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Songa Offshore Q2 2013 results presentation
 

Songa Offshore Q2 2013 results presentation

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    Songa Offshore Q2 2013 results presentation Songa Offshore Q2 2013 results presentation Presentation Transcript

    • 26 August 2013 Songa Offshore SE Presentation 2Q 2013
    • Disclaimer This presentation (the “Presentation”) has been produced by Songa Offshore SE ("Songa" or the "Company") exclusively for information purposes. This Presentation includes forward-looking statements regarding Songa, including projections and expectations, which involve risk and uncertainty. Such statements are included without any guarantee as to their future realization. Although Songa currently believes that the expectations regarding the Company reflected in such forward-looking statements are based on reasonable assumptions, no assurance can be given that such projections will be fulfilled. Any such forward-looking statement must be considered along with the knowledge that actual events or results may vary materially from such predictions due to, among other things, political, economic, financial or legal changes in the markets in which Songa does business, and competitive developments or risks inherent to the Company’s business plans. Many of these factors are beyond Songa’s ability to control or predict. Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements. Accordingly, the Company does not accept any responsibility for the future accuracy of the forward- looking statements expressed in this Presentation or the actual occurrence of the forecasted developments. The Company does not intend, and does not assume any obligation, to update any such forward-looking statements as of any date subsequent to the date hereof. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including, without limitation, projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, the Company does not accept any liability whatsoever arising directly or indirectly from the use of this Presentation. By receiving this Presentation, the recipient acknowledges that he will be solely responsible for its own assessment of the market and the market position of the Company and that he will conduct his own analysis and be solely responsible for forming his own view of the potential future performance of the businesses of the Company. This Presentation must be read in conjunction with the recent financial information, as well as other publicly disclosed information. Nothing in this Presentation, nor any other information provided to the recipient by the Company or any of its advisers constitutes, or may be relied upon as constituting, investment advice or any financial, tax or legal advice by such persons or anybody else. 2
    • Agenda • Financial performance • Highlights • New Songa Vision • Organization • Operations • Fleet and contract update • Market update • Cat D newbuild project • Financing • Financial review 3
    • Financial Performance • Second quarter EBITDA of $52 million compared to $50 million in first quarter 2013 • Earnings negatively impacted by Mercur down time from March 25 to April 10 from BOP issues and Venus subsea recertification from April 1 to May 5 • Net profit of $5 million compared to $9 million in first quarter 2013 • Term sheets signed for financing of $1,014 million for Songa Equinox and Songa Endurance 56 50 66 16 40 59 57 42 50 52 0 10 20 30 40 50 60 70 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 $million QUARTERLY EBITDA 4
    • Highlights • Mike Mannering appointed Chairman of the Board and Frederik W. Mohn appointed Director on 6 June 2013 • Bjornar Iversen appointed CEO from 1 June 2013 • Songa Dee, Songa Trym and Songa Delta in operation for the first full quarter in Norway under Songa management with an average earning efficiency of 98% • Songa Mercur - 1 option 1 well contract signed with Idemitsu, bringing the total Songa order backlog to $6.6 billion • Redefined strategy with focus on the North Atlantic mid-water market with Norway as the main operating base 5
    • New Songa Vision We will accomplish this by: • Providing safe and cost efficient operations which exceed our customers expectations • Following our key customers world wide • Being recognised for having competent and passionate employees combined with robust systems and procedures • Working with our customers to effectively utilize value added technologies • Taking on management contracts, with a special focus on South East Asia • Offering high-quality engineering and Rental Services Songa Offshore shall be the preferred International Midwater Drilling Contractor with a strong presence in the harsh environment North Atlantic basin Vision: Mission: 6
    • Building the largest semi submersible drilling contractor on the Norwegian Continental Shelf 7 0 1 2 3 4 5 6 7 8 Semis per Operator on the NCS Source: Fearnley’s
    • Organization • Board strengthened with more than 100 man-years of oil & gas and drilling experience • Strengthened Senior Management team • Project and Technical division established – strong focus on Songa Dee 2014 SPS • In the process of establishing Rental division to optimise the use of equipment internally and rent out surplus equipment to third party 8
    • Operations
    • Operations • Operating Efficiency of Norwegian fleet of 95% and Earnings Efficiency of 98% in second quarter 2013 - first quarter with all three units under Songa management • Operating Efficiency of international fleet of 89% and Earnings Efficiency of 91% in the second quarter reflecting Venus subsea recertification and Mercur BOP related downtime Operating Efficiency 92% 95% 94% 86% 97% 94% 94% 94% 98% 93% 60% 65% 70% 75% 80% 85% 90% 95% 100% Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 10
    • Rig Operating Expenses 0 20 40 60 80 100 120 140 160 180 200 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 k$/Day Norwegian fleet International fleet 11 k $/Day Q2’ 13 Q1’ 13 Q4’ 12 Q3’ 12 DELTA 194 197 138 154 DEE 169 179 217 159 TRYM 195 107 72 170 Average 186 161 142 161 VENUS 121 108 84 82 MERCUR 187 168 176 66 ECLIPSE - - 286 292 Average 154 138 182 147
    • Contract Status 12 Yard and mobilizationContract Option IS / SPS / Shipyard U n it C u s to m e r C u rre n t O p tio n D a y ra te D a y ra te N o rw e g ia n C o n tin e n ta l S h e lf So ng a D e e Sta to il 3 5 3 R a te e n d o f fir m c o n tr a c t So ng a T rym Sta to il 3 6 8 R a te e n d o f fir m c o n tr a c t So ng a D e lta Sta to il 3 6 0 R a te e n d o f fir m c o n tr a c t N C S N e w b u ild s C a t D -1 Sta to il 4 4 0 1 ) F ir m c o n tr a c t e n d r a te + $ 1 5 k 8 ye a r firm + 4 x3 ye a r o p tio ns C a t D -2 Sta to il 4 4 0 1 ) F ir m c o n tr a c t e n d r a te + $ 1 5 k 8 ye a r firm + 4 x3 ye a r o p tio ns C a t D -3 Sta to il 4 4 3 F ir m c o n tr a c t e n d r a te 8 ye a r firm + 4 x3 ye a r o p tio ns C a t D -4 Sta to il 4 4 7 F ir m c o n tr a c t e n d r a te 8 ye a r firm + 4 x3 ye a r o p tio ns The above indic ate C at D delivery dates are under revision by the D S M E y ard 1 ) Inc luding D y nam ic P ositioning (D P ) elem ent of $11k In te rn a tio n a l So ng a V e nus P e tro na s M a la ys ia / M ub a d 2 3 0 - So ng a M e rc ur Z a rub e z hne ft / E ni/ Id e m its u 2 5 0 - Q 4 2 0 1 8 Q 4 2 0 1 6 2 0 1 7 Q 1 Q 2 Q 3Q 2 Q 3 Q 4 Q 1 Q 2 Q 3Q 2 Q 3 Q 4 Q 1 2 0 1 4 2 0 1 5 Q 2 2 0 1 3 Q 3 Q 4 Q 1Q 1 Q 2 Q 3 Q 4 Q 1
    • Order Backlog 274 494 861 864 638 638 638 640 638 618 248 3 36 170 333 22 21 400 651 0 200 400 600 800 1,000 1,200 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 $million Contract Option Strong firm backlog of USD 6.6 billion and further USD 8.4 billion in option revenues 13
    • Market update
    • Market Update 15 • Worldwide Semi utilization works toward 90% • At 90% there is a potential for day rates to increase at a greater pace Source: IHS Petrodata • North Sea semi market very strong in spite of increased supply • Forecast rig demand from IHS Petrodata shows rig demand growing from 40 to 47 units by 2014 Source: IHS Petrodata
    • Status Cat D Newbuild Project Building a unique North Atlantic portfolio of midwater drilling rigs – 4 “identical” Cat Ds and 3 existing units
    • Cat D Newbuild Project - Schedule • Good project progress with construction progress as per August 1: • Songa estimate delays due to yard and sub-suppliers capacity issues: 17 Equinox Endurance Encourage Enabler Construction Progress 70.1% 65.8% 19.1% 8.0% Equinox Endurance Encourage Enabler Current schedule Q2 2014 Q4 2014 Q1 2015 Q1 2015 Songa estimate Q4 2014 Q4 2014/Q1 2015 Q2 2015 Q2 2015
    • Cat D Newbuild Project - Cost • Cat Ds constructed according to Statoil’s specifications – reduces delivery risk • Mutual understanding with Statoil to technically accept as much as possible of the rig before Songa takes delivery from yard • Songa expects only marginal cost increase from yard change orders • Average gross project and mobilization costs about $100 million • Average ready-to-drill cost about $660 plus capitalized interests • Mobilization fee $40 million at yard delivery 18
    • Cat D Operations Preparations • Organisation • Building organisation and offshore crews according to plan • Development of systems and procedures on track • Schedule • Timing of crew ramp up important for overall mobilization costs • Recruitment plan • Significant interest to work on Songa Cat Ds • Recruitment campaign starts 4Q 2013 Creating the largest semi submersible drilling contractor in Norway 19
    • Financing • Signed term sheets for the financing of the two first Cat D rigs with pre- and post-delivery financing of $1,014 million with quality finance institutions at competitive rates • Loan availability pre-delivery of $120 million can be drawn at loan agreement signing • The facilities are supported by the Norwegian and Korean Export Credit Agencies • The facilities are subject to final credit approvals and customary documentation, expected to be finalized during 2013 • The company continues to work on a number of initiatives in order to strengthen its balance sheet, including possible sale of assets and potential partnerships 20
    • Financial Review
    • Profit & Loss $ million 2Q 2013 1Q 2013 4Q 2012 3Q 2012 Operating revenue 127.4 124.8 134.6 145.4 Reimbursables 4.8 2.5 - 1.7 Other revenue 11.0 6.5 4.9 3.4 Total revenues 143.2 133.8 139.5 150.5 Rig operating expenses 76.1 65.4 89.7 83.4 Reimbursables 4.2 2.4 - 1.6 General and administrative expenses 12.4 16.2 15.0 13.7 Other gain and loss (1.4) (0.5) (7.0) (5.0) Total expenses 91.3 83.4 97.7 93.7 EBITDA 51.9 50.4 41.8 56.8 22
    • Profit & Loss $ million 2Q 2013 1Q 2013 4Q 2012 3Q 2012 EBITDA 51.9 50.4 41.8 56.8 Depreciation and amortisation (37.5) (31.0) (29.7) (32.9) Impairment - - (213.3) (116.7) EBIT 14.4 19.4 (201.2) (92.8) Finance income 0.1 0.1 0.3 0.2 Finance expenses (9.5) (8.9) (12.3) (13.3) Net financial items (9.4) (8.8) (12.0) (13.1) Profit (loss) before tax 5.0 10.6 (213.2) (105.9) Income tax (charge) credit (0.5) (1.2) (5.7) (2.5) Profit (loss) for the period 4.5 9.4 (218.9) (108.4) Earnings (loss) per share (USD) 0.02 0.05 (1.08) (0.53) 23
    • Balance Sheet $ million June 30 2013 March 31 2013 December 31 2012 Non-Current Assets Rigs, machinery and equipment 1,362.5 1,389.8 1,372.3 Newbuilds 541.7 523.6 506.6 Deferred tax assets 102.9 102.9 102.9 Derivative financial instrument - 3.1 9.7 Total non-current assets 2,007.1 2,019.4 1,991.5 Current assets Asset held for sale - - 590.0 Trade and other receivables 53.9 70.0 50.6 Prepayments 5.5 5.7 8.0 Earned revenue 26.4 30.4 26.0 Other assets 17.3 20.8 35.6 Cash and cash equivalents 104.9 147.8 37.6 Total current assets 208.0 274.7 747.8 Total assets 2,215.2 2,294.1 2,739.3 24
    • Balance Sheet $ million June 30 2013 March 31 2013 December 31 2012 Total shareholder’s equity 956.7 952.2 947.0 Non-current liabilities Bank loans and other facilities 523.6 591.4 620.1 Bond loans 340.6 357.5 372.5 Derivative financial instruments 27.9 19.0 5.1 Deferred revenue 63.6 68.0 71.7 Other long term liabilities 2.6 3.0 10.0 Total non-current liabilities 958.3 1,038.9 1,079.4 Current liabilities Liabilities “assets held for sale” - - 304.9 Current portion of bank loans and other facilities 157.0 115.6 94.5 Trade and other payables 24.2 27.3 94.5 Tax payable 14.0 15.8 14.7 Deferred revenue 31.6 32.0 34.4 Other liabilities 73.4 112.3 169.9 Total current liabilities 300.2 303.0 712.9 Total equity and liabilities 2,215.2 2,294.1 2,739.3 25
    • Capital Expenditures 2013 • Total 2013 Cat D Capex of $35 million, where $15 million is project expenditures and $20 million capitalized interests • Total 2013 Capex for operating fleet at $57 million where Songa Trym and Delta first quarter yard stay expenditures amount to $51 million and other Capex related to existing fleet $6 million 0 5 10 15 20 25 30 35 40 45 $million CAPEX Capitalized Interest 26
    • Summary • Solid North Sea Operations • Good Cat D project control but delay from yard – low cost impact • Board, Management and Organization significantly strengthened • Strong contract backlog of $6.6 bn with options worth $8.4 bn • $1,014 million term sheet signed for the two first Cat D rigs and full focus on improving capital structure 27
    • Q&A