Investor Relations(IR) Investor Relations (IR) Web Data Services
Investor Relations Presentation October 2010
Transcript of Investor Relations Presentation October 2010
-
8/8/2019 Investor Relations Presentation October 2010
1/35
Investor Relations Presentation - October 2010
Investor Relations PresentationOctober 2010
TSX: PLK
Jay B. SimmonsChairman & CEO
-
8/8/2019 Investor Relations Presentation October 2010
2/35
-
8/8/2019 Investor Relations Presentation October 2010
3/35
-
8/8/2019 Investor Relations Presentation October 2010
4/35
Investor Relations Presentation - October 2010
COMPANY FORMATION
Plan of Arrangement - June 2010
1. Palko Environmental formed through the combination of PalkoEnergy of Midale, Saskatchewan and Deepwell Energy Services
2. $3 million private placement by Gibson Energy ULC
4. New company: Palko Environmental Ltd.
5. New Trading Symbol: TSX: PLK
6. Market capitalization: $25 million
-
8/8/2019 Investor Relations Presentation October 2010
5/35
Investor Relations Presentation - October 2010
RECENT HISTORYAug. 16, 2010: Q2 2010 FINANCIAL & OPERATING HIGHLIGHTS
Revenues increased Q/Q by 64%, and Y/Y by 63%
Operating margins in Q2 were 25%, and YTD were 33%
EBITDA* $0.09/share vs. $0.04 for Q2 2009 (increase of 125%)
Sept. 15, 2010: COREY ZAHN STEPS IN AS NEW CFO
11 yrs. in VP Finance and CFO roles with private and public oilfieldservice companies; 9 years as Sr. Manager with KPMG
Oct. 6, 2010: ADDITION OF NEW FACILITY IN MIDALE, SK
Excess custom treating capacity, pipeline access and water disposal
through an arrangement with a producer owner and operator
Oct. 12, 2010: FORMATION OF TECHNICAL ADVISORY GROUP
Innovation forum in support of assessing and applying leading edgetreatment technologies and processes to oilfield wastes.
Composed of four faculty members of the Schulich School ofEngineering at the University of Calgary
* Before one-time restructuring and reorganization costs of $322,900 associated with the Plan of Arrangement.
-
8/8/2019 Investor Relations Presentation October 2010
6/35
Investor Relations Presentation - October 2010
PALKO FACILITIES
-
8/8/2019 Investor Relations Presentation October 2010
7/35
Investor Relations Presentation - October 2010
WATER INTENSITY
-
8/8/2019 Investor Relations Presentation October 2010
8/35
Investor Relations Presentation - October 2010
ENERGY STORY is a WATER STORY
Source: GeoScout : AB, BC and SK figures combined
0.9x 1.5x2.6x 3.7x
-
8/8/2019 Investor Relations Presentation October 2010
9/35
Investor Relations Presentation - October 2010
WATER MANAGEMENT About 75% of Albertas oil production (conventional, in-situ and
mining) is water assisted.
In-situ oilsands projects recycle greater than 90% of the water usedin their production process.
Hydraulic fracturing operations for shale and tight gas are waterintensive.
Operators are looking for strategies to reduce water intensityincluding the processing and recycling of recovered drilling and fracfluids.
Water optimization efforts include treating water for reuse.
Source: Responsible Water Management in Canadas Oil and Gas Industry Canadian Association of Petroleum Producers, June 2010
-
8/8/2019 Investor Relations Presentation October 2010
10/35
Investor Relations Presentation - October 2010
-
8/8/2019 Investor Relations Presentation October 2010
11/35
Investor Relations Presentation - October 2010
REGULATORY COMPLEXITY
-
8/8/2019 Investor Relations Presentation October 2010
12/35
Investor Relations Presentation - October 2010
ERCB REGULATORY PROCESS
-
8/8/2019 Investor Relations Presentation October 2010
13/35
Investor Relations Presentation - October 2010
WHICH EXPANDS FURTHER
-
8/8/2019 Investor Relations Presentation October 2010
14/35
Investor Relations Presentation - October 2010
REGULATIONS KEEP CHANGING
JUL 2010: Amendment to B.C. Water Act
APR 2010: Amendments to B.C. Environmental Mgmt. Act
MAR 2010: Amendment to B.C. Water Act
JAN 2010: Amendment to B.C. Water Act
DEC 2009: Amendment to B.C. Greenhouse Gas Reduction Act
MAR 2009: Amendment to B.C. Environmental Assessment Act
MAR 2009: Amendment to B.C. Oil & Gas Commission Act
In Progress at ERCB:
Directive 047: Waste Reporting Requirements for Oilfield WasteManagement Facilities
Directive 051: Injection and Disposal Wells
-
8/8/2019 Investor Relations Presentation October 2010
15/35
Investor Relations Presentation - October 2010
ISSUES = OPPORTUNITY
-
8/8/2019 Investor Relations Presentation October 2010
16/35
Investor Relations Presentation - October 2010
THE OPPORTUNITYWater Intensity
Water treatment, recycling, reuse, increasing demand for water
Demand for technology and innovation
Producers establishing water teams
Regulatory Environment Increasing complexity and amount of regulation - not core business for producers
Market Size Producers hold 66% of $1.5 billion market - opportunity to take on more
Palko Position In the middle of all the opportunity - geographically, active sale organization, organic growth,
application of innovative technology
Past solutions wont work in the future as water issues and regulation intensifies
-
8/8/2019 Investor Relations Presentation October 2010
17/35
Investor Relations Presentation - October 2010
Palko Environmental Ltd. operates six (6)waste management and disposal facilities:
Mayerthorpe, Alberta
full service waste management facility
Rycroft, Alberta
waste water disposal facility
Grande Cache, Alberta
full service waste management facility
Claresholm, Alberta
full service waste management facility
Midale, Saskatchewan
full service waste management facility a second custom oil treatment facility with
pipeline access and waste water disposal
-
8/8/2019 Investor Relations Presentation October 2010
18/35
Investor Relations Presentation - October 2010
WASTE MANAGEMENT FACILITY
-
8/8/2019 Investor Relations Presentation October 2010
19/35
Investor Relations Presentation - October 2010
INJECTION WELL
-
8/8/2019 Investor Relations Presentation October 2010
20/35
Investor Relations Presentation - October 2010
GIBSON ENERGY ULC
Gibson owns 39% of Palko Environmental
Palko is Gibsons water strategy
Gibson is Palkos midstream strategy
Gibson touches 20% of all the oil produced in Canada
Single shipper and marketer agreement
Increase in oil emulsion and custom treating volumes
Potential future pipeline connectivity
-
8/8/2019 Investor Relations Presentation October 2010
21/35
Investor Relations Presentation - October 2010
GIBSONS FOOTPRINT
-
8/8/2019 Investor Relations Presentation October 2010
22/35
Investor Relations Presentation - October 2010
INDUSTRY WASTE STREAMS
CHEMICAL SOUP
(Composed of Oil, Water & Solids)
OIL EMULSIONS Frac Fluids
Produced WaterWASTE WATERMILSHAKE MUDSDrilling Fluids
Completions PIPELINE SLUDGEFLOWBACK WATERChemical Spills Tank Sludge
-
8/8/2019 Investor Relations Presentation October 2010
23/35
Investor Relations Presentation - October 2010
Elements include
-
8/8/2019 Investor Relations Presentation October 2010
24/35
Investor Relations Presentation - October 2010
ENVIRONMENTAL STRATEGY
Commercialization of existing treatment technology
Water treatment technology Oil treatment technology
Pilot projects taken to date
Implementation at existing Palko facilities
Implementation at customer sites (on-site services)
Establishment of Palko Technical Advisory Group
-
8/8/2019 Investor Relations Presentation October 2010
25/35
Investor Relations Presentation - October 2010
TECHNICAL ADVISORY GROUP
Innovation forum for leading edge waste, water and oiltreatment technologies and processes
Development of solutions that are environmentallysound, technically feasible and economically attractive
Members are:
Dr. Anil K. Mehrotra, Ph.D., P.Eng. is a Professor at, and the Interim Dean of, theSchulich School of Engineering, as well as the Director of the Centre forEnvironmental Engineering Research and Education (CEERE). Dr. Mehrotrasresearch expertise includes the transport and thermophysical properties of crude oilsand bitumens, the kinetics and mechanism of solids deposition and fouling, and theremediation of contaminated soils and methane oxidation by biofiltration.
-
8/8/2019 Investor Relations Presentation October 2010
26/35
Investor Relations Presentation - October 2010
TECHNICAL ADVISORY GROUP (contd)
Dr. Thomas G. Harding, Ph.D., P.Eng. is a Professor, and the Associate Head ofUndergraduate Studies, at the Schulich School of Engineering. Dr. Harding joined theUniversity of Calgary's Schulich School of Engineering in January 2004 after a 28-year
career in the petroleum industry and has varied engineering experience related to heavyoil, conventional oil and gas production operations both domestic and international.
Dr. Maen Husein, Ph.D., P.Eng. is an Associate Professor, and currently the AssociateHead of Graduate Studies, in the Department of Chemical Engineering at the SchulichSchool of Engineering. Dr. Huseins research focus is on the energy and environmentand application of nanotechnology to optimize energy recovery from primary sourceswhile reducing the associated environmental impact.
Dr. Nader Mahinpey, Ph.D., P.Eng., MCIC is an Associate Professor at the SchulichSchool of Engineering. His research activities focus on promoting research programs inthe areas of clean energy and green engineering.
-
8/8/2019 Investor Relations Presentation October 2010
27/35
Investor Relations Presentation - October 2010
TOP CUSTOMER RELATIONSHIPS
Encana Corporation
ConocoPhilips Canada
Connacher Oil and Gas
Canadian Natural Resources
ARC Resources
Nexen Inc.
Crescent Point Energy
Petrobakken Energy Ltd.
Cenovus Energy Inc.
Talisman Energy
Birchcliff Energy
MEG Energy Corp.
-
8/8/2019 Investor Relations Presentation October 2010
28/35
Investor Relations Presentation - October 2010
MARKET SHARE 2009 waste and water disposal market approximately $1.5
billion in size
Estimate of water and waste volumes processed in 2009:22%
7%
3%
2%66%
CCS
Newalta
Secure
PALKOProducers
Source: GeoScout at April 30, 2010 - Aggregate 2009 data (OGC, ERCB, SIR databases)
-
8/8/2019 Investor Relations Presentation October 2010
29/35
Investor Relations Presentation - October 2010
Q2 2010 FINANCIAL HIGHLIGHTSFigures in $000s exceptper share amounts 2010 2009 Change 2010 2009 Change
Revenue 3,521 2,150 64% 8,835 5,416 63%
Operating expenses 2,630 1,628 62% 5,913 3,882 52%Operating margin 892 522 71% 2,923 1,535 90%
Operating margin (%) 25% 24% 33% 28%
General & Administrative 804 543 48% 1,595 1,263 26%
EBITDA (before restructuring costs) 87 (21) 1,327 272 388%
Per share, basic and diluted $0.01 $0.00 $0.09 $0.04 125%
Net income (loss) (1,008) (1,729) (919) (2,678)
Per share, basic and diluted ($0.07) ($0.24) ($0.06) ($0.37)
Weighted average units 15,420 7,200 15,379 7,200outstanding (000s)
Three months ended June 30 Six months ended June 30
-
8/8/2019 Investor Relations Presentation October 2010
30/35
Investor Relations Presentation - October 2010
OPERATING MARGINFor the years ended December 31:
2006 2007 2008 2009
($000s) ($000s) ($000s) ($000s)
Revenues 9.65 14.12 18.65 11.55Operating Margin 5.05 7.49 7.9 3.4
Operating Margin % 52% 53% 42% 29%
For the six months ended June 30 (unaudited):
2007 2008 2009 2010
($000s) ($000s) ($000s) ($000s)
Revenues 6.96 9.87 5.42 8.84
Operating Margin 3.85 4.29 1.53 2.92
Operating Margin % 55% 43% 28% 33%
-
8/8/2019 Investor Relations Presentation October 2010
31/35
Investor Relations Presentation - October 2010
CAPITALIZATIONAt October 8, 2010:
TSX symbol: PLK
Shares outstanding: 23 million
Closing share price: $1.07
Market capitalization at Aug. 27: $24.4 million
Insider ownership*: 66% (Gibson 39%)
Public float: 34% or 7.8 million shares
52 week price range: $0.75 - $1.70
* Includes Manvest Inc.
-
8/8/2019 Investor Relations Presentation October 2010
32/35
Investor Relations Presentation - October 2010
SENIOR MANAGEMENT TEAM
Jay B. Simmons, CA, Chairman & Chief Executive OfficerPresident, Simmons Financial Holdings Corporation.
Steven Peterson, PresidentCo-founder of Palko Energy in Spring 2008, over 35 years in oilfield production, construction, maintenance,consulting and management, including four years on the Board of Weyburn Inland Terminal.
Corey Zahn, CGA, CA, Vice President Finance & Chief Financial OfficerJoined in October 2010, has over 20 years of corporate financial experience including 11 yrs. in VP Financeand CFO roles with private and public oilfield service companies and 9 years as Sr. Manager with KPMG LLP.
Niels Versfeld, B.Sc. (Hons), MBA, Vice President Corporate DevelopmentJoined in 2009, environmental consulting background, 4 years at CCS in regulatory development.
Don Johnson, RET, Vice President OperationsJoined in 2006, over 23 years of oilfield experience with 14 years in waste management operations andconstruction including six years at Anadime Processing and four years at Newalta.
Brian Johnson, Vice President Sales & MarketingJoined in 2006 in business development role, has over 22 years of oilfield waste management experienceincluding leading sales and marketing for CCS, and six as facility owner and operator for private firm.
-
8/8/2019 Investor Relations Presentation October 2010
33/35
Investor Relations Presentation - October 2010
BOARD OF DIRECTORSJay B. Simmons, ChairmanPresident, Simmons Financial Holdings Corporation
Steven PetersonPresident, Palko Environmental Ltd.
A. Stewart HanlonPresident and Chief Executive Officer, Gibson Energy ULC
Rick M. WiseSenior Vice President, Operations, Gibson Energy ULC
Sam ParrottaChief Financial Officer, Onni Group of Companies
William P. RobinsonPresident, Manvest Inc.
-
8/8/2019 Investor Relations Presentation October 2010
34/35
Investor Relations Presentation - October 2010
INVESTMENT SUMMARY
1. Excellent market! Large and growing in complexity
2. Well positioned
Geographic locations
Customer driven demand
Active sales force
3. Meeting demand for technology & innovation
-
8/8/2019 Investor Relations Presentation October 2010
35/35
Investor Relations Presentation - October 2010
THANK YOU
www.palko.com