UMW Oil & Gas Corporation Berhad 9 June 2014 INVEST MALAYSIA 2014
UMW Oil & Gas Corporation Berhad
9 June 2014
INVEST MALAYSIA
2014
Overview
1
• 1988 Establishment of UMW Oilpipe Services Sdn Bhd marks
our foray into the oil and gas business
• 2002 UMW Oil & Gas Division was established
• 1 November 2013 UMW Oil & Gas Corporation Berhad Listed in Bursa
Malaysia
• Market capitalisation RM 8.7 Billion
Background
Financial Performance 2013
94%
6% <0%
Drilling services
Oilfield services
Others
92%
4% 4%
RM738 million
RM207 million
REVENUE PBT
Our Company Overview
2
Our Shareholders
UMW Holdings
55.2%
PNB 10.7%
EPF 6.6%
Others 27.5%
Individual 3.5%
Body Corporate
74.5%
Government 0.5%
Nominees 21.5%
Malaysian 97.1%
Foreign 2.9%
As at 30 May 2014
ARMENIA
AZERBAIJAN
AUSTRALIA
CHINA
FRANCE
INDIA
INDONESIA
MALAYSIA
NETHERLANDS
NEW ZEALAND
PAKISTAN
PHILIPPINE
ROMANIA
SINGAPORE
THAILAND
TURKEY
TURKMENISTAN
UK
USA
JAPAN
SOUTH AFRICA
Our Company Overview
3
794 as at April 2014
719 as at December 2013
10%
Our People Demographics
Staff strength
People Development
UMW-Instep Drilling Academy
Building Capabilities
Structured training • Floorman Module
• Derrick Man
• Driller
Short Specialised training Training Rig Rig Simulator
21 nationalities
794
72.4%
NAGA 1
Offshore Rigs
UMW NAGA 2
Our assets : Drilling Operations
UMW NAGA 3 UMW NAGA 4
UMW NAGA 8 Delivery : Sept 2015
4
UMW NAGA 5
UMW NAGA 6 Delivery : 3Q2014
UMW NAGA 7 Delivery : 4Q2014
Semi-submersible
Jack-ups
Our Company Overview
UMW Gait 1 UMW Gait 2 UMW Gait 3
UMW Gait 5
5
UMW Gait 6 Delivery: 3Q2014
Hydraulic Workover Units
Our assets : Drilling Operations
Our Company Overview
6
West Plant & East Plant in Labuan
Sattahip & Songkhla
Tianjin
Turkmenbashy
Plants
in Malaysia
in China
in Thailand
in Turkmenistan
Our assets : Oilfield Services
Our Company Overview
Our Company Overview
7
Total Recordable
Case Frequency
0.29 as at April 2014
1.00 Industry average
Our Safety Record
Committed to the health and safety of personnel, protection of the
environment and compliance with applicable laws and regulations
Our Policy Statements
Quality Smoking Stop Work Drug & Alcohol Health, Safety &
Environment
8
Market Outlook
0
20
40
60
80
100
120
0
20
40
60
80
100
120
9
Cru
de
oil
pro
du
cti
on
(m
b/d
)
Cru
de
oil
pri
ce
per
barr
el (U
SD
)
USD 62/bbl due to GFC
Peak Oil price = USD 108/bbl
The Brent crude oil price is projected to average USD105/bbl and
USD101/bbl in 2014 and 2015, respectively
Crude oil production (mb/d) Crude oil price per barrel (USD)
World Oil Production
0 052 100
237 026 058
246 139 031
107 072 157
0 122 192
255 204 204
255 204 153
199 184 222
153 204 255
0.0
0.3
0.6
0.9
1.2
1.5
1.8
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013F
2014F
2015F
2016F
2017F
2018F
China Indonesia MalaysiaThailand Myanmar Vietnam
Asia offshore oil & gas production outlook
10
Offshore oil and gas production by country
These are all markets which we are currently active in, making it a
positive key driver to our services
(mmboe/day)
Source: Douglas-Westwood.
Asia offshore oil and gas production with jack-up and semi-submersible drilling
rigs demand
0
20
40
60
0
2
4
6
8
10
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013F
2014F
2015F
2016F
2017F
2018F
Offshore shallow (LHS) Offshore deep (LHS)
Jackup (RHS) Semisub>1000ft (RHS)
(mmboe/day) 2012– 2015 Total production CAGR = 3.4%
2012–15
Jack-up
demand
CAGR = 4.6%
• Jack-up demand in Asia is
growing at CAGR of 4.6%.
• Malaysia : > 23% of total
offshore production in Asia,
followed by Indonesia
• Vietnam and Myanmar are
the two countries in SEA
which is expected to
experience large growth
11
Asia Pacific drilling activities
• E&P activities
expenditure : USD162
billion for next five
years
• Drilling Expenditure is
USD73 billion:
• Australia - 27%
• Indonesia - 19%
• Malaysia -11%
• Shallow water still
dominating drilling
landscape
Source: “The Rising East “– Drilling Contractor Magazine (Nov/Dec 2013)
USD73 billion for drilling in APAC where shallow water will still be the dominating landscape.
Drilling market outlook
12
Offshore drilling rig demand by country, SEA
MODU rig demand by rig type, SEA
The DCR of jack-up drilling rigs in SEA is expected to recover from the downturn period from 2009 – 2012 to reach US$153,000 on average over 2013 – 2018, increasing by 26% compared to 2012. Semi-submersible <1,000ft DCR is
likely to stay at US$164,000 on average, increasing by 19% compared to 2012
Source: Douglas-Westwood and RigLogix.
(unit)
(Unit)
UMW-OG’s addressable market is dominated by demand for jack-up drilling rigs due to the shallow water drilling environment in SEA
0
8
16
24
32
2009 2010 2011 2012 2013F 2014F 2015F 2016F 2017F 2018F
Malaysia Vietnam Indonesia Thailand Myanmar
0
20
40
60
2009 2010 2011 2012 2013F 2014F 2015F 2016F 2017F 2018F
Jackup Semisub>1000ft Drillship Semisub<1000ft
506 22
26
170 18
3
2
43
≥30 years
20-29 years
10-19 years
<10 years
4
0 1
11
Summary : Age of jack-ups
13
Global : 724 rigs SEA : 66 rigs
Malaysia : 16 rigs
Rigpoint as at 27 May 2014
≥ 30 years
Global 70%
SEA 27%
Malaysia 25%
Drilling market outlook
Drilling market outlook
78.7%
4.9% (3 rigs)
16.4%
Foreign
UMW
Other Asean
Jack-ups working in Malaysia (15 rigs)
86.7%
13.3% (2 rigs)
100% of total Malaysia
94.4%
5.6% (1 rig)
Foreign
Malaysian
87.5%
12.5% (1 rig)
100% of total of Malaysia
Semi-sub working in Malaysia (8 rigs)
Jack-ups working in SEA (61 rigs)
Semi-sub working in SEA (18 rigs) 14 source: ODS-petrodata - as at 27 May 2014
2 2
1 1 1
3
1
0
1
2
1
0
1
2
3
4
2014 2015 2016
300 ft
350 ft
375 ft
400 ft
6 5
11
5
1
6
19
1 3 3
1
0
5
10
15
20
2014 2015 2016
300 ft
350 ft
375 ft
400 ft
Drilling market outlook
15
Jack-up Rig Contract expiry - Malaysia
Jack-up Rig Contract expiry - SEA
Total: 26 Total: 32
Total: 3
source: ODS-petrodata - as at 27 May 2014
Total: 7 Total: 6 Total: 2
SEA O&G prospects in the headlines
16
• Petronas spent RM17.5 billion of its CAPEX in the 1Q - 1Q
results announcement, 14 May 2014
• Petronas expected to keep up exploration efforts – The Sun Daily, 1
Apr 2014
Malaysia
Myanmar
Thailand
Vietnam
The Philippines launched a tender for exploration rights in 11 oil and gas blocks– 9
May 2014, Reuters UK
Philippines
Thai PTT Plans to Invest USD10 Billion in O&G CAPEX for 2014 -2018 – 9 Jan 2014,
www.rigzone.com
Vietsovpetro Eyes Offshore, Deepwater Activities areas to boost reserves – 14 December
2013, www.rigzone.com
Indonesia Appoints Winners in USD4 Billion Jangrik Gas Projects- 12 Feb 2014,
www.rigzone.com
Indonesia
• Myanmar awards 20 offshore blocks for oil and gas exploration – Malaysia Sun, 26 March 2014
• PTTEP will spend USD3.3 billion over the next five years to develop gas projects throughout Myanmar- Myanmar Times, 2 March 2014
Malaysian O&G industry
17
EPP 3: Intensifying exploration activities
Global upstream spending in the oil and gas sector is expected to remain set at around USD700 billion (about RM2.31 trillion) over the next decade
Close to 20% of this spending will be here in South East Asia
Malaysia: Investing close to RM198 billion (about USD 60 billion) over the next five years in the oil and gas sector upstream sector
Impact of the ETP on the Malaysian O&G industry: PETRONAS’ development programme
18
PETRONAS RM198 Billion
5 YEAR UPSTREAM CAPEX Programme
(2011-2015)
EPP 1: Enhanced Oil Recovery Programmes
EPP 2: Development of Marginal Fields
EPP 3: Intensifying exploration activities
Drilling new wells
Rework (workover) of existing wells
Drilling new development wells (smaller platform requires jack-up)
Drilling exploration and appraisal wells
Impact of the ETP on the Malaysian O&G industry: PETRONAS’ development programme
19
Major contracts awarded by
Petronas:
2011-2014 • 1st RSC - Berantai Field
• 2nd RSC - Balai Field
• 3rd RSC - Kapal, Banang and
Meranti
• 4th RSC - Tanjong Baram field
• 5th RSC – Tembikai Field
2013: The 13-package, five-year
jobs under the Pan Malaysia
integrated hook-up and
commissioning and topside major
maintenance contract worth
RM10B
2014: 5 years umbrella contract
for Design and engineering
0
10
20
30
40
50
60
70
2011 2012 2013 2014F 2015F
Target
Spent
RM B
Spent RM 126.3B Balance RM 173.7B
Capex Balance,
58%
Capex Spent, 42%
Q1 2014
Unsa
ve
d D
ocu
me
nt
/ 5
/6/2
01
3 /
12
:41
20
Business Strategies
21
Our journey
Labuan,
Malaysia Sattahip & Songkhla,
Thailand UMW Gait 1 Tianjin,
China
UMW Gait 2 Naga 1 Turkmenbashy,
Turkmenistan UMW Gait 3
22
Our journey
UMW Naga 2 UMW Naga 3 UMW Gait 5
Beginning of major expansion plan
Build Asset Base
Build Capabilities
Secure Market Share
Manage Day rates
& Utilisation
23
Drilling academy
Experienced management
Strong HSE
Increase in number of assets
Assets with higher technical capabilities
Strong in Malaysia
International experience
Ability to secure contracts
Higher asset base
Higher utilisation
Higher day rate
Balance between short and long term contracts
Optimise utilisation
Our expansion plan
24
Why expand
Why
Expand
Financial & Risk
Market opportunities
Growth Sustainability
Increase Capacity Diversify
revenue
Reduce dependency on single client
Widen geographical coverage
Widen client base
GAIT 2 GAIT 1 NAGA 1 GAIT 3 NAGA 2 NAGA 3
GAIT 5
NAGA 4 NAGA 8
NAGA 5
NAGA 6
NAGA 7
GAIT 6
Baseline
1 rig per
year
25
Asset expansion Focus on Drilling Services
Prior to 2012 2013 2014 2015 & beyond
rigs rigs rigs rigs & growing
26
Geographical expansion
Prior to 2012 2013 2014 2015 & beyond
Footprint in ASIA
moving towards
MIDDLE EAST,
OCEANIA, NORTH SEA
& ultimately REST OF
THE WORLD
countries countries countries
27
Widen client base
Prior to 2012 2013 2014 2015 & beyond
PETRONAS Carigali
Oil Majors
Blue chip customers
28
UMW NAGA 5
days ahead of
schedule
Delivered : 29 April 2014
Asset expansion
Additions in year 2014
UMW NAGA 6 UMW NAGA 7 Expected Delivery :
September 2014
Expected Delivery :
December 2014
completed completed
UMW GAIT 6 Expected Delivery :
Aug 2014
completed
√
Geographical expansion
29
Semi-submersible rig
Oilfield services operations
Jack-up rigs
Hydraulic workover units
4 Jack-Ups, 1 Semi-sub 4 HWUs, 6 plants
in SEA
30
Geographical expansion
Balancing
MALAYSIA & INTERNATIONAL presence
Offshore Drilling
2013
• 3 rigs Malaysia
• 1 rig
International
2014
• 2 rigs
Malaysia
• 3 rigs
International
2015 & beyond
• X rigs
Malaysia
• Y rigs
International
75% : 25% 40% : 60% 40% : 60%
31
Oilfield Services Operations
in Malaysia
in China
in Thailand
in Turkmenistan
Recurring sustainable income stream
Market penetration platform to expand from China, Thailand, Turkmenistan
• Familiar with:
• Financial regime
• Tax regime
• Logistics
• Govt. Regulations
• Local Culture
• Cross Selling
• Marketing
A strategic fit
Participation in Tendering Process
32
12 Malaysia
13 International
25 Total
2.21 USD Billion
33 Financial overview
Financial Performance
34
185
(41)
102 74.4
207
(100)
(50)
-
50
100
150
200
250
-
100
200
300
400
500
600
700
800
2010 2011 2012 2013 1Q 2014
Drilling Oilfield Others Profit/(Loss) Before Taxation
RM Million RM Million
349
550
724 738
PBT: 58
196
Either pbt or pat
94%
6% <0%
Drillingservices
Oilfieldservices
Others
Revenue development
35
Revenue segmentation
95%
5%
2013 1Q 2014
RM738 Million
RM196 Million
1Q 2014: Increase in contribution from drilling services with additional rigs with higher day rates
0.3
0.4
-0.1
-0.02
36
Gearing ratio Figures in times
Net Gearing Gross Gearing
2013 1Q 2014
Capital commitments as at 31.3.2014
37
Rigs & HWUs RM 2.7 Billion
99.5%
Plant & machinery
RM 7.4 Million 0.3%
Others RM 6.3 Million
0.2%
RM 2.71
Billion
Developing and further expanding our asset base CAPITAL COMMITMENTS = RM 2.71 Billion
38
Rigs & HWUs RM 2.3 Billion 99.94%
Plant & machinery
RM 499 <0.01%
Others RM 1.3 Million 0.06%
RM 2.3
Billion
Contracted Not Contracted
Rigs & HWUs
RM 374.4 Million 96.8%
Plant & machinery
RM 7.4 Million 1.9%
Others RM 5.0 Million 1.3%
Capital commitments as at 31.3.2014
RM 0.4
Billion
39
UMW NAGA 5
THANK YOU