Nine Energy Service, Inc. · AMEX:NINE
Nine Energy Service — Merger or Acquisition (October 2018)
16 slides from Nine Energy Service's merger presentation, Oct 15, 2018
Slide 1: Acquisition of Magnum Oil Tools
NINE ENERGY SERVICE ACQUISITION OF MAGNUM OIL TOOLS OCTOBER 15, 2018
Slide 2: Disclaimer
DISCLAIMER This presentation has been prepared by Nine Energy Service, Inc. (together with its subsidiaries, “Nine” or the “Company”) for the exclusive use of the party to whom the Company delivers this presentation (such party, together with its subsidiaries and affiliates, the “Recipient”). Althou
Slide 3: Transaction Overview
TRANSACTION OVERVIEW • Nine Energy Service (“Nine”) to acquire Magnum Oil Tools (“Magnum”) for $493 million of upfront consideration — Consideration consists of 5mm shares and $334mm cash upfront as well as potential future earn-out payments — Closing expected by the end of October 2018 • Transactio
Slide 4: Transaction Rationale
TRANSACTION RATIONALE EXECUTING NINE’S STRATEGY TOWARDS A TECHNOLOGY-DRIVEN SERVICE OFFERING 80+ patents contributed by Magnum TECHNOLOGY ENABLER WITH • Successful track-record of running Dissolvable DIFFERENTIATED, PROLIFIC AND PROVEN • technology with #2 market share in dissolvables and COMPLETION
Slide 5: Magnum Oil Tools Overview
MAGNUM OIL TOOLS OVERVIEW • Provides patented, market-leading downhole completions products that reduce E&P operators’ time to production and total well intervention costs while increasing wellsite safety • Proprietary designs and technology with 80+ patents • Product sales in major U.S. unconventio
Slide 6: Leaders in Dissolvable Technology
LEADERS IN DISSOLVABLE TECHNOLOGY • #2 market share in US dissolvable frac plugs and DISSOLVABLE PORTFOLIO FOR ALL NAM MARKETS #1 in polymer-based (plastic) dissolvable frac plugs HIGH TEMP MVPTM Eagle Ford, Haynesville, Duvernay • Fully dissolvable capabilities with presence of fluids and targeted
Slide 7: The Trend Towards Dissolvable Plugs Is Accelerating
THE TREND TOWARDS DISSOLVABLE PLUGS IS ACCELERATING • Dissolvable plug market forecast expected to experience significant growth as lateral lengths and stage counts increase, and as dissolvable plug use becomes more widespread • Dissolvable frac plugs dissolve inside the wellbore and do not need to
Slide 8: Multi-Well Pads Concentrate Risk
MULTI-WELL PADS CONCENTRATE RISK BARRIERS TO ENTRY CONTINUE TO INCREASE SINGLE-WELL PAD COMPLETIONS MULTI-WELL PAD COMPLETIONS LONGER LATERALS TIGHTER SPACING PAD DRILLING l l Concentration of dollars / pad + exponential impact of Non-Productive Time = highly selective customers • Dissolvable plugs
Slide 9: Pro Forma Nine Overview
PRO FORMA NINE OVERVIEW • Pro forma business mix is more differentiated with higher barriers to entry • Accretive to Nine’s financial profile, increasing long-term returns on invested capital, free cash flow generation and earnings per share long-term • Significantly increases cash flow generation a
Slide 10: Broad Footprint Enables Technology Leadership
BROAD FOOTPRINT ENABLES TECHNOLOGY LEADERSHIP FOOTPRINT IN EVERY MAJOR NAM BASIN – significant benefit to potential strategic partners through distribution volume Canada 4% EXCELLENT NAM REACH CAPABILITY – proximity to the field, customer Bakken 8% and acreage Rockies 5% LOCALIZED TEAMS WITH Marcell
Slide 11: Sources and Uses and Pro Forma Capitalization
SOURCES AND USES AND PRO FORMA CAPITALIZATION ($mm) Sources Uses Equity to seller $159 Purchase price due at closing1 $493 Senior Unsecured Notes 400 Retirement of TLA 115 Draw on ABL 26 Est. Fees and Expenses 21 Cash from Balance Sheet 45 Total $630 Total $630 Pro Forma Capitalization Pro forma as
Slide 12: The Combination of Nine and Magnum Creates a Leading Completions Company
THE COMBINATION OF NINE AND MAGNUM CREATES A LEADING COMPLTIONS COMPANY WITH A FOCUS ON TOOLS COMBINATION OF EXCELLENCE IN SERVICE AND TECHNOLOGY • Innovative, differentiated • Broad and diversified LEADING DIVERSIFIED completion tools portfolio service offering • Geographically COMPLETION TECHNOLOG
Slide 13: Close to Perfection. Far from Ordinary. Driven to Succeed.
CLOSE TO PERFECTION. FAR FROM ORDINARY. DRIVEN TO SUCCEED.
Slide 14: Nine Historical Adj. EBITDA Reconciliation
NINE HISTORICAL ADJ. EBITDA RECONCILIATION ($ mm unless otherwise noted) 2017 1H'18 Q3'18 - Low Q3'18 - High EBITDA Reconciliation Net income (loss) ($68) $11 $9 $13 Interest expense 16 5 2 2 Depreciation 53 26 14 14 Amortization 9 4 2 2 Income tax expense (benefit) (5) 1 1 1 EBITDA $5 $46 $27 $31 A
Slide 15: Magnum Historical Adj. EBITDA Reconciliation
MAGNUM HISTORICAL ADJ. EBITDA RECONCILIATION ($ mm unless otherwise noted) 2016 2017 1H'18 Q3'18 - Low Q3'18 - High EBITDA Reconciliation Net income (loss) $1 $22 $21 $12 $13 Interest expense 0 0 0 - - Depreciation 1 1 0.4 0.2 0.2 Income tax expense (benefit) 0 0 1 0.5 0.5 EBITDA $2 $23 $22 $13 $14
Slide 16: Nine Pro Forma Adj. EBITDA Reconciliation
NINE PRO FORMA ADJ. EBITDA RECONCILIATION ($ mm unless otherwise noted) 1H'18 EBITDA Reconciliation Net income (loss) $15 Interest expense 18 Depreciation 27 Amortization 9 Income tax expense (benefit) 3 EBITDA $72 Adjusted EBITDA Reconciliation EBITDA $72 Impairment of goodwill and other intangible
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