Fred. Olsen Energy ASA. 2Q 2018 results presentation

Transcription

1 Fred. Olsen Energy ASA 2Q 2018 results presentation

2 Disclaimer This presentation has been produced by Fred. Olsen Energy ASA (the "Company") based on information which is publicly available. This presentation is for information purposes only. Further to the aforementioned, this presentation is the result of an effort of the Company to present certain information which the Company has deemed relevant in an accessible format. The presentation is not intended to contain an exhaustive overview of the Company's present or future financial condition and there are several other facts and circumstances relevant to the Company and its present and future financial condition that has not been included in the this presentation. No representation or warranty (express or implied) is made or intended to be made as to the accuracy or completeness of any or all of the information contained herein and it should not be relied upon as such. The recipient of this presentation acknowledges that it will be solely responsible for its own assessment of the information. This presentation contains forward-looking statements. Such forward-looking statements give the Company's current expectations and projections relating to its financial condition, the market in which it operates and the future performance of the Company. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the Company's actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company s present and future business strategies and the environment in which it will operate in the future. Neither the Company's nor any of its affiliates (nor any department in any of those entities), nor any such person s directors, officers, employees, advisors or representatives (collectively the "Representatives"), in any capacity, shall have any liability whatsoever arising directly or indirectly from the use of this presentation, including (but not limited to) as a result of any liability for errors, inaccuracies, omissions or misleading statements in this presentation. 2

3 FINANCIAL RESULTS MARKET OPERATIONS SUMMARY

4 Income statement key figures (USD mill) 2Q Q 2018 Change Operating revenues 17,2 69,5 (52,3) Recharged income 0,1 1,9 (1,8) Total revenues 17,3 71,4 (54,1) Operating costs (68,7) (37,7) (31,0) Recharged expenses - (1,9) 1,9 Total operating expenses (68,7) (39,6) (29,1) Oper. result before depr. (EBITDA) (51,4) 31,8 (83,2) Depreciation (53,4) (56,4) 3,0 Impairment (96,7) - (96,7) Operating result (EBIT) (201,5) (24,6) (176,9) Net financial items (6,2) (18,2) 12,0 Result before tax (207,7) (42,8) (164,9) Estimated tax 0,5 0,2 0,3 Net result (207,2) (42,6) (164,6) 4

5 EBITDA comparison 2Q 2018 vs. 1Q 2018

6 Offshore Drilling Segment (USD mill) 2Q Q 2018 Change Operating revenues 5,9 61,8 (55,9) Recharged income - 1,9 (1,9) Total revenues 5,9 63,7 (57,8) Operating costs (52,1) (28,1) (24,0) Recharged expenses - (1,9) 1,9 Total operating expenses (52,1) (30,0) (22,1) Oper. result before depr. (EBITDA) (46,2) 33,7 (79,9) Depreciation (53,0) (55,9) 2,9 Impairment (96,7) - (96,7) Operating result (EBIT) (195,9) (22,2) (173,7)

7 Engineering & Fabrication Segment (USD mill) 2Q Q 2018 Change Operating revenues (external) 11,4 7,7 3,7 Inter-segment revenues Total operating revenues 11,4 7,7 3,7 Operating costs (16,6) (9,6) (7,0) Oper. result before depr. (EBITDA) (5,2) (1,9) (3,3) Depreciation (0,4) (0,5) 0,1 Operating result (EBIT) (5,6) (2,4) (3,2)

8 Financial Items Breakdown (USD mill) 2Q Q 2018 Change Interest income 0,9 1,1 (0,2) Gains on financial instruments 0,2 0,4 (0,2) Financial income 1,1 1,5 (0,4) Interest expenses (9,0) (8,1) (0,9) Losses on financial instruments (0,1) (0,2) 0,1 Other financial expenses (5,6) (1,8) (3,8) Financial expenses (14,7) (10,1) (4,6) Net foreign currency loss 7,4 (9,6) 17,0 Net financial items (6,2) (18,2) 12,0

9 Consolidated Balance Sheet (USD mill) 30 Jun Mar 2018 Change Property, plant & equipment 886, ,8 (140,7) Other non-current assets 1,6 1,5 0,1 Total non-current assets 887, ,3 (140,6) Other current assets 106,9 121,7 (14,8) Cash and cash equivalents 192,6 253,5 (60,9) Total current assets 299,5 375,2 (75,7) Total assets 1 187, ,5 (216,3) Equity 344,8 552,4 (207,6) Non-current interest bearing debt - 546,9 (546,9) Other non-current liabilities 60,5 64,3 (3,8) Total non-current liabilities 60,5 611,2 (550,7) Current interest bearing debt 737,0 190,9 546,1 Other current liabilities 44,9 49,0 (4,1) Total current liabilities 781,9 239,9 542,0 Total equity and liabilities 1 187, ,5 (216,3)

10 Consolidated Cash Flow (USD mill) 2Q Q 2018 Change Profit before income taxes (207,7) (42,8) (164,9) Depreciation and impairment 150,1 56,4 93,7 Interest expense 10,4 9,4 1,0 Changes in working capital 26,9 10,7 16,2 Bolette termination fee amortized - (61,7) 61,7 Unrealized loss/(gain) financial instruments (6,4) 6,5 (12,9) Cash generated from operations (26,7) (21,5) (5,2) Interest paid (8,0) (9,2) 1,2 Taxes paid (6,7) (0,8) (5,9) Net cash flow from operating activities (41,4) (31,5) (9,9) Net investment in fixed assets (16,2) (5,6) (10,6) Cash flow from/used in investment activities (16,2) (5,6) (10,6) Repayments of interest bearing loans - (147,5) 147,5 Cash flow used in financing activities - (147,5) 147,5 Foreign currency (3,3) 3,1 (6,4) Net change in cash and cash equivalents (57,6) (184,6) 127,0 Cash at beginning of period 253,5 435,0 (181,5) Cash at end of period 192,6 253,5 (60,9)

11 Offshore drilling EBITDA and margin

12 Fleet status RIG DESIGN W DEPTH LOCATION CLIENT CONTRACT STATUS DAY RATE NEXT CRS ULTRA- / DEEPWATER UNITS Bolette Dolphin DS/ Gusto P10' Tenerife Termination for convenience Termination fee USD 96 million Blackford Dolphin SS / Aker H UK BP May-October 2018 GBP Q 2020** Options: October- December Belford Dolphin DS / LMG Marin Malaysia Preserved and maintained MID WATER FLOATERS NORWAY Bideford Dolphin SS / Aker H Norway Smart stacked 4Q 2019* Borgland Dolphin SS / Aker H Norway Smart stacked 4Q 2021* Bredford Dolphin SS / Aker H Norway Preserved and maintained MID WATER FLOATERS UK Byford Dolphin SS / Aker H Norway (UK compliant) Smart stacked 1Q 2022* * Will be further postponed if further smart stacking period ** Limited work remains for the renewal in 2Q 2020

13 Update on the financial position The waiver period expired 30 June 2018 with no extension granted by the Company's financial creditors on terms acceptable to the Company In order to preserve the liquidity reserves of the Fred. Olsen Energy group, the Company resolved to stop its service of interest and amortizations to its financial creditors with effect from 3 July 2018 at which date USD 95.5 million plus interests were due under the bank facility The Fred. Olsen Energy group's operations will otherwise continue in their ordinary course. All suppliers and trade creditors will be paid in the ordinary course of business Constructive discussions are continuing with the financial creditors It is expected that a long term solution will require new equity and amendments to the Company's bank and bond facilities, including impairments of debt, in order to secure a viable financial foundation for the purpose of safeguarding the Company's position in the market

14 FINANCIAL RESULTS MARKET OPERATIONS SUMMARY

15 Global market Floating units The positive market trend has continued during the quarter with new requests and contract fixtures mainly targeting 2019 and 2020 work The emerging recovery has been seen in the harsh environment, and now also followed by ultra deepwater An increased number of tenders have emerged in the UDW market, some with scopes of 1-2 years duration Based on the fleet composition in the midwater segment, the market is expected to rebalance in

16 Dayrates- worldwide

17 Norwegian floater market New contracts have been awarded for work in 2019 and 2020, predominantly for field development activities Further sanctioning of field development projects are expected over the next years This has resulted in an increase in the dayrates in the North Sea market, in particular for the field development work in Exploration and appraisal activity is also expected to increase into 2019 Name West Navigator Bredford Dolphin Polar Pioneer West Venture West Alpha Songa Dee Borgland Dolphin Songa Delta Scarabeo 5 Bideford Dolphin Island Innovator COSLInnovator West Hercules Scarabeo 8 Deepsea Bergen Leiv Eiriksson Deepsea Stavanger Transocean Arctic COSLPromoter Deepsea Atlantic West Phoenix West Mira Transocean Spitsbergen Deepsea Nordkapp Songa Endurance Songa Encourage Songa Equinox Songa Enabler Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Contract Option Idle/yard/const Source: IHS/DNB 17

18 Average dayrates Norway

19 UK floater market Several contracts have been awarded during the recent quarters Focus has now switched to work in 2019 Blackford Dolphin commenced the contract with BP Exploration Operating Company Ltd. mid May. Duration of the firm contract is estimated until mid October Borgland Dolphin has a safety case and is also marketed in UK A safety case is also being prepared for Bideford Dolphin Name WilHunter Sedco 711 Sedco 714 Byford Dolphin Stena Don Ocean Guardian COSLProspector Transocean 712 Blackford Dolphin Transocean Leader COSLPioneer Paul B. Loyd, Jr. WilPhoenix Ocean Valiant Paragon MSS1 Ocean Endeavor Stena Spey Deepsea Aberdeen Ocean Patriot Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Contract Option Idle/yard/const Source: IHS/DNB 19

20 Average dayrates UK

21 FINANCIAL RESULTS MARKET OPERATIONS SUMMARY

22 Blackford Dolphin Setting a new standard Smart Stacking proven concept Re-activation delivered as planned Successful start up for BP Smarter classification demonstrated 22

23 Re-activation and preparation for operation of Blackford Dolphin Delivered in less than four months Smart stacking proven concept No surprises experienced Certificates prolonged to mid 2020 Re-activation and preparation for operation on target Executed in less than four months Total cost USD 14 million including planned corrective maintenance Strong and dedicated Dolphin Drilling team mobilized Predominantly former crew was rehired Start up on time with no serious incidents Setting a new standard in reactivation 23

24 Smarter classification of Blackford Dolphin A new approach to main certificate renewal The regulatory framework is opening up the 5 year cycle whereby class related work can be performed in different time intervals Smarter classification optimises the timing and cost of a class renewal The major part of the next cycle CRS completed at a total cost of USD 12 million The remaining part planned completed offshore within 2Q 2020 for an estimated cost of USD 5 million The next cycle certificates will expire in 2025, with next inshore inspection in 2023 Smarter classification is also being implemented for Bideford Dolphin Class Renewal Period 1 Undertaken during reactivation Hull and Structure Drilling equipment (load path) BOP Electric power system (main) Propulsion Anchoring Offshore Cranes Life-saving appliances Sea inlets and discharges Class Renewal Period 2 Planned during operations BOP crane Anti-recoil valves Helideck Fail-safe valves Cementing system Tensioners Bulk and mud systems Marine Riser Rotational components 24

25 The core fleet High operational performance - High technical condition Fit for purpose Ready for operations Norway UK International Bideford Dolphin Borgland Dolphin Blackford Dolphin Byford Dolphin Bolette Dolphin v v Total rebuild 98 Drilling & completion workhorse Consistent top performer for Statoil Total rebuild 99 Drilling & completion workhorse Top performance for a variety of customers Total rebuild 08 High spec UK rig Versatile, DW capable The last 6 years with BP in UK Mix of drilling and completion/work-over 12pts mooring High spec. 7G UDW Consistent top performance Proven MPD operations

26 Aggressively pursuing new contract opportunities Unit Bolette Anadarko Continuous class during operations Blackford Chevron Smart stacked BP Bideford Statoil Statoil Borgland Byford Belford Bredford Smart stacked Smart stacked Contract schedule Preserved and maintained Preserved and maintained Original CRS date Current CRS date if operations restarted today Certificates prolonged 2 years if 2 yrs smart stacked (potentially 3 years) Class renewal survey schedule Main focus to redeploy core units in a recovering market Bolette Dolphin targeting work in South America and West Africa Blackford Dolphin a candidate for UK and International assignments Bideford Dolphin primarily NCS focus Borgland Dolphin being marketed in both NCS and UKCS Byford Dolphin targeting UK work Firm contract Terminated for convenience Option 26

27 Harland & Wolff The yard experienced increased activity during the quarter Work has mainly been construction and assembly of substructures for offshore windfarm development as well as a number of dockings

28 FINANCIAL RESULTS MARKET OPERATIONS SUMMARY

29 Summary Revenues were USD 17 million Financial EBITDA was negative USD 51 million Profit after tax was negative USD 207 million Market Blackford Dolphin commenced its contract with BP New contract opportunities are pursued aggressively Operational Smart stacking of units continues with high focus on technical condition and preparation for efficient restart Smarter classification regime demonstrated for Blackford Dolphin, significantly reducing total CRS cost. Now also being implemented on Bideford Dolphin

30 Q&A 30