STEP Energy Services — Investor Presentation (July 2022)
29 slides from STEP Energy Services's investor presentation, July 2022
Slide 1: STEP Energy Services Investor Presentation
July 2022 STEP ENERGY SERVICES Investor Presentation
Slide 2: Disclaimer
DISCLAIMER The information contained in this presentation does not purport to be all-inclusive or to contain all information that prospective and subject to numerous risks, it should not be relied on as necessarily indicative of future results. investors may require. Readers are encouraged to conduc
Slide 3: Safety Trust Execution
Founded Safety 2011 Trust Shares Outstanding Execution 68.2 Million Market Cap Possibilities $258 Million* Average Daily Volume 325,000 Number of Employees 1,275 Deployed Frac Fleets 8 * As at July 15, 2022
Slide 4: North American Operations
North American Operations Montney Deep Basin Duvernay Viking Active: Q2-22 Fracturing Coiled Tubing Calgary Consolidated Asset Base – in Q2-2022: Canada 5 spreads 8 units Bakken U.S. 3 spreads 8 units Fracturing (HHP) Coiled Tubing TOTAL: 490,000 29 units Powder River Basin Niobrara Uinta-Piceance D
Slide 5: Creating Shareholder Value
North American fracturing market is tight • Limited available equipment and 12+ month newbuild timelines. • Utilization high: Pricing recovering. Creating STEP is well-positioned to capitalize • Strategic client alignment & geographic diversity. Shareholder • Modern fleet that supports sustainabilit
Slide 6: North American Fracturing Supply and Demand
NORTH AMERICAN MARKET IS TIGHT Canadian Frac Industry Supply vs Demand U.S. Frac Industry Supply vs Demand 3,000,000 30,000,000 2,500,000 25,000,000 2,000,000 20,000,000 1,500,000 15,000,000 1,000,000 10,000,000 500,000 5,000,000 0 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E 2023E 2013 2014
Slide 7: Utilization and Pricing
UTILIZATION HIGH: PRICING RECOVERING STEP FRAC FLEET UTILIZATION ADJUSTED EBITDA MARGINS* 30% 100% 25% 90% 20% 80% 70% 15% 60% 10% 50% 5% 40% 0% 30% -5% STEP entered US fracturing market in Q3 2018 * Adjusted EBITDA is a non-IFRS financial measure and Adjusted EBITDA % is a non-IFRS financial ratio.
Slide 8: STEP is well-positioned in Canada and the US
STRATEGIC CLIENT ALIGNMENT IN BOTH MAJOR MARKETS Canada/US Revenue Canada - Top 10 US - Top 10 Customer Combined - Top 10 Split Customer Split Split Customer Split 62% 38% 20% 60% 40% 41% 80% 59% Canada US Private Public Private Public Private Public Source: STEP (May 2022 YTD) STEP is well-position
Slide 9: Modern and Sustainable Fleet
MODERN AND SUSTAINABLE FLEET PRESSURE PUMPING FLEET (HP)* OVER HALF OF STEP’S FLEET HAS LOW EMISSION PROFILE • Tier 2 dual-fuel Dynamic Gas Blending (“DGB”) (132,500 HP) o Tier 2 DGB CAT engines displace diesel with cleaner-burning natural gas, reduce onsite diesel consumption and lower overall fuel
Slide 10: Diversified Service Offering
DIVERSIFIED SERVICE OFFERING COILED TUBING, FLUID PUMPING, AND NITROGEN • STEP began as a technology focused Coiled Tubing company and now has the largest deep capacity Coiled Tubing fleet in North America. • Leading edge equipment capable of working in deepest basins. o Depth record of 8,030 meters
Slide 11: Return on Equity Moving to Solid Levels
RETURN ON EQUITY MOVING TO SOLID LEVELS Q2-22 TTM ROE vs North American Pressure Pumpers 20% 15% 10% 5% 0% -5% -10% -15% -20% Company A Company B STEP Company C Company E Company D Company F *Projections based on analyst consensus on July 15, 2022 ** ROE is a non-IFRS financial measures. See Non-IFR
Slide 12: Free Cash Flow Yield the Best in Class
FREE CASH FLOW YIELD THE BEST IN CLASS Q2-22 TTM FCF Yield vs North American Pressure Pumpers 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% STEP Company C Company A Company B Company D Company E Company F *Projections based on analyst consensus on July 15, 2022 ** Free Cash Flow Yield is a non-IFRS finan
Slide 13: Enterprise Value to EBITDA Multiple Near the Lowest in Segment
VALUATION PROVIDES COMPELLING UPSIDE POTENTIAL Q2-22 TTM EV/Adj. EBITDA vs North American Pressure Pumpers 10.0x 9.0x 8.0x 7.0x 6.0x 5.0x 4.0x 3.0x 2.0x 1.0x 0.0x Company D Company F Company B Company C Company A STEP Company E *Projections based on analyst consensus on July 15, 2022 ** EV/Adjusted
Slide 14: Leverage Targets in Sight - Debt Reduction Progress
LEVERAGE TARGETS IN SIGHT - DEBT REDUCTION PROGRESS ~$160mm Reduction 300 from onset of debt 250 Net Debt ($ millions) 200 150 100 50 - Initial Q4-18 Q4-19 Q4-20 Q4-21 Q4-22C* *Projections based on analyst consensus Adjusted EBITDA on June 21, 2022 ** Net Debt and Adjusted EBITDA are non-IFRS financ
Slide 15: Q2 Guidance & Outlook
Q2-2022 Adjusted EBITDA: Issued guidance of $42 to Q2 Guidance $50 million vs $37 million ($9.2 million net income) in Q1-2022. & Outlook Q2-2022 Revenues: On track for $250 to $265 million – a new company record. • Canada: Higher pricing on larger multi-well pads. • U.S.: Profitability improving on
Slide 16: Q2 Performance – Rarified Air
Q2 GUIDANCE: BEATING Q1 IS RARE IN CANADIAN PRESSURE PUMPING Q2/22 vs Q1/22 Revenue Q2/22 vs Q1/22 ADJ EBITDA MARGINS 300,000 60,000 $250-265mm 17-19% Margin 250,000 50,000 $219.5mm 200,000 40,000 17% Margin 150,000 30,000 100,000 20,000 50,000 10,000 - - Q1 Q2 Q1 Q2 *Projections based on analyst co
Slide 17: Mid-Line Torque to Top-Line Changes
CONTINUED FINANCIAL PROGRESS Consolidated Revenue Adjusted EBITDA 800,000 130,000.00 120,000.00 700,000 22.5% 110,000.00 6-Month, Yr/Yr 600,000 100,000.00 6-Month, Yr/Yr 90,000.00 500,000 80,000.00 17.5% 70,000.00 400,000 60,000.00 300,000 50,000.00 12.5% 40,000.00 200,000 30,000.00 100,000 20,000.0
Slide 18: The Canadian LNG Story
OUTLOOK: CANADIAN LNG – THE FRACTURING OPPORTUNITY Source: BMO Capital Markets (June 9, 2022) Source: Peters & Co. Limited (June 10, 2022) THE CANADIAN LNG Story • LNG Canada offers Canada a natural gas growth driver missing for many years (2024/2025 trains I/II start-up). • Some forecasts show Cana
Slide 19: How STEP is Creating Shareholder Value
North American fracturing market is tight • Limited available equipment and 12+ month newbuild timelines. • Utilization high: Pricing recovering. How STEP is STEP is well-positioned to capitalize Creating • Strategic client alignment & geographic diversity. • Modern fleet that supports sustainabilit
Slide 20: Investor Relations Contact
587-349-5672 investor_relations@step-es.com www.stepenergyservices.com
Slide 21: Appendix
Appendix 21
Slide 22: Driving ESG Performance
Driving ESG Performance We released our first ESG report on May 11. Please read the complete report on our website. As a part of our commitment, we will: • Pursue ESG priorities that protect the health and safety of our team and the communities in which we work. • Minimize the environmental impact o
Slide 23: ESG In Our Business
Reduce diesel consumption and emissions • With dual-fuel pressure pumping fleet, helped clients displace 18.7 mm liters of ESG In Our diesel with cleaner-burning natural gas. • By using field gas for Canadian dual-fuel operations, operators displaced ~10.5 mm liters of diesel which eliminated 420 ro
Slide 24: ESG In Our Business
Unwavering commitment to safety • Safety is our number one core value and the foundation of our culture; we work to reinforce Goal Zero throughout our professionals’ careers. ESG In Our • 9.5% reduction of Total Recordable Incident Rate (TRIR) compared to 2020; Lost Time Injury Rate (LTIR) was 0.00.
Slide 25: Investing in Industry-Leading Technology
Investing in Industry-Leading Technology We will: • Drive incremental margin. • Increase value to clients. • Pursue sustainable solutions that positively impact our stakeholders. OPERATIONS BUSINESS INNOVATION SYSTEMS • Electric-powered fracturing services • Single Shot IOR™ - post-production oil •
Slide 26: Electric-Powered Assets
ELECTRIC-POWERED ASSETS THE EPIC UNIT • An efficient and versatile integrated coiled tubing and fracturing spread (STEP-XPRS) that delivers ESG-focused benefits to operators. • The purpose-built spread includes an Electric-Powered Integrated Combination unit (EPIC) which is capable of being powered
Slide 27: E-Coil and STEP-conneCT
E-COIL AND STEP-CONNECT REAL-TIME DATA ACQUISITION • As a part of our STEP-IQ™ Real-Time Data Services, e-coil and STEP-conneCT are used during coiled tubing milling operations to provide live downhole data from wellbore conditions. • STEP-conneCT is a downhole data acquisition tool, conveyed using
Slide 28: Single Shot IOR
SINGLE SHOT IOR™ POST-PRODUCTION STIMULATION • Proprietary technology designed to improve post-production recovery with a single pumping treatment of liquid petroleum gas (LPG) into the hydrocarbon-bearing reservoir. • LPG such as propane or butane is pumped into the existing stimulated rock volume
Slide 29: Financial Performance
FINANCIAL PERFORMANCE CO NSO LIDATED HIGHLIGHTS ($000s except percentages) Three months Three months Q1-2022 IN REVIEW ended March 31, ended March 31, 2022 2021 Consolidated revenue $ 219,539 $ 136,812 • Q1-2022 saw a significant increase in activity: Net (loss) income $ 9,173 $ (7,944) A djus ted E
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