Complete Production Services at Banc of America Securities SMid Cap Conference - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

UNIDENTIFIED PARTICIPANT: We'll go ahead to get started. We'll be getting a lot of personal attention. (multiple speakers) Next presentation is going to be Complete Production Services. As you are aware, we are required to make a number of conflict of interest and related disclosures in connection with our participation in this conference and the companies that we may discuss. If you would like to review these important disclosures, please pick up the packets containing the public appearance disclosures at the back of his room and at each of the breakout sessions. PDF copies can be accessed by those of you viewing these presentations via webcast.

Presenting today is Joe Winkler, CEO of Complete. Things are very interesting for this Company right now. Chesapeake's announcement earlier this week that they are increasing their spending with a large focus on the resource plays really kind of fits into complete (inaudible). It's where they do have been positioning themselves since creation. And to talk more about it we have Joe.

JOE WINKLER, CHAIRMAN AND CEO, COMPLETE PRODUCTION SERVICES: Thank you very much. We follow on with Q&A at the end? Is that the form? (multiple speakers) Okay. Thanks. Forward-looking statements. A couple of quick points about CPX. Our symbol is, of course, CPX. Share price is a little out of date. Before I came in, it was about 21. We will see what it is when I leave, so. Shares outstanding, about 73.5 million. Market cap -- well it's up another $150 million or thereabout, so $1.5 billion. Net debt at the end of the year $813 million. Enterprise value today is about 2.4, $2.5 billion.

Talk about CPX, a couple of points to note. We are what we call the resource play service provider. Proven ability to execute, well-positioned in the basins that are growing in North America. We believe the fundamentals in our sector are sound and solid. Complementary completion and production services -- I will talk to you about what that is it, what does that mean.

We are built around a concept of local leadership and basin level expertise, people that know what they're doing in the field. It's a balanced and disciplined growth strategy and we put the numbers up.

Take a moment and look at what we call the scoreboard. Looking from 2005 to 2006 to 2007 it, revenue up 2005 to 2006 about 68%, and then 2006 to 2007, about 39% -- a combination of growth both from acquisitions as well as from organic means. EBITDA from 2005 to 2006 more than doubled and then up about 35, 40% from 2006 to 2007 -- sorry -- 19% 2006 to 2007.

EPS from 106 to 204 to 238. EBITDA margins of from 20 to -- excuse me -- 22 to 28 to 28 incrementals along the way 2005 to 2006. We're about 36% and about 30% in 2006 to 2007. So we've grown effectively over the course of that time.

Talk about our position in the market and fundamentals and why we think they are sound. Take a bit of a step back and look at what's going on in our segment. And what you're looking at the top of the slide are decline rates and you can see over the course of the last couple of years, starting in 2001, increasing decline rates. Down below while all of that is going on, initial production is declining, so we have increasing decline rates and decreasing initial production rates across the same period of time.

Some of the wells that are being brought in today and some of the new areas the initial productions are higher than what they've been on average. That's the good news. Bad news is very, very high decline rates on those initial productions as well. So the treadmill continues.

What's all of that mean? The top of the slide in the red are the wells being drilled in order to meet our production needs and you can see the constant increase over that period of time. And then down below that translates to increased CapEx by our customer and their CapEx becomes our revenue in the course of time.

So being driven by the increasing decline rates and the decreasing initial production rates and that is being driven by the unconventional plays or the resource plays as we call them. Drill down a little bit further, taking a look at what's happened over that ten-year period, in gray are the number of rigs drilling for gas. The blue line across the scale is the amount of production.

We have noted on there a couple of the major storms that have affected or interrupted production. But what we wanted to do is show the correlation between activity and volume. As the rig count goes up, volume goes up. Rig count goes down, volume goes down. Up down, up down.

And then as we come out into 2003 and 2004, that trend changes. And what you're looking at there is the direct result of that increasing decline rate and decreasing initial production rate. And what you see there is a significant acceleration in the number of rigs drilling for natural gas and we are at best, maintaining our production. That's the treadmill that we are on and that's where we think the fundamentals in the areas that we're in are sound.

Resource plays are increasing in importance to what we do in North America. Again, looking back over that ten-year period of time back in '96, '97, …