Post on 01-Jun-2020
KCA Deutag is a leading international
drilling and engineering company
working onshore and offshore with
a focus on safety, quality and
operational performance
Investor Presentation
FOURTH QUARTER 2018
0
Disclaimer
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The distribution of this presentation in certain jurisdictions may be restricted by law.Persons into whose possession this presentation comes are required to informthemselves about and to observe any such restrictions.
This presentation contains forward-looking statements concerning KCADeutag. These forward-looking statements are based on management’s currentexpectations, estimates and projections. They are subject to a number ofassumptions and involve known and unknown risks, uncertainties and other factorsthat may cause actual results and developments to differ materially from any futureresults and developments expressed or implied by such forward-lookingstatements. KCA Deutag has no obligation to periodically update or release anyrevisions to the forward-looking statements contained in this presentation to reflectevents or circumstances after the date of this presentation.
Agenda
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Fourth Quarter Investor Presentation
1 Q4 and Full Year Key Highlights
2 Operational Highlights
3 Business Update
4 Business Unit Financials
5 Group Results
6 Summary
Q4 and Full Year Key Highlights
3
KCA Deutag is a leading international drilling and engineering company working onshore and
offshore with a focus on safety, quality and operational performance
1Full year revenue of $1,262.6m (2017: $1,166.2m) and EBITDA of $253.9m (2017: $221.5m)
Q4 2018 revenue of $332.8m (Q4 2017: $300.2m) and EBITDA of $71.3m (Q4 2017: $65.8m)
2 Operational integration of the former Dalma business now complete, with further synergies identified
3 Stable contract backlog of $5.6bn (at 1 March 2019) across a blue chip customer base
4 Multiple contract awards within the Land, Offshore and RDS Business Units
5 Available liquidity of $186.4m at 31 December 2018
Financial results noted above include results from the Dalma business which was acquired 30 April 2018
2017 results restated for prior year adjustment relating to IFRS 15 revenue recognition
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2
3
5
4
KCA Deutag Operations are Diversified Across Global Markets
Baku
London Bad Bentheim
Tyumen
Nizwa
St. Johns
Bergen
Dubai
Land Drilling Offshore Services RDS offices BentecRegional offices
Aberdeen (HQ)
North Sea
/Norway
18 Plat
Europe &
Caspian
7 Rigs
Caspian
7 Plat
Russia
17 Rigs
Middle
East
41 Rigs
Angola
2 Plat
Africa
11 Rigs
Brunei
1 Rig
Canada
1 Plat
Map shows position at 1 March 2019
(1) The % split of LTM EBITDA is calculated using total KCAD group LTM Proforma EBITDA of $307m (after corporate costs of
$20m)
Russia
Sakhalin
3 Plat
PRESENCE IN KEY AREAS
130
59 5444
19
0
30
60
90
120
150
Europe North Africa Middle East North Sea Russia
Ye
ars
4
Geographical EBITDA Split(1)
Market Outlook by Business Unit
5
Business Units Outlook
Land
Drilling
Europe New contract awards across Europe, Russia, Africa and the Middle East
High levels of tendering continue across most markets, noticeable
uptick in Africa
Improved conversion from tendering to contract awards
Pricing remains competitive
Utilisation levels steadily increasing
Russia / Kazakhstan
Africa
Middle East
BentecTendering activity continues in a competitive market
Further Top Drive wins in Q4
Offshore
Services
North SeaActivity remains steady with contract extensions plus a new platform
award
International Positive discussions continue on International contracts
RDS First detail design award for a new Greenfield platform since 2014
Integration of Dalma Energy LLC
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Target synergies ($25m EBITDA & $2m capex)
EBITDA synergies by type
Integration plan largely complete
• Expectation of run rate EBITDA synergies increased further
from $15.7m (Q3) to $24.5m (Q4)
• Synergy target now more than double original estimate of
c.$11m
• Already achieved 88% of annual run rate savings (c.$22m
p.a)(1)
• Full run rate synergy realisation still on track for end of Q2
2019
• Operational integration now complete, with Dalma business
working under group policies and on KCA Deutag systems
(1) Run rate synergy achievement based on 1 March 2019 actual achievement
(1)
Strong HSSE Performance Continues
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1 Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average2 Dalma business have been incorporated from May 20183 KCAD Total Recordable Incident Rate is directly comparable with IADC’s Total Recordables (RCRD) statistic
Note: IADC stands for International Association of Drilling Contractors
Q4 2018
0.271,2
IADC industry
average 0.683 for
2018
KCA Deutag, along with Weatherford and CNR
International, collectively won the award for
Collaboration at the 2019 Offshore
Achievement Awards for work in the UK North
Sea
Stable Backlog Providing Excellent Visibility
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 necessarily indicative of our future revenue or earnings. KCAD backlog amounts are estimates as of 1-March-2019 8
Total contract backlog as at 1 November 2018
Total contract backlog by BU as at 1 November 2018
Total contract backlog as at 1 March 2019
Total contract backlog by BU as at 1 March 2019
Robust Offshore Services Contract Backlog
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Firm
Options
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
Exxon Angola Kizomba (2) Oct- 28 Stacked 2
Equinor (Statoil) Norway Oseberg's (4) & Kvitebjorn Oct- 28 Operating / Stacked 3/2
Vår Energi Norway Ringhorne Dec- 25 Operating 1
Enquest UK Thistle, Heather & Magnus Dec- 25 Operating / Stacked 1/2
CNOOC UK Scott Feb- 23 Operating 1
AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Dec- 24 Operating 7
Total UK Alwyn / Dunbar May- 23 Operating / Stacked 1/1
COP UK Britannia Nov- 22 Stacked 1
Equinor (Statoil) Norway Pipe pool management Nov- 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
2 0 18 2 0 19 2 0 2 0
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)Historical utilisation represents actual utilisation calculated on a bi-monthly basisForward contracted utilisation represents the current contracted position
Continued Focus on Building Land Utilisation
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Historical and Forward Contracted Utilisation
Utilisation in Q4 2018 was 65%
Source: Company information. EBITDA shown after corporate overhead allocations.
Notes: (1) 2 months of Dalma only (includes $0.6m synergies) (2) Includes $1.6m synergies (3) Includes $3.0m synergies
(4) Bentec results shown before intercompany eliminations 11
Land & Bentec Financial Performance
Land Quarterly EBITDA ($m)
Bentec Quarterly EBITDA ($m) (4)
= EBITDA Margin
Land Full Year Revenue & EBITDA ($m)
Bentec Full Year Revenue & EBITDA ($m) (4)
33% 30%
0% 4%
(1) (2) (3)
= EBITDA Margin
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Offshore & RDS Financial Performance
Offshore Services Quarterly EBITDA ($m)(1)
RDS Quarterly EBITDA ($m)
Source: Company information. EBITDA shown after corporate overhead allocations.
Notes: (1) Q1 2018 EBITDA shows $12m relating to MODUs, margin for Offshore Services only
Offshore Services Full Year Revenue & EBITDA ($m)(1)
RDS Full Year Revenue & EBITDA ($m)
13% 16%
4% 5%
KCAD LTM 224
Ex-Dalma LTM 103
Corporate Costs (20)
Total 307
Q4 2018 LTM Pro Forma EBITDA ($m)
KCAD LTM 222
Ex-Dalma (May - December) 52
Corporate Costs (20)
Total 254
Q4 2018 LTM EBITDA ($m)
KCA Deutag Group Full Year EBITDA and Pro Forma EBITDA
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2018 Full Year EBITDA
LTM
EBITDA
$254m
2018 Full Year Pro Forma EBITDA(1)
LTM
EBITDA
$307m
(1) Business Unit proportions calculated based on group EBITDA before corporate overheads of $327m. (2) 2018 Full Year EBITDA includes $5.5m of actualised synergies. (3) 2018 Full Year Pro Forma EBITDA includes $19.0m of additional Pro Forma synergies, Dalma pre-acquisition EBITDA of $31.8m for Jan-Apr 2018 and unaudited pre-acquisition EBITDA of the acquired IDTEC business of $1.9m for Jan-Sep 2018
(2) (3)
Q4 2018 Q3 2018 Q4 2017 FY 2018 FY 2017
$'m $'m $'m $'m $'m
Cash generated from operations 84.3 2.4 93.5 159.7 176.3
Tax paid (3.2) (6.3) (5.3) (27.3) (30.0)
Cash flow from operating activities 81.1 (3.9) 88.2 132.4 146.3
Capital expenditure (10.5) (13.7) (10.9) (46.0) (62.9)
Proceeds from sale of Fixed Assets 1.2 0.1 0.9 2.0 1.6
Interest received 5.8 6.0 5.7 23.5 22.6
Dalma acquistion 0.0 0.0 0.0 (440.2) 0.0
Other 0.0 (0.5) 0.0 (0.5) 0.0
Cash flow from investing activities (3.5) (8.1) (4.3) (461.2) (38.7)
Interest paid (78.2) (16.7) (53.3) (171.6) (132.5)
Foreign exchange (2.2) (2.5) 2.9 (12.6) (12.6)
Dividend paid to minority shareholders 0.0 0.0 0.0 (0.3) (0.3)
Net Cash flow before debt
drawdown/(repayment)(2.8) (31.2) 33.5 (513.3) (37.8)
Drawdown/(repayment) of debt and
debt redemption/issuance costs105.3 (6.2) (5.8) 523.8 (15.8)
Net cash flow 102.5 (37.4) 27.7 10.5 (53.6)
Cash Flow and Working Capital
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9
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(1) Includes purchase of intangible assets
(2) Denotes the effect of foreign exchange rate changes on cash and bank overdrafts
(3) Deltas denote quarterly working capital movement
(2)
Free Cash Flow Working Capital (3)
(1)
Capital Structure
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Net leverage as at 31 December 2018
(1) PF LTM EBITDA adjusted for unaudited LTM EBITDA of the acquired Dalma businesses of $31.8m and synergies of $19.0m, plus
unaudited LTM EBITDA of the acquired IDTEC business of $1.9m. (2) Q4 2017 to Q1 2018 LTM EBITDA includes the $25m Holdco
equity contribution as defined in the Amended Credit Agreement (3) Facility ratings shown as at March 2019.
Net Debt Evolution
221 237
(1)
25 25
(3)
Capital Structure at 31 December 2018 Rating(3): B3/B-
TLB 4Oman 16Revolver (Cash) 15IDTEC 1
TLB 4Oman 16Guarantee Facility 15IDTEC 1
TLB 4IDTEC 1
Closing Remarks
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• Operational integration of the Omani and Saudi Arabian businesses of Dalma Energy LLC now
complete
• Multiple contract awards within the Land, Offshore and RDS Business Units
• Full year 2018 EBITDA $253.9m and Q4 2018 EBITDA of $71.3m; pro forma 2018 EBITDA of $307m
• Backlog remains strong at $5.6 billion across a blue chip company base
• Strong liquidity position at $186 million
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Q & Ainvestor.relations@kcadeutag.com