Slide 1: Our Landscape: Investor's Presentation Q2 2015
OUR LANDSCAPE Investor’s Presentation Q2 2015
Slide 2: Advisories
ADVISORIES FORWARD-LOOKING INFORMATION This presentation contains information that constitutes “forward looking information” or “forward looking statements” (collectively, “forward looking information”) within the meaning of applicable securities legislation. This forward looking information include
Slide 3: Pulse Profile
PULSE PROFILE
Slide 4: Canada's Leading Seismic Data Library Provider
PULSE: Canada’s Leading Seismic Data Library Provider 28,400 Sq. km of 3D seismic LICENSED 340,000 Lin. km of 2D seismic MULTIPLE TIMES PARTICIPATION SURVEYS DATA LIBRARY SALES Pulse partners with oil and gas exploration Our 2D and 3D data is licensed to multinational and companies to shoot particip
Slide 5: Metrics That Matter: Shareholder Free Cash Flow and Cash EBITDA
METRICS THAT MATTER: Shareholder Free Cash Flow and Cash EBITDA $0.08/common share Returning capital to our annual dividend shareholders is a priority $6.3 million in common share buybacks in 2014 We are a pure play Cash EBITDA is our Shareholder free cash seismic data library proxy for EBITDA: we f
Slide 6: Key Trading Facts
KEY TRADING Information as at June 30, 2015, unless otherwise specified Trading Symbols TSX: PSD FACTS OTCQX: PLSDF Corporate Headquarters Calgary, Alberta, Canada Stock Price $2.51 PULSE SEISMIC INC. Shares Outstanding 56,796,689 TSX: PSD Avg. Daily Trading Volume (Q2 2015) 51,875 OTCQX: PLSDF Inst
Slide 7: Strong Balance Sheet
JULY 31, 2015 STRONG $1.0mm $2.0mm BALANCE SHEET CASH LONG TERM DEBT $1.0mm $48.0mm $50 million, three-year extendible, revolving credit facility with current UNDRAWN PORTION maturity of February 13, 2018 NET DEBT OF REVOLVING CREDIT FACILITY $20 million accordion feature No scheduled payments $
Slide 8: 2015 YTD Financial Results
2015 YTD FINANCIAL RESULTS $11mm $7.8mm JUNE 30, 2015 TOTAL REVENUE DATA LIBRARY SALES $4.7mm $4.5mm CASH EBITDA SHAREHOLDER FREE CASH FLOW $2.5mm $5.5mm OPERATING LINE LONG TERM DEBT *Information as at June 30, 2015, unless otherwise specified. 8
Slide 9: How Our Business Works
HOW OUR BUSINESS WORKS
Slide 10: Our Landscape in Western Canada: Growth in Unconventional Plays
OUR LANDSCAPE IN WESTERN CANADA: GROWTH IN UNCONVENTIONAL PLAYS MONTNEY TIGHT SANDS PLAY LIQUIDS-RICH (DEEP BASIN) TARGETS 2.3 bcf/d estimated Montney gas DUVERNAY SHALE CARDIUM LIGHT OIL PLAY production, 2014 4-6 bcf/d forecast Montney gas production, 2020 13 billion boe estimated recoverable
Slide 11: Western Canada: A World-Class Energy-Producing Region
WESTERN CANADA: A WORLD-CLASS ENERGY- PRODUCING REGION LIQUIDS PIPELINES NATURAL GAS PIPELINES PROPOSED PIPELINES 3.2 million bbls/d crude oil production in Western Canada, 2013 13.9 bcf/d natural gas production in Western Canada, 2013 $134 billion, the value of energy products shipped through
Slide 12: Understanding Our Business: High-Quality Data that Retains its Value
UNDERSTANDING OUR BUSINESS: Pulse Acquires High-Quality Data that Retains its Value Why 2D: 2D seismic allows exploration companies to plan land acquisition programs and exploration drilling concepts. Why Pulse 2D: Most of Pulse’s 2D data was Second White Specks purchased from Chevron and Shell, Dun
Slide 13: 2D Seismic Data Retains Its Value
2D SEISMIC DATA 2D SEISMIC SALES, 2010-2014 By Date of Seismic Recording RETAINS ITS VALUE 2% 1960s Last 5 Years’ Sales 13% 11% 1970s 1980s 1990s 2000s Our 2D Seismic Data Library Generates Revenue Continuously 2D data accounts for 22% of our total data $42 MM library sales Total Sales, 2010-2014
Slide 14: 3D Seismic Provides Pinpoint Accuracy of Complex Targets
3D SEISMIC PROVIDES PINPOINT ACCURACY OF GEOLOGICALLY COMPLEX TARGETS 3D seismic is more detailed and more expensive to shoot Important for horizontal drilling, unconventional plays like shale and tight gas formations and complex conventional drilling Pulse owns 28,409 square km (10,969 square
Slide 15: Pulse Seismic: A Market Leader in Western Canada
PULSE SEISMIC: A Market Leader in Western Canada ESTIMATED CANADIAN 2D MARKET ESTIMATED CANADIAN 3D MARKET Others 7,000 Pulse Schlumberger 340,000 11,000 Pulse 28,400 TGS Arcis 2D 3D 14,810 Seitel Canada (km) (km2) 650,000 Others 230,000 CGG Veritas 20,100 Seitel Canada 36,000 15
Slide 16: Our Customers: Diverse and Long-Term
OUR CUSTOMERS: DIVERSE AND LONG-TERM PULSE HAS A BASE OF 300 KEY FACTS CUSTOMERS A noteworthy amount of 3D data in the dry Concentrated in Alberta’s oil and natural natural gas area of northeast British gas industry Columbia has been licensed in the past few 58% of sales during the past five y
Slide 17: Drivers of Data Library Sales
DRIVERS OF DATA LIBRARY SALES NEW PROCESSING EXPLORATION Better New Discoveries Interpretation M&A, JV’S AND NEW PIPELINES & ASSET SALES INFRASTRUCTURE New Players Economically Viable Development CROWN MINERAL LAND SALES NEW DRILLING TECHNOLOGY New Players & Multi-zone Oil and Nat. Gas Play Targets
Slide 18: Types of Transactional Sales
TYPES OF TRANSACTIONAL SALES PARTNERSHIPS & CORPORATE JOINT VENTURES MERGER/ACQUISITION ASSET SALE New technical or operational Buyer has 30 days to decide Seismic licenses do not participants must purchase a to pay a discounted transfer with the asset. Pulse data license relicensing fee in order to
Slide 19: Changing Seismic Data Sales Profiles
CHANGING SEISMIC ANNUAL TRADITIONAL & TRANSACTION-BASED DATA SALES PROFILES SALES 50,000 44,874 45,000 Sales Breakdown 2D/3D (%) for the Six Months Ended June 30 40,000 100 35,000 33,121 90 86 83 80 30,000 70 25,000 60 19,166 19,471 19,114 50 20,000 16,629 15,431 40 14,833 15,000 30 20 17 10,000 7,6
Slide 20: Growing the Data Library: Two Approaches
GROWING THE DATA LIBRARY: TWO APPROACHES PARTICIPATION SURVEYS ACQUIRE EXISTING DATA Surveys designed and managed by Pulse Purchase high-quality proprietary datasets and partly pre-funded by customer from competitors and E & P companies Area must hold resource opportunity in Incurs nominal i
Slide 21: Growing the Seismic Library Through High Demand Data
GROWING THE SEISMIC Size of the Seismic Data Library LIBRARY THROUGH 2D (km) 3D (sq. km) HIGH DEMAND DATA 400,000 30,000 350,000 25,000 300,000 20,000 250,000 3D (km2) 2D (km) 200,000 15,000 150,000 10,000 100,000 5,000 50,000 - - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 21
Slide 22: Transformational Acquisition
2010 TRANSFORMATIONAL ACQUISITION Pulse Seismic Data Pre-Purchase Pulse Seismic Data Post-Purchase 3D Seismic 3D Seismic Acquired seismic assets from Divestco in 2010 2D Seismic 2D Seismic Purchase price of $75.5 million including $55.5 million in cash plus 14.3 million Pulse common shares 100
Slide 23: Results
: pulseseismic
Slide 24: Return on Net Participation Survey Costs, 2000-2015
RETURN ON NET PARTICIPATION SURVEY NET SURVEY COSTS VS. DATA LIBRARY SALES COSTS, 2000-2015 40 26 24 Total survey cost $220 million 35 22 Pulse net survey cost $67 million 30 20 Pulse Net Cost (Cdn$MM) 18 Data library sales $130 million Data Library Sales (Cdn$MM) 25 16 Return of data sales
Slide 25: It All Adds Up: Cash Return on 2004 Net Survey Cost
IT ALL ADDS UP: CASH RETURN ON 2004 NET SURVEY COST 9.0 CASH RETURN ON 2004 8.0 8.0 NET SURVEY COST 7.0 670% 6.6 Total Return on 7 surveys shot: 1,104 sq. km Pulse Net Cost 6.0 Gross CAPEX: $25 million Cash Return ($MM) 5.0 78% prefunded, survey revenue: $19.4 million 4.0 3.6 3.5 Pulse net c
Slide 26: Seismic Data Library Sales & SFCF per Share
SEISMIC DATA CORRELATION OF SEISMIC DATA LIBRARY SALES TO SFCF PER SHARE LIBRARY SALES & SFCF PER SHARE 0.80 ($/Diluted Weighted Shares Outstanding) 0.59 0.49 0.47 (Cdn$MM) 0.34 0.36 0.35 0.28 0.08 2007 2008 2009 2010 2011 2012 2013 2014 2015 Seismic Data Library Sales SFCF per Share 26
Slide 27: Shareholder Free Cash Flow (SFCF) Calculation
SHAREHOLDER FREE Q2 June 30, June 30, ($MM except per share) 2015 2014 2015 YTD 2014 YTD CASH FLOW (SFCF) Data library sales 6.5 7.3 7.8 35.7 Participation survey revenue - - 3.2 - CALCULATION Less: Salaries, internal commissions (1.0) (1.2) (1.8) (4.8) and benefits Other SG&A (0.6) (0.8) (1.3) (2.7
Slide 28: Strong Shareholder Value
pulse seismic
Slide 29: Strong Shareholder Value Through Dividends and Share Purchases
STRONG SHAREHOLDER DIVIDENDS AND SHARE PURCHASES ($MM) VALUE THROUGH 12.0 DIVIDENDS AND SHARE 10.8 10.5 PURCHASES 10.0 8.4 8.4 8.0 7.1 6.3 6.0 5.4 4.8 4.7 4.5 4.0 3.5 2.2 2.3 2.3 2.0 1.7 1.7 1.3 1.0 0.5 0.5 0.2 - 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Dividends ($MM) Share
Slide 30: Strong Returns with Shrinking Long-Term Debt
STRONG RETURNS SFCF, CASH EBITDA & LONG-TERM DEBT AT YEAR-END 2010-2014 WITH SHRINKING 70.0 LONG-TERM DEBT 60.0 61.7 54.7 50.0 50.0 46.7 40.0 ($ MM) 30.0 26.7 27.9 28.6 27.7 23.9 22.1 21.7 19.6 20.7 20.0 19.1 10.0 5.5 0.0 2010 2011 2012 2013 2014 Shareholder Free Cash Flow ($ MM) Cash EBITDA ($ MM)
Slide 31: Historical Allocation of Funds: Five Years (2010-2014)
HISTORICAL ALLOCATION OF FUNDS: FIVE YEARS (2010-2014) FUNDS AVAILABLE ($MM) FUNDS ALLOCATED ($MM) Cash in Bank Common Share $19 Purchases $28 Shareholder Free Debt Repayments Cash Flow $69 $142 Debt Financing $46 Equity Financing $22 Dividend Payments $16 Net CAPEX $116 31
Slide 32: 2014 Capital Allocation
2014 CAPITAL 2014 CAPITAL ALLOCATION ($MM) ALLOCATION Stable annual dividend $4.7 Share buyback totaling $6.3 million (2.1 million common shares) Long-term debt reduced by $16.6 million Stable annual dividend totalling $4.7 million ($0.8 per share) Share buyback $6.3 Long-term debt reduced by
Slide 33: Reasons to Invest in Pulse
REASONS TO INVEST IN PULSE • High barriers to entry — • Joint venture and M&A • Strong balance sheet replacement value of our activity leads to • Historical cash margins seismic data library potential transaction- of 75-85% on our data estimated at over based data sales sales $2 billion • We can lic
Slide 34: Our People
OUR PEOPLE EXECUTIVE MANAGEMENT TEAM Neal Coleman Pamela Wicks Jeff Bectold Trevor Meier President and Chief Vice President Vice President Vice President Executive Officer Finance and Chief Operations Sales & Marketing Financial Officer DIRECTORS Robert Robotti, Chair of Pulse Seismic Karen El-Tawil
Slide 35: Financial Appendices
FINANCIAL APPENDICES
Slide 36: Consolidated Statements of Financial Position
CONSOLIDATED (thousands of Canadian dollars) June 30, 2015 December 31, 2014 Assets STATEMENTS OF Cash and cash equivalents - 901 Trade and other receivables 8,897 7,083 Prepaid expenses 283 275 FINANCIAL POSITION Total current assets Participation surveys in progress 9,180 - 8,259 36 Seismic data l
Slide 37: Consolidated Statements of Comprehensive Income (Loss)
CONSOLIDATED (thousands of Canadian dollars) Three months ended June 30 Six months ended June 30 2015 2014 2015 2014 STATEMENTS OF Revenue Data library sales 6,461 7,321 7,777 12,827 COMPREHENSIVE Participation surveys Total revenue 6,461 - 7,321 - 3,220 10,997 12,827 - INCOME (LOSS) Operating expen
Slide 38: Consolidated Statement of Cash Flows
(thousands of Canadian dollars) For the six months ended June 30 CONSOLIDATED Cash flows provided by (used in): 2015 2014 STATEMENT OF Operating: Net earnings (loss) and comprehensive income (loss) (4,387) (2,432) CASH FLOWS Adjustment for: Amortization of seismic data library 12,595 11,674 Deprecia
Slide 39: Capital Structure
CAPITAL SHARES OUTSTANDING AT YEAR-END (MM) STRUCTURE 70 66 62 61 59 60 57 57 Authorized unlimited common and preferred 53 shares 50 56,796,689 common shares outstanding (millions of shares outstanding) (June 30, 2015) 40 30 20 10 0 2009 2010 2011 2012 2013 2014 2015 39
Slide 40: Pulse Seismic Inc.
PULSE SEISMIC INC. 2400, 639 5TH Avenue S.W. Toll-free: 1.877.460.5559 Calgary, Alberta T2P 0M9 Telephone: 1.403.237.5559 Email: info@pulseseismic.com