Download - Atwood Oceanics Pareto Securities Oil & Offshore conferences Sept 2013

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Page 1: Atwood Oceanics Pareto Securities Oil & Offshore conferences Sept 2013

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September 4, 2013

Pareto Securities 20th

Annual Oil & Offshore Conference

Mark L. MeySr. Vice President and CFO

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Forward Looking Statements

Statements contained in this report with respect to the future are forward-lookingstatements. These statements reflect management’s reasonable judgment with respectto future events. Forward-looking statements are subject to numerous risks,uncertainties and assumptions and actual results could differ materially from thoseanticipated as a result of various factors including: uncertainties related to the level ofactivity in offshore oil and gas exploration and development; oil and gas prices;competition and market conditions in the contract drilling industry; the risks inherent inthe construction of a rig; delays in the commencement of operations of a rig followingdelivery; our ability to enter into and the terms of future contracts; possible cancelation orsuspension of drilling contracts; the availability of qualified personnel; labor relations;operating hazards and risks; terrorism and political and other uncertainties inherent inforeign operations (including risks of war, civil disturbances, seizure or damage toequipment, and exchange and currency fluctuations); the impact of governmental andindustry laws and regulations; and environmental matters. These factors and others aredescribed and discussed in our most recently filed annual report on Form 10-K, in ourForms 10-Q for subsequent periods and in our other filings with the Securities andExchange Commission which are available on the SEC’s website at www.sec.gov. Eachforward looking statement speaks only as of the date of this presentation and weundertake no duty to update the content of this presentation or any forward-lookingstatement contained herein to conform the statement to actual results or to reflectchanges in our expectations.

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Overview & Strategy

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Transforming Atwood Oceanics

Multi-year investment in fleet modernization and expansion Delivering 6 UDW floater and 3 jackup newbuilds from 2011 through

2015 Will own youngest high-specification floater and jack-up fleets in the

industry

Industry-leading safety and reliability performance

Top-tier revenue efficiency, cost control and project management leads to: Best-in-class margins Superior shareholder returns

Growth is fully funded and sourced predominantly from operating cash flow Current contract backlog of $3.9 billion Retain substantial balance sheet flexibility

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$245Q1

$527

$651

$787

$253Q2

$273Q3

$288*Q4

$0

$200

$400

$600

$800

$1,000

$1,200

2008 2010 2012 2013

Note: Revenue and Net Income represented on fiscal year basis.Source: * IPREO Factset dated August 27, 2013

Steady Revenue and Earnings Growth2008-Present

$ Millions

$73Q1

$215

$257$272

$86Q2

$90Q3

$96*Q4

$0

$50

$100

$150

$200

$250

$300

$350

2008 2010 2012 2013

$ Millions

Revenue Net Income

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Shareholder Return: ATW Vs. Peers*

*As of August 28, 2013Source: FactSet

125.7%

-4.7%

26.3% 26.6%41.5% 47.4%

154.2%

-20%0%

20%40%60%80%

100%120%140%160%180%

ATW RIG NE DO RDC ESV SDRL

Total Shareholder Return: 3 Year Comparison

809.9%

52.8%118.7% 125.3% 133.8%

416.5%

0%100%200%300%400%500%600%700%800%900%

ATW RDC RIG ESV NE DO

Total Shareholder Return: 10 Year Comparison

4085.0%

745.7%290.9%

0%500%

1000%1500%2000%2500%3000%3500%4000%4500%

ATW NE RDC

Total Shareholder Return: 20 Year Comparison

25.0%

-4.6%

0.8%2.7% 2.9% 3.4%

20.5%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

ATW RIG ESV RDC NE DO SDRL

Total Shareholder Return: 1 Year Comparison

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Expanding our High Specification Rig FleetFive newbuilds delivered on budget and ahead of schedule

2011 2012 2013 2014 2015 Atwood Osprey

Atwood Orca

Atwood Mako

Atwood Manta

Atwood AdvantageAtwood Condor

CALENDAR YEAR

6 Ultra-Deepwater Floaters3 High-Spec Jackups

$4.5 Billion InvestmentProjected $57 million potential annual revenue per jackupProjected $200 million potential annual revenue per UDW$1.4 billion in potential total annual revenue from these 9 rigs

Atwood Achiever Atwood Admiral

Delivered and Working Under Construction; Contracted

Atwood Archer

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Improving Revenue Quality – 2011 vs. 2015

*Source: Atwood internal analysis (pro forma estimate for FY 2015)

10%

80%

10%

FY 2011 Revenue

Ultra Deepwater FloatersHigh Spec JackupsOther

17%

29%54%

FY 2015 Revenue*

Ultra Deepwater FloatersHigh Spec JackupsOther

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Fleet Transformation and Growth

Atwood’s fleet has a strong presence in Australia, Southeast Asia and West Africa

Houston, Texas

Headquarters UDW / DW Semisubmersibles

ATWOOD EAGLE

ATWOOD FALCON

ATWOOD HUNTER

ATWOOD OSPREY

ATWOOD CONDOR

VICKSBURG

ATWOOD BEACON

ATWOOD AURORA

Jack-ups

ATWOOD MANTA

ATWOOD ORCA

ATWOOD MAKO

Newbuild Drillships

ATWOOD ADVANTAGE

ATWOOD ACHIEVER

ATWOOD ADMIRAL

ATWOOD ARCHER

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Execution Performance

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Revenue Efficiency

Achieving Top-Tier Execution

Cost Control

ProjectManagement

Best-in-class Operating and Net Margins

Consistent, Superior Shareholder Returns

2011- Atwood Osprey2012- Atwood Mako- Atwood Condor2013- Atwood Manta- Atwood Orca2014- Atwood Advantage- Atwood Achiever2015- Atwood Admiral

Key Enablers- Centralized

maintenance and technical support

- Consistent standards and institutionalizing lessons learnt

- Common equipment across rigs and supplier consolidation

- Organic growth with proven rig designs and world-class shipyards

- Early capital project scoping and detailed project planning

- Experienced project management teams

Value Drivers

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1.05

0.80

0.68

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2008 2010 2012

Continuous Safety Performance ImprovementFiscal Year 2008-Present

Total Recordable Incident Rate

Atwood Oceanics recognized as leading offshore driller for HSE in 2012*

0.26

0.18

0.06

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

2008 2010 2012

Lost Time Incident Rate

*Results from EnergyPoint Research customer satisfaction survey published February 20, 2013

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Signed Orca to initial 2-year contract in Thailand Jan 2013

Announced 1Q FY2013 results with 95% revenue efficiency Jan 2013

Delivered Atwood Orca 10 weeks ahead of schedule April 2013

Announced 2Q FY2013 results with record quarterly revenue May 2013

Agreed to repurchase 2 million shares from Helmerich & Payne May 2013

Signed Atwood Eagle to 2-year contract in Australia May 2013

Signed Atwood Condor to 39-month contract in the Gulf of Mexico June 2013

Signed Atwood Beacon to 2-year contract in Italy June 2013

Signed Atwood Achiever to 3-year contract in Morocco June 2013

Atwood Announces 4th Drillship the Atwood Archer June 2013

Announced 3Q FY2013 results with record quarterly revenue July 2013

Signed Atwood Manta to 2-year contract extension in Thailand August 2013

Major Accomplishments – Year to DatePartial Listing

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Contracting of the Vicksburg (early 2014 availability)

Delivery and start-up of the Atwood Advantage

Contracting of Atwood Admiral (2015 availability)

Calendar 2013 Priorities and Potential Catalysts

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Market Outlook and Contracts

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64 Recent Discoveries in Floater Water Depths*December 2011 to June 2013

Source: IHS-Petrodata

5

12

4

7

5

5

12

107

9

* Water depths greater than 500 ft.

“GoldenTriangle”

Deepwater and ultra-deepwater prospectivity continues to be excellent

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Steady Floater Utilization – UDW Rigs “Sold Out”

Source: IHS-PetrodataNote: Contracted Utilization equals Working Rigs / Total Supply

80%82%84%86%88%90%92%94%96%98%100%

0

20

40

60

80

100

120

140

Util

izat

ion

Tota

l Sup

ply

Floater Utilization UDW (7500’+)

Total Supply 7500+

70%

75%

80%

85%

90%

95%

100%

150170190210230250270290310

Util

izat

ion

Tota

l Sup

ply

Floater Utilization by Category - >7,500’

Total Supply 5001-7500 3001-5000 <3000

26

132

196

307

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65%

70%

75%

80%

85%

90%

95%

100%

105%

0

80

160

240

320

400

480

Total Supply Total Contracted Utilization High Spec Contracted Utilization

Jackups: Dayrate and Utilization Improvement Even as Supply Grows

Source: IHS-PetrodataNote: Contracted Utilization equals Working Rigs / Total Supply

386

499

Worldwide Jackup Supply and Utilization

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Accelerating High Spec Jack-Up Dayrate OutlookBifurcation driving increased utilization and day rates

Jack-up tenders up significantly over the past 6 months

Driven by demand in the Middle East, SE Asia, Mexico, North Sea and IndiaMarket outlook for 2013 remains favorable

Overall contracted utilization rates for high spec rigs approximately 100%

Dayrates currently in the $165,000 to $195,000 range, depending on the geographic region and contract term

67 high specification rigs under construction 17 contracted

50 to be delivered over next 40 monthsMany older rigs are not likely to return to market

27 jack-up rigs permanently removed from the fleet in 2011 and 2012; compared to aggregate of 18 rigs for the previous 15 years ending 2010

Jack-up demand continues to shift toward newer, high-specification rigs

Source – IHS, ISI Group, Pareto Securities

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Atwood Fleet Contract Status(by calendar year)

Rig Class/Rig Customer2013 2014 2015 2016

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Ultra-Deepwater Drillships

Atwood Advantage Noble Energy $409K $584K

Atwood Achiever Kosmos Energy Delivery mid-2014 $463K $595K / $661K*

Atwood Admiral Available Delivery early 2015

Atwood Archer Available Delivery Late 2015Ultra-Deepwater Semisubs

Atwood Osprey Chevron $490K $470K

Atwood Condor Shell $514K $555K

Deepwater Semisubs

Atwood Eagle Woodside / BHP /Apache/Woodside $436K / $385K $460K

Atwood Falcon Apache $385K

Atwood Hunter Noble Energy/GEPetrol $435K/$510K $515K

Jack-UpsAtwood Aurora Glencore / Addax $155K $165K / $193K*

Atwood Beacon Shemen Oil / ENI $175K

Atwood Mako Salamander $145K $155K

Atwood Manta CEC International $145K $160K

Atwood Orca Mubadala Petroleum $160K

Vicksburg CEC International $105 / $115K

Contracted (current)Contracted (follow on work)ShipyardMobilization (as of 9/1/13)

Firm Term 26.7 Rig Years

Firm Revenue $3.9 Billion

* Rates shown are “exclusive of tax / inclusive of tax”

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Revenue Backlog Analysis

$96

$1,320 $1,194

$1,339

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2013 2014 2015 2016+

$389

$2,093

$1,466

($Millions)

($Millions)

Majors/Large NOCsLarge IndependentsSmall Independents

Total = $3.9 Billion

(as of 9/01/13)

Fiscal Year

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Financial Considerations

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30

945

509 514

30

724

509 514

221

0

100

200

300

400

500

600

700

800

900

1000

CAPEX Contracted CashflowDebt Uncontracted Cash Flow

1. Excludes $293 million of maintenance and other CAPEX and capital spares for 2013, 2014, 2015 and 20162. CAPEX for 2013 represents projections for remaining month for fiscal 2013

Future Capital Expenditures Fully Financed

($ millions)• $1.4 billion1 in remaining total capital expenditures as of September 1, 2013

• Approximately $2.0 billion in contracted after tax cash flow through 2016 is available to fund these expenditures

• With the exercise of the $200 million Credit Facility accordion, we are fully funded for all construction costs

• Credit metrics peak in mid-2014 with the delivery of the Atwood Achiever

• Debt-to-cap and debt to EBITDA ratios are maintained below 40% and 2.7 times, respectively

Fiscal Year

2014 2015 201620132

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$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

FY 2014 FY 2015 FY 2016 FY 2017

High-Spec Jackups Ultra-Deepwater

Earnings Growth Through Newbuild Rig Deliveries

* Comparison versus FY2012 earnings; EPS analysis excludes any increases in Operating or SG&A costs or interest expense during the 4 year period

Atwood MantaAtwood OrcaAtwood AdvantageAtwood Achiever

Atwood AchieverAtwood Admiral

Atwood AdmiralAtwood Archer

Assumptions:UDW Floaters – Dayrate of $600,000, operating cost of $190,000 (inflation-adjusted), revenue efficiency of 95% and a tax rate of 13%

High Specifications Jack-ups – Dayrate of $170,000,operating costs of $65,000 (inflation-adjusted), revenue efficiency of 95% and a tax rate of 13%

Atwood Archer

Potential Incremental $6.74 Earnings Per Share from Newbuild Rig Deliveries*

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Summary

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The Atwood Advantage

High-Quality Operating Fleet with Aggressive Growth Initiative

Strong Backlog with High Quality

Customers

Knowledgeable and Experienced

Management Team

Attractive Geographic

Diversity

Established Reputation for Safe

and Efficient Operations

Significant Liquidity and

Financial Flexibility

Industry-Leading Margins and Shareholder

Returns

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Thank You

www.atwd.comwww.atwd.com