August 2011 Investor Presentation

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August 2011 Investor Presentation

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  • SECURE INVESTOR PRESENTATION

    August 2011

    www.secure-energy.ca TSX: SES

  • HISTORY

    Secures first facility opened October 2007.

    Over 400 employees in the field and head office.

    Secures network has grown to 12 operating facilities in Western Canada. Largest drilling fluid service company in

    Western Canada.

    Raised $86 million of equity (May 2011).

    Closed the acquisition of Marquis Alliance June 1, 2011 for $131 million. Closed the acquisition of XL Fluid Systems July

    1, 2011 for $37 million.

    Current Market Cap value approx. $750 million Cdn.

    2

  • EXECUTIVE TEAM

    Rene Amirault, President and Chief Executive Officer 29 years experience IOL, CCS, Consultant

    Nick Wieler, C.F.O. 20 years experience IOL, Newalta, CCS

    George Wadsworth, President Drilling Services Division 17 years experience Marquis founder, M.I. Swaco

    Karen Myrheim, V.P. Sales & Marketing

    24 years experience CCS, Enerland, Triumph EPCM

    Gary Perras, V.P. Operations 15 years experience Sask Energy, CCS

    Dan Steinke, V.P. Business Development 25 years experience Koch, CCS, SCF Partners

    Allen Gransch V.P. Finance 10 years experience Price Waterhouse Coopers

    3

  • BOARD OF DIRECTORS

    Rene Amirault President & CEO of Secure Energy Services Inc.

    Murray Cobbe (Lead Director) Executive Chairman of Trican Well Service Ltd.

    Dave Johnson Chairman of Progress Energy Resources Corp.

    Brad Munro Former CCS lead director, Director of Galleon, 49 North Resource Fund, Winalta.

    Kevin Nugent C.A. Former CEO of NQL Energy Services Inc., Director of Savanna & Trican

    George Wadsworth

    President of Marquis Alliance (Drilling Services Division of Secure)

    4

  • SECURE VALUE CHAIN

    5

    Drill cuttings to Landfill Drill mud to FST Recycling of hydrocarbon drilling mud MA & XL services

    Completion waste to FST Waste water to FST and SWD Recycling of frac water Frac water supply and storage

    Treating and terminaling of crude oil Produced water Slop oil and tank bottoms Pipeline spills Plant maintenance

    Fluids and cement Contaminated soil to landfill Environmental services

    Swabbing De-waxing Acidization Re-completion fluids

  • FOX CREEK FULL SERVICE TERMINAL (FST)

    6

    KEY SERVICES

    Crude Oil Treatment

    Crude Oil Marketing and Storage

    Produced and Waste Water Disposal

    Oilfield Waste Processing

    Oilfield Solids Disposal

  • DAWSON PHASE I & II FST FACILITY

    9

    [Dawson Creek]

    7

    Phase I: Produced and Waste

    Water Disposal (SWD)

    Phase II: Oil Treatment and Waste

    Processing (FST)

  • PEMBINA AREA CLASS I & II LANDFILL (PAL)

    8

  • SECURE FACILITIES

    9

    1. LA GLACE

    2. FOX CREEK

    3. DAWSON

    4. KOTCHO

    5. NOSEHILL

    6. OBED

    7. SOUTH GP

    8. DRAYTON (Q3/2011)

    9. EMERSON

    10. BRAZEAU

    11. WILD RIVER (Q4/2011)

    12. SOUTH GP

    13. WILLESDEN GREEN

    14. PEMBINA

    FULL SERVICE

    TERMINALS

    STAND ALONE WATER

    DISPOSAL FACILITIES

    LANDFILLS

  • 10

    Marquis Alliance offers clients environmental services and solids control to compliment its drilling fluids business

    Marquis Alliance Energy Group (MA) provides a specialized and integrated service offering to

    upstream E&P companies, comprised of three

    core segments:

    Drilling Fluids (82% of MA revenue)

    Environmental Services (13% of MA revenue)

    Solids Control (5% of MA revenue)

    Focusing on leading resource plays in the Canadian WCB and Northern US markets

    Innovative and patented technologies leveraged to medium/deep and horizontal drilling activity

    which provide higher revenues and margins

    MARQUIS ALLIANCE DRILLING SERVICES DIVISION

  • DRILLING FLUID RECYCLING SYNERGIES IDENTIFIED

    11

    OBM Blended at Facility

    OBM used to drill well

    OBM

    Waste Generated

    OBM waste delivered to SES

    facility

    SES facility processes and treats waste

    Oil can be recovered from multiple sources:

    Cuttings sent to landfill Slop oil/water, tank

    bottoms, frac oils, etc.

    Spent Oil based muds

    OBM blending facilities will be an extension of FST

    Recycle 80% of oil based mud hydrocarbon in 4 years

    Integrated Process for Oil Based Mud

    (OBM)

  • MA & XL ACQUISITION STRATEGY

    Corporate culture, management teams aligned for growth

    Recycled drilling fluids at FSTs

    New blending facilities at strategic FSTs to reduce trucking costs

    Improve waste handling at the drill site

    Enhanced environmental stewardship to our combined customers

    Provide full cycle cradle to grave customer solutions

    Accretive to Secure shareholders

    Balance sheet remains strong

    12

  • WESTERN CANADA PRODUCING OIL & GAS WELLS

    13

    0

    50,000

    100,000

    150,000

    200,000

    250,000

    Crude Oil Natural Gas

    Source: Canadian Association of Petroleum Producers (CAPP)

  • WCSB OIL & GAS WELL WATER PRODUCTION

    0

    500,000

    1,000,000

    1,500,000

    2,000,000

    2,500,000

    3,000,000

    2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

    Water produced from Gas Wells (cubic metres/month)

    Water produced from Oil Wells (cubic metres/day)

    Source: IHS Accumap

    14

  • 2011 ESTIMATED REVENUE MARKET SHARE

    7%7%

    22%

    3%

    14%

    54%

    2011 Est. Revenue $1.5 Billion

    Secure

    CCS

    Other

    Newalta

    Producers

    Western Canadian Conventional Oil and Gas By-Products

    Increased outsourcing Maturing basin = volumes growing

    Source: Internal estimates

    15

  • WESTERN CANADIAN DRILLING ACTIVITY

    16

    -12.5%

    0.0%

    12.5%

    25.0%

    37.5%

    50.0%

    62.5%

    75.0%

    -

    5,000

    10,000

    15,000

    20,000

    25,000

    30,000

    2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 H1 2011

    Total Wells Completed Total Metres Drilled (000s metres) Hz/Directional Wells as % of all Wells Drilled

    Sources: Daily Oil Bulletin

  • BUSINESS STRATEGY

    Exploit the value chain from cradle to grave, with a

    focus on environmental and recycling services:

    Complimentary services at FSTs (ie. drilling mud blending/recycling plants, environmental consulting)

    Recycling services (ie. frac water and storage, oil based mud)

    Organic growth in key under serviced and capacity constrained markets (ie. Drayton and Dawson)

    Acquisitions that compliment existing network (ie. Marquis Alliance / XL and Pembina Landfill)

    Acquire surplus assets and facilities from producers

    17

  • LATEST DEVELOPMENTS

    Expanded unconventional liquids rich gas services in Obed through FST expansion in Q1, 2011.

    Expanded Cardium exposure with the completion of the Brazeau (West Drayton) Disposal Well facility in Q2, 2011.

    South Grande Prairie FST expansion completed July, 2011.

    Drayton FST construction started and forecasted to be operational in Oct., 2011.

    Acquired Marquis Alliance for $131 million and raised $86 million of equity June 1, 2011.

    Acquired XL Fluid Systems Inc. on July 1, 2011 for $37 million.

    Approved credit facility for $150 million August, 2011.

    18

  • JUNE 30, 2011 BALANCE SHEET ($MMs)

    Current Assets $93.6 Cash, A/R, Inventory, Prepaid

    Assets $150.1 Plant & Equipment

    $ 41.3 Assets under construction

    $114.8 Other (Intangible, goodwill, FIT)

    Total Assets $399.8

    Liabilities $ 59.3 A/P, Current debt & leases

    $ 2.0 Lease Obligations (non-current)

    $ 10.7 Asset Retirement Obligations

    $ 15.5 Deferred taxes

    $ 1.7 Long Term Debt

    Shareholders' Equity $310.6

    Total Liabilities/Equity $399.8

    19

  • SECURES CONSISTENT ANNUAL GROWTH

    20

    -10.0

    0.0

    10.0

    20.0

    30.0

    40.0

    50.0

    60.0

    2007 2008 2009 2010

    ($ M

    illio

    ns)

    EBITDA Revenue

    Figures exclude oil purchase and resale

  • SECURES STRONG Q2 & YTD PERFORMANCE

    21

    0.0

    10.0

    20.0

    30.0

    40.0

    50.0

    Q2 Revenue H1 Revenue Q2 EBITDA H1 EBITDA

    ($ M

    illio

    ns)

    2010 2011

    Figures exclude oil purchase and resale

  • BORROWING CAPACITY

    Syndicated Credit Facility*

    Loan Facility Max. $150 million plus $50 million accordion

    Prime plus 1.25% to 2.5%**

    **(rate is based on Funded Debt to EBITDA level, adjusted quarterly)

    Multi-use Facility Operating, letters of credit, Capex,

    Acquisitions

    Renewal July 2014

    Major Covenants Debt to T-12 EBITDA: < 3.0 to 1.0

    * ATB, BMO, NB, HSBC, BNS, CWB

    22

  • 2011 CAPITAL PLANS ($MMs)

    Projects/Acquisitions for 2011

    Organic

    Carry over from 2010 $34.0

    Facility expansion 36.0

    Drilling rental equipment 10.0

    New Opportunities (under evaluation) 2011/12 15.0