INVESTOR PRESENTATION. April 2018

Transcription

1 INVESTOR PRESENTATION April 2018

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 TRICAN OVERVIEW

4 OVERVIEW OF TRICAN Strong Financial Position Market capitalization 1 billion (April 6, 2018) Total debt of $103.7 million, cash of $12.7 million (December 31, 2017) Financial investment in US listed company Keane Group ($177 million, December 31, 2017) Strong cash flow with minimal capital expenditures, opportunities for deployment: NCIB M&A (longer-term) Process optimization Fraction Energy, 4% Acid, Coil, Nitrogen, 7% Cementing, 15% Industrial, 2% Market Leading Positions Canadian market leader in fracturing services Canadian market leader in cementing services Supporting service lines: coil tubing, nitrogen, acid, water management services and industrial services Fracturing, 72% 4

5 EQUIPMENT AS OF FEBRUARY 23, 2018 Service Line Total Equipment Active, Manned Active, Maintenance, Unmanned Idled ~ Market Share Fracturing (HHP) 680, , , ,000 30% Cementing (trucks) % Coil Tubing (units) n/a Nitrogen (units) n/a Ability to reactivate idle equipment would increment both free cash flow and ROIC: Our $33 million H capital budget includes our estimated reactivation costs of $3 to $4 million for all remaining fracturing equipment 5

6 MARKET DYNAMICS INCREASING WELL INTENSITY Increased frac intensity and job size improve profitability 2017 total sand volumes increased 112% year-over-year Average stages per well increasing approximately 10% per year Leading sand per well: 6,000 7,000 tonnes Still below US average sand / well High utilization and increased pumping time per well significantly improves margins Over 50% of fleet is comprised of continuous duty pumps suited to increased frac intensity 6

7 TRICAN COMPETITIVE ADVANTAGE Strong safety record LTI Rate of 0.19 Technical advantage in Canada Numerous engineers embedded in client offices MVP Frac TM system Lightweight cement blends Technology retains and grows market share and improves returns Lowers product cost High-quality, efficient operations Significantly lowered cost structure from the downturn Large scale going forward 7

8 GEOGRAPHIC COVERAGE Horn River Shale British Columbia Alberta Saskatchewan Manitoba Montney Shale FORT ST. JOHN Deep Basin GRANDE PRAIRIE WHITECOURT HINTON NISKU LLOYDMINSTER DRAYTON VALLEY RED DEER CALGARY BROOKS ESTEVAN MEDICINE HAT Duvernay Shale Viking Tight Oil Cardium Tight Oil Lower Shaunavon Tight Oil Bakken Shale Spearfish 8

9 OUTLOOK Customer economics in Canadian liquids-rich gas plays are competing with all plays worldwide Driven largely by condensate pricing CDN / US dollar exchange rate helps customer economics Anticipate customer spend for fracturing to be flat year-over-year Gas spending down Liquids spending up Continued growth in service intensity Proppant per well estimated to increase 15% in 2018 The net result is more spend on fracturing and a balanced or undersupplied market 9

10 OUTLOOK % of revenue from liquids rich and oil plays (Q4 2017) Only 17% of revenue from dry gas customers (Q4 2017) Pricing stable with ability to recover cost increases Focus on driving better crew efficiency and increased sand per well to drive better profitability Four fracturing crews committed through April and May Additional crews planned in May will be weather dependent Active fracturing equipment fully booked from June 1 to the end of Q3 Hard committed on half of active equipment in Q4 and soft committed on the remainder 10

11 OUTLOOK Plan to add one additional fracturing crew by Q3 Will evaluate adding additional crews if current pricing and ROCE can be maintained Activated 3 additional cement crews for Q1 Looking at activating additional coil crews in 2018 Hiring qualified staff limiting speed of equipment activations 11

12 TRICAN COST SAVINGS Minimal fixed cost increases going forward as business improves Lowered fixed/variable cost ratio Fixed costs now 25% of costs as compared to 50% pre-downturn Canyon-Trican combination allows for additional cost savings Annual synergies between $20 and $40 million - $31 million realized as of December 31, 2017 Large scale will reduce costs 12

13 GROWTH

14 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 after Canyon is fully integrated 14

15 GROWTH Strong earnings potential from existing assets with minimal additional capital investment required Existing asset base generated $347 million adjusted EBITDA in 2014 (see Non-GAAP Measures in the 2014 Annual MD&A for Trican (Canadian operating income) and Canyon (EBITDA before share-based payments), respectively) Substantial leverage on fixed cost structure as equipment utilization increases 15

16 ADDITIONAL GROWTH Retained ownership in Keane allows us to participate in U.S. recovery Approximate 5% ownership in Keane Group (FRAC) 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 No non-compete in U.S. Trican will license our technology in U.S. and International markets Licensed sand supplier and chemical suppliers in North America Selling selective chemistry in US and Canada Selling silica dust control product in other industries Exploring technology and product sales internationally 16

17 ADDITIONAL GROWTH Year Ending March 2017 Keane Holding Company Proceeds Trican Pro Rata Proceeds Trican Pro Rata Proceeds (1.25 CAD/USD Exchange Rate) FRAC USD $14.00 share price: 2018 (March 16, 2018 March 15, 2019) USD$797 million USD$123 million CAD$153 million 2019 (March 16, 2019 March 15, 2020) USD$797 million USD$76 million CAD$95 million 2020 (March 16, 2020 March 15, 2021) USD$797 million USD$74 million CAD$92 million 2021 (March 16, 2021 March 15, 2022) USD$797 million USD$74 million CAD$92 million FRAC USD $18.00 share price: 2018 (March 16, 2018 March 15, 2019) USD$1.02 billion USD$185 million CAD$241 million 2019 (March 16, 2019 March 15, 2020) USD$1.02 billion USD$121 million CAD$175 million 2020 (March 16, 2020 March 15, 2021) USD$1.02 billion USD$95 million CAD$126 million 2021 (March 16, 2021 March 15, 2022) USD$1.02 billion USD$95 million CAD$126 million FRAC USD $20.00 share price: 2018 (March 16, 2018 March 15, 2019) USD$1.14 billion USD$216 million CAD$270 million 2019 (March 16, 2019 March 15, 2020) USD$1.14 billion USD$152 million CAD$190 million 2020 (March 16, 2020 March 15, 2021) USD$1.14 billion USD$105 million CAD$131 million 2021 (March 16, 2021 March 15, 2022) USD$1.14 billion USD$105 million CAD$131 million Notes: 1. Assumption for table = 100% of remaining FRAC shares liquidated in year shown and at price shown (could be single or multiple events). 2. Remaining FRAC shares held by Keane Investor Holdings LLC ("InvestorCo ) = 56,919,000 FRAC shares. The above table valuations includes the two secondary offerings: Liquidation event #1: Jan 20, 2017 Secondary offering w/ IPO = USD$28 million payable to Trican out of USD$284 million in proceeds to InvestorCo Liquidation event #2: Jan 17, 2018 Secondary offering = USD$27 million payable to Trican out of USD$280 million in proceeds to InvestorCo 17

18 INNOVATION

19 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 Introduced friction reducers that will lower product cost CleanTRACK - patented dust control product that is being used to control dust on lease roads, lease sites and all dirt roads 19

20 FINANCIAL OVERVIEW

21 AS OF DECEMBER 31, 2017 $43 million drawn on $227 million revolving credit facility $227 million revolving credit facility is committed until April 2020 $57 million of Senior Notes Debt of approximately $103.7 million (excludes cash of $12.7 million and $15.1 million of currency derivative assets) Company is in full compliance with covenants, and continues to forecast compliance in the future Capital expenditures approximately $33 million in 1H 2018 Maintenance: $15 million Growth: $15 million Reactivations: $3 million 21

22 SHARE BUYBACK NCIB in place to purchase up to 10% of Trican shares before October 2, 2018 Purchased approximately 11.9 million shares at a weighted average share price of $4.27 per share from October 2017 to February 21, 2018 Will continue to pay down debt and purchase shares going forward 22

23 INVESTMENT ADVANTAGES Largest Canadian pressure pumping company Included in S&P TSX Index Executing on share buyback Significant earnings potential on existing assets No significant capital investment required for reactivations Leverage on low cost structure coming out of downturn Upside to U.S. market recovery through Keane ownership Strong management team that has managed through numerous cycles 23

24 SUMMARY Number of Outstanding Shares (as of March 31, 2018): 331 million Average Daily Volume (one month period): ~ 4.7 million (as of March 31, 2018) Directors/Officers Ownership: 1.1% (approx. - diluted basis) Market Cap (as of March 31, 2018) $1 billion 24

25 INVESTOR PRESENTATION April 2018