Trican Well Service Ltd. · TSX:TCW
Trican Well Service — Investor Presentation (May 2017)
34 slides from Trican Well Service's investor presentation, May 2017
Slide 1: Investor Presentation May 2017
INVESTOR PRESENTATION May 2017
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This document contains statements that constitute forward-looking statements within the meaning of applicable securities legislation. These forward-looking statements include, among others, the Company’s prospects, expected revenues, expenses, profits, expected development
Slide 3: Canada
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Slide 4: Overview of Trican and Canyon
OVERVIEW OF TRICAN AND CANYON Market leader in Canada Approximately 680,000 HP fracturing capacity Fraction Industrial, 2% Acid, Coil, Energy, 4% Industry-leading Cement business Nitrogen, 7% Expanded scale of Coiled Tubing, Cementing, Acid, Nitrogen businesses will 15% improve overall profi
Slide 5: Trican and Canyon
TRICAN AND CANYON Strong, loyal customer base Minimal customer overlap between companies Complementary cultures and vision Significant growth with approximately 245,000 HP parked fracturing capacity Technology advantage in Canada 5
Slide 6: Trican-Canyon Equipment
TRICAN-CANYON EQUIPMENT Trican-Canyon Canadian fleet • 680,000 fracturing HP • 62 Cementing units • 55 N2 Pumpers • 31 Acid Units • 26 Deep Coil Units Approximately • 35% of fracturing capacity parked • 50% of other services parked Equipment not scavenged • Estimate $3.5 million Capex to activ
Slide 7: Trican and Canyon - Synergies
TRICAN AND CANYON - SYNERGIES Annual synergies between $20 and $40 million Complete geographical overlap Real estate synergies an additional $7 to $8 million Will implement best practices from both companies 7
Slide 8: Trican and Canyon – Transaction Overview
TRICAN AND CANYON – TRANSACTION OVERVIEW Trican to acquire all of the issued and outstanding shares of Canyon in an all-share transaction Transaction Canyon shareholders to receive 1.7 shares of Trican for each common share held Overview: Total consideration of ~$637 million, including the ass
Slide 9: Trican and Canyon – Transaction Metrics
TRICAN AND CANYON – TRANSACTION METRICS Accretive deal for Trican Approximately 15% to 20% above replacement value of Canyon $1500 USD / HP as compared to U.S. recent IPO’s of $2870 USD / HP and $2600 USD / HP 9
Slide 10: Strong Financial Position
STRONG FINANCIAL POSITION Creates the premier pressure pumping company in Canada One of the largest service companies in Canada Combined market cap of approximately $1.3 billion Well positioned for index inclusion Strong balance sheet with roughly $145 million net debt Significant capabi
Slide 11: Trican – Competitive Advantage
TRICAN – COMPETITIVE ADVANTAGE Strong safety record • TRIR rate of 1.40 and LTIR rate of 0.10 Technical advantage in Canada • Numerous engineers embedded in client offices • MVP FracTM system • Geological and reservoir services integrated into frac designs • Lightweight cement blends • Technolog
Slide 12: Geographic Coverage
GEOGRAPHIC COVERAGE Horn River Shale British Columbia Alberta Saskatchewan Manitoba Montney FORT ST. JOHN Shale GRANDE PRAIRIE Duvernay Shale WHITECOURT HINTON NISKU LLOYDMINSTER DRAYTON VALLEY Viking RED DEER Tight Oil Deep CALGARY Basin BROOKS ESTEVAN Bakken Spearfish Cardium Lower Shaunavon Shale
Slide 13: Trican Equipment – Fracturing Pumps
TRICAN EQUIPMENT – FRACTURING PUMPS 85% of Trican’s active fleet already running continuous duty Quintuplex high HP pumps Canyon converting pumps to new technology continuous duty pumps 70% of fluid ends converted to stainless steel • Gives 4 times longer life 40% reduction in pumper equipme
Slide 14: Trican - Outlook 2017
TRICAN - OUTLOOK 2017 Estimate 6,700 wells to be drilled in 2017 (PSAC Forecast) • Up 65% year-over-year Industry capacity balanced by year-end Anticipate full utilization of staffed equipment for remainder of the year Deep Basin, Montney, Duvernay activity generates 70-75% of Trican revenue
Slide 15: Trican - Outlook 2017
TRICAN - OUTLOOK 2017 Fully booked for active equipment in major service lines through to Q4 Q2 programs significantly higher than 2016 • Fracturing fleet fully booked in Q2 • Will still have weather issues Second half of 2017 activity looks strong based on current commodity prices Looking t
Slide 16: Trican - Outlook 2017
TRICAN - OUTLOOK 2017 Will face cost increases from Q2 onward for products, spare parts, third-party hauling and labour Contracts allow for recovery of major input costs Cost savings on products anticipated from new technology introductions Additional scale will provide more leverage on fixe
Slide 17: Trican - Outlook 2017
TRICAN - OUTLOOK 2017 Increased frac intensity and job size Sand volume up 46% per well year-over-year Average sand per well increasing • Currently 2,700 tonnes / well in Montney • Leading edge sand volume 4,000 tonnes per well • Still 40% below US average Average stages per well increasing
Slide 18: Trican – Cost Savings
TRICAN – COST SAVINGS Fixed costs reduced by $140 million per year since the start of the downturn Minimal fixed cost increases going forward as business improves Lowered fixed/variable cost ratio • Fixed costs now 25% of costs as compared to 50% pre-downturn Variable costs reduced by 27% si
Slide 19: Growth
GROWTH
Slide 20: Growth
GROWTH Strong earnings from Canadian assets with a reduced cost structure as utilization improves • Mid-cycle EBITDA from Canada (2014): $226 million (19% EBITDA margin) • Peak EBITDA from Canada: $465 million No significant capital required to generate returns Substantial leverage on lower co
Slide 21: Growth
GROWTH We will focus on: • Being on leading edge of cost and operational efficiencies • Achieving cost advantages through size and scale in Canada • Separating ourselves through safety, technology, service quality and innovation Will explore adding or growing additional service lines in Canada a
Slide 22: Additional Growth
ADDITIONAL GROWTH Retained ownership in Keane allows us to participate in U.S. recovery 10% ownership in Keane Group with potential increased ownership from certain economic conditions upon liquidity event • Keane announced pricing of its IPO on January 20, 2017 • Trican received an initial dist
Slide 23: Additional Growth
ADDITIONAL GROWTH Non-compete in U.S. until April 2018 and first right to purchase the Keane business should we decide to re-enter the U.S. Trican will license our technology in U.S. and International markets • Licensed one sand supplier in North America 23
Slide 24: Innovation
INNOVATION (20)
Slide 25: Innovation
INNOVATION Trican focuses on separating itself with technology Technology must reduce $/BOE for our customers or lower our costs MVP FracTM • Patented chemical solution that reduces proppant settling in slick water fracs • Strong market acceptance in Canada • Recent case studies show 20% incre
Slide 26: Innovation – TriVert Diverting Agent
INNOVATION TriVertTM Diverting Agent • Can be used in new completions or refracturing treatments • Redirects fluid into new sections of the wellbore • Contains particles that dissolve with time and temperature • Results in increased production without further well intervention 26
Slide 27: Trican Reservoir Solutions
TRICAN RESERVOIR SOLUTIONS Geological Solutions • Offer unconventional rock analysis, core testing and rock mechanics Reservoir Solutions • Reservoir model that integrates geological and frac data to optimize long-term reservoir recoverability 27
Slide 28: Sustainable Innovation
SUSTAINABLE INNOVATION EcoClean Fluids • Continuing to expand our line of environmentally friendly fracturing fluids Water Management and Reduction • Developed a 100% recycled water crosslinked fluid solution with no mechanical treatment • Recycled water used on most fracturing projects in the U
Slide 29: Financial Overview
FINANCIAL OVERVIEW
Slide 30: As of May 2, 2017
AS OF MAY 2, 2017 $69 million drawn on $227 Outstanding Senior Notes (Shown in $CAD) million revolving credit facility $40,000 $227 million revolving credit $35,000 facility is committed until 2018 $30,000 $67 million of Senior Notes $25,000 $20,000 Net debt of approximately $15,000 $110 mil
Slide 31: Cash Flow
CASH FLOW Managing cash flow and liquidity a key focus Dividend suspended until financial performance improves Total capital spend estimated at less than $10 million in 2017 • No expansion initiatives will be considered until financial performance improves • Will be reviewed quarterly Approx
Slide 32: Investment Advantages
INVESTMENT ADVANTAGES Trican-Canyon deal increases scale Trading substantially below U.S. pressure pumpers Significant earnings potential on existing assets • No significant capital required Equipment base not scavenged and ready to go when activity increases High leverage on low cost stru
Slide 33: Summary
SUMMARY Number of Outstanding Shares (as of May 2, 2017): • 193.6 million Average Daily Volume (one month period): • 1,261,982 (as of May 2, 2017) Directors/Officers Ownership: • 0.87% (approx. - diluted basis) Market Cap: • $728 million as of May 2, 2017 33
Slide 34: Investor Presentation
INVESTOR PRESENTATION May 2017
Trican Well Service — Investor Presentation (May 2017) on 6ix