Trican Well Service Ltd. · TSX:TCW
Trican Well Service — Investor Presentation (September 2015)
34 slides from Trican Well Service's investor presentation, September 2015
Slide 1: Investor Presentation
Investor Presentation September 2015
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 YEAR TO DATE JUNE 30, 2015 Large, international, full service Revenue by Geography pressure pumping company 17% 43% 1,083,500 HP available fracturing USA International Canada capacity 40% 87 Cement & 37 Acid Units Revenue by Service Line 3% 3% 2% 29 Coiled Tubing & 61 N2 U
Slide 4: Competitive Advantages
COMPETITIVE ADVANTAGES Customer-focused provider of technical solutions • Separate ourselves with technology • Technology must reduce $/BOE for our customers or lower our costs • Product development is a quick, customer-focused process • Strong regional technical teams that understand the customer
Slide 5: Canada
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Slide 6: Canada
CANADA Trican is the largest pressure pumper in Canada Trican offers full services in Canadian market which balances revenue and profitability Canadian market has fewer competitors (6 vs. over 30 in the U.S. market) Trican has a strong customer base in Canada and leverages technology Canad
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 WHITECOURT Shale HINTON NISKU LLOYDMINSTER DRAYTON VALLEY Viking RED DEER PROVOST DRUMHELLER Tight Oil Tight Gas CALGARY BRANDON BR
Slide 8: Canada - Outlook
CANADA - OUTLOOK 2015 well count expected to be down by roughly 50% compared to 2014 and 37% compared to 2009* Trican activity will not be down the full 50% 35% of equipment expected to remain parked during 2015; anticipate keeping remaining equipment highly utilized Pricing expected to be d
Slide 9: Canada - Cost Cutting
CANADA – COST CUTTING Product Costs • Largest element of cost structure • Have achieved almost 15% reduction to date • Targeting 20% reductions to match our pricing declines People • Have reduced Canadian employee base by 40% • 57% total salary and benefits reductions • Expected annual fixed cos
Slide 10: USA
USA 10
Slide 11: Geographic Coverage - Fracturing
GEOGRAPHIC COVERAGE - FRACTURING MINOT Bakken Marcellus Mid-Con Utica Barnett Current Active US Crews Eagle Ford: 1 crews SHAWNEE Permian: 1 crews SPRINGTOWN Oklahoma: 2 crew ODESSA Marcellus: 4 crews HOUSTON Current Active HP: 330,000 Permian Current Parked HP: 315,000 MATHIS Eagle Ford
Slide 12: USA - Outlook
USA – OUTLOOK U.S. rig count down 55% from peak Pricing stabilizing - down approximately 30% from peak Expect to operate 50% of available equipment over the remainder of 2015 Utilization improved to 65% in June and July; targeting 75-80% utilization Significant cost cutting measures expect
Slide 13: US - Cost Cutting
US - COST CUTTING Product costs • Have achieved 18.5% reduction to date • Targeting 20 to 23 % reductions People • Have reduced employee base by 56% • Salary reductions of 10% • Expected annual fixed cost reductions of $71 million Other • Implemented significant cost cutting measures for all o
Slide 14: Corporate - Cost Cutting
CORPORATE - COST CUTTING People Costs • Salary and benefits reductions - Salary reductions of 10% - Temporary suspension of certain benefits • Reduced Corporate employee base by 18% • Total annualized cost reductions of $24 million Other • Implemented significant cost cutting measures for all ot
Slide 15: Russia & Kazakhstan
RUSSIA & KAZAKHSTAN 15
Slide 16: Sale of Russia & Kazakhstan
SALE OF RUSSIA & KAZAKHSTAN Closed sale of Russian business for $197 million CDN • Includes first tranche of working capital adjustment We believe a sale was in the best interest of shareholders given our long term view of the Russian market Kazakhstan sale to Rosneft in progress; • Terms and
Slide 17: Completion Tools
COMPLETION TOOLS 17
Slide 18: Completion Tools
COMPLETION TOOLS Operations in Norway, Russia, USA and Canada Offer multistage frac tools, completion and intervention tools for both open hole and cemented installations Competitive advantage with patented completion system that has capacity for 240 cemented stages Strong year-over-year gro
Slide 19: After the Downturn
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Slide 20: Positives After the Downturn
POSITIVES AFTER THE DOWNTURN The importance of the services we provide to the industry • Well completions costs (primarily fracturing) represent 50% of total well costs • Unconventional North American oil and gas plays cannot be developed without fracturing • When commodity prices recover, our ser
Slide 21: Positives After the Downturn - Competitive Landscape
POSITIVES AFTER THE DOWNTURN Competitive landscape changing • Baker-Halliburton merger will create opportunities in all of our markets • U.S. competitive landscape will change - Smaller competitors struggling to survive - Mergers of mid-sized companies improves markets - Equipment attrition will b
Slide 22: Positives After the Downturn - Completions Backlog
POSITIVES AFTER THE DOWNTURN Substantial completions backlog • Currently estimating over 4,500 drilled but uncompleted wells in the US market • Bodes well for an increase in fracturing demand coming out of the downturn Oil supply will drop over time • North American production will decrease as d
Slide 23: Changes to Pressure Pumping
CHANGES TO PRESSURE PUMPING We will focus on: • Being on the leading edge of cost and operational efficiencies • Achieving cost advantages through size and scale in active regions • Separating ourselves through technology and innovation Long term, need to lower cost to producers without lowering
Slide 24: Innovation
INNOVATION 24
Slide 25: Innovation - MVP Frac
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 • MVP FracTM used in 20% of all well
Slide 26: 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 • Gaining
Slide 27: 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 27
Slide 28: 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 29: Financial Overview
FINANCIAL OVERVIEW 29
Slide 30: Debt Structure
DEBT STRUCTURE Current outstanding and available debt at June 30, 2015 • $454 million in fixed rate notes payable - $147 million due by April 2016 • $245 million drawn on revolving credit facility • $368 million of cash and available debt as of June 30 • Plus $197 million in cash from Russian sale
Slide 31: Cash Flow
CASH FLOW Managing cash flow and liquidity a key focus in 2015 Dividend suspended until financial performance improves Total capital spend in 2015 expected to be $35 to $45 million • No expansion initiatives will be considered until financial performance improves Working capital release in 2
Slide 32: Investment Advantages
INVESTMENT ADVANTAGES Significant earnings potential on existing assets Low capital expenditures in 2015 and 2016 Free cash flow in 2015 Strong Canadian business that historically weathers the storm Strong management team that has managed through numerous cycles Focus on cost control H
Slide 33: Summary
SUMMARY Number of Outstanding Shares (as of August 31, 2015): • 148.9 million Average Daily Volume (one month period): • 1,647,604 (as of August 31, 2015) Directors/Officers Ownership: • 2.0% (approx. - diluted basis) Market Cap: • $274 million as of August 31, 2015 33
Slide 34: Investor Presentation
Investor Presentation September 2015
Trican Well Service — Investor Presentation (September 2015) on 6ix