Slide 1: Third Quarter Update
THIRD QUARTER UPDATE
Slide 2: Quarterly Highlights
Quarterly Highlights Significant improvements in operating and financial results in 2018 – Highest quarterly earnings per share and net earnings since the third quarter of 2014 – Highest level of adjusted EBITDA since the fourth quarter of 2014 – US operations led growth N i n e - M o nt h N i n e
Slide 3: Financial Results
Financial Results Stated in thousands of dollars except per unit Three-Month Period ended September 30, Nine-Month Period ended September 30, amounts, percentages and operating days 2018 2017 % Chg 2018 2017 % Chg Operating Results (unaudited) (unaudited) Revenue 85,033 65,396 30 224,800 180,340 25
Slide 4: Focused on Profitability
Focused on Profitability US $60.0 $51.6 $53.9 40% 35% $50.0 $38.1 30% $36.3 $40.0 25% $30.0 20% 21% 15% $20.0 19% 10% $10.0 5% 7% 6% $- 0% Q4 2017 Q1 2018 Q2 2018 Q3 2018 Revenue Margin as % of Revenue Consolidated $90.0 50% $80.0 $85 40% $70.0 $60.0 $70.8 $69 30% $50.0 $60.7 $40.0 20% $30.0 $20.0 1
Slide 5: US Revenue as a Percentage of Revenue
US Revenue as a Percentage of Revenue 80 75% 70 60% 64% 60 50 54% 40 30 20 10 0 Q4 2017 Q1 2018 Q2 2018 Q3 2018
Slide 6: Capital Expenditures
Capital Expenditures 2018 Capital Expenditure Budget $33.5 million Initial 2019 Capital Expenditure Budget $15.0 million Dedicated to Velocity and Atlas High Performance Drilling Motor Ve l o c i t y M W D S y s t e m Continues to be in high demand in all operating areas Majority of the fleet
Slide 7: Phoenix's objective is to offer unique solutions powered by disruptive technologies
Phoenix’s objective is to offer unique solutions powered by disruptive technologies
Slide 8: PowerDrive Orbit Rotary Steerable System
PowerDrive Orbit Rotary Steerable System PHX Energy entered agreement to purchase Schlumberger’s PowerDrive Orbit RSS system to operate in US PowerDrive Orbit RSS is widely recognized as the industry’s leading RSS technology PHX Energy has developed internal engineering and operational compete
Slide 9: Velocity Real-Time MWD System
Velocity Real-Time MWD System Continues to be in high demand in all operating areas – Majority of the fleet is deployed to the Permian – Clients include Shell, Chevron, Pioneer and COG Benefits include: – Unified telemetry – Greater reliability – Improved data rates – Advanced measurements • Ex:
Slide 10: The Atlas Motor… Discover the Power
The Atlas Motor… Discover the Power Industry demanded a motor that could perform with upgraded high specification drilling rigs We designed the Atlas to be the motor – Exclusively developed and manufactured by Phoenix with proprietary bearing and power section – Propels rate of drilling with abi
Slide 11: 7¼" Atlas Motor
7¼" Atlas Motor Applicable in 8 ½"/ 8¾" hole BEARING SECTION size Size 7.25" OD – Largest percent of drilling in Flow Range 450 -750 gpm North America Stall Torque 33,338 ft/lb – Typically the curve and lateral Bit-to-Bend - Fixed 49 in section of the well Bit-to-Bend - Adjustable 59 in – Conventi
Slide 12: Sizable Opportunity
Sizable Opportunity 1,077 US PHX currently 7 ¼" High rigs/day Performance has a small fleet of Atlas 2018 Estimated Motor Rig Count Motors 647 US Small fleet rigs/day with 3,235 * High Performance from multiple suppliers 8 ½"/ 8¾" motors 7" Motors Est. fleet of 200 Motors Hole Size required Legacy C
Slide 13: Atlas motor single run curve and lateral in the Wolfcamp B
Our Atlas high performance motor once again demonstrated the impactful performance its unique design can produce. The Atlas powered our client’s first single run curve and lateral in the Wolfcamp B after already achieving an impressive single run on the prior well in the Wolfcamp A (Q2 2018).
Slide 14: 7.25" Atlas motor drilled pacesetter well in Delaware basin
Our 7.25” Atlas High Performance Drilling Motor recently drilled a client’s pacesetter well in the Delaware basin. (Q3 2018)
Slide 15: Where We Are and Expansion Plan
Where We Are and Expansion Plan PHX Energy has secured work numerous clients in the Permian to provide a motor fleet that includes exclusive 7¼" Atlas motors Demand exceeds supply today in full service division and we are exploring additional contracts with target clients to supply Atlas motors
Slide 16: Vertical Integrated Life Cycle
Vertical Integrated Life Cycle Phoenix has become a vertically integrated provider of
Slide 17: Direction for 2018 and Beyond
Direction for 2018 and Beyond Differentiate PHX Energy as a provider of disruptive technology – The combination of Atlas and Velocity gives PHX Energy a significant competitive advantage in a market that rewards robust, reliable and efficient technology – Other technologies are in development that