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1
Sevan Marine ASAPresentation Q1- 2007
Shippingklubben, Oslo, April 26, 2007
2
Contents
• Current Status
• The Sevan Technology
• Business Model
• Market Outlook
• Shareholder Info
• Appendix
3
4
Current status
Sevan Piranema
The Sevan Piranema accepted by Petrobras, and is currently on standby rate
Unit now preparing for field installation
Motion behaviour and transit speed in accordance with model testing and analyses
Installation of mooring system (by Petrobras), drilling of production and injection wells,environmental license – in progress
Newbuilds: Sevan Piranema
5
Current status
Sevan HummingbirdOn scheduleArrived Rotterdam on April 13, 2007 after a 36 days sea voyage from ChinaInstallation of topside to commence
Sevan #3On scheduleHull to be completed Q2 ’07
Sevan #4On scheduleKeel-laying milestone achieved Jan ’07Hull to be completed Q4 ’07
Sevan DrillerOn scheduleHull Construction expected to start May ’07
Newbuilds: Hummingbird, Sevan #3-4, Sevan Driller
6
Current status
• Two floating production hulls ordered – one Sevan 300 and one Sevan 650
• Additonal yard capacity secured at COSCO - EPCI contract signed for the Sevan Driller
• Options to build 8 more units at Hantong and 2 units at Cosco
• A direct share issue of USD 121m and a bond issue of USD 270m completed
• Kanfa Aragon (www.aragon.no) established – with focus on gas applications- FPSO gas systems, gas compression, offshore LNG, engineering studies, process
packages
• Alternative applications for the Sevan technology under evaluation
• Strong market continues – 15+ prospects under evaluation- order backlog USD 2.3 bn, USD 3.6 bn including options
Other business activities
7
Gas Treatment PlantLNG, GTW, LPG, Power Terminal
MODUMobile Offshore Drilling Unit
ACCOMMODATIONService platform
The Sevan Platform- the versatile technology -
FSOFloating Storage
Offloading
FDPSOFloating Drilling Production
Storage Offloading
SICVSubsea Installation
Construction Vessel
FPSOFloating ProductionStorage Offloading
8
Global solutions: the Sevan Technology can be applied in all offshore markets
Brazil
US Gulf
North Sea
9
Q1 2007 – Financial highlights
• Operating revenues USD 10.3m (USD 12.9m)– Revenues consist of Kanfa’s external sales and standby rate for Sevan
Piranema from mid-March.
• Operating profit USD - 22.1m (USD -4.0m)– The increase in cost is due to pre-operational cost that has been expensed,
and a general increase in activity in the Group
• Net profit USD - 16.6m (USD -4.3m)
• Total assets USD 974m (USD 559m)– Capital assets of USD 605m (USD 183m)– Cash and equivalents of USD 260m (USD 343m)
10
Q1 2007 - Balance Sheet & Profit and Loss statement
Balance SheetUSDm 31.03.07 31.03.06Total long term assets 692,6 205,1Total current assets 281,2 353,5Total assets 973,8 558,6
Total shareholders' equity 461,2 368,5Minority Interest 8,1 6,4Total long-term debt 424,7 156,8Total current liabilities 79,8 26,9Total shareholders' equity and liabilitie 973,8 558,6
Profit & Loss accountUSDm Q1 07 Q1 06 2006Operating revenues 10,3 12,9 21,9Operating expenses 32,4 16,9 46,7Operating profit -22,1 -4,0 -24,8
Net financial gain/(loss) 1,3 -1,8 4,3Profit before tax -20,8 -5,7 -20,5Net profit -16,6 -4,3 -15,4
11
Sevan Piranema was accepted by Petrobras in March, 2007
12
The Sevan Hummingbird arrived Rotterdam, Netherland April ‘07
13
Sevan Hummingbird dock-side at Keppel Verolme April ‘07
14
Progress at Yantai Raffles, Sevan # 3, April, 2007
15
Progress at Hantong Shipyard, Sevan # 4, April, 2007
Block assembly in Hull workshop Block 101 + 201 center shaft block at site.
16
Summary: An attractive investment opportunity
• Technological and cost advantages make business case superior
• Sevan Piranema accepted by Petrobras; major milestone achieved
• Five Sevan units on long term contracts; two additional hulls ordered
• New shipyard capacity secured
• Order back log as of April 2007: USD 2.3 bn, USD 3.6 bn incl. options
• Strong market interest – more than 15 prospects under evaluation
• New applications for the Sevan technology – possibilites to createshareholder value
17
18
Contents
• Current Status
• The Sevan Technology
• Business Model
• Market Outlook
• Shareholder Info
• Appendix
19
• Drilling equipment (some)
• Deck space• Large no. of risers• Good motions
Pro’s• Storage capacity• Deck space• Deep water• Flexibility (re-use)
• Drilling equipment• Well access• Traditional steel
risers• Track record
• Drilling equipment• Well access• Traditional steel
risers• Deep water
• Limited storage capacity
• Costly risers• Limited well access• Limited deck load
Con’s• Costly risers• Limited no. of risers• No well access
• No storage• Expensive design• Limited depth• Limited deck load
• Limited storage• Not for harsh
environment• Limited no. of risers• Limited deck load
• Limited well access in harsh environment
• Pre-qualified - but no units delivered yet
Semi FPSO TLP Sevan
• Low construction cost• No turret and swivel • Storage capacity• Drilling and well compl.• Large number of risers• High deck load cap.• Good motions• Deep water
Source: Sevan Marine, Enskilda Securities
SPAR
The Sevan platform compared to other floating units
20
Simplified cylinder design based on standard ship building principles
Keeping cargocompartments
• Compact design• Turret and swivel arrangements replaced by spread mooring solution• Simple integration between hull and topside• Standard panel and block fabrication and structural members with few
dimensions• Reduced cable and piping, no piping in tanks
21
Reduced investments and improved operation
• High deck load capacity and stability reserves
• Any number and type of risers• Excellent motion response• No global bending and reduced
fatigue exposure in hull• Less piping and easy access to all
equipment
Reduced investment cost
Compact design
No turret, No swivel
• 20-25% less steel weight• 50% less piping• 50-70% less engineering cost• Shorter construction time
Improved operation
Reduced maintenanceHigher flexibility
Improved reliability in demanding conditions
22
Module based concept offering a wide capacity range
Sevan 300 300.000 55.000 17 60Sevan 600 600.000 110.000 20 75Sevan 850 850.000 140.000 24 84Sevan 1000 1.000.000 165.000 28 84Sevan 1700 1.700.000 278.000 30 106Sevan 2000 2.000.000 305.000 33 106
Production capacity from 20.000 to 200.000 bbl/day
DesignStorage
(bbl)Displacement
(mt)Draft
(m)Diameter
(m)
23
The Sevan technology verification process completed
• Sevan has over the last three years invested ~NOK 50 million on the development of the Sevan technology
2001 2002 2003 2004Patent process
Quotations and construction schedules from leading Yards
Co-op with ABB and Schlumberger for the design, fabrication and operation of the process plant
In house hydrostatic and hydrodynamic analysis
Steel design of the hull
Assessment of flexibility, size variation and deck load capacity
Structural design and main scantling drawings
Building of 1st unit at Yantai Raffles Shipyard
Generic model tests at Marintek
DNV review of technical, cost and
schedule risks
Model tests for Haltenbanken, GoM
and Brazil
DNV Concept Risk Analysis
DNV Design Appraisal
Demo/Model testing LABOCEAN, Rio
Pre-qualified by Petrobras
Patent PCT recommendation
Main scantling appr. initiated
Detail eng. and
fabrication drawings
completed
Verification of riser and mooring
configuration at Marintek
24
Complete verification by Det Norske VeritasClassification and Statutory Requirement Status
– Rules and Class Notations established (+OI, FPSO)– Main scantling approval– Global design analysis, incl. fatigue assessment– Approval in principal (AIP)– Class approval of construction drawings
Assessment of Construction and Delivery Risk– Following yards have been assessed: Yantai-Raffles, Hyundai,
Samsung, Daewoo, Keppel Fels, Jurong– “No show stoppers. The concept is simple and effective and has many
advantages over other types of Mobile Production Units”
Safety case assessment for UK
Concept Risk Analysis (CRA)– “The risk results are within the defined acceptance criteria for the North
Sea, satisfying NPD requirements”
25
Contents
• Current Status
• The Sevan Technology
• Business Model
• Market Outlook
• Shareholder Info
• Appendix
26
• Ownership in all units
• Partnerships on a case by case basis
• Proprietary technology• In-house expertise
− Hull − Topside (Kanfa)
Design
Business model: to capture the cost advantage
• Long-term construction capacity secured with key yards
• In-house expertise in project management and execution
• Operation responsibility
• Combines internal and external resources
• Lease contracts – no reservoir exposure
• Full control of own technology
• Higher returns over a longer period
• The core competencies and competitive advantages are within the technology
• Inhouse marine and process expertise provides optimization and flexibility
• Full control through own operation management
• Increased flexibility
FOC
US
RA
TIO
NA
LE
Engineering Construction Ownership Operation
• Construction capacity is a critical success factor
• Extensive construction program in the years ahead requires key competence in execution
27
Contents
• Summary
• The Sevan Tecnology
• Business Model
• Market Outlook
• Shareholder Info
• Appendix
28Source: “Deepwater GoM: Americas Emerging Frontier”; MMS 2000-022
Sevan targets the market for floating oil production – challenging existing technology
150 m
3 000 m
Floating production units (FPU)
Seismic Fieldsurvey
Fielddevelopment Exploration Subsea
construction Production Storage Transportation
E.g. shuttle tankers
• Long term contracts (av. 5-7 yrs)• Stable dayrates• Limited building on spec• Usually ~100 % utilization in market
Offshore value chain
Fixed platform
Compliant tower Mini TLP FPSO TLP Spar
The Sevan technology is suited for all depths and conditions
Market characteristics for floating production units
Maximum depth
29
Floating production is used for a wide range of oil fields
• Oil fields based on floating production vary considerably in size, depth and conditions
• Typically projects are in locations remote from existing infrastructure
• Other characteristics:– Total reserves > 10 mbbl– Daily production 5.000 – 200.000
bbl/day
• Sevan’s initial focus is on marginal/ small and medium sized oil fields
Sevan 300
Oil reserves:10-25 mbbl
Oil reserves:25-80 mbbl
Marginal / smalloil fields Medium oil fields
Different Sevan units for different sized oil fields
30
Key market drivers positive
Macro drivers
• Increased demand for oil and gas1)
• Sustainable higher oil price shift focus to small and medium-sized fields2)
Competition drivers
• Contractors expected to take a larger stake of the fragmented market
• Little available capacity units are extended under existing contracts
• Several new entrants
Market drivers
• Increased exploration activity new floating production projects
– New discoveries further away from existing infrastructure
• Several new oil companies with main focus on smaller fields / tail production
• Constrained shipyard capacity increased building cost
1) India and China key growth drivers2) Require improved and more cost-effective technological solutions
31
0
5
10
15
20
25
30
35
40
45
Source: Infield – Floating Production Systems Market Update 2005/09
Several opportunities in the focused areas141 floaters currently evaluated with first oil within 5 years
Sevan Marine’s main focus areas
Africa Asia Austral-asia
Europe Latin America
Middle East
North America
FPSO
Other
Marginal fields require improved and more cost-effective technical solutionsThe Sevan platform is an accessible and fast-track solution for these fields
32
Contents
• Current Status
• The Sevan Tecnology
• Business Model
• Market Outlook
• Shareholder Info
• Appendix
33
Shareholder structure
10 largest shareholders
Shareholder No of shares %Goldman Sachs Intern Equity 28 863 257 17,95Morgan Stanley & Co Client Equity Ac 17 254 766 10,73Bank of New York, Br Bny Gcm 13 178 948 8,20Credit Suisse Securi (Europe) Ltd. 7 253 813 4,51Arne Smedal 3 648 703 2,27Morgan Stanley & Co. 3 230 198 2,01UBS AG, London Branc Equities 3 124 270 1,94Supernova AS 2 943 444 1,83Hallngen AS 2 871 296 1,79Aasen AS 2 804 036 1,74
85 172 731 52,97
10 largest shareholders
Total no of shares: 160 785 765 Foreign ownership: 80%.Free Float: 88%. As of April 17, 2007.
Trade development (SEVAN)
34
Outstanding Bonds
Bondholders
Call Option
Issue Price
Coupon
Maturity
Issue Date
Amount
Norwegian and international Institutional Investors
Period 6-12 months after Acceptance Date at 104%(expected Sept. 2009 – March 2010)
20 December 2009 at 103%20 December 2010 at 102%
N.A.
100%100%100%
NIBOR + 5%9,25%9%
7 December 201220 December 201131 March 2008
7 December 200620 December 200631 March 2005
NOK 1,000,000,000USD 140,000,000NOK 670,000,000
SD06Sevan Drilling AS Callable
Bond Issue 2006/2012
SEMA06Sevan Marine ASA Callable
Bond Issue 2006/2011
Sevan01Sevan Marine ASA Senior
Secured Bond Issue 2005/2008
35
Contents
• Current Status
• The Sevan technology
• Business Model
• Market Outlook
• Shareholder info
• Appendix
36NEWBUILD PROJECT INCORPORATING THE SEVAN TECHNOLOGY
37
Sevan Drilling - Company structure• Sevan Drilling AS is a 100% owned
subsidiary of Sevan Marine ASA
• Project management, engineering, and yard supervision agreements handled under contract with Sevan Marine ASA
• Seasoned management with drilling experience from reputable drillers
– Willy Tørhaug, VP Operations. 37 years experience from the drilling industry. Last 9 years SVP Drilling operations with Ocean Rig. Previously in similar position with Transocean Norway.
– Dan Eggan, VP QHSE, 9 years with Ocean Rig, last 5 years as VP QHSE
Sevan Marine ASA
Sevan Drilling PteLtd (Singapore)
Sevan Drilling AS
100%
100%
38
Sevan driller - the next generation drilling rig
• Combines the high deckload capacity of a drillship with the stability of a semi
• Ultra deep water (12,500 ft) and harsh environment capabilities
• High cost efficiency compared to drillship and semis
• Critical contracts for long lead items in place
• NOK 1bn bond in place – USD 250m bank loan under negotiation
39
The Sevan management has a proven track-record of creating shareholder value
Commercialized technology:• Navis ASA: Deepwater drill ship
– From concept to delivery in 28 months– Built on time and budget at Samsung
• APL AS: STL and STP technology– More than 15 units in operation on Shuttle
tankers, FSOs and FPSOs– From 0 to NOK 325m in 3 yrs
• MCG AS: Bow loading and offloading systems– More than 60 units in operation world wide on
shuttle tankers and FPSOs– From 0 to NOK 250m in 5 yrs
• Pusnes: Product development, commercialization and internationalization of various products
Transaction & business track-record:• Navis ASA, IPO: Sold to Fred. Olsen Energy
for NOK 1.8bn• Sale/IPO of Anchor Drilling Fluids, NOK 700m
and Prosafe, NOK 800m• Transocean: From NOK 300m to NOK 10bn in
6 yrs, sold to Sonat Offshore• Negotiating and managing 8 contracts worth
USD 850m with Petrobras• Successful build-up and management of
Angola turnkey operations for Petrobras• Senior Management with experience from
FPSO operations
40
• A supplier of process equipment, systems and consultancy services, i.e. design, studies and troubleshooting
• An independent company with regard to technology, clients and vendors
Kanfa AS
• Sevan Piranema – Sevan Marine• KMZ Field, Mexixo – Bergesen Offshore• Ormen Lange – Aker Kværner• Gullfaks A/B/C – Statoil• Draugen – Norske Shell• Siri – Dong• Borgen Dolphin/Knock Taggart – Fred Olsen• Balder FPU – Aker/Esso• Valhall – BP• Corocoro FSO, Venezuela – Conoco Phillips
Extensive project experience – selected projects
Kanfa is a Norwegian process design and engineering company owned 100 % by Sevan Marine
41
Sevan will strive to make the company share an attractive investment object
• In accordance with generally accepted recommendations
• Proactively follow up of routines
• Available management
• Best practice web site
• Investor presentation in Oslo every quarter
Sound Corporate Governance routinesOpen and proactive IR-work
• OB Match• Strategy and markets conditions
• Important value drivers
• Relevant risk factors
Qualify for OSE-categoriesClarify long term value potential
42
Patent status – all proprietary rights owned by Sevan Marine ASA
• Sevan has filed patent applications in Norway in connection with the development of the Sevan Technology
• Further, Sevan has filed patent applications in various countries, under the PCT convention
• Sevan has been advised from Patentstyret that the patent applications satisfy the requirements for patentability and that patents will be granted
• All patents and proprietary rights are the ownership of the parent company Sevan Marine ASA
Sevan has filed for patents in Norway and all other relevant markets
Sevan has been advised that patents will be granted
43
• 1997-2001: Vice President Technology of Navis• 1994-1997: Vice President Technology of Advanced Production Loading• 1990-1994: Project Manager of Marine Consulting Group• Holds an MSc in ship construction from NTNU in Trondheim 1973
VP TechnologyKåre Syvertsen
(1951)
• 1998-2001: CFO of Navis • 1996-1998: VP Corporate Planning in Sonat Offshore (Transocean Offshore)• 1991-1996: CFO in Transocean AS• Board member of various companies within offshore, land based industry and finance• Holds an MBA from NHH in Bergen 1985
CEO Jan Erik Tveteraas
(1960)
PresidentSevan Marine Brasil
Gerson Peccioli(1955)
• 2000-2005: Business Development Manager and New Tecnology Manager of Schlumbergerl, Brasil• 1988-2000: General Manager Libya and Angola, operations manager head office for Braspetro• 1980-1988: Various management positions within Petrobras, Brazil• Holds a PMP certificate from Project Management Institute
• 1997-2001: President & CEO of Navis ASA• 1996-1997: Executive Vice President of Hitec ASA• 1989-1996: Founder & President of MCG and APL• Board member of various companies within shipping and electronics• Holds an MSc in hydrodynamics from NTNU in Trondheim 1973
DirectorArne Smedal
(1947)
Senior Management
• 2001-2004: Financial Manager MI SWACO Scandinavia (Smith International)• 1997-2001: Analyst MI Norge AS• 1996-1997: Banking• Board member of various companies and organizations• Holds a BA in Bus. Admin. from Norwegian School of Management and Bishops University Canada
CFOEgil Kvannli
(1972)
VP OperationsErling A. Ronglan
(1969)
• 2001-2005: Operations Manager FPSO Petrojarl I, PGS Production• 1999-2001: Operations Engineer PGS Production• 1997-1999: Customer Service Manager DNV Oslo• Holds an MSc in Marine Technology from NTNU in Trondheim
VP Business DevelopmentFredrik Major
(1950)
• 1995-2005: Vice President Business Development Advanced Production and Loading • 1994-1995: Technical Director Ericsson AS• 1983-1994: Founder and Director of Semafor Data• Holds an BSc in Naval Architecture and an MSc in Computer Science from NTNU in Trondheim in 1976
44
Board of directors
Jan Fredrik Wilhelmsen
(1953)Chairman
Jean-Philippe Flament(1968)
Board member
Hilde Drønen(1961)
Board memberArne Smedal
(1947)Vice chairman
Kåre Syvertsen(1951)
Board member
Vibeke Strømme(1964)
Board member
45
Board of directors
Jan Fredrik Wilhelmsen (1953)
Chairman
Jean-Philippe Flament(1968)
Board member
Hilde Drønen (1961)
Board member
Arne Smedal(1947)
Vice Chairman
Kåre Syvertsen (1951)
Board member
Vibeke Strømme(1964)
Board member
Mr. Wilhelmsen graduated with a law degree from the University in Oslo in 1979. He was admitted to the Supreme Court Bar in 1992 and is now partner in the law firm BAHR in Oslo. During his law practice he has gained extensive knowledge of the offshore industry.
Mr. Flament holds a BS in Finance and International Business from New York University. Since 2003, Mr. Flament has worked as a Portfolio Manager in Cheyne Capital Management. Mr. Flament has previously served as a Managing Director of Morgan Stanley & Co Intl Ltd (1993-2002) and as Assistant Director of NatWest Financial Products plc (1991-1993).
Mrs. Drønen holds a Business Administration degree from 1986. Mrs Drønen works as CFO of DOF ASA and has, inter alia on this basis, extensive experience from the offshore sector. Mrs. Drønen is represented in several other board of directors, interalia the board of directors of Tide ASA and Subsea ASA.
Mr. Syvertsen graduated with an MSc in ship construction from NTNU in Trondheim in 1973. Mr. Syvertsen was previously Vice President Technology of Navis (1997-2001), Vice President Technology of Advanced Production Loading from 1994 to 1997, Project Manager of Marine Consulting Group from 1990 to 1994 and Professor in marine technology at NTNU, Trondheim from 1976 to 1990.
Mrs. Strømme holds an MSc in petroleum technology engineering and a MBA from IMD, Lausanne. Mrs Strømme is senior Vice President of Mesta AS, and has previously held leading positions in Philips Petroleum Company Norway AS, VikenEnerginett AS and Hafslund ASA. She has also experience as management consultant. Mrs. Strømme has experience from several board of directors.
Mr. Smedal holds an MSc in hydrodynamics from the Norwegian institute of Technology (NTNU) in Trondheim. Mr. Smedal has previous experience as President and CEO of Navis ASA 1997-2001, Executive Vice President of Hitec ASA from 1996-1997, founder and President of Marine Consulting Group and Advanced Production Loading from 1989-1996, as well as various positions, incl. President at Pusnes from 1979 to 1989. Before this, Mr. Smedal worked for Det Norske Veritas from 1974-79. Mr. Smedal has been a board member of various companies within shipping and electronics.