Investor Presentation THIRD QUARTER 2019 KCA Deutag is a leadinginternational drilling, engineering and technology company working onshore and offshore with a focus on safety, quality and operational performance 0
Disclaimer 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 These forward-looking statements are based on management’s current Deutag. 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. 1
Agenda Third Quarter Investor Presentation Q3 Key Highlights 1 Operational Highlights 2 Business Update 3 Business Unit Financials 4 Group Results 5 Summary 6 2
Q3 Key Highlights 1 Q3 2019 revenue of $318.2m (Q3 2018: $345.9m) and EBITDA of $74.5m (Q3 2018: $75.7m) 2 Land Drilling secures $460m of new contracts in the Middle East, Africa and Europe 3 Bentec awarded a multi-million dollar contract for seven cluster slider drilling rigs in Russia 4 4 Offshore services awarded contract extensions on two of their existing contracts 5 Contract backlog increased by 7% to $5.8bn (at 1 November 2019) across a blue chip customer base 6 Launched #enhancethebrand Well of Innovation campaign and several operating improvement initiatives Financial results noted above include results from the Dalma business which was acquired 30 April 2018 2018 results restated in compliance with IFRS 16 3
KCA Deutag Operations are Diversified Across Global Markets Russia North Sea 17 Rigs /Norway 18 Plat Russia Canada Sakhalin 1 Plat 3 Plat Bergen Caspian Tyumen 7 Plat Aberdeen (HQ) London Bad Bentheim St. Johns Baku Middle East Europe & 42 Rigs Caspian 7 Rigs Dubai Nizwa Africa 11 Rigs Angola Geographical EBITDA Split (1) 2 Plat PRESENCE IN KEY AREAS 150 131 120 90 Years 60 55 45 60 20 30 0 Europe North Africa Middle East North Sea Russia Regional offices Land Drilling Offshore Services RDS offices Bentec Map shows position at 1 November 2019 (1) The % split of LTM EBITDA is calculated using total KCAD group Q3 2019 LTM Proforma EBITDA of $316m (after corporate 4 costs of $16m)
Market Outlook By Business Unit • Continued lower oil price and volatility driven by concerns around a global slowdown • Customers continue to challenge suppliers for lower pricing • Despite the competitive pricing environment we continue to improve utilisation and backlog Business Units Outlook New contract awards and extensions in Middle East, Africa and Europe Land Drilling Utilisation levels steadily increasing despite the competitive pricing environment New seven cluster slider rig contract award Bentec Tendering activity continues in a difficult market Market remain stable with increased activity coming from reactivation Offshore Services Continue to explore ways to expand into adjacent services New tendering opportunities but very slow conversion rates RDS Targeting diversification in existing markets and the energy transition space 5
HSSE Performance Continues To Out Perform Industry Average IADC industry average 0.68 3 for 2018 Q3 2019 0.27 1,2 KCA Deutag Nigeria Wins Promoting increased Best HSE Performance Award awareness through at the IADC Nigeria Chapter’s safety campaigns to 2018 Safety Awards drive to zero incidents (1) Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average (2) Dalma business has been incorporated from May 2018 6 KCAD Total Recordable Incident Rate is directly comparable with IADC’s Total Recordables (RCRD) statistic (3) Note: IADC stands for International Association of Drilling Contractors
#enhancethebrand ‘Well Of Innovation’ Initiative Software products to significantly improve drilling efficiency, reduce downhole +veDRILL TM problems and help drive towards full remote rig operations. TurnRight +veDRILL TM A digital approach to address human factors, enhance procedural compliance and Enhance support rig personnel in making the right choices with the right information. Innovations in maintenance, such as remote and condition based monitoring to +veDRILL TM Maintain improve performance, equipment overhaul and repair replacement schedules. +veDRILL TM Advanced data analytics tools to evaluate and analyse performance using a library of Insight years of historical drilling data to create continuous improvement cycles. State of the art technology to design and upgrade rigs, and lead the drilling digital +veDRILL TM transformation to reduce the man-hours required to complete projects. Design +veDRILL TM Leadership in drilling innovation driven by the combination of our KCAD operational Future expertise and Bentec rig and equipment manufacturing experience. Go to www.wellofinnovation.com for more information, including case studies 7
#enhancethebrand Improvement Initiatives Encourage a bottoms up approach where all employees can contribute ideas to SKORE eliminate wasted time and spend and preserve cash. Supply Improve supply and inventory management to drive local spend efficiencies, cost Management avoidance, strategic sourcing and stock optimization. Functional Review all support structures to ensure we can deliver more effective functional Support support and operate at optimum performance. Evaluate digital work streams from going paperless, building operational platforms to Digitalisation identifying smarter technologies that allow us to deliver value to our customers. Customer Continue to deliver safe and incident-free services and further understand tough customer challenges so we can invent innovative products and solutions. Centricity Energy Identify and implement internal carbon reduction projects and aggressively pursue Transition revenue generating opportunities in this space. 8
Improved Backlog With An Uptick In Land And Bentec Total contract backlog as at 1 August 2019 Total contract backlog as at 1 November 2019 Total contract backlog by BU as at 1 August 2019 Total contract backlog by BU as at 1 November 2019 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 9 necessarily indicative of our future revenue or earnings. KCAD backlog amounts are estimates as of 1-November-2019
Long Term Offshore Services Contract Backlog (1) 2019 2020 2021 Contract Platform Client Country Assets end date status # Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Exxon Canada Hebron M ar-46 Operating 1 Equinor (Statoil) Norway CAT J (2) M ay-36 Operating 2 Equinor (Statoil) Norway Oseberg's (4) & Kvitebjorn Oct-28 Operating / Stacked 3/2 AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Apr-26 Operating 7 Vår Energi Norway Ringhorne Dec-25 Operating 1 Enquest UK Thistle, Heather & M agnus Dec-25 Operating / Stacked 1 /2 CNOOC UK Scott Feb-25 Operating 1 CNR UK Ninian's (2) Tiffany Nov-24 Operating / Stacked 1 /2 Exxon Angola Kizomba (2) Jan-24 Operating / Stacked 1 /1 Total UK Alwyn / Dunbar M ay-23 Operating / Stacked 1 /1 Chrysaor (COP) UK Britannia Nov-22 Stacked 1 Equinor (Statoil) Norway Pipe pool management Nov-22 Active mgmt. contract SEIC Russia LA, PA & PB M ay-21 Operating 3 Firm Options (1) Contract and rig status shown as at 1 November 2019 10 Denotes change since last earnings call
Land Utilisation Shows Steady Increase Historical and Forward Contracted Utilisation 1 Utilisation in Q3 2019 was 73% 1 Utilisation includes 29 Dalma Rigs on a proforma basis from 2017, and is shown after the retirement of 6 rigs on 1 November 2018 (including 5 Dalma rigs) 11 Historical utilisation represents actual utilisation calculated on a bi-monthly basis Forward contracted utilisation represents the current contracted position
Land & Bentec Financial Performance Land Quarterly EBITDA ($m) Land YTD Revenue & EBITDA ($m) (2) (2) (2) 32% 30% (1) Bentec Quarterly EBITDA ($m) (3) Bentec YTD Revenue & EBITDA ($m) (3) 10% 0% = EBITDA Margin (1) 2 months of Dalma only (2) Adjusted to remove the one off Revenue increase of $14.3m relating to IFRS 15 (3) Bentec results shown before intercompany eliminations 12
Offshore & RDS Financial Performance (1) Offshore Services Quarterly EBITDA ($m) Offshore Services YTD Revenue & EBITDA ($m) 14% 18% RDS Quarterly EBITDA ($m) RDS YTD Revenue & EBITDA ($m) 4% 8% = EBITDA Margin (1) Q1 2018 EBITDA shows $12m relating to MODUs, margin for Offshore Services only 13
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