Investor Presentation SECOND 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 Second Quarter Investor Presentation Q2 Key Highlights 1 Operational Highlights 2 Business Update 3 Business Unit Financials 4 Group Results 5 Summary 6 2
Q2 Key Highlights 1 Q2 2019 revenue of $395.1m (Q2 2018: $292.8m) and EBITDA of $74.4m (Q2 2018: $50.3m) 2 Bentec successfully delivered the final 3 rigs for our customer in Ukraine Operational integration of the former Dalma business now complete with synergies of $27.6m identified 3 and 89% of these already secured 4 4 Land Drilling awarded a number of new contracts in the Middle East, Russia, Europe and Africa 5 Contract backlog of $5.4bn (at 1 August 2019) across a blue chip customer base 6 Significant progress made on our technology initiative, Well of Innovation, with launch in September 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 August 2019 (1) The % split of LTM EBITDA is calculated using total KCAD group Q2 2019 LTM Proforma EBITDA of $306m (after corporate 4 costs of $16m)
Market Outlook By Business Unit • Recent decline in oil price and continued volatility driven by concerns around a global slowdown with continued uncertainty • A very challenging landscape where our customers continue to maintain a low pricing environment coupled with ongoing local cost pressures Business Units Outlook New contract awards and extensions in Middle East, Russia, Europe and Africa Tendering has levelled out though remains steady Land Drilling Pricing remains competitive Utilisation levels steadily increasing Bentec Tendering activity continues in a very competitive and difficult market Activity remains steady with some reactivation discussions Offshore Services New Greenfield and Brownfield tendering opportunities but very slow conversion rates RDS Greater investment in the industry required to provide meaningful uptick Targeting diversification in the FPSO, Subsea, Wind and Decommissioning sectors 5
HSSE Performance Continues To Out Perform Industry Average IADC industry average 0.68 3 for 2018 Q2 2019 0.32 1,2 Norway’s Ringhorne Operation wins the Vår Energi – CEO 2018 Contractor Safety Award (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
A Well of Innovation • Upcoming September 2019 launch of KCA Deutag’s “Well of Innovation” marketing campaign and our exciting new +veDRILL technology brand • Sitting underneath this, there are six product ranges. These address the main issues and challenges that our customers face and that our technology can help them solve. 7
Stable Backlog Across The Business With An Uptick In Land Total contract backlog as at 1 May 2019 Total contract backlog as at 1 August 2019 Total contract backlog by BU as at 1 May 2019 Total contract backlog by BU as at 1 August 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 8 necessarily indicative of our future revenue or earnings. KCAD backlog amounts are estimates as of 1-August-2019
Long Term 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 AIOC 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 Exxon Angola Kizom ba (2) Jan-24 Stacked 2 Total UK Alwyn / Dunbar May-23 Operating / Stacked 1 /1 Chrysaor (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 Firm Options (1) Contract and rig status shown as at 1 August 2019 9
Land Utilisation Shows Steady Increase Historical and Forward Contracted Utilisation Utilisation in Q2 2019 was 71% 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) 10 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 ($m) (2) (2) (2) 31% 30% (1) Bentec Quarterly EBITDA ($m) (3) Bentec YTD Revenue & EBITDA ($m) (3) 11% (9)% = EBITDA Margin (1) 2 months of Dalma only (2) Adjusted to remove the one off Revenue increase of $14.3m relating to IFRS 15 (3) Bentec results shown before intercompany eliminations 11
Offshore & RDS Financial Performance (1) Offshore Services Quarterly EBITDA ($m) Offshore Services YTD Revenue & EBITDA ($m) 17% 13% RDS Quarterly EBITDA ($m) RDS YTD Revenue & EBITDA ($m) 6% 10% = EBITDA Margin (1) Q1 2018 EBITDA shows $12m relating to MODUs, margin for Offshore Services only 12
KCA Deutag Group LTM EBITDA and Pro Forma EBITDA (1) Q2 2019 LTM EBITDA (2) Q2 2019 Pro Forma LTM EBITDA LTM LTM EBITDA EBITDA $294m $306m Q2 2019 LTM EBITDA ($m) Q2 2019 LTM Pro Forma EBITDA ($m) (4) KCAD LTM 216 KCAD LTM 217 (3) (5) Ex-Dalma LTM 94 Ex-Dalma LTM 106 Corporate Costs (16) Corporate Costs (16) Total 294 Subtotal 306 Holdco Equity Contribution 25 Total 331 (1) Q2 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 $311m. (3) Q2 2019 LTM EBITDA includes $16.1m of actualised synergies. 13 (4) Q2 2019 KCAD Pro Forma LTM EBITDA includes unaudited pre-acquisition EBITDA of the acquired IDTEC business of $0.3m. (5) Q2 2019 Pro Forma LTM EBITDA includes $11.5m of additional Pro Forma synergies.
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