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$: TSX:CFW CALFRAC WELL SERVICES LTD.calfrac.mediaroom.com/file.php/202361/Calfrac... · “Business Risks” in the Company’s 2015 Annual Report and under the heading “Risk Factors”$
TSX:CFW

CALFRAC WELL SERVICES LTD. Investor Presentation – January 2017

Certain information contained within this presentation and statements made in conjunction with this presentation constitute forward-looking statements. These statements relate to future events or the future performance of the Company. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate,” “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “forecast”, “can” and similar expressions. In particular, forward-looking statements in this presentation include, but are not limited to, statements with respect to future capital expenditures, future financial resources, anticipated equipment utilization levels, future oil and gas well activity, projections of market prices and costs, outcomes of specific events and trends in the oil and gas industry.

The forward-looking statements within this presentation and made in conjunction with this presentation are derived from certain assumptions and analyses made by the Company based on its experience and perception of historical trends, current conditions, expected future developments and other factors that it believes are appropriate in the circumstances, including assumptions and analyses relating to: the economic and political environment in which the Company operates; the Company’s expectations for its customers’ capital budgets and geographical areas of focus; the effect unconventional oil and gas projects have had on supply and demand fundamentals for oil and natural gas; the Company’s existing contracts and the status of current negotiations with key customers and suppliers; the effectiveness of cost reduction measures instituted by the Company; and the likelihood that the current tax and regulatory regime will remain substantially unchanged. Forward-looking statements are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from the Company’s expectations. Such risks and uncertainties include the items discussed under the heading “Business Risks” in the Company’s 2015 Annual Report and under the heading “Risk Factors” in the Company’s most recently filed Annual Information Form. Consequently, all of the forward-looking statements contained within this presentation and made in conjunction with this presentation are qualified by these cautionary statements and there can be no assurance that actual results or events anticipated by the Company will be realized or that they will have the expected consequences or effects on the Company or its business or operations.

Other than as required by applicable securities laws, the Company assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.

Forward Looking Statement

© Calfrac Well Services Ltd. 2


Company Snapshot

TSX Stock Symbol: CFW

Share Price* $5.03

30-Day Average Volume* 1,930,000

Market Capitalization* $687.3 million

Enterprise Value* $1.5 billion

Shares Outstanding* 136.6 million

Insider Ownership ~25%

* As at 16:00:00 ET 1/6/2017

Active Rig Counts: North America & International


- U.S. land rig count up ~260 rigs from

trough

- International rig count remains down

~30% from peak

Source: Baker Hughes

- WCSB active rig count strengthening

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Full Service Pressure Pumping

Canada Fleet: 410,000 Horsepower

13 Coiled Tubing Crews

U.S. Fleet: 611,000 Horsepower

11 Cementing Crews


Latin America Fleet: 131,000 Horsepower

14 Cementing Crews


Russia Fleet: 70,000 Horsepower


As at September 30, 2016


Our License to Operate

Plan ▪ Do ▪ Assess ▪ Adjust HSE

QUALITY

SUPPLY CHAIN Evaluate ▪ Negotiate ▪ Finalize ▪ Implement

Monitor ▪ Refine ▪ Execute ▪ Improve

Calfrac employee on a Canadian hydraulic fracturing job. Calfrac Well Services Photo

TECHNOLOGY Research ▪ Develop ▪ Test ▪ Refine

Calfrac sand terminal in Whitecourt, Alberta. Calfrac Well Services Photo


Calfrac Market Positioning

Positioned in key areas of frac demand

– Montney, Duvernay, Deep Basin, Cardium and Viking

Diversified customer base gives us exposure to all key areas of the world-class Montney resource play

– Calfrac has highest market share in Montney

Pricing & Utilization

Modest pricing increases in Q4/16

– More meaningful improvement expected in Q1/17

~50% of horsepower parked

6 of 13 coil units idled

Market Trends

Stages per well increasing

Frac spacing tightening

Operators focusing on highest quality

plays and assets

Larger pads

Greater proportion of 24-hour operations

Market Outlook

Full utilization of active equipment

expected through to spring breakup

Market for available horsepower

expected to remain tight in Q1/17

Visibility for Q2/17 improving


Canada – Market Update


Focus on customers that are financially strong and intend to remain active in key plays across the U.S.

Continuing to broaden customer base

Positioned in key areas of frac demand:

– Bakken, Marcellus, Rockies, Utica, Eagle Ford

Pricing & Utilization

Pricing gaining momentum

– Increase expected in Q1/17

~60% of horsepower parked

Temporarily suspended coiled tubing and cementing operations

Market Trends

Stages per well increasing

Frac spacing tightening

Larger pads

Majority of work 24-hour operations

Market Outlook

Majority of active frac spreads locked up

for 2017

– Incremental work awarded to Calfrac

would require reactivation of equipment

– Increased opportunities in the Bakken

and Rockies

United States – Market Update



One of the largest pressure pumping companies in Argentina

Customer expansion to IOCs and domestic players

Contracts based in USD

Awarded two year frac contract for PAE in the Vaca Muerta shale play

Leader in annular fracturing

Market Outlook

Rig count down ~30% year-over-year

– Shift towards gas-focused activity

Union strikes negatively impacting activity

Country focused on reducing reliance on imported energy

Medium-to-longer term upside potential following reforms by new President Macri

Argentina – Market Update

Argentina Fleet: 108,250 Horsepower

13 Cementing Crews




Horizontal fracturing in conventional reservoirs is a significant amount of Calfrac’s activity

Rouble devaluation has negatively impacted reported financial results

Russia – Market Update


Russia Fracturing Crew (2015). Calfrac Well Services Photo

Market Outlook

2017 activity and pricing expected to

be largely consistent with 2016

Change in customer mix

Introduction of multi-stage annular

fracture treatments is a market

differentiator

NAVIGATING THROUGH THE DOWNTURN



Margin Erosion To Below Breakeven

Source: Company Reports, Morgan Stanley


North American Pressure Pumping Supply

Number of competitors decreasing through both bankruptcies and consolidation

Supply of horsepower decreasing as a result of cannibalization of equipment, lack of R&M and fleet retirements

Expect ~5-6 million horsepower to permanently exit the U.S. pumping

market (~30% of peak supply)

Expect Canadian supply to decrease by ~200k HHP

Fracturing Operation (2015) Calfrac Well Services Photo

Strong management team and Board of Directors that have been through multiple

downturns

Optimized cost structure and developed operational efficiencies

Maintained core customer and supplier relationships

Strong existing employee base and recruiting capabilities

Well maintained equipment – initial fleet reactivations require minimal time and cost

“License To Operate” upheld through downturn

– Sustained focus on technology – developed more cost effective solutions for our customers

[CalVisc, diverter systems, etc.]

Proceeds from equity financing, second lien term loan and undrawn credit facilities provide

the liquidity needed to fund incremental working capital requirements associated with a

recovery


Positioned For Recovery


Service Intensity Continues To Increase

Source: Frac Database, Peters&Co., Rystad Energy, Morgan Stanley

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FINANCIAL HIGHLIGHTS


Term Debt

US$600 mm with an interest rate of 7.5%

Matures in 2020

Second Lien Term Loan

$200 mm with an interest rate of 9%

Matures in 2020

Credit Facilities

Loan facility $300 mm (largely undrawn)

Matures in 2018

Recent Equity Financing

Raised $60 million, proceeds used to fund second equity cure ($25 million) and provide additional liquidity

Capital Program

2016 capital budget set at $40 million

– Includes $30 mm of carryover


The Balance Sheet

Neuquén, Argentina Frac Operation (2014). Calfrac Well Services Photo

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