LAMPRELL Analyst Presentation Site Visit, 22 November 2006

Transcription

1 LAMPRELL Analyst Presentation Site Visit, 22 November 2006

2 I. OVERVIEW OF LAMPRELL 2

3 Overview of Lamprell A leading jackup rig refurbisher in the Arabian Gulf with a significant share of the market in the Middle East Established over 30 years ago and is now providing specialised services to the offshore and onshore oilfield industries ENERGY CONTRACTOR OF THE YEAR MIDDLE EAST & SUB CONTINENT Principal areas of expertise Jackup rig upgrades and refurbishment New build construction for the offshore oil and gas industry Land rig upgrades and refurbishment Considerable expansion opportunities including Buoyant market for rig refurbishment Development of a new facility in the Hamriyah Free Zone 2005 turnover of $205m and net income of $28.7m; 2006H1 turnover of $160m and net income of $26.8m 3

4 Company Highlights Track record of organic growth High quality earnings Extensive level of repeat business Contract expansion can significantly add to revenues Robust management of commercial risk Good cash generation and a strong balance sheet Attractive market environment Record level of drilling activity leading to high levels of rig demand Additional rigs entering the Arabian Gulf Many rigs in the region require upgrade and refurbishment Regional leader in rig upgrade and refurbishment Long standing client relationships with major international corporates Currently there are physical barriers preventing entry of regional competition to new portside facilities Highly experienced management team 4

5 Lamprell Management Team Steven Lamprell President Founder and currently 33.9% owner of Lamprell Ongoing role, with particular focus on local liaison and political relationships in United Arab Emirates Peter Whitbread Chief Executive Officer and Chairman 14 years at Lamprell 34 years in the oilfield services sector Will move to Chairman by end of 2007 David Moran Chief Operating Officer and Chief Financial Officer 14 years at Lamprell Qualified accountant with Coopers & Lybrand Will replace Peter Whitbread as Chief Executive Officer by end of 2007 Non-executive Directors Peter Birch (Senior Independent Non-executive) Chairman of Land Securities and Kensington, SID of Trinity Mirror Nigel McCue CEO of Jura Energy and NED of Dragon Oil and Sky Petroleum Richard Raynaut former CFO of SBM offshore division Business line managers Team of 5 VPs who collectively have over 100 years industry experience Highly experienced management team 5

6 II. MARKET OVERVIEW 6

7 Brent oil price $/bbl Favourable Energy Environment Focused on Middle East Capex ($bn) Brent spot E&P Capex % % % global output produced in Persian Gulf % % 50 22% % Source: Datastream for oil price; OPEC for E&P Capex Source: Energy Information Administration, April 2006 Sustained high oil price environment Limited existing production capacity Significant cash generation and resources available for oil majors and National Oil Companies to fund increase in exploration and production capacity Arabian Gulf critically important to world s energy supply with 28% of current production and 61% of proven reserves 1 Physically benign operating conditions contribute to low production costs The UAE is the hub for support services to the region s oil industry Limited industrial refurbishment and fabrication facilities, especially with quayside access 1 Source: BP 7

8 Overview of Jackup Rig Market Global shortage of jackup rigs Attrition of global fleet partly from natural disasters Ageing fleet Many years of underinvestment Increasing delivery period for new rigs Increased global demand for jackup rigs Day rates have increased significantly over the last 12 months 250ft rigs have increased 150% from $50,000/day to $125,000/day Annual deliveries Approximately 90% of fleet is at least 20 years old Cumulative deliveries More rigs entering into the regional market Client requirements and operational advancements have driven the need to upgrade assets Source: ODS Petrodata Increased day rates driving demand for rig upgrades and refurbishment 8

9 FPSO Market Floating Production Storage Offloading (FPSO) is a growth market Production moving from continental shelf areas to deeper water New geographically remote fields require higher production storage facilities Number of deep and ultra deep water fields due to enter production FPSO vessels operate in a global arena Increased activity, particularly in Africa 32% of global expected expenditure between Latin America Asia $ million FPSO Global Expenditure Forecast 6,000 Global expenditure 5,000 4,000 3,000 2,000 1, FPSO s installed between with a further 125 planned in next 4 years Limited facilities for fabricating FPSO process modules in the region Source: Infield Systems

10 Land Rig Market Land rigs are an essential element of exploration and production in the Arabian Gulf Pressure to increase land based drilling especially in Saudi Arabia and also Libya Move to outsource land rig repair and planned maintenance programmes Increased regulation demanding upgrades Rig numbers Middle East Land Rig Activity Rig count 10% p.a. growth Few available facilities offering integrated services (including fabrication, assembly and mechanical works) associated with land rig refurbishment and new builds in the Arabian Gulf region Source: Schlumberger web site 10

11 III. LAMPRELL 11

12 Development of Lamprell Business established in 1974 Refurbished first jackup drilling rig in 1992 Executed more than 100 rig refurbishment projects at its Sharjah facility, now the Arabian Gulf s leading jackup rig refurbisher Diversified into offshore fabrication projects in the late 1990 s Arabian Gulf Hamriyah Dubai (Jadaf) Sharjah Jebel Ali United Arab Emirates Gulf of Oman Expanded into the FPSO market and commissioned the design and construction of its fabrication facility in Jebel Ali Free Zone in 2002 Jebel Ali facility has since further expanded, in response to customer demand for increased services, including construction of topside decks and land rigs Planned addition of a major new facility in Hamriyah Free Zone 12

13 Sharjah Facility Portside facility based at Sharjah Variety of work undertaken, ranging from simple repairs to major upgrades and refurbishments New opportunity to rehabilitate hurricane damaged rigs Larger projects generally have a final contract value of over $20m and have reached up to $35m in the past 25 rigs were repaired in 2005 compared to 19 in 2004 Rigs refurbished Regional Competitors AHI QGM MIS DDD Asry Lamprell The regional rig count is currently increasing Source: Lamprell estimates Repeat business rigs return to our facility on a regular basis 13

14 Rig Refurbishment Case Study Trident VIII Client: Triton Industries (member of Transocean Group) Date of proposal: 28 February 2005 Initial contract value: $9.9m Final account value: $19.5m Safety award recognition of 1 million man hours without a lost time incident (LTI) Original contract schedule was for 90 days; having doubled the work scope, the rig left after only 110 days 14

15 Jebel Ali Facility Facility completed in 2002 to service the FPSO market Subsequent expansion driven by customer demand Based at Jebel Ali Free Zone with portside access Products used in key offshore production geographies Prominent facility in the Arabian Gulf for the fabrication of: Process modules Turrets Process barges Offshore fixed structures Land rigs Jackup rigs Topside decks 15

16 New Build Case Study Enfield Turret The Enfield Bow mounted fully disconnectable, Typhoon class Turret and Riser column Client: Single Buoy Moorings Inc. (SBM) End user: Woodside Petroleum Construction period to load out Turret: August 2003 August 2004 Column: August 2003 December 2004 The 2,800 tonne bow mounted disconnectable turret is the largest of its kind in the world Contract value $11m The first time a turret of this size has been full-disconnect tested by the fabrication yard prior to load out 16

17 Oilfield Engineering Dedicated facilities in Jebel Ali Free Zone Upgrade and refurbishment of land rigs Projects undertaken include: Drilling equipment overhaul Mud system fabrication Rig camp construction Client-driven demand to move into new build land rig construction American Petroleum Institute (A.P.I.) accredited 17

18 Hamriyah Free Zone A new 330,000m 2 quayside facility New Hamriyah site 1.25km of deepwater berthing Intended capabilities will include Quayside capacity for in excess of 10 rigs from 2009 Capacity for multiple new build jackup construction FPSO topsides integration Free zone status Modern client and employee facility Current temporary Hamriyah facility 18

19 Operating Strategy Quality and customer satisfaction Prudent financing and cash flow management Focus on health and safety and the environment Human resource development ENERGY CONTRACTOR OF THE YEAR MIDDLE EAST & SUB CONTINENT Active management of business risk, including a thorough understanding of operational and counterparty risk Limited design or engineering risk Emphasis on timely and managed delivery 19

20 Key clients Major international corporate client base End Users Focus on client service and long-term relationships History of repeat business and contract expansion Top 5 Clients by Revenue ($m) Clients

21 Competition and Lamprell s Position in the Market Lamprell s Strengths Longstanding and trusted relationships with customers and suppliers Emphasis on maintaining high quality standards Located in an important regional market Modern purpose built facility in Jebel Ali Retention of skilled workforce Free zone environment Experienced management team Main Regional Competitors Dubai Drydocks Gulf Piping Company Maritime Industrial Services Main Global Competitors Jurong Shipyard - Singapore Keppel Fels - Singapore Keppel Offshore & Marine - Singapore Sembawang - Singapore Signal - USA Project and risk management skills Safety record Record of on-time delivery 21

22 IV. FINANCIALS 22

23 Summary Profit and Loss 70 Turnover ($m) Strong sales growth driven by increasing market demand Service capacity has increased due to new facilities at Jebel Ali H1 EBITDA ($m) & margin (%) % 12% 15% 18% H1 Net earnings ($m) & margin (%) * * Consistent margin improvement Zero tax Increase in earnings Well placed for further growth in 2006 and beyond H1 Interims * ($m) 2005H1 2006H Turnover % 17% 8% 10% H1 * EBITDA Net earnings * Half year interims are unaudited 23

24 Profit & Loss (US$ m) 2003 FY 2004 FY 2005 FY 2005 H H1 Contract revenue Contract costs (58.33) (88.37) (163.82) (73.04) (124.50) Gross profit Gross margin 17.1% 16.5% 20.1% 19.5% 22.2% Other operating income Selling & distribution (0.50) (0.68) (0.64) (0.34) (0.58) G&A (6.13) (6.69) (12.62) (6.01) (9.57) EBITDA D&A (2.43) (2.60) (3.31) (1.56) (2.00) Operating profit Operating margin 7.8% 9.6% 13.8% 12.5% 16.4% Interest income Pre-tax Profit

25 Balance Sheet ($m) 2003 FY 2004 FY 2005 FY Non-current assets Current assets Current liabilities (11.9) (31.8) (55.8) Net current assets Total assets less current liabilities Non-current liabilities (3.3) (4.1) (5.7) Net assets H1 * (63.0) (6.5) 74.2 Equity shareholders funds * Half year interims are unaudited 25

26 Cash Flow (US$m) 2003 FY 2004 FY 2005 FY 2005 H H1 Operating Profit Depreciation & Amortisation Working capital movements (2.53) (2.26) 4.04 (14.54) (23.49) Others Cash generated from operations (1.11) 4.77 Net Interest Margin Deposits 0.04 (0.51) (0.98) (0.56) (0.89) Net Capital Expenditure (3.59) (2.54) (5.90) (3.41) (9.45) Funds due from/to related parties (0.26) (6.59) (7.26) Dividends (8.58) (3.81) (3.81) (25.32) Net Acquisitions/Disposals 2.71 Net Cash Flow (6.70) (5.70) (10.01) Opening Net Cash/(Debt) Closing Net Cash/(Debt)

27 V. STRATEGY AND PROSPECTS 27

28 Future Strategy and Prospects Maintain a leading position in the growing jackup rig market Maintain focus on repeat business and continue expansion of services Investment in a new facility in Hamriyah Free Zone Continue to expand existing client base Commence new build jackup and land rig construction Increase operating efficiencies through investment in operating equipment and personnel Retain and attract skilled labour and management On IPO Lamprell will be well positioned to take advantage of future growth opportunities 28

29 LAMPRELL Analyst Presentation Site Visit, 22 November 2006