Jefferies 2014 Energy Conference

Transcription

1 Jefferies 2014 Energy Conference November 12, 2014 Rob Saltiel President and CEO Atwood Oceanics, Inc. Atwood Advantage 1

2 Forward Looking Statements Statements contained in this report with respect to the future are forward-looking statements. These statements reflect management s reasonable judgment with respect to future events. Forward-looking statements are subject to numerous risks, uncertainties and assumptions and actual results could differ materially from those anticipated as a result of various factors including: uncertainties related to the level of activity in offshore oil and gas exploration and development; oil and gas prices; competition and market conditions in the contract drilling industry; the risks inherent in the construction of a rig; delays in the commencement of operations of a rig following delivery; our ability to enter into and the terms of future contracts; possible cancelation or suspension of drilling contracts; the availability of qualified personnel; labor relations; operating hazards and risks; terrorism and political and other uncertainties inherent in foreign operations (including risks of war, civil disturbances, seizure or damage to equipment, and exchange and currency fluctuations); the impact of governmental and industry laws and regulations; and environmental matters. These factors and others are described and discussed in our most recently filed annual report on Form 10-K, in our Forms 10-Q for subsequent periods and in our other filings with the Securities and Exchange Commission which are available on the SEC s website at Each forward looking statement speaks only as of the date of this presentation and we undertake no duty to update the content of this presentation or any forward-looking statement contained herein to conform the statement to actual results or to reflect changes in our expectations. 2

3 3 Investment Thesis

4 Atwood Oceanics Investment Thesis Modern, high quality rig fleet 6 UDW floaters and 3 high-specification jackups delivered Bifurcation favors young fleet and supports financial sustainability Industry-leading operations performance and financial returns Superior safety, revenue efficiency, and cost control Strong returns on capital investment Earnings growth and revenue visibility 84% of FY2015 available days contracted $2.9 billion contract backlog Sustainable dividend initiated for 2015 Expect to grow by 10% annually Not expected to impact our growth strategy 4

5 Modern, High Quality Fleet - $4.5 billion Investment in Expanding our High Specification Rig Fleet Atwood Mako 2015 EBITDA: Approximately 76% 1 derived from UDW floaters and high specification jackups Atwood Manta Atwood Orca Atwood Osprey Atwood Condor Atwood Advantage Atwood Achiever Atwood Admiral Atwood Archer CALENDAR YEAR Delivered and Working 5 1 Source: FactSet dated November 1, 2014 and Internal Analysis

6 Modern, High Quality Fleet - Bifurcation Why the New Rigs will Rule Specification A-Class Drillship Typical 5 th Gen Drillship Max Water Depth (Ft) 12,000 10,000 Atwood Advantage Max Drilling Depth (Ft) Variable Deckload (mt) 40,000 35,000 23,000 20,000 Dual 15K BOP Yes No BOP Rams 7 6 Hookload (Lbs) 2,500,000 2,000,000 Mud Pumps 5 4 Cranes 3 x 100 mt 3 x 85 mt Compensating Crane Yes 165 mt No Active Heave with Crown-Mounted Compensator Yes No 6

7 Fleet Age (Years) Modern, High Quality Fleet - Revenue-weighted Age of Fleet 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16 'Revenue Weighted Age' of Fleet DO RIG ESV RDC NE PGN NE (ex PGN) ATW Source: Heikkinen Energy Advisors, November 3, 2014

8 Industry-Leading Operations Performance and Financial Returns - Achieving Top-Tier Execution Value Drivers Key Enablers Revenue Efficiency Cost Control Project Management - Centralized maintenance and technical support Consistent standards - Atwood Osprey and institutionalizing 2012 lessons learned - Atwood Mako - Common equipment - Atwood Condor across rigs and 2013 supplier consolidation - Atwood Manta - Organic growth with - Atwood Orca proven rig designs 2014 and world-class - Atwood shipyards Advantage - Early capital project - Atwood Achiever scoping and detailed 2015 project planning - Atwood Admiral - Experienced project management teams Best-in-class Operating and Net Margins (31%)* Average for Peer Group: 16%* Consistent, Superior Shareholder Returns 8 *Average Peer group and Operating Net Margins as of November 10, 2014

9 Industry-Leading Operations Performance and Financial Returns - Net Income Margin trailing 8 quarters 35% 30% 25% 20% 15% 10% 5% 0% 31% 29% 28% 19% 18% 17% 16% Peer Group Average: 16% 9% 6% 2% 9 Source: SEC Financials Trailing 8 Quarters Net Margin as of November 10, * ESV Net Income excludes both the 2Q14 impairment and discontinued operations charges ** SDRL Deconsolidation of Seadrill Partners and gain on sale of assets are excluded. Net Margins as of 6/30/2014 *** RIG Excludes loss on impairment for 9/30/2014 ****VTG Excludes early retirement debt in 12/31/2012 and 3/31/2013

10 Industry-Leading Operations Performance and Financial Returns - Return on Capital Employed 16% 14% 14% 12% 10% 8% 9% 9% 7% 8% 8% 9% 9% 11% 11% 10% 10% 10% 6% 5% 4% 2% 0% RIG NE RDC ESV *SDRL DO ATW Source: FactSet and IPREO as of November 10, 2014 ROCE is calculated as EBIT / Capital Employed; using 9/30/2014 Capital Employed figures *SDRL Capital Employed as of 6/30/2014

11 Recent Accomplishments Atwood Advantage delivered - December 2013 Atwood Aurora: 1-year contract extension - February 2014 Expanded and extended Revolving Credit Facility - April 2014 Atwood Orca: 9-month contract extension - May 2014 Atwood Falcon: 11-month contract - May 2014 Atwood Hunter: 90-day contract - June 2014 Atwood Oceanics granted IADC Accreditation for Competence Assurance Program August 2014 Atwood Achiever delivered - August Atwood Advantage Atwood Orca

12 Market Snapshot - Floater and Jackup Markets Ultra-Deepwater Deepwater High-Spec Jackups E&P focus on returns and dividends resulting in a slowdown of contract awards Lower oil prices now contributing to the negative outlook Near-term outlook: Several uncontracted newbuilds 5th gen rigs starting to idle UDW rig rollover risk Recent contract awards and UDW renewals by Petrobras, Hess and others improving supply and demand balance 28 UDW newbuilds scheduled for delivery over next twelve months Newbuild delivery delays may ease contracting pressure DW rig fleet challenged by bifurcation and substitution by higher specification 5 th generation rigs 12 DW units currently idle and contract opportunities are highly contested over next twelve months Class surveys for older rigs expected to accelerate rig attrition 25 DW rigs rolling off contract over next twelve months Scheduled Special Survey and required investment are likely catalysts for cold stacking Day rates starting to weaken, especially in SE Asia. 55 newbuilds scheduled for delivery next twelve months 18 owned by inexperienced speculators 26 newbuilds are being constructed in Chinese shipyards (62 jackups in total are being constructed in Chinese shipyards) 50 High-Spec Jackups are still uncontracted over next twelve months 12 Source IHS Petrodata as of November 7, 2014

13 Earnings Visibility, Predictability and Built-in Growth - Steady Revenue and Earnings Growth: $ Millions $2,000 Revenue $ Millions $600 Net Income $1,600 $500 $1,200 $1,174 $400 $341 $800 $527 $651 $787 $300 $200 $215 $257 $272 $400 $100 $ $ Note: Revenue and Net Income represented on fiscal year basis. Source: Company

14 Earnings Visibility, Predictability and Built-in Growth - Atwood Fleet Contract Status - (by calendar year) Rig Class/Rig Customer Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ultra-Deepwater Drillships Atwood Advantage Noble Energy $584K Atwood Achiever Kosmos Energy $417K $595K / $661K* Atwood Admiral Available Delivery Late 2015 Atwood Archer Available Delivery mid 2016 Ultra-Deepwater Semisubs Atwood Osprey Chevron $470K Atwood Condor Shell $555K Deepwater Semisubs Atwood Eagle Woodside $460K Atwood Falcon Apache / Murphy / BHP $385K $499K $430K Atwood Hunter CNOOC $337K Jack-Ups Atwood Aurora Addax $158K / $185K* Atwood Beacon ENI $185K Atwood Mako Salamander $165K Atwood Manta CEC International $160K Atwood Orca Mubadala Petroleum $160K $165K 14 Contracted (current) Contracted (follow on work) Shipyard Mobilization (as of 11/01/14) Firm Term 18.6 Rig Years Firm Revenue $2.9 Billion * Rates shown are exclusive of tax / inclusive of tax

15 Earnings Visibility, Predictability and Built-in Growth - Revenue Backlog Analysis as of November 1, 2014 $ Millions $1,400 By Year By Customer Type $1,200 $1,285 $1,000 $800 $1,127 $0.9BN $0.9BN $600 $400 $480 $1.1BN $ $ Fiscal Year Percentage of Days Contracted % 53% 16% Majors/Large NOCs Large Independents Small Independents

16 Earnings Visibility, Predictability and Built-in Growth - Planned Capital Expenditures Fully Financed $1.1 billion 1 in remaining total capital expenditures as of November 1, 2014 $ Millions $900 Approximately $1.5 billion in contracted after tax cash flow through FY2016 is available to fund these expenditures Credit metrics peak in FY2014 with the delivery of the Atwood Achiever Upsized our Revolving Credit Facility to $1.55 billion and extended maturity to May We also reduced our LIBOR margin to 2.0% On a positive outlook by both credit rating agencies for a potential update to Ba1 / BB+ $65 $600 $71 $640 $751 2 $667 $300 2 $470 $ Fiscal Year Contracted After Tax Cashflow CAPEX Expected Dividend Debt/Cap (EOY) 38.5% 36.6% Debt/EBITDA (EOY) 2.7x 2.8x Includes $175 million of maintenance and other CAPEX and capital spares through Includes only contracted operating cashflow. Does not include estimates for uncontracted cashflow

17 17 Summary

18 Atwood Investment Thesis Fleet Age and Quality Backlog and Cash Flow Visibility Strong Balance Sheet with Significant Liquidity Revenue, Net Income and Dividend Growth Operational Excellence and Cost Control Lead to Best in Class Margins 18

19 Thank You Atwood Achiever Naming Ceremony May 30,