Investor Presentation FIRST QUARTER 2018 KCA Deutag is a leadinginternational drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance
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 KCA Deutag is a leading international drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance Q1 2018 Group revenue of $291.1m (Q1 2017: $269.1m) and Q1 2018 1 EBITDA of $65.8m (Q1 2017: $50.1m) respectively (1) Acquisition of the Omani and Saudi Arabian businesses of Dalma Energy 2 LLC completed on 30 April 2018 3 Successful contract awards in Offshore and Bentec Combined contract backlog of $6.3bn (at 1 May 2018) across a blue chip 4 customer base 5 Available liquidity of $260m at 31 March 2018 (1) Financial results noted above do not include any results from the newly acquired Dalma businesses 3
Successful acquisition of Dalma’s Omani and Saudi Arabian businesses on 30 April 2018 Highlights Entrance into new market in Saudi Arabia and expansion of existing presence in Oman KCA Deutag is now one of the largest International Drilling Contractors in the Middle East Acquired 20 rigs in Oman and 9 rigs in Saudi Arabia Significant boost to backlog of $993m at 1 May 2018 Enterprise Value of $660m 4
Significant synergies identified from acquisition of Dalma Target synergies ($11m EBITDA & $2m capex) Focus on integration Early adoption of KCA Deutag Way – Senior management communication at all offices and rig locations in week 1 Delivering cost synergies – Full run rate synergy realisation targeted for Q3 2019 – Integration team in place to oversee consolidation and focus on synergy realisation Unlocking further revenue synergies – Actively engaged with customers – Opportunities for collaboration between business units EBITDA synergies by type Enhancement of capital structure – Deleveraging effect – Extended maturity date 5
KCA Deutag Operations are diversified across global markets with an increased Middle Eastern presence Russia North Sea 17 Rigs /Norway 20 Plat Russia Canada Sakhalin 1 Plat 3 Plat Bergen Caspian Tyumen 7 Plat Aberdeen (HQ) London Bad Bentheim St. Johns Baku Middle East Europe & 46 Rigs Brunei Caspian 8 Rigs 1 Rig Dubai Nizwa Africa 11 Rigs Angola 2 Plat Enlarged Middle East Profile Country KCAD Dalma Total PRESENCE IN KEY AREAS Kurdistan 2 2 Oman 8 20 28 150 130 Pakistan 2 2 120 Saudi Arabia 9 9 90 Years 59 54 South Iraq 3 3 44 60 UAE 2 2 19 30 Total 17 29 46 0 Europe North Africa Middle East North Sea Russia Regional offices Land Drilling Offshore Services RDS offices Bentec Map shows position at 1 May 2018 6
Enlarged KCA Deutag group is now one of the largest International drilling contractors in the Middle East Middle East Onshore Rig Count – International Players (1) LTM EBITDA (4) Geographical EBITDA Split (5) (2) (3) Notes: (1) Source: Douglas Westwood. Middle East includes rigs in, KSA, Oman, Iraq, UAE and Pakistan. (2) Includes 32 ZP Arabia rigs. (3) Includes 22 ADC rigs, a Schlumberger and Taqa Joint Venture. (4) The % split of LTM EBITDA is calculated using total KCAD group LTM 7 EBITDA of $255.7m (before corporate costs of $18.4m) plus Dalma business unaudited LTM EBITDA of $131.5m (before corporate costs of $28m). (5)The % split of Geographical LTM EBITDA is calculated using total KCAD group LTM EBITDA of $296.3m (before overheads of $22.1m and corporate costs of $18.4m) plus Dalma business unaudited LTM EBITDA of $131.5m (before corporate costs of $28m).
Improved overall market sentiment driven by sustained increase in oil price, however not yet delivering increased international drilling activity Medium Term Business Units Activity Market Outlook Europe / Kazakhstan High levels of tendering across most Russia markets. Slower than expected conversion Land to contract awards. Pricing remains under Drilling pressure as utilisation levels are yet to Africa increase Middle East Good tendering activity in a competitive Bentec market. New build rig awards provide a positive backdrop Steady activity and recent contract re- North Sea Offshore awards Services International Stable activity Limited tendering; seeking diversification RDS opportunities Outlook refers to medium term activity outlook 8
Strong HSSE performance continues KCAD TRIR at end of Q1 2018 was 0.19 1 injuries per 200,000 man hours worked IADC industry average 0.54 2 for 2017 The UK’s Scott Platform wins IADC Land Business North Sea 2017 Industry Safety Award Unit achieved lowest ever TRIR of 0.12 in March 2018 1 Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average 2 KCAD Total Recordable Incident Rate is directly comparable with IADC’s Total Recordables (RCRD) statistic 9 Note: IADC stands for International Association of Drilling Contractors
Increased Backlog Providing Excellent Visibility KCAD contract backlog as at 1 May 2018 Total contract backlog as at 1 May 2018 Ex-Dalma contract backlog as at 1 May 2018 Total contract backlog by BU as at 1 May 2018 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 10 necessarily indicative of our future revenue or earnings. KCAD and Dalma backlog amounts are estimates as of 1-May-2018
Robust Offshore Services contract backlog 2018 2019 2020 Contract Platform Client Country Assets end date status # Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 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 4/1 Exxon Angola Kizomba (2) Apr- 28 Stacked 2 Point Resouces Norway Ringhorne Dec- 25 Stacked 1 AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Dec- 24 Operating 7 Nexen UK Scott Feb- 23 Stacked 1 COP UK Britannia Nov- 22 Stacked 1 Equinor (Statoil) Norway Pipe pool management Oct- 22 Active mgmt. contract CNR UK Ninian's (2) Tiffany Nov- 21 Operating / Stacked 1 /2 SEIC Russia LA, PA & PB May- 21 Operating 3 Total UK Alwyn / Dunbar Dec- 20 Stacked 2 Enquest UK Thistle & Heather May- 20 Operating / Stacked 1 /1 Equinor (Statoil) Norway Gulfaks (3) Oct- 1 8 Operating 3 Contract and rig status shown as at 1 May 2018 11 Denotes change since last earnings call
Continued focus on building utilisation Historical and forecast utilisation Utilisation includes 29 Dalma Rigs on a proforma basis from 2017 onwards 12
Land Drilling Q1 2018 Q4 2017 Q1 2017 Q1 2018 Q1 2017 Result Result Result YTD YTD $m $m $m $m $m Revenue 120.4 126.8 122.2 120.4 122.2 EBITDA (post support allocation) 45.7 42.4 43.0 45.7 43.0 Margin 38.0% 33.5% 35.2% 38.0% 35.2% • Higher EBITDA compared to the prior quarter and prior year, assisted by receipt of early termination fee in Oman • Reasonable performance in the quarter in core markets of Russia and Oman • Tendering activity continues in Algeria and Europe • Dalma Q1 2018 EBITDA of $25.6m • Utilisation for the quarter of 68% (1) (1) Utilisation figure for Q1 includes 29 Dalma Rigs on a proforma basis Financial results noted above do not include any results from the newly acquired Dalma businesses 13
Bentec Q1 2018 Q4 2017 Q1 2017 Q1 2018 Q1 2017 Result Result Result YTD YTD $m $m $m $m $m Revenue 15.1 19.2 15.6 15.1 15.6 EBITDA (post support allocation) (1.6) (0.5) 0.3 (1.6) 0.3 Margin -10.6% -2.6% 1.9% -10.6% 1.9% • Lower EBITDA during Q1 2018 due to timing of delivery of component sales • Revenue recognition for new build rigs will commence with delivery from Q3 2018 • Continued active tendering market across after sales, components and new build rigs 14
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