Peters & Co Energy Conference

Transcription

1 IT'S ABOUT PERFORMANCE Peters & Co Energy Conference September 14, 2016 IT'S ABOUT PERFORMANCE 1

2 Forward Looking Information Certain information in this document is forward-looking and is subject to important risks and uncertainties. The results or events predicted in this information may differ from actual results or events. Factors which could cause actual results or events to differ materially from current expectations include, among other things, the ability of Trinidad Drilling Ltd. to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits, the availability and price of energy commodities, regulatory environment, competitive factors in the natural gas transportation and natural gas liquids extraction industries and the prevailing economic conditions in North America. For additional information on these and other factors, see the reports filed by Trinidad Drilling Ltd. with Canadian securities regulators. Trinidad Drilling Ltd. disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. IT'S ABOUT PERFORMANCE 2

3 Why Invest in Trinidad? The right rigs for the rebound Canada Heavy-duty double United States 1,500 HP AC triple Flexible cost structure, lowering debt levels Well-located operations for rig reactivation and future growth opportunities IT'S ABOUT PERFORMANCE 3

4 Update from the Field Customer enquiry level increasing significantly Activity levels increasing Dayrates remain low Contract terms lengthening to 6 months or longer IT'S ABOUT PERFORMANCE 4

5 Diversified Operations Canada 72 rigs US 66 rigs Mexico* 6 rigs Saudi* 4 rigs UAE 1 rig * Rigs operating under the JV included at 100 percent; does not include DCM service rigs Operations through North America, Middle East and Mexico Diversification provides opportunities and stability Ability to move existing idle rigs to high demand areas (domestic or international) IT'S ABOUT PERFORMANCE 5

6 Trinidad is Active in the Key Plays Liard Montney Deep Basin Duvernay Bakken Main areas of activity Permian Eagle Ford Montney Deep Basin Duvernay Active Fleet Permian Eagle Ford 8% 25% 8% 14% 25% 20% Permian Deep Basin Montney Eagle Ford Duvernay Other IT'S ABOUT PERFORMANCE 6

7 Right Rigs for Canada Canadian customers want heavy-duty doubles Depth >6,500 metres, high hook-load, and large pumps Triples in select locations TDG s Active Canadian Fleet TDG s Total Canadian Fleet 20% 8% Single 18% 8% 2% Other Double Heavy-duty Double Triple Total Fleet: 72 Rigs 72% 72% IT'S ABOUT PERFORMANCE 7

8 Right Rigs for the United States United States customers want 1,500 AC triples Walking systems and 7,500 PSI circulating systems also in demand TDG s Active US Fleet TDG s Total US Fleet 7% Other Double Triple 1500 AC Triple SCR Triple Mech. 18% 5% Total Fleet: 66 Rigs 24% 93% 53% IT'S ABOUT PERFORMANCE 8

9 Why Customers Chose Trinidad Strong history of operational excellence The right assets for the job Track record of crewing rigs with well trained, skilled people Trinidad has a broad customer base with diverse needs IT'S ABOUT PERFORMANCE 9

10 Consistent Industry Outperformance Trinidad s rigs are more active 70% 60% Canadian Utilization 1 Rates Trinidad s Canadian Utilization TDG US US Average Active Rig Count Trinidad s US Average Active Rig Count US 2,800 2,400 50% ,000 40% ,600 30% 20% Industry Average Industry Average Active Rig Count 1, % % 0 0 Source Canadian Association of Oil Well Drilling Contractors 1: Utilization rate drilling days Source US Baker Hughes Rig Counts, Company Reports excludes rigs on Standby IT'S ABOUT PERFORMANCE 10

11 International Update HAL JV contributing solid Adjusted EBITDA Saudi: three rigs working Mexico: four rigs receiving standby revenue One TDG-owned rig added in UAE Continuing to pursue opportunities to redeploy existing assets through JV and independently IT'S ABOUT PERFORMANCE 11

12 Managing through the Downturn Operating cost control Lower capex Suspended dividend Debt covenant relief Ongoing focus on performance and safety G&A down 50%, $45m in savings 1 1 Compared to Dec 31, 2014, pro forma CanElson IT'S ABOUT PERFORMANCE 12

13 Contract Coverage Impact of long-term contracts Supported activity levels and revenue Early termination revenue drove debt reduction Future of contracts Expect less contract coverage industry wide idle rigs available, dayrates too low to lock in Have 18% or 27 rigs under long-term contract 1 1 At August 2, 2016 IT'S ABOUT PERFORMANCE 13

14 Preparing for the Rebound Ready for the opportunities and challenges Prepared to crew rigs Rigs well maintained and operationally ready Managing upgrade requests to equipment Demand for 7,500 PSI circulating system with third pump Closely monitoring industry behaviour for price inflection point IT'S ABOUT PERFORMANCE 14

15 Times Increased Financial Flexibility Net debt lowered by $124m in last 12 months Credit facility undrawn (C$100m/US$100m) Covenant relief until Mar 2018 JV distribution paid in Q Net Debt/EBITDA As at June 30, HP PTEN TDG ESI SVY NBR PD PES WRG IT'S ABOUT PERFORMANCE 15

16 Long-Term Debt Reduction Strategy Only debt outstanding is US$450m Senior Notes US$450m Senior Notes Debt Refinancing Plan Debt/EBITDA x Non-covenant debt Interest of 7 7/8 % Currently trades at ~US$92.00 Matures in 2019 Redeemable at par in 2017 Refinancing goals - smaller note - currency balance - extended maturity Long term goal for lower overall leverage Target range - 1.0x at top - 2.0x at bottom IT'S ABOUT PERFORMANCE 16

17 Why Invest in Trinidad? The right rigs for the rebound Canada Heavy-duty double United States 1,500 HP AC triple Well-located operations for rig reactivation and future growth opportunities Flexible cost structure, lowering debt levels IT'S ABOUT PERFORMANCE 17

18 Non-GAAP Measures Definitions This document contains references to certain financial measures and associated per share data that do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. These financial measures are computed on a consistent basis for each reporting period and include Adjusted EBITDA, Total Debt to EBITDA, drilling days, operating days, utilization rate - drilling day, utilization rate - operating day, and rate per operating day. These non-gaap measures are identified and defined as follows: Adjusted EBITDA is used by management and investors to analyze the Company's profitability based on the Company's principal business activities prior to how these activities are financed, how assets are depreciated and amortized and how the results are taxed in various jurisdictions. Additionally, in order to focus on the core business alone, amounts are removed related to foreign exchange, share-based payment expense, impairment expenses and the sale of assets, as the Company does not deem these to relate to the core drilling business. Adjusted EBITDA also takes into account the Company s portion of the principal activities of the joint venture arrangements by removing the (gain) loss from investment in joint ventures and including adjusted EBITDA from investment in joint ventures. Adjusted EBITDA is not intended to represent net (loss) income as calculated in accordance with IFRS. Adjusted EBITDA is calculated using 100% of the related amounts from all entities controlled by Trinidad where Trinidad may not hold 100% of the outstanding shares. Adjusted EBITDA from investment in joint ventures is used by management and investors to analyze the results generated by the Company's joint venture operations prior to how these activities are financed, how assets are depreciated and amortized and how the results are taxed in various jurisdictions. Additionally, in order to focus on the core drilling business, amounts related to foreign exchange, share-based payment expense, impairment adjustments to property and equipment as well as preferred shares and the sale of assets are removed. Lastly, amounts recorded for the revaluation on the investment of the TDI joint venture are removed as these are non-cash entries and unrelated to the operations of the business. Adjusted EBITDA from investment in joint ventures is not intended to represent net (loss) income as calculated in accordance with IFRS. Utilization rate - drilling day is defined as drilling days divided by total available rig days. Rate per operating day or Dayrate is defined as operating revenue (net of third party costs) divided by operating days (drilling days plus moving days). IT'S ABOUT PERFORMANCE 18

19 Add l GAAP Measures Definitions The Company uses certain additional GAAP financial measures within the financial statements and this document that are not defined terms under IFRS to assess performance. Management believes that these measures provide useful supplemental information to investors, and provide the reader a more accurate reflection of our industry. These financial measures are computed on a consistent basis for each reporting period and include Funds provided by operations, Operating income and Operating income - net percentage or Operating margin. These additional GAAP measures are identified and defined as follows: Operating income is used by management and investors to analyze overall and segmented operating performance. Operating income is not intended to represent an alternative to net earnings or other measures of financial performance calculated in accordance with IFRS. Operating income is calculated from the consolidated statements of operations and comprehensive income (loss) and from the segmented information contained in the notes to the consolidated financial statements. Operating income is defined as revenue less operating expenses. Operating income - net percentage or operating margin (net) is used by management and investors to analyze overall and segmented operating performance excluding third party recovery and third party costs, as well as inter-segment revenue and inter-segment operating costs, as these revenues and expenses do not have an effect on consolidated net earnings. Operating income - net percentage is calculated from the consolidated statements of operations and comprehensive income (loss) and from the segmented information in the notes to the consolidated financial statements. Operating income - net percentage is defined as operating income less third party G&A expenses divided by revenue net of operating and G&A third party costs. IT'S ABOUT PERFORMANCE 19

20 Appendix

21 week 1 week 4 week 7 week 10 week 13 week 16 week 19 week 22 week 25 week 28 week 31 week 34 week 37 week 40 week 43 week 46 week 49 week 52 week 01 week 04 week 07 week 10 week 13 week 16 week 19 week 22 week 25 week 28 week 31 week 34 week 37 week 40 week 43 week 46 week 49 week 52 Industry Update Canadian Industry Active Rig Count 5 year range US Industry Active Rig Count 5 year range Source: Baker Hughes Oil and Gas Rotary Rig Count IT'S ABOUT PERFORMANCE 21

22 Competitive Fleet Trinidad s rigs: High spec fleet Compete well for work in the downturn Ready for the rebound High Performance Rigs 18% 5% 77% Tier 1 - High Hookload, Top Drive, Large Mud Pumps Tier 2 - Must have two of the three (High Hookload, Top Drive, Large Mud Pumps) Tier 3 - Mechanical Rigs, Lower HP, Lower Hookload IT'S ABOUT PERFORMANCE 22

23 1000, Avenue S.W. Calgary, AB, Canada T2P 1G1 T IT'S ABOUT PERFORMANCE investors@trinidaddrilling.com IT'S ABOUT PERFORMANCE 23