Q Presentation

Transcription

1 Q Presentation

2 Contents Highlights and material events Segment reporting Financial information Summary Page 2

3 Group Financial performance Q highlights: Operating revenue of USD 183 million EBITDA of USD 73 million EBITDA margin of 40% EBIT of USD 31 million Net profit of USD 9 million Page 3

4 Highlights and material events in/after Q Refinancing of Deepsea Atlantic and Deepsea Stavanger Odfjell Drilling received on 24 August 2016 a firm offer from its bank syndicate to refinance the senior secured term loan facility secured by the rigs Deepsea Atlantic and Deepsea Stavanger maturing in November The new loan facility will be USD 525 million, the same amount as was outstanding under the existing facility as at 30 June 2016, and will be repaid by quarterly installments of USD 12.5 million, first time in Q1 2017: No repayment in H Quarterly installment reduction of USD 12.5 million compared to the current facility Margin of 415 basis points above LIBOR 3 year tenor from drawdown scheduled for September 2016 Odfjell Drilling has also agreed with its lenders to amend the following financial covenants across all its credit facilities: Leverage ratio (net debt to ebitda) of maximum 6.0x through 2016, maximum 5.5x through 2017 and maximum 5.0x thereafter Equity ratio (book equity to total assets) of minimum 30% In addition, Odfjell Drilling Services Ltd. has agreed with its lenders to amend its financial covenants by replacing the leverage ratio covenant applicable to the Odfjell Drilling Services group with a debt service coverage ratio (ebitda to debt service) of minimum 1.1x. Page 4

5 Highlights and material events in/after Q (cont.) Impairment write-down of Deepsea Atlantic and Deepsea Stavanger as at 30 September 2015 Following the enforcement decision by the Financial Supervisory Authority of Norway received on 24 May 2016, the mobile drilling units Deepsea Atlantic and Deepsea Stavanger have been written-down as at 30 September 2015 in the total amount of USD million. All relevant figures have been restated from 30 September 2015 and in subsequent quarters. MODU Deepsea Stavanger Deepsea Stavanger commenced on the one well contract with JX Nippon west of Shetland (UK) on 10 May 2016 and it was completed on 8 July The rig is currently awaiting commencement on the Wintershall contract on the Maria field in Q Deepsea Metro I Deepsea Metro I commenced the one firm well plus four optional wells contract with Petronas offshore Malaysia on 17 July Page 5

6 Highlights and material events in/after Q (cont.) Drilling & Technology Odfjell Drilling s platform portfolio for Statoil will be reduced from 1 October 2016 following Statoil s decision not to declare optional contract periods for five of the platforms. Odfjell Drilling will transfer approximately 300 employees (the majority being offshore crews) to the contractor taking over the operations on the five platforms. Statoil has declared the 2 years option for the Heidrun and Grane platforms. Odfjell Drilling will commence operations on the Johan Sverdrup platform in Norway and the Mariner platform in UK for Statoil when these come into drilling operation during Well Services Odfjell Drilling s Well Services division re-entered the Iranian market with its first operations commenced in early July Page 6

7 Mobile Offshore drilling Units (MODU) - Strong operations with high utilization Q Financial Utilization MODU Financial Utilization Q2 16 Q2 15 YTD 16 YTD 15 FY 15 Deepsea Stavanger 99,7 % 99,7 % 99,7 % 99,4 % 98.8% Deepsea Atlantic 99,9 % 98,8 % 99,7 % 98,9 % 99.0% Deepsea Bergen 98,7 % 94,3 % 96,8 % 92,2 % 83.9% Deepsea Aberdeen 99,7 % 96,7 % 98,2 % 96,7 % 97.2% 2) Deepsea Stavanger commenced its contract with JX Nippon west of Shetland on 10 May 2016 after being idle since November ) Deepsea Atlantic commenced its Statoil contract on the Johan Sverdrup field 1 March 2016 after being idle since August ) Deepsea Bergen was operating for Statoil on the NCS for the first half of ) Deepsea Aberdeen was operating for BP West of Shetland for the first half of Modern fleet of harsh environment drilling / UDW units Extensive drilling experience Provision of integrated management services for drilling units 1) Financial Utilisation is measured on a monthly basis and comprises the actual recognised revenue for all hours in a month, expressed as a percentage of the full day rate for all hours in a month. Financial Utilization, by definition, does not take into account periods of non-utilisation when the units are not under contract. Page 7

8 Mobile Offshore drilling Units (MODU) - Contract status and day rates Drilling unit Location /operator day rate (USDk/day) 1 Contract status Deepsea Stavanger Norway - Wintershall 275/305/365 Deepsea Atlantic Norway Statoil 300/ X 6 months Deepsea Aberdeen UK BP Exploration 450 Deepsea Bergen Norway Statoil Contract Option Firm MODU contract backlog at 30 June 2016 of USD 1.5 billion with additional priced options valued at USD 0.6 billion 1) Rates may include mix of currencies and fluctuate based on exchange rates. Page 8

9 Platform Drilling and Technology - Portfolio secured by medium to long-term contracts Platform Drilling and Technology Drilling & Technology One of the leading contractors in the North Sea platform drilling market Drilling engineering services Established competence for the latest generation technology Firm contract backlog of USD 0.3 billion at 30 June 2016 Value of priced optional periods of USD 0.6 billion 1) In addition, Njord, Sleipner A, Visund, Snorre A and Snorre B until 1 October ) Clair, Andrew, Bruce, Magnus, Clair Ridge Page 9

10 Well Services - Pricing pressure offset by cost efficiency measures BASES : EUROPE Norway Key figures ~400 employees United Kingdom Holland Romania Services from 12 bases Operations in more than 20 countries Service offering Tubular running services BASES : ASIA Thailand Vietnam Drill tool rental services Well intervention services BASES : MIDDLE EAST Saudi Arabia United Arab Emirates Turkmenistan Kurdistan BASE OPERATIONS Iran A leader in remote operated drilling technologies Page 10

11 Earnings visibility through USD 3.0 billion order backlog Total revenue backlog per year 1 USD million Firm Options Firm contracts USD 1.8 billion Priced options USD 1.2 billion Total backlog USD 3.0 billion H After Revenue backlog for Well Services, Technology and MODU Management is not included in the revenue backlog above. 1) Estimates at 30 June 2016 Page 11

12 Market outlook MODU The drilling and oil service market remains weak and we do not see any signs of improvement near term. The soft market is due to the substantial supply of newbuilds, especially in the UDW market. At the same time, oil companies still focus on cost cutting programs and capital spending reductions which have further reduced demand for drilling capacity. The results are an increasing number of stacked units and continued downward pressure on day rates and asset values. Within the next few years we believe the continued scrapping of older rigs in combination with required exploration and development drilling will bring the market back to balance and subsequent improved day rates. Odfjell Drilling has a fleet of 6 th generation units capable of working in both ultra deep waters and harsh environments providing operational and geographical flexibility. Deepsea Stavanger is currently idle after the completion of its JX Nippon contract on 8 July The rig is expected to commence its new drilling contract for Wintershall on the Maria field in Q We are following leads for potential work for Deepsea Stavanger prior to the Wintershall contract. Deepsea Aberdeen is contracted until 2022 for BP West of Shetland, Deepsea Atlantic is contracted to Statoil until 2019 on the Johan Sverdrup field and Deepsea Bergen has a contract for Statoil ending mid Well Services Well Services has faced increased competition and price pressure for its services globally but has been able to partly compensate for the price pressure and lower volumes through cost reduction initiatives and increased efficiency. Well Services has further reduced its capital expenditures to enhance utilization of the equipment base. Well Services has continued its growth within well intervention services. Page 12

13 Market outlook (cont.) Platform Drilling and Technology The slowdown in the North Sea activity level has led to continued low activity level for development and upgrade projects. To meet this challenge the Group has continued its work to increase efficiency and reduce its cost base. Group measures implemented to stay competitive The Group has reduced the cost level substantially throughout the organisation to be in a better position to compete in the current market environment. General, longer-term In the longer term, we are of the opinion that the oil industry s demand for drilling services will continue to be supported by the need for replacement of reserves and by continued spending on exploration and field-development in the main offshore regions. The Group s business segments are positioned for taking advantage of the future market improvements. Page 13

14 Financial information

15 Financial performance highlights Odfjell Drilling reports for Q2 2016: Group Operating Revenues (USDm) Operating revenue of USD 183 million EBITDA of USD 73 million EBITDA margin of 40% EBIT of USD 31 million Net profit of USD 9 million Q2 16 Q2 15 YTD 16 YTD 15 FY 15* FY 14 Group EBITDA (USDm) Q2 16 Q2 15 YTD 16 YTD 15 FY 15* FY 14 * Restated 2015 figures Page 15

16 Group summary financials Condensed consolidated income statement Restated P&L - (USD million) Q2 16 Q2 15 YTD 16 YTD 15 FY 15 Operating revenue Other gains/losses Share of profit/(loss) from Deep Sea Metro Ltd Group Personnel expenses Other operating expenses EBITDA Depreciation Operating profit (EBIT) Share of profit (loss) from other joint ventures Net financial items Profit/(loss) before tax Income taxes Profit/(loss) for the period Page 16

17 Segment reporting - MODU financials MODU Key Financials (USD million) Restated Condensed P&L - (USD million) Q2 16 Q2 15 YTD 16 YTD 15 FY 15 Operating revenue EBITDA Depreciation and impairments EBIT Book value rigs Revenues EBITDA-margin 53,1 % 49,4 % 46,7 % 50,0 % 48,4 % EBIT-margin 26,1 % 31,0 % 17,5 % 31,9 % 3,1 % Share of group revenue 1 64,7 % 69,6 % 62,4 % 66,0 % 64,9 % Share of group EBITDA 1 85,4 % 88,3 % 83,6 % 87,1 % 83,5 % Share of group EBIT 1 95,6 % 95,9 % 97,6 % 95,3 % 50,4 % 1) Before group eliminations and corporate overheads Q2 16 Q2 15 YTD 16 YTD 15 FY 15* EBITDA Figures above do not include pro-rata 40% of Deep Sea Metro Q2 16 Q2 15 YTD 16 YTD 15 FY 15* * Restated 2015 figures Page 17

18 Segment reporting - Drilling & Technology financials Drilling and Technology Key Financials (USD million) Condensed P&L - (USD million) Q2 16 Q2 15 YTD 16 YTD 15 FY 15 Operating revenue EBITDA Depreciation and impairments EBIT Revenues EBITDA-margin -0,6 % -5,5 % -1,2 % -5,5 % 2,2 % EBIT-margin -4,1 % -9,4 % -4,6 % -8,5 % -0,4 % Share of group revenue 1 19,7 % 17,4 % 21,3 % 19,5 % 20,6 % Share of group EBITDA 1-0,3 % -2,4 % -0,8 % -2,9 % 1,2 % Share of group EBIT 1-4,6 % -7,2 % -8,8 % -7,5 % -2,0 % 1) Before group eliminations and corporate overheads Q2 16 Q2 15 YTD 16 YTD 15 FY 15 EBITDA Q2 16 Q2 15 YTD 16 YTD 15 FY 15 Page 18

19 Segment reporting - Well Services financials Well Services Key Financials (USD million) Condensed P&L - (USD million) Q2 16 Q2 15 YTD 16 YTD 15 FY 15 Operating revenue EBITDA Depreciation and impairments EBIT Revenues Book value of equipment Cost price for equipment in use EBITDA-margin 38,6 % 42,2 % 36,7 % 41,3 % 39,6 % EBIT-margin 10,2 % 19,5 % 7,7 % 18,6 % 14,3 % Share of group revenue 1 15,5 % 13,1 % 16,3 % 14,5 % 14,5 % Share of group EBITDA 1 14,9 % 14,2 % 17,2 % 15,8 % 15,2 % Share of group EBIT 1 9,0 % 11,3 % 11,2 % 12,2 % 51,7 % 1) Before group eliminations and corporate overheads Q2 16 Q2 15 YTD 16 YTD 15 FY 15 EBITDA Q2 16 Q2 15 YTD 16 YTD 15 FY 15 Page 19

20 Group - Eliminations & Reconciliation Group Eliminations & Reconciliation Restated (USD million) Q2 16 Q2 15 YTD 16 YTD 15 FY 15 Operating revenue EBITDA EBIT EBIT for reportable segments Corporate / eliminations Share of profit from DSM Ltd Group Accounting differences Group EBIT Share of profit from other joint ventures Net financial items Group profit before tax Page 20

21 Summary statement of financial position Group statement of financial position Group s gross interest bearing debt was USD 1,480 million (net of capitalized financing fees) at 30 June USD 166 million in cash and cash equivalents at 30 June Equity-ratio of 32% at 30 June Restated Assets (USDm) Deferred tax asset 6 8 Intangible assets Property, plant and equipment Financial fixed assets Total non-current assets Trade receivables Other current assets Cash and cash equivalents Total current assets Total assets The debt facility for Deepsea Atlantic and Deepsea Stavanger, with an outstanding amount of USD 525 million at 30 June 2016, is classified as short term debt. A firm offer to refinance this debt was received on 24 August Odfjell Drilling Services Ltd. was on 15 August 2016 granted a waiver by the lenders for its non-compliance with the leverage ratio covenant as at 30 June The leverage ratio covenant will be replaced by a debt service coverage covenant hereafter. USD 326 million has in the interim been reclassified as short term debt as at 30 June Restated Equity and liabilities (USDm) Total paid-in capital Other equity Total equity Borrowings Post-employment benefits Deferred tax liability - 4 Other non-current liabilities Total non-current liabilities Borrowings Trade payables Other current liabilities Total current liabilities Total liabilities Total equity and liabilities Page 21

22 Summary statement of cash flow Group statement of cash flow Restated Cash Flow - (USDm) Q2 16 Q2 15 YTD 16 YTD 15 FY 15 Profit before income tax Cash from operations Interest paid Income tax paid Net cash from operations Net cash used in investing activities Net cash from financing activities Net change in cash and cash equivalents Cash and cash equivalents at period end Page 22

23 Summary Q Secured long term refinancing of Deepsea Atlantic and Deepsea Stavanger Earnings visibility through USD 3.0 billion order backlog MODU: - Continued strong operational performance - Fleet secured by medium- to long-term contract Drilling & Technology: - Reduced engineering capacity to increase utilization and reduce cost - Remaining platform portfolio secured by medium- to long-term contracts Well Services: - Pricing pressure offset by cost efficiency measures Book equity ratio of 32% and cash position of USD 166 million at 30 June 2016 Page 23

24 President & CEO Simen Lieungh EVP & CFO Atle Sæbø Investor relations Eirik Knudsen, / Next event: Q results to be published 23 November 2016 For more information see: