INVESTOR PRESENTATION. March 2017

Transcription

1 INVESTOR PRESENTATION March 2017

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 OVERVIEW OF TRICAN Full service, Canadian pressure pumping company YEAR TO DATE DECEMBER 31, 2016 Market leader in Canada 422,000 HP available fracturing capacity 26% 5% Revenue by Service Line 3% 4% Large Cement, Coiled Tubing, Acidizing, Nitrogen and Industrial Services business 4% 58% Focus on safety, technology, and operational performance Fracturing Coiled Tubing Cementing Acid & Specialty Chemicals Nitrogen Industrial & Pipeline Services 3

4 CANADA

5 CANADA Trican is the largest pressure pumper in Canada Trican offers full services in Canadian market which balances revenue and profitability Large cementing market share Strong market share in other services Canadian market has fewer competitors (6 vs. over 30 in the U.S. market) Trican has a strong customer base in Canada Numerous long-term clients Canadian to U.S. dollar exchange rate helps customer economics 5

6 CANADA COMPETITIVE ADVANTAGE Strong safety record TRIR rate of 1.05 LTIR rate of 0.09 Technical advantage in Canadian market 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 Strong operations Significantly lowered cost structure in downturn 6

7 GEOGRAPHIC COVERAGE Horn River Shale Montney Shale British Columbia Saskatchewan Alberta Manitoba FORT ST. JOHN Duvernay Shale GRANDE PRAIRIE WHITECOURT HINTON NISKU LLOYDMINSTER DRAYTON VALLEY Viking Tight Oil RED DEER Deep Basin CALGARY BROOKS Cardium Tight Oil 7 ESTEVAN Lower Shaunavon Tight Oil Bakken Shale Spearfish

8 CANADA EQUIPMENT Current Canadian fleet 422,000 fracturing HP 55 Cementing units 38 N 2 Pumpers 19 Acid Units 16 Coil Units Approximately 40% of fracturing capacity parked 50% of other services parked Equipment not scavenged Estimate $3.5 million Capex to activate parked fracturing equipment $50,000 Capex / truck to activate parked cement equipment Looking to activate parked equipment in , , , , , , , , ,000 50,000 0 Canadian HP Growth * * Anticipated HP at year-end based on approved budgets, which are subject to change 8

9 CANADA EQUIPMENT FRACTURING PUMPS 85% of Trican s active fleet already running continuous duty Quintuplex high HP pumps 70% of fluid ends converted to stainless steel Gives 4 times longer life 40% reduction in pumper equipment operators on location due to electronic control systems No additional capital required to upgrade fracturing pumps 9

10 CANADA - OUTLOOK 2017 Customers conventional capex up 50-60% year-over year Estimate 5,500 to 6,500 wells to be drilled in 2017 Up 38-63% year-over-year Anticipate full utilization of staffed equipment for remainder of the year Deep Basin, Montney, Duvernay activity generates 70-75% of Trican revenue Cardium, Bakken, Viking and other oil plays will remain strong 10

11 CANADA - OUTLOOK 2017 Fully booked for active equipment in major service lines until April 2017 Pricing increased 10% from September levels Q2 programs significantly higher than 2016 Three 24-hour fracturing crews committed in Q2 Second half of 2017 activity looks strong based on current commodity prices Looking to activate some parked equipment as margins improve Hiring qualified staff limiting speed of equipment activations 11

12 CANADA - OUTLOOK 2017 Will continue to push pricing upwards if activity remains high Will have cost increases from Q2 onward for products, third-party hauling and labour Contracts allow for recovery of major input costs Cost savings on products anticipated from new product introductions 12

13 CANADA - OUTLOOK 2017 Increased frac intensity and job size Sand volume up 47% per well year-over-year Average sand per well increasing Currently 2,604 tonnes / well in Montney Still 50% below US average Average stages per well increasing Currently 29 stages per well Increasing 12% per year 13

14 CANADA 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 cost structure Fixed costs now 25% of costs as compared to 50% pre-downturn Variable costs reduced by 27% since the beginning of 2016 No increases forecast in early

15 GROWTH

16 GROWTH Strong earnings from Canadian assets with a reduced cost structure as utilization and pricing improve Mid-cycle EBITDA from Canada (2014): $226 million (19% EBITDA margin) Peak EBITDA from Canada: $465 million Equipment attrition and service intensity will improve recovery Substantial leverage on lower costs 16

17 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 17

18 ADDITIONAL GROWTH Retained ownership in Keane allows us to participate in U.S. recovery 10% ownership in Keane Group with potential increased ownership from certain economic conditions upon liquidity event Keane announced pricing of its IPO on January 20, 2017 Trican received an initial distribution totaling approximately CAD $37.8 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 18

19 ADDITIONAL GROWTH Non-compete in U.S. until April 2018 and first right to purchase the Keane business should we decide to re-enter the U.S. Trican will license our technology in U.S. and International markets Licensed one sand supplier in North America 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 21

22 INNOVATION TriVert TM Diverting Agent Can be used in new completions or refracturing treatments Redirects fluid into new sections of the wellbore Contains particles that dissolve with time and temperature Results in increased production without further well intervention 22

23 TRICAN RESERVOIR SOLUTIONS Geological Solutions Offer unconventional rock analysis, core testing and rock mechanics Reservoir Solutions Reservoir model that integrates geological and frac data to optimize long-term reservoir recoverability 23

24 SUSTAINABLE INNOVATION EcoClean Fluids Continuing to expand our line of environmentally friendly fracturing fluids Water Management and Reduction Developed a 100% recycled water crosslinked fluid solution with no mechanical treatment Recycled water used on most fracturing projects in the U.S. 24

25 FINANCIAL OVERVIEW

26 AS OF FEBRUARY 24, 2017 $119 million drawn on $250 million revolving credit facility $40,000,000 Outstanding Senior Notes - Post Equity and TCS Sale (Shown in $CAD) $250 million revolving credit facility is committed until 2018 Max utilization capped at $175 million until the first quarter in which $25 million in EBITDA is reached $65 million of Senior Notes Net debt of approximately $134 million (net of cash and currency swaps) $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 Nov 2017 Apr 2018 USD Notes (hedged) Apr 2021 USD Notes (unhedged) Sept 2024 CAD Notes 26

27 COVENANT RELIEF Amended covenants put Trican in a strong position to ride out the downturn Leverage covenant of 5x and interest coverage of 2x will start in 2017 and will be calculated in Q1 as four times Q1 EBITDA plus $20 million 27

28 COVENANT RELIEF $20 million equity cure will be added to 2017 EBITDA LTM calculations will not commence until Q Normalized covenant of 3x Debt/EBITDA by Q

29 CASH FLOW Managing cash flow and liquidity a key focus Dividend suspended until financial performance improves Total capital spend estimated at less than $5 million in 2017 No expansion initiatives will be considered until financial performance improves Will be reviewed quarterly Approximately $106 million of cash and available debt as of February 24, 2017 Proceeds from NOV transaction and corresponding working capital adjustment as well as distribution from Keane IPO total approximately CAD $73.5 million and was intended to reduce outstanding debt with noteholders and banks 29

30 INVESTMENT ADVANTAGES Balance sheet largely fixed Trading substantially below historic book values Significant earnings potential on existing assets High leverage on low cost structure coming out of downturn Strong Canadian business that generates industry leading margins Upside to U.S. market recovery through Keane ownership and NOV shares Strong management team that has managed through numerous cycles Equipment base not scavenged and ready to go when activity increases 30

31 SUMMARY Number of Outstanding Shares (as of February 21, 2017): million Average Daily Volume (one month period): 1,221,045 (as of February 21, 2017) Directors/Officers Ownership: 1.5% (approx. - diluted basis) Market Cap: $1 billion as of February 21,

32 INVESTOR PRESENTATION March 2017