Aj Lucas Group Limited · ASX:AJL
Aj Lucas — Merger or Acquisition (July 2008)
31 slides from Aj Lucas's merger presentation, Jul 23, 2008
Slide 1: Acquisition of Mitchell Drilling Corporation
For personal use only Acquisition of Mitchell Drilling Corporation 23 July 2008
Slide 2: Disclaimer
Disclaimer For personal use only This presentation has been prepared by, and is the sole responsibility of AJ Lucas Limited (“Company”). Distribution restrictions The distribution of this presentation in jurisdictions outside Australia may be restricted by law and you should observe any such restric
Slide 3: Agenda
Agenda For personal use only Overview The Coal Seam Gas Industry Lucas Mitchell Drilling Lucas Energy Pipelines and Infrastructure Trading Update Acquisition Funding Investment Highlights 3
Slide 4: Overview
For personal use only Overview
Slide 5: Overview
Overview For personal use only Lucas to acquire Mitchell Drilling business for A$150m (debt free) ⎯ A$120m cash at closing ⎯ A$15m vendor equity placement at closing (escrowed for 12 months) ⎯ A$15m cash in 12 months Acquisition expected to be EPS accretive in FY09 ⎯ Purchase price represents es
Slide 6: Lucas Corporate Structure
Lucas Corporate Structure Mitchell Drilling is a Complementary Business For personal use only Services Lucas Drilling Pipelines Construction & Infrastructure Lucas Energy** Involved in exploration and Industry leader in Operates as managing Four high quality CSG extraction of minerals, gas construct
Slide 7: The Coal Seam Gas Industry
For personal use only The Coal Seam Gas Industry
Slide 8: The Coal Seam Gas Industry
The Coal Seam Gas Industry For personal use only Australian CSG Reserves Growth Coal Seam Gas (“CSG”) is a growing energy 20,000 Historic Forecast source in Australia ⎯ Provides significant proportion of Queensland’s 18,000 energy requirements 16,000 ⎯ New drilling techniques have made CSG increas
Slide 9: The Coal Seam Gas Industry (Cont.)
The Coal Seam Gas Industry (Cont.) For personal use only Anticipated growth in demand for CSG will lead to substantially higher levels of CSG drilling and exploration ⎯ CSG producers will seek to prove up current reserves and identify new reserves ⎯ Gas distributors will continue to invest in the
Slide 10: The Combined Drilling Division: Lucas Mitchell Drilling
For personal use only The Combined Drilling Division Lucas Mitchell Drilling
Slide 11: Lucas Drilling Division
Lucas Drilling Division For personal use only Overview FY08 Revenue Split by Segment Established drilling services provider for coal and CSG sectors in Australia Water \ Wastewater Significant focus on technology and work 32.0% Minerals practices to deliver superior results 56.0% ⎯ Developed pro
Slide 12: Mitchell Drilling
Mitchell Drilling For personal use only Overview FY08 Revenue Split by Segment* One of the largest privately owned Australian drilling businesses Minerals Founded almost 4 decades ago in Oil & Gas 19.0% Queensland 32.0% Led by 2nd generation of the Mitchell family - Nathan Mitchell (CEO) will
Slide 13: Lucas Mitchell Drilling - Rigs
Lucas Mitchell Drilling - Rigs For personal use only The acquisition of Mitchell will give Lucas a meaningful presence in the major CSG and coal areas along Australia’s east coast Geographic Spread of Rigs* Mitchell Drilling Other Areas: 3 AJ Lucas Drilling Other Areas: 4 21 6 Bowen Queensland 8 S
Slide 14: Lucas Mitchell Drilling - Revenue
Lucas Mitchell Drilling - Revenue For personal use only The different geographic locations of Lucas and Mitchell’s rigs translates into different key geographies for revenue for both companies Contributes to the complementary nature of the businesses Lucas Mitchell Drilling will have strong dr
Slide 15: Combined Drilling Division - Customers
Combined Drilling Division - Customers For personal use only Lucas – Key Customers Mitchell Drilling – Key Customers 15
Slide 16: Combined Group – Industry Trends
Combined Group – Industry Trends For personal use only Industry Trend Comments Opportunity for Combined Group Demand for Drill Rigs Strong global demand for drill rigs and Greater purchasing power associated equipment Established relationships with a broader Significant lead time from order
Slide 17: Lucas Energy
For personal use only Lucas Energy
Slide 18: Lucas Energy - Overview
Lucas Energy - Overview For personal use only Overview Investments Established to identify, develop and commercialise CSG and other unconventional gas assets NSW assets very strategic New management team established in Feb 2007 4 major investments Separate advisory board Intention to res
Slide 19: Asset Value Re-Rating
Asset Value Re-Rating For personal use only Australian CSG Companies EV/2P Overview reserves (A$ per “GJ”) $3.28 CSG is a fast growing energy source in Australia $2.93 Lucas continues to see strong demand for CSG $2.78 driven by: $ 2.76 $2.61 $2.50 Average at 21-Jul-08: ⎯ Increasing domestic and
Slide 20: Pipelines and Infrastructure
For personal use only Pipelines and Infrastructure
Slide 21: Pipeline Division
Pipeline Division For personal use only Overview Core Lucas business for over 25 years To exploit the technical strengths in the broader Strategy pipeline business Full service, EPC, design and construct model Focus on key sectors of water, energy and utility Emphasis on engineering and kn
Slide 22: Construction and Infrastructure
Construction and Infrastructure For personal use only Overview Proven skills and scale to be a consortium Strategy Traditionally focused on Building Construction partner in large projects Repositioning of business towards infrastructure Leverage skills in other divisions well advanced Stro
Slide 23: Lucas Trading Update
For personal use only Lucas Trading Update
Slide 24: Lucas Trading Update
Lucas Trading Update For personal use only Division Performance Highlights A leading Australian driller #1 Well balanced equipment portfolio Drilling Division Demand is increasing – CSG is a fast growing energy source in Australia with significant exploration and development drilling anticipat
Slide 25: Acquisition Funding
For personal use only Acquisition Funding
Slide 26: Funding Overview
Funding Overview For personal use only Acquisition and transaction costs together with refinance of existing facilities to be funded by: ⎯ $105m Senior Bank Debt: 3-year term, with a combination of an amortising and bullet tranche ⎯ $45m Redeemable Convertible Preference Shares ⎯ $15m Equity Place
Slide 27: Convertible Preference Shares - Terms
Convertible Preference Shares - Terms For personal use only Redeemable Convertible Preference Shares Type/Value $45 million face value Coupon 11% cash pay Conversion Price Conversion price $7.20 At any time Conversion Not redeemable for 3 years from issue Period Redeemable thereafter i
Slide 28: Equity Placement
Equity Placement For personal use only Underwritten equity placement to institutional and sophisticated investors to raise at least $25m Final price to be determined via a bookbuild ⎯ Floor price of $5.00 which represents a 13.6% discount to the last closing price on 22 July 2008 ⎯ 5.0m new shar
Slide 29: Investment Highlights
For personal use only Investment Highlights
Slide 30: Investment Highlights
Investment Highlights For personal use only #1 Mitchell Drilling acquisition consolidates Lucas’ position as a leading driller in the Australian market #2 Attractive exposure to CSG – a fast growing energy source in Australia #3 Demand for CSG drilling and exploration expected to grow strongly as gl
Slide 31: Information About Reserves Certifications
Information About Reserves Certifications For personal use only The independent certification of Lucas’ initial reserve estimates has been completed by Netherland, Sewell and Associates Inc (NSAI). The reserves estimates used in this presentation were compiled by Mr. Dan Paul Smith and Mr. John Hatt