UBS Global
Oil & Gas Conference
Oil & Gas Conference
Strong Experience - Focused Growth - Managing Risk
Forward-Looking Statements
Ш This presentation contains forward-looking statements.
Ш Forward-looking statements are based on management
assumptions and analyses.
assumptions and analyses.
Ш Actual experience may differ and such differences may
be material.
be material.
Ш 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.
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.
Ш Forward-looking statements are subject to uncertainties
and risks which are disclosed in Geokinetics’ Annual
Report on Form 10-K.
and risks which are disclosed in Geokinetics’ Annual
Report on Form 10-K.
Market Data (at 5/14/2008)
• Exchange/Ticker: AMEX/GOK
• Market Capitalization: $211.8MM
• Enterprise Value $342.2MM*
Trading Data (at 5/14/2008)
• Common Shares Out. 10.3 MM
• Average Volume 32,514 shares/day
• Institutional Ownership 59%
Key Financial Data (at 3/31/2008)
• Cash $23.8MM
• Debt $92.0MM
• Debt to Total Cap 31.9%
* Debt, Preferred Equity and Cash as of 3/31/08
About Geokinetics
Ш A Global Geophysical Contractor for
Customer-Driven Seismic Services in
Tough Environments & Frontier Zones
Customer-Driven Seismic Services in
Tough Environments & Frontier Zones
Exploit
Seismic Data Acquisition and Processing
Needed at All Stages of the E&P Cycle
“With 3-D seismic, we can understand the detailed geology much
better than before. And that translates to opportunities to drill new
wells to bolster production in mature fields.”
- ExxonMobil, The Lamp (2007 - Number 4)
better than before. And that translates to opportunities to drill new
wells to bolster production in mature fields.”
- ExxonMobil, The Lamp (2007 - Number 4)
Ш Increase drilling success rates
Ш Reduce finding and development costs
E&P Project Cycle
Equipment Providers
Sercel (CGV); ION Geophysical; OYO Geospace; Mitcham; Bolt Technologies
Data Acquisition
(Contractors)
(Contractors)
WesternGeco (Schlumberger); CGGVeritas;
Petroleum Geo-Services; BGP; Geokinetics;
Dawson; Tidelands; and many more
Petroleum Geo-Services; BGP; Geokinetics;
Dawson; Tidelands; and many more
Data
Processing
and Interpretation
Processing
and Interpretation
Seismic Industry Structure
Company | Data Acquisition | M-C Data Library | Data Proc & Interp | Eqpmt. | Seismic Crews | ||||
Marine Streamer | Land | TZ | OBC | Intl | US | ||||
Geokinetics | | | | | | | |||
Dawson | | | | ||||||
Tidelands | | | | ||||||
PGS | | | | | | | |||
BGP | | | | | | | |||
CGGVeritas (Sercel) | | | | | | | | | |
WesternGeco (Schlumberger) | | | | | | | | | |
Mitcham | | ||||||||
ION Geophysical | | | | ||||||
Bolt Technologies | | ||||||||
OYO Geospace | |
Geophysical Market
Strong Customer Relationships
(Partial Customer List)
(Partial Customer List)
Robust Industry Fundamentals
Ш Seismic crew activity has grown steadily in land and increased
rapidly in the marine streamer market in response to commodity
prices, but still lags increase in drilling rigs
rapidly in the marine streamer market in response to commodity
prices, but still lags increase in drilling rigs
Ш International plays (NOCs) are a key driver for seismic growth
– Pressure for continued growth in activity, even at lower
commodity prices
commodity prices
Ш Seismic crew count in the U.S. is still less than the lowest levels
in the 1990s when oil prices were near $20 per barrel
in the 1990s when oil prices were near $20 per barrel
Ш Increasing demand for seabed seismic data acquisition
(Transition Zone, Ocean Bottom Cable and 4D)
(Transition Zone, Ocean Bottom Cable and 4D)
Ш Oil companies reloading prospect inventories
– Resource plays are big drivers
– Technical advances drive activity and create barriers to entry
– Recent trend for more specialized crews and equipment
Ш Fundamentals are strong, but we are continually monitoring
for any trend toward overcapacity
for any trend toward overcapacity
Continue to
Leverage
Competitive Advantage
Grow Customer Base
& Expand into New
Markets
& Expand into New
Markets
Strengthen
Complementary
Service Offerings
Complementary
Service Offerings
ШLeverage competitive advantage and expertise in
difficult land environments and offshore shallow water
zones to maximize profitability.
difficult land environments and offshore shallow water
zones to maximize profitability.
ШBetter assist customers with full range of seismic
services, from acquisition and processing to
interpretation and management.
services, from acquisition and processing to
interpretation and management.
ШPresence in 18 of 194 countries worldwide. Further
expand geographic presence and services offered.
expand geographic presence and services offered.
Pursue Strategic
Acquisitions / Alliances
As Appropriate
Acquisitions / Alliances
As Appropriate
ШContinue to monitor opportunities for prudent
expansion.
expansion.
Capture New Market
Opportunities
Opportunities
ШLeverage operational expertise to pursue
opportunities in complementary markets such as OBC
opportunities in complementary markets such as OBC
Growth Strategy
Strong Experience - Focused Growth - Managing Risk
Operational Experience & Focus
Global Operations Map
Up the
Escarpment
Escarpment
Elements of Transition Zone
To Shallow
From Deepwater
150 feet
To Level
Ground
Ground
Surf Zone - New Zealand
Inter Tidal Zone - India
Typical Transition Zones
Ш 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
ultra shallow draft vessels
– Fit into four 40’ containers
– Capable of operating
150 ft. water depth
150 ft. water depth
Shallow Water - Transition Zones,
Lakes, Swamps and Offshore
Lakes, Swamps and Offshore
Ш Launch of OBC operations using first Sercel SeaRay system
Ш Expands offshore capabilities to 500 ft. water depth
Ш Currently using on extensive OBC projects
on Australia’s N. W. Shelf
on Australia’s N. W. Shelf
Ш Expanding OBC capabilities near-term
– Enhancing operating efficiency
– Expanding operations
– Second SeaRay system on order
– Capture additional OBC projects
Ocean Bottom Cable (OBC) -
Capitalizing on Opportunities
Capitalizing on Opportunities
Areas of Expertise and Opportunity
Ш Mountainous jungle environments
Ш High channel count crews
Ш State-of-the-art domestic operations
Ш Arctic environments
Ш Socially and/or environmentally sensitive areas
Land Operations
Processing & Interpretation
Capabilities
Capabilities
Ш Full suite of onshore and offshore proprietary seismic
data processing services and interpretation products
data processing services and interpretation products
– Geophysical processing
– Interpretation / well log analysis (existing database)
– Software
– Consulting Services
Ш Advanced Technologies for processing new data
and reprocessing old data with new methods
and reprocessing old data with new methods
– AVO, pre-stack time and depth imaging
– Multi-component and 4D
Ш Global Reach
– Offices in US and UK
– P&I services stretch to all regions of the globe
Ш Complements data acquisition services
– GROWTH OPPORTUNITY for follow on work;
currently less than 5%
currently less than 5%
Processing & Interpretation
Strategy
Strategy
��Reorganization complete - benefits being realized
Ш Complement acquisition, both in onshore and in
offshore shallow water environments
offshore shallow water environments
Ш Enhance multi-component processing capabilities
Ш Enhance 4D processing techniques
Ш Improve profitability through direct awards
– Recent success with new clients
North American Operations -
Canada
Canada
Ш Operated five land crews during Canadian winter (1Q ‘08)
Ш Three ION Vectorseis crews, two Sercel 428/408 crews
Ш Leader in proprietary multi-component data acquisition
Ш Sercel equipment to move internationally for Summer
North American Operations -
United States
United States
Ш Operate up to 8 land crews all year
Ш ION RSR, Sercel 428 / 408 and Aram Aries
Ш Experience throughout U.S.
Ш Competitive advantage in TX & LA swamp/marsh regions
Ш Processing center in Houston, Texas
International Operations -
Latin America
Latin America
Ш Operate up to 6 land crews all year
Ш Sercel 428 / 408 and Aram Aries
Ш Near-term operations in Bolivia, Brazil and Colombia
Ш Market leader in Colombia with 19 years
continuous presence
continuous presence
Ш 40 years experience in Brazil with continuous presence
since 2000
since 2000
Seismic Recording
Over Difficult Terrain
Over Difficult Terrain
International Operations -
Eastern Hemisphere
Eastern Hemisphere
Ш Operate up to 3 land crews, 3 transition zone crews and
1 OBC crew
1 OBC crew
Ш Sercel SeaRay, Aram Aries, Sercel 408
Ш Near-term operations in Australia, New Zealand,
Bangladesh, Egypt, Tanzania and Mozambique
Bangladesh, Egypt, Tanzania and Mozambique
Ш Market leader in transition zone
Ш Sole provider of Sercel SeaRay
Ш Processing center in London (Woking), England
Strong Experience - Focused Growth - Managing Risk
Financial Strength
Capitalization
(1) Includes $1.4 million of restricted cash at 3/31/08 and 12/31/07
Capitalization as of March 31, 2008
YTD Financial Results
Ш 2006 Pro Forma Results
§ Grant had revenue of $104.2 million and Adjusted EBITDA of $14.8 million for
period ended 9/8/06
period ended 9/8/06
§ Implies full year 2006 revenue of $329.4 million and Adjusted EBITDA of $38.0 million
§ FY ’07 vs. FY ‘06 combined revenue growth of 9% and Adjusted EBITDA decline of 10%
1Q Revenues up 8% year-over-year; driven by Capital Investment Program
Comparative Actual Financial Results
($ thousands expect per share and operating data)
Pro Forma By Quarter
Ш Seasonality is prevalent in operations
– Results from a variety of factors including Canadian working season in 1Q and thaw in 2Q,
and the budgeting cycle of international companies
and the budgeting cycle of international companies
Ш 2Q07 impacted primarily by severe weather in the U.S. and a job being declared force majeure
Ш 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 Pro Forma Revenue
Quarterly Pro Forma Adjusted EBITDA
($ in millions)
($ in millions)
Note: Adjusted EBITDA reflects $727k of Grant’s Abandoned IPO expenses and $12.9 million of expenses related to the Grant Acquisition consisting primarily of investment advisor and professional
fees, payout under phantom stock plan and completion bonuses which are added back in 3Q06 as well as $3.2 million of one-time severance costs in 3Q07.
fees, payout under phantom stock plan and completion bonuses which are added back in 3Q06 as well as $3.2 million of one-time severance costs in 3Q07.
Investing for Growth
Ш Invested $95 million in 2007:
– New state-of-the-art equipment
(67% received in second half of year)
(67% received in second half of year)
– Expanded recording capacity
– Entered OBC market
– Upgraded US crews
Ш 2008 capital expenditure budget
of $65 million*, $26 million invested in 1Q ‘08
of $65 million*, $26 million invested in 1Q ‘08
Ш 118,000 channels at 3/31/08 vs. 94,000
channels at 3/31/07, a 20% increase
channels at 3/31/07, a 20% increase
Ш Maintenance CAPEX averages 3% to 4%
of revenues
of revenues
Ш Capital investment decisions are based
on an average expected payback of
less than three years EBITDA
on an average expected payback of
less than three years EBITDA
*Subject to amendment to loan covenants
Sercel SeaRay
Near-Term Growth
Ш Quarterly record
seismic data
acquisition and data
processing backlog
of $417 million as of
March 31, 2008
seismic data
acquisition and data
processing backlog
of $417 million as of
March 31, 2008
Ш Substantial amount of
2008 covered by
current backlog,
remainder to be
completed in 2009 and
2010
2008 covered by
current backlog,
remainder to be
completed in 2009 and
2010
311
283
321
381*
*Includes a $59 million job in Argentina which has been removed from current
backlog due to continued delays and uncertainty.
backlog due to continued delays and uncertainty.
411*
Backlog Trend
2008 Value Drivers
Ш Reap benefit of US Crew Upgrades
Completed in 1Q ‘08
Completed in 1Q ‘08
Ш Increased Recording Capacity
Driving Revenue Growth
Driving Revenue Growth
Ш New Operations in Angola, Bolivia, Mozambique
and Tanzania
and Tanzania
Ш Expand TZ / OBC Capacity
Ш Positive Earnings from Processing & Interpretation
Why Buy GOK?
Ш Record backlog provides visible growth through 2008
and into 2009
and into 2009
Ш Leader in high-value transition zone/OBC niche
Ш Improving data acquisition operating margins
Ш Integration of acquired companies substantially complete
Ш Recent investments of $121 MM in new revenue-generating
equipment and upgrades
equipment and upgrades
Ш Solid domestic operations with strong
international upside
international upside
Ш First-mover advantage in large markets with
long-term visibility (Australia and Angola)
long-term visibility (Australia and Angola)
Strong Experience - Focused Growth - Managing Risk
UBS Global
Oil & Gas Conference
Oil & Gas Conference