Financial results 1Q 2015 Oslo, 6 May 2015
Financial results 1Q 2015
Oslo,6 May 2015
AGENDA
FINANCIAL RESULTS 1Q 2015
MARKET
OPERATIONS
SUMMARY
Income Statement – Key Figures
(USD mill) 1Q 2015 4Q 2014 Change
Operating revenues 272,0 286,4 (14,4)Recharged income 11,9 11,2 0,7 Total revenues 283,9 297,6 (13,7)
Operating costs (114,9) (129,6) 14,7 Recharged expenses (11,7) (10,9) (0,8)Total operating expenses (126,6) (140,5) 13,9
Oper. result before depr. (EBITDA) 157,3 157,1 0,2
Depreciation (91,1) (86,6) (4,5)Operating result (EBIT) 66,2 70,5 (4,3)
Net financial items 8,7 33,7 (25,0)Result before tax 74,9 104,2 (29,3)
Estimated tax (5,2) (8,6) 3,4 Net result 69,7 95,6 (25,9)
EBITDA Comparison 1Q 2015 vs. 4Q 2014
Financial Items Breakdown
(USD mill) 1Q 2015 4Q 2014 Change
Interest income 0,4 0,4 - Gains on financial instruments - - - Financial income 0,4 0,4 -
Interest expenses (11,5) (12,3) 0,8 Capitalized borrowing cost (projects) 1,7 1,7 - Losses on financial instruments (7,6) (9,4) 1,8 Other financial expenses (3,7) (4,2) 0,5 Financial expenses (21,1) (24,2) 3,1
Net foreign currency gain 29,4 57,5 (28,1)
Net financial items 8,7 33,7 (25,0)
Offshore Drilling Segment
(USD mill) 1Q 2015 4Q 2014 Change
Operating revenues 268,0 283,3 (15,3)Recharged income 11,9 11,2 0,7 Total revenues 279,9 294,5 (14,6)
Operating costs (111,8) (128,1) 16,3 Recharged expenses (11,7) (10,9) (0,8)Total operating expenses (123,5) (139,0) 15,5
Oper. result before depr. (EBITDA) 156,4 155,5 0,9
Depreciation (90,5) (86,0) (4,5)
Operating result (EBIT) 65,9 69,5 (3,6)
Engineering & Fabrication Segment
(USD mill) 1Q 2015 4Q 2014 Change
Operating revenues (external) 4,0 3,1 0,9 Inter-segment revenues 33,7 3,0 30,7 Total operating revenues 37,7 6,1 31,6
Operating costs (35,4) (4,4) (31,0)Oper. result before depr. (EBITDA) 2,3 1,7 0,6
Depreciation (0,6) (0,6) -
Operating result (EBIT) 1,7 1,1 0,6
Consolidated Balance Sheet
(USD mill) 1Q 2015 4Q 2014 Change
Intangible assets 12,2 13,3 (1,1)Property, plant & equipment 2 989,7 2 901,6 88,1 Other non-current assets 30,8 31,4 (0,6)Total non-current assets 3 032,7 2 946,3 86,4
Other current assets 331,1 318,9 12,2 Cash and cash equivalents 152,4 203,4 (51,0)Total current assets 483,5 522,3 (38,8)Total assets 3 516,2 3 468,6 47,6
Equity 1 376,5 1 307,9 68,6
Non-current interest bearing debt 1 238,6 1 359,9 (121,3)Other non-current liabilities 135,1 139,0 (3,9)Total non-current liabilities 1 373,7 1 498,9 (125,2)
Current interest bearing debt 190,9 95,5 95,4 Current liabilities newbuilds 337,2 292,7 44,5 Other current liabilities 237,9 273,6 (35,7)Total current liabilities 766,0 661,8 104,2 Total equity and liabilities 3 516,2 3 468,6 47,6
Consolidated Cash Flow
(USD mill) 1Q 2015 4Q 2014 Change
Profit before income taxes 74,9 104,2 (29,3)Depreciation and impairment 91,1 86,6 4,5 Interest expense 9,9 10,6 (0,7)Gain on sale of assets 0,1 - 0,1 Changes in working capital (28,5) 33,4 (61,9)Unrealized loss/(gain) financial instruments (20,3) (43,0) 22,7 Cash generated from operations 127,2 191,8 (64,6)
Interest paid (11,9) (12,8) 0,9 Taxes paid (7,0) (19,7) 12,7 Net cash flow from operating activities 108,3 159,3 (51,0)
Net investment in fixed assets (157,0) (130,7) (26,3)Cash flow used in investment activities (157,0) (130,7) (26,3)
Cash flow from financing activities - - -
Foreign currency (2,3) 0,3 (2,6)Net change in cash and cash equivalents (48,7) 28,6 (77,3)Cash at beginning of period 203,4 174,5 28,9 Cash at end of period 152,4 203,4 (51,0)
Offshore drilling EBITDA and margin
Fleet statusRig Type / design W depth ft Location Client Contract status Day rate (in USD) Next CR survey
Bollsta Dolphin SS / Moss 10 000 UK Chevron 4Q 2015- 4Q 2020 560 000 3Q 2020
Bolette Dolphin DS/ Gusto P10' 12 000 Colombia Anadarko 2Q 2014 - 2Q 2018 488 000 1Q 2019
Belford Dolphin Drillship 10 000 Mozambique Anadarko January '12 - September '15 495 000 2Q 2015September '15 - March'16 Termination for convenience
Blackford Dolphin SS / Aker H-3 7 000 UK Nexen October '14 - May '15 428 000 4Q 2018UK Chevron June '15 - January '17 428 000
Option January '17 - October '17
Bideford Dolphin SS / Aker H-3 1 500 Norway Statoil February '14 - February '17 NOK 1048' + USD 301' 2Q 2019
Borgland Dolphin SS / Aker H-3 1 500 Norway Consortium* April '14 - December '17 NOK 1046' + USD 349' 4Q 2019
Bredford Dolphin SS / Aker H-3 1 500 Norway Consortium** October '13 - September '15 NOK 1025' + USD 274' 2Q 2017
Byford Dolphin SS / Aker H-3 1 500 UK BP April '13 - September '16 345 500 OngoingOption September '16 - August '19
Borgsten Dolphin Tender support / AH-3 UK Total February '13 -May '16 202 000/ 240 500 incl. capital contributionOption June '16 - June '17 1Q 2018
Borgholm Dolphin Accomodation / AH-3 UK BG October '14 - May '15 240 000 4Q 2017
Borgny Dolphin SS / Aker H-3 2 300 Idle
Participants in the consortiums: * Wintershall, Tullow Oil, E.ON Ruhrgas, Suncor Energy ** RWE DEA, Lundin, Noreco, Repsol
Midwater floaters Norway
Midwater floaters UK
Ultra-deepwater and deepwater units
FINANCIAL RESULTS
MARKET
OPERATIONS
SUMMARY
Global market – floating units
The market continues to be challenging in all segments
The contracting and tender activity is low, while further newbuilds are entering the market
The imbalance between demand and supply is expected to prevail through 2015 and into 2016
Increased stacking and scrapping is materializing
Norwegian floater market
The low contracting activity over the last two years will continue through 2015
Several rigs will come off contract during 2015, including Bredford Dolphin
Contract renewal will be challenging and increased idle time is expected
As per April 2015
Source: DNB
NameWest NavigatorTransocean SpitsbergenWest VentureTransocean SearcherDeepsea AtlanticBredford DolphinTransocean BarentsTransocean ArcticTransocean WinnerCOSLPioneerBideford DolphinSonga DeltaSonga DeeIsland InnovatorBorgland DolphinStena DonSonga TrymScarabeo 5Deepsea BergenScarabeo 8Leiv EirikssonCOSLInnovatorCOSLPromoterSonga EquinoxSonga EnduranceSonga EncourageSonga Enabler
Contract Option Yard/under construction
Q3 Q4 Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4 Q1 Q22015 2016 2017
Average dayrates Norway
NameOcean VanguardOcean NomadOcean PrincessTransocean ProspectOcean GuardianWest PhoenixParagon MSS1Sedco 711Transocean John ShawWilHunterSedco 704Ocean ValiantSedco 714Stena SpeySedco 712Blackford DolphinPaul B. Loyd, Jr.Byford DolphinWilPhoenixOcean PatriotTransocean LeaderBollsta DolphinDeepsea Aberdeen
Q3 Q4 Q1 Q2 Q3 Q42015 2016 2017
Q1 Q2 Q3 Q4 Q1 Q2
UK floater market
The activity is weak also in the UK market
Despite some tendering activity there is still limited visibility for contract renewal during the next year
The low activity in the market in general is affecting the accommodation segment, with low contracting activity also in this market
As per April 2015
Source: DNB and the Company
Average dayrates UK
Wordwide deepwater dayrates
FINANCIAL RESULTS
MARKET
OPERATIONS
SUMMARY
Russia
New Zealand
Papua -New Guinea
Australia
Philippines
Japan
Brunei
Taiwan
South Korea
North Korea
Indonesia
Malaysia
Vietnam
Cambodia
LaosMyanmar
Sri Lanka
Madagascar
India
Mongolia
China
Mozambique
South Africa
Malawi
Pakistan
Zimbabwe
Botswana
Kirgistan
Tadschikistan
Somalia
Afghanistan
Tanzania
Namibia
Sambia
Kenya
Dschibuti
Qatar
Yemen
Uganda
Ethiopia
Usbekistan
Angola
Turkmenistan
Eritrea
Iran
Zaire
Saudi-Arabia
Sudan
Iraq
Kazakhstan
Azerbaijan
Congo
Argentina
Jordan
Central Africa
Chile
Gabun
Israel
Syria
Lebanon
Georgia
Cameroon
Chad
Egypt
Cyprus
Nigeria
Turkey
Benin
Togo
Ghana
Libya
Greece
Niger
Bulgaria
Ivory Coast
Burkina Faso
Liberia
Ukraine
Serbia
Romania
Tunesia
Sierra Leone
Belarus
Mali
Guinea
Brazil
Hungaria
Algeria
Lithuania
Italy
Guinea- Bissau
Estonia
Latvia
Senegal
Gambia
Poland
Mauretania
Finnland
Bolivia
West Sahara
Germany
Marocco
Sweden
Denmark
Spain
France
Belgium
Netherlands
Portugal
Peru
Norway
French- Guayana
United Kingdom
Guyana
Ireland
Columbia
Ecuador
Venezuela
Trinidad
Panama
Puerto Rico
Costa Rica
Dominican RepublicHaiti
Nicaragua
Jamaica
Honduras
El Salvador
Iceland
Belize
Cuba
Mexico
USA
Greenland
Canada
NepalBhutan
Bangladesh
Thailand
Uruguay
Guatemala
Kuwait
Oman
United Arab Emirates
Lesotho
Swaziland
Burundi
Rwanda
Croatia Bosnia- Herzegovina
Austria
Switzerland
Luxemburg
Moldawia
Albania
Macedonia
Montenegro
Slovenia
Czech Republic
Slovakia
Armenia
Paraguay
Surinam
ByfordDolphin
BorgstenDolphin
BorgholmDolphin
BlackfordDolphin
BidefordDolphin
BorglandDolphin
BredfordDolphin
BorgnyDolphin (idle – UK)
BoletteDolphin
BelfordDolphin
BollstaDolphin
Fred. Olsen Energy – Operating worldwide
Contract overview
Average contract length ca. 19 months
Bolette Anadarko
Bollsta Chevron
Belford Anadarko1)
Blackford Chevron
Bideford Statoil
Borgland RMN consortium
Bredford AGR cons
Byford BP
Borgsten Total
Borgholm BG
Borgny Cold stacked1) Terminated for convenience (termination fee of USD 52 million)
Option Mobilization Yard
202020192015 2016 2017 2018
Contract backlog
Total backlog ca. USD 2.9 billion
22
Bollsta Dolphin
Harsh environment ultra deepwater semi-submersible under construction
Moss Maritime CS 60 E (Enhanced) design from Hyundai Heavy Industries
Delivery is scheduled to 3Q 2015
Mechanical completion continues
Has secured a five-year contract with Chevron for operations West of Shetland in the UK sector
Ta inn nytt bilde
2424
Ultra deepwater
Belford Dolphin
Continued operations for Anadarko offshore Mozambique
A notice for termination has been received effective from early September 2015. The termination fee is approximately USD 52 million
The unit will undertake its five-year Class Renewal Survey in 2/3Q 2015, estimated to approximately 100 days and at a cost of USD 130 million
Bolette Dolphin
Operates under a four-year contract with Anadarko, estimated to expire 2Q 2018
Continued drilling operations under a two well drilling campaign offshore Colombia
Midwater - Norway
Bideford DolphinOperates under a three-year contract with Statoil, estimated to be completed end of January 2017
Completed its five-year class renewal survey July 2014
Borgland Dolphin
Continued its operations under the contract with an RMN consortium after the class renewal survey. The contract is estimated to be completed end of 2017
The five year class renewal survey was completed end of February. The total cost was USD 160 million, including a life extension program of USD 50 million
A new 15K BOP was installed during the yard stay
Midwater - Norway / United Kingdom
Bredford DolphinContinued under the 12-well contract with an AGR consortium. The contract is expected to expire end of 3Q 2015
The class renewal survey was completed August 2012
Borgholm DolphinContinued operations under the BG contract, estimated to expire end of May 2015
Class renewal survey was completed March 2013
Midwater - United Kingdom (cont.)
Byford Dolphin
The rig is under a drilling contract with BP Exploration, estimated to expire 3Q 2016
The class renewal survey was commenced early January 2015. An increase in scope includes some structural upgrade, subsea investment and general repair of equipment
The unit is now expected to complete the CRS in June and will cost approx. USD 190 million
Borgsten Dolphin
Continued under the tender support services contract of 40 months duration with Total E&P UK. Two six month options exist under the contract
Completed class renewal survey and conversion to tender support vessel in February 2013
Deepwater – United Kingdom
Blackford Dolphin
Continued under the contract with Nexen, estimated to be completed end of May 2015. A contact with Chevron of approximately 19 months will follow. Chevron has an option for extending the contract between 300 and 700 days
The unit completed its class renewal survey in June 2014
Harland & Wolff
Focus on ship repair, ship building, steel fabricationand engineering services
Byford Dolphin is undertaking its class renewal surveyat the yard, estimated to be completed first half of June 2015
A number of ship dockings have been carried out in the quarter
Summary
Financial
Revenues were USD 284 million
EBITDA was USD 157 million
Profit before tax was USD 75 million
Contract backlog amounting to approximately USD 2.9 billion
Annual General Meeting to be held 27th of May 2015
Operational
Borgland Dolphin class renewal survey completed end of February
Byford Dolphin class renewal survey commenced early January
Market
Average contract duration approximately 19 months
Q&A