Investor Presentation

Transcription

1 Investor Presentation Fourth Quarter 2016 KCA Deutag is a leading international drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance

2 Disclaimer The distribution of this presentation in certain jurisdictions may be restricted by law. Persons into whose possession this presentation comes are required to inform themselves about and to observe any such restrictions. This presentation contains forward-looking statements concerning KCA Deutag. These forwardlooking statements are based on management s current expectations, estimates and projections. They are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from any future results and developments expressed or implied by such forward-looking statements. KCA Deutag has no obligation to periodically update or release any revisions to the forward-looking statements contained in this presentation to reflect events or circumstances after the date of this presentation. 1

3 Agenda 1 Q4 Key Highlights 2 Business Update 3 Business Unit Financials 4 Group Results 5 Summary 2

4 Q4 and Full Year Key Highlights KCA Deutag is a leading international drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance full year revenue and EBITDA of $1,252.2m (2015: $1,668.8) and $262.9m (2015: $289.8m) respectively Q Group revenue of $287.6m (Q4 2015: $396.0m) and Q EBITDA of $60.1m (Q4 2015: $79.1m) respectively Contract backlog of $5.3bn (at 1 February 2017) across a blue chip customer base Positive cash generation of over $100m with available liquidity of $262m at 31 December

5 Market Overview KCAD operates in low breakeven oil price environments Weighted Average Breakeven Oil Price ($/bbl) KCAD core markets Current Brent price Onshore Middle East 15 Shelf 32 Ultra Deepwater Russia Row Deepwater Onshore Onshore Extra Heavy Oil 55 North American Shale Oil Sands Source Rystad Energy (May-16) Cumulative Liquids Production in 2020 (MMbpd) International vs. North American drilling markets International markets North America Commodity price Less dependency on commodity prices High dependency on commodity prices Gas heavy market with depressed/volatile Henry Hub prices Volatility Low operating cost base Rig count largely inelastic to price downturns High operating cost base High sensitivity to price downturns Supply growth drivers Supply critical to national economy and often driven by NOCs Supply of less significance to government revenue Contract duration Customers willing to ensure rig availability through long term contracts Contract durations and terms more favourable to customers 4

6 Business update Integrated land drilling Offshore drilling services & design $186.1m / 66.1% of total¹ $(1.2)m / (0.4)% of total¹ $74.8m / 26.6% of total¹ $5.1m / 1.8% of total¹ Land drilling Bentec Bentec Offshore services RDS Strong activity in Oman and Russia Utilisation in Nigeria, Kurdistan and Algeria remains weaker Utilisation now picking up in Europe After sales remains stable with a large increase in component activity 21 Top Drives now secured for 2017 backlog Continued focus on cost savings Most of our International operations continue to perform well despite market conditions Activity levels remain lower in the North Sea and Angola Recent contract wins provides for long term stable backlog Reduced capex spend by E&P companies continues to impact activity A focus on continued cost savings to preserve low level positive EBITDA All activity now brownfield with few opportunities in greenfield 5 1 The % split of LTM EBITDA is calculated using total group EBITDA (including MODUs) of $281.4m (before corporate costs of $18.5m). Note: MODUs LTM EBITDA of $16.6m represented 5.9% of total EBITDA.

7 Group margin performance 6

8 Years KCAD operations are diversified across global markets PRESENCE IN KEY AREAS Canada 1 Plat Europe North Africa Middle East 43 North Sea 18 Russia Houston St. Johns Aberdeen (HQ) London North Sea /Norway 26 Plat. Bergen Europe & Caspian 8 Rigs Bad Bentheim Baku Caspian 7 Plat. Middle East 17 Rigs Tyumen Russia 16 Rigs Russia Sakhalin 3 Plat. Africa 11 Rigs LTM Q EBITDA split by region Dubai Nizwa Brunei 1 Rig Angola 2 Plat. Regional offices Land Drilling Offshore Services RDS offices Bentec 7 Map excludes work over land rigs, defined as being below 900HP. Map shows position at 1 February 2017.

9 Health, safety and environmental performance IADC industry average for 2015 KCA Deutag has continued to achieve satisfactory safety results The group continues to perform ahead of industry peers in the International Association of Drilling Contractors (IADC) Maintaining high safety and operational standards is a key priority for the business KCAD TRIR at end of Q was injuries per 200,000 man hours worked 8 1 Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average. 2 KCAD Total Recordable Incident Rate is directly comparable with IADC s Total Recordables (RCRD) statistic. Note: IADC stands for International Association of Drilling Contractors.

10 Backlog Status Total contract backlog as at 1 November 2016 Total contract backlog as at 1 February 2017 Contract backlog by BU as at 1 November 2016 Contract backlog by BU as at 1 February Backlog figures exclude revenue generated in the year to date.

11 Land fleet utilisation Historical and forecast utilisation 10 Contracted utilisation as of 1st February 2017, adjusted to include additional potential contribution from 5 new Russian rig contracts (additional 0.4%, 6.6%, 9.2% and 8.8% contracted utilisation in H1 2017, H2 2017, H and H2 2018)

12 Robust platform services contract 15 February Client Country Assets Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 end date status # Exxon Canada Hebron M ar-46 Under Construction 1 Statoil Norway CAT J (2) M ay-36 Under Construction 2 Exxon Angola Kizomba (2) Jan-27 Stacked 2 AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Nov-24 Operating 7 Nexen UK Scott Feb-23 Operating 1 Statoil Norway Oseberg's (4) & Gulfaks (3) Oct-22 Operating 7 Statoil Norway Pipe pool management Oct-22 Active mgmt. contract Statoil Norway Kvitebjorn Oct-22 Operating 1 CNR UK Ninian's (3) Tiffany Nov-21 Operating / Stacked 1 /3 SEIC Russia LA, PA & PB M ay-21 Operating 3 Total UK Alwyn M ar-20 Stacked 1 Total UK Dunbar M ar-20 Stacked 1 Exxon Norway Ringhorne Dec-17 Stacked 1 COP UK Britannia Jul-17 Stacked 1 Taqa UK Cormorant A & N, Tern, Eider & Harding Jul-17 Stacked 5 Enquest UK Thistle & Heather Apr-17 Operating / Stacked 1 /1 Contract Platform 11 Contracts have been extended or renewed since last call

13 Land Drilling Financial Performance to 31 December 2016 Q Q Q Q Q Result Result Result YTD YTD $m $m $m $m $m Revenue EBITDA (post support allocation) Margin 34.7% 32.4% 35.1% 32.7% 27.3% Despite tough market conditions the land business has delivered strong financial results and is significantly ahead of the prior year EBITDA Activity levels remain robust in Russia and Oman We continue to experience weaker market conditions in Nigeria, Kurdistan and Algeria due to weaker utilisation Significant increase in tendering activities Utilisation for the quarter of 58%, which is consistent with the prior quarter 12

14 Bentec Financial Performance to 31 December 2016 Q Q Q Q Q Result Result Result YTD YTD $m $m $m $m $m Revenue EBITDA (post support allocation) (2.0) (2.2) 2.3 (0.8) 20.7 Margin -12.2% -17.8% 5.2% -1.1% 8.8% Revenues and EBITDA significantly lower than Q4 2015, but has improved revenue compared to the prior quarter Improved activity during Q4 with a marked increase in tender activity Increase in After Sales and 21 Top Drives now secured for 2017 backlog Continued focus on cost savings 13

15 Offshore Services Financial Performance to 31 December 2016 Q Q Q Q Q Result Result Result YTD YTD $m $m $m $m $m Platform Services Revenue EBITDA (post support allocation) Margin 14.6% 14.4% 15.2% 14.3% 13.0% MODUs Revenue EBITDA (post support allocation) (0.2) 1.2 (0.3) Margin 0.0% 140.8% -1.7% 56.5% 26.2% Offshore Services Revenue EBITDA (post support allocation) Margin 14.5% 15.2% 13.5% 16.5% 14.5% Strong performance despite challenging market conditions Lower activity levels continued in Angola and the North Sea Cat J and Hebron projects continuing on schedule to commence operations mid-2017 Recent contract wins provide for stable long term backlog 14

16 RDS Financial Performance to 31 December 2016 Q Q Q Q Q Result Result Result YTD YTD $m $m $m $m $m Revenue EBITDA (post support allocation) (0.3) 1.8 (0.5) Margin -2.4% 10.9% -1.4% 6.8% 9.4% All activity now brownfield with few opportunities in greenfield Reduced capex spend by E&P companies continues to impact activity We continue to manage costs in line with project activity 15

17 Group Results Financial Performance to 31 December 2016 Revenue and EBITDA ($m) Q $m Q $m Q $m FY 2016 $m FY 2015 $m Revenue from business units , ,776.9 Eliminations (8.0) (2.9) (14.2) (22.2) (108.1) Total third party revenue , ,668.8 EBITDA from business units Eliminations 0.2 (0.1) (0.1) (0.3) (1.5) Corporate costs/other (4.6) (5.1) (4.0) (18.9) (18.4) Exchange 1.1 (0.4) 2.0 (0.3) (2.8) Total EBITDA

18 Cash flow and working capital Financial Performance to 31 December 2016 Free Cash Flow Working Capital 2 Q Q Q $'m $'m $'m $'m $'m Cash generated from operations Tax paid (6.4) (9.3) (13.7) (38.6) (49.6) Cash flow from operating activities Capital expenditure (15.1) (15.3) (24.9) (105.6) (128.0) Proceeds from sale of Fixed Assets Interest received Other (1.9) Cash flow from investing activities (8.7) (9.2) (11.3) (22.9) (94.6) 9 Interest paid 1 (50.5) (13.2) (50.7) (127.3) (125.7) Foreign exchange (0.7) (3.3) 20.4 (6.6) Dividend paid to minority shareholders 0.0 (0.5) 0.0 (0.5) 0.0 Acquisition of non-controlling interests (25.0) Net Cash flow before debt drawdown/(repayment) (10.4) (7.9) Drawdown/(repayment) of debt and debt issuance costs (8.1) (8.0) (1.9) 51.4 (22.2) Net cash flow (12.3) (30.1) 17 1 Denotes the effect of foreign exchange rate changes on cash and bank overdrafts. 2 Deltas denote current quarter working capital movement

19 Capital structure Net leverage as at 31 December 2016 Utilisation 31 st December 2016 Coupon Maturity Facility Rating 3 Recovery Rating 3 Net Leverage 1 Revolver ($250m) L+400 May-19 Caa1/CCC+ 3/3 0.07x Senior Secured Term Loan L(100)+525 May-20 Caa1/CCC+ 3/3 1.38x HSBC Oman Term Loan 64.0 L+400 Dec x Total Bank Debt x UK Finance Senior Secured Notes % May-21 Caa1/CCC+ 3/3 1.43x Globe Luxembourg Senior Secured Notes % May-18 Caa1/CCC+ 3/3 1.90x Total Institutional Debt 1, x Finance lease & other debt Aug x Gross Debt 1, x Cash x Net Debt 1, x 18 1 Based on Q LTM EBITDA of $263m. 2 Revolver is split $75/$175m non cash/cash, the amount shown represents the cash element. 3 Facility and Recovery ratings shown as at March 2016

20 Closing remarks Full year EBITDA of $263m and fourth quarter EBITDA of $60m delivered in challenging market conditions Backlog position of $5.3bn across a blue chip company base Strong HSE and operational performance recognised by customers Increase in tendering activity across several regions providing positive outlook for m Positive cash generation of over $100m and strong liquidity position at $262m g liquidity position at $245m 19

21 20 Q & A investor.relations@kcadeutag.com