How did we go from this in 2000….
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© Copyright 2007 Fiberspar Corporation
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 $$$$$$...
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© Copyright 2007 Fiberspar Corporation
Fiberspar Overview
Market 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
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© Copyright 2007 Fiberspar Corporation
Fiberspar’s initial product, LinePipe, fills major need
Large Market Opportunity
Market for Fiberspar LinePipe is greater than $1B+ per year in North America
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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 today
Significantly lower installed costs compared to industry standard steel
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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 time
Reduced operating costs
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No corrosion vs. slow corrosion
Reduced in-field maintenance activities
Improved uptime and reliability
Other benefits of Fiberspar LinePipe
Reduced health, safety, and environmental costs
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Reduced loss time injuries - 70% reduction in man-hours compared to steel.
Reduced environmental and land owner costs
© Copyright 2007 Fiberspar Corporation
LinePipe Sales/Service Channel Consolidation
Our technology and business model allows us to sell directly.
Traditional Oil Field Business Model
Raw
Raw
Material
Material
Strip
Strip
Steel
Steel
Producer
Producer
Tubular
Tubular
Mfg..
Mfg
Secondary
Secondary
Processing
Processing
(Coat, Thread)
Coat, Thread)
Distributor
Oil
OilField
Field
Service
Service
Company
Company
End User
- ser
U
Oil/
Oil &
& Gas
Gas
Producer
Fiberspar Business Model
Raw
Material
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Proprietary
Design, Manufacturing & Deployment
Proprietary Design, Manufacturing & Deployment
© Copyright 2007 Fiberspar Corporation
End User
Oil & Gas
Producer
Financing Transactions
• 1997 – Fiberspar Spoolable Products Founded – hired boutique investment bank in Houston to raise
$5M equity capital
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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
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© Copyright 2007 Fiberspar Corporation
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.
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© Copyright 2007 Fiberspar Corporation