Jefferies Conference. UBH Houston November 11 th, 2014

Transcription

1 Jefferies Conference UBH Houston November 11 th,

2 Forward-looking statements Statements that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and forward looking information within the meaning of applicable Canadian legislation. These forward-looking statements are based on current expectations, estimates and assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside Precision's control, which could cause actual results to differ materially from those anticipated by Precision and described in the forward looking statements. These forward-looking statements are also affected by the risk factors, challenges and uncertainties described in Precision's Annual Report on Form 40-F (Annual Information Form in Canada) for the fiscal year ended December 31, 2013, and those set forth from time to time in Precision's filings with the Securities and Exchange Commission and the securities regulatory authorities in each of the Provinces of Canada, which are available through Precision's website at No assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do so, what benefits will be derived therefrom. Security holders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements which speak only as of the date made. Except as may be required by law, Precision expressly disclaims any intention or obligation to revise or update any forward-looking statements and information whether as a result of new information, future events or otherwise. 2

3 Recent Precision Developments v v v NEWBUILD Super Series Demand Announced newbuilds: 18 in in % growth in U.S. Tier 1 fleet ALLIANCE with Schlumberger Unique service and technology offering Precision field execution and customer interface Schlumberger tools, technology, training and engineering support CONTINUED STRONG Financial Performance Four quarters of growing revenue and EBITDA Strong dayrate/margin growth Flexible and efficient balance sheet Dividend increase 3

4 Precision s Competitive Strategy PEOPLE DRILLING TECHNOLOGY SYSTEMS & SCALE PRODUCES LOWER RISK MAXIMUM EFFICIENCY ATTRACTIVE RETURNS 4

5 Positioned In Most Active North American Regions Positioned in Most Active North American Regions Dots representative of areas where Precision has had operations within the past two years 5

6 High Performance Starts with People Precision HR Training and Processes Career Path Management Field Training Investments Long-term Compensation Programs Structured Promotion Programs World-Class Safety Culture and Processes EXPERIENCED, HIGHLY SKILLED PRECISION CREWS Permanent Training Facilities with Fully Functioning Rigs Tier 1 Assets Leadership Development Programs Structured Competency Standards 6

7 High Performance Requires Robust Proven Systems And Scale Toughnecks talent acquisition program processed 44,274 applications and hired 2,798 people in 2013 Integrated Rig Supply Tech Center Repair 3,992 employees completed training through Precision Tech Centers in ,636 in Houston, Texas 2,356 in Red Deer, Alberta Houston Tech Center Engineering Systems 7

8 High Performance Achieved With Tier 1 Super Series Fleet 1 U.S. Canada International Year End Year End To Date 1) As of November 6, Includes 23 newbuilds that are yet to be delivered (22 North America and 1 International). Does not include prospective tier upgrades. 8

9 Precision is Canada s Leading Oilfield Service Company Operated over 150 drilling rigs in each of last 4 winters Consistently the highest land drilling margins in industry 24 new build rigs added to fleet from Nisku center opened in fall 2014 Best positioned to serve deep basin markets: Duverney/Montney and Horn River 9

10 International Revenue (million) International Revenue Growth Late Q Initiated Kuwait with 2 Rigs $60 Revenue $50 Initiated Kurdistan with 2 Rigs $40 Deployed additional 3 Rigs to Mexico +28% $30 Initiated Saudi with 3 Rigs $20 $10 $0 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q

11 Completion & Production Segment: Full Well Cycle Exposure Largest well service provider in Canada and growing presence in U.S. 210 Well Service and Snubbing Rigs 11 Coil Tubing units Large fleet of high value rental equipment Camps and Catering Excellent footprint in Canada and Northern U.S. 11

12 Consolidated TTM Revenue and EBITDA Trending Up TTM Revenue (millions) TTM EBITDA (millions) $2, % $ % $2,200 $2,000 $700 $1,800 $600 $1,600 $1,400 $500 $1,200 $400 $1,000 $800 $300 $600 $200 $400 $200 $100 $0 Q Q Q Q Q Q Q Q $0 Q Q Q Q Q Q Q Q Business operating leverage enables EBITDA to grow faster than revenue. 12

13 Contract Coverage Position Strong Average Term Contract by Quarter International Canada US Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 13

14 Balance Sheet Flexibility Attractive Capital Structure (1) Total debt to total capital: 41% Net debt to total capital: 31% Interest coverage: 7.3x Available liquidity as of 9/30/2014 (2) $1,317 Long maturity, low cost debt Average interest rate of 6.2% $558 Cash First Principal Payment due 2019 (3) 2019: $200 million 2020: US$650 million 2021: US$400 million 2024: US$400 million Flexibility to react to market upturn or downturn $759 Revolver / operating facilities Availability 1) Statistics refer to balance sheet and annual income statement as of 9/30/14. Debt to total capital equals longterm debt to long-term debt plus equity. Interest coverage equals EBITDA divided by interest. 2) Calculated as undrawn portion of revolver (adjusted for LCs outstanding) and cash using CAD/USD exchange rate and balance sheet numbers as at 9/30/14. 3) Current blended cash interest cost of our debt is approximately 6.2%. 14

15 Precision Drilling Investment Merits Leading North American resource driller 238 High Performance Tier 1 rigs Delivering high return growth investments 30% growth in U.S. Tier 1 Fleet Increasing shareholder returns (dividend and share price) Schlumberger alliance provides unique growth opportunity Best positioned driller for Canadian LNG and Duverney TSX: PD NYSE: PDS

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17 November North American Market Update Tier 1 demand strong, pricing firm and renewals moving to higher dayrates through Q Tier 1 utilization approximately 90%. Precision operates 215 Tier 1 rigs with 23 additional announced deliveries through mid total deliveries in announced deliveries for 2015 and build rate of 3 to 4 rigs/month to start Tier 2 demand less strong (30% to 40% utilization). In Canada, rig count for the industry remains above the 5 year seasonal average. Precision contracted 6 deep ST-1500 rigs, one Super Single for 2014 delivery (4 delivered). Q activity expected to be up approximately 5% to 15% from U.S. horizontal drilling growth creating newbuild opportunities. Precision horizontal/directional activity: 88% in U.S. Planned delivery of 8 newbuilds to U.S. in 2014 (4 delivered). Demand for C & P services in Canada remains depressed. 17

18 Canadian Active Land Rig Count Canadian Activity Update Year Range Present Source: BHI 18

19 Precision s Canadian Dayrate Growth $24,000 Average Quarterly Dayrate $22,000 $20,000 Q4 Q3 Q2 Q1 $18,000 $16,000 $14,000 Year over year, quarterly average increase of 11% from 2010 to 2013 $12,

20 Proposed LNG Export Facilities in British Colombia Location Asset Name Ownership Kitimat, B.C. Douglas Channel Energy Project Haisla Nation/LNG Partners (50%), Golar LNG (25%), unnamed Asian investor (25%) Source: The School of Public Policy SPP Research Papers, University of Calgary Capacity (Bcf/d) 1 NEB Export Application Status and Length NEB Maximum Annual Export Allowance (Bcf/d) 1 Expected Start Date 0.3 Approved; 20 years Kitimat, B.C. Kitimat LNG Terminal Apache Canada Ltd. (50%), 0.7 Approved; 20 years Chevron Corp. (50%) Kitimat, B.C. Kitsault Kitsault Energy and a 0.7 Under Review; 25 years Memorandum of Understanding signed with an Asian oil and gas major Woodfibre, B.C. Woodfibre, B.C. Woodfibre (Pacific Oil & Gas 0.3 Approved; 25 years Group) Kitimat or Prince Triton LNG AltaGas Ltd. (50%), Idemitsu 0.3 Approved; 25 years Rupert, B.C. Kosan Co. (50%) Lelu Island, Port Pacific Northwest Petronas (62%), SINOPEC (15%), 1.7 Approved; 25 years Edward, B.C. LNG Indian Oil Corp. (10%), Japex (10%), Petroleum Brunei (3%) Campbell River, B.C. Discovery LNG Quicksilver Resources Canada, 0.0 None and a to-be-determined third party Kitimat, B.C. LNG Canada Terminal Shell Canada Ltd. (40%), 1.7 Approved; 25 years Mitsubishi Corp. (20%), Korea Gas Corp. (20%), PetroChina (20%) Kitimat or Prince WCC LNG Imperial Oil Ltd. (50%), Approved; 25 years Rupert, B.C. ExxonMobil Canada (50%) Ridley Island, Prince Prince Rupert LNG BG Group 2.0 Approved; 25 years Rupert, B.C. Grassy Point, B.C. (13) Aurora LNG Nexen (60%), Inpex Corp. and 3.4 Approved; 25 years JGC Corp. (40%) Stewart, B.C. Stewart Energy LNG Canada Stewart Energy Group Ltd Under review; 25 years 2017 Grassy Point, B.C. TBA Woodside Petroleum 0.0 None Vancouver, B.C. Tilbury LNG WesPac Midstream LLC 0.4 Under review; 25 years Capacity converted from MMTPA to Bcf/d at 1 Bcf per 7.059MMTPA. 20

21 PD U.S. and International Revenue ($ millions) Revenue and Activity Growth in Non-Canadian Drilling $300 2,200 $275 $250 $244 $247 $252 $200 $150 $100 $224 $217 $215 $226 $199 $204 $205 2,000 1,800 1,600 U.S. Industry Avg. Rig Count * $50 $0 Q Q Q Q Q Q Q Q Q Q Q ,400 U.S. Industry Avg. Rig Count PD International Revenue PD U.S. Drilling Revenue * Baker Hughes Quarterly Avg. Rig Count 21

22 PD Tier 1 + Tier 2 & PSST 1 PSSt Tier 2 Tier Year End 2015 To Date 1) As of November 6, Includes 23 newbuilds that are yet to be delivered (22 North America and 1 International). Does not include prospective tier upgrades. 22

23 Precision s Tier 1 Super Series Fleet High Performance Horizontal Drilling Machines Super Triple Super Triple Super Single Rapid mobility: Walking/skidding system Location to location Sophisticated connections Smart design: Small footprint Integrated components Cold weather operations Automation & safety features: Pipe handling Electronics and hydraulics Advanced control systems 1) ST1500 requires as few as 42 truck loads in addition to 12 loads of tubular and any operator rental loads 2) ST1200 requires as few as 36 truck loads in addition to 10 loads of tubular and any operator rental loads 23

24 Precision Horizontal Leadership Percentage of Horizontal/Directional Wells United States 1,2 Canada 3 88% 93% 80% 81% Precision Industry Precision Industry 1. Precision Q Average. 2. Baker Hughes rig count average for Q Rolling 12 month average as at September 30 th,

25 800, 525-8th Avenue S.W. Calgary, Alberta, Canada T2P 1G1 Telephone: Facsimile: