Investor Presentation

Transcription

1 Investor Presentation SECOND QUARTER 2018 KCA Deutag is a leadinginternational drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance 0

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 Second Quarter Investor Presentation 1 Q2 Key Highlights 2 Operational Highlights 3 Business Update 4 Business Unit Financials 5 Group Results 6 Summary 2

4 Q2 Key Highlights 1 Q Group revenue of $293m (1) (Q2 2017: $288m) and Q EBITDA of $46m (1) (Q2 2017: $51m) respectively 2 Ongoing integration of the Omani and Saudi Arabian businesses of Dalma Energy LLC 3 Expansion into the Kuwait market following multi-million dollar contract 44 Joint venture in Azerbaijan with Socar AQS to further grow our operations in the Caspian 5 Combined contract backlog of $6.3bn (at 1 August 2018) across a blue chip customer base 6 Available liquidity of $178m at 30 June 2018 KCA Deutag is a leading international drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance (1) Financial results noted above include results from the newly acquired Dalma businesses for May and June

5 Ongoing Integration of the Omani and Saudi Arabian Businesses of Dalma Energy LLC Target synergies ($12m EBITDA & $2m capex) Focus on integration Continued adoption of KCA Deutag Way Integration proceeding as planned and on time EBITDA synergies by type Delivering cost synergies We have already increased our expectation of run rate EBITDA synergies from $10.9m (Q1) to $11.8m (Q2) Full run rate synergy realisation still targeted for Q One third of synergies secured after only 2 months of operation This equates to an annual run rate per year of c. $4m per annum Unlocking further revenue synergies Actively engaged with customers Opportunities for collaboration between business units 4

6 Positive Developments Since Q New Country Entry in Kuwait for Land Entered the Kuwait market for the first time KCAD will supply and operate two new build 3000HP deep drilling rigs for an initial term of five years, commencing in Q with a one year extension option The rigs will be procured by the Action Group and leased to KCAD They will contain state of the art components provided by Bentec. These include the provision of Bentec s latest generation drilling enhancement software Offshore Services Forms JV with SOCAR AQS Agreement to form a joint venture that will target existing and future opportunities in the offshore and onshore Caspian drilling and engineering market The Joint Venture will be based in Baku, Azerbaijan and will focus on business development in the provision of oil and gas well drilling and engineering services in the Caspian Offshore and certain other parts of the Central Asia region 5

7 Years KCA Deutag Operations are Diversified Across Global Markets Canada 1 Plat Aberdeen (HQ) London North Sea /Norway 20 Plat Bergen Bad Bentheim Caspian 7 Plat Tyumen Russia 17 Rigs Russia Sakhalin 3 Plat Geographical EBITDA Split (1) St. Johns Africa 11 Rigs Europe & Caspian 8 Rigs Angola 2 Plat Baku Dubai Middle East 46 Rigs Nizwa Brunei 1 Rig PRESENCE IN KEY AREAS Europe North Africa Middle East North Sea Russia Regional offices Land Drilling Offshore Services RDS offices Bentec Map shows position at 1 August 2018 (1) The % split of LTM EBITDA is calculated using total KCAD group LTM Proforma EBITDA of $330m (before corporate costs of $18m) 6

8 Market Sentiment Remains Steady As Oil Price Sustains, However Not Yet Delivering Increased International Drilling Activity Business Units Activity Land Drilling Europe / Kazakhstan Russia Africa Middle East Bentec High levels of tendering across most markets. Slower than expected conversion to contract awards. Pricing remains under pressure as utilisation levels are yet to increase. New contract awards in Kuwait and across other jurisdictions Reasonable tendering activity in a competitive market. Further Top Drive wins in Q2 Offshore Services North Sea International RDS Steady activity and recent contract re-awards Stable activity and new Joint Venture with Socar AQS Limited tendering; seeking diversification opportunities 7

9 Strong HSSE Performance Continues KCAD TRIR at end of Q was ,2 injuries per 200,000 man hours worked IADC industry average for Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average 2 Dalma business have been incorporated from May KCAD Total Recordable Incident Rate is directly comparable with IADC s Total Recordables (RCRD) statistic Note: IADC stands for International Association of Drilling Contractors 8

10 Stable Backlog Providing Excellent Visibility Total contract backlog as at 1 May 2018 Total contract backlog as at 1 August 2018 Total contract backlog by BU as at 1 May 2018 Total contract backlog by BU as at 1 August 2018 Note: Backlog is an estimate and may change over time depending on certain factors; Backlog reflects business that is considered to be firm, this calculation is based on assumptions deemed appropriate at the time and is subject to change. Backlog is not necessarily indicative of our future revenue or earnings. KCAD and Dalma backlog amounts are estimates as of 1-August

11 Robust Offshore Services Contract Backlog Contract Platform Client Country Assets Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 end date status # Exxon Canada Hebron Mar-46 Operating 1 Equinor (Statoil) Norway CAT J (2) May-36 Operating 2 Equinor (Statoil) Norway Oseberg's (4) & Kvitebjorn Oct-28 Operating / Stacked 4/1 Exxon Angola Kizomba (2) Jul-28 Stacked 2 Point Resouces Norway Ringhorne Dec-25 Stacked 1 AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Dec-24 Operating 7 Total UK Alwyn / Dunbar May-23 Operating / Stacked 1/1 Nexen UK Scott Feb-23 Stacked 1 COP UK Britannia Nov-22 Stacked 1 Equinor (Statoil) Norway Pipe pool management Oct-22 Active mgmt. contract CNR UK Ninian's (2) Tiffany Nov-21 Operating / Stacked 1 /2 SEIC Russia LA, PA & PB May-21 Operating 3 Enquest UK Thistle & Heather May-20 Operating / Stacked 1/1 Equinor (Statoil) Norway Gulfaks (3) Oct-18 Operating 3 Contract and rig status shown as at 1 August 2018 Denotes change since last earnings call 10

12 Continued Focus on Building Utilisation Historical and Forward Contracted Utilisation Utilisation includes 29 Dalma Rigs on a proforma basis from 2017 onwards 11

13 Land Drilling Q Q Q Q Q Result Result Result YTD YTD $m $m $m $m $m Revenue EBITDA (post support allocation) Margin 23.1% 38.0% 34.0% 29.8% 34.6% Lower EBITDA compared to the prior quarter due to one-offs of $13m in Q1 and lower utilisation in Q2 Dalma EBITDA from May and June of $11.7m included in the Q2 results above Dalma results lower than historic levels due to some planned maintenance and operational downtime Utilisation for the quarter of 63% (1) (1) Utilisation figure for Q2 includes 29 Dalma Rigs on a proforma basis 12

14 Bentec Q Q Q Q Q Result Result Result YTD YTD $m $m $m $m $m Revenue EBITDA (post support allocation) (0.7) (1.6) 0.2 (2.3) 0.5 Margin -6.3% -10.6% 1.2% -8.7% 1.6% Q2 EBITDA continues to be negative but revenue recognition for new build rigs will commence in Q3 with delivery of the first rig Continued active tendering market across after sales, components and new build rigs albeit in a competitive market 13

15 Offshore Services Q Q Q Q Q Result Result Result YTD YTD $m $m $m $m $m Platform Services Revenue EBITDA (post support allocation) Margin 13.2% 10.0% 9.8% 11.5% 9.6% MODUs Revenue 0.0 (1.2) 0.0 (1.2) 0.0 EBITDA (post support allocation) Margin n/a n/a n/a n/a n/a Offshore Services Revenue EBITDA (post support allocation) Margin 13.2% 18.4% 9.8% 16.0% 9.6% Platform Services EBITDA has increased on Q due to better performance across most locations There is now no on-going activity in the MODUs business following the collection of the overdue receivable in Q

16 RDS Q Q Q Q Q Result Result Result YTD YTD $m $m $m $m $m Revenue EBITDA (post support allocation) (0.1) Margin 9.5% 2.8% -0.7% 5.9% 1.8% Small positive EBITDA in the quarter, largely due to a provision reassessment in Norway Limited new opportunities in greenfield Continuing to pursue diversification opportunities outside of the oil and gas sector 15

17 KCA Deutag Group LTM EBITDA and Pro Forma LTM EBITDA Q LTM EBITDA Q LTM Pro Forma EBITDA LTM EBITDA $232m LTM EBITDA $330m Q LTM EBITDA ($m) KCAD LTM 239 Ex-Dalma (May & June) 12 Corporate Costs (18) (1) (2) Q LTM Pro Forma EBITDA ($m) KCAD LTM 239 Ex-Dalma LTM 109 Corporate Costs (18) Total 232 Total 330 (1) Q LTM EBITDA includes $1m of actualised synergies (2) Q LTM Pro Forma EBITDA includes $12m of Pro Forma synergies 16

18 Cash Flow and Working Capital Free Cash Flow Working Capital (2) Q Q Q YTD 2017 YTD $'m $'m $'m $'m $'m Cash generated from operations Tax paid (9.7) (8.1) (11.2) (17.8) (19.7) Cash flow from operating activities Capital expenditure (12.4) (9.4) (35.0) (21.8) (41.8) Proceeds from sale of Fixed Assets (0.1) Interest received Dalma acquistion (440.2) (440.2) 0.0 Other Cash flow from investing activities (447.0) (2.6) (28.7) (449.6) (29.9) Interest paid (62.8) (13.9) (50.0) (76.7) (64.9) (1) Foreign exchange (3.5) (4.4) (4.6) (7.9) (7.2) Dividend paid to minority shareholders 0.0 (0.3) 0.0 (0.3) (0.3) Net Cash flow before debt drawdown/(repayment) (512.5) 33.2 (78.5) (479.3) (84.6) Drawdown/(repayment) of debt and debt redemption/issuance costs (6.3) (3.8) Net cash flow (81.5) 26.9 (75.7) (54.6) (88.4) (1) Denotes the effect of foreign exchange rate changes on cash and bank overdrafts (2) Deltas denote current quarter working capital movement Financial results noted above do include results from the newly acquired Dalma businesses for May and June

19 Capital Structure Shows No Significant Maturities Until 2021 Net Debt Evolution (1) (2) Capital Structure at 30 June 2018 Rating (3) : B3/B- (1) PF LTM EBITDA adjusted for unaudited LTM EBITDA of the acquired Dalma businesses of $109m (2) Q to Q LTM EBITDA includes the $25m Holdco equity contribution as defined in the Amended Credit Agreement (3) Facility ratings shown as at August

20 Closing Remarks Q results of $293m revenue and $46m EBITDA Ongoing successful integration of the Omani and Saudi Arabian businesses of Dalma Energy LLC Further diversification and increased footprint in more robust markets such as Kuwait Joint venture in Azerbaijan with Socar AQS to further grow our operations in the Caspian Stable backlog position of $6.3 billion across a blue chip company base Strong HSE and operational performance sustaining low group incident rate 19

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