Key Energy Services Inc · OTC:KEGX
Key Energy Services — Scotia Howard Weil 2016 Energy Conference
19 slides from Key Energy Services's conference presentation, Mar 23, 2016
Slide 1: Get More with Key Energy Services
Get More WITH KEY ENERGY SERVICES Key Scotia Howard Weil 2016 Energy Conference March 23, 2016 Robert Drummond President and Chief Executive Officer
Slide 2: Safe Harbor
+safe harbor This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements as to matters that are not of historic fact are forward-looking statements. The forward-looking statements include a description of our int
Slide 3: Overview
+overview Production enhancement leader that is able to provide the equipment and service necessary to optimize production on existing wells and efficiently complete new wells
Slide 4: Profile
+profile Key is a leader in production enhancement with service offerings comprised of rig-based well services, fluid management services, fishing & rental services and coiled tubing services across all major oil & gas producing regions in the U.S. Rockies 2015 Revenue - $91.4 2% 4% 94% West Coast 2
Slide 5: Rig Services Business Overview
+rig services Business Overview + Rig Services deploys well service rigs that have been built to increase safety and reliability while reducing the chance of unplanned downtime + Services include: + Completion of newly-drilled horizontal and vertical wellbores + Recompletion of existing wellbores +
Slide 6: Rig Services: Market-Leading Position
+rig services Key holds a market-leading position with assets most capable to respond to the demand for return-accretive activities in the horizontal wellbore Class 4 Rigs by Market – Production Hours Right Hours 60,000 50,000 40,000 30,000 20,000 10,000 0 Class 4 Production Hours Up 95% 50,990 26,0
Slide 7: Fishing & Rental Business Overview
+fishing & rental Business Overview + Rental equipment used in the drilling and completion of wellbores including drill pipe, blowout preventers, frac stacks and well-testing equipment and services + Rental equipment used in the maintenance and workover of producing wellbores including tubing and tu
Slide 8: Fluid Management Business Overview
+fluid management Business Overview + Transportation of fluids, including sourcing of brine and fresh water, used in the drilling and completion process + Transportation of frac flowback and produced water from completed or producing wellbores + Temporary on-site fluids storage via frac tank rentals
Slide 9: Coiled Tubing Business Overview
+coiled tubing Business Overview + Key’s Coiled Tubing Services delivers value and time savings by minimizing downtime and reducing time to completion + Services include: + Completion of newly drilled horizontal wellbores pre and post hydraulic fracturing + Maintenance of producing wellbores + Plugg
Slide 10: Reorganization
+reorganization + Q3 2015 - Geographic Management Structure - Geographic management structure for multiple business lines + Regional and Business Line VPs share management responsibility + Pricing decisions pushed closer to the field + Enhanced revenue pull-through – no boundaries between business l
Slide 11: Results
+results + Q3 2015 - Delayered and combined LOBs yield $13 million of annualized savings - Functional Support reductions yield $10 million of annualized G&A savings - Organization changes helped limit U.S. sequential gross margin decrementals to 24% + Q4 2015 - G&A expense decreased another $5 milli
Slide 12: Update
+update + Monthly rig hours in the Rig Services segment for January and February 2016 were approximately 57,000 and 50,000, respectively, as compared to fourth quarter average monthly rig hours of approximately 68,000 - Rig hours in California drove approximately 40% of the sequential decline + Mont
Slide 13: Strategy
+ strategy Key’s core production enhancement business is primarily focused on extending the life and ultimate recovery of a well through-out the majority of a well’s life Life-Cycle of an Oil Well Service Activity Drilling & Completion Well Servicing & Production Enhancement Abandonment Time (years)
Slide 14: Economics
+ economics Compelling economics at moderate oil prices is the catalyst to achieve capital-efficient cash flow generation Well Service Payback Period at Various Oil Prices Payback Period (days) 0 50 100 150 200 250 300 350 3-month Payback 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43
Slide 15: Conventional U.S. base production rapidly declining
+conventional U.S. base production has been rapidly declining as shown by the decline in oil production from wells producing less than 15 barrels per day Average Daily Production (bbls/day in millions) 0.0 0.5 1.0 1.5 2.0 Up ~35% since 2011 Down ~30% since 2011 0 10,000 20,000 30,000 40,000 50,000 6
Slide 16: Shift to horizontals will increase demand for well services
+horizontal Shift to horizontals will yield a sharp increase in demand for well services as valuable assets begin to require maintenance Horizontal Wells 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 HZ well count up ~4x since 2010 ~68,000 HZwells to enter well maintenance
Slide 17: Balance Sheet & Liquidity
+balance sheet Balance Sheet & Liquidity ($ in millions) As of December 31, 2015 Cash & cash equivalents $ 204.4 Total Debt, including current portion $675.0 million 6.750% Senior Notes due 2021 $ 675.0 $315.0 million L + 9.250% Term Loan Facility due 2020 313.4 $100.0 million Asset-based Revolving
Slide 18: Final Thoughts
+ final thoughts + Managing the downturn through execution of strategic reorganization of the business + Cost reductions are scalable when the market returns - Positioned to generate strong incremental margins + Largest fleet of well servicing rigs ready to deploy - Compelling economics supporting w
Slide 19: Get More with Key Energy Services
Get More WITH KEY ENERGY SERVICES Key
Key Energy Services — Scotia Howard Weil 2016 Energy Conference on 6ix