The Norwegian Oil field Service Analysis - Summary of key findings. Energiåret Espen Norheim Managing Director EY Transaction Advisory Services

Transcription

1 The Norwegian Oil field Service Analysis - Summary of key findings Energiåret 214 Espen Norheim Managing Director EY Transaction Advisory Services

2 EY a global partner in Oil & Gas A global company The largest assurance, tax and advisory company in Norway Worldwide revenues (213): 26 billion USD 175 professionals worldwide across 14 countries 1 65 professionals in more than 3 locations in Norway EY s services: Our dedication to Oil & Gas More than 92 professionals serving the Oil and Gas Industry We serve most of the Fortune 1 oil & gas companies through 13 Global Oil & Gas Centers We have 2 professionals in Norway working with the Oil & Gas sector North-Sea team established for seamless support to clients operating across the North Sea EY Assurance Advisory TAX TAS Slide 2

3 The Oilfield Service (OFS) Analysis - Developed over time and captures activities of the entire Norwegian OFS industry Background: Ernst & Young has since 26 issued an annual analysis of the Oilfield Service sector in the Stavangerarea (Rogaland county) From 29 this was expanded to capture the entire OFS sector in Norway A similar analysis was published in UK in 211 and 212 How: Company revenues must exceed 2 mnok at least once in the period Financials based on publically available data The majority of the activity (>5%) in the oil & gas sector The database is updated annually Slide 3

4 bnok Improved margins and revenue growth in Highest average EBIT-margin since 28 Revenue and EBIT margin 44 25% % One of Norway s largest industries 814 companies 385 bnok in revenues 17 employees % 5% 212 a good year for the industry Average EBIT-margins up 2.5% Industry revenues up 9% Number of employees up 7% Revenues Avg. EBIT margin Avg. ROCE % Slide 4

5 bnok US$ per barrel 212 was a result of several factors aligning positively - High activity on the NCS, increasing exports and lower wage inflation An increasing oil price has resulted in growing exports due to global upstream spending Oil price development The Norwegian OFS industry 212 Investments on the NCS (SSB) Labor cost per employee A 29A 21A 211A 212A and increasing investments on NCS while wage inflation has slowed down Slide 5 Sources: SSB, IHS, EIA

6 Growth in all segments in Upturn in Reservoir/seismic and EFI after years of standstill Reservoir/ Seismic Exploration and production drilling Engineering, fabrication and installation Operations % % % % % % % % Revenues (NOK b) Avg. EBIT margin Revenues (NOK b) Avg. EBIT margin Revenues (NOK b) Avg. EBIT margin Revenues (NOK b) Avg. EBIT margin Slide 6

7 ' cdp km # Reservoir/ seismic - Growth driven by technology improvements and high exploration activity Reservoir / seismic - Revenues and EBIT % Reservoir / seismic Increasing exploration activity on the NCS Improved technology and efficiency in seismic acquisition High demand for geologists The segment with highest EBITDA-margins % Revenues (NOK b) Avg. EBIT margin 3 2,5 2 1,5 1,5 Seismic interpretation and Consultants % % Seismic equipment % % Seismic acquisition activity on the NCS Total length [cdp km] Number of operations Slide 7

8 Exploration and production drilling - Strong growth the last period, but rig shortage leads to slower growth in Exploration and production drilling - Revenues and EBIT 1 E&P Drilling % Fewer exploration wells in 212 due to rig shortage and more complicated wells rebound in 213 Increasing number of rigs on the NCS from 29 in 211 to 38 in expected in % Strong growth in rig equipment driven by high newbuild activity in international rig market Revenues (NOK b) Avg. EBIT margin 8 Rig companies 1 4 Rig equipment 1 35 Well services 1 7 Explorationwells - NCS % % % % % % Wildcats Appraisal Forecast (total) Slide 8

9 Engineering, fabrication & installation - Rebound in activity in 212 after two tough years Engineering, fabrication & installation -Revenues and EBIT % 9% 7% 5% 3% 1% % Engineering, fabrication & installation Subsea revenues increasing with 2 in the period due to several subsea field developments Growth in surface segment in 212 due to startup of several topside developments (Gudrun and Edvard Grieg to be built in Norway and Valemon and Martin Linge abroad) Revenues (NOK b) Avg. EBIT margin 8 Subsea 1 16 Surface 1 14 Number of fields under development - NCS 1% 12 1% % % Subsea FPSO Platform Slide 9

10 Operations - Activity driven by an increasing number of producing fields on the shelf Operations -Revenues and EBIT 1 1% Operations Maintenance and modification - growth due to lifetime extension programs and ageing installations on the NCS Offshore logistics growth driven by an increase in offshore vessels % Revenues (NOK b) Avg. EBIT margin 35 3 Offshore logistics M&M Production-related services Number of producing fields - NCS % % % % % % Platform FPSO Subsea Slide 1

11 bnok bnok Company size - Industry dominated by large players 3 Revenues by company size Revenue development - Active companies % <1 1-1, >1, Company revenues % NOK m No. of companies Sum of revenues No. of employees Small (<1 ) ,98,978 1,66 Medium (1 1,) ,887,697 39,262 (Large) >1, 72 24,814,87 57,79 Total ,682,762 17,1 Small Medium Large Based on companies active throughout the period (represents 95% of industry revenue). Revenue size classification based on 28 performance Slide 11

12 bnok bnok Rogaland compared to the national development in OFS - The largest region and high growth in revenues and employees 4 Development in revenues Norway + 4 Development in revenues Rogaland Key figures Norway Rogaland % of Norway Companies % Revenues 384 BNOK 155 BNOK Employees Development in employees Norway + 15 Development in employees Rogaland % Slide 12

13 Other OFS regions - Predicts high activity in the South in combination with the growth in the North Existing and future producing offshore fields Rogaland compared with other regions Regions Companies (No.) Employees (No.) Revenue mnok Rev growth 8-12 Agder 48 7,897 4,144 The Barents Sea # Potential future dev. 2 # Fields under dev. 1 # Fields in production 1 BTV* 55 9,376 25,221 1 Hordaland ,236 42,548 1 Møre 79 9,92 45,86 5% Northern Norway ,627 75% Rogaland , ,383 Trøndelag 61 6,664 16,526 1% Eastern Norway 14 1,755 57,154 5% The Norwegian Sea # Potential future dev. 1 # Fields under dev. 1 # Fields in production 17 Total ,1 383,688 21% The North Sea # Potential future dev. 5 # Fields under dev. 11 # Fields in production 19 Source: Offshore.no, EY Slide 13

14 bnok Expectation for 213 (based on Q3 213 performance) - Continued strong growth in Revenue and EBIT margin 1 1% Expects growth key indicators: Revenue growth in listed companies per Q3 213 at 9% - equals 1 for their Norwegian entities (based on historic development) Investment growth on the NCS in line with previous years (NPD estimates): 211: 17. % 212: 17. % 213: 16.9 % Increased drilling activity Number of wells up from 172 in 212 to 225 in 213 (+31%) Number of rigs from 34 in 212 to 38 in E Revenues EBIT margin % 23 fields under development: Gudrun 7 subsea developments (whereof 3 onstream in 213) Several developments in start-up phase and several contracts to Asia Slide 14

15 bnok bnok Oil prie (USD/barrel) Looking forward.. - Uncertainty in oil price and focus on operator s cash flow 25 Investments Source: NPD 1 E&P revenues and investments on the NCS Exploration and consept studies Existing facilities New fixed and floating facilities Well costs New subsea facilities Pipelines and onshore facilities E&P revenue NCS less investments Investment NCS Oil price Slide 15 Sources: NPD, EIA

16 Keep updated on the oil & gas industry - Access our thought leadership anywhere with EY Insights, our mobile app Ernst & Young s Global Oil & Gas Centres keep you updated with the latest development in the sector with monthly publications of Thought Leadership, exploring the development and trends within the sector EY Insights provides access to more than 5 of our most recent global and country-specific Thought Leadership pieces via ipad, iphone and Android devices Slide 7

17 Thank you for your attention Questions?