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2017 Quarterly Industry Watch

QUARTERLY INDUSTRY WATCH Q2 2017

Over last quarter, the only notable observation in this quarter’s activity seems to have been the rise in activity in U.S. Fracturing. Texas and Oklahoma continue to lead in drilling activity accounting for more than 50% of active rigs in the U.S., a number which, itself, has doubled in Q2 over Q1. While the Alberta Oilsands has settled into operations over exploration, and LNG activity worldwide continues to lower prices with increased supply thus making LNG mega-projects less attractive in Canada, it now seems that conventional oil and gas has adapted to the new order and that camp operations have adjusted as much as required. A possible early indicator of yet another step adjustment may be signalled by the increase in the number of hours a room is left uncleaned, post check-out. With the jump to 30 days in Western Canada, we may see a further shakeout in the number of off-market rooms in this region next quarter. Otherwise, we would expect Q3 to show very little change over Q2 given summer holidays, and a wait-and-see approach in response to the political climates in the U.S. and Western Canada. Read Full Report ...

QUARTERLY INDUSTRY WATCH Q2 2017

Over last quarter, the only notable observation in this quarter’s activity seems to have been the rise in activity in U.S. Fracturing. Texas and Oklahoma continue to lead in drilling activity accounting for more than 50% of active rigs in the U.S., a number which, itself, has doubled in Q2 over Q1. While the Alberta Oilsands has settled into operations over exploration, and LNG activity worldwide continues to lower prices with increased supply thus making LNG mega-projects less attractive in Canada, it now seems that conventional oil and gas has adapted to the new order and that camp operations have adjusted as much as required. A possible early indicator of yet another step adjustment may be signalled by the increase in the number of hours a room is left uncleaned, post check-out. With the jump to 30 days in Western Canada, we may see a further shakeout in the number of off-market rooms in this region next quarter. Otherwise, we would expect Q3 to show very little change over Q2 given summer holidays, and a wait-and-see approach in response to the political climates in the U.S. and Western Canada. Read Full Report ...

QUARTERLY INDUSTRY WATCH Q1 2017

In an environment where we increasingly observe consolidations, acquisitions, and changes in asset ownership, we don’t expect to see any substantial thinning of camp assets as a means of reducing costs. With the strongest assets being strategically located close to active production sites, consolidation across geographies under a single operator will not typically yield significant cost and/or revenue synergies in short order. What we will likely see is an imposition of tighter reservations policies and operational best practices on newly acquired properties to more quickly improve margins. Overall, this quarter saw another step down in camp activity, and this is not reflective of reduced seasonal drilling activity, necessarily. It appears that there has been another correction in asset inventory as demand (as measured by new hires, reservations) fell markedly. Read Full Report ...

2016 Quarterly Industry Watch

QUARTERLY INDUSTRY WATCH Q4 2016

In our view, the most notable trend of Q4 and in fact all of 2016 was in the step change in rooms taken off-market. For the first time in our 15-year history in the workforce housing industry, we observed a decommissioning of assets not isolated to any specific region, operator, or camp size. The impact is compounded by the fact that we believe the decommissionings to be permanent; our information indicates some of these assets have been decommissioned or sold and are not in a position to be brought back to service. Q4 did offer some optimism, however, in stronger U.S. Fracturing occupancy, increased year-over-year reservation activity, and a higher margin mix of booking types. For operators with good cost control discipline and the ability to deploy adequate resources in an environment of very short-term guest notice, 2017 should be a year of improving cash flows. Read Full Report ...

QUARTERLY INDUSTRY WATCH Q3 2016

Western Canada being the exception, Q3 showed relatively stable occupancy rates and average lengths of stay across the sample relative to what had already been observed in 2016. Worth noting, however, was evidence of a potential shift in guest booking behaviour, with record low rates of cancellation and no-shows, along with longer booking notice. We see this shift as being important to operators maintaining cashflow-positive properties. With operators also contractually possessing the tools to incentivise or penalize booking behaviour, it’s possible this shift remains in place going forward, given the benefits in this environment. Read Full Report ...

QUARTERLY INDUSTRY WATCH Q2 2016

With no major, negative changes in occupancy rates outside of the Western Canada region, and the first positive change in occupancy in the U.S. Fracturing region since its downward slide began in Q1 2015, Q2 proved to be a continuation of the positive trends in revenue-related metrics observed in Q1. Add the particularly strong reservations activity in the Alberta Oilsands and Other U.S.A. regions, along with the increased mix of higher-revenue, Executive class bookings, we could deem Q2 a relatively strong quarter for workforce housing in the current climate. With discipline around operating costs and asset utilization now likely engrained among the remaining, stronger operators, future quarters such as Q2 could bring welcomed, positive cashflows. Read Full Report ...

QUARTERLY INDUSTRY WATCH Q1 2016

Along with an apparent stop to the freefall in occupancy and booking levels in the U. S. Fracturing areas, Q1 2016 revealed continued strength in the Alberta Oilsands region. With increased reservation volume that significantly offset modest booking activity in other regions, and despite a number of camp closures in the area, the Alberta Oilsands continues to weather the downturn better than the others. As of this writing however, the impact of the wildfires of May 2016, in which a number of workforce camps took in evacuees from the Fort McMurray area, is unclear. With planned outages reported by major producers and refiners and an extended time period anticipated before restarting, we expect the ramifications for camp operators will be significant. Read Full Report ...

2015 Quarterly Industry Watch

QUARTERLY INDUSTRY WATCH Q4 2015

With WTI prices in the $50 range, the early months of 2015 showed a tempered response across most of the camps in our sample. The U. S. Fracturing region, however, would be the exception, seeing significant negative impacts almost immediately. This pattern of distribution proved to be the general story of 2015: rapid declines in the U. S. Fracturing areas, with relatively modest movements in the other areas sampled, particularly in revenue-related metrics. As production and drilling plans continue to be deferred or canceled, we believe the negative trend of 2015 will not markedly alter course in 2016. We do anticipate that the U. S. Fracturing region will see a floor at or close to current levels. Meanwhile, we expect the Alberta Oilsands and Western Canadian areas will continue to see single-digit declines per quarter. Read Full Report ...

QUARTERLY INDUSTRY WATCH Q3 2015

Q3 2015 could be characterized by the sharp decreases in guest activity in the U.S. Fracturing and Western Canadian regions. With U.S. shale production expected to continue its decline, it remains a possibility that revenue historically tied to shale activity will fall even further. The Alberta Oilsands region, by contrast, showed resilience in occupancy levels and even saw an increase in reservations quarter-over-quarter. Guest service metrics, with a small number of regional exceptions, remained at q2 levels. q4 will bring the start of winter drilling which combined with optimism in gas plays could be result in a recovery in Western Canadian occupancy rates. Read Full Report ...

QUARTERLY INDUSTRY WATCH Q2 2015

While the end of the second quarter of 2015 represented the sixth consecutive month WTI prices were held to USD 65.00 or less, we observed a neutral to slightly positive impact on metrics underlain by reservations and revenue. However, as the region most sensitive to rig count decline and exploration decline — and given the ease with which shale activity is de-mobilized — the U.S. fracturing region was the one notable exception, having seen more significant negative impact in its revenue-related metrics. Guest service metrics tracked were equally neutral, possibly as the result of preserved staffing levels despite the drop in energy prices. In the third quarter, we at Orissa anticipate maintaining the quarter over quarter observation of the metrics in this quarterly Industry Watch, in addition to further expanding the number of guest service and operating metrics tracked. Read Full Report ...

QUARTERLY INDUSTRY WATCH Q1 2015

The camps in our data set did not see a significant reduction in operations in the initial wake of the drop in oil prices. Supported by notable increases in average length of stay in most regions, as well as strong reservation activity in the Alberta oilsands, higher first quarter occupancy rates in 2015 vs. 2014 seem to indicate a tempered reaction to lower energy prices. In our Q2 snapshot, we will update the information provided here in addition to providing snapshots at a more micro level, from room management to operations data. Read Full Report ...