texcom, inc. (texc) an environmental services provider corporate presentation november 18, 2009
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TexCom, Inc. (TEXC)TexCom, Inc. (TEXC)
An Environmental Services ProviderAn Environmental Services Provider
Corporate PresentationCorporate Presentation
November 18, 2009November 18, 2009
Forward-Looking StatementForward-Looking Statement
Statements contained herein and the information incorporated by reference herein may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Forward-looking statements can be identified by the use of forward-looking terminology such as, but not limited to, "may," "will," "expect," "anticipate," "estimate," "would be," "believe," or "continue" or the negative or other variations of comparable terminology. We intend such forward-looking statements to be covered by the safe harbor provisions applicable to forward-looking statements contained in Section 21E of the Exchange Act. Such statements (none of which is intended as a guarantee of performance) are subject to certain assumptions, risks and uncertainties, which could cause our actual future results, achievements or transactions to differ materially from those projected or anticipated. Such risks and uncertainties are set forth herein.
Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, or performance and underlying assumptions and other statements, which are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demands and acceptance, changes in technology, economic conditions, the impact of competition and pricing, and government regulation and approvals. TexCom cautions that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. Some of the key factors which could cause actual results to vary from those TexCom expects include changes in oil prices, soybean prices, soybean oil prices, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating and forecasting production results, political conditions in Paraguay, the condition of the capital markets generally, as well as our ability to access them, and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting our business.
Our expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis, including without limitation, our examination of historical operating trends, data contained in our records and other data available from third parties. There can be no assurance, however, that our expectations, beliefs or projections will result, be achieved, or be accomplished.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no duty to update these forward-looking statements.
The information contained herein is offered for informational purposes only. None of this information is to be construed as an offer to buy or sell securities.
TexCom Description
An energy field services company engaged in the disposal of waste from oil and gas exploration and production.
In the process of permitting an additional site for disposal of Class I non-hazardous industrial wastewater.
Currently services companies in the U.S. Gulf Coast including: Exploration & Production Companies Drilling Companies Oilfield Waste Transporters
Actual : 2008 Revenue $6.1 million EBITDA $4.1 million Estimated: 2009 Revenue $6.9 million EBITDA $4.7 million
• Market Cap 11/10/2009: $7,500,000
• Basic Shares Outstanding: 49,549,500
• Headquarters: Houston, Texas
• Employees: 22
• Websites: www.texcomresources.com
www.mbenvironmental.net
• Market Cap 11/10/2009: $7,500,000
• Basic Shares Outstanding: 49,549,500
• Headquarters: Houston, Texas
• Employees: 22
• Websites: www.texcomresources.com
www.mbenvironmental.net
TEXC Corporate SnapshotTEXC Corporate Snapshot
TEXC Business SegmentsTEXC Business Segments
TexCom, Inc.
EnvironmentalServices
Biofuels
Organizational StructureOrganizational Structure
TexCom, Inc.
M.B. Environmental Services, LLC.
Status:Operating
TexComGulf Disposal, LLC.
Status:Permit Pending
BiodieselInternational
Corp., ParaguayStatus:
Development Phase
Funded Funded Not Funded
E & P Waste Disposal Drivers
Non-hazardous Oilfield Waste Disposal Active drilling rigs in region No. of existing oil & gas wells in region Marked uptick in drilling
Naturally Occurring Radioactive Material Increased regulatory enforcement Growing litigation associated with producing
oilfield property transactions
Recast Current & Proforma ProjectionsReflects financing already in place and 100% ownership of MB Class II Site
2009 E 2010 E 2011 E 2012 E 2013 EM.B. Energy Class II SiteRevenue 6,440,000$ 8,521,000$ 9,202,366$ 10,112,925$ 12,557,500$
Profit to 100% Ownership 2,449,600 3,451,566 3,589,645 4,300,618 5,802,978
TexCom Gulf Disposal Site Management Fees 240,000$ 240,000$ 240,000$ 240,000$ Net Profits Interest 250,000 400,000 Profit to TexCom's 20% 240,000$ 240,000$ 490,000$ 640,000$
Total Subsidiary Earnings 2,449,600 3,691,566 3,829,645 4,790,618 6,442,978
TexCom Corporate Overhead (1,020,000) (1,020,000) (1,082,118) (1,114,582) (1,148,019)
TEXC Earnings 1,429,600$ 2,671,566$ 2,747,527$ 3,676,036$ 5,294,959$
Notes: 1. Earnings reflect 100% ownership of M.B. Energy Class II Site
What’s the OpportunityWhat’s the Opportunityfor TexCom Growth?for TexCom Growth?
NORM
Naturally Occurring Radioactive Material
What is NORM?What is NORM? Radioactive Radium is present everywhere in earth’s
crust.
Dissolves in underground saltwater along with other minerals.
Deposits with other minerals as scale.
In oil & gas production, scale precipitates from saltwater due to decrease in temperature and pressure.
In the oilfield, scale builds on well tubing and in surface gathering equipment (pipelines, pumps, storage tanks)
NORM: Trigger for Growth
10,000,000 barrels of NORM existed in 1995 in the United States ($3 Billion market for disposal) Source: Argonne Labs
It is still there and growing by 140,000 – 160,000 Barrels per year ($45MM/yr.) Source: American Petroleum Institute
NORM Disposal Market Drivers
NORM Surveys – now part of oil & gas property transaction due diligence
Public Awareness – NORM contamination in the oilfield has been the subject of a number of Newspaper articles in Texas and Louisiana as well as a high profile $1 Billion lawsuit for soil contamination.
Regulatory Awareness – regulators now test for NORM in oilfields
How Does TexCom Address the Industry How Does TexCom Address the Industry Problem and Exploit the Opportunity? Problem and Exploit the Opportunity?
We have: The permits A suitable site location Ample disposal capacity Qualified personnel Experience in the business Existing customer base Knowledge
Our Competitive AdvantageOur Competitive Advantage
Most Class II wells inject into depleted oil & gas Most Class II wells inject into depleted oil & gas formations; only accept produced waterformations; only accept produced water
Limited number of Class II wells inject into Limited number of Class II wells inject into fractured caprock or salt caverns that can fractured caprock or salt caverns that can accept solids (rock tailings, drilling muds and accept solids (rock tailings, drilling muds and NORM scale)NORM scale)
Even fewer Class II wells are permitted to Even fewer Class II wells are permitted to accept NORMaccept NORM
Company ManagementCompany ManagementName Title Background / Experience
Lou Ross
President and Chairman
Vice President, Planning and Development – Westlake Chemicals
Managing Director for Research , Engineering and Business Planning – Chemicals Group of United States Steel Corporation
Worldwide Director of Chemicals Business Planning – Gulf Oil Corporation
Manager, Planning and Development – Gulf Oil Corporation, Petrochemicals Division
Britt Brooks
Executive Vice President, Secretary and Director
Former Vice President and Director – Texas Commercial Resources
Director Sabine Resources, Inc. 17 years experience in Small Cap Finance
Robert Wilson
Chief Financial Officer
Partner 5 years in Audit Department at Price Waterhouse
20 years as Financial Operations Principal for Investment Banks
10 years as CFO of several publicly traded companies
Jay Charles
General Manager, Biodiesel
Managing Partner – GlobalNet, Inc. Executive Vice President and General Manager –
C&L Communications, Inc. Permitted and Developed 3 Biodiesel Plants in
Texas
Matt McEneny
General Manager, Disposal
Corporate Director, Environmental Health & Safety – Burlington Resources
Don Black
President , M.B. Environmental Services, LLC
More than 45 years of experience in oil and gas drilling in major oil producing regions around the globe.
Spent 12 years in the North Sea as the Drilling Superintendent for six offshore drilling rigs
Representative TexCom Clients
ANADARKO FOREST OIL
APACHE CORP. HILCORP
BAKER HUGHES KAISER FRANCIS
CHESAPEAKE KINDER MORGAN
CONOCOPHILLIPS NEWFIELD
DELTA SEABOARD PETROHAWK ENERGY
DENBURY ONSHORE, LLC PRIDE ENERGY COMPANY
DEVON ENERGY RANGE RESOURCES
E.O.G. TXCO
EL PASO PRODUCTION UNION OIL & GAS OPERATING
EXCO RESOURCES, INC. XTO
180 total active account relationships
Our Disposal Revenue vs. Drilling Rig Count
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
Q-1 Q-2 Q-3 Q-4 Q-1 Q-2 Q-3 Q-4 Q-1 Q-2 Q-3
2007 2008 2009
Rev & Net No.
0
10
20
30
40
50
60
70
Rig Count
Disposal Revenue/Quarter Net Income/Quarter Tx Region 3 Rig Count
Current Capacity Utilization
Less than 35% of permitted capacity for oilfield waste disposal
Less than 5% of our NORM capacity *
* TEXC is 1 of the 3 companies having commercial NORM injection
permits in the U.S.
$3 Billion NORM Disposal Market is Underserved
Disposal: Historical and Proforma Revenue (Millions)
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
2007 2008 2009 E 2010 E
NORM NOW Truck Washouts Transfer Facility Other
$3.1
$6.1$6.4
$8.5
TEXC’s Disposal Revenue Mix
9 Months Sep 2009
Waste disposal
45%
Skim Oil Income
1%
Truck Wash Out
12%
Norm Waste
Disposal42%
Full Year 2008
Waste disposal
53%Norm Waste
Disposal28%
Truck Wash Out
15%
Skim Oil Income
4%
Revenue: $6,197,583 Revenue: $4,968,543
Pathway to Major Growth in Pathway to Major Growth in NORM DisposalNORM Disposal
Vertically Integrate into Engineering Services and Decontamination Operations
Acquire and Joint Venture with Licensed Engineering Service and Decontamination Companies.
Acquire additional NORM disposal capacity
Target Market Major E&P Companies
Target Market Key E&P production fields
To Accelerate Growth
DISPOSAL
Vertical DECON
SITE
EnvironmentalEngineering
Firms
Capture 88% of the Value Chain
12%
40%
33%
15%Survey
Decontamination
Disposal
Transport
Position upstream in Engineering & Decontamination
Vertical Integration
Advantages of vertical integration into Engineering and Decon.
1. Capture 3 out of the 4 NORM value chain components
2. Build or buy engineering capability
3. NORM Engineering firms direct product through the value chain
Engineering 15%
Decontamination 33%
Transportation 12%
Disposal 40%
Horizontal IntegrationExisting Sites
Expansion
Oil ProductionGas ProductionMixed Production
TexCom Gulf Disposal, LLCTexCom Gulf Disposal, LLC
Limited number of Class I wells in commercial operationLimited number of Class I wells in commercial operation
Deep well injection at 6,500 feetDeep well injection at 6,500 feet
Existing and completed well on 27 acresExisting and completed well on 27 acres
Near to Greater Houston refining/petrochemical complexNear to Greater Houston refining/petrochemical complex
Permit allows injection of 12,000 bbls/dayPermit allows injection of 12,000 bbls/day
Large anchor customer nearby Large anchor customer nearby
Action on permit expected Q-1 2010Action on permit expected Q-1 2010
Class I Non-hazardous Industrial Wastewater DisposalClass I Non-hazardous Industrial Wastewater Disposal
Class I Deep Well Injection ProformaClass I Deep Well Injection Proforma
Funded
Capacity Limit (gal/yr) 180,000,000 180,000,000 180,000,000
Utilization Rate 20% 40% 60%
Income StatementGross Income
Volume (gal) 36,000,000 72,000,000 108,000,000 Rate (gal) 0.12$ 0.12$ 0.12$
Total Gross Income 4,320,000$ 8,640,000$ 12,960,000$
Electricity 360,000 720,000 1,080,000
G & A ExpenseProfessional Fees (Lgl, Engr, CPA) 125,000 150,000 175,000 General & Administrative 144,000 288,000 200,000 Bonds & Insurance 75,000 75,000 75,000 Salary 500,000 1,000,000 1,500,000 Other Expense 48,000 96,000 144,000 Property Taxes 75,000 75,000 75,000
Total Gross Expense 1,327,000 2,404,000 3,249,000
EBITDA 2,993,000 6,236,000 9,711,000 69% 72% 75%
To TEXC's 20% Interest 598,600$ 1,247,200$ 1,942,200$ Proforma Pricing
Per Bbl Pricing 5.04$ Daily Bbl's Per Permit 12,000
Why TEXC NowWhy TEXC Now
No blue sky in market valuationNo blue sky in market valuation
Public environmental companies trade at 20 + P/E multiplesPublic environmental companies trade at 20 + P/E multiples
Completing buyout of partners brings profitability at a Completing buyout of partners brings profitability at a low multiplelow multiple
TEXC Prior Ownership – 36.79%TEXC Prior Ownership – 36.79%
TEXC 2010 Ownership – 93.4% to 100%TEXC 2010 Ownership – 93.4% to 100%
One of a few operating companies in a large marketOne of a few operating companies in a large market
Uniquely positioned to scale the Environmental Services Uniquely positioned to scale the Environmental Services portion of our businessportion of our business