North Atlantic Drilling Ltd.

Transcription

1 North Atlantic Drilling Ltd. Fourth quarter 2013 results February 25, 2014

2 Forward-Looking Statements The statements described in this presentation that are not historical facts are forwardlooking 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. 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 and uncertainties. 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 forwardlooking 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 Fourth Quarter Call Agenda Company profile Highlights 4Q 2013 Assets & contract backlog Market overview & outlook Financing & 4Q 2013 financials Summary Q&A 3

4 Company profile Setting the Standard in Harsh Environment Drilling Offers investors opportunity to invest in experienced pure-play harsh environment driller NADL is Seadrill s dedicated vehicle for harsh environment and Arctic operations. Seadrill retains ~70% shareholding post the IPO Advanced fleet of 9 high end harsh environment mobile drilling units, including 1 rig under construction US$2.6 billion backlog from tier one oil companies Visible near term growth with rig deliveries in 2014 and 2015 Well-positioned for continued growth in the North Atlantic and Arctic regions Exceptional track record for operational uptime and QHSE 1 Industry-leading dividend yield 1) Quality, Health, Safety and Environment 4

5 Utilization (%) Operational Excellence Quality of Operations Recognized for providing high quality operations, in the most challenging sectors of offshore drilling Business has approximately 1,600 skilled employees with over 40 years of offshore drilling experience in harsh environment conditions Key focus on procedures to control, measure and improve performance and risk management High Performance Stable and high average economic utilization above 95% for the past two years High reliability in challenging and remote environments - a prerequisite for clients Focus on Health & Safety One of the most stringent safety control systems in the drilling industry 100% of fleet certified with the Norwegian AoC 1 certificate (regarded as one of the strictest regimes in the world) Economic Utilization Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 1) Acknowledgement of Compliance, certificate to operate in Norway, regarded as one of the most QHSE focused regions in the world 5

6 Company profile Highlights 4Q 2013 Assets & contract backlog Market overview & outlook Financial performance 4Q 2013 Summary Q&A 6

7 Fourth quarter 2013 highlights and subsequent events Highlights Fourth quarter 2013 EBITDA of US$137.6 million Fourth quarter 2013 net income of US$48.0 million and EPS of US$0.211 Regular quarterly cash dividend increased to US$0.23 per share Successful placement of NOK1,500 million senior unsecured bonds in the Nordic market Subsequent events US$600 million senior unsecured notes in a private offering in the United States. The notes mature in 2019 and carry an annual coupon of 6.25 percent Completion of the initial public offering in the United States by issuance of US$125 million in new shares and the listing on the New York Stock Exchange Launch of the exchange offer enabling the existing shareholders on the Norwegian N- OTC to exchange their shares for registered shares tradable in the US Delivery of the harsh environment jack-up Linus 7

8 Company profile Highlights 4Q 2013 Assets & contract backlog Market overview & outlook Financing & 4Q 2013 financials Summary Q&A 8

9 The Assets - Fleet of Premium Harsh Environment Rigs Floaters Jack-ups Newbuild Managed rig Newbuild Phoenix Venture Alpha Navigator Rigel Hercules Epsilon Elara Linus Ownership 100% 100% 100% 100% 100% 0% 1 100% 100% Long-Term financial lease from Ship Finance Type AoC 4 6 th gen HE 2 SS 5 th gen HE 2 SS 4 th gen HE 2 SS Built th gen HE 2 DS 3 6 th gen HE 2 SS Q Delivery 6 th gen HE 2 SS HE HPHT 5 JU HE HPHT 5 JU HE HPHT 5 JU Water depth (feet) 10,000 2,600 2,000 7,500 10,000 10, Yard Samsung Hitachi Japan Nippon Japan Samsung Jurong DSME KFELS Jurong Jurong Positioning DP3/Mooring DP3 Prop/Mooring DP2/Mooring DP3/Mooring DP3 NA NA NA Client TBA 6 Country of operation TBA 6 1) The Hercules is owned by a wholly-owned subsidiary of Ship Finance, a related party, and is controlled by Seadrill through a bareboat charter agreement that expires in ) Harsh Environment 3) Drillship 4) Acknowledgement of Compliance certificate to operate on Norwegian Continental Shelf 5) High pressure / high temperature 6) Expected start-up Q

10 Strong Contract Coverage As of Q Rig Client Current dayrate (US$k/day) Contract status Alpha Venture 441 Phoenix 454 Hercules 497 Navigator Epsilon 286 Elara 360 Linus To Q Transit Firm contract Option Managed on behalf of Seadrill Contract coverage 1% 27% 49% Contracted Uncontracted % 73% 51% 1) Excludes potential bonus payments of a maximum of 5% of the daily rate, which are based on certain performance criteria 2) Excludes $12,430 per day which we will receive in addition to the ordinary daily rate as compensation for additional capital expenditures we incur to provide the customer with additional equipment 10

11 US$m with US$2.6 Bn Backlog to High Quality Customers Strong Contract Backlog Strong contract backlog of US$2.6 Bn with A-rated 1,200 customers 1,000 Differentiated by premium harsh environment assets and high operational performance High safety track-record prerequisite to secure contracts in one of the most safety focused drilling regions Key client relationships with top-tier oil companies within offshore harsh environment regions Contract Option Remaining Customer Credit Rating Moody's 1 S&P 1 Statoil Aa2 AA- ConocoPhillips A1 A Backlog Supported by A-rated Customers 2% 19% 38% ExxonMobil Aaa AAA Total Aa1 AA- Shell 2 Aa1 AA 9% 6% 26% 1) Moody s long-term credit rating and S&P s long term foreign issuer credit rating, source from Bloomberg 2) Centrica Energy will take up the contract for 70 days 11

12 Company profile Highlights 4Q 2013 Assets & contract backlog Market overview & outlook Financing & 4Q 2013 financials Summary Q&A 12

13 Harsh Environment Focus and Young Fleet % Pure-Play Harsh Environment Player - HE Units in % of Total Fleet NADL Stena Songa Offshore Odfjell Drilling Maersk Drilling COSL Ocean Rig Saipem Fred Olsen Energy Transocean Rowan Diamond Offshore Young and Technically Advanced Fleet - Average Fleet Age NADL Ocean Rig COSL Odfjell Drilling Stena Maersk Drilling Rowan Saipem Transocean Diamond Offshore Fred Olsen Energy Songa Offshore Source: Company and peer disclosure 1) Average age of NADL fleet calculated as of 2013 year end, including Linus assuming age of zero years and excluding Rigel 13

14 Market Situation for Harsh Environment Rigs Strong Growth in HE Rig Demand and Full Utilization USDk/day High Dayrates % Strong Growth in Number of Rigs with CAGR of 14.2% from 2008 to % % 2 nd Gen Norway 3 rd Gen Norway 4 th Gen Norway 5 th /6 th Gen Norway 16 40% % Long Term Contracts 160% 120% 8 20% 80% 40% 0 0% 0% Total HE Rig Demand Total HE Rig Supply Utilization Norway Floater Contract Term vs. international (ex Brazil; 3 Year rolling average) 1 Source: Fearnley Offshore, Company information based on industry data 1) Average contract duration for floaters in Norway as a % of average contract duration of international floaters 14

15 Significant Arctic Opportunity Arctic region estimated at over 400 billion barrels of oil equivalents 85% of resources expected to be offshore More than 50% expected to be in Russia ~30% of global undiscovered natural gas ~13% of global undiscovered oil The Alpha is scheduled to drill the first wells in the Kara Sea for ExxonMobil / Rosneft in the summer of 2014 and 2015 Arctic Alaska 82 BBOE East Canada 21 BBOE Russian Arctic 214 BBOE Greenland 45 BBOE Norwegian Arctic 49 BBOE Source: USGS, Industry research 15

16 Potential in Russia The Russian offshore harsh environment areas contain ~5x the recoverable resources in Norway Norway: ~48Bn boe Barents Sea: 47Bn boe Kara Sea: 103Bn boe East Siberian, Chukchi & Laptev Seas: 71Bn boe 42 Oil 29 Gas Oil Gas Oil Gas Oil Okhotsk Sea: 30Bn boe Gas Source: NPD, Rosneft 1) Alpha is scheduled to drill on a block in the Kara Sea that is owned by ExxonMobil and Rosneft 16

17 Company profile Highlights 4Q 2013 Assets & contract backlog Market overview & outlook Financing & 4Q 2013 financials Summary Q&A 17

18 Debt Overview Facility Balance 1 Interest Details NOK1,500m Quarterly US$245 unsecured bond NIBOR % Maturity in 2018 US$2,000m secured bank facility US$1,503m L % Matures with a US$1bn balloon in 2017 US$500m 2 unsecured bonds US$500m 7.75% Seadrill Revolving Facility US$5m drawn L % US$195m to SFL Linus Ltd 3 US$195m L % US$475m to SF Linus Ltd 4 US$0m L % US$600 million senior unsecured notes 5 US$0 6.25% Seadrill sole investor Entered into in 2011 Maturity in 2018 Overdraft facility provided by Seadrill Maturity in 2015 Pre-delivery financing granted by Ship Finance in June 2013 Maturity in 2029 Secured term loan and revolving credit facility with a syndicate of banks to fund the acquisition of the Linus Issued in January 214 Maturity in 2019 Supported by high quality financiers, including: 1) As of December 31, ) This loan was repaid in connection with the US$600 million unsecured notes issuance in January ) Repaid in connection with the delivery of Linus in February ) SFL Linus Ltd US$475 million secured term loan and revolving credit facility drawn in connection with delivery of Linus 5) Issued in January 2014, use of proceeds to repay the US$500 million unsecured bonds and general corporate purposes 18

19 Financial reporting highlights This quarter Previous quarter EBITDA US$138 m US$144 m Earnings per share US$0.21 US$0.30 Operating profit US$89 m US$93 m Financial items US$(30) m US$(22) m Cash flow from operating activities US$121 m US$75 m Dividend declared per share US$0.23 US$

20 Operating Income - Total 4Q13 3Q13 2Q13 1Q13 Unaudited accounts in USD millions Contract revenues Reimbursables Related party revenues Total operating revenues Vessel and rig operating expenses Reimbursable expenses Depreciation and amortisation General and administrative expenses Total operating expenses Net operating income

21 Net Income - Total 4Q13 3Q13 2Q13 1Q13 Unaudited accounts in USD millions Net operating income Financial items Interest expense (24) (21) (21) (19) Gain / (loss) on derivatives (16) (3) 9 (6) Other financial items 10 2 (3) (5) Total financial items (30) (22) (15) (30) Income before income taxes Income taxes (12) (2) (8) (7) Net income / (loss) Earnings per share (US$)

22 Balance Sheet - Assets December 31, 2013 September 30, 2013 June 30, 2013 March 31, 2013 Current assets Cash and cash equivalents Restricted cash Accounts receivables, net Related party receivables Deferred tax assets Other current assets Total current assets Non-current assets Newbuildings Drilling units Goodwill Deferred tax assets Other non-current assets Total non-current assets Total assets

23 Balance Sheet Liabilities and Shareholder s Equity Current liabilities December 31, 2013 September 31, 2013 June 30, 2013 March 31, 2013 Current portion of long-term debt Related party transaction Tax payable Deferred taxes Other current liabilities Total current liabilities Non-current liabilities Long-term interest bearing debt Related party liability Deferred taxes Pension liabilities Other non-current liabilities Total non-current liabilities Equity Total shareholder s equity Total liabilities and shareholder s equity

24 Company profile Highlights 4Q 2013 Assets & contract backlog Market overview & outlook Financing & 4Q 2013 financials Summary Q&A 24

25 Summary High-End Assets with Strong Contract Backlog 40 Strong Growth in HE Rig Demand and Full Utilization 100% 32 80% 24 60% 16 40% 8 20% 0 0% Total Demand Total Supply Utilization 160% 120% 80% Long Term Contracts Potential in Russia The Alpha is scheduled to drill the first wells in the Kara Sea for ExxonMobil / Rosneft in the summer of 2014 and 2015 The Russian offshore harsh environment areas contain ~5x the recoverable resources in Norway Barents Sea: 47Bn boe Kara Sea: 103Bn boe Oil Gas East Siberian, Chukchi & Laptev Seas: 71Bn boe 42 Oil 29 Gas Oil Gas 40% 0% Norway Floater Contract Term vs. international (ex Brazil; 3 Year rolling average) Oil Okhotsk Sea: 30Bn boe Gas 25

26 Company profile Highlights 4Q 2013 Assets & contract backlog Market overview & outlook Financing & 4Q 2013 financials Summary Q&A 26

27 North Atlantic Drilling Ltd. Fourth quarter 2013 results February 25, 2014