Canada - Savanna Energy Services Corp

Savanna Energy Services Corp.
January 2016
TSX: SVY
1
Forward Looking Information
This document contains statements that constitute forward-looking statements within the
meaning of applicable securities legislation. These forward looking statement 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 operations or performance. These forward-looking statement 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 if these uncertainties materialize, or if assumptions are incorrect, actual results may
vary from those expected.
2
Corporate Overview
TSX: SVY
Equipment Fleet:
DIVISION
Drilling
Well Servicing
Rentals
(1)
(2)
As at January 4, 2016
As at September 30, 2015
Common Shares Outstanding(1)
90.3 million
Common Share Trading Price(1)
$1.24
52-week Trading Range(1)
$1.01-$3.48
Market Capitalization(1)
$113.72 million
Property and Equipment(2)
$925 million
Book Value per Share(2)
$7.29
COUNTRY
EQUIPMENT
Canada
68 Rigs
USA
28 Rigs
Australia
5 Rigs
Canada
65 Rigs
USA
18 Rigs
DIVISION
COUNTRY
LOCATION
Australia
12 Rigs
Headquarters
Canada
Calgary, AB
CA/USA/AUS
5,000+ pieces
Operations
Canada
Leduc, AB
Operations
United States
Midland, TX
Operations
Australia
Toowoomba, QL
Main Office Locations:
3
Structural Changes
• Non-rig related positions reduced 45% from YE 2014
• Organizational structure flattened:
– Executive Officers reduced from six to two
– Middle management greatly reduced
• Consolidated operating locations / sold real estate:
– Five locations in Alberta into one
– Drilling and well servicing in same building
• Improved efficiencies and lower operating costs with a shared
warehouse, supply chain, maintenance and yard
– Sold five locations for $27 million
– Additional $7.5 million listed as “Assets Held for Sale”
4
Other Initiatives
• Cancelled dividend
• Salary and wage roll backs of all non-rig employees
(15% average for the Board and executives; 7%
average for all others)
• Reduced field wages
• Capital spend reduction to $27.7 million*
• Unutilized equipment shared across operational
divisions to decrease operating expenses and
maintenance capital
• Idle rental fleet assets being provided at no cost to
maintain dayrates and margins
*Including 2014 carryover, net of asset disposals of $16.3 million in the first nine months of 2015 and an additional
$14.2 million in real estate sales closed in Q4/15
5
Results
• EBITDA of $78 million through Q3/15
– Includes $10M severance
• Operating margins of 34% in Q3/15 vs. 29% in Q3/14
• Annualized G&A and Indirect down by $50 million
relative to 2014 exit run-rate
• YTD net debt reduced by $60 million by the end of
October
• Debt to EBITDA at Q3/15 of 2.4
6
Diversification Benefits
Revenue Distribution (1)
33%
41%
Canada
US
26%
Australia
• Multiple countries
• Multiple business lines – drilling,
well servicing & rentals
• Multiple equipment types
6%
34%
60%
Drilling
Servicing
Rentals
(1)
Based on YTD financials at September 30, 2015
7
Health, Safety & Environment
Total Recordable Incident Frequency (TRIF)
Rolling 12-month TRIF
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
8
Equipment Fleet
North American Drilling Rig Fleet
by Depth Rating
2015
2009
40, 41%
16, 17%
5, 5%
68, 71%
12, 12%
53, 54%
4000m and >
2200m-3800m
4000m and >
<2200m
2200m-3800m
<2200m
•
This is a newer fleet with over $880 million invested in new equipment since 2009
•
In addition to the 4 new-build rigs added in the 4000m plus depth range in 2014
Savanna’s drilling rig fleet in North America has also been upgraded and enhanced
since 2009 in terms of: rig hookload, pump and drawworks capacity, and the number
of rigs with Top Drives.
9
Equipment Fleet
• ‘Tier One’ 1,500 hp AC rigs in the North American oilfield services
market appear overbuilt.
• Spot day rates well below $20k a day for $20-$25 million dollar rigs
means poor ROA.
Nabors
Helmerich & Payne
10
Equipment Fleet
Savanna’s investment in Australia is roughly equivalent to 8 Tier One
rigs.
• New, highly mobile hybrid CT-1500 drilling rigs ideally suited for
coal seam gas drilling in Queensland.
– Currently trialing “Octopus” horizontal coil drilling to reduce production costs
• New, high-specification service rigs capable of working in any of
the basins in Australia.
– Not at all like North American service rigs: PLC controlled rigs that employ
many leading technical features including working floor Human Machine
Interface, auto drill, top drives, safety redundancies such as dual encoders,
and remote access allowing technicians to troubleshoot problems from around
the world via satellite
– The average cost per service rig is $8.1 million
• Trucking operations to complement both service lines and mitigate
risk of less mature trucking infrastructure in Queensland.
11
Equipment Fleet
Canada
• Diverse Canadian drilling fleet that can work in all but the deepest
basins in Western Canada.
Entire Canadian drilling fleet equipped with top drives
CT-1500s have become preferred rigs for oil sands coring and delineation
Top drive singles that perform very well in active basins such as the Viking
A telescoping double fleet that consistently performs at or better than CAODC
averages in the relevant depth ranges
– 7 AC telescoping double drilling rigs with higher hookload, pump and
drawworks capacity
–
–
–
–
• Canadian service rig fleet that competes very well against any
other service rig fleet in Western Canada.
• Rental assets that can be packaged with both drilling and well
servicing rigs.
12
Equipment Fleet
U.S.
• High specification, top drive equipped AC drilling rigs in the U.S.
– 1 AC triple drilling rig and 2 AC telescoping double drilling rigs built for the
Marcellus
– 2 AC triple drilling rigs, one in Colorado and one in the Permian
– 4 AC telescoping double drilling rigs that have worked in Texas, Pennsylvania,
and Colorado
• Service rig fleet with a long track record of top tier customers,
performance, safety, and financial results in the Bakken
13
Equipment Fleet
Australia
($ millions)
(1)$129
U.S.
Canada
($ millions)
($ millions)
$561 million CAD NBV
million CAD NBV (FX - $0.94)
$22, 4%
$106,
19%
$77,
60%
$12,
10%
$6, 4%
$235 million CAD NBV (FX - $1.34)
$82,
14%
$68,
12%
$96,
41%
$30,
13%
$13, 6%
$34, 6%
$34,
26%
(1)
$150,
27%
$99,
18%
$62,
26%
$22,
9%
$5, 2%
Coring - 16
Top Drive Singles - 3
Top Drive Singles - 20
Doubles <1000HP - 14
Doubles up tp 850HP - 25
Triples 1500HP - 2
Drilling - 5
AC Doubles up to 1200HP - 7
AC Doubles up to 1200HP - 6
Well Servicing - 12
Well Servicing - 65
AC Triples 1500HP - 3
Trucking
Rentals
Well Servicing - 18
Ancilliary, spare & other
Ancilliary, spare & other
Ancilliary, spare & other
All amounts as at September 30, 2015
14
$7,
3%
2015 Capital Program
Capex Program
Initiatives
$ millions
2014 Carry-Over:
31%
39%
30%
2014 Growth Initiatives
22.7
2014 New Field Operating Facilities
17.9
2015 Maintenance Capital
14.1
Proceeds on sale of assets
(16.3)
Net Capital Program Spend to Sep 30
38.4
Remaining 2015 Capital Spend
3.4
Real estate sales closed in Q4/15
2014 Growth Initiatives
Maintenance Capital
2014 New Field Operating Facilities
(14.2)
Net 2015 Capital Spend
27.7
Remaining Assets Held For Sale
7.5
15
Financial Highlights
Financial Highlights ($000s)
September 30
OPERATING RESULTS
Revenue
Operating margin
Nine months ended
2015
2014
Operating margin %
Adjusted EBITDAS
(adjusted for severance expenses)
Attributable to shareholders of the Company
Per share: diluted
Depreciation*
Net loss
Attributable to shareholders of the Company
Per share: diluted
345,290
113,159
586,925
157,965
33%
27%
88,427
117,432
(25%)
87,124
0.97
111,802
1.25
(22%)
83,330
(11,267)
77,568
(14,409)
16%
(22%)
(9,249)
(0.10)
(18,042)
(0.20)
(49%)
*Effective January 1, 2015, all equipment is depreciated based on the
straight-line method over the assets useful life in years. Previously
equipment was depreciated based on a straight-line method utilizing
either operating days in the case of drilling equipment, or hours in the
case of well servicing equipment.
(1)
As of September 30, 2015
16
Change
(41%)
(28%)
Total Debt
Balance Sheet
($millions)
Senior Notes, due May
2018
Revolving Credit
Facilities
Partnership & Other
Financing
Authorized
Drawn
Drawn
Drawn
Nov 2/15
Sep 30/15
Dec 31/14
$175
$175
$175
$175
$250
$117
$126
$161
$17
$9
$11
$15
$442
$301
$312
$351
$16
$18
$6
$285
$294
$345
Cash
Total Debt Net of Cash
• Total Debt Net of Cash balance was decreased by $60 million as of
November 2, 2015 from the end of 2014
• $14.2 million of Q4/15 proceeds on real estate sales directed to
further debt reduction
(1)
As of September 30, 2015
17
Debt to EBITDA Covenant
Savanna’s Total Funded Debt to twelve-month trailing EBITDA ratio
moved from 2.3:1 at December 31, 2014 to 2.4:1 as of September
30, 2015. The covenant ratios for 2015 and 2016 are as follows:
•
•
•
•
•
•
•
For the quarter ending September 30, 2015
For the quarter ending December 31, 2015
For the quarter ending March 31, 2016
For the quarter ending June 30, 2016
For the quarter ending September 30, 2016
For the quarter ending December 31, 2016
Thereafter
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4.50:1
5.25:1
5.25:1
5.00:1
5.00:1
4.50:1
4.00:1
Competitor Comparison
YoY Change - Debt / EBITDA
EV / EBITDA
2011 2012 2013 2014 2015E(1) 5 Yr Avg.
(1)
2014
2015E(1)
%
WRG
6.3
5.4
6.9
3.8
8.1
6.1
WRG
1.5
4.3
181%
PD
5.3
5.0
6.5
4.3
6.9
5.6
TDG
2.1
4.2
99%
TDG
6.2
4.9
6.0
4.7
6.3
5.6
PD
2.3
4.5
93%
ESI
6.4
5.0
6.5
4.2
6.1
5.6
ESI
1.4
2.6
84%
SVY
6.3
5.9
7.1
4.2
4.3
5.6
SVY
2.2
2.9
33%
Based on analyst estimates from IPREO on January 4, 2016
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SAVANNA ENERGY SERVICES CORP.
Suite 800, 311-6th Avenue S.W.
Calgary, Alberta, Canada T2P 3H2
Telephone: 1-403-503-9990
Facsimile: 1-403-503-0654
www.savannaenergy.com
[email protected]
TSX: SVY
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