Investor Presentation FIRST QUARTER 2019 KCA Deutag is a leadinginternational drilling and engineering 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 First Quarter Investor Presentation Q1 Key Highlights 1 Operational Highlights 2 Business Update 3 Business Unit Financials 4 Group Results 5 Summary 6 2
Q1 Key Highlights 1 1 Q1 2019 revenue of $321.3m (Q1 2018: $291.1m) and EBITDA of $67.7m (Q1 2018: $69.0m) 2 2 Operational integration of the former Dalma business now complete, with further synergies identified 3 3 Several contract extensions and awards for the Land and Offshore Business Units 4 4 Increase of 18% firm contract backlog to $2.7bn (at 1 May 2019) across a blue chip customer base KCA Deutag is a leading international drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance 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 & 41 Rigs Brunei Caspian 7 Rigs 1 Rig 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 May 2019 (1) The % split of LTM EBITDA is calculated using total KCAD group Q1 2019 LTM Proforma EBITDA of $295m (after corporate 4 costs of $17m)
Market Outlook by Business Unit Business Units Outlook Europe New contract awards and extensions in Russia, Algeria and the Middle East Russia / Kazakhstan Land High levels of tendering continue across most markets Drilling Africa Pricing remains competitive Utilisation levels steadily increasing Middle East Bentec Tendering activity continues in a competitive market North Sea Offshore Activity remains steady with further contract awards Services International New Greenfield and Brownfield tendering opportunities however very RDS slow conversion rates Greater investment in the industry required to provide meaningful uptick 5
A well of innovation 6
Integration of Dalma Energy LLC Target synergies ($27m EBITDA & $2m capex) Integration plan complete • Expectation of run rate EBITDA synergies increased further from $24.5m (Q4 2018) to $27.4m (Q1 2019) • Synergy target more than double original estimate of c.$11m • Monthly run rate achievement in March 2019 of $1.9m, being 81% of total savings identified • Close to full run rate synergy realisation on track for end of Q2 2019 • Additional supply chain synergies identified in both Oman and Saudi Arabia (1) EBITDA synergies by type (1) Run rate synergy achievement based on 31 March 2019 actual achievement 7
Strong HSSE Performance Continues IADC industry average 0.68 3 for 2018 Q1 2019 0.28 1,2 Offshore awarded two Best Safety Performance awards received from key Performance Awards by the IADC international customer 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 8 3 KCAD Total Recordable Incident Rate is directly comparable with IADC’s Total Recordables (RCRD) statistic Note: IADC stands for International Association of Drilling Contractors
Stable Backlog Providing Excellent Visibility Total contract backlog as at 1 March 2019 Total contract backlog as at 1 May 2019 Total contract backlog by BU as at 1 March 2019 Total contract backlog by BU as at 1 May 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-May-2019
Robust Offshore Services Contract Backlog (1) 2019 2020 2021 Contract Platform Client Country Assets Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 end date status # Exxon Canada Hebron Mar-46 Operating 1 Equinor (Statoil) Norway CAT J (2) May-36 Operating 2 Equinor (Statoil) Norway Oseberg's (4) & Kvitebjorn Oct-28 Operating / Stacked 3/2 BP Azerbaijan Azeris, SD, DWG, Cop & Chirag Apr-26 Operating 7 Vår Energi Norway Ringhorne Dec-25 Operating 1 Enquest UK Thistle, Heather & Magnus Dec-25 Operating / Stacked 1 /2 CNOOC UK Scott Feb-25 Operating 1 Total UK Alwyn / Dunbar May-23 Operating / Stacked 1 /1 COP UK Britannia Nov-22 Stacked 1 Equinor (Statoil) Norway Pipe pool m anagem ent Nov-22 Active m gm t. contract CNR UK Ninian's (2) Tiffany Nov-21 Operating / Stacked 1 /2 SEIC Russia LA, PA & PB May-21 Operating 3 Exxon Angola Kizom ba (2) Stacked 2 Firm Options Not Disclosed Denotes change since last earnings call (1) Contract and rig status shown as at 1 May 2019 10
Continued Focus on Building Land Utilisation Historical and Forward Contracted Utilisation Utilisation in Q1 2019 was 70% 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 ($m) 39% 30% (1) (2) (3) (4) Bentec Quarterly EBITDA ($m) (5) Bentec YTD Revenue & EBITDA ($m) (5) 6% (10)% = EBITDA Margin Source: Company information. EBITDA shown after corporate overhead allocations. Notes: (1) 2 months of Dalma only (includes $0.7m synergies) (2) Includes $1.8m synergies (3) Includes $3.0m synergies 12 (4) Includes $5.1m synergies (5) Bentec results shown before intercompany eliminations
Offshore & RDS Financial Performance (1) Offshore Services YTD Revenue & EBITDA ($m) Offshore Services Quarterly EBITDA ($m) 11% 17% RDS Quarterly EBITDA ($m) RDS YTD Revenue & EBITDA ($m) 3% 7% = EBITDA Margin Source: Company information. EBITDA shown after corporate overhead allocations. Notes: (1) Q1 2018 EBITDA shows $12m relating to MODUs, margin for Offshore Services only 13
KCA Deutag Group Full Year EBITDA and Pro Forma EBITDA (1) Q1 2019 Pro Forma LTM EBITDA (2) Q1 2019 LTM EBITDA LTM LTM EBITDA EBITDA $270m $295m Q1 2019 LTM EBITDA ($m) Q1 2019 LTM Pro Forma EBITDA ($m) KCAD LTM 203 (4) KCAD LTM 204 (3) Ex-Dalma (May - March) 83 (5) Ex-Dalma LTM 107 Corporate Costs (17) Corporate Costs (17) Total 270 Subtotal 295 Holdco Equity Contribution 25 Total 320 (1) Q1 2019 LTM figures include restated 2018 figures in compliance with IFRS 16 (2) Business Unit proportions calculated based on group EBITDA, before corporate overheads, of $286m. (3) Q1 2019 LTM EBITDA includes $10.6m of actualised synergies. (4) Q1 2019 14 KCAD Pro Forma LTM EBITDA includes unaudited pre-acquisition EBITDA of the acquired IDTEC business of $1.3m for Apr-Sep 2018. (5) Q1 2019 Pro Forma LTM EBITDA includes $16.8m of additional Pro Forma synergies, Dalma pre-acquisition EBITDA of $6.4m for Apr 2018.
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