Trican Well Service Ltd. · TSX:TCW
Trican Well Service — Investor Presentation (September 2016)
30 slides from Trican Well Service's investor presentation, September 2016
Slide 1: Investor Presentation September 2016
INVESTOR PRESENTATION September 2016
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 Full service, Canadian pressure YEAR TO DATE JUNE 30, 2016 pumping company Revenue by Service Line Market leader in Canada 5% 5% 4% 3% 440,000 HP available fracturing capacity 25% Large Cement, Coiled Tubing, 58% Acidizing, Nitrogen and Industrial Services business Fractur
Slide 4: Canada
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Slide 5: 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 6: Canada – Competitive Advantage
CANADA – COMPETITIVE ADVANTAGE Strong safety record Technical advantage in Canadian market which pays off in downturn • Numerous engineers embedded in client offices • MVP FracTM system • Geological and reservoir services integrated into frac designs • Lightweight cement blends • Technology reta
Slide 7: 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 Shale WHITECOURT HINTON NISKU LLOYDMINSTER DRAYTON VALLEY Viking RED DEER Tight Oil Deep CALGARY Basin BROOKS ESTEVAN Bakken Spearf
Slide 8: Canada Equipment
CANADA EQUIPMENT Current Canadian fleet • 440,000 fracturing HP • 55 Cementing units Canadian HP Growth • 38 N2 Pumpers 500,000 450,000 • 19 Acid Units 400,000 • 16 Coil Units 350,000 300,000 250,000 50% of equipment parked during 200,000 remainder of 2016 150,000 100,000 Parked equipment ring
Slide 9: Canada Equipment – Fracturing Pumps
CANADA EQUIPMENT – FRACTURING PUMPS 85% of Trican’s active fleet already running continuous duty Quintuplex high HP pumps 60% of fluid ends converted to stainless steel • Gives 4 times longer life 40% reduction in pumper equipment operators on location due to electronic control systems No ad
Slide 10: Canada - Outlook
CANADA - OUTLOOK Q2 2016 very slow due to extended spring breakup and low commodity prices Second half of 2016 outlook: • Overall activity down 10-15% in Q3 vs. Q1 • Pricing returns to near Q1 levels • Improved profitability over Q1 results due to cost savings Customer base remains strong Vi
Slide 11: Canada - Outlook
CANADA - OUTLOOK Increased frac intensity and job size increasing May 2016 vs. May 2015 • Sand volume up 79% year-over-year • Stages per well up 19% year-over-year • Sand per stage up 50% year-over-year Deep Basin, Montney, Duvernay activity remains strong • Liquids-rich gas economic in curren
Slide 12: Canada - Second Half Cost Savings
CANADA - SECOND HALF COST SAVINGS 50% of equipment parked in second half of 2016 Closed Medicine Hat, Provost, Brandon and Drumheller locations Variable cost reduction estimated to be 4-6% Fixed cost reduction estimated to be $16.5 million in Q2 from Q1 levels; • Anticipate maintaining these
Slide 13: Getting Through the Downturn
GETTING THROUGH THE DOWNTURN
Slide 14: Getting Through the Downturn
GETTING THROUGH THE DOWNTURN Improve balance sheet Keep utilization high and costs low in remaining operations Reduce fixed costs as business centralizes to Canada Maintain customer relationships Provide differentiating safety, efficiency and technology 14
Slide 15: Positives After the Downturn
POSITIVES AFTER THE DOWNTURN Strong earnings on reduced cost structure as utilization and pricing improve • Mid-cycle EBITDA from Canada (2014): $226 million • Peak EBITDA from Canada: $465 million Competitive landscape changing • Sanjel / STEP deal reduces competition • One other small fracturi
Slide 16: 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 Canada • Separating ourselves through technology, safety, service quality and innovation Long term, need to lower cost to producers
Slide 17: Additional Growth
ADDITIONAL GROWTH 10% ownership in Keane Group with potential 20% increased ownership from certain economic conditions upon Keane liquidity event • Keane interest valued at $84 million in June 2016 2-year non-compete in U.S. and first right to purchase the Keane business should we decide to re-e
Slide 18: Innovation
INNOVATION 20)
Slide 19: Innovation
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 • Recent case studies show 20% incre
Slide 20: 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 20
Slide 21: 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 21
Slide 22: 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 23: Financial Overview
FINANCIAL OVERVIEW
Slide 24: As of August 11, 2016
AS OF AUGUST 11, 2016 Will have $112 million drawn Outstanding Senior Notes - Post Equity and TCS Sale on $250 million revolving (Shown in $CAD) $40,000,000 credit facility $35,000,000 $250 million revolving credit $30,000,000 facility is committed until 2018 $25,000,000 • Max utilization capped
Slide 25: Covenant Relief
COVENANT RELIEF Amended covenants put Trican in a strong position to ride out the downturn All financial covenants eliminated until 2017 Leverage covenant of 5x and interest coverage of 2x will start in 2017 and will be calculated in Q1 as four times Q1 EBITDA plus $20 million 25
Slide 26: Covenant Relief
COVENANT RELIEF $20 million equity cure will be added to 2017 EBITDA LTM calculations will not commence until Q4 2017 Normalized covenant of 3x Debt/EBITDA by Q1 2018 26
Slide 27: Cash Flow
CASH FLOW Managing cash flow and liquidity a key focus in 2016 Dividend suspended until financial performance improves Total capital spend in 2016 expected to be less than $2 million and evaluated quarterly • No expansion initiatives will be considered until financial performance improves Ap
Slide 28: Investment Advantages
INVESTMENT ADVANTAGES Balance sheet largely fixed Trading substantially below book value Significant earnings potential on existing assets High leverage on low cost structure coming out of downturn Strong Canadian business that generates industry leading margins Upside to U.S. market rec
Slide 29: Summary
SUMMARY Number of Outstanding Shares (as of August 31, 2016): • 193 million Average Daily Volume (one month period): • 837,317 (as of August 31, 2016) Directors/Officers Ownership: • 1.5% (approx. - diluted basis) Market Cap: • $413 million as of August 31, 2016 29
Slide 30: Investor Presentation
INVESTOR PRESENTATION September 2016
Trican Well Service — Investor Presentation (September 2016) on 6ix