INVESTOR PRESENTATION April 2018 FORWARD LOOKING STATEMENTS This - - PDF document

▶
investor presentation
SMART_READER_LITE
LIVE PREVIEW

INVESTOR PRESENTATION April 2018 FORWARD LOOKING STATEMENTS This - - PDF document

Apr 02, 2024 207 likes •467 views

INVESTOR PRESENTATION April 2018 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

slide-1
SLIDE 1

INVESTOR PRESENTATION

April 2018

slide-2
SLIDE 2

FORWARD LOOKING STATEMENTS

2

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.

slide-3
SLIDE 3

TRICAN OVERVIEW

slide-4
SLIDE 4

OVERVIEW OF TRICAN

4

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,
  • pportunities for deployment:
  • NCIB
  • M&A (longer-term)
  • Process optimization

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% Cementing, 15% Acid, Coil, Nitrogen, 7% Fraction Energy, 4% Industrial, 2%

slide-5
SLIDE 5

EQUIPMENT – AS OF FEBRUARY 23, 2018

5

Service Line Total Equipment Active, Manned Active, Maintenance, Unmanned Idled ~ Market Share Fracturing (HHP) 680,000 455,000 114,000 111,000 30% Cementing (trucks) 67 30 10 27 40% Coil Tubing (units) 28 6 9 13 n/a Nitrogen (units) 80 26 12 42 n/a

Ability to reactivate idle equipment would increment both free cash flow and ROIC:

  • Our $33 million H1 2018 capital budget includes our estimated reactivation costs
  • f $3 to $4 million for all remaining fracturing equipment
slide-6
SLIDE 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

slide-7
SLIDE 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

slide-8
SLIDE 8

GEOGRAPHIC COVERAGE

8 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

slide-9
SLIDE 9

OUTLOOK - 2018

9

  • 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

slide-10
SLIDE 10

OUTLOOK - 2018

  • 83% 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

slide-11
SLIDE 11

OUTLOOK - 2018

  • 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

slide-12
SLIDE 12

TRICAN – COST SAVINGS

12

  • 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
slide-13
SLIDE 13

GROWTH

slide-14
SLIDE 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

slide-15
SLIDE 15

GROWTH

15

  • 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

slide-16
SLIDE 16

ADDITIONAL GROWTH

16

  • 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

  • n 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
slide-17
SLIDE 17

ADDITIONAL GROWTH

17

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

  • 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

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.

slide-18
SLIDE 18

INNOVATION

slide-19
SLIDE 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

19

  • 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

slide-20
SLIDE 20

FINANCIAL OVERVIEW

slide-21
SLIDE 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
  • f $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

slide-22
SLIDE 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

slide-23
SLIDE 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

slide-24
SLIDE 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

slide-25
SLIDE 25

INVESTOR PRESENTATION

April 2018