Songa Offshore SE 1Q 2016 Presentation. Conference call, 27 May 2016

Transcription

1 Songa Offshore SE 1Q 2016 Presentation Conference call, 27 May 2016

2 Disclaimer This presentation (the Presentation ) has been produced by Songa Offshore SE ("Songa Offshore" or the "Company") exclusively for information purposes. This Presentation includes forward-looking statements regarding Songa Offshore, including projections and expectations, which involve risk and uncertainty. Such statements are included without any guarantee as to their future realization. Although Songa Offshore currently believes that the expectations regarding the Company reflected in such forward-looking statements are based on reasonable assumptions, no assurance can be given that such projections will be fulfilled. Any such forward-looking statement must be considered along with the knowledge that actual events or results may vary materially from such predictions due to, among other things, political, economic, financial or legal changes in the markets in which Songa Offshore does business, and competitive developments or risks inherent to the Company s business plans. Many of these factors are beyond Songa Offshore s ability to control or predict. Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements. Accordingly, the Company does not accept any responsibility for the future accuracy of the forward-looking statements expressed in this Presentation or the actual occurrence of the forecasted developments. The Company does not intend, and does not assume any obligation, to update any such forward-looking statements as of any date subsequent to the date hereof. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including, without limitation, projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, the Company does not accept any liability whatsoever arising directly or indirectly from the use of this Presentation. By receiving this Presentation, the recipient acknowledges that he will be solely responsible for its own assessment of the market and the market position of the Company and that he will conduct his own analysis and be solely responsible for forming his own view of the potential future performance of the businesses of the Company. This Presentation must be read in conjunction with the recent financial information, as well as other publicly disclosed information. Nothing in this Presentation, nor any other information provided to the recipient by the Company or any of its advisers constitutes, or may be relied upon as constituting, investment advice or any financial, tax or legal advice by such persons or anybody else. 2

3 $ million Financial Performance and Highlights 120 Quarterly EBITDA Songa Encourage commenced the 8-year drilling contract on 11 April Songa Enabler delivered from the yard on 31 March % total fleet earnings efficiency reflecting start up challenges for Songa Equinox and Songa Endurance Comprehensive refinancing including a new $125m convertible bond issued in April Q4' 14 Q1'15 Q2'15 Q3'15 Q4'15 Q'116 EBITDA Trym Cancellation Fee 3

4 Fleet and Operations Songa Equinox Fensfjorden, Norway

5 Fleet Efficiencies Legacy Fleet 100% 80% 60% 40% 20% 0% Q4' 14 Q1' 15 Q2' 15 Q3' 15 Q4' 15 Q1' 16 Operating Efficiency % Earnings Efficiency % 5

6 Fleet Efficiencies Cat D Fleet Songa Equinox 100% 80% 60% 40% 20% 0% Jan-16 Feb-16 Mar-16 Apr-16 Operating Efficiency % Earnings Efficiency % Songa Endurance 100% 80% 60% 40% 20% 0% Jan-16 Feb-16 Mar-16 Apr-16 Operating Efficiency % Earnings Efficiency % 6

7 Rig Operating Expenses k$/day Q2 15 Q3 15 Q4 15 Q1 16 Songa Delta Songa Dee Songa Trym Average Legacy Fleet Songa Equinox Songa Endurance Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Average Cat D Fleet Legacy Fleet Cat D Fleet NOK denominated portion of Rig Opex around 93% 7

8 EBITDA - Q1 vs Q Q4' 2015 Trym Cancellation Fee Trym Operating Contrib. Cat D Fleet Dee/Delta G&A Q1'

9 Contract Status Unit Customer Current Option Day rate Day rate $ k $ k Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Songa Dee 362 Songa Delta 369 Songa Equinox 490 Firm contract end rate + $15 k 7 year + 4x3 year options Songa Endurance 490 Firm contract end rate + $15 k 7.5 year + 4x3 year options Songa Encourage 446* Firm contract end rate 8 year + 4x3 year options Songa Enabler 450* Firm contract end rate 8 year + 4x3 year options Songa Trym Marketed *USD/NOK quarter end rate of 8.27 Contract (incl. mob) Yard SPS 9

10 $ million Firm Backlog of $5.1bn and further $7.9bn in Options Firm Contracts Options 10

11 All Cat D Rigs delivered from the yard Endurance Encourage Equinox Bergen Las Palmas South Korea Enabler Singapore Walvis Bay Mauritius 11

12 Cat D Project last rig approaching the NCS Songa Equinox and Songa Endurance commenced drilling operations in December 2015 Songa Encourage commenced drilling operations in April 2016 Songa Enabler delivered from the yard 31 March 2016, expected to arrive in Norway early July and to commence the drilling contract in August Cat D project organization in South Korea demobilized Estimated average ready-to-drill cost per rig of $693m excluding estimated tug assist cost of $9m less estimated net liquidated damages of $15m Mobilization fee of $40m per rig received for the first three rigs in 2015 and in May 2016 for Songa Enabler 12

13 DSME Arbitration In July 2015 Songa Offshore received notices of arbitration from DSME Claims of $373m received from DSME in November 2015 for Songa Equinox and Songa Endurance In March 2016 Songa Offshore submitted its response to DSME s claim and a $66m counterclaim against DSME Songa Offshore is of the view that DSME is responsible for the delays and any attempt to recover cost overruns is of no merit Songa Offshore has continued to prepare its case, remains confident on its position and will defend it vigorously 13

14 Market Update

15 NCS Floater Market Unit Songa Equinox Songa Endurance Songa Encourage Songa Enabler COSL Promoter Deepsea Atlantic Deepsea Stavanger Deepsea Bergen Scarabeo 5 Stena Don Scarabeo 8 Leiv Eiriksson Transocean Arctic Borgland Dolphin Bideford Dolphin Songa Delta Songa Dee Transocean Winner West Alpha Songa Trym Island Innovator COSL Innovator Transocean Barents Bredford Dolphin West Venture COSL Pioneer Polar Pioneer West Navigator Transocean Searcher Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Songa Dee and Songa Delta have firm contracts to September and November 2016 Songa Trym is stacked and marketed Number of stacked NCS compliant rigs increased during the quarter Weak floater demand on NCS in 2016 through 2017 Contract Option Yard/Transit 18

16 Financial Review

17 Comprehensive Refinancing Capital raise New convertible bond of $125m o Bridge Bond of $91.5m issued in March o Remaining proceeds received in April Subsequent equity offering of gross proceeds up to $25m Restructuring of bonds and shareholder loan Existing convertible bond of $150m converted to equity Maturities for senior unsecured bonds and shareholder loan extended 1/3 to be repaid in 2018 on original maturity and remaining balance extended 30 months until 2020 / 2021 Front loaded coupon reductions in exchange for equity providing increased liquidity buffer Covenant relief through second quarter 2018 Bank amendments and swaps Extension of cross currency swaps related to the senior unsecured bonds Loan agreement amendments on secured debt facilities providing covenant headroom and reducing deposit/repayment requirements from lower rig valuations 17

18 $ millions New Debt Maturity Profile 1, Q2-Q Dee, Try, Del Cat D 1&2 Cat D 3&4 NOK 750m Bond NOK 1,400m Bond Shareholder loan Convertible Bond Notes: NOK bonds converted to USD based on exchange rate 8.27 Table does not include cross currency interest rate swaps related to the NOK 1,400 and 750m Bonds (Negative MtM $126m) 18

19 Profit & Loss $ million Q Q Q Q Operating revenue Reimbursables Other revenue Total revenues Rig operating expenses Reimbursables General and Administrative expenses Total expenses EBITDA

20 Profit & Loss $ million Q Q Q Q EBITDA Depreciation (39) (28) (33) (32) Impairment - (193) (328) - EBIT 32 (118) (297) 28 Finance income Finance expense (22) (1) (4) (6) Other financial items (6) (16) (14) (1) Net financial items (26) (14) (17) (6) Profit (loss) before tax 6 (132) (314) 22 Income tax (charge) credit 4 (27) (3) (5) Profit (loss) for the period 10 (159) (317) 17 20

21 Balance Sheet $ million Mar Dec Sep Jun Rigs, machinery and equipment 1,929 1, ,010 Newbuilds 1, ,819 1,283 Financial assets Derivative financial instrument Deferred tax assets Total non-current assets 3,330 2,955 2,629 2,439 Trade receivables Prepayments Earned revenue Financial assets Derivative financial instrument Other assets Cash and cash equivalents Total current assets Total assets 3,642 3,250 2,964 2,799 21

22 Balance Sheet $ million Mar Dec Sep Jun Total shareholder s equity ,040 Bank loans and other facilities 1,967 1,517 1, Bond loans Convertible bond including bridge loan Derivative financial instruments Deferred revenue Other long term liabilities Total non-current liabilities 2,690 2,232 1,937 1,481 Current portion of bank loans and other facilities Trade and other payables Tax payable Deferred revenue Derivative financial instruments Other liabilities Total current liabilities Total equity and liabilities 3,642 3,250 2,964 2,799 22

23 $ million $ million Capital Expenditures Operating fleet Cat D project Q1' 15 Q2' 15 Q3' 15 Q4' 15 Q1' Q1' 15 Q2' 15 Q3' 15 Q4' 15 Q1' 16 Legacy Fleet Cat D Fleet Capitalized Interest Capital Expenditure

24 Summary Three Cat D Rigs on day rate and the fourth Rig arriving in Norway early July Continued solid operations from Legacy Fleet Strong focus on the Cat D Fleet performance and cost efficiency Comprehensive refinancing with new $125m convertible bond, conversion of the existing $150m convertible bond to equity, extensive unsecured bond coupon reductions and maturity extensions, as well as improved bank- and bond covenants Refinancing to be concluded with $25m subsequent equity offering Drilling market environment remains challenging, securing new contracts for existing rigs remains a top priority 27

25 Setting the New Standard on the NCS Q&A Q&A