Pulse Seismic Inc. · TSX:PSD
Pulse Seismic — Investor Presentation (October 2022)
41 slides from Pulse Seismic's investor presentation, October 2022
Slide 1: Corporate Presentation
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Slide 2: Advisories
2 ADVISORIES FORWARD-LOOKING NON-GAAP MEASURES INFORMATION This presentation contains non-GAAP measures. This presentation contains information that The Company’s continuous disclosure documents constitutes “forward-looking information” or provide discussion and analysis of “EBITDA”, “forward-lookin
Slide 3: We Are Canada's Largest Seismic Data Library Provider
WE ARE CANADA’S LARGEST SEISMIC DATA LIBRARY PROVIDER Business Overview
Slide 4: Pulse's Business Model
4 PULSE’S BUSINESS MODEL 65,310 Sq. km of 3D seismic LICENSED MULTIPLE 829,207 Lin. km of 2D seismic TIMES GROWTH DATA LIBRARY SALES 1. Pulse acquires existing 2D and 3D datasets Oil and gas producers of all sizes license our that meet rigorous economic and technical digitally stored 2D and 3D data.
Slide 5: Metrics That Matter
5 METRICS THAT MATTER CASH MARGIN EBITDA SHAREHOLDER FREE CASH FLOW We are a data-driven, cash-based EBITDA is calculated as business. Pulse’s cash margin on earnings or loss from EBITDA plus non-cash and data library sales averaged 80% for operations before interest, non-recurring expenses, the las
Slide 6: Key Trading Facts
6 KEY TRADING FACTS PULSE SEISMIC INC. Information as at June 30, 2022, unless otherwise specified TSX: PSD Trading Symbols TSX: PSD OTCQX: PLSDF OTCQX: PLSDF Corporate Headquarters Calgary, Alberta, Canada Stock Price $2.08 Shares Outstanding 53,720,317 Avg. Daily Trading Volume (Q2 2022) 39,567 In
Slide 7: Q2 2022 YTD Financial Results
7 Q2 2022 YTD FINANCIAL RESULTS $5.0MM TOTAL REVENUE • $5.0M total revenue $4.1MM • Revenue includes $4.8M in data sales split $104,000 in SCB and OTHER SG&A transaction-based sales and $4.7M in traditional EXPENSES sales plus $182,000 in other revenue $827,000 EBITDA $1.4MM SHAREHOLDER FREE CASH FL
Slide 8: The Company We Have Built
8 THE COMPANY WE HAVE BUILT Positioned for a volatile commodity-price environment COSTS AND SPENDING CREDIT FACILITIES Pulse’s operating costs were $4.2M in the first half of 2022, Debt consists of a $25.0M As of July 20, 2022 generating positive EBITDA (17% revolving credit facility, Pulse had $25.
Slide 9: Value in Our Business
Value in Our Business
Slide 10: Understanding Our Business
10 UNDERSTANDING OUR BUSINESS Simplified What We Do: Pulse’s business model is to acquire geological column, high-quality 2D and 3D seismic data sets, then to repeatedly re-license the greater Alberta data. Deep Basin Second White Specks Why 2D: 2D seismic allows exploration companies Dunvegan Vikin
Slide 11: 3D Seismic Enables Detailed Modelling of Geologically Complex Targets
11 3D SEISMIC ENABLES DETAILED MODELLING OF GEOLOGICALLY COMPLEX TARGETS › 3D seismic is more detailed and more expensive to shoot. › Critical for most horizontal drilling, unconventional plays like shale gas and tight light oil formations, as well as complex conventional drilling. › Pulse owns 65,3
Slide 12: Pulse: A Western Canada Market Leader
12 PULSE: A WESTERN CANADA MARKET LEADER ESTIMATED CANADIAN 2D MARKET ESTIMATED CANADIAN 3D MARKET 24,232 Others Schlumberger 10,827 829,207 PULSE 65,310 2D 3D TGS Arcis 17,981 PULSE (km) (km2) 28,445 SEI Seismic Exchange 18,000 2,767 Divestco (Charts exclude seismic data held proprietarily by E and
Slide 13: Western Canada Key Pulse Data Library Areas
13 WESTERN CANADA KEY PULSE DATA LIBRARY AREAS Data Library Montney 2D Coverage 191,726 km Play Coverage 3D Coverage 40,274 km2 Deep Basin 2D Coverage 127,505 km 3D Coverage 24,109 km2 Duvernay 2D Coverage 265,008 km 3D Coverage 24,313 km2 Cardium 2D Coverage 102,901 km 3D Coverage 9,642 km2
Slide 14: Our Customers: Diverse and Long-Term
14 OUR CUSTOMERS: DIVERSE AND LONG-TERM PULSE ‘S CUSTOMERS: › Majority of customers focused on liquids-rich natural gas and light oil in Alberta’s › Concentrated in Alberta’s oil and natural gas and “greater Deep Basin”. new energy industry. › We also have customers involved in energy transition, ›
Slide 15: Generating Revenue: Two Types of Library Data Sales
15 GENERATING REVENUE: TWO TYPES OF LIBRARY DATA SALES TRADITIONAL SALE TRANSACTION-BASED SALE A straightforward license New licensing fees on already- of 2D or 3D data from licensed library data triggered Pulse’s library related to by a change in control over the drilling in new areas or licensee o
Slide 16: Drivers of Traditional Data Library Sales
16 DRIVERS OF TRADITIONAL DATA LIBRARY SALES 16
Slide 17: Types of Transaction-Based Sales
17 TYPES OF TRANSACTION-BASED SALES PARTNERSHIPS & CORPORATE JOINT VENTURES MERGER/ACQUISITION ASSET SALE New technical or operational Buyer has 30 days to decide Seismic licence does not participants must purchase a to pay a discounted transfer with the asset. Pulse data licence. relicensing fee in
Slide 18: Seismic Data for Subsurface Exploration
18 SEISMIC DATA for SUBSURFACE EXPLORATION Existing and technology enhanced seismic data improves subsurface characterization for oil and gas and energy transition exploration. Pulse’s existing and technology optimized data improve subsurface characterization for structural mapping. and validating a
Slide 19: Fluctuating Seismic Data Sales Profiles
19 TRADITIONAL & TRANSACTION-BASED SALES ($MM) 50,000 44,877 27% 45,000 40,000 Traditional Sales In 2021 35,775 FLUCTUATING SEISMIC 35,000 31,762 DATA SALES PROFILES 30,000 25,000 19,473 19,606 20,000 19,163 19,114 16,629 15,000 12,942 11,095 11,763 10,119 9,970 9,239 10,000 7,605 6,740 4,029 4,369
Slide 20: Growing the Data Library: Two Methods
20 GROWING THE DATA LIBRARY: TWO METHODS More Data Increases Future Revenue-Generating Capacity ACQUIRE EXISTING DATA PARTICIPATION SURVEYS › Pulse purchases high-quality proprietary datasets › Have not conducted a survey since 2015 from competitors or E&P companies. › Surveys were designed and mana
Slide 21: Growing the Size of the Seismic Data Library
21 GROWING THE SIZE OF THE SEISMIC DATA LIBRARY SEISMIC LIBRARY 900,000 70,000 › January 15, 2019, Pulse acquired 100 percent of 800,000 60,000 the shares of Seitel Canada Ltd. Includes 700,000 approximately 36,354 net square kilometres of 50,000 3D and 379,207 net 2D seismic data. 600,000 › Decembe
Slide 22: Strategic Investments at Opportune Moments
22 STRATEGIC INVESTMENTS AT OPPORTUNE MOMENTS › Acquired seismic assets from Divestco in 2010. › Acquired 100% of shares of Seitel Canada Ltd. › Purchase price of $75.5MM included $55.5MM in cash plus 14.3MM Pulse › Purchase price of $58.6MM including common shares. $53.6MM cash on closing, $5MM def
Slide 23: Last Ten Years of Capital Investments
23 LAST TEN YEARS OF CAPITAL INVESTMENTS 3D Seismic Data Acquired by Purchase and Participation Survey As at January 1 km2 added km2 added 2013 26,514 575 2014 27,089 1,195 2015 28,284 Pulse net investment in seismic data ($Millions) 2016 28,284 271 2017 28,555 92 2013 $24.00 2018 28,647 309 2014 $0
Slide 24: Current Seismic Coverage
24 CURRENT SEISMIC COVERAGE Western Canada’s Premium Licensable Seismic Dataset 65,310 Sq. km of 3D seismic 829,207 Lin. km of 2D seismic
Slide 25: Value in Our Results
Value in Our Results
Slide 26: Return on Participation Surveys
26 RETURN ON NET SURVEY COSTS VS. DATA LIBRARY SALES PARTICIPATION SURVEYS 26 55 2000-2021 24 22 280% Return of Data Sales on Pulse Net Cost 45 20 › Total gross survey costs: $219 MM 18 35 › Prefunding: $153 MM 16 Data Library Sales ($MM) Pulse Net Cost ($MM) › Pulse net survey costs: $66 MM 14 12 2
Slide 27: Seismic Data Library Sales Strongly Correlate to Shareholder Free Cash Flow
27 SEISMIC DATA LIBRARY SEISMIC DATA LIBRARY SALES VS. SFCF PER SHARE SALES STRONGLY 70.0 0.90 CORRELATE TO 0.80 SHAREHOLDER FREE 60.0 0.70 CASH FLOW ($/Diluted Weighted Share Outstanding) 50.0 0.60 40.0 0.50 ($MM) 30.0 0.40 0.30 20.0 0.20 10.0 0.10 0.0 0.00 2007 2008 2009 2010 2011 2012 2013 2014 2
Slide 28: How We Calculate Shareholder Free Cash Flow (SFCF)
28 Three months ended June 30, Six months ended June 30, ($MM except per share) 2022 2021 2022 2021 2021 Full Year HOW WE CALCULATE Data library sales Other Revenue 3,028 69 18,973 115 4,771 182 23,713 200 48,717 433 SHAREHOLDER FREE Less: Salaries, internal commissions and benefits 1,252 1,058 2,49
Slide 29: Second Quarter Highlights
29 Three months ended June 30, Six months ended June 30, Years ended (thousands of Canadian dollars except per share data and numbers of share) December 31, 2022 2021 2022 2021 2021 Revenue Data library sales 3,028 18,973 4,771 23,713 48,717 2022 Other Revenue 69 115 182 200 433 SECOND Total revenue
Slide 30: Value for Shareholders
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Slide 31: Shareholder Value Through Dividends and Share Purchases
31 SHAREHOLDER VALUE THROUGH DIVIDENDS AND SHARE PURCHASES ($MM) DIVIDENDS AND SHARE PURCHASES 12.0 10.8 10.9 10.0 TOTAL SPENDING ON DIVIDENDS 8.4 AND SHARE PURCHASES ($MM) 8.0 7.1 Share Purchases 6.0 4.8 4.7 $46.2 4.5 4.0 3.5 3.4 $111.9MM 2.8 2.2 Dividends 2.0 1.7 2003-2021 1.0 $65.7 0.0 0.0 0.0 20
Slide 32: Strong Returns with Shrinking Long-Term Debt
32 STRONG RETURNS SFCF, CASH EBITDA & LONG-TERM DEBT ($MM) WITH SHRINKING 70 LONG-TERM DEBT 61.7 60 50 46.7 40 ($MM) 31.8 30 26.7 27.9 22.1 20 10 5.5 0 2.4 0 0 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Shareholder Free Cash Flow ($MM) Cash EBITDA ($MM) Long-term Debt (Exluding
Slide 33: Ten-Year Allocation of Funds
33 TEN-YEAR ALLOCATION OF FUNDS 2012-2021 FUNDS AVAILABLE ($MM) FUNDS ALLOCATED ($MM) Unallocated working capital $35 $20 Long Term Debt Common Share Purchases $36 Equity Financing Debt $80 Repayments $3 Cash and Working Capital $21 Dividend Net Capital $100 $31 Payments Expenditures $208 Shareholde
Slide 34: Reasons to Invest in Pulse
34 REASONS TO INVEST IN PULSE COMPETITIVE STRENGTHS OPPORTUNITIES TIME-TESTED › High barriers to entry both for › Industry M&A activity creates BUSINESS MODEL E&P companies shooting own data and for competing data potential for transaction- based data sales. › Strong balance sheet. providers. › New
Slide 35: Our People
35 OUR PEOPLE EXECUTIVE MANAGEMENT TEAM Neal Coleman Pamela Wicks Trevor Meier President and Chief Vice President Vice President Executive Officer Finance and Chief Sales and Marketing Financial Officer DIRECTORS Robert Robotti, Chair of Pulse Seismic Melanie Westergaard Dallas Droppo President and
Slide 36: Financial Appendix
Financial Appendix
Slide 37: Consolidated Statements of Financial Position
37 (thousands of Canadian dollars) (unaudited) June 30, 2022 December 31, 2021 Assets CONSOLIDATED Cash and cash equivalents Trade and other receivables 5,910 906 15,030 - STATEMENTS Current tax assets 527 - Prepaid expenses 292 363 Total current assets 7,635 15,393 OF FINANCIAL Seismic data library
Slide 38: Consolidated Statements of Comprehensive Earnings (Loss)
38 Three months ended June 30, Six months ended June 30, CONSOLIDATED (thousands of Canadian dollars) (unaudited) Revenue 2022 2021 2022 2021 STATEMENTS OF Data library sales 3 ,0 2 8 18,973 4 ,7 7 1 23,713 Other revenue 69 115 182 200 Total revenue 3 ,0 9 7 19,088 4 ,9 5 3 23,913 COMPREHENSIVE Oper
Slide 39: Consolidated Statement of Cash Flows
39 Three months ended June 30, Six months ended June 30, (thousands of Canadian dollars) (unaudited) 2022 2021 2022 2021 Cash flows provided by (used in): CONSOLIDATED Operating: Net earnings (loss) and comprehensive income (loss) Adjustment for: (1,766) 10,159 (4,284) 10,192 STATEMENT OF Amortizati
Slide 40: Capital Structure
40 CAPITAL STRUCTURE SHARES OUTSTANDING AT YEAR-END ($MM) 80.0 70.0 67.2 66.0 › Authorized unlimited number of 61.1 59.3 common and preferred shares 60.0 57.2 55.6 55.9 54.0 54.0 54.0 54.0 54.0 › 53,784,717 common shares (Millions of Shares Outstanding) 50.0 outstanding (December 31, 2021) 40.0 30.0
Slide 41: Pulse Seismic Inc.
Pulse Seismic Inc. 2700, 421 7th Avenue SW. Calgary, Alberta T2P 4K9 2016 Toll-free: 1.877.460.5559 Telephone: 1.403.237.5559 Email: [email protected]