Maersk Drilling Q3 2013 14 November 2013
page 2 Legal notice This presentation contains certain forward looking statements (all statements that are not entirely based on historical facts, among others expectations to future financial performance, developments, resources growth and production levels). Those forward looking statements reflect current views on future events and are by their nature subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. We consider such forward looking statements reasonable based on the information available to us at this time, but the actual results etc. may differ materially from our reliance should be placed on such statements. Neither APMM, nor any other person, shall assume responsibility for the accuracy or completeness of the forward looking statements and do not undertake any obligation to update such statements except as required by law. This Legal Notice shall be governed by Danish Law. Any dispute arising out of or in relation to this Legal Notice which can not be solved amicably shall be decided by the Danish Courts.
page 3 Summary of Q3 2013 Profit of USD 148m ROIC of 11.7% For 2013 Maersk Drilling specifies a result above USD 500m Forward contract coverage is 100% for 2013, 90% for 2014 and 61% for 2015 The newbuild programme is on budget but the delivery of the first rigs will be slightly delayed Order placed for an ultra harsh environment jack-up, XL Enhanced 4 Well on track towards the financial ambition of delivering a NOPAT of USD 1bn to the A.P. Moller Maersk Group in 2018
Financials page 4 Financial Highlights (USDm, third quarter) Highlights 2013 2012 Revenue 507 400 Profit/loss before depreciation, amortisation and impairment losses etc. (EBITDA) Depreciation, amortisation, and impairment losses 237 163 61 55 Share of profit/loss in joint ventures 4 1 Profit/loss before financial items (EBIT) 183 109 Tax 35 25 Net operating profit/loss after tax (NOPAT) 148 84 Cash flow from operating activities 212 96 Cash flow used for capital expenditure -483-73 Invested capital 5,334 3,988 ROIC 11.7% 8.5% Operational uptime 98% 94% Maersk Drilling result Revenue increased to USD 507m in Q3 2013 from USD 400m in Q3 2012 EBITDA increased to USD 237m in Q3 2013 from USD 163m in Q3 2012 Profit (NOPAT) increased to USD 148m in Q3 2013 from USD 84m in Q3 2012 ROIC was 11.7% in Q3 2013, up from 8.5% in Q3 2012 Profit increased by 76% to USD 148m (USD 84m), mainly due to two rigs on yard stay in Q3 2012, higher dayrates and operational uptime in Q3 2013, while managing to keep costs unchanged for rigs in operation For 2013 Maersk Drilling specifies a result above USD 500m
New investment in Q3 2013 XL Enhanced 4 High-specification ultra harsh environment jack-up rig Delivery in 2016 To be constructed at Daewoo (DSME), South Korea Ultra harsh environment jack-up, XL Enhanced 4 Total investment of USD 650m Order backed by a firm 5-year contract with BP Norway with estimated contract value of USD 812m Options for extending the contract up to a total duration of 10 years
Contracts providing a revenue backlog of above USD 1.1bn signed during Q3 2013 page 6 Maersk XL Enhanced 4 Mærsk Giant Maersk Resilient Customer: BP Country: Norway Contract value: USD 812 million Duration: Five years Customer: Talisman Country: Norway Contract value: USD 137 million Duration: One year Customer: ConocoPhillips Country: UK Contract value: USD 170 million Duration: Two year extension
High forward contract coverage reflecting solid demand for high end assets page 7 Maersk Drilling forward contract coverage 100% 80% 100% 90% 60% 61% 40% 45% 20% 0% 2013 2014 2015 2016 Note: As per end of Q3 2013
Total revenue backlog of USD 7.7bn provides strong revenue visibility page 8 Revenue backlog end Q3 2013, USDbn 2.5 2 1.5 ~2.2 ~1.8 ~1.9 1 ~1.3 0.5 0 ~0.5 Q4 2013 2014 2015 2016 2017- Note: Annual revenue backlog figures reflect upcoming yardstays
Contracts secured for six out of the eight newbuilds page 9 Ultra harsh environment jack-ups Ultra deepwater drillships XL Enhanced 1 Customer: Total E&P Norge AS Country: Norway Contract value: USD 550 million Duration: 4 years XL Enhanced 2 Customer: Det norske Oljeselskab Country: Norway Contract value: USD 700 million Duration: 5 years Maersk Viking Customer: ExxonMobil Country: US GoM Contract value: USD 610 million Duration: 3 years Drillship 2 Customer: ConocoPhillips/Marathon Oil Country: US GoM Contract value: USD 694 million Duration: 3 years XL Enhanced 3 Customer: Statoil Country: Norway Contract value: USD 620 million Duration: 4 years XL Enhanced 4 Customer: BP Country: Norway Contract value: USD 812 million Duration: 5 years Drillship 3 Uncontracted Drillship 4 Uncontracted
The newbuild programme is on budget, but delivery of the first rigs will be slightly delayed page 10 Ultra harsh jack-ups XL Enhanced Ultra deepwater drillships Four ultra harsh jack-ups (CJ-70s) under construction at Keppel FELS shipyard in Singapore and Daewoo in South Korea Expected delivery in 2014-2016 Four ultra deepwater drillships under construction at Samsung Heavy Industries, South Korea Expected delivery in 2014
Continued stellar operational uptime in Q3 2013 page 11 Operational uptime 100% 80% 94% 98% 97% 97% 98% 88% 60% 40% 20% 0% Maersk Drilling Floating rigs Jack-ups Q3 2012 Q3 2013
page 12 Strategy Deliver on the financial ambition of Net Operating Profit After Tax (NOPAT) of USD 1bn in 2018 (ROIC >10%) Conduct incident free operation Become a sizeable player in the market with 30 rigs Grow the business within the ultra deepwater and ultra harsh environment segments Leverage market leading position in Norway and build ultra deepwater positions in the US Gulf of Mexico and West Africa
page 13 Present in the most important oil and gas markets Rig fleet 3+4 Ultra deepwater floaters 6+4 Ultra harsh environment jack-up rigs 6 Premium jack-up rigs 1 Midwater floater 10 Drilling barges Financial investment Egyptian Drilling Company, Joint Venture (50/50)
Ultra deepwater market page 14 US Egypt Enjoyed full utilisation of capacity in Q3 2013 driven by continued strong demand for modern, high specification floaters Fact box Maersk Drilling s ultra deepwater fleet consists of three semisubmersibles Maersk Drilling has four ultra deepwater drillships under construction Maersk Drilling has been operating in ultra deepwater since 2009 Angola All newbuilds in the market scheduled for delivery in 2013 have secured contracts, and the 10 yet uncontracted rigs scheduled for delivery in 2014 are expected to be absorbed Dayrates are currently in the USD 570,000-620,000 range; the variations reflecting differences in operating cost levels and taxes across regions and countries Ordering activity picked up in Q3 2013 with orders for a total of six units placed
page 15 Ultra harsh environment jack-up market Remains strong with full utilisation of capacity, and most jack-ups are tied up in long term contracts reducing the near term availability of jack-up rigs in the market Fact box Maersk Drilling s fleet consists of six ultra harsh environment jack-up rigs Maersk Drilling has four ultra harsh environment rigs under construction Maersk Drilling has been operating in the ultra harsh environment market since 1990 Currently there are nine jack-up rigs working in Norway and including the order of XL Enhanced 4, there are seven ultra harsh jack-ups under construction for the Norwegian market of which all have secured long term contracts Norway Dayrate levels for newbuilds is currently at an all time high level of USD 425,000
page 16 Egypt Leading operator in MENA-region with a fleet of four jack-up rigs and 64 land rigs Operation in Egypt since 1976 Financial investment, JV (50/50) Non-core assets Strong positions in respective markets No further investments planned Divestment if/when time is right Venezuela Leading drilling contractor in Venezuela with a fleet of 10 cantilevered drilling barges Operation in Venezuela since 1992 Maersk Drilling has started to look into divesting its business activities in Venezuela
page 17 Maersk Drilling Moving boundaries within offshore drilling