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www.kcadeutag.com
KCA Deutag is a leading international drilling and engineering
company working onshore and offshore with a focus on safety,
quality and operational performance
Fourth Quarter 2016
Investor Presentation
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 inform themselves about and to
observe any such restrictions.
This presentation contains forward-looking statements concerning KCA Deutag. These forward-
looking statements are based on management’s current expectations, estimates and
projections. They are subject to a number of assumptions and involve known and unknown risks,
uncertainties and other factors that may cause actual results and developments to differ materially
from any future results and developments expressed or implied by such forward-looking
statements. KCA Deutag has no obligation to periodically update or release any revisions to the
forward-looking statements contained in this presentation to reflect events or circumstances after
the date of this presentation.
Q4 and Full Year Key Highlights
KCA Deutag is a leading international drilling and engineering company working
onshore and offshore with a focus on safety, quality and operational performance
1 2016 full year revenue and EBITDA of $1,252.2m (2015: $1,668.8) and
$262.9m (2015: $289.8m) respectively
2 Q4 2016 Group revenue of $287.6m (Q4 2015: $396.0m) and Q4 2016
EBITDA of $60.1m (Q4 2015: $79.1m) respectively
3 Contract backlog of $5.3bn (at 1 February 2017) across a blue chip
customer base
4 Positive cash generation of over $100m with available liquidity of $262m at
31 December 2016
3
Market Overview
4
KCAD operates in low breakeven oil price environments
International vs. North American drilling markets
International markets North America
Commodity price • Less dependency on commodity prices • High dependency on commodity prices
• Gas heavy market with depressed/volatile Henry Hub
prices
Volatility • Low operating cost base
• Rig count largely inelastic to price downturns
• High operating cost base
• High sensitivity to price downturns
Supply growth
drivers
• Supply critical to national economy and often driven by
NOCs
• Supply of less significance to government revenue
Contract duration • Customers willing to ensure rig availability through long
term contracts
• Contract durations and terms more favourable to
customers
15
32
41 42 42 43
48
55
56
0
10
20
30
40
50
60
70
80
Source Rystad Energy (May-16)
KCAD core markets
0 10 20 30 40 50 60 70 80 90 100
Onshore Middle East
Shelf
Russia
Onshore
Row
Onshore
Deepwater
Extra
Heavy Oil
Ultra
Deepwater
North
American
Shale
Weighted Average Breakeven Oil Price
($/bbl)
Cumulative Liquids Production in 2020 (MMbpd)
Oil Sands
Current Brent price
Business update
5
Bentec Offshore services RDS
1 The % split of LTM EBITDA is calculated using total group EBITDA (including MODUs) of $281.4m (before corporate costs
of $18.5m). Note: MODUs LTM EBITDA of $16.6m represented 5.9% of total EBITDA.
Integrated land drilling Offshore drilling services & design
• Most of our International
operations continue to
perform well despite
market conditions
• Activity levels remain
lower in the North Sea
and Angola
• Recent contract wins
provides for long term
stable backlog
• Reduced capex spend by
E&P companies
continues to impact
activity
• A focus on continued cost
savings to preserve low
level positive EBITDA
• All activity now brownfield
with few opportunities in
greenfield
• After sales remains
stable with a large
increase in component
activity
• 21 Top Drives now
secured for 2017 backlog
• Continued focus on cost
savings
• Strong activity in Oman
and Russia
• Utilisation in Nigeria,
Kurdistan and Algeria
remains weaker
• Utilisation now picking up
in Europe
$186.1m / 66.1% of total¹ $(1.2)m / (0.4)% of total¹ $74.8m / 26.6% of total¹ $5.1m / 1.8% of total¹
Land drilling Bentec
Houston
Baku
London Bad
Bentheim
Tyumen
Nizwa
St.
Johns
Bergen
Dubai
Land Drilling Offshore Services RDS offices Bentec Regional offices
KCAD operations are diversified across global markets
Aberdeen (HQ)
Map excludes work over land rigs, defined as being below 900HP.
Map shows position at 1 February 2017.
PRESENCE IN KEY AREAS
North Sea
/Norway
26 Plat.
Europe &
Caspian
8 Rigs
Caspian
7 Plat.
Russia
16 Rigs
Middle
East
17 Rigs
Angola
2 Plat.
Africa
11 Rigs
Russia
Sakhalin
3 Plat.
Brunei
1 Rig
129
58 53 43
18
0
30
60
90
120
150
Europe NorthAfrica
MiddleEast
North Sea Russia
Ye
ars
LTM Q4 2016 EBITDA split by region
7
Canada
1 Plat.
8
1Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average. 2 KCAD Total Recordable Incident Rate is directly comparable with IADC’s Total Recordables (RCRD) statistic.
Note: IADC stands for International Association of Drilling Contractors.
• KCA Deutag has continued to achieve satisfactory safety results
• The group continues to perform ahead of industry peers in the International Association of Drilling
Contractors (IADC)
• Maintaining high safety and operational standards is a key priority for the business
Health, safety and environmental performance
KCAD TRIR at
end of Q4 2016
was 0.261 injuries
per 200,000 man
hours worked
IADC industry average
0.602 for 2015
9
Backlog Status
Backlog figures exclude revenue generated in the year to date.
Total contract backlog as at 1 February 2017
Contract backlog by BU as at 1 February 2017
Total contract backlog as at 1 November 2016
Contract backlog by BU as at 1 November 2016
10
Land fleet utilisation
Historical and forecast utilisation
Contracted utilisation as of 1st February 2017, adjusted to include additional potential contribution from 5 new Russian rig
contracts (additional 0.4%, 6.6%, 9.2% and 8.8% contracted utilisation in H1 2017, H2 2017, H1 2018 and H2 2018)
Contract Platform
Client Country Assets Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 end date status #
Exxon Canada Hebron M ar-46 Under Construction 1
Stato il Norway CAT J (2) M ay-36 Under Construction 2
Exxon Angola Kizomba (2) Jan-27 Stacked 2
AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Nov-24 Operating 7
Nexen UK Scott Feb-23 Operating 1
Stato il Norway Oseberg's (4) & Gulfaks (3) Oct-22 Operating 7
Stato il Norway Pipe pool management Oct-22 Active mgmt. contract
Stato il Norway Kvitebjorn Oct-22 Operating 1
CNR UK Ninian's (3) Tiffany Nov-21 Operating / Stacked 1 /3
SEIC Russia LA, PA & PB M ay-21 Operating 3
Total UK Alwyn M ar-20 Stacked 1
Total UK Dunbar M ar-20 Stacked 1
Exxon Norway Ringhorne Dec-17 Stacked 1
COP UK Britannia Jul-17 Stacked 1
Taqa UK Cormorant A & N, Tern, Eider & Harding Jul-17 Stacked 5
Enquest UK Thistle & Heather Apr-17 Operating / Stacked 1 /1
2017 2018 2019
11
Robust platform services contract backlog @ 15 February
Contracts have been extended or renewed since last call
12
• Despite tough market conditions the land business has delivered strong financial results
and is significantly ahead of the prior year EBITDA
• Activity levels remain robust in Russia and Oman
• We continue to experience weaker market conditions in Nigeria, Kurdistan and Algeria due
to weaker utilisation
• Significant increase in tendering activities
• Utilisation for the quarter of 58%, which is consistent with the prior quarter
Financial Performance to 31 December 2016
Land Drilling
Q4 2016 Q3 2016 Q4 2015 Q4 2016 Q4 2015
Result Result Result YTD YTD
$m $m $m $m $m
Revenue 133.6 135.2 157.7 569.6 600.7
EBITDA (post support allocation) 46.7 43.8 55.4 186.5 164.2
Margin 34.7% 32.4% 35.1% 32.7% 27.3%
Bentec
13
• Revenues and EBITDA significantly lower than Q4 2015, but has improved revenue
compared to the prior quarter
• Improved activity during Q4 with a marked increase in tender activity
• Increase in After Sales and 21 Top Drives now secured for 2017 backlog
• Continued focus on cost savings
Financial Performance to 31 December 2016
Q4 2016 Q3 2016 Q4 2015 Q4 2016 Q4 2015
Result Result Result YTD YTD
$m $m $m $m $m
Revenue 16.5 12.4 43.3 75.4 235.4
EBITDA (post support allocation) (2.0) (2.2) 2.3 (0.8) 20.7
Margin -12.2% -17.8% 5.2% -1.1% 8.8%
Offshore Services
14
Financial Performance to 31 December 2016
• Strong performance despite challenging market conditions
• Lower activity levels continued in Angola and the North Sea
• Cat J and Hebron projects continuing on schedule to commence operations mid-2017
• Recent contract wins provide for stable long term backlog
Q4 2016 Q3 2016 Q4 2015 Q4 2016 Q4 2015
Result Result Result YTD YTD
$m $m $m $m $m
Platform Services
Revenue 131.0 121.2 159.6 524.2 686.8
EBITDA (post support allocation) 19.2 17.4 24.3 74.9 89.5
Margin 14.6% 14.4% 15.2% 14.3% 13.0%
MODUs
Revenue 0.0 0.8 18.2 29.4 85.4
EBITDA (post support allocation) (0.2) 1.2 (0.3) 16.7 22.3
Margin 0.0% 140.8% -1.7% 56.5% 26.2%
Offshore Services
Revenue 131.0 122.0 177.8 553.5 772.2
EBITDA (post support allocation) 19.0 18.6 24.0 91.6 111.8
Margin 14.5% 15.2% 13.5% 16.5% 14.5%
RDS
15
Financial Performance to 31 December 2016
• All activity now brownfield with few opportunities in greenfield
• Reduced capex spend by E&P companies continues to impact activity
• We continue to manage costs in line with project activity
Q4 2016 Q3 2016 Q4 2015 Q4 2016 Q4 2015
Result Result Result YTD YTD
$m $m $m $m $m
Revenue 14.4 16.9 31.3 75.3 168.1
EBITDA (post support allocation) (0.3) 1.8 (0.5) 5.1 15.8
Margin -2.4% 10.9% -1.4% 6.8% 9.4%
Group Results Financial Performance to 31 December 2016
16
Revenue and EBITDA ($m)
Q4
2016
$m
Q3
2016
$m
Q4
2015
$m
FY
2016
$m
FY
2015
$m
Revenue from business units 295.7 286.5 410.2 1,274.4 1,776.9
Eliminations (8.0) (2.9) (14.2) (22.2) (108.1)
Total third party revenue 287.7 283.6 396.0 1,252.2 1,668.8
EBITDA from business units 63.4 62.0 81.2 282.4 312.5
Eliminations 0.2 (0.1) (0.1) (0.3) (1.5)
Corporate costs/other (4.6) (5.1) (4.0) (18.9) (18.4)
Exchange 1.1 (0.4) 2.0 (0.3) (2.8)
Total EBITDA 60.1 56.4 79.1 262.9 289.8
Cash flow and working capital Financial Performance to 31 December 2016
17
Working Capital2
9
1Denotes the effect of foreign exchange rate changes on cash and bank overdrafts. 2Deltas denote current quarter working capital movement
Free Cash Flow
1
Q4 2016 Q3 2016 Q4 2015 2016 2015
$'m $'m $'m $'m $'m
Cash generated from operations 87.1 54.0 68.6 281.5 293.6
Tax paid (6.4) (9.3) (13.7) (38.6) (49.6)
Cash flow from operating activities 80.7 44.7 54.9 242.9 244.0
Capital expenditure (15.1) (15.3) (24.9) (105.6) (128.0)
Proceeds from sale of Fixed Assets 1.0 0.8 9.7 61.6 13.9
Interest received 5.4 5.1 5.8 21.1 19.5
Other 0.0 0.2 (1.9) 0.0 0.0
Cash flow from investing activities (8.7) (9.2) (11.3) (22.9) (94.6)
Interest paid1 (50.5) (13.2) (50.7) (127.3) (125.7)
Foreign exchange 10.0 (0.7) (3.3) 20.4 (6.6)
Dividend paid to minority shareholders 0.0 (0.5) 0.0 (0.5) 0.0
Acquisition of non-controlling interests 0.0 0.0 0.0 0.0 (25.0)
Net Cash flow before debt
drawdown/(repayment)31.5 21.1 (10.4) 112.6 (7.9)
Drawdown/(repayment) of debt and
debt issuance costs(8.1) (8.0) (1.9) 51.4 (22.2)
Net cash flow 23.4 13.1 (12.3) 164.0 (30.1)
18
Capital structure Net leverage as at 31 December 2016
1 Based on Q4 2016 LTM EBITDA of $263m. 2 Revolver is split $75/$175m non cash/cash, the amount shown represents the cash element. 3Facility and Recovery ratings shown as at March 2016
Utilisation
31stDecember 2016 Coupon Maturity
Facility
Rating3
Recovery
Rating3 Net Leverage1
Revolver ($250m)2 19.4 L+400 May-19 Caa1/CCC+ 3/3 0.07x
Senior Secured Term Loan 363.3 L(100)+525 May-20 Caa1/CCC+ 3/3 1.38x
HSBC Oman Term Loan 64.0 L+400 Dec-20 0.24x
Total Bank Debt 446.8 1.70x
UK Finance Senior Secured Notes 375.0 7.250% May-21 Caa1/CCC+ 3/3 1.43x
Globe Luxembourg Senior Secured Notes 500.0 9.625% May-18 Caa1/CCC+ 3/3 1.90x
Total Institutional Debt 1,321.8 5.03x
Finance lease & other debt 5.9 - Aug-18 - - 0.02x
Gross Debt 1,327.7 5.05x
Cash 181.4 0.69x
Net Debt 1,146.3 4.36x
Closing remarks
19
• Full year EBITDA of $263m and fourth quarter EBITDA of $60m delivered in challenging market
conditions
• Backlog position of $5.3bn across a blue chip company base
• Strong HSE and operational performance recognised by customers
5m
• g liquidity position at $245m
• Increase in tendering activity across several regions providing positive outlook for 2017
• Positive cash generation of over $100m and strong liquidity position at $262m