Citi MLP/Midstream Infrastructure Conference. Las Vegas August 2014

Transcription

1 Citi MLP/Midstream Infrastructure Conference Las Vegas August 2014

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 Company Snapshot Number of assets 9 6 UDW floaters 3 tender rigs Hemen Holding (Fredriksen Group) Average Contract Duration Contract Order Backlog 3.7 years $5.4bn 22.9% Seadrill Limited (NYSE: SDRL) 67.3 MM Common Units 16.5 MM Subordinated Units 51.1% 48.9% Public Unit Holders Annualized Distribution Per Unit Current $2.17 Seadrill Partners LLC (NYSE: SDLP) Issuer Q EBITDA & Distributable Cash Flows (DCF) (2) $163m EBITDA $30m Distributable Cash Flow Seadrill Partners Operating LLC 100% 58.0% 51.0% Seadrill Operating LP OPCO (1) Seadrill Capricorn Holdings LLC Market Capitalization $2.8bn T-15 T-16 West Aquarius West Capella (56%) West Capricorn West Sirius Attractive 1099 structure (1) Remaining ownership interests in each of OPCO subsidiaries held by Seadrill Limited. (2) After distribution to non-controlling interest holders West Vencedor West Leo West Auriga 3

4 Significant Progress Since IPO More Growth to Come 40% increase since IPO 7% increase for West Auriga aquisition Major Events to Date Tender rig T-15 acquired for US$210 million 2.25 Tender rig T-16 acquired for US$200 million 2.17 Completed 5 year classing on West Aquarius, West Sirius, and West Capella 2.03 West Sirius and West Leo acquired for a total consideration of US$2.3 billion on a 100% basis Annualized Distributions per Unit ($) US$1.8 billion term loan B and US$100 million revolver executed, creating a more efficient capital structure West Auriga acquired for a US$1.24 billion on a 100% basis US$1.1 billion add-on term loan B Public offering of 6,100,000 common units for approximate net proceeds of $192 million, and private placement to Seadrill Limited of $100 million of common units IPO T-15 T-16 Sirius / Leo Auriga Acquired an additional 28% interest in Seadrill Operating LP for approximately $373 million, taking the ownership in Seadrill Operating LP to 58% 4

5 Acquisition of 28% Interest in Seadrill Operating LP Seadrill Operating LP West Aquarius West Leo USD millions Total SDLP Share Purchase Price $2,872 $804 (1) West Capella (56%) West Vencedor Financed by: (2) Seadrill Operating LP Debt $1,540 $431 Equity Portion $1,332 $373 SDLP Acquisition 28% SDLP Equity Share $373 Previously 30% owned by Seadrill partners 58% ownership following acquisition Diversified Fleet Enables Acquisition of Operating Company Units (1) Net of NCI in West Capella (2) Net of term loan debt applicable to West Capricorn, West Auriga and West Sirius 5

6 Add-on Term Loan B Refinancing Term Loan B Refinances existing debt facilities at Seadrill Partners Issued an additional $1.1bn as an add-on to the existing $1.8bn Term Loan B facility Structure creates a more efficient capital structure at Seadrill Partners with 1% annual amortization profile Frees additional funds to reinvest in fleet growth Debt maturity profile staggered against contract rollovers and extends maturity profile Priced at existing rate of Libor plus 3%, swapped to fixed of ~5.5% Seadrill Partners Operating LLC T-15 T-16 Seadrill Limited (NYSE: SDRL) 51.1% Seadrill Partners LLC (NYSE: SDLP) Seadrill Operating LP (Borrower) 48.9% 100% 58.0% 51.0% West Aquarius* West Capella* (56%) West Vencedor West Leo* Borrower Group Public Unit Holders Seadrill Capricorn Holdings LLC (Guarantor (3) ) West Capricorn* West Auriga* West Sirius* * Represents pledged collateral vessels 6

7 Assets & Contracts Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q West Vencedor US$213,931 West Aquarius US$540,000 US$615,000 West Capella US$627,500 West Capricorn US$495,650 US$495,650 T-15 US$122,723 T-16 US$121,268 West Leo US$605,000 West Sirius US$490,173 US$535,000 West Auriga US$565, Contracted Option Period Average remaining contract term: 3.7 years - Order backlog: $5.4bn 7

8 Operational highlights SeadrillPartners economic utilization 100.0% 98.4% 100.0% 99.6% 97.4% 100.0% 100.0% 100.0% 94.8% 95.0% 94.8% 94.1% 95.2% 90.4% 91.0% 88.2% 80.0% 75.5% 60.0% 40.0% 20.0% 0.0% Semi-submersible rigs Drillship Tender rigs Q Q excluding West Aquarius Strong operational performance with economic utilization on average greater than 95% High renewal rate with existing customers who prefer high-specification rigs 8

9 Robust industry fundamentals World oil demand and oil price (1) by scenario Tight supply demand balance going forward (mb/d) Dollars per barrel (2011) Oil demand: Current policies scenario New policies scenario 450 scenario Oil price (right axis): Current policies scenario New policies scenario 450 scenario (mb/d) mbbl/d needed New policy 450 scenario Current status of total production potential Undiscovered Discovered Under development Producing Abandoned Seasonal (other liquids) Commercial volumes at forward curve (mb/d) (1) Average IEA crude oil import price Global change of supply of liquids from 2012 to Production Decline 2012 conventional 8.0 New Onshore 4.3 New Shale/ tight 4.0 New Oil sands/extra heavy New offshore Supply potential 2020 Projects performing under expectations Likely supply 2020 New NGLs +bio+other Not sanctioned Sanctioned Producing Brent equivalent breakeven price(us$) Deep and ultra-deep well positioned on cost curve Onshore Middle East 27 Offshore Shelf 41 Onshore Russia 50 Heavy Oil 47 Onshore RoW Total liquids production (mb/d) 51 Nam Shale Deep Water 52 Ultra deepwater 56 Arctic Oil sands 70 9

10 Recent Discoveries to Become Produced Volumes Discovered resources 1980 to 2013 (billions boe) Shelf Deep Water Ultra deepwater Resources discovered and produced Group Waterdepth Produced (bn boe) Discovered (bn boe) Replacements(ratio) Ultra Deepwater: 7,500 ft Off-shore Deep: 500-2,499 ft Shelf: 400 ft Total On-shore On-shore On-shore Off-shore Source: Rystad Energy research and analysis, UCube Global

11 Preferential demand for newer rigs Industry trends Contract Backlog UDW & DW Challenges of remote drilling sites 14,000 Drilling deeper wells with longer offsets Greater drilling efficiency to reduce total well costs Advances in well construction techniques Backlog months 12,000 10,000 8,000 6,000 4,000 More demanding downhole environments (e.g., high pressure and high temperature drilling) 2, Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Increasingly demanding regulatory climate DW UDW Total DW Spread between UDW & DW backlog leading to bifurcation in dayrates Source: Fearnley Offshore 11

12 Global rig supply and demand imbalance favors contractors 500 Significant newbuilds required to bridge expected demand gap (50) (1) Current Floater Fleet Newbuilds Potential Supply Possible Retirements Additional Rig Requirements 2020 Demand (2) Ultra-Deep water deliveries (1) Current fleet figure includes all currently delivered semisubmersibles and drillships, excluding any hot, warm or cold stacked rigs and rigs in the shipyard for maintenance (2) Includes Brazil rigs Source: IHS Petrodata, all rights reserved, Rystad Energy 12

13 Growth - Additional UDW rigs from Seadrill Unit Customer 1Q Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Q 3Q 4Q Floaters West Vela BP US$565, West Auriga BP US$565, West Mira Husky Newbuild Transit US$590, West Jupiter Total Newbuild US$567, West Sirius BP US$490,173 US$535, Sevan Brasil Petrobas US$398, West Leo Tullow Oil US$605, West Polaris ExxonMobil US$655, West Capricorn BP US$495,650 US$495' West Saturn ExxonMobil Newbuild US$610, West Hercules Statoil US$497,000 US$497,000 West Neptune LLOG Newbuild Transit US$570,000 West Gemini Total US$656,000 West Alpha ExxonMobil US$535,000 US$547,000 Rosneft West Capella ExxonMobil US$627,500 West Aquarius ExxonMobil US$540,000 US$615,000 Sevan Louisiana LLOG Transit US$505,000 West Eclipse Total US$450,000 US$455,000 West Pegasus PEMEX US$555,000 Market rate West Orion Petrobras US$624,460 Sevan Driller Petrobas US$419,817 West Phoenix Total US$464,000 West Venture Statoil US$441,000 West Eminence Petrobras US$624,460 West Taurus Petrobras US$656,662 West Navigator Shell / Centrica Energi NUF US$589,000 US$621' Rosneft West Tellus Chevron US$635,000 West Dorado - Newbuild West Aquila - Newbuild West Libra - Newbuild West Draco - Newbuild West Rigel - Newbuild Rosneft West Carina - Newbuild Sevan Developer - Newbuild Option Yard plus transit period SDLP Rigs 13

14 Growth - Other Acquisition of Additional OPCO Ownership Interests from Seadrill Ltd. - 42% of three UDW rigs and one tender rig - 49% of three UDW rigs Long-Term Contracted Jack-ups - E.g. 5 Jack-ups with long-term contracts to PEMEX - Total of 30 rig years 14

15 Summary & Outlook Significant progress made since IPO More than doubled fleet size with the acquisition of five rigs Diversified fleet Making acquisition of OPCO units an option Strong track record - Distribution growth of 40% since IPO in October 2012 More efficient capital structure following two successful Term Loan B transactions Headwinds in the broad offshore drilling market Seadrill Partners is protected No exposure to 2014 dayrates, only West Vencedor available in 2015 Pause in fundamentals limiting newbuild activity in 2016 Medium / Long term fundamentals intact Potential for re-contracting rigs into a rising market Visible growth opportunities via acquisitions from Seadrill Strong distribution growth potential Acquisition of additional rigs Acquisition of OPCO units 15