XDC Corporate Update - Xtreme Drilling and Coil Services

XDC Corporate Update
August 2014
Forward Looking
CAUTIONARY STATEMENT
Certain information contained in this presentation is forward-looking and involves risks
and uncertainties that could significantly impact expected or prospective results.
A discussion of risks and uncertainties is contained under the heading “Forward-Looking
Statements” in the “Management’s Discussion and Analysis” sections of Xtreme’s
SEDAR filings including, but not limited to the 2013 Annual Filing.
These reports are available at:
www.xtremecoil.com
2
XTREME DRILLING AND COIL SERVICES OVERVIEW
3
Corporate Snapshot
TICKER: XDC
(Toronto Stock Exchange)
Market Cap¹: $399mm
Enterprise Value¹: $504mm
3 Month Average Daily Volume: 151,521
Shares Outstanding: 81.5mm
Public Float: 44mm
• Directors & Management: 13%
• Greater than 10% Shareholders: 33%
Total Assets²: $514 mm
Employees²: 696
Headquarters: Calgary, Alberta and Houston, Texas
Website: www.xtremecoil.com
1. Market Cap as of 8/12/14 and Net Debt as of 6/30/14
2. As of 6/30/14
4
Xtreme Overview
XTREME DRILLING AND COIL SERVICES IS A TECHNOLOGY FOCUSED PROVIDER OF LAND
BASED DRILLING AND COILED TUBING SERVICES
We provide new generation drilling rigs as well as large built for purpose coil service rigs. With the continuous
focus on improving existing technology in the land drilling and coil services market, Xtreme has developed
numerous patents and proprietary designs for drilling and coil service rigs.
•
Drilling Services: High specification tier 1 XDR drilling rigs
•
•
•
•
•
Operations focused in the Rocky Mountain region with growing presence in the Bakken and Niobrara
unconventional shale plays.
One of the youngest high specification fleets in the land drilling industry.
Ideally suited for unconventional resource plays.
Optimized drilling and mobilization efficiencies through AC equipment, integrated skidding packages,
small footprint design and minimized craneless loads.
Coiled Tubing Services: High specification large diameter proprietary XSR coil tubing service rigs
•
•
•
•
•
The largest and most technologically advanced land based CT units in the world.
Ideally suited for CT cleanouts, re-entry, wellbore extensions, fracturing, production logging,
perforating, stimulations and other complex interventions.
Units are both masted and mastless, utilize AC 200,000 lbs. injectors, proprietary coil reel trailers and
twin 1,000hp pumps.
4 new service rigs currently in the US with an additional 8 under construction.
2 service rigs currently operating under long term contract in Saudi Arabia.
5
2014 Corporate Strategy
•
Drive 2014 financial performance through focused execution and cost reduction as well as deployment of
under or unutilized assets.
•
Leverage strong Middle East reputation into improved contracts and strategic growth opportunities.
•
Continue to build brand as deep reach coil of choice in the US through continued operating success and
strong field leadership and service.
•
Grow XSR division through new build units and pursue opportunities for next step of coil technology
deployment in long lateral US resource plays.
•
Develop strategic options for smaller horsepower XDR (200/300) that will insure long term utilization and
returns on deployed capital.
6
Xtreme’s Fleet Today
•
The Xtreme fleet consists of XDR drilling rigs and XSR coiled
tubing service rigs with patented and proprietary design
•
•
•
Similar designs enable benefits of scale in maintenance and spare part
inventories
The XDR fleet consist of 21 modern high-spec rigs
•
4 different models; XDR 500, XDR 400 XDR 300 and XDR 200
•
Majority of rigs working on term contracts in the U.S.
•
3 rigs drilling in the Canadian market
The XSR fleet consists of 7 new high-spec units
•
2 rigs working on term contract in Saudi Arabia with the rest targeting
the South Texas well-to-well market
RIG FLEET BY TYPE
Total
XDR drilling rigs
21
XSR coiled tubing service
rigs
7
Total
28
7
XDC Investment Overview
XTREME (XDC.T) IS A COMPELLING ROCKIES AND SOUTH TEXAS FOCUSED DRILLING AND COILED
TUBING SERVICE COMPANY WITH AN INTERNATIONAL PRESENCE IN SAUDI ARABIA
•
Leading Edge Drilling and Coil Technology
•
Average fleet age of 3.5 years
•
Tier 1 XDR rigs are ideally suited for major
operators with leverage to oil and liquids rich US
basins.
•
Attractive Valuation
•
EV / 2014 EBITDA¹: 6.3x vs. industry group²
average of 6.5x
•
EV / 2015 EBITDA¹: 4.6x vs. industry group²
average of 5.4x
Mkt. Cap / TEV³: 1.2x vs. industry group²
average of 1.7x
•
Largest as well as highest spec coiled tubing units
in North America.
•
•
Middle East business that has developed excellent
operating results using coil technology.
7.0
6.0
•
Strong Growth Profile
•
•
•
Consensus¹ 2014 revenue growth of 18% and
EBITDA growth of 17%.
Consensus¹ 2015 revenue growth of 26% and
EBITDA growth of 32%.
Announced expansion of US XSR business in 2014
by 160% by 8 to 13 units. The market for this
service line continues to grow as demand outstrips
supply for large coiled tubing units.
6.5
6.3
5.4
5.0
4.6
4.0
3.0
1.7
2.0
1.2
1.0
0.0
EV/'14 EBITDA
EV/'15 EBITDA
XDC
•
Balance sheet is in good shape and allows for
healthy growth in 2014 and beyond.
Price/Tangible Equity
Value
Industry Goup
1. Analyst consensus EBITDA as of 8/12/14
2. Industry group defined as PD.TO, TDG.TO, WRG.TO, CDI.TO
3. Mkt. Cap as of 8/12/14 and TEV as of 6/30/14
8
Operations in the U.S., Canada, Saudi
Arabia and India
United States
Bakken
4 Drilling Rigs
Rigs by Region
U.S.
Canada
Saudi
Arabia
India
XDR
16
3
0
2
XSR
5
0
2
0
Total
21
3
2
2
DJ Basin/Niobrara
12 Drilling Rigs
2Q 2014 segmented revenues (%)
U.S.
Canada
India
Saudi Arabia
XDR
61%
2%
8%
0%
XSR
15%
0%
0%
14%
Total
76%
2%
8%
14%
Canada
Alberta
2 Drilling Rigs
Hydrocarbons targeted – Active Rigs
Oil/Liquids
Gas
XDR
21
0
XSR
4
2
Total
25
2
Eagle Ford
4 Service Rigs
Saudi Arabia
Saskatchwan
1 Drilling Rig
Khuff Gas Reservoir
2 Service Rigs
Territory Key
Headquarters
Drilling
Support Facility
Well Service
Shale Plays
Operations
9
Xtreme Growth Summary
•
•
Aggressive $200mm+ CAPEX program increased fleet to 28 RIGS from 16 rigs in 2011 and 2012
Announced $70mm+ capital growth program that will increase US XSR fleet by 160% over the next 18 to 24 months.
In millions of $CAD
$49.0
$40.0
$50.00
$40.00
$46.0
$33.0
$30.00
$15.5
$20.00
$21.7
$9.5
$10.00
$3.9
$9.8
$6.6
$2.7
$8.7
$0.00
CAPEX
30
25
20
7
7
9
13
15
21
21
21
21
21
Q4 2012
Q4 2013
3
15
10
15
5
0
Q4 2011
¹ Estimate based on current XSR new build program.
Q4 2014¹
XDR
XSR
Q4 2015¹
Q2 2016¹
10
Revenue, EBITDA and Utilization
In ‘000’s of CAD
35.0%
$229,840
32.1%
$200,000
30.3%
30.0%
$174,150
25.0%
22.8%
$150,000
$132,000
21.1%
20.0%
$103,962
15.0%
$100,000
$73,691
10.0%
$39,766
$50,000
$40,056
5.0%
$21,889
0.0%
$FY 2011
FY 2012
FY 2013
Revenue
Operating Days
Total Utilization*
By Segment: XDR US
XSR US
EBITDA Margin (right axis)
2011
4,602
75.2%
2012
6,550
74.7%
2013
8,069
81.9%
72.0%
88.0%
93.1%
53.0%
65.7%
93.0%
99.2%
28.0%
46.6%
XDR CA
XSR SA
EBITDA
98.5%
-
*Includes Rig 109 which has not b een marketed
1H 2014
1H 2014
3,879
77.9%
89.3%
43.5%
99.0%
71.0%
11
Balance Sheet and Liquidity
35.0%
$160
$150
In millions of $CAD
$7.0
$5.2
$140
30.0%
$13.9
$130
28.6%
$120
$3.5
24.3%
$110
$18.4
$12.2
25.0%
23.9%
$8.0
$9.0
27.9%
25.0%
$11.0
23.8%
$100
21.8%
$18.2
22.5%
23.6%
20.0%
20.5%
$90
15.0%
$80
$70
$114.0
$144.0
$119.8
$141.7
$128.9
$124.0
$110.2
$116.2
$125.4
$105.4
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
$60
Net Debt (Left Axis)
•
Cash (Left Axis)
10.0%
Net Debt/Total Assets (Right Axis)
At Q2 2014:
•
•
•
•
•
Total Assets:$514mm
Cash: $18.2mm
Total Debt: $123.6mm in CAD terms. (credit line is based and drawn in USD)
Net Debt to Trailing 12 Month EBITDA: 1.4x
$116.8mm USD funded on $150mm capacity
12
DRILLING SERVICES - XDR
13
Xtreme Focused in Three of Top US Oil/Liquids Plays
U.S. Unconventional Oil Production Growth
•
•
Production from the U.S. unconventional oil plays
is expected to increase rapidly over the coming
years due to significant capital investments
Main contributors will be the Bakken and Eagle
Ford plays
High production growth will require substantial
drilling activity
3.5
3.0
Production (mmbd)
•
2.5
2.0
1.5
1.0
0.5
0.0
2008
2010
2012e
2014e
2016e
2018e
2020e
Source: IEA; IHS Cera; Wood Mackenzie; Pareto
U.S. unconventional oil production ('000 bpd)
Williston (Bakken)
Barnett
Eagle Ford
Monterey
Niobrera
Utica
Other
Total tight oil
2010
270
20
30
10
30
0
20
380
2011
390
20
100
10
40
0
50
610
2012
630
30
230
10
60
0
50
1,010
Source: IEA; Railroad Commission of Texas; DMR North Dakota; Pareto
2013
800
40
360
20
70
0
80
1,370
2014
950
50
490
30
90
10
80
1,700
2015
1,050
50
620
40
100
50
110
2,020
2016
1,100
50
750
50
120
90
120
2,280
Chg p.a. '11-'16
142
6
130
8
16
18
14
334
14
High Specification Equipment Preferred
U.S. Land Rig Count by Power Type
•
1,000
900
800
Operators have a preference for AC
rigs, which provide more power and
efficiency than mechanical and SCR
rigs
•
700
600
500
•
400
300
200
100
It is estimated that almost 35% of the
current fleet is still mechanical
•
0
AC RIGS (Tier 1)
SCR RIGS (Tier 2)
2008
Source: Helmerich & Payne
MECHANICAL RIGS (Tier 3)
2013
•
The AC powered fleet in the U.S. has
doubled in the past 5 years
According to RigData, older, mechanical
rigs are being scrapped in large numbers
as a result of their inability to adequately
drill more complex horizontal wells
All of Xtreme’s rigs are AC
powered
15
Drilling Segment Overview - XDR
XDR FLEET IS AMONG THE YOUNGEST AND MOST TECHNOLOGICALLY ADVANCED IN
THE INDUSTRY
•
•
Average Age 3.5 years on entire fleet
100% of the fleet is AC driven w/Top Drive
XDR by Type
4
11
2
XDR 200
XDR 300
XDR 400
4
XDR 500
RIG
RIG TYPE
STATUS
LOCATION
Rig 3
XDR 200
Operating
Canada
Rig 4
XDR 200
Operating
North Dakota
Rig 5
XDR 200
Operating
Canada
Rig 6
XDR 400
Operating
Colorado
Rig 7
XDR 500
Operating
Colorado
Rig 8
XDR 400
Operating
Colorado
Rig 10
XDR 200
Operating
Canada
Rig 11
XDR 300
Operating
Colorado
Rig 12
XDR 300
Operating
India
Rig 14
XDR 300
Operating
India
Rig 15
XDR 300
Operating
Colorado
Rig 16
XDR 500
Operating
North Dakota
Rig 17
XDR 500
Operating
Colorado
Rig 18
XDR 500
Operating
Colorado
Rig 19
XDR 500
Operating
Colorado
Rig 20
XDR 500
Operating
Colorado
Rig 21
XDR 500
Operating
North Dakota
Rig 22
XDR 500
Operating
Colorado
Rig 23
XDR 500
Operating
Colorado
Rig 24
XDR 500
Operating
Colorado
Rig 25
XDR 500
Operating
North Dakota
16
Contracted Days Summary as of 6/30/2014
2014
RIG TYPE
2015
2016
XDR 200
XDR 200
XDR 200
XDR 400
XDR 500
XDR 400
XDR 200
XDR 300
XDR 300
XDR 300
XDR 300
XDR 400
XDR 500
XDR 500
XDR 500
XDR 500
XDR 500
XDR 500
XDR 500
XDR 500
XDR 500
XSR 200
XSR 200
Term Contract
Well to Well Contract
0
200
400
OPERATING DAYS
600
800
1000
Est. Term Contract Days 2014: 5,500 Est. Term Contract Days 2015 : 3,200 Est. Term Contract Days 2016 : 1,000
17
COILED TUBING SERVICES - XSR
18
XSR Opportunity and Overview
HORIZONTAL WELL LATERALS ARE GETTING LONGER AND NOW ACCOUNT FOR
MORE THAN 70% OF THE WELLS BEING DRILLED IN NORTH AMERICA

The majority of the industry’s coiled tubing units are at their limit and not completing
the job.

Extended lateral depths require larger, more powerful and precise controlled CT
equipment such as AC powered injectors.

Extended lateral depths require other means of pipe transportation to handle the
amount and size of coil required.

Our business opportunity has been created by combining




management with large diameter coil experience
experienced engineering and design team
proprietary equipment and control systems
supportive industry conditions
19
XSR 200 Ultra-Deep CT Rig
DEEPER

AC Powered Injector with 200,000 lbs. pulling
capacity

23,500ft x 2-5/8” Coiled Tubing

Up to ±3,000ft horizontal reach over standard 2”
string
FASTER

Programmable Logic Computer (PLC): Increased
precision & measurability allowing for acute
control of weight on bit, differential pressure and
ROP resulting in a reduction in motor stalls &
resultantly mill times

Rigup Times: Reduced
SAFER

Mast Configuration: Minimizes working under
suspended loads, reduced total lifts

Transportation: Proprietary double-trailer
configuration
20
Eagle Ford Ops Summary Since Inception
Operational Summary:
Challenges Addressed along the way:
•
600+ Interventions, more than 17mm run in
feet
•
Trouble shooting techniques
•
Average of 25 plugs / well
•
Design flaws/modifications
•
Average well TMD: ~16,000ft
•
Over/Under Qualified personnel
•
Average well lateral Length: ~ 7,000ft
•
Training
•
Client acceptance
•
2.0” Rig up time & total job time comparisons
•
Longest well TMD: 20,400 ft.
•
Longest lateral to date: 10,400 ft.
•
Never left a tool or CT pipe in the hole
21
International Operations
INTERNATIONAL OPERATIONS OFFER UPSIDE POTENTIAL AND GEOGRAPHIC DIVERSIFICATION
Saudi Arabia
•
Two XSR 200 rigs currently
operating for major international
service company in Saudi Arabia
•
Margins are consistent with deep
coil North American expectations
•
Provides International opportunity
to deploy new XSR 200 coil service
rigs
•
Contract runs through July of 2016
•
Customer Endorsement: Coiled tubing re-entry drilling program reduces drilling time by half;
improves production six fold
Source: Baker Hughes; 2011 Investor and Analyst
Conference Presentation
22

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