Select Water Solutions, Inc. · NYSE:WTTR
Select Water Solutions — Select Energy Services — Investor Presentation (June 2019)
27 slides from Select Water Solutions's investor presentation, June 2019
Slide 1: Select Energy Services, Inc. Investor Presentation
Select Energy Services, Inc. Investor Presentation | June 2019
Slide 2: Disclaimer Statement
Disclaimer Statement Cautionary Statement Regarding Forward Looking Statements This presentation, including the oral statements made in connection herewith, contains certain statements and information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securitie
Slide 3: Select's Value Proposition
Select’s Value Proposition Market Leading Pure Play in Large, Growing Water Market Highly Differentiated Capital Discipline with Technology and Strategic Strong Cash Flow Infrastructure Generation Capabilities 3
Slide 4: U.S. Shale: Best Solution to Global Oil Demand Growth
U.S. Shale: Best Solution to Global Oil Demand Growth IEA Projected Future Oil Supply/Demand Balance 105 Global energy demand is estimated to grow 25% to 2040 100 U.S. shale will need to add >10 million Bbl/d to 95 meet estimated demand growth 90 ~34 million Bbl/d MMBbl/d 85 supply/demand gap by 202
Slide 5: Water Market Growing in Size and Complexity
Water Market Growing in Size and Complexity 2019 U.S. Water Market Estimated to be $20-$25 Billion1 5% 5% Injection Disposal 6% 29% Post-Frac Fluids Hauling U.S. water Water Storage 8% market growing Water Acquisition with continued Water Transfer shale production Pre-Frac Water Treatment 11% growth
Slide 6: Select Energy Services – Company Snapshot
Select Energy Services – Company Snapshot Segment Overviews1 1Q19 Revenue by Segment2,3 6% Comprehensive water services Water including water transfer, flowback 18% Services Water and well testing, water storage and containment, water treatment and Water Services Infrastructure recycling systems,
Slide 7: Growth in Financial Performance & Liquidity
Growth in Financial Performance & Liquidity Annual Revenue1 Financial Performance Commentary1 $1,800 ($ in millions) Efficiency, execution and pricing improvements $1,600 $1,529 have led to increased profitability, even as labor $1,400 $1,250 and equipment markets remained tight $1,200 Scale in
Slide 8: Robust Cash Flow Generation with Room to Expand
Robust Cash Flow Generation with Room to Expand With $81 million of cash flow in 2018, Select has the ability to generate robust FCF and expects to generate $65-80 million in 2019 from continuing operations, or $95-110 million including divestiture proceeds1,2 $120 ($ in millions) $107.8 $80 $56.6 $
Slide 9: Industry Leading Customer Base in Every Basin
Industry Leading Customer Base in Every Basin Top Water Solutions Customers Top Oilfield Chemicals Customers Expertise and technology allow Select to provide solutions to meet the ever growing complexity of leading edge customers 9
Slide 10: Differentiation through Technology
Differentiation through Technology Technology Capability Differentiated Results • Operational visibility AquaView® monitoring & • Data collection measurment • Quality control • Decreased OpEx AquaLogic™ automation • Increased HSE safeguards systems • Improved operational control • Provides flexible
Slide 11: Water Infrastructure Growth Opportunities
Growth Opportunities in Both Pre-Frac and Post-Frac Water Infrastructure With 10+ years of operations, Select has the landowner and regulatory relationships, the asset portfolio and the balance sheet to support the ever increasing scale and complexity of the water needs of our customers with high-
Slide 12: Strategic Infrastructure Project: Northern Delaware Pipeline
Strategic Infrastructure Project Northern Delaware Pipeline Project Select recently announced the commencement of Phase I and Phase II of a new ~$40 million permanent pipeline infrastructure development in Eddy and Lea Counties in New Mexico □ Operations commencing by 4Q19 □ Complements existing G
Slide 13: Growth Opportunities in Water Services
Growth Opportunities in Water Services • Margin enhancement through increased Margin operational efficiency Enhancement • Investments to reduce labor and expand higher- capacity equipment • Enhanced technological innovation with focus on Technological equipment automation and data capture Innovation
Slide 14: Strategies to Maximize Value Per Share
Strategies to Maximize Value Per Share Operational excellence and innovation/technical achievements Maximizing Free Cash Flow Disciplined approach to growth, achieve strong returns through cycles Maintain a strong balance sheet Return excess capital to shareholders 14
Slide 15: Select's Value Proposition
Select’s Value Proposition Market Leading Pure Play in Large, Growing Water Market Highly Differentiated Capital Discipline with Technology and Strategic Strong Cash Flow Infrastructure Generation Capabilities 15
Slide 16: Appendix
Appendix 16
Slide 17: Select Corporate Profile
Select Corporate Profile Select Corporate Profile1 Listing and Ticker Symbol NYSE: WTTR Recent Share Price $10.70 Market Capitalization ~$1,151MM Enterprise Value ~$1,161MM Total Outstanding Shares 106.0MM Average Daily Trading Volume 535,589 (last 30 days) Headquarters Houston, TX Note: 1. Share
Slide 18: Revised Segment Structure Overview
Revised Segment Structure Overview With the intent to increase transparency into our business, and in conjunction with the further development of our water-related infrastructure offering and the sale & winding down of certain operations within the Wellsite Services segment, we have revised our repo
Slide 19: Revised Segment Structure Overview, continued
Revised Segment Structure Overview, continued As a result of the resegmentation, certain reclassifications have been made to the Company’s prior period financial information in order to conform to the current period presentation Water Services □ Includes Select’s services businesses including wa
Slide 20: Market Leading Comprehensive Water and Chemical Solutions Company
Market Leading Comprehensive Water and Chemical Solutions Company Completions-Oriented Activities Production-Oriented Activities Temporary Post-Frac Water Treatment/ Transfer Recycling Flowback / Water Water Pre-Frac Hydraulic Fluids Production Well Sourcing Containment Treatment Fracturing Containm
Slide 21: Historical Financial Summary by Segment
Historical Financial Summary by Segment ($ in millions) 2018 2019 Q1 Q2 Q3 Q4 Q1 Revenue by Segment Water Services 218,230 233,954 233,504 211,096 220,595 Water Infrastructure 54,057 55,727 65,877 54,454 53,616 Oilfield Chemicals 63,630 64,807 63,985 67,368 66,829 Corporate & Other(1) 40,478 38,759
Slide 22: Historical Financial Summary by Segment (cont.)
Historical Financial Summary by Segment (cont.) ($ in millions) 2018 2019 Q1 Q2 Q3 Q4 Q1 D&A Water Services 18,891 18,947 19,987 25,050 21,263 Water Infrastructure 5,037 5,219 5,960 6,826 6,089 Oilfield Chemicals 2,915 2,824 2,115 2,643 2,453 Corporate & Other(1) 4,039 3,455 3,791 2,838 1,713 Total
Slide 23: Water Represents a Critical, but Lower-Cost Input to the Frac
Water Represents a Critical, but Lower-Cost Input to the Frac, with Less Price Volatility • Secular trends driving demand for increasingly complex and sophisticated water solutions • Water is a critical component of a successful well completion, but a relatively small % of the overall well completio
Slide 24: Select is a Proven Partner Meeting the Complexity Demanded in Today's Oilfield
Select is a Proven Partner Meeting the Complexity Demanded in Today’s Oilfield Technology Scale Expansive suite of remote monitoring and Largest water solutions service provider in the automation technologies within our oil and gas industry AquaView portfolio Comprehensive service offerings ac
Slide 25: Growth in Permian Drilled but Uncompleted Wells
Growth in Permian Drilled but Uncompleted Wells Supports Future Growth in Completions Activity U.S. Drilled but Uncompleted (DUC) Well Inventory: Last 2 Years 9,000 8,000 7,000 Total U.S. +48% 6,000 5,637 wells to 8,500 5,000 4,000 3,000 2,000 Permian +160% 1,000 1,486 wells to 4,021 - Nov 2017 Nov
Slide 26: Scalable and Reliable Water Sourcing and Logistics Are Critical
Scalable and Reliable Water Sourcing and Logistics Are Critical to Unconventional Production Evolution of the Oil & Gas Industry’s Approach To Water Emerging Pre - 2008 2008 - 2010 Current Multi-Well Pad Conventional Vertical Early Horizontal Leading Edge Horizontal Development Frac Water per ~15,00
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Select Energy Services, Inc. 2016 2017 2018 2019 ($ in millions) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Net Income/(Loss) ($26) ($228) ($35) ($25) ($12) ($10) $3 ($15) $16 $25 $31 ($18) $1 Interest Expense $3 $4 $4 $4 $1 $1 $0 $5 $1 $1 $1 $1 $1 Depreciation and Amortization
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