Pareto rig slides 13 june 2013


Published on

JU slides

Published in: Business, Economy & Finance
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Pareto rig slides 13 june 2013

  1. 1. Rig market overview Jackup rates up, UDW flat – solid profitability June 2013 Please refer to important disclosures at the end of this document Andreas Stubsrud Direct: +47 2413 2116 Email: Frank Harestad Direct: +47 5183 6315 Email: Bård Rosef Direct: +47 2413 2156 Email:
  2. 2. Solid economics despite earnings revisions .Payback: UDW/JU newbuilds ~5Y .Pricing attractive at P/E 14: 6-9x UDW rates flat, Jackups up .We still predict UDW rats to be USD 550- 650–/day, JU rates to increase to USD 180–/day Top picks .Seadrill: Strong earnings growth. Driven by deliveries of new rigs .Pacific Drilling from start-up phase to cash flow machine .Prospector Offshore and Discovery Offshore exposed to most attractive jackup segment .US: Ensco and Transocean .Other (with significant positive triggers): NADL & SEVDR 2 Solid profit and market outlook Sector Q1–13 performance Core names 11% 9% 7% 5%5%4% 3% 2% 0% 0%-1% -3%-4% -7% -16% -20% -15% -10% -5% 0% 5% 10% 15%Q1'13EBITDA surprise
  3. 3. 3 Dayrate assumption increased for jackups 2014Current-6 mnths.-1 yearOldEstimate$'/day$'/day$'/dayEstimateHigh Spec JU 1)180160155145170Int. older jackups110-140130125120120Harsh env. JU ex. Norway210-230220200185185UDW harsh 2)550-650600600550550-650UDW INT 3)550- 650550550500550-6503G Norway 4)500450450390450Standard semis UK4004253752953501) 300 feet+ IC jack-ups less than 5 yrs old 2) Includes Norway, UK and Canada, limited number of units currently working in this segment 3) High spec. 5th gen. International (USGoM, West Africa etc.) 4) Rates for 4th Gen units ~$/day 50– higher Dayrates are based on what Pareto expects to be the current level for new fixtures
  4. 4. 4 Still very solid economics 391249127127102995.0x2.5x4.5x5.6x5.6x3.4x2.5x.0x1.0x2.0x3.0x4.0x5.0x6.0x02040608 0100120140High Spec JUInt. olderjackupsHarsh env. JU ex. NorwayUDW harshUDW INT3G NorwayStandardsemis UKEBITDA/yrPayback to implied valueUSDm
  5. 5. 5 SDRL: –The conglomorate– .Pure floaters and jackups .Tender rig business sold to SapuraKencana .Growth in jackup and UDW segments continues .Subsidiaries/investments .North Atlantic Drilling – strategic discussion/NYSE listing – positive trigger in our view .Sevan Drilling – positive trigger would be another USGoM contract (rig #4), negative would be Brazil contract in terms of potential bid from SDRL in our view .SapuraKencana – share price up 31% YTD. Value of USD ~1bn for SDRL .Archer – downside from here marginal .Going forward .MLP – much easier to issue units after 1 year (October 2013). But MLP window must be open .Seabras – on the –shelf– SEADRILLFloatingrigsJackupsTender RigsNADL (75%) 3x Semis2x JUs1x Drillship1x JU and 1x semi under construction1x semitender 2x tender bargesunder construction9x Semis 3x Drillships7 x Drillships and 1x semi under construction13x JUs8x JUs under constructionSevan Drilling(30% owned) 2x semis2x semis under construction3x JUs under constructionAsia Offshore Drilling(66.0%) SapuraKencana(13% owned*) Malaysian integrated oil & gasservice providerTender rigs bought from SDRLArcher (40% owned) Oil service company North & South America and North Sea SDRL stake ~USD 250m
  6. 6. Pacific Drilling: Attractively priced UDW driller .New orders: probably 1x a year, we expect next one in 2014 .Confirms yard cost of low USD 500m (as Ensco) .Capital not the problem in terms of growth, but people .Dividends probably in 2015, most likely 2H–15 due to dividend covenants .Stock: .Few triggers .Very attractive valuation .Low free float (USD 500m) .Share price same as IPO March 2011 6 Contract status & dayrate assumptionsRigYear builtCountryPacific BoraNigeriaChevron @ 475'$/day Pareto est. 600'$/dayest. 600'$/dayPacific SciroccoNigeriaTotal @ 474-493'$/day Pareto est. 600'$/dayPacific MistralBrazilPetrobras @ 458'/day Pareto est. 600'$/dayPacific Santa AnaUSGoMChevron @ 468'$/dayPacific KhamsinS.KoreaChevron Africa 670'$/dayPacific SharavS.KoreaChevron USGoM @555'$/day 5YPacific MeltemS.Korea Pareto est. 600'$/dayPacific TBN 8S.Korea Pareto est. 600'$/day20162017201220132014201520102014201520112011201220132013 Share price USD9.512.515.017.5P/E 15E6.38.29.911.5EV/EBITDA YE15E USDm601683751818EV/EBITDA 15 adj.
  7. 7. Share price NOK15. of sharesmill92929292Market capUSDm237316347394Cash Q1"125125125125Enterprise value"112191222269Remaining capex"1270127012701270Total EV"1382146014921539Implicit value per rigAll in priceUSDm230243249257Yard price"203216222230Last 2x SWS2102102102104x existing177197205217Avg. all in priceUSDm225Avg. Yard price"198 7 Discovery Source: Pareto Research Prospector .Prospector with significant leverage is still cheap .Discovery also relatively cheap, but all in price dependent on extra cost (figures above our assumptions) Small cap jackup companies left (from 4 to 2) Share price NOK10. of sharesmill66666666Market capUSDm112134168224Cash Q1"21212121Enterprise value"91114147203Remaining capex"437437437437Total EV"528550584640Implicit value per rigAll in priceUSDm264275292320Yard price"218229246274Avg. all in priceUSDm270Avg. Yard price*"224* includes upgrade of USD 16m
  8. 8. 8 Jackups
  9. 9. Jackup fleet overview – 435 in the water, 107 arriving .391 units currently contracted .Average age of 21 years .107 units under construction/on order .However only 33 are available to the open markets 9 Jackup fleet overview 391441548173310705101520253035400100200300400500600ContractedWarmstackedCold stackedTotalNewbuildsSupply incl. NewbuildsAge (yrs)# of units
  10. 10. Incremental jackup supply is 9 units in 2013 .107 newbuilds, but 59 are uncompetitive (our assumptions) .8x owner-operated or operated by close affiliate of operator .15x owned by Mexican players and destined for Pemex .7x –local– units built/destined for India .5x units built in India very delayed .10x low-spec units built in China with very uncertain delivery likely to be picked up by Chinese players or not built at all .19x other (Iran, uncertain, local China) .Of the 49 remaining newbuilds, 16 have firm contracts at hand .9 available in 2013 .2x DISC, 2x SDRL, 1x NE, 1x PROS, 1x KS Drilling, 1x TS Drilling, 1x Arabian Drillign 10 Jackup newbuild supply 10733581691311
  11. 11. Jackup tender activity at full pace - +27% over past six months 11 Source: ODS, Pareto Research .The tender activity is very high at the moment despite many new awards: .+27% in firm tenders, +14% in overall open demand over the past 4 month, despite 15% more awards (rig years) .North Sea is extremely active and ONGC with a huge tender out at 40 rig years .Middle East is down after they have taken several long term contracts lately Development in open demand 01.09.12 – 01.05.13 35282146191412513838180555035400102030405060708090NW EuropeMiddle EastSE AsiaIndian OceanW AfricaOtherTenderPre-tenderProbablePossible#of rig years +13 -3 +8 +33 +1 -4 3533181310281213200688347173460102030405060708090NW EuropeMiddle EastSE AsiaIndian OceanW AfricaOtherTenderPre-tenderProbablePossible#of rig years
  12. 12. Market balance even tighter – Supply lagging demand 12 Available supply includes newbuilds, but excludes cold stacked and out of service rigs Source: ODS, Pareto Research Demand increasingly outstripping supply 24527227230135634536230529628329129931833234132431631636135132630829526326326426 527025325682% 84% 86% 88% 90% 92% 94% 96% 050100150200250300350400Q4'09Q1'10Q2'10Q3'10Q4'10Q1'11Q2'11Q3'11Q4'11Q1'12Q2'12Q 3'12Q4'12Q1'13LatestRig yearsOpen DemandAvailable next 1.5YUtilizationUtilization 2011: Utilization 2012: Dayrates .Steady upswing in demand since 2010 .In 2011, demand was met by old rigs reactivated and resumed work .Utilization increased steeply for old assets .In 2012, dayrates followed with few idle and stacked rigs to be reactivated .Strong increase in demand continues ion 2013 .With limited supply (despite many newbuilds) and high utilization we expect dayrate momentum to continue .Dayrates projected to increase to USD 180–/day
  13. 13. Stacked rigs have decreased significantly to meet demand 13 .Since last fall, the number of warm stacked have decreased significantly from 32 to 17 .Effectively full utilization as some units will always undergo upgrades etc. .Meanwhile, the number of cold stacked rigs have been fairly stable .Very low spec assets, expected to be scrapped Number of stacked jackups rigs Source: Pareto Research, ODS 77622921203232161517566864595635353435331331309380766767505050020406080100120140 Jan-10Oct-10Jul-11Oct-11Jan-12Jul-12Sep-12Jan-13Apr-13Jun-13Cold stackedWarm stacked
  14. 14. 14 Source: Pareto Research, ODS Middle East West Africa NW Europe Jackups no longer migrating from USA to Mexico and Asia Note: All figures including all jackups in the region USGoM activity is down more than 50% last 10yrs – this trend is over Mexico/Asia have absorbed this supply – and demand will continue to rise South East Asia India Med. & Black Sea 1498960050100150200200020072013 9314201020304050200020072013 2625280102030200020072013 35354301020304050200020072013 13118051015200020072013 11181805101520200020072013 5892137050100150200020072013 223333010203040200020072013 233769020406080200020072013
  15. 15. 01020304050607080196519671969197119731975197719791981198319851987198919911993199 51997199920012003200520072009201120132015ContractedWarm StackedCold StackedNewbuilds# of rigs 15 Age development contracted jackup fleet Source: ODS-Petrodata, Pareto Research Age profile global jackup fleet .Almost no jackups were built from mid-1980s until 2006, and as such jackups are either very old or new .During the next decade the 1970-80s built jackups, which is more than 50% of the current fleet, will be phased out .By 2015, 222 of the currently contracted units are aged more than 30 years, which, assuming no scrapping, is more than 50% of the demand/working fleet .90 of the units will be more than 35 years–. Long-term profitability supported by fleet replacement need 1017259051679022021021522023205010015020025020132014E2015E2020E40 years or more35 years or more30 years or more# of rigs
  16. 16. 12368710612211983421114111141121502468101214161980198219841986198819901992199419 9619982000200220042006200820102012# of rigs The scrapping wave has started 16 .Despite improved market conditions scrapping started in 2011-12 .Stacked rigs that are highly uncompetitive .Driven by large caps divesting non- core old assets to smaller companies targeting fleet optimization .30 rigs were removed in 2011- 2012, which is higher than the sum of the 15 preceding years– Jackups removed from the market (excl. accidents) per year 1980-2012 Source: Pareto Research, ODS 2011-2012: 27x Average age 31Y 1995-2010: 22x Average age 28Y
  17. 17. 17 Mexican jackup market
  18. 18. Pemex ramping up demand: 2x fleet growth from 2012-15 18 Pemex jackup break-through Source: Pareto Research, ODS .After growing rapidly at the beginning of the decade, the number of jackups operating in Mexico has remained fairly stable around 30 units .The fleet has started to increase and the Mexican drillers have ordered/acquired multiple new rigs .19 newbuilds: 9 in 2013 (2 in operation), 3 in 2014 and 7 in 2015 .All controlled by Mexican players .In addition, 4x jackups have/will start operating in Mexico in 2013 .Three old units acquired by Goimar (1x) and AMS/Ezion (2x cold stacked) moved from other regions and upgraded for operations in Mexico .Deep Driller 7 coming from in UAE in mid-2013 96213130272834322923313659419010203040506070
  19. 19. Mexican players with 19 units in the orderbooks –17 ordered/acquired during the past year! 19 13 units destined for Mexico/Pemex Source: Pareto Research, ODS .All owned by Mexican players. First three units have been delivered and contracted DeliveryRig NameOwnerTypeYardOrdered/acquiredCommentsJan-13Independencia 1Operadora Cicsa400F ICTuxpan, MexicoJul-07Feb-13PrimusOro Negro400F ICKeppel FELSAug-12Acquired from Jasper @ 216mMar-13PapaloapanPerforadora Central375F ICKeppel AmFELSFeb-11May-13LaurusOro Negro400F ICKeppel FELSNov-12Acquired from Jasper @ 216mMay-13PROSPECTOR 2Perforadora Mexico400F ICDalianOct-12Acquired from Prospector @ 230mJul-13Standard IntegrityCP Latina400F ICKeppel FELSNov- 12Acquired from Standard Drilling @ 223mSep-13PROSPECTOR 4Perforadora Mexico400F ICDalianNov-12Acquired from Prospector @ 228mNov-13Standard VisionCP Latina400F ICKeppel FELSJan-13Acquired from Standard Drilling @ 215mDec-13FortiusOro Negro400F ICPPL ShipyardDec-12Feb-14DecusOro Negro400F ICPPL ShipyardDec-12Mar- 14CoatzacoalcosPerforadora Central375F ICKeppel AmFELSMar-12Dec-14ImpetusOro Negro400F ICPPL ShipyardMar-13Feb-15YunuenPEMEX400F ICKeppel FELSDec-12Feb- 15PEMEX JU Tbn2PEMEX400F ICKeppel FELSDec-12Mar-15VastusOro Negro400F ICKeppel FELSMar-13Apr-15Grupo R Tbn1Grupo R400F ICKeppel FELSMar-13Jun-15Grupo R Tbn2Grupo R400F ICKeppel FELSMar-13Aug-15Grupo R Tbn3Grupo R400F ICKeppel FELSMar-13Oct-15Grupo R Tbn4Grupo R400F ICKeppel FELSMar-13
  20. 20. 05001,0001,5002,0002,5003,0003,5004,00020012002200320042005200620072008200920102 01120122013Crude production (mbd) Crude production -25% 05,00010,00015,00020,00025,00020012002200320042005200620072008200920102011201220 13Reserves (mbd) More drilling required to reverse declining production and reserves 20 .2012 marked Pemex– 8th consecutive year of decline in oil production .Last 10 years at annual average rate of 11% .Yearly production declines have been lower since 2009 as Cantarell (production decline of ~20% p.a.) is reduced in importance and due to new energy laws .2013YTD production flat compared to 2012 Proved (–1P–) reserves Source: Pemex, Pareto Research -33% .Also to limited exploration, resulting decreasing proven (–1P–) reserves and RRR well below 100% .Reserves have stabilized in later years with increased investments and drilling, but also due to lower production
  21. 21. Pemex targets 3,000 mbd crude production by 2018 21 .Current production ~75% offshore (shallow water) and ~25% onshore .Pemex targets to reverse decline and increase crude production to 3,000 mbd by 2018 .Deepwater not projected to come onstream until 2020 Pemex oil production – Historic and targets (mbd) Source: Pemex, Pareto Research 05001,0001,5002,0002,5003,0003,5002001200220032004200520062007200820092010201120 122013e2014e2015e2016e2017e2018e2019e2020e2021e 2022e2023e2024e2025e2026eCantrarellKu-Maloob-ZaapSouthwest offshore regionOnshoreProducing fieldsFuture development offshoreFuture development onshoreDeepwaterOil Production (mbd) 2,7003,000HistoricTargets
  22. 22. Mexico–s dependence on Pemex oil production 22 .Mexico takes a share of Pemex profits .Around on third of Mexico–s Government income comes from taxes and duties paid by Pemex .Mexico for years treated Pemex as a cash cow, squeezing most revenue from Cantarell in taxes and investing little in exploration .A new reform in 2008 opened up for Pemex to use international players (Pemex still owner of all fields) .President Enrique Peña Nieto (elected in 2012) has included more liberal energy reform as one of the planks of his campaign platform, with overhaul plan expected by late this summer .With Pemex declining production distribution has been maintained by increasing oil prices Pemex taxes and duties and % of Government income Source: Pemex, Pareto Research 5662574253636938.0% 35.4%36.9% 31.0% 32.9%33.7%33.7% 0% 10% 20% 30% 40% 50% 010203040506070802006200720082009201020112012Taxes and duties (USDbn)% of the Government income (rhs) USDbn%
  23. 23. Shallow water has been, is and will continue to be in focus 23 .Shallow water oil the cheapest and most easily available .69% of proven crude reserves in shallow waters .Pemex– has low finding and development cost USD ~14/bbl and (2012, ~75% shallow water) .Pemex has drilled onhore shale and tight oil wells that produce oil and targets ramp up in medium- term .High potential, but much more expensive and difficult than shallow water production .Pemex has spent more than USD 5bn on the promising Chicontepec field which has resulted in less than 60,000 bbl/d despite ~17.7bn boe possible reserves .Large hydrocarbon potential in in deepwater, however production is more expensive and further into future .58% of prospective resources in deepwater, however first oil projected in 2020 (slide X) Proven crude reserves (million barrels) Source: Pemex, Pareto Reseach Marine, 6,795 mbblOnshore, 3,230 mbbl
  24. 24. Large long-term demand from reducing production decline 24 .To increase production, step one is stabilizing production with several fields in decline .Particularly Cantarell, but by 2015-16 also KMZ complex (~50% of current Pemex crude production combined) .Pemex targets Increased Recovery of mature offshore fields to reduce depletion .Gives large base demand for completions and new production and injection wells .Production facilities not running at full capacity makes the commercial hurdle for tie- in fields lower .In addition, further developments are necessary to maintain production .On top of that comes exploration and accompanying appraisal and development drilling… Source: Pemex, Pareto Research
  25. 25. Number of wells drilled offshore Mexico Large exploration potential remaining in Mexican shallow waters 25 .Pemex has drilled an average ~50-60 wells per year since ramping up in 2004 .Most drilling related to boosting production at existing fields .Very limited exploration despite success rate of ~50% (onshore and offshore) Total # of wells drilled 2001-2011 Source: Pemex, BOEM, Pareto Research .Very limited drilling activity compared to the U.S. side of the border .9.5x as many wells drilled in shallow water USGoM as offshore Mexico from 2001-2011 .US shallow water drilling on a decline (despitre recent tightening of the market) while Mexican on the rise 28142435445754614038433472813117131468010203040506070802001200220032004200520062 0072008200920102011DevelopmentExploration#wells MexicoUSGoM (<250ft.) 4,653wells552 wells
  26. 26. 26 Ultra-deepwater (UDW)
  27. 27. Summary .Very limited UDW availability in 2013 … only three available newbuilds .Order activity has slowed down and is expected to remain constrained to large players .Orderbook to be absorbed by replacement of old mid- and deepwater fleet .Demand expected to grow significantly in West Africa with large drilling capaigns ahead .USGoM to continue rebound post Macondo … development of deepwater discoveries driving demand .Brazil expected to have limited incremental demand .New regions Mexico and East Africa to grow in importance 27
  28. 28. Floaters fleet profile … UDWs replacing conventional floaters 28 Jackups by delivery year Source: Pareto Research, ODS 05101520253035197019721974197619781980198219841986198819901992199419961998200020 022004200620082010201220142016Ultra-deepwaterDeepwaterMidwater# units
  29. 29. The UDW market is soon sold out through 2013 Source: ODS-Petrodata, Pareto Research 29 UDW availability before YE…2013 .Only three newbuilds available before YE…2013 .Two 2013 newbuilds contracted in February (Tungsten Explorer and Ensco DS-7) RigOwnerBuiltDepthOperator/YardDayrateFreeCommentsGSF ExplorerTransocean19987800Dec-12Tungsten ExplorerVantage201310000Daewoo / W AfricaJun-13Has contract from mid-2014 @ USD 600'/dayDalian DeveloperDalian201310000COSCO DalianJul-13Delivery time uncertainStena DrillMAXStena20077500OphirJul-13Expected to be the rig for Tullow 3Y contractDeepwater DiscoveryTransocean200010000BP463Aug-13Deepsea StavangerOdfjell201010000BP415Sep-13Option likely calledWest TellusSeadrill201310000SamsungSep-13Sedco EnergyTransocean20017500Tullow Oil440Oct-13Ocean Rig SkyrosOcean Rig201310000SamsungNov-13GSF Development Driller IITransocean20057500BP580Nov-13Q1Q2Q3Q4
  30. 30. The UDW fleet has grown rapidly, there are 51 units in the orderbooks .The UDW fleet have increased ~118% over the past three years and will increase another ~42% over the next three .Excluding Sete Brasil units, 31 rigs were ordered from Q4…10 until Q3…11, leading to a high number of deliveries in 2013-14 .Of the remaining 15 newbuilds scheduled for delivery in 2013, three have not yet been awarded contracts .In 2014, 10 out of 25 newbuilds have been awarded contracts UDW fleet development Newbuild delivery schedule Source: Pareto Research, ODS 30 Note: Excludes 29 units to be built in Brazil with delivery 2016-2020 29365681106122126111921125383020406080100120140160180200200720082009201020112012 2013e2014e2015eContractedUncontracted 15663312363012345678910Q1'13Q2'13Q3'13Q4'13Q1'14Q2'14Q3'14Q4'14ContractedUncontr acted
  31. 31. UDW orders per quarter 31 .A wave of newbuild orders from November 2010 until June 2011 .Since then, the difficult financial climate has limited the number of orders .Eight units ordered in Q3 this year, but four of these are against long-term contracts .Only three orders in 2013 Source: ODS-Petrodata, Pareto Research However: Capital restraints and barriers to entry limit further orders 510133346823135040045050055060065002468101214Q4'10Q1'11Q2'11Q3'11Q4'11Q1'12Q2'12 Q3'12Q4'12Q1'13Q2'13# or ordersDayrate (rhs)
  32. 32. Seadrill with most available UDW newbuilds 32 Source: ODS, Pareto Research Available UDW newbuilds 1123221113111113SDRL (& NADL) RDCESVNEDOPACDATWRIGORIGOther201320142015-16
  33. 33. .Almost all newbuilds are built with water depth capacity above 7,500ft .UDW fleet will go from ~41% today to ~53% of total floater fleet upon delivery of current orderbook (assuming no scrapping) Less than 10% of the UDW fleet is actually drilling UDW Floater newbuilds by water depth UDW rigs… current water depth operations Source: Pareto Research, ODS Petrodata, Company reports 33 39% 51% 9% < 4,500 ft4,500-7,500 ft> 7,500 ft 9% 2% 89% < 4,500 ft4,500-7,500 ft> 7,500 ft .Today, only 10 out of 109 UDW units, or 9%, actually drills wells above 7,500ft .This figure has actually decreased since Q3…11, when around 12% were drilling in UDW .Hence, newbuilds are also replacing an ageing mid- and deepwater fleet
  34. 34. Age of global floater fleet (incl newbuilds and stacked) 34 .The average age for the mid- and deepwater units are ~30 and 28 years respectively .In 2013, there are 67 mid- and deepwater rigs more than 35 years old .15 of 56 operating deepwater units and 25 of 89 operating midwater rigs have contracts expiring before YE…2013 .Fleet removals may thus be imminent Source: ODS-Petrodata, Pareto Research Including mid- and deepwater rigs, the floater fleet is old… 192117358254720020406080100120140160180200MidwaterDeepwaterUDW# of rigs35Y+20- 35YLess than 20
  35. 35. 35 Brazil 37x rigs . USGoM 33x rigs W Africa 23x rigs North Sea 10x rigs . E Africa 5x rigs Mexico 4x rigs Other: 1x in Canada 1x in Egypt 1x in Israel 1x in French Guiana 1x in Saudi Arabia . . . . Source: ODS-Petrodata, Pareto Research . Asia/Australia 9x rigs . . . . The Golden Triangle ~80% of UDW floaters located in …the Golden Triangle…
  36. 36. Incremental UDW demand to outstrip supply next 3 years 36 Source: Pareto Research, ODS RegionShare (mid-range) LowHighWest Africa121441% USGoM6924% Harsh Env.237% East Africa136% Brazil-123% Other4819% Total incremental demand2439100% Available newbuilds2222Surplus/Deficit-2-17Incremental Demand
  37. 37. West Africa is the growth region for deepwater oil production *Definition of deepwater: > 400m = 1300 feet Source: Wood Mackenzie, Pareto Research Global deepwater oil production estimates 37 .Angola and Nigeria are experiencing a sharp growth in deepwater activity .From near zero production in 2006, Wood Mac estimates around 3m barrels of daily production before 2020 .This is clearly driving demand for deepwater rigs, and our analyses show sharp increase in drilling activity over the next few years .Several large discoveries are going to be developed, and new areas are going to be explored 012345678910112000200220042006200820102012e2014e2016e2018e2020eGlobal deepwater* oil production (mbd) OthersUS GoMNigeriaAngolaBrazil
  38. 38. Multiple tenders in the pipeline with expected awards in 2013-14 *Definition of deepwater: > 400m = 1300 feet Source: Wood Mackenzie, Pareto Research 38 West AfricaField/AreaCountryExp. durationExp. Start upCommentsDevelopmentTotalBlock 17 (Rig 2)Angola2-5 years2013Ensco DS-7TotalMoho NordCongo2-4 years2014Tungsten ExplorerTotalMoho NordConco3-4 years2015Ocean Rig ApolloTotalEgina, OML130Nigeria5 years2015Awarded LOA to unknown rigTotalEgina, OML130Nigeria5 years2015TotalKaombo, Blk 32Angola6 years2014-15TotalKaombo, Blk 32Angola6 years2014-15ShellBonga, OML 118Nigeria5-6 years2014-15Dual- BOPShellBonga, OML 118Nigeria5-6 years2016Dual-BOPHessDeepwater Tano/Cape ThreeGhana1-3 years2013-14Appraisal/DevelopmentCNR Intl.Baobob Ph. IIIIvory Coast2 years2014TullowJubilee + TENGhana3 years2013Awarded LOA. Likely Stena DrilMAXExxonMobilErha, OML 133Nigeria3 years2014ExxonMobilVariousAngola1-3 years2014-15ExxonMobilVariousAngola1-3 years2014-15ShellBonga, OML 118Angola1-2 years2015Might be awarded to convential DW rigMaerskChissongaAngola2-3 years2015PotentialTotalBlock 17 (Rig 3)Angola2-4 years2014- 15PotentialExplorationStatoilVaroiusAngola3 years2014Stena CarronCairn + variousVariousMorocco1-2 years2013Cajun ExpressKosmosVariousMorocco, Suriname +3-5 years2014Atwood AchieverChevronVarious (Rig 2)Nigeria, Morocco +2-5 years20141st rig: Pacific KhamsinCobaltVariousAngola3-5 years2013-14Maersk OilVariousAngola2-3 years2013-14HRT + Misc.VariousNamibia2-4 years2013- 15Misc.VariousAngola3 years2014African Petr.VariousIvory Coast, Sierra Leone +1- 3 years2014Misc.VariousSouth Africa1-3 years2014Kosmos +VariousGhana1-2 years2013-15PotentialMaersk OilVarious (Rig 2)Angola1-3 years2014Potential
  39. 39. 39 USGoM: Development drilling yet to kick in Source: ODS, Companies, Pareto Research USGoM: UDW by well type .We expect a few additional rigs to be added for exploration .Statoil to replace Deepwater Americas .Chevron with multi-year exploration Ccampaign .Eni and COP in Walker Ridge blocks .Very few rigs are drilling development at current and with multiple large discoveries, more rigs are needed for development work .USGoM deepwater still in early phase due to Macondo incident 23 rigs70% 10 rigs30% ExplorationDevelopment
  40. 40. 40 Huge potential in deepwater Mexico Source: National Geographic, Wood Mackenzie, Pareto Research GoM: Mexico vs. USA deepwater drilling .While one large DW discovery after the other has been made in the USGoM, the first two ones were announced in Mexico not long ago .As can be seen from the map to the left, the infrastructure and exploration activities in the vast Mexican acreage is completely absent .Consequently we see a huge potential for further work, as Pemex recently has highlighted .The company estimates that it could have 29bn boe in the Gulf of Mexico
  41. 41. 41 Norwegian Continental Shelf
  42. 42. 2011-2012 … Renewed exploration optimism in Norway Average annual discoveries (oil and gas) Source: NPD, Pareto Research 42 .51.5% hit rate in 2011 .Two great new discoveries .Johan Sverdrup .Skrugard .2012: Further success .Havis .King Lear .Geitungen .Skarfjell .2013 already seen more than 50% of the cumulative discoveries in the ten years before 2011 1,6781,7012,1563,8816146318221723623,37597428405001,0001,5002,0002,5003,0003,500 4,0004,5001967- 19701971- 19751976- 19801981- 19851986- 19901991- 19951996- 20002001- 20052006- 2010201120122013YTDMill boeMill boe
  43. 43. .Excluding the 4x Songa newbuilds, NCS floaters are on average contracted until March 2016 .Consequently, we believe the earliest available rigs will secure record high dayrates .Note that only a limited number of these rigs are able to operate in Arctic conditions (Barents Sea) Floater market «sold out» for the next couple of years 43 Source: IHS, Pareto Research RigOwnerBuiltDepthOperator*DayratePolar PioneerTransocean19851640Statoil (BP)490/516Transocean BarentsTransocean200910000Detnor (Repsol)564Deepsea AtlanticOdfjell200910000Statoil490West NavigatorSeadrill/NADL20008200Shell610COSLPioneerCOSL20101640StatoilTransocean WinnerTransocean19831500Marathon461Ocean VanguardDiamond19821500Statoil349/450Transocean LeaderTransocean19874500Statoil400Trans. SearcherTransocean19831500BG (Statoil)386Island InnovatorMaracc20132300Lundin470Trans. SpitsbergenTransocean201010000Statoil491/533Bredford DolphinFred. Olsen Energy19801500Lundin365/355West VentureSeadrill/NADL20005906Statoil435Trans. ArcticTransocean19861640Rig mgmt.414/390Leiv EirikssonOcean Rig20017500Rig mgmt. (Total)530Songa TrymSonga19761200Statoil355Songa DeltaSonga19801500Statoil374Songa DeeSonga19841800Statoil340West AlphaSeadrill/NADL19861968ExxonMobil476Stena DonStena Drilling20011640Statoil399/496Bideford DolphinFred. Olsen Energy19751750Statoil385/475West HerculesSeadrill/NADL200810000Statoil490Scarabeo 8Saipem20129843Eni575Deepsea BergenOdfjell19831475Statoil349Borgland DolphinFred. Olsen Energy19991475Rig mgmt.531Scarabeo 5Saipem19906233Statoil400/495COSLInnovatorCOSL20111640Statoil335COSLPromoterCOSL 20121640Statoil335Songa EquinoxSonga20141640Statoil422Songa EnduranceSonga20141640Statoil422Songa EncourageSonga20151640Statoil438Songa EnablerSonga20151640Statoil438*Sublet in bracketsContractedOptionYard201320142015Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
  44. 44. 44 .Average age of operating fleet ~20 years .Average age in the UK is even older ~32 years .With limited newbuilds arriving, and all capable units expected to go to the Barents Sea the older units are needed Age profile - Norwegian floater fleet Mature NCS rig fleet … multiple rigs nearing end of useful life Source: IHS, Pareto Research 38373333313030302928272726231413131212544332110510152025303540Avg. age operating fleet = ~20 years
  45. 45. 45 Barents Sea: Set for record drilling activity in 2013-2014 Source: NPD, Pareto Research Barents Sea exploration wells per year 02468101214161981- 19851986- 19901991- 19951996- 20002001- 20052006- 2010201120122013E2014EDrilledPlanned# wells per year .Three rigs now located in the Barents Sea .Scarabeo 8 .West Hercules .Leiv Eiriksson .All arrived recently with initial Barents campaigns (finally) kicked off
  46. 46. 46 Leiv Eiriksson (Ocean Rig) … Nordvarg appraisal for Total Source: North Energy, Pareto research .Leiv Eiriksson started drilling Nordvarg appraisal well on April 30th 2013 .Large gas discovery in the Barents Sea .1,250ft. water depth .Increased expectations to volume estimates upon apprasal campaign .At present volume is estimated to ~250 mboe .Additional discoveries in the area could support new trunk line to the North Sea gas grid .Skrugard/Havis 400-600 mill boe (mainly oil) .Snøhvit upgraded by 125 mill boe in Jan…12
  47. 47. 47 West Hercules (Seadrill) – Statoil exploration campaign Source: Statoil, Pareto Research .West Hercules arrived the Barents Sea on May 20th 2013 .This year the rig will drill a 4-well exploration campaign for Statoil in the Skrugard/Havis area (now Johan Carlsberg) .Expected to take ~8 months .We expect additional discoveries in this area in coming years .Similar hydrocarbon indicators (as at Skrugard) observed at several nearby prospects .High interest in license transaction market and in upcoming license round indicates the high exploration activity will continue in the years thereafter Still-Not-Ready-for-AoC.jpg
  48. 48. 48 Source: Eni, Pareto Research .Arrived in August 2012 .The Goliat PDO was submitted in February 2009, and approved in June the same year. .A total of 22 development wells (11 oil producers, 9 water injectors and 2 gas injectors) are planned. .Around two thirds of the wells are anticipated to be completed prior to production start. Scarabeo 8 (Saipem) – Development drilling at Goliat
  49. 49. 37% 63% 50% 63% 49% 16% 50% 37%51% 84% 5134637186010203040506070809010018th200419th200620th200921st201122nd2012# of blocks (or parts of blocks) awardedBarents Sea blocksNorwegian Sea BlocksNorth Sea Blocks Going forward, exploration focus is on the Barents Sea 49 Regional distribution of blocks awarded in NCS license rounds Source: NPD, Pareto Research .With the recent Barents Sea discoveries, interest in the area is taking off .In the 18th NCS licensing round in 2004 there where not made any awards in blocks located in the Barents .The absolute number of awards has increased gradually over the past years .The number of blocks awarded in the Barents Sea has gone from 17 in 2006, to a proposed number of 72 this year .In the 22nd round 84% of all blocks are located in the Barents Sea and none in the North Sea
  50. 50. 50 The Barents Sea will be key to future NCS exploration success Source: Statoil, NPD .The Norwegian Barents Sea has an acreage almost as large as North Sea + Norwegian Sea combined .Border agreement with Russia opened area with interesting potential .Only 95 exploration wells drilled historically .Compared to 1,500 wells in North Sea + Norwegian Sea .22nd round awards in 2013 to boost exploration activity further .Extremely high interest in remaining acreage in Skrugard area where a large portion of the awards are located .Majors such as Shell and BP are back
  51. 51. More rigs to arrive to satisfy demand– .Transocean Barents .Will relocate to the Barents for Statoil in early 2014 .Transocean Arctic .Will arrive in 2H–2013 to drill Gotha prospect for Lundin after well in progress .In addition, the fourth Cat-D newbuild expected to arrive upon delivery in 2015 .In the longer term we project all capable rigs to go to the Barents Sea to satisfy demand .Other potential arrivals: .Transocean Spitsbergen .Polar Pioneer .Deepsea Atlantic 51 Source: Companies, Pareto Research jpg Use-Transocean-Arctic-for-PL-418-Drilling-Norway.jpg
  52. 52. –.however large demand elsewhere on NCS .Demand has increased in the North Sea on the back off exploration successes .Johan Sverdup .Ivar Aasen .In addition, development plans for Aasta Hansteen (including gas pipeline) opens up new plays in the Norwegian Sea .Increased recovery at mature fields also demanding many rigs– 52 Source: Statoil, Pareto Research steen_468map.jpg
  53. 53. Ageing fields demanding many rigs – Increased focus on IOR Source: IHS, Companies, Pareto Research 53 Exploration, 6Appraisal, 3Development -New fields, 6Development -Old fields, 13 Drilling by field category (ex. Cat-D) .Despite the exploration successes with a large Drilling activity on NCS is dominated by development drilling .19 of 28 rigs .Statoil with increased focus on Increased Oil Recovery (IOR) .Developed –old– fields that are past peak production are demanding almost half of the units .Needed to extend the life of the fields, which accounts for a very large share of the overall production .Last year Statoil matured reserves on the NCS to an extent equivalent to Skrugard and Havis combined
  54. 54. Five rigs at Statoil–s Troll field alone Source: Statoil, Pareto Research 54 .The Troll field alone is currently occupying five rigs .In addition, the first of the Cat-D is intended to join for the long term .Statoil aims to have at least four rigs in continuous operation for eight years .The field accounts for 1/3 of all gas capacity on the NCS .In addition we have Gullfaks, Kvitebjørn and Åsgard (Statoil) and Ormen Lange (Shell) COSLPioneer Gives-Nod-for-COSLPioneer.jpg West Venture Stena Don COSLInnovator bH3dpSIPjfo/T0o_khdfjDI/AAAAAAAANYU/8szj1gpAB40/s1600/012.JPG COSLPromoter q=tbn:ANd9GcQP4GXU2p9B3raiUx5QHTMBNx0bo9yTPTUWfadEF3bxT-Kb73Kw g Five rigs at Troll with start-up in mid-1990s
  55. 55. An attractive UK market also in demand for rigs Source: IHS, Pareto Research 55 UK market has tightened significantly over the past years due to: 1.The exploration successes in the mature North Sea just across the border .Record interest in most recent UKCS licensing round 2.Tax breaks for increased recovery from developed brownfields in the North Sea as well as West of Shetlands developments .90% of new development activity in 2012 on projects qualifying for new tax incentives Average backlog per rig UKCS (in years)
  56. 56. UK floater fleet overview – Starting to look like Norway .Only 2 (!) rigs available before YE–2014 .Starting to look like the Norwegian side of the North Sea, a totally different than 1-2 years ago Source: IHS, Pareto Research RigBuiltDepthOperatorDayrateFreeJ.W. McLean19741250Apr-11Cold StackedOcean Princess19751500EnQuest230Sep-13WilPhoenix19821200Premier315Jun-14West Phoenix200810000Total445Jan-15Trans. John Shaw19821800TAQA/EOG205Feb-15Sedco 70419741000Chevron/Maersk335/355Apr-15GSF Arctic III19841800Nexen/Valiant313/335Apr-15Paul B. Loyd, Jr.19872000BP344Apr-15Noble Ton van Langeveld19791500Maersk Oil247/365May-15Trans. Prospect19831500Nexen(COP251/405May-15Ocean Guardian19851500Shell263/355Jul- 15Ocean Nomad19751200Fairfield Energy280Jul-15Sedco 71419831600Total395Oct- 15WilHunter19831500Suncor315/385Nov-15Sedco 71119821800Talisman275/350Dec- 15Stena Spey19831500EnQuestPrivateJan-16Byford Dolphin19741500BP328/346Apr- 16Sedco 71219831600Tba380Oct-16ReactivationStena Carron20087500Chevron515Dec- 16AngolaOcean Patriot19831640ShellPrivateApr-17SE AsiaUpgradeBollsta Dolphin201510000Chevron560May-20Deepsea Aberdeen20147500BP470Jul- 21201320142015Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
  57. 57. But UK floaters are even older than on the NCS Source: IHS, Pareto Research 3939393838343131313030303030302928265051015202530354045Avg. age operating fleet = ~31 years Age profile - UK floater fleet .5x rigs more than 40 years in 2016 .Fleet renewal limited to West of Shetlands developments
  58. 58. 58 Top picks
  59. 59. Rig # 1Rig # 2Rig # 3Rig # 4Rig # 5Rig # 6Rig # 7Rig # 8YardDalianDalianDalianDalianSWSSWSSWSSWSDesignF&G JU-2000EF&G JU-2000EF&G JU- 2000EF&G JU-2000EF&G JU-2000EF&G JU-2000EF&G JU-2000EF&G JU-2000ETurnkey price (USDm)185185199199196196207207DeliveryFeb-13Mar-13Aug-13Sep-13Feb-14May-14Sep- 15Feb-16Payment terms10:9010:9010:9010:901:991:997:937:93 Prospector Offshore Drilling: The right jackup exposure at a discount .Pure play HE/HS jackup company .2 units under construction at Dalian, as well as another 4x units from SWS .All rigs with same design: Friede & Goldman Enhanced JU 2000E .Management with extensive experience from companies like Premium Drilling, Noble Drilling, Seahawk, Hercules, Smedvig and Schlumberger .Proven design: Noble had 3 of the same rigs delivered from Dalian in 2007-2009, Seadrill also has 6x rigs similar rigs under construction .USD 139m bank financing secured through Chinese banks/ECAs for rig #1 Source: Pareto Research, Prospector Company Overview ManagementRobert W. Rose (CEO) Steven Manz (SVP CFO) Michael Pope (VP, Marketing) Anirudha Pangarkar (VP, operations) Michael Cardigan (VP, Administration) 59 Real options – 99/93% construction financing, no parent guaranties Rig #1 (Dalian 1)F&G JU2000E400 ftTotal at 185'/dayRig #3 (Dalian 3)F&G JU2000E400 ftPareto est. 185-200'$/dayRig #5 (SWS 1)F&G JU2000E400 ftPareto est. 185-200'$/dayRig #6 (SWS 2)F&G JU2000E400 ftPareto est. 185-200'$/dayRig #7 (SWS 3)F&G JU2000E400 ftPareto est. 185-200'$/dayRig #8 (SWS 4)F&G JU2000E400 ftPareto est. 185-200'$/dayContractOptionYardAvailable20172013201420152016
  60. 60. Prospector Offshore: Significant upside potential 60 Source: Pareto Research, ODS Share price NOK15. of sharesmill92929292Market capUSDm237316347394Cash Q1"125125125125Enterprise value"112191222269Remaining capex"1270127012701270Total EV"1382146014921539Implicit value per rigAll in priceUSDm230243249257Yard price"203216222230Last 2x SWS2102102102104x existing177197205217Avg. all in priceUSDm225Avg. Yard price"198
  61. 61. Pacific Drilling: Attractively priced UDW driller .New orders: probably 1x a year, we expect next one in 2014 .Confirms yard cost of low USD 500m (as Ensco) .Capital not the problem in terms of growth, but people .Dividends probably in 2015, most likely 2H–15 due to dividend covenants .Stock: .Few triggers .Very attractive valuation .Low free float (USD 500m) .Share price same as IPO March 2011 61
  62. 62. Pacific Drilling 62 Source: Pareto Research CASH FLOW200820092013e2014e2015eMtMOperating cash flowUSDm--187325570592Net from investments"--(1,246)(620)(422)- Free Cash flow"--(1,058)(295)148592Dividend paid"------ Equity/adjustments"------ Change in debt"--646233(107)- Other"--(22)--- Net from financing "--624233(107)- Cash flow"--(434)(62)41592BALANCE SHEET200820092013e2014e2015eMtMTangible fixed assetsUSDm--4,8815,2995,4495,819Intangible assets"------ Other assets"--88888888IB long-term receivables"--1007575100Other current assets"--290310310290Cash and liquid assets"--220158198220Total assets"-- 5,5785,9296,1206,516Shareholders' equity"--2,3832,5332,8622,383Minority interests"------ IB long-term debt"--2,6812,9142,8063,619Other long-term debt"--1057343105IB current liabilities"--219219219219Other current liabilities"--190190190190Total liabilites & equity"--5,5785,9296,1206,516Capex (PACD)201120122013E2014E2015ENewbuildingsUSDm(306)(1,155)(586)(352) Rigs and equipment"(139)(71)(45)(70) Other"(5)(44)(14)- Total capex(1,540)(450)(1,271)(645)(422) DEBT OVERVIEW (PACD)Collaterals201120122013E2014E2015EECA facilityUSDm4x 2010/11 drillships1,6751,457--- Term loan B (USD 750m)*"4x 2010/11 drillships--750743735USD 750m bond loan"4x 2010/11 drillships--750750750Credit facility (USD 500m)"4x 2010/11 drillships----- USD 500m bond loan (7.25%)"Pacific Khamsin-500500500500Senior Credit Facility (USD 1bn)"Sharav, Meltem--600840740Pacific Zonda"Pacific Zonda----- USD 300m bond loan"Unsecured-300300300300Total loans"1,6752,2572,9003,1333,025* assumed debt anortization P&L PACD200820092013e2014e2015eMtMOperating revenuesUSDm-- 7491,1391,4531,631Operating costs"--(402)(551)(599)(654) EBITDA"--347588854978DD&A"--(156)(227)(271)(294) Operating profit"--191361583684Associated companies"------ EBIT"--191361583684Net interest"--(102)(154)(181)(204) Other financial items"------ Profit before taxes"--89207402480Taxes"--(28)(57)(73)(82) Minority interest"------ Net profit"--60150329399EPS (reported)USD--"--"--(5.0)(1.5)0.72.7BVPS"--11.011.713.211.0Dividend per share"------ CAPITALIZATION200820092013e2014e2015eMtMShare priceUSD--9.679.679.679.67No. of sharesmill--217217217217Market cap.USDm--2,0972,0972,0972,097Net interest bearing debt"--2,5812,9002,7523,518Enterprise value"-- 4,6784,9984,8495,616VALUATION200820092013e2014e2015eMtMP/Ex-- 34.714.06.45.3EV/EBITDAx-- ROE"--
  63. 63. Seadrill Q1–13 review May 2013 Please refer to important disclosures at the end of this document Frank Harestad Direct: +47 5183 6315 Email: Andreas Stubsrud Direct: +47 2413 2116 Email: Target: NOK 275 C:UserssamirAppDataLocalMicrosoftWindowsTemporary Internet FilesContent.OutlookVE8T0EF8Buy.jpg
  64. 64. 64 SDRL: –The conglomorate– .Pure floaters and jackups .Tender rig business sold to SapuraKencana .Growth in jackup and UDW segments continues .Subsidiaries/investments .North Atlantic Drilling – strategic discussion/NYSE listing – positive trigger in our view .Sevan Drilling – positive trigger would be another USGoM contract (rig #4), negative would be Brazil contract in terms of potential bid from SDRL in our view .SapuraKencana – share price up xx% YTD. Value of USD ~1bn for SDRL .Archer – downside from here marginal .Going forward .MLP – much easier to issue units after 1 year (October 2013). But MLP window must be open .Seabras – on the –shelf–
  65. 65. 65 SDRL: A strong quarter .P&L better than expected .EBITDA 713/652 adj. vs 665/610E .EPS adj. USD 0.67 vs 0.59E .DPS USD 0.88 vs 0.90E and previously 0.85 .Improved utilization float.: Q1:92% and Q2: to date 97% .Seeking further growth bullish market outlook .Closing Sapura in Q2 gain and Cash flow > USD 1bn. Market value remaining Sapura stake ~USD 1bn .T15 dropped down to SDRL partners. From October drop down process and equity raises easier for SDRL partners .Board sees opportunities to grow either organically or through M&A within JU and UDW .Dividends, UDW contracts and EPS growth triggers .EPS and dividend to continue to grow .Quarterly dividend projected at USD 1 from Q4–13 ~10% .EPS in 2013 around NOK 15, 21 next year and 27 in 2015 .5 available UDW newbuilds up for grab ActualActualQ4'12Q1'13ParetoCons. RevenuesUSDm1,2141,2651,1291,140EBITDA"603713665604EBIT"224554507442Pre tax profit"105484419358Net profit "15409334319EPS adj.USD0.590.670.590.59DPSUSD0.000.880.900.87Net debtUSDm11,32511,83311,72510,625FloatersUSDm413434413Jackups"90182166Tender rigs"1009786Other"- - - Total EBITDA"603713665Q1'13 Estimates
  66. 66. Seadrill: Siginficant fleet expansion 66 .This partly offset by sale of the majority of the tender rig fleet to Sapura Kencana 24West Mira22West RigelWest SaturnWest NeptuneWest Jupiter18West CarinaWest TellusWest VelaWest Auriga14West Eclipse13West LeoWest Capricorn11West PegasusWest OrionWest GeminiWest AquariusWest EminenceWest HerculesWest TaurusWest PhoenixWest SiriusWest CapellaWest PolarisWest Navigator2010201120122013E2014E2015E 27Dalian Q1'15Dalian Q2'15Dalian Q3'152323Dalian Q4'15West LinusAOR 1AOR 2AOR 3West CastorWest TucanaWest Telesto1515West OberonWest Cressida13West ElaraWest Callisto West Leda West Courageous West DefenderWest ResoluteWest VigilantWest IntrepidWest FreedomWest MischiefWest Triton West ProsperoWest ArielWest Epsilon2010201120122013E2014E2015E UDW rig from 14 to 24 by YE15 Jackup fleet from 15 to 27 by YE15
  67. 67. Seadrill – strong EPS growth projected –tender rig sale negative impact 2013 67 17.415.414.815.320.827.60510152025302010201120122013e2014e2015e NOK per share
  68. 68. 68 NADL: US listing further delayed .P&L slightly below .EBITDA USD 135m vs 140E .EPS adj. USD 0.28 vs 0.30 .DPS USD 0.225 as expected .Numbers negatively impacted yard stay Alpha. Phoenix SPS now Q2 vs previously 2014 .US listing delayed due to strategic discussion .Attractive mutliples .P/E 7x and dividend yield 10% .Struggle with continued delays US listing .Balance sheet remains an issue .How credible is the strategic discussion? ActualActualQ1'13EQ4'12Q1'13ParetoRevenuesUSDm283318268EBITDA"140135140EBIT"9792 98Pre tax profit"796277Net profit "505569EPS adj.USD0.200.280.30DPSUSD0.230.230.23Net debtUSDm2,3312,2872,056
  69. 69. 69 NADL: Key figures P&L North Atlantic Drilling201120122013e2014e2015eMtMOperating revenues7111,0451,1851,2391,4691,335Operating costs(286)(478)(610)(622)(686) (556) EBITDA425567575617783779DD&A(106)(163)(170)(195)(215)(220) Operating profit319404406422569559Net interest(61)(83)(81)(117)(140)(198) Other financial items(56)(30)(10)--- Profit before taxes201291315306429361Taxes(21)(55)(33)(31)(43)(36) Net profit181237282275386325EPS (reported) per share0. V/EBITDA9.
  70. 70. 70 NADL: Valuation West AlphaUSDm450407380343West Venture"600542507457West Phoenix "975881824742West Navigator"700633591533West Riegel"975881824742West Epsilon"375339317286West Elara"650588549495West Linus"675610570514Total rig value"5,4004,8824,5624,112CASH & LIABILITIESWest HerculesUSDm63634323Cash"229229159156Interest bearing debt"(2,751)(2,751)(3,017) (2,750) Tax claim"(62)(62)(62)(62) Remaining capex"(468)(468)-- Equity value"2,4111,8931,6861,479KEY FIGURESShares outstandingMill.230230230230Value per shareUSD10. per shareNOK61.348.142.937.6Dividend" per share"65.352.152.152.1IMPLIED VALUESPareto target 2013EImplied value 2013EImplied value 2014EImplied value 2015E
  71. 71. 71 SDRL: solid back-log existing rigs, 5 of 9 UDW newbuilds uncontracted .16 existing UDW rigs + 1x 4GSS Norway .1 unit available 2014 .4 units available 2015 .12 units contracted to 2015 – 2019 .9x UDW newbuilds .4 units contracted .1 unit available 2013 .2 units available 2014 .2 units available 2015 Contract status & dayrate assumptionsFloater fleetWest Tellus(2013)SamsungWest Navigator (Drillship 1999)*Shell @590'$ West Jupiter (2014)SamsungWest Saturn (2014)SamsungWest Phoenix (Semi built 2008)*Total @ 452'$/dayWest Carina (2014)SamsungWest Riegel (Semi built 2015)JurongWest Taurus (Semi 2009)Petrobras @ 655'$/dayWest Eminence (Semi 2009)*Petrobras @ 615'$/dayWest Venture (Semi 1999)*Statoil @ 440'$/day West Orion (Semi 2010)Petrobras @ 615'$/dayWest Leo (Semi 2011)Tullow @ 525- 625'$/dayWest Pegasus (Semi 2011)Pemex @ 465-MtM'$/daySonga Eclipse (Semi built 2012)Total@ 435-450'$/day AngolaWest Hercules (Semi 2008)Statoil Norway 496'$/dayWest Capella (Drillship 2008)**Total @ 544-627'$/dayWest Acquarius (Semi 2008)**Exxon @ 530'$/dayWest Gemini (Drillship 2010)Total/TBN @ 447- 640'$/dayWest Neptune (2014)SamsungLLOG @570'$/dayWest Alpha (4G Semi 1984)*BG/Exxon @480-548'$/dayWest Polaris (Drillship 2008)Exxon/TBN @617- 642'$/dayWest Capricorn (Semi 2011)BP 496'$/dayWest Sirius (Semi built 2008)**BP @ 475-540'$ West Mira (Semi built 2015)HyundaiHusky @590'USD/dayWest Auriga (2013)SamsungBP @565'USD/dayWest Vela(2013)SamsungBP @565'USD/day* NADL**MLPContractOptionYardAvailable2013201420152016201720182019
  72. 72. 72 SDRL: USD 8bn projected in new financing needed by YE15 Q1'13EQ2'13EQ3'13EQ4'13E2013E2014E2015EOperating CFUSDm5714414654921,9702,9443,151Sale assets"731,134- - 1,207- - Capex"(963)(192)(1,524)(1,837)(4,514)(2,261)(2,084) Other invest."(81)- - - (81) Debt due"(495)(255)(448)(334)(1,532)(1,867)(2,116) New debt"758- 1,0952,1504,0033,1003,000Dividend"- (423)(447)(470)(1,340)(1,880) (1,880) Cash flow"(137)706(858)2(287)3671Cash opening USDm5023651,071213502215251Cash closing"3651,071213215215251322Acc. New debtUSDm7587581,8534,0034,0037,10310,103Herof secured"7587581,6532,6032,6032,6032,603Need"- - 2001,4001,4004,5007,500Acc. amort."- - - - - 117492Need post amort."- - 2001,4001,4004,6177,992
  73. 73. Seadrill – significant availability unencumbered assets 73 .Financial need of USD 8.0bn (assuming dividend increased to USD 1 per quarter) .By YE 2014 we project a need of USD 4.5bn .Based on unencumbered assets achievable through lien bank .By 2015 we see a capacity in new bank loans of USD 7.9bn vs need of USD 8.0bn .In addition to bank the company has also access to other sources like: Equity, bonds, proceeds MLP structures, NADL/Seabras, sell Sapura Crest or Archer e.g. .In light of this we believe SDRL should be well positioned to secure the needed funds Unencumbered delivered assets2013E2014E2015ENew UDW rigs#4501812Harsh environment JU's"400111New JU's"1106718Semi tender"150--1Acc. loan capacity EUSDm1,5104,7707,930Amortization new loans"-(117)(492) Additional need"(110)(153)62Loan capacity per rig USDm E
  74. 74. Seadrill – still valued at a premium vs peers –however, not at a record level 74 Value per UDW rig YE15 8237016676606176015695465125115024874390100200300400500600700800900SDRLVTGATWNEN ADLPACDFOEESVDOORIGRIGRDCSEVUSDm
  75. 75. * Other assets include: Archer, Sapura Kencana, Sevan Drilling # of rigs per segment Valuation mix per segments SDRL asset base – implied values YE–12 Jackups, 26.2Floaters, 23.4Tenders, 2.9Jackups26% Floaters70% Tenders2% Other assets2%
  76. 76. SEADRILL Floating rigs Jackups Tender Rigs NADL (75%) 3x Semis 2x JUs 1x Drillship 1x JU and 1x semi under construction 1x semi tender 2x tender barges under construction 9x Semis 3x Drillships 7 x Drillships and 1x semi under construction 13x JUs 8x JUs under construction Sevan Drilling (30% owned) 2x semis 2x semis under construction 3x JUs under construction Asia Offshore Drilling (66.0%) SapuraKencana (13% owned*) Malaysian integrated oil & gas service provider Tender rigs bought from SDRL SDRL: Company overview – post tender rig sale Archer
  77. 77. (40% owned) Oil service company North & South America and North Sea SDRL stake ~USD 250m
  78. 78. 77 Appendix Valuation
  79. 79. 78 Multiples DRILLERSShare priceMarket Cap.EV 1)P/EP/EP/EP/EKEY FIGURESNOK/USDUSDmUSDmMtM15E14E13EAtwood Oceanics54.00 3,596 5,892 6.2 7.7 9.0 11.0 Awilco Drilling93.00 483 512 3.3 2.0 2.9 3.8 Diamond Offshore66.6 9,258 11,431 8.2 6.8 8.7 15.1 Discovery Offshore12.0 136 569 5.4 5.9 8.0 - Ensco57.5 13,212 18,749 6.2 5.8 7.1 8.4 Fred Olsen Energy241.9 2,773 3,883 5.3 4.4 6.0 7.8 Hercules Offshore6.7 1,084.4 1,622 9.3 8.6 9.3 46.3 North Atlantic Drilling51.0 2,029 5,039 6.3 3.6 5.9 6.6 Noble37.3 9,417 16,906 7.0 7.7 9.4 15.8 Northern Offshore8.6 231 183 9.7 2.1 2.5 3.3 Ocean Rig97.2 2,214 6,264 5.0 5.2 7.8 26.5 Pacific Drilling9.5 2,056 5,575 5.2 6.3 13.7 34.1 Prospector Offshore15.2 243 1,416 2.5 3.9 8.8 - Rowan32.5 4,026 7,043 4.7 5.5 7.6 16.7 Seadrill227.9 18,532 34,241 7.6 6.1 9.1 14.0 Sevan Drilling3.4 353 1,952 2.2 3.2 11.7 - Songa Offshore5.7 199 3,127 1.4 3.1 9.0 3.0 Transocean 48.32 17,395 28,409 4.6 5.9 6.3 10.9 Vantage1.96 570 3,352 5.5 4.8 6.2 16.4 Median2,056 5,039 5.4 5.5 8.0 12.5 1) Market cap + net debt 31/12/13E + committed capex and other adjustments3) Dividend adjusted2) Mark-to-market: Based end YE 2013 estimatesDRILLERSShare priceEV/EBITDAEV/EBITDAEV/EBITDAEV/EBITDANet debt/MtM EBITDA
  80. 80. 79 Multiples DRILLERSShare priceEV/EBITDAEV/EBITDAEV/EBITDAEV/EBITDAKEY FIGURESNOK/USDNet debt/EV 1)MtM 2)15E14E13EAtwood Oceanics54.00 39%2.3x5.8 6.2 7.2 8.8 Awilco Drilling93.00 6%0.2x2.9 1.4 2.0 3.0 Diamond Offshore66.6 19%0.9x4.7 4.1 5.4 7.9 Discovery Offshore12.0 76%5.1x6.7 4.9 6.4 - Ensco57.5 30%1.6x5.3 4.5 5.8 6.8 Fred Olsen Energy241.9 29%1.2x4.2 3.9 4.8 6.0 Hercules Offshore6.7 33%1.3x3.9 2.7 3.4 5.0 North Atlantic Drilling51.0 60%3.9x6.5 5.2 7.4 8.0 Noble37.3 44%2.4x5.4 5.1 6.3 8.7 Northern Offshore8.6 -26%-0.7x2.7 0.6 0.9 1.5 Ocean Rig97.2 65%3.5x5.4 4.9 6.1 11.6 Pacific Drilling9.5 63%3.6x5.7 5.6 8.4 13.4 Prospector Offshore15.2 83%4.5x5.4 6.3 12.8 - Rowan32.5 43%2.0x4.7 4.3 6.1 9.4 Seadrill227.9 46%3.3x7.2 6.6 8.5 11.2 Sevan Drilling3.4 82%4.1x5.0 5.4 9.6 14.0 Songa Offshore5.7 94%4.9x5.2 8.5 11.0 4.8 Transocean 48.32 39%1.7x4.3 4.8 5.1 7.5 Vantage1.96 83%5.4x6.5 6.0 6.7 9.0 Median44%2.4x5.3 4.9 6.3 7.9 1) Market cap + net debt 31/12/13E + committed capex and other adjustments3) Dividend adjusted2) Mark-to-market: Based end YE 2013 estimatesNet debt/MtM EBITDA
  81. 81. UDW implied values including new builds .In 2012E implied values all new builds are included, hence there are –unproductive– rigs included .2014E implied values are comparable to new build orders .Most new builds are delivered and the figures above are comparable .Note that average fleet age differentiate significantly: VTG, SDRL, OCR, SEVDR and PDSA with the youngest fleet 2012E implied UDW values 2014E implied UDW values Source: Pareto Research 80 98479879779373572169768063362659458448801002003004005006007008009001,000SDRLVTGA TWNENADLFOEPACDESVDOORIGRDCRIGSEVUSDm 8747006836696316085805725315225214954370100200300400500600700800900SDRLVTGNEATWN ADLPACDFOEESVDORIGORIGRDCSEVUSDm
  82. 82. 81 Disclaimers and disclosures Origin of the publication or report This publication or report originates from Pareto Securities AS (–Pareto Securities–, reg. no. 956 632 374 (Norway) and Pareto Öhman AB (–Pareto Öhman–), reg. no. 556206-8956 (Sweden) and Pareto Securities Oy (–Pareto Finland–) reg. No. 2045188-8 (Finland) and (together the Group Companies or the –Pareto Securities Group–) acting through their common unit Pareto Securities Research. The Group Companies are supervised by the Financial Supervisory Authority of their respective home countries. Content of the publication or report This publication or report has been prepared solely by Pareto Securities Research. Opinions or suggestions from Pareto Securities Research may deviate from recommendations or opinions presented by other departments or companies in the Pareto Securities Group. The reason may typically be the result of differing time horizons, methodologies, contexts or other factors. Basis and methods for assessment Opinions and price targets are based on one or more methods of valuation, for instance cash flow analysis, use of multiples, behavioral technical analyses of underlying market movements in combination with considerations of the market situation and the time horizon. Key assumptions of forecasts, price targets and projections in research cited or reproduced appear in the research material from the named sources. The date of publication appears from the research material cited or reproduced. Opinions and estimates may be updated in subsequent versions of the publication or report, provided that the relevant company/issuer is treated anew in such later versions of the publication or report. Credit ratings are based on the same rating scale as international rating agencies and represent the opinion of Pareto Securities Research as to the relative creditworthiness of securities. A credit rating on a standalone basis should not be used as a basis for investment operations. Pareto Securities Research may also provide credit research with more specific price targets based on different valuation methods, including the analysis of key credit ratios and other factors describing the securities creditworthiness, peer group analysis of securities with similar creditworthiness and different DCF- valuations. All credit ratings mentioned in this publication or report are Pareto Securities Research–s own credit rating estimates unless otherwise mentioned. All descriptions of loan agreement structures and loan agreement features are obtained from sources which Pareto Securities Research believes to be reliable, but Pareto Securities Research does not represent or warrant their accuracy. Be aware that investors should go through the specific complete loan agreement before investing in any bonds and not base an investment decision based solely on information contained in this publication or report. Pareto Securities Research has no fixed schedule for updating publications or reports. Unless otherwise stated on the first page, the publication or report has not been reviewed by the issuer before dissemination. In instances where all or part of a report is presented to the issuer prior to publication, the purpose is to ensure that facts are correct. Validity of the publication or report All opinions and estimates in this publication or report are, regardless of source, given in good faith and may only be valid as of the stated date of this publication or report and are subject to change without notice. No individual investment or tax advice The publication or report is intended only to provide general and preliminary information to investors and shall not be construed as the basis for any investment decision. This publication or report has been prepared by Pareto Securities Research as general information for private use of investors to whom the publication or report has been distributed, but it is not intended as a
  83. 83. personal recommendation of particular financial instruments or strategies and thus it does not provide individually tailored investment advice, and does not take into account the individual investor–s particular financial situation, existing holdings or liabilities, investment knowledge and experience, investment objective and horizon or risk profile and preferences. The investor must particularly ensure the suitability of an investment as regards his/her financial and fiscal situation and investment objectives. The investor bears the risk of losses in connection with an investment. Before acting on any information in this publication or report, we recommend consulting your financial advisor. The information contained in this publication or report does not constitute advice on the tax consequences of making any particular investment decision. Each investor shall make his/her own appraisal of the tax and other financial merits of his/her investment. V. 05.13
  84. 84. 82 Disclaimers and disclosures Sources This publication or report may be based on or contain information, such as opinions, recommendations, estimates, price targets and valuations which emanate from Pareto Securities Research– analysts or representatives, publicly available information, information from other units or companies in the Group Companies, or other named sources. To the extent this publication or report is based on or contains information emanating from other sources (–Other Sources–) than Pareto Securities Research (–External Information–), Pareto Securities Research has deemed the Other Sources to be reliable but neither the companies in the Pareto Securities Group, others associated or affiliated with said companies nor any other person, guarantee the accuracy, adequacy or completeness of the External Information. Ratings Equity ratings: –Buy– Pareto Securities Research expects this financial instrument–s total return to exceed 10% over the next six months –Hold– Pareto Securities Research expects this financial instrument–s total return to be 0-10% over the next six months –Sell– Pareto Securities Research expects this financial instrument–s total return to be negative over the next six months Credit ratings: AAA Best Quality AA+ / AA / AA- Strong ability for timely payments A+ / A / A- Somewhat more exposed for negative changes BBB+ / BBB / BBB- Adequate ability to meet payments. Some elements of protection. BB+ / BB / BB- Speculative risk. Future not well secured B+ / B / B- Timely payments at the moment, but very exposed to any negative changes CCC+ /CCC/ CCC- Default a likely option Limitation of liability Pareto Securities Group or other associated and affiliated companies assume no liability as regards to any investment, divestment or retention decision taken by the investor on the basis of this publication or report. In no event will entities of the Pareto Securities Group or other associated and affiliated companies be liable for direct, indirect or incidental, special or consequential damages resulting from the information in this publication or report. Neither the information nor any opinion which may be expressed herein constitutes a solicitation by Pareto Securities Research of purchase or sale of any securities nor does it constitute a solicitation to any person in any jurisdiction where solicitation would be unlawful. All information contained in this research report has been compiled from sources believed to be reliable. However, no representation or warranty, express or implied, is made with respect to the completeness or accuracy of its contents, and it is not to be relied upon as authoritative. Risk information The risk of investing in certain financial instruments, including those mentioned in this document, is generally high, as their market value is exposed to a lot of different factors such as the operational and financial conditions of the relevant company, growth prospects, change in interest rates, the economic and political environment, foreign exchange rates, shifts in market sentiments etc. Where an investment or security is denominated in a different currency to the investor–s currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor. Past performance is not a guide to future performance. Estimates of future
  85. 85. performance are based on assumptions that may not be realized. When investing in individual shares, the investor may lose all or part of the investments.
  86. 86. 83 Disclaimers and disclosures Conflicts of interest Companies in the Pareto Securities Group, affiliates or staff of companies in the Pareto Securities Group, may perform services for, solicit business from, make a market in, hold long or short positions in, or otherwise be interested in the investments (including derivatives) of any company mentioned in the publication or report. To limit possible conflicts of interest and counter the abuse of inside knowledge, the analysts of Pareto Securities Research are subject to internal rules on sound ethical conduct, the management of inside information, handling of unpublished research material, contact with other units of the Group Companies and personal account dealing. The internal rules have been prepared in accordance with applicable legislation and relevant industry standards. The object of the internal rules is for example to ensure that no analyst will abuse or cause others to abuse confidential information. It is the policy of Pareto Securities Research that no link exists between revenues from capital markets activities and individual analyst remuneration. The Group Companies are members of national stockbrokers– associations in each of the countries in which the Group Companies have their head offices. Internal rules have been developed in accordance with recommendations issued by the stockbrokers associations. This material has been prepared following the Pareto Securities Conflict of Interest Policy. The guidelines in the policy include rules and measures aimed at achieving a sufficient degree of independence between various departments, business areas and sub-business areas within the Pareto Securities Group in order to, as far as possible, avoid conflicts of interest from arising between such departments, business areas and sub-business areas as well as their customers. One purpose of such measures is to restrict the flow of information between certain business areas and sub-business areas within the Pareto Securities Group, where conflicts of interest may arise and to safeguard the impartialness of the employees. For example, the Corporate Finance departments and certain other departments included in the Pareto Securities Group are surrounded by arrangements, so-called Chinese Walls, to restrict the flows of sensitive information from such departments. The internal guidelines also include, without limitation, rules aimed at securing the impartialness of, e.g., analysts working in the Pareto Securities Research departments, restrictions with regard to the remuneration paid to such analysts, requirements with respect to the independence of analysts from other departments within the Pareto Securities Group rules concerning contacts with covered companies and rules concerning personal account trading carried out by analysts. Distribution restriction The securities referred to in this publication or report may not be eligible for sale in some jurisdictions and persons into whose possession this document comes should inform themselves about and observe any such restrictions. This publication or report is not intended for and must not be distributed to private customers in Great Britain or the US. This research report is only intended for and may only be distributed to institutional investors in the United States and U.S. entities seeking more information about any of the issuers or securities discussed in this report should contact Auerbach Grayson & Company at 25 West 45th Street New York, NY 10036 Tel. 1 212-453-3549 or Pareto Securities Inc. at 150 East 52nd Street, New York, NY 10022, Tel. 212 829 4200. Auerbach Grayson & Company is a broker-dealer registered with the U.S. Securities and Exchange Commission and is a member of the FINRA & SIPC. Investment products provided by or through Auerbach Grayson & Company or Pareto Securities Research are not FDIC insured may lose value and are not guaranteed by Auerbach Grayson & Company or Pareto Securities Research. Investing in non-U.S. securities may entail certain risks.
  87. 87. This document does not constitute or form part of any offer for sale or subscription, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. The securities of non-U.S. issuers may not be registered with or subject to SEC reporting and other requirements. The information available about non-U.S. companies may be limited, and non-U.S. companies are generally not subject to the same uniform auditing and reporting standards as U.S. companies. Fluctuations in the values of national currencies, as well as the potential for governmental restrictions on currency movements, can significantly erode principal and investment returns. Market rules, conventions and practices may differ from U.S. markets, adding to transaction costs or causing delays in the purchase or sale of securities. Securities of some non-U.S. companies may not be as liquid as securities of comparable U.S. companies. Auerbach Grayson & Company and/or Pareto Securities Research may have material conflicts of interest related to the production or distribution of this research report which, with regard to Pareto Securities Research, are disclosed herein. Pareto Securities Inc. is a broker-dealer registered with the U.S. Securities and Exchange Commission and is a member of FINRA & SIPC. U.S. To the extent required by applicable U.S. laws and regulations, Pareto Securities Inc. accepts responsibility for the contents of this publication. Investment products provided by or through Pareto Securities Inc. or Pareto Securities Research are not FDIC insured, may lose value and are not guaranteed by Pareto Securities Inc. or Pareto Securities Research. Investing in non-U.S. securities may entail certain risks. This document does not constitute or form part of any offer for sale or subscription, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. The securities of non-U.S. issuers may not be registered with or subject to SEC reporting and other requirements. The information available about non-U.S. companies may be limited, and non-U.S. companies are generally not subject to the same uniform auditing and reporting standards as U.S. companies. Market rules, conventions and practices may differ from U.S. markets, adding to transaction costs or causing delays in the purchase or sale of securities. Securities of some non-U.S. companies may not be as liquid as securities of comparable U.S. companies.
  88. 88. 84 Disclaimers and disclosures Distribution in Singapore Pareto Securities Asia Pte Ltd (–Pareto Securities Asia–) is an exempt financial advisor under the Singapore Financial Advisers Act and a subsidiary of Pareto Securities AS in Singapore. This report is directed only to "accredited investors", "expert investors" and "institutional investors" as defined in the Singapore Securities and Futures Act. This report is intended for general circulation amongst such investors and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should seek advice from a financial adviser regarding the suitability of any product referred to in this report, taking into account your specific financial objectives, financial situation or particular needs before making a commitment to purchase any such product. Please contact Pareto Securities Asia, 16 Collyer Quay, # 27-02 Hitachi Tower, Singapore 049318, at +65 6408 9800 in respect of any matters arising from or in connection with this report. Additional provisions on Recommendations distributed in the Canada Canadian recipients of this research report are advised that this research report is not, and under no circumstances is it to be construed as, an offer to sell or a solicitation of or an offer to buy any securities that may be described herein. This research report is not, and under no circumstances is it to be construed as, a prospectus, offering memorandum, advertisement or a public offering in Canada of such securities. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed upon this research report or the merits of any securities described or discussed herein and any representation to the contrary is an offence. Any securities described or discussed within this research report may only be distributed in Canada in accordance with applicable provincial and territorial securities laws. Any offer or sale in Canada of the securities described or discussed herein will be made only under an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable securities laws or, alternatively, pursuant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made. Under no circumstances is the information contained herein to be construed as investment advice in any province or territory of Canada nor should it be construed as being tailored to the needs of the recipient. Canadian recipients are advised that Pareto Securities AS, its affiliates and its authorized agents are not responsible for, nor do they accept, any liability whatsoever for any direct or consequential loss arising from any use of this research report or the information contained herein. Copyright This publication or report may not be mechanically duplicated, photocopied or otherwise reproduced, in full or in part, under applicable copyright laws. Any infringement of Pareto Securities Research´s copyright can be pursued legally whereby the infringer will be held liable for any and all losses and expenses incurred by the infringement.
  89. 89. 85 Disclaimers and disclosures Column IColumn IIBuy64,0%87,0 % Hold25,0%13,0 % Sell11,0%0,0 % This overview is updated quarterly (last updated 15.05.2013). CompanyAnalyst holdingsTotal holdingsCompanyAnalyst holdingsTotal holdingsArcher-17 500Olav Thon Eiendomsselskap420920Bonheur-15 800Orkla-22 514BW Offshore-61 686Petroleum Geo-Services-2 700Cermaq-3 000Prosafe-1 405Discovery Offshore-12 000Protector Forsikring-499 000DNB-48 227Questerre Energy-67 000DNO International-20 400Renewable Energy Corp-48 444DOF-100 000SalMar-2 600EOC Limited-25 000Sandnes Sparebank-5 001Farstad Shipping-21 700Seadrill-5 500Fred Olsen Energy100300Selvaag Bolig-50 000Gjensidige Forsikring-2 129Ship Finance Ltd-3 184Golden Ocean Group-100 200Solstad Offshore-4 100Havila Shipping-3 150Sparebank 1 Nord-Norge-20 637Hexagon Compsites-100 000Sparebank 1 SR-Bank-112 023Höegh LNG-7 263Sparebanken Øst-23 149InterOil-130 000Statoil-8 335Itera40 00041 000Stolt-Nielsen-1 035Kongsberg Gruppen1 20059 700Storebrand-2 570Lerøy Seafood Group-10 500Subsea 7-76 471Marine Harvest Group-20 000Telenor-7 800Morpol-55 250TGS-NOPEC-7 450Norsk Hydro-357 808The Scottish Salmon Company- 100 000Norske Skogindustrier-40 496Veidekke-42 400Northland Resources-467 000Wilh. Wilhelmsen Holding A-404Norwegian Air Shuttle-300Yara International-30 529Odfjell-7 300This overview is updated monthly (last updated 30.04.2013) Appendix A Disclosure requirements pursuant to the Norwegian Securities Trading Regulations section 3-10 (2) and section 3-11 (1), letters a-b Pareto Securities AS does not alone or - together with affiliated companies or persons – owns a portion of the shares exceeding 5 % of the total share capital in any company where a recommendation has been produced or distributed by Pareto Securities AS. Pareto Securities AS or its affiliates own as determined in accordance with Section 13(d) of the Exchange Act, 1 % or more of the equity securities of Equinox Offshore Accommodation Ltd. Pareto Securities AS may hold financial instruments in companies where a recommendation has been produced or distributed by Pareto Securities AS in connection with rendering investment services, including Market Making. Please find below an overview of material interests in shares held by employees in Pareto Securities AS, in companies where a recommendation has been produced or distributed by Pareto Securities AS. By material interest is meant holdings exceeding a value of NOK 50 000. Appendix B Disclosure requirements pursuant to the Norwegian Securities Trading ST Regulation § 3-11, letters d-f, ref the Securities Trading Act Section 3-10 Overview over issuers of financial instruments where Pareto Securities AS have prepared or distributed investment recommendation, where Pareto Securities AS have been lead manager/co-lead manager or have rendered publicly known not immaterial investment banking services over the previous 12 months: Appendix C Disclosure requirements pursuant to the Norwegian Securities Trading ST
  90. 90. Regulation § 3-11 (4) Column I shows the overall ratio of –Trading Buy–, –Buy–, –Hold–, –Sell– and –Trading Sell– in Pareto–s Recommendations in financial instruments. Column II shows the ratio of –Trading Buy–, –Buy–, –Hold–, –Sell– and –Trading Sell– in Pareto–s Recommendations in financial instruments where Pareto Have provided investment banking services to the issuer the previous 12 months. -AGR Group-GlobalConnect-Saga Tankers-Aker-Grieg Seafood-Scana Industrier- Archer-Haikui-Scandinavian Insurance Group-Atlantic Offshore-Havila Shipping-Sea Trucks Group-Austevoll Seafood-Hercules Offshore-Seadrill-BassDrill-Houston American Energy Corp-Selvaag Bolig-Bergen Group-InterOil-Sevan Drilling-Berner Gruppen-Kistefos-Sigma Drilling-BN Bank-KrisEnergy-SinOceanic Shipping-BOA Offshore-Marine Harvest-Solør Bioenergi-Cecon-Mecom Group-Sparebank 1 Nord- Norge-Clearwater-Morpol-Sparebank 1 SR Bank-Dannemora Mineral -Nordic Mining- Sparebanken Møre-Det Norske Oljeselskap-Noreco-Sparebanken Øst-DNB-Norse Energy- Sterling Resources-Dockwise-Northern Offshore-Teekay-DOF-Ocean Yield-Tizir-DOF Subsea-Oceanteam Shipping-Troll-Dolphin Group-Odfjell Drilling-TTS Group-EMS Seven Seas-Panoro Energy-Western Bulk-Fjord Line-Prospector Offshore Drilling- Wilh. Wilhelmsen-Floatel-Remora-Xtreme Drilling and Coil Services-Global Investment Group Finance-RocksourceThis overview is updated monthly (this overview is for the period 30.04.2012 – 30.04.2013).
  91. 91. 86 Disclaimers and disclosures Appendix DThis section applies to research reports prepared by Pareto Öhman AB. Disclosure of positions in financial instruments The beneficial holding of the Pareto Group is 1 % or more of the total share capital of the following companies included in Pareto Öhman AB–s research coverage universe: Isconova. The Pareto Group has material holdings of other financial instruments than shares issued by the following companies included in Pareto Öhman AB–s research coverage universe: Disclosure of assignments and mandates Overview over issuers of financial instruments where Pareto Öhman has prepared or distributed investment recommendation, where Pareto Öhman AB has been lead manager or co-lead manager or has rendered publicly known not immaterial investment banking services over the previous twelve months: Africa OilEndominesShaMaran PetroleumAlpcot AgroIsconovaTethys OilBlackpearl ResourcesKlövernVostok NaftaBlack Earth FarmingLucara DiamondDannemora MineralRusForestMembers of the Pareto Group provide market making or other liquidity providing services to the following companies included in Pareto Öhman AB–s research coverage universe: Africa OilIsconovaTethys OilBlackpearl ResourcesShaMaran PetroleumTrigon AgriLucara DiamondMembers of the Pareto Group have entered into agreements concerning the inclusion of the company in question in Pareto Öhman AB–s research coverage universe with the following companies: Africa Oil, Isconova, Shamaran Petroleum. This overview is updated monthly (last updated 15.05.2013).