SR-Markets oljeservice seminar. CEO and President Alf C Thorkildsen June 5, 2012

Transcription

1 SR-Markets oljeservice seminar CEO and President Alf C Thorkildsen June 5, 2012

2 Contents Company profile Rig fleet Financial gearing Value creation North Atlantic Drilling Ltd Summary 6 th gen. semi-submersible rig West Capricorn 6 th gen. semi-submersible rig West Pegasus 2

3 Company Profile Most modern fleet of all major offshore drillers Diverse asset base of 66 units - 24 drillships & semi-submersibles - 21 jack-up rigs - 21 tender rigs Worldwide footprint - global reach Harsh environment exposure through North Atlantic Drilling Ltd Broad customer base with revenue backlog ~ US$14.9 bn EBITDA annualized ~ US$2.4 bn Dividend annualized ~ US$1.5 bn Enterprise value ~ US$31.5 bn * No of employees ~ 7,600 Enterprise value The leading offshore drilling company 3 * Fully invested enterprise value = market cap plus net debt plus newbuild commitments

4 Key Steps in Developing Seadrill Selective M&A organic growth performance 4 Includes five tender rigs owed by Varia Perdana

5 May 2005: Seadrill start-up Sakhalinskaya Ekha Toto Crystal Ocean Crystal Sea Start-up assets that have been disposed due to focus on new rigs 5 * Fully invested enterprise value = market cap plus net debt plus newbuild commitments

6 June 2012: An Industry Leader Existing rigs Capella 2008 Gemini 2010 Polaris 2008 Navigator 2000 Alpha 1986 Aquarius 2009 Capricorn 2011 Eminence 2009 Hercules 2008 Leo 2012 Orion 2010 Pegasus 2011 Phoenix 2008 Sirius 2008 Taurus 2008 Venture 2000 Courageous 2007 Defender2007 Freedom2009 Intrepid 2008 Mischief 2010 Resolute 2007 Vigilant 2008 Ariel 2008 Callisto 2010 Cressida 2009 Elara 2011 Epsilon1993 Janus 1985 Leda 2010 Prospero 2007 Triton 2008 Alliance 2001 Berani 2006 Jaya 2011 Menang 1999 Pelaut 1994 Setia 2005 Vencedor 2010 T T T T T T T T Teknik Berkat 1990 Newbuilds Auriga 1Q13 Tellus 3Q13 Vela 2Q13 Jupiter 3Q14 Neptune 2Q14 TBN 2Q14 TBN 4Q14 TBN 1Q15 Castor 1Q13 Oberon1Q13 Telesto 4Q12 Tucana 4Q12 Linus 2013 Esperanza 2013 T T T17 2Q13 T18 4Q13 6

7 Most modern fleet in the industry Fleet age established drillers Oil companies with increased focus on modern rigs 7 Source: DnB Markets

8 Offshore Drilling Rig Development West Alpha (4th gen. Norway rig) West Mira (Harsh environment newbuild 7 th gen.) Improvement in positioning systems Increased size, more deck load (40,000 tones to 65,000 tones) Increased water depth (2,000 ft to 12,000 ft) Increased equipment capacity; tensioners, hook-load, subsea equipment Dual derricks and/or Offline capabilities More redundancy for safety and productivity Increased efficiency including automation of processes Persons on board from 110 to 200 8

9 Future Development 2014 West Mira Higher demand on discharges to air and sea Possibilities to drill deeper, 12,000ft and beyond Arctic areas to be developed, rigs able to drill in icy waters and -30 to -40 0C Under balanced / managed pressure / dual gradient drilling. Equipment rated for 20,000 psi (today 15,000 psi). More back-up equipment e.g. second BOP 9

10 Global Operational Footprint Americas 9 units Gulf of Mexico - 3 Semis South America -3 Semis -2 Jack-ups -1 Semi-tender North Atlantic 6 units -3 Semis -2 Jack-ups - 1 Drillship Africa-Middle East 10 units - 3 Drillships -1 semi -2 Semi-tenders -4 Jack-ups Newbuilds 18 units Asia Pacific 23 units * -2 Semis -4 Semi-tenders -9 Tender rigs -8 Jack-ups - 6 Drillships -2 HE Semis -1 HE jack-up -4 BE jack-ups -4 Tender Rigs -1 Semi-tender Critical size in all important regions 10 * Includes five tender rigs owed by Varia Perdana

11 Second Largest Ultra-deepwater Player New regulations and age related issues underestimated 11 Source: ODS Petrodata

12 Markets Trends for High Capacity Floaters Significant exploration successes continue Activity expanded to new regions and countries GoM, Brazil and Africa continue to be the main demand drivers Development drilling programs are materializing New high capacity rigs are replacing older rigs Strong emphasis on quality equipment and track record Growing market for deepwater rigs Deepwater Discoveries Growing deepwater production Incremental rig demand in various regions is surfacing 12 Source: DnB NOR Markets, PCF Energy, Pareto, Woodmac

13 Significant Exploration Success 2011 discoveries Ultra-deepwater demand supply Ultra-deepwater daily rates development 700, , , , , , ,000 0 Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10 Jan 12 Ultra deepwater Deepwater Boost for future offshore drilling programs and rig demand 13

14 Largest Operator of Premium Jack-Ups New fleet to meet future drilling challenges 14 Source: ODS Petrodata

15 Market Development - Jack-ups Newbuilds are being absorbed by the market Number of warm stacked rigs decreased significantly An increasing number of rigs are relocated to the Arabian Gulf Daily rates for modern rigs are slowly increasing Opportunities for term contracts have improved significantly Replacement of aging fleet ongoing Number of stacked jack-ups Jan 10 Oct 10 Jul 11 Oct 11 Jan 12 Jun 12 Warm stacked Cold stacked Market Utilization Rates Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10 Jan 12 WDR > 350ft WDR < 350ft Market Rates 300, , ,000 Bifurcation in favor of new high spec equipment continues 150, ,000 50,000 0 Jan 01 Jan 03 Jan 05 Jan 07 Jan 09 Jan 11 WDR > 350ft WDR < 350ft 15 Source: SEB Enskilda, Pareto, ODS Petrodata

16 Largest Tender Rig Fleet Maintaining market share with improving margins 16 Source: ODS Petrodata

17 Tender rig market development Drilling concept focused on production drilling only Main operational areas are shallow water Southeast Asia and West Africa Market expanding to Central and South America Concept also being applied in deepwater in combination with TLPs and Spars Cost-effective and versatile concept Niche market with Seadrill as the only major driller participating Recent Fixtures Unit Dayrate Term Area West Esperanza US$235, yr Equatorial Guinea West Berani US$170, yr Indonesia West Menang US$170, yr Malaysia Quality equipment required for enhanced reservoir recovery 17

18 Harsh Environments including Arctic Areas Focus Areas: North Sea Norwegian Sea Barents Sea Arctic Russia Greenland North-western Canada Arctic areas estimated to hold 7% of proven oil reserves Source: CARA, USGS, NPD, Statoil, RS Platou Markets.

19 Harsh Environment - Norway Supply side Norway Age profile rig types # of units North Atlantic Drilling 8 Maersk Drilling 7 7 Songa 4 Transocean Fred Olsen Energy 3 3 COSL Rowan Odfjell Drilling 2 2 Saipem Floaters Jack ups Option to acquire SDRL's HE Newbuild Diamond Offshore Stena Ocean Rig # of units gen 3. gen 4. gen 5. gen 6. gen* Semis Drillships Jack ups # units Average age * * 19 NADL is a leading player in the North Atlantic Source: ODS-Petrodata, RS Platou Markets Equity Research. Include rigs under construction and NADL and FOE s HE newbuilds will be operating in Norway. 19

20 US$14.9 bn - Revenue Backlog #units Average Average Current term dayrate market rate Floaters Y US$541,000 US$550,000+ HE Jack-up rigs 3 4.2Y US$343,000 US$360,000 Jack-up rigs Y US$142,000 US$150,000 Semi-tenders 8 1.8Y US$173,000 US$200,000+ Tender barges 8 2.5Y US$116,000 US$120,000 Attractive backlog daily rates back to all-time high 20 Except for benign environment jack-ups

21 Rig Investment Economics UDW floaters Jack-ups Tender rigs Dayrate US$550,000 US$150,000 US$170,000 Opex incl. G&A US$170,000 US$60,000 US$60,000 Tax (of revenues) 4.0% 4.0% 4.0% 5Y cash-flow US$605 m US$140 m US$223 m Investment US$600 m US$210 m US$200 m Repaid in 5.0Y 7.5Y 4.5Y Timing of investment and contract fixture drive economics 21

22 M&A and Newbuild Orders Rigs Delivered US$11.3 bn 22 Rigs Acquired US$3.7 bn 18 Rigs under construction US$6.9 bn Significant investment in premium assets 22

23 EBITDA* Potential Development EBITDA CAGR 11% CAGR 43% Growth through newbuilds matching growth in demand 23 * EBITDA earnings before interest, tax, depreciation and amortization ** Assumes daily rates of $550,000 for floaters, $170,000 for semi-tenders, $120,000 for tender barges and $140,000 for jack-ups

24 Financial Strategy Growth funded through equity, convertible bonds, bonds, sale leaseback arrangement and secured bank financing Debt portfolio as of year-end 2012 Secured bank financing favored due to its attractive pricing and flexibility Combination of new premium assets and term contracts with quality customers seen as attractive security Net debt development * Bank debt 75% Bonds 4% Convertible bond 7% Sale leaseback 14% Bank credit market remains open for good projects and existing clients Newbuild program provides opportunities for Export Credit Financing (ECA) Premium assets and term contracts are key to financing 24 * Assumes daily rates of $550,000 for floaters, $170,000 for semi-tenders, $120,000 for tender barges and $140,000 for jack-ups

25 Dividend Policy & Track-record Quarterly cash dividend is a key objective Strong operational performance and positive market outlook have supported higher dividend Last quarters regular dividend is set as a guideline dividend floor for the foreseeable future Ambition is to grow dividend capacity Share price May 12 Seadrill 35.3 Ensco 47.8 Diamond 59.7 Noble 33.6 Rowan 30.8 Transocean 43.2 Share price Dividend increase 12m* Yield 13.1% 8.6% 9.2% 10.9% 2.9% 5.9% 15.8% 2.0% 19.5% 33.4% 7.3% Superior value creation among peer group 25

26 Strategic Focus Expanding fleet of premium rigs in a growing market Emphasize operational excellence and HSE Take advantage of the strong market conditions for ultra-deepwater units, harsh environment units and tender rigs Continue to build attractive revenue backlog and earnings visibility Debt finance our growth on the basis of premium assets and contracts Return cash to our shareholders Market outlook and newbuilding program supports US$4 billion EBITDA target 26

27 Seadrill Uniquely Positioned Seadrill selectively growing its already modern fleet at attractive rig prices Creating value through cycles 27