Howard Weil Energy Conference Per Wullf, CEO

Transcription

1 Howard Weil Energy Conference Per Wullf, CEO March 2015

2 Forward Looking Statements The statements described in this presentation that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of Forward-looking statements which could be made include, but are not limited to, statements involving prospects for the Company, expected revenues, capital expenditures, costs and results of operations and contingencies and other factors discussed in the Company's most recent annual report on the Form 20-F for the year ended December 31, 2013 and in the Company's other filings with the SEC, which are available free of charge on the SEC's website at Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. All subsequent written and oral forward-looking statements attributable to the Company or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements. 2

3 Presentation Agenda 1 Seadrill Summary 2 Rising to the Market Challenge 3 Market Outlook 3

4 Executive Summary Successful 2014, Expecting Challenges in 2015 Operational excellence Three drillships taken into service in the fourth quarter Strong financial and operational performance during 2014 Secured 5 new contracts, adding $1.3 billion to contract backlog in 4Q Prudent action taken during 2014, will continue to do so in 2015 Utilization and pricing challenges expected to continue in 2015 Subdued upstream spending in a low oil price environment Well Positioned for Downturn Modern fleet, strong operational organization, focus on driving efficiencies Secured nearly $10 billion in financing commitments in 2014 Limited exposure to current dayrate environment Strategic adjustments to newbuild delivery schedule Well defined and manageable funding requirements Ability to act as consolidator when the time is right 4

5 US$ Millions Utilization (%) US$ Millions Robust Backlog & Operational Excellence Seadrill Group generated combined EBITDA of $897 million for the fourth quarter Economic utilization for the Group s floaters on a combined basis was 91% for 2014 $17 billion current orderbacklog for the 3.2 Seadrill 2.9 Group Quarterly EBITDA (Including Seadrill Partners) Current Backlog (Including Seadrill Partners) Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Ultra-Deepwater Economic Utilization (incl. Seadrill Partners) 6,000 5, ,000 3,000 2,000 1, Remaining 0 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 5

6 Rising to the market challenge Rising to the Market Challenge 6 6

7 Tough Times... times but But we re We Are tougher Tougher Approximately $17 billion in contract backlog Strong relationships with solid counterparties, built through strong operational performance Adjusted deliveries of our new builds to be better in line with market conditions Taken a prudent decision on dividends to strengthen our cash and balance sheet position Significant expansion on our cost savings program this year 7

8 We re having very difficult conversations Floater Contract Coverage Seadrill Contract Coverage Marketed Floater Availability Until End of 2016 Contracted 40 63% 65% 2015 Uncontracted 15% 85% % 25 52% 65% 50% 50% 44% 60% 55% 50% % 15 45% % 63% 40% % Transocean Diamond Ensco Noble Seadrill * 40% 35% 30% Floaters > 7,500 ft Floaters 0-7,499 ft % of floater fleet Source: IHS Petrodata * Excludes SDLP 8

9 Rising to the market challenge Floater Stacking Increasing at Accelerated Pace Marketed Floater Age Stacking of Old Floaters 60 80% 50 70% 70% % 60% 50% 30 38% 40% % % Diamond Transocean Noble Ensco Seadrill* # floaters built afer 2000 # floaters built before 2000 % of floater fleet built before % 20% 10% 0% 54 floaters are currently stacked This is an increase from 34 one year ago 15 floaters were retired last year. YTD 15 more are planned for scrapping. Out of ~240 currently contracted floaters approximately 70 rigs are coming off contract in the next 12 months 9Source: IHS Petrodata * Excludes SDLP 9

10 Floater Cash Flow Breakeven 1 Year Ago 6 Months Ago Today Typical Floater 3 5 years $525,000 - $575,000 Typical Floater 2 3 years $475,000 - $525,000 Typical Floater 1 2 years $350,000 - $400,000 $120 $25 $45 $365 $175 $200 $245 Opex G&A EBITDA Breakeven Interest Expense Operational Breakeven Principal Repayment Cash Flow Breakeven Instalments based on $450m, 10 year profile Debt interest 3.5% per annum 10

11 Jack-up Contract Coverage Contract Coverage Marketed Jack-up Availability Until End of 2016 Contracted % 2015 Uncontracted 25 84% 90% 85% 65% 44% 90% 23% 20 80% % % 48% 67% % 59% 60% 52% % % 50% % 0 Paragon Hercules Rowan Ensco Shelf Seadrill * 40% Jack-ups > 350 ft Jack-ups ft % of jack-up fleet Source: IHS Petrodata * Excludes SDLP 11

12 Jack-up Stacking Increasing As Well Marketed Jack-up Age Stacking of Jack-ups % 95% 100% 40 90% % 30 75% 62% 70% 60% 25 50% % 31 40% 30% In jack-ups were stacked (56 cold & 77 warm) % 1 Paragon Shelf Hercules Ensco Rowan Seadrill * # jack-ups built after 2000 # jack-ups built before 2000 % of jack-up fleet built before % 10% 0% Both warm stacked and cold stacked numbers are increasing again due to reduced activity and age of fleet. 109 jack-up units are currently stacked. Out of ~405 currently contracted jack-ups approximately 190 rigs are coming off contract in the next 12 months Source: IHS Petrodata * Excludes SDLP 12

13 Jack-up Cash Flow Breakeven 1 Year Ago 6 Months Ago Today Typical Jack-up 1-2 years $165,000 Typical Jack-up 6 months - 2 years $145,000 Typical Jack-up 1 well - 2 years $115,000 $40 $10 $15 $125 $60 $70 $85 Opex G&A EBITDA Breakeven Interest Expense Operational Breakeven Principal Repayment Cash Flow Breakeven Instalments based on $150m, 10 year profile Debt interest 3.5% per annum 13

14 New Builds: Adjusting adjusting deliveries Deliveries We have the benefit of being part of the bigger Fredriksen Group We ve adjusted the delivery timings of our new builds in light of market conditions 4 JUs pushed back 4 months 2 JUs pushed back 8 months 2 JUs pushed back 6 months 1 SS pushed back 12 months Discussions to defer other rigs ongoing 14

15 Continuing focus on cost Efforts we put in place in 2014 helped us deliver approximately $220 million in savings versus budget in CAPEX, personnel cost, G&A, and other operating costs To keep costs a focus in 2015, we have put in place a cost savings program to identify both short-term and long-term cost savings across a wide range of opportunities, including the following Purchasing and supply chain Personnel costs Other onshore costs Without compromising our safe operations, we believe savings opportunities in excess of $250 million exist to be captured across our cost base 15

16 Financial performance highlights Market Outlook Appendix: Seadrill Limited Financials 16

17 Annual Capex - USDbn More capex for less production Major oil companies production and upstream investment FY 2013 Combined USD 1.4 trillion spent! FY Source: Maersk; Evaluate Energy, RSPM mmboed production Companies included: BP, Chevron, ConocoPhilips, ENI, ExxonMobil, Shell, Statoil, Total Massive cost inflation you get less for more! Source: RS Platou 17

18 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14 Sep 14 Mar 15 Global E&P spending (USDm) Annual E&P spending growth (%) Challenging 2015 for Oil Services Companies Brent back to 2009 level 2015 E&P Spending Estimates % % 15% 19% 12% 20 % 15 % 10 % % 5 % 0 % -5 % % -9% -10 % -15 % E 2015E -20 % Expect a significant drop in E&P spending Source: RS Platou Markets AS, Bloomberg 18

19 Preferential Demand for Newer Rigs Bifurcation is a Reality Source: Fearnley Offshore Source: Pareto Securities AS 19

20 Aging Fleet & UDW Units Becoming the Standard Average floater age today: 17 years Operating Water Depth 12% 30 year + 31 % <=10 >=10 years 50% % 41% 47% years 12 % Source: ODS-Petrodata, RS Platou Markets years 6 % years 1 % Above 7,500 ft 4,500-7,499 ft Below 4,500 ft Source: IHS Petrodata 20

21 Well positioned for the future Modern, industry-leading fleet Long-standing reputation among customers for reliable operations Deep commercial backlog and close relationship with customers Experienced management team with strong backing and engagement from the Board Ability to take tough decisions and to quickly respond to opportunities in the market We will demonstrate better and safer operations 21