DeepOcean July 2014 DeepOcean Presentation - Pareto Conference Oslo - PowerPoint PPT Presentation

DeepOcean July 2014 DeepOcean Presentation - Pareto Conference – Oslo – 10 September 2014 by Bart Heijermans - CEO

Navigating through crowded waters Could have been worse…. Cliff diving into the Norwegian fjords of Kragerø Temporary softening due to demand growth slow down and oversupply of assets www.deepoceangroup.com 1

Navigating through crowded waters Brief introduction to DeepOcean – a subsea services company  A leading provider of integrated subsea services  Focused on the lower risk subsea service niches with inherent day- rate nature of contracts  Revenues predominantly exposed to end-user OPEX budgets  A market leader in diverless subsea IMR in the Greater North Sea  A global leader of trenching services  Recognised global brand for relentless customer focus and operational excellence having operated in the sector since the 1990s Service lines Survey & IMR Seabed Intervention Subsea Installation Decommissioning Seabed Mapping www.deepoceangroup.com 2

Navigating through crowded waters Company overview Vessels (1) ROVs Trenchers & Ploughs Human Resources (1)  Owned vessels: 7  35 ROVs  5 ploughs  1,360 employees  Long term charters: 12  5 ROVs ordered for  7 jet trenchers  235 full time agency delivery in 2014/2015  +2 charters starting in  4 mechanical cutters personnel / contractors 2016  10 offices in 6 countries  Edda Freya (SURF) 2013 Financials  YTD turnover 3.2% (2)  Interconnector Other Assets vessel (Maersk)  $609 million revenue  Module handling Notes : systems  $95 million Adj. 1) As of 30-June-2014 Ownership 2) Higher turnover in Mexico EBITDA  Geotechnical rig and Brazil  Private Company  13% ROCE  Excavators / dredgers  Financial Investors  Neg. net debt (YE)  ROV tooling  Largest owner ~16%  $74 million CAPEX  1 (+1) AUV of shares Note: (1) Walker1 not included in vessel overview www.deepoceangroup.com 3

Confidential – Not for Public Dissemination Navigating through crowded waters Current Fleet 14 Edda Flora Edda Fauna Edda Fonn Volstad Surveyor Deep Vision Rem Forza Havila Phoenix 14 Maersk Recorder Deep Helder 14 Rem Ocean Northern Commander Atlantic Challenger Northern Wave Office locations Arbol Grande Northern Supporter 14 14 Long term ROV operations on:  North Sea Giant Owned  Normand Ferking  CBO Isabella Deep Endeavour Chartered Tau Volantis Go Pegasus (1) Walker1 is excluded www.deepoceangroup.com 4

Navigation through crowded waters Diverless IMR Operations One of our dedicated IMR vessels, Edda Fauna, with a third party IMR vessel Too many companies call themselves IMR contractors. Chartering a PSV or a ROVSV with a rented ROV doesn’t make you an IMR Contractor… Subsea IMR and pipeline inspection  Need ingenuity and fast track problem solving capabilities  > 1500 vessel days per year and >500 call-offs (projects) per year  3000 - 5000 km of pipeline inspected annually  Approximately 60-70 (75-80% are engineers) persons in the Haugesund office are supporting IMR operations FPSO Thruster Brace installation Scale squeeze Module Handling Replacement

Navigating through crowded waters Selection of IMR projects IMR 2 Replacement of Veslefrikk flexible risers Diverless IMR Operations IMR YME Platform weld NDT Pipeline Validation Orman Lange diverless hot-tap www.deepoceangroup.com 6

Navigating through crowded waters Selection of Construction and Seabed Intervention Projects Renewables LOFS / PRM Installation and burial of ~535km of cables and umbilicals on Snorre PRM project Trenching in German sector Cable installation for BP www.deepoceangroup.com 7

Navigating through crowded waters Selection of Survey and Decommissioning projects Costa Concordia GASSCO Laser and Sonar Survey by ADUSDEEPOCEAN Petrobras Survey Diverless decommissioning www.deepoceangroup.com 8

Navigating through crowded waters New developments IMR 2 and SURF Power cables and umbilicals Pipeline Repair System (PRS) Technip – DeepOcean JV Edda Freya to be delivered in Vessel with 7000 te. carousel to 1Q2016 be delivered in 1Q2016 received award from Statoil for new 5 year contract AUV Operations Wind farm IMR Geotechnical Services Use of ADUSDeepOcean’s Secured first long term AUV Geotechnical work for oil & gas contract visualization technology and renewable customers www.deepoceangroup.com 9

Navigating through crowded waters Industry Developments  Strong long-term drivers , but short-term visibility reduced as projects are pushed out in time  Muted overall sentiment for offshore oil services, as evidenced by e.g. seismic majors trading at all-time low since the global financial crisis after having reported weak Q2 and reduced guidance  Focus on cut-backs in E&P spending (Statoil, Total and Shell most vocal) and greater capital discipline among oil companies has continued resulting in project delays and margin pressure contractors. Unlikely that any contractor won’t be impacted by this development  Worry that less mature companies with low backlog will pursue volume with irrational pricing and drive down margins. While this is unsustainable in the long-term, it can harm the whole industry on the shorter-term  Contractors taking more risk on CAPEX projects in oil & gas and renewable segments  Sale of properties by majors to independents in Greater North Sea resulting in temporarily lower level of activity  Large PSV and AHTS vessel owners are looking at deploying these vessels in subsea market www.deepoceangroup.com 10

Navigating through crowded waters The Sequel…. Challenges  Too many tier 2 subsea contractors  Potential to be squeezed by:  Oil & gas producers / Utilities  Tier 1 contractors  Peers  Financial sponsors seeking to exit at some stage Hot, Floating  Consolidation is needed and Crowded Our plan for navigating through crowded waters Why we need consolidation and how it can renew  Focus on niche areas our industry…  Control cost and maintain a healthy balance sheet  Align the company with customers and offer quality services to lower cost  Operational excellence www.deepoceangroup.com 11

Navigating through crowded waters Strong believer in underlying subsea trends  More subsea wells  Increased demand for construction, IMR and decommissioning  Bigger and more complex subsea structures Need for larger and more capable vessels  More pro-active and critical maintenance  requirements  Ageing Infrastructure  Increased requirements for IMR and replacement scope Focus on IOR (Increased Oil Recovery)  Installation, IMR and change-out of subsea  production systems  Well P&A and intervention (downhole IMR) Permanent Reservoir Monitoring (PRM)  Electrification projects   Renewables Increase in number of Offshore wind farms  Growing market for IMR and remedial trenching   West European Grid  New interconnector power cables www.deepoceangroup.com 12

Navigating through crowded waters Follow DeepOcean Group on Twitter @deepoceangroup Q&A Join the discussion on LinkedIn: www.linkedin.com/company/deepocean http://www.youtube.com/deepoceanonline www.deepoceangroup.com www.deepoceangroup.com 13