Flotek Industries Presentation at IPAA New York Investor Conference

Report
IPAA
OGIS New York
2013
April 15, 2013
April, 2013
1
Forward Looking Statement Disclaimer
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.
Flotek’s Stock Performance
Stock Performance 2010-2012
900%
810%
Flotek’s rejuvenation is evident both financially
and operationally. Flotek’s market cap increased
from $32.4 million at the beginning of 2010 to over
$600 million by the end of 2012.
800%
700%
600%
500%
400%
• Flotek’s stock price increased 810% since the
beginning of 2010. That compares to a median
increase of 14% for other companies in their
peer group. The NYSE composite index gained
18% and the OSX gained 13% in that time
period.
• Flotek’s stock price grew 22% in 2012, more than
any other of the 15 companies in their peer
group. The median loss for Flotek’s peer group in
2012 was -15%.
• Flotek also outperformed the NYSE Composite
Index and the OSX. Flotek’s stock price gained
22% in 2012, while the NYSE composite index
gained only 13% and the OSX only gained 2%.
300%
200%
100%
18%
13%
0%
-100%
Return
30%
20%
10%
Median (14%)
Stock Performance 2012
22%
13%
2%
0%
-10%
-20%
-30%
-40%
-50%
Return
Median (-15%)
Flotek’s Focus: A Deleveraging Oilfield Technology Growth Story
Flotek continues to further deleverage its balance
sheet providing the company the ability to both
address its obligations and fund its current
growth from internally generated capital.
$160,000
$140,000
$120,000
(in thousands)
$100,000
$80,000
$60,000
$40,000
$20,000
$25,000
$-
Interest Expense, 2009-2013
(in thousands)
• Total debt (excluding capital leases) has been
reduced from a peak of ~$155 million to now
under $25 million, the vast majority being done
through internally generated cash flow.
• $25 million term loan with PNC is the only debt
(excluding capital leases) currently on the
balance sheet.
• Cash generation remains robust, with a current
run rate of approximately $1 million per week.
• Final convertible notes were called February 13,
2013. No additional expenses related to the
notes are anticipated, and all notes are paid in
full. Final $5.2 million were paid with cash on
hand without need to tap revolver.
• Flotek does not anticipate significant use of
revolving credit facility under current operating
scenario.
Debt Balances, 2009-2013
$20,000
$18,000
$16,000
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$-
$15,524
$19,399
$15,960
2009
2010
2011
$8,103
2012
$1,325
2013 Estimate
Reduction in Debt PLUS Acceleration of Cash EQUALS Flotek’s Powerful Engine for Future Growth
Flotek’s Improved Operational and Financial Performance
Flotek continues its strong operational and
financial performance. As you can see, Flotek is
in the midst of a significant transformation from
post financial crisis levels.
$350,000
Revenues ($ mm)
• Total revenue has more than doubled from 2010
and increased over 20% from 2011. Revenue in
2012 was the highest in company history.
• Chemical Revenue increased 30% over 2011
levels.
• Operating income in 2012 was $58.6 million, a
20% increase over 2011 levels.
Total Revenue
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$2008
Chemical & Logistics Revenue
$50,000
$2008
2009
2010
Year
2011
2012
Operating Income ($ mm)
Revenues ($ mm)
$100,000
2010
Year
2011
2012
Operating Income
$200,000
$150,000
2009
$60,000
$40,000
$20,000
$2008
2009
2010
$(20,000)
$(40,000)
Year
2011
2012
The Flotek Oilfield Technology Portfolio
Flotek is a Houston-based oilfield services company with focus on value-added drilling, completion and
production products. We deliver our services through a network of field offices in key basins across North
America and through strategic partnerships internationally.
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 everchanging challenges of our customers and exceptional customer service.
Key Technology Drivers: Specialty Chemicals
•
Continued trend toward unconventional resources plays in North America and in
international markets.
•
New product innovations: Research & development commitment leading to the
“next generation” Complex nano-FluidsTM and other “on demand” chemistry
solutions. CnF® 2.0
•
New markets: Liquids growth, enhanced oil recovery applications and basin-specific
solutions.
•
International markets: Continued growth from Basin Supply partnership and additional
opportunities.
•
Marketing penetration to both service companies and E&P end-users that convey
compelling economic benefits of the CnF technology.
•
Environmental focus: Flotek filed first patent on environmentally friendly products in 2003.
•
Commitment to Research: Creating durable client relationships.
Key Technology Drivers: Drilling Tools
• 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 & Eagle Ford.
• Teledrift focus: Continued growth in domestic markets. Pricing strength in
Permian Basin. Remote technology should enhance Teledrift pricing and
market share
• International expansion. Focus on Saudi Arabia and Middle East, Central
& South America, Russian Federation.
• Technology Focus: Remote view of Teledrift results.
Key Technology Drivers: Teledrift Remote
• Remote system allows you to
select region and specific jobs.
Also provide the ability to look
at all job details in a single
page.
• Details of well direction can be
seen both graphically and in
chart form. Certification sheet
also provided.
• iPhone & Android apps
available.
Key Technology Drivers: Artificial Lift
• Key customer relationships in Powder River CBM. Flotek improved key
customer relationships in 2011 which provided additional service revenue in
2012 even as natural gas prices tumbled..
• We have made significant progress in growing our oil exposure:
•
Successful installation of Petrovalve in the Niobrara with mainstream
participants. Repeat business beginning to build.
•
ESP brand recognition growing. We are competing for major ESP jobs with
gross margins in the 50% range.
•
New significant customer in the Bakken establishes new territory for Flotek.
• International sales of Petrovalve provide significant upside.
Oman Expansion
• Flotek signed a Letter of Intent with Gulf Energy of Oman to construct a
specialty oilfield chemical production and distribution facility, as well as a
research and development center in Oman.
• Extends Flotek’s reach into a region in need of advanced chemistry
solutions that Flotek provides.
• Strategically positions Flotek to serve the Middle East and North Africa,
amongst the most prolific oil and gas producing regions in the world:
2013 Business Objectives
• Continued focus on improved marketing efforts
 Key objective to reach ultimate beneficiaries of property CnF chemistries. Combination of
working with service companies and working independent of service companies to sell
E&P companies on economic benefits of the CnF technology.
 Increased emphasis on “depth” of relationships along with “breadth” of relationships. “Is
Flotek in your well” provides multiple touch point opportunities.
• Introduce the “next generation” of CnF chemistry technologies to the market.
• Continue to focus on more balanced revenue mix: liquids vs. natural gas. Continued to build a
“hydrocarbon agnostic” suite of leading-edge, proprietary technologies.
• Continue to pursue international opportunities through partnerships, established relationships and
key agents.
• Opportunities for Flotek chemical technologies to be utilized in Enhanced Oil Recovery (EOR).
• Consider prudent opportunities to deploy cash balances to enhance long-term growth.
IPAA
OGIS New York
2013
April 15, 2013
April, 2013
13

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