Willbros - Capital One Southcoast, Inc Energy Conference Presentation
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Willbros - Capital One Southcoast, Inc Energy Conference Presentation

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    Willbros - Capital One Southcoast, Inc Energy Conference Presentation Willbros - Capital One Southcoast, Inc Energy Conference Presentation Presentation Transcript

    • Willbros Group (NYSE : WG) Capital One Southcoast6th Annual Energy Conference December 7, 2011
    • Forward Looking Statements This presentation contains forward looking statements. All statements, other than statements of historical facts which address activities, events or developments the Company expects or anticipates will or may occur in the future, are forward looking statements. A number of risks and uncertainties could cause actual results to differ materially from these statements. These risk factors are described in the Company’s documents and reports filed with the SEC. The Company assumes no obligation to update publicly such forward looking statements, whether as a result of new information, future events or otherwise. This presentation contains non-GAAP numbers and a reconciliation is provided in the Appendix. 2 December 2011
    • Willbros: Over 100 years of Current work regions Past work regions Willbros of f ices Founded in 1908: IPO in 1996 Exchange / Ticker: NYSE : WG Share Price(1): $4.62/share Market Capitalization: $231 millionNotes:(1) Share price as of 11/14/11 Avg. Trading Volume(2): 433,006 shs/d(2) Based on 3 month average(3) Inside Ownership 8/31/11 Inside Ownership(3): ~9 million shares 3 December 2011
    • Willbros Overview Who We Are• Global contractor specializing in energy infrastructure serving the oil, gas and power industries.• Offerings include engineering, procurement and construction (individually or as an integrated “EPC” service offering), ongoing maintenance and other specialty services. Services Span Energy Infrastructure Sector Upstream / Midstream Utility T&D Downstream Onshore Gathering & Long Haul Utilities & Refining, Processing, Production Processing Transportation Power & Terminals 4 December 2011
    • Willbros Vision and Values Our mission is to be a multi-billion dollar engineering and construction company with a diversified revenue stream, exposure to high growth opportunities and ability to achieve more stable and predictable results 5 December 2011
    • Recurring Revenue from MSAs• Master service agreements (MSAs) are MSA Backlog by Segment(1) typically multi-year agreements (1-3 yrs)• Contracts are based on established rates Upstream 7% for time and materials Utility T&D 87% Downstream• Acquisition of InfrastruX increased MSA 6% related backlog• Current significant MSA agreements / $1.7 billion alliances include: Utility T&D Backlog by Type(1) – NiSource – Oncor Discrete Services – Syncrude 5% MSAs• Enhances visibility 95% (1)September $1.6 billion 30, 2011 6 December 2011
    • 2011 Objectives on Track Returning Willbros to profitability and strengthening the balance sheet Objective StatusReduce debt by • Third quarter debt reduction of $94.7 millionapproximately $50 - $100 • Applied certain proceeds from disposition of non-strategic businessmillion unit for total debt reduction of $113.4 million as of October 31, 2011 • Remaining principal balance of $185.9 million on the outstanding Term LoanImprove project management • Increased executive level project management oversighttools and capabilities • Engaged in enterprise-wide improvements and implementationMaintain focus on North • Utility Transmission & Distribution build outAmerica • Regional U.S. Upstream offices in the Permian Basin and Eagle Ford, Barnett, Marcellus, Haynesville, Bakken and Niobrara Shale plays • Pipeline Integrity Management Services • In Canada, focusing on oil sands-centric markets while discontinuing operations in cross-country pipeline constructionRemain focused on Safety • Made improvements over last years performance and our HSE management system implementation and safety culture enhancement programs are continuing on target 7 December 2011
    • Key Investment Considerations• Worldwide brand recognition and reputation for quality, safety and schedule / price certainty• Exposure to burgeoning markets in electric transmission, hydrocarbon infrastructure and the Canadian oil sands driven by: – Renewable energy – Shale development – Pipeline integrity – Aging infrastructure – Ongoing maintenance – Government regulation• Transmission infrastructure market outlook implies earnings break-out as pricing power shifts to contractors in a tightening market• Broad range of services enhanced by in-house engineering• Critical scale, extensive geographic presence and strong customer base reduces cyclicality and risk• Balanced revenue base from recurring services and EPC / discrete projects• Trading at a discount to peer group based on most valuation metrics 8 December 2011
    • Focusing on North America Willbros has the backlog, resources and expertise to drive profitability from: • Utility Transmission & Distribution Build-Out • U.S. Oil and Gas Infrastructure: – Large Diameter Pipelines – Shale Play Development – Pipeline Integrity Services • Canadian Oil Sands Production 9 December 2011
    • Track Record for Recognizing Growth Markets U.S. Large Diameter Pipeline Construction Electricity Transmission Infrastructure Forecast(1) vs. Upstream Revenue (billions) Market(2) (billions)16,000 $1.2 $1.1 $12.3 $0.7 $11.9 $11.212,000 $0.6 $0.9 $9.7 $9.3 $0.3 $8.6 $8.0 $7.8 $7.1 8,000 $0.3 $0.6 $6.0 14,238 11,991 12,115 10,323 4,000 $0.3 7,105 4,309 0 $0.0 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 U.S. Pipeline Construction Miles of 30+" Underway or Anticipated Actual Planned Willbros U.S. Upstream Revenue We see similar opportunities for electric utility transmission infrastructure construction like we saw for U.S. pipeline construction in 2006 (1) Oil & Gas Journal (2) Edison Electric Institute 10 December 2011
    • Utility T&D Positioned for Growing Market• Near-term investment in the utility T&D industry is growing – Over $54 billion in planned U.S. transmission investment from 2009 - 2013• Build-out investment continues to grow – Over $880 billion in new T&D infrastructure expected from 2010 – 2030(1) – $298 billion for transmission infrastructure – $582 billion to be spent on distribution• Willbros now has service offering to participate in the utility T&D market – Broad spectrum of overhead and underground energy transportation services – Provide recurring services through Master Service Agreements (MSAs)• Strong Utility T&D backlog Transmission infrastructure market outlook implies pricing power shifts to contractors in a capacity tightening environment(1)Transforming Americas Power Industry: The Investment Challenge 2010-2030, Edison Electric Institute 11 December 2011
    • Large Diameter Pipeline Construction Remains aCore Upstream Capability• Maintaining capacity to execute 1 to 2 large diameter pipeline construction projects per year in the United States• Continuous process improvement to ensure we offer competitive value propositions to our customers• Opportunistic view of international markets• Willbros has the resources and in-depth expertise to perform pipeline assessment, engineering, construction and ongoing pipeline integrity management and maintenance The full pipeline lifecycle 12 December 2011
    • U.S. Production Growth Concentrated in ShalePlays is Changing Pipeline Landscape Active rig count: October 2011 / Change in rig count from October 2010 198/+50 8/-9 5/+4 25/+1 43/+6 8/-1 46/+7 178/+39 30/+3 78/+8 9/-2 29/-6 21/-6 240/+34 38/-3 59/+11 12/+2 24/-4 102/-11 461 85/-12 91/-35 17/-4 +117 29/+11 74/+1 Dry Gas Focused Areas 2221 226 85/+13 +81 +294 Liquids Rich/Oil Focused Areas Rig Declines Source: Bentek, October 2011 13 December 2011
    • Operating & Expanding in the U.S. Shale Plays Broaden our offerings to provide strategic customers the services they want in the places they want them• Increasing unconventional production is driving demand for Watford City, ND smaller & shorter distance pipelines and gathering systems Gillette, WY• New supply areas lack sufficient Greeley, CO Pittsburgh, PA infrastructure Denver, CO Kansas City, MO• The natural gas, NGL and oil Tulsa, OK midstream sectors are projected Eunice, NM Ponder, TX Carlsbad, NM Shreveport, LA to require capital expenditures of Odessa, TX Forth Worth, TX Geismer, LA $10 billion per year(1) Houston, TX• Willbros is strategically George West, TX positioning offices in the shale Existing office / presence plays (focus on liquids-rich areas) New office, 2011(1) INGAA, North American Midstream Natural Gas Infrastructure Through 2035: A Secure Energy Future, June 28, 2011 14 December 2011
    • Compelling Opportunities for Pipeline IntegrityManagement Services Ability to offer discrete and integrated EPC services Market Drivers Willbros Offerings• Aging pipeline infrastructure with • Data mining • Maintenance significant exposure in densely populated • MAOP validation • Construction areas • Class location • Engineering• Fatal pipeline incidents across the U.S. analysis • Survey services – San Bruno, CA and Allentown, PA • As-built services • EPC• New regulations by DOT/PHMSA are • Corrosion services • Operations expected to be imposed in 2012 • Risk & threat• There are ~3,000 companies with over assessment 2.5 million miles of high pressure Willbros Upstream Engineering Backlog(2) pipelines – Pipeline integrity services market is Other expected to double to ~$12 bn/year Upstream Engineering starting in 2012(1) 96% Integrity Services – Upgrade initiatives will be offset by 4% increased rate bases(1) Willbros estimate based on data from American Gas Association and operator projections(2) September 30, 2011 15 December 2011
    • Canadian Opportunities Improving in Oil Sands• Production from the oil sands set to increase significantly over the next decade (1) – Production expected to increase from ~1.5 MMBD in 2010 to ~2.2 MMBD by 2015• Capital spending is forecast to peak at $22 billion in 2014 – 20% higher than previous peak of 07/08 and close to double from 2009• Labor shortage will be a factor (2)(1)CAPP Canadian Crude Oil Production Forecast 2011 – 2025, June 2011(2)Peters & Co. Limited 16 December 2011
    • Financial Overview
    • Willbros Financial Snapshot Historical Revenue Revenue Q3 2011 ($ in millions) $3,000 Utility T&D Upstream $2,500 40% 49% $827 $2,000 $599 $1,500 $657 $309 $1,000 Downstream $1,913 11% $1,600 $1,260 $1,192 $500 $948 Total: $466 million $0 (1) 2007 2008 2009 2010 2011 Guidance Willbros InfrastruX(1) InfrastruX revenue Jan – Jun 2010 18 December 2011
    • Backlog Total Backlog by Segment (1) Major Projects Downstream 7% Total Backlog Oncor Upstream 24% Utility T&D MPRP 69% ECHO Eagle Ford $2.3 billion NiSource 12 Month Backlog by Segment (1) Syncrude Maintenance Downstream 13% Oman LNG Maintenance Upstream 36% Husky Sunrise Tanks Camp Pendleton Utility T&D 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 51% 2011 2012 $0.9 billion(1)September 30, 2011 19 December 2011
    • Improving Adjusted EBITDA While Reducing Debt • Q3 revenue growth driven primarily by strong project execution in the Upstream (Acadian Pipeline) and UT&D segments (BP Solar, Bangor Hydro and MPRP) • Downstream continues to experience a slow market recovery, especially in small capital projects ($ in millions) • Cash build and debt paydown aided by receipt of $61 million related to the TransCanada settlement Q2 2011 Q3 2011 Contract revenue $458.3 $466.1 Adjusted EBITDA(1) $21.0 $31.6 Adjusted operating income $13.1(1) $17.8(2) Backlog (12 month) 948.3 910.8 Cash 93.6 68.3 Total debt 317.9 297.1(1)Adjusted operating income excludes the $8.2M charge related to TransCanada settlement(2)Adjusted operating income excludes the $134.3 million charge related to the Goodwill Impairment 20 December 2011
    • Liquidity and Free Cash Flow(1)• Cash and cash equivalents of approximately $68.3 million• $175 million credit facility ‒ $25 million cash revolver available ‒ $21 million letters of credit drawn ‒ $59 million cash revolver borrowings• Maturity profile ‒ $32 million of convertible notes due in December 2012 ‒ Senior credit facility due in June 2013 ‒ Term loan due in June 2014• Flexible maintenance and capital expenditure requirements(1)September 30, 2011 21 December 2011
    • WG is Undervalued Relative to Peers 2012 EV/EBITDA Valuation 2012 Price/Cash Flow Valuation10x 14x 12x 8x 10x 6x 8x 4x 6x 4x 2x 2x 0x 0x WG FWLT MTRX PIKE EXH DY TTEK MTZ MYRG PWR TISI CBI GLBL EXH WG DY TISI MTZ TTEK MTRX MYRG GLBL FWLT CBI PWR 2012 Price/Sales Valuation 1.6x 1.4x 1.2x 1.0x 0.8x 0.6x 0.4x Source: Thomson One 0.2x Pricing as of November14, 2011 0.0x WG EXH PIKE MTRX MTZ MYRG CBI FWLT DY TTEK PWR TISI GLBL 22 December 2011
    • Key Investment Considerations• Worldwide brand recognition and reputation for quality, safety and schedule / price certainty• Exposure to burgeoning markets in electric transmission, hydrocarbon infrastructure and the Canadian oil sands driven by: – Renewable energy – Shale development – Pipeline integrity – Aging infrastructure – Ongoing maintenance – Government regulation• Transmission infrastructure market outlook implies earnings break-out as pricing power shifts to contractors in a tightening market• Broad range of services enhanced by in-house engineering• Critical scale, extensive geographic presence and strong customer base reduces cyclicality and risk• Balanced revenue base from recurring services and EPC / discrete projects• Trading at a discount to peer group based on most valuation metrics 23 December 2011
    • www.willbros.com