2011 - Estrella International Energy Services Ltda.

2011 - Estrella International Energy Services Ltda.

Estrella International Energy Services Ltd.
Energy Services Ltd
Corporate Update
March 2011
TSX‐V: EEN.V
Disclaimer: Forward Looking Statements
Certain statements included or incorporated by reference in this presentation constitute forward‐looking statements or
forward‐looking information under applicable securities legislation. Such forward–looking statements or information
are provided for the purpose of providing information about management's current expectations and plans relating to
the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as
making investment decisions. Forward‐looking statements or information typically contain statements with words such
as "anticipate", "believe", "expect“, "plan", "intend", "estimate", "propose", "project“, “seek”, “continue”, “forecast”,
“may”, “will”, “potential”, “could”, “should” or similar words suggesting future outcomes or statements regarding an
outlook. Forward‐looking statements or information in this presentation include, but are not limited to, statements or
i f
information
i
with
i h respect to: business
b i
strategy and
d objectives;
bj i
acquisition
i ii
plans
l
and
d the
h timing
i i
thereof;
h
f capital
i l
expenditures; net revenue; operating and other costs; and taxes.
Forward‐looking statements or information are based on a number of factors and assumptions that have been used to
develop
p such statements and information but which mayy p
prove to be incorrect. Although
g Estrella Overseas Ltd. (the
“Company”) believes that the expectations reflected in such forward‐looking statements or information are reasonable,
undue reliance should not be placed on forward‐looking statements because the Company can give no assurance that
such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this
presentation, assumptions have been made regarding, among other things: the impact of increasing competition; the
general stability of the economic and political environment in which the Company operates or plans to operate; the
timely receipt of any required regulatory approvals; and the ability of the Company to obtain qualified staff, and
equipment in a timely and cost‐efficient manner.
Forward‐looking statements or information are based on current expectations, estimates and projections that involve a
number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the
Company and described in the forward‐looking statements or information.
The forward‐looking statements or information contained in this presentation are made as of the date hereof and the
Company undertakes no obligation to update publicly or revise any forward‐looking statements or information, whether
as a result of new information,
information future events or otherwise unless required by applicable securities laws.
laws The forward‐
forward
looking statements or information contained in this presentation are expressly qualified by this cautionary statement.
2
Disclaimer: Privileged Information
This presentation may contain information concerning Estrella of a material nature that has not been generally
disclosed. This information is being provided to you in the necessary course of the business of Estrella in connection
with proposed business or professional activities to be conducted between Estrella and you. You understand that this
information is being provided to you on the understanding that you are considered a person or company which is in a
“special relationship” with Estrella, as defined in the applicable securities laws, and as such, you may not purchase or sell
any securities of Estrella with knowledge of a material information, nor disclose any material information concerning
Estrella, that has not been generally disclosed. Any failure to adhere to such prohibitions against such trading and
tipping could expose you to criminal and civil liability.
3
Latin American OFS company, growing consistently since 2005
i Rapid regional expansion over the last five years, with R
id i
l i th l t fi ith our customers support
Public company (TSX:EEN.V) with Latin America based bi lingual and bi cultural management
based bi‐lingual and bi‐cultural management
‐ Operate at the highest level of service quality
‐ Operate with global experience and local know how
p
g
p
‐ Vision
To set the standard of excellence by which all other service companies in Latin America are measured
p
4
Ser mejor, hacer mas
Contents
•
•
•
•
•
•
5
Our services and who we are
Why South America and why services?
Overview and investment highlights
Capitalization
Expansion success
S M j H
Ser Mejor, Hacer
M
Mas
Diversified Service Offering
Drilling and Workover Rigs
• 350 – 1200 HP modern rig fleet
• Modern
Modern, portable, self erecting portable self erecting rigs (no cranes required)
• Automation • No external anchor lines
• High efficiency, low emission engines
Tools and Services:
T
l d S i
• Directional Drilling & Tool Rental
• Completion and Workover
C
l ti d W k
Engineering & Consulting
• Well design and engineering
W ll d i d i
i
• Project management and field operations management 6
World Class O.F.S. Team
Management Title W
Warren Levy L Ch i
Chairman & CEO & CEO Christian Bauwens CFO Guillermo Lamacraft Senior Advisor Matthew Holdeman VP, Engineering Gary Pidcock VP New Ventures Luis Aviles Giovanni Rios Patrick Galletti Wade Maingot Jesus Orozco
Experience
15 years of global OFS experience –
f l b l OFS i
SLB 18 years of corporate finance / CM experience (GM/Nissan/BNP)
35 years of experience in regional Oil & Gas
25 years of experience, SLB & BHI (IPM & QHSE) 28 years of experience, onshore and offshore, (SLB, BP, Gulf, PlusPetrol) ‐ Camisea Project Manager VP Sales & Marketing 27 years (SLB) in operational & management roles
GM, Peru 15 years of experience(SLB, Oxy), 17 countries ‐ MWD/LWD
GM Arg/Chile/Para 10 years of experience(SLB) ‐ MWD/LWD ‐ 3 regions
GM Col
26 years in industry, 6 countries in South America (SLB)
GM STS
12 years in industry.
Directors Warren Le Warren Levy Christian Bauwens Carlos Contreras,Sr. Title
Chairman & CEO
Director & CFO
Director Andrew Fentress Gustavo Garrido John Zaozirny Director Director Director Remo Mancini Director 30 years of oil & gas experience (Oxy). Former Energy Minister, Bolivia
Partner, Medley Capital (Shareholder nominated director)
Managing Partner at large M&A law firm in Buenos Aries
Vice Chair at Canaccord, former Alberta Minister of Energy
Director of Pacific Rubiales, PetroAmericas and others
Former MPP (Ontario), 30 years of experience in business/government
With new Colombian acquisitions: 800 employees, 15 nationalities
7
Locations
Argentina
Barranca
Chile
Buenos Aires – Headquarters 2005
Comodoro Rivadavia – Ops Base 2005 Neuquen – Ops Base 2006 ECN –
ECN Storage Yard 2007
25 de Mayo – Living Camp 2007
Kaike – Storage Yard 2008
Punta Arenas – Ops Base 2005
Santiago – Sales Office 2009
C l
St
Yard 2009
d Calama
– Storage Peru
Lima – Sales Office 2008
El Altos de Talara – Ops Base 2010
Colombia Bogota – Sales Office 2010
Yopal – Ops Base 2010
Barranca Bermejo – Ops Base 2010
Bolivia
Santa Cruz de la Sierra – Sales Office 2010
Paraguay Asuncion – Sales Office 2010
2006 2007 2008 2009 2010 2011
6 6 2007 2008 2009 2010 2011
2008 2009 2010 2011
8 8
8 2009
2010 2011
2011
2005
2005 2006
2006 2007
2006 2007 2008
2006 2007 2008 2009 2010
2009 2010 2011
Current Deployed Rig Fleet
Argentina
551P – 550 HP AC Portable Drilling Rig
S 350 HP Portable Workover
HP P
bl W k
Ri 101S –
Rig 102S – 350 HP Portable Workover Rig
103S – 350 HP Portable Workover Rig
Chile
Peru
1201P – 1200 HP AC Geothermal Drilling Rig
Bolivia
1001P – 1000 HP Drilling Rig
Maple1* –
l
2000 HP DC Helil Rig
552P – 550 HP Ultra Portable Drilling Rig
351 – 350 HP Light Drilling, Heavy Workover
Colombia STS Acquisition – 5 Workover Rigs
PL/Z Acquisition – 4 Drilling / 8 Workover Rigs
Punta Arenas
.
8
*Rig Leased from Customer – sold in 2010
Rig Fleet
Colombia
Barranca
STS1 STS2 STS3 STS4 STS STS5 PL1
PL2
PL10
PL11
PL12
PL20
PL21
Z2
Z3
Z4
Z5
Z6
250 HP 440 HP 350 HP 375 HP 375 HP HP 550 HP
350 HP
450 HP
450 HP
350 HP
550 HP
550 HP
550 HP
350 HP
900 HP
550 HP
250 HP
Workover
Workover
Workover
Workover
W k
Workover
Drilling
Workover
Workover
Workover
Workover
Drilling/WO
Drilling/WO
Drilling
Workover
Drilling
Drilling
Workover
Idle
On Contract
On Contract
On Contract
O C t t
On Contract
On Contract
On Contract On Contract On Contract On Contract On Contract
On Contract
On Contract
On Contract
On Contract
In Refit
Idle
351
552
350 HP
550 HP
Drilling/WO Mobilizing
Drilling
On Contract
1001
1000 HP
Drilling
Mobilizing
101
102
103
551
350 HP
350 HP
35
350 HP
550 HP
Workover
Workover
Workover
Drilling
On Contract
On Contract
On Contract
On Contract
1201
1200 HP
Drilling
On Contract
Peru
Bolivia
Argentina
.
Punta Arenas
9
Chile
25 Rigs – 8 Drilling 3 Drl/Wo 14 Workover
88% contracted, 4% in refit
Directional Drilling
Barranca
Job Capacity:
A
ti Argentina: 5 Chile: 3
Peru: 2
Colombia: 2
Directional and Service Bases
i
i
l d
i
Punta Arenas
.
10
Engineering Services
Barranca
Country
O
Oil &
Gas
Ge
eothermall
S
Solution Mining
M
Argentina



Chile


Peru

Colombia


Canada
Kenya
Punta Arenas
.
11

Current and Past Projects
d
j
Size = relative revenue
Capabilities and Experience
Oil & Gas
•
•
•
•
Current presence in six Latin American markets
Multiple service offering and integrated project ready
Proven ability to grow around the region
Globally experienced team, all resident in the region and all Bi or Tri‐
lingual – experience in every Latin American market where wells have lingual been drilled
Non Standard Expertise •
•
12
World class team in remote and non standard projects
Geothermal and mining experience and capabilities Why Focus on Latin American
• Less volatile than global market
• Up by > 50% in last six years and expected to continue to grow
• E&P operators have > $10 billion in E&P commitments in 2011 on land
• Democratization of block bidding has facilitated entry of juniors and mid sized
players.
• Numerous remote and challenging projects, antiquated equipment and
g customer demands to improve
p
increasing
• Must have a regional footprint to take advantage of sustained growth
Active Drilling Rig Count
4000
3500
3000
2500
2000
1500
1000
500
0
13
World
L i A
Latin Am
The Operating Markets
14
Hot Hot
Markets
Poised for for
Growth
Steady Steady
State
Politically Politically
Challenges Limiting Limiting
Activity
Colombia
Peru – 2012 jungle drilling &
near shore Brazil –
Offshore focus of Petrobras
Venezuela
Bolivia
Chile –
Geothermal boom
Trinidad
Ecuador –
activity, but not stable
Argentina –
Argentina
2011 Elections
Central America
Central America
The Geothermal Market
Global Production Base
•
US, Indonesia, Philippines, Mexico,
New Zealand, Italy, Kenya, Central America
•
10 7 GW of installed capacity
10.7
•
Steady growth for the last 30+ years
Sustainable Growth
•
Each 40 MW plant requires 8-15 wells
•
Virtually zero carbon footprint
•
Long plant life and excellent baseload power
Source: US Geological Survey
Only part of the (>95% uptime on production)
“Ring of Fire” Latin American Potential
without current •
C
Current
t developments
d
l
t in
i C
Central
t l America
A
i and
d Chile,
Chil
geothermal greenfields projects in Peru and Argentina
production
•
Chile has stated goal of 3000 MW of installed power by 2015
Global Geothermal Production
30 years of steady growth
15
Source: Bertani, 2010
Diversified Market Presence
•
•
Only active rig and directional player in the rapidly growing Geothermal Market
g
gg
,
, j y,
Argentina seeing geothermal interest in San Juan, Salta, Jujuy, Neuquén. One production project underway. Estrela Rig 1201 drilling a geothermal well in northern geot
e al ell
ot e
Chile at 4500 m of altitude
Proved that a modern automated rig can outperform in remote t f
i t geothermal operations
Rig is now mobilizing onto a new contract
t t t
16
Case Study – Full Service Capabilities
•
•
Rio Tinto / Vale ‐
Ri
Ti / V l Potash Development –
P
h D l
Mendoza Province, Argentina
M d P i
A
i
Estrella got involved in late 2005
–
–
Initial work to evaluate feasibility of a directionally drilled development, Later to design and have fabricated a custom built , fully automated 1000 HP AC walking rig
Field taken to 16 well pads, saving hundreds of millions on infrastructure costs and being featured in Rio Tinto’s quarterly update to investors as a case study in reduced environmental impact
•
5 years later‐ Estrella continues to supervise the rig operation and provide engineering support
•
Recently awarded phase II rig construction project to design and build two additional rigs and awarded early engineering work in the Vale Saskatchewan Potash project
Manipulator Crane
Each circle is 2 wells
1000 x 16 well pads
17
Walking Automated Rig
Loyal Customer Base
•
•
•
Long term, sustained customer relations
Many of our new country entries have been facilitated by existing customers
Only Key customers that have fallen off the list have stopped E&P operations (March & Maple)
YEAR
18
Customers > 1 MM in Revenue
2005
‐
2006
6
‐
2007
PRC / Oxy 2008
PRC / Oxy / PetroAndina / Maple / March
2009
PRC / Oxy / PetroAndina / ENAP / ENG / Maple
2010
PRC / Oxy / PetroAndina / ENAP / ENG / GeoPark / PlusPetrol / Ecopetrol
Ownership
• Stable Management with strong alignment with investor base
• 15 million share position escrowed against price performance (vesting at 4 million at $1 30, 6 million at $1 40 and 5 million at $2 00)
4 million at $1.30, 6 million at $1.40 and 5 million at $2.00)
• Management and early principal investor (Medley) have majority control of Estrella both on a common stock basis and fully diluted basis
Capitalization
Basic Shares – Management1
15.0 Million
Basic Shares – Medley
39.6 Million
Basic Shares ‐ Public
47.6 Million
Basic Shares – Total 102.2 Million
Share Price (CDN$) 2
$0.80
Market Capitalization
Long Term Debt3
1.
2.
3.
4.
5.
6.
19
7.
$82 Million
$32 + $15 Million
Management shares are escrowed against share price performance
Closing price as of Feb 23, 2010
Credit Suisse provided a senior secured loan facility of $32 million USD. Under certain conditions, this facility could be expanded up to $80 million USD. An additional $15 Million convertible debenture is expected to be closed this week.
Associated with the STS acquisition, the shareholders of STS were issued 4.75 Million preferred shares with a $1 / share conversion price
The company has 38.7 Million warrants outstanding at $1.5 / warrant
The company issued warrants to Credit Suisse in conjunction with the long term debt facility. These warrants have a strike price of $0.91 / warrant
The company will issue warrants to the Convertible Debenture investors with a strike price of $0.80 / warrant.
Expansion Experience and Plans
Expansion
• Successful growth in six countries • Successful deployment of rigs in three countries • Continue organic growth of rig and service tool Contin e organic gro th of rig and ser ice tool fleet
– Plan to deploy an additional 4
Plan to deploy an additional 4‐5 rigs in coming year, grow 5 rigs in coming year, grow fleet to 35+ rigs in near term
– Plan to expand service tool fleet during 2011, and grow to number 3 provider in the region
– Targeted growth for consulting business in areas high pull through potential – become a viable alternative to the big four service companies • Objective for 2009/2010 – reduce relative risk exposure to Argentina
20
Expansion Experience and Plans
Acquisition
•
•
March 2010 – acquired single rig operating entity in Chile from partner
November 2010 – acquired STS de los Andes
–
–
–
–
–
–
•
•
21
Colombia based 5 rig company
Existing contracts with Ecopetrol and Occidental
Strong base off which to grow in high overhead market
15 MM in cash and 4,75 MM in preferred shares issued at $1/share
Purchase Price (inclusive of cancelled debt) approx $20 MM
Proforma EBITDA of > $5 MM January 2011 acquired Petroland and Zigma
January 2011 –
–
–
–
–
–
Colombia based 7 and 5 rig companies respectively 4 drilling, 2 drilling/workover and 6 workover rigs
Purchase 49% in Jan for 10.3 MM
Option to purchase an addition 11% now for 2.3 MM
Balance of 40% due in Q1 2012 and based off of actual performance of companies, half paid in shares and half in cash
–
Implied purchase price based on 49% and 11% options (inclusive of debt) approx $33.8 MM
–
Proforma EBITDA of > 7 ‐ 9 MM 2011 Proforma cashflows > 80% from Peru, Colombia and Chile
Why Estrella ?
People and Presence • Only small service provider with a fully Latin American based team
• International and home grown talent
• World class capabilities for remote and non‐
standard projects
p j
• Sustained, proven growth around the region for the last five years
• Close ties with the local communities and commitment to local employment
• Successfully executing organic and acquisition based growth
i i i b d h
Clients
• We work and grow alongside our customers
g
g
• Long standing, close customer relations • Customer driven solutions
• Contract discipline
22
22
Why Estrella ?
Safety / Quality / Environment • Focused on high quality, efficient equipment • The youngest and most automated rig and equipment fleet in Latin America
• Diversified geographic and market presence including key niches of geothermal and potash development
th
l d t h d l
t
• We are relentless in the pursuit of setting the standard for quality, safety and environmental performance
• opportunities are abundant, obtaining growth that can be sustained is the only acceptable goal
Be better, domore
23
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Estrella International Energy Services Ltd.
Warren Levy
Chairman & CEO
[email protected]
Phone: +5411 5217 5250
Fax:
+5411 5217 5280
www estrellasp com
www.estrellasp.com
24
Christian Bauwens
CFO
[email protected]