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Investor Presentation February 2019
Investor Presentation February 2019
Forward-looking Statements
2
We include the following cautionary statement to take advantage of the "safe harbor" provisions of the PrivateSecurities Litigation Reform Act of 1995 for any forward-looking statement made by us, or on our behalf. The factorsidentified in this cautionary statement are important factors (but not necessarily all of the important factors) thatcould cause actual results to differ materially from those expressed in any forward-looking statement made by us, oron our behalf. You can typically identify forward-looking statements by the use of forward-looking words such as"may," "will," "could," "project," "believe," "anticipate," "expect," "estimate," "potential," "plan," "forecast," andother similar words. Forward-looking statements may include statements regarding our future financial position,budgets, capital expenditures, projected costs, plans and objectives of management for future operations andpossible future acquisitions. Where any such forward-looking statement includes a statement of the assumptions orbases underlying such forward-looking statement, we caution that, while we believe such assumptions or bases tobe reasonable and make them in good faith, assumed facts or bases almost always vary from actual results. Thedifferences between assumed facts or bases and actual results can be material, depending upon the circumstances.Where, in any forward-looking statement, we, or our management, express an expectation or belief as to the futureresults, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However,there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished.Taking this into account, the following are identified as important factors that could cause actual results to differmaterially from those expressed in any forward-looking statement made by, or on behalf of, our company: the levelof supply and demand for and supply of oil and natural gas, fluctuations in the current and future prices of oil andnatural gas, the level of exploration, drilling and completion activity, the level of offshore oil and natural gasdevelopmental activities, general global economic conditions, the cyclical nature of the oil and natural gas industry,the financial health of our customers, and the other factors discussed within the "Business" and "RiskFactors" sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, PeriodicReports on Form 8-K and Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance onforward-looking statements, which speak only as of the date hereof, and, except as required by law, the Companyundertakes no obligation to update those statements or to publicly announce the results of any revisions to any ofthose statements to reflect future events or developments.
Well Site Services – provides service equipment and personnel primarily for completion and production operations
o U.S. shale focused (86% of 4Q 2018 Completion Services revenues)
o GOM and international markets (14% of 4Q 2018 Completion Services revenues)
o Acquired Falcon Flowback Services on February 28, 2018
Downhole Technologies (acquired GEODynamics, Inc. on January 12, 2018) – researcher, developer and manufacturer of highly engineered consumable products used in completion applications
o U.S. shale market represents over 95% of TTM segment revenues
Offshore/Manufactured Products – designs, manufactures and sells capital equipment utilized on floating production systems, subsea pipelines, and offshore drilling rigs and vessels, along with shorter-cycle products used in land applications
o Activity drivers:
• Long-term, technology-focused business driven by investments in global deepwater capital equipment
• Shorter-cycle products (consumables) driven primarily by U.S. onshore shale activities
Technology-Focused, Pure-Play Energy Services Company
3
(1) Segment EBITDA excludes corporate costs; see non-GAAP reconciliation on slides 24-25
4Q 2018 Financial Snapshot
Total Revenue: $274 Segment EBITDA (1): $38
($ in Millions)
Offshore/Manufactured
Products35%
Well Site Services
46% Offshore/Manufactured
Products34%
Well Site Services
50%
Downhole Technologies
16%
DownholeTechnologies
19%
Global Footprint with Blue-Chip Customer Base
4
Oil States’ broad global footprint provides diversification through the cycle and significant growth potential
o Products and services provided to a blue-chip customer base
o U.S. locations positioned in the most active basins
Drilling Services: 2
Offshore/Manufactured Products: 28
Completion Services: 47
Downhole Technologies: 14
Number of Locations
Long history of generating free cash flow(3) through cycles (total of $439 million generated from 2014 to 2018)
$52 million of debt reduction since March 31, 2018
$176 million of liquidity (inclusive of $19 million of cash)
2019 capex investments forecasted at $65-$70 million
$120.5 million remaining under share repurchase program authorization (through July 2019)
Disciplined approach of capital allocation for organic capital expenditures, M&A or share repurchases to realize highest returns on invested capital
Disciplined Financial Position
5
Debt Maturity Profile at 12/31/2018
(1) Excludes $2.0 million of unamortized debt issuance costs at 12/31/2018(2) Convertible Senior Notes carrying value at 12/31/2018 was $167 million and will accrete up to $200 million principal amount at the maturity date(3) Defined as cash flow from operating activities less capital expenditures
(U.S
. dolla
rs in m
illio
ns)
Total Debt / Total Capitalization 18.7%
Total Net Debt to TTM EBITDA 2.4x(maximum 4.0x through 12/31/18;
3.75x thereafter)
Total Senior Secured Debt to TTM EBITDA 1.2x(maximum 2.25x)
Key Leverage Statistics
$136
$156
$200
$25
$1 $1 $1
$1
$3 $0
$100
$200
$300
$400
2019 2020 2021 2022 2023 Thereafter
Revolver - Drawn(1) Revolver - AvailabilityConvertible Senior Notes(2) Current DebtOther
Well Site Services
Well Site Services
Drilling
Drilling
Wireline/Coiled Tubing
Support
Frac/PressurePumpingSupport
Flowback
Completion Services
Well Testing
Own and operate 34 land drilling rigs in the Permian Basin (24 rigs) and the Rockies (10 rigs)
Rigs are highly mobile, reducing the mobilization time and the necessary crew size
Rig specifications:
o <500 HP- 4
o 500 HP- 17
o >500 HP- 13
7
Proprietary, technology-driven, HPHT equipment which is well suited for increasingly complex completion requirements – hold over 225 patents
Leading market position in oil and gas shale plays, primarily U.S. onshore
Network of over 45 locations in U.S. and Canada and operate in over 20 countries on a rotating/consignment basis, employing about 1,700 personnel
Wireline, coiled tubing and gravel pack support equipment and personnel
Wellhead isolation equipment and services which are integral to stage frac operations
Downhole proprietary extended reach technology and thru tubing (drill-outs and fishing)
Flowback separation equipment and services, well testing, production testing equipment, and service personnel (Falcon)
Region#
LocationsU.S. Rig Count (1)
S. Texas, Permian
9 555
Northeast 6 81
Mid- Continent 13 139
Gulf Coast 6 19 (2)
Rockies 6 89
Manufacturing Kilgore / OKC
2
Corporate/Other
1 164
Total 43 1,047
Broad North American Coverage
8
Source: Baker Hughes (1) Rig count as of 2/22/2019.(2) Gulf of Mexico offshore rig count.
Oil States’ Completion Services Offerings
9
Frac StacksWireline Support Isolation Tools
Sand ControlFlowback Thru Tubing
Ball Launchers
Production Services
Frac Valves – Manifolds Ball Catchers – Sand Knockout UnitsBOPs – Plug Catchers – Chokes
Casing Isolation Tools Wellhead Isolation ToolsTubing Isolation Tools
Wash Pipe – Tool Baskets Handling Equipment – Frac Heads CoFlex Hoses – Hydraulic Chokes TCP Heads – Hydraulic Frac Manifolds
Hydraulic Annular Valves Grease Injection Packages / Units Flanges & Swages – Pump In Subs Wireline Valves - Tool Traps - Quick Test SubsLubricators - Head Catchers Velocity Ball Check Valves Grease Heads – Slick Line Stuffing Boxes Line Wipers – Pressure Test Units
Well Service & Test PumpsIntegral Iron Packages Spacer SpoolsGas Buster, Mixing, Sand, & FracTanks - Tool & Pipe Baskets Cranes
Hydraulic Motors –Bottom Hole Assemblies
Circulating Subs –Torque Knuckle Joints
Over Shots –Wash Tools – Mills
Tubing Cleaners
Combination Test Units Test Separators – Flare Stacks Line Heaters – Flow Iron Dual Plug Catchers –
Under Balanced Drilling Sand Separators –
Flowback Manifolds
Proprietary Automatic Launchers
Tempress
HydroPull® Extended Reach Tools Pulsed Cleanout & Stimulation Tools Motor Gas Separators MGS™ Water Bypass SubJet Rotor™ High-Pressure Rotary JetNitroBlast™ Acoustic Well Stimulation Tools
Completion Services offers differentiated proprietary technology, expertise and know-how, including the areas of wireline support, frac stacks, isolation tools, Tempress Tools, flowback and ball launchers
Leverage to Activity-Based Incrementals Will Drive Near-Term Results
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Shale Well Completion Attributes and Benefits
Wirel
ine
Support
Frac
Sta
cks
Isol
atio
n To
ols
Tem
press
Ball L
aunch
ers
Produ
ctio
n Se
rvic
es
Wel
l Tes
ting
Thru
Tub
ing
Drivers
Longer Laterals More days on location, best-in-class extended reach
technology including drill-out operations.
Higher Sand Concentrations Isolation Tool ideal for finer grain sand sizes and higher volumes due to full-bore access and plug valve
configuration. Well testing and flowback requirements are higher.
More Frac Stages
Isolation Tool provides signficant efficiencies for switching between pressure pumping and wireline operations.
Higher density frac stages provide more days on location for a given length lateral and by offering support for both ball and sleeve and plug and perf operations.
Pad Drilling Quality equipment is critical in multistage completions due
to the close proximity of other service providers.
Zipper Manifolds Significant efficiences and cost savings for customers.
Downhole Technologies
Downhole Technologies Overview (GEODynamics Acquisition)
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Founded in 2004 as a researcher, developer and manufacturer of consumable engineered products for completion applications
Provider of proprietary consumable completion products
o Supports recurring revenue streams at attractive margins
o Supplies products with relatively high barriers to entry due to strict regulatory compliance associated with safe handling of explosive materials
Proven track record of growth through technological innovation
o Strong engineering culture supported by an R&D facility and both in-house and outsourced manufacturing
o Offers robust growth pipeline of technologies complementary to Oil States’ current product lines with opportunities to expand domestically and internationally
Direct technical relationships with blue-chip customer base
Strong brand recognition
Nearly 120 issued patents
Headquartered in Millsap, Texas (near Fort Worth). The Millsap campus supports engineering, product testing, manufacturing, sales and administrative functions
Employs approximately 500 personnel in 14 locations
GEODynamics’ Product Offerings
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Engineered Perforation Solutionso Pioneered advancements in perforation
technology using patented and proprietary systems combined with advanced modeling and analysis tools• Hole size, depth and quality of
tunnels are key factors for optimal production
Completion Products and Technologyo Proprietary toe valve and frac plug
products• Focused on zonal isolation for
hydraulic fracturing of horizontal wells
Legacy® Oil Toolso Broad range of consumable products used
in completion, intervention and decommissioning applications
SmartStart PLUS ® Toe Valve Evolv™+ FracTrap ® Composite Plug
Power Charges and Ignitors Setting Equipment Bi-Directional Booster
Bridge Plug Jet Cutter Cement Retainer
Perforating Gun and Charges (inset)
Typical Permian Basin Well in 2014
Lateral length: 6,000 ft.Frac Stages: 25Perforating Clusters: 100
Products Required Per Well:Perforating Charges: 1,250Perforating Guns: 100Frac Plugs: 25
Typical Permian Basin Well in 2017 Leading Edge Permian Basin Well in 2018
Lateral length: 10,000 ft.+Frac Stages: 70+Perforating Clusters: 1,200+
Products Required Per Well:Perforating Charges: 3,600+Perforating Guns: 1,200+Frac Plugs: 70+
Lateral length: 8,200 ft.Frac Stages: 40Perforating Clusters: 280
Products Required Per Well:Perforating Charges: 2,000Perforating Guns: 280Frac Plugs: 40
Industry Drivers
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(1) Source: well completion design and product requirements data are Company management estimates.
Implementation of technology for complex well completions, coupled with sustained WTI prices above $50+/Bbl are delivering top-tier well results and economics
o Driving increased completions activity by E&P operators in U.S. shale plays
Modern completion practices driving increased demand for GEODynamics’ consumable completion products include longer lateral lengths, increased frac stages and more perforation clusters for improved unconventional well productivity
Operators increasingly utilizing integrated gun systems
o Currently in field trials with our integrated gun system, anticipate commercialization in 2Q 2019
On-Going Completion Intensity in North America
Increasing Well Completion Design and Product Requirements Over Time (1)
Offshore/Manufactured Products
Offshore/Manufactured Products—Diversified Products
Major project content opportunities for floating production facilities (FPSO’s, TLP’s and Spars), subsea pipelines and tie-backs along with shorter-cycle consumable products (primarily destined for U.S. land applications), newbuild rig and vessel equipment
Over 25 manufacturing and service locations globally, including four Engineering Centers of Excellence providing technical support to the offshore industry
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$0
$200
$400
$600
$800
$1,000
$1,200
$0
$100
$200
$300
$400
$500
$600
$700
2Q
'08
2Q
'09
2Q
'10
2Q
'11
2Q
'12
2Q
'13
2Q
'14
2Q
'15
2Q
'16
2Q
'17
2Q
'18
Quarter-end Backlog Quarterly Bookings TTM Revenue
Exposure to deepwater production infrastructure and large development projects has mitigated some of the commodity price volatility
Deepwater projects are generally longer-term in nature and are normally based on through-cycle economics
Major project bidding and quoting activity is improving
Book-to-bill ratio totaled 1.1x for full-year 2018
Historical Backlog, Bookings Trends & Revenue Components
(U.S. dollars in millions)
Back
log a
nd B
ooki
ngs
TTM
Reve
nue
17
Note: As of 12/31/2018.
Total backlog of $179 million at December 31, 2018 provides Project Driven revenue visibility through 2019
o ~75% of backlog to turn into revenues in forward twelve months
Short-cycle products comprised of:
o Elastomer consumables (composite frac plug used primarily in onshore applications)
o Valve products (onshore and offshore applications)
Service and Other Products, including military
58%
62% 58% 55% 60%
58%
33% 31%
12%
13% 16%
19%
14%
17%
39% 36%
30%
25%
26%
26%
26%
25%
28% 33%
0%
5%
10%
15%
20%
25%
30%
$0
$200
$400
$600
$800
$1,000
2011 2012 2013 2014 2015 2016 2017 2018
Project Driven Short Cycle Services & Other Products EBITDA %
Reve
nue (
U.S
. dolla
rs in m
illio
ns)
EBIT
DA M
arg
in
Revenue Breakout
Macroeconomic Drivers
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Offshore Field Developments – Engineered Equipment for Production Platforms
Subsea Pipeline Equipment – Primarily for Export Systems
Offshore Drilling – OEM Capital Equipment and Consumables
Onshore O&G – Consumables for Completion, Drilling & Workover
Aftermarket - Maintenance, Service and Repair on OEM and CEM Equipment
Industry Drivers- Offshore Exposure Provides Long-Cycle Growth
19
Source: Westwood Global Energy Group, January 2019
Attractive opportunity to participate in the early stages of the offshore recovery
Major project award activity is improving as the industry is exiting trough levels of activity
Offshore E&P activity should see accelerated project sanctioning over the next few years with average annual spend of approximately $15-$16 billion
Latin America is expected to be the most active regional market, followed by Africa (both East and West coasts), the Gulf of Mexico and South East Asia
Conclusion
Outlook for Oil States
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Longer-term positive outlook for North American complex shale completions bodes well for Well Site Services and Downhole Technologies
Improved major offshore project FID outlook for 2019-2022
Quality customer base
o Partnering with customers to design customized downhole completion solutions
Strong balance sheet position
Long history of generating free cash flow through cycles
Opportunity to continue to deploy capital for strategic acquisitions
Ability to execute opportunistic share repurchases
Highly experienced management team to navigate the current economic environment and capitalize on opportunities to strengthen Oil States for the long-term
Goal to create long-term stockholder value through strategic growth and returns on invested capital
Appendix
Strong Financial Position
23
(USD in millions, except percentages and ratios) 12/31/2018
Actual
Net Working Capital (excludes cash and current portion of long-term debt) 359.2$
Current Debt (1) 25.6$
Revolving Credit Facility (Matures January 2022)(2) 134.1
Convertible Senior Notes (Due February 2023) 167.1
Other Debt 5.0
Total Debt 331.7
Stockholders' Equity 1,439.8
Total Capitalization 1,771.4$
Total Debt / Total Capitalization 18.7%
Total Net Debt to TTM EBITDA (maximum 4.0x through 12/31/18; 3.75x thereafter)(3) 2.4x
Total Senior Secured Debt to TTM EBITDA (maximum 2.25x)(3)
1.2x
Credit Facility Availability 156.2$
Cash 19.3
Total Liquidity 175.5$
Notes:
1) Includes $25 million promissory note (accrued and unpaid interest) issued in connection
with the GEODynamics (Downhole Technologies) acquisition scheduled to mature in July 2019.
2) Net of $2.0 million of unamortized debt issuance costs.
3) TTM EBITDA for loan compliance purposes adjusted for non-cash stock-based compensation
expense of $22.6 million.
Non-GAAP EBITDA Reconciliation
24
(1) 2014 results include $11 million of transaction costs associated with the spin-off of Civeo(2) 2015 results include $6.4 million of severance and downsizing charges(3) 2016 results include $5.2 million of severance and downsizing charges(4) 2017 results include $2.0 million of severance and downsizing charges and $1.4 million of transaction-related charges(5) 2018 results include $8.4 million of legal fees incurred for patent defense, $3.3 million of transaction-related charges, $3.0 million of reserves for prior
years’ FLSA claim settlements, and $1.6 million of severance and downsizing charges
Oil States International, Inc.Non-GAAP Reconciliation(USD in millions)
Three Months Ending
2014(1) 2015(2) 2016(3) 2017(4) 2018(5) 3/31/18 6/30/18 9/30/18 12/31/18
Well Site Services
Operating Income (Loss) 178$ (44)$ (108)$ (59)$ (17)$ (7)$ (2)$ (5)$ (3)$ Other Income 3 1 1 1 3 1 1 1 1Depreciation and Amortization Expense 101 103 93 82 81 19 20 20 21
Segment EBITDA 282$ 60$ (13)$ 24$ 67$ 13$ 19$ 16$ 19$
Downhole Technologies
Operating Income 27$ 8$ 12$ 6$ 1$ Other Income (Expense) (0) (0) - 0 (0)Depreciation and Amortization Expense 19 4 5 5 6
Segment EBITDA 45$ 12$ 16$ 11$ 6$
Offshore/Manufactured Products
Operating Income 199$ 146$ 87$ 38$ 39$ 12$ 13$ 7$ 7$ Other Income (Expense) 1 0 (0) 0 0 0 0 0 0
Depreciation and Amortization Expense 22 27 24 25 23 6 6 5 6 Segment EBITDA 222$ 174$ 111$ 63$ 62$ 18$ 18$ 13$ 13$
Oil States International, Inc.Net Income (Loss) from Continuing Operations 127$ 28$ (46)$ (85)$ (19)$ (3)$ 3$ (4)$ (14)$ Income Tax Provision (Benefit) 69 22 (27) 7 (3) (1) 2 (4) 1
Net Interest Expense 17 6 5 4 19 4 5 5 5Depreciation and Amortization Expense 125 131 119 108 124 29 31 31 33Loss on Extinguishment of Debt 100 - - - - - - - -
Consolidated EBITDA 438$ 188$ 50$ 35$ 121$ 29$ 40$ 28$ 24$
For the Year Ending December 31,
Non-GAAP EBITDA Reconciliation (Continued)
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The term Consolidated EBITDA consists of net income (loss) from continuing operations plus net interest expense, taxes,depreciation and amortization expense, and certain other items. Consolidated EBITDA is not a measure of financialperformance under generally accepted accounting principles and should not be considered in isolation from or as asubstitute for net loss from continuing operations or cash flow measures prepared in accordance with generally acceptedaccounting principles or as a measure of profitability or liquidity. Additionally, Consolidated EBITDA may not be comparableto other similarly titled measures of other companies. The Company has included Consolidated EBITDA as a supplementaldisclosure because its management believes that Consolidated EBITDA provides useful information regarding its ability toservice debt and to fund capital expenditures and provides investors a helpful measure for comparing its operatingperformance with the performance of other companies that have different financing and capital structures or tax rates. TheCompany uses Consolidated EBITDA to compare and to monitor the performance of the Company and its businesssegments to other comparable public companies and as a benchmark for the award of incentive compensation under itsannual incentive compensation plan. The table above sets forth a reconciliation of Consolidated EBITDA to net income (loss)from continuing operations, which is the most directly comparable measure of financial performance calculated undergenerally accepted accounting principles.
The term Segment EBITDA consist of operating income (loss) plus depreciation and amortization expense, and certain otheritems. Segment EBITDA are not measures of financial performance under generally accepted accounting principles andshould not be considered in isolation from or as a substitute for operating income (loss) or cash flow measures prepared inaccordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, SegmentEBITDA may not be comparable to other similarly titled measures of other companies. The Company has included SegmentEBITDA as a supplemental disclosure because its management believes that Segment EBITDA provide useful informationregarding its ability to service debt and to fund capital expenditures and provides investors a helpful measure for comparingits operating performance with the performance of other companies that have different financing and capital structures ortax rates. The Company uses Segment EBITDA to compare and to monitor the performance of its business segments toother comparable public companies and as a benchmark for the award of incentive compensation under its annual incentivecompensation plan. The tables above set forth reconciliations of Segment EBITDA to operating income (loss), which is themost directly comparable measure of financial performance calculated under generally accepted accounting principles.
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