Pareto Securities’ annual Oil and Offshore /media/Files/S/SevanDrilling/reports-and...Pareto...

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Transcript of Pareto Securities’ annual Oil and Offshore /media/Files/S/SevanDrilling/reports-and...Pareto...

  • Pareto Securities annual Oil and Offshore Conference12 September 2012

    CEO Scott Kerr

  • Important information

    THIS PRESENTATION AND ITS ENCLOSURES AND APPENDICES (HEREINAFTER JOINTLY REFERRED TO AS THE PRESENTATION) HAVE BEENPREPARED BY SEVAN DRILLING ASA (SEVAN DRILLING OR THE COMPANY) EXCLUSIVELY FOR INFORMATION PURPOSES. THIS PRESENTATIONHAS NOT BEEN REVIEWED OR REGISTERED WITH ANY PUBLIC AUTHORITY OR STOCK EXCHANGE. RECIPIENTS OF THIS PRESENTATION MAY NOTREPRODUCE, REDISTRIBUTE OR PASS ON, IN WHOLE OR IN PART, THE PRESENTATION TO ANY OTHER PERSON.

    THE CONTENTS OF THIS PRESENTATION ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS, INVESTMENT OR TAX ADVICE. EACH RECIPIENTSHOULD CONSULT WITH ITS OWN LEGAL, BUSINESS, INVESTMENT AND TAX ADVISER AS TO LEGAL, BUSINESS, INVESTMENT AND TAX ADVICE.

    THERE MAY HAVE BEEN CHANGES IN MATTERS WICH AFFECT THE COMPANY SUBSEQUENT TO THE DATE OF THIS PRESENTATION. NEITHER THEISSUE NOR DELIVERY OF THIS PRESENTATION SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATIONCONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THE AFFAIRS OF THE COMPANY HAVE NOTSINCE CHANGED, AND THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT ANYINFORMATION INCLUDED IN THIS PRESENTATION.

    THIS PRESENTATION INCLUDES AND IS BASED ON, AMONG OTHER THINGS, FORWARD-LOOKING INFORMATION AND STATEMENTS. SUCHFORWARD-LOOKING INFORMATION AND STATEMENTS ARE BASED ON THE CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS OF SEVANOR ASSUMPTIONS BASED ON INFORMATION AVAILABLE TO THE COMPANY. SUCH FORWARD-LOOKING INFORMATION AND STATEMENTS REFLECTCURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS, UNCERTAINTIES AND ASSUMPTIONS. SEVAN CANNOT GIVEANY ASSURANCE AS TO THE CORRECTNESS OF SUCH INFORMATION AND STATEMENTS.

    AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE ORACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAYBE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, AMONG OTHERS, RISKS ORUNCERTAINTIES ASSOCIATED WITH THE COMPANYS BUSINESS, SEGMENTS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKETACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES INDOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS INCURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIESMATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBEDIN THIS DOCUMENT. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT THE INFORMATIONINCLUDED IN THIS PRESENTATION.

    THIS PRESENTATION IS SUBJECT TO NORWEGIAN LAW, AND ANY DISPUTE ARISING IN RESPECT OF THIS PRESENTATION IS SUBJECT TO THEEXCLUSIVE JURISDICTION OF NORWEGIAN COURTS.

    2

  • A pure-play ultra deepwater drilling company

    Options for additional two rigs of same design with a delivery time of 30 months

    All-in turnkey price of USD 526 million each

    Options expire on 10 December 2012

    From yard end 2009 In operation for Petrobras

    under a six year contract Start up: Q2 2010 Charter rate: USD 423,000

    Sevan Driller

    From yard Q1 2012 In operation for Petrobras

    under a six-year contract Start up: Q3 2012 Charter rate: USD 400,000

    Sevan Brasil

    Delivery in Q4 2013 No need for additional

    financing until delivery Progress on schedule

    Sevan Drilling Rig 3 Sevan Drilling Rig 4

    3

    Delivery in Q2 2014 No need for additional

    financing until delivery Progress on schedule

  • Large load carrying capacity

    Independent of environmental directionality

    Low roll and pitch motions

    Simple structural layout simple to build

    Lower cost to build and operate

    With a unique and cost efficient design

    Offers a very stable drilling platform tomeet growing need for low cost, efficient

    operations

  • 5

    0

    100

    200

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    500

    600

    2007

    2009

    2011

    2013

    2015

    2017

    2019

    Dry exploration wellsDiscoveries and producing fieldsAwarded acreage

    0

    400

    800

    1200

    1600

    2007

    2009

    2011

    2013

    2015

    2017

    2019

    Discoveries and producing fields Development risk: Appraisal, development and production maintenance drilling at existing discoveries and producing fields

    Awarded acreage Exploration and development risk: Exploration, appraisal, development and productionmaintenance drilling for discoveries to be made in awarded acreage

    Unawarded (open) acreage Award, exploration and development risk: Exploration, appraisal, development and production maintenance drilling for discoveries to be made in unawarded (open) acreage

    Floating rig market growth

    Source: Rystad Energy UCube, research & analysis

    Market growth beyond 2014 relies on exploration and developmentin currently unawarded acreage

    By number of wells

    By rigs

    Global floating rig drilling demand by field/license status

  • 6

    Most deepwater discoveries still not developed

    Start-up of oil and gas disc. deeper than 400 ft by current status

    Million boe/decade

    Discoveries of oil and gas deeper than 400 ft by current status

    Million boe/decade

    55% of discovered resources not yet put in production a significant backlog of deepwater discoveries to be developed

    Resources found,but not yet developed

    Source: Rystad Energy UCube

  • 7

    The future of deepwater developments

    Supply of oil and gas will be adequate to meet demand Demand driven by non-OECD Growth All potential sources of supply must be exploited

    Deepwater and ultra deepwater are key to supply

    Half of demand for deepwater drilling rigs will be for development drilling

    Development drilling will require mobile units More specialization in rig designs

    Safe, reliable and efficient operations are critical 50% of capital in upstream is spent on drilling Macondo

  • Sevan Drilling well fitted with market demand

    Ultra deepwater capabilites

    Capable of drilling in water depths up to 10,000 feet

    Upgradable to 12,000 feet

    2.53.0 times deck load capacity of a 6th generation semi-submersible unit

    High storage capacity for bulk and fluids

    High stability reserve

    Less roll and pitch confirmed through drilling and FPSO operations

    Zero discharge capabilites Double sides double bottom Low fuel consumption Drilling through moon pool

    High storage capacity

    Excellent motion characteristics

    Environmentally friendly

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  • Sevan Driller has proven the rig design

    In operation since June 2010

    Operations in ultradeep waters Campos Basin (1,800 meters) Santos Basin (2,200 meters)

    Improving uptime Downtime related to specific events on

    specific equipment

    Good client feedback Consistently high ratings from

    Petrobras (BAD Sonda scores)

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    Technical uptime and BAD Sonda last 12 months

    4

    6

    8

    10

    40%

    60%

    80%

    100%

    jun. 11 aug. 11 okt. 11 des. 11 feb. 12 apr. 12

    Technical Uptime BAD Sonda score

  • Sevan Brasil proves project management and delivery Delivered on time and on budget

    Accepted in 7 weeks and now operates under a 6 year contract with Petrobras on 24 July

    Achieved a technical uptime of 100% in August

    On 90% stand-by rate since acceptance

    Spudded the first well at 1 800 meters in Santos basin on 31 August

    10

  • Solid contract coverage and backlog

    Unit Built Region Client

    SevanDriller 2009 Brazil Petrobras

    SevanBrasil 2012 Brazil Petrobras

    SevanUDW3 2013

    SevanUDW4 2014

    Constructionperiod

    Firmcontractperiod

    2017 20182012 2013 2014 20162015

    Existing rigs secured onlong term contracts withPetrobras

    Aggregated revenue backlog of USD 1.5 billion as per Q2 2012

    Average base dayrate

    Sevan Driller: ~USD 423k/day

    Sevan Brasil: ~USD 400k/day

    Bonus element of up to 10%

    Cash opex of ~USD 170k/day after 6 months of operations

    Opex cost inflation mitigated throughannual dayrate adjustments

    152 152 152 15276

    58136 145 145

    145

    145

    2012 2013 2014 2015 2016 2017

    SevanDriller SevanBrasil

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  • Significant revenue potential*

    Controlled expansion One rig in 2011 Four rigs in 2014

    Corresponding revenue growth From USD 130 million in 2011 to above

    USD 600 million in 2015

    Cost control and operational synergies A four-fold increase in EBITDA Significant reduction in leverage

    152 152 152 154

    58136 145 145

    164 173

    108173

    2012 2013 2014 Run RateEnd 2015

    Sevan Driller Sevan BrasilRig No. 3 Rig No. 4

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    *) Excluding bonus element and reflecting additional dayrate in operating year 2 of USD 36k/day for Sevan Driller. Assuming dayrates of USD 500,000 for Rig No.3 and Rig No.4 with start-up in Q4 2013 and Q2 2014 respectively, mobilization fee to cover costs. Technical uptime from 80% to 95% after 12 months of operation for newbuilds.

  • -

    200

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    800

    2011 2013 Run-Rate2015

    Strategic priorities in Sevan Drilling

    Lower risk, operational excellence Stable operations for Sevan Drille