TRINIDAD DRILLING A LEADING PERMIAN POSITION AND SIGNIFICANT UPSIDE FROM PRODUCT EXPANSION

Transcription

1 TRINIDAD DRILLING A LEADING PERMIAN POSITION AND SIGNIFICANT UPSIDE FROM PRODUCT EXPANSION APRIL 2018 TD Securities Inc th Avenue S.W., 36th Floor, Calgary, Alberta T2P 4K9 Telephone:

2 Opportunity Overview High Quality Assets & Leading Operational Performance High quality asset base with over 70% of Trinidad s U.S. fleet classified as high spec, and 50% as ultra-high spec (1) Strong activity gains in core U.S. market; operating days increased >100% year-over-year (2) Leading operational performance and safety track record»» 2017 Total Recordable Incident Rate of 0.24 Broad Customer Base Underpinned by Leading E&Ps Strong customer relationships with leading E&Ps in both Canada and the U.S.»» Exposure to 50% of the top 20 Permian drillers and 40% of top 20 Montney drillers over the last three years (3) 31 rigs under long-term contract with select commodity-priced contracts providing additional revenue upside (4) Diverse Geographic Footprint Exposure to key North American basins with a leading position in the Permian»» Over 65% of Trinidad s net revenue comes from outside Canada Targeted International operations characterized by high day rates historically contracted with select NOC counterparties Significant Product Expansion Upside Trinidad provides an integrated suite of drilling services augmented by automation/technology Industry leading RigMinder technology platform provides value added customer solutions and is an emerging cost saving and efficiency technology platform Addressing customer demand for one stop solutions Trinidad has a leading Permian position and significant upside from product expansion (1) Pro forma for 2018 rig relocations and capital upgrade program (2) Based on Q and Q reporting days (3) Source: geoscout, Drilling info (4) As at Feb 26,

3 Active in Key North American Plays NORTH AMERICAN FOOTPRINT Cardium Montney Deep Basin Duvernay Bakken / Torquay Frobisher ACTIVE FLEET (1) Miles km Permian Haynesville Eagle Ford LEGEND Permian Montney SE Sask Duvernay Eagle Ford Cardium Other RIG BY TYPE (% / #) (1) U.S. Canada Int. / JV Total 13% (9) 47% (68) 76% (50) 76% (52) 82% (9) 46% (67) 23% (15) 1% (1) 18% (2) 3% (4) 2% (1) 9% (6) % (6) Single Double Heavy Double Triple Trinidad holds leading positions in the most active North American basins (1) As at Feb 26,

4 Leading Permian Position PERMIAN ACTIVE RIG COUNT (1) % Permian active: TDG % 10% 8% 7% 7% 4% 4% 3% 2% 2% Trinidad is a top 5 Permian driller with ~50% of U.S. assets focused in the play TRINIDAD PERMIAN RIG COUNT Current Trinidad has a successful track record of growth in the Permian; driven by top-tier performance and working with leading E&P customers (1) Source: RigData, as at Feb 26,

5 Large Scale Operator FINANCIAL & OPERATING OVERVIEW 2017 Net Revenue (1) $68 13% 2017 Op. Income (1) $37 19% $183 34% Total $537 $286 53% LEGEND $66 34% Total $194 $91 47% 2017 Op. Days (2) 1,278 6% U.S. Canada JV Rig Count (3) 11 8% 9,004 40% Total 22,206 11,924 54% 68 47% Total % Over 65% of Trinidad s net revenue comes from outside Canada CAPITALIZATION SUMMARY (4)(5)(6) (C$mm) Share Price $1.70 Shares Outstanding (F.D.) 273 Market Capitalization (F.D.) $465 Net Debt $533 Enterprise Value $998 (C$mm) Book Value of Equity $1,263 Drawn Credit Facility $ Senior Notes $452 Total Debt $537 Cash $4 Net Debt $533 Book Capitalization $1,796 Book Value of Fixed Assets $1,579 (1) JV contribution shown at 60% interest (2) JV contribution shown at 100% interest (3) Rig count as at Feb 26, 2018; includes international rig not within the JV (4) Balance sheet data as at December 31, 2017, adjusted for FX rate of 1.29 as at April 2, 2018 (5) Market data as at April 2, 2018 (6) Book Value of Fixed Assets inclusive of Investment in Joint Venture 5

6 RigMinder - Additional Revenue Opportunities RIG SPECIFIC Real-time monitoring of rig and drilling process RigMinder EDR Integrates with TDG s control system Provides access and ownership of data WELL PATH AND FRAC OPTIMIZATION Improve wellbore placement and frac results Pursuing software opportunities to optimize completion results DIRECTIONAL OPTIMIZATION Horizontal drilling advisory, automation, well engineering Criterion bit guidance Real Time Operating Centres Criterion automation DOWNHOLE TOOL INTEGRATION Enhances overall drilling performance Criterion provides flexibility of tool/ technology choices Access to state of art technology Additive to the value chain Trinidad is adding incremental revenue generating services on top of its existing high spec rig fleet, driving higher revenue per day and lowering execution risk 6

7 Additional Drilling Fleet Characteristics RIG BY HORIZONTAL DEPTH CAPACITY (m) U.S. 6% (4) 11% (7) Canada 10% (7) Int. / JV 36% (4) 50% (33) 66% (45) 9% (1) 36% (4) 30% (20) 3% (2) 66 7% (5) 7% (5) 9% (6) 68 18% (2) 11 <4,000m <5,000m <6,000m <7,000m 7,000m Trinidad has spent >$215 million in growth and maintenance capital over the last two years, leading to a significant proportion of the fleet being classified as ultra-high spec RIG BY HOOKLOAD (lbs) U.S. Canada 13% (9) Int. / JV 25% (17) 76% (50) 82% (9) 53% (36) 23% (15) 2% (1) 66 4% (3) 4% (3) 68 18% (2) 11 <200,000 lbs <300,000 lbs <400,000 lbs <500,000 lbs 500,000 lbs Trinidad s rig fleet has the capacity to drill the deepest and most complex wells across all operating regions 7

8 Optimizing Canadian Fleet to Customer Needs CANADIAN UTILIZATION RATES (1) 60% LEGEND Industry Utilization TDG Canada Utilization 45% TRINIDAD S CANADIAN FLEET COVERAGE Trinidad Rig Horizontal Depth Capacity (2) Canadian Wells Drilled by Measured Depth Since 2016 (3) 26% 30% 91% 7% 9% 16% 15% 42% 9% <2,000m <2,500m <3,000m <3,500m 3,500m Trinidad has historically achieved superior utilization for its Canadian rigs Canadian rig fleet able to drill all well depths currently targeted in the WCSB High-Graded International Footprint HISTORICAL JV DAY RATES & UTILIZATION (2) $125,000 $100,000 U.S. ($) LEGEND $75,000 JV Day Rate (US$) JV Utilization $50,000 $25, % 80% 60% 40% 20% (%) Strategic Joint Venture: Trinidad (60%), Haliburton (40%) Diversified across multiple jurisdictions; historically contracted with select NOC counterparties Provides Trinidad first look at all of HAL s Integrated Project Management Drilling opportunities Historically acheived margins >40% $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q % (1) Source: CAODC (2) Source: Management information (3) Source: geoscout 8

9 Experienced Leadership BRENT CONWAY, PRESIDENT AND CEO Brent Conway joined Trinidad Drilling in 2001 as CFO, was promoted to President in In March of 2017, he was appointed President and CEO. Brent began his business career in 1991 joining Deloitte and Touche, Chartered Accounts where he advanced through the audit group reaching the level of Senior Accountant. In 1994, Brent joined Bowridge Resource Group Inc. in the capacity of Corporate Controller. He was promoted to CFO in 1996 and was promoted again in 1999 to VP Finance and CFO. Brent left Bowridge in 2001 when the company was purchased and privatized. LESLEY BOLSTER, CFO Lesley Bolster joined Trinidad Drilling in 2009 as Corporate Controller and in 2011 was promoted to VP Finance & Treasurer. In 2012, she was promoted to CFO. Lesley received her Chartered Accountant designation in 1997 while working at Grant Thornton, Chartered Accountants. In 1998, she joined Ernst & Young, Calgary and advanced to Manager, Assurance & Advisory services in In 2001, Lesley joined a TSX listed technology company, Wireless Matrix Corporation as Controller and was promoted to Interim CFO in Due to restructuring of the company s head office to the United States, Lesley left Wireless Matrix and joined Gienow Windows and Doors Income Fund in 2004 to assist in establishing its public and trust structure. In 2007, Lesley assisted in the privatization of Gienow working with its new private equity ownership. During this time, she was promoted to VP Finance. ADRIAN LACHANCE, COO Adrian Lachance joined Trinidad Drilling in 2003 as SVP Business Development. Adrian now holds the position of COO. He is also responsible for recognizing and capturing opportunities for the growth and expansion of Trinidad Drilling s operations. He was an integral part of Trinidad s initial move, and subsequent expansion and success in the United States. His expansive knowledge base, contacts and experience in deep, technical drilling have been a key addition to Trinidad s management team. Prior to joining Trinidad Drilling, Adrian owned his own successful drilling business. He has extensive experience in the drilling industry, having worked in the sector for almost 30 years in the drilling, well servicing and oil sands areas. 9

10 Process & Key Contacts Trinidad has engaged TD Securities as its exclusive financial advisor to undertake a comprehensive review to identify and consider a broad range of alternatives and their potential to enhance shareholder value, including, but not limited to, a sale of selected assets, a merger, a corporate sale, a strategic partnership, various capital re-deployment opportunities or any combination of the foregoing, (the Process ). It is the intention of Trinidad and TD Securities to conduct the process such that it minimizes any disruption to Trinidad s operations. Interested parties should not contact Trinidad directly regarding any aspect of the process. A Confidentiality Agreement may be requested by contacting one of the individuals at TD Securities listed on this page. Virtual Data Room access may be obtained upon executing and submitting a Confidentiality Agreement via to the attention of David Krauss (david.krauss@tdsecurities.com). All other inquiries, communications or additional information requests related to the Offering, should be directed to one of the individuals listed on this page. Key Process Dates: Virtual Data Room: Week of April 9 th Management Presentations: Beginning the week of April 23 rd Bid Date: TBD TD SECURITIES TD Canada Trust Tower Suite 3600, 421-7th Ave SW Calgary, AB T2P 4K9 Tel: INVESTMENT BANKING Scott Barron Managing Director T: scott.barron@tdsecurities.com Taso Arvanitis Vice President T: taso.arvanitis@tdsecurities.com Greg Saksida Managing Director, Head U.S. Investment Banking T: greg.saksida@tdsecurities.com David Krauss Associate T: david.krauss@tdsecurities.com Scott Davis Managing Director, Energy M&A T: scott.davis@tdsecurities.com Gilles Hickey Associate, M&A T: gilles.hickey@tdsecurities.com 10

11 Advisory This Information Summary (the Summary ) is being furnished solely for use by prospective purchasers ( Prospective Purchasers ) in connection with the strategic review ( Strategic Review ) of Trinidad Drilling Ltd. (the Company ) and is not binding in any way. The Company has retained TD Securities Inc. ( TD Securities or the Advisor ) as its financial advisor in connection with a Strategic Review of potential alternatives to enhance shareholder value. The Strategic Review includes, but is not limited to, a sale of selected assets, a merger, a corporate sale, a strategic partnership, various capital re-deployment opportunities or any combination of the foregoing. This Summary is based on information supplied by the Company and from other sources. This Summary includes certain statements, estimates and projections provided by the Company with respect to its management s subjective views of the anticipated future performance of the Company s business. Such statements, estimates and projections are identified by words such as estimate, forecast, expect, potential, or similar expressions and includes suggestions of future outcomes. Such statements, estimates, and projections reflect various assumptions by the management of the Company concerning anticipated results, which assumptions may or may not prove to be correct. These projections have not been independently verified and cannot be regarded as forecasts. The pro forma and estimated financial information contained herein was prepared expressly for use herein and is based on certain assumptions and management s analysis of information available at the time this Summary was prepared. There can be no assurance that management s views or assumptions are accurate or that management s projections and forward-looking statements will be realized. Industry experts may disagree with these assumptions and with management s view of the market and the prospects for the Company. The actual results may vary from the anticipated results and such variations may be material. For additional information regarding the underlying assumptions made by management in developing forward-looking information and the risks and uncertainties associated with such information, please see the advisories contained in the Company s most recently filed Management Discussion & Analysis and Annual Information Form filed on SEDAR. No representations are made, and any and all representations are hereby expressly disclaimed, as to the accuracy of such statements, estimates or projections, and none of the Advisor or the Company has any obligation to update or correct any such information. Only information and representations and warranties specifically contained or referred to in a definitive purchase agreement, if any, and subject to such limitations and restrictions as may be contained or made in a definitive and final written agreement, when, as and if executed, will have any legal effect. No person has been authorized to provide any information with respect to the Company or the Proposed Transaction except the information contained herein. Unless otherwise stated, this Summary presents information with respect to the Company as of the date hereof. In furnishing this Summary, the Advisor and the Company reserve the right to amend or replace the Summary at anytime and undertake no obligation to provide any Prospective Purchaser with any additional information, or to update, or to correct any inaccuracies which may become apparent in this Summary or any other information made available in connection with the Proposed Transaction. The Advisor, including its respective subsidiaries, controlling companies, affiliates, companies under common control and their directors, officers, employees, advisors and other representatives ( Representatives ) expressly disclaims any and all liability relating to or resulting from the use of the Summary or such other information, reliance on the information contained herein, or the distribution or possession of this Summary, including without limitation, any market analysis and financial projections that may be contained herein or provided in connection herewith, by a Prospective Purchaser or its affiliates or any of their respective directors, officers, employees, advisors or other representatives. The Advisor has not independently verified any of the information, including the projections, contained herein. None of the Advisor, the Company nor any of their respective Representatives makes any representation or warranty, express or implied, as to the accuracy or completeness of any of the information contained in the Summary or any other information (whether communicated in written or oral form) transmitted or made available to Prospective Purchasers. In providing this Summary, the Advisor is not acting as financial advisor, intermediary and/or distributor of securities to or for any Prospective Purchaser and has no fiduciary responsibility of any kind to any Prospective Purchaser. The information contained herein does not purport to be all-inclusive or contain all of the information that a Prospective Purchaser may need or desire. Before deciding to participate in the Proposed Transaction, Prospective Purchasers shall take all measures that they deem necessary to ensure the due understanding of the Proposed Transaction in all its aspects and make an independent assessment of the merits, terms, conditions, risks, suitability and appropriateness of any transaction and/or any related securities described herein. Prospective Purchasers should also seek advice from specialized advisors (financial, tax, legal and accounting, among others) to make such assessment. The Company reserves the right to terminate, at any time, solicitations of interest for a transaction involving the Proposed Transaction or future participation in the investigation and proposal process by any party. Any dealings, negotiations and/or discussions that may be initiated or established with a Prospective Purchasers may be interrupted at any time without any explanation. No responsibility can be attributed to the Advisor for any interruption of any ongoing discussions. The Company reserves the right to negotiate with one or more Prospective Purchasers at any time and to enter into a definitive agreement for a transaction involving the Proposed Transaction without prior notice to any other Prospective Purchaser. The Company also reserves the right to enter into exclusive discussions with any third party at any time without incurring any liability whatsoever. Finally, the Company and the Advisor reserve the right to modify, at any time, any procedures relating to such process, or terminate or extend the process, without assigning any reason therefore and reject or decline any proposals at its sole discretion. The Company reserves the right to take any action, whether in or out of the ordinary course of business, including but not limited to the sale of any securities or property, which the Company deems necessary or prudent in the conduct of such business. This Summary does not constitute nor does it form part of an offer to sell or purchase, or the solicitation of an offer to sell or purchase, any securities or any of the businesses or assets described herein or an offer of financing or an offer or recommendation to enter into any transaction described herein. Neither this Summary nor its contents will form the basis or part of any contract. No transaction or service related thereto is contemplated without a written agreement. The information contained in this document is not intended to constitute a report, statement or opinion of an expert for purposes of Canadian securities legislation. 11