Presentation for the Capital One Securities Energy Conference. December 11, 2014

Transcription

1 Presentation for the Capital One Securities Energy Conference December 11, 2014

2 Forward-looking Statements We include the following cautionary statement to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statement made by us, or on our behalf. The factors identified in this cautionary statement are important factors (but not necessarily all of the important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement made by us, or on our behalf. You can typically identify forward-looking statements by the use of forward-looking words such as "may," "will," "could," "project," "believe," "anticipate," "expect," "estimate," "potential," "plan," "forecast," and other similar words. Forward-looking statements may include statements regarding our future financial position, budgets, capital expenditures, projected costs, plans and objectives of management for future operations and possible future acquisitions. Where any such forward-looking statement includes a statement of the assumptions or bases underlying such forward-looking statement, we caution that, while we believe such assumptions or bases to be reasonable and make them in good faith, assumed facts or bases almost always vary from actual results. The differences between assumed facts or bases and actual results can be material, depending upon the circumstances. Where, in any forward-looking statement, we, or our management, express an expectation or belief as to the future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. Taking this into account, the following are identified as important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, our company: the level of demand for and supply of oil and gas, fluctuations in the current and future prices of oil and gas, the level of drilling activity, the level of offshore oil and gas developmental activities, general economic conditions, our ability to find and retain skilled personnel, the availability of capital, and the other factors discussed within the "Business" and "Risk Factors" sections of our Form 10-K for the year ended December 31, 2013 filed by Oil States with the SEC on February 25, You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. 2

3 Company Overview Pure-play oilfield services company o Strong revenues and EBITDA growth o Creating long-term shareholder value through strategic growth and returns on invested capital Two business segments o Offshore Products o Well Site Services Two primary activity drivers o o Investments in global deepwater capital equipment Drilling and completion activity in North America Approximately 44% of trailing September 30, 2014 EBITDA derived from the Offshore Products segment with strong revenue visibility (backlog) 3

4 Oil States Today Consists of Offshore Products and Well Site Services Focused on delivering technology and solutions to the growing deepwater capital equipment and North American shale play markets Pure play energy services company Significant growth opportunities For the Twelve Months Ended September 30, 2014 (1) Well Site Services 46% Offshore Products 54% Well Site Services 56% Offshore Products 44% Revenue= $1.76 Billion EBITDA (2) = $485 Million (1) Excludes corporate costs (2) See non-gaap reconciliation on slide 27 4

5 Strong History of Growth EBITDA (1), (4) $600 (U.S. dollars in millions) $ $ $ $ $ $ (2) 2013 (3) LTM (4) Offshore Products Well Site Services (1) EBITDA excludes corporate costs as well as goodwill impairment charges taken in 2009 and is pro forma for the sale of the tubular services business and the spin-off of the accommodations business (Civeo Corporation) (2) Excluded a $2.5 million gain related to insurance proceeds for a land drilling rig lost in a fire in 2Q 2012 (Well Site Services) (3) Excluded a $3.0 million charge associated with an acquisition-related contingent liability in Well Site Services in 2Q 2013 (4) LTM as of 9/30/14; See non-gaap reconciliation on slide 27

6 Update on Strategic Focus Areas and Outlook Offshore Products segment o Strong backlog level at September 30, 2014 ($543 million) o Market demand favors our proprietary products for deepwater production platforms (FPSO s and TLP s) and subsea pipelines, generating strong revenues and margins o International growth prospects in Brazil, West Africa and Southeast Asia o Acquired Quality Connector Systems in December 2013, increasing our pipeline connector market share and gaining expansionary capacity Completion and production activity in North America drives our Well Site Services segment o Focus on higher-end and proprietary completion services utilized on complex horizontal, multi-zone completions o Deployment of proprietary and high-end services has sustained strong margins in the current market environment 6

7 Offshore Products Segment

8 Driven by Worldwide Deepwater Capital Spending Floating Production Facilities (FPSO s, TLP s and Spars) o Steel catenary riser connectors and receptacles o TLP tendon connectors o Riser tensioning equipment o Welding technology, engineering and services o Cranes Subsea Pipelines o Collet connectors and jumpers o Pipeline end manifolds and pipeline tie-in sleds o Valve products and services o Pipeline repair equipment and services Offshore Drilling, Newbuild Rigs and Vessel Equipment o Mooring and winch systems o Drilling riser FlexJoints o Valve products and services o Conductor casing connectors o Riser repair services 8

9 Global Breadth of Operations Arlington, TX USA Lampasas, TX USA Houston, TX USA OKC, OK USA Tulsa, OK USA Houma, LA USA Aberdeen, Scotland Bathgate, Scotland Barrow, England Marseille, France Baku, Azerbaijan Houston, TX USA Dubai, UAE Mumbai, India Vietnam Rayong, Thailand Singapore Arlington, Houma, & Houston, USA Lagos, Nigeria Rio de Janeiro, Brazil Macaé, Brazil Perth, Australia 9 Operating Division/Sales, Manufacturing & Service Locations Regional Sales Locations; Engineering Centers of Excellence Continuing to expand manufacturing capabilities globally Engineering Centers of Excellence providing global technical support to all Oil States facilities and customers Maximizing efficiency of throughput at existing facilities 2013 capacity added in India, Thailand, Tulsa and Vietnam 2014/2015 capacity additions planned for Brazil, Lampasas, Oklahoma City, and the UK

10 Potential Content Opportunities Floating Production System (FPS) spending for 2014 to 2018 forecasted to grow at an 8.6% CAGR to $79 billion Latin America and West Africa will account for nearly 50% of global spending followed by Southeast Asia Regional FPS Capex Global FPS Installations West Africa 15% Australasia 10% South East Asia 12% Latin America 33% NWECS 11% North America 11% Source: Infield, as of June 2014 Floating Production Systems include: FPS, FPSO, FSU and other floaters 10

11 FPSO and Subsea Tieback Content Steel Catenary Riser (SCR) Free Standing Hybrid Riser (FSHR) Deck Equipment Subsea FlexJoints Receptacles Merlin Connectors Upper Riser Assembly Bend Stiffeners Merlin Connectors Roto Latch Pile Anchors Cranes Mooring Winches Fairleads Clutches & Brakes Spread Mooring Systems Structural Mooring Connector Subsea Tie-in Sleds Subsea Tie-in Manifolds Jumpers Collet Connectors 11

12 Historical Backlog and Bookings Trends $700 $600 $500 (U.S. dollars in millions) $1,000 $900 $800 $700 Backlog & Bookings $400 $300 $200 $100 $600 $500 $400 $300 $200 $100 LTM Revenue $0 $0 1Q'08 1Q'09 1Q'10 1Q'11 1Q'12 1Q'13 1Q'14 3Q'14 Quarter-end Backlog Quarterly Bookings LTM Revenue LTM as of 9/30/

13 Offshore Products Select Major Backlog Awards (Jan 13 Sept 14) Major backlog awards over the past 21 months that are over $10 million: Customer/ Project Market Product Line Products Technip Australia SCR/TLP/Other Products Merlin Joints Saipem Brazil Pipeline Products PLETS, Pipeline Connectors Saipem Brazil Pipeline Products Pipeline Connectors COSCO China Deck Equipment Mooring Winches Dalian Shipbuilding China Deck Equipment Mooring Winches Keppel Fels China Deck Equipment Mooring/Storage Winches, Underwater Fairleads Hess Gulf of Mexico SCR/TLP/Other Products Tendon Top & Bottom Connectors, Receptacles, Assemblies & Bearings Technip Malikai Malaysia SCR/TLP/Other Products Tendon Connectors & Assemblies Total Norway Connector Products Merlin and Swift Joints ExxonMobil Russia Connector Products Leopard & Swift Joints 13

14 Well Site Services

15 Well Site Services Drilling Completion Services Drilling Wireline/ Coiled Tubing Support Frac/Pressure Pumping Support Flowback Well Testing Own and operate 34 land drilling rigs in the Permian Basin (24 rigs) and the Rockies (10 rigs) Rigs are highly mobile, reducing the mobilization time and the necessary crew size Wireline, coiled tubing and gravel pack support equipment and personnel Provide proprietary wellhead isolation equipment and services which are integral to stage frac operations Downhole proprietary extended reach technology Flowback and separation equipment and services Network of over 50 locations in U.S., Canada and Mexico serving North America o Leading market position in oil and gas shale plays o Proprietary, technology driven, HPHT equipment which is well suited for increasingly complex completion requirements International operations in over 25 countries Well testing and production testing equipment and service personnel Growing platform in key shale regions 15

16 Oil States Completion Services Offering Frac Stacks Frac Valves Manifolds Ball Catchers Sand Knockout Units BOPs Plug catchers Chokes Wireline Support Hydraulic Annular Valves Grease Injection Packages / Units Flanges & Swages Pump In Subs Isolation Tools Casing Isolation Tools Wellhead Isolation Tools Tubing Isolation Tools Ball Launchers Proprietary Automatic Launchers Wireline Valves - Tool Traps - Quick Test Subs Lubricators Head Catchers Well Service & Test Pumps Velocity Ball Check Valves Integral Iron Packages Grease Heads Slick Line Stuffing Boxes Spacer Spools Line Wipers Pressure Test Units Gas Buster, Mixing, Sand, & Frac Tanks - Tool & Pipe Baskets Production Services Tempress HydroPull Extended Reach Tools Pulsed Cleanout & Stimulation Tools Motor Gas Separators MGS Water Bypass Sub Jet Rotor High-Pressure Rotary Jet NitroBlast Acoustic Well Stimulation Tools Light Plants & Cranes Thru Tubing Hydraulic Motors Bottom Hole Assemblies Circulating Subs Torque Knuckles Joints Over Shots Wash Tools Mills Tubing Cleaners Completion Fluids Potassium Chloride KCL Alternative Additives H2S Service Equipment Frac Tanks - Portable Mixing Plants Sand Control Wash Pipe Tool Baskets Handling Equipment Frac Heads CoFlex Hoses Hydraulic Chokes TCP Heads Hydraulic Frac Manifolds Well Testing Combination Test Units Test Separators Flare Stacks Line Heaters Flow Iron Dual Plug Catchers Under Balanced Drilling Sand Separators Flowback Manifolds LACT Units 16

17 Broad North American Coverage = OSES Location 17 Region # Locations Northeast 5 Mid-Con 8 TexLa 8 S. Texas, Permian 11 Gulf Coast 7 Rockies 6 Manufacturing 3 Corporate 2 Total 50

18 Complex Completions Driving U.S. Spending and Activity Complex shale well completions, drilling rig efficiency and pad drilling are decoupling U.S. rig count from completion activity With our market presence in all major U.S. shale plays and focus on technology, our completion services activity, as measured by revenue or job tickets, has been outperforming rig count changes Revenue / Active U.S. Rig (in $000 s) $400 $350 $300 $250 $200 $150 $100 $50 $151 Annualized Revenue per Rig For Completion Services Business $207 $215 $223 $260 $272 $327 $ LTM 2,200 14,500 2,000 13,500 1,800 12,500 1,600 11,500 1,40010,500 1,200 9,500 1,000 8,500 1Q10 Completion Services Job Tickets 1Q11 1Q12 1Q13 1Q14 3Q14 Rev/Rig Source: Baker Hughes rig count LTM as of 9/30/2014 Rig Count 18

19 Completion Services Margin Performance With a broad market presence across all major U.S. shale plays coupled with a focus on high-end proprietary technology, our completion services business is performing well compared to other North American companies LTM as of 9/30/2014 Source: public company filings Large Cap peers includes the North American operations of: BHI, HAL, SLB Small Cap peers includes: BAS, KEG, PES, RES, SPN 19

20 U.S. Drilling and Completions Outlook The recent pull-back in oil prices has resulted in lower expectations for drilling and completions activity heading into 2015 While new wells drilled are anticipated to be down 16% y/y, new non-vertical wells are expected to be down 8% y/y New Wells Drilled U.S. 50,000 40,000 43,305 46,504 45,130 48,628 40,612 30,000 20,000 10,000 0 Horizontal Directional Vertical Source: Spears & Associates, December

21 U.S. Drilling and Completions Outlook Total footage to be drilled in 2015 is expected to be down 10% y/y; however, non-vertical footage drilled is estimated to be down 6% y/y Service intensity and increased number of frac stages are projected to continue Footage Drilled U.S. 500 (Millions) Source: Spears & Associates, December

22 Conclusions

23 Key Drivers of Profitability Offshore Products o Strong backlog levels at September 30, 2014 ($543 million) o Robust outlook for future deepwater capital equipment bookings o Continued focus on international expansion o Bolt-on acquisition potential (e.g. QCS, closed in December 2013) o Manufacturing capacity additions (U.S. and non-u.s.) in 2014 and 2015 Well Site Services o Service intensity driven by horizontal drilling, extended laterals and complex completions o Focused on higher-end and proprietary completion equipment o Technology is the key differentiator o Strong margin performance o Rig utilization has improved in

24 Oil States Post Spin-Off of Civeo Transformed into a technology-focused, pure-play oilfield services company o o Offshore Products: deepwater capital equipment Well Site Services: complex shale play development Growth potential with continued international expansion opportunities Quality customer base Opportunity to deploy capital for strategic acquisitions Opportunities to return cash to shareholders o o Repurchased approximately 1.2 million total shares of common stock in 3Q 14 and through October 31, 2014; repurchased 2.5 million shares YTD through October 31, 2014 As of October 31, 2014, $163 million remained available under current share repurchase authorization (expires in September 2015) Goal to create long-term shareholder value through strategic growth and returns on invested capital 24

25 Appendix

26 Strong Financial Position (USD in millions, except percentages and ratios) 26

27 Non-GAAP Reconciliation USD in millions For The Year Ending December 31, For the Three Months Ending, LTM /31/13 3/31/14 6/30/14 9/30/14 9/30/14 Well Site Services Net Income (Loss) $ (97) $ 23 $ 80 $ 94 $ 80 $ 16 $ 24 $ 26 $ 32 $ 98 Income Tax Provision (Benefit) (23) Net Interest Expense (Income) (0) (0) (0) Other Depreciation and Amortization EBITDA (47) Goodwill Impairment Charges Acquisition Related Contingent Liability Insurance Proceeds (3) Adjusted EBITDA $ 48 $ 114 $ 203 $ 232 $ 244 $ 66 $ 63 $ 67 $ 77 $ 273 Offshore Products Net Income $ 47 $ 38 $ 61 $ 88 $ 106 $ 27 $ 27 $ 37 $ 41 $ 132 Income Tax Provision Net Interest Expense Other Depreciation and Amortization EBITDA $ 92 $ 72 $ 107 $ 149 $ 175 $ 52 $ 43 $ 56 $ 61 $ 212 The terms EBITDA and Adjusted EBITDA consist of net income from continuing operations plus interest, taxes, depreciation and amortization. EBITDA and Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included EBITDA and Adjusted EBITDA as a supplemental disclosure because its management believes that EBITDA and Adjusted EBITDA provides useful information regarding our ability to service debt and to fund capital expenditures and provides investors a helpful measure for comparing its operating performance with the performance of other companies that have different financing and capital structures or tax rates. The Company uses EBITDA and Adjusted EBITDA to compare and to monitor the performance of its business segments to other comparable public companies and as a benchmark for the award of incentive compensation under its annual incentive compensation plan. The table above sets forth a reconciliation of EBITDA and Adjusted EBITDA to net income, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles. 27

28 Non-GAAP Reconciliation USD in millions For the Three Months Ending, LTM 12/31/13 3/31/14 6/30/14 9/30/14 9/30/14 Oil States International, Inc. Net Income (Loss) $ 45 $ 35 $ (24) $ 58 $ 114 Income Tax Provision (Benefit) (14) Net Interest Expense Depreciation and Amortization Loss on Debt Extenguishment (0) 107 EBITDA Transaction Costs Adjusted EBITDA $ 104 $ 92 $ 109 $ 123 $ 428 The terms EBITDA and Adjusted EBITDA consist of net income from continuing operations plus interest, taxes, depreciation and amortization. EBITDA and Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included EBITDA and Adjusted EBITDA as a supplemental disclosure because its management believes that EBITDA and Adjusted EBITDA provides useful information regarding our ability to service debt and to fund capital expenditures and provides investors a helpful measure for comparing its operating performance with the performance of other companies that have different financing and capital structures or tax rates. The Company uses EBITDA and Adjusted EBITDA to compare and to monitor the performance of its business segments to other comparable public companies and as a benchmark for the award of incentive compensation under its annual incentive compensation plan. The table above sets forth a reconciliation of EBITDA and Adjusted EBITDA to net income, which is the most directly comparable measure of financial performance calculated under generally accepted accounting principles. 28

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