KCA Deutag Alpha Limited ( KCA Deutag or the Group ) Results for the three months ended 30 September 2015

Transcription

1 Fr immediate release [19] Nvember 2015 KCA Deutag Alpha Limited ( KCA Deutag r the Grup ) Results fr the three mnths ended 30 September 2015 KCA Deutag, ne f the wrld s leading drilling and engineering cntractrs, is pleased t annunce its results fr the three mnths ended 30 September 2015, reprting EBITDA f $69.5m. Highlights Year t date revenues f $1,272.8m (2014: $1,574.7m) Grup YTD EBITDA f $210.8m (2014: $243.3m) Cntract backlg f $7.2bn acrss a blue chip custmer base Pst quarter-end delivery f 2 new build rigs t custmers in Oman and Brunei with 1 remaining new build rig t deliver in Q Imprved EBITDA delivered by ur 2 largest business units cmpared t Q2, 2015 $129m f available liquidity at 30 September $50m f cmmitted funding frm KCAD Hldings I Limited sharehlders still available fr draw dwn if required Cst reductin prgramme cntinues t deliver an nging benefit t the bttm line with the business delivering imprved margin year t date versus the prir year As part f ur cntinuing review f the business further initiatives t imprve efficiency and reduce csts are being implemented during the furth quarter Cmmenting n the results Nrrie McKay, KCA Deutag s Chief Executive Officer said: The grup delivered slid perfrmance in the third quarter, reprting EBITDA f $69.5m, a six per cent increase ver the prir perid. We are pleased with the prgress we are making in reducing ur cst base and maintaining ur EBITDA at a satisfactry level. We als remain very fcused n tightly managing ur cash, wrking capital psitin, and capital expenditure t maintain ur liquidity psitin. In ur Land Drilling peratin we cntinue t see strng activity in Russia, Oman and Algeria and reduced activity in Eurpe, Nigeria and Kurdistan. The cmpletin f ur new rig prgramme remains n track with 7 rigs nw fully peratinal under cntract and the remaining rig in the prgramme expected t start peratins befre the end f the year. In September we als had 2 stacked rigs recmmence wrk fr new custmers in Suth Iraq and the UAE. 1

2 Bentec cntinued t have a reasnable level f utilisatin during the third quarter when we cmpleted delivery and were paid fr the final rig under ur cntract fr 7 rigs fr a custmer in Algeria. The pririty fr Bentec is nw t win new rders which will allw ur facilities t maintain prductin levels and perate efficiently as we mve thrugh int Offshre, ur Platfrm Services peratin cntinues t perfrm steadily with an imprvement in EBITDA cmpared t the secnd quarter. Hwever, the wrklad fr RDS cntinues t reduce as investment in new greenfield prjects by E&P cmpanies remains at lw levels. Lking frward we expect market cnditins t remain very challenging thrughut 2016, and have taken practive steps t manage ur cst base and structure ur peratins t reflect this new business envirnment. Our pririty is t cntinue t imprve the efficiency f the grup whilst delivering best in class drilling peratins fr ur custmers and winning new wrk in ur cre markets. Business Review KCA Deutag reprts that Adjusted EBITDA fr the third quarter f 2015 was $69.5m, cmpared t $73.5m fr Q3, 2014 and $65.2m fr Q2, Year t date EBITDA f $210.8m cmpares t $243.3m fr the same perid in Revenue and EBITDA Revenue frm business units ,367 1,659 Cnslidatin adjustments (18) (34) (40) (94) (84) Ttal Revenue ,273 1,575 EBITDA frm business units Cnslidatin adjustments 0 0 (1) (1) (3) Exchange (2) (1) (4) (5) (4) Crprate csts (4) (4) (4) (14) (16) Ttal EBITDA There have been n significant changes in the business envirnment during the third quarter with generally weak demand, strng cmpetitin and pricing pressures in each f ur businesses. Oil prices remain lw and are nt expected t recver significantly in the shrt t medium term. During the third quarter we have cntinued t priritise ways t make ur peratins mre efficient and t manage ur csts. At the same time we have renewed ur fcus n service delivery t ensure we wrk safely, minimise nn-prductive time and meet r exceed the expectatins f ur custmers. If we can achieve each f these, we believe that we will increase the likelihd f retaining existing cntracts and f being awarded new wrk. During the third quarter we were able t deliver an imprved level f EBITDA perfrmance frm each f ur Land Drilling, Platfrm Services and MODU business units cmpared t the secnd quarter f 2015 despite the very challenging market cnditins. Overall ur margins have imprved year t date versus the prir year demnstrating that ur cst reductin initiatives have ffset the impact f reduced vlume and lwer sales prices. Our Land peratins cntinue t benefit frm revenues frm 5 new rigs delivered in Q4, 2014 and the first half f further new build rigs were delivered n schedule in Octber and ur final new build rig is n schedule fr delivery in Q4, Activity in Russia 2

3 has remained strng helping t ffset mre challenging cnditins in West Africa and Kurdistan. In September we started up new cntracts fr custmers in Suth Iraq and the UAE using stacked rigs frm ur existing fleet which will have a full quarter f peratin in Q4, Offshre activity has held up relatively well with EBITDA being increased ver Q2, Our Platfrm peratins have nt experienced the vlatility seen in sme f ur ther businesses. In general we have been able t manage the csts f ur peratins while preserving margins due t the cst plus nature f ur cntracts. The MODU business delivered imprved EBITDA frm Q2, 2015 largely due t tight cst cntrl and the remval f certain staff incentive pay mechanisms. RDS has cntinued t see a significant reductin in activity due t a lack f new greenfield prjects. We remain fcused n managing dwn ur csts in this business and aligning the size f the peratin t the current requirements f the market. Bentec currently has a reasnable backlg which will maintain gd utilisatin f ur manufacturing facilities thrugh int The fcus is currently n seeking new rders fr 2016 and making sure that existing rders are delivered n time and with high quality. During the third quarter we have been successful in maintaining liquidity levels in line with thse at the end f the secnd quarter, despite the higher capital expenditure assciated with the cmpletin f ur new build rig prgramme. We have cntinued t fcus ur attentin n cash management and particularly, wrking capital and capital expenditure. Available liquidity under undrawn facilities at 30 September 2015 was $129m. This des nt include the $50m undrawn but cmmitted facility f additinal cash funding available frm the sharehlders f KCAD Hldings I Limited. Land Drilling The Land Drilling business segment reprted EBITDA f $36.4m cmpared t $34.6m in Q2, 2015 and $37.0m in Q3, Land Drilling Revenue EBITDA Land Drilling delivered a higher level f EBITDA than in Q2, 2015 with a small decrease frm Q3, Althugh market cnditins have tightened in a number f cuntries in which we perate, we have experienced cntinued resilience in ur cre markets f Russia, Oman and Algeria which have held up relatively well. Althugh n new rigs were delivered in the third quarter we have since delivered 2 further new build rigs in Octber t custmers in Oman and Brunei, with the final new build rig n schedule fr delivery in Oman in Q This will cmplete the new build rig prgramme with n further new build grwth capex currently planned. Russia Our Russian peratin cntinues t perfrm well with gd levels f utilisatin. Q3, 2015 EBITDA was higher than bth Q2, 2015 and Q3, Year t date EBITDA is higher than the same perid in

4 A large part f the year n year increase is due t the tw new build rigs which cmmenced peratins at the start f Q4, 2014 and in early Q2, We currently have 3 rigs perating in Russia under cmbined drilling services style cntracts which histrically have prvided higher levels f EBITDA than traditinal day rate cntracts, althugh this is subject t nging drilling perfrmance. Eurpe/Kazakhstan We cntinue t perate a single rig in Kazakhstan which delivered EBITDA in Q3, 2015 in line with Q2, 2015 and Q3, This rig is planned t cmplete this cntract in the first quarter f 2016 s we are currently tendering fr new pprtunities. Activity in the Eurpean market remains very weak which has led t a significant year n year reductin in the utilisatin f ur rigs. In respnse we have identified further ptential cst reductin measures in ur Eurpean Land peratins and are currently cnsulting with ur wrkfrce n these prpsals. As nted in the secnd quarter press release we have mved ne f ur rigs ut f Eurpe int Algeria fllwing a cntract award and expect this rig t cmmence peratins during the furth quarter. Middle East In the Middle East EBITDA was in line with Q2, 2015 but slightly reduced n Q3, Our largest peratin, Oman, delivered EBITDA in line with Q2, 2015 but significantly higher than Q3, 2014 as a result f the 3 new rigs delivered in the first half f Year t date EBITDA als shws a significant year n year increase as a result f this. As already nted we delivered 1 new build rig in Oman in Octber 2015 with the final Omani rig scheduled fr delivery in December. In Suth Iraq we experienced an increase in revenue in the third quarter as a rig transferred frm Kurdistan was delivered and started up peratins, with its first well spudding n 11 September. This brings ur rig cunt in Suth Iraq t 2 rigs. Over the curse f 2015 we have seen a significant reductin in activity in Kurdistan as rig cntracts were cancelled r terminated. We cntinue t seek new pprtunities fr ur 2 remaining rigs there. We experienced lwer levels f EBITDA in Pakistan in the third quarter largely due t increased rig mve activities. In Brunei revenues were increased cmpared t the prir quarter as a result f reimbursable related items, and ur new build rig began cntracted peratins in Octber In the UAE we successfully cmpleted the refurbishment f a rig which had been mved ut f Libya and it spudded under a new cntract n 3 September. Africa In Africa we experienced lwer levels f EBITDA than bth Q2, 2015 and Q3, Year t date EBITDA is lwer than the prir year. 4

5 Algeria remains ur strngest market in Africa with an increase in EBITDA cmpared t bth Q2, 2015 and Q3, We nw have 7 rigs in Algeria fllwing the transfer f the Eurpean rig, which is expected t cmmence peratins in Q4, Utilisatin and activity in Algeria cntinue t be resilient with gd frward cntractual cverage. In Nigeria we have experienced a significant reductin in EBITDA and have had t make bad debt prvisins f $3.6m in Q3 due t ptential payment difficulties frm certain f ur custmers. The lw il price has depressed activity and we have taken steps t reduce ur csts in this market. We cntinue t wrk n exiting Gabn fllwing the cancellatin f ur cntract there earlier in the year. Bentec The Bentec business segment reprted EBITDA f $3.3m cmpared t $4.2m in Q2, 2015 and $12.8m in Q3, Bentec Revenue EBITDA Bentec again delivered a satisfactry quarter with year t date EBITDA in line with the prir year. During the third quarter we cmpleted the delivery f, and received payment fr, the final rig under the 7 rig cntract fr a custmer in Algeria. The wrk n new build rigs fr the Land business segment is als largely cmpleted. Onging activity is fcused n manufacturing rigs and cmpnents fr custmers in Russia and Azerbaijan. This activity is currently giving ur manufacturing facilities a reasnable level f utilisatin thrugh int Bentec s pririty is t successfully deliver these rders, and wrk n tenders t secure additinal cntracts fr Platfrm Services The Platfrms Services business segment reprted EBITDA f $22.6m cmpared t $19.9m in Q2, 2015 and $23.5m in Q3, Platfrms Revenue EBITDA Platfrm Services cntinued t perfrm well despite the difficult market cnditins. EBITDA in Q3, 2015 was higher than in Q2, 2015 and in line with Q3, Year t date EBITDA has shwn a mdest reductin frm 2014 reflecting activity levels and pricing pressures frm ur custmers. We have largely been able t minimise the impact f pricing pressures n ur margins due t the pass thrugh nature f many f ur csts. 5

6 UK and Nrway In Nrway we had an increase in EBITDA cmpared t Q2, 2015 but a reductin cmpared t the same perid in Year t date EBITDA is significantly lwer reflecting reduced activity in ur platfrm drilling peratins and reduced earnings frm ur equipment rental business. In the UK we experienced a small increase in EBITDA cmpared t Q2, 2015 but a reductin frm the prir year. Since the prir year there has been a reductin in activity as ne f ur custmers has dwn manned their platfrm drilling activities and many f ur custmers have changed their ffshre rtas in an effrt t reduce csts which in turn reduces the number f drill crews required. Our wn cst reductin initiatives have helped t preserve margins in line with Q2, Internatinal Our Internatinal Platfrms peratins achieved results in the quarter in line with Q and Q3 f the prir year. In Angla we experienced increased activity n the Kizmba platfrm, whereas in Azerbaijan we had slightly lwer levels f activity. In Sakhalin and Myanmar ur peratins have cntinued at similar levels t Q2, In Canada we cntinue t supprt the start-up f the Hebrn platfrm. RDS The RDS business segment reprted EBITDA f $3.4m cmpared t $4.6m in Q2, 2015 and $8.9m in Q3, RDS Revenue EBITDA RDS cntinues t experience reducing levels f activity in extremely challenging market cnditins. With the current il price mst E&P cmpanies have cut back very significantly n new greenfield prjects with little prspect f this changing in the shrt term. In respnse t this we have significantly reduced headcunt bth in terms f cntractrs, wh are generally engaged n a prject by prject basis, as well as emplyees. We have als experienced a higher level f challenge n csts frm ur custmers. EBITDA in Q3, 2015 was lwer than in Q2, 2015 as well as Q3, 2014 with year t date earnings significantly reduced. Activity in Canada assciated with the Hebrn cntract is gradually decreasing as manning requirements reduce but this will be smewhat ffset by additinal wrk n a new brwnfield cntract. In ur Lndn ffice we cntinue t wrk n ther greenfield wrk awarded befre the dwnturn but this is als gradually reducing in wrklad. Brwnfield activity in the UK, Nrway, Caspian and Sakhalin cntinues althugh this has als reduced. There is strng cmpetitin fr all wrk and pressures n pricing. We cntinue t manage ur csts t allw us t remain cmpetitive whilst retaining key talent and skills within the business. 6

7 MODUs The MODU business segment reprted EBITDA f $10.3m cmpared t $7.2m in Q2, 2015 and $1.0m in Q3, MODUs Revenue EBITDA MODUs cnsists f ur tw jack-up rigs; the Ben Lyal in the Gulf f Mexic and the Ben Rinnes perating ffshre Angla. Bth rigs were perating during Q3, Cmpared t Q2, 2015 we had a higher level f EBITDA which was largely as a result f cst reductins made n bth rigs and the remval f incentive pay mechanisms which are nt required in the current market. There was a significant increase in EBITDA cmpared t Q3, 2014 which had been negatively impacted by 5 millin dllars f stacking csts n the 3 tender barges which were sld later that year. Crprate Csts/Other We have reduced crprate csts by 12.5% in the year t date cmpared t the equivalent perid last year. This is due t the varius cst reductin initiatives put in place during the curse f 2015, including salary and headcunt reductins. In Q3, 2015 we experienced an exchange lss f $2.1m principally against the Kwanza in Angla. Cashflw Cash flw frm perating activities Cash flw frm investing activities (13) (21) (54) (104) (134) Interest paid (13) (50) (7) (75) (61) Freign exchange 1 (10) (8) (3) (14) Net cash flw befre debt repayment 21 3 (13) 14 (30) Draw dwn (repayment) f debt (14) (4) 0 (32) (82) (net f issuance csts and exchange mvement n debt) Net cash flw 7 (1) (13) (18) (112) Operating cash flw in Q3, 2015 was $46m cmpared t $84m in Q2, 2015 and $56m in Q3, We experienced a smaller reductin in receivables in Q3, 2015 than in Q2, 2015 in part due t a larger quarter n quarter reductin in revenue frm Q1 t Q2 than we experienced between Q2 and Q3. There was a reductin in payables during the quarter in part due t the utilisatin f a further $19m f the $50m advance payment fr the purchase f 2 new build rigs. As described last quarter this advance payment was made int the Alpha 7

8 Grup in Q1, 2015 fllwing the rights issue at parent cmpany level. balance f this advance payment is $4m. The remaining Cash flw frm investing activities was $12.6m in Q3, 2015 cmpared t $21m in Q2, 2015 and $54m in Q3, During the quarter we spent $21.1m n capital expenditure which was in line with Q2, 2015 and significantly lwer than in Q3, Hwever, this capital expenditure amunt has been reduced by the utilisatin f the advance payment described abve s wuld therwise have been $40m. Interest paid f $12.6m in Q3, 2015 was lwer than the $49.6m paid in Q2, 2015 due t the six mnthly phasing f interest payments n the majrity f ur debt. Overall net cash flw befre draw dwn r repayment f debt was $21m in Q3, 2015 cmpared t $3m in Q2, 2015 and an utflw f $13m in Q3,