Presentation of first quarter results Shippingklubben, Oslo, May 31, 2011

Transcription

1 Presentation of first quarter results 2011 Shippingklubben, Oslo, May 31, 2011

2 IMPORTANT INFORMATION THIS PRESENTATION AND ITS ENCLOSURES AND APPENDICES (HEREINAFTER JOINTLY REFERRED TO AS THE PRESENTATION ) HAVE BEEN PREPARED BY SEVAN DRILLING ASA ( SEVAN DRILLING OR THE COMPANY ) EXCLUSIVELY FOR INFORMATION PURPOSES. THIS PRESENTATION HAS NOT BEEN REVIEWED OR REGISTERED WITH ANY PUBLIC AUTHORITY OR STOCK EXCHANGE. RECIPIENTS OF THIS PRESENTATION MAY NOT REPRODUCE, REDISTRIBUTE OR PASS ON, IN WHOLE OR IN PART, THE PRESENTATION TO ANY OTHER PERSON. THE CONTENTS OF THIS PRESENTATION ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS, INVESTMENT OR TAX ADVICE. EACH RECIPIENT SHOULD CONSULT WITH ITS OWN LEGAL, BUSINESS, INVESTMENT AND TAX ADVISER AS TO LEGAL, BUSINESS, INVESTMENT AND TAX ADVICE. THERE MAY HAVE BEEN CHANGES IN MATTERS WICH AFFECT THE COMPANY SUBSEQUENT TO THE DATE OF THIS PRESENTATION. NEITHER THE ISSUE NOR DELIVERY OF THIS PRESENTATION SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THE AFFAIRS OF THE COMPANY HAVE NOT SINCE CHANGED, AND THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT ANY INFORMATION INCLUDED IN THIS PRESENTATION. THIS PRESENTATION INCLUDES AND IS BASED ON, AMONG OTHER THINGS, FORWARD-LOOKING INFORMATION AND STATEMENTS. SUCH FORWARD-LOOKING INFORMATION AND STATEMENTS ARE BASED ON THE CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS OF SEVAN OR ASSUMPTIONS BASED ON INFORMATION AVAILABLE TO THE COMPANY. SUCH FORWARD-LOOKING INFORMATION AND STATEMENTS REFLECT CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS, UNCERTAINTIES AND ASSUMPTIONS. SEVAN CANNOT GIVE ANY ASSURANCE AS TO THE CORRECTNESS OF SUCH INFORMATION AND STATEMENTS. AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY S BUSINESS, SEGMENTS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS DOCUMENT. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT THE INFORMATION INCLUDED IN THIS PRESENTATION. THIS PRESENTATION IS SUBJECT TO NORWEGIAN LAW, AND ANY DISPUTE ARISING IN RESPECT OF THIS PRESENTATION IS SUBJECT TO THE EXCLUSIVE JURISDICTION OF NORWEGIAN COURTS.

3 Contents The Company Highlights First Quarter New Builds Focus Areas Operations Construction 1Q Financials

4 What is Sevan Drilling 1 Pure-play ultra deepwater drilling company 2 Experienced operating organization 3 Solid contract coverage and cash flows 4 Robust financing at attractive terms 5 Strong balance sheet with growth opportunities 4

5 A PURE-PLAY ULTRA DEEPWATER DRILLING COMPANY Sevan Driller Sevan Brasil 2 x UDW newbuild rigs Delivered from COSCO end 2009 In operation for Petrobras under a six year contract Under construction at COSCO Scheduled delivery from yard in Q Will operate for Petrobras under a six year contract start-up expected in Q Contract with COSCO for two UDW rigs Identical design to Sevan Driller and Sevan Brasil Turnkey contract with attractive payment structure (20 / 80) and full refund guarantee Four high-end ultra deepwater ( UDW ) rigs with a unique and cost efficient design Perpetual license with Sevan Marine for use of the Sevan design for drilling purposes Experienced management team and operating organization in place 5

6 Contents The Company Highlights First Quarter New Builds Focus Areas Operations Construction 1Q Financials

7 Highlights year to date Raised USD 364 mill in new equity and listed the company on Oslo Axess May 3 Current rig, Sevan Driller, operating under contract to Petrobras S.A. Increasing regularity Operating costs as expected Rig under construction, Sevan Brasil, over 80% complete and on track for delivery in 1Q 2012 Startup for Petrobras S.A in 2Q 2012 Executed construction contracts for two newbuilds for delivery in Q and Q Strong Balance Sheet Bank facilities for Sevan Driller and Sevan Brasil completed and first monies drawndown Equity fund raised to cover commitments on newbuilds and ongoing operations

8 Interface with Sevan Marine Sevan Marine remains a shareholder in Sevan Drilling License agreement with Sevan Marine for perpetual access to IP technology Bank loans on Sevan Driller and Sevan Brasil have the following connections to Sevan Marine: Sevan Marine is a guarantor on both loan facilities Both facilities have cross default provisions We are in dialog with our lenders regarding the above provisions with the expectation that we will remove both provisions as soon as practical Lenders are working with us on the issue

9 Contents The Company Highlights First Quarter New Builds Focus Areas Operations Construction 1Q Financials

10 NEW RIGS AT ATTRACTIVE TERMS AND IDENTICAL DESIGN Contract for two UDW rigs from COSCO entered into in May for delivery in Q and Q Sevan design and premium equipment providers All-in turnkey price of USD 526 million Including project management, pre-delivery financing, capital spares, drilling tools and pre-operations Drilling control system Derrick Pipehandling Cranes BOP Control system Marine riser system Back-end loaded payment structure 20% payable on signing of firm contract and 80% at delivery No financing cost during construction period Full refund guarantees and non-recourse financing structure Options for another two UDW rigs Option price of USD 526 million subject only to changes in RMB / USD and certain industry indices Same specification and payment structure Delivery 1 st option: Q (option expires in Q1 2012) Delivery 2 nd option: Q (option expires in Q3 2012) Dynamic positioning systems Diesel engines Thrusters Electrical Automation Telecom systems Drilling mud pumps 10

11 Contents The Company Highlights First Quarter New Builds Focus Areas Operations Construction 1Q Financials

12 Focus Areas Safe, reliable and cost effective operations Proof of technology and concept Delivery and startup of Sevan Brasil on time and on budget Project execution Build rig capacity while maintaining a strong balance sheet Capitalize on technology advantages Marketing of our rigs Cost advantages over traditional design

13 SIGNIFICANT ULTRA DEEPWATER MARKET POTENTIAL Current focus areas and future opportunities US Gulf of Mexico: 8 deepwater units 20 UDW units Activity expected to pick up due to end of drilling moratorium Brazil: 24 deepwater units 20 UDW units Petrobras expected to double oil & gas production by 2020 leading to substantially increased demand for UDW rigs West Africa: 12 deepwater units 12 UDW units Deepwater production expected to increase by some 35% by 2015 Current developments Future prospects Source: Managers research 13

14 Contents The Company Highlights First Quarter New Builds Focus Areas Operations Construction 1Q Financials

15 SEVAN DRILLER IN STABLE OPERATIONS Operating in the Santos Basin Rig uptime of 98% last month 37% 37% 52% 52% 90% 91% 86% 85% 98% Operating in water depths of ~2,200 meters 1) 1) Q3-10 Q4-10 Q1-11 Apr-11 May-11 Technical Uptime Commercial Uptime 1) 1) 2) 2) 2) 1) 2010 performance impacted by downtime during Q3 and Q4 due to defects in 3 rd party equipment 15

16 Contents The Company Highlights First Quarter New Builds Focus Areas Operations Construction 1Q Financials

17 SEVAN BRASIL CONSTRUCTION ACCORDING TO PLAN EPC contract with COSCO Estimated construction cost of USDm 685 Including project management, pre-delivery financing, capital spares, drilling tools and preoperations USDm 331 invested by end of Q Construction process 80% complete, and progressing according to plan and budget Scheduled for delivery from yard in Q Expected start-up for Petrobras in Q

18 Sevan Brasil - Status Dry Tow vessel booked All modules erected Major Equipment delivered

19 SOLID CONTRACT COVERAGE AND BACKLOG Unit Built Region Client Existing rigs secured on long-term contracts with Petrobras Sevan Driller 2009 Brazil Petrobras Sevan Brasil 2012 Brazil Petrobras xxxxx Sevan UDW xxxxxxxxxx Sevan UDW xxxxx xxxxxx xx Construction period 11 Firm contract period Aggregate revenue backlog of USDbn 1.9 as per year-end ) USDm Average base dayrate 2) Sevan Driller: ~USDk 430 / day Sevan Brasil: ~USDk 400 / day Bonus element of up to 10% Opex cost inflation mitigated through annual dayrate adjustments Currency exposure mitigated through contract structure Sevan Driller Sevan Brasil 1) Estimate including full bonus element and mobilization fee of USDm 29 for Sevan Brasil in ) Excluding bonus element and reflecting additional dayrate in operating year 2 of ~USDk 36 / day Source: Sevan Drilling 19

20 LONG-TERM DEBT FINANCING AT ATTRACTIVE TERMS Overview of debt facilities Debt amortization profile from Q Security Type Maturity Principal amount Pro forma amount outstanding 1) Interest USDm 142 Sevan Driller 1.lien Bank Jun 16 USDm 480 USDm 480 LIBOR +3.5% 2. lien Vendor credit Jun 12 USDm 78 USDm % lien Bank Jun 18 USDm 525 USDm 182 LIBOR +3.1% 2) Sevan Brasil lien Vendor credit Feb 16 USDm % 3) Amortization - bank debt Bullet - bank debt Vendor credit Weighted average interest rate after delivery of Sevan Brasil of ~5.1% ~75% of interest rate exposure hedged 1) Amount outstanding as per 31 March 2011 adjusted for refinancing 2) LIBOR +3.4% prior to delivery 3) Amortization in 2011 not including USDm 26 repayment of Sevan Driller vendor credit facility which has already been paid Source: Sevan Drilling 20

21 Contents The Company Highlights First Quarter New Builds Focus Areas Operations Construction 1Q Financials

22 Income statement as of March 31, 2011 Comments: - Revenues reflects commercial uptime of 91 % - Operating cost of USD 179k per day; expected to be lower in Q2 - One off financials expenses of USD 10 million related to redemption of the NOK bond - One off foreign exchange loss of USD 7.1 mill related to the NOK bond Condensed Consolidated Income Statement Unaudited figures in USD million Q1 11 pro Q1 11 Q4 10 Q forma Operating income 34,0 8,1 3,6 0,0 7,8 Operating expense -18,2-9,4-7,2-1,0-14,3 EBITDAFX 15,8-1,3-3,5-1,0-6,5 Foreign exchange gain/(loss) relating to operation -1,8-0,6 0,5 0,4-0,7 EBITDA 14,0-1,9-3,0-0,6-7,2 Depreciation, amortization and impairment -9,2 0,0-6,8 0,0-6,9 Operating profit/(loss) 4,8-1,9-9,9-0,6-14,1 Financial income/(expense) -17,0-1,9-0,6-0,7-2,0 Foreign exchange gain/(loss) relating to financing -7,1 1,3 0,0-1,2-1,2 Net financial items -24,1-0,6-0,6-1,9-3,1 Profit/(loss) before tax -19,3-2,5-10,5-2,5-17,3 Tax income/(expense) 3,0-1,0-0,2 0,0-1,0 Net profit/(loss) -16,3-3,5-10,7-2,5-18,3 Q1 11 reflects the revenues and costs under the Service Contract

23 Balance sheet as of March 31, 2011 Condensed Consolidated Balance Sheet Unaudited figures in USD million pro forma Comments: - Interest bearing debt classified as current liabilities due to a cross default into one of Sevan Marine s financing facility being in default at the end of Q This default situation was waived in April. Sevan Capital Assets 999,0 330,7 165,9 318,3 Other fixed assets 6,0 0,3 0,3 0,3 Intangible assets 0,1 0,1 0,0 0,1 Deferred income tax assets 26,0 0,0 0,0 0,0 Other non-current assets 22,7 3,8 6,2 37,7 Total non-current assets 1 053,9 334,9 172,5 356,5 Inventories 9,4 1,5 0,0 1,4 Trade and other receivables 21,8 10,2 26,4 3,3 Cash and cash equivalents 215,1 6,9 10,9 1,8 Total current assets 246,4 18,6 37,2 6,5 Total assets 1 300,3 353,5 209,7 362,9 Share capital 6,5 6,5 0,5 0,5 Other equity 351,3 162,9-15,2-29,5 Total equity 357,8 169,4-14,7-29,0 Interest-bearing debt 0,0 0,0 0,0 0,0 Other non-current liabilities/provisions 4,8 3,7 80,2 168,0 Total non-current liabilities 4,8 3,7 80,2 168,0 Interest-bearing debt 833,0 150,1 0,0 0,0 Current liabilities 104,8 30,3 144,2 223,7 Total current liabilities 937,7 180,4 144,2 223,7 Total liabilities 942,5 184,1 224,4 391,7 Total equity and liabilities 1 300,3 353,5 209,7 362,7

24 Summary Safe, reliable and cost effective operations Proof of technology and concept Delivery and startup of Sevan Brasil on time and on budget Project execution Build rig capacity while maintaining a strong balance sheet Capitalize on technology advantages Marketing of our rigs Cost advantages over traditional design

25 Appendix

26 STRONG MARKET OUTLOOK Significant E&P spending growth expected Total global E&P spending Deepwater production increasing rapidly Global deepwater production by region Source: Wood Mackenzie, Managers research 26

27 CLIENTS PAYING A PREMIUM FOR MODERN RIGS Modern UDW rigs achieve premium dayrates Average dayrate fixtures 1) Floater fleet ripe for renewal 42% >25 years old Distribution of floaters by age Built 2006 or after (incl. newbuilds) Built 1985 or before Built between Built between ) Rigs with water depth capacity of >7,500 ft Source: ODS-Petrodata, Managers research 27

28 SEVAN DRILLING UNIQUELY POSITIONED Pure-play UDW driller......with the most modern fleet % of EBITDA 2012E attributable to UDW fleet of listed drillers Average age of deepwater fleet of listed drillers 1) Note: Ocean Rig (OCR) and Pacific Drilling (PD) registered on the Norwegian OTC but not yet publicly listed 1) Assuming 0 years for newbuilds. Options not included. Only rigs with water depth capacity of >5,000 ft included Source: ODS-Petrodata, Managers research 28

29 SEVAN UDW RIGS KEY SPECIFICATIONS Key specifications Sevan design 29

30 KEY HISTORICAL MILESTONES 2006 / 2007 Sevan Driller ordered first unit 6 year drilling contract with Petrobras secured Sevan Drilling management team and organization established 2008 Second 6 year drilling contract with Petrobras secured Sevan Brasil ordered second unit Recruitment of senior rig personnel and development of the operating organization 2009 First unit fully staffed for operations Construction of Sevan Brasil commenced Sevan Driller delivered from yard ) Commenced drilling operations offshore Brazil in water depths of 1,900 meters Construction of second unit on schedule Long term financing secured Rig uptime of 98% last month Separation from Sevan Marine to establish an independent growth platform Construction Contracts for two UDW newbuild rigs from COSCO with options for another two newbuild rigs 30