Xtreme CorporateUpdate Nov2011
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Transcript of Xtreme CorporateUpdate Nov2011
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Corporate Update
November 15, 2011
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Forward Looking
CAUTIONARY STATEMENT
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and uncertainties that could significantly impact expected or prospective results.
A discussion of risks and uncertainties is contained under the heading Forward-Lookinga emen s n e anagemen s scuss on an na ys s sec ons o reme o s
SEDAR filings including, but not limited to, the 2011 Third Interim Quarter MD&A and the2010 Annual Report.
These reports are available at:
www.xtremecoil.com
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XTREME DRILLING AND COIL SERVICES OVERVIEW
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Corporate Snapshot
TICKER: XDC (Toronto Stock Exchange)
. .
Enterprise Value: $258.1mm
3 Month Average Daily Volume: 54,008
Shares Outstanding: 65.6mm
Public Float: 38mm
Directors & Management: 11.8% Greater than 10% Shareholders: 30%
Total Assets: $375.7mm
Em lo ees: 481 11/1/11
Headquarters: Calgary, Alberta and Houston, Texas
Website: www.xtremecoil.com
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1. Market Cap as of 11/11/11 and Net Debt as of 9/30/112. As of 9/30/11
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OVERVIEW
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Xtreme Overview
XTREME DRILLING AND COIL SERVICES IS A TECHNOLOGY FOCUSED PROVIDEROF LAND BASED DRILLING AND WELL SERVICES
We provide new generation drilling rigs as well as large built for purpose coil service rigs. With thecontinuous focus on improving existing technology in the land drilling and coil services market,Xtreme has developed over 32 patents and proprietary designs for drilling and coil service rigs.
Drilling: High specification XDR drilling rigs
Operations focused in the Rocky Mountain region with growing presence in the Bakken andNiobrara 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 skiddingpackages, small footprint design and minimized craneless loads.
Coil Services: High specification large diameter proprietary XSR coil tubing service rigs
Ideally suited for CT cleanouts, re-entry, wellbore extensions, fracturing, production logging,perforating, stimulations and other complex interventions.
Rigs are masted, utilize AC 200,000 lbs. injectors, proprietary coil reel trailers and twin1,000 hp pumps.
5 new service rigs will be deployed over the next 2 quarters.
2 service rigs currently operating under long term contract in Saudi Arabia. 6
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Operations Geographic
Canada
Bakken
5 Drilling Rigs*6 Service Rigs*
3 Drilling Rigs
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Outlook for 2011-2012
AGGRESSIVE IN PROCESS DRILLING AND COIL SERVICE FLEET EXPANSION
mm capex roug - w a ona mm expec e n
Q4 2011.
Current growth and maintenance capex budget of approximately $70mm in.
Increase XDR drilling fleet by 50% from the current 14 rig fleet to 21 rigs by
the end of 2012. Continue to build efficiencies with increased scale and focus in the Williston and
Greater DJ basins.
Launch large coil service business with the deployment of 5 XSR 200 series.
Ideally suited for unconventional plays with long lateral reach capabilities.
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Investment Overview
XTREME (XDC.T) IS A COMPELLING WILLISTON AND GREATER DJ BASIN FOCUSED DRILLING ANDCOIL SERVICE COMPANY WITH AN INTERNATIONAL PRESENCE IN THE MIDDLE EAST
ea ng ge r ng an o ec no ogy
Average fleet age of less than 3.5 years Rigs are ideally suited for major operators in
expanding resource plays due to AC
rac ve a ua on
EV / 2012 EBITDA: 3.5x vs. industry groupaverage of 4.0x
Mkt. Cap / TEV: 0.8x vs. industry group, ,
small footprint design and minimizedcraneless loads
Strong Growth Profile
.
Pipeline of attractive IRR projects At inflection point of realizing potential of
past engineering and technology R&D
70% in 2012
High Margin Coil service business expectedto increase operating margin
Expanding drilling business has signedcontracts that represent expected IRR of20%+
High margin coil service business expected
88% and consensus EBITDA growth of194% in 2012
Focused operations with leverage to oil andliquids rich plays Anticipated in next 12 months 100% of
XSR Coil service rigs in oily Williston Basinor liquids rich Greater DJ Basin of the USand 18% or 2 XSR rigs working on gas playsin the Middle East 9
1. Firstcall consensus EBITDA as of 11/11112. Industry group defined as PTEN, PDC, PD, TDG and UDRL3. TEV as of 9/30/11
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DRILLING SERVICES
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Drilling Macro Themes
DEMAND FOR RIGS HIGHLY LEVERED TO TYPE AND SIZE
ven o s a e an unconven ona r ng as p ace grea er eman s on r g
technology
Unconventional resource plays now account for 70% and growing of all land drilling
Horizontal drilling now 58% of wells being drilled and higher technology and smallerloads is the trend in virtually every play
40%
50%
Land Rig Distribution by Type Expected 12 Month Utilization by Type
DRAWWORKS HP A/C SCR MECHANICAL
601-999 95% 75% 65%
-
0%
10%
20%
, ,
1,201-1,500 98% 95% 65%
1,501-1,999 98% 95% 65%
2,000 > 95% 95% 65%
11
% of US Land Fleet
Source: Global Hunter Securities
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Drilling Segment Overview
XDR FLEET IS AMONG THE YOUNGEST AND MOST TECHNOLOGICALLYADVANCED IN THE INDUSTRY
Average Age of less than 3.5 years onentire fleet
RIG RIG TYPE STATUS LOCATIONSTARTDATE
Rig 3 XDR 200 Prep for CAN Texas
Rig 4 XDR 200 Operating Wyoming
Rig 5 XDR 200 Prep for CAN Texas
Current utilization of 80% on 15 rigs
6 New XDR 500 ri s in rocess w/ term
Rig 6 XDR 400 Operating Colorado
Rig 7 XDR 500 Operating N Dakota
Rig 8 XDR 400 Operating Colorado
Rig 10 XDR 200 Prep for CAN Texas
Rig 11 XDR 300 Operating Colorado
contracts Rig 12 XDR 300 Operating ColoradoRig 14 XDR 300 Operating Colorado
Rig 15 XDR 300 Operating Colorado
Rig 16 XDR 400 Operating Colorado410
XDR by Type
Rig 18 XDR 500 Operating N Dakota
Rig 19 XDR 500 Operating Colorado
Rig 20 XDR 500 In Process Colorado Q1 2012
Rig 21 XDR 500 In Process N Dakota Q1 2012
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Rig 22 XDR 500 In Process Colorado Q2 2012
Rig 23 XDR 500 In Process Colorado Q3 2012
Rig 24 XDR 500 In Process Colorado Q4 2012
Rig 25 XDR 500 In Process N Dakota Q2 2012
XDR 200 XDR 300 XDR 400 XDR 500
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XDR 500
Craneless 250 ton, two-stage telescopic mast andsingle piece step-down substructure
Compact AC 1500 horsepower drawworks
Integrated AC top drive which transports in mast
,
Climate controlled drillers cabin w/PLC Joystick
controls
Automated hydraulic catwalk and iron roughneckfor safe, efficient tubular handling
Integrated multi-well pad moving system
Modular design for rapid deployment
Winterized for harsh environments
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XDR 500 Detail
Climate controlled drillers cabin Variable frequency drive systemCompact 1500HP AC Drawworks
Integrated AC top drive systemAutomated hydraulic catwalk Iron roughneck pipe handling
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Integrated multi-well skid systemCraneless modular design Large capacity 1600HP pumps
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XDR Advantages and Stats
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Coil Services
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Large Coil Macro Themes
ANTICIPATED SUPPLY DEMAND IMBALANCE IN LARGE COIL SERVICE MARKET THROUGH2012
Large diameter coil units are expected tomake up an increasing portion of the majorunconventional resource com letion and
BAKKEN EAGLE FORD HAYNESVILLE
Wells Drilled 2,951 3,292 1,473
% to be Completed 98% 98% 98%
Total Completions 2,892 3,227 1,443
% of Wells Using CT 66% 66% 66%
2011
service activities
As drilling continues and wells age in theseunconventional resource la s, it is antici ated
Total Wells Using CT 1,909 2,130 953
Avg. Days per Well 7 6 7
Days Required 13,743 11,712 6,192
Total Working Days 250 250 250
CT Unit Demand 55 47 25
Total Demand 127
that well intervention or service with coil willincrease demand over the long term
Even with current industr fleet ex ansion
Total Supply 76
Implied Utilization 167%
BAKKEN EAGLE FORD HAYNESVILLE
Wells Drilled 4,083 4,500 1,264
% to be Com leted 98% 98% 98%
2012
taken into account, it is anticipated thatdemand will outstrip supply into 2013
Current economics on lar e coil service
Total Completions 4,001 4,410 1,239% of Wells Using CT 66% 66% 66%
Total Wells Using CT 2,641 2,910 818
Avg. Days per Well 8 6 7
Days Required 19,807 17,171 5,315
Total Working Days 250 250 250
units imply returns in excess of 50%
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Total Demand 169
Current Supply 124
Implied Utilization 136%Source: Global Hunter Securities
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XSR Opportunity and Overview
HORIZONTAL WELL LATERALS ARE GETTING LONGER AND NOW ACCOUNT FORMORE THAN 50% OF THE WELLS BEING DRILLED IN NORTH AMERICA
The majority of the industrys coiled tubing units are at their limit and not completingthe job.
,equipment such as AC powered injectors.
Extended lateral depths require other means of pipe transportation to handle the.
Our business opportunity has been created by combining
management with large diameter coil experience
exper ence eng neer ng an es gn eam proprietary equipment and control systems
supportive industry conditions
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XSR Initial Target Market
BAKKEN SHALE
Typical Well
Vertical Depth = 10,000 12,000 ft.
Lateral Length = 6,500 11,000 ft.
Max Measured Depth = 23,000 ft.
Plug & Perf Completion Technique
20 44 stages
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XSR 200 Ultra-Deep CT Rig
AC 200,000 lbs. injector capacity (utilizing large diameter coil)
PLC based controls that more recisel controls wei ht on bit,differential pressure and ROP
Ability to control drill/mill
Reduced motor stalls
Proprietary double-trailer configuration for transportationof the coil
Truck mounted twin um in /mixin units
Horsepower: 1,200 total
Discharge Rate: 4 BPM @ 0 psi
Dischar e Pressure: 15 000 si
Tank Sizes (3): 40 bbl total capacity
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XSR CT Reel Transport Trailer
XTREMES REEL TRAILER IS THE LARGEST CAPACITY COILED TUBINGTRANSPORT TRAILER IN THE WORLD
Capable of transporting 23,500 ft.of 2-5/8 coil
Complies with road standards in
COIL TUBING OD (in) CT WALL REEL OD/ID (in) CAPACITY WEIGHT (lb)
2-7/8 0.188 180 / 115 21140 114053
2-5/8 0.188 180 / 115 23500 114011
the United States and Canada 2-3/8 0.188 180 / 115 25970 114040
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XSR 200 Ultra-Deep CT Rig On Location
AC 200K Injector
Control Cabin & VFD
75 Mast
Engine Generator
BOPCT Reel Trailer
Carrier
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XSR Differentiating Technology
MILLING/DRILLING WITH PLC CONTROLLED VARIABLE FREQUENCY DRIVEN ACINJECTORS
Increased precision and measurability Computerized electronic driller that more precisely
,
Ability to control drill
Reduced motor stalls
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International Operations
INTERNATIONAL OPERATIONS OFFER UPSIDE POTENTIAL AND GEOGRAPHICDIVERSIFICATION
Saudi Arabia
Two XSR 200 rigs currentlyoperating for major internationalservice com an in Saudi Arabia
Margins are consistent with deepcoil North American expectations
Provides International opportunityto deploy new XSR 200 coil servicerigs
Customer Endorsement
Coiled tubing re-entry drilling program reduces drilling time by half; improvesproduction six fold
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Source: Baker Hughes; 2011 Investor and AnalystConference Presentation
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Future Free Option
CURRENTLY DEVELOPING WITH INDUSTRY PARTNER A FIT FOR PURPOSEMINING RIG
Currently in a feasibility testing phase of 50/50 joint venture
No capital contribution required under terms of the joint venture
reme con r u es eng neer ng, es gn an opera ona now e geto the partnership
Potential to capture portion of large global metals mining market
COMPANY ENTERPRISE VALUE (mm NUMBER OF RIGS LTM REVENUE PER RIG 1
Ausdrill L td. $744.5 322 $2.0
Boart Longyear Limited $1,913.6 965 $1.2
Capital Drilling Ltd $165.1 64 $0.9
Energold Drilling Corp. $124.5 94 $0.4
. . . .
Geodrill $67.0 18 $2.7Layne Christensen Co. 2 $565.0 150 $1.1
Major Drilling International $793.6 536 $0.7
Orbit Garant Drilling Inc. $164.2 140 $0.8
Swick Limited $111.9 78 $1.1
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2543
Source: Geodrill Investor Presentation November 2010
1. Industry Average utilization is between 60-70%2. LTM Revenue is comprised solely of the Mineral Exploration division, as reported in Layne Christensen Co.s financial reports.
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Financial Overview
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Strong Growth Potential
XTREME IS ON THE VERGE OF REALIZING HIGHER REVENUES AND EBITDAMARGINS BASED ON PAST R&D AND ENGINEERING EXPENDITURES
Strong Revenue Growth Potential
Current contract coverage of existing and newbuild rigs provides strong revenue clarity
Estimated that available ri s will avera e 25 in 2012
Of these rigs currently 16 or 67% have long term contracts that span into or through2012
EBITDA Growth of 4x and 50% margin expansion potential
Existing operating leverage coupled with addition of higher margin coil service divisionprovides opportunity for substantial margin expansion
In process contracted fleet expansion will drive higher EBITDA$66.5
20
$30
$40
$50
$60
$70
$22.9 $22.8
In millions of $CAD
27
$0
$10 $6.2
Revenue EBITDAQ4 11 Q4 12 based on 11/11/11 Firstcall consensus
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Q3 Update Rig Contract Status
Term Contract Status (Including Committed New Builds)
14
16
18
2
2
2
cts
)
10
12
ero
fRigs
ong
-Term
Con
tr
uart
erly
Average
4
6
8
13
15 15 15 1514 14
12
6
Num
b
Alrea
dy
Un
der
L
(Es
tima
tedQ
2
5 5 5
3
21
28
XDR XSR
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Fleet Expansion
AGGRESSIVE CAPEX PROGRAM IS PROJECTED TO INCREASE FLEET BY 75% TO29 RIGS BY END OF Q4 2012
$30.00
$40.00
$50.00In millions of $CAD
$0.00
$10.00
$20.00
CAPEX
25
30
8
5
10
15
20
13
21
3
29
0
XDR XSRQ4 11 Q4 12 based on company estimates
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Corporate Information
Board of Directors
Saad Bargach 5
Managing Director, Lime Rock Partners, Houston, TX
Officers
Thomas D. WoodChairman and Interim CEO
AuditorsPricewaterhouseCoopers LLPCalgary, AB
an op . arron ,
President, Characo Corporation, Calgary, AB
Lawrence M. Hibbard2,3,4
Independent Businessman, Houston, TX
Daniel Z. Remenda 4, 5
Independent Businessman, Calgary, AB
att ew . orterChief Financial Officer
Richard D. HavingaChief Operating Officer and VicePresident, Engineering and Design
Brett Cole
anHSBC Bank Canada, Calgary, AB
SolicitorsStikeman Elliott LLP, Calgary, AB
Stock Exchange and Symbol
Peter J. Sharpe 5
Executive Vice President, WellsShell International Exploration and Production B.V.The Hague, The Netherlands
Marc L. Staniloff
2,3
Chairman and Chief Executive Officer
enera ounse
Tyson SeeligerVice President, Sales & Marketing
Martin Ramirez
Corporate Controller
,
Transfer Agent and RegistrarValiant Trust Company, Calgary, ABtoll free: +1 866 313 1872e-mail: [email protected]
-uper or o g ng orp., a gary,
Kyle W. Swingle 5
Senior Technical and Project AdvisorXtreme Coil Drilling Corp., Steamboat Springs, CO
Thomas D. Wood 1
Chairman, Xtreme Coil Drilling Corp., Calgary, AB
.Corporate Secretary
Corporate and Investor Relationstel: +1 403 450 1190e-mail: [email protected]
Shareholders and other interested
Xtreme Coil Drilling CorporationHouston, Texas, USAtel: +1 281 994 4600fax: +1 281 994 4650
Xtreme Coil Drilling Mxico, S.A. deC.V.
1 Chairman of the Board2 Audit Committee
individuals can view Xtreme Coil public
documents atwww.xtremecoildrilling.com where wehave posted drilling rigs and locations,historical information, shareholderreports, news releases, the currentcorporate presentation, as well as
Mexico
Xtreme (Luxembourg) S.A.Xtreme Equipment Group S.A.Luxembourg
Joint Ventures
ompensa on omm ee4 Governance and Nominating Committee5 Health, Safety, Environment Committee
trading and contact information..
Saudi Arabia
Lucas-Xtreme Drilling Pty Ltd.Australia
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