TSX:CFW. CALFRAC WELL SERVICES LTD. Investor Presentation June 2014

Transcription

1 TSX:CFW CALFRAC WELL SERVICES LTD. Investor Presentation June 2014

2 Forward Looking Statement Certain information contained within this presentation and statements made in conjunction with this presentation, including information and statements that contain words such as anticipates, can, may, believe or believes, forecast, will and similar expressions, are forward-looking statements. These statements may include, but are not limited to, future capital expenditures, future financial resources, future oil and gas well activity, outcome of specific events and trends in the oil and gas industry. These statements are derived from certain assumptions and analyses made by the Company based on its experience and interpretation of historical trends, current conditions and expected future developments, and other factors that it believes are appropriate in the circumstances. These statements or predictions are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from the Company s expectations. These risks and uncertainties include the items discussed under the heading Business Risks in the Company s 2013 Annual Report and most recently filed Annual Information Form. Consequently, all of the forwardlooking information contained within this presentation and statements made in conjunction with this presentation are qualified by these cautionary statements and there can be no assurance that actual results or developments anticipated by the Company will be realized or that they will have the expected consequences or effects on the Company or its business or operations. Other than as required by applicable securities laws, the Company assumes no obligation to update publicly any such forward-looking information or statements, whether as a result of new information, future events or otherwise. 2

3 Company Snapshot TSX Stock Symbol CFW Share Price $19.15 (6/3/2014) Market Capitalization $1.8 billion Quarterly Dividend $0.125 per share Dividend Yield Shares Outstanding 2.6 percent (6/3/2014) 94.2 million (6/2/2014) 30-Day Avg. Volume 513,750 (6/3/2014) Insider Ownership ~25% Note: A two-for-one share split was approved and trading in the common shares on a split-adjusted basis commenced on June 2, The quarterly dividend has been adjusted to reflect the share split. 3

4 Operations Calfrac s Size and Scope Fifteen Years of Service ~4,600 Employees 1.2 Million Hydraulic Horsepower Sixteen Lab Facilities 450 Primary Suppliers 7 th Largest In Horsepower (North America) 24 hours ops 80% US 30% Canada Revenue 92% Fracturing 5% Coiled Tubing 3% Cementing TRIF Tons +1.2MM Short Proppant Pumped 2013 North America 24 Hour 80% United States 25% Canada +175 Customers Worldwide 4

5 GROWING OPERATIONAL SCALE 5

6 Full Service Hydraulic Pressure Pumping Canada Fleet: 17 Fracturing Spreads 392,000 Hydraulic Horsepower 17 Coiled Tubing Crews U.S. Fleet: 15 Fracturing Spreads 674,450 Hydraulic Horsepower 18 Cementing Crews 7 Coiled Tubing Crews Russia Fleet: 7 Fracturing Spreads 70,000 Hydraulic Horsepower 7 Coiled Tubing Crews Latin America Fleet: 81,000 Hydraulic Horsepower 13 Cementing Crews 3 Coiled Tubing Crews FACTS 1999 Founded ~4,600 Employees Calgary Headquarters 6 Countries 1.2 Million Horsepower 6

7 Canadian Operations 7

8 Canada Update Market Activity Six largest companies control 85% of the market Exposure to LNG through strong relationships with a number of key operators in NE B.C. and NW Alberta Montney and Duvernay are creating incremental HHP demand Pricing & Utilization Positive pricing momentum Activity levels are expected to remain robust in the back half of 2014 One of the Largest Pressure Pumpers by HHP Competitor 4, 11% Competitor 3, 12% Competitor 5, 10% Competitor 2, 14% Source: PacWest Consulting Partners Other, 15% Calfrac, 18% Competitor 1, 19% 8

9 Canada Key Trends Well count is not the only factor for increasing utilization of Calfrac s equipment Market continues to trend towards more stages per well and greater tonnage per stage which positively impacts equipment utilization In Canada, 24-hour operations comprise ~25% of the fracturing fleets and the Company believes this can move higher 9

10 United States Operations 10

11 United States Update Market Approach Sustainable and meaningful market share in each operating area Target a contracted status of ~70% in the U.S. and an equal mix of oil/gas exposure Growing coiled tubing and cementing business Pricing & Utilization Pricing is competitive, but stable Positive momentum Utilization expected to remain robust Source: PacWest Consulting Partners Growing U.S. Presence 11

12 United States Regional Update Highlights Adding a fifth crew in the Marcellus that will become active in 2H14 Leading market share position in the Fayetteville Rockies activity increasing due to Niobrara exposure Growing presence in the Eagle Ford Increasing customer diversification in North Dakota Meaningful Market Share (4/30/2014) Region HHP Crews Mkt. Share Rank by HHP (1) Marcellus/Utica 262, Eagle Ford 157, Fayetteville 87, Rockies Area 89, U.S. Bakken 76, U.S. Total 674, (1) Source: PacWest Consulting Partners 12

13 Latin American Operations 13

14 Argentina Update Market Activity One of the largest pressure pumping companies in Argentina Contract win with YPF in fall of 2013 High rate fracturing crew for tight gas operations Capital spending by IOCs creating opportunities to deploy equipment Argentina Fleet: 68,000 Hydraulic Horsepower* 7 Cementing Crews 3 Coiled Tubing Crews Other Considerations Contracts based in USD 2H14 Adding 32,000 HHP to meet incremental demand * Includes 32,000 hhp to be added in 2H14 14

15 Mexico Update Market Overview Long-term opportunity with the ongoing reform of the Mexican energy industry Technology Opportunity Latest technological advancement improves play economics One of only two service providers to perform horizontal completions work in the Mexican Eagle Ford trend Expect 2014 activity levels to be lower compared to 2013 Mexico Fleet: 45,000 Hydraulic Horsepower 2 Cementing Crews Poza Rica 15

16 Russian Operations 16

17 Russia Update Market Overview and Outlook 34% of fracturing work on horizontal wells in 2013 Expect horizontal completions to trend towards 50% of fracturing work in 2014 Highly contracted status creates stable utilization levels Operating margins are expected to improve during the remainder of the year due to a reduction in weather related issues 17

18 LICENSE TO OPERATE 18

19 Health, Safety & Environment Excellent HSE Performance Outperforming industry benchmark groups US experience modification rate of % below industry average for insurance claims Objective is zero incidents HSE Advancements Implementation of SandStorm in fracturing operations Virtually eliminates potential exposure to respirable crystalline silica TRIF LTIR Calfrac Global HSE Performance (2013) Alberta Workers Compensation Board (wcb.ab.ca) Association of Energy Service Companies (aesc.net) US Bureau of Labour Statistics (bls.gov)

20 Quality Commitment At Calfrac What is API-Q2? A quality management system that reinforces specific guidelines for safety, environmental and regulatory concerns API s goal for Q2 is that service companies will need to be certified in order to work for the major oil and gas companies Quality Leadership Expect to be among the first pressure pumpers in the world to be certified in API-Q2 Submitted first set of applications for API Spec Q2 in March

21 U.S. Tons Supply Chain and Logistics Provide key direction on network optimization Leveraging the supplier landscape to manage growth opportunities Managing infrastructure and storage to enhance service levels Key suppliers in place to help provide efficient services to our customers. M M = 12,200 PROPPANT PUMPED RAILCARS 2013 North America 1 2 filled with sand 21

22 PEOPLE WHO MAKE A DIFFERENCE 22

23 People & Service The Calfrac Team Culture of innovation, growth and continuous improvement Build and maintain strong client relationships at all levels Commitment to employee safety Three Es Culture: Energy, Ethics and Entrepreneurship Learning & Development Structured development program from Field Competencies to Supervisor to Management 23

24 TECHNOLOGIES THAT WORK IN THE FIELD 24

25 Technology Commitment Develop technologies to: Meet and exceed safety and environmental goals Continually advance our technical expertise Engineering & Geoscience: In-house multidisciplinary team supports program development and field operations Continually advancing our knowledge of reservoirs to optimize productivity and economics Benefits to this Strategy: Allows Calfrac s customers to complete wells more efficiently Production comes on stream earlier Production comes on at better rates More cash flow to reinvest in additional development Commitment To Continuous Improvement In Technology Optimize Fluid Chemistries Gain a Thorough Reservoir Understanding Create Operational Efficiencies 25

26 STRONG FINANCIAL PERFORMANCE 26

27 Financial Results Income Statement For the Three Months Ended March 31 (C$ millions except per share amounts) % Change Revenue $548 $ Operating Income $64 $63 2 Net Income $8.9 $24.6 (64) Earnings Per Share (Diluted) $0.19 $0.54 (65) Balance Sheet - As at March 31, 2014 Working Capital $339 Total Assets $1,912 Long-Term Debt $667 Total Equity $804 Available Credit Facilities $257 27

28 CALFRAC S OPPORTUNITIES 28

29 Strategic Focus Increase market share in unconventional resource plays Grow global footprint Expand customer base in key markets where we operate Top 10 Countries - Technically Recoverable Shale Gas Resources Top 10 Countries - Technically Recoverable Shale Oil Resources Rank Country Shale Gas (TCF) Rank Country Shale oil (BN BBL) 1 China 1,115 2 Argentina Algeria U.S Canada Mexico Australia South Africa Russia Brazil 245 World Total 7,299 1 Russia 75 2 U.S China 32 4 Argentina 27 5 Libya 26 6 Australia 18 7 Venezuela 13 8 Mexico 13 9 Pakistan 9 10 Canada 9 World Total 345 Source: EIA Technically Recoverable Shale Oil and Shale Gas Resources, June

30 Value Creation Optimize return on capital employed for our investors Create an environment that fosters dedicated employees Develop long-term relationships with our customers Cultivate strong supply chain alliances 30

31 Investment Advantages Management team with depth and breadth of experience Strong operational backgrounds Global experience History of capital discipline Targeted, strategic investments in equipment and growth Geographic and commodity diversification Leadership position in the global adoption of unconventional resource development 31

32 Ian Gillies Manager, Investor Relations