Geir Sjurseth 2014
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Seite 1
Geir Sjurseth, Managing Director, Global Head Offshore Finance
DVB Bank SE
Dubai 6 March 2014
OFFSHORE SUPPORT – Prospects in 2014 and beyond
Page 2
Introducing DVB Bank
DVB Overview
• European Company (SE), listed on the Frankfurt Stock Exchange
• 95% owned by DZ Group, the largest co-operative banking group
in Germany
• Over 500 professionals, all specialising in transport finance
• Over 500 clients worldwide, all active in the transport sector
Global Coverage
EUR 1.11bn
Market Capitalisation
$ 29.2bn / EUR 22.2bn
Total Loan Book
EUR 124.9m / 110.4m
Net Profit FY 2012 / FY 2011
20.3%
Basel II Core Capital Ratio
A+
Long Term Debt (Standard & Poor’s)
A-1
Short Term Debt (Standard & Poor’s)
Key Facts
Total Lending Volume: $29.2bn
AMERICA EUROPE ASIA / PACIFIC
New York
Curaçao Singapore
Tokyo
HamburgFrankfurt/MainZurich
Bergen/Oslo
Athens
RotterdamCardiff London
Shipping
42.2%
Land Transport
7.7%
Investment Management
2.7%
Other
4.9%
Aviation
31.1%
Offshore
11.4%
Page 3
DVB’s 4 Global Divisions
OffshoreShipping Aviation Land Transportation
DVB’s Global Divisions takes calculated asset risks in various niches of the transportation industry
• Narrowbody Pax
• Widebody Pax
• Regional jets
• Freighters
• Freight cars
• Locomotives
• Regional passenger train sets
• Passenger coaches
• Road tractors and trailers
• Tank containers
• Crude tankers
• LNG
• Chemical tankers
• Product tankers
• LPG
• Dry bulk
• Container vessels
• Container boxes
• RoRos
• Ferries
• Supply
• Subsea & Construction
• Heavy Lift
• Accommodation
• Seismic
• Drilling
• Floating Production
Page 4
Asset Coverage – Offshore sub segments
OSVs
Hydrocarbon
Exploration
• Seismic Survey Vessel (SSV)
• Electro Magnetic Survey Vessel
Supply & Anchor
Handling
• Anchor Handling Tug (AHT)
• Anchor Handling, Tug & Supply (AHTS)
• Platform Supply Vessel (PSV)
• Stand-by Vessel
• Emergency Response Rescue Vessel (ERRV)
• Multifunction Vessel
Production
• FPSO
• FSO
• FPU
Crew
Accommodation
• Jack-up Platforms
• Semisubmersible Platforms
• Mono-hull Vessels
• Accommodation Barges
Seabed Installation
• Diving Support Vessel (DSV)
• Lay Support Vessel
• ROV Support Vessel
• Multifunction serv
• Construction vsl
• Well Intervention Vessels
• Derrick Barge
• Pipe Carrier
Drilling
• Tender
• Jack-ups
• Semi subs
• Drillships
AccommSeismic Drilling FPSOsSubsea
Page 5
Ability to finance Mexican and
Brazilian flag vessels
S&P and Newbuild Finance
Sale & Leasebacks
Restructuring and
Recapitalizations
Acquisitions and Divestitures
Sale & Leasebacks
(Structuring and Execution)
Structured Equity and
Mezzanine Finance
Equity Public and Private
Placements
Private Equity / Equity Co-
Investments
Product Offering
Financing Advisory and M&A Capital Markets
Acquisition and Mezzanine
Finance
Valuations and Fairness
Opinions
Debt Public and Private
Placements
DVB’s Offshore Division provides a range of financial solutions backed by strong lending capacity
Page 6
Current market snap shot
Offshore companies reporting
strong 2013 financials
Lots of liquidity in the market
Interest rates at their bottom
Bond and equity markets “wide”
open for offshore
Growing interest from PE
China leasing companies doing
deals
Ship yards hungry for business
Risk of too many projects being
funded
Excesses of speculative NBs in
the Jack-Up drilling and large
PSV segments
Oil majors in profit squeeze -
E&P spend down to 4%?
MARKET AT A CROSSROAD?
Page 7
When will the offshore market peak?
Page 8
The oil majors & the contracting companies..
Rig fleet +53%
since 2005
Offshore oil
production from 24
to 22.5mbp over
same time
Page 9
Offshore Rigs Currently On Order / Avg Price
Raw Data Source: RigLogix, 18Oct13
Drillships, 75,
$638mio
Jack-Ups, 107,
$248mio
Semi-Sub, 23,
$670mio
Tender,10,
$147mio
Drillship Jackup Semisub Tender
Page 10
Jack-Up Demand / Supply
Raw Data Source: Rystad EnergyThe Global Drillship Market Forecast
0
100
200
300
400
500
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Rig
Ye
ars
Rig Supply Years Rig Demand Years (275d/y)
Page 11
AHTS Orderbook (31/12/13)
Page 12
PSV Orderbook (31/12/13)
Page 13
Changes in financing patterns?
Ship finance banks
ECAs
Bonds Oslo – public bonds/ NY – public bonds/144A
International/London
Sale & LBs
PE funds
KS financings
SPC financings
IPO/ share issue
$250bn/year v HF/PE of $5-6bn
Page 14
What’s the common denominator?
Page 15
How will PE shape the industry?
Page 16
IPOs?
Stocks on both sides of
the Atlantic trade below
replacement cost. US OSV
stocks all trade below
book value despite
historic premiums, and
Norwegian OSV stocks
trade at an eye-popping
0.47x NAV on average. The
sector trades at earnings
multiples close to historic
lows despite the solid
outlook. (Platou, Feb 2014)
Page 17
Comparable Listed Offshore Supply Companies
Company name CurrencyStock
Price% 52w H % 52w L MV USDm EV USDm
EV / EBITDA
LTM 2014 2015
P /E
LTM 2014 2015
Date: 26 February 2014
Offshore Supply Owners
Europe
Bourbon SA EUR 21.61 99% 124% 2,214 5,359 33.6x 18.0x 10.7x 9.6x 9.4x
Deep Sea Supply NOK 10.35 83% 116% 219 360 5.2x 8.7x 6.7x 7.4x 4.1x
DOF ASA NOK 30.20 89% 129% 556 4,835 NM 5.5x 4.1x 9.8x 7.8x
Eidesvik Offshore NOK 33.80 90% 104% 169 609 6.9x 7.3x 5.5x 6.3x 6.6x
Farstad Shipping NOK 131.00 93% 111% 847 2,171 21.3x 8.4x 6.3x 9.2x 6.9x
Havila Shipping NOK 33.80 89% 140% 169 1,090 NM 3.3x 4.0x 9.5x 7.7x
Rem Offshore NOK 65.75 97% 153% 227 894 9.0x NA NA 12.2x NA
Siem Offshore NOK 9.38 90% 130% 606 1,421 NM 6.5x 6.0x 13.5x 5.9x
Solstad Offshore NOK 113.00 93% 121% 725 2,168 9.3x 4.9x 4.5x 9.5x 7.3x
Americas
Gulfmark Offshore USD 44.99 84% 128% 1,207 1,778 31.8x 9.8x 8.5x 14.2x 7.7x
Hornbeck Offshore USD 40.93 69% 105% 1,487 2,334 15.1x 9.3x 6.9x 9.1x 5.7x
Seacor Holdings USD 87.22 89% 128% 1,802 2,197 NM 17.3x 13.0x 9.5x 7.6x
Tidew ater USD 48.40 77% 106% 2,406 3,945 17.8x 9.6x 7.7x 11.0x 7.5x
Asia
Alam Maritim Resources MYR 1.49 91% 186% 372 541 12.6x 10.6x 9.3x 18.5x 14.5x 13.6x
Bumi Armada Berhad MYR 3.90 96% 105% 3,492 4,453 26.9x 16.0x 14.6x 14.8x 9.5x 8.4x
CH Offshore SGD 0.41 85% 103% 229 159 NM NA NA NM NA NA
Ezra Holdings SGD 1.05 71% 127% 814 2,039 NM 11.9x 9.2x 22.3x 11.3x 9.1x
Global Offshore INR 210.00 100% 465% 84 267 19.9x 10.4x 9.6x 10.4x 9.4x 8.7x
Great Offshore INR 64.30 83% 173% 39 483 22.4x NA NA 4.6x NA NA
Jaya Holdings SGD 0.77 93% 138% 467 444 13.7x 12.1x 10.1x 8.0x 6.3x 5.4x
Perdana Petroleum MYR 1.96 98% 233% 434 592 23.9x 13.4x 13.1x 20.2x 10.1x 9.3x
Sw issco Holdings SGD 0.38 95% 169% 137 211 8.6x NA NA 11.0x NA NA
Sw iber Holdings SGD 0.65 83% 110% 314 1,196 8.9x 6.4x 5.7x 6.9x 8.7x 7.8x
Tanjung Offshore MYR 0.60 81% 231% 67 30 NM NA NA 1.6x NA NA
8.4x
3.5x
7.5x
5.8x
6.0x
6.9x
NA
5.2x
6.8x
6.8x
4.5x
6.5x
6.9x
Page 18
Potential adverse market conditions?
Demand change - period
of lasting economic
recession/deflation, falling
asset values
Oil price shock?
New supply/game changer
– shale oil?
Event
Falling E&P spending by oil
majors/ nationals, leading
to;
Marginal, high cost UDW
fields hit
Exploration in fragile
areas/Arctic hit
A 3-5 years period of
equipment over supply, will
reduce rates and values to
new, lower balances
Impact
Page 19
Shale oil v shale gas
US production, million barrels a day
Note: * Converted from cubic feet to barrels of oil equivalent
Sources: Energy Information Administration; The Economist
Page 20
World Oil Demand
Raw Data Source: IEA / Barclays Cap / DVB Research
mio
bb
ls /
day
83.7
85.1
86.1 86.485.2
86.6
89.089.4
90.2
80
82
84
86
88
90
92
2005 2006 2007 2008 2009 2010 2011 2012 2013
Rig fleet +53%
since 2005
Offshore oil
production from
24 to 22.5mbp
over same time
Page 21
Potential World Oil Demand Components in 2020
Raw Data Source: Rystad Energy, DVB Research
90
10
25
11 97
Mio Bbls/day
60
65
70
75
80
85
90
95
100
Current Production
Depletion by 2020
New Conventional
Onshore
New Shale New Oil Sands
New Offshore 2020 Oil demand
69
Page 22
How to conclude?
The Offshore owners/markets are
enjoying very good conditions, but:
Market at a crossroad – downside risk
next 18-24 months
Time for consolidation, reduction in
capex, increased employment cover
Page 23
But then there’s the..
P R E D I C T I O N This will be a year of great energy and power
for those who can grab hold and hang on. You won’t get left in the dust if you’ve
planted a lot of seeds in the previous Snake year. The 2014 Horse will want room to run so have big dreams and goals worthy of a powerful steed and you’ll ride your way to
success.
Page 24
Bergen
DVB Bank SE Nordic Branch
Strandgaten 18
5807 Bergen
NORWAY
New York
DVB Transport (US) LLC
609 5th Avenue, 5th floor
New York, 10017
USA
Singapore
DVB Group Merchant Bank (Asia) Ltd
77 Robinson Road #30-02
068896 Singapore
SINGAPORE
Oslo
DVB Bank SE Nordic Branch
Haakon VII’s gate 1
P.O. Box 1999 Vika, 0125 Oslo
NORWAY
DVB Offshore Division
Thank you for your attention!
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