ABILITY GROUP ASA. 3 rd QUARTER 2006 REPORT. Sverre Skogen CEO, Ability Group ASA. 7 November 2006

Transcription

1 ABILITY GROUP ASA 3 rd QUARTER 2006 REPORT Sverre Skogen CEO, Ability Group ASA 7 November

2 Business unit snapshot Petroleum Services Drilling Services Integrity Services Project Services Well Management drilling services Consultancy Services recruitment and consultancy services within drilling Reservoir Management reservoir modeling, exploration services, petroleum economics, field development and evaluation Performance management systems Special Projects Rig Consortia FDPSO Unique drilling technologies RMR zero emission tophole riserless drilling CTS removes cement, mud and clay deposits from well template Dynamic Desander System sea-bed separation of water solids and oil Junk Trapper mechanical well cleaning Drillpipe production and refurbishment Pipetech pipeline inspection technology and services. World leader in shortdistance cable based pipeline inspection Miscellaneous inspection tools for sale Emiteam facility maintenance management Maintenance planning, inspection and follow-up (no execution) Top-side and onshore facilities in Norway Technical advisory services, project management and manpower pool High-competence resource base Provides oil companies with temporary consultants Hourly/ project-based fees Resource base in AGR projects and source for recruitment 2

3 Q operational highlights Petroleum Services is experiencing a strong market sentiment with more than 180 wells on prospect list Rig availability will be of essence the next months Drilling Services awarded new RMR contracts Awarded contract with Gupco - BP's joint venture with the Egyptian General Petroleum Company for the provision of providing RMR equipment and services to the Taurt Development Project offshore Egypt Entered into a JIP with BP and Shell for the development of Riserless Mud Recovery Pilot (RMR) in deepwater Gulf of Mexico with field trials in 2007 Final tests on the machinery at the Mongstad factory were successfully completed. The factory's first order completed. Ramp up of factory on track Weaker results by Integrity Services due to temporary halt on the Åsgaard Project, and delay in projects within Pipeline inspection and technology upgrading Several M&A processes to support international growth and organic growth ongoing within Petroleum Services and Drilling Services, likely to be concluded Q and Q1 next year Employee presence for the first nine months of 2006 was 98.2% compared to an industry average of 96.7% (1)(2) (1) Based on figures from Statistics Norway for Q22006 (2) Excludes Peak, RES and Technology Design 3

4 SeaVation acquisition completed in November Strong Market Backdrop Large and sustained increases forecast in subsea spending Exceptional growth forecast in the deep and ultra deepwater segments Technology & Management SeaVation technology represents the cutting edge of subsea excavation technology Highly experienced management team Customers & Markets Potentially substantial future client overlap between SeaVation and AGR group companies SeaVation brings access to the Asian market to AGR group companies Efficient Use of Assets AGR/SeaVation personnel and equipment can be cross-utilised when appropriate The acquisition of SeaVation represents AGR Subsea s first step in achieving its mission of becoming the provider of choice for deep/ ultradeep water seabed intervention services 4

5 Q Group financials P&L 3Q Q M M Pro Forma Operating income 399,4 341, ,2 948, ,5 EBITDA 58,8 58,8 192,7 142,4 203,1 Margin (%) 14,7 % 17,2 % 16,1 % 15,0 % 15,4 % Depreciation (10,0) (6,9) (26,3) (21,2) (28,5) EBITA 48,8 51,9 166,4 121,3 174,7 Margin (%) 12,2 % 15,2 % 13,9 % 12,8 % 13,3 % Amortisation (14,6) (13,1) (38,9) (73,5) (85,9) EBIT 34,2 38,8 127,5 47,8 88,7 Margin (%) 8,6 % 11,3 % 10,7 % 5,0 % 6,7 % Net financial items (12,8) (14,0) (51,0) (38,7) (54,9) Profit before taxes 21,4 24,8 76,5 9,1 60,3 Margin (%) 5,4 % 7,3 % 6,4 % 1,0 % 4,6 % Taxes (5,5) (6,9) (21,4) (2,5) (16,9) Profit after taxes 15,9 17,9 55,1 6,6 43,4 Margin (%) 4,0 % 5,2 % 4,6 % 0,7 % 3,3 % CAPEX (1)(2) 47,9 25,6 138,7 49,7 112,8 Operating income for Q increased by 16,8% compared to Q EBITDA Q3 ended at MNOK 58.8, same level as last year: Integration cost for Q3 was MNOK 3, anticipated full year integration cost is approximately MNOK 10 Weaker results by Integrity Services Net financial expenses ended MNOK 12.8 for Q3, which includes an unrealized loss on investment of MNOK 2.5 and MNOK 2.4 in banking fees On track for future growth despite temporary setback within Integrity Services Excludes acquisitions and acquisition related items Actual figures 5

6 Segment Financials Petroleum Services (Pro forma) (1) 120 3Q Q M M 2005 Operating income 183,5 143,5 493,7 380,7 Growth (%) 27,8 % 29,7 % EBITDA 39,2 27,9 109,2 60,4 Margin (%) 21,3 % 19,4 % 22,1 % 15,9 % Growth (%) 40,6 % 80,7 % Capex (2)(3) 8,6 0,1 11,2 0,1 Possible wells 40.5% growth in EBITDA (pro forma) for Q compared to the same period last year. In total, AGR Petroleum Services has drilled 16 wells during the first nine months of Another 10 wells are expected to be drilled by year-end Currently working with a prospect list of around 180 wells, of which 60% are planned for 2007 key focus on rig availability 100 No. of wells (1) Includes the Peak and RES acquisition (2) Excludes acquisitions (3) Actual figures Year Bredford Dolphin moved to yard in Poland for upgrading AGR personnel have conducted site visits on the Bredford Dolphin to identify the potential location of an RMR on the rig 6

7 Finding drilling rigs Conventional tender and contract process for existing rigs Example: Bredford Dolphin Contract new build rig Example: Wilcraft Assignment from oil company Example: Ensco 92, BP Refurbishment of a rig currently not working AGR is continuously monitoring all alternative options for getting rig time 7

8 Segment Financials Drilling Services (Pro forma) 3Q Q M M 2005 Operating income 42,8 29,6 116,9 99,9 Growth (%) 44,6 % 17,1 % EBITDA 19,3 13,4 47,0 38,9 Margin (%) 45,1 % 45,1 % 40,2 % 38,9 % Growth (%) 44,7 % 20,9 % Capex (1)(2) 35,4 21,7 111,9 39,6 44.0% growth in EBITDA (pro forma) for Q compared to the Q EBITDA contribution from the RMR increased by approximately 90% in the same period Currently working with a prospect list of 176 (150 in Q2) RMR operations Identified RMR opportunities Final tests on the machinery at the Mongstad factory were successfully completed. The factory's first order completed. In dialog with several new customers No. of wells Year (1) Excludes acquisitions (2) Actual figures 8

9 RMR Commercial development RMR's Clients Wells During Q3 2006, one new RMR became available for operations, seven in total Ordered long lead items for additional five RMRs for delivery in 2007 Approximately MNOK 180 in CAPEX for 2007 in new RMR equipment Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q RMR's Clients Wells

10 Segment Financials Integrity Services (Pro forma) (1) 3Q Q M M 2005 Operating income 50,5 59,2 181,1 147,9 Growth (%) -14,6 % 22,4 % EBITDA -2,0 14,1 26,2 29,8 Margin (%) -3,9 % 23,8 % 14,4 % 20,1 % Growth (%) -114,1 % -12,1 % Capex (2)(3) 3,7 3,8 15,3 9,7 Operating income for Q was MNOK 50.5 compared to MNOK 59.2 in Q Weaker results related to temporary halt at the Åsgaard project, more third party volume (lower margin), other project delays and seasonally lower activity Also, delays in upgrading of the pipeline inspection equipment based on Technology Design s ultrasonic technology (completion expected in Q1 2007) Profitability level expected to increase to Q1/Q2 level for 4th quarter this year. (1) Includes the Technology Design acquisition (2) Excludes acquisitions (3) Actual figures 10

11 Segment Financials Project Services (Pro forma) 3Q Q M M 2005 Operating income 156,5 113,6 448,8 333,3 Growth (%) 37,8 % 34,7 % EBITDA 9,1 5,3 24,8 15,8 Margin (%) 5,8 % 4,6 % 5,5 % 4,7 % Growth (%) 73,3 % 57,0 % Capex (1)(2) 0,1 0,1 0,3 0,3 Close to full utilization of personnel both within the manning business and for project related services Operating income for the first nine months of 2006 ended at MNOK compared to MNOK last year. EBITDA increased by 73.3% from MNOK 5.3 in Q to MNOK 9.1 in Q (1) Excludes acquisitions (2) Actual figures 11

12 9M 2006 Group financials Balance sheet (Actual) Figures in MNOK Actual Actual Actual Actual Immaterial assets 1 123,2 618, ,5 613,7 Machinery and equipm. 231,0 97,0 203,9 132,3 Other fixed assets 36,0 7,1 34,2 25,6 Total fixed assets 139,2 722, ,6 771,6 Account receivables 571,3 228,3 514,6 228,8 Other current assets 102,0 45,4 84,2 50,0 Cash and cash eq. 68,8 91,3 142,9 66,5 Total current assets 742,0 355,0 741,8 345,3 Total assets 2 132, , , ,9 Total equity 719,4 133,7 694,1 142,8 L-T Interest-bearing debt 802,4 519,4 802,3 460,5 Other L-T liabilities 43,3 174,5 61,3 172,5 Total L-T liabilities 845,7 693,9 863,6 633,0 Total assets per end of September 2006 was MNOK (1) Immaterial assets, MNOK per September 2006, consists of MNOK in goodwill and MNOK in patents and R&D (amortized) Total equity per 30 September was MNOK 719.4, resulting in an equity / total assets ratio of 33.7% Net interest bearing debt per Q ended at MNOK S-T Interest-bearing debt 0,0 24,4 0,0 83,8 Other S-T liabilities 567,1 235,3 536,7 257,3 Total S-T liabilities 567,1 259,7 536,7 341,1 Total equity and liab , , , ,9 (1) Includes RES, PEAK and Technology Design 12

13 9M 2006 Group financials Cash Flow (Actual) 3Q Q M M Figures in MNOK Actual Actual Actual Actual Actual Profit before tax 3,9 9,8 40,4 23,0 38,2 Adj. for non-cash items 42,1 13,3 73,0 40,4 50,7 Change in working capital (1) -63,1 56,6-88,3-16,4-46,4 Change in other accruals (2) 15,0 7,7 49,5 48,5 70,5 Operating cash flow (2,1) 87,4 74,5 95,4 113,1 Cash flow from investm. (72,0) (4) (163,4) (689,0) (304,7) (341,6) Net issuance of debt (3) 0,1 56,9 67,1 240,1 232,3 Issuance of shares 0,0 13,6 549,6 41,1 43,4 Cash flow from financing 0,1 70,6 616,8 281,2 275,7 Change in cash -74,1-5,4 2,3 72,0 47,2 Cash per start of period 142,8 96,7 66,5 19,3 19,3 Cash per end of period 68,8 91,3 68,8 91,3 66,5 Operating cash Q ended at MNOK -2.1, versus MNOK 87.4 in Q The deviation between EBITDA and cash flow from operations is due to increase in working capital During the third quarter of 2006, cash-flow from investment- and financing activities were MNOK 72.0 and 0.1 MNOK respectively. For the same period for 2005 these figures were MNOK and MNOK 70.6 Capex first nine months 2006 was MNOK 138.7(excluding acquisitions), of which 58% was invested in RMR. Anticipated Capex for 2007 is MNOK 200 (1) WC = Inventory + Trade receivables trade payables (2) Includes changes in pension liabilities and adjustments related to acquisitions (3) Includes both acquisition funding and new funding for operations of acquired businesses (4) Includes MNOK 25 in Peak transaction related items 13

14 Interest-bearing debt post refinancing (1) C r e d it A m o u n t In te r e s t L o a n d e s c r ip tio n a v a ila b le p e r S e p te m b e r r a te M N O K M N O K (% ) T e rm L o a n s 7 5 0, ,0 4,1 3 R e v o lv in g c re d it fa c ility 3 0 0,0 5 0,0 4,1 3 O th e r c re d it fa c ilitie s 5,4 2,4 N M (2 ) M u ltip u rp o s e c re d it fa c ility (3 ) 2 0 0,0 0,0 3,9 8 In te r e s t b e a r in g d e b t , ,4 The group s interest bearing debt was refinanced with DnBNOR in relation to the listing At current debt levels, the company s borrowing rate is 70bp above NIBOR MNOK 450 fixed interest rate at 5,03% (5 years) (1) Includes the Peak acquisition (2) A combination of small loans with different terms and conditions (3) Drawdown of MNOK 70,1 is reported net against cash in Balance Sheet 14

15 Overview shareholders per 30 October 2006 Shareholder No. of shares % Ownership ALTOR 2003 GP LIMITED AS GENERAL ,6 % LONAVEIEN INVEST AS ,6 % PIR AS ,5 % MORGAN STANLEY AND CO.INTL.LIMITED ,8 % ABILITY HOLDING A/S ,4 % BEAR STEARNS SECURITIES CORP ,6 % EINEVOLL INVEST AS ,3 % LANDE INVESTERING AS ,1 % COMMERZBANK AG ,8 % AVANSE NORGE (II) ,7 % FORTIS BANK LUXEMBOURG S.A ,6 % ODIN OFFSHORE ,5 % PATERSON ,3 % NORD-PEKO HOLDING AS ,3 % JPMORGAN CHASE BANK ,3 % SB HOLDING AS ,1 % HAUGUM INVEST AS ,1 % DNB NOR NORGE SELEKTV (III) ,1 % CITIBANK, N.A ,1 % CREDIT SUISSE SECURITIES ,9 % OTHERS ,1 % Total no. of shares outstanding: 65,4M Free float of approximately 37% Lock-up on remaining shares until April 2007 Total shares outstanding ,0 % 15

16 Summary Positive outlooks for all business areas, on track for growth Strong market sentiment within Petroleum Services, focus on rig availability Steadily increasing demand for the RMR strengthens our view on the RMR development for 2007 AGR will increase investments in new equipment Final tests on the machinery at the Mongstad factory were successfully completed. The factory's first order completed Continued high employee presence shows strong commitment from our staff Thank you for your attention! 16

17 Ability Group ASA Key Figures (Pro forma) 3Q Q M M 2005 Capital items Total assets 2 132, , , ,3 Equity 719,4 133,7 719,4 133,7 Net interest-bearing debt 733,6 619,8 733,6 619,8 Capital Employed (1) 1 453,0 753, ,0 753,5 Equity / Total assets ratio 33,7 % 12,3 % 33,7 % 12,3 % Profitability Operating income 399,4 341, ,2 948,5 EBITDA 58,8 58,8 192,7 142,4 EBITDA margin (%) 14,7 % 17,2 % 16,1 % 15,0 % Profit after tax 15,9 17,9 55,1 6,6 Profit margin (%) 4,0 % 5,2 % 4,6 % 0,7 % EPS (2) 0,24 0,27 0,84 0,10 Cash flow (3) Change in working capital (63,1) 56,6 (88,3) (16,4) Capex (excluding acq.) 47,9 25,6 138,7 49,7 Petroleum Services 3Q Q M M 2005 Operating income 183,5 143,5 493,7 380,7 EBITDA 39,2 27,9 109,2 60,4 Margin (%) 21,3 % 19,4 % 22,1 % 15,9 % Drilling Services 3Q Q M M 2005 Operating income 42,8 29,6 116,9 99,9 EBITDA 19,3 13,4 47,0 38,9 Margin (%) 45,1 % 45,1 % 40,2 % 38,9 % Integrity Services 3Q Q M M 2005 Operating income 50,5 59,2 181,1 147,9 EBITDA -2,0 14,1 26,2 29,8 Margin (%) -3,9 % 23,8 % 14,4 % 20,1 % Project Services 3Q Q M M 2005 Operating income 156,5 113,6 448,8 333,3 EBITDA 9,1 5,3 24,8 15,8 Margin (%) 5,8 % 4,6 % 5,5 % 4,7 % (1) Capital employed = book equity + net interest-bearing debt (2) Assumes no.of shares per 30 June 2006, including a 1:5 share split and shares issued in relation to the acquisition of Peak (3) Based on actual figures 17