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NPS

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by

Ali Alatas

on 2 May 2017

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Transcript of NPS

Driving Forward
Strategic Partners
History of Quintana Energy Services
KSA Opportunity
Presented by the QES Team
Date: 02-May-2017
Quintana Overview
USA Drilling Activity









Quintana Operations








KSA Economy
Leading independent provider of onshore directional drilling services, with owned fleet of downhole motors and 113 owned and 3 leased measurement while-drilling (“MWD”) kits.
Vertically integrated with in-house support functions and logistics capabilities



Hydraulic fracturing, cementing and acidizing services via 182,000 active hydraulic horsepower (“HHP”) of 235,000 total HHP
Modern, well-maintained equipment with two active fleets and a third available to be re-deployed




Well control services for completion and production activities, primarily through 23 coiled tubing units and 36 rig-assisted snubbing units
Also provide nitrogen and fluid pumping services
In-house manufacturing, repair and refurbishment capabilities





Full range of pump-down and cased hole wireline services, as well as plug-and-perf
Owns 58 wireline trucks from 8 locations


Eagle Ford Record
QES Directional Drilling successfully drilled an average of 4,593’/day for the entire well in Karnes County, TX targeting the Eagle Ford Shale. The depth in was 3,671’ MD and the depth out was 17,750’ MD, thus delivering our customer a total of 3.86 days spud to TD with our conventional BHA assembly.




Glasscock Record
QES Directional Drilling sets a Lateral record in Glasscock County, Texas drilling 9,979’ of 8.75” lateral section, with an average of 67 ft./hr., in a single run utilizing the QSeries 7” Drilling Motor (7/8 6.0).




Marcellus Record
QES Directional Drilling set another record run in the Marcellus Shale successfully drilling 6,203’ in 24 hours utilizing a conventional assembly. The section drilled in 24 hours was from 8,813’ to 15,016’ with zero downtime.





QES’ management team has an average of 26 years energy experience and has overseen the development of the business through organic growth and several successful acquisitions
Divisional managers are best-in-class operators and many have been affiliated with QES and predecessor companies before acquisition by QES
QES’ retention of its highly-skilled managers and employees through the industry downturn have resulted in strong operational performance and execution for customers
Experienced Management & Operations Team
Rig counts correlate with Directional Drilling company's revenue
Opportunity to hedge against next US downturn
Operate in an area where rig assignment is more closely correlated to performance than global production
KSA Segments
Gas Drilling has historically been the greatest DS spend per segment at Aramco.
Compared QES Economy
Next Steps
White Paper or Strategic Report
Full CapEx calculation
OpEx outlook
ROI potential
Legal requirements
Corporate tax implications
Market potential
Competitors
Added Value for QES
Hedge against US uncertainty, stabilize revenue, and diversify to reduce volatility in overall corporate performance
Create international expansion project architecture for:
sister product lines to follow
DD to expand into other countries or regions
Expand company image with US companies and IOC's by drilling for biggest O&G company globally
Extreme profit potential - US provides revenue potential while KSA provides profit potential
Expansion into the most stable global O&G market
Low barrier to entry through strategic partnership
Critical first step for global expansion
Increased company value due to global footprint & cash flow
Simple UAE company registration
Simple liquidation plan & ability to mothball
No corporate tax
100% repatriation of capital and profits
Aramco acknowledges need for competitor to Big 4
Aramco has history of investing into companies to help them meet their needs

Qualification for Aramco
Quality Management
Technical Qualification
JV
Long lead time
Bidding in late 2017 with likely 2018 start up
Next window of opportunity could stretch to 2021-2023
Long transit time (shipping) requiring significant capital tied up without revenue
Sourcing qualified personnel
Market intelligence
Substantial capital requirement
Personnel, time, and experience constraints

Synergies & Effects of Diversification
Shared cost economies
Cross-promotion / Cross-selling
Better positioned to provide integrated project services and compete - one stop shop
Having the opportunity to profit from drilling with minimal capital investment & without the lead time to create own DD service line
Bring QES competencies to MENA
Simple liquidation plan & ability to mothball
Increased value to Aramco
Total Average Field Cost: $5,000/day

Estimated Indirect Allocation: $1,500/day

Depreciation & Interest Allocation: $1,000/day

Daily Break Even: $7,500/day
KSA Segments
Oil & Gas fields of KSA
2015 avg. drilling services revenue per rig by segment. Performance drilling targets in Gas Drilling & Exploration
All prices in KSA are footage
Different formations have different footage rates
Prices demanded by SLB will not be the same as that by QES
Sample Daily Job Ticket - Company 2
Company 2 Daily Job Ticket breakdown
SLB prices over
same section
Capital
Avg 5 motors active + 2 in repair: $295k
3 MWD strings: $600k
Total $895k capital per job

Personnel
MWD Field Personnel (x2): $1,065/day
MWD Shop Overhead: $155/day
MWD Repair Costs: $500/day
Total MWD Costs: $1720/day

DD Field Personnel (x2): $1480/day
Motor Costs: $1,800/day
Total DD Costs: $3,280/day

MENA offers competitive labor costs, skilled labor force and easy recruitment procedures
US MWD Personnel: $530/day/person
US DD Personnel: $740/day/person
MENA MWD
L1: $70/day
L2: $155/day
L3: $200/day
L4: $310/day
L5: $335/day
MENA DD
L1: $70/day
L2: $250/day
L3: $350/day
L4: $500/day
L5: $725/day
Added Value for NPS
KSA
Total Available Market
Sample Daily Job Ticket - Company 3
Possible Barriers
Complete all legal requirements for JV or strategic partnership
NPS
QES legal team
UAE legal firm
Establish UAE business in Free Zone
Watermill Consultants
Negotiate QES/NPS JV terms, capital investment, & profit sharing
QES DD Complete
Seek Aramco sponsorship
Full transcript