SOLSTAD OFFSHORE ASA Company Presentation 19 August 2014
SOLSTAD OFFSHORE ASACompany Presentation19 August 2014
AGENDA
1. KEY HIGHLIGHTS
2. FINANCIALS
3. FLEET AND MARKETS
4. OUTLOOK
2
Segments Current Fleet New buildings
Weighted Average
Age 1)
CSV 19 1 7.3
AHTS 19 9,7
PSV 9 8.9
Total: 47 1 8.2
1) Weighted average age excluding newbuildings based on broker valuations of the vessels as of 30.06.2014
SOLSTAD OFFSHORE IN BRIEF
Founded in 1964. In the offshore segment since 1973
Operations worldwide – North Sea, Brazil, US Gulf, West Africa, Asia etc.
Listed on Oslo Stock Exchange (Ticker: SOFF) since 1997
Main office in Skudeneshavn and branch offices in Aberdeen, Rio de Janeiro, Singapore, Manila and Perth
Total of 1,800 onshore and offshore personnel
Key facts Fleet overview
3
SOLSTAD OFFSHORE - HIGHLIGHTS 30.06.2014
2Q 2014 Financial & Operational Highlights Net revenues NOK 845 mill.
Adjusted EBITDA NOK 385 mill / Adjusted EBITDA margin 43%
Margin influenced by slower than expected spot market in the AHTS and PSV segments
Net revenues 1st half 2014 NOK 1.695 mill and adjusted EBITDA NOK 736 (42%)
2Q 2014 Events Delivery of “Normand Reach” (CSV) in June, commenced 5 year charter with Reach Subsea
Ordered large CSV for delivery 2Q ’16, based on an 8 year contract with industry leading offshore company
Agreement to increase ownership to 100% in CSV “Normand Vision” with effect from delivery from yard primo July ‘14
Issued a NOK 1,000 million unsecured bond loan at favorable terms
Sale of “Nor Supporter” (small AHTS) with positive cash effect
Financing of newbuilds and refinancing of current part of long term debt according to plan
Backlog Contract coverage remaining 2014 of 66% (73% incl. options). 46% (60% incl. options) for 2014
Contract backlog of NOK 8 billion (NOK 12,7 billion incl. options) coming 5 years
4
THE SOLSTAD OFFSHORE FLEET47 VESSELS IN OPERATION AS PER 18. AUGUST 2014
Vessels: 5
Vessels: 9
Vessels: 23Newbuild: 1
Vessels: 5
Vessels: 2
Vessels: 3
Vessels: 1
Perth
Rio de Janeiro
Singapore
SkudeneshavnAberdeen
ManilaKuala Lumpur
Solstad offices
5
AGENDA
1. KEY HIGHLIGHTS
2. FINANCIALS
3. FLEET AND MARKETS
4. OUTLOOK
6
OPERATING REVENUE AND EBITDA(EX. GAIN / LOSS ON SALE OF ASSET / INCL. SHARE IN JV)
7
1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14Opr.rev 556 675 679 707 669 702 822 842 788 878 913 811 842 917 1005 915 873 901EBITDA 202 290 278 202 248 209 346 330 283 397 440 303 299 409 510 346 343 385EBITDA % 36% 43% 41% 29% 37% 30% 42% 39% 36% 45% 48% 37% 36% 45% 51% 38% 39% 43%
0%
10%
20%
30%
40%
50%
60%
0
200
400
600
800
1000
1200
EBIT
DA
%
NO
K m
ill
PROFIT & LOSS ACCOUNTS
(Mill NOK) 2Q2014
2Q2013
1H2014
1H2013
Total 2013
Total Operating Income (1) 845 909 1 696 1 707 3 546
Operating expenses (497) (526) (1 000) (1 018) (2 049)
Ord. Depreciation (109) (109) (209) (217) (431)
Joint Venture & Associated Companies 15 21 36 38 57
Operating Profit 254 328 523 509 1 123
Net Agio (71) (37) (48) (63) (166)
Other fin. items (90) (95) (168) (224) (415)
Result before taxes 93 196 307 223 541
EBITDA (2) 385 408 737 708 1 574
30. June 2014
(1) Including net gain on sale of assets, excluding share in JV’s(2) Excluding net gain of sale of assets, including share in JV’s
BALANCE
(Mill NOK) 201430.06
201330.06
201331.12
Long Term fixed assets 13 137 13 282 12 740
Current assets 2 691 1 904 2 285
Total assets 15 828 15 187 15 025
Equity 5 078 4 700 4 954
Long Term liabilites 8 861 8 262 7 807
Current liabilites (1) 1 888 2 224 2 264
Total equity an liabilites 15 828 15 187 15 025
30. June 2014
Booked equity at 30.06.2014 NOK 132,- pr share
(1) NOK 1.275 million of Current Liabilities per 30.06.14 is current portion of long term debt.
SOLSTAD OFFSHORE ASA - VALUES & DIVIDEND
AGENDA
1. KEY HIGHLIGHTS
2. FINANCIALS
3. FLEET AND MARKETS
4. OUTLOOK
11
THE SOLSTAD FLEET – MARKET SEGMENTS
0%
10%
20%
30%
40%
50%
60%
AHTS PSV CSV
Segments based onVessel Valution
30.06.14 (1)
1)Based broker valuations as of 30.06.2014 with SOFF’s 50% share in “Normand Installer” and “Normand Oceanic excluding “Normand Vision” (delivered 3Q ‘14)
33 %
13 %
54 %
Freight Income YTD 30.06.2014
AHTS PSV CSV
30 %
9 %61 %
EBITDA YTD 30.06.2014
AHTS PSV CSV
General comments
Operational highlights
CSV SEGMENT
High world wide subsea activity Subsea market driven by solid fundamentals The large subsea players have substantial backlog
High tendering activity but some projects are also being postponed
Solstad has a strong position and favorable market exposure 19 CSV’s working for all the main players
1 CSV on order with long term T/C from delivery
Potentially some availability in 4q -14 (Frame Agreements)
Solid contract coverage for the CSV fleet 93 % utilization during 2Q ’14, negatively influenced by mobilization and periodic
maintenance
Increased earning visibility during the quarter
Delivery of “Normand Reach”. Started 5 year firm contract (mid June-14)
Delivery of “Normand Vision”. Started 8 year firm contract (early July-14)
Subsea 7 exercised their option to keep “Normand Subsea” 1 more year
DLB “Norce Endeavour” Some idle time between projects in 2q, but commenced new Seasonal contract with
Chevron in Gulf of Thailand early July.
Continue to show strong operational performance
30 %
9 %61 %
EBITDA YTD 30.06.14% from each segment
AHTS PSV CSV
AHTS SEGMENT
General comments
Operational highlights
Slower than expected marked conditions in the North Sea spot market through 2Q ’14
Positive medium to long term outlook as market balance continues to improve Increased international bidding activity expected, including drilling campaigns in
remote areas with special vessel requirements.
Large number of DW rigs to enter market in coming years
Limited number of larger AHTS’s under construction
Solstad has a substantial AHTS operation with 19 vessels trading worldwide Vessel size ranging from 5,500 to 32,000 bhp
75% utilization in 2Q ’14
“Normand Titan” commenced a new 4 year contract with Petrobras, Brazil
Sale of “Nor Supporter” (8,000 bhp) in June ‘14
Currently 5 - 6 AHTSs of various sizes are trading the spot market in the North Sea and in SE Asia
PSV SEGMENT
General comments
Operational highlights
Slower spot-market in the North Sea than expected. Activity level is high Active tendering activity for medium and long-term work
Several new companies and the total number of vessels, put pressure on dayrates.
Demand will continue to rise as new drilling rigs and production units begin their operations
Still many new vessels under construction, and entry barrier is too low.
82% utilization during 2Q ’14
Currently 3 vessels in the North Sea spot market
AGENDA
1. KEY HIGHLIGHTS
2. FINANCIALS
3. FLEET AND MARKETS
4. OUTLOOK
16
FUTURE OUTLOOK
Demand for CSV’s is expected to continue to be strong as a consequence of high subsea activity
Focus on longer term contracts for our CSV fleet to achieve predictable EBITDA
The combination of long term contracts and spot exposure for the AHTS/PSV fleet will influence on the company’s margins, depending on how the market develops.
Sale of older vessels to continue. Strong focus on keeping cost on a
competitive level
17
100%
COMPANY STRUCTURE*
Solstad Offshore ASA
*As per 18 August 2014 – simplified structure
SOLSTAD SHIPPING AS
SOLSTAD OFFSHORE UK LTD
(GROUP)
OCEAN SOLSTAD AS
NORMAND SKARVEN AS/KS
OCEAN SOLSTAD OPERATIONS AS
SOLSTAD REDERI ASNORMAND DRIFT AS
NISA INC
SOLSTAD OPERATIONS AS
SOLSTAD BRASIL AS
NORMAND OCEANIC AS
NORMAND OCEANIC CHARTERING AS
SOLSTAD OFFSHORE ASIA
PACIFIC LTDSOLSTAD
MANAGEMENT AS
TRYM TITAN AS
NORMAND FLOWER AS
100%100%100%
50%
72.1%
100%
100%
100% 100% 100%
100%
100%
50%
50%NON-SHIPOWNING COMPANIES
SHIPOWNING COMPANIES
NORCE OFFSHORE PTE LTD100%
100%
SOLSTAD OFFSHORE LTDA
100%
9 CSV inc. 1 NB12 AHTS5 PSV
1 CSV
2 CSV
2 CSV1 AHTS2 PSV
1 CSV
2 CSV6 AHTS2 PSV
1 CSV
1 AHTS
1 CSV
1 CSV
19
Vessel name Built HP DWT
CSVNomand Oceanic 2011 26 000 11 300
Normand Pacific 2010 20 560 4 500
Nomand Baltic 2010 12 000 4 100
Normand Subsea 2009 21 000 6 100
Normand Seven 2007 26 000 10 000
Normand Installer 2006 31 500 8 600
Normand Commander 2006 10 197 4 305
Normand Fortress 2006 10 197 4 300
Normand Flower 2002 10 600 4 500
Nomand Mermaid 2002 11 000 4 000
Normand Cutter 2001 22 000 10 000
Normand Clipper 2001 22 000 10 000
Normand Pioneer 1999 27 800 5 000
Normand Progress 1999 27 800 5 000
Nor Australis 2009 5 500 2 500
Nor Valiant 2008 5 500 3 100
Norce Endeavour 2010 N.A. 18 000
Normand Reach 2014 20 944 4 750
Normand Vision 2014 28 200 12 000
TBN 2016 39 600 13 500
2014 2015 2016 2017Q2 Q3 Q4 Q1 Q2 Q3Q2 Q3 Q4 Q1 Q4 Q1 Q2 Q3 Q4
Contracted Charterer’s option Under construction
20Note: HP = horsepower, DWT = deadweight
CSV SEGMENT
Contracted Charterer’s option
Vessel name Built HP DWT
Large AHTSNormand Ranger 2010 28,000 4,250
Normand Prosper 2010 32,000 5,000
Normand Ferking 2007 20,000 5,000
Normand Titan 2007 16,092 2,600
Normand Master 2003 23,500 3,700
Normand Mariner 2002 23,500 3,700
Normand Ivan 2002 20,000 4,140
Normand Borg 2000 16,800 2,873
Normand Atlantic 1997 19,400 4,200
Normand Neptun 1996 19,400 4,200
2014 2015Q4
2016 2017Q2 Q3 Q1 Q2 Q3Q2 Q3 Q4 Q1 Q4 Q1 Q2 Q3 Q4
Smaller AHTSNormand Draupne 1985 18 000 2 500
Normand Jarl 1985 12 000 2 000
Normand Skarven 1986 13 000 2 500
Normand Drott 1984 12 000 2 500
Nor Chief 2008 10 800 2 100
Nor Spring 2008 8 000 2 600
Nor Captain 2007 10 880 2 300
Nor Tigerfish 2007 5 500 1 650
Nor Star 2005 5 500 1 860
21Note: HP = horsepower, DWT = deadweight
AHTS SEGMENT
Contracted Charterer’s option
Vessel name Built HP DWT
PSVNormand Arctic 2011 10 640 4 900
Normand Vibran 2008 5 310 3 240
Normand Corona 2006 8 931 4 100
Normand Trym 2006 5 310 3 240
Normand Aurora 2005 10 000 4 900
Normand Skipper 2005 9 500 6 400
Normand Flipper 2003 9 000 4 500
Normand Vester 1998 10 300 4 590
Normand Carrier 1996 10 300 4 560
Q2 Q3 Q4Q2 Q3 Q4 Q1 Q2 Q32017
Q2 Q3 Q4 Q1 Q4 Q12014 2015 2016
22Note: HP = horsepower, DWT = deadweight
PSV SEGMENT