Trican Well Service Ltd. · TSX:TCW
Trican Well Service — Investor Presentation (November 2015)
40 slides from Trican Well Service's investor presentation, November 2015
Slide 1: Investor Presentation
Investor Presentation November 2015
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This document contains statements that constitute forward-looking statements within the meaning of applicable securities legislation. These forward-looking statements include, among others, the Company’s prospects, expected revenues, expenses, profits, expected development
Slide 3: Overview of Trican
OVERVIEW OF TRICAN YEAR TO DATE SEPTEMBER 30, 2015 Large, North American, full service Revenue by Geography pressure pumping company 44% 56% 1,083,500 HP available fracturing USA capacity Canada 87 Cement & 37 Acid Units Revenue by Service Line 3% 2% 4% 29 Coiled Tubing & 61 N2 Units 9% 3% F
Slide 4: International
INTERNATIONAL Closed sale of Russian business for $195 million CDN • Includes first tranche of working capital adjustment • Sold for 6.4x 2014 EBITDA Closed Saudi Arabia and Australia as scale not large enough to sustain International infrastructure Kazakhstan sale in progress • Terms and cond
Slide 5: Overview of Trican: Parked Equipment
OVERVIEW OF TRICAN 577,000 HP (53% of equipment) Historical Fracturing HP parked since 2014 1,400,000 • 35% parked in Canada 1,200,000 • 62% now parked in USA 1,000,000 Equipment parked whole and not 800,000 scavenged 600,000 400,000 Continue to maintain R&M 200,000 expenditures during downtur
Slide 6: Competitive Advantages
COMPETITIVE ADVANTAGES Strong safety record • 2015 YTD injury frequency rate of 1.07 Operational performance • Efficiency saves clients money Technology • MVP Frac TM • TriVert Diverting Agent • Lightweight cements • Recycled water 6
Slide 7: Canada
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Slide 8: Canada
CANADA Trican is the largest pressure pumper in Canada Trican offers full services in Canadian market which balances revenue and profitability • Large cementing market share • Strong market share in other services Canadian market has fewer competitors (6 vs. over 30 in the U.S. market) Trica
Slide 9: Canada: Technical Advantage
CANADA Technical advantage in Canadian market which pays off in downturn • 20% of fracturing work in 2014 done with MVP frac • Geological and reservoir services integrated into frac designs • Lightweight cement blends • Numerous engineers embedded in client offices • Technology retains and grows m
Slide 10: Geographic Coverage
GEOGRAPHIC COVERAGE Horn River FORT NELSON HIGH LEVEL Shale British Columbia Alberta Saskatchewan Manitoba Montney FORT ST. JOHN Shale RED EARTH GRANDE PRAIRIE Duvernay WHITECOURT Shale HINTON NISKU LLOYDMINSTER DRAYTON VALLEY Viking RED DEER PROVOST DRUMHELLER Tight Oil Tight Gas CALGARY BRANDON BR
Slide 11: Canada Equipment
CANADA EQUIPMENT Current available Canadian fleet Canadian HP Growth 500,000 • 440,000 fracturing HP 450,000 400,000 • 55 Cementing units 350,000 300,000 • 38 N2 Pumpers 250,000 200,000 • 19 Acid Units 150,000 100,000 • 16 Coil Units 50,000 0 2008 2009 2010 2011 2012 2013 2014 2015* Approximatel
Slide 12: Canada - Outlook
CANADA - OUTLOOK 2015 well count expected to be down by roughly 63% compared to 2014 and 49% compared to 2009* 35% of equipment parked during 2015; anticipate keeping remaining equipment highly utilized Parked equipment ring fenced and ready to go to work when activity improves Pricing down
Slide 13: Canada - Outlook
CANADA - OUTLOOK Customer base strong – have had market share improvements Cost cutting measures have substantially improved second half results; still working on additional cost savings 85% of crews committed to year end Strong activity in October and November with anticipated holiday slowd
Slide 14: Canada – Cost Cutting
CANADA – COST CUTTING Product Costs • Largest element of cost structure • Have achieved 10-15% reduction People • Have reduced Canadian employee base by 45% • Total salary and benefits cost reduced by 57% • Expected annual fixed cost reductions of $86 million Other • Implemented significant co
Slide 15: USA
USA 15
Slide 16: Geographic Coverage - Fracturing
GEOGRAPHIC COVERAGE - FRACTURING MINOT Bakken Marcellus Mid-Con Utica Barnett SHAWNEE Current Active US Crews SPRINGTOWN Oklahoma: 2 crew ODESSA Marcellus: 4 crews HOUSTON Current Active HP: 217,500 Permian Current Parked HP: 427,500 MATHIS Cement and Coiled Eagle Ford Tubing services in t
Slide 17: USA – Outlook
USA – OUTLOOK U.S. rig count down 60% from peak Pricing stabilizing - down approximately 30% from peak Shut down 2 fracturing crews in Texas in October resulting in additional cost savings Expect to operate 35% of available equipment over the remainder of 2015 and 2016 (6 of 6 fracturing cre
Slide 18: USA – Outlook
USA – OUTLOOK Anticipate a slowdown in December Anticipate Q1 2016 activity to be strong on committed crews based on current customer plans • Will continue to monitor customer programs and adjust equipment up or down Significant cost cutting measures anticipated to improve profitability in sec
Slide 19: US - Cost Cutting
US - COST CUTTING Product costs • Have achieved 15-25% reduction to date People • Have reduced employee base by 60% • Salary reductions of 10% on remaining employees • Expected annual fixed cost reductions of $76 million Equipment • Repair costs have not declined on a $/HP basis as we continue
Slide 20: US - Cost Cutting
US - COST CUTTING Other • Implemented significant cost cutting measures for all other costs Will right size fleet to generate positive cash flow • Need to run high utilization on active fleet to maximize profitability Fixed costs reduced 51% year-over-year and 16% sequentially 20
Slide 21: Corporate - Cost Cutting
CORPORATE - COST CUTTING People Costs • Salary and benefits reductions - Salary reductions of 10% - Temporary suspension of certain benefits • Reduced Corporate employee base by 40% • Total annualized cost reductions of $24 million Other • Implemented significant cost cutting measures for all ot
Slide 22: Completion Tools
COMPLETION TOOLS 22
Slide 23: Completion Tools
COMPLETION TOOLS Operations in Norway, Russia, USA and Canada Offer multistage frac tools, completion and intervention tools for both open hole and cemented installations Competitive advantage with patented completion system that has capacity for 240 cemented stages Strong year-over-year gro
Slide 24: Getting Through the Downturn
GETTING THROUGH THE DOWNTURN 24
Slide 25: Getting Through the Downturn
GETTING THROUGH THE DOWNTURN Size operations to current activity levels Lower costs Keep utilization high on remaining equipment Work for the right customers Maintain equipment Provide differentiating safety, efficiency and technology Increase scale in Basins to lower fixed costs 25
Slide 26: Steps to Manage the Downturn
STEPS TO MANAGE THE DOWNTURN Sell Russia, Kazakhstan, and spare international equipment in closed regions Close remaining International operations Maximize profitability and cash flow from remaining operations • Canada doing well • Still working on improving U.S. Continue to de-lever the bal
Slide 27: Positives After the Downturn
POSITIVES AFTER THE DOWNTURN Strong earnings on reduced cost structure as utilization and pricing improve Competitive landscape changing • Baker-Halliburton merger will create opportunities in all of our markets • U.S. competitive landscape will change - Smaller competitors struggling to survive
Slide 28: Positives After the Downturn
POSITIVES AFTER THE DOWNTURN Sand per Stage Substantial completions 400,000 350,000 backlog 300,000 • Currently estimating over 250,000 200,000 4,500 drilled but 150,000 uncompleted wells in the 100,000 US market 50,000 - • Bodes well for an 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 increase in fracturin
Slide 29: Coming Out of the Downturn
COMING OUT OF THE DOWNTURN We will focus on: • Being on the leading edge of cost and operational efficiencies • Achieving cost advantages through size and scale in active regions • Separating ourselves through technology, safety, service quality and innovation Long term, need to lower cost to pr
Slide 30: Innovation
INNOVATION 30
Slide 31: Innovation: MVP Frac
INNOVATION Trican focuses on separating itself with technology Technology must reduce $/BOE for our customers or lower our costs MVP FracTM • Patented chemical solution that reduces proppant settling in slick water fracs • Strong market acceptance in Canada • MVP FracTM used in 20% of all well
Slide 32: Innovation: TriVert Diverting Agent
INNOVATION TriVertTM Diverting Agent • Can be used in new completions or refracturing treatments • Redirects fluid into new sections of the wellbore • Contains particles that dissolve with time and temperature • Expected to result in increased production without further well intervention • Gaining
Slide 33: Trican Reservoir Solutions
TRICAN RESERVOIR SOLUTIONS Geological Solutions • Offer unconventional rock analysis, core testing and rock mechanics Reservoir Solutions • Reservoir model that integrates geological and frac data to optimize long-term reservoir recoverability 33
Slide 34: Sustainable Innovation
SUSTAINABLE INNOVATION EcoClean Fluids • Continuing to expand our line of environmentally friendly fracturing fluids Water Management and Reduction • Developed a 100% recycled water crosslinked fluid solution with no mechanical treatment • Recycled water used on most fracturing projects in the U
Slide 35: Financial Overview
FINANCIAL OVERVIEW 35
Slide 36: Debt Structure
DEBT STRUCTURE Current outstanding and available debt at September 30, 2015 • $480 million in fixed rate notes payable - $147 million due by April 2016 • $296 million drawn on revolving credit facility • $550 million in cash and available debt as of September 30 New covenant agreement in place 3
Slide 37: Cash Flow
CASH FLOW Managing cash flow and liquidity a key focus in 2015 Dividend suspended until financial performance improves Total capital spend in 2015 expected to be approximately $30 million • No expansion initiatives will be considered until financial performance improves 2016 Capex anticipate
Slide 38: Investment Advantages
INVESTMENT ADVANTAGES Trading substantially below book value Significant earnings potential on existing assets Low capital expenditures in 2015 and 2016 Free cash flow in 2015 Strong Canadian business that is generating industry leading margins Strong management team that has managed thr
Slide 39: Summary
SUMMARY Number of Outstanding Shares (as of October 30, 2015): • 148.9 million Average Daily Volume (one month period): • 1,068,527 (as of October 30, 2015) Directors/Officers Ownership: • 2.0% (approx. - diluted basis) Market Cap: • $130 million as of October 30, 2015 39
Slide 40: Investor Presentation
Investor Presentation November 2015
Trican Well Service — Investor Presentation (November 2015) on 6ix