Select Water Solutions, Inc. · NYSE:WTTR
Select Water Solutions — Select Energy Services — Investor Presentation (December 2017)
28 slides from Select Water Solutions's investor presentation, December 2017
Slide 1: Investor Presentation
Investor Presentation Select Energy Services, Inc. December 2017
Slide 2: Disclaimer Statement
Disclaimer Statement Cautionary Statement Regarding Forward Looking Statements This presentation contains certain statements and information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Slide 3: Unmatched OFS water-oriented franchise
Unmatched OFS water-oriented franchise Merger with Rockwater combined the #1 and #2 water solutions companies servicing the North American unconventional oil & gas industry. On a Q3 2017 combined basis, Select has: P Annualized Revenue of $1.4 billion P Annualized Adjusted EBITDA of ~$235 million be
Slide 4: Company Snapshot
Company Snapshot Business Overview Q3 2017 Combined Revenue by Service Line1 Leading provider of total water solutions to the U.S. unconventional oil and gas industry End-to-end water solutions extending from 14% Water sourcing to disposal Water Solutions Solutions ~1,400 miles of lay-flat hos
Slide 5: Scalable and Reliable Water Sourcing and Logistics Are Now Critical
Scalable and Reliable Water Sourcing and Logistics Are Now Critical to Unconventional Production Evolution of the Oil & Gas Industry’s Approach To Water Emerging Pre - 2008 2008 - 2010 Current Multi-Well Pad Conventional Vertical Early Horizontal Leading Edge Horizontal Development Frac Water per ~1
Slide 6: Industry Trends Driving Increasing Water Demand
Industry Trends Driving Increasing Water Demand Demand Drivers Growing Water Market Opportunity Horizontal Completions Water Demand (MBbls) Targeting of Stacked Shale Reservoirs 6,680 Increased Use of Horizontal Drilling 6,025 5,180 More Wells per Rig 4,115 More Feet of Wellbore 2,163 More Stages pe
Slide 7: Water Solutions Revenue vs Completions
Water Solutions Revenue vs Completions • Since the market trough in 2Q16, Select’s Water Solutions revenue has dramatically outpaced the growth in completions activity due to a combination of factors including increasing completions intensity, market share capture and a modest amount of pricing reco
Slide 8: Strong Completion Activity Tailwinds
Strong Completion Activity Tailwinds A lag in completions activity relative to drilling activity has resulted in the continued growth of drilled uncompleted well (“DUC”) backlog □ This lag has decoupled the primary market drivers for drilling-oriented (rig count) vs completions-oriented companies
Slide 9: Critical Solutions for Challenges Facing E&P Operators
Critical Solutions for Challenges Facing E&P Operators Solving Logistical Challenges Around Water Increasing completion intensity □ Longer horizontal laterals Maximizing Well Performance □ More stages per foot of Large, complex completion programs require lateral Water sophisticated chemical sol
Slide 10: Market Leading Comprehensive Water and Chemical Solutions Company
Market Leading Comprehensive Water and Chemical Solutions Company Pre-Frac and Flowback Activities Directly Tied to Well Completions Well Testing, Water Hauling and Disposal Temporary Post-Frac Water Treatment/ Transfer Recycling Flowback / Water Water Pre-Frac Hydraulic Fluids Production Well Sourc
Slide 11: Leader in Pre-Frac Water Solutions
Leader in Pre-Frac Water Solutions Highly Differentiated Pre-Frac Water Solutions Platform Permanent Temporary Water Water Water Pipeline Water Sourcing Containment Treatment Infrastructure Transfer 1.5 bn bbls of Full time staff with High-rate transfer to Market leading Company owned annu
Slide 12: Differentiated Automation Technology Capabilities
Differentiated Automation Technology Capabilities Monitoring & Measuring Automation & Remote Control Proprietary hardware and software for water Automated and remote controlled water measurement and monitoring transfer pumps, manifold, proportioning □ Accurate data on water availability systems
Slide 13: Growth of Produced Water Recycling is an Opportunity
Growth of Produced Water Recycling is an Opportunity Some E&P operators are beginning to incorporate produced water gathering and recycling into their field development programs to help manage sourcing and disposal costs Oil & Gas Industry’s Historical Approach to The shift to produced water recyc
Slide 14: Leading Onshore U.S. Flowback / Well Testing Business
Leading Onshore U.S. Flowback / Well Testing Business Flowback / Well Testing Equipment Business Overview Among the largest U.S., onshore flowback / well testing services providers □ Flowback, Well Testing, Frac Support and Production Services providing exposure to completion and production cycles
Slide 15: Industry Leading Customer Base for Water Solutions
Industry Leading Customer Base for Water Solutions Deep customer breadth with no customer concentration as evidenced by largest customer being less than 7% of revenue and top 20 customers representing approximately 50% of revenue1 Top Water Solutions Customers Large, diverse customer base that inc
Slide 16: Differentiated Oilfield Chemicals Franchise
Differentiated Oilfield Chemicals Franchise Oilfield Chemical Solutions Franchise Completion & Specialty Chemicals Production Chemicals Leading developer, manufacturer and provider of Engineered chemical solutions and services chemical technologies primarily for hydraulic designed to improve wel
Slide 17: Comprehensive Suite of Completion Chemicals
Comprehensive Suite of Completion Chemicals Fluid systems provided to a well vary by basin, county and operator – Select is one of the leading providers of the majority of these chemicals Technological expertise enables Select to create customizable solutions for its operators Illustrative Chemi
Slide 18: Market Leader in Nearly Every Major Basin
Market Leader in Nearly Every Major Basin Basin Marcellus/ Eagle Western Services Provided Permian MidCon Bakken Rockies Haynesville Competitors Utica Ford Canada E&P Companies Water Sourcing Various regional private companies Various regional Market Presence Water Transfer private companies Water S
Slide 19: Attractive Underlying Fundamentals
Attractive Underlying Fundamentals Oilfield Pressure Proppant Land Other Oilfield Chemicals Pumpers Companies Drillers Services High completion exposure Hard to replicate platform Low Capital Intensity Favorable Competitive Dynamics More favorable Less favorable Differentiated platform driven by att
Slide 20: Where Do We Rank?
Where Do We Rank? Q3 2017 Annualized Revenue¹ ($ in millions) $2,250 2,024 $2,000 1,909 1,884 1,771 $1,750 $1,500 1,434 1,420 1,380 $1,250 1,131 1,120 $1,000 934 865 835 807 $750 670 656 597 $500 443 413 318 224 201 $250 164 157 74 $0 SPN FRAC RES CJ CFW WTTR SLCA PUMP FMSA BAS TTI CEU NR HCLP OIS T
Slide 21: Recent Momentum in Financial Performance
Recent Momentum in Financial Performance Quarterly Revenue1 Q3 2017 Performance Commentary1 ($ in millions) $355 3Q17 showed sequential revenue growth of $300 18% over 2Q16, representing a current run-rate of over $1.4 billion $221 $191 $167 $139 Adjusted EBITDA increased 34% in 3Q17 to $59 mill
Slide 22: Significant Earnings Capacity & Growth Potential
Significant Earnings Capacity & Growth Potential The combined company generated over $2 billion of revenue and $316 million of Adjusted EBITDA in 2014 Select and Rockwater have made several acquisitions and invested heavily in growth since 2014, including the buildout of the Bakken pipelines and
Slide 23: Strong Balance Sheet and Liquidity Provides Flexibility
Strong Balance Sheet and Liquidity Provides Flexibility Combined Balance Sheet As Of September 30, 20171 Best-in-class balance sheet with ($ in millions) significant liquidity and attractive public currency Upsized credit facility allows financial flexibility for continued organic growth, large
Slide 24: Disciplined Growth Philosophy
Disciplined Growth Philosophy Comprehensive footprint and diverse services and product offerings presents numerous avenues for growth Accretive to Investment opportunities within margins Water Solutions and Oilfield Chemicals provide high return to shareholders Attractive Increases return on marke
Slide 25: Significant Growth Opportunities
Significant Growth Opportunities Evaluating multiple projects that involve the development of fixed infrastructure Water connecting strategic water sources to E&P operator activity Infrastructure Development Recently developed third Bakken Pipeline intake system targeting activity in Williams an
Slide 26: Highly Attractive Investment Profile
Highly Attractive Investment Profile Leading water solutions company in all service lines across all geographies Differentiated completions & production chemicals business adds unique complement to core water solutions franchise Market leader in automated water logistics and pre-frac water mon
Slide 27: Appendix: Non-GAAP Reconciliation
Appendix: Non-GAAP Reconciliation 27
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation Select Energy Services, Inc. 2017 ($ in millions) 2014 2015 2016 Q1 Q2 Q3 Net Income/(Loss) $2 ($82) ($314) ($12) ($10) $3 Taxes 1 0 (1) 0 (0) (0) Interest Expense 17 14 16 1 1 0 Depreciation and Amortization 128 108 97 22 23 24 EBITDA $148 $40 ($201) $10 $13 $27 Net (Income)
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