Capital One Southcoast 6th Annual Energy Conference - TESCO ...

Tesco CorporationCapital One Southcoast 6 thAnnual Energy ConferenceDecember 2011

Corporate InformationJulio M. QuintanaPresident andChief Executive OfficerRobert L. KaylSenior Vice President andChief Financial OfficerTesco Corporation3993 W. Sam Houston Parkway N., Suite 100Houston, TX 77043Phone: (713) 359-7000Fax: (713) 359-7100Web: www.tescocorp.comInvestor Relations ContactBlanca Felan(713) 359-7105blanca_felan@tescocorp.comFORWARD LOOKING STATEMENTThis presentation contains statements that mayconstitute “forward-looking statements” withinthe meaning of the US Private SecuritiesLitigation Reform Act of 1995. These statementsinclude, among others, statements regardingexpectations of future revenue, activities, capitalexpenditures, earnings, and technical results.These statements are based on currentexpectations that involve a number of risks anduncertainties, which could cause actual resultsto differ from those anticipated. These risksinclude, but are not limited to: the backgroundrisks of the drilling services industry [e.g.operational risks; potential delays or changes inplans with respect to customers’ exploration ordevelopment projects or capital expenditures;the uncertainty of estimates and projectionsrelating to levels of rental activities; uncertaintyof estimates and projections of costs andexpenses; risks in conducting foreign operations(e.g. political and fiscal instability) and exchangerate fluctuations]; uncertainty and risks intechnical results and performance oftechnology, and other uncertainties.2

TESCO at a Glance• Global leader in design and delivery of technology-based solutionsfor the drilling industry• Three business line segments:– Top Drives– Tubular Services– CASING DRILLING• Seven acquisitions from 2005 to 2007 to expand Tubular Services footprint• Global reach: over 1,500 employees in 35 key oilfield locations• Founded in 1986; IPO in 1993• Listed: NASDAQ (TESO)• 52 week stock price range: $10.01 – $23.39• 30 day average stock price: $14.19• Market Cap: $465 million*Note: All $ shown in this presentation are in United States Dollars ($USD).TESCO® is a registered trademark in the United States and Canada. TESCO CASING DRILLING® is a registered mark in the United States and Canada. CASING DRILLING® isa registered mark in Canada and CASING DRILLING is a trademark in the United States. Casing Drive System, CDS, Multiple Control Line Running System andMCLRS are trademarks in the United States and Canada.3

Strategic Direction2005 – 2010• Become the second largest Top Drive company• Become a top five player in Tubular Services• Commercialize CASING DRILLING• Aggressively grow international businessAll focused on the commercialization of past key Research and Developmentinvestments and organic growth.4

Accelerated Strategic Direction2011 – 2015• Develop best-in-class service and product quality• Become the automation company of choice, starting with Top Drives• Become the largest Tubular Services company in the industry• Accelerate the growth of CASING DRILLING while concurrentlycommercializing LINER DRILLINGAccomplish this by being recognized in the industry as the premier drillingservices company explicitly focused on Non-Productive Time (NPT)elimination. Grow primarily through organic means, but augmented with keyacquisitions.5

TESCO DeliversWe have delivered growth and earnings…Millions $ USDMillions $ USDREVENUEEBITDA*600$535120$114500400300$462$356$379$4631008060$79$42$57$74200401002002007 2008 2009 2010 TTM02007 2008 2009 2010 TTM*Non-GAAP Measure; please refer to the reconciliation of Non-GAAP measures on ourwebsite at www.tescocorp.com under Investor Relations.6

TESCO Top DrivesA solid foundation for growth...Millions $ USDUNITS SOLDREVENUE1401201001221379093350300250$289$341$225$244$30980692006015040100205002007 2008 2009 2010 TTM02007 2008 2009 2010 TTM11

Top Drives – Revenue BreakdownMillions $ USDMillions $ USD9M 20109M 2011AMSS$35Sales$55Rental$77AMSS$39Sales$91Rental$103Total: $167 Total: $23312

Top Drive MarketOFFSHORE RIGSLAND RIGSOffshoreRigs withTop Drives95%Land RigswithoutTop Drives40%Land Rigswith TopDrives60%OffshoreRigs withoutTop Drives5%Total Rigs: 700 Total Rigs: 5,000*Further, the growing directional drilling market will continue to drive theneed for high efficiency, new generation rigs.* Includes China & FSU; two large markets with minimal complements of Top DrivesSources: BHI Rig Count, MI Rig Count, Schlumberger Rig Count, TESCO Research and Estimates13

Tubular Services• Conventional casing running, tubing installation, andcompletions services• Proprietary Casing Drive System (CDS) technologygreatly increases efficiency and safety• Proprietary technology associated with sub-sea intelligentcompletions Multiple Control Line Running System(MCLRS)14

CDS Sets the StandardMillions $ USDPROPRIETARY JOBSREVENUE4,0003,5003,0002,5002,0001,5001,0005001,4061,9712,2543,1733,51512010080604020$66$87$95$101$11202007 2008 2009 2010 TTM02007 2008 2009 2010 TTMObjective next five years: Grow faster and more profitably15

Tubular ServicesRevenue BreakdownMillions $ USDMillions $ USD9M 2010 9M 2011Conventional$15Conventional$20Proprietary$74Proprietary$85Total: $89Total: $10516

Conventional Casing Running17

Proprietary Casing Running18

Tubular Service Metrics• Approximately $2+ billion market• TTM Revenue = $132 million• Less than 5% penetration of Proprietary Services• 14,005 jobs run to date with CDS as of September 30, 2011• Proprietary CDS requires a Top Drive (any Top Drive)• Approximately 250,000 total casing running jobs per year• 308 CDS units in fleet at September 30, 2011• Typical revenue (varies with size and depth):• Onshore: $15,000 – $18,000 per job• Offshore: $45,000 – $50,000 per job19

CASING DRILLING• Proprietary technology allows wells to be simultaneouslydrilled and cased• Retrievable (exclusive to TESCO) – Interval or complete well• Non-Retrievable (TESCO, et al) – Interval with drillable shoe• 2009 / 2010 Accomplishments• Drilled the largest number of offshore wells in our history• Designed the first fully-retrievable liner drilling system• Completed field testing of the Liner Drilling system• Commercialized TESCO XCD Level 2 Casing Drill Bits20

CASING DRILLINGRemaining ready to grow...Millions $ USDREVENUE30$27252015$15$13 $13$1610502007 2008 2009 2010 TTM21

CASING DRILLING TechnologyConventional DrillingCASING DRILLING22

CASING DRILLING Plastering Effect23

CASING DRILLING Customers24

2011 Objectives• Improve profitability in all segments• Accelerate Casing Drive System growth• Commercialize ESI 500 ton top drive• Commercialize Liner Drilling offering• Continue to generate free cash from operations• Complete key strategic acquisitions27

Tesco CorporationCapital One Southcoast 6 thAnnual Energy ConferenceDecember 2011