Download - Maersk Drilling FY2013 results presentation

Maersk Drilling Annual Result 2013 28 February 2014

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 our

reliance 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.

Legal notice

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• Profit of USD 528m

• ROIC 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 rigs

• Forward contract coverage is 94% for 2014, 70% for 2015 and 53% for 2016

• Revenue backlog of USD 7.9bn

• The 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 suppliers

• On track towards the financial ambition of delivering a NOPAT of USD 1bn to the A.P. Moller Maersk Group in 2018

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Summary of 2013 page 3

Highlights 2013 2012

Revenue 1,972 1,683

Profit/loss before depreciation, amortisation and impairment losses etc. (EBITDA)

863 638

Depreciation, amortisation, and impairment losses

239 197

Gain on sale of non-current assets, etc., net 4 -

Share of profit/loss in joint ventures 19 0

Profit/loss before financial items (EBIT) 647 441

Tax 119 94

Net operating profit/loss after tax (NOPAT) 528 347

Cash flow from operating activities 775 597

Cash flow used for capital expenditure -1,517 -555

Invested capital 5,320 4,283

ROIC 10.8% 8.8%

ROIC excl. assets under construction 15.9% 10.4%

Operational uptime 97% 92%

Financial Highlights (USDm, 2013) Maersk Drilling result

• Revenue increased to USD 1,972m in 2013 from USD 1,683m in 2012

• EBITDA increased to USD 863m in 2013 from USD 638m in 2012

• Profit (NOPAT) increased to USD 528m in 2013 from USD 347m in 2012

• The 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 operation

• ROIC was 10.8% in 2013, up from 8.8% in 2012

• Operational uptime increased to 97% from 92% in 2012

• For 2014 Maersk Drilling expects a result below the result for 2013 (USD 528m)

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92%

85%

95% 97% 96% 97%

0%

20%

40%

60%

80%

100%

Maersk Drilling Floating rigs Jack-ups

Operational uptime

2012 2013

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High forward contract coverage reflecting solid demand for Maersk Drilling´s high end assets

94%

70%

53%

0%

20%

40%

60%

80%

100%

2014 2015 2016

Maersk Drilling forward contract coverage

Note: As per end 2013

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BP

Statoil

ConocoPhillips Det norske

ExxonMobil

Total

Marathon

Others

USD 7.9bn

Revenue backlog of USD 7.9bn with quality customers provides strong revenue visibility

Revenue backlog, end 2013, USDbn Revenue backlog by customer, end 2013

Note: Annual revenue backlog figures reflect upcoming yard stays

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~2.3

~2.0

~1.5

~2.0

0.0

0.5

1.0

1.5

2.0

2.5

2014 2015 2016 2017-

New investment in 2013 • Ultra harsh environment jack-up, XL

Enhanced 4

• Total investment of USD 650m

• Order backed by a firm 5-year contract with BP Norway with estimated contract value of USD 812m

• Options for extending the contract up to a total duration of 10 years

XL Enhanced 4 • High-specification ultra harsh

environment jack-up rig

• Delivery in 2016

• To be constructed at Daewoo (DSME), South Korea

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Maersk XL Enhanced 4

Maersk Drilling signed several major contracts in 2013

Maersk XL Enhanced 2 Mærsk Giant

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Customer: BP

Country: Norway

Contract value: USD 812 million

Duration: Five years

Customer: Talisman

Country: Norway


Duration: One year

Customer: Det norske

Country: Norway


Duration: Two year extension

Note: Original three year contract for Maersk XL Enhanced 2 was signed in 2011

Partnership 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 rigs

• 20K rigs will be critical to unlock the next frontier of deepwater oil and gas resources

• 20K rigs will be designed to operate in high pressure and high temperature reservoirs (20,000 psi and 350

• BP estimates that application of this technology across its own global portfolio alone could potentially access an additional 10-20 billion barrels of resources

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Strategy

• Deliver on the financial ambition of Net Operating Profit After Tax (NOPAT) of USD 1bn in 2018 (ROIC >10%)

• Conduct incident free operation

• Grow the business within the ultra deepwater and ultra harsh environment segments

• Leverage market leading position in Norway and build ultra deepwater positions in the US Gulf of Mexico and West Africa

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Ultra deepwater market • 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 beyond

• Market characterised by full utilisation of capacity in 2013 but a slight oversupply of rigs will be seen in 2014

• Dayrates peaked at around USD 600,000 in 2013 and we see dayrates moving slightly lower in 2014

• Maersk Drilling retains our long term positive view on the ultra deepwater market

Fact box • Maersk Drilling´s ultra deepwater

fleet consists of three semi-submersibles

• Maersk Drilling has four ultra deepwater drillships under construction

• Maersk Drilling has been operating in ultra deepwater since 2009

US

Angola

Egypt

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Ultra harsh environment jack-up market

• Remains strong with full utilisation of capacity throughout 2013

• Most 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 2014

• 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 contracts

• Dayrate 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 400,000

Fact box • Maersk Drilling´s fleet consists

of six ultra harsh environment jack-up rigs

• Maersk Drilling has four ultra harsh environment rigs under construction

• Maersk Drilling has been operating in the ultra harsh environment market since 1990

Norway

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International premium jack-up market

• Continue to benefit from the fact that oil companies prefer newer rigs due to the safety and efficiency gains offered

• Premium 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 Asia

• In general, demand for premium jack-up rigs looks set to remain healthy, with many long term duration projects commencing in 2014

South East Asia

North Sea

Cameroon

Fact box • Premium jack-up rigs are capable of

drilling in water depths >350ft

• Maersk Drilling´s fleet consists of six premium jack-up rigs

• Maersk Drilling has been present in the international jack-up market since 1972

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Non-core assets • Strong positions in respective markets

• No further investments planned

• Divestment if/when time is right

Venezuela • 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 1992

• Maersk Drilling has started to look into divesting its business activities in Venezuela

Egypt • Leading operator in MENA-region

with a fleet of four jack-up rigs and 64 land rigs

• Operation in Egypt since 1976

• Financial investment, JV (50/50)

• Profit contribution in 2013 amounted to USD 19m (USD 0m)

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Maersk Drilling´s priorities for execution in 2014 • Take delivery and commence operation of

six rigs without further delay

• Complete the extensive yard stay programme on time and budget

• Secure contracts for the third and fourth drillships under construction with expected delivery in mid- and end 2014

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The newbuild programme is on budget, but delivery of five of the eight rigs will be two to four months delayed

Ultra harsh jack-ups XL Enhanced Ultra deepwater drillships

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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 2014-2016

Four ultra deepwater drillships under construction

at Samsung Heavy Industries, South Korea

Delivery in 2014

Extensive yard stay programme during 2014

Maersk Developer yard stay in Pascagoula, US 2014 Yard stays

Heydar Aliyev*

Q4 2013 5 year special survey + upgrade

Mærsk Developer*

Q4 2013 5 year special survey

Maersk Resolve


Mærsk Gallant

Q2 2014 5 year special survey + lifetime extension

Maersk Reacher


Mærsk Inspirer


Maersk Completer

Q3 2014 UWILD (offshore)

Maersk Discoverer


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Note: * was commenced in 2013 but will not be completed until early 2014

Commercial focus on securing work for the two uncontracted drillships

Ultra harsh environment jack-ups Ultra deepwater drillships

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XL Enhanced 1

Customer: Total E&P Norge AS

Country: Norway


Duration: 4 years

XL Enhanced 2

Customer: Det norske Oljeselskab

Country: Norway


Duration: 5 years

XL Enhanced 3

Customer: Statoil

Country: Norway


Duration: 4 years

Maersk Viking

Customer: ExxonMobil

Country: US GoM


Duration: 3 years

Maersk Venturer

Uncontracted

Drillship 4

Uncontracted

Maersk Valiant

Customer:

ConocoPhillips/Marathon Oil

Country: US GoM


Duration: 3 years

XL Enhanced 4

Customer: BP

Country: Norway


Duration: 5 years

Rig fleet 3+4 Ultra deepwater floaters

6+4 Ultra harsh environment jack-up rigs

6 Premium jack-up rigs

1 Midwater floater

10 Drilling barges

Financial investment Egyptian Drilling Company, Joint Venture (50/50)

Present in the most important oil and gas markets

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Maersk Drilling Moving boundaries within offshore drilling

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