgamation of Lakota Drilling, Trailblazer Drilling, Akuna Drilling, Accell Well Servicing, Great Plains Well Servicing, Command Coil, Greystone Drilling, Bear Stream, Northern Nakota Well Servicing, Laredo Well Servicing, Western Lakota Energy Services and Ultraline Wireline to name a few!

Generated by http://www.opensky.ca/~jdhildeb/software/sudokugen/ on Thu Mar 24 03:07:37 2011 GMT. Enjoy!

Photo Contest Time!

Savanna’s annual Photo Contest is back for another year! The theme this time around is Action & Motion.

Entries can be print or digital images. Digital images must be submitted at the highest resolution possible to savannaphotocontest@ gmail.com. Printed photos can be given to Janine Tannahill (15th floor) or John Bayko (17th floor).

Prizes are up for grabs for first, second and third place, with the best from each month’s entries printed in the Rig-n-Dig. Entries will be judged based on composition and relation to the theme.

The competition begins now and closes September 30!

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Feeding kids is simple. Do something. Start something. Take action.

You hear something on TV or in church, perhaps it’s something your child said or something you read in the paper…for some reason, it grabs you. That piece of information stays with you and nags at you to “do something”.

Where do you start? When a problem is so big, what can one person do?

Ask yourself this…If your brother’s child was hungry, what would you do?

If the answer to that question came a little easier, then the rest is simple. Look for an action that is as immediate and direct as feeding your brother’s child. 

Call your local school and ask how you can help.

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Connect with a family in your neighbourhood. Ask them what they need.

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Call your local community center or church and ask how you can take part in community efforts.

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Send an extra lunch to school with your child.

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Call a friend and ask them to send an extra lunch as well.

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Donate healthy food to a school or lunch program.

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Volunteer to make or deliver lunches to schools in need.

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Call us. We can have a conversation and help you to find your “brother’s child”.

Brown Bagging for Calgary’s Kids Ph: (403) 264‐7979 www.brownbaggingit.org