National Energy Services Reunited Corp · NASDAQ:NESR
National Energy Services Reunited — Investor Presentation (February 2019)
31 slides from National Energy Services Reunited's investor presentation, February 2019
Slide 1: Investor Presentation
Investor Presentation National Energy Services Reunited Corp. February 2019 Sherif Foda Chairman and Chief Executive Officer
Slide 2: Safe Harbor and Other Disclaimers
Safe Harbor and Other Disclaimers This presentation (the “Presentation”) is for information purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debt or other financial instruments of National Energy Services Reunited
Slide 3: NESR – An Introduction
NESR – An Introduction |3 Strictly confidential – Do not reproduce or distribute Copyright NESR Corp.
Slide 4: NESR – a MENA focused Oilfield Services
NESR – a MENA focused Oilfield Services ▪ Raised $230 million from an IPO on NASDAQ in May 2017 ▪ Agreed to acquire National Petroleum Services (NPS) and Gulf Energy SAOC (GES) in November 2017 in a 1.1 B$ transaction ▪ Transaction closed June 2018 ▪ Trades under the “NESR” ticker on NASDAQ ▪ The fi
Slide 5: NESR – Largest indigenous OFS in the region
NESR – Largest indigenous OFS in the region Iraq Bahrain UAE ▪ Head office in Houston and regional offices across MENA and Asia Pacific ▪ Operations Bases: 14 Countries ▪ 3,600 Employees USA Libya ▪ 20 Product Lines Algeria India Saudi Arabia ▪ Clients Portfolio: 25+ Customers Malaysia Indonesia (Ma
Slide 6: Management Structure
Management Structure Geographical management focused on delivery Technology Groups focused on portfolio and growth |6 Strictly confidential – Do not reproduce or distribute Copyright NESR Corp.
Slide 7: Our Values
Our Values Customer Centric Customer satisfaction is at the center of everything we do We deliver fit-for-purpose technologies & solutions with best-in- class service People and Teamwork Employee engagement, professional development, diversity and health & safety are top priorities Social Responsibi
Slide 8: Production Group
Production Group Unlock Customer’s Full Reservoir Potential Construct Intervene Produce Cementing Coiled Tubing Artificial Lifting Services Primary & remedial cementing Well intervention services Wide range of artificial lift solutions Laboratory Services Stimulation & Pumping Nitrogen Services Engi
Slide 9: Drilling and Evaluation Group
Drilling and Evaluation Group Reach the Reservoir Smarter and Faster Drill Reach Evaluate and Intervene Drilling and Workover Rigs Directional Drilling Slicklines Services Oil and gas well drilling & work overs Directional drilling services & solutions All slickline applications Fishing and Remedial
Slide 10: Large and growing portfolio
Large and growing portfolio Cementing Units Coiled Tubing Units Fluids Pumps N2 Units Machine Shops SMS | FBU Well Testing Packages CH Wireline Trucks Slickline WO Rigs/Hoists Thru Tubing Tools Fishing & Milling Tools Drilling Tools Directional Drilling Fracturing | 10 Strictly confidential – Do not
Slide 11: From the region, for the region…
From the region, for the region… One of the largest indigenous fishing and drilling Signing Ceremony With Saudi Aramco & Dhahran Selected as part of the first round of OFSE cos. to build equipment manufacturing center in the region (Oman) Techno Valley for Opening of R&D Center a state of the art fa
Slide 12: Open Platform approach on Technology
Open Platform approach on Technology Strategic partnerships for R&D and portfolio expansion Rotary Steerable System Mutiphase Flow Meter Perforation Systems Wireless Tools for Production Chemicals (RSS) (MPFM) (PERF) Slickline (CHEM) Advanced Production Well Head System for Next Gen Well Head Downho
Slide 13: Macro Outlook
Macro Outlook | 13 Strictly confidential – Do not reproduce or distribute Copyright NESR Corp.
Slide 14: Middle East Fundamentals
Middle East Fundamentals The Middle East remains amongst the most profitable regions globally due to development costs at the bottom end of the curve Global Liquids Cost Curve Brent Equivalent Forward Looking Breakeven Oil Price, USD/bbl ▪ Full-cycle break-even oil prices are among the lowest global
Slide 15: Last drop of oil will come from…
Last drop of oil will come from… Growing demand for liquid fuels in emerging economies met largely by OPEC and US supplies Middle East | 15 Source: 2018 BP Energy Outlook Strictly confidential – Do not reproduce or distribute Copyright NESR Corp.
Slide 16: 2019 will be a solid year for MENA
2019 will be a solid year for MENA ▪ 2019 v 2018 growth estimates are in the 8%-9%* range compared to 2% estimated growth for 2018 over 2017 ▪ Low end consensus estimate of 6% CAGR growth for Middle East market over the next 4 years ▪ NESR objective is to grow as a minimum at double the market CAGR
Slide 17: Long term trends show significant growth potential for OFS
Long term trends show significant growth potential for OFS Saudi Aramco 10 yr plan updated to $414 Billion update in Dec 2017 ~65-70 B$ average spend on D&C over the next 5 yrs Vs 40-45 B$ over the last 5 yrs App. 75% of the spend in KPC said they expect to spend ~$114bn in capex over Drilling and C
Slide 18: Investment Opportunity
Investment Opportunity | 18 Strictly confidential – Do not reproduce or distribute Copyright NESR Corp.
Slide 19: NESR – 9% CAGR growth (2013-2017)
NESR – 9% CAGR growth (2013-2017) NPS GES NESR ▪ Leading regional provider of integrated energy services in the MENA and Asia Pacific regions ▪ Provider of high-quality integrated oilfield service solutions in the MENA region ✓ ▪ Leading regional well services player ✓ ▪ Focus on local content ✓ ▪ L
Slide 20: Industry leading revenue growth
Industry leading revenue growth Turbo charged growth when the rest of the industry was contracting and an accelerated trend going forward 160 9% Growth $158.0 150 23% Growth $145.6 140 13% Growth 130 $131.4 120 15% Growth $121.2 $117.6 $116.5 $117.9 110 100 $102.3 90 (in $ millions) 80 Q1 2017 Q1 20
Slide 21: Drilling & Evaluation integration on track
Drilling & Evaluation integration on track Drilling and Evaluation revenue grew in excess of 50% over the course of two quarters $61.1 $56.9 $44.8 $36.4 (in $ millions) Q1 2018 Q2 2018 Q3 2018 Q4 2018 1 All growth rates on this slide are quarter-over-quarter comparisons. | 21 Strictly confidential –
Slide 22: Strong growth profile and attractive leverage
Strong growth profile and attractive leverage Revenue CAGR 2013-2018A/E1 EBITDA CAGR 2013-2018A/E1 Leverage (2018A/E)2 4.1x 9% 11% North America North America 3.3x International onshore European onshore diversified drillers OFS services Equipment 2.7x North North 2.3x America America onshore onshore
Slide 23: Significant upside potential
Significant upside potential TEV/EBITDA 2019E TEV/EBITDA 2020E 13.3x 8.6x 8.3x Significant valuation Significant upside 10.2x valuation 6.0x potential upside 5.3x potential 7.4x 4.3x 4.3x 6.3x 6.2x 5.1x Equipment International European North North Equipment International European North North diversi
Slide 24: Increasing free cash flow yield
NESR out performed over the last cycle Increasing EBITDA growth ▪ Analyst consensus estimate of NESR 2013A – 2018E EBITDA CAGR 2017- 2018 revenue growth at ~ 20% 15% (Barclays estimate of market growth at 2%) 10% ▪ Objective for 2018 to repay short term $50 Increasing free cash flow yield million lo
Slide 25: Differentiated ROIC over peers
Differentiated ROIC over peers NESR 2017 ROIC1 of 8.5%2 - Well in excess of industry averages 4-Quarter Trailing ROIC for OFS Sector 10-Year ROIC 5-Year ROIC North North North North America America America America onshore European International onshore onshore International European onshore 20% Equi
Slide 26: NESR represents an unparalleled investment opportunity
NESR represents an unparalleled investment opportunity 1 Strong growth profile 2 Experienced mgmt. team and board 5 Attractive EBITDA margins 3 Attractive returns on invested capital 4 Strong free cash flow profile Diversified Business Model Leading Market Share 100% MENA-Focused | 26 Strictly confi
Slide 27: Executing on our Strategic Vision
Executing on our Strategic Vision Growth Target ▪ Customer focused ▪ National champion ▪ Flawless execution ▪ Open source platform for technologies ▪ Regional value-enhancing acquisitions ▪ People focused to attract the best talent 2017 Geographical Geographical Geographical Drilling Portfolio Evalu
Slide 28: Solving Customers Challenges
Solving Customers Challenges | 28 Strictly confidential – Do not reproduce or distribute Copyright NESR Corp.
Slide 29: Appendix
Appendix | 29 Strictly confidential – Do not reproduce or distribute Copyright NESR Corp.
Slide 30: Adjusted EBITDA and Free Cash Flow (Non-GAAP reconciliation)
Adjusted EBITDA and Free Cash Flow (Non-GAAP reconciliation) Adjusted EBITDA 2017 Free Cash Flow NPS financial results for 2013,2014 are prepared under IFRS and 2015-2017 are prepared under USGAAP; GES 2013-2017 financial results are prepared under IFRS EBITDA is adjusted for impairment which is not
Slide 31: 2018 Adjusted EBITDA (Non-GAAP reconciliation)
2018 Adjusted EBITDA (Non-GAAP reconciliation) NESR ($million) 2018 Revenue 552.5 Net income (loss) 39.5 Depreciation and amortization 69.5 Finance Cost 19.5 Goodwill Impairment - Impairment - Tax 13.1 Transaction & Integration Costs 26.2 Earn-out Adjustment (6.1) Adjusted EBITDA 161.7 Source: Compa
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