Willbros Group at D.A. Davidson's 11th Annual Engineering & Construction Conferece

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Presentation for D.A. Davidson Engineering & Construction Conference

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Willbros Group at D.A. Davidson's 11th Annual Engineering & Construction Conferece

  1. 1. Willbros Group (NYSE : WG) D.A. Davidson’s 11th AnnualEngineering & Construction Conference September 12, 2012
  2. 2. 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 September 2012
  3. 3. Willbros: Over 100 years of• 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 Founded in 1908: IPO in 1996 Exchange / Ticker: NYSE : WG Share Price(1): $5.85/share Market Capitalization: $289 million Avg. Trading Volume(2): 567,105 shs/d Inside Ownership(3): ~9 million shares Notes: (1) Share price as of 08/09/12 Current work regions (2) Based on 3 month average Past work regions Willbros of f ices (3) Inside Ownership 8/31/11 3 September 2012
  4. 4. 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 4 September 2012
  5. 5. Willbros Today… Positioned for Success Recent Accomplishments Positive Market Indications• Settled West Africa Pipeline Company • Oil & Gas segment: (WAPCO) litigation – 90% of planned 2012 revenue committed• Completed DOJ monitorship and all – Downstream engineering profitable and charges dismissed adding additional resources• Reduced debt by over $170 million in – Downstream Gulf Coast office awarded MSA at a major refinery in Pascagoula last 18 months – Developed cloud-based pipeline lifecycle• Changed segment reporting structure integrity management solution with to mirror strategic growth opportunities GeoEye and served from the Google• Focus on improving the results of our Earth Builder platform underperforming business units: • Canada building quality backlog – Focused best management talent on • Utility T&D segment: operational improvements – Over $400 million in transmission backlog – Either quickly turnaround or exit these – Willbros T&D generating profit in 2Q12 businesses 5 September 2012
  6. 6. Willbros Business Segments Oil & Gas Canada Utility T&D• Engineering • Turnarounds • Tank Construction • Capital • Transmission • Utility Line• EPC • Manufacturing • Slurry Line Construction (OH & UG) Locating• Pipeline • Field Services Maintenance • Heater • Substation • Large-bore• Construction • Tank Services / • Spool Fabrication Services • Distribution Horizontal• Integrity Construction • Field Maintenance • Cable Restoration Directional Drilling Management • Compressor & • Mod Fab / Assembly • Smart Grids • Telecom• Field Development Pumping Stations • Emergency • Civil• Gathering Systems • Gov’t Services Restoration • Leak Detection 6 September 2012
  7. 7. Focusing on Growth Markets in 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 – Liquids-rich Resource Development – Pipeline Integrity Management Services • Canadian Oil Sands Production 7 September 2012
  8. 8. Utility T&D Positioned for Growing Market• Strong Utility T&D backlog of Actual and Planned Transmission Investment by Shareholder-Owned Utilities(2) over $1.3 billion(1) with: (billions) – Over $400 million of transmission $15.5 construction projects $14.0 – 96% of backlog associated with $13.1 $12.4 Master Service Agreements $11.7 $10.3 $10.7 (MSAs) $8.9 $9.5 $8.6• Continued investment in U.S. transmission infrastructure – Focused on expanding capabilities / presence in Texas to surrounding states 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Actual Planned (1)Backlog as of June 30, 2012 (2)Edison Electric Institute, July 2012 8 September 2012
  9. 9. U.S. Production Growth Concentrated in Liquids-richRegions Has Changed Infrastructure Landscape Active rig count: August 10, 2012 / Change in rig count from January 6, 2012 225/+23 10/+5 1/-3 29/+9 5/-1 29/-1 47/+4 76/-42 23/+10 40/+2 92/+17 10/+2 14/-8 40/+18 2/-1 242/+4 18/-12 6/-4 55/-5 11/-12 78/-23 37/-45 35/-34 16/+1 506/+47 73/+15 27/-6 2130 259/+18 -12 96/+11 Rig Increases Liquids-Rich/Oil Focused Areas Rig Declines Source: Bentek, August 2012 9 September 2012
  10. 10. Pipeline Construction Remains a Core Capability U.S. Pipeline Construction Forecast(1) • Aligned capacity with market demand 25,000 100% for long-distance and large diameter oil & gas pipelines 20,000 80% • Continuous process improvement to 77% 72% ensure we offer value propositions to 65% 65% 63% our customers at competitive prices 15,000 54% 60% • Opportunistic view of international 55% markets 10,000 40% • Willbros has the resources and in- depth expertise to perform pipeline 28% assessment, engineering, 5,000 20% construction and ongoing pipeline integrity management and maintenance… 0 0% 2005 2006 2007 2008 2009 2010 2011 2012 4-10" 12-20" 22-30" 30"+ Gas P/L % The full pipeline lifecycle(1) Oil & Gas Journal 10 September 2012
  11. 11. Operating & Expanding in the U.S. Production Plays Broaden our offerings to provide strategic customers the services they want in the places they want them• Increasing unconventional production is driving demand Watford City, ND for smaller & shorter distance pipelines and gathering Gillette, WY systems Greeley, CO Pittsburgh, PA• New supply areas lack Denver, CO Cambridge, OH Kansas City, MO sufficient infrastructure Tulsa, OK• The natural gas, NGL and oil Eunice, NM Ponder, TX midstream sectors are Carlsbad, NM Odessa, TX Shreveport, LA projected to require capital Forth Worth, TX Geismer, LA expenditures of $10 billion per San Antonio, TX Houston, TX year(1) George West, TX• Willbros is strategically Office / presence positioning offices in the PSL Headquarters liquids-rich plays(1) INGAA, North American Midstream Natural Gas Infrastructure Through 2035: A Secure Energy Future, June 28, 2011 11 September 2012
  12. 12. Compelling Opportunities for Integrity Management Services Ability to offer discrete and integrated EPC services Pipeline Integrity Management Solution Market Drivers• Partnered with GeoEye to develop a cloud- • Aging pipeline infrastructure with based pipeline lifecycle integrity significant exposure in densely populated management solution: areas – Provides customers easy access to real- • Fatal pipeline incidents across the U.S. time pipeline information served from the – San Bruno, CA and Allentown, PA Google Earth Builder platform – We believe this will become the standard • New regulations by DOT/PHMSA are expected to be imposed in 2012 in pipeline integrity management • There are ~3,000 companies with over Willbros Integrity Management Offerings 2.5 million miles of pipelines• Data mining • Maintenance – Pipeline integrity services market is• MAOP validation • Construction expected to double to ~$12 bn/year• Class location analysis • Engineering starting in 2012(1)• As-built services • Survey services• Corrosion services • EPC – Upgrade initiatives will be offset by• Risk & threat • Operations increased rate bases assessment (1) Willbros estimate based on data from American Gas Association and operator projections 12 September 2012
  13. 13. 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 Potential Capital Spending on New Project Development and Maintenance (Risked Forecast)(2) $25 $20 $15 $ Billions $10 $5 $0 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 In Situ Mining(1)CAPP Canadian Crude Oil Production Forecast 2011 – 2025, June 2011(2)Peters & Co. Limited, Winter 2012 13 September 2012
  14. 14. Financial Overview
  15. 15. Willbros Financial Snapshot Historical Revenue Revenue 2Q12 ($ in millions) $3,000 $2,500 Utility T&D $827 34% $2,000 $1,900 Oil & Gas 58% $1,700 $599 $1,500 $309 $1,000 Canada $1,913 8% $1,600 $1,260 $500 $1,192 Total: $499.2 million $0 2008 2009 2010 (1) 2011 2012 Guidance Willbros InfrastruX(1) InfrastruX revenue Jan – Jun 2010 15 September 2012
  16. 16. Backlog Total Backlog by Segment (1) Major Projects Canada 15% Total Backlog Oncor Oil & Gas 30% MPRP Y-Grade Utility T&D 55% NiSource $2.4 billion 12 Month Backlog by Segment (1) Camp Pendleton Oil & Gas Oman LNG Maintenance 48% Canada 14% Mildred Lake Mine Replacement Syncrude Maintenance Husky Sunrise Tanks Utility T&D 38% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q $1.2 billion 2012 2013(1)June 30, 2012 16 September 2012
  17. 17. Recurring Revenue from MSAs• Master service agreements(1) (MSAs) are MSA Backlog by Segment(2) typically multi-year agreements (1-3 yrs) Oil & Gas 22%• Contracts are based on established rates for time and materials• Acquisition of InfrastruX increased MSA Utility T&D 67% Canada 11% related backlog• Current significant MSA agreements / $1.9 billion alliances include: Utility T&D Backlog by Type(2) – NiSource – Oncor Discrete Services – Syncrude MSAs 4% 96%• Enhances visibility $1.3 billion (1)Work performed under MSAs is typically billed on a unit-price or time-and-materials basis. (2)June 30, 2012 17 September 2012
  18. 18. Improving Balance Sheet by Reducing Debt• Paid $46.7 million against the Term Loan during 1H12 – June 30, 2012 Term Loan balance of $129.2 million• Year over year Q2 revenue and backlog growth driven primarily by our expanded U.S. upstream presence and service offerings and improved resource utilization in the Utility T&D segment, especially in the Texas market ($ in millions) Q2 2012 Q2 2011 Contract revenue $499.2 $442.7 Adjusted EBITDA $18.2 $23.2 Operating income $5.9 $16.4(1) Backlog (12 month) $1,177.6 $904.4 Cash $38.5 $93.7 Total debt $227.9 $317.9(1)Adjusted operating income from continuing operations excludes $8.2 million charge related to the settlement of a project dispute with TransCanada in Q2 2011. 18 September 2012
  19. 19. Liquidity and Free Cash Flow(1)• Cash and cash equivalents of approximately $38.5 million• $175.0 million credit facility ‒ $25.0 million cash revolver available provided pro-forma leverage ratio does not exceed 3 to 1 ‒ $48.2 million letters of credit drawn ‒ $59.4 million cash revolver borrowings• Maturity profile ‒ $32.1 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)June 30, 2012 19 September 2012
  20. 20. Key Investment Considerations• Worldwide brand recognition and reputation for quality, safety and schedule / price certainty• Strategically positioned to capture opportunities in to burgeoning markets including: electric transmission, hydrocarbon infrastructure and the Canadian oil sands• 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 20 September 2012
  21. 21. www.willbros.com

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