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

Transcription

1 TSX:CFW CALFRAC WELL SERVICES LTD. Investor Presentation August 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 $20.70 (8/27/2014) Market Capitalization $2.0 billion Quarterly Dividend $0.125 per share Dividend Yield Shares Outstanding 2.4 percent (8/27/2014) 94.4 million (6/30/2014) 30-Day Avg. Volume 499,572 (8/27/2014) Insider Ownership ~25% 3

4 Calfrac s Size and Scope Fifteen Years of Service ~4,700 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 +0.9MM Short Tons Proppant Pumped YTD 2014 North America 24 Hour 95% United States 30% Canada Operations +175 Customers Worldwide 4

5 GROWING OPERATIONAL SCALE 5

6 Full Service Hydraulic Pressure Pumping Canada Fleet: 17 Fracturing Spreads 384,000 Hydraulic Horsepower 17 Coiled Tubing Crews U.S. Fleet: 15 Fracturing Spreads 660,000 Hydraulic Horsepower 18 Cementing Crews 8 Coiled Tubing Crews Russia Fleet: 7 Fracturing Spreads 70,000 Hydraulic Horsepower 7 Coiled Tubing Crews Latin America Fleet: 103,000 Hydraulic Horsepower 13 Cementing Crews 4 Coiled Tubing Crews FACTS 1999 Founded ~4,700 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 ~30% of fracturing activity and the Company is targeting 50% by year-end

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 remains competitive, with an upward bias Positive momentum Utilization expected to remain robust Source: PacWest Consulting Partners Growing U.S. Presence 11

12 United States Regional Update Highlights Fifth Marcellus crew became active in June 2014 Growing presence in the Eagle Ford Rockies activity increasing due to Niobrara exposure Leading market share position in the Fayetteville Bakken activity levels significantly improved since 1Q14 Meaningful Market Share (6/30/2014) Region HHP Crews Mkt. Share Rank by HHP (1) Marcellus/Utica 250, Eagle Ford 157, Rockies Area 89, Fayetteville 85, U.S. Bakken 76, U.S. Total 660, (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 Multi-year 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* 8 Cementing Crews 3 Coiled Tubing Crews Other Considerations Contracts based in USD Fleet will grow to 68,000 hhp in third quarter of 2014 * Includes 10,000 hhp being added in 3Q14 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 Expect 2014 activity levels to be lower compared to 2013 Right sizing business to reflect current activity levels Mexico Fleet: 45,000 Hydraulic Horsepower 2 Cementing Crews 1 Coiled Tubing Crew Poza Rica 15

16 Russian Operations 16

17 Russia Update Market Overview and Outlook Horizontal fracturing composed 42% of frac jobs YTD, compared to 32% in the same period last year Operating margins have shown improvement y/y due to higher activity Ongoing geopolitical issues have yet to impact activity, but monitoring daily 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* Alberta Workers Compensation Board (wcb.ab.ca) Association of Energy Service Companies (aesc.net) US Bureau of Labour Statistics (bls.gov) *Calfrac s statistics are 12-month rolling averages while the industry statistics are for

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 First audits started in August 2014 for three U.S. locations 20

21 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 North American sand pumped in 1H14 was up 70% y/y 0. 9MM U.S. Tons Proppant Pumped YTD 2014 North America = 8,600 = 70% Y/Y RAILCARS filled with sand increase 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 Our Core Values: Energy, Execution, Ethics, Entrepreneurship and Learning Training & Development Structured development program from Field Competencies to Supervisor to Management 23

24 Calfrac s 15 th Anniversary In 2014, the Company celebrates its 15 th Anniversary Operations began in Medicine Hat, Alberta in 1999 Since inception, the Company has used its strategy of capital discipline to systematically increase its operating presence in key areas From July 17-31, employees across the company participated in The 15 Days of Giving, a campaign focused on volunteering time local not-for-profit organizations Impressive Growth Since Inception CAGR* Employees 4 4,300 65% Countries % Revenue ($mm) $3.7 $1, % EBITDA ($mm) $0.4 $ % HHP 2,250 1,194,000 57% Cementing Crews % Coiled Tubing Crews 0 38 n/a *CAGR - Compound Annual Growth Rate 24

25 TECHNOLOGIES THAT WORK IN THE FIELD 25

26 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 26

27 STRONG FINANCIAL PERFORMANCE 27

28 Financial Results Income Statement For the Three Months Ended June 30 (C$ millions except per share amounts) % Change Revenue $503 $ Operating Income $45 $ Net Income ($12.9) ($14.6) 12 Earnings Per Share (Diluted) ($0.14) ($0.16) 13 Balance Sheet - As at June 30, 2014 Working Capital $334 Total Assets $1,843 Long-Term Debt $652 Total Equity $795 Available Credit Facilities $247 28

29 2014 Capex and the Balance Sheet 2014 Capital Program Expanded to $360 mm from $150 mm $120 mm of the spending will occur in 2015 Capex includes 155,000 hhp for delivery in 2015: US 80,000 hhp for two crews Canada 35,000 hhp for one crew Argentina 40,000 hhp for the Vaca Muerta Term Debt US$600 million with an interest rate of 7.5% Matures in 2020 Credit Facilities $247 mm available at June 30,

30 INVESTMENT ADVANTAGES 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