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8-K - GEOKINETICS INC | form8-k.htm |
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
EnerCom’s
The
Oil & Services Conference
February
17, 2010
Investor
Presentation
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
2
Forward-Looking
Statements
u This presentation
contains forward-looking statements.
u All forward-looking
statements speak only as of the date of this presentation or,
in the case of any document incorporated by reference, the date of that
document. All subsequent written and oral forward-looking statements
attributable to the company or any person acting on the company’s behalf are
qualified by the cautionary statements in this section. The company does not
undertake any obligation to update or publicly release any revisions to forward-
looking statements to reflect events, circumstances or changes in expectations
after the date of this report.
in the case of any document incorporated by reference, the date of that
document. All subsequent written and oral forward-looking statements
attributable to the company or any person acting on the company’s behalf are
qualified by the cautionary statements in this section. The company does not
undertake any obligation to update or publicly release any revisions to forward-
looking statements to reflect events, circumstances or changes in expectations
after the date of this report.
u Actual experience
may differ and such differences may be material.
u Backlog consists of
written orders and estimates for our services which we
believe to be firm. In many instances contracts are cancelable by customers so
we may never realize some or all of our backlog, which may lead to lower than
expected financial performance.
believe to be firm. In many instances contracts are cancelable by customers so
we may never realize some or all of our backlog, which may lead to lower than
expected financial performance.
u Forward-looking
statements are subject to uncertainties and risks which are
disclosed in Geokinetics’ Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q.
disclosed in Geokinetics’ Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q.
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
3
GOK
Market Data
u Leading provider of
seismic data acquisition, processing and
interpretation services to the oil & gas industry worldwide
interpretation services to the oil & gas industry worldwide
Market
Data (at
2/8/2010)
• Exchange/Ticker:
NYSE
Amex: GOK
• Market
Capitalization: $132.5
MM
• Enterprise
Value: $253.4
MM*
Trading
Data (at
2/8/2010)
• Common Shares
O/S 15.8
MM
• Avg. Volume (90
day) 184,811
shs/day
• Institutional
Ownership 56%
*Reflects
Debt & Preferred Equity as of 9/30/09, Cash (including $2.0M of Restricted
Cash) as of 9/30/09
adjusted for net proceeds from December Equity Offering, excludes December Bond Offering & Related Cash
Proceeds as these are being held in Escrow pending closing of the PGS Onshore acquisition and will be returned
if this acquisition does not close
adjusted for net proceeds from December Equity Offering, excludes December Bond Offering & Related Cash
Proceeds as these are being held in Escrow pending closing of the PGS Onshore acquisition and will be returned
if this acquisition does not close
Institutional
ownership as reported by Ipreo Bigdough.
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
Industry
Dynamics
u NOC’s control as
much as 94% of world’s oil and gas reserves
(Source: Oil & Gas Journal, February 2, 2009)
(Source: Oil & Gas Journal, February 2, 2009)
u Over 50% of Top 50
oil companies are NOC’s
(Source: Petroleum Intelligence Weekly)
(Source: Petroleum Intelligence Weekly)
u OPEC oil production
is at its highest level since December 2008
u Technical advances
such as 3-D seismic, hydraulic fracturing and horizontal
drilling are bringing new activity in regions with known hydrocarbon systems
drilling are bringing new activity in regions with known hydrocarbon systems
u U.S. shale plays
still active and profitable, E&P expenditures expected to rise by
13% in 2010
13% in 2010
u U.S. projects
generally focused on natural gas, while international projects are
mostly targeting oil prospects
mostly targeting oil prospects
u 45% of companies
surveyed indicated an increase in 2010 exploration spending
u Increasing demand
for seabed seismic data acquisition
(Transition Zone, Ocean Bottom Cable and 4D)
(Transition Zone, Ocean Bottom Cable and 4D)
Source:
Barclays Capital - The Original E&P Spending Survey , December 16,
2009.
International
Exploration and Production Expenditures ($B)
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Amex: GOK - A
World of Opportunities, Revealed
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Amex: GOK - A
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5
Expanding
Capital Budgets
Source:
Barclays Capital - The Original E&P Spending Survey , December 16,
2009.
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
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6
Global
Seismic Crew Count
Seismic
Crew Data Source: IHS Energy.
1.
Source: Barclays Capital - The Original E&P Spending Survey
12/16/2009
u International
markets grew
to 79% of total market from 77%,
driven by NOCs and IOCs
primarily targeting oil
to 79% of total market from 77%,
driven by NOCs and IOCs
primarily targeting oil
u U.S. and Canadian
markets
declined to 21% of total market
from 23%
declined to 21% of total market
from 23%
u U.S. E&P
spending in 2010
expected to increase 12%;
international E&P expected to
increase 10%, mostly due to
higher capital spending from
NOCs(1)
expected to increase 12%;
international E&P expected to
increase 10%, mostly due to
higher capital spending from
NOCs(1)
u E&P companies
announcing
increase in percent of budget
allocated to exploration(1)
increase in percent of budget
allocated to exploration(1)
u Global presence
provides
ability to redeploy assets
to best markets
ability to redeploy assets
to best markets
Region
|
Feb-2009
|
Feb-2010
|
Change
|
U.S.
|
75
|
65
|
-10
|
Canada
|
15
|
14
|
-1
|
U.S.
& Canada
|
90
|
79
|
-11
|
Europe
|
36
|
32
|
-4
|
CIS
|
47
|
46
|
-1
|
Latin
America
|
36
|
35
|
-1
|
Africa
|
74
|
72
|
-2
|
Middle
East
|
35
|
35
|
-
|
Far
East
|
73
|
70
|
-3
|
Outside
U.S. & Canada
|
301
|
290
|
-11
|
World
Total
|
391
|
369
|
-22
|
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
7
Geophysical
Market - Competitive Landscape
Company
|
Data
Acquisition
|
M-C
Data
Library |
Data
Proc
& Interp |
Eqpmt. |
Land
Seismic
Crews |
||||
Marine
Streamer
|
Land
|
TZ
|
OBC
|
Intl
|
North
Amer. |
||||
Geokinetics
(Pro Forma)
|
|
ü
|
ü
|
ü
|
ü
|
ü
|
|
ü
|
ü
|
Dawson
|
|
ü
|
|
|
|
ü
|
|
|
ü
|
Tidelands
|
|
ü
|
ü
|
|
|
|
|
|
ü
|
PGS
(Pro Forma)
|
ü
|
|
|
|
ü
|
ü
|
|
|
|
BGP
|
ü
|
ü
|
ü
|
|
|
ü
|
ü
|
ü
|
|
CGGVeritas
(Sercel)
|
ü
|
ü
|
ü
|
ü
|
ü
|
ü
|
ü
|
ü
|
ü
|
WesternGeco
(Schlumberger) |
ü
|
ü
|
ü
|
ü
|
ü
|
ü
|
ü
|
ü
|
|
Global
Geophysical
|
|
ü
|
ü
|
ü
|
ü
|
ü
|
|
ü
|
ü
|
Seitel
|
|
|
|
|
ü
|
|
|
|
|
Mitcham
|
|
|
|
|
|
|
ü
|
|
|
ION
Geophysical
|
|
|
|
|
ü
|
ü
|
ü
|
|
|
Bolt
Technologies
|
|
|
|
|
|
|
ü
|
|
|
OYO
Geospace
|
|
|
|
|
|
|
ü
|
|
|
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
8
Geokinetics
Overview
u Leading provider of
seismic data acquisition, processing and interpretation services to the oil
& gas
industry worldwide
industry worldwide
u Provides seismic
data acquisition services by collecting two-dimensional (2D),
three-dimensional
(3D), and multi-component seismic data in land, marsh and swamp, and shallow water environments
on a contract basis for its customers
(3D), and multi-component seismic data in land, marsh and swamp, and shallow water environments
on a contract basis for its customers
u Provides a suite of
onshore and offshore proprietary seismic data processing and
interpretation
products and services to produce an image of the earth’s subsurface
products and services to produce an image of the earth’s subsurface
u Purpose-built
vessels designed for cost-
effective mobilization by air, land or sea
effective mobilization by air, land or sea
§ Up to 65’ in length,
ultra shallow draft vessels
§ Capable of operating
150 ft. water depth
§ Four active
crews
u Launched OBC
operations Q4 2007
u First operator of
Sercel SeaRay (2 systems)
u Offshore
capabilities up to 500 ft. water depth
u Expanding OBC
capabilities near-term
Leader
in Transition Zone
Emerging
OBC Market
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Amex: GOK - A
World of Opportunities, Revealed
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Amex: GOK - A
World of Opportunities, Revealed
9
Investment
Highlights
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
10
Leading
Provider with a Global Market
Presence
Presence
Significant
backlog provides strong visibility for crew utilization into 2010
Geographic
Revenue % Split
Significant
international presence with backlog of ~$455.1 millions as of
9/30/09
*
Backlog
is pro forma for the acquisition of PGS Onshore
Backlog
%
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
Acquisition of PGS Onshore Enhances
Capabilities and International Expertise
PGS
Onshore Capabilities
u PGS Onshore engages
in seismic operations on land, shallow water and
transition zones, including onshore multi-client library
transition zones, including onshore multi-client library
u As of September
2009, PGS Onshore had:
§ 13 crew capacity (9
active) in 10 countries
§ 3,514 data
acquisition employees
§ ~84,000
channels
u Extensive PGS
Onshore geographic capabilities include:
§ Desert - experience
in severe desert conditions in Middle East and Africa
§ Arctic -
environmentally sensitive terrain through its modern equipment
§ Mountain, Jungle and
Swamp
§ Highland - high
channel count capability
§ Transition Zone -
“light tackle” shallow marine, and transition zone surveys
u Multi-client data
library contains over 5,500 square miles of 2D / 3D
seismic information covering the U.S.
seismic information covering the U.S.
11
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
12
Transaction
Overview
Sources
and Uses
u On December 3, 2009,
Geokinetics Inc. (“Geokinetics”) signed a
definitive agreement to acquire the onshore seismic data
acquisition and multi-client data library business of Petroleum Geo
-Services ASA (“PGS Onshore”)
definitive agreement to acquire the onshore seismic data
acquisition and multi-client data library business of Petroleum Geo
-Services ASA (“PGS Onshore”)
u Purchase price of
$210 million consisting of:
§ $183.9 million in
cash consideration
§ $26.1 million common
stock issued directly to the seller (1)
u Financing of the
acquisition and refinancing of current debt
outstanding includes:
outstanding includes:
§ 4.0 million Share
Common Stock Equity Follow-On
§ $300 million Senior
Secured Notes
(1) Reflects stock
consideration based 2.15 million shares at an average price
of $12.11 per share.
of $12.11 per share.
(2) Includes expenses
related to this note offering, the concurrent common
stock offering, the new senior secured revolving credit facility, the bridge
loan and the preferred stock restructuring.
stock offering, the new senior secured revolving credit facility, the bridge
loan and the preferred stock restructuring.
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
Premier
Global Seismic Company
|
1
|
Standalone
|
|
Combined
|
||
|
|
|
|
PGS
Onshore
|
|
The
New
|
Recording
Channels (1) |
|
~120,000
|
|
~84,000
|
|
~204,000
|
Vibrator
Equipment |
|
68 (2)
|
|
84 (1)
|
|
152
|
Crew
Capacity |
|
25 (1)
|
|
13 (1)
|
|
38
|
Multi-Client
Library Area |
|
742 sq.
miles
(3)
|
|
5,500 sq.
miles
|
|
6,242 sq.
miles
|
Employees
(1) |
|
4,077
|
|
|||
2008
EBITDA
|
|
$65.0
|
|
$71.9
|
|
$136.9 (4)
|
YTD
9/30/09
EBITDA |
|
$71.6
|
|
$9.2
|
|
$80.8 (4)
|
Total
Assets
|
|
$459.5
|
|
$211.5
|
|
$755.4 (5)
|
Backlog
(9/30/09) |
|
$259
|
|
$196
|
|
$455
|
(1) As of September
2009.
(2) Reflects vibrator
trucks only.
(3) Currently in
process.
(4) Refer to
reconciliation of EBITDA.
US$
millions
13
(5) Total reflects pro
forma adjustments.
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
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Extensive
Multi-Client Library
Source: PGS
website.
Multi-Client Data
Library
14
Willow
Bend MC3D
35
square miles
Patrick
Draw
290
square miles
Taloga
102
square miles
Wichita
Mountain Front MC3D
3,000+
square miles
Ultra
Deep Regional 2D
125
square miles
Hearne
East and Flynn 3D
488
square miles
Crockett
3D
455
square miles
Key
Creek North
505
square miles
High
Density Alaska
Foothills
Foothills
500
square miles
Bradford
County
742
square miles (1)
(1) In
progress
PGS
Onshore
Geokinetics
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
15
Strong
Relationships with Diversified
Customer Base
Customer Base
Choice
of Leading Operators - Geokinetics (Pro Forma)
u Long-standing
relationships with major and independent oil and natural gas producers, as well
as
national oil companies throughout the world
national oil companies throughout the world
– Broad distribution
of revenue across customer base
u No one customer
represents more than 16% of total pro forma revenues
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
Execution
of Business Strategy Has Led to
History of Successful Growth
History of Successful Growth
Maintain
focus and specialization in
profitable, high-potential markets
profitable, high-potential markets
16
Prudently
invest in new and
technologically advanced equipment
technologically advanced equipment
Provide
a broad range of services
Diversify
operations geographically, oil
vs. gas, shallow water vs. land and other
services (Multi-Client and Data Process.)
vs. gas, shallow water vs. land and other
services (Multi-Client and Data Process.)
Actively
pursue strategic acquisitions
u In
becoming a leading global seismic provider, Geokinetics has been able
to
execute its business strategy which has resulted in a history of successful growth
execute its business strategy which has resulted in a history of successful growth
Successful
integration of past
acquisitions
acquisitions
Significant
capital investment in assets
and technology
and technology
(Over
$200M over the past three years)
Transition
to more international and
technologically advanced model
technologically advanced model
Significant
growth in revenues and
improvements in profitability
improvements in profitability
Enhanced
asset utilization and
operating efficiency
operating efficiency
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
Financial
Highlights
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
Historical
and Pro Forma Financial
Performance
Performance
Historical
and Pro Forma Revenue & EBITDA Trends
18
Source:
Prospectus Supplement.
$357.7
$474.6
$388.6
$753.4
$530.2
$31.2
$65.0
$71.6
$136.9
$80.8
$0
$100
$200
$300
$400
$500
$600
$700
$800
2007A
2008A
YTD
9/30/09
2008
PF
YTD
9/30/09 PF
Revenues
EBITDA
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
19
Quarterly
Results
Quarterly
earnings can be uneven
u Seasonality
primarily affects second quarter operations due to:
§ Canadian working
season and thaw
§ Colombian rainy
season
u Budgeting cycle of
international companies
u Quarterly volatility
reflects varying crew profitability due to fluctuations in size, job,
location,
utilization of crews and the timing of crew moves
utilization of crews and the timing of crew moves
Quarterly
Revenue ($MM)
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
20
Pro
Forma Capitalization and Credit Statistics
Pro
Forma Capitalization (9/30/09)
(1) Enterprise value as
of 12/29/09 based on GOK stock price of $9.81. Stand
alone based on 10.8 million shares outstanding. Pro
forma shares outstanding based on 10.8 million basic shares outstanding +
0.8
million shares issued to Avista + 4.0 million shares issued to the public + 2.2 million shares issued to PGS.
million shares issued to Avista + 4.0 million shares issued to the public + 2.2 million shares issued to PGS.
(2) Represents revolver
availability ($58.8M and $50M on stand alone and PF basis, respectively, less
amount outstanding, plus cash on the balance sheet
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
Geokinetics
and PGS Onshore Capital
Expenditures and Multi-Client Investments
Expenditures and Multi-Client Investments
21
u In
2009, Geokinetics began investment in the Multi-Client data library
u Both
GOK and PGS Onshore capex has fallen in line with drop in oil
prices
u PGS
Onshore has invested heavily over the past several years to develop its
multi-client library in the U.S.
Historical
and Pro Forma Capital Expenditure and Multi-Client Investments
(US$ in
millions)
NYSE
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NYSE
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Synergies
Discussion
22
$10
million in
annual
synergies
Cost
Revenue
Growth
Platforms
Platforms
u After
completion of the PGS Onshore acquisition, Geokinetics estimates preliminary
annual synergies of $10
million
million
u Majority
of the synergies to be driven by overlap and cost reductions
u Synergies
will begin to be partially realized in Q2 of 2010
Procurement
Corporate
marketing
Organizational
overlap
Office
overlap
Cross-sell
Market
access
New
technology commercialization
NYSE
Amex: GOK - A
World of Opportunities, Revealed
NYSE
Amex: GOK - A
World of Opportunities, Revealed
Thank
you for your interest.
Investor
Presentation