Kirby Corporation · NYSE:KEX
Kirby — Spears & Associates — Kirby Analyst Day 2018
28 slides from Kirby's conference presentation, May 2018
Slide 1: Hydraulic Fracturing: services & equipment
Hydraulic Fracturing: services & equipment Richard Spears Spears & Associates Tulsa May 2018
Slide 2: The Spears Difference
THE SPEARS DIFFERENCE John and Richard Spears lead the firm’s team of oilfield veterans and data analysts. Both brothers are former field engineers and operations managers for oilfield service companies. The brothers also hold board seats in privately held This Tulsa company and its affiliated data
Slide 3: Remember This Chart
Remember This Chart Day 1 is the best day of a well’s life…each successive day is worse
Slide 4: Take-away #1
Take-away #1 Because US wells decline rapidly, 16,000 wells must be drilled & frac’d each year to keep US oil output flat.
Slide 5: US new well drilling
US new well drilling New Wells Drilled Per Year Horizontal Vertical 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2014 2015 2016 2017 2018
Slide 6: Take-away #2
Take-away #2 In 2017 and 2018 the US will drill enough horizontal wells to make oil production rise.
Slide 7: The 2018 environment
The 2018 environment Drilling New Resv Sand & Rigs Wells Footage Water 1000 27,000 215 M 115 M Rigs Wells Feet tons
Slide 8: Rail Shipments of Sand
Rail Shipments of Sand 30,000 25,000 20,000 Thousands of Tons 15,000 10,000 5,000 - Q1 13 Q1 14 Q1 15 Q1 16 Q1 17
Slide 9: NoAm Oilfield Spending
NoAm Oilfield Spending $40,000 $35,000 $30,000 $25,000 MILLIONS $20,000 $15,000 $10,000 $5,000 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2015 2016 2017
Slide 10: Domestic v. Intl Oilfield
Domestic v. Intl Oilfield $90,000 $80,000 $70,000 $60,000 $50,000 Millions $40,000 $30,000 $20,000 $10,000 NAM Intnl $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2015 2016 2017
Slide 11: Take-away #3
Take-away #3 Lack of international investment in new well drilling is causing foreign oil output to fall
Slide 12: Take-away #4
Take-away #4 Even if international oil companies decided today to ramp up drilling, first oil would be 5 years in the future
Slide 13: From site to drilling to frac
From site to drilling to frac Spears © Associates
Slide 14: Frac job ~1979
Frac job ~1979 Frac job from 30 years ago…this is how China fracs today
Slide 15: Frac job 3 weeks ago
Frac job 3 weeks ago 100-stage frac on 3 wells in the STACK
Slide 16: Infrastructure today
Infrastructure today Spears © Associates
Slide 17: Big Trend: Long laterals
Big Trend: Long laterals <6000' 6000-8000 Extended Reach 2500 2000 1500 1000 500 0 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 DrillingInfo
Slide 18: Big Trend: Intensity
Big Trend: Intensity 1978 2018 Time to drill 1 well 60 days 15 days Wells per pad 1 1 - 25 % horizontal 0% 75% Days to frac 1 well 1 7 Proppant per well 0.1 million lbs 14 million lbs Cost in 2018 $ $3M $6M Frac % of total cost 10% 40%
Slide 19: Take-away #5
Take-away #5 Frac jobs always grow in size and intensity. This trend will continue.
Slide 20: US Frac Market
US Frac Market 2017 (Market Share) 0% 5% 10% 15% 20% 25% Hydraulic Fracturing Market (Millions) $35,000 HAL SLB Keane $30,000 Liberty FTS $25,000 PTEN BJS $20,000 RPC/Cudd ProPetro $15,000 CJES USWellSVs $10,000 Calfrac SPN TUSK $5,000 BAS QES $0 2014 2015 2016 2017 2018 ProSvs Market $29,356 $16,17
Slide 21: Permian Frac Market
Permian Frac Market 2017 (Market Share) 0% 5% 10% 15% 20% Hydraulic Fracturing Market (Millions) $12,000 HAL SLB Keane $10,000 Liberty FTS BJ $8,000 PTEN RPC/Cudd $6,000 ProPetro CJES USWellSVs $4,000 Calfrac SPN $2,000 TUSK BAS QES $0 2014 2015 2016 2017 2018 ProSvs Market $6,173 $3,643 $3,040 $7,2
Slide 22: NoAm Frac HHP
NoAm Frac HHP 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 23: Incremental Frac HHP
Incremental Frac HHP 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 - 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (1,000,000) (2,000,000) (3,000,000)
Slide 24: Frac Equipment Mfrg
Frac Equipment Mfrg $7,000 $6,000 $5,000 $4,000 Millions $3,000 $2,000 $1,000 $0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 25: Frac Pricing is Flat
Q418 Q318 Q218 Q118 Q118 Q417 Q317 Q217 Q117 Q117 Q416 Q316 Q2 16 Frac Pricing is Flat Q1 16 Q1 16 Q4 15 Q3 15 Q2 15 Q1 15 Q1 15 Quarter to Quarter Price Change Q4 14 Hydraulic Fracturing Cost Index Q3 14 Q2 14 Q1 14 Q1 14 Q4 13 Q3 13 Q2 13 Q1 13 Q1 13 Q4 12 Q3 12 Q2 12 Q1 12 Q1 12 Q4 11 Q3 11 Q2 11
Slide 26: Oilfield Markets (B)
Oilfield Markets (B) Hydraulic Fracturing Offshore Contract Drilling Offshore Construction Services Land Contract Drilling Oil Country Tubular Goods Subsea Equipment Wireline Logging Directional Drilling Services Artificial Lift Drilling & Completion Fluids Geophysical Equipment & Services Cementing
Slide 27: NoAm New Well Metrics
NoAm New Well Metrics New Wells Drilled Frac Stages Pumped 12,000 300,000 10,000 250,000 8,000 200,000 6,000 150,000 4,000 100,000 2,000 50,000 0 0 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Reservoir Footage Drilled (millions) Proppant Pumped (billions of lbs) 70 80 60 70 60 50 50
Slide 28: Free to investors
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