Seadrill Partners LLC Conference Call Third Quarter 2013 Results. November 25, 2013

Transcription

1 Seadrill Partners LLC Conference Call Third Quarter 2013 Results November 25, 2013

2 Forward Looking Statements This presentation includes forward looking statements. Such statements are generally not historical in nature, and specifically include statements about the Company s plans, strategies, business prospects, changes and trends in its business and the markets in which it operates. In particular, statements regarding the Company s ability to make cash distributions, the expected performance of the drilling rigs in OPCO s fleet, estimated duration of customer contracts, contract dayrate amounts and the Company s ability to purchase drilling rigs from Seadrill Limited in the future are considered forward-looking statements. These statements are made based upon management s current plans, expectations, assumptions and beliefs concerning future events impacting the Company and therefore involve a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, which speak only as of the date of this news release. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to the performance of the drilling rigs in the Company s fleet, delay in payment or disputes with customers, fluctuations in the international price of oil, changes in governmental regulations that affect the Company or the operations of the Company s fleet, increased competition in the offshore drilling industry, and general economic, political and business conditions globally. Consequently, no forward-looking statement can be guaranteed. When considering these forward-looking statements, you should keep in mind the risks described from time to time in the Company s filings with the SEC. The Company undertakes no obligation to update any forward looking statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, the Company cannot assess the impact of each such factor on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward looking statement. 2

3 Agenda Highlights 3Q 2013 Market Outlook Growth Opportunities Financial Overview Q&A session 3

4 Seadrill Partners 3Q Highlights Seadrill Partners reports net income attributable to Seadrill Partners Members of US$14.2 million Net operating income for the third quarter of US$63.4 million Generated distributable cash flow of US$15.9 million Paid a distribution for the third quarter of US$ per unit a 10% increase from the Company s minimum quarterly distribution 4

5 Subsequent Events In October, Seadrill Partners announced the acquisition of the T-16 tender rig from Seadrill for a purchase price US$200 million. The transaction closed on October 21, Commenced operations in September 2013 under a five-year contract with Chevron in Thailand at an initial contract dayrate of US$115,500 Recommendation made to the Board for a US$0.10 US$0.12 increase in the annual distribution for the quarter ended December 31, 2013 US$0.01 of the recommended distribution increase commenced early and distributed as part of the third quarter distribution Announced settlement agreement and 18 month extension for the semi-submersible West Aquarius with a total estimated revenue potential of US$337 million Total S.A. exercised their option to convert the contract extension for the West Capella from 5 years to 3 years. As a result the dayrate has increased from US$580,000 per day to US$627,500 Achieved seasoned issuer status and filed a US$800 million mixed shelf registration statement 5

6 T-16 Tender Barge Acquisition USD millions Purchase Price $200 Financed by: Bank Debt Facility with Seadrill $107 Equity Issuance to Seadrill $93 Current Contract Rate Initial Contract Term $115,500 per day 5 years Management Recommended Annualized Distributiuon Increase: $ $0.12 Increases Distribution per unit on an Annualized basis to: $ $1.79 6

7 Top-Tier Distribution Growth Dividend Share price 7

8 Market Outlook 8

9 Production Growth Coming from Ultra-Deepwater Global liquids production, by land and water depth Global offshore production by water depth Million bbl/d CAGR = 1.3% CAGR Thousand boe/d 19% Offshore ultra deep 2% 0% 5 mbbl/d 16 mbbl/d 1% Onshore 30 mbbl/d 9 Source: Rystad Energy 9

10 Development drilling will be driving the growth Number of drilling units Demand for floating drilling services Increasing development drilling relative to exploration drilling should lead to longer average contract terms. 10 Source: Rystad Energy 10

11 Seadrill Partners Fleet & Potential Dropdowns 11

12 Seadrill Partners Long-Term Contract Coverage (2) (1) Average remaining contract term: 3.3 years (3) (1) Customer exercised the right to shorten the term of the contract to three years from five years in exchange for an increased dayrate of US$627,500, from US$580,000 (2) Since the West Aquarius arrived in Canada (December 2012), it has been operating under a sub-contract to Statoil ASA (3) As of 22 November 2013; excluding any optional extension periods 12

13 Dropdown Candidates 13

14 Seadrill s existing fleet $16 Billion Contract Backlog Contract coverage 6% 34% 53% Contracted Uncontracted 100% 94% 66% 47% 14

15 Financial Performance Highlights 15

16 Income Statement Operating income Unaudited accounts in USD millions 3Q13 2Q13 Contract revenues $161.5 $158.6 Reimbursable revenues Other revenues Total operating revenues $164.7 $162.2 Vessel and rig operating expenses Reimbursable expenses Depreciation and amortization General and administrative expenses Total operating expenses $101.3 $90.6 Net operating income $63.4 $

17 Income Statement Net Income Unaudited accounts in USD millions 3Q13 2Q13 Net operating income $63.4 $71.6 Financial items Interest income Interest expense (14.1) (12.8) (Loss) / Gain on derivative financial instruments (5.5) 24.5 Currency exchange Gain / (Loss) 1.2 (0.3) Total financial items $(17.6) $12.3 Income before income taxes Income taxes (1.3) (6.7) Net income $44.5 $77.2 Net income attributable to non-controlling interests Net income attributable to Seadrill Partners LLC Members $14.2 $

18 Balance Sheet - Assets Unaudited accounts in USD millions 3Q13 4Q12 Current assets Cash and cash equivalents $71.8 $19.5 Accounts receivable, net Mobilization revenue short term Amount due from related party Other current assets Total current assets $349.7 $241.3 Non-current assets Newbuildings Drilling units 2, ,103.0 Mobilization revenue receivable long-term Deferred tax assets Other non-current assets Total non-current assets $2,251.2 $2,274.2 Total assets $2,600.9 $2,

19 Balance Sheet Liabilities & Members Capital / Owners Equity Unaudited accounts in USD millions 3Q13 4Q12 Current liabilities Current portion of long-term related party payable $545.1 $235.6 Revolving credit facility Trade accounts payable and accruals Deferred mobilization revenue short term Related party payable Other current liabilities Total current liabilities $869.6 $433.3 Non-current liabilities Long-term related party payable ,057.1 Deferred mobilization revenue long-term Other non-current liabilities Total non-current liabilities $716.7 $1,098.6 Equity Total equity $1,014.6 $983.6 Total liabilities and equity $2,600.9 $2,515.5 As of September 30 th, 2013 total debt was US$1,292.8 million 92% of debt swapped to a fixed rate of 1.16% West Aquarius and West Capella facility matures in June 2014, refinancing discussions underway 19

20 Distributable Cash Flow Unaudited accounts in USD millions 3Q13 2Q13 EBITDA for the third quarter Add: Net mobilization earnings capitalized Less: Amortization of Mobilization Revenue and Expenses (2.9) (2.3) Adjusted EBITDA Cash Interest Income Cash Interest Expense (16.6) (12.2) Cash Tax Paid (6.0) (9.8) Pre acquisition losses of T-15 (April 1, 2013 May 17, 2013) Pre-IPO West Aquarius Settlement Estimated maintenance and replacement capital expenditure (20.4) (19.6) Cash flow available for distribution Less: Cash flow attributable to non-controlling interest (29.6) (38.1) Distributable cash flow for the third quarter Distribution Declared Coverage Ratio 0.83x 0.91x 20

21 Summary On track to achieve approximately 15% distribution growth for the first year since our initial quarterly distribution Completed second acquisition and focused on executing further rig acquisitions with the goal of becoming a high growth MLP Outlook for further distribution growth is strong with significant opportunities from Seadrill s existing fleet and newbuilds Having achieved seasoned issuer status and filed a US$800 million mixed shelf, our financial flexibility is enhanced Strong market fundamentals in deepwater drilling, especially for ultra-deepwater assets contract duration expected to lengthen 21