Attached files
| file | filename |
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| 8-K - FORM 8-K - FLOTEK INDUSTRIES INC/CN/ | d236221d8k.htm |
| EX-99.1 - PRESS RELEASE - FLOTEK INDUSTRIES INC/CN/ | d236221dex991.htm |
 Exhibit 99.2 |
 Certain statements and information included in this presentation
constitute “forward–looking statements”
within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements
are based on certain assumptions and analyses made by the
Company’s management in light of its experience and its perception
of historical trends, current conditions, expected future developments
and other factors it believes are appropriate under the circumstances.
These statements involve known and unknown risks and
uncertainties, some of which are outlined in the Company’s most
recent 10-K and subsequent 10-Qs, which may cause the actual
performance of Flotek to be materially different from any future
results expressed or implied in this presentation and the forward-
looking statements. Flotek undertakes no obligation to update any of
its forward-looking statements for any reason.
September 26, 2011
John Chisholm, Chairman and President
©
2011, Flotek Industries. All Rights Reserved
1
Disclaimer: Forward Looking Statements
Presentation to the Independent Petroleum Association of America San Francisco Oil &
Gas Investment Symposium |
 •Overview & Business Strategy
•Flotek’s Technology Portfolio& Business Drivers
•Chemical Technologies and Related Logistics Services
•Drilling Technologies
•Artificial Lift Technologies
•Financial Overview
•Capital Structure Review
•2011 & 2012 Objectives
•Conclusions
2
Flotek Today |
 •
Houston-based oilfield services company with focus on value-
added drilling, completion and production products.
•
Chemical
Technologies
and
Related
Logistics
Services
add
value in the drilling, completion and production stages of oil and gas
wells.
•
Drilling
Technologies
provide
solutions
during
the
drilling
stage
of
oil and gas wells from motors and actuated tools to our best-in-class
Teledrift technologies.
•
Artificial
Lift
Technologies
address
a
number
of
production
challenges for oil and gas companies.
Our diverse mix of products and services touch every stage of the life
cycle of a well. And, while each technology requires unique technical
expertise, all of our technologies share a commitment to our vision to
provide best-in-class technology, cutting-edge innovation to address
the ever-changing challenges of our customers and exceptional
customer service.
3
Flotek’s Technology Portfolio |
 •
Focus on improved marketing efforts
•
Increased focus on depth of Flotek market combined with expanding breadth of
market in drilling technologies segment
•
Grow exposure to end user/beneficiaries of Flotek chemical technologies.
•
Look
for
select
“new
markets”
for
artificial
lift
technologies.
Continue
select
marketing of Petrovalve when appropriate.
•
Is “Flotek Inside Your Well”
approach.
•
Continue to focus on more balanced revenue mix: liquids vs. natural
gas.
•
Pursue international opportunities through partnerships, established
relationships and key agents.
•
Focus on Basin Supply relationship. Select opportunities with chemical
technologies and Teledrift.
•
Continued growth with Saudi Aramco; Opportunities in Turkey
•
Follow the integrated service companies into key unconventional markets.
•
Opportunities for Flotek chemical technologies to be utilized in
Enhanced Oil Recovery (EOR)
4
Flotek’s 2011 Business Drivers |
 •
Core Competencies
•Our
chemical
technologies
focus
on
developing,
manufacturing
and
distributing
a
wide array of specialty chemicals used in both the primary and secondary efforts.
•Our unique and patented chemistries are used in cementing,
stimulation, acidizing, drilling and production.
•Also provide logistics technologies which manage automated handling, loading
facilities and blending capabilities for energy services companies.
•Key Product: Patented, Best-in-class Complex Nano-Fluids
(microemulsifiers) that are environmentally friendly and used to
meaningfully increase production and well integrity in unconventional tight
gas and oil formations •
Key Business Drivers
•Continued trend toward unconventional resource plays in North America.
•International
growth
in
unconventional
resource
plays
–
Flotek
chemicals
involved in recent activity in Poland, Turkey & Paris Basin.
•New product innovations, including focus on liquids, enhanced recovery and
basin-specific solutions.
•Marketing penetration to service companies and ultimate beneficiaries with
better understanding of positive economic impact of Flotek proprietary
chemicals. •Environmental
sensitivity
benefits
Flotek
–
First
patent
focused
on
“environmentally
friendly”
chemistry
filed
in
2003.
5
Chemical Technologies & Logistics Services |
 •
Core Competencies
•Focused on designing, manufacturing and distributing a diverse inventory of
downhole drilling equipment with applications in oil and gas drilling as
well as mining, water and industrial drilling applications.
•Flotek Rental Tools on > 25% of all rigs in the United States, from
“commodity”
tools to “specialty”
tools and equipment such as drilling motors,
jars
and
stabilizers.
2010
was
focused
on
increasing
penetration
and
stabilizing
pricing.
2011
focus
on
increased
service
density
per
well
and
continued growth in overall market share.
•Key Product: Teledrift Measurement While Drilling (MWD) tool. A leading
choice of drillers needing accurate, uninterrupted drilling measurements in
vertical section of all wells.
•
Key Business Drivers
•Downhole
tool
growth
in
key
regions
including
Oklahoma
and
Eagle
Ford
•Improvement
in
market
share
and
pricing
in
drilling
motors
–
focus
on
key
regions including Barnett, Bakken, Haynesville & Eagle Ford.
•Teledrift is important focus: Continued growth in domestic markets. Pricing
strength in Permian Basin.
•International growth in Teledrift is key. Focus on Saudi Arabia and Middle
East, Central & South America, Russian Federation.
6
Drilling Technologies |
 •
Core Competencies
•Focused
on
assembling,
distributing,
installing,
and
servicing
a
broad
spectrum
of pumping system components including electrical submersible pumps (ESPs),
gas separators and other services that largely support coal bed methane (CBM)
production, primarily in Powder River Basin.
•In addition, our Petrovalve patented production valve and components is used
by a plethora of international oil and gas producers in downhole production
assemblies.
•
Key Business Drivers
•Key customer relationships in Powder River CBM. Flotek improved key customer
relationships in 2010.
•Focus on service relationship in Powder River Basin. Every production
assembly Flotek installs equals additional service revenue in future years.
•Work
to
find
new
markets
for
niche
CBM
product
applications.
Gas
price
and
regulatory considerations will drive opportunities.
•Petrovalve
is
wildcard.
Orders
are
“lumpy”
but
margins
are
superior
in
international markets.
7
Artificial Lift Technologies |
 •
Revenue
of
$108.8
million
in
first
six
months.
•
Operating Income of $17.2 million.
•
Net income of $7.6 million; extraordinary items impacted
results. GAAP EPS (diluted) of $0.17.
•
Strength in Chemical and Drilling Products segments.
•
Growth in Complex Nano-Fluid microemulsions with
focus on key unconventional plays.
•
Expansion of chemistry applications to liquids in both
primary and enhanced recovery.
•
Teledrift and motors continue to lead the way for
drilling products division.
•
International opportunities beginning to have impact.
8
First Half, 2011 Highlights |
 Outstanding
Debt (in millions) •Senior Secured Debt
$ 0.0
•Secured (Second Lien) Convertible Notes*
$ 36.0
•Convertible Subordinate Debt*
$ 70.5
Total Outstanding Debt
$ 106.5
Equity Recap
•Shares Outstanding (August 5, 2011)
49.8
•Other Potential Issuance (Warrants, Options)
~ 5.0
Total Potential Fully Diluted Common
54.8
Cash as of 9/20/2011
~$ 23mm
*Debt matures in 2/2028; Put/Call Option 2/2013.
Data as of June 30, 2011 except as noted
9
Select Balance Sheet Data (unaudited) |
 10
2011 Financial Objectives & Action Plan
•
Conversion of Preferred Equity to Common Equity
•
Completed 2/2011
•
Continue to Focus on Balance Sheet Improvement
•Consider options for outstanding convertible debt. Toolbox is more
robust than it was a year ago.
•
Completed $4.5 million debt-for-equity exchange on 5/12/2011.
•
Will consider additional opportunities for notes in the coming months
including exchange opportunities and potential re-crafting the convertible
notes. Will consider secured and unsecured notes. Will be strategic,
opportunistic and incremental.
•Consider options for more conventional senior-level financing.
•Analyze options for growing cash balances and better management of
financial information.
•
Continue to focus on intrinsic growth with cash flow maximization;
However, will consider strategic, “niche intellectual”
partnerships and
acquisitions that are strategic, accretive and market-driven.
•
Private placement of 5/12/2011 which raised ~$29.5 million will effectively
eliminate senior debt. Plan to complete principal repayment this
month.
•
Completed
new
Revolving
Credit
Facility
–
Announced
9/26/2011 |
 •
Significant Improvement in Revenue
•
First
Six
Months
of
2010
-
$59.5
million
in
revenue
•
First
Six
Months
of
2011
-
$108.8
million
in
revenue
•
Year-over-year revenue increase of 83%.
•
Significant Improvement in GAAP EPS
•
First Six Months of 2010 -
$0.84 Loss per share
•
First Six Months of 2011 -
$0.17 Earnings per share
•.
Improvement
in
Cash
Flow
•
Cash
Balance
on
June
30,
2010
-
$5.3
million
•
Cash
Balance
on
June
30,
2011
-
$15.1
million
•
Year-over-year cash balance increase of 185%.
•
Balance Sheet –
Today vs. 2009
•
August 31, 2009: Debt ~ $144 million; Cash ~ $3 million
•
August 31, 2011: Debt ~ $108 million; Cash ~ $17 million
11
Operating Comparisons to 2010;
Balance Sheet Comparisons to 2009
Significant |
 •
July, 2011 Revenue of ~ $23 million
•
August, 2011 Revenue of ~ $25 million
•
Cash as of August 31 was ~ $17 million; Cash as of
September 20 was ~ $23 million.
•
Operational Highlights
•
Continued progress in “direct”
marketing of Chemical Segment.
•
Growth in Teledrift, Motors and other tools business.
•
Artificial Lift continues to be impacted by low natural gas prices
and poor Rockies pricing. Service revenues remain firm.
•
Remain focused on operational efficiencies, pricing integrity and
margins.
12
Third Quarter, 2011 Snapshot (Through August) |
 Lead
•Lead in innovation, responsiveness and service quality for our customers in
each of our key business units.
•Senior leadership leads by example, setting the tone and course of success
for our front-line team members.
•Lead our industry in performance and returns for our stakeholders.
Support
•Support our customers by anticipating their needs, developing new products
and innovative ways to provide “best-in-class”
service.
•Support the Flotek team by anticipating their needs, providing the tools for
success and listening to every suggestion on how to improve our operations,
culture and results.
Accelerate
•Accelerate Innovation
•Accelerate Efficiency and Teamwork
•Accelerate Growth and Stakeholder Returns
13
2011-2012 Objectives |
 14
IR@flotekind.com |