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Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd

Kentz Corporation Ltd · Dec 9, 2013 · 31 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 1
    Kentz Corporation Limited Proposed Acquisition of Valerus Field Solutions
  2. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 2
    Overview Expand ability to provide EPC for small to medium onshore process facilities Kentz Annual Report 2012 Kentz stated strategy to acquire process oil and gas engineering to bolster capabilities and move up the value chain…
  3. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 3
    Key transaction terms Transaction US435m in cash subject to working capital adjustment Value Acquisition on a cash-free-debt-free basis Internal resources (US35m) and term loan (US400m) Financing Revolving credit facility of…
  4. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 4
    Background to Valerus Field Solutions
  5. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 5
    Valerus Overview Transaction involves the acquisition of Valerus Contract Services (NOT ACQUIRED) Valerus Field Solutions Provides compression services to owners on a contract basis Operates contract fleet and provides Integrated…
  6. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 6
    Field Solutions Scope Integrated Services Production Equipment Processing & Treating Compressors Indicative only 7
  7. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 7
    Production Equipment Service Offering Illustrative Project Well head production solutions (including treaters, 38% stabilisers, coolers, heaters, dehydration systems, separators) Wide range of oilfield applications 40% off the…
  8. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 8
    Compression Systems Service Offering Illustrative Project Designs, engineers, and fabricates 38% compression units for well head gas lift, midstream gas gathering systems and pipeline booster stations Largest provider of Waukesha…
  9. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 9
    Processing and Treating Service Offering Illustrative Project Designs, engineers and fabricates cryogenic gas 38% plants, amine treaters, refrigeration plants and NGL fractionation units Offers standard configurations and…
  10. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 10
    Integrated Services Service Offering Illustrative Project Designs, fabricates, engineers cryogenic gas 38% plants, amine treaters, refrigeration plants and NGL fractionation plants Offers standard configurations and customised…
  11. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 11
    Valerus FS Client Base Local & Major Oil and Gas Companies National Oil Major Oil & & Gas Gas Cardon (ENI/Repsol) Companies Companies Apache 22% 26% Marathon BHP Hess Local & National Oil and Gas Companies Pemex Midstream…
  12. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 12
    Valerus FS Segmental Revenue Analysis Revenue by Sector Revenue by Sales Destination Unconventional Gas Australasia 45% Middle East 1% 10% Latin America 32% USA 57% Conventional Gas 55% Oil & Gas EPC and Engineered…
  13. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 13
    Strategic Rationale
  14. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 14
    Kentz Strategy Key Elements Valerus acquisition delivers on inorganic EPC strategy Organic strategies ongoing; proceeding in line with expectations EPC Construction Technical Support Services Build a process EPC Maintain our E&I…
  15. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 15
    Kentz EPC Strategy Timeline of Acquisition Appoint acquisition Six strategic initiatives Identify suitable targets Enter into search firm chosen discussions with TPG Commence discussion Board strategy workshop Business plans with…
  16. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 16
    Market Focus - US Strategically located in the most prolific shale plays; developed offerings for liquids-focused areas 240 gas processing plants will be required through 2035 (ICF Assessment) 17
  17. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 17
    Expands Access to Global Gas Market Valerus market/Kentz opportunity Kentz market/Valerus opportunity 36bn approximate addressable market in onshore facilities Kentz/Valerus market by 2018 for Valerus FS New market Major gas…
  18. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 18
    Broadened Service Offering 10% Capex 15% Capex 30% Capex 40% Capex 5% Capex Conceptual Engineering, & Front End Project & Equipment Construction Commissioning Construction Engineering Management Valerus opportunity Kentz…
  19. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 19
    Financial
  20. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 20
    Valerus FS Financial Performance USm Historical Revenue Historic Drivers of Growth 600 Strong growth in Processing and Treating 493 500 and Integrated Services 423 400 278 New business lines introduced 300 200 Supply chain management…
  21. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 21
    Valerus FS Financial Performance Margins Historical Period Combined gross margin of US 2010 2011 2012 approximately 20% in 2012 across the four business units Revenue 278.4 423.1 492.9 Expect this to be sustainable Gross Profit…
  22. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 22
    Valerus FS Balance Sheet Summary Balance Sheet 2010 2011 2012 ASSETS Non-current assets 10.8 10.7 11.1 Valerus Field Solutions Inventories 98.0 91.4 111.4 Low fixed cost base Trade and other receivables 28.1 67.0 61.7 Balance sheet…
  23. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 23
    Valerus FS Cash Flow Summary Cash flow 2010 2011 2012 EBITDA 10.5 4.0 51.4 Strong track record of cash conversion Depreciation 1.8 2.1 2.2 Negligible level of bad debts due to blue chip client base Working Capital movement 4.8 28.5…
  24. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 24
    Revised Capital Structure Timeline of Financing Engaged with existing Board review of Financing options and Club of banks Selected core financing banks proposed financing debt capacity analysis strategy performed Term sheet proposed…
  25. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 25
    Financing of the Transaction Use of senior unsecured debt financing to achieve higher equity returns by introducing an appropriate leverage mix into the finance structure New facilities: 4-year 5-month term loan of US400m 18 month…
  26. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 26
    Combined Entity
  27. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 27
    Proposed Organisation Kentz Board of Directors C Brown* Kentz CEO T Doshi Oversight Board COO EPC Valerus Field Solutions S Gill Valerus CEO Operations Support Integrated Sales Operations Finance HR Legal IT…
  28. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 28
    Valerus Field Solutions Organisation Strong platform for future growth Valerus expected to continue to operate on standalone basis for first 2 years brand name to be retained Management and leadership team: Valerus CEO (Steve Gill)…
  29. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 29
    Kentz / Valerus Combined Backlog 2014 Backlog (USm) Combined backlog: 3.4bn* 398 Valerus: 60% of projected 2014 revenues under contract (90% including book and burn business) 95% of Integrated Services 2014 revenues on hand by Dec…
  30. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 30
    Summary Kentz EPC Strategy Acquire O&G process engineering; move up the value chain; Address market for small/mid-sized process EPC Disciplined approach taken to M&A to create shareholder value Capital structure provides…
  31. Proposed Acquisition if Valerus Field Solutions – Kentz Corporation Ltd – slide 31

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