Transcript An Environmental Services Provider to the Oil & Gas
Business for a Better Tomorrow
“A better environment is a better future.”
An Environmental Services Provider to the Oil & Gas Industry
National Investment Banking Association Conference - June 16, 2011
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 as amended (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 are 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 any 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.
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M.B. Environmental Services, LLC Operating Company 12 Years of Operation 90% Owned by TexCom E&P Waste Disposal TexCom Gulf Disposal, LLC Development Stage Permits Pending 20% Owned by TexCom Nonhazardous Industrial Wastewater Disposal
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Traditional
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Drilling Waste (NOW)
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Produced Water
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Tank and Truck Washouts
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New
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Frac Water (Shale Gas Production)
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Naturally Occurring Radioactive Material (NORM)
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Name Lou Ross Title President and Chairman Britt Brooks Executive Vice President, Secretary and Director Jay Charles General Manager, Biodiesel Matt McEneny Don Black General Manager, Disposal President , M.B. Environmental Services, LLC Background / Experience and Prior Positions 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 Former Vice President and Director – Texas Commercial Resources Director Sabine Resources, Inc.
17 years experience in Small Cap Finance Managing Partner – GlobalNet, Inc.
Executive Vice President and General Manager – C&L Communications, Inc.
Permitted and Developed 3 Biodiesel Plants in Texas Corporate Director, Environmental Health & Safety – Burlington Resources Amoco Production Co. - Regional Safety Engineer 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 5
Exchange/Ticker:
Market Capitalization:
Basic Shares Outstanding:
Headquarters:
Number of Employees:
Websites: OTC Markets: TEXC $13.26 Million 63.16 Million Houston, Texas 22 www.texcomresources.com
www.mbenvironmental.net
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Disposes of Wastes from Oilfield Operations Product Saltwater Other Liquids NORM Waste Truck Washout Unit Bbl Bbl Bbl Truck Avg. 2010 Price $ 0.39
$ 3.96 $ 123.05
$ 180.17
Truckload Value (120 Barrels) $43.20
$475.20
$12,305.00
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$9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $491 $2,000 $1,781 $1,000 $0
NORM
$403 2007
NOW
$859 $3,202 $1,641 2008
Truck Washouts
$790 $2,992 $2,500 2009
Transfer Facility
$1,479 $4,694 $2,531 2010
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(Millions) Revenue: Net Income Earnings Per Share: 2007 $ 2.80
$ (3.50) ($0.10) 2008 $ 6.00
$ (1.20) ($0.04) 2009 $ 6.80
$ 0.10
$0.02
2010 $ 8.80
$ 0.90
$0.02
Q-1 2011 $2.60
$0.84
$0.014
Weighted Average Shares: 39 44 50 56 64 Notes: 1. Compound Annual Revenue Growth Rate ("CAGR") of 41.4% 2. Our facility currently handles approximately 60 barrels of NORM per day (approximately $7,600 Revenue) 3. We can handle 2,000 NORM barrels ($254,000/day) and the material is out there.
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Non-hazardous Oilfield Waste Disposal (NOW)
Increase in active drilling rigs in region Increased number of producing oil and gas wells in region
Naturally Occurring Radioactive Material (NORM)
Increased regulatory enforcement
Billion dollar judgment against Exxon in 2004 Growing NORM related Business-to-Business litigation associated with producing oilfield property transactions
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10 million barrels of NORM in existence in 1995 Cost to remediate and dispose estimated at $3.5 to $5.5 Billion and growing.
At 1995 rates of oil and gas production, additional amounts of NORM being generated were estimated to be 140,000 to as much as 640,000 barrels per year. There are over 60% more producing wells now than in 1995.
We estimate that only a small fraction of NORM in equipment has been removed.
TexCom is one of only four companies permitted to dispose of NORM by underground injection. TexCom is one of only two public companies that dispose of NORM and could be considered a “Pure Play.”
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Environmental Engineering Firms TexCom is working to position upstream in NORM Engineering and NORM Decontamination DECON SITE DISPOSAL
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Oil Production Gas Production Mixed Production Existing Sites Expansion potential
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The Eagle Ford shale covers an area covers a 24-county area 50 miles wide and 400 miles long stretching from northeast of San Antonio to Maverick and Webb counties on the U.S.-Mexico border. Producing oil and gas from a new oil play follows a predictable pattern once initial wells have proven economic.
Activity – January 21, 2010 Activity – November 8, 2010
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Permits will become drilled wells within 24 months .
* Each rig can drill about 16 wells year .
1. Leasing - rights to underground minerals are leased from their owners in blocks. 2. Permitting – oil and gas companies obtain permits to drill wells from governing agencies.
3. Drilling – rigs are brought in from other regions to begin drilling programs. Large modern rigs are expensive to move, taking a great many trucks to transport each drilling rig. 4. Result: Too much drilling waste and not enough disposal capacity.
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3,034 Wells have been permitted in Railroad Commission Districts 1 through 4 over the twelve months ending 4/1/2011. Our immediate market counties: Atascosa – 72, Karnes – 290, LaSalle – 358, McMullen – 344 received 1,064 permits During that same time period the counties surrounding MB Energy: Liberty, Chambers, Jefferson and Hardin had 60, 86, 72 and 99 permits respectively. We generated approximately $7 Million in revenue from drilling and production waste disposal during that period.
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Medical Waste Nuclear Waste Metals Recycling Water/Wastewater Hazardous Waste E & C Recycling Solid Waste 0 5
Median Price / LTM Earnings (3Q 2010 vs. 10 Yr Avg)
10 Year Average Q3 Source: Madison Williams & Co.
33.5
17.2
22.9
12.6
16.7
18.7
20.1
22.4
27.3
16.8
20.4
17.1
22.3
16.4
22.1
23.1
10 15 20 25 30 35 18
Q-1 2011 vs Q-1 2010 Sales Cost of sales Gross profit Selling, general and administrative expenses Operating income (loss) Other income (expense) Other Interest expense Total other income (expense) Income before provision for income taxes and non-controlling interest Provision for income taxes Net income before non-controlling interest Income attributable to non-controlling interest Net income (loss) available to common shareholders Income (loss) per share – basic and diluted: Weighted average common shares outstanding - basic and diluted EBIT to TexCom's Current Ownership 2011 $2,638,580 991,153 1,647,427 393,340 1,254,087 655 -278,934 -278,279 975,808 -141,304 $834,504 $0.013
63,979,285 $1,113,438 2010 $2,240,637 696,376 1,544,261 388,926 1,155,335 -1,200 -308,700 -309,900 845,435 -184,394 $661,041 $0.013
51,691,893 18% 42% 7% 1% 9% N/A -10% -10% 15% -23% 26% 24% $969,741 15%
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Business for a Better Tomorrow
“A better environment is a better future.”
Questions?
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Radioactive Radium is present everywhere in Earth’s crust
Dissolves in underground saltwater
Deposits along with other minerals as scale
In oil and gas production, scale precipitates from saltwater brought to surface due to decrease in temperature and pressure
In the oilfield, scale builds up on well tubing and in surface gathering equipment (pipelines, pumps and storage tanks)
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WHERE ELSE DOES NORM ACCUMULATE?
In Wellheads In Storage Tanks On Smart Pigs that Clean Pipelines
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Radium/NORM poses little human health risk when held in place in pipe, tankage, etc.
It does, however, pose a threat when particles become airborne and/or are leached into the groundwater.
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Differentiated from Competition
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Most Class II wells inject into depleted oil and gas formations; only accept produced water
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Our wells are drilled into fractured Caprock on flank of salt dome Can accept mixtures of solids slurried in water
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That allows us to inject NORM scale and sludge underground
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One of four companies permitted to dispose of NORM by underground injection
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