INVESTOR PRESENTATION April 2019 FORWARD LOOKING STATEMENTS This - - PDF document

INVESTOR PRESENTATION

April 2019

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

• perations 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

TRICAN & INDUSTRY OVERVIEW

INVESTMENT SUMMARY

• Largest Canadian pressure pumping company
• Industry-leading fracturing and cementing service lines
• Focused on top quartile return on invested capital
• Capital disciplined investments
• Investments must exceed ROIC hurdle rate
• Cash flow in 2018 used to repay debt and re-purchase shares
• Shareholder returns through NCIB
• Repurchased approximately 16% of the Company’s shares from October 2017

to present

• Continue to invest into repurchasing shares into Q2 2019
• Very strong balance sheet
• Net debt of approximately 38 million at year end. (debt less cash)
• Non cash working capital balance of 108 million
• Focused on lowering costs in competitive environment
• Approximately $55 million of annualized cost savings since Canyon acquisition

in June, 2017

4

INVESTMENT SUMMARY

• Existing idle equipment provides opportunity for

incremental returns upon a market recovery (minimal investment required for reactivations – just staffing)

• Substantial leverage on existing infrastructure and fixed cost

structure

• Monetized $17.6 million of idle non-core assets in 2018
• Strong loyal customer base that supports the company

through the downturn

• Experienced and motivated work force supported by an

executive leadership team with extensive experience managing oilfield services cycles

• Trading substantially below tangible book value and

replacement cost

• Opportune time to invest in cyclical business

5

INVESTMENT SUMMARY

• Company valuation approaching cyclical low valuation – opportune

time to invest in a cyclical business

• Company has significantly improved asset coverage relative to 2015

cyclical low – exit 2018 debt lower than 15% of tangible equity value

0.0x 0.2x 0.4x 0.6x 0.8x 1.0x 1.2x 1.4x 1.6x 1.8x 2.0x

• 0.20

0.40 0.60 0.80 1.00 1.20 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18

Price to Tangible Book Value Debt / Tangible Equity

Price to Tangible Book Value vs. Leverage Profile

Debt to Tangible Equity (LHS) Price to Tangible Book (RHS)

6

• Trican is a Canadian-

focused, energy services company, which provides an array of specialized products, equipment and services for the drilling and completions cycle of

• il and gas

exploration and development.

Customer Full Cycle Technical Expertise

Engineering Support Reservoir Expertise Laboratory Services

Drilling Cycle

Cementing Services

Completion Cycle

Fracturing Coil Tubing Nitrogen Fluid Management Acidizing

Production Cycle

Coil Tubing Acidizing Pipeline Services Industrial Services Chemical Services Remedial Cementing

WHAT WE DO

7

Market Leading Positions

• Canadian market leader in fracturing services (based
• n adjusted EBITDA margin and market share)
• Canadian market leader in cementing services

(based on market share – no competitor margin data available)

• Supporting service lines: coil tubing, nitrogen, acid,

water management services, pipeline and industrial services Strong Financial Position

• 2018 revenue of $900 million
• Market capitalization $431 million (April 5, 2019)
• Total debt of $46 million (net debt of 38 million) at year

ended 2018

OUR CANADIAN MARKET AND FINANCIAL POSITION

Trailing 12 Month Revenues: Service Line Breakdown

Hydraulic Fracturing, 69% Cementing, 16% Coil, Nitrogen, Acid, 9% Fluid Management, 4% Industrial, 2% 8

OUR FOCUS To achieve top quartile ROIC in our sector

• Maintain market leading position in Fracturing and Cementing service lines
• Strengthen auxiliary service lines (Coiled Tubing, Nitrogen, Water Management)
• Growth in existing or complimentary, less capital intensive, less cyclical

services lines (i.e. Production & Pipeline Services)

• Leverage strong technical expertise into additional markets or services
• Disciplined investment into future growth – ensure ROIC hurdle rates are met
• Return value to shareholders through Normal Course Issuer Bid (share

buyback program)

• Reduce costs for ourselves and our clients through efficiency improvements and

scale Strengthen Existing Business Growth Share- holder Return Cost Control & Efficiency Gains

9

FOCUSED GEOGRAPHIC COVERAGE

Horn River Shale Montney Shale Bakken Shale Cardium Tight Oil Viking Tight Oil Lower Shaunavon Tight Oil

GRANDE PRAIRIE WHITECOURT

HINTON

FORT ST. JOHN NISKU LLOYDMINSTER RED DEER BROOKS ESTEVAN

British Columbia Alberta Saskatchewan

Deep Basin Duvernay Shale

DRAYTON VALLEY CALGARY

Manitoba

Spearfish

MEDICINE HAT

10

CANADIAN INDUSTRY DYNAMICS – INCREASING WELL INTENSITY

• 2018 well count 37% below 2014 levels
• 7,000 – 8,000 wells today equates to 2014 well count levels in terms of fracturing equipment demand
• We expect well service intensity to remain flat in 2019 to 2018 levels;
• Tonnes of proppant placed per / meter grew by approximately 25% in 2018 relative to 2017;
• 1.5 tonnes/metre in 2018 vs. 1.2 tonnes/metre in 2017
• 2018 data weighted to higher well service intensity wells

Source: Canadian Discovery Source: GMP First Energy 10,924 5,376 3,963 6,959 6,940 5,600

• 2,000

4,000 6,000 8,000 10,000 12,000 2014 2015 2016 2017 2018E 2019E

WCSB - Wells Drilled

647 813 1,329 1,384 1,855 2,851

• 500

1,000 1,500 2,000 2,500 3,000 2013 2014 2015 2016 2017 2018

WCSB - Tonnes / Well

11

CANADIAN INDUSTRY DYNAMICS – FRACTURING COMPETITIVE LANDSCAPE

Source: Competitor company reports, internal company data, and internal estimates

Hydraulic Horsepower (HHP) Capacity Idled Available Active Crewed Trican 671,850 90,000 581,850 340,000 Competitor A 355,000 28,000 327,000 327,000 Competitor B 297,500 72,500 225,000 225,000 Competitor C 270,000

• 270,000

250,000 Competitor D 250,000

• 250,000

250,000 Competitor E 240,000

• 240,000

240,000 Competitor F 80,000

• 80,000

50,000 Competitor G 50,000

• 50,000

50,000 2,214,350 108,600 2,023,850 1,732,000

• Estimated industry demand of ~ 1,400,000 HHP in Q1 2019
• Internal estimate of 20% - 25% of equipment in Canada is not suited for higher

well service intensity plays (Montney and Duvernay)

12

CANADIAN INDUSTRY DYNAMICS – TRICAN’S COMPETITIVE POSITIONING

• More than 50% of Trican’s fleet is continuous duty

pumps, most efficient style of fracturing pump, designed for higher well service intensity plays:

• Approximately 122,000 HHP dual fuel capability
• Positions Trican to service growing, higher well service

intensity plays

• Supports Trican’s continued leading Canadian fracturing

market position as measured by both market share and margin

• Allows Trican to continue to efficiently operate in the highest

well service intensity resource plays: Montney, Duvernay and Deep Basin (estimated to account for ~ 80% of the required HHP demand in Canada)

13

OPERATING ENVIRONMENT – PRICING, LABOUR & REPAIRS EXPENSE

Pricing:

• Q4 2018 pricing dropped slightly sequentially

as activity decreased in the quarter

• Experienced further pricing concessions in

the first quarter of 2019 relative to Q4 2018

• Demand improvements, or supply

contraction, will be required for pricing to improve:

• Increased customer budgets
• Improvement in commodity prices and / or

Canadian commodity price differentials

• West Coast LNG

Indexed to 2014 pricing levels. Based on equipment revenue per tonne of proppant pumped.

• 80
• 70
• 60
• 50
• 40
• 30
• 20
• 10

2014 2015 2016 2017 2018

Pricing Index

14

OPERATING ENVIRONMENT – PRICING, LABOUR & REPAIRS EXPENSE

Labour Wage Rates for Field Staff:

• Labour wage rates in-line with

industry

• We have and will further adjust field

labour levels going forward to match

• ur utilization
• Variable pay for field staff in 2019
• Well size and operating efficiencies

allow more efficient labour rates

Indexed to 2014. Based on personnel expenses per tonne of proppant pumped (component of ‘cost of sales – other’ within the statement of income).

• 60
• 50
• 40
• 30
• 20
• 10

2014 2015 2016 2017 2018

Labour Index

15

• 100
• 90
• 80
• 70
• 60
• 50
• 40
• 30
• 20
• 10

2014 2015 2016 2017 2018

R&M Index

OPERATING ENVIRONMENT – PRICING, LABOUR & REPAIRS EXPENSE

Repairs and Maintenance Expense:

• Increased intensity equals increased

expense, built into our pricing models

• Stainless steel fluid ends are expensed,

not depreciated

• Reduced 2018 annual capital

expenditures by $22 million

• Decreases fracturing gross margins by

4%

• Only Canadian company expensing fluid

ends (estimate that > 80% of US listed public pressure pumping companies expense fluid ends)

Indexed to 2014. Based on repairs and maintenance expense per tonne of proppant pumped, a component of ‘cost of sales – other’ within the statement of income.

Changed to cash expense

• f fluid ends, previously

depreciation 16

PERFORMANCE – ROIC and ADJUSTED EBITDA %

• Corporate Adjusted EBITDA margin of 18% or

greater supports corporate level ROIC hurdles

• To improve adjusted EBITDA margins:
• Continue to optimize costs
• Recovery in utilization of existing fracturing fleet:

adjusted EBITDA margin improvement when utilization at >80%

• Generate revenue from idled equipment
• Leverage existing IP and technology into new
• pportunities: sell chemicals and technology in US

and internationally

• Modest pricing improvements

17

OUTLOOK & TRICAN ADVANTAGE

Q1 2019

• Slower start to 2019
• Rig count approximately 35% below Q1 2018
• Uncertainty surrounding commodity prices, especially differentials,

and the impact of production cuts in late 2018 slowed customer plans at start of the year

• Ran 10 fracturing crews in the quarter vs. 11 crews in 2018
• 10 crews fully booked from mid January to mid March
• Crews smaller this year: running 340,000 HHP in Q1 2019 vs.

455,000 HHP in Q1 2018

• Utilization on active equipment this year approximately 75% per as

compared to 90% last year; more move and rig-up days

• Cementing activity is down approximately 30% from Q1 2018

levels correlating to the decrease in rig count

• Coil services is operating at comparable levels to 2018 with 2

additional units active

• Pricing has stabilized

19

Q2 2019

• Approximately 30% of fracturing fleets booked in

April and May (weather permitting)

• Approximately 70% of fracturing fleets booked in

June (weather permitting)

• Cementing will follow rig count
• 30% below last year
• Coiled tubing has stronger activity than last year
• Still have tenders outstanding for May and June

to increase work scope

• Focus on lowering costs in Q2
• Labour costs reduced

20

OUTLOOK – SECOND HALF OF 2019

• Visibility past the second quarter is still limited as customers

have not confirmed second half budgets

• Approximately 70% of crewed fracturing equipment committed to

clients in the second half of 2019

• Additional bids are currently being tendered that could fill second half

commitments

• Potential for increased spending by our clients if current

commodity prices hold

• Approximately 340,000 HHP active but not staffed (6 large

fleets)

• We’ll adjust active staffed equipment to meet customer

demand as second half programs are finalized

21

CAPITALIZATION – POSITIONED FOR OPPORTUNITIES

• Strong balance sheet allows for opportunistic

investment:

• Keane Monetization: December 2018 monetization of

Keane for approximately $72 million further strengthens our financial position

• Continued return to shareholders, active NCIB:

repurchased 50.4 million (approximately 15%) of the

• utstanding Trican shares from October 2017 through

February 20, 2019

• Fleet upgrades: can further strengthen our

market leading fracturing fleet through selective upgrades

• Invest in supporting service lines: target increased

market share in coil and other supporting service lines

• M&A Opportunities: low leverage levels allow

cost effective funding options for acquisition opportunities

• 0.10

0.20 0.30 0.40 0.50 0.60 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18

Debt / Tangible Capital

22

COMPETITIVE ADVANTAGE – PERSONNEL DEVELOPMENT

• Over one third of employees with more than 5 years of experience
• Career progression is an attraction to entry level employees
• Employee experience key to training and customer service

Technical, Support

• r Administrative

Position Manager Level Position Field Supervisor Field Technical Field Entry Level

23 0 to 1 Years 15% 1 to 3 Years 36% 3 to 5 Years 9% 5+ Years 39% Employee Headcounts by Years of Service

COMPETITIVE ADVANTAGE - PEOPLE AND CUSTOMER SERVICE

Leveraging more than 20 years of Canadian expertise:

• Safety: LTI rate of 0.14
• Efficiency: Working to increase fracturing pumping

hours per day to 16-20 from 10-12 hours per day

• Development: Industry-leading training programs
• Total Training Hours;
• 2017: 75,837
• 2018: 101,656
• Canadian geographic focus: Canadian focus

allows potential for expansion of existing service lines or adding services lines within

• ur current infrastructure
• Improving our operating leverage: Building
• n our existing infrastructure and adding
• perationally focused personnel while

maintaining G&A support levels

Dec-15 5.5 Dec-16 4.4 Dec-17 6.5 Dec-18 8.2 1 2 3 4 5 6 7 8 9 10 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18

Field and Shared Service / SG&A Employee

Field & Shared Service / G&A Yearly Avg Field & Shared Service / G&A

• Expon. (Field & Shared Service / G&A)

24

COMPETITIVE ADVANTAGE – INNOVATION

Leveraging innovation for new opportunities:

• Scale allows targeted investment into internally developed

IP and new technologies

• Patented MVP

TM fracturing fluids; case studies indicate:

• 30% increased production in the Montney
• 20% increased production in the Cardium
• Global technology reputation allows new markets for IP

and technology

• Initial licensing agreement signed in the US for MVP Frac

TM

• CleanTRACK

TMpatented dust control product field tested and

will be commercial in 2019

• 3rd party interest in customer facing applications platform
• International technical service agreement opportunities

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SUMMARY

• Capital disciplined company focusing on ROIC
• Strong financial position to:
• Withstand near-term cyclical weakness
• Evaluate opportunistic growth
• Return capital to shareholders
• Continued focus on reducing costs to gain a

competitive advantage

• Largest Canadian pressure pumping company

with broad range of services

• Existing equipment complement provides
• pportunity for substantial incremental returns

upon a market recovery

26

APPENDIX

APPENDIX 1: EQUIPMENT AS OF DECEMBER 2018

Service Line Total Equipment Active, Manned Active, Maintenance, Unmanned Idled ~ Market Share Fracturing (HHP) 672,000 340,000 242,000 90,000 30% Cementing (trucks) 69 32 8 29 37% Coil Tubing (units) 28 8 4 16 n/a Nitrogen (units) 80 17 24 39 n/a

• Given the industry slow down, increased amount of fracturing hydraulic horse power is

expected to be parked

• We will explore opportunities to monetize equipment that is no longer anticipated to be

competitive in the WCSB

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INVESTOR PRESENTATION

April 2019