Transcription
Financing During a Period ofSustained GrowthSteve BeckleyVice President TreasurySuperior Energy Services, Inc.Financial Forecasting & Planning Innovation SummitFebruary 19 & 20, San Diego, 2014
Objectives Who we are and what we do?– Drill, Complete, Produce, Well Services Financial Strategy– Our approach to structuring deals Discuss our journey – 3 key acquisitions \ expansions– Early Stage Acquisition– New Product Line/Technology Acquisition– Transformative Merger – Complete Discuss considerations related to structuring transactions
Who is Superior Energy Services? Insert Slide 9 of Investor Day Presentation – half donut Or Slides 4 and 5 of ‘SPN Johnson Rice Energy Conference 2013’ presentation
Financial Strategy Sustain DISCIPLINED approach to growth– Generally keep capital expenditures inside of cash flow Maintain Moderate Leverage Throughout the Cycle– Target debt / EBITDA is less than 3.0x– Debt / capitalization is less than 45% Retain Ample Liquidity and Manage Debt Maturity Acquire and Invest in Down Cycles Reinvest Cash Flow in the Business
Superior – Company HistoryMarket Capitalization ( MM)5,000 140 AKER n 40 Oil05
Equity Based – CARDINAL HOLDINGBusiness Description Liftboat ServicesSlickline ServicesPlug and Abandonment ServicesCoiled Tubing and Nitrogen ServicesElectric Line ServicesWell Performance Testing and EvaluationArtificial LiftPumping and Stimulation Services6
Case Study – Cardinal Holding CorpBusiness EnvironmentRationale\Objectives Scale of Asset Base Product Line Diversity Market PositionWTI: 12 per barrelNatural Gas: 2/McfDJIA: 10,000Exxon/Mobil AcquisitionFinancingCredit Profile/Requirements Reverse Acquisition ABL Structure Term Loans Continuous ReportingFixed Charge Coverage RatioS&P: BBMoody’s: B17
Cardinal Holding – CapitalizationSuperiorCardinalAmount to beRefinancedNew Financing StructureRevolver/Bank Facility 24.0 0.0 24.0 20.0Contingent Commitment 0.0 0.0 0.0 22.0Term Loan A 0.0 50.0 50.0 20.0Term Loan B 0.0 58.0 58.0 90.0Sr Subordinated Notes 0.0 20.0 20.0 0.0Total Debt 24.0 128.0 152.0 152.0Equity Contribution 0.0 45.0 0.0 45.0CapitalizationCommitment 1.0Funded 1.0W/C FacilityFunding of A.C.C.Term Loan ATerm Loan BTotal Debt 20.0 22.0 20.0 90.0 152.0Existing Book EquityNew EquityTotal Equity 71.0 45.0 116.0CashTotal Capitalization 268.0% of Cap.x 1999 EBITDA 0.0 0.0 20.0 90.0 110.08.8%39.8%48.7% 71.0 45.0 116.031.4%19.9%51.3%1.054.745.790.003.742.376.11 226.011.89*1999 EBITDA: 19MM8
Revolving Credit – Baker Hughes \ BJBusiness Description Sand ControlStimulation VesselsWell ScreensStimulation and Sand Control FluidsSkid Based EquipmentSub Surface Safety Valves9
Case Study – Baker Hughes \ BJBusiness EnvironmentRationale WTI: 70 per barrel DOJ mandated sale Post Macondo Incident Technology Product Line Diversity Transferable to other MarketsFinancingCredit Profile/Requirements Revolver Quarterly ReportingMax Leverage RatioMin Interest Coverage RatioS&P: BB Moody’s: Ba310
Baker Hughes \ BJ – CapitalizationCapitalizationExistingAsset PurchaseProforma% of Cap.x 2010 EBITDA 55.0 193.79.1%0.42Cash 70.0Revolver 138.71.50% Convertible Debt 400.0 400.018.8%0.876.875% Sr. Notes 300.0 300.014.1%0.656.45% MARAD Notes 13.8 13.80.6%0.03Total Debt 852.5 907.542.7%1.97 1,218.057.3%2.6557.3%2.65 55.0Equity 1,218.0Total Equity 1,218.0 0.0 1,218.0Total Capitalization 2,070.5 55.0 2,125.54.62*2010 EBITDA: 460MM11
Complex Capital Structure – COMPLETEBusiness Description Completion RigsCompletion SnubbingFluid ManagementCoiled TubingFracturing ServicesAcidizingPumping Services12
Case Study – Complete (CPX) AcquisitionBusiness EnvironmentRationale WTI: 90/bbl US rig count had justgrown to 2000 European Debt Crisis SCALE Product Line Diversity Market PositionFinancingCredit Profile/Requirements EquityBridge LoanRevolverTerm LoanSenior Notes OfferingMax Leverage RatioInterest Coverage RatioS&P: BBBMoody’s: Ba113
Complete Production – CapitalizationSourcesUsesR/C FacilityTerm Loan ANew 7.125% Sr. NotesNew Equity 250.0 400.0 800.0 2,316.0Stock consideration to targetCash consideration to targetRefinance existing debtEstimated transaction costs, fees and expenses 2,316.0 554.0 821.0 75.0Total Sources 3,766.0Total Uses 3,766.0CapitalizationCommitment 345.0Funded 345.0% of Cap.x 2011 EBITDA 600.0 400.0 1,000.0 250.0 400.0 650.04.1%6.6%10.8%0.240.380.626.875% Sr. Notes6.375% Sr. Notes6.45% MARAD NotesNew 7.125% Sr. NotesTotal Debt 300.0 500.0 12.5 800.0 2,612.5 300.0 500.0 12.5 800.0 xisting Book EquityNew EquityTotal Equity 1,453.6 2,316.0 3,769.6 1,453.6 2,316.0 3,769.624.1%38.4%62.5%1.402.223.62Total Capitalization 6,382.1 6,032.1CashR/C FacilityTerm Loan ATotal Secured Debt5.79*2011 EBITDA: 1042 MM14
Summary Business rationale must be there for successfulmerger/acquisition/asset purchase Stick to your financial strategy Transaction Structures should support the Financial Strategy Be aware of overall market conditions– Balance what you want to do with what market will allowDisciplinedApproachCardinalBaker \ BJCompleteModerateLeverageAmpleLiquidityAcquire & Investin Down Cycles
Superior Energy Services, Inc. Financial Forecasting & Planning Innovation Summit February 19 & 20, San Diego, 2014 . Slides 4 and 5 of 'SPN Johnson Rice Energy Conference 2013' presentation Who is Superior Energy Services?
