QUESTIONS AND ANSWERS ABOUT THE FRIENDLY WESTERN OFFER

Q. Should I accept the Western Energy Services Offer?

A. Yes. The Savanna Board is unanimously recommending that its shareholders vote in favour of the Arrangement Agreement at a meeting of shareholders to be held in May 2017, in order to benefit from the value and opportunity of the pure play combination with Western.

The Arrangement is expected to provide holders of Savanna Shares with the opportunity to own a material stake in a larger drilling company with:

  • The second largest contract drilling and second largest well servicing fleet in Canada;
  •  A broader, more diverse, domestic and international drilling platform from which to grow operations to meet customer demand;
  •  An expanded customer base with greater geographic exposure within key operating areas throughout North America and a leading position in the Australian onshore drilling and well servicing market;
  •  Increased ability to strategically move equipment to meet customer demand and capture growth opportunities;
  •  A stronger organization after integrating talent at the board, senior management and employee levels;
  • Significant operational synergies and efficiencies through combining operational facilities and reduced corporate and professional fees; and
  •  Potentially enhanced shareholder liquidity, with reduced cost of capital and future access to capital to fund future growth and acquisition opportunities.

Q. What did the Savanna Board consider in recommending the arrangement?

A. The Savanna Board considered a number of factors in recommending the Arrangement including:

  • The premium offered pursuant to the Arrangement;
  • The Arrangement is a better strategic opportunity, providing Savanna shareholders with the opportunity to own a material stake in a stronger company that remains focused on drilling and well servicing;
  • The Arrangement provides Savanna shareholders with enhanced exposure to a recovery in industry activity levels;
  • Western is highly experienced in operating a large scale contract drilling and well servicing company;
  • The Arrangement is the result of an active and thorough strategic alternatives process conducted by Savanna to maximize value for all of its shareholders;
  • Peters & Co. Limited and Cormark Securities Inc. have each provided fairness opinions in respect of the Arrangement;
  • There is less risk to completing the Arrangement as compared to the Total Offer;
  • The Arrangement requires Court approval and shareholders of Savanna will be granted rights of dissent
  • Savanna’s directors and officers and certain other shareholders have agreed to vote in favour of the Arrangement
  • The Savanna Board has preserved the ability to respond to unsolicited superior proposals.

QUESTIONS AND ANSWERS ABOUT THE HOSTILE TOTAL OFFER

Q. Should I accept the Total Offer?

A. NO. The Savanna Board, on recommendation of the Special Committee, has unanimously determined that the Total Offer significantly undervalues the Common Shares and is not in the best interests of Savanna or the Shareholders.

The Savanna Board UNANIMOUSLY recommends that Shareholders REJECT the Total Offer and NOT TENDER their Common Shares. Members of the Savanna Board and executive officers do NOT intend to tender their Common Shares to the Total Offer, which the Savanna Board views as offering insufficient consideration to Shareholders.

Q. How do I reject the Total Offer?

A. You do not need to do anything. DO NOT tender your Common Shares. If you are contacted by Total or its information or solicitation agent, DO NOT TENDER your Common Shares or complete any documents that Total may provide you.

Q. Can I withdraw my Common Shares if I have already tendered?

A. YES. You can withdraw your Common Shares. For information on how to withdraw your Common Shares, Savanna recommends you contact your broker or D.F. King, the Information Agent retained by Savanna, at the phone numbers listed at the end of this Q&A.

Q. Why does the Board believe that the Total Offer should be rejected?

A. The Savanna Board, on recommendation of the Special Committee, has unanimously determined that the Total Offer significantly undervalues the Common Shares and is not in the best interests of Savanna or the Shareholders. The Savanna Board took into account numerous factors including, but not limited to, the reasons set out in the Directors’ Circular and in the Reasons section of this website, in reaching its UNANIMOUS recommendation that Shareholders REJECT the Total Offer and NOT TENDER their Common Shares to the Total Offer:

· A superior offer has emerged from Western Energy Services Corp.

· The Total Offer does not provide a control premium for Shareholders.

· The Total Offer is highly opportunistic and timed to deprive Shareholders of both significant positive recent market changes and value increasing actions achieved to date which had not yet been reflected in the share price.

· The Total Offer substantially undervalues the contribution that Savanna’s assets would bring to a combined entity and provides inadequate value to Shareholders.

· Transaction multiples are too low compared to similar transactions.

· The Total Offer does not attribute any value to the potential future success of Savanna’s ongoing actions to increase Shareholder value.

· Peters & Co. has delivered a written opinion to the Savanna Board that the consideration offered pursuant to the Total Offer is inadequate, from a financial point of view, to Shareholders.

· If successful, the Total Offer may have an adverse effect on the liquidity of the Common Shares.

· The Total Offer is conditional and does not represent a firm offer.

· The value of the consideration under the Total Offer is uncertain and entirely dependent on the value of the Total Shares in the future.

· Total, an amalgamation of many disparate small businesses, has not emerged as a material player in any particular business line, has never completed an acquisition of Savanna’s size, and is underdeveloped in the highly consequential oilfield operations sector.

· Total has failed to provide adequate disclosure that would reasonably be expected to affect the decision of a Shareholder to accept or reject the Total Offer.

Shareholders are strongly encouraged to carefully review the full explanation of the reasons for the Savanna Board’s recommendation starting on page 8 of the Directors’ Circular or in the “Reasons” section of this website, including the opinion of Peters & Co. dated December 21, 2016 that, as of that date and subject to the assumptions, limitations and qualifications contained therein, the consideration offered pursuant to the Total Offer is inadequate, from a financial point of view, to Shareholders.

Q. My broker advised me to tender my Common Shares. Should I?

A. NO. The Savanna Board, upon recommendation of the Special Committee, has UNANIMOUSLY recommended that Shareholders REJECT the Total Offer and NOT TENDER their Common Shares to the Total Offer. The Total Circular states that Total is paying brokers a fee for soliciting tenders to the Total Offer, so their advice with respect to a decision to tender may not be impartial.

Q. Will Total increase the Total Offer?

A. Savanna does not know if Total will increase the Total Offer. However, given the significant accretion to Total based on the existing Total Offer, the Savanna Board believes that Total has the ability to substantially increase its offer as the Total Offer substantially undervalues the Common Shares and is opportunistic.

Q. Will I have protections if Total buys more than 66⅔% of the Common Shares and I don’t sell?

A. YES. In Canada, applicable corporate law contains protections for minority Shareholders, including the right, in certain circumstances, to dissent and demand payment of the fair value of their Common Shares. If Total is successful in acquiring in excess of 90% of the Common Shares pursuant to the Total Offer, Total has disclosed an intention to acquire the remaining Common Shares pursuant to a right of compulsory acquisition pursuant to the ABCA, which process may, however, not be available to Total. If Total is successful in acquiring in excess of 66⅔% of the Common Shares, but less than 90% of the Common Shares or the right of compulsory acquisition is not available, Total has disclosed only that it may pursue other means of acquiring the remaining Common Shares not deposited under the Total Offer pursuant to an amalgamation, statutory arrangement, capital reorganization or other transaction (as determined by Total). You are encouraged to read Section 20 of the Total Circular, “Acquisition of Savanna Common Shares Not Deposited Under the Offer” for an explanation of Total’s intentions and the mechanics of any such acquisition.

Q. Do I have to decide now?

A. NO. You do not have to take any action at this time. The Total Offer is currently scheduled to expire at 11:59 p.m. (Pacific time) on March 24, 2017, and is subject to a number of conditions that have yet to be satisfied and may never be satisfied. You do not have to take any action until close to the expiry date of the Total Offer to ensure that you are able to consider all of the options available to you.

If you have already tendered your Common Shares to the Total Offer and you decide to withdraw these Common Shares from the Total Offer, you must allow sufficient time to complete the withdrawal process prior to the expiry of the Total Offer. For more information on how to withdraw your Common Shares, you should contact your broker or D.F. King, the Information Agent retained by Savanna, at the numbers listed below.

Q. Who do I ask if I have more questions?

A. The Savanna Board recommends that you read the information contained in this Directors’ Circular carefully. You should contact D.F. King, the Information Agent retained by Savanna, with any questions or requests for assistance that you may have.

 

D.F. King Canada Ltd.

North American Toll Free Phone:

1-800-622-1678

E-mail: moc.g1490278741nikfd1490278741@seir1490278741iuqni1490278741

Outside North America, Banks and Brokers Call Collect: 1-201-806-7301

 

Shareholder Disclaimer

Savanna Energy Services Corp. ("Savanna" or "the Company") is a public company trading on the Toronto Stock Exchange under the symbol SVY. Savanna's expectations and predictions for the future are discussed in our press releases, presentations, quarterly and annual reports. Such statements, including statements in this document and the documents listed above that relate to matters that are not historical are forward-looking statements within the relevant securities regulations in Canada and elsewhere. Certain forward-looking statements may constitute projections regarding future events or the future financial performance of Savanna Energy Services Corp. When used in this website, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "seek", "propose", "estimate", "expect" and similar expressions, as they relate to Savanna Energy Services Corp., are intended to identify forward-looking statements. Such statements reflect Savanna Energy Services Corp.'s views at the time such statements are made with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause Savanna Energy Services Corp.'s actual results, performance or achievements to vary from those expressed or implied in such forward-looking statements or could affect the extent to which a particular projection is realized.

It is important to take the following factors into consideration when evaluating Savanna Energy Services Corp.

  • The rise and fall in worldwide prices and demand for oil and gas.
  • Changes in the demand for our services, competitors' existence, technological changes and developments in the oilfield services industry.
  • Changes in levels of natural gas and crude oil exploration and development activities.
  • The continuation of operating risks inherent in the oil field services industry.
  • The continuation of regulatory and legislative uncertainties.
  • The change in tax laws.
  • Political instability, war or acts of terrorism in any of the countries in which we do business.
  • General economic conditions.

Savanna's business depends significantly on the level of spending by oil and gas companies for exploration, development and production activities. Sustained increases or decreases in the price of natural gas or oil could materially impact such activities, and thereby materially affect our financial position, results of operations and cash flows.

The above disclaimer outlines the risks and factors which are important to consider.

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