1 © copyright 2007 fiberspar corporation how did we go from this in 2000…

1 © Copyright 2007 Fiberspar Corporation

How did we go from this in 2000….

To this in 2007……..

Market-leading oil field service provider of spoolable pipe products

2007: $70 million revenues with 20% EBITDA

Fast growth, high profitability in addressable $10 billion oil and gas markets

Dynamic geographically concentrated base of 100 plus customers

Proven benefits of 25% cost reductions over steel

41 patents (issued & pending) on fiber reinforced plastic pipe technologies

Significant future growth opportunities through product and service line extensions


A lot of $$$$$$...


Fiberspar OverviewMarket leader of spoolable pipe technology to oil and gas producers

• Founded in 1986 as a spin-off from MIT

• Manufacturer of patent-protected advanced composite materials

• Initially targeted the sporting goods industry; sold that business in 2000: 12 consecutive world championships Windsurfing, 3 NHL scoring titles and 3 America’s Cup victories.

• Entered oil-gas industry with alliances with Conoco & Halliburton

• Produce composite pipeline which is a superior alternative to steel– Immune to corrosion– Continuous long lengths allow for much faster install time– Lower installed cost and reduced field maintenance

• 100 plus customers (ConocoPhillips, ChevronTexaco, Shell, Occidental)

• Disruptive technology in a $10 billion addressable market growing 10-15% annually

• 10 years of strong IP: 41 issued and pending US, CAD patents with 20 years of unique manufacturing experience


Fiberspar’s initial product, LinePipe, fills major need

Large Market OpportunityMarket for Fiberspar LinePipe is greater than $1B+ per year in North America

– Market trends are favorable – high industry activity, increasing corrosion– Used in new construction and in existing operations to remediate aging infrastructure

Fiberspar LinePipe value proposition todaySignificantly lower installed costs compared to industry standard steel

– 25% lower installed cost vs. steel using data from ConocoPhillips study of more than 350 installations between 1998–2005. $125M Savings over 20 years if Fiberspar LinePipe was used in place of steel

Opportunities to extract value in future by proving over timeReduced operating costs

– No corrosion vs. slow corrosion– Reduced in-field maintenance activities– Improved uptime and reliability

Other benefits of Fiberspar LinePipeReduced health, safety, and environmental costs

– Reduced loss time injuries - 70% reduction in man-hours compared to steel.– Reduced environmental and land owner costs


LinePipe Sales/Service Channel Consolidation

Our technology and business model allows us to sell directly.

Traditional Oil Field Business Model

Raw Material

Strip Steel Producer

Tubular Mfg .

Secondary Processing Coat, Thread)

Oil Field Service Company

End User Oil/ & Gas Producer

Raw Material

Strip Steel Producer

Tubular Mfg.

Secondary Processing

(Coat, Thread)

Oil Field Service

Company

End -User Oil & Gas Producer Distributor

Fiberspar Business Model

Proprietary Design, Manufacturing & Deployment Raw

Material

Proprietary Design, Manufacturing & Deployment

End UserOil & GasProducer


Financing Transactions• 1997 – Fiberspar Spoolable Products Founded – hired boutique investment bank in Houston to raise $5M equity capital

– Halliburton invested in 1997 $5M, and also sponsored joint development – Series A Preferred Stock

• 1999 – spent all of the capital raised on Halliburton sponsored development initiative – raised $3M more – Series B Preferred Stock

• 2000 – sold our sporting goods business, raised $5M more equity capital from Halliburton, and $5M of development funding – Series C Preferred Stock (35% fully diluted equity position Series A, B, C)

• 2001 – raised $10M of equity from Mitsubishi Corp, Series D Preferred Stock, International LinePipe Distribution agreement (15% fully diluted equity position Series D) – First commercial sales

• 2003 – established LinePipe Subsidiary with s&p 500 oil field service company, Weatherford International – raised $10M. - $5M commercial sales, $5M loss

• 2006 – sold license to WFT related to rights to downhole technology $19M, used proceeds to buyout ¼ of WFT interest, and all of Mitsubishi interest. $35M private equity financing failed 2 days to closing - $50M commercial sales, very profitable

• 2007 – Raised $50M of senior and subordinated debt, bought out all of WFT’s interest, using combination of senior and seller financing, bought out 80% of HAL’s interest, $70M sales, very profitable.

• 2008 – Raise $50M plus equity, to facilitate development of Fiberspar as independent oil field service company, with vision to grow at sustained 50% CAGR - $500M Revenue in 2012


Lessons Learned• Strategic financing is widely available, and competitive alternative to financial

investment (angels, VC’s, private equity), but alignment of interests with strategic investors is often difficult to achieve. It enabled us to get where we are today, but also cost us significant time.

• You are always raising money, and don’t get fixated on valuation – subsequent deals MUST be done at higher prices than earlier deals

• Focus on value creation, not ownership %

• Always raise money when you can, even if you don’t “need it”.

• Later stage financing is based on results, early stage financing is based on potential – lots more alternatives for financing based on results, but harder to explain how much better things will be in future – so your results have to be superior to have superior alternatives.

• Cross over from being measured on potential, vs. results is a one way street – can’t have it both ways.

• To be a superior company, you need superior product, service, and financial resources.

1 © copyright 2007 fiberspar corporation how did we go from this in 2000…

Documents