Attached files
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| 8-K - FORM 8-K - KEY ENERGY SERVICES INC | d477259d8k.htm |
 2013 Credit
Suisse Energy Summit February 6, 2013
Dick Alario
Chairman, President and Chief Executive Officer
Exhibit 99.1 |
 2
Safe Harbor Language
This presentation may contain “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995. Any matters that are not of historic fact are
forward-looking statements. These forward-looking statements are based on Key's
current expectations, estimates and projections about Key, its industry, its management’s beliefs
and certain assumptions made by management, and include statements regarding future
operational expectations and anticipated financial performance. No assurance can be given
that such expectations, estimates or projections will prove to have been correct. Whenever
possible, these “forward-looking statements” are identified by words such as “expects,”
“believes,” “anticipates” and similar phrases.
Readers and any audience are cautioned that any such forward-looking statements are not
guarantees of future performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict, including, but not limited to: risks that
Key will be unable to achieve its financial and operational projections, including quarterly and annual
projections of revenue and/or operating income and risks that Key’s expectations
regarding future activity levels, customer demand, and pricing stability may not materialize (whether
for Key as a whole or for geographic regions and/or business segments individually); risks
that fundamentals in the U.S. oil and gas markets may not yield anticipated future growth in
Key’s businesses, or could further deteriorate or worsen from the recent market
declines, and/or that Key could experience further unexpected declines in activity and demand for
its rig service, fluid management service, coiled tubing service, and fishing and rental
service businesses; risks relating to Key’s ability to implement technological developments and
enhancements; risks relating to compliance with environmental, health and safety laws and
regulations, as well as actions by governmental and regulatory authorities; risks affecting
Key’s international operations, including risks that Key may not be able to achieve its
international growth and mobilization strategy in the foreign countries in which Key operates; risks
associated with the recently completed sale of Key’s Argentine operations, including
risks that Key may be unable to achieve the benefits contemplated under the transaction; risks, in
responding to changing or declining market conditions, that Key may not be able to reduce,
and could even experience increases in, the costs of labor, fuel, equipment and supplies
employed and used in Key's businesses; risks relating to changes in the demand for or the
price of oil and natural gas; risks that Key may not be able to execute its capital expenditure
program and/or that any such capital expenditure investments, if made, will not generate
adequate returns; and other risks affecting Key’s ability to maintain or improve operations,
including its ability to maintain prices for services under market pricing pressures,
weather risks, and the impact of potential increases in general and administrative expenses.
Because such statements involve risks and uncertainties, Key's actual results and
performance may differ materially from the results expressed or implied by such forward-looking
statements. Given these risks and uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements. Other important risk factors that may affect
Key's business, results of operations and financial position are discussed in its most
recently filed Annual Report on Form 10-K, recent Quarterly Reports on Form 10-Q, recent Current
Reports on Form 8-K and in other Securities and Exchange Commission filings.
Unless otherwise required by law, Key also disclaims any obligation to update its view of any such
risks or uncertainties or to announce publicly the result of any revisions to the
forward-looking statements made here. However, readers should review carefully reports and
documents that Key files periodically with the Securities and Exchange Commission.
|
 3
Service Offering
Rig Services
•
Heavy Workover
•
Horizontal Well Completions
•
Re-completions
•
Specialty Drilling
•
Repair & Maintenance
•
Plugging & Abandonment
Fluid Management Services
•
Fluid Transportation
•
Fluids Disposal
•
Storage Tank Rental
•
Total Field Fluid Logistics Management
•
Fresh & Brine Water Supply
Coiled Tubing Services
•
Wellbore Cleanout
•
Multi-stage Frac Plug Milling
•
Plug Setting & Retrieval
•
Logging & Perforating Tool
Deployment
•
Remedial Repair & Maintenance
Fishing & Rental Services
•
Drill Pipe & Tubing Rental
•
Pressure & Flow Control
Equipment Rental
•
Edge Frac Stacks & Well Testing
•
Pipe & Downhole Tool Retrieval
(1) Results from Continuing Operations, which exclude Key’s Argentina
operations. Key’s Argentina operations were sold effective September 14,
2012
and
were
reported
as
discontinued
operations
for
the
above
stated
periods.
2011
3Q 2012 YTD
Revenue
% Of
Revenue
% Of
(In millions)
Total
(In millions)
Total
U.S.
Rig Services
$726
42%
$614
41%
Fluid Management Services
$388
22%
$277
19%
Coiled Tubing Services
$232
13%
$162
11%
Fishing & Rental Services
$184
11%
$202
14%
International
(1)
$199
12%
$239
16%
Total Revenue
(1)
$1,729
100%
$1,494
100%
3 |
 4
Key’s Global Presence
Globally recognized franchise of safe, consistent and reliable job execution with a broad
customer base. Well Servicing
Workover
Drilling & Completion
Reservoir Engineering
Well Servicing
Workover
Drilling & Completion
Fluid Management
Coiled Tubing
Fishing & Rental
Frac Stack Rental
Well Testing
Well Servicing
Workover
Completion
Coiled Tubing
Wireline
Reservoir Engineering
Well Servicing
Workover
Completion
Well Servicing
Workover
Completion |
 5
U.S. Market
Source: Smith Bits; through 1/25/2013.
0
50
100
150
200
250
300
2009
2010
2011
2012
2013
Eagle Ford
0
50
100
150
200
250
2009
2010
2011
2012
2013
Bakken
0
100
200
300
400
500
2009
2010
2011
2012
2013
Permian Basin
Drilling Rig Count
Horizontal Rig Count
2009
2010
2011
2012
2013
0
10
20
30
40
50
60
West Coast
0
50
100
150
200
250
2009
2010
2011
2012
2013
Haynesville
0
20
40
60
80
100
120
140
160
2009
2010
2011
2012
2013
Marcellus / Utica
Drilling Rig Count
Horizontal Rig Count
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2009
2010
2011
2012
2013
Total U.S. Onshore Drilling Rig Counts
Onshore Oil-Directed Rigs
Onshore Gas-Directed Rigs
Horizontal Rig Count (%)
Oil-Directed Rigs (%)
California,
Eagle Ford
and Bakken
Permian
Basin
Other Oil
Markets
Haynesville
Other Gas
Markets
Key's Estimated 3Q 2012
U.S. Revenue Split by Market
~25%
~15%
~5%
~10%
~45% |
 6
Growing Backlog of Potential Horizontal Well Interventions
The secular growth in producing horizontal wells should lead to increased demand for
Key’s higher capability workover rigs and higher well intervention service
intensity. 550 HP Rig with 116’
Derrick and
425 HP Rig with 102’
Derrick |
 7
U.S. Revenue Potential for Underutilized Assets
We believe there is approximately 25% to 30% additional U.S. revenue potential if
Key’s existing service capacity were operating at effective full utilization levels of
90%. $0
$100
$200
$300
$400
$500
$600
U.S. Rigs
Fluid Management
Services
Coiled Tubing
Services
Fishing & Rental
Services
U.S. Total
Source: Key Energy Services, Inc.
Hypothetical Additional Quarterly Revenue Potential*
Q3 2012 Actual Reported Revenue
* Represents hypothetical additional revenue
that might have been generated if all of
Key's existing assets had been operating at full effective utilization of 90% and at the same
pricing levels that were realized during the third quarter.
|
 8
Oil Well Life Cycle Exposure
Key’s growing toolbox of service solutions deliver value throughout the well’s life
cycle. Rig Services
Coiled Tubing Services
Fluid Management Services
Fishing & Rental Services
Drill & Complete
Production
Abandonment
Horizontal well completions
Specialty fit-for-purpose drilling
Logistics management: fluid
delivery, storage and disposal
Pre-frac wellbore preparation
Post-frac plug milling
Premium drill pipe and blowout
preventers
Frac stack assemblies and well
testing
Fishing services
Heavy workovers
Repair and maintenance
Re-completions
Produced water handling and
disposal
Wellbore cleanouts
Slim-hole drill-outs
Remedial well stimulation
Workstring and tubing rental
Fishing services
Well prep and pipe
removal
Fishing and pipe recovery
Fluid delivery and disposal
Fluid treatments and
cementing |
 9
International Markets
Heavy Workover Rig in Mexico
Key has generated strong international growth.
$12
$57
$129
$101
$199
$138
$239
$0
$50
$100
$150
$200
$250
$300
2007
2008
2009
2010
2011
Q1-Q3
2011
Q1-Q3
2012
Historical International Revenue Growth*
Source: Key Energy Services,Inc.
73% Y/Y
52% CAGR
2008 -
2011
*Excluding Argentina for all periods.
Argentina was was sold in September 2012. |
 10
Well Interventions Drive Value
Key’s growth in well interventions contributes to production growth in PEMEX’s ATG
asset. |
 11
•
Reduce costs and improve U.S. operating efficiencies.
•
Capitalize on international growth opportunities.
•
Use free cash flow to enhance shareholder value.
2013 Focus |
 |
 13
Appendix -
The KeyView
®
System
The KeyView
®
System is a proprietary technology that provides equipment-verified data to achieve
enhanced operational IQ.
•
Patented system with job activity monitoring, recording
capabilities and automated controls that provides
operators
with
an
“intelligent”
rig
that
can
meaningfully
improve job safety, quality and efficiency.
•
Safety incidents reduced by as much as 56%.
•
Job quality improved by as much as 63%.
•
Efficiency improved by as much as 50%.
•
Real-time analytics and advanced benchmarking yield
actionable efficiency gain opportunities.
•
Growing database of >50,000 jobs allows for historical
and peer comparison.
0
10
20
30
40
50
60
Typical Permian
Basin Job
Typical Bakken
Shale Job
Pipe Tripping
Transition
Workover Activity
Well Control
Stand-by
Mobilization
Crew Break
BOP/TAC/PKR
Other
Safety
Source:Key Energy Services, Inc. |
 14
Appendix –
Class 4, 500 HP Heavy Workover Rig
14 |
 15
Appendix –
Class 5, 1,000 HP Modular Completion Rig
15 |
 16
Appendix –
Extended Reach Coiled Tubing Unit
16 |
 17
Appendix –
Frac Stack Equipment Layout
17 |