Offshore Developments New challenges, New Strategies France-Norway Oil & Gas Technology Partnerships Workshops Jean-Marc LETOURNEL Group SVP Offshore Business & Technology May 28th 2015, Paris, France
Safe Harbor This presentation contains both historical and forward-looking statements. These forward-looking statements are not based on historical facts, but rather reflect our current expectations concerning future results and events and generally may be identified by the use of forwardlooking words such as believe, aim, expect, anticipate, intend, foresee, likely, should, planned, may, estimates, potential or other similar words. Similarly, statements that describe our objectives, plans or goals are or may be forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by these forward-looking statements. Risks that could cause actual results to differ materially from the results anticipated in the forward-looking statements include, among other things: our ability to successfully continue to originate and execute large services contracts, and construction and project risks generally; the level of production-related capital expenditure in the oil and gas industry as well as other industries; currency fluctuations; interest rate fluctuations; raw material (especially steel) as well as maritime freight price fluctuations; the timing of development of energy resources; armed conflict or political instability in the Arabian-Persian Gulf, Africa or other regions; the strength of competition; control of costs and expenses; the reduced availability of government-sponsored export financing; losses in one or more of our large contracts; U.S. legislation relating to investments in Iran or elsewhere where we seek to do business; changes in tax legislation, rules, regulation or enforcement; intensified price pressure by our competitors; severe weather conditions; our ability to successfully keep pace with technology changes; our ability to attract and retain qualified personnel; the evolution, interpretation and uniform application and enforcement of International Financial Reporting Standards (IFRS), according to which we prepare our financial statements as of January 1, 2005; political and social stability in developing countries; competition; supply chain bottlenecks; the ability of our subcontractors to attract skilled labor; the fact that our operations may cause the discharge of hazardous substances, leading to significant environmental remediation costs; our ability to manage and mitigate logistical challenges due to underdeveloped infrastructure in some countries where we are performing projects. Some of these risk factors are set forth and discussed in more detail in our Annual Report. Should one of these known or unknown risks materialize, or should our underlying assumptions prove incorrect, our future results could be adversely affected, causing these results to differ materially from those expressed in our forward-looking statements. These factors are not necessarily all of the important factors that could cause our actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could have material adverse effects on our future results. The forward-looking statements included in this release are made only as of the date of this release. We cannot assure you that projected results or events will be achieved. We do not intend, and do not assume any obligation to update any industry information or forward looking information set forth in this release to reflect subsequent events or circumstances. **** This presentation does not constitute an offer or invitation to purchase any securities of Technip in the United States or any other jurisdiction. Securities may not be offered or sold in the United States absent registration or an exemption from registration. The information contained in this presentation may not be relied upon in deciding whether or not to acquire Technip securities. This presentation is being furnished to you solely for your information, and it may not be reproduced, redistributed or published, directly or indirectly, in whole or in part, to any other person. Non-compliance with these restrictions may result in the violation of legal restrictions of the United States or of other jurisdictions. 2
A word about the Technip Group 3
Technip Today With Engineering, Technologies and Project Management, on land & at sea, we safely and successfully deliver the best solutions for our clients in the energy business Worldwide presence with 40,000 people in 48 countries Industrial assets on all continents, including a state-of-the-art fleet, and world-class manufacturing plants Our Fleet Our Plants 27 Vessels (21 in operation, 6 under construction) 4 Flexible Plants 4 Umbilicals Plants 4 Spoolbase 1 Yard 2013 Revenue: 9.3 billion 2014 Revenue: 10.7 billion 2014 Order Intake: 15.3 billion Backlog: 20.9 billion (as of February 2015) Energy is at the core of Technip 4
Three Segments, One Technip Subsea Offshore Onshore Design, manufacture and supply of deepwater flexible and rigid pipelines, umbilicals and riser systems Subsea construction, pipeline installation services and Heavy Lift Six state-of-the-art flexible pipe and / or umbilical manufacturing plants Five spoolbases for reeled pipeline assembly as well as four logistic bases A constantly evolving fleet strategically deployed in the world's major offshore markets Engineering, Procurement & Construction services of Fixed platforms for shallow waters (Conventional, GBS & TPG 500) Floating platforms for deep waters (Spar, Semi-submersible platforms, TLP & FPSO) Leadership in Floatover technology (including the Unideck technology) Leadership in Floating Liquefied Natural Gas (FLNG) Construction yard Gas treatment and liquefaction (LNG), Gas-to-Liquids (GTL) Oil refining (refining, hydrogen and sulphur units) Onshore pipelines Petrochemicals (ethylene, aromatics, olefins, polymers, fertilizers) Process technologies (proprietary or through alliances) Biofuel and renewable energies Non-oil activities (principally in life sciences, metals & mining, construction) Technip delivers the best solutions across the value chain 5
A Worldwide Presence Orkanger Regional Headquarters Operating Centers 4 Umbilicals Plants 4 Spoolbases 4 Flexible Pipe Plants 3 Logistic Bases 1 Construction Yard (1) Former Duco Evanton Pori Claremont Calgary Mexico City Stavanger Technip Umbilicals (1) Ltd: Newcastle Antwerp Aberdeen London Flexi France: St. John s Le Trait Paris Boston Weymouth Barcelona Lisbon Technip Umbilicals (1) Inc Houston Caracas Bogota Mobile Ciudad del Carmen Port-Of-Spain Flexibras: Vitória Accra Luanda Flexibras: Açu Oslo St. Petersburg Zoetermeer Moscow Düsseldorf Warsaw Frankfurt Lyon Marseille Rome Athens Lagos Cairo Kuwait Al-Khobar Doha Abu Dhabi Dande Angoflex: Lobito Mumbai New Delhi Chennai Kuala Lumpur Jakarta Seoul Shanghai Bangkok Rayong Ho Chi Minh City Singapore Balikpapan Miri Asiaflex Products: Tanjung Langsat Rio de Janeiro Macaé Port of Angra Perth A unique combination of operating centers, facilities and plants allows us to remain close to our Clients operations 5
Technip Offshore Facilities Segment Technip is a leading integrated company in Project Management, Engineering, Procurement and Construction for the Energy Industry To the Offshore Facilitites Industry, Technip provides Project management Engineering Procurement Construction Installation Hook-up & Commissioning For Topsides (including FLNG & HP/HT) Substructures (Fixed & Floating) Modification & Brownfield works Fixed Facilities Floating Facilities Services Technip tackles all the challenges of the Offshore Industry 7
Offshore Facilities: Our Products & Services Conventional Fixed Platforms Self-Elevating (TPG 500) GBS Fixed Facilities Artificial Islands Floatover Installation Services HU&C Modifications FPSO Semi-Submersible Spar Floating Facilities TLP FLNG A complete range of Products, Technologies & Services covering all demands 8
$60 barril, Project Delays, Cost Overruns: Consequences 9
New context Oil Prices Oil Price Forecast: Analysts (*) Average Consensus ($/bbl) Expenditures Global E&P Capex forecast ($B) 120 Sources: IFPEN 2014; Morgan Stanley Nov. 2014 2015: BoAML Dec 14, Bernstein Jan. 2015, 100 80 60 66 61 81 75 565 11% p.a. 3% p.a. 628 697 733 696 586 (5)% (20)% 875 40 Brent Yearly WTI Yearly 2011 2012 2013 2014E 2015E [ ] 2020E Zoom on 2015 Brent Price Forecast ($/bbl) Zoom on 2015 Global E&P Capex Forecast 66 Average 5% IFP Oct 2014 50 84 Goldman Sachs 12 Jan 2015-2% Societe Gen. Nov 14 73 Deutsche Bank 07 Jan 2015-1% Morgan Stanley Nov 14 63 City Research 05 Jan 2015 70 UBS 02 Jan 2015 65 Morgan Stanley 30 Dec 2014 70 Societe Gen 02 Dec 2014 72 Barclays 01 Dec 2014 0 20 40 60 80 Previous forecast * Barclays, Goldman Sachs, City, Morgan Stanley, UBS, Deutsche Bank, Societe Generale -5% -10% -22% -25% -9% -30% -20% -10% 0% 10% BoAML Dec 14 DB Dec 14 Jefferies Jan 15 Bernstein Jan 15 Barclays Jan 15 10
New Rules Low Oil Price + Projects Size & Complexity Cost Overruns CAPEX Reduction Greater Selectiveness For our Clients, a Greater Selectiveness Thourough assessment of their Upstream Assets Portfolio ROI & NPV are drivers, rather than resources replacement Avoid CAPEX underestimation leading to Cost Overruns Many factors can explain Cost Overruns, with root causes at Concept/FEED Stages FEED execution by others than the EPC contractor Underestimated impact of complex production parameters & regulations Client specifications limiting standardization & repeatability potential Lack of interactions between the different contractors & suppliers Understanding of the Cost Structure is key 11
The answer of the industry could be one of or a mix of the following Early Engagement Get involved at Concept Definition or FEED stage in order to engage Client & Partners on critical issues such as equipment definition & specification Simplification NO COMPROMISE ON HSE Focus on proven solutions to maximize cost and schedule Identify possible improvements Standardization Identify areas (equipment, disciplines, SoW ) where standardization can be safely & reliably achieved Improved efficiency through collaboration with manufacturers & fabricators Repeatability Enhance delivery process in term of Cost, Schedule, Safety & Quality Collaboration Mode amongst the different actors of the EPC industry has become an absolute must, to develop streamlined & efficient execution plans 12
Technip maintains a continuous involvement in the field development process Upstream Industry Exploration & Engineering Discovery Exploration Appraisal Concept Selection & Definition Development FEED FID EPC & Installation 1 st Oil/Gas Operation Production Decommissioning Prod. End Being involved at early stage, from Concept Selection & Definition, should allow a greater understanding of the project challenges & the development of the best suited solution 13
One example: Technip s leadership with Spar Hulls Engineering Integrated EPC Solution Procurement Classic Construction Truss Cells Technip delivers fully-integrated EPC for Spar Hulls Engineering, including Concept & FEED, in Houston, USA Detail Design, Procurement & Construction in Pori, Finland 14
A world-class delivery track record Pori Yard Spar projects fabrication duration in months, from Fabrication Start to Sail Away 0 5 10 15 20 25 Perdido Tahiti Kikeh Constitution Mad Dog Holstein Gunnison Horn Mountain Boomvang Nansen Diana Genesis Neptune Actual Fabrication Duration Contract Fabrication Duration 15
Broader Integrated Subsea Solutions at Conceptual Stage (1) (2) Providing independent subsea architecture development and component selection Proprietary Technologies Improving equipment and installation converge in subsea architecture Electrically Trace Heated Pipe-in-pipe In-line Monitoring Technologies Umbilicals (Power & control) Integrated Production Bundle Subsea Field Architecture Pre-FEED and FEED Offshore field development studies Innovative technology solutions for platform and subsea challenges Integrating Technip subsea proprietary technologies and offshore platform know-how with third party processing equipment to provide innovative development Integrated Subsea Design Integrated concept selection phase of FEED, combining industry-leading technologies Innovative technology solutions from Subsea Tree to Floater 16
Forsys Subsea, An Exclusive Alliance between FMC Technologies and Technip Concept Delivery Beyond Reservoir Characterization Concept Selection Step change in design Rationalize overall field layout, drive standards, development and integration of technology Leverage of SURF* products with Subsea Production and Processing equipment Topside selection and modification Design systems for improved field performance Reduce complexity and time Seamless subsea infrastructure delivery from seabed to topside Integrated project planning and reduced interfaces Increased field performance Life of field monitoring and surveillance, data analysis and advisory services Preemptive analysis of Integrated SURF* and SPS** enabling timely maintenance Maximize reliability and uptime providing the lowest total ownership cost available in the industry. Front End Engineering Reservoir Development Subsea Field Development SURF Field Development Tender Preparation Project Execution* Drilling & Downhole Completion Subsea Production Systems (SPS) SURF*** * Covers engineering, supply, fabrication and installation ** Life of field surveillance and monitoring *** Subsea Umbilicals, Risers and Flowlines LOF** Surveillance Plug and Abandonment Alliance Scope Topsides Topsides 17
Delivering Results through Integrated Collaboration Traditional Field CAPEX cost savings examples: EVDTs without tubing heads Single active-heated production pipelines No PLETs Compact, block manifold Subsea pig launching eliminating flowline between drill centers Subsea pumps for seawater injection eliminating flowline Topsides design optimization Subsea equipment design fit for installation assets Integrated Approach LOF cost savings examples: Condition-based maintenance enabling the right decisions to be made at the right time Avoid costly unplanned failures Increased asset efficiency and availability Optimized use and selection of vessels 18
Take-Aways HSE remains our industry s utmost priority We must not hold the Oil Price as the sole explaination of our industry s situation EPC Contractors must focus on offering: Predictability Credibility Affordability In addition to Early Engagement, Collaboration between all the actors has become mandatory: SURF & SPS Engineering, Equipment suppliers & Fabricators Topsides & Subsea Client & Contractors A time of challenges for our industry. From the Contractors & Solution Providers perspective, Early Engagement & Collaboration give time & leverage to define the right solution, at the right cost. 19
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