AGENDA Introduction Keith Cochrane Oil & Gas division overview Steve Noon Overview of unconventional oil and gas markets Colin Welsh, Simmons International CEO Pressure Pumping: winning in the aftermarket Paul Coppinger Coffee break…
INTRODUCTION Keith Cochrane, CEO
DELIVERING SUSTAINABLE GROWTH THROUGH THE CYCLE Divisions with shared characteristics Serving structural growth markets Highly engineered equipment Extreme and remote environments Intensive aftermarket demand Power & Oil & Gas…
PORTFOLIO BENEFIT UNDERPINS SUSTAINABLE GROWTH Revenue Margin 3,000 20.0% 2,500 17.5% 2,000 15.0% Other Power m 1,500 12.5% Mining Oil & Gas EBITA 1,000 10.0% 500 7.5% 0 5.0% 2007 2008 2009 2010 2011 2012…
OIL & GAS DIVISION SUSTAINABLE PROFITABLE GROWTH Aligned to structural growth markets Tight oil and shale gas in North America High growth regions in Middle East and internationally Unconventional market leadership extended since…
OIL & GAS END MARKETS DRIVING GROWTH Core end market for each division Group input from oil and gas end market* (m) Contributes 10% of P&I and Minerals divisional input 1,000 Structural growth markets: input up c.3.5x since 2007…
LEVERAGING TECHNOLOGIES AND GLOBAL FOOTPRINT Leveraging cross-divisional technologies in upstream oil and gas Stampede swellable packer Upstream forum launched in 2011 Rubber technologies (Minerals division) - Developing range of…
DIVISIONAL OVERVIEW Steve Noon
DEVELOPING A BROADER OIL & GAS PRESENCE Gabbioneta SPM Mesa and PCS Seaboard Mathena Acquisitions acquired acquired SOS Baku acquired, acquired acquired acquired extending SPM into Novatech Australia acquired 2005 2010…
LEADING PROVIDER OF SURFACE EQUIPMENT & SERVICES Input by segment* (2013) Upstream Pressure Pumping Upstream Pressure Control 18% Market leader in pressure pumping Emerging Tier-1 pressure control Pressure Pumping equipment & service…
REPOSITIONING GABBIONETA Significantly improved cost competitiveness Sales* (m) 80 Transferred smaller products to best cost facility in Poland Improved operational efficiencies in Italy 60 Reduced product costs through VA/VE…
UPSTREAM COMPETITIVE POSITIONING Pressure Pumping Pressure Control Portfolio Portfolio* Well Service Wellheads, Mud-gas Pumps Flow control valves and frack Zipper rentals Flowback surface control (including trees…
POSITIONED FOR SUSTAINABLE PROFITABLE GROWTH Strong growth in shale gas and tight oil in North America Structural Internationalisation of shale growth markets Global conventional upstream LNG and refining opportunities Focused on…
CONFIDENTIAL OVERVIEW OF UNCONVENTIONAL OIL AND GAS MARKETS June 17, 2014 F:Interoffice InformationDTPKharmaLibbyPowerPoint Presentations2013Generic Pitchbook - DraftGeneric_Pitchbook_v3.pptx 8/26/2013 9:56:39 AM
Unconventionals Have Transformed North American Market (Dollar amounts in billions) Unconventionals have revolutionized the North American oil and gas market. U.S. drilling and completion spending of 137 billion in 2013, up from 26…
Oil And Gas Production Growth Has Been Prolific Unconventional development initially targeted natural gas reserves. After 32 years of stagnation/decline, production started to increase in 2005 and is now at record levels. U.S. oil…
Unconventional Plays Have Attractive Economics Threshold prices for unconventional plays are lower than traditional plays. Unconventional oil plays are driving much of the current development activity driven by superior economics.…
Gas-directed Rig Counts Have Upside Potential The U.S. rig count was historically almost 80% natural gas-driven. Crude oil-directed rigs now represent 82% of the total U.S. rig count. U.S. natural gas-directed rig count has upside…
Well Complexity Continues To Increase The share of wells drilled horizontally has increased from approximately 7% in 2002 to approximately 67% currently. Horizontal rig count has increased from 60 in 2002 to 1,251 currently. Lateral…
Drilling Efficiencies Are Driving Increased Well Counts Enhanced reservoir knowledge and drilling processes are reducing the number of days needed to drill wells in unconventional basins. Results in more wells drilled per rig per…
Large Unconventional International Opportunities Yet To Be Developed Estimated worldwide shale gas reserves: 16,000 Tcf. Total potential worldwide unconventional gas reserves: 32,000 TcF. Total technically recoverable shale oil…
International Shale Development Is Emerging International International land rig count: +9% in 2014. Locations International locations demanding similar technology used in NAM to develop unconventional resources. Middle East Saudi…
Frac Market Has Increased Dramatically Unconventional reservoir completions have resulted in dramatic growth in North American frac fleet. Challenging environment in 2012 - 2013 resulted in limited fleet additions in 2013. 2014…
Current North American Pressure Pumping Dynamics A catch-up of frac horsepower supply with demand led to depressed pricing and utilization through 2012 and 2013. However, improving market dynamics driving a strong outlook. North…
Factors Contributing To Improving Frac Market Continued shift to horizontal wells (higher unconventional well count). Longer laterals, higher frac stage counts. Limited newbuild fleets. Greater wear-and-tear on equipment as a…
Frac Pump Replacement Cycle Simple structure to consider useful life of frac equipment components. Shift to 24-hour work, longer laterals, etc. increases wear-and-tear. Data suggests key frac equipment needs to be replaced/overhauled…
Conclusions Unconventional plays have transformed North American crude oil and natural gas into a growing market after more than 30 years of decline/stagnation. Attractive economics of unconventional plays have led to increased rig…
PRESSURE PUMPING: WINNING IN THE AFTERMARKET Paul Coppinger
EXTENDING MARKET LEADERSHIP SINCE 2011 Increased efficiencies through 2012/13 market downturn OE and aftermarket input trends 1(m) 200 Centralised US manufacturing in Fort Worth 150 Value chain excellence initiatives increasing…
AFTERMARKET STRATEGY AND VALUE PROPOSITION 33 service centres placed in all key global oil & gas basins Global service One stop shop supports repair, inspection, rental and spares network Local presence supports new around the clock…
UNRIVALLED AFTERMARKET SUPPORT AND OFFERING Service footprint 25 service centres across all major oil & gas fields in North America 8 international service centres - Brazil, UK, Dubai, Singapore, Australia (three), Indonesia, China…
VALUE PROPOSITION FROM FRACK TO FLOWBACK OPERATIONS SPM Safety Relief Valve with ARC System SPM frack pump (power & fluid end) SPM Flowline Novatech Valve safety restraint & seats systems SPM Flow control Mesa products…
AFTERMARKET SUCCESS Supporting 24/7 operations mindset Pressure Pumping AM revenue (m) 600 Pump expendable trailers embedded on customer frack sites 450 Fluid end stocks at service network supporting supply on demand 300 Rapid…
DEVELOPING NEXT GENERATION TECHNOLOGY Current market solutions sub-optimal for customers Primary components of a frack unit Pump, engine and transmission separate individual components Customers seeking more efficient & integrated…
PRESSURE PUMPING: BUILDING TECHNICAL LEADERSHIP David Paradis 39
RESEARCH & DEVELOPMENT Investing in technology to meet changing market needs Product 9 230% increase in direct pressure pumping spend since 2009 Design centres of 33 global launch 2014 R&D spend to exceed 1.2% of sales origin product…
CASE STUDY Advancing fluid end systems to improve customer productivity What it is Duralast Fluid End system developed and launched in 2013 Integrates technological advancements from WARC Offset bore, tapered seat deck, suction covers…
CASE STUDY Increasing well site safety through application of new technologies What it is The SPM Automated Relief Valve Control System, or A.R.C. System allows for remote, simple and highly accurate control of nitrogen relief valve…
CASE STUDY SPM Heavy-duty TWS 600S well service pump What it is Integrates technological advancements that result in a highly reliable, durable and easier to maintain pump for cementing, coiled tubing and other applications in the…
ONGOING AREAS OF DEVELOPMENT Duralast fluid end system development New design and application of materials to extend the life of expendables, including valves and seats Advanced repair techniques for extended life Advancing pumping…
PRESSURE CONTROL: DEVELOPING A TIER-1 OFFERING Franck Degueure 45
PLATFORM FOR GROWTH IN PRESSURE CONTROL 2013 revenue by product offering Seaboard Nov 2011 acquisition provided entry to Pressure Control markets Wellhead 31% Equipment Increased exposure to high-growth unconventional markets Service &…
DEVELOPING OUR TIER 1 PRESSURE CONTROL OFFERING Seaboard frack flow-back and well- test services Seaboard frack- tree rental programme Seaboard production tree Seaboard wellhead systems Mathena shale gas separator…
Pressure PRESSURE Control CONTROLacross ACROSSthe THEwell WELLlife-cycle LIFE-CYCLE Manufacture and sale of full range of wellhead & pressure control products Drilling Mud gas separation rentals (Mathena) Subsea overshot product…
WELLHEAD AND PRESSURE CONTROL MARKETS No.4 in 6.5bn North American market Comprehensive service coverage USA 5.4bn, Canada 1.0bn Current addressable/served market of 3.8bn Leading position across the well lifecycle Drilling - 4…
STRENGTHENING THE OPERATIONAL PLATFORM Substantial investment in past two years to upgrade Seaboard operational capability Private equity infrastructure insufficient to support rapid growth over 2010-2013 Processes and procedures…
SEABOARD GAINING SHARE IN NORTH AMERICA % of rigs served1 - US Gaining share through responsive business model 12% Customer centric model with tailored solutions 11% Maintaining responsive service and support, low lead times 10%…
ORGANICALLY EXTENDING PRODUCT AND SERVICE PORTFOLIO Zipper Frack flowback Overview Set of frack valves and other Process that follows hydraulic fracturing of piping/valves on a transportable skid to well that releases excess energy and…
CASE STUDY Statoil Bakken Shale Basin Full tier-1 offering that leverages the complete Group offer for well completions Application: two well pads with Zipper manifold and Flowback rental services Weir Product offering (during pressure…
PRESSURE CONTROL: EXTENDING OUR OFFERING John Mathena 54
MATHENA: A LEADER IN MUD-GAS SURFACE CONTROL Acquisition of Mathena expanded pressure control offering to include drilling and production equipment Started in 1990, acquired by Weir in 2012 Manufacture and rental of mud-gas surface…
GAINING MARKET SHARE IN FAST-GROWING OIL-RICH PLAYS North American market share by play Addressable market of c.900m 70% NAm, 15% EMEA and APAC Rig Count: 112 Rig Count: 193 Driven by rig count Market Share: 42% Market Share: 14% Rig…
CASE STUDY Expanding share in rapidly growing Permian basin Permian market share Developed region specific sales strategy Aggressive rig level sales approach 140 25% Opportunity to share existing Weir Oil & Gas 120 Service Centre…
STRATEGY FOR GROWTH Invest in technology and new products Expand existing product lines to accommodate larger flow rates Integrate instrumentation and controls to develop intelligent technologies Invest in green technologies Well…
UPSTREAM: INTERNATIONAL EXPANSION Paul Coppinger
GROWING INTERNATIONAL PRESENCE Leveraging a strong global platform Divisional revenue international (m) Expertise in pressure pumping equipment & application 300 250 Leveraging strong customer relations in NAm internationally 200…
ENHANCING PUMP MARKET SHARE IN CHINA Current position Pressure Pumping input China2 (m) 14 Dongying based JV with Sheng-li Highland (formed Dec- 12 10) manufacturing SPM pumps 10 Supporting established base (200+) and growing share…
DEVELOPING A LEADING PRESENCE IN AUSTRALIA Current position Pressure Pumping input Australia2 (m) 2010 PCS acquisition provided base 8 Established service centres in Perth, Adelaide, Toowoomba 6 - 2 field bases in Moomba and…
MARKET TRENDS EXPECTED TO SUPPORT STRONG GROWTH Vast global shale oil & gas resources International HP forecast1 Global tight gas, shale gas, CBD production2 (ex NAm) NAm largest, but international opportunities significant 16 6 Tight…
SERVICES: MARKET LEADERSHIP IN THE MIDDLE EAST Vikas Handa 64
BROAD TECHNICAL CAPABILITY AND SERVICE OFFERING Fully equipped workshops located in key growth regions Focus on repair, service, maintenance management and rehabilitation: Oil and gas drilling and production equipment Pumps, motors,…
REGIONAL OVERVIEW 2010-2013 revenue2 (m) Dubai 150 270+ employees 1 in Pressure Control 125 100 Aberdeen 75 90+ employees 50 1 in Asset Mgmt 25 CIS - 2010 2011 2012 2013 100+ employees 1 in OCTG 2013 sales by country2…
CAPITALISING ON A FAST GROWING MARKET Serving a total market of 1.8bn Sales by product (2013) 50% currently addressable, market share of 15% Pressure Control OCTG & Threading Growing at 7% CAGR* Rotating Euipment Highly…
CASE STUDY Saudi Arabia A JV (49% Weir) with Olayan group since 2005 Revenue growth (m) 40 Strong presence with 10% share of addressable market State of art manufacturing and servicing capability 30 Reputation for quality 20…
CASE STUDY Iraq Re-entered in 2010 after winning a significant refurbishment 2010-2013 revenue *(m) contract with an E&P major 30 Fully established service centre in Basra, Zubair oilfield area 25 20 First in South Iraq to obtain…
SERVICES: SUPPORTING EXPANSION OF FULL DIVISIONAL OFFERING IN MIDDLE EAST Pressure Pumping Revenue growing at 25% CAGR since 2010 First orders for Novatech valves and valve seats from Saudi Arabia Local manufacturing and repair of SPM…
STRATEGY FOR GROWTH IN THE MIDDLE EAST Continue geographical expansion, Oman presence recently established Further develop existing key account relationships (e.g. BP/Shell/Aramco) Services Leverage experience gained to win additional…
CONCLUSION Keith Cochrane 72 72
KEY TAKEAWAYS Aligned to structural growth markets Tight oil and shale gas in North America High growth regions in Middle East and internationally Unconventional market leadership extended since 2011 Pressure Pumping offering…
POSITIONED FOR SUSTAINABLE PROFITABLE GROWTH Oil & Gas Minerals Power & Industrial Leading upstream surface Leadership in core mill circuit Niche provider of engineered equipment & service provider technologies valves, turbines and…
DELIVERING SUSTAINABLE PROFITABLE GROWTH Process critical THE WEIR GROUP MODEL products 5%-10% organic revenue growth over the cycle Growing faster than our end markets (4%-7%) Structural growth markets Top-quartile margins and…
QUESTIONS 76 76
ATTENDEES: WEIR GROUP PLC & EXTERNAL SPEAKER KEITH COCHRANE JON STANTON COLIN WELSH Chief Executive Finance Director Simmons & Company Keith joined the Weir Group as Finance Director in Jon joined the Weir Group as finance…
ATTENDEES: WEIR GROUP PLC ANDI SIMON RAYMOND Regional Finance BUCHANAN Director of Weir Group Minerals North Communications America Andi joined Weir in June 2008 as the Regional Raymond joined Weir in September 2013 to manage Finance…
ATTENDEES: WEIR OIL & GAS DIVISION - PRESENTERS STEVE NOON PAUL COPPINGER FRANCK DEGUEURE Divisional Managing President, Pressure President, Weir Director Pumping Seaboard Steve joined Weir in 2007 as President of Weir SPM Paul…
ATTENDEES: WEIR OIL & GAS DIVISION PRESENTERS BILL CURRIE ANDREA FORZI DAVE WARNICK Divisional Finance Managing Director, Divisional VP Director Gabbioneta Human Resources A Chartered Accountant who has spent his entire Joined Weir…
ATTENDEES: WEIR OIL & GAS DIVISION ROB LYNCH JACKIE WILKERSON Divisional VP HSE Divisional Marketing Communications Manager Rob joined Weir in 2013 as Divisional Vice Jackie joined Weir in 2010 after working as a President, EHS.…
Head office 20 Waterloo Street Glasgow G2 6DB weir.co.uk WeirGroup
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