Songa Offshore SE 4Q 2015 Presentation. Conference call, 26 February 2016

Transcription

1 Songa Offshore SE 4Q 2015 Presentation Conference call, 26 February 2016

2 Disclaimer This presentation (the Presentation ) has been produced by Songa Offshore SE ("Songa Offshore" or the "Company") exclusively for information purposes. This Presentation includes forward-looking statements regarding Songa Offshore, including projections and expectations, which involve risk and uncertainty. Such statements are included without any guarantee as to their future realization. Although Songa Offshore currently believes that the expectations regarding the Company reflected in such forward-looking statements are based on reasonable assumptions, no assurance can be given that such projections will be fulfilled. Any such forward-looking statement must be considered along with the knowledge that actual events or results may vary materially from such predictions due to, among other things, political, economic, financial or legal changes in the markets in which Songa Offshore does business, and competitive developments or risks inherent to the Company s business plans. Many of these factors are beyond Songa Offshore s ability to control or predict. Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements. Accordingly, the Company does not accept any responsibility for the future accuracy of the forward-looking statements expressed in this Presentation or the actual occurrence of the forecasted developments. The Company does not intend, and does not assume any obligation, to update any such forward-looking statements as of any date subsequent to the date hereof. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including, without limitation, projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, the Company does not accept any liability whatsoever arising directly or indirectly from the use of this Presentation. By receiving this Presentation, the recipient acknowledges that he will be solely responsible for its own assessment of the market and the market position of the Company and that he will conduct his own analysis and be solely responsible for forming his own view of the potential future performance of the businesses of the Company. This Presentation must be read in conjunction with the recent financial information, as well as other publicly disclosed information. Nothing in this Presentation, nor any other information provided to the recipient by the Company or any of its advisers constitutes, or may be relied upon as constituting, investment advice or any financial, tax or legal advice by such persons or anybody else. 2

3 $ million Financial Performance and Highlights 120 Quarterly EBITDA % fleet earnings efficiency 100 Received Trym contract cancellation fee of $41m EBITDA of $103m of which $36 attributable to Songa Trym cancellation Songa Equinox commenced contract on 7 December Songa Encourage delivered from yard on 16 December 20 Songa Endurance commenced contract on 31 December 0 3Q' 14 4Q' 14 1Q'15 2Q'15 3Q'15 4Q'15 3

4 Fleet and Operations Songa Equinox Fensfjorden, Norway

5 Fleet Operations Songa Equinox and Songa Endurance commenced contract and are currently performing production drilling wells on the Troll field Songa Dee is continuing a drilling and workover campaign on the Gullfaks field Songa Delta completed drilling Fast Track production wells on the Oseberg field and is currently drilling exploration wells for Statoil Songa Trym is stacked following early contract cancellation 5

6 Fleet Efficiencies Operating and Earnings Efficiency % 100% 95% 90% 85% 80% 75% 70% Average Operating Efficiency of 97% in fourth quarter 2015 Operating efficiency of legacy fleet of 100% Challenging start-up for Songa Equinox Average Earnings Efficiency of 95% 65% 60% Q4' 13 Q1' 14 Q2' 14 Q3' 14 Q4' 14 Q1' 15 Q2' 15 Q3' 15 Q4' 15 Operating Efficiency Earnings Efficiency 6

7 Rig Operating Expenses Rig Opex 000 $/day Average Q4 Rig Opex at $119,000 per day NOK denominated portion of Rig Opex around 93% $/Day Q1 15 Q2 15 Q3 15 Q Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Songa Delta Songa Dee Songa Trym Songa Equinox Average

8 Rightsizing of the Onshore Organisation On 1 February 2015 the Company announced the rightsizing program of its onshore organisation Reduction of up to 200 onshore employees and contractors Offices in Aberdeen and South Korea to be closed Rightsizing of the operating and staff organisations in Cyprus, Stavanger, Oslo and Bergen Annual reduction onshore expenses estimated to $30m, excluding Korea Project organisation 8

9 Contract Status Unit Customer Current Option Day rate Day rate Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Norwegian Continental Shelf Songa Dee Statoil 362 Songa Delta Statoil 369 Songa Equinox Statoil 490 Firm contract end rate + $15 k 8 year + 4x3 year options Songa Endurance Statoil 490 Firm contract end rate + $15 k 8 year + 4x3 year options Songa Trym Marketed NCS Newbuilds Songa Encourage Statoil 438* Firm contract end rate 8 year + 4x3 year options Songa Enabler Statoil 443* Firm contract end rate 8 y 8 year + 4x3 year options *USD/NOK quarter end rate of 8.81 Contract (incl. mob) Yard Option SPS 9

10 $ million Firm Backlog of $5.4bn and further $7.6bn in Options , , , Cat D - Firm Contracts Cat D - Options Legacy - Firm Contracts Firm Contracts Options 10

11 Market Update

12 NCS Floater Market Unit Transocean Searcher COSL Pioneer West Venture Bredford Dolphin Transocean Barents Songa Trym Scarabeo 5 Deepsea Stavanger Deepsea Atlantic Transocean Arctic Island Innovator Transocean Spitsbergen Leiv Eriksson West Alpha Transocean Winner Songa Dee Songa Delta Bideford Dolphin Stena Don Deepsea Bergen Scarabeo 8 Borgland Dolphin COSL Innovator COSL Promoter Songa Equinox Songa Endurance Songa Encourage Songa Enabler Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Contract Option Under construction/yard/transit Weak floater demand on NCS in 2016 and 2017 Several NCS compliant rigs stacked Songa Dee and Songa Delta have firm contracts to Q3 and Q Songa Trym is stacked and currently marketed 18

13 Cat D Project

14 Cat D Project Songa Equinox and Songa Endurance commenced operations in December 2015 Songa Encourage delivered from yard 16 December 2015 and arrived in Las Palmas 24 February 2016 Songa Enabler is scheduled for delivery end March Knowledge and experience gained from the first two rigs transferred to last two rigs Estimated average ready-to-drill cost per rig of $694m excluding estimated tug assist cost of $8m less estimated net liquidated damages of $15m In addition mobilization fee of $40m per rig already received for the first three rigs 14

15 Songa Encourage in Transit Delivered on 16 December 2015 Completed the third leg of its transit and is currently in Las Palmas for crew change, fuelling and installation of client s third party equipment Expected arrival in Norway mid March 2016 Acknowledgement of Compliance (AoC) application submitted to the Petroleum Safety Authority (PSA) process to be completed when the rig is in Norway Expected contract commencement in April

16 Songa Enabler completed sea-trials Songa Enabler scheduled for delivery late March 2016 Fully winterised for year around Barents Sea operations Cat D crewing completed Acknowledgement of Compliance (AoC) application for Barents Sea submitted to PSA Expected contract commencement in Q

17 Sailing Route Transit from Korea Endurance Bergen Equinox Las Palmas Encourage South Korea Enabler Singapore Walvis Bay Mauritius 17

18 Cat D Arbitration Case with DSME In July 2015 Songa Offshore received notices of arbitration from DSME Claims received from DSME in November 2015 for Songa Equinox and Songa Endurance Total claims are $273m, including $44m in repayment of Liquidated Damages Claims response will be submitted by 18 March 2016 Counterclaim will be submitted by 18 March 2016 Songa Offshore is of the view that DSME is responsible for the delays and any attempt to recover cost overruns is of no merit Songa Offshore has continued to prepare its case, remains confident on its position and will defend it vigorously 18

19 Financial Review

20 Financing Songa Encourage delivery $550m credit facility fully utilized Pre-delivery loan of $90m repaid $24m deposited with lenders due to decreasing broker rig valuations Year end 2015 cash position of $168m first quarter cash flow negatively impacted by Songa Equinox and Songa Endurance start-up issues and Songa Encourage and Songa Enabler deposit requirements Good progress made in discussions with lenders in relation to certain financing covenants, including Book Equity Ratio, but not yet fully concluded with all group of lenders 20

21 $ millions Debt Maturity Profile Legacy fleet $1,014m Cat D 1&2 $1,100m Cat D 3&4 NOK 750m Bond 2018 NOK 1,400m Bond 2018 Shareholder loan Convertible Bond 2019 Note: Table does not includes pre-delivery loan for Songa Enabler as it will be rolled into the post-delivery loan 21

22 Profit & Loss $ million 4Q Q Q Q 2015 Operating revenue Reimbursables Other revenue Total revenues Rig operating expenses Reimbursables General and Administrative expenses Other Total expenses EBITDA

23 Profit & Loss $ million 4Q Q Q Q 2015 EBITDA Depreciation (28) (33) (32) (33) Impairment (1) (328) - - EBIT 75 (297) Finance income Finance expense (1) (4) (6) (10) Other financial items (16) (14) (1) (22) Net financial items (14) (17) (6) (29) Profit (loss) before tax 61 (314) 22 (9) Income tax (charge) credit (27) (3) (5) (2) Profit (loss) for the period 34 (317) 17 (11) 23

24 Balance Sheet $ million Dec Sep Jun Mar Rigs, machinery and equipment 2, ,010 1,036 Newbuilds 869 1,819 1, Financial assets Derivative financial instrument Deferred tax assets Total non-current assets 3,147 2,629 2,439 2,016 Trade receivables Prepayments Earned revenue Financial assets Derivative financial instrument Other assets Cash and cash equivalents Total current assets Total assets 3,442 2,964 2,799 2,265 24

25 Balance Sheet $ million Dec Sep Jun Mar Total shareholder s equity ,040 1,008 Bank loans and other facilities 1,517 1, Bond loans Convertible bond Derivative financial instruments Deferred revenue Other long term liabilities Total non-current liabilities 2,232 1,937 1, Current portion of bank loans and other facilities Trade and other payables Tax payable Deferred revenue Derivative financial instruments Other liabilities Total current liabilities Total equity and liabilities 3,442 2,964 2,799 2,265 25

26 $ million $ million Capital Expenditures Operating fleet Cat D project Q4' 14 Q1' 15 Q2' 15 Q3' 15 Q4' Q4' 14 Q1' 15 Q2' 15 Q3' 15 Q4' 15 Songa Dee SPS Opex Capitalized Songa Dee SPS Capitalized Interest Capital Expenditure Other Capex Dee, Delta and Trym 26

27 Summary Solid legacy fleet operations and strong EBITDA Songa Equinox and Songa Endurance commenced contracts with start up challenges operations stabilized in February 2016 Songa Encourage will arrive in Norway mid March 2016, while Songa Enabler scheduled for yard delivery late March 2016 Cost management and onshore rightsizing project on-going Drilling market environment remains challenging, securing new contracts for existing rigs remains a top priority 27

28 Setting the New Standard on the NCS Q&A Q&A