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UBH Investor Presentation
June, 2015
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, 2014, 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 www.precisiondrilling.com.
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.
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Historical North American Drilling Activity
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Jan, 2008
Jan, 2006
Jan, 2014
Jan, 2012
Jan, 2010
U.S. Land Rig Count 10 Year History
0
100
200
300
400
500
600
700
800
January
Febru
ary
Marc
h
April
May
June
July
August
Septe
mber
Oct
ober
Novem
ber
Dece
mber
5 Year Range 2010 - 2014 2009 2015
Canadian Land Rig Count 5 Year History
Source: Baker Hughes land rig count
May, 2015
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Lessons from 2009 Downturn
Rig Capability _____
Liquidity _____
Revenue Security __
Concentration Risk
141 Tier 1 Rigs Added with Tier 1 Crews Trained
Strong Balance Sheet + $449* million Cash
104 Contracts for 2015 _
Global Diversification
Precision Strategy
Creates Shareholder Value
* Excludes cash receipt of $69 million from the Ontario government in Q2 2015.
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High Performance Rig Fleet 1
122
106
93
International 6
U.S.
1 July, 2015
234
1 Jan, 2009
Canada
141 Tier 1 Rigs Added
1) As of May 26th 2015 - Includes 4 newbuilds that are yet to be delivered (1 for Canada and 3 for United States ). Does not include prospective tier upgrades.
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6,987 employees completed training through Precision Tech centres in 2013 & 2014
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Balance Sheet Strength
$1.3 billion in available liquidity 1
+ $69 million tax receipt from Ontario Government in Q2 2015
Staggered long-term maturities starting 2019 to 2024
Average interest rate of 6.2%
Long track record of maintaining financial flexibility
Available liquidity as of 3/31/2015 1
Revolver / operating facilities Availability
Cash
$1,293
$844
$449
1.Calculated as undrawn portion of revolver (adjusted for LCs outstanding) and cash
using CAD/USD exchange rate and balance sheet numbers as at 3/31/2015.
8
Average market cap. of $29 billion.2
Accounts for 77% of total revenue.
Strong Contract Book backed by Well Capitalized Customers
National Oil Companies
8%
Private 5%
Public 87%
1 Includes Canada, U.S. and International operations. 2 As of April 29th 2015.
2014 Top 50 Customers 1
47
51
58
12104
2016 Q2’15
110
2015 Average
International Canada US
Average Term Contracts
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Focused International Footprint
Middle East 4 active rigs in Saudi Arabia
2 active rigs in Kurdistan
3 active rigs in Kuwait
1 active rig in Georgia
Focus on deep high pressure drilling
Specialized customer needs
Mexico 6 rigs in Mexico
Focus on IPM support
North America 121 Tier 1 Rigs in Canada
103 Tier 1 Rigs in U.S.
Focused on development drilling
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Positioned In Most Active North American Regions Comprehensive North American Coverage
Dots representative of areas where Precision has had operations within the past two years
11
Key Financial Metrics
Key Operational
Metrics
• Operating Earnings
• Return on Capital Employed
• Total Shareholder Return
• Safety Performance
• Mechanical Downtime
• Employee Retention
Delivers Shareholder Value
12
Competitive Strategy Tailored for Development Drilling
PEOPLE
SYSTEMS & SCALE
DRILLING TECHNOLOGY
LOWER RISK
MAXIMUM EFFICIENCY
ATTRACTIVE RETURNS
PRODUCES
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Career Path Management
Field Training
Investments
Structured Promotion
Programs
Long-term
Compensation
Programs
Permanent Training
Facilities with Fully
Functioning Rigs
Leadership Development Programs
World-Class
Safety Culture
and Processes
Tier 1 Assets
EXPERIENCED,
HIGHLY SKILLED
PRECISION CREWS
Precision HR Training and Processes
Structured Competency Standards
Structured Measured Retention Programs for Key Personnel
14
Global recruitment
7 Countries
10 Provinces
50 States
Toughnecks program processed 44,461 applications and hired 4,013 people in 2014
90% retention target of key field positions
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SYSTEMS &
SCALE
IT Infrastructure and ERP
Supply Chain Management • Leverage Procurement • Vendor Management • Centralized Support
Technical Support centres • Asset Integrity • Maintenance Standard • Centralized Support • In House Repair & Rebuild
Manufacturing + Capital Projects • Engineering • Project Management • Equipment Manufacturing (Rostel)
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Safety & Operations
Training
Rig Build & Construction
Repair & Maintenance
Nisku Drilling Support Centre
17
Unique Schlumberger Alliance Drives Efficiency
Maximum efficiency
Reliability
More productive
drilling programs
Better field economics
Precision field execution
and customer interface
Schlumberger downhole tools
& technology, training &
engineering support
18 Precision Super Triple rigs operating in Duvernay
Fully Industrialized Development Drilling
Maximum Efficiency
Repeatability + Predictability
Risk Minimization
Technology deployment
Long-term economic mindset
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Completion & Production Segment: Full Well Cycle Exposure
Largest well service provider in Canada and growing presence in U.S.
Over 170 Well Service, Snubbing and Coil Tubing rigs
Large fleet of high value rental equipment
Camps and Catering
Excellent footprint in Canada and Northern U.S.
Existing asset base supports solid cash flow generation
Focus on maximizing cash flow
20
Increasing Diversification of Revenue Contribution
44%
7%
49%
U.S. Canada International
46%
3%
51%
2012 2013
47%
8%
46%
2014
International revenue was 8% of total in 2014, up from 3% in 2012.
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Historical Annual Revenue and EBITDA
Annual Revenue (millions)
Annual EBITDA (millions)
2014
$800
2013
$639
2012
$671
2011
$695
2010
$435
2009
$407
$1,430
2009
$1,197
2010 2014 2013
$2,351
$2,030
2012
$2,041
2011
$1,951
Q1 2015 Revenue – $512 million EBITDA – $163 million
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International Revenue Growth
Inte
rna
tio
na
l R
eve
nu
e (
mil
lio
n)
$70
‘$50
‘$40
‘$30
‘$20
‘$10
‘$0
$60
+24%
Q1’15 Q4’14 Q3’14 Q2’14 Q1’14 Q4’13 Q3’13 Q2’13 Q1’13 Q4’12 Q3’12 Q2’12 Q1’12
Initiated Saudi with 3 Rigs
Deployed additional 3 Rigs to Mexico
Initiated Kurdistan with 2 Rigs
Revenue
Late Q2 2014 - Initiated Kuwait with 2 Rigs
Deployed additional 1 rig
to Saudi
Initiated Georgia with 1 rig
CAGR
23
Capital Spending Highlights 1
2015 Planned Capital Spending
1) Canadian dollar amount in millions. As of April 27th, 2015
Total: $506 million
$320
$195
$187
$721
2015 – $506 million
Construction and delivery of 17 newbuild Super Series rigs
13 to U.S. (10 delivered)
3 to Canada (2 delivered)
1 to Kuwait (delivered)
$78
$428
Maintenance & Infrastructure
Expansion & Upgrades
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Returning Value to Shareholders
Div
ide
nd
s P
aid
($
in
mil
lio
n)
$14
$14
$14
$17
$18
$18
$18
$20
$20
$166
$14
Q4’12 Q1’15 Total Q4’14 Q3’14 Q2’14 Q1’14 Q4’13 Q3’13 Q1’13 Q2’13
Initiated dividends with $0.05
per share per quarterly
Increased dividends to $0.06 per share
per quarter
Increased dividends to $0.07 per share
per quarter
25
Precision Drilling Investment Merits
Leading North American driller with global diversification
High Performance Tier 1 fleet of rigs with Tier 1 crews
Strong balance sheet with $449* million of cash
Contract position backed by excellent customer base
Experienced organization and management team
Dividend yield ≈ 3.5%
TSX: PD NYSE: PDS * Excludes cash receipt of $69 million from the Ontario government in Q2 2015.
26
Appendix
27
June North American Market Update
Oil-weighted regions are more than 50% below November 2014 peak activity levels.
• Decline in activity is increasing at a decreasing rate.
• Operators focusing on core areas of unconventional plays.
Precision operates 234 Tier 1 rigs (122 Canada, 106 U.S. and 6 internationally).
• Tier 1 rigs remain most in-demand but utilization still declining.
• 17 new build deliveries scheduled in 2015 (13 delivered).
• Provides additional contracted cash flow visibility.
Canadian spring break-up activity is 53% below 2014 levels.
• Year over year April activity was down over 55%.
Demand for C & P services in Canada is following drilling activity, however business is generating cash.
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0
100
200
300
400
500
600
700
800
Ca
na
dia
n A
cti
ve
La
nd
Rig
Co
un
t
5 Year Range 2010 - 2014 2013 2014 2015
Canadian Activity Update
2011
Source: BHI
29
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
U.S
. A
cti
ve
La
nd
Rig
Co
un
t
Oil Gas
Oil Drilling Dominates Activity
Total rig count has dropped
54% from Peak
Oil rig count has dropped
58% from Peak
Source: BHI, as of May 15th, 2015
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Precision Horizontal Leadership
82%
91%
Precision Industry
85%86%
Precision Industry
1. Precision Q1 2015 Average. 2. Baker Hughes rig count average for Q1 2015. 3. Rolling 12 month average as at March 31st, 2015.
United States 1,2 Canada 3
Percentage of Horizontal/Directional Wells
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Commodity • Vertical gas • Vertical gas • Vertical oil • Horizontal gas emerges
• Horizontal gas, development mode • Horizontal oil/liquids growth • Vertical oil • Vertical gas declining
Customers • Small independents • Highly cyclic customer
demand
• Large cap independents • Mid cap independents • Small cap independents
• Integrated oil companies • National oil companies • Large cap independents • Mid cap independents • More stable demand
Unconventional Basins
• Oil Sands • U.S. focused • 3 to 5 basins
• U.S. and Canada • Emerging Internationally • 20+ basins
Barriers to Entry & Competitive Advantage
• Low barriers • No differentiation
• Rig ownership • Capital • Technology bifurcation
emerging • High performance contractors
emerge • Shortage of Tier 1 rigs
• Technology bifurcation complete • Rig efficiency dominates • Scale benefits apparent • Capital needs large • Established track record • Robust support systems • Tier 1 market undersupplied
North American Market Has Transitioned To Industrialized Resource Drilling
1985-2005 Reservoir Drilling
2005-2010 Resource Drilling Emergence
2010-PRESENT Industrial Resource Drilling
32
Precision Commands Leadership In Canadian LNG
Approved export capacity of 26Bcf/day 1
Opportunity for 20 to 25 rigs per Bcf of export capacity
Longer-term demand source
Require deeper Tier 1 rigs
ST-1200 and ST-1500 rigs ideal for type of development Pad walking Potential year around operations
Well capitalized players funding projects
Want long-term partners with proven
track record
Precision has won approximately half of the awarded LNG related new builds
ST-1500 deployed in Northwestern Alberta in February 2014
1. Source: Risky Business: This issue of timing, entry and performance in the Asia-Pacific LNG Market, The School of Public Policy SPP Research Papers, University of Calgary
33
PD Tier 1 + Tier 2 & PSST 1
109 120144
188200
217234
140 126
126
108103 74
74
103 109 6726 24
22
22
2015E
330
2014
313
2013
327
2012
322
2011
337
2010
355
2009
352
PSSt
Tier 1
Tier 2
1) As of May 26th 2015 - Includes 4 newbuilds that are yet to be delivered (1 for Canada and 3 for United States ). Does not include prospective tier upgrades.
34
High Performance Horizontal Drilling Machines
Precision’s Tier 1 Super Series Fleet
Super Triple 1500 1 Super Triple 1200 2 Super Single
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
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
35
Precision’s Canadian Dayrate Strength
2010 2011 2012 2013 2014 2015
$12,000
$24,000
$22,000
$20,000
$18,000
$16,000
$14,000
Q1
Q3
Q2
Q4
Average Quarterly Dayrate
Year over year, quarterly average increase of 8% from 2010 to 2015
36
Balance Sheet Strength
1) Statistics refer to balance sheet and annual income statement as of 3/31/2015. Debt to total capital equals long-term 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 3/31/2015.
3) Current blended cash interest cost of our debt is approximately 6.2%.
Attractive Capital Structure (1)
Total debt to total capital: 45% Net debt to total capital: 35% Interest coverage: 6.3x
Long maturity, low cost debt Average interest rate of 6.2%
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
Available liquidity as of 3/31/2015(2)
Revolver / operating facilities Availability
Cash
$1,293
$844
$449
37
800, 525-8th Avenue S.W.
Calgary, Alberta, Canada T2P 1G1
Telephone: 403.716.4500
Facsimile: 403.264.0251
www.precisiondrilling.com
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