Upload
rowancompanies
View
2.460
Download
0
Embed Size (px)
Citation preview
Forward-Looking Statements
Statements herein that are not historical facts are forward looking statements within the meaning of thePrivate Securities Litigation Reform Act of 1995, including, without limitation, statements as to theexpectations, beliefs and future expected business, financial performance and prospects of the Company.These forward-looking statements are based on our current expectations and are subject to certain risks,assumptions, trends and uncertainties that could cause actual results to differ materially from thoseindicated by the forward-looking statements. Among the factors that could cause actual results to differmaterially include oil and natural gas prices, the level of offshore expenditures by energy companies,variations in energy demand, changes in day rates, cancellation or renegotiation by our customers ofdrilling contracts, letter agreements or letters of intent or the exercise of early termination provisions,risks associated with fixed cost drilling operations, cost overruns or delays on shipyard repair, constructionor transportation of drilling units, maintenance and repair costs, costs or delays for conversion or upgradeprojects, operating hazards and equipment failure, risks of collision and damage, casualty losses andlimitations on insurance coverage, customer credit and risk of customer bankruptcy, conditions in thegeneral economy and energy industry, weather conditions and severe weather in the Company’s operatingareas, increasing complexity and costs of compliance with environmental and other laws and regulations,changes in tax laws and interpretations by taxing authorities, civil unrest and instability, terrorism andhostilities in our areas of operations that may result in loss or seizure of assets, the outcome of disputesand legal proceedings, effects of the change in our corporate structure, and other risks disclosed in theCompany’s filings with the U.S. Securities and Exchange Commission. Each forward-looking statementspeaks only as of the date hereof, and the Company expressly disclaims any obligation to update or reviseany forward-looking statements, except as required by law.
2
Rowan Has Evolved into a Pure Play, High-Spec Offshore Driller
COMPANY OVERVIEW & INVESTMENT HIGHLIGHTS
5
Rowan Overview & Investment Highlights
As a result of our timely strategic decisions and investments,Rowan is well positioned to navigate the current challenging market
Strong financial position
Investment Highlights
• RDC: NYSE-listed
• Investment Grade (BBB- / Baa3)
• 3,708 direct employees worldwide (2)
• 32 offshore drilling units
• 4 UDW drillships
• 28 Jack-ups(3)
• 19 High-Spec(1) and 8 Premium
(1) High-specification defined as rigs with a two million pound or greater hook-load capacity(2) As of August 11, 2015(3) Includes one cold stacked commodity jack-up
1
2
3
4
5
Company Overview
6
Competitive differentiation in drilling demanding wells
High-specification(1) fleet well positioned in key industry segments
Solid contract backlog diversified among premium customer base, geographic regions and asset types
Experienced and loyal workforce
COMPANY OVERVIEW & INVESTMENT HIGHLIGHTS
Rowan is Focused on Demanding Drilling Services1
West Franklin
Wil-K
Al-Shaheen
“Our mission is to be recognized by our customers as the most efficient and capable provider of demanding contract drilling services”
Rowan ranks #1 among offshore drillers for HPHT applications four out of the last five Energypoint
Research Inc. surveys7
Blackbeard
Extended Reach Gas
Forties Field
North Platte
Heidelberg
Demanding Drilling Requirements achieved by Rowan:Temperatures up to 450°FDrilling depths beyond 30,000 ft.Pressures exceeding 20,000 psiHookloads exceeding 2,000,000 lbs.Ultra Harsh EnvironmentsJU water depths exceeding 400 ft.
Jackdaw
Examples of demanding wells drilled by Rowan
Ekofisk
COMPANY OVERVIEW & INVESTMENT HIGHLIGHTS
Rowan Has a Leading Position in High-Spec Jack-ups 2
8
• 2,000,000+ lb hookloadcapability
• Rugged and reliable legs and jacking system
• High pressure drilling systems
• Backlog extending into 2024
• Valued jack-up customers
High-Specification Jack-up Fleet Well Positioned to
Outperform
COMPANY OVERVIEW & INVESTMENT HIGHLIGHTS
Best-in-class drillships, all on contract
• Dual, redundant seven-ram BOPs
• 1,250 ton hook load
• Designed and equipped for 12,000 foot water depth
• All four contracted into 2017 and beyond
• Valued UDW customers
Rowan Ultra-Deepwater Drillships are Best-in-Class 2
9
COMPANY OVERVIEW & INVESTMENT HIGHLIGHTS
Rowan’s Fleet Strategically Positioned in Global Markets2
10
COMPANY OVERVIEW & INVESTMENT HIGHLIGHTS
Rowan has Solid Backlog with Diversity of Customers, Geographic Regions, and Asset Base3
Current Rowan contract backlog as of 07/20/2015
Contract Backlog by Region & Asset Type
USD Billions
43%
34%
16%4% 3%
1%0%
0%
Deepwater Middle EastNorway TrinidadUK Southeast AsiaTunisia Gulf of Mexico
-
500
1,000
1,500
2,000
2015 2016 2017 2018+
Contract Backlog by Year
USD Millions
Contract Backlog by Customer Type
Majors / Independent67%
NOCs33%
Total backlog of $4.4B that extends to 2024
11
Note: Approximately 2/3 of our backlog is with NOCs or investment grade customers
COMPANY OVERVIEW & INVESTMENT HIGHLIGHTS
4 Strong Financial Position
Strong balance sheet / Investment grade credit rating (BBB- / Baa3) provides:
Access to capital even in challenging markets
The ability to grow opportunistically
Attractive debt maturity profile with significant untapped borrowing capacity available from $1.5B revolver
Projected free cash flow from existing backlog exceeds debt maturities through 2018
*Weighted-average annual interest rate is 5.6%
2042 2044
Outstanding Debt is $2.8 Billion* as of June 30, 2015
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
5.0
00
%
7.8
75
%
4.8
75
%
4.7
50
%22
.5 b
ps
(un
dra
wn
)Available $1.5B
revolver
5.4
00
%
5.8
50
%
12
USD
Millions
COMPANY OVERVIEW & INVESTMENT HIGHLIGHTS
4 Strong Financial Position
$0$200$400$600$800
$1,000$1,200$1,400$1,600$1,800$2,000
Debt Maturities Through 2017
Newbuild Commitments Through 2017
Rowan has $0 in Newbuild Capex Commitments and only $400mm in Debt Maturities through 2017
In M
illio
ns
Total: ~6,300
Total: ~11,000
13
COMPANY OVERVIEW & INVESTMENT HIGHLIGHTS
92-year history of operating excellence
Culture of continuous improvement
Experienced and loyal employees with proven industry leadership
Strong commitment to safe and reliable operations supports goal of highest customer satisfaction
14
Rowan Has an Experienced and Loyal Workforce5
Rowan is one team built around great equipment, great people, and shared mission and values
COMPANY OVERVIEW & INVESTMENT HIGHLIGHTS
Uncontracted Newbuild Deliveries Pushing to the RightJack-ups
Schedule
d R
ig D
eliveri
es
/ Q
tr.
• 120 uncontracted jack-ups on order• >40% have delayed delivery by 6+ months
29
Majority of uncontracted newbuildjack-ups are at Chinese shipyards, which have agreed to delay deliveries with little resistance thus far
Includes data supplied by IHS-Petrodata, Inc; Copyright 2015 and Rowan Companies (as of 27-AUG- 2015)
74 units
46 units
Build Country
China
Other
0
5
10
15
20
25
30
35
Before3Q15
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 After4Q16
Original Delivery Date
Current Delivery Date
16
MARKET DYNAMICS
A Roadmap to RecoveryJack-ups
• Sluggish demand forecast for several years likely results in:• Less competitive rigs stacking after current contract• Many uncontracted newbuilds struggling to contract• Active modern rigs from established drilling contractors winning work
• Market recovers after supply is reduced and demand rebounds
Includes data supplied by IHS-Petrodata, Inc; Copyright 2015, Rystad Energy and Rowan Companies (as of 27-AUG- 2015)
Cu
rre
nt
YE
20
15
YE
20
16
YE
20
17
YE
20
18
YE
20
19
YE
20
20
Uncontracted Newbuilds
Active Fleet
Stacked Rigs
17
Older stacked rigs unlikely to reactivate
100+ stacked
rigs
MARKET DYNAMICS
0
2
4
6
8
10
12
14
16
18
20
Current By YE 2020
19Rowan High-Spec
Jack-ups
Includes data supplied by IHS-Petrodata, Inc. Copyright 2015 (as of 08/18/15) and Rowan Companies
Customers Demand Higher-Specification Rigs
• Drilling challenging
wellbore designs
• Focused on achieving
lower wellbore costs
• Higher regulatory
standards
Number of High-Specification Jack-Ups
More Capable Rigs Likely to Work Through the CycleJack-ups
18
MARKET DYNAMICS
• 38 uncontracted floaters• >50% have delayed delivery by 6+ months
Uncontracted Newbuild Deliveries Pushing to the RightDrillships and Semi-Submersibles
Schedule
d R
ig D
eliveri
es
/ Q
tr.
Includes data supplied by IHS-Petrodata, Inc; Copyright 2015 and Rowan Companies (as of 27-AUG-2015)
19
2216
Build Country
Singapore/S. Korea
Other
Majority of uncontracted newbuildfloaters are at Singaporean/S. Korean shipyards, which continue to agree to delivery delays but starting to impose significant financial penalties on buyers
Recent delivery delays have resulted in cost increases of $50-$100M per rig
0
2
4
6
8
10
12
14
16
18
20
Before3Q15
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 After4Q16
Original Delivery Date
Current Delivery Date
MARKET DYNAMICS
A Roadmap to RecoveryDrillships & Semi-Submersibles
• Sluggish demand forecast for several years likely results in:• Less competitive rigs stack after current contract• Many uncontracted newbuilds struggle to contract• Active modern rigs from established drilling contractors winning work
• Market recovery after supply is reduced and demand rebounds
Includes data supplied by IHS-Petrodata, Inc; Copyright 2015, Rystad Energy and Rowan Companies (as of 27-AUG- 2015)
Cu
rre
nt
YE2
01
5
YE2
01
6
YE2
01
7
YE2
01
8
YE2
01
9
YE2
02
0
Uncontracted Newbuilds
Active Fleet
Stacked
20
MARKET DYNAMICS
75+ stacked
rigsOlder stacked rigs unlikely to reactivate
21
More Capable Rigs Likely to Work Through the CycleDrillships & Semi-Submersibles
Best-in-Class Specifications:
• 1,250 ton hook load
• Dual 7-ram blowout preventers
• Managed Pressure Drilling capable
• Advanced Riser Gas Handling
• 12,000 ft water depth equipped
• IMO Tier III emissions compliance
Few rigs possess the specifications required for today’s demanding wells and pending regulations
MARKET DYNAMICS
23
Priorities to Deliver Shareholder Value
Rowan will improve our return on assets,profit margins, and maximize the earningspower of our fleet
StrongFinancialReturns
Customers want: • Safe and reliable operations• Managed operational risk • Procedural discipline• Low flat spot time• Solid counterparty stability
HighestCustomer Satisfaction
Employees want to be part of a winninghigh- performing team, a career path with development opportunities, and a healthywork-life balance
Best PlaceTo Work
DELIVERING SHAREHOLDER VALUE
24
Rowan is Focused on Strong Financial Returns
Execution
Cost Control
Optimal Capital Allocation
StrongFinancialReturns
DELIVERING SHAREHOLDER VALUE
25
Executing Operational Efficiency
(1) Out-of-Service Time (OOS) are those days when a rig is out of service and is not able to earn revenue. The Company may be compensated for certain out-of-service days, such as for shipyard stays or for rig transit periods preceding a contract; however, recognition of any such compensation is deferred and recognized over the period of drilling operations.
Rowan is focused on maintaining low levels of operational downtime and reducingout-of-service time to drive higher earnings and improve margins
0%
1%
2%
3%
4%
Unbillable Operational DowntimeJack-up Target: 2.5% Drillship Target: ~5%
Out-of-Service Time (OOS) (1)
FY 2015 Target: 3-6% (excludes idle time)
0%
5%
10%
15%
20%
25%
30%
DELIVERING SHAREHOLDER VALUE
26
Cost Control: Rowan is Focused on Cost Efficiency
Cost Structure• Review back office and support processes for
efficiency and focus on controlling off-rig costs
• Reducing costs of offshore crews
Cost
Control
• Streamline maintenance systems
• Optimize preventive maintenance
MaintenanceSystems
Rig Inventories
• Optimize inventories of parts and capital spares
• Reduce costs by strategically sourcing with key vendors
Performance Management
• Drive performance through strong key performance
indicators and clear incentives at regional and rig levels
DELIVERING SHAREHOLDER VALUE
27
Cost Control Focus Has Had Material Impact
2015 Projections
Preliminary (Nov.)
Year-End (Feb.)
May Current Reduction
Drilling Expense
$1,130 -$1,160
$1,100 -$1,120
$1,015 -$1,030
$1,000 -$1,010
~12%
SG&A $133 - $136 $120 - $130 $115 - $120 $115 - $120 ~13%
Non-newbuildCapex
$250 - $310 $190 $190 $190~25% -
40%
$ in millionsDELIVERING SHAREHOLDER VALUE
28
Optimal Capital Allocation: Options to Maximize Shareholder Value
Dividends• Enhance shareholder value through a regular quarterly
cash dividend
Optimal
Capital
Allocation Debt Repayment
Share Repurchases
Upgrades of Existing Rigs
As Rowan generates free cash flow, we will consider all capital allocation options while maintaining a strong balance sheet
Asset Acquisitions
and Divestitures
• In this uncertain time, we stay the course. However,
we will continue to opportunistically consider share
repurchases
• Consider early retirement of debt to maintain solid
balance sheet
• Consider acquisition of quality assets if pricing and
contract opportunities are attractive
• Consider building assets against contracts with
suitable rate and term
• Continue divesting older assets
• Invest in older assets only if returns are clear
DELIVERING SHAREHOLDER VALUE
30
Rowan is Positioned to Benefit from its Strategic Actions
Competitive differentiation in drilling demanding wells 1
High-specification fleet well positioned in key industry segments
2
Solid contract backlog diversified among premiumcustomer base, geographic regions and asset types3
4 Strong financial position
5 Experienced and loyal workforce
Worldwide Marketed Jack-up Utilization has dropped to 82%
Includes data supplied by IHS-Petrodata, Inc; Copyright 2015
US GOM
Indian Ocean
North Sea
Mediterranean
Middle East
Southeast AsiaMexico
C&S America
West AfricaAustralia
45%
22 Rigs
82%
50 Rigs92%
12 Rigs
74%
27 Rigs
84%
37 Rigs
50%
2 Rigs
69%
70 Rigs
91%
150 Rigs
63%
16 Rigs
88%
50 Rigs
Marketed Supply: 483 units
32
APPENDIX
Jack-up Market Bifurcation on Utilization Continues
20
40
60
80
100
IS, MS, MC <300'IC 300'IC 350'+ IC(including High Spec)
%
59 units
124 units
141 units
218 units
Worldwide jack-up total utilization by rig class
33
APPENDIX
Includes data supplied by IHS-Petrodata, Inc; Copyright 2015
While High-Spec Jack-ups Still Command Premium Rates; No Rig Class is Immune to the Cycle
$0
$50,000
$100,000
$150,000
$200,000
$250,000
IS, MS, MC <300'IC 300'IC 350'+ IC(including High Spec)
~$71K
~$94K
~$108K
~$172K
Earned day rates worldwide by rig class
USD
34
APPENDIX
Includes data supplied by IHS-Petrodata, Inc; Copyright 2015
USA
Indian Ocean
Southeast Asia
C&S America
West AfricaAustralia
95%
37 Rigs
83%
29 Rigs
88%
26 Rigs
100%
7 Rigs
100%
1 Rig
57%
7 Rigs
0%
1 Rig
Mediterranean
66%
3 Rig
Worldwide Marketed Drillship Utilization has dropped to 86%
Marketed Supply: 113 units
35
APPENDIX
Includes data supplied by IHS-Petrodata, Inc; Copyright 2015
10,000’+ Utilization Remains Above 85% … So Far
50
60
70
80
90
100
<5,000' 5,000'-7,499' 7,500'-9,999' 10,000'+
%
*Floater Market includes drillships and semis
Includes data supplied by IHS-Petrodata, Inc; Copyright 2015
120 units
47 units
99 units
Worldwide floater total utilization by water depth
44 units
36
APPENDIX
Later Generation Floaters Attain Higher Rates
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
<5,000' 5,000'-7,499' 7,500'-9,999' 10,000'+
~$516K
~$354K
~$380K
~$422K
Earned day rates worldwide by water depth
*Floater Market includes drillships and semis
Includes data supplied by IHS-Petrodata, Inc; Copyright 2015 37
APPENDIX
Region Jack-ups ($K/day) Jack-ups ($K/day)
Gulf of Mexico Mid $40s – Mid $50s Low – Mid $50s
Middle East Low $50s – Mid $60s Mid $50s – Mid $70s
U.K. North Sea Mid – High $70s Mid – High $80s
Norway North Sea Mid $130s - Low $140s Low – Mid $160s
Southeast Asia Mid $40s – Low $50s Mid – High $50s
Trinidad Mid $60s – Mid $70s Mid $60s – Low $70s
As of 08/05/2015. Ranges exclude mobilization amortization and rebills. Daily operating costs vary by rig class and region. Higher capable rigs
generally earn higher day rates and typically have higher operating costs per day. During shipyard stays, crew and other personnel-related costs are
usually capitalized rather than expensed.
Region Drillships ($K/day) Drillships ($K/day)
Gulf of Mexico Low $150s – Low $160s High $160s – High $170s
Current Rowan Avg. Regional Offshore Rig Operating Costs
38
APPENDIX
As of August 2015 As of September 2014
58%
10%
14%
3%
1% 3%
10%
Labor & Fringes
Employee-related *
R&M
Insurance
Rig moves
Rebillables
All other **
* Employee-related costs include training, catering and crew transportation
** Other includes rentals, medics, agent commissions, satellite
communications and other misc. drilling costs
Percentage of total operating costs
2015 Operating Cost Components
39
APPENDIX
Rowan Guidance as of August 5, 2015
Key metrics:2Q 2015
Actual
3Q 2015
Projected
FY 2015
Projected
Jack-up Operational Downtime
(unbillable)Slightly over 1% 2.5% 2.5%
Drillship Operational Downtime (1) ~13% N/ASlightly higher than
5%
Contract Drilling Expenses
(excluding rebills)$241 MM $265 - $270 MM $1.000 -1.010 BN
SG&A $31 MM ~$31MM $115 - $120 MM
Depreciation $95 MM ~$102MM $385 - $395 MM
Interest Expense,
Net of Capitalized Interest$31 MM ~$41MM $145 - $150 MM
Effective Tax Rate ~8%Slightly higher than
10%-15% range10-15%
Capital Expenditures $102 MM N/A $750 - $775 MM
(1) Rowan expects operational downtime for the drillships to be less than 5% after approximately six-months up to
one year break in period during which operational downtime is likely to be somewhat higher.
APPENDIX
40
Investor Contacts:
Chris Pitre Director, Investor Relations and Corporate [email protected]+1 713 968 6642
Carrie PratiManager, Marketing and Investor [email protected]+1 713 960 7581
41