North American Construction Group Ltd. · TSX:NOA
North American Construction — North American Energy Partners — Investor Presentation (November 2009)
35 slides from North American Construction's investor presentation, November 2009
Slide 1: Investor Presentation
Investor Presentation November 2009 Rod Ruston Bernie Robert President & CEO VP Corporate Affairs & Business Strategy
Slide 2: Forward-Looking Statements
Forward-Looking Statements The information provided in this presentation contains forward-looking statements and information which reflect the current view of North American Energy Partners with respect to future events and financial performance. Actual results could differ materially from those con
Slide 3: Investment Highlights
Investment Highlights Largest construction and mining contractor in the oil sands Solid core business of recurring revenue with high barriers to entry and near-term growth potential Investment in Canada’s oil sands without direct exposure to the price of oil Financially secure with the ability to ge
Slide 4: About the Company
About the Company Heavy Construction and Mining A leading mining and industrial construction contractor to western Canadian resource industries Founded in 1953 TSX and NYSE listings: “NOA” Pipeline Piling 4
Slide 5: Revenue by End Market
Revenue by End Market Conventional Oil & Gas 4% Commercial and Canadian Public Construction 7% 89% Oil Sands 12 Months Ended September 30, 2009 5
Slide 6: Canadian Oil Sands
Canadian Oil Sands Second largest recoverable oil reserves in the world* billions of barrels Alberta 300 Saskatchewan 264 250 Fort McMurray 200 173 150 132 115 Edmonton 102 100 92 80 50 0 Calgary Saudi Canada Iran Iraq Kuwait UAE Venezuela Arabia Source: Cambridge Energy Research Associates 6
Slide 7: Oil Sands in the Global Energy Context
Oil Sands in the Global Energy Context 20% of world’s Oil Supply Gap recoverable heavy oil and bitumen is located 120 Million Barrels/Day in Canada’s oil sands 100 Canada is largest supplier of oil to US 80 90 mbd 76 US imports 2.5 million 60 mbd bpd from Canada 40 (19% of total imports) High Case W
Slide 8: Leading Oil Sands Service Provider
Leading Oil Sands Service Provider Over 30 years experience in the Canadian oil sands Relationships with all major producers Sole supplier of both mining and construction services Only mining contractor servicing all operational sites 8
Slide 9: Active on Every Oil Sands Mining Site
Active on Every Oil Sands Mining Site years 0 5 10 15 20 25 30 UTS 32 SUNCOR CANADIAN FORT EXXON NATURAL HILLS KEARL HORIZON SYNCRUDE 70 km AURORA TOTAL SHELL/ALBIAN JOCELYN JACKPINE AND MUSKEG RIVER 30 SUNCOR SYNCRUDE FIREBAG NORTH SYNCRUDE 11 BASE PLANT SUNCOR MILLENNIUM and STEEPBANK SUNCOR VOYAG
Slide 10: Oil Sands Mining Projects
Oil Sands Mining Projects Project Development Phase (3-4 years) Ongoing Operations Phase (30-40 years) Initial mine site development, project site development, Overburden removal, mine infrastructure development, airstrips, pipeline construction reclamation, equipment and labour supply Build Relatio
Slide 11: Project Lifecycles
Project Lifecycles Project Development Recurring Services Revenue Engineering Commissioning and Design and Start-up Proceeding Initial Operational Delayed Construction Phase Syncrude - Base Syncrude - Aurora Syncrude – Aurora South Exxon - Kearl Suncor - Original Lease Suncor - Steepbank Suncor - Vo
Slide 12: Recurring Services
Recurring Services Our largest and most stable source of revenue Oil Sands Revenue (Trailing 12 Months) Oil Sands Revenue Project Development Revenue C$ millions Recurring Services Revenue 900 800 700 600 500 400 300 25% 75% 200 100 Project Recurring Development Services 0 Jun Sep Dec Mar Jun Sep De
Slide 13: Stability of Recurring Services
Stability of Recurring Services Supports the 30 to 40-year operational phase Secured by multi-year contracts, master services agreements and long-term customer relationships Operating oil sands mines are not designed for production shutdowns or slowdowns Competitive unit production costs only achiev
Slide 14: Oil Sands Production Cost vs. Market Price
Oil Sands Production Cost vs. Market Price $100 $ Canadian/barrel 100 90 $78 80 $69 $68 70 60 $44 $40 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 YTD Sept 2009 Average oil price (WTI) Syncrude cash operating costs Suncor cash operating costs 14
Slide 15: Why Producers Outsource
Why Producers Outsource Lower project cost and execution risk NAEP offers 30+ years experience across multiple sites NAEP’s core capabilities are mining and construction; customers’ core capability is oil production More efficient resource allocation Plant investments deliver better return to the pr
Slide 16: Swing Supplier
Swing Supplier NAEP achieves higher equipment utilization rates by working on every major site in the oil sands Single Customer Fixed production capacity Excess production requirement Multiple Customers NAEP demand 16
Slide 17: Large, Well Maintained Oil Sands Fleet
Large, Well Maintained Oil Sands Fleet Maximizes flexibility, minimizes risk Rented2 Sept. 30, Nearest 10% Oil Sands Fleet by Category 2009 Competitor1 Haul trucks 198 68 Leased 45% 45% Owned Shovels and excavators 113 14 Dozers 124 13 Total 435 95 (2) Represents target mix. Actual mix varies over t
Slide 18: Barriers to Entry
Barriers to Entry No new competitors entered the market during recent boom Unique operating conditions Harsh climate creates significant challenges for competitors unfamiliar with conditions Few long-term contracts increase importance of relationships Recurring services projects rarely tendered Comp
Slide 19: Recurring Services Outlook
Recurring Services Outlook Expanding market for recurring services Number of operational mines is growing Horizon (Canadian Natural) – Operational Feb 2009 Jackpine 1 (Shell/Albian) – Under Construction Kearl (Exxon) – Under Construction Fort Hills (Suncor/Petro-Canada) – Under Review Expanding geog
Slide 20: Project Development Outlook
Project Development Outlook Improving environment for investment Oil prices strengthening Project costs coming down Industry consolidation creating better capitalized participants Project Status Jackpine (Shell) Under construction Kearl (Exxon) Under construction Board approval for $8 billion projec
Slide 21: Financial Performance
Financial Performance Rolling LTM Revenue Rolling LTM EBITDA* (C$ millions) (C$ millions) 17% 14% 15% 15% 16% 15% 15% $1,138 $1,121 $1,081 11% 11% $177 $171 $990 $973 $162 $871 $146 $861 $135 $752 $751 $129 $124 $98 $81 Sep Dec Mar Jun Sep Dec Mar Jun Sep Sep Dec Mar Jun Sep Dec Mar Jun Sep 07 07 08
Slide 22: Ability to Generate Strong Free Cash Flow
Ability to Generate Strong Free Cash Flow Fiscal 2007 to 2009 $ millions 400 Increase in Cash from Operating 350 and Investing Activities 300 250 Growth Capex (1) 200 150 Sustaining Capex (2) Working Capital (3) 100 Taxes (4) 50 Interest (5) 0 Consolidated EBITDA 1. Excludes $44.5 million of operati
Slide 23: Financial Position
Financial Position Strong liquidity $90 million borrowing availability under credit facility, less $20 million letters of credit Cash balance of $98 million as at September 30, 2009 No short-term refinancing risk Senior notes and associated hedging instruments mature Dec/2011 Revolving credit facili
Slide 24: Consolidated Revenue by Segment
Consolidated Revenue by Segment Piling Pipeline 12% 3% Heavy 85% Construction & Mining 12 Months Ended September 30, 2009 24
Slide 25: Heavy Construction & Mining
Heavy Construction & Mining Revenue and Gross Margin % $ millions 800 $716 700 $627 600 500 $473 400 $365 300 $287 200 100 17% 16% 16% 15% 13% 0 FY 2007 FY 2008 FY 2009 6 months 6 months FY 2009 FY 2010 25
Slide 26: Heavy Construction & Mining Outlook
Heavy Construction & Mining Outlook Positive outlook for recurring services Canadian Natural overburden removal contract ramping up again Volumes increasing under new three-year contract with Shell Improving environment for project development $8 billion Kearl project recently given green light Sunc
Slide 27: Piling
Piling Revenue and Gross Margin % $ millions 200 180 $162 160 $155 140 120 $109 100 $91 80 60 32% 40 28% $30 25% 22% 20 0 16% FY 2007 FY 2008 FY 2009 6 months 6 months FY 2009 FY 2010 27
Slide 28: Piling Outlook
Piling Outlook Commercial and industrial construction remains constrained Infrastructure spending expected to grow Federal budget includes $12.0B for infrastructure over next two years Alberta budget includes $23.2B for infrastructure over next three years Ontario budget includes $27.5B for infrastr
Slide 29: Industrial Construction Outlook
Industrial Construction Outlook Potash Mine Expansions Rocanville, Mosaic and Allan (Saskatchewan) Hydro Electric Power and Run of River Projects Canadian Hydro Developers (BC) SAGD Projects ConocoPhillips Surmont II, Husky Sunrise Petro-Chemical Plant and Refinery Projects Imperial Oil Refinery RIB
Slide 30: Pipeline
Pipeline Revenue and Gross Margin % $ millions 250 225 $201 200 175 150 125 $101 100 $83 75 $47 22% 50 20% 13% 14% 25 $2 0 FY 2007 FY 2008 FY 2009 6 months 6 months FY 2009 FY 2010 -22% 30
Slide 31: Pipeline Outlook
Pipeline Outlook Market conditions remain competitive but new projects continue to be tendered Recent contract wins include: Three-year integrity contract with TransCanada Pipelines Ltd. Fraser River South Arm Crossing project for Terasen Gas Inc. North Maxhamish Loop project for Spectra Energy Corp
Slide 32: Pipeline Construction Outlook
Pipeline Construction Outlook TMX Project Other pipeline opportunities: 2010 Anchor Loop Pembina (Nipisi) 270 km (20”, 12” and 8” TMX-2 diameter) TMX-3 Williams Energy (Redwater ) 420 km (12” diameter) Enbridge Multi year integrity program ConocoPhillips (Surmont II) SAGD project Husky (Sunrise) SAG
Slide 33: Strategic Direction
Strategic Direction Short-Term Strategy: Pursue long-term strategic partnerships Carefully manage costs and liquidity Long-Term Strategy: Leverage and expand our integrated service offering Enhance our competitive position by increasing our operating efficiencies Continue to emphasize safety culture
Slide 34: Investment Highlights
Investment Highlights Largest construction and mining contractor in the oil sands Solid core business of recurring revenue with high barriers to entry and near-term growth potential Investment in Canada’s oil sands without direct exposure to the price of oil Financially secure with the ability to ge
Slide 35: Thank you
C) Anienican ENERGY PARTNERS INC. Thank you
North American Energy Partners — Investor Presentation (November 2009) on 6ix