INVESTOR PRESENTATION. January 2018

Transcription

1 INVESTOR PRESENTATION January 2018

2 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 developments and strategies for its operations, and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. These forward-looking statements are identified by their use of terms and phrases such as anticipate, achieve, achievable, believe, estimate, expect, intend, plan, planned, and other similar terms and phrases. Forward-looking statements are based on current expectations, estimates, projections and assumptions that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks and uncertainties include: fluctuating prices for crude oil and natural gas; changes in drilling activity; general global economic, political and business conditions; weather conditions; regulatory changes; and availability of products, qualified personnel, manufacturing capacity and raw materials. If any of these uncertainties materialize, or if assumptions are incorrect, actual results may vary materially from those expected. 2

3 TRICAN OVERVIEW

4 OVERVIEW OF TRICAN Strong Financial Position Market capitalization ~ $1.7 billion (November 1, 2017) $150 million net debt (September 30, 2017) Financial investment in US listed company Keane Group (~$142 million, September 30, 2017) Strong cash flow with minimal capital expenditures, opportunities for deployment: NCIB M&A (longer-term) Process optimization Fraction Energy, 4% Acid, Coil, Nitrogen, 7% Cementing, 15% Industrial, 2% Market Leading Positions Canadian market leader in fracturing services Canadian market leader in cementing services Supporting service lines: coil tubing, nitrogen, acid and water management services Fracturing, 72% 4

5 EQUIPMENT AS OF SEPTEMBER 30, 2017 Service Line Total Equipment Active, Manned Active, Maintenance, Unmanned Idled ~ Market Share Fracturing (HHP) 680, , , ,000 30% Cementing (trucks) % Coil tubing (units) n/a Nitrogen (units) n/a Ability to reactivate idle equipment would increment both free cash flow and ROIC: Less than $1.0 million Capex YTD to activate 90,000 fracturing HP equipment this year $3MM to $4MM to activate all of the remaining fracturing fleet ~$0.2MM for cement truck additions 5 CONFIDENTIAL

6 TRICAN Q SNAPSHOT ($ millions) Q Q Revenue $362.8 $78.0 Adjusted Operating Income $98.0 ($3.2) Net Income $46.9 ($14.7) Per Share (diluted) $0.13 ($0.08) Increased frac intensity and job size improve profitability Higher pumping time translates to increased operating margins Q total sand volume increased 143% year-over-year Q sand per well increased 108% over Q Average stages per well increasing Increasing 11% per year 6

7 MARKET DYNAMICS INCREASING WELL INTENSITY Montney Average Tonnes / Well Leading sand per well: tonnes Still below US average sand /well Operating Efficiency is a competitive advantage Estimate ~ 80% of the WCSB market is weighted to higher intensity formations: - Montney - Duvernay - Deep Basin > 50% of the fleet are continuous duty pumps, ideally suited to increasing well intensity environment We continue to work with customers to optimize pumping time: - leading edge > 80% daily pumping time - Utilizing maintenance crews to minimize downtime 7

8 TRICAN COMPETITIVE ADVANTAGE Strong safety record LTI Rate of 0.19 Technical advantage in Canada Numerous engineers embedded in client offices MVP Frac TM system Geological and reservoir services integrated into frac designs Lightweight cement blends Technology retains and grows market share and improves returns Lowers product cost High-quality, efficient operations Significantly lowered cost structure in downturn Large scale going forward 8

9 GEOGRAPHIC COVERAGE Horn River Shale British Columbia Alberta Saskatchewan Manitoba Montney Shale FORT ST. JOHN Deep Basin GRANDE PRAIRIE WHITECOURT HINTON NISKU LLOYDMINSTER DRAYTON VALLEY RED DEER CALGARY BROOKS ESTEVAN MEDICINE HAT Duvernay Shale Viking Tight Oil Cardium Tight Oil Lower Shaunavon Tight Oil Bakken Shale Spearfish 9

10 OUTLOOK % of revenue from liquids rich plays Customer economics in Canadian liquids-rich gas plays are competing with all plays worldwide Driven largely by condensate pricing CDN / US dollar exchange rate helps customer economics Hard committed on approximately half of our manned fracturing equipment Soft commitments on all manned fracturing equipment throughout 2018 Pricing stable with ability to recover cost increases Focus on driving better crew efficiency and increased sand per well to drive better profitability 10

11 OUTLOOK Anticipate customer capex budgets flat year-over-year Gas spending down Liquids spending up Continued growth in service intensity Proppant per well estimated to increase 50% in 2018 The net result is more spend on fracturing and the market will remain undersupplied throughout the year 11

12 OUTLOOK Plan to add one additional fracturing crew in Q May activate four additional fracturing crews in remainder of 2018 Activating 3 additional cement crews for Q1 Looking at activating additional coil crews in 2018 Hiring qualified staff limiting speed of equipment activations but not a barrier to growth 12

13 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 Canyon-Trican combination allows for additional cost savings Annual synergies between $20 and $40 million - $21 million realized as of September 30, 2017 Will implement best practices from both companies Large scale will reduce costs 13

14 GROWTH

15 GROWTH Strong earnings from Trican-Canyon assets with a reduced cost structure as utilization improves Mid-cycle combined EBITDA from Canada (2014): $347million % EBITDA margin 70% utilization Peak combined EBITDA from Canada: $586 million No significant capital required to generate returns Substantial leverage on lower cost structure 15

16 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 after Canyon integrated 16

17 ADDITIONAL GROWTH Retained ownership in Keane allows us to participate in U.S. recovery Approximately 6.5% ownership in Keane Group with potential increased payout from certain economic conditions upon liquidity event Trican received an initial distribution totaling approximately CAD $38 million Trican maintains significant residual value in remaining common stock of Keane and measurable value is dependent on timing and share price of any further liquidating events 17

18 ADDITIONAL GROWTH Year Ending March 15 Keane Holding Company Proceeds Trican Pro Rata Proceeds Trican Pro Rata Proceeds (1.35 CAD/USD Exchange Rate) FRAC USD $9.87 share price: 2018 USD$0.71 billion USD$99 million CAD$134 million 2019 USD$0.71 billion USD$67 million CAD$91 million 2020 USD$0.71 billion USD$67 million CAD$91 million 2021 USD$0.71 billion USD$67 million CAD$91 million FRAC USD $13.87 share price: 2018 USD$1.00 billion USD$178 million CAD$241 million 2019 USD$1.00 billion USD$130 million CAD$175 million 2020 USD$1.00 billion USD$94 million CAD$126 million 2021 USD$1.00 billion USD$94 million CAD$126 million FRAC USD $17.87 share price: 2018 USD$1.29 billion USD$257 million CAD$347 million 2019 USD$1.29 billion USD$209 million CAD$282 million 2020 USD$1.29 billion USD$144 million CAD$195 million 2021 USD$1.29 billion USD$120 million CAD$162 million 18

19 ADDITIONAL GROWTH Non-compete in U.S. until April 2018 Trican will license our technology in U.S. and International markets Licensed sand supplier and chemical suppliers in North America Selling selective chemistry in US and Canada Selling silica dust control product in other industries Exploring technology and product sales internationally 19

20 INNOVATION

21 INNOVATION Trican focuses on separating itself with technology Technology must reduce $/BOE for our customers or lower our costs MVP Frac TM Patented chemical solution that reduces proppant settling in slick water fracs Strong market acceptance in Canada Recent case studies show 20% increased production in the Cardium and 30% increased production in the Montney Signed one license in U.S. with sand supplier and pursuing additional licenses Introduced friction reducers that will lower product cost CleanTRACK - patented dust control product that is being used to control dust on dirt roads 21

22 FINANCIAL OVERVIEW

23 AS OF SEPTEMBER 30, 2017 $106 million drawn on $227 million revolving credit facility $227 million revolving credit facility is committed until April 2020 $40,000 Outstanding Senior Notes (Shown in $CAD) $65 million of Senior Notes Net debt of approximately $145 million (net of cash and currency swaps) $35,000 $30,000 $25,000 $20,000 Company is in full compliance with covenants, and continues to forecast compliance in the future $15,000 $10,000 Capital expenditures approximately $44 million in 1H 2018 Maintenance: $26 million Growth: $15 million Reactivations: $3 million $5,000 $0 Nov-17 Apr Apr Sep-24 USD Notes (unhedged) USD Notes (hedged) CAD Notes 23

24 SHARE BUYBACK NCIB in place to purchase up to 10% of Trican shares before October 2, 2018 Purchased approximately 5.7 million shares at $4.54 per share from October to December 11, 2017 Will continue to pay down debt and purchase shares going forward 24

25 INVESTMENT ADVANTAGES Largest Canadian pressure pumping company Included in S&P TSX Index Executing on share buyback Peer-leading margins in North America 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 structure coming out of downturn Upside to U.S. market recovery through Keane ownership Strong management team that has managed through numerous cycles 25

26 SUMMARY Number of Outstanding Shares (as of December 31, 2017): million Average Daily Volume (one month period): ~1.5 million (as of December 31, 2017) Directors/Officers Ownership: 1.1% (approx. - diluted basis) Market Cap (as of December 31, 2017) $1.4 billion 26

27 INVESTOR PRESENTATION January 2018