Slide 1: Building Momentum from New Technology
RESULTS PRESENTATION BUILDING MOMENTUM FROM FOR THE YEAR ENDED 31 DECEMBER 2017 NEW TECHNOLOGY H-1 Perforating System www.huntingplc.com 1
Slide 2: Group Summary
Group Summary Group well positioned but challenges remain Group financials on firm footing with $30.4m net cash at year end and return to underlying profitability Bank covenant suspension period ended 18 January 2018 – revert to historical EBITDA/Net Debt (3x) and EBITDA/Finance Charge (4x) rati
Slide 3: Summary Income Statement
Summary Income Statement1 Operating leverage delivering improved margins 2017 Margin 2016 Margin $m % $m % Revenue 722.9) 455.8) Gross profit 174.8) 24 52.1) 11 EBITDA2 profit (loss) 55.4) 8 (48.9) -11 Profit (loss) from operations 13.7) 2 (92.2) -20 Finance expense (1.5) (0.7) Profit (loss) before
Slide 4: Segmental Results
Segmental Results1 Improved results underpinned by US onshore completions market 2017 2016 Results from Results from Revenue Operations Revenue Operations $m $m $m $m Hunting Titan 312.8) 63.3) 145.2) (3.6) US 217.6) (17.2) 166.7) (33.6) Canada 36.5) (3.7) 29.3) (4.0) Europe 85.0) (12.6) 71.7) (25.7
Slide 5: Revenue by Product
Revenue by Product Improved revenues across most product lines – up 59% 2017 2016 $m $m Change OCTG and Premium Connections 254.3 189.6 +34% Perforating Systems 305.6 143.0 +114% Subsea 20.6 21.5 -4% Intervention Tools 34.3 24.5 +40% Drilling Tools 25.8 10.9 +137% Advanced Manufacturing 59.8 45.2 +3
Slide 6: Amortisation & Exceptional Items
Amortisation & Exceptional Items Cape Town trading losses halted through facility closure 2017 2016 $m $m Amortisation of acquired intangible assets 29.1 33.2 Restructuring costs 2.4 12.2 Plant, property and equipment impairment 7.6 - UK Pension Scheme closure - 3.1 Bank facility fees written off -
Slide 7: Balance Sheet
Balance Sheet Solid platform with strong liquidity 2017 2016 $m $m Property, plant and equipment 383.3) 419.0) Goodwill 230.3) 229.8) Other intangible assets 125.4) 150.7) Working capital1 342.4) 300.2) Taxation (6.0) (3.4) Provisions (18.0) (15.7) Other 22.7) 38.7) Net cash (debt) 30.4) (1.9) Net a
Slide 8: Inventory
Inventory Restoring working capital efficiency RESULTS PRESENTATION : MARCH 2018 8
Slide 9: Cash Flow
Cash Flow Managed cash flows with in-line working capital increase 2017 2016 $m $m Underlying EBITDA 55.4) (48.9) Add: share-based payments 11.9) 8.2) 67.3) (40.7) Working capital (39.3) 58.4) Interest and bank fees (2.4) (4.6) Net tax receipts 6.5) 31.3) Pension scheme refund 9.7) -) Replacement ca
Slide 10: Market Overview: North America
Market Overview: North America Hunting Titan: • Increased demand for industry leading technology primarily US onshore • Continued development of perforating systems to support growing demand • Wellbore completion intensity increasing US: • Unconventional oil and gas driving oilfield service dema
Slide 11: Market Overview: Europe, Asia Pacific, MENA
Market Overview: Europe, Asia Pacific, MENA Europe: • Seeing improvement in North Sea FID’s • Norwegian sector opportunities being pursued Asia Pacific: • Improvement in OCTG activity • Increased sales of perforating systems Middle East and North Africa: • Saudi Arabia joint venture gaining OE
Slide 12: Distribution Centres Strategically Located in North American Shale Plays
Distribution Centres Strategically Located in North American Shale Plays Current and Prospective Shale Plays CURRENT SHALE PLAYS PROSPECTIVE SHALE PLAYS HUNTING DISTRIBUTION CENTERS RESULTS PRESENTATION : MARCH 2018 12
Slide 13: US Onshore: Onshore Metrics
US Onshore: Onshore Metrics Historically the rig count was the leading industry metric. Today, well count, number of stages and lateral length are also key metrics For our industry, we considered 2014 a Percent Change 2014 to 2017 peak year. Yet in some areas, 2017 was a peak year in the US onsh
Slide 14: US Onshore: Hunting Service Intensity
US Onshore: Hunting Service Intensity Hunting Titan had stronger unit sales in 2017 than in 2014 with 2014 2017 47% less wells in the US market 23 Stages 41 Plus Stages 5 to 6 Guns Per Stage 6 to 7 Guns Per With more stages per well and 1,150 components Stage more concentration within each per w
Slide 15: US Onshore: Perforating Systems H-1 System Simplicity of Design
US Onshore: Perforating Systems H-1 System Simplicity of Design The H-1 System is the next generation in perforating technology As our customers use the H-1 system, many have specified it as their preferred system They like the combination of increased safety, reliability and simplistic design
Slide 16: US Onshore: Specialised Energetics
US Onshore: Specialised Energetics Hunting developed the EQUAfrac™ charge in response to a complex industry problem When a charge is detonated in the wellbore, depending on it’s position, it can create a different size hole in the formation This size variation creates added expense in the pressu
Slide 17: US Onshore: Perforating Electronics
US Onshore: Perforating Electronics Hunting Titan remains an industry-leading supplier of perforating system switches Industry Change – Shift from De-stocking to Re-stocking • Before, customers would buy just what they needed for short term requirements • Now, customers are internally re-stockin
Slide 18: Unfinished Business: Drilled But Uncompleted Wells, US Onshore
Unfinished Business Drilled But Uncompleted Wells, US Onshore 7,488 Completed DUC’s will require equipment which includes the following Hunting 6,316 products: 6,271 • Perforating Systems 5,944 5,901 • Completion Tubing • Premium 5,446 Connections • Completion 4,874 Accessories 4,568 4,128 Inventory
Slide 19: Natural Gas Consumption Growing: US LNG Exports
Natural Gas Consumption Growing US LNG Exports US natural gas production in 2018 is expected to hit historic levels. Part of the reasoning for this increase is environmentally grounded in countries addressing air pollution Source: Gibson Shipbrokers RESULTS PRESENTATION : MARCH 2018 19
Slide 20: Manufacturing Mix and Opportunity
Manufacturing Mix and Opportunity Historically, Hunting‘s product mix has been equally divided between the onshore and offshore markets Today, with the resurgence of the US onshore market, the balance has shifted toward the onshore market While offshore spending has reduced over the last three
Slide 21: Offshore Recovery
Offshore Recovery Although there has not been substantial new investment in offshore drilling, we are seeing large discoveries that were seeded several years ago: • Shell and Chevron in the Gulf of Mexico • BP in the North Sea • ExxonMobil in Guyana As the oil markets start balancing and the com
Slide 22: Additional Opportunities
Additional Opportunities AMG: • As the destocking cycle comes to an end we are seeing significant orders for high-end technology tools Pressure Control: • The onshore activities have generated increased demand for pressure control units and supporting hardware Connection Technology: • Introduc
Slide 23: Strategic Capital Disciplines: Agility
Strategic Capital Disciplines Agility Capitalise on our prior Move decisively Continually review our investment Add production capacity positions globally High return projects in quickly in growing markets Closing the Cape Town, South growing markets Enhance our market position Africa and Lafayette,
Slide 24: Strategic Capital Disciplines - continued
Strategic Capital Disciplines - continued Driven by a +$90 oil price, Hunting invested in expanding its geographic footprint We are currently capitalising on the past investment in additional roofline and new manufacturing technologies Going forward we will continue to invest in flexible, advanced,
Slide 25: Capital Investment Highlights: Shaped Charge Production Expansion
Capital Investment Highlights Shaped Charge Production Expansion Simple, bolt-on plant expansion and equipment modernisation yields tremendous return Our Milford, Texas facility is our key energetics plant. It is situated on approximatively 550 acres approximately 50 miles south of Dallas, Texas
Slide 26: Investment Highlights
Investment Highlights Robust long-term fundamentals for oil and gas Strategic focus on the wellbore Strong proprietary technologies and diverse product range World class manufacturing facilities located close to our customers Proven track record of manufacturing excellence and reliability
Slide 27: Building Momentum from New Technology
RESULTS PRESENTATION BUILDING MOMENTUM FROM FOR THE YEAR ENDED 31 DECEMBER 2017 NEW TECHNOLOGY H-1 Perforating System www.huntingplc.com 27