Savanna Energy Services Corp. January 2016 TSX: SVY

Transcription

1 Savanna Energy Services Corp. January 2016 TSX: SVY 1

2 Forward Looking Information This document contains statements that constitute forward-looking statements within the meaning of applicable securities legislation. These forward looking statement 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 statement 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 if these uncertainties materialize, or if assumptions are incorrect, actual results may vary from those expected. 2

3 Corporate Overview TSX: SVY Equipment Fleet: DIVISION COUNTRY EQUIPMENT Drilling Canada 68 Rigs USA 28 Rigs Australia 5 Rigs Well Servicing Canada 65 Rigs USA 18 Rigs Common Shares Outstanding (1) 90.3 million Common Share Trading Price (1) $ week Trading Range (1) $1.01-$3.48 Market Capitalization (1) $ million Property and Equipment (2) $925 million Book Value per Share (2) $7.29 Main Office Locations: DIVISION COUNTRY LOCATION Australia 12 Rigs Headquarters Canada Calgary, AB Rentals CA/USA/AUS 5,000+ pieces Operations Canada Leduc, AB Operations United States Midland, TX Operations Australia Toowoomba, QL (1) As at January 4, 2016 (2) As at September 30,

4 Structural Changes Non-rig related positions reduced 45% from YE 2014 Organizational structure flattened: Executive Officers reduced from six to two Middle management greatly reduced Consolidated operating locations / sold real estate: Five locations in Alberta into one Drilling and well servicing in same building Improved efficiencies and lower operating costs with a shared warehouse, supply chain, maintenance and yard Sold five locations for $27 million Additional $7.5 million listed as Assets Held for Sale 4

5 Other Initiatives Cancelled dividend Salary and wage roll backs of all non-rig employees (15% average for the Board and executives; 7% average for all others) Reduced field wages Capital spend reduction to $27.7 million* Unutilized equipment shared across operational divisions to decrease operating expenses and maintenance capital Idle rental fleet assets being provided at no cost to maintain dayrates and margins *Including 2014 carryover, net of asset disposals of $16.3 million in the first nine months of 2015 and an additional $14.2 million in real estate sales closed in Q4/15 5

6 Results EBITDA of $78 million through Q3/15 Includes $10M severance Operating margins of 34% in Q3/15 vs. 29% in Q3/14 Annualized G&A and Indirect down by $50 million relative to 2014 exit run-rate YTD net debt reduced by $60 million by the end of October Debt to EBITDA at Q3/15 of 2.4 6

7 Diversification Benefits Revenue Distribution (1) 33% 26% 41% Canada US Australia Multiple countries Multiple business lines drilling, well servicing & rentals Multiple equipment types 6% 34% 60% Drilling Servicing Rentals (1) Based on YTD financials at September 30,

8 Health, Safety & Environment Total Recordable Incident Frequency (TRIF) Rolling 12-month TRIF 8

9 Equipment Fleet North American Drilling Rig Fleet by Depth Rating , 41% 16, 17% 5, 5% 68, 71% 12, 12% 53, 54% 4000m and > 2200m-3800m <2200m 4000m and > 2200m-3800m <2200m This is a newer fleet with over $880 million invested in new equipment since 2009 In addition to the 4 new-build rigs added in the 4000m plus depth range in 2014 Savanna s drilling rig fleet in North America has also been upgraded and enhanced since 2009 in terms of: rig hookload, pump and drawworks capacity, and the number of rigs with Top Drives. 9

10 Equipment Fleet Tier One 1,500 hp AC rigs in the North American oilfield services market appear overbuilt. Spot day rates well below $20k a day for $20-$25 million dollar rigs means poor ROA. Nabors Helmerich & Payne 10

11 Equipment Fleet Savanna s investment in Australia is roughly equivalent to 8 Tier One rigs. New, highly mobile hybrid CT-1500 drilling rigs ideally suited for coal seam gas drilling in Queensland. Currently trialing Octopus horizontal coil drilling to reduce production costs New, high-specification service rigs capable of working in any of the basins in Australia. Not at all like North American service rigs: PLC controlled rigs that employ many leading technical features including working floor Human Machine Interface, auto drill, top drives, safety redundancies such as dual encoders, and remote access allowing technicians to troubleshoot problems from around the world via satellite The average cost per service rig is $8.1 million Trucking operations to complement both service lines and mitigate risk of less mature trucking infrastructure in Queensland. 11

12 Equipment Fleet Canada Diverse Canadian drilling fleet that can work in all but the deepest basins in Western Canada. Entire Canadian drilling fleet equipped with top drives CT-1500s have become preferred rigs for oil sands coring and delineation Top drive singles that perform very well in active basins such as the Viking A telescoping double fleet that consistently performs at or better than CAODC averages in the relevant depth ranges 7 AC telescoping double drilling rigs with higher hookload, pump and drawworks capacity Canadian service rig fleet that competes very well against any other service rig fleet in Western Canada. Rental assets that can be packaged with both drilling and well servicing rigs. 12

13 Equipment Fleet U.S. High specification, top drive equipped AC drilling rigs in the U.S. 1 AC triple drilling rig and 2 AC telescoping double drilling rigs built for the Marcellus 2 AC triple drilling rigs, one in Colorado and one in the Permian 4 AC telescoping double drilling rigs that have worked in Texas, Pennsylvania, and Colorado Service rig fleet with a long track record of top tier customers, performance, safety, and financial results in the Bakken 13

14 Australia ($ millions) Equipment Fleet Canada ($ millions) U.S. ($ millions) (1) $129 million CAD NBV (FX - $0.94) $561 million CAD NBV $235 million CAD NBV (FX - $1.34) $106, 19% $22, 4% $77, 60% $12, 10% $6, 4% $68, 12% $82, 14% $34, 6% $96, 41% $30, 13% $7, 3% $13, 6% $34, 26% $150, 27% $99, 18% $62, 26% $22, 9% $5, 2% Drilling - 5 Well Servicing - 12 Trucking Ancilliary, spare & other Coring - 16 Top Drive Singles - 20 Doubles up tp 850HP - 25 AC Doubles up to 1200HP - 7 Well Servicing - 65 Rentals Ancilliary, spare & other Top Drive Singles - 3 Doubles <1000HP - 14 Triples 1500HP - 2 AC Doubles up to 1200HP - 6 AC Triples 1500HP - 3 Well Servicing - 18 Ancilliary, spare & other (1) All amounts as at September 30,

15 2015 Capital Program Capex Program Initiatives $ millions 31% 30% 39% 2014 Growth Initiatives Maintenance Capital 2014 New Field Operating Facilities 2014 Carry-Over: 2014 Growth Initiatives New Field Operating Facilities Maintenance Capital 14.1 Proceeds on sale of assets (16.3) Net Capital Program Spend to Sep Remaining 2015 Capital Spend 3.4 Real estate sales closed in Q4/15 (14.2) Net 2015 Capital Spend 27.7 Remaining Assets Held For Sale

16 Financial Highlights Financial Highlights ($000s) Nine months ended September Change OPERATING RESULTS Revenue 345, ,925 (41%) Operating margin 113, ,965 (28%) Operating margin % 33% 27% Adjusted EBITDAS (adjusted for severance expenses) 88, ,432 (25%) Attributable to shareholders of the Company 87, ,802 (22%) Per share: diluted Depreciation* 83,330 77,568 16% Net loss (11,267) (14,409) (22%) Attributable to shareholders of the Company (9,249) (18,042) (49%) Per share: diluted (0.10) (0.20) *Effective January 1, 2015, all equipment is depreciated based on the straight-line method over the assets useful life in years. Previously equipment was depreciated based on a straight-line method utilizing either operating days in the case of drilling equipment, or hours in the case of well servicing equipment. (1) As of September 30,

17 Total Debt Balance Sheet ($millions) Authorized Drawn Nov 2/15 Drawn Sep 30/15 Drawn Dec 31/14 Senior Notes, due May 2018 $175 $175 $175 $175 Revolving Credit Facilities $250 $117 $126 $161 Partnership & Other Financing $17 $9 $11 $15 $442 $301 $312 $351 Cash $16 $18 $6 Total Debt Net of Cash $285 $294 $345 Total Debt Net of Cash balance was decreased by $60 million as of November 2, 2015 from the end of 2014 $14.2 million of Q4/15 proceeds on real estate sales directed to further debt reduction (1) As of September 30,

18 Debt to EBITDA Covenant Savanna s Total Funded Debt to twelve-month trailing EBITDA ratio moved from 2.3:1 at December 31, 2014 to 2.4:1 as of September 30, The covenant ratios for 2015 and 2016 are as follows: For the quarter ending September 30, :1 For the quarter ending December 31, :1 For the quarter ending March 31, :1 For the quarter ending June 30, :1 For the quarter ending September 30, :1 For the quarter ending December 31, :1 Thereafter 4.00:1 18

19 Competitor Comparison EV / EBITDA E (1) 5 Yr Avg. WRG PD TDG ESI SVY YoY Change - Debt / EBITDA E (1) % WRG % TDG % PD % ESI % SVY % (1) Based on analyst estimates from IPREO on January 4,

20 SAVANNA ENERGY SERVICES CORP. Suite 800, 311-6th Avenue S.W. Calgary, Alberta, Canada T2P 3H2 Telephone: Facsimile: TSX: SVY 20