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Q1 2015 Presentation
Contents
• Highlights and material events
• Segment reporting
• Financial information
• Summary
Page 2
Group – Financial performance
Page 3
Q1 2015 highlights:
• Operating revenue of USD 240 million
• EBITDA of USD 71 million
• EBITDA-margin of 29 %
• EBIT of USD 34 million
• Profit of USD 18 million
Highlights and material events in Q1 2015
Page 4
Dividend and share buy-back program suspended
- In February 2015, the Board decided to suspend the annual dividend for the financial year 2014 due to the significant weakening of market fundamentals and the re-contracting risk in the Company’s MODU segment. At the same time, the Board also decided to suspend the share buy-back program for the same reasons.
Cost reduction programs
- The Group has implemented a series of measures to reduce cost levels throughout the organisation:
- The Group is in the process of optimising its support functions in order to provide more efficient support services. During Q1 2015, about 60 onshore employees in Norway has been laid off.
- Further downsizing of the onshore organisation will be executed throughout 2015 to reduce future cost level and other cost savings initiatives are in the process of implementation.
- A reorganisation of operational and technical support services has also been initiated to increase efficiency and operational performance.
Page 5
Highlights and material events in Q1 2015 (cont.)
MODU – Deepsea Aberdeen commenced on its 7-year drilling contract with BP on 21 April 2015 on the
Quad 204 field development project West of Shetland, UK.
– Deepsea Metro I has secured employment for Vietgazprom for approximately 20 weeks in Vietnam. Expected commencement is mid Q3 2015 and estimated contract value is USD 40 million. In additon there are two options for approximately 90 days each.
– Deepsea Metro II finalized its contract with Petrobras in Brazil mid May 2015 and will be laid-up awaiting new employment.
Drilling & Technology
– During Q1 2015 approximately 60 employees in the Technology business area were made redundant following the downsizing communicated in Q4 2014 report.
– Odfjell Drilling was awarded the drilling engineering sub contract for the Johan Sverdrup drilling platform topside and will be one of Aibel's major sub-contractors for their engineering, procurement and construction (EPC) contact for the Drilling Platform Topside for Johan Sverdrup in the Norwegian North Sea. The contract value is estimated to NOK 110 million.
Well Services
– Due to the current market situation and a reduction of rigs in operation in Norway, Well Services has downsized with approximately 30 offshore and onshore personnel in Q1 2015.
Segment reporting - Mobile Offshore Drilling Units (MODU)
MODU
• Firm MODU contract backlog at 31 March 2015 of USD 1.6 billion
• Financial utilisation:
• Comments:
1) Financial Utilisation is measured on a monthly basis and comprises the actual recognised revenue (encompassing different hourly day rates) for all hours in a month, expressed as a percentage of the full day rate for all hours in a month. Financial Utilization, by definition, does not take into account periods of non-utilisation when the units are not under contract.
2) Deepsea Bergen’s financial utilization in Q1 2015 was negatively impacted by 8 days off-hire in connection with challenges with the subsea equipment in February 2015.
3) Deepsea Metro I was free of charter in Q1 2015.
Page 6
MODU
• Modern fleet of UDW and harsh environment drilling units
• Extensive drilling experience
• Provision of integrated management services for drilling units
Financial Utilisation1
Q1 15 Q1 14 FY 14 FY 13
Deepsea Stavanger 99.0% 95.1% 96.5% 87.1%
Deepsea Atlantic 99.1% 91.8% 92.1% 98.7%
Deepsea Bergen2
90.2% 98.1% 98.7% 97.9%
Deepsea Metro I3
n/a 96.7% 97.7% 98.7%
Deepsea Metro II 94.3% 64.1% 75.5% 78.7%
Drilling unit Location
/operator Current day rate
(USD/day)1 Contract status
Deepsea Stavanger
Angola BP Angola
545,000
Deepsea Atlantic
Norway Statoil
566,371
Deepsea Aberdeen
UK BP Exploration
450,000
Deepsea Bergen
Norway Statoil
350,403
Deepsea Metro I
Anchored in South Africa
255,000
Deepsea Metro II
Brazil Petrobras
432,598
Deepsea Guarapari
Brazil Petrobras
518,453
Deepsea Itaoca
Brazil Petrobras
524,592
Deepsea Siri
Brazil Petrobras
528,687
Contract Option Construction
2014 2015 2016 2017 2018 2020 2021 2019
4
4
4
1) Rates may include mix of currencies and fluctuate based on exchange rates. 2) Day rate is net of taxes 3) In addition to the day rate there is a bonus element of up to 10% linearly from 93% to 98% utilization. 4) In addition to the day rate there is a bonus element of up to 15% linearly from 93% to 98% utilization. Contract length for
each of the units is 15 years from commencement of operations
MODU - Dayrates, contract status and options
Page 7
3
2022
@ 350k
2
Segment reporting - Platform Drilling and Technology
Platform Drilling and Technology
• Firm contract backlog of USD 0.5 billion at 31 March 2015
– Value of priced optional periods of USD 1.4 billion
• Platform Drilling contracts:
Page 8
Drilling & Technology
• One of the leading contractors in the North Sea platform drilling market
• Drilling engineering services
• Established competence for the latest generation technology
Customer Platforms Contract status
7 NO platforms1
Mariner (UK)
Bressey (UK)
Brage
6 UK platforms2
5 UK platforms3
2014 2015 2016 2017 2018 2020 20212019 2022 2023 2024 2025 2026 2027
Contract Option
1) Grane, Heidrun, Njord, Sleipner A, Visund, Snorre A, Snorre B 2) Claymore, Clyde, Saltire, Piper, Tartan, Fulmar 3) Clair, Andrew, Bruce, Magnus, Clair Ridge
Segment reporting - Well Services
9
A leader in remote operated drilling technologies
Norway
Saudi Arabia
United Arab Emirates
Turkmenistan
Kurdistan
BASES : EUROPE
United Kingdom
Holland
Romania
BASES : MIDDLE EAST
OPERATIONS
BASE
Thailand
BASES : ASIA
Vietnam
Key figures
• ~525 employees
• Services from 11 bases
• Operations in more than 20 countries
Service offering
• Tubular runnng services
• Drill tool rental services
• Well intervention services
MODU
• The drilling market has continued weakening into 2015 and we expect a weak drilling market over the next couple of years. The soft market is due to continued delivery of newbuilds and oil companies’ increased cost focus and capital discipline, resulting in an increasing number of stacked units and continued downward pressure on day rates.
• Several of the Group’s drilling units are exposed to re-contracting risk in the current or near term drilling market.
• Fierce competition for a limited number of contract opportunities in the market, and reduced day rates alone does not clear the current market.
• The bifurcation between modern and older drilling units is expected to continue and scrapping of older units will continue.
• In our opinion, the demand for modern UDW and HE units will slowly start improving throughout 2016 leading to increased utilization and a subsequent improvement in day rates.
Platform Drilling and Technology
• Platform drilling services is secured by medium to long-term contracts. The slowdown in the North Sea activity level has led to postponement and cancellation of development- and upgrade projects. As a result the Group has further adjusted the manning within engineering services and further cost cuts and efficiency improvement programs are in the process of being implemented.
Market outlook
Exposed to re-contracting risk in a weak drilling market over the next couple of years
Page 10
Market outlook (cont.)
Well Services
• Well Services has experienced a further reduction in its activities on the Norwegian Continental Shelf (NCS) so far in 2015. This has partly been neutralised by continued growth outside the NCS.
General
• Due to the overall challenging market conditions, cost cutting and efficiency improvement programs have already been implemented and further programs are in the process of implementation.
• In the longer term, we are of the opinion that the oil industry’s demand for drilling services will continue to be supported by the need for reserves replacement and by continued spending on exploration and field-development in the main offshore regions. The Group’s business segments will all benefit and will be well positioned for taking advantage of such future market improvements.
Page 11
Total revenue backlog per year (for firm contracts and priced option periods)1
1) At 31 March 2015, includes pro-rata backlog figures in respect of Odfjell Drilling’s 40% ownership in Deep Sea Metro Ltd, but does not include any backlog for Odfjell Drilling’s share of Odfjell Galvão. Total backlog figures may not equal the sum of firm contracts and priced option periods for the year due to rounding. The Vietnam contract for Deepsea Metro I has not been included in the backlog figures above.
Earnings visibility through USD 3.6 billion order backlog
• Revenue backlog for Well Services, Technology and MODU Management is not included in the revenue backlog above.
Page 12
USD million
Firm contracts USD 2.1 billion
Priced options USD 1.5 billion
Total backlog USD 3.6 billion
Financial information
71 75
270
393
331
382
88
Q1 15 Q1 14 FY 14 FY 13 FY 12 FY 11 FY 10
240274
1 088
1 174
1 0941 057
782
Q1 15 Q1 14 FY 14 FY 13 FY 12 FY 11 FY 10
Financial performance highlights
Odfjell Drilling reports for Q1 2015:
• Operating revenue of USD 240 million
• EBITDA of USD 71 million
• EBITDA-margin of 29 %
• Net profit in the period of USD 18 million
Page 14
Group Operating Revenues (USDm) Group EBITDA (USDm)
Note that the group includes the Deep Sea Metro figures applying the equity method
Group summary financials
Condensed consolidated income statement
Page 15
P&L - (USD million) Q1 15 Q1 14 FY 14 FY 13
Operating revenue 240 274 1 088 1 174
Other gains/losses 0 2 11 22
Share of profit/(loss) from joint ventures -15 -2 -82 0
Personnel expenses -107 -136 -501 -547
Other operating expenses -48 -63 -246 -256
EBITDA 71 75 270 393
Depreciation and impairments -36 -38 -141 -145
Operating profit (EBIT) 34 37 129 248
Net financial items -11 -10 -50 -77
Profit/(loss) before tax 23 27 79 171
Income taxes -5 -4 -36 -102
Profit/(loss) for the period 18 23 42 69
Note that the group includes the Deep Sea Metro figures applying the equity method
MODU
Note that the MODU segment includes pro-rata 40% of Deep Sea Metro figures
1) Include drilling units, periodic maintenance and construction in progress 2) DSM = Deep Sea Metro Ltd Group 3) Before group eliminations and corporate overheads
Page 16
Key Financials (USD million)
Segment reporting - MODU financials
Condensed P&L - (USD million) Q1 15 Q1 14 FY 14 FY 13
Operating revenue 165 180 748 762
EBITDA 78 73 331 338
Depreciation and impairments -34 -36 -203 -134
EBIT 44 37 128 205
Book value own rigs1
2 186 1 624 2 159 1 632
Share of DSM2 non-current assets 531 629 537 645
Total book value MODU units (incl 40% DSM) 2 718 2 254 2 696 2 277
Revenue growth -8,2 % -2,9 % -1,9 % 9,8 %
EBITDA growth 6,7 % -8,8 % -2,3 % 18,7 %
EBIT growth 19,7 % -22,1 % -37,6 % 26,3 %
EBITDA-margin 47,2 % 40,6 % 44,2 % 44,4 %
EBIT-margin 26,6 % 20,4 % 17,1 % 26,9 %
Share of group revenue3
63,8 % 58,0 % 59,9 % 56,8 %
Share of group EBITDA3
85,8 % 76,6 % 79,1 % 72,2 %
Share of group EBIT3
93,8 % 74,3 % 73,9 % 70,2 %
165 180
748 762
Q1 15 Q1 14 FY 14 FY 13
Revenues
78 73
331 338
Q1 15 Q1 14 FY 14 FY 13
EBITDA
Drilling and Technology
Page 17
Key Financials (USD million)
Segment reporting - Drilling & Technology financials
1) Before group eliminations and corporate overheads
Condensed P&L - (USD million) Q1 15 Q1 14 FY 14 FY 13
Operating revenue 54 78 302 352
EBITDA -3 -1 2 25
Depreciation and impairments -1 -1 -6 -5
EBIT -4 -3 -4 20
Revenue growth -30,6 % -11,9 % -14,0 % 11,2 %
EBITDA growth -106,4 % -128,9 % -91,7 % 2,2 %
EBIT growth -54,5 % -168,3 % -121,6 % 5,5 %
EBITDA-margin -5,6 % -1,9 % 0,7 % 7,2 %
EBIT-margin -7,6 % -3,4 % -1,4 % 5,7 %
Share of group revenue1
20,9 % 25,1 % 24,2 % 26,2 %
Share of group EBITDA1
-3,3 % -1,5 % 0,5 % 5,4 %
Share of group EBIT1
-8,8 % -5,4 % -2,5 % 6,9 %
54 78
302
352
Q1 15 Q1 14 FY 14 FY 13
Revenues
-3 -1
2
25
Q1 15 Q1 14 FY 14 FY 13
EBITDA
Well Services
Page 18
Key Financials (USD million)
Segment reporting - Well Services financials
1) Before group eliminations and corporate overheads
Note that FY 13 figures include the divested Mooring business up to 30 April 2013 with a revenue of USD 11.5 million, EBITDA of USD 9.5 million and EBIT of USD 6.7 million.
Condensed P&L - (USD million) Q1 15 Q1 14 FY 14 FY 13
Operating revenue 40 53 198 227
EBITDA 16 24 85 105
Depreciation and impairments -9 -8 -36 -38
EBIT 7 15 49 67
Book value of equipment 144 141 148 136
Cost price for equipment in use 381 374 384 359
Revenue growth -24,9 % -12,9 % -12,7 % 9,0 %
EBITDA growth -33,0 % -16,7 % -18,7 % 10,3 %
EBIT growth -54,2 % -11,5 % -25,9 % 26,8 %
EBITDA-margin 40,3 % 45,2 % 43,1 % 46,3 %
EBIT-margin 17,8 % 29,1 % 25,0 % 29,4 %
Share of group revenue1
15,3 % 17,0 % 15,9 % 16,9 %
Share of group EBITDA1
17,6 % 25,0 % 20,4 % 22,4 %
Share of group EBIT1
15,0 % 31,1 % 28,6 % 22,9 %
40 53
198
227
Q1 15 Q1 14 FY 14 FY 13
Revenues
16 24
85
105
Q1 15 Q1 14 FY 14 FY 13
EBITDA
Group – Eliminations & Reconciliation
Page 19
Group - Eliminations & Reconciliation
(USD million) Q1 15 Q1 14 FY 14 FY 13
Operating revenue -19 -37 -160 -167
EBITDA -20 -21 -148 -76
EBIT -13 -13 -42 -44
EBIT for reportable segments 47 49 173 292
Corporate overheads -4 -3 -11 -19
Gain from sale of Mooring business unit 20
Gain from sale of JV PSW Group AS 8
40% share of EBIT DSM Ltd 6 -8 36 -46
Share of profits from JV/disposals -15 -2 -82 0
Accounting differences 0 0 5 2
Group EBIT 34 37 129 248
Net financial items -11 -10 -50 -77
Group profit before tax 23 27 79 171
Deep Sea Metro financials
Interest bearing debt:
At 31 March 2015 the total interest bearing debt in the Deep Sea Metro Ltd. Group was USD 850 million.
Deep Sea Metro Ltd Group - Key financials (100% basis)
Page 20
Condensed figures - (USD million) Q1 15 Q1 14 FY 14 FY 13
Total income 37 80 345 359
Operating expenses -51 -60 -435 -243
Financial items -19 -22 -91 -93
Profit/(loss) before tax -33 -2 -181 23
Taxes -1 -3 -14 -29
Profit/(loss) -34 -5 -196 -7
Non-current assets 1 328 1 574 1 342 1 611
Cash 177 132 172 83
Current assets 25 83 48 57
Total assets 1 531 1 789 1 562 1 752
Equity 659 875 692 767
Non-current liabilities 394 830 394 467
Current liabilities 478 84 476 517
Total equity and liabilities 1 531 1 789 1 562 1 752
Summary statement of financial position
Group statement of financial position
• Group gross interest bearing debt was USD 1,783 million (net of capitalized financing fees) at 31 March 2015
• The remaining USD 110 million of the revolving credit facility was fully utilised during Q1 2015
• USD 249 million in cash and cash equivalents at 31 March 2015
• Equity-ratio of 36 %
• In compliance with financial covenants at end of Q1 2015
Page 21
Assets (USDm) 31 Mar 2015 31 Mar 2014 31 Dec 2014
Intangible assets 36 35 37
Property, plant and equipment 2 335 1 771 2 312
Financial fixed assets 292 403 308
Total non-current assets 2 663 2 209 2 657
Trade receivables 197 225 213
Other current assets 26 43 31
Cash and cash equivalents 249 221 191
Total current assets 472 489 435
Total assets 3 135 2 698 3 093
Equity and liabilities (USDm) 31 Mar 2015 31 Mar 2014 31 Dec 2014
Total paid-in capital 332 332 332
Other equity 794 814 784
Total equity 1 125 1 145 1 116
Borrowings 1 545 1 060 1 471
Post-employment benefits 68 66 77
Deferred tax liability 3 19 3
Other non-current liabilities 9 15 11
Total non-current liabilities 1 625 1 160 1 562
Borrowings 239 180 234
Trade payables 21 40 29
Other current liabilities 124 173 152
Total current liabilities 384 393 415
Total liabilities 2 009 1 553 1 977
Total equity and liabilities 3 135 2 698 3 093
Summary statement of cash flow
Group statement of cash flow
Page 22
Cash Flow - (USDm) Q1 15 Q1 14 FY 14 FY 13
Profit before income tax 23 27 79 171
Cash from operations 69 88 358 339
Interest paid -12 -13 -51 -56
Income tax paid -12 -19 -68 -37
Net cash from operations 46 55 240 245
Net cash used in investing activities -62 -0 -680 -81
Net cash from financing activities 74 -35 431 -165
Net change in cash and cash equivalents 58 20 -9 -1
Cash and cash equivalents at period end 249 221 191 201
Summary Q1 2015
Page 23
• Earnings visibility through USD 3.6 billion order backlog
• MODU exposed to current and near term re-contracting risk for several of its units
• Deepsea Aberdeen commenced its long-term drilling contract in April 2015
• Deepsea Metro I secured new employment in Vietnam
• Platform Drilling secured by medium-to long term contracts
• Engineering capacity further adjusted to meet the reduced demand for engineering services in the North Sea basin
• Well Services experiencing further reduction in activities on the NCS so far in 2015. Partly neutralised by continued growth outside the NCS.
• Balance sheet with USD 1.1 billion in book equity and book equity-ratio of 36 %
• USD 249 million in cash and cash equivalents
President & CEO Simen Lieungh EVP & CFO Atle Sæbø Investor relations Lasse H. Johannesen, [email protected], +47 55 92 11 01 / +47 995 06 908 Press contact Gisle Johanson, [email protected], +47 414 40 050 Next event: Q2 2015 results to be announced on 26 August 2015 For more information see: www.odfjelldrilling.com
