Forbes Energy Services Ltd · OTC:FLSS
Forbes Energy Services — Merger or Acquisition (December 2019)
33 slides from Forbes Energy Services's merger presentation, Dec 18, 2019
Slide 1: Strategic Update December 2019
Exhibit 99.2 Strategic Update December 2019Exhibit 99.2 Strategic Update December 2019
Slide 2: Cautionary Note to Investors – Forward-Looking Statements
Cautionary Note to Investors Forward-Looking Statements All statements in this presentation (and oral statements made regarding the subjects of this presentation) other than historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as a
Slide 3: Unlocking Shareholder Value
Unlocking Shareholder Value Strengthening the balance sheet and strategically reconfiguring the portfolio Ceased U.S. hydraulic fracturing operations as of December 10, 2019, which will be accounted for in discontinued operations beginning Q4’19 Divested non-core business in 2019 resulting in $119 m
Slide 4: Superior's Debt Summary
Superior’s Debt Summary 1 1 • Superior’s leverage to immediately improve from 6.2x to 4.7x upon closing assuming the exchange offer is fully subscribed 2 • Post-exchange cash plus revolver, before issuance of letters of credit, is anticipated to be $425 mm • Superior may retire debt using operationa
Slide 5: Transaction Overview
Transaction OverviewTransaction Overview
Slide 6: Newco Transformative Combination
Newco Transformative Combination Creating a leading provider of U.S. completion, production & water solutions § Superior Energy Services to combine its North America services 1 businesses (“NAM”) with Forbes Energy Services (“Forbes”) in $831 mm an all-stock combination (the combined businesses, col
Slide 7: Newco Transaction Summary
Newco Transaction Summary • All-stock transaction Transaction Structure • Transaction unanimously approved by the Boards of Directors of both companies and the Special Committee of Forbes • Four members, consisting of Chairman & CEO, plus three independent directors Board of Directors (two nominated
Slide 8: Newco Creating a Leading U.S. Focused Services Platform
Newco Creating a Leading U.S. Focused Services Platform Dollar amounts in millions TTM Q3’19 Revenue $1,378 $1,500 Peer Average: $620 1,200 $899 $831 900 $621 $587 $578 $548 600 $446 $342 $210 $180 300 -- WTTR NINE NewCo SPN-NAM PES KLXE QES KEG RNGR FLSS NES Newco (NAM) TTM Q3’19 EBITDA $200 Peer A
Slide 9: Newco Primary Service Offerings and Key Brands
Newco Primary Newco Service Offerings and Key Brands Service Rigs Coiled Tubing Wireline • Provides well services, • Provides nitrogen, pumping and • Provides perforating, pipe snubbing, swabbing, and P&A plug drill-out services recovery, fishing, cased hole services • Pipe Sizes Ranging from 1 1/4”
Slide 10: Newco at a Glance
Newco Newco at a Glance Services Overview Geographic Footprint § Leading provider of production (well services, fluid § Transaction significantly increases scale of services management and produced water) and completion across geographies (coiled tubing, wireline) solutions § Balanced across major b
Slide 11: Newco Proven & Experienced Leadership Team
Newco Proven & Experienced Leadership Team Top four operating executives have 133 years of combined experience David Dunlap | Chairman & CEO ü 36 years of experience in oilfield services most recently as President & CEO of Superior ü Prior responsibility: COO BJ Services, Inc. Brian Moore | COO ü 40
Slide 12: Newco Strategic Philosophy
Newco Strategic Philosophy Market & Operations Capital Deployment & Growth § Flat to further declining market § First mover for much needed consolidation environment § Predominately all equity deals § Fragmented and oversupplied market § Long life assets requiring minimal capital § Limited/no liquid
Slide 13: Newco Consistent Free Cash Flow Generation
Newco Consistent Free Cash Flow Generation Dollar amounts in millions 1 NAM Historical Free Cash Flow 2 Conversion : 60% 31% 74% $50 100% $40 80% Superior management has demonstrated a track record of $30 60% $50 generating consistent Free Cash Flow with these assets despite a $20 40% volatile marke
Slide 14: Newco Meaningful Value Creation in Synergies
Newco Meaningful Value Creation in Synergies “Sticky” and not market dependent 1 ~$23 mm Total Identified Synergies Identified Ø Corporate and field cost reduction opportunities $3 mmØ Supply chain optimization Ø Improved efficiency of asset allocation Ø Improved asset utilization and $5 mm producti
Slide 15: = “Sup erior
= “Sup erior per SERVICES ea - i¢ x. pS a : Soe, - se a, \-
Slide 16: Market Leading, Global Franchises
Market Leading, Global Franchises Brands Value-added engineering services and high- specification premium downhole tubular and accessory rentals Design, engineering, manufacturing and rental of premium bottom hole assemblies Engineering, risk management, well control and training solutions Hydraulic
Slide 17: Compelling Attributes
Compelling Attributes TTM 3Q’19 Revenue by Business Market and technology leading global brands that are highly mobile and competitively Completion and Production Down Hole advantaged Services Drilling Tools 34% 40% Managed capital intensity with Well Control Services Completion organic and inorgani
Slide 18: Consistent Historical Free Cash Flow
Consistent Historical Free Cash Flow Dollar amounts in millions 1 1 Historical EBITDA & Capex $533 $339 $229 $226 $203 $134 $140 $119 $75 $71 $43 $37 2014 2015 2016 2017 2018 TTM Q3'19 2 EBITDA CAPEX 1 Only includes Workstrings, Stabil Drill, Wild Well Control, ISS and Completion Services. 18 2 Does
Slide 19: Proven & Experienced Leadership
Proven & Experienced Leadership Westy Ballard James Spexarth William Masters President & CEO Chief Financial Officer General Counsel 12 years at Superior 6 years at Superior 11 years at Superior Currently serves as Executive Vice Currently serves as Chief Accounting Currently serves as Executive Pre
Slide 20: Key Peer Benchmarking
Key Peer Benchmarking TTM 3Q’19 EBITDA Margin Median: 12.5% 30% 23.3% 20.8% 19.8% 20% 17.3% 15.8% 12.5% 11.4% 10.1% 10% 6.9% 6.8% 0% APY RemainCo SLB-US CLB HAL-US BKR-US OII OIS DRQ FI Remainco 1 TTM 3Q’19 FCF Conversion 100% 84.3% 90% 79.9% Median: 52.4% 80% 68.2% 70% 59.2% 55.8% 60% 52.4% 49.8% 5
Slide 21: Capitalization Summary
Capitalization Summary Capitalization 3 9/30 TTM Exchange Adjustments 9/30 TTM Post Exchange 1 $-- $-- $-- ABL Revolver 2021 Senior Unsecured Notes 800,000 (500,000) 300,000 2024 Senior Unsecured Notes 500,000 -- 500,000 2027 Senior Secured 2nd Lien Notes -- 250,000 250,000 Total Debt $1,300,000 ($2
Slide 22: Appendix
Appendix Appendix
Slide 23: Adjusted EBITDA & FCF Reconciliation Pro Forma RemainCo (9M 2019)
Adjusted EBITDA & FCF Reconciliation Pro Forma RemainCo For the nine months ended September 30, 2019 (unaudited) Historical Pro Forma (in thousands) Less: Pumpco Pro Forma Superior Energy Less: NAM Energy Services Adjustments RemainCo Revenues $ 1 ,329,208 $ (484,392) $ (239,911) $ - $ 6 04,905 Cost
Slide 24: Adjusted EBITDA & FCF Reconciliation Pro Forma RemainCo (Q4 2018)
Adjusted EBITDA & FCF Reconciliation Pro Forma RemainCo For the three months ended December 31, 2018 (unaudited) Historical Pro Forma (in thousands) Less: Pumpco Pro Forma Superior Energy Less: NAM Energy Services Adjustments RemainCo Revenues $ 5 39,331 $ (188,157) $ (149,884) $ - $ 2 01,290 Cost o
Slide 25: Adjusted EBITDA & FCF Reconciliation Pro Forma RemainCo (TTM Sep 2019)
Adjusted EBITDA & FCF Reconciliation Pro Forma RemainCo For the twelve months ended September 30, 2019 (unaudited) Historical Pro Forma (in thousands) Less: Pumpco Pro Forma Superior Energy Less: NAM Energy Services Adjustments RemainCo Revenues $ 1 ,868,539 $ (672,549) $ (389,795) $ - $ 8 06,195 Co
Slide 26: Adjusted EBITDA & FCF Reconciliation Pro Forma NewCo (9M 2019)
Adjusted EBITDA & FCF Reconciliation Pro Forma NewCo For the nine months ended September 30, 2019 (unaudited) Historical Pro Forma (in thousands) Pro Forma NAM Drilling Rigs Forbes Adjustments NewCo Revenues $ 484,392 $ (32,831) $ 153,647 $ - $ 6 05,208 Cost of services and rentals (exclusive of dep
Slide 27: Adjusted EBITDA & FCF Reconciliation Pro Forma NewCo (Q4 2018)
Adjusted EBITDA & FCF Reconciliation Pro Forma NewCo For the three months ended December 31, 2018 (unaudited) Historical Pro Forma (in thousands) Pro Forma NAM Drilling Rigs Forbes Adjustments NewCo Revenues $ 1 88,157 $ (18,730) $ 5 6,454 $ - $ 2 25,881 Cost of services and rentals (exclusive of de
Slide 28: Adjusted EBITDA & FCF Reconciliation Pro Forma NewCo (TTM Sep 2019)
Adjusted EBITDA & FCF Reconciliation Pro Forma NewCo For the twelve months ended September 30, 2019 (unaudited) Historical Pro Forma (in thousands) Pro Forma NAM Drilling Rigs Forbes Adjustments NewCo Revenues $ 6 72,549 $ (51,561) $ 210,101 $ - $ 8 31,089 Cost of services and rentals (exclusive of
Slide 29: Revenue by Service Line Reconciliation Pro Forma NewCo
Revenue by Service Line Reconciliation Pro Forma NewCo For the twelve months ended September 30, 2019 (unaudited) Historical Pro Forma (in thousands) NAM Drilling Rigs Forbes NewCo Fluid Management $ 206,128 $ - $ 52, 547 $ 258,675 Service Rigs 116,502 - 96, 068 212,570 Coiled Tubing 83,771 - 61,486
Slide 30: Adjusted EBITDA & FCF Reconciliation Pro Forma NAM (TTM)
Adjusted EBITDA & FCF Reconciliation Pro Forma NAM For the twelve months ended September 30, 2019 (unaudited) Historical Pro Forma (in thousands) NAM Drilling Rigs NAM Revenues $ 6 72,549 $ (51,561) $ 6 20,988 Cost of services and rentals (exclusive of depreciation, amortization and accretion) 508,9
Slide 31: Adjusted EBITDA & FCF Reconciliation Pro Forma NAM (2018, 2017)
Adjusted EBITDA & FCF Reconciliation Pro Forma NAM (unaudited) For the year ended December 31, 2018 For the year ended December 31, 2017 (in thousands) Historical Pro Forma Historical Pro Forma NAM Drilling Rigs NAM NAM Drilling Rigs NAM Revenues $ 737,533 $ (71,016) $ 6 66,517 $ 630,762 $ ( 63,063)
Slide 32: Adjusted EBITDA Reconciliations SPN
Adjusted EBITDA Reconciliations SPN (unaudited) Twelve months ended September 30, 2019 (in thousands) Global Five Businesses Corporate and all other businesses Consolidated Reported net income (loss) from continuing operations $ 126,610 $ (1,033,991) $ (907,381) Reduction in value of assets 7,008 77
Slide 33: Adjusted EBITDA Reconciliations SPN (cont'd)
Adjusted EBITDA Reconciliations (cont’d) SPN (unaudited) Twelve months ended December 31, 2017 (in thousands) Global Five Businesses Corporate and all other businesses Consolidated Reported net income (loss) from continuing operations $ 1, 562 $ (188,573) $ (187,011) Reduction in value of assets 292
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