Investor Presentation Second Quarter 2017 KCA Deutag is a leading international 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 Deutag. These forward-looking statements are based on management’s current 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 Q2 Key Highlights 1 Business Update 2 Business Unit Financials 3 Group Results 4 Summary 5 2
Q2 Key Highlights KCA Deutag is a leading international drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance Q2 2017 Group revenue of $287.5m (Q2 2016: $323.7m) and Q2 2017 1 EBITDA of $50.9m (Q2 2016: $75.2m) respectively Steady tendering activity for Land and Bentec, with increased activity on the 2 new Cat J and Hebron contracts for Offshore Contract backlog of $5.2bn (at 1 August 2017) across a blue chip customer 3 base Successful closing of offering of $535 million 97/8% Senior Secured Notes 4 due 2022 5 Available liquidity of $226m at 30 June 2017 3
Market Overview KCAD operates in low breakeven oil price environments Weighted Average Breakeven Oil Price ($/bbl) Oil Sands 80 KCAD core markets Ultra Deepwater 70 Deepwater Russia Row 56 60 Onshore Onshore Current Brent price 55 50 Shelf 48 40 43 42 42 41 30 32 North Onshore Middle East 20 Extra American 15 10 Heavy Oil Shale 0 0 10 20 30 40 50 60 70 80 90 100 Cumulative Liquids Production in 2020 (MMbpd) Source Rystad Energy (May-16) International vs. North American drilling markets International markets North America Commodity price • Less dependency on commodity prices • High dependency on commodity prices • Gas heavy market with depressed/volatile Henry Hub prices Volatility • Low operating cost base • High operating cost base • Rig count largely inelastic to price downturns • High sensitivity to price downturns Supply growth • Supply critical to national economy and often driven by • Supply of less significance to government revenue drivers NOCs Contract duration • Customers willing to ensure rig availability through long • Contract durations and terms more favourable to term contracts customers 4
Business update Integrated land drilling Offshore drilling services & design $177.0m / 74.7% of total¹ $(3.7)m / (1.6)% of total¹ $2.0m / 0.8% of total¹ $61.9m / 26.1% of total¹ Land drilling Bentec Offshore services RDS Bentec • Strong activity in Oman • Several component • Long term stable • Workload remains weak and Russia with continuing orders received securing backlog continues to be with very limited new ongoing opportunities reasonable workload for maintained with some project activity • Utilisation in Nigeria, remainder of 2017 recent contract • Brownfield work remains Kurdistan and Algeria • After Sales remains extensions relatively steady remains weaker steady with stable outlook • Activity levels remain • Developing diversification • Europe activity continues lower in the North Sea opportunities into non-oil to show signs of recovery and Angola and gas sectors • Difficult conditions continue in Norway • CAT J and Hebron contracts continue to ramp up activity 1 The % split of LTM EBITDA is calculated using total group EBITDA of $237.1m (before 5 corporate costs of $19.6m)
Group margin performance 6
KCAD operations are diversified across global markets PRESENCE IN KEY AREAS 129 150 120 90 Years 58 53 43 60 18 30 Canada 0 1 Plat. Europe North Africa Middle East North Sea Russia Russia North Sea /Norway 16 Rigs St. 21 Plat. Caspian Russia Johns 7 Plat. Sakhalin Bergen 3 Plat. Tyumen Aberdeen (HQ) Europe & Caspian London 8 Rigs Houston Bad Bentheim Middle East Baku 17 Rigs LTM Q2 2017 EBITDA split by region Africa 11 Rigs Brunei Dubai Nizwa 1 Rig Angola 2 Plat. Regional offices Land Drilling Offshore Services RDS offices Bentec Map excludes 1 workover land rig in Nigeria, defined as being below 900HP 7 Map shows position at 1 August 2017
Health, safety and environmental performance IADC industry average 0.45 2 for 2016 KCAD TRIR at end of Q2 2017 • Sustaining low TRIR levels in a range which are the best in the company’s history was 0.23 1 injuries • In Russia the T-321 was awarded the HSE Excellence Award by our client per 200,000 man • All KCA Deutag and RDS onshore operations in the UK have successfully achieved re-certification to the new hours worked environmental ISO 14001:2015 standard 1 Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average 8 2 KCAD Total Recordable Incident Rate is directly comparable with IADC’s Total Recordables (RCRD) statistic Note: IADC stands for International Association of Drilling Contractors
Backlog Status Total contract backlog as at 1 May 2017 Total contract backlog as at 1 August 2017 Contract backlog by BU as at 1 May 2017 Contract backlog by BU as at 1 August 2017 Backlog figures exclude revenue generated in the year to date 9
Land fleet utilisation Historical and forecast utilisation 10
Robust platform services contract backlog @ 1 August 2017 2018 2019 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 Statoil Norway CAT J (2) May-36 Under Construction 2 Exxon Angola Kizomba (2) Apr-27 Stacked 2 AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Dec-24 Operating 7 Nexen UK Scott Feb-23 Operating 1 Statoil Norway Oseberg's (4) & Gulfaks (3) Oct-22 Operating / Stacked 6/1 Statoil Norway Pipe pool management Oct-22 Active mgmt. contract Statoil Norway Kvitebjorn Oct-22 Operating 1 CNR UK Ninian's (3) Tiffany Nov-21 Operating / Stacked 1 /3 SEIC Russia LA, PA & PB May-21 Operating 3 Total UK Alwyn Dec-20 Stacked 1 Total UK Dunbar Dec-20 Stacked 1 Enquest UK Thistle & Heather May-20 Operating / Stacked 1/1 Exxon Norway Ringhorne Dec-17 Stacked 1 COP UK Britannia Oct-17 Stacked 1 Contracts have been extended or renewed since last call 11
Land Drilling Financial Performance to 30 June 2017 Q2 2017 Q1 2017 Q2 2016 Q2 2017 Q2 2016 Result Result Result YTD YTD $m $m $m $m $m Revenue 128.0 122.2 150.6 250.1 300.9 EBITDA (post support allocation) 43.5 43.0 48.3 86.6 96.0 Margin 34.0% 35.2% 32.0% 34.6% 31.9% • The land business although down on the prior year has delivered strong financial results in tough market conditions with EBITDA in line with the prior quarter • Activity levels remain robust in Russia and Oman • Ongoing weaker market conditions in Nigeria, Kurdistan and Algeria due to softer utilisation • Reasonable level of tendering activity in several markets • Utilisation for the quarter of 61%, a slight increase on the prior quarter 12
Bentec Financial Performance to 30 June 2017 Q2 2017 Q1 2017 Q2 2016 Q2 2017 Q2 2016 Result Result Result YTD YTD $m $m $m $m $m Revenue 16.5 15.6 16.8 32.1 46.5 EBITDA (post support allocation) 0.2 0.3 0.5 0.5 3.4 Margin 1.5% 1.7% 3.0% 1.6% 7.3% • EBITDA has decreased slightly compared to the prior quarter • After Sales remains steady with a stable outlook • Continued active tendering market, particularly for components 13
Offshore Services Financial Performance to 30 June 2017 Q2 2017 Q1 2017 Q2 2016 Q2 2017 Q2 2016 Result Result Result YTD YTD $m $m $m $m $m Platform Services Revenue 132.0 119.0 127.4 251.0 272.0 EBITDA (post support allocation) 12.9 11.3 18.4 24.2 38.2 Margin 9.8% 9.5% 14.4% 9.6% 14.0% MODUs Revenue 0.0 0.0 15.6 0.0 28.5 EBITDA (post support allocation) (0.0) (0.0) 11.6 (0.0) 15.7 Margin n/a 0.0% 73.8% n/a 54.9% Offshore Services Revenue 132.0 119.0 143.0 251.0 300.5 EBITDA (post support allocation) 12.9 11.3 29.9 24.2 53.8 Margin 9.8% 9.5% 20.9% 9.6% 17.9% • Higher revenue and EBITDA compared to Q1 2017, primarily due to strong performance in Azerbaijan and Sakhalin • Conditions in Norway continue to prove challenging • Cat J and Hebron projects continue to ramp up and are scheduled to commence operations in H2 2017 14
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