Trinidad Drilling & CanElson Drilling June 2015

Transcription

1 Trinidad Drilling & CanElson Drilling June 2015 Trinidad Contact: Brent Conway President CanElson Contact: W. Randy Hawkings President & CEO IT'S ABOUT PERFORMANCE 1

2 Trinidad Positioned to be an Industry Leader Addition of CanElson positions Trinidad to be an industry leader: Increased scale to better capitalize on opportunities Broader, highly marketable rig fleet to support full cycle resource play development Creates large North American, performance-driven rig fleet Combined senior operational leadership team has approx. 90 years of experience Combined board adds operational depth with over 150 years of drilling experience Significant opportunities for increased efficiencies and synergies Strong balance sheet and liquidity IT'S ABOUT PERFORMANCE 2

3 Proposed Transaction Summary Consideration shares of Trinidad or $4.90 per CanElson share in cash to a maximum of $50 million in cash Board / Management Three board representatives of CanElson will join the Trinidad board of directors (Don Seaman, Elson McDougald, Dale Johnson) Randy Hawkings and other CanElson executives to take key long-term roles with Trinidad Support Both CanElson s board of directors and Trinidad s board of directors unanimously support the transaction Financing No financing required, cash portion is fully funded Approval Shareholder vote required for both companies Standard regulatory approvals and closing conditions apply IT'S ABOUT PERFORMANCE 3

4 Scale to Capitalize on Opportunities Canadian leader - the second most active drilling contractor in Canada Increased US market share - sixth most active drilling contractor in the US Increased depth of operational expertise for continued focus on top tier customer service Increased resources for faster response to opportunities Ability to capitalize on top tier best in class crews Drilling Rig Summary - Canada Drilling Contractor Total Rigs (1) Active Rigs (3) Precision Drilling Trinidad & CanElson Pro-Forma (4) Ensign Drilling Inc Savanna Drilling Canada & Hybrid Trinidad Drilling Ltd. (4) Horizon Drilling (Western Energy Services) Akita Drilling Ltd CanElson Drilling Inc. (4) Drilling Rig Summary - US Drilling Contractor Total Rigs (2) Active Rigs (3) Helmerich & Payne, Inc Nabors Industries Ltd Patterson - UTI Energy, Inc Precision Drilling Unit Drilling Company Trinidad & CanElson Pro-Forma (4) Ensign Energy Services Inc Trinidad Drilling Ltd. (4) CanElson Drilling Inc. (4) (1) Canada Total Rig Data Source: Q Company Filings. (2) U.S.A. Total Rig Data Source: Q Company Filings & Presentations. (3) Active Rigs are the average daily active rig count through (4) JV and partnership rigs included at 100%, includes 1 rig under construction, excludes barge and service rigs Source: Publicly disclosed materials. IT'S ABOUT PERFORMANCE 4

5 Broad North American Expertise Liard Montney Duvernay Deep Basin Cardium AB Bakken Oil sands Lloyd Heavy Oil Bakken CANADA Niobrara MIDDLE EAST TDG Operating Area Permian Mississippi Lime Barnett Woodford Haynesville Tuscaloosa Eagle Bine Eagle Ford MEXICO US Canada US Int'l Total Trinidad Rigs CanElson Rigs Total JV and partnership rigs included at 100%, includes 1 rig under construction, excludes barge and service rigs Mutual Operating Area IT'S ABOUT PERFORMANCE 5

6 What Makes a Rig High Spec? Specification Purpose CanElson Fleet High hook load Drill deep wells, manage heavy pipe weights Powerful mud pumps Pump high volumes of mud in deep wells AC Power Consistent weight on bit, precise rate of penetration Top drive Increased torque, drilling speed and control Pipe handling Efficient, safe pipe connections Moves easily Moves between wells easily, less loads or moving system * * CanElson does provide AC rigs on customer request for specific needs, 10% of CanElson fleet are AC rigs. IT'S ABOUT PERFORMANCE 6

7 Highly Marketable Fleets The right rigs with operational leadership and top performing crews drive industry outperformance Combined Canadian fleet is made up of deep rigs with high horsepower, high hook loads, top drives and other key features Utilization 80% 70% 60% 50% 40% 30% 20% 10% 0% Q Source CAODC, Company reports CAODC TDG CDI IT'S ABOUT PERFORMANCE 7

8 Customers and Plays Require Diversity Montney Case Study: Montney drilling takes advantage of doubles and triples at different phases of development Both asset classes are required for full-cycle development of any resource play Combined fleet can meet customers diverse demands Montney Market Share 60% 50% 40% 30% 20% 10% 0% Montney Market Share 80% 60% 40% 20% 0% Triples Doubles Singles Source GeoScout, Peters & Co. Limited AC Electric Mechanical Other IT'S ABOUT PERFORMANCE 8

9 Leveraging a Model of Industry Leading Results CanElson s fleet is more active and more profitable Above average operating profits Above average returns Gross Margin Return on Capital Employed 60.0% 30.0% 50.0% 25.0% 40.0% 20.0% 30.0% 15.0% 20.0% 10.0% 10.0% 5.0% 0.0% 0.0% CanElson Can Average CanElson Can Average IT'S ABOUT PERFORMANCE 9

10 US Fleet Increases Market Share Combination of Trinidad and CanElson s US operations: Increases market share Adds new customers and expands customer base CanElson s engineering expertise adds new opportunities In-house engineering team adds certainty to project costs for E&Ps Footage expertise provides opportunities for the combined entity The combined fleet creates one of the most active fleets in the US IT'S ABOUT PERFORMANCE 10

11 Expanded Customer Base New customers added in both Canada and the US Increased market share with some existing customers Customer base made up of well-capitalized, active E&P companies Take or pay contracts cover 35-40% of combined fleet, average term remaining of 1.5 years IT'S ABOUT PERFORMANCE 11

12 Where the Future Opportunities Lie The new Trinidad has opportunities on several fronts: Improved activity and performance from existing assets Ability to redeploy existing assets to new opportunities Growth through new assets both in North America and internationally Trinidad has the combined team, the skills and the experience to take advantage of these opportunities IT'S ABOUT PERFORMANCE 12

13 The Opportunity for Combined Benefit Top tier North American footprint in all key resource basins Ability to capitalize on opportunities Improved capital structure with strong balance sheet and available liquidity Deep drilling expertise to drive continued leading activity Enhanced trading liquidity Material opportunities for synergies and efficiencies Accretion on earnings IT'S ABOUT PERFORMANCE 13

14 Forward Looking Information This presentation contains certain statements or disclosures relating to Trinidad Drilling Ltd. ("Trinidad"), CanElson Drilling Inc. ("CanElson"), the proposed combination of Trinidad and CanElson (the "Transaction") and the combined entity that will be created pursuant to the Transaction, which constitute forwardlooking information under applicable securities laws. All statements and disclosures, other than those of historical fact, which address activities, events, outcomes, results or developments that Trinidad or CanElson anticipates or expects may, or will occur in the future (in whole or in part) should be considered forward-looking information. In some cases, forward-looking information can be identified by terms such as "may", "will", "expect", "anticipate", "pro forma", or other comparable terminology. In particular, this presentation includes forward-looking information about the Transaction and its impacts on Trinidad, CanElson and their respective shareholders, including without limitation: the anticipated benefits of the Transaction to the shareholders of Trinidad and CanElson; the expected operational and strategic benefits, including size and scope of estimated synergies, of the Transaction to the combined entity; the expected dividends payable to shareholders of the combined entity; the timing and closing of the Transaction; the anticipated size and activity level of the combined entity; and future financial and operational results of the combined entity. The forward-looking information provided in this presentation is based upon a number of material factors and assumptions including without limitation: (a) that the Transaction will be completed in the timelines and on the terms currently anticipated; (b) that all necessary exchange, Court and regulatory approvals will be obtained on the timelines and in the manner currently anticipated; (c) that all necessary Trinidad and CanElson shareholder approvals will be obtained; and (d) general assumptions respecting the business and operations of both Trinidad and CanElson, including that each business will continue to operate in a manner consistent with past practice and pursuant to certain industry and market conditions. Forward-looking information is subject to a number of risks and other factors that could cause actual results and events to vary materially from that anticipated by such forward-looking information. In particular, the completion of the Transaction is subject to a number of risks including, without limitation: (a) exchange, Court and regulatory approvals may not be obtained in the timelines or on the terms currently anticipated or at all; (b) Trinidad and/or CanElson shareholder approval may not be obtained; (c) the Transaction is subject to a number of closing conditions and no assurance can be given that all such conditions will be met or will be met in the timelines required by the arrangement agreement in connection with the Transaction; and (d) the business, operational and/or financial performance or achievements of Trinidad or CanElson may be materially different from that currently anticipated. In particular, the synergies and benefits anticipated in respect of the Transaction are based on the current business, operational and financial position of each of Trinidad and CanElson which are subject to a number of risks and uncertainties. Readers are urged to consult the disclosure provided under the heading "Risk Factors" in Trinidad's annual information form for the year ended December 31, 2014 and under the heading "Risk Factors" in CanElson's annual information form for the year ended December 31, 2014, each of which has been filed on SEDAR at for further information respecting the risks and other factors applicable to Trinidad and CanElson, respectively. Readers are cautioned not to place undue reliance on forward looking information, which is given as of the date of this presentation. Trinidad and CanElson undertake no obligation to update publicly or revise any forward looking information, whether as a result of new information, future events or otherwise, unless required to do so pursuant to applicable law. IT'S ABOUT PERFORMANCE 14

15 Appendix June 2015 IT'S ABOUT PERFORMANCE 15

16 Meeting Customers Specific Needs Customers want mechanical rigs for specific plays: Some plays don t need AC low pressure, low complexity wells High hook load and big pumps can still get the results Lower capital cost allows for lower dayrates Meets customers needs, generates good returns IT'S ABOUT PERFORMANCE 16

17 Material Synergies to be Realized Estimated synergies of $10 million (annualized) Overlap in operational areas lowers yard and facilities costs Larger fleet allows improved efficiencies with inventory management, safety processes, operational management Reduced corporate overhead such as rent, public listing and reporting costs, professional fees IT'S ABOUT PERFORMANCE 17

18 Rig Fleet Summary Drilling Rig Summary Horse Power Hookload Rigs with Canada U.S.A. Int'l Total Low High Low High Top Drive Trinidad # # # # HP HP (dan) (dan) # < 3,000m , , ,000m - 4,000m , , , > 4,000m ,000 3, , , Total CanElson < 3,000m , , ,000m - 4,000m , , ,000 4 > 4,000m , , , Total Pro-Forma < 3,000m , , ,000m - 4,000m , , , > 4,000m , , , Total Source: Company Reports and Raymond James JV and partnership rigs included at 100%, includes 1 rig under construction, excludes barge and service rigs IT'S ABOUT PERFORMANCE 18

19 CanElson Drilling Curves & Efficiencies All wells were drilled with mechanical tele-doubles. Drilling to ~20,000 ft measured depth in the North Dakota Bakken and Deep Basin Drilling pace setting horizontal wells for a Major Domestic E&P in the Permian Like Trinidad, CanElson s strength lies within its operations team and focus on performance IT'S ABOUT PERFORMANCE 19

20 Trinidad Drilling & CanElson Drilling June 2015 Trinidad Contact: Brent Conway President CanElson Contact: W. Randy Hawkings President & CEO IT'S ABOUT PERFORMANCE 20