Archer First Quarter 2019 Executive Chairman Kjell-Erik Østdahl and CFO Dag Skindlo 9 May 2019
Disclaimer – forward looking statements Cautionary Statement Regarding Forward-Looking Statements In addition to historical information, this press release contains statements relating to our future business and/or results. These statements include certain projections and business trends that are “forward-looking.” All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements preceded by, followed by or that include the words “estimate,” pro forma numbers, “plan,” project,” “forecast,” “intend,” “expect,” “predict,” “anticipate,” “believe,” “think,” “view,” “seek,” “target,” “goal” or similar expressions; any projections of earnings, revenues, expenses, synergies, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations, including integration and any potential restructuring plans; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements do not guarantee future performance and involve risks and uncertainties. Actual results may differ materially from projected results/pro forma results as a result of certain risks and uncertainties. Further information about these risks and uncertainties are set forth in our most recent annual report for the Year ending December 31, 2018. These forward-looking statements are made only as of the date of this press release. We do not undertake any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from Fourth parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies, which are impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. 2
Key highlights • Strong financial and operational quarter • Received two separate tenders for Modular Rigs projects in 2020 • Well Services shipped first Mechanical Packer (Mcap) • Land Drilling on track 3
Archer – strong first quarter financial results • Revenue of $225.7 million • EBITDA of $25.0 million or 11.1% of revenue, which is an increase of 89% relative to the same period last year. • EBIT of $11.9 million or 5.3% of revenue versus a loss in same period last year • Net Interest Bearing Debt further reduced to $581.3 million. Revenue [$m] EBITDA [$m] EBIT [$m] 250 30 14 225.7 11.9 218.3 25.0 12 25 200 10 20 8 150 6 15 13.2 4 100 10 2 0 50 5 Q1-18 Q1-18 -2 -1.5 0 0 -4 Q1-18 Q1-19 Q1-18 Q1-19 4
Platform Drilling & Engineering Financial highlights Revenue and EBITDA [$m and %] Revenues ($m) EBITDA (%) • Good operational performance with 9.4% 150 12% 120.3 EBITDA margin 115.5 10% 101.4 99.7 96.0 100 8% • 20% increase in Revenue compared to Q1 2018 6% • 39% increase in EBITDA relative to Q1 2018 50 4% 2% • Low Capex spend in the quarter of $0.2m 0 0% Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 $m Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Operational highlights EBITDA 7.9 9.1 9.5 10.0 10.9 Capex 0.1 0.3 1.0 3.8 0.2 • Good operational quarter in Platform Drilling with well bonuses achieved both in Norway and UK. Platform Drilling contracted rigs [nr of rigs] • We expected to demobilize from two platforms in the UK during Q4 2018 which extended into Q1 47 50 46 45 45 44 45 2019 40 • Received two tenders for deploying the Modular 35 27 27 29 30 30 28 Drilling Rigs with start up in 2020 25 20 15 10 20 19 16 16 15 5 0 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Active Drilling Rigs Maintenance mode rigs 5
Well Services Financial highlights Revenue and EBITDA [$m and %] Revenues ($m) EBITDA (%) • 20% increase in Revenue compared to Q1 2018 40 20% 30.4 29.7 • 80% increase in EBITDA relative to Q1 2018 26.9 26.5 30 15% 24.7 • New technology in Oiltools accounts for 16% of 20 10% revenue in the quarter, with good traction in Asia 10 5% and Middle East 0 0% Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 $m Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Operational highlights EBITDA 2.4 3.9 3.3 5.0 4.4 Capex 0.3 0.4 0.9 3.2 1.1 • Shipped first Mcap to Qatar. Aiming to get access to large Saudi Arabia market later in the year Number of runs show good development • Oiltools with increased client activity, but West Africa lagging • Good activity levels on wireline logging • Mechanical wireline in Norway experienced Wireline lower than expected activity level (reduced client Logging runs activity and some technical downtime) Oiltool runs • Mechanical wireline expects a soft Q2 due to Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 shutdown of client platforms for maintenance in Norway 6
Land Drilling Financial highlights Revenue and EBITDA [$m and %] Revenues ($m) EBITDA (%) • Completed restructuring leading to strong results 100 20% 89.2 86.2 82.3 80.4 79.4 • 239% increase in EBITDA relative to Q1 2018 due 80 15% to strong drilling performance and lower cost base 60 10% 40 • The Argentinian Peso has depreciated 13% vs the 5% 20 USD during the quarter, leading to lower reported 0 0% USD revenue Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 $m Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 EBITDA 3.5 -0.3 10.9 11.4 12.0 Operational highlights Capex 1.8 3.8 2.5 4.9 1.0 • Strong stable operational performance both in the North and South of Argentina. In Bolivia we Archer active rigs [nr of rigs] experienced technical difficulties in one well, which 70 has impacted results negatively in the quarter. 60 52 52 51 51 51 • Stable activity levels for both drilling rigs, workover 50 40 rigs and pulling units 33 32 32 33 33 30 • Despite a difficult macroeconomic climate in 20 Argentina, the activity levels remain elevated, 10 19 19 19 18 19 especially in the unconventional market in 0 Neuquén with increased tender activity for high Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 spec rigs Drilling rigs Workover & Pull units 7
Archer Group – financial highlights first quarter 2019 Revenue [$m] EBITDA [$m, %] 250 233 30 226 224 218 14% 214 25 24 25 22 200 12% 20 10% 150 8% 15 13 12 100 6% 10 4% 50 5 2% 0 0 0% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Capex [$m] Net Interest Bearing Debt [$m] 14 700 630 620 12 601 586 581 12 600 10 500 8 400 6 300 5 5 4 200 3 2 2 100 0 0 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 8
Condensed profit and loss statement (Figures in $ million) Q4 18 1) Q1 19 2018 1) • First quarter revenue of $225.7 million, a decrease of 212.7 210.3 811.2 Operating revenues 3.2% relative to fourth quarter 2018 largely due to less 20.5 15.4 78.4 Reimbursable revenue working days in the quarter and less reimbursable 233.2 225.7 889.6 Total Revenues revenue. 26.9 25.0 88.7 EBITDA before exceptional items • EBITDA reported and EBITDA before exceptional items of (2.5) - (16.4) Exceptional items $25.0 million, or 11.1% of revenue. No restructuring costs reported in the quarter. All divisions, with the exception of 24.3 25.0 72.3 EBITDA after exceptional items Wireline, are continuing the positive trend from second half of 2018. (13.6) (13.1) (56.8) Deprecation, amortization, impairments, other 10.7 11.9 15.5 EBIT • Positive EBIT of $11.9 million, or 5.3% of revenue. (35.9) (1.2) (39.4) Result from associated entities (10.0) (10.2) (38.2) Interest rate expensed • Net financial items of $12.8 million in the first quarter, (14.1) (1.4) (5.5) Other financial costs significant improvement from previous quarter due to less (60.0) (12.8) (83.1) Net financial items foreign exchange impact and impairment of investment in (49.3) (0.9) (67.6) Net result before tax associated entities in first quarter 2019 (7.6) 2.3 14.6 Tax benefit / (expense) • Net positive result for the quarter of $1.4 million. (56.9) 1.4 (53.0) Net result - - - Net loss from discontinued operations 1) Amended Q4 2018 and 2018 relative to Q4 18 reporting on 27 th February 2019 due to reduced carrying value of our QES shares in the Annual Report for 2018 9
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