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Energy Ventures Conference – Cowboy Operating Llc

Cowboy Operating Llc · Nov 6, 2013 · 50 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. Energy Ventures Conference – Cowboy Operating Llc – slide 1
    Energy Ventures Conference November 6, 2013 A Different Kind of Upcycle James D. Crandell james.crandellcowen.com www.cowen.com Please refer to the addendum of this report for important disclosures.
  2. Energy Ventures Conference – Cowboy Operating Llc – slide 2
    Job of a Sell-Side Oil Service Analyst n Provide industry analysis n Analysis of different subsectors n Companies n With an 8-person team we cover 54 companies
  3. Energy Ventures Conference – Cowboy Operating Llc – slide 3
    Summary and Highlights n International exploration and production spending (70% of the worldwide total) in the fourth year of a moderate recovery that is expected to continue for the next 3-4 years n North American E&P spending…
  4. Energy Ventures Conference – Cowboy Operating Llc – slide 4
    Large Cap Oil Service Companies Under Coverage Na m e Ma rke t C a p (in m illions) Inve stm e nt Opinion B aker Hughes 25,654 O utperform Halliburton 45,066 O utperform S c hlumberger 121,673 O utperform Tenaris 27,825 Market P erform…
  5. Energy Ventures Conference – Cowboy Operating Llc – slide 5
    Small/Mid Cap Oilfield Service Companies Under Coverage Na m e Ma rke t C a p (in m illions) Inve stm e nt Opinion C ore L abs 8,527 Market P erform K ey E nergy S ervic es 1,226 O utperform S uperior E nergy S ervic es 4,429 Market…
  6. Energy Ventures Conference – Cowboy Operating Llc – slide 6
    Oilfield Equipment Companies Under Coverage Na m e Ma rke t C a p (in m illions) Inve stm e nt Opinion C ameron International 12,840 O utperform Dres s er-R and 4,448 O utperform F MC Tec hnologies 11,846 O utperform F orum E nergy Tec…
  7. Energy Ventures Conference – Cowboy Operating Llc – slide 7
    Offshore Drillers Under Coverage Na m e Ma rke t C a p (in m illions) Inve stm e nt Opinion A twood O c eanic s 3,408 Market P erform Diamond O ffs hore 8,246 O utperform E NS C O International 13,328 Market P erform F red O ls en…
  8. Energy Ventures Conference – Cowboy Operating Llc – slide 8
    Offshore Service and Supply Companies Under Coverage Na m e Ma rke t C a p (in m illions) Inve stm e nt Opinion O c eaneering International 9,252 O utperform B ris tow G roup 2,908 O utperform B ourbon 1,505 O utperform G ulfmark…
  9. Energy Ventures Conference – Cowboy Operating Llc – slide 9
    Land Drillers Under Coverage Na m e Ma rke t C a p (in m illions) Inve stm e nt Opinion Helmeric h & P ayne 8,283 O utperform Nabors Indus tries 5,260 O utperform P atters on-UTI 3,500 Market P erform P rec is ion Drilling 2,835 O…
  10. Energy Ventures Conference – Cowboy Operating Llc – slide 10
    Seismic Companies Under Coverage Na m e Ma rke t C a p (in m illions) Inve stm e nt Opinion C G G 3,909 Market P erform G eos pac e Tec hnologies 1,273 O utperform G lobal G eophys ic al 89 O utperform IO N G eophys ic al 696 O…
  11. Energy Ventures Conference – Cowboy Operating Llc – slide 11
    Investment Themes and Top Picks n Deepwater-focused Offshore rigs: Noble Corp. (NE), Ocean Rig (ORIG), Pacific Drilling (PACD), Transocean (RIG) Offshore transportation: Bristow Group (BRS), Tidewater (TDW) ROVs: Oceaneering…
  12. Energy Ventures Conference – Cowboy Operating Llc – slide 12
    Macro Outlook n Global exploration and production spending forecast to grow by 5% in 2013 and 7% in 2014 n Oil price strength will continue Average of 95 per WTI barrel forecast in 2014 Spending gains remain intact down to 80/bbl…
  13. Energy Ventures Conference – Cowboy Operating Llc – slide 13
    International Activity to Lead the Way n A 8% E&P spending gain is forecast for 2013 led by Asia-Pacific and deepwater activity n Gains in 2013 represent the fourth consecutive year of a moderate recovery n The last upcycle (2001-2008)…
  14. Energy Ventures Conference – Cowboy Operating Llc – slide 14
    North America in a Major Transition n Higher levels of horizontal drilling n Major shift in 2012-2013 to oil from natural gas drilling n E&P spending down modestly in 2013 but forecast to be up in 2014 n Rig efficiency emerging as a…
  15. Energy Ventures Conference – Cowboy Operating Llc – slide 15
    Global E&P Capital Expenditures n Survey done semi-annually since 1982 n Includes significant national oil companies (NOCs) n Most recent edition published in June 2013 Global E&P Spending Estimates Y ear-to- Y ear % C ompanies (…
  16. Energy Ventures Conference – Cowboy Operating Llc – slide 16
    Global E&P Capital Expenditures n Net change over the course of the year has been small n Good barometer unless significant change in oil/natural gas prices Global E&P Spending Estimates as of June 2013 Year-to- Year % C ompanies (…
  17. Energy Ventures Conference – Cowboy Operating Llc – slide 17
    Select E&P Company Spending in the US n Many of the largest spenders are down in 2013 Y ear-to- Y ear Y ear-to-Y ear (in millions ) 2013E 2012 C hang e % C hang e A pac he C orp 5,250 5,151 99 2% C hes apeake E nergy 6,000 8,750…
  18. Energy Ventures Conference – Cowboy Operating Llc – slide 18
    US E&P Spending by Company Size n Big difference in spending intentions based on company size Y ear-to- Y ear % C ompanies (1) ( in millions ) 2013E 2012 C hang e S urveyed S pending L es s T han 50 Million 1,171 1,196 -2% 120…
  19. Energy Ventures Conference – Cowboy Operating Llc – slide 19
    Select Large Canadian E&P Spenders n LNG-related spending will impact 2014 Y ear-to- Y ear Y ear-to-Y ear (in millions ) 2013E 2012 C hang e % C hang e A R C R es ourc es L td 830 650 180 28% B onavis ta E nergy C orp 450 400 50…
  20. Energy Ventures Conference – Cowboy Operating Llc – slide 20
    E&P Spending of Latin American-based Companies n Pemex and Petrobras have each come down n Pemex heading up in 2014 n Brazil flat-to-down in 2014 Y ear-to- Y ear Y ear-to-Y ear (in millions ) 2013E 2012 C hang e % C hang e E c…
  21. Energy Ventures Conference – Cowboy Operating Llc – slide 21
    E&P Spending of Companies Based in the Middle East n An area of relative strength n Saudi Arabia, Kuwait, Abu Dhabi all ramping up n Increased production capacity Y ear-to- Y ear Y ear-to-Y ear (in millions ) 2013E 2012 C hang e %…
  22. Energy Ventures Conference – Cowboy Operating Llc – slide 22
    E&P Spending of Companies Based in Africa n North Africa still feeling the impact of the Arab Spring n Deepwater plays driving West and East Africa Y ear-to- Y ear Y ear-to-Y ear (in millions ) 2013E 2012 C hang e % C hang e A fren…
  23. Energy Ventures Conference – Cowboy Operating Llc – slide 23
    E&P Spending of Companies Based in Russia n Solid increase in 2013 n Strong oil prices, tax incentives driving activity Y ear-to- Y ear Y ear-to-Y ear (in millions ) 2013E 2012 C hang e % C hang e G az prom 5,100 5,400 -300 -6% G…
  24. Energy Ventures Conference – Cowboy Operating Llc – slide 24
    E&P Spending of Companies Based in Europe n Larger companies strong across the board n Many of these companies are North Sea focused Y ear-to- Y ear Y ear-to-Y ear (in millions ) 2013E 2012 C hang e % C hang e B G G roup 6,500 5,000…
  25. Energy Ventures Conference – Cowboy Operating Llc – slide 25
    E&P Spending of Companies Based in Asia/Pacific n Primarily driven by NOCs n Chinese companies are large spenders n NOCs spend outside of own countries Y ear-to- Y ear Y ear-to-Y ear (in millions ) 2013E 2012 C hang e % C hang e B…
  26. Energy Ventures Conference – Cowboy Operating Llc – slide 26
    International E&P Spending of Major Oil Companies n Majors keeping up with overall spending growth n Eni and Chevron leading the gains n Total announced reductions in 2014 Y ear-to- Y ear Y ear-to-Y ear (in millions ) 2013E 2012 C…
  27. Energy Ventures Conference – Cowboy Operating Llc – slide 27
    International E&P Spending of US Independents n US independents refocusing on US shale n No trend towards shifting away from US Y ear-to- Y ear Y ear-to-Y ear (in millions ) 2013E 2012 C hang e % C hang e A nadarko P etroleum C orp…
  28. Energy Ventures Conference – Cowboy Operating Llc – slide 28
    Key Determinants of E&P Spending n Cash flow, oil & gas prices are the key drivers of spending 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Cash Flow 50% 25% 53% 48% 48% 47% 42% 36% 60% 54% 53% 59% 65% 68%…
  29. Energy Ventures Conference – Cowboy Operating Llc – slide 29
    2013 Exploration Budgets n Exploration budgets are growing as a % of overall E&P spending n An early cycle indicator Will The Percentage of Your Capital Budget Allocated to Exploration Increase, Decrease, or Stay the Same in 2013…
  30. Energy Ventures Conference – Cowboy Operating Llc – slide 30
    2013 Offshore Spending n No major shifts in offshore/onshore mix in 2013 n Follows several years of shifting offshore Will The Percentage of Your Capital Budget Allocated to Offshore Increase, Decrease, or Stay the Same in 2013…
  31. Energy Ventures Conference – Cowboy Operating Llc – slide 31
    2013 Deepwater Spending n The largest secular trend in the industry n Deepwater shift to continue through the decade Will The Percentage of Your Capital Budget Allocated to Deepwater Increase, Decrease, or Stay the Same in 2013…
  32. Energy Ventures Conference – Cowboy Operating Llc – slide 32
    Most Important Technologies n 3D/4D seismic on top 1992-2006 n Horizontal drilling and fracturing technology viewed as most important currently 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Horizontal…
  33. Energy Ventures Conference – Cowboy Operating Llc – slide 33
    US Land A Changed Business n Rig count no longer a good proxy for service demand n Drilling efficiency is driving the change n New AC-drive rigs with pads and multi-directional walking capabilities are changing the business n Wells…
  34. Energy Ventures Conference – Cowboy Operating Llc – slide 34
    Analyzing US Onshore: Oil Rigs Vs. Gas Rigs Historically Gas rigs make up 21% of 1,600 US Oil & Gas Rig Count 1,800 the US total versus oil rigs at 1,600 1,400 79%. The opposite was true mid-2009 1,200 1,400 1,200 1,000 Gas…
  35. Energy Ventures Conference – Cowboy Operating Llc – slide 35
    Analyzing US Onshore: US Drilling Mix Historically North America Drilling Mix 70% US horizontal rigs make up 63% of the total rig fleet, 60% compared to directional rigs (13%) and vertical rigs 50% (23%) 40% 30% 20%…
  36. Energy Ventures Conference – Cowboy Operating Llc – slide 36
    Shale Rig Count: Barnett and Fayetteville Barnett Shale Fayetteville Shale 200 60 180 50 160 140 40 120 100 30 80 60 20 40 20 10 - Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12…
  37. Energy Ventures Conference – Cowboy Operating Llc – slide 37
    Shale Rig Count: Haynesville and Marcellus Haynesville Shale Marcellus Shale 250 180 160 200 140 120 150 100 80 100 60 40 50 20 - - Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12…
  38. Energy Ventures Conference – Cowboy Operating Llc – slide 38
    Shale Rig Count: Bakken and Eagle Ford Bakken Shale Eagle Ford Shale 180 250 160 140 200 120 150 100 80 100 60 40 50 20 - - Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12…
  39. Energy Ventures Conference – Cowboy Operating Llc – slide 39
    Analyzing US Onshore: US Rigs Vs. US Wells 8,000 2,000 1,950 US well count trending 7,000 upward while rig count is 6,000 1,900 trending downward 1,850 Greater rig efficiency allows 5,000 1,800 fewer rigs to drill more wells…
  40. Energy Ventures Conference – Cowboy Operating Llc – slide 40
    Analyzing US Onshore: Well Count Vs. Stage Count (Indexed to 1Q11) 1.80 1.60 Total stage count has 1.40 increased more than the well 1.20 count 1.00 Index 0.80 0.60 0.40 0.20 - 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13…
  41. Energy Ventures Conference – Cowboy Operating Llc – slide 41
    Analyzing US Onshore: % Pad Drilling by Geological Play 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Bakken Barnett DJ Basin Eagle Ford Fayetteville Marcellus Miss. Permian Utica 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13…
  42. Energy Ventures Conference – Cowboy Operating Llc – slide 42
    Analyzing US Onshore: Days Per Hz Well, Stages Per Hz Well, Stage Count 40.0 35.0 30.0 110,000 Days Per Hz Well 25.0 100,000 20.0 90,000 15.0 80,000 10.0 70,000 Total Stages 5.0 60,000 0.0 50,000 1Q11 2Q11…
  43. Energy Ventures Conference – Cowboy Operating Llc – slide 43
    US Footage Drilled and Average Well Depth US Footage Drilled Average Well Length 120,000 9,000 8,000 100,000 7,000 80,000 6,000 5,000 60,000 4,000 40,000 3,000 2,000 20,000 1,000 - 0 Mar-01 Mar-02 Mar-03 Mar-04…
  44. Energy Ventures Conference – Cowboy Operating Llc – slide 44
    US, Oil, and Natural Gas Completions 20,000 US Completions 15,000 10,000 5,000 10,000 Nat Gas Well Completions 8,000 0 Mar-01 Mar-02 Mar-03 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12…
  45. Energy Ventures Conference – Cowboy Operating Llc – slide 45
    Pressure Pumping n Largest segment of oil service business n Some 23 pressure pumping companies with over 25 million in annual revenues n Few barriers to entry to serve the low-end market n Utilization estimated at 71% in Q4 2013 n…
  46. Energy Ventures Conference – Cowboy Operating Llc – slide 46
    0 5 10 15 20 25 30 35 40 0 20 40 60 80 100 120 140 Nov 2008 Nov 2008 Feb 2009 Mar 2009 May 2009 Aug 2009 Jul 2009 Nov 2009 Nov 2009 Feb 2010 Mar 2010 May 2010 Jul 2010 Total UDW Rigs Working Aug 2010 Gulf…
  47. Energy Ventures Conference – Cowboy Operating Llc – slide 47
    Floater Market Dynamics UDW Floater Supply, Demand, & Utilization Newbuild UDW Floater Delivery Calendar 375 100% 45 40 325 96% 35 9 Global Marketed Utilization Global Floating Rigs 30 275 92% -Forecast 25 20 16 16…
  48. Energy Ventures Conference – Cowboy Operating Llc – slide 48
    Jackup Market Dynamics International Jackup Supply, Demand, & Newbuild Jackup Delivery Calendar Utilization 600 70 99% 550 96% 60 500 93% International Jackup Units International Marketed Utilization 50 450 90% 87% 40…
  49. Energy Ventures Conference – Cowboy Operating Llc – slide 49
    Subsea Completions Cycle Just Beginning n Subsea tree orders will hit a new record in 2013 n We project growth from here over the next five years n The growth in the number of deepwater rigs and exploration success are the primary…
  50. Energy Ventures Conference – Cowboy Operating Llc – slide 50
    Summary and Highlights n International exploration and production spending (70% of the worldwide total) in the fourth year of a moderate recovery that is expected to continue for the next 3-4 years n North American E&P spending…

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