Maersk Drilling FY2013 results presentation

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  • 1. Maersk Drilling Annual Result 2013 28 February 2014

2. page 2Legal notice This presentation contains certain forward looking statements (all statements that are not entirely based on historical facts, among others expectations to future financial performance, developments, resources growth and production levels). Those forward looking statements reflect current views on future events and are by their nature subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. We consider such forward looking statements reasonable based on the information available to us at this time, but the actual results etc. may differ materially from ourreliance should be placed on such statements. Neither APMM, nor any other person, shall assume responsibility for the accuracy or completeness of the forward looking statements and do not undertake any obligation to update such statements except as required by law. This Legal Notice shall be governed by Danish Law. Any dispute arising out of or in relation to this Legal Notice which can not be solved amicably shall be decided by the Danish Courts. 3. Summary of 2013 Profit of USD 528mROIC of 10.8%For 2014 Maersk Drilling expects a result below the result for 2013 due to planned yard stays in 2014 and high costs associated with training and start-up of operation of six new rigsForward contract coverage is 94% for 2014, 70% for 2015 and 53% for 2016Revenue backlog of USD 7.9bnThe newbuild programme is on budget, however five of the eight rigs are delayed two to four months per rig due to interruptions in the delivery of certain equipment from sub suppliersOn track towards the financial ambition of delivering a NOPAT of USD 1bn to the A.P. Moller Maersk Group in 2018page 3 page 3 4. page 4Maersk Drilling resultFinancial Highlights (USDm, 2013) Highlights201320121,9721,683Profit/loss before depreciation, amortisation and impairment losses etc. (EBITDA)863638Depreciation, amortisation, and impairment losses2391974-190Profit/loss before financial items (EBIT)647441Tax11994Net operating profit/loss after tax (NOPAT)528347Cash flow from operating activities775Revenue increased to USD 1,972m in 2013 from USD 1,683m in 2012EBITDA increased to USD 863m in 2013 from USD 638m in 2012Profit (NOPAT) increased to USD 528m in 2013 from USD 347m in 2012The increase in profit of USD 181m compared to 2012 was mainly due to higher operational uptime, full utilisation of all rigs and higher dayrates and effective cost management for rigs in operation597ROIC was 10.8% in 2013, up from 8.8% in 2012-1,517-555Operational uptime increased to 97% from 92% in 20125,3204,283ROIC10.8%8.8%For 2014 Maersk Drilling expects a result below the result for 2013 (USD 528m)ROIC excl. assets under construction15.9%10.4%97%92%RevenueGain on sale of non-current assets, etc., net Share of profit/loss in joint venturesCash flow used for capital expenditureInvested capitalOperational uptime 5. page 5Operational uptime100% 92%97%80%96%97%95%85%60%40%20%0% Maersk Drilling20122013Floating rigsJack-ups 6. page 6High forward contract coverage reflecting solid demand for Maersk Drillings high end assets Maersk Drilling forward contract coverage100%94% 80%70%60%53% 40%20%0% 2014Note: As per end 201320152016 7. page 7Revenue backlog of USD 7.9bn with quality customers provides strong revenue visibility Revenue backlog, end 2013, USDbnRevenue backlog by customer, end 20132.5OthersBP~2.32.0 ~2.0~2.01.5Marathon~1.51.0Total0.5Det norskeStatoilExxonMobil0.0USD 7.9bn201420152016Note: Annual revenue backlog figures reflect upcoming yard stays2017-ConocoPhillips 8. page 8XL Enhanced 4 New investment in 2013 Ultra harsh environment jack-up, XL Enhanced 4Total investment of USD 650mOrder backed by a firm 5-year contract with BP Norway with estimated contract value of USD 812mOptions for extending the contract up to a total duration of 10 yearsHigh-specification ultra harsh environment jack-up rig Delivery in 2016To be constructed at Daewoo (DSME), South Korea 9. page 9Maersk Drilling signed several major contracts in 2013 Maersk XL Enhanced 4 Customer: BP Country: Norway Contract value: USD 812 million Duration: Five yearsMaersk XL Enhanced 2 Customer: Det norske Country: Norway Contract value: USD 280 million Duration: Two year extensionNote: Original three year contract for Maersk XL Enhanced 2 was signed in 2011Mrsk Giant Customer: Talisman Country: Norway Contract value: USD 137 million Duration: One year 10. page 10Partnership agreement with BP signed in 2013 In 2013, Maersk Drilling signed a partnership agreement with BP to develop conceptual engineering designs for a new breed of advanced technology offshore drilling rigs20K rigs will be critical to unlock the next frontier of deepwater oil and gas resources20K rigs will be designed to operate in high pressure and high temperature reservoirs (20,000 psi and 350BP estimates that application of this technology across its own global portfolio alone could potentially access an additional 10-20 billion barrels of resources 11. page 11Strategy Deliver on the financial ambition of Net Operating Profit After Tax (NOPAT) of USD 1bn in 2018 (ROIC >10%)Conduct incident free operationGrow the business within the ultra deepwater and ultra harsh environment segmentsLeverage market leading position in Norway and build ultra deepwater positions in the US Gulf of Mexico and West Africa 12. page 12Ultra deepwater market US In 2014, the ultra deepwater market will experience intensified competition due to a number of uncontracted rigs entering the market while several operators have postponed commencement for a large number of the long term projects from 2014 to 2015 and beyondMarket characterised by full utilisation of capacity in 2013 but a slight oversupply of rigs will be seen in 2014Dayrates peaked at around USD 600,000 in 2013 and we see dayrates moving slightly lower in 2014Maersk Drilling retains our long term positive view on the ultra deepwater marketEgyptAngolaFact box Maersk Drillings ultra deepwater fleet consists of three semisubmersiblesMaersk Drilling has four ultra deepwater drillships under constructionMaersk Drilling has been operating in ultra deepwater since 2009 13. page 13Fact boxUltra harsh environment jack-up market Currently there are nine jack-up rigs working in Norway and including the order of XL Enhanced 4, there are seven ultra harsh jack-ups under construction for the Norwegian market, all of which have secured long term contractsDayrate levels for newbuilds are currently at an all time high level of USD 425,000 and older jack-up rigs have secured rates just below USD 400,000NorwayMaersk Drilling has four ultra harsh environment rigs under constructionMost jack-ups are tied up in long term contracts reducing the near term availability of jack-up rigs in the market where the first rig is available in fourth quarter 2014Maersk Drillings fleet consists of six ultra harsh environment jack-up rigsRemains strong with full utilisation of capacity throughout 2013Maersk Drilling has been operating in the ultra harsh environment market since 1990 14. page 14International premium jack-up marketNorth SeaContinue to benefit from the fact that oil companies prefer newer rigs due to the safety and efficiency gains offeredPremium jack-up rigs enjoy high utilisation and dayrates have stabilised in excess of USD 200,000 in the North Sea and USD 170,000 in South East AsiaIn general, demand for premium jack-up rigs looks set to remain healthy, with many long term duration projects commencing in 2014Cameroon South East AsiaFact box Premium jack-up rigs are capable of drilling in water depths >350ftMaersk Drillings fleet consists of six premium jack-up rigsMaersk Drilling has been present in the international jack-up market since 1972 15. page 15Egypt Leading operator in MENA-region with a fleet of four jack-up rigs and 64 land rigsOperation in Egypt since 1976Financial investment, JV (50/50)Profit contribution in 2013 amounted to USD 19m (USD 0m)Non-core assets Leading drilling contractor in Venezuela with a fleet of 10 cantilevered drilling barges which in 2013 generated a revenue of USD 195m (USD 194m)Operation in Venezuela since 1992Maersk Drilling has started to look into divesting its business activities in VenezuelaNo further investments plannedVenezuelaStrong positions in respective marketsDivestment if/when time is right 16. page 16Maersk Drillings priorities for execution in 2014 Take delivery and commence operation of six rigs without further delayComplete the extensive yard stay programme on time and budgetSecure contracts for the third and fourth drillships under construction with expected delivery in mid- and end 2014 17. page 17The newbuild programme is on budget, but delivery of five of the eight rigs will be two to four months delayed Ultra harsh jack-upsXL Enhanced Four ultra harsh jack-up rigs (CJ-70s) under construction. Three at Keppel FELS shipyard in Singapore and one at Daewoo in South Korea Delivery in 2014-2016Ultra deepwater drillships Four ultra deepwater drillships under construction at Samsung Heavy Industries, South Korea Delivery in 2014 18. page 18Extensive yard stay programme during 2014 Maersk Developer yard stay in Pascagoula, US2014 Yard stays Heydar Aliyev*Q4 20135 year special survey + upgradeMrsk Q4 2013 Developer*5 year special surveyMaersk ResolveQ2 20145 year special surveyMrsk GallantQ2 20145 year special survey + lifetime extensionMaersk ReacherQ2 20145 year special surveyMrsk InspirerQ2 20145 year special surveyMaersk Q3 2014 CompleterUWILD (offshore)Maersk Q3 2014 Discoverer5 year special surveyNote: * was commenced in 2013 but will not be completed until early 2014 19. page 19Commercial focus on securing work for the two uncontracted drillships Ultra harsh environment jack-upsUltra deepwater drill