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KCA Deutag is a leading international
drilling and engineering company
working onshore and offshore with
a focus on safety, quality and
operational performance
Investor Presentation
FIRST QUARTER 2018
Disclaimer
1
The distribution of this presentation in certain jurisdictions may be restricted by law.Persons into whose possession this presentation comes are required to informthemselves about and to observe any such restrictions.
This presentation contains forward-looking statements concerning KCADeutag. These forward-looking statements are based on management’s currentexpectations, estimates and projections. They are subject to a number ofassumptions and involve known and unknown risks, uncertainties and other factorsthat may cause actual results and developments to differ materially from any futureresults and developments expressed or implied by such forward-lookingstatements. KCA Deutag has no obligation to periodically update or release anyrevisions to the forward-looking statements contained in this presentation to reflectevents or circumstances after the date of this presentation.
Agenda
2
First Quarter Investor Presentation
1 Q1 Key Highlights
2 Operational Highlights
3 Business Update
4 Business Unit Financials
5 Group Results
6 Summary
Q1 Key Highlights
3
KCA Deutag is a leading international drilling and engineering company working
onshore and offshore with a focus on safety, quality and operational performance
1Q1 2018 Group revenue of $291.1m (Q1 2017: $269.1m) and Q1 2018
EBITDA of $65.8m (Q1 2017: $50.1m) respectively (1)
2Acquisition of the Omani and Saudi Arabian businesses of Dalma Energy
LLC completed on 30 April 2018
3 Successful contract awards in Offshore and Bentec
4Combined contract backlog of $6.3bn (at 1 May 2018) across a blue chip
customer base
5 Available liquidity of $260m at 31 March 2018
(1) Financial results noted above do not include any results from the newly acquired Dalma businesses
Successful acquisition of Dalma’s Omani and Saudi Arabian businesses on 30 April 2018
4
Highlights
Entrance into new market in Saudi Arabia and expansion of existing
presence in Oman
KCA Deutag is now one of the largest International Drilling Contractors
in the Middle East
Acquired 20 rigs in Oman and 9 rigs in Saudi Arabia
Significant boost to backlog of $993m at 1 May 2018
Enterprise Value of $660m
Significant synergies identified from acquisition of Dalma
5
Target synergies ($11m EBITDA & $2m capex)
EBITDA synergies by type
Focus on integration
Early adoption of KCA Deutag Way
– Senior management communication at all offices and rig
locations in week 1
Delivering cost synergies
– Full run rate synergy realisation targeted for Q3 2019
– Integration team in place to oversee consolidation and focus
on synergy realisation
Unlocking further revenue synergies
– Actively engaged with customers
– Opportunities for collaboration between business units
Enhancement of capital structure
– Deleveraging effect
– Extended maturity date
KCA Deutag Operations are diversified across global markets with an increased Middle Eastern presence
Baku
London Bad Bentheim
Tyumen
Nizwa
St. Johns
Bergen
Dubai
Land Drilling Offshore Services RDS offices BentecRegional offices
Aberdeen (HQ)
North Sea
/Norway
20 Plat
Europe &
Caspian
8 Rigs
Caspian
7 Plat
Russia
17 Rigs
Middle
East
46 Rigs
Angola
2 Plat
Africa
11 Rigs
Brunei
1 Rig
Canada
1 Plat
Map shows position at 1 May 2018
Russia
Sakhalin
3 Plat
PRESENCE IN KEY AREAS
130
59 5444
19
0
30
60
90
120
150
Europe North Africa Middle East North Sea Russia
Ye
ars
6
Enlarged Middle East Profile
Country KCAD Dalma Total
Kurdistan 2 2
Oman 8 20 28
Pakistan 2 2
Saudi Arabia 9 9
South Iraq 3 3
UAE 2 2
Total 17 29 46
Middle East Onshore Rig Count – International Players (1)
Notes: (1) Source: Douglas Westwood. Middle East includes rigs in, KSA, Oman, Iraq, UAE and Pakistan. (2) Includes 32 ZP Arabia rigs. (3) Includes 22 ADC rigs, a Schlumberger and Taqa Joint Venture. (4) The % split of LTM EBITDA is calculated using total KCAD group LTM EBITDA of $255.7m (before corporate costs of $18.4m) plus Dalma business unaudited LTM EBITDA of $131.5m (before corporate costs of $28m). (5)The % split of Geographical LTM EBITDA is calculated using total KCAD group LTM EBITDA of $296.3m (before overheads of $22.1m and corporate costs of $18.4m) plus Dalma business unaudited LTM EBITDA of $131.5m (before corporate costs of $28m).
(2) (3)
Enlarged KCA Deutag group is now one of the largest International drilling contractors in the Middle East
7
LTM EBITDA (4)
Geographical EBITDA Split (5)
Improved overall market sentiment driven by sustained increase in oil price, however not yet delivering increased international drilling activity
8
Outlook refers to medium term activity outlook
Activity Medium Term
Market Outlook
Europe / Kazakhstan
Russia
Africa
Middle East
Good tendering activity in a competitive
market. New build rig awards provide a
positive backdrop
North SeaSteady activity and recent contract re-
awards
International Stable activity
Limited tendering; seeking diversification
opportunities
Business Units
Offshore
Services
RDS
High levels of tendering across most
markets. Slower than expected conversion
to contract awards. Pricing remains under
pressure as utilisation levels are yet to
increase
Bentec
Land
Drilling
Strong HSSE performance continues
9
1 Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average2 KCAD Total Recordable Incident Rate is directly comparable with IADC’s Total Recordables (RCRD) statistic
Note: IADC stands for International Association of Drilling Contractors
IADC industry
average 0.542 for
2017
KCAD TRIR at
end of Q1 2018
was 0.191
injuries per
200,000 man
hours worked
The UK’s Scott Platform wins IADC
North Sea 2017 Industry Safety Award
Land Business
Unit achieved
lowest ever
TRIR of 0.12 in
March 2018
Increased Backlog Providing Excellent Visibility
Note: Backlog is an estimate and may change over time depending on certain factors; Backlog reflects business that is considered to be firm, this calculation is based on assumptions deemed appropriate at the time and is subject to change. Backlog is not necessarily indicative of our future revenue or earnings. KCAD and Dalma backlog amounts are estimates as of 1-May-2018 10
KCAD contract backlog as at 1 May 2018
Ex-Dalma contract backlog as at 1 May 2018
Total contract backlog as at 1 May 2018
Total contract backlog by BU as at 1 May 2018
Contract Platform
Client Country Assets Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 end date status #
Exxon Canada Hebron Mar- 46 Operating 1
Equinor (Statoil) Norway CAT J (2) May- 36 Operating 2
Equinor (Statoil) Norway Oseberg's (4) & Kvitebjorn Oct- 28 Operating / Stacked 4/1
Exxon Angola Kizomba (2) Apr- 28 Stacked 2
Point Resouces Norway Ringhorne Dec- 25 Stacked 1
AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Dec- 24 Operating 7
Nexen UK Scott Feb- 23 Stacked 1
COP UK Britannia Nov- 22 Stacked 1
Equinor (Statoil) Norway Pipe pool management Oct- 22 Active mgmt. contract
CNR UK Ninian's (2) Tiffany Nov- 21 Operating / Stacked 1 /2
SEIC Russia LA, PA & PB May- 21 Operating 3
Total UK Alwyn / Dunbar Dec- 20 Stacked 2
Enquest UK Thistle & Heather May- 20 Operating / Stacked 1/1
Equinor (Statoil) Norway Gulfaks (3) Oct- 18 Operating 3
2 0 18 2 0 19 2 0 2 0
Robust Offshore Services contract backlog
11Contract and rig status shown as at 1 May 2018
Denotes change since last earnings call
Utilisation includes 29 Dalma Rigs on a proforma basis from 2017 onwards
Continued focus on building utilisation
12
Historical and forecast utilisation
Land Drilling
13
• Higher EBITDA compared to the prior quarter and prior year, assisted by receipt of
early termination fee in Oman
• Reasonable performance in the quarter in core markets of Russia and Oman
• Tendering activity continues in Algeria and Europe
• Dalma Q1 2018 EBITDA of $25.6m
• Utilisation for the quarter of 68%(1)
Q1 2018 Q4 2017 Q1 2017 Q1 2018 Q1 2017
Result Result Result YTD YTD
$m $m $m $m $m
Revenue 120.4 126.8 122.2 120.4 122.2
EBITDA (post support allocation) 45.7 42.4 43.0 45.7 43.0
Margin 38.0% 33.5% 35.2% 38.0% 35.2%
(1) Utilisation figure for Q1 includes 29 Dalma Rigs on a proforma basisFinancial results noted above do not include any results from the newly acquired Dalma businesses
Bentec
14
• Lower EBITDA during Q1 2018 due to timing of delivery of component sales
• Revenue recognition for new build rigs will commence with delivery from Q3 2018
• Continued active tendering market across after sales, components and new build rigs
Q1 2018 Q4 2017 Q1 2017 Q1 2018 Q1 2017
Result Result Result YTD YTD
$m $m $m $m $m
Revenue 15.1 19.2 15.6 15.1 15.6
EBITDA (post support allocation) (1.6) (0.5) 0.3 (1.6) 0.3
Margin -10.6% -2.6% 1.9% -10.6% 1.9%
Offshore Services
15
• Strong Offshore Services EBITDA result in Q1 primarily due to collection of overdue
MODUs receivable resulting in $12m upside
• Both of the Cat J jack-up rigs have now commenced operations
• Weaker results in North Sea but steady performance in Angola, Azerbaijan, Sakhalin and
Canada
Q1 2018 Q4 2017 Q1 2017 Q1 2018 Q1 2017
Result Result Result YTD YTD
$m $m $m $m $m
Platform Services
Revenue 145.4 145.2 119.0 145.4 119.0
EBITDA (post support allocation) 14.6 26.4 11.3 14.6 11.3
Margin 10.0% 18.2% 9.5% 10.0% 9.5%
MODUs
Revenue (1.2) 0.0 0.0 (1.2) 0.0
EBITDA (post support allocation) 12.0 0.1 (0.0) 12.0 (0.0)
Margin n/a n/a n/a n/a n/a
Offshore Services
Revenue 144.2 145.2 119.0 144.2 119.0
EBITDA (post support allocation) 26.6 26.5 11.3 26.6 11.3
Margin 18.5% 18.3% 9.5% 18.5% 9.5%
RDS
16
• Maintained breakeven EBITDA in the quarter
• Limited new opportunities in greenfield
• Continuing to pursue diversification opportunities outside of the oil and gas sector
Q1 2018 Q4 2017 Q1 2017 Q1 2018 Q1 2017
Result Result Result YTD YTD
$m $m $m $m $m
Revenue 14.5 15.3 14.2 14.5 14.2
EBITDA (post support allocation) 0.4 1.6 0.6 0.4 0.6
Margin 2.8% 10.5% 4.2% 2.8% 4.2%
Q1 2018 Q4 2017 Q1 2017 2018 YTD 2017 YTD
$'m $'m $'m $'m $'m
Cash generated from operations 62.5 93.5 21.4 62.5 21.4
Tax paid (8.1) (5.3) (8.5) (8.1) (8.5)
Cash flow from operating activities 54.4 88.2 12.9 54.4 12.9
Capital expenditure (9.4) (10.9) (6.8) (9.4) (6.8)
Proceeds from sale of Fixed Assets 0.8 0.9 0.2 0.8 0.2
Interest received 6.0 5.7 5.4 6.0 5.4
Other 0.0 0.0 0.0 0.0 0.0
Cash flow from investing activities (2.6) (4.3) (1.2) (2.6) (1.2)
Interest paid (13.9) (53.3) (14.9) (13.9) (14.9)
Foreign exchange (4.4) 2.9 (2.6) (4.4) (2.6)
Dividend paid to minority shareholders (0.3) 0.0 (0.3) (0.3) (0.3)
Acquisition of non-controlling interests 0.0 0.0 0.0 0.0 0.0
Net Cash flow before debt
drawdown/(repayment)33.2 33.5 (6.1) 33.2 (6.1)
Drawdown/(repayment) of debt and
debt redemption/issuance costs(6.3) (5.8) (6.6) (6.3) (6.6)
Net cash flow 26.9 27.7 (12.7) 26.9 (12.7)
Cash Flow and Working Capital
17
9
Working Capital2
9
Free Cash Flow
1 Denotes the effect of foreign exchange rate changes on cash and bank overdrafts2 Deltas denote current quarter working capital movementFinancial results noted above do not include any results from the newly acquired Dalma businesses
1
Revised capital structure now shows no significant maturities until 2021
18
Capital Structure at 31 March 2018 Rating: Caa1/CCC+
Pro Forma Capital Structure at 31 March 2018 Rating(4): B3/B-
PF Leverage 4.4x
PF net debt 1,667m
PF LTM EBITDA(3) 377m
Cash 100m
Notes: (1) Q1 2018 LTM EBITDA of $262m includes the $25m Holdco equity contribution as defined in the Amended Credit Agreement; (2)
Revolver usage shown represents the utilisation of the cash facility only; (3) PF LTM EBITDA adjusted for unaudited LTM EBITDA of the
acquired Dalma businesses of $103.5m plus $10.9m PF synergies (4) Facility ratings shown as at May 2018
$m
$m
Closing Remarks
19
• Improved market sentiment driven by sustained increase in oil price, however not yet delivering
increased international drilling activity
• Q1 2018 results of $291.1m revenue and $65.8m EBITDA
• Several contract awards in Offshore Services and Bentec
• Backlog position of $6.3 billion across a blue chip company base
• Strong HSE and operational performance sustaining low group incident rate
• Acquisition of the Omani and Saudi Arabian businesses of Dalma Energy LLC completed on 30
April 2018
20