Investor Presentation

Transcription

1 Investor Presentation Second Quarter 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 forward-looking 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 Introduction Industry highlights and challenges Health, safety and environmental performance Business overview Group results and contract backlog Summary 2

4 Industry highlights and challenges The Oil & Gas industry in Industry Highlights Industry Challenges Robust oil price continues to support global E&P activity, including marginal fields. x Fiscal policy in some territories can lead to challenges e.g. Nigeria. Strong demand for land rigs in international markets. Substantial forecast global capital expenditure. Fiscal policy continues to have an impact on this sector e.g. UK. x x Protests in UK and departure of oil companies from Eastern European operations highlight difficulty in replicating US shale oil revolution in Europe. Sourcing the additional personnel required for growth and replacing the aging workforce failure to do so could defer or limit future capital investment. x Civil unrest in the parts of the AFMEA region 3

5 TRIR per 200,000 man hours Health, safety and environmental performance 1.4 Average Total Recordable Injury Rate for was 0.46 injuries per 200,000 man hours worked TRIR (average) Overall TRIR rate decreased in comparison with Q1, driven by an improvement in our onshore BUs

6 Assetlight Contract tenor H1 EBITDA Segment description Q1 Update Diversified business across both onshore and offshore Onshore (c.50% of EBITDA) Offshore (c.50% of EBITDA) Land Drilling Bentec Platform Services RDS MODUs Leading International premium drilling contractor High end fleet of 54 drilling and 9 workover rigs Track record of executing complex wells in harsh environments 46% Design and manufacture of premium land rigs and key components Capacity for rigs and 36 top drives p.a., increasing in to meet market demand Provision of after sales services Leading global platform service operator outside of North America 36 platform rigs under management Operations in UK North Sea, Norway, Russia, Azerbaijan and Angola 9% 18% 0% 27% Design and refurbishment of offshore drilling facilities and MODUs Engineering from concept to commission Employs over 800 engineers and support staff across the globe Owns and operates fleet of 2 jack-ups and 3 barge type self erecting tender (SET) rigs High visibility of earnings with all rigs majority contracted for 1 5 years + options n/a 3 5 years + options n/a 1 3 years Over 50% of EBITDA generated in asset light businesses EBITDA stated before normalisation adjustments and excluding central overheads. 5

7 Significant new contracts Global Oil Major Contract nature Contract length & timeframes Customer Offshore Angola Drilling operations and maintenance of two offshore platforms Initial five year award, with mutually agreeable extension options Global oil major Norway Drilling and maintenance services 30 month extension to existing contract Contract value Initial contract awards worth over $165m. Estimated backlog of $310m given evergreen nature of offshore Angola contract To be awarded two contracts in these core markets is an excellent result for KCA Deutag. We have an undeniably strong reputation working in these offshore regions, and these contracts will only serve to enhance this even further Rune Lorentzen, President, Offshore 6

8 Significant new contracts Mariner and Bressay Contract nature Mariner Detailed design and follow-on engineering for Statoil s Mariner platform drilling facilities Bressay Front End Engineering Design (FEED) of the Bressay platform Contract length & timeframes Customer Contract value 29 months 9 months Daewoo Shipbuilding & Marine Engineering $42m These new awards provide a great example of the on-going investment in the UK Continental Shelf. We have a very strong presence in the North Sea and these agreements further demonstrate that RDS is the flagship rig design engineering specialist in the region Simon Drew, Senior Vice President, RDS 7

9 Land Drilling Financial Performance to 30 June Revenue EBITDA Strong performance with utilisation at 94%* Full benefit of delivery of two new land rigs in Russia in Q1, with third in process of being mobilised at end of. Two rigs commenced CDS work in Russia in, which include pass through revenues at lower margins. Improved performance in Europe / Kazakhstan due to higher rig utilisation. Performance in Middle East in line with. Higher activity in Africa but with reduced EBITDA margins. Two new rigs were successfully delivered into Algeria. 8 *94% utilisation excludes the 6 Libyan rigs (re-entry to the Libyan market is ongoing); Including the 6 Libyan rigs the utilisation figure is 88%

10 Bentec Financial Performance to 30 June Revenue EBITDA Significant progress made on manufacture and assembly of rigs earmarked for Algeria (four), New Zealand (one) and Russia (one). Growth of component business continued in line with management s expectations. 9

11 Platform Services Financial Performance to 30 June Revenue EBITDA (3) Continued strong performance across all locations. Sustained strong performance in Norway, largely driven by new Statoil contract. c.50% of revenue increase was attributable to lower margin pass through items. Higher activity in the UK, with lower EBITDA margin due to the loss of a high margin contract towards the end of. Revenue and EBITDA growth achieved in Angola and Azerbaijan, partially offset by slightly lower activity in Sakhalin. 10

12 RDS Financial Performance to 30 June Revenue EBITDA RDS continues to benefit from strong demand for premium engineering design services to the offshore sector. Performance driven by Hebron (Newfoundland Canada) project, higher activity in Norway and other greenfield projects run through our London office. 11

13 MODUs Financial Performance to 30 June Revenue (7) EBITDA (4) 10 (14) 0 23 (23) Cancellation of Glen Esk was the primary driver for the generation of a loss in. In, Glen Esk had been warm stacked, with a lower cost base. Shortfall partially offset by improved performance from Glen Affric, which was not operating in. Ben Rinnes had lower revenue and EBITDA due to a oneoff demobilisation fee in. Ben Loyal and Glen Tanar continued to perform largely in line with expectations. 12

14 Group Results Financial Performance to 30 June Revenue and EBITDA Revenue from business units , Consolidation adjustments (9) (31) (16) (53) Total Revenue , EBITDA from business units Corporate costs (16) (12) (26) (24) Total EBITDA

15 Cash Impact of Delta () Cash Flow and Working Capital Financial Performance to 30 June Free Cash Flow Working Capital Cashflow () Working Capital Delta Cashflow from operating activities (12) 56 Cashflow from investing activities (70) (50) (70) (120) Equity injection Foreign Exchange (7) (5.0) (10.0) Delta* Delta* (7) Net cashflow before debt repayment (23) 1 (20) (59) Drawdown of debt (net of issuance costs) Net cashflow (59) (15.0) (20.0) (25.0) (30.0) (19) Main driver for slightly lower operating cash flow was the increase in working capital. Cash flow from investing activities is mainly capital expenditure and cash interest payments. - Capital expenditure was c.$3m lower than in. - Interest was $25m higher as a result of a six monthly interest payment on the term loan being paid at the end of April. Only three months of interest was paid in. Further $19m of shareholder equity injected to support the currently approved growth capital expenditure programme. (35.0) (40.0) Working Capital Delta Increase in working capital driven by a generally higher level of activity, as illustrated by revenue increases across the Group. Receivables from Bentec rig orders increased by $45m - these are expected to unwind in the second half of the year. *Deltas denote working capital movements from Q1 and Q1 respectively. 14

16 Capital Structure As at 30 June Net debt () : $1,260m Cash Liquidity Facilities Term Loan B & Capex Facility Term Loan C Senior Secured Notes New Liquidity Facility LC Facility Maturity profile available facilities ()

17 Contract backlog* approaching $9 billion Contract Backlog by BU Q1 $359m $187m $254m $1,221m Contract Backlog by BU $420m $207m $218m $1,268m $6,306m Land Platforms MODUs RDS Bentec $6,608m Land Platforms MODUs RDS Bentec *Please refer to Offering Memorandum for explanation of methodology of backlog calculation. 16

18 Summary Delivered on promised uptick in performance compared to Q1. Majority of BUs are trading in line with, or ahead of, management expectations this partially offsets the MODU s underperformance. Our business efficiency process is on track and delivering excellent results, particularly around procurement. Future performance continues to be supported by strong order backlog, which was enhanced again by the award of further new contracts in. 17

19 18 Q & A