Industry Note

Equity Research October 13, 2021

Oil & Gas Services

Q3/21 Preview Aaron MacNeil, CA
Commodity Prices Continue to Move Higher Aly Hemraj, CPA, CA (Associate)
D&C Activity Forecasts Increase; Introducing 2023 Estimates

TD Investment Conclusion
Making Upward Revisions to Our Industry Forecasts: In concert with our recent
commodity price deck update (full report), we are making modest upward revisions
to our Canadian and U.S. industry forecasts. In our view, the current strength in
commodity pricing is an acknowledgement that there are no broad expectations
of a significant North American supply response. To the contrary, our review of
publicly traded North American E&P commentary suggests that these companies
will pursue modest production growth, while prioritizing increased dividends, share
buybacks, and debt repayment. There are examples of producers rationalizing
higher spending/drilling and completions (D&C) activity, while continuing to appease
investor demands for capital discipline and anecdotes of much higher spending from
private companies. The increases in our industry forecasts reflect these changes.
Details on page 3.
Q3/21 Preview: Canadian drilling activity was very strong at the start of Q3/21 due, in
part, to dry field conditions, but that momentum failed to build throughout the quarter.
Conversely, the U.S. market continued to see small, but consistent increases in
activity as the quarter progressed. Overall, updates to our estimates heading into the
quarter are relatively limited. We expect that several companies could increase their
dividend with Q3/21 results or in the near term, with Enerflex and North American
having the highest likelihood, in our view.
Our Sector Stance: MARKET WEIGHT
On page 2, we show that share-price performance for our coverage universe
continues to correlate with WTI pricing, whereas the U.S. rig count, and North
American D&C activity more broadly, continues to significantly underperform. As a
result, we believe that investors have already priced-in a strong sector recovery for
companies with high D&C exposure. As a result, our best ideas for oilfield services
sector exposure continue to focus on companies with a combination of recurring
and/or production-weighted revenue profiles, capital-light business models, strong
growth outlooks, attractive free-cash-flow generation, and positive ROIC. Among
them, we highlight Secure Energy Services (SES-T, BUY, $8.00 target price) as our
top pick. Although share-price performance has been strong in recent weeks, Secure
remains fundamentally mispriced, in our view, following the acquisition of Tervita (full
report), given the improved competitive landscape of its core business, its ability to
achieve meaningful transaction synergies ($75 million), its free-cash-flow-generating
capabilities and the relative stability of operating and financial performance. Q3/21
represents the first combined quarter for Secure and Tervita, and we expect the
stock to outperform once the positive deal attributes noted above are realized. At
the current share price, Secure is also a likely candidate for S&P/TSX Composite
Index inclusion, separating the company from the rest of the coverage universe from
a market-relevance perspective, in our view.

Please see the final pages of this document for important disclosure information. Page 1 of 10
 October 13, 2021

Comparing WTI & the Rig Count Through the Cycle

In Exhibit 1A, we compare historical spot WTI pricing and the U.S. rig count through three
major Energy sector downturns, including the 2009 financial crisis, the 2016 oil glut and
the COVID-19 pandemic in 2020. As shown, the correlation between WTI and the U.S.
rig count has typically remained very strong, even through periods of high volatility.
Historically, E&Ps have been quick to increase production and fill supply gaps when
sector fundamentals improved. However, the strength in commodity pricing is a
continued acknowledgement that there are no broad expectations of a supply response
from E&Ps. The current recovery in the energy sector continues to follow the capital
discipline thematic, as essentially all publicly traded E&Ps continue to guide to low- to
mid-single-digit production growth, and are increasingly allocating free-cash-flow to a
combination of increased dividends, share buybacks, and debt repayment. In Exhibit 1B,
we take a closer look at the most recent energy downturn and include share-price
performance to highlight that although the U.S. rig count has significantly lagged activity,
share-price performance has more closely resembled the improvement in WTI. As a
result, we do not believe that the recent performance of the sector is being driven by
fundamentals. As a result, we continue to take a relatively cautious approach to valuation
and believe that a strong sector recovery is already priced-in.

Exhibit 1: Spot WTI Price, the U.S. Rig Count, and Share Price Performance
Exhibit 1A: Historical Spot WTI Price and U.S. Rig Count Exhibit 1B: Oilfield Services Share Price Performance

160 2500 1.6

Share Price Performance (Indexed to 100)

140 1.4
2000
120 1.2
WTI Price (US$/bbl)

100 1500 1
Rig Count

80 0.8

60 1000 0.6

40 0.4
500
20 0.2
0
0 0
Apr-20

Oct-20

Apr-21

Oct-21
Jan-20

Mar-20

Jul-20

Jan-21

Mar-21

Jul-21
May-20
Jun-20

Aug-20

Dec-20

May-21
Jun-21

Aug-21
Feb-20

Sep-20

Nov-20

Feb-21

Sep-21
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

WTI Price U.S. Rig Count WTI Price U.S. Rig Count TD Oilfield Service Coverage
Source: Baker Hughes, Bloomberg, FactSet, TD Securities Inc.

Page 2 of 10
 October 13, 2021

Commodity Price Deck & Industry Forecasts

Our updated price deck features a constructive commodity-price outlook for both crude
oil and natural-gas benchmarks through 2022, with the long-term outlook remaining
unchanged. However, our industry activity is based on North American E&Ps’
commentary about low- to mid-single-digit production growth. As a result, we have made
modest increases to our 2021 and 2022 industry activity forecasts to reflect increasing
D&C activity, with the 2022 active rig count in Canada and U.S. increasing by 23% and
28%, respectively. Although our 2023 and long-term commodity price forecasts feature
backwardation consistent with current strip, we do contemplate modest improvements in
activity in 2023 and note that E&Ps continue to spend well within cash flow.

Exhibit 2: Commodity Price Deck Assumptions and Industry Forecasts

2021E 2022E 2023E Long Term (2024E+)
2020A New Prior Chg. 21/20 New Prior Chg. 22/21 New Prior Chg. 23/22 New Prior Chg.
Commodity Price Deck Assumptions
Crude Oil
West Texas Intermediate US$/bbl $39.50 $66.00 $65.00 2% 67% $67.00 $65.00 3% 2% $60.00 $60.00 0% -10% $55.00 $55.00 0%
Brent US$/bbl $42.50 $68.75 $67.50 2% 62% $70.00 $68.25 3% 2% $64.00 $64.00 0% -9% $59.50 $59.50 0%
Edmonton Par C$/bbl $46.25 $78.00 $75.00 4% 69% $79.25 $75.50 5% 2% $70.50 $70.25 0% -11% $63.75 $63.75 0%
Western Canadian Select C$/bbl $36.00 $67.25 $64.50 4% 87% $68.00 $63.25 8% 1% $58.25 $58.00 0% -14% $52.50 $52.50 0%
Natural Gas
NYMEX US$/Mcf $2.00 $3.90 $3.20 22% 95% $3.95 $3.00 32% 1% $3.00 $2.75 9% -24% $2.50 $2.50 0%
AECO C$/Mcf $2.25 $3.60 $3.15 14% 60% $3.65 $2.80 30% 1% $2.80 $2.50 12% -23% $2.35 $2.40 -2%
Industry Activity Assumptions
Canada
Average Active Rig Count # 87 130 120 8% 49% 160 150 7% 23% 165 n/a n/a 3%
HHP Demand hhp 510,000 910,000 850,000 7% 78% 1,200,000 1,100,000 9% 32% 1,230,000 n/a n/a 2%
United States
Average Active Rig Count # 433 470 448 5% 9% 600 575 4% 28% 625 n/a n/a 4%

Source: Baker Hughes, Bloomberg, CAODC, TD Securities Inc.

Page 3 of 10
 October 13, 2021

Estimate Changes & Q3/21 Preview

As it relates to the third quarter, we are updating our estimates to reflect actual Q3/21
activity levels, commodity prices, and other relevant factors. Consistent with our industry
forecasts that featured modest improvements in D&C activity, we highlight that our 2021
and 2022 estimates increase by an average of 1.2% and 3.5%, respectively. Trican is a
notable exception, given what we believe was a very strong Q3/21 and a constructive
outlook for 2022, with the company realizing modest pricing improvements and
upgrading additional legacy frac pumps to next-generation Tier 4 DGB engines (full
report), with the equipment expected to be operational in Q2/22. With this report, we are
introducing our 2023 estimates that feature modest year-over-year growth, particularly
for D&C companies (ESI, PD, and TCW) that are leveraged to E&P capital spending.

Exhibit 3: Q3/21 Preview and Estimate Change Summary

Q3/21E & 2021E Estimate Changes Est. Report Q3/21E EBITDAS Est./Prior Est./Cons. 2021E EBITDAS Est./Prior Est./Cons.
Name Ticker Date Estimate Prior Consensus %∆ %∆ Estimate Prior Consensus %∆ %∆
CES Energy Solutions CEU Nov 11 (After) $ 36.2 $ 35.9 $ 34.2 1.0% 5.9% $ 139.2 $ 138.7 $ 135.8 0.3% 2.5%
Dexterra Group DXT Nov 9 (After) $ 22.9 $ 21.7 $ 21.9 5.3% 4.5% $ 83.9 $ 79.8 $ 79.9 5.1% 4.9%
Enerflex Ltd. EFX Nov 4 (After) $ 40.0 $ 42.4 $ 40.5 -5.7% -1.4% $ 160.6 $ 164.0 $ 153.0 -2.1% 5.0%
Ensign Energy Services ESI Nov 5 (Before) $ 56.5 $ 54.8 $ 56.7 3.1% -0.4% $ 213.8 $ 209.6 $ 211.6 2.0% 1.0%
Mullen Group MTL Oct 27 (After) $ 66.1 $ 66.1 $ 66.5 0.0% -0.7% $ 234.5 $ 234.5 $ 233.9 0.0% 0.2%
North American Construction NOA Oct 27 (After) $ 49.7 $ 45.7 $ 49.0 8.7% 1.4% $ 210.9 $ 206.9 $ 206.5 1.9% 2.1%
Precision Drilling PD Oct 21 (Before) $ 60.4 $ 63.2 $ 62.0 -4.4% -2.5% $ 236.6 $ 235.6 $ 225.3 0.4% 5.0%
Shawcor Ltd. SCL Nov 9 (After) $ 28.4 $ 31.6 $ 30.4 -10.1% -6.6% $ 106.9 $ 112.6 $ 110.2 -5.1% -3.0%
Secure Energy Services SES Oct 28 (After) $ 96.8 $ 96.6 $ 93.5 0.3% 3.6% $ 260.5 $ 260.4 $ 264.6 0.0% -1.6%
Trican Well Service TCW Oct 26 (After) $ 28.7 $ 24.6 $ 27.7 16.4% 3.7% $ 94.7 $ 86.8 $ 95.7 9.0% -1.1%
Average 1.5% 0.8% 1.2% 1.5%
2022E & 2023E Estimate Changes 2022E EBITDAS Est./Prior Est./Cons. 2023E EBITDAS Est./Prior Est./Cons.
Estimate Prior Consensus %∆ %∆ Estimate Prior Consensus %∆ %∆
CES Energy Solutions $ 161.1 $ 156.9 $ 158.7 2.7% 1.5% $ 171.4 n/a $ 179.5 n/a -4.5%
Dexterra Group $ 94.3 $ 84.0 $ 86.5 12.3% 9.1% $ 89.0 n/a $ 100.0 n/a -11.0%
Enerflex Ltd. $ 200.2 $ 201.5 $ 204.0 -0.6% -1.8% $ 239.0 n/a $ 228.2 n/a 4.7%
Ensign Energy Services $ 308.1 $ 305.5 $ 295.6 0.9% 4.2% $ 319.1 n/a $ 333.0 n/a -4.2%
Mullen Group $ 271.8 $ 271.8 $ 267.7 0.0% 1.5% $ 288.4 n/a $ 284.8 n/a 1.2%
North American Construction $ 242.3 $ 239.6 $ 234.5 1.1% 3.3% $ 259.1 n/a $ 234.0 n/a 10.7%
Precision Drilling $ 313.4 $ 307.0 $ 307.9 2.1% 1.8% $ 325.1 n/a $ 348.7 n/a -6.8%
Shawcor Ltd. $ 129.1 $ 130.1 $ 134.1 -0.7% -3.7% $ 142.4 n/a $ 143.4 n/a -0.7%
Secure Energy Services $ 447.7 $ 447.8 $ 445.7 0.0% 0.4% $ 474.3 n/a $ 480.1 n/a -1.2%
Trican Well Service $ 126.5 $ 108.3 $ 137.3 16.7% -7.9% $ 145.6 n/a $ 161.9 n/a -10.1%
Average 3.5% 0.9% -2.2%
Source: FactSet, TD Securities Inc.

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 October 13, 2021

Ratings and Changes in Target Prices

Based on our updated industry outlook, we have made modest changes to our 2021 and
2022 estimates and long-term NAV assumptions, and as a result, we have made select
changes to our target prices. We are not making any changes to our ratings at this time.

Exhibit 4: Ratings and Changes in Target Prices

Rating and Target Changes Prior Ratings and Targets
NAV/ Risk
Rating Share Target Return Rating Rating Target Return
CES Energy Solutions CEU BUY $ 4.08 $ 4.00 93.5% HIGH BUY $ 4.00 90.5%
Dexterra Group DXT BUY $ 10.83 $ 11.00 ↑ 31.8% HIGH BUY $ 9.00 8.6%
Enerflex EFX BUY $ 14.85 $ 15.00 ↑ 50.8% HIGH BUY $ 14.00 40.8%
Ensign Energy Services ESI HOLD $ 2.33 $ 2.25 ↑ -0.4% SPEC HOLD $ 2.00 -11.5%
Mullen Group MTL BUY $ 19.23 $ 19.00 ↑ 42.8% HIGH BUY $ 18.50 39.1%
North American Construction NOA HOLD $ 22.77 $ 23.00 ↑ 16.2% HIGH HOLD $ 21.00 6.2%
Precision Drilling PD HOLD $ 60.19 $ 60.00 ↑ 1.6% HIGH HOLD $ 50.00 -15.3%
Shawcor SCL BUY $ 9.38 $ 9.50 64.1% HIGH BUY $ 9.50 64.1%
Secure Energy Services SES BUY $ 8.01 $ 8.00 ↑ 44.7% HIGH BUY $ 7.50 35.7%
Trican Well Service TCW HOLD $ 3.15 $ 3.25 ↑ 0.6% HIGH HOLD $ 3.00 -7.1%

Denotes changes in rating, target price or risk rating

Source: TD Securities Inc.

Page 5 of 10
 Sector Stance: Market Weight TD Securities Forecast

Capital Structure Revenue EBITDAS CAPEX

Closing Target Yield Total Shares Mkt Cap Net Debt EV 2021E 2022E 2023E 2021E 2022E 2023E 2022E
Name Ticker Price ($/sh.) (%) Return Rating Risk (mm) ($mm) ($mm) ($mm) ($mm) ($mm) ($mm) ($mm) ($mm) ($mm) ($mm)

CES Energy Solutions Corp. CEU-T $2.10 $4.00 3.0% 93.5% BUY HIGH 256 $536.6 $389.7 $926.3 $1,120.8 $1,248.5 $1,284.1 $139.2 $161.1 $171.4 $60.0
Dexterra Group Inc. DXT-T $8.61 $11.00 4.1% 31.8% BUY HIGH 65 $560.8 $127.8 $688.6 $773.3 $940.8 $900.8 $83.9 $94.3 $89.0 $29.0
Enerflex Ltd. EFX-T $10.00 $15.00 0.8% 50.8% BUY HIGH 90 $896.8 $340.1 $1,236.9 $916.8 $1,070.4 $1,324.4 $160.6 $200.2 $239.0 $70.0
Ensign Energy Services Inc. ESI-T $2.26 $2.25 0.0% -0.4% HOLD SPEC 163 $368.0 $1,466.8 $1,834.9 $1,017.8 $1,255.4 $1,295.9 $213.8 $308.1 $319.1 $63.0
Mullen Group Ltd. MTL-T $13.64 $19.00 3.5% 42.8% BUY HIGH 96 $1,312.3 $652.4 $1,964.6 $1,437.5 $1,693.6 $1,751.3 $234.5 $271.8 $288.4 $80.0
North American Construction Group Ltd. NOA-T $19.93 $23.00 0.8% 16.2% HOLD HIGH 28 $561.0 $419.3 $980.3 $581.1 $694.3 $721.1 $210.9 $242.3 $259.1 $110.0
Precision Drilling Corp. PD-T $59.03 $60.00 0.0% 1.6% HOLD HIGH 13 $785.4 $1,111.1 $1,896.4 $994.7 $1,178.0 $1,225.7 $236.6 $313.4 $325.1 $65.0
Shawcor Ltd. SCL-T $5.79 $9.50 0.0% 64.1% BUY HIGH 70 $408.1 $346.9 $754.9 $1,177.5 $1,356.2 $1,434.8 $106.9 $129.1 $142.4 $50.0
Secure Energy Services Inc. SES-T $5.55 $8.00 0.5% 44.7% BUY HIGH 308 $1,709.7 $1,173.1 $2,882.8 $3,685.1 $4,921.6 $5,000.2 $260.5 $447.7 $474.3 $100.0
Trican Well Service Ltd. TCW-T $3.23 $3.25 0.0% 0.6% HOLD HIGH 256 $826.0 $0.6 $826.7 $541.8 $723.1 $911.1 $94.7 $126.5 $145.6 $39.0
Exhibit 5: OFS Comp. Table

Source: FactSet, TD Securities Inc.

Average 1.3% 34.6%
Valuation Metrics Leverage Metrics
Total
EV/EBITDAS FCF Yield FCF/EV P/TBV ROIC ND/EBITDA Payout
2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E Current 2021E 2022E 2023E 2021E 2022E 2023E 2022E
Name (x) (x) (x) (%) (%) (%) (%) (%) (%) (x) (%) (%) (%) (x) (x) (x) (%)

CES Energy Solutions Corp. 6.5x 5.4x 4.8x 17% 22% 24% 10% 14% 16% 1.5x 6% 7% 7% 2.7x 2.1x 1.7x 26%
Dexterra Group Inc. 8.2x 7.2x 7.1x 13% 15% 14% 11% 12% 12% 3.1x 7% 8% 8% 1.5x 1.2x 0.8x 32%
Enerflex Ltd. 7.8x 5.8x 4.5x 13% 18% 23% 9% 14% 19% 1.1x 4% 5% 6% 2.2x 1.4x 0.8x 15%
Ensign Energy Services Inc. 8.3x 5.4x 4.8x 35% 37% 42% 7% 8% 10% 0.3x -3% -2% -2% 6.5x 4.2x 3.7x 31%
Mullen Group Ltd. 8.3x 6.9x 6.2x 13% 14% 15% 9% 10% 11% 2.8x 7% 9% 9% 2.7x 2.1x 1.7x 41%
North American Construction Group Ltd. 4.5x 3.7x 3.1x 13% 18% 23% 7% 11% 16% 2.3x 11% 13% 17% 2.3x 1.6x 1.0x 52%
Precision Drilling Corp. 8.1x 5.7x 5.1x 14% 23% 22% 6% 10% 11% 0.6x -3% 0% 0% 4.8x 3.2x 2.6x 25%
Shawcor Ltd. 6.6x 5.2x 4.3x 8% 17% 19% 5% 10% 13% 1.5x 1% 3% 4% 2.8x 2.1x 1.4x 33%
Secure Energy Services Inc. 11.1x 5.8x 4.9x 10% 19% 20% 6% 12% 15% 1.0x 3% 7% 10% 4.5x 2.0x 1.2x 14%
Trican Well Service Ltd. 8.3x 5.7x 4.3x 9% 12% 13% 9% 13% 17% 1.7x -1% 2% 6% -0.4x -0.8x -1.3x 23%
Average 7.8x 5.7x 4.9x 14% 19% 22% 8% 12% 14% 1.6x 3% 5% 6% 3.0x 1.9x 1.4x 29%

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October 13, 2021
 October 13, 2021

Appendix I: Justification of and Key Risks to Target Prices

Target Risk
Company Name and Ticker Rec. Justification of Target Price Key Risks to Target Price
Price Rating

Key risks associated with our target price include weakness in

CES Energy Solutions Corp. (CEU-T)
Our target price of $4.00/share is based on 1.0x our NAV
commodity prices including the demand destruction caused by
calculation. Our NAVPS assumes terminal multiples of 6.0x, a
COVID-19; variability of drilling activity; marketability and
$4.00 BUY HIGH WACC of 11.6%, contemplates our near-term estimates,
competitiveness of chemical products (technical
longer-term commodity price deck assumptions and industry
obsolescence); competition; foreign country risk (U.S.); foreign
forecast.
exchange; and play concentration (Permian).

Key risks associated with our target price include weakness in

Dexterra Group Inc. (DXT-T)
Our target price of $11.00/share is based on 1.0x our NAV
commodity prices, including the demand destruction caused by
calculation. Our NAVPS assumes terminal multiples ranging
COVID-19; customer relationships; manufacturing project
between 5.0x (WAFES segment) and 6.0x (Facilities
risks; seasonality; relations with aboriginal communities;
$11.00 BUY HIGH Management, Modular Solutions segments), a WACC of
lumpiness of infrastructure spending; cost inflation (including
13.4%, contemplates our near-term estimates, longer-term
labour); market share; competition; merger integration; and the
commodity price deck assumptions and industry forecast for its
risk of COVID-19-related occupancy disruptions in Dexterra
Energy-weighted businesses.
camps

Our target price of $15.00/share is based on 1.0x our NAV

Enerflex Ltd. (EFX-T)
Key risks associated with our target include weakness in
calculation. Our NAVPS assumes terminal multiples ranging
commodity prices including the demand destruction caused by
between 5.0x (Engineered Systems and Service segments)
$15.00 BUY HIGH COVID-19; lumpiness of infrastructure spending; performance
and 6.0x (Rentals segment), a WACC of 9.5%, contemplates
on turnkey projects; competition; foreign country risk; foreign
our near-term estimates, longer-term commodity price deck
exchange.
assumptions and industry forecast.

Ensign Energy Services Inc. (ESI-T)
Our target price of $2.25/share is based on 1.0x our NAV
calculation. Our NAVPS breaks down asset values by rig
category with terminal multiples ranging from 0.0x to 6.0x,
$2.25 HOLD SPEC
assumes a WACC of 18.3%, contemplates our near-term
estimates, longer-term commodity price deck assumptions and
industry forecast.
Key risks associated with our target include weakness in
commodity prices including the demand destruction caused by
COVID-19; market share; acquisition integration risk; day
rates/pricing; availability/cost of labour; weather;
availability/cost of equipment and parts; foreign country risk;
foreign exchange and high financial leverage.

Our target price of $19.00/share is based on 1.0x our NAV

Mullen Group Ltd. (MTL-T)
Key risks associated with our target price include: weakness in
calculation. Our NAVPS assumes terminal multiples ranging
the Canadian economy; weakness in commodity prices
between 6.0x (Specialized & Industrial segment) and 10.0x
including the demand destruction caused by COVID-19;
$19.00 BUY HIGH (Less-Than-Trucking, Logistics & Warehousing segments), a
competition; increasing e-commerce activity;
WACC of 10.6%, contemplates our near-term estimates,
acquisition/integration risk; foreign country risk; foreign
longer-term commodity price deck assumptions and industry
exchange.
forecast for its Energy-weighted businesses.

Key risks associated with our target price include weakness in

Our target price of $23.00/share is based on 1.0x our NAV commodity prices including the demand destruction caused by
calculation. Our NAVPS assumes terminal multiples of 6.0x, a COVID-19; marketability of assets; customer concentration; oil
North American Construction Group
$23.00 HOLD HIGH WACC of 11.0%, contemplates our near-term estimates, sands activity levels; ESG profiles of key customers;
(NOA-T)
longer-term commodity price deck assumptions and industry competition/market share; weather; availability of equipment
forecast. and parts; liquidity; and labour relations/availability due to the
fact that ~76% of their employees base operate under a CBA.

Our target price of $60.00/share is based on 1.0x our NAV

Precision Drilling Corp. (PD-T)
Key risks associated with our target include weakness in
calculation. Our NAVPS breaks down asset values by rig
commodity prices including the demand destruction caused by
category with terminal multiples ranging from 0.0x to 6.0x,
$60.00 HOLD HIGH COVID-19; market share; day rates/pricing; availability/cost of
assumes a WACC of 12.7%, contemplates our near-term
labour; weather; availability/cost of equipment and parts;
estimates, longer-term commodity price deck assumptions and
foreign country risk; foreign exchange; high financial leverage.
industry forecast.

Key risks associated with our target include weakness in

Shawcor Ltd. (SCL-T)
Our target price of $9.50/share is based on 1.0x our NAV
commodity prices including the demand destruction caused by
calculation. Our NAVPS assumes terminal multiples ranging
COVID-19; pace of global oil and gas infrastructure buildout
between 6.0x (Pipeline & Pipe Services segment) and 8.0x
(including customers' ability to fund projects); acquisition
$9.50 BUY HIGH (Composite Systems, Automotive & Industrial segments), a
integration risk; significant cost overrun on a major project;
WACC of 12.2%, contemplates our near-term estimates,
market share; pricing; availability/cost of labour; weather;
longer-term commodity price deck assumptions and industry
availability/cost of equipment and parts; foreign country risk;
forecast for its Energy-weighted businesses.
foreign exchange; high financial leverage.

Key risks associated with our target price include weakness in

Secure Energy Services Inc. (SES-T)
Our target price of $8.00/share is based on 1.0x our NAV
commodity prices including the demand destruction caused by
calculation. Our NAVPS assumes terminal multiples of 6.0x, a
COVID-19; marketability of assets; competition/market share;
$8.00 BUY HIGH WACC of 11.6%, contemplates our near-term estimates,
WCSB production volumes; weather; availability of equipment
longer-term commodity price deck assumptions and industry
and parts; foreign country risk; foreign exchange; high financial
forecast.
leverage.

Trican Well Service Ltd. (TCW-T)
Our target price of $3.25/share is based on 1.0x our NAV Key risks associated with our target include weakness in
calculation. Our NAVPS assumes terminal multiples of 5.0x, a commodity prices including the demand destruction caused by
$3.25 HOLD HIGH WACC of 16.5%, contemplates our near-term estimates, COVID-19; marketability of assets; market share; pricing;
longer-term commodity price deck assumptions and industry availability/cost of labour; weather; availability/cost of
forecast. equipment and parts.

Source: Company reports, TD Securities Inc.

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Industry Note
Equity Research October 13, 2021

TD Securities Equity Research Disclosures

 Company Ticker Disclosures
CES Energy Solutions Corp. CEU-T 9
Dexterra Group Inc. DXT-T n/a
Enerflex Ltd. EFX-T 9
Ensign Energy Services Inc. ESI-T n/a
Mullen Group Ltd. MTL-T 9
North American Construction Group Ltd. NOA-T | NOA-N 9
Precision Drilling Corp. PD-T | PDS-N n/a
Secure Energy Services Inc. SES-T 9
ShawCor Ltd. SCL-T 2, 4, 9
Trican Well Service Ltd. TCW-T n/a

1. TD Securities Inc., TD Securities (USA) LLC or an affiliated company has managed or co-managed a public offering of securities within the last 12 months with respect to the subject
company.
2. TD Securities Inc., TD Securities (USA) LLC or an affiliated company has received compensation for investment banking services within the last 12 months with respect to the
subject company.
3. TD Securities Inc., TD Securities (USA) LLC or an affiliated company expects to receive compensation for investment banking services within the next three months with respect to
the subject company.
4. TD Securities Inc. or TD Securities (USA) LLC has provided investment banking services within the last 12 months with respect to the subject company.
5. A long position in the securities of the subject company is held by the research analyst, by a member of the research analyst’s household, or in an account over which the research
analyst has discretion or control.
6. A short position in the securities of the subject company is held by the research analyst, by a member of the research analyst’s household, or in an account over which the research
analyst has discretion or control.
7. A long position in the derivative securities of the subject company is held by the research analyst, by a member of the research analyst’s household, or in an account over which the
research analyst has discretion or control.
8. A short position in the derivative securities of the subject company is held by the research analyst, by a member of the research analyst’s household, or in an account over which
the research analyst has discretion or control.
9. TD Securities Inc. and/or an affiliated company is a market maker, or is associated with the specialist that makes a market, in the securities of the subject company.
10. TD Securities Inc. and/or affiliated companies own 1% or more of the equity securities of the subject company.
11. A partner, director or officer of TD Securities Inc. or TD Securities (USA) LLC, or a research analyst involved in the preparation of this report has, during the preceding 12 months,
provided services to the subject company for remuneration.
12. This security has Subordinate voting shares.
13. This security has Restricted voting shares.
14. This security has Non-voting shares.
15. This security has Variable voting shares.
16. This security has Limited voting shares.

Additional Important Disclosures

We visited CES’s JACAM chemical manufacturing facility in Sterling, Kansas on October 2, 2019. The facility manufacturers chemicals that would account for approximately 25% of CES’s gross
revenue. The company provided local transportation and a meal.

Price Graphs
Full disclosures for all companies covered by TD Securities can be viewed at https://www.tdsresearch.com/equities/welcome.important.disclosure.action by TD Securities' institutional
equity clients.

Distribution of Research Ratings^ Investment Services Provided*

100%
81.94%
REDUCE - 1.8%
75%
NOT RATED - 0.3%

50%
HOLD - 23.8% BUY - 74.1%

25% 16.13%

0.65% 1.29%
0%
BUY HOLD NOT REDUCE
RATED

Current as of: October 13, 2021

^ Percentage of subject companies under each rating category: BUY (covering ACTION LIST BUY,
BUY and SPECULATIVE BUY ratings), HOLD, and REDUCE (covering TENDER and REDUCE
ratings) and NOT RATED (covering UNDER REVIEW, SUSPENDED, and NOT RATED).

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* Percentage of subject companies within each of the four categories (BUY, HOLD, REDUCE, and
NOT RATED) for which TD Securities Inc. has provided investment banking services within the last
12 months.

Definition of Research Ratings

ACTION LIST BUY: The stock's total return is expected to exceed a minimum of 15% (with higher thresholds for less liquid, more risky securities) over the next 12 months and it is a
top pick in the Analyst's sector.
BUY: The stock's total return is expected to exceed a minimum of 10% (with higher thresholds for less liquid, more risky securities) over the next 12 months.
SPECULATIVE BUY: The stock's total return is expected to exceed a minimum of 30% over the next 12 months (with higher thresholds for less liquid securities); however, there is material
event risk associated with the investment that could result in a significant loss.
HOLD: The stock's total return is expected to be between 0% and 10%, (with higher thresholds for less liquid, more risky securities) over the next 12 months.
TENDER: Investors are advised to tender their shares to a specific offer for the company's securities or to support a proposed combination reflecting our view that a superior offer
is not forthcoming.
REDUCE: The stock's total return is expected to be negative over the next 12 months.
SUSPENDED: Due to evolving circumstances, we can no longer generate what we consider a defensible target price and rating at the current time.
UNDER REVIEW: Our rating is under review pending additional information and/or analysis. The prior rating should not be relied on.
NOT RATED: We do not currently produce a recommendation and a target price on this security.
Risk ratings are relative to other companies in the TD Securities Equity Research coverage universe. In order of increasing risk, our risk ratings are LOW, MEDIUM, HIGH, and
SPECULATIVE. These risk ratings are not meant to be compared to ratings on other securities and asset classes outside our Equity Research coverage universe.
Overall Risk Rating in order of increasing risk: Low (6.8% of coverage universe), Medium (41.8%), High (43.7%), Speculative (7.7%)

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