Hunting Plc · LSE:HTG
Hunting — H1 2011 Earnings Presentation
39 slides from Hunting's earnings presentation, 2011
Slide 1: 2011 Half Year Results
HUNTING PLC G wore 2011 HALF YEAR RESULTS ae
Slide 2: Year-to-date
Year-to-date • Solid trading in Hunting Energy Services • Momentum build up for H2 2011 • Shale drilling remains strong in North America • Gulf of Mexico – recommencing activity • Acquisition / investment activity • Titan and Dearborn acquisitions announced (c. £526 million) • Two further transactio
Slide 3: 2011 Acquisition Activity
2011 Acquisition Activity • Titan Specialties – Leading provider of perforating gun systems and switches • US$775 million consideration – expected completion 16 September 2011 • New £375 million five year multi currency credit facility • Placing of 13,175,838 new shares raising gross proceeds £85.4
Slide 4: Acquisitions since disposal of Gibson Energy in 2008
Acquisitions since disposal of Gibson Energy in 2008 2011 £m National Coupling – June 2009 32 PT SMB Industri – July 2009 6 Welltonic – December 2009 9 Innova-Extel – September 2010 80 Titan – August 2011 475 Dearborn – August 2011 51 653 4
Slide 5: Global Footprint
Global Footprint 3 2.5 Footprint Sq ft (millions) 2 1.5 1 • 10 countries globally • c. 3,200 employees 0.5 0 2009 Wuxi (China) US Drilling Other US Innova/Extel Aberdeen NCC (USA) Houma Titan (USA) Dearborn Tools (USA) (USA) (USA) (UK) (USA) (USA) New Facilities/Investments 5
Slide 6: 2011 Half Year Results Summary
2011 Half Year Results Summary* H1 H1 2011 2010 Change £m £m Revenue 251.3 193.3 +30% EBITDA 35.5 14% 27.5 14% +29% Profit from operations 23.0 18.8 +22% Finance (expense) income (0.4) 0.7 Profit before tax 23.0 19.9 +16% Effective tax rate 30% 32% Basic earnings per share 11.3p 9.4p +20% Dividend p
Slide 7: Segmental Results
Segmental Results* H1 H1 2011 2010 Profit Profit Profit from from from Revenue Operations Revenue Operations Operations £m £m Margin £m £m Margin Change Hunting Energy Services Well Construction 77.8 6.8 9% 41.9 2.9 7% +134% Well Completion 131.2 11.2 9% 107.5 10.9 10% +3% Well Intervention 26.0 3.8
Slide 8: Exceptional Items
Exceptional Items 2011 £m Property provisions (0.3) Acquisition costs (0.6) Tax credit 0.1 Continuing operations (0.8) Gain on redemption of Gibson Energy warrant 58.3 Tax charge (5.2) Foreign exchange (0.8) Continuing and discontinued operations 51.5 8
Slide 9: Balance Sheet
Balance Sheet June December 2011 2010 £m £m Property, plant and equipment 160.4 154.1 Intangible assets & goodwill 118.2 122.9 Available for sale financial investments 0.2 45.1 Working capital 143.0 137.2 Provisions (55.5) (56.1) Other (22.8) (20.8) Dividend Payable (11.0) - Net Cash 297.1 212.2 NET
Slide 10: Capital Expenditure
Capital Expenditure* H1 Full Year 2011 2010 £m £m Hunting Energy Services Well Construction 10.2 20.6 Well Completion 6.8 17.1 Well Intervention 3.3 3.9 Exploration & Production 1.4 7.1 Other 0.1 0.3 21.8 49.0 Split: Maintenance 4.7 12.2 New Business 17.1 36.8 21.8 49.0 * The 2010 comparatives have
Slide 11: Capital Expenditure
Capital Expenditure 2011 £m Well Construction Casper facility - US 0.9 New Drilling tools & spare parts 7.5 Tools, Equipment & Other 1.8 Well Completion Aberdeen facility - UK 5.3 Tools, Equipment & Other 1.5 Well Intervention National Coupling expansion - US 1.6 Other equipment 1.7 Exploration & Pr
Slide 12: Cash Flow
Cash Flow* H1 H1 2011 2010 £m £m Profit from operations 23.0 18.8 Depreciation and amortisation 12.5 8.7 Working capital (9.0) (30.3) Interest and tax (6.7) (0.5) Capital expenditure (21.8) (18.6) Disposals / acquisitions 85.3 (0.7) Dividend paid - (9.2) Tax indemnity payments - (14.3) Other 1.6 (4.
Slide 13: Our Strategy: Realising significant potential
Our Strategy INTEGRATE Proprietary NEW BUSINESS Products TECHNOLOGY R&D Market Realising Global Footprint Pricing Leverage Share Strength significant potential PRODUCTS PRODUCT SERVICES OFFERING CUSTOMERS Synergies FOOTPRINT 13
Slide 14: Our Footprint
Our Footprint Mose 14
Slide 15: Our Market
Our Market Drilling Tools Thru-Tubing Premium Technology Connections International Oil Companies, Well Intervention National Oil Companies, Completions Oilfield Service Companies High-Tech Electronics Manufacturing OCTG 15
Slide 16: Titan Overview
Titan Overview • Titan is a leading provider of downhole tools and equipment for the oil & gas industry • Titan operates in 3 divisions: Perforating, Energetics and Instruments • A market leader in North America with significant market share in perforating products • Well invested facilities and lea
Slide 17: Complete Perforating System
Complete Perforating System • Cable Head • Casing Collar Locator • Swivel • Top Sub • Orienting Eccentric Weight Bar • Orienting Quick Change • Roller / Swivel Sub • Arming Sub • Gun Assembly • Firing Switch • Shaped Charges • Arming Sub • Gun Assembly • Plug Shoot Adapter • Roller / Swivel Sub • T-
Slide 18: Titan Footprint
Titan Footprint Distribution Facilities (18, 17 in US)* Manufacturing Facilities (6)* * Oklahoma City and Tyler are both manufacturing and distribution facilities Source: Titan Industries 18
Slide 19: Titan's Products Cover the Full Life-Cycle of a Well
Titan’s Products Cover the Full Life-Cycle of a Well • MWD Gamma • Perforating Gun • Production • Perforating Gun • Jet Cutters Detectors Systems Logging Tools Systems • Severing Tools • Severing Tools • Shaped Charges • Jet Cutters • Setting Tools • Setting Tools • Freepoint Tools • TCP Gun • Junk
Slide 20: Industry Trends Expanding Titan Revenue Opportunity
Industry Trends Expanding Titan Revenue Opportunity Oil & Gas Rig Count Wellbore Linear Footage Horizontal Longer Lateral More Stages Demand Increases Increases Increases Wellbores Lengths Completed Source: Titan Industries 20
Slide 21: Global Shale Gas reserve estimates
Global Shale Gas reserve estimates Source: Schlumberger 21
Slide 22: Oil Production from Shale Formations
Oil Production from Shale Formations 22
Slide 23: Unconventional Shale Plays
Unconventional Shale Plays * * * Marcellus data for 2009 (in place of 2008 which is not available). 23
Slide 24: IOC/NOC NAM Shale Acquisitions
IOC/NOC NAM Shale Acquisitions (4Q10) (4Q09) Source: Simmons Research 24
Slide 25: E&P Shale Joint Ventures
E&P Shale Joint Ventures Source: Simmons Research 25
Slide 26: Dearborn
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Slide 27: Dearborn Overview
Dearborn Overview • Expansion of Market Presence in Directional, Extended Reach Wells • Exposure to Aerospace, Nuclear, Medical, Power Generation, Capital Equipment and Oil & Gas Markets • Highly Proprietary Manufacturing Technology • Customer Base similar with Hunting’s • Employees 235 • Capacity o
Slide 28: MWD/LWD to Market
MWD/LWD to Market High-Tech Electronics Manufacturing Housing To Market Hunting Revenue Opportunities 28
Slide 29: Well Construction
Well Construction | Mtns | inc Ce Shale Drilling, Fracing tH i " Med , Shale Drilling, Fracing " J ‘ y oe Completions ment While Drilling Logging While Drilling Collars q he | SEAL-LOCK $F SEAL-LOCK HT WEDGE-LOCK MW a HUNTING y, p 29
Slide 30: Well Construction
Well Construction • High Interest in “Shale Play” Connection Technology • Expansion of Product Offerings • High Demand for Tubular Products • Acquisitions Enhance Global Footprint Offerings • Deepwater GOM Opening Up Profit from Operations £m 8 6.8 7 6 5.1 5 £m 4 2.9 3 2 1 0 H1 2010 H2 2010 H1 2011
Slide 31: Well Completion
Well Completion i Pup Joints Crossovers Perforating Equipment Downhole Instrumentation Thread Protectors My eS” HUNTING HUNTING } Shale Drilling, Fracing and Completions gigas como SEAL-LOCK TSH SEAL-LOCK TSHD SEAL-LOCK XP RTC 4040 31
Slide 32: Well Completion
Well Completion • Deepwater GOM Opening and Re-entry to Wells not Completed • Expansion of Product Demand from Oilfield Service Companies • Completion Technology advances Expand Product Offerings & Opportunities • Expansion of Shale Play Footprint Globally Profit from Operations £m 14 12.2 12 10.9 1
Slide 33: Well Intervention
Well Intervention Tubing SEAL-LOCK XP SEAL-LOCK TSHP SEAL-LOCK TSHD RTC 4040 Pup Joints Crossovers Landing Nipples Flow Couplings Blast Joints Subs Double Pin Subs ¥ yy & HUNTING HUNTING Shale Drilling, Fracing / and Completions OEM Products Completion Equipment Completion Assemblies Downhole Instru
Slide 34: Well Intervention
Well Intervention • Continued Expansion of Pressure Control Technologies • Wells Drilled are Wells that need Maintenance • Coiled Tubing and Thru Tubing Technologies Growth with Shale Drilling Expansion • Subsea Projects Aligned with GOM Opening Profit from Operations £m 6 5.1 5 4.2 3.8 4 £m 3 2 1 0
Slide 35: Tenkay - Exploration and Production activities
Tenkay - Exploration and Production activities • Wells Drilled 3 • Successful Wells - all onshore 3 • Discovery • Gas 1 • Oil & Gas 2 • Production • H1 2011 147 NEB (000’s) • H1 2010 101 NEB (000’s) Profit from Operations £m 2 1.5 1.5 0.9 £m 1 0.4 0.5 0 H1 2010 H2 2010 H1 2011 35
Slide 36: North American Rig Count
North American Rig Count North American Land Rig Count North American Offshore Rig Count {Annual Averages) (Annual Averages) 3,000 110 © Historical [§) Projected BF Historical §§ Projected 100 aa 2,500 90 2,486 an 18 2.035 ars n a 2,000 60 50 45 42 1,500 40 35 30 1,000 20 10 Q 0 2006 «2007 208 = 200
Slide 37: Worldwide Rig Count
Worldwide Rig Count Worldwide Land Rig Count Worldwide Offshore Rig Count {Annual Averages) (Annual Averages) 6,000 550 © Historical [§) Projected 5.576 BF Historical §§ Projected 5137 500 466 4,820 5,000 sans 4.520 450 400 265 400 sao 4 4.000 3778 = , 350 300 3,000 250 2,000 200 150 1,000 100 50 Q
Slide 38: Global Subsea Capex Forecast spending 2011-2016e $66.5bn
Global Subsea Capex Forecast spending 2011-2016e $66.5bn US$66.5bn 109% Increase US$31.7bn Source: Quest Offshore Rescources 38
Slide 39: Disclaimer
Disclaimer This presentation contains (or may contain) certain forward-looking statements with respect to certain of Hunting's plans and its current goals and expectations relating to its future financial condition and performance and which involve a number of risks and uncertainties. Hunting cautio