SeaBird Exploration. Investor Presentation Acquisition of Geowave Voyager. July 2018

Transcription

1 SeaBird Exploration Investor Presentation Acquisition of Geowave Voyager July 2018

2 Disclaimer and important notice This company presentation (the Presentation ) has been prepared by SeaBird Exploration PLC ( SeaBird or the Company ). The Presentation has not been reviewed or registered with, or approved by, any public authority, stock exchange or regulated market place. No independent verifications have been made and the Company makes no representation or warranty (whether express or implied) as to the correctness or completeness of the information contained herein, and neither the Company nor any of its subsidiaries, directors, employees or advisors assume any liability connected to the Presentation and/or the statements set out herein. This Presentation is not and does not purport to be complete in any way. The information included in this Presentation may contain certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words believes, expects, predicts, intends, projects, plans, estimates, aims, foresees, anticipates, targets, and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or its advisors or any of their parent or subsidiary undertakings or any such person s affiliates, officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company and its advisors assume no obligation to update any forward-looking statements or to conform these forward-looking statements to the Company s actual results. Investors are advised, however, to inform themselves about any further public disclosures made by the Company, such as filings made with the Oslo Stock Exchange or press releases. This Presentation has been prepared for information purposes only. This Presentation does not constitute any solicitation for any offer to purchase or subscribe any securities and is not an offer or invitation to sell or issue securities for sale in any jurisdiction, including the United States. Distribution of the Presentation in or into any jurisdiction where such distribution may be unlawful, is prohibited. This Presentation speaks as of July 2018, and there may have been changes in matters which 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 is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts with Oslo City Court as exclusive venue. By receiving this Presentation, you accept to be bound by the terms above. 2

3 Strong rationale for fleet growth SeaBird has ~70% utilization booked for 3 active vessels through Q3-18 Already secured backlog well into Q4 for parts of the fleet Strong tender activity for both 2D and OBN work in Q4-18 and Q1-19 Significant amount of 2D work (ex US East Coast) out to tender, a first in current cycle Few surveys awarded yet OBN contractors testing market for source vessel capacity on long term charters Opening of US East Coast combined with visible rest-of-world demand would tighten market substantially Only 12 purpose-built vessels in global fleet are 10 years or younger 4 vessels operated by Chinese owners SeaBird has a global operating platform, clean balance sheet, and strong QHSE track record SBX is well positioned to benefit from tightening market conditions and capitalize on attractive investment opportunities 3

4 Geowave Voyager Vessel specs Built USD ~120m newbuild cost 10 streamer capacity Newbuild cost was for vessel only and excludes streamer & source Well suited for 2D, Source and niche-3d Powerful 2D and Source vessel MoA with CGG allows for up to 6 streamer operations in 3D-mode Can be modified for use as node laying vessel in the OBN market Vessel has remained active throughout the downturn Last project was a 2D project for Equinor Source vessel for CGG in Q3-18 Source: CGG Eidesvik Ship Management AS 4

5 Transaction & Investment analysis Transaction details Illustrative earnings scenarios 1 USD 17m purchase price agreed with CGG Purchase price includes: Fully rigged vessel including 3 high capacity compressors and full suite of source equipment 40km Sercel Sentinel Solid streamer «Preferred supplier» to CGG for 2D/Source projects When using the Geowave Voyager Transaction to be signed in July with transfer of ownership in Oct % payment after successful technical inspection 90% to be paid on closing in October 1) Management estimates of earning potential for Geowave Voyager (not based on specific contract opportunities) 5

6 SeaBird investment highlights Strong demand side effects with cyclical and structural growth - Target niche segments 2D / Source & Shallow water 3D Global operating reach Low and flexible cost base New management team with strong track record Net cash positive and limited debt Well positioned for pursuing M&A at current attractive pricing levels 6

7 Management team Hans Petter Klohs CEO Joined the company as CEO in July Served as director on the BoD from years of executive management experience from Oil & Gas and Shipping Successfully built and sold seismic ventures Exploration Resources and Arrow Seismic through GC Rieber AS Extensive experience from corporate finance, risk management, M&A and business development Holds a MPhil in International Finance, BSc Economics, BSc Business Administration Nils Haugestad CFO Has held the position as CFO since April 2012 Over 20 years experience in investment banking, principal investments and corporate strategy Previous experience includes CEO and founding partner of Fokus Capital Ltd Holds a Bsc. Degree from the Wharton School, University of Pennsylvania and a MBA from Harvard Business School 7

8 Management team Finn Atle Hamre COO Joined the company as COO in July years experience in the Offshore Oil and Gas industry across both European and Asian markets More than 10 years in senior executive management positions including VP, MD, COO, CMO and CFO Successfully built and sold seismic ventures Exploration Resources and Arrow Seismic through GC Rieber AS Holds a B.eng (Hons) in Naval Architecture, and a Master of Business Administration Kjell Mangerøy VP Business Development More than 35 years of experience working in the seismic industry Been with SeaBird since 2006, VP Business Development from 2008 Business Development Manager (Africa) in PGS from 2001 to 2006 Electronic Engineer from The Royal Norwegian Navy 8

9 Management team track record 9

10 Segmentation of market 10

11 Targeted market positioning E&P growth focus ( ): Harsh environment & deep water «elephant» discovery Large scale 3D seismic surveys «Blue Ocean» market position E&P growth focus (2018->): IOR on existing fields Near-field development OBS surveys Exploration 3D Seismic industry migrated / moved up in the value chain pre-2014 OBS is well suited for the «new» E&P seismic demand 2D/Source vessels needed as OBS support vessels Most seismic players weighed down by legacy investments and debt levels 11

12 SBX fleet overview Current fleet, excluding Geowave Voyager 2D and source vessels SW 1) -3D vessels Aquila Explorer Osprey Explorer Harrier Explorer Voyager Explorer 2D - 1 X 12 Km Source - Dual Source - Dual Propulsion Owned vessel Divested vessels 2D - 1 X 12 Km Source - Dual Source - Dual Propulsion Owned vessel Northern Explorer Previously owned vessel Decommissioning completed early February D - 1 X 12 Km Source - Dual Source - Dual Propulsion Owned vessel 3D-SW - 4 X 6 000m 2D - 1 X 12 Km Source - Dual Source - Dual Propulsion Joint marketing agreement Munin Explorer Previously chartered-in vessel Agreement for redelivery signed Q1 2018, with redelivery in Q and subsequent 3-year non compete 1) Shallow water 12

13 A diversified blue-chip client base Operational track-record ensures blue-chip client base Company prequalified to work with most oil majors Major oil National oil Independent oil Seismic Surface Seabed 13

14 Debt & lease obligations drastically reduced Pre 2017 restructuring Post restructuring Restructured debt obligations Q Q Q Q Q Interest Principal Charter hire obligations May-Dec May-Dec Remaining charter hire obligations mostly removed after Munin Explorer redelivery 14

15 Flexible cost base Cost base significantly reduced Offshore crewing cost model USD 6m targeted SG&A in 2018, Down 70% from ~USD 20m in 2015 Implemented a flexible offshore crewing model ensuring 70% cost saving when off hire Old model: standard employment contracts; two crew shifts required for each vessel New model: crew hired on a project basis; payed 2x normal salary when onhire, zero when off-hire Net effect: SBX has same cost base with 100% fleet utilization, but zero crewing cost if fleet idle 15

16 Market trends 2D otraditionally muted interest for frontier exploration during downturns osubstantial reduction in reserve replacement fueling increase in exploration budgets opotential opening of US offshore should create significant 2D seismic demand Source ostructural growth in the demand for source vessels should lead to significant market tightening oocean bottom seismic tendering activity at record levels, awards expected coming months SW-3D oshallow-water 3D is coming to life again, after zero activity recent years oshallow-water development increasingly viewed as a time and cost effective alternative to deepwater mega projects 16

17 17 Tender activity The seismic market has troughed Clear uptick in tendering activity 18

18 Better pricing power in 2D vs 3D 2D rates vs 3D rates 18

19 2D seismic industry Observations Global fleet reduced with 50% vs D market dynamics improving # vessels Commercial 2D-fleet in 2012 seen at vessels In 2018 reduced to vessel Competitive pressure from 3D owners has eased 2D-seismic first tool in the box to find new offshore oil reserves Seabird and BGP are the only 2D operators remaining with a global service offering 2D players 3D players with 2D vessels1) 2) 3D working in 2D space 2) Note: Approximation of players focusing on 2D 1) Rosgeo controlled by Russian government, operates in Russian waters 2) ex-dolphin fleet now operated under ShearWater, with no 2D capability 19

20 US offshore areas potentially opening Nearly all US offshore areas to be opened for O&G exploration under a new 5 year lease plan Still subject to public hearings and reviews, with an uncertain implementation timeline Demand for 2D seismic likely to be significant if implemented in current form Companies including TGS-Nopec, Spectrum, CGG and ION Geophysical have pending applications for 2D surveys Source: BOEM 20

21 Source vessel demand expected to rise Ocean Bottom Seismic is experiencing strong structural growth driven by technological breakthroughs and cost reduction OBS expected market growth Mainly used for increased oil recovery (IOR) on existing fields and proven reserves Exposure to less volatile E&P operating budgets Source vessel demand tied to the growth in OBS Vessels use air-guns to send signals which the ocean bottom receivers pick up Source vessels needed regardless of survey technology choice Source: Magseis ASA company presentation 21

22 Market share in % on the back of continued OBS market share gains OBS share of total seismic spending OBS delivers superior data quality compared to streamer seismic 20% 18% 18% Has systematically gained market share from 3D streamer seismic Significant survey cost reductions achieved Technology has improved E&P adoption increasing 16% 14% 12% 10% 8% 7% 11% 9% 9% 13% 10% 15% 12% Trend expected to continue Further improvements in technology; new node-models in pipeline Gains in node-laying speed and source vessel productivity 6% 4% 2% 0% 5% 4% 3% 3% Source: InApril AS company presentation, Arkwright 22

23 While source vessel supply is limited The seismic industry has mainly invested in larger 3D vessels over the last 10 years, ignoring the «low-end» segment Current marketed fleet limited to around vessels Additional capable vessels could bring total available fleet to around 30 vessels in a market recovery, but most would require substantial investment to re-enter Most OBS operators do not have «in-house» source vessel capacity SeaBird differentiated through seismic operational expertise, well adapted to meet increasing project demands SeaBird can provide multi-vessel operational service to clients Trend toward increased source vessel count in OBN project configuration 23

24 2D & Source vessel owners 24

25 Earnings sensitivity - break-even level 1 (Excluding Geowave Voyager) Operating costs are substantially reduced compared to previous years Based on maintaining two vessels in active use 70% of the time, SeaBird is fully funded going forward ~66% average utilization in weak 2017 with two vessel equivalent Stable cash position expected from Q2-18; working capital fluctuations will occur Assumptions: Two vessels with 70% active utilization in source and/or 2D mode through a year SW3D work excluded, offers upside to estimates if secured Vessel OPEX including fuel at stable levels Dayrates remaining at achieved 2017 levels One vessel warm stacked, and one vessel cold stacked 1) Management estimates (not based on specific contract opportunities) 25

26 Earnings potential normalized scenario 1 (Excluding Geowave Voyager) Seabird has significant operational leverage towards a return to normalized mid-cycle market conditions Assumptions: Four vessels with 70% active utilization in source and/or 2D mode through the year SW3D work excluded, offers upside to estimates if secured Historical mid-cycle day rates achieved OPEX including fuel at stable levels SG&A costs growing 25% due to increased company activity 1) Management estimates (not based on specific contract opportunities) 26

27 Outlook SeaBird s operational and financial reorganization is completed Reducing debt with 85% and SG&A with 70% during 2H 2017 Raised USD 17 million in new equity in May 2018 The cost structure and liquidity runway now aligned to current market conditions Market activity on the up, with good tendering activity, but contract conversion remains drawn out SeaBird positioned to benefit from strong demand side effects; Towed streamer seismic in early stage of cyclical recovery Structural increase in ocean bottom seismic activity High operational leverage in a recovery Will utilize a net cash positive balance sheet to grow the fleet at current attractive pricing levels, assuming satisfactory backlog is secured 27

28 Appendix 28

29 Income statement Q

30 Balance sheet Q