Investor Presentation August 2012 Martin Ferron President and CEO David Blackley Chief Financial...
-
Upload
giles-reeves -
Category
Documents
-
view
225 -
download
0
Transcript of Investor Presentation August 2012 Martin Ferron President and CEO David Blackley Chief Financial...
Investor PresentationAugust 2012
Martin FerronPresident and CEO
David BlackleyChief Financial Officer
2
Forward-Looking Statements
The information provided in this presentation contains forward-looking statements and information which reflect the current view of North American Energy Partners with respect to future events and financial performance. Actual results could differ materially from those contemplated by such forward-looking statements as a result of any number of factors and uncertainties, many of which are beyond our control. Important factors that could cause actual results to differ materially from those in forward-looking statements include success of business development efforts, changes in oil and gas prices, availability of a skilled labour force, internal controls, general economic conditions, terms of our debt instruments, exchange rate fluctuations, weather conditions, performance of our customers, access to equipment, changes in laws and ability to execute transactions. Undue reliance should not be placed upon forward-looking statements and we undertake no obligation, other than those required by applicable law, to update or revise those statements.
For more complete information about us you should read our disclosure documents filed with the SEC and the CSA. You may obtain these documents by visiting EDGAR on the SEC website at www.sec.gov or on the CSA website at www.sedar.com.
Overview
Founded in 1953
TSX and NYSE listings: “NOA”
Current share price: $3.05
52 week high/low: $8.03/$2.23
Market capitalization: $111 million
Shares outstanding: 36 million
52 week average daily share volume: 134,857
3
Heavy Construction and Mining
Commercial and Industrial Construction
* Data from NYSE in USD as at August 9, 2012
4
Presentation Agenda
Oil sands realities
Opportunities
About the company
Financial results
Segment performance and opportunities
5
Reality #1:Low Sensitivity to Oil Prices
Oil sands mines keep operating despite changes in oil prices
Competitive unit costs achieved at full capacity
High risk of employee loss/ plant damage during shutdowns
Reality #2:SAGD Will Not Replace Mining
SAGD and mining are geologically distinct processes
Mining Typical size: 100-300k bpd Base load production to feed upgrader Draws on full range of NAEP services Construction and recurring services
opportunities
SAGD Typical size: 10-50k bpd Supplements mining production Construction opportunities Draws on NAEP’s recently acquired
screw piling technology
6
Reality #3:Producers Outsource
Outsource
7
Seasonal work
Part-time labour requirement
Non core to oil production
Short-term equipment requirement
Specialized knowledge & equipment
8
Reality #4: Demand is Growing
9
The Opportunity
Largest heavy construction and mining contractor in high growth oil sands market
Poised to benefit from recently announced oil sands development
Position further entrenched by recent competitor difficulties
Significant barriers to new entrants
Proven base of stable recurring services business with recent long-term contract wins
Key Customer Contracts
3-year master services agreement 3-year muskeg removal contract
4-year master services agreement covering mining services & construction
Year 7 of 10-year overburden removal contract
10
5-year master services agreement covering mining services & construction
One-year contract for site preparation Significant earthworks still to be awarded by the client
About the Company
Expertise 30+ years in Northern Alberta’s harsh
operating environment
Knowledge to come up with best solutions for customers
Broad Service Offering Unique suite of services across project
lifecycle
Operational Flexibility Unrivalled equipment fleet
Active on every site
Long-Term Customer Relationships Reliability; on-time delivery
11
12 Months Ended March 31, 2012
Revenue by End Market
Largest Construction & Mining Contractor in the Oil Sands
12%
61%
12%
15%
Commercial & Public Construction
Canadian Oil Sands
Pipeline
Industrial
First On, Last Off
12
Explore and Design Initial Development and Secondary Upgrades / Expansions
Build Relationship Major Projects
Initial mine site development, project site development, airstrips, pipeline construction
Overburden removal, mine infrastructure development, reclamation, tailing ponds remediation, equipment and labour supply
Project Development Phase (3-4 years) Ongoing Operations Phase (30-40 years)
Operation / Ongoing Services
Recurring Services
77% of NAEP’s Oil Sands Revenue
Mine Services
Service NAEP Client Season Haul Truck(tonnes)
Ore Mining Year-round 300 - 400
Overburden Removal Year-round 240 - 400
Muskeg (Removal/Remediation) Winter* 100 - 240
Site Construction Summer 100 - 240
Tailings Management Summer 100 - 240
13
Muskeg & TopsoilActive Mine
Overburden
Ore
* Occasionally we will complete this work outside the winter season for our customers
Swing Supplier
14
NAEP achieves higher equipment utilization rates by working on every major site in the oil sands
NAEP demand
Multiple Customers
Single Customer
Excess production requirement
Fixed production capacity
Active with Every Oil Sands Client
Current or recent NOA job site
Providing estimates
EXXONKEARL
SHELL/ALBIANJACKPINE AND MUSKEG RIVER
SYNCRUDEAURORA
UTS
CANADIAN NATURAL
HORIZON
TOTAL JOSLYN
SUNCORVOYAGEUR
SUNCORMILLENNIUM and
STEEPBANK
SYNCRUDE BASE PLANT
Fort McMurray
70
km
SUNCOR FORT
HILLS
15
Current Activity: 10-year overburden removal and dyke construction, mine operations and projects group support
Future Opportunities: plant site civil projects
Current Activity: site development (ditching, water diversion, reclamation, haul roads, camp grading, etc.)
Future Opportunities: MSE wall, compensation lake, long-term overburden and reclamation (undefined volumes), contract mining (unknown if Total will contract this scope of self perform)
Future Opportunities: Phase 2 Kearl Expansion Project (earthworks), long-term overburden and reclamation (undefined volumes)
MRM Current Activity: major tailings projects (AFD Phase 2 & 3 construction, tailings corridor), plant site civil support
Future Opportunities: major tailings projects, haul road construction, debottlenecking & civil scopes
JPM Current Activity: reclamation, major tailings projects (TTD construction)
Future Opportunities: major tailings projects, starter dyke construction, reclamation
Future Opportunities: site development, haul roads, civil construction, MSE walls, compensation lake, long-term overburden and reclamation (undefined volumes), contract mining
Current Activity: ramp removal, Dyke 12 drains, NSE road, equipment rental (8 x 793s), sump construction
Future Opportunities: overburden and reclamation (undefined volumes), light and heavy civil for mining and tailings operations and projects groups
Future Opportunities: mine train relocations, MSE walls & associated civil scopes
Current Activity: 2012 winter reclamation prep, MLMR shear key construction, MSE wall construction, base mine tailings dam, manmade water shed construction, mine operations support
Future Opportunities: overburden and reclamation (undefined volumes), various construction projects for mining, tailings and projects group
Future Opportunities: civil underground construction
16
Mining Project Lifecycles
Engineering and Design
Initial Construction
Commissioning and Start-up
Operational Phase
Project Development Recurring Services
2-3 3-4 0.5 40+years years years years
Suncor - Original Lease
Suncor – Voyageur South
Shell - Muskeg River MineShell - Jackpine 1
Canadian Natural - Horizon
Suncor - Fort Hills
Total - Joslyn
Syncrude - Aurora
Exxon - Kearl
Suncor - Steepbank
Syncrude - Base
Proceeding
Delayed
Syncrude – Aurora South
Tailings & Environmental Services
Engineered Earth Structures
17
Pipeline & infrastructureFluids Transfer &
Hydraulic Transport
Tailings ManagementPond Closure & Land Reforming
Final Reclamation
Fluid Fine Tailings Inventory Projections
New regulations require dramatic reduction in tailings inventory
18
Fluid Line Tailings Inventory (After Tailings Directive) Millions of Cubic Metres (LHS)
Bitumen Production Million of Barrels per day (RHS)
Fluid Line Tailings Inventory Millions of Cubic Metres (LHS)
FFT Inventory (millions m3)
6,000
5,000
4,000
3,000
2,000
1,000
02010 2015 2020 2025 2030 2035 2040 20502045 20602055
3.0
2.5
2.0
1.5
1.0
0.5
0
Bitumen Production (millions bbls/d)
Forecast Mined Bitumen Production
Forecast Fluid Tailings Inventory AFTER Directive 74
Source: Silver Birch Energy Presentation – Peter’s & Co. Winter Energy Conference January 28, 2011
Low Risk/High Growth Business Model
Construction & Mining Piling Pipeline
Leveraged to high-growth construction markets
Offers geographic & sector diversification
Proprietary technology and expertise creates high barriers to entry
Suited to cyclical industry with low capital commitment & scalable operating model
Proven environmental & safety record offers significant competitive advantages
Recurring services provide stable base
Oil sands project development provides strong growth potential
Long-term customer relationships create high barrier to entry
19
20
12%
Sep10
Sep10
$862
Financial Performance
Rolling LTM Revenue Rolling LTM EBITDA* C ($) millions C ($) millions
14%
*Consolidated EBITDA as defined within the credit agreementConsolidated EBITDA as percentage of revenue
Jun10
Jun10
$798
8%
Mar10
$761
Mar10
16%
10%
Dec10
Dec10
$904
$105$114
$122
$87
Mar11
$858
10%
Mar11
$84
Jun11
$868
Jun11
$78
9%
Sep11
$879
Sep11
$83
10%
Dec11
$899
Dec11
$73
6%
Mar12
$57
Mar12
$1,007
Operating Leases
Significant growth in operating lease portfolio from 2008-2010
Operating lease expense directly impacts Consolidated EBITDA
21
200
150
100
50
0
($) millions
Impact of Operating Leases
Consolidated EBITDA
2008 2009 2010 2011
Lease Expense
150
125
100
75
50
25
0
($) millions
Operating Lease Portfolio
Lease Additions Lease Expense
2008 2009 2010 2011 2012 2013 2014 2015 2016
Fiscal YearFiscal Year
* Future lease expense reflects operating lease commitments as at March 31, 2011
2017 2012
Purchase Price $5.0M $5.0MLease Term / Asset Life 5 years 12 years
Residual / Salvage Value $1.0M $0.3M
Depreciation$1.2M-
$3.0MNBV - End of Period
Interest
Lease Expense
Consolidated EBITDA
$5.2M
($5.2M)
-
$1.0M
$2.0M
-
Cumulative Impact (5 years):-
Operating Leases
22
Operating Lease PurchaseLarge Truck Example
Pros: Low cost financing Readily accessible
Cons: Accelerated amortization Consolidated EBITDA impact
23
Operating Leases
$66 million of potential equity value in operating lease portfolio
Potential equity value can be realized through future earnings
($) millions
* Values are as at March 31, 2012 and exclude leases related to the Canadian Natural overburden removal contract
$173
$117
Calculated Net Book Value Actual Lease Buyout Value
Current Lease Portfolio Value
$56 million of potential equity
50
100
150
200
0
24
Heavy Construction & Mining
Revenue and Gross Margin % Impact of temporary shutdown at Canadian Natural and late
winter freeze-up partially offset by new contracts and increased tailings and environmental work
*Excluding the writedown, FY2011 segment revenue would have been $710 million and segment margin would have been 13%
($) millions
800
700
600
500
400
300
200
100
0FY 2010 FY 2011*
$666
17%
$667
8%
FY 2012
$671
13%
Heavy Construction & Mining Outlook
Expected impacts on mine support services should be offset by: Continued demand for reclamation and tailings services
Mine expansion projects
Resumed overburden removal operations at Canadian Natural
New project development, including initial earthworks at Joslyn, industrial construction activity at Mt. Milligan Copper/Gold project and site development at Dover SAGD
25
Source: CAPP
Oil Sands Opportunities
Production capacity increasing
All active oil sands mines expected to be operating later this year
Kearl mine scheduled to begin production in 2012
$124 billion in new investment forecasted over next 5 years
26
0
5
10
15
20
25
30
35
1920
27
29
27
2011 2012 2013 2014 2015
($) billions
14
18 18
11
13
2006 2007 2008 2009 2010
Oil Sands Investment
Actuals Forecast
27
Commercial and Industrial Construction
Revenue and Gross Margin % FY 2013 revenue up 130% and segment profit up $10.5 million,
reflecting growing demand, favorable weather, positive impact of Cyntech acquisition and strong project execution
($) millions
200180160140120100
80604020
0FY 2010 FY 2011
$69
17%
$192
8%
FY 2012
$349
9%
28
Commercial and Industrial Construction Outlook
Continued demand across all regions and sectors Large backlog of projects expected to contribute to strong Q2
activity levels Continued work on high-margin, low-risk maintenance contract
Investment Highlights
Largest construction and mining contractor in the oil sands
Solid core business of recurring services with high barriers to entry and near-term growth potential
Investment in Canada’s oil sands without direct exposure to the price of oil
Financially secure with the ability to generate strong cash flow
Attractive near-term growth potential
29
Thank you
Appendix
32
CNRL Contract Resolution
$38 million settlement for past cost escalations and change orders Removal of $10 million letter of credit for 2012 Profitable contract structure with reduced risk
NAEP continues to operate all equipment with guaranteed base margin and upside potential based on performance
~$40 million of additional net proceeds to NACG Early buyout of ~30% of contract-related assets Includes the buyout of contract-related operating leases, owned assets,
inventory and maintenance facility
Strengthened working relationship Opportunities to extend contract beyond 2015 Opportunities to provide broader range of services
CNRL recognized that NACG is the best option for overburden removal & mining services
33
Credit Agreement Amendments
Recent amendments to credit facility include:
Temporary relief from Consolidated EBITDA-related covenants
Extension of credit agreement maturity date to October 31, 2013
Temporary facility capacity of $20.8 million to be eliminated by June 30, 2012, in line with receipt of proceeds from asset sale to CNRL
Capacity of the revolving facility after June 30, 2012 will be $85 million less any outstanding letters of credit
34
Pipeline Construction Opportunities
2011 TCPL (NW AB, NE BC – 7 projects) 217+ km (20”-48”) TCPL (Tanghe Creek - Sloat) 38 km (48”) Enbridge (Husky (Sunrise)) Norealis Pipeline 112 km (24”) Enbridge (Wood Buffalo/L18) 95 km (30”) Enbridge – Cdn. Mainline Integrity Program 1,875 digs
scheduled Spectra Energy (T-North Looping) 100+ km (36”-48”)
Beyond 2011 TCPL (NW AB, NE BC – 4 projects) 500+ km (24”-48”) Access Pipeline (50/50 JV Devon/MEG Energy) 300 km (42”) Spectra Energy (NE BC) Looping 300-400 km (24”-
36”) Enbridge (Woodland) Extension 385 km (36”) Enbridge (Athabasca) Twinning Project 345 km (36”) Enbridge (Bakken Oil Pipeline) 123 km (24”-30”) Kinder Morgan (TMX Expansion) 800-1,000 km (36”) Pacific Trails Pipeline (PTP) 462 km (36”) Enbridge (Northern Gateway) 1,170 km (36/20”) TCPL Keystone XL 2,673 km (36”) CO2 Pipeline (Enhance Energy) 240 km (12”)
Alliance Pipeline (Fort St. John) 60 km (24”) Alaska Pipeline est. 2020-2025 Mackenzie Valley Pipeline est. 2020-2025 Nova (Vantage Pipeline) 575 km (10/12”)
Anchor Loop
TMX-3TMX-2
Edmonton
Vancouver
TMX Project