Chris Beckett CEO, Pacific Drilling 40 th Annual Marine/Offshore Industry Outlook Conference. March 30, 2017

Transcription

1 Chris Beckett CEO, Pacific Drilling 4 th Annual Marine/Offshore Industry Outlook Conference March 3, 217

2 Forward Looking Statements Certain statements and information contained in this presentation constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and are generally identifiable by the use of words such as believe, estimate, expect, forecast, our ability to, plan, potential, projected, target, would, or other similar words, which are generally not historical in nature. The forward-looking statements speak only as of the date hereof, and we undertake no obligation to publicly update or revise any forwardlooking statements after the date they are made, whether as a result of new information, future events or otherwise. Our forward-looking statements express our current expectations or forecasts of possible future results or events, including: market outlook; forecasts of trends; future client contract opportunities; contract dayrates; our business strategies and plans and objectives of management; and estimated duration of client contracts. Although we believe that the assumptions and expectations reflected in our forward-looking statements are reasonable and made in good faith, these statements are not guarantees and actual future results may differ materially due to a variety of factors. These statements are subject to a number of risks and uncertainties, many of which are beyond our control. Important factors that could cause actual results to differ materially from our expectations include: the global oil and gas market and its impact on demand for our services; the offshore drilling market, including reduced capital expenditures by our clients; changes in worldwide oil and gas supply and demand; rig availability and supply and demand for high-specification drillships and other drilling rigs competing with our fleet; costs related to stacking of rigs; our ability to enter into and negotiate favorable terms for new drilling contracts or extensions; possible cancellation, renegotiation, termination or suspension of drilling contracts as a result of market changes or other reasons; and the other risk factors described in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 2-F and Current Reports on Form 6-K. These documents are available through our website at or through the SEC s website at 2

3 Uninterrupted growth in demand for oil continues Year-over-year change in world demand projected to average ~1.5 mmb/d Million b/d Historic Oil Demand Growth Projected Oil Demand Growth Source: EIA World Oil Demand (Feb 217) 3

4 Operators are not replacing reserves Oil and gas discoveries are at their lowest in 6 years Conventional Oil Discoveries (Bn Bbls) Reserve Replacement Ratios 2% 15% 128% 1% 87% 8% 5% 29% % % -1% -15% -2% Range Average Source: Wood Mackenzie Source: Bloomberg RRR, includes: BP, Chevron, Exxon, Petrobras, Shell, Statoil, and Total 4

5 Net effect: supply will not keep pace with demand Oil Supply/Demand Balance Absent New Supply Through Gap: 5% Gap: 14% Gap: 22% Million Barrels per Day Supply- Demand Gap Supply Supply Inventory Demand New Demand (+1.5mmb/d) Forecast EIA supply/demand through 217, assumes 5% decline rate on existing production

6 Supply gap remains after drawing on all possible sources Potential Call on New Supply beyond Sanctioned Projects 2 15 While extensive infill drilling can help reduce decline rates, major projects need 3+ years to reach production ~5mmb ~7mmb Supply- Demand Gap 1 5 ~1mmb Supply Growth Potential Demand Gap (prev slide) 1% Opec Spare Capacity 1% of Disruptions back Online Shale (assumed +1mmb annually) Conventional / Heavy Oil Sanctioned Storage to Levels Deepwater Sanctioned Sources: EIA storage and disruptions, OPEC spare capacity, company filings, Simmons, BMI, analyst estimates and PACD estimates 6

7 Market expected to rebalance in Contracted, Available and Warm Stacked 5th and 6th Gen Rigs Projected Floater Demand Warm Stacked Rigs Visible Demand Uncontracted 5 th gen Contracted 5 th gen Uncontracted 6 th gen Contracted 6 th gen % Utilization of Marketed/Warm Supply = 114 rigs Demand Range = rigs Note: Projected Floater Demand excludes demand from harsh environments and globally non-competitive areas Sources: IHS, Rystad, PACD internal estimates 7

8 Marketed global floater fleet will look very different by 218 Floater fleet size will be reduced by 42% and employee count reduced by 34% Number of floating rigs , 5, 4, 3, 2, 1, 49,96 31,56 32,96 12,36 18,4 2,6 215 Peak Fleet End of 218 High Spec - Low Spec 215 Peak Implied Employee Count End of 218 Note: Includes active, hot-stacked, warm-stacked; excludes cold stacked; cold stacking is assumed after a rig is stacked for more than six months or after announced; low spec fleet include 5 th gen and older; high spec employee count assumed 2, low spec assumed 12 8

9 Challenge: Impact of short-termism drives market volatility Cycles becoming more extreme, particularly on the employee front 18, 16, 14, 5% -36% Offshore Personnel 12, 1, 8, 6, 4, 2, -36% Jan 1985 Dec 1985 Nov 1986 Oct 1987 Sep 1988 Aug 1989 Jul 199 Jun 1991 May 1992 Apr 1993 Mar 1994 Feb 1995 Jan 1996 Dec 1996 Nov 1997 Oct 1998 Sep 1999 Aug 2 Jul 21 Jun 22 May 23 Apr 24 Mar 25 Feb 26 Jan 27 Dec 27 Nov 28 Oct 29 Sep 21 Aug 211 Jul 212 Jun 213 May 214 Apr 215 Mar 216 Feb 217 Jan 218 Dec 218 Nov 219 Oct 22 Sep 221 Source: IHS-Petrodata for quarters capacity, Rystad for demand forecast Floaters Jackups 9

10 Preparing the organization for the upturn Safety, uptime and cost control more important than ever Rigorous attention to operating procedures Proactively understanding and addressing new regulations Efficient adoption of new technologies Managing through the cycle Continuous maintenance to address periodic surveys Smart stacking enables back to work in 9 days Pre-locating idle assets in key markets Expanding client base, addressing new market entrants alongside historical Major Oil Co. clients 1

11 Preparing the workforce for the upturn Integrated professional development via Project Origin Robust technical competency assessment Enhanced technical development tools Leadership development from rig floor to management Accurate evaluation of personnel Retention of critical knowledge Flexible effective workforce planning 11

12 Thank you 12