Johnson Rice Emerging Growth Energy Conference

Transcription

1 Johnson Rice Emerging Growth Energy Conference

2 Forward-Looking Statements This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that Superior expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by Superior based on management's experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond Superior s control, which may cause Superior s actual results to differ materially from those implied or expressed by the forward-looking statements. These risks include a decrease in domestic spending by the oil and natural gas exploration and production industry, a decline in or substantial volatility of crude oil and natural gas commodity prices, the loss of one or more significant customers, the loss of or interruption in operations of one or more key suppliers, the incurrence of significant costs and liabilities in the future resulting from our failure to comply with new or existing environmental regulations or an accidental release of hazardous substances into the environment. These risks and uncertainties are detailed in Superior s Annual Report on Form 10-K for the year ended December 31, 2006 and other reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forwardlooking statements. 2

3 Management Representatives Dave Wallace Chief Executive Officer Thomas Stoelk Chief Financial Officer 3

4 Superior Overview Leading Provider of Comprehensive, High-Tech Well Completion Services Market Data: Market Capitalization $504MM (1/10/08) Exchange/Ticker NASDAQ: SWSI Daily Volume 148,000 Shares Shares Outstanding 23.48MM Insider Ownership 48% Debt < 1% of Book Capitalization 4

5 Smaller Reserves Decreasing First Year IP per New Well Bcfe E 2007E Source: Raymond-James

6 and Faster Depletion Increasing First Year Well Decline Rates 60% Percent Decline 55% 50% 45% 40% 44% 42% 43% 42% 44% 49% 41% 42% 46% 52% 54% 55% 35% E 2007E Source: Raymond-James

7 = More Wells Needed to Maintain Production 30,000 25,000 20,000 15,000 10,000 5, Wells Drilled Annual U.S. Lower 48 Gas Production (Tcf) Declining Well Productivity = Drilling More Wells Wells Drilled Lower 48 Gas Production Source: EIA

8 Resource Plays Filling the Gap Unconventional Gas Wells Require Stimulation, Multi-Stage Fracs and Technical Fluids Expertise Annual Production (Tcfe) U.S. Lower 48 Natural Gas Production 15% Total 45% Total Unconventional Gas Production Offshore Associated-Dissolved Conventional Unconventional Source: EIA 8

9 = Increasing Capital Spending Increased Drilling and Completion Complexity Driving Greater Investment $120 $110 Drilling and Completion Spending (In Billions) $108.4 $100 $90 $80 $70 $72.1 $60 $50 $53.4 $40 $30 $20 $15.7 $25.1 $22.3 $30.4 $10 $ P Natural Gas Spending Oil Spending Source: Spears & Associates Drilling and Production Outlook. March Excludes Dry Hole Costs 9

10 Today s Well Completion Market Market Segment Market Size (Est) Exploratory 12,000 to 15,000 PSI > F Technical Fluids >8,000 to 12,000 PSI 250 to F Low-Tech <8,000 PSI <10,000 Feet Less than F Super High-Tech R&D High-Tech Resource Plays Nitrogen, Cross-Linked Fluids Challenging Down-Hole Environments Reliability and Quality Valued Low-Tech Slick Water Fracs, Price Sensitive 10% to 15% 3 Major Providers 40% to 45% SWSI Expertise 5 Major Providers 40% X Providers 10

11 Competitive Strengths Technical Fluids Expertise for High-Tech Completions High-Value, High-Margin Offerings Comprehensive Range of Services One-Stop Shop Experienced People Operations Leaders have 262 Years Combined Experience with Halliburton, Schlumberger and BJ Operational Excellence Reliable and Predictable Performance Rapid Response/Large Geographic Footprint 26 Service Centers in the Most Active Drilling Regions Management Team with Proven Track Record and Established Client Relationships 11

12 Growth Strategy Vertical Growth (New Service Centers) Since 1997, 2 to 26 Centers Horizontal Growth (New Services in Existing Centers) Down-Hole/Cementing/Stimulation/Nitrogen Foundation of Operational Excellence and Proprietary Processes 12

13 Growing Revenue (In Millions) $300 $250 $200 $150 $100 $50 $0 $15 $26 59% CAGR (1) $34 $ Mos $76 $132 $245 $256 (1). 6-year cumulative annual growth rate. 13

14 Growing EBITDA (In Millions) $80 $70 $60 $50 $40 $30 $20 $10 $0 $3 $8 $8 70% CAGR (1) $12 $15 $33 $68 $ Mos 2007 (1). 6-year cumulative annual growth rate. 14

15 Operations Overview 15

16 26 Service Centers in 38 States Since 1997, Grown from 2 to 26 Service Centers Located In Most Active Resource Plays and Drilling Basins Fleet of 1,054 Specialized Multi-Purpose Trucks (90% for Technical Pumping) 16

17 Revenue by Service Line 2007 (9 mos.) Comprehensive, High-Tech Well Completion Service Line: - Technical Pumping: Stimulation, Nitrogen and Cementing - Down-Hole Surveying: Well Logging and Perforating Stimulation 10% 21% 14% 55% Cementing Nitrogen Down-Hole Surveying 17

18 Cementing Technical Pumping %Revenue ( mos.) Cementing Critical for Protecting Fresh Water Zones and Isolating Productive Zones Exploration and initial drilling Target Zone Cementing Cementing 21% Surface Cementing 54 Cementing Crews (3 to 4 Employees Each) 196 Cement Trucks Created Cement Testing Lab 2006 Up to 14,400 Feet and 300 F Production Completion timeline of standard well 18

19 Logging Down-Hole Surveying Logging 19

20 Logging Down-Hole Surveying %Revenue ( mos.) Open-Hole Logging for Identifying Target Zone Characteristics 44 Logging and Perforating Crews (2 to 4 Employees Each) 18 Logging Trucks Cementing 21% Exploration and initial drilling Surface Cementing Logging Target Zone Cementing Production Completion timeline of standard well 20

21 Perforating Down-Hole Surveying Perforating 21

22 Perforating Down-Hole Surveying %Revenue ( mos.) Cased-Hole Perforating Services Use Explosives to Penetrate the Producing Zones 67 Perforating Trucks and Cranes Up to 17,000 Feet and 6,000 psi Logging and Perforating 14% Cementing 21% Exploration and initial drilling Surface Cementing Logging Target Zone Cementing Perforating Production Completion timeline of standard well 22

23 Nitrogen Technical Pumping Nitrogen 23

24 Nitrogen Technical Pumping %Revenue ( mos) Foam-Based Nitrogen Stimulation for CBM, Shales, Tight Gas Sands, and Low-Pressure Reservoirs 32 Nitrogen Pump Trucks 40 Nitrogen Transport Vehicles 10 Crews (3-4 Employees Each) Nitrogen 10% Logging and Perforating 14% Cementing 21% Exploration and initial drilling Surface Cementing Logging Target Zone Cementing Perforating Nitrogen Production Completion timeline of standard well 24

25 Stimulation Technical Pumping Stimulation 25

26 Stimulation Technical Pumping %Revenue (2007-9mos) Stimulation 55% Fracturing and Acidizing for Increasing Flow of Oil and Gas from Producing Zones Specialized Equipment 27 Crews (6 to 20 Employees) 701 Vehicles (High-Tech Pump Trucks, Blenders and Frac Vans) Nitrogen 10% Logging and Perforating 14% Cementing 21% Exploration and initial drilling Surface Cementing Logging Target Zone Cementing Perforating Nitrogen Stimulation Production Completion timeline of standard well 26

27 Financial Overview

28 Strong Balance Sheet 12/31/2006 9/30/2007 Cash and Equiv. $ 56,752 $ 1,093 Current Assets 55,691 72,873 PPE, net 141, ,456 Other 5,167 8,345 Total Assets 259, ,767 Current Liabilities 28,400 31,848 Long-Term Debt 1,597 1,245 Deferred Taxes 15,133 21,545 Stockholder s Equity 213, ,129 Total Liab & S.E. $259,034 $300,767 Simple Structure Conservative Policies Nearly Zero Debt Positioned for Growth 28

29 Increasing Operating Margins Experience and Increasing Scale Improves Margins 24% 22% 21.7% 20% 18% 18.0% 16% 14% 13.5% 12% 10% Source: Bloomberg 29

30 Net Income Growth Profitable Growth (In Millions) $35 $30 $25 $20 $15 $10 $5 $0 $4 $3 85% CAGR (1) $5 $ Mos $18 $32 $31 (1). 6-year cumulative annual growth rate. 30

31 Capital Expenditure Growth Newer, More Reliable Fleet for Delivering Quality Completion Services (In Millions) $100 $95 $80 $60 $40 $20 $0 $4 $10 $9 $ Mos $41 $75 (1). 6-year cumulative annual growth rate. 31

32 How We Measure Up Growth EBITDA (1) Growth 2005 vs EBITDA (1) Growth 2006 vs % 120% 111% 109% 110% 110% 100% 90% 89% 100% 90% 80% 80% 76% 70% 70% 60% SWSI AVG 60% SWSI AVG (1) EBITDA is a Non-GAAP financial measure. We define EBITDA as net income plus interest expense, taxes, depreciation and amortization expense. In 2006, net income, taxes, interest expense an depreciation and amortization were $31.9 million, $20.8 million, $0.5 million and $14.5 million, respectively. In 2005, net income, taxes, interest expense an depreciation and amortization expense were $9.5 million, $13.8 million, $0.6 million and $8.7 million, respectively. In 2004, net income, taxes, interest expense an depreciation and amortization expense were $5.5 million, $4.2 million, $0.3 million and $5.1 million, respectively. Other companies may define EBITDA differently and we make no representation as to the comparability of our EBITDA to the EBITDA of other companies. (2) Peer group average includes PDC, KEGS, PTEN, BJS, CFW.TO, CLB, WHQ, OIS, RES, TTI, TCW.TO, SPN BAS, SPX, HAL and SLB. 32

33 PEG Ratio relative to Peer Group SWSI Undervalued by 30% vs. Average PEG ratio of Forward P/E SWSI Peers PEG Ratio: % % 15% 20% 25% 30% Consensus Growth Rate Peers used for comparison include: BAS, BJS, CLB,CPX, HAL, KEGS, PDC, RES, SLB, TCW.TO and TTI. Source: Bloomberg 33

34 Company Highlights Advantage in Comprehensive, High-Tech Well Completions High-Margin Technical Fluids/Pumping Expertise 10 Years of Consistent Performance and Growth Revenue 59% CAGR 6-Years EBITDA 70% CAGR 6-Years Visible Future Growth New Service Centers New Offerings in Existing Centers Experienced Management Owns 15% of Shares Outstanding Operations Managers Minimum 24 Years Oilfield Experience Inexpensive, Given Earnings Growth Potential 34