Jefferies 2016 Energy Conference

Transcription

1 Jefferies 2016 Energy Conference November 29, 2016 Clint Walker, Exec. VP and Gen. Mgr., Cudd Energy Services Jim Landers, VP of Corporate Finance

2 Forward-Looking Statement Disclosure Certain statements and information included in this presentation constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including all statements that look forward in time or express management s beliefs, expectations or hopes. In particular, such statements include, without limitation, RPC s expectations regarding capital expenditures during 2016, our commitment to maintaining our equipment and remaining in a strong financial condition, our belief that our industry will recover within a reasonable time period, and our beliefs regarding the companies that will benefit from the eventual recovery. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of RPC to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause the actual results to differ materially from management's projections, forecasts, estimates and expectations is contained in RPC's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, RPC has used the non-gaap financial measure of earnings before interest, taxes, depreciation and amortization (EBITDA) in this presentation. EBITDA should not be considered in isolation or as a substitute for operating income, net income or other performance measures prepared in accordance with GAAP. RPC uses EBITDA as a measure of operating performance because it allows us to compare performance consistently over various periods without regard to changes in our capital structure. We are also required to use EBITDA to report compliance with financial covenants under our revolving credit facility. A non-gaap financial measure is a numerical measure of financial performance, financial position, or cash flows that either 1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows, or 2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Set forth in Appendix A is a reconciliation of EBITDA with Net Income, the most comparable GAAP measure. This reconciliation also appears on RPC's investor website, which can be found on the Internet at 2

3 Corporate Profile NYSE: RES. Publicly-traded since 1984 Recent Share Price (November 2, 2016) $ Market Capitalization $ 3.9 billion Average Daily Volume (YTD 2016) 1,830,000 Large Insider Ownership Provider of Oilfield Completion, Workover and Rental Services. Primarily U.S., Land-Based Conservative Capitalization, High Returns on Invested Capital 3

4 Fourth Quarter 2016 Update ON THE POSITIVE SIDE - U.S. domestic rig count has increased since May 2016 trough. Competitive pricing pressures have moderated. RPC s operations have benefited from a strong and enduring presence in the Permian Basin. Service intensity continues to increase. HOWEVER There is still a large oversupply of service capacity. Economics are not self-sustaining for oilfield service companies without improved pricing U.S. Domestic Rig Count, 5/27/16 11/25/16 (Source: Baker Hughes, Inc.) 300 5/27/2016 6/27/2016 7/27/2016 8/27/2016 9/27/ /27/ Column1

5 Annual Avg.Oil price / bbl ($), RPC Net Income ($mm) RPC s Evolution Throughout the Oilfield Cycles $350 Early 2000's Present 1970's ,500 Cudd Pressure 1980 s 1990 s RPC entered the Market Oil and natural gas RPC purchased pressure pumping Capitalization prices and the U.S. $300 Control founded and Chaparral Boats service line; Thru at 12/31/05: domestic rig count 4,000 acquired by Rollins; Tubing Solutions $1.7 billion; declined precipitously in 1986; Several Rollins spun off founded; Chaparral Board during 2015 and early smaller $250 Boats spun off; authorized RPC has taken oilfield division to acquisitions in Market Cap at seeking steps to improve 3,500 form RPC Energy 1990 s; Dividend Chaparral spin-off: outside financial strength and $200 Services, Inc.; Market initiated in $298 million; Two capital to preserve productive Capitalization at spinoff: $52 million. 2:1 stock split in 2005; one in pressure September 1997; 3-for-2 splits in expand assets for next upcycle. Q2 and early 3,000 $150 December 1997; pumping and Q3 appear to have Share other service marked the trough in 2,500 repurchases lines and domestic activity. $100 Patterson Services authorized in open new locations; founded in Long-term 2,000 $50 Louisiana after growth plan World War II. executed; Provided oilfield Credit facility 1,500 $0 trucking and drilling closed in fluids. Operates Refinanced in 1,000 today as RPC s -$50 rental tool service 2010; 3-for-2 line. Rollins, Inc. splits in 2010 (NYSE: ROL) and 2012; -$100 acquired Patterson Special 500 in dividend in $ Annual Average Rig Count (Source: Baker Highes, Inc.) 5

6 Our Strategy During the Downturn Preservation of Operating Assets and Service Infrastructure Strong Balance Sheet Debt-Free since 12/31/15. Prudent Cost Management Measures Materials and Supplies, Employment Costs Capital Expenditure and Working Capital Management Operating Leverage and Strong Incrementals as Activity Improves 35% 30% 25% 20% 15% 10% Debt to Total Book Capital Ratio, 12/31/06 09/30/16 5% 0% Q1 07 Q2 08 Q3 09 Q4 10 Q1 12 Q2 13 Q3 14 Q4 15 6

7 Top Service Lines Service Line Revenue as a Percentage of Consolidated Revenues Three Months Ended September 30, 2016 Pressure Pumping Thru Tubing Solutions (Downhole Tools) Coiled Tubing 42.1% 24.1% Rental Tools 10.5% Nitrogen Snubbing Other 9.7% 2.5% 7.8% 3.3% 7

8 Pressure Pumping Well-maintained, high quality fleet concentrated in service-intensive oilfield basins Fleet assessment process has efficiently refined maintenance procedures Maintaining fleets and locations to benefit from eventual upcycle Demonstrated ability to operate efficiently and effectively positioned to benefit from increasing activity levels 8

9 ThruTubing Solutions ThruTubing Solutions (Downhole tools and motors) provides services used in unconventional completion operations Specializes in accomplishing multi-stage completions in unconventional wells. Significant revenue growth during past decade Continuous innovation in specialized completion space 9

10 Coiled Tubing 58 units used to enter new and existing wells to perform a variety of services. Approximately 26 are > 2 in diameter. Growing utilization with unconventional plays and larger-diameter coiled tubing strings #4 U.S. competitor with 9% market share 10

11 Patterson Rental Tools Rents a variety of tools and products required during drilling or reentering a well 3.3% of Q revenues 2% market share Currently Leveraged to Liquids- and Oil- Related Plays in Bakken and Eagle Ford with recent entrance into Permian Basin 11

12 Other Workover Services Nitrogen Used in a variety of oilfield applications and several non-oilfield industrial uses 68 nitrogen units, 7.8% of Q revenues Snubbing / Hydraulic Workover Allows workover work to be performed on live wells 30 snubbing units, 2.5% of Q revenues Well Control Worldwide provider of blowout and well control services Also provides pre-event contingency planning and well inspections < 1% of consolidated revenues 12

13 3 rd Quarter 2016 Financial Highlights Key Financial Results ($ millions) Revenues: $ Operating (Loss): $ (56.4) Net (Loss): $ (38.9) EBITDA: $ (4.4) Q Compared to Q Revenues increased by 23%. EBITDA incrementals of 45%. Pricing stopped declining, with slight improvement in selected cases. Began recruiting skilled personnel in selected markets. Balance Sheet Highlights Continue to be Debt-Free. $139 million in cash. $0.05 per share dividend payable in December. Continues 20-year history of dividends. 13

14 Responsible Stewardship of Cash Between the Beginning of 2006 and the end of Q3 2016, RPC borrowed as much as $225 million. RPC has repaid that entire amount, returned more than $600 million to shareholders in the form of dividends and share repurchases, and at the end of Q had $139 million in cash on the balance sheet. 14

15 Return on Invested Capital * 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% RPC Peers ** YTD 16 * Calculated using cash flow from operations and average invested capital ** BAS, SPN, 2006; BAS, SPN, KEG 2007; BAS, KEG, SPN, CJES, SPN, YTD16 15

16 Contact Us Operational Headquarters: The Woodlands, Texas (above) Corporate Headquarters: 2801 Buford Highway NE, Suite 520 Atlanta, GA (404)

17 Appendix A Periods ended, (Unaudited) Three Months Ended Nine Months Ended (in thousands except per share data) September 30, 2016 June 30, 2016 September 30, Reconciliation of Net Loss to EBITDA Net Loss $ (38,942) $ (48,686) $ (35,173) $ (120,139) $ (61,680) Add: Income tax benefit (17,335) (26,712) (18,766) (86,583) (33,571) Interest expense ,331 Depreciation and amortization 51,975 56,280 69, , ,824 Less: Interest income EBITDA $ (4,356) $ (19,096) $ 15,353 $ (37,561) $ 110,884 EBITDA PER SHARE Basic $ (0.02) $ (0.09) $ 0.07 $ (0.18) $ 0.52 Diluted $ (0.02) $ (0.09) $ 0.07 $ (0.18) $