Savanna Reiterates Rejection of the Inadequate Value of the Total Offer and Support for Acquisition of Savanna by Western Energy

CALGARY, ALBERTA–(Marketwired – March 22, 2017) – Savanna Energy Services Corp. (“Savanna“) (TSX:SVY) today reiterates the unanimous support of the special committee (the “Special Committee“) of the board of directors of Savanna (the “Savanna Board“) and the Savanna Board of the acquisition of all of the issued and outstanding common shares of Savanna (the “Savanna Shares“) by Western Energy Services Corp. (“Western“) on the basis of 0.85 of a common share of Western (the “Western Shares“) and $0.21 in cash per Savanna Share (the “Western Offer“).

The Savanna Board, on the recommendation of the Special Committee, has unanimously determined that Savanna shareholders should reject the offer from Total Energy Services Inc. (“Total“) to purchase all of the Savanna Shares on the basis of 0.13 common shares of Total and $0.20 in cash for each Savanna Share (the “Total Offer“).

Total is Purchasing Savanna Shares in the Market for Greater Than its Offer Price to Savanna Shareholders

Why is Total not treating all Savanna shareholders equally? Even Total knows that the Total Offer undervalues Savanna and fails to adequately compensate Savanna shareholders for their shares. The proof is in Total’s own actions: on four occasions within the last month, including as recently as March 21, Total purchased Savanna Shares in the market at a price that is HIGHER than the implied value of the Total Offer.

On all four days, the implied value of the Western Offer was SUPERIOR to both the implied value of the Total Offer and the price paid by Total for the shares it purchased, as illustrated in the table below.

Western Offer is Superior to the Total Offer and to Total’s Recent Purchases of Savanna Shares

Date Implied Value of
Total Offer
Price Paid by Total in
the Open Market
Implied Value of
Western Offer
March 9(3) $1.90 $1.98 $2.03
March 16 $1.92 $2.00 $2.19
March 20 $1.92 $1.96 $2.12
March 21 $1.95 $1.99 $2.12
(1) Closing prices on the applicable date on the Toronto Stock Exchange.
(2) Highest price paid for Savanna Shares acquired on the applicable date as disclosed by Total.
(3) Implied value of Western Offer on March 9th excludes cash consideration of $0.21 per share.

In addition, Total sought and received the approval of its shareholders to issue more than twice the number of common shares of Total currently required to be issued pursuant to the Total Offer indicating it expected to pay significantly more for the Savanna Shares.

A Higher Value, Strategically Superior Alternative is Available

The Savanna Board believes the Western Offer is financially, strategically and operationally superior to the Total Offer and Savanna shareholders should not tender their Savanna Shares to the Total Offer. Based on price alone, the Western Offer represents a premium of 9.1% over the Total Offer for Savanna shareholders (based on the closing price of the Western Shares and common shares of Total, as applicable, on March 21, 2017).

Total’s self-interested arguments do not change the fundamental fact that a combination of Western and Savanna makes more business sense and creates greater potential for long-term value.

2016 Was the Worst Year for Oilfield Services Companies in Recent History and the Outlook for the Sector is Considerably Stronger

In its latest press release Total once again refers to Western’s financial results for the year ended December 31, 2016 (the most challenging year in recent decades for oilfield services companies). Total, once again, is misleading shareholders by ignoring the fact that current financial projections of oilfield equity research analysts for 2017 and 2018 are materially higher than 2016 levels. The previously disclosed operations updates of Savanna and Western are supportive of oilfield equity research analyst views on activity levels in 2017.

Total has highlighted that Western operated at above average utilization levels during 2016. What Total has not stated is that Total operated at utilization levels below the industry average. Western has demonstrated that it is a drilling contractor that is committed to providing an essential service to its customers during even the most challenging of times. As the industry continues to recover, Western and its current and prospective shareholders will be well served by the commitment that Western made to its customers during 2016.

Western Debt Following a Combination with Savanna is Appropriately Positioned

Total’s ongoing efforts to justify their inferior offer with references to Western’s debt levels are misleading for two primary reasons. Firstly, Western’s debt levels are already reflected in its share price. Total’s continued insistence that Savanna shareholders should apply a further discount to the consideration they are receiving from Western is illogical. Secondly, upon the planned and fully financed redemption of Savanna’s senior notes, the combined company would have no debt maturities before 2019, which provides for considerable certainty should near-term weakness in the oilfield services industry persist. Debt capital markets continue to share this view with Western’s senior unsecured notes trading very near to par and a key credit agency considering a potential credit upgrade for Western as a result of the proposed business combination. With the anticipated industry activity levels in 2017 and 2018, the combination of Western and Savanna would be on a very firm footing.

Total Offer Introduces Significant Potential Debt Charges

Total has not advised how it intends to refinance the Savanna debt that may become due and payable upon the change of control that would occur upon it taking up Savanna Shares pursuant to the Total Offer which may be significantly more difficult if Savanna is still a public company not wholly-owned by Total. Specifically:

  • Savanna will be required to make an offer to acquire all of its outstanding senior notes at 101% of the principal amount thereof, plus the accrued and unpaid interest.
  • If consent to the change of control is not obtained, the second lien credit agreement with Alberta Investment Management Corporation (“AIMCo“) will become due and payable with Savanna having to refinance the same in a circumstance where Savanna could be a public company with shareholders other than Total at the time and not be wholly owned by Total.

The agreements Savanna entered into with AIMCo fundamentally restructured Savanna’s balance sheet and were the result of comprehensive efforts to negotiate the best available alternative. Total’s hostile and inferior offer put Savanna’s balance sheet stability at risk.

Do Not Be Coerced Into Tendering to the Inferior Total Offer Prior to Its Expiry

You should not accept inferior value for your Savanna Shares, particularly when Total is itself willing to purchase shares for a higher price.

If Total does acquire 50.1% of the outstanding Savanna Shares (excluding Savanna Shares owned by Total and persons acting jointly or in concert with Total), Total will be required to extend the Total Offer for ten days following the initial expiry of the Total Offer.

Savanna shareholders are urged not to tender their Savanna Shares to the Total Offer. If you have already tendered your Savanna Shares to the Total Offer, you can withdraw your Savanna Shares by contacting your broker or D.F. King, North American Toll Free at 1-800-622-1678 or via email at [email protected].


Peters & Co. Limited is acting as financial advisor to Savanna in respect of the Western Offer and has provided the Savanna Board with its verbal opinion that, subject to certain customary assumptions, qualifications and limitations, the consideration to be received by holders of Savanna Shares pursuant to the terms of the Western Offer is fair, from a financial point of view, to the holders of Savanna Shares.

Cormark Securities Inc. has provided the Savanna Board with its verbal opinion that, subject to certain customary assumptions, qualifications and limitations, the consideration to be received by holders of Savanna Shares pursuant to the terms of the Western Offer is fair, from a financial point of view, to the holders of Savanna Shares.

About Savanna

Savanna is a leading contract drilling and oilfield services company operating in North America and Australia providing a broad range of drilling, well servicing and related services with a focus on fit for purpose technologies and industry-leading Aboriginal relationships.

Cautionary Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “may”, “will”, “project”, “should”, “believe”, “plans”, “intends” and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward-looking statements and information relating to the proposed acquisition of Savanna by Western pursuant to a plan of arrangement, the indebtedness of the combined company, expectations with an industry recovery and the risks resulting from Total acquiring more than 50% of the Savanna Shares. These forward-looking statements and information are based on certain key expectations and assumptions made by Savanna. Completion of the Western Offer is subject to a number of conditions which are typical for transactions of this nature. Assumptions have been made with respect to the satisfaction of all conditions precedent under the arrangement agreement with Western. Although Savanna believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information as Savanna cannot give any assurance that they will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to satisfy any of the conditions to completion of the Western offer, the emergence of a superior proposal in respect of either party or the failure to obtain approval of the Savanna shareholders or Western shareholders may result in the termination of the arrangement agreement.

Readers are cautioned that the foregoing list of risks and uncertainties is not exhaustive. Additional information on these and other risks that could affect completion of the Western Offer will be set forth in an information circular of Savanna to be mailed in connection with the Western Offer, which will be available on SEDAR at Other risk factors that could affect Savanna’s operations or financial results are included in Savanna’s annual information form and may be accessed through the SEDAR website ( The forward-looking statements and information contained in this press release are made as of the date hereof and Savanna does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Savanna Energy Services Corp.
Chris Strong
President and Chief Executive Officer
(403) 267-6728

Savanna Energy Services Corp.
Dwayne LaMontagne
Executive Vice President and Chief Financial Officer
(403) 214-5959

Media contact:
Trevor Zeck
Longview Communications Inc.
(604) 694-6037

Shareholder inquiries:
D.F. King Canada
(Toll Free): 1-800-622-1678