Transcript
Page 1: August 2011 Investor Presentation

SECURE INVESTOR PRESENTATION

August 2011

www.secure-energy.ca TSX: SES

Page 2: August 2011 Investor Presentation

HISTORY

• Secure’s first facility opened October 2007.

• Over 400 employees in the field and head office.

• Secure’s 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.

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Page 3: August 2011 Investor Presentation

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

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Page 4: August 2011 Investor Presentation

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)

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Page 5: August 2011 Investor Presentation

SECURE VALUE CHAIN

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•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

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FOX CREEK FULL SERVICE TERMINAL (FST)

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KEY SERVICES

Crude Oil Treatment

Crude Oil Marketing and Storage

Produced and Waste Water Disposal

Oilfield Waste Processing

Oilfield Solids Disposal

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DAWSON PHASE I & II FST FACILITY

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[Dawson Creek]

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Phase I: Produced and Waste

Water Disposal (SWD)

Phase II: Oil Treatment and Waste

Processing (FST)

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PEMBINA AREA CLASS I & II LANDFILL (“PAL”)

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Page 9: August 2011 Investor Presentation

SECURE FACILITIES

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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

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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

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DRILLING FLUID RECYCLING SYNERGIES IDENTIFIED

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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”)

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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

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Page 13: August 2011 Investor Presentation

WESTERN CANADA PRODUCING OIL & GAS WELLS

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0

50,000

100,000

150,000

200,000

250,000

Crude Oil Natural Gas

Source: Canadian Association of Petroleum Producers (CAPP)

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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

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Page 15: August 2011 Investor Presentation

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

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Page 16: August 2011 Investor Presentation

WESTERN CANADIAN DRILLING ACTIVITY

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-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

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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

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Page 18: August 2011 Investor Presentation

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.

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Page 19: August 2011 Investor Presentation

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

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Page 20: August 2011 Investor Presentation

SECURE’S CONSISTENT ANNUAL GROWTH

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-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

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SECURE’S STRONG Q2 & YTD PERFORMANCE

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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

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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

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Page 23: August 2011 Investor Presentation

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

Organic $95.0

Acquisitions

Marquis Alliance $132.0

XL Fluids 37.0

Acquisitions $169.0

Total 2011 Capital Budget $264.0

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Page 24: August 2011 Investor Presentation

SUMMARY

• Revenue growth will come from competitors, producers outsourcing and the market expansion

• Environmental Recycling services to complement existing facility base

• Value Added Services through acquisitions of Marquis Alliance & XL Fluids

• Facility growth will come from mostly organic built facilities and timely acquisitions

• Strong Balance Sheet to expand accretive opportunities

• Employer of choice based on leadership, corporate values and team culture

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Page 25: August 2011 Investor Presentation

FORWARD LOOKING STATEMENTS

• Certain statements contained in this presentation regarding 2011 construction plans, capital expenditures, future facilities and expansions of services constitute "forward-looking statements". Such statements reflect the current views of Secure with respect to future events and are subject to certain risks, uncertainties and assumptions, including, without limitation, general market conditions, commodity prices, interest rates and exchange rates, seasonality of operations, growth, acquisition strategy, integration of businesses into Secure's operations, potential liabilities from acquisitions, dependence on senior management, regulation, landfill operations, competition, risk of pending and future legal proceedings, employees, labour unions, fuel costs, access to industry and technology, insurance, future capital needs, debt service and sales of additional common shares.

• Many other factors could also cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements and readers are cautioned that the foregoing list of factors is not exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from the projections described herein. The forward-looking statements in this presentation are expressly qualified by this cautionary statement. Secure does not undertake any obligation to update or revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

• The forward-looking statements in this document are provided for the limited purpose of enabling potential

investors to evaluate an investment in the shares of Secure. Readers are cautioned that such statements

may not be appropriate, and should not be used, for other purposes.

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