Q2 2015 Presentation
Contents • Highlights and material events • Segment reporting • Financial information • Summary Page 2
Group – Financial performance Q2 2015 highlights: • Operating revenue of USD 286 million • *EBITDA adjusted of USD 89 million • EBITDA of negative USD 156 million • *EBITDA margin adjusted of 31 % • EBITDA-margin of negative 54 % • Net loss of USD 224 million * EBITDA and EBITDA margin adjusted for impairment write-down on the two drillships, Deepsea Metro I and Deepsea Metro II, of which USD 210 million represents the Group’s 40% share and USD 35 million represents impairment write-down of the Group’s remaining investment in Deep Sea Metro Ltd. In total USD 245 million. Page 3
Highlights and material events in Q2 2015 Lenders’ consent to reduce equity ratio financial covenant The Group has received consent from its lenders to reduce the equity ratio financial covenant of the • Odfjell Drilling Group from 35 % to 28 % for all of the Odfjell Drilling Group’s debt facilities for a period until and including the financial quarter ending on 31 December 2016. As a condition, the Group shall not declare, make or pay any dividend or buy back any shares in this period. Impairment write-down of investment in Deep Sea Metro Ltd. Impairment write-downs have been made in Q2 2015 on Deepsea Metro I and Deepsea Metro II, owned • by Deep Sea Metro Ltd., of which the Odfjell Drilling Group owns 40%. The book value on each of the drillships are written-down to USD 400 million to reflect what is assessed to be the recoverable amount. In addition, Odfjell Drilling has made an impairment write-down on its remaining investment in Deep • Sea Metro Ltd with the result the Odfjell Drilling Group’s book value of the investment in Deep Sea Metro Ltd is zero at 30 June 2015. Page 4
Highlights and material events in Q2 2015 (cont.) MODU Deepsea Aberdeen commenced on its 7-year drilling contract with BP on 21 April 2015. • Deepsea Metro II ended its contract with Petrobras in Brazil in mid May and has since June been • stacked in Curacao. Chloe Marine Corporation Ltd., the owner of Deepsea Metro II, is in default under its debt facilities and has initiated a sales process of the vessel. Deepsea Metro I secured new employment with VietGazprom in Vietnam with a contract duration • of approximately 20 weeks and an estimated contract value of USD 40 million. The contract also includes options for two well testing periods of an estimated duration of 90 days each. The vessel commenced drilling operations on 9 August. Deepsea Atlantic secured a contract with Statoil on the Johan Sverdrup field for a period of three • years plus 6x6 months options. Expected start-up of drilling operations is March 2016. The contract value over the firm period is estimated at USD 330 million. Estimated contract value of the optional periods is in the range of USD 370 million to USD 470 million. Deepsea Atlantic ended its contract with Statoil in the Gullfaks field on the Norwegian Continental • Shelf on 19 August. The rig will be hot-stacked, on a temporary basis, as the company continues to market the rig in the short-term, while preparing to be mobilised for the new Johan Sverdrup contract with Statoil scheduled for March 2016. Deepsea Bergen is expected to start on its 5 year SPS in the first half of September 2015. The rig • will undertake the SPS at Aibel Haugesund situated on the West coast of Norway. The SPS project budget is USD 53 million in addition to a 6 week expected off-hire period. Page 5
Highlights and material events in Q2 2015 (cont.) Drilling & Technology In Q2, Odfjell Drilling secured a contract with Statoil for the platform drilling services on the – Johan Sverdrup platform, including assistance during the engineering, construction and commissioning phase of the Johan Sverdrup field development project. The firm contact period is 4 years plus 3 x 2 year options. Drilling commencement is expected during the fourth quarter of 2018 and the estimated contract value is USD 240 million including the pre-drilling assistance and the optional periods. Approximately 60 employees in the Technology business area were made redundant as a result of – reduced activity level on the NCS. In August Odfjell Drilling and Island Drilling Company ASA made an out-of-court settlement of – NOK 85 million for the unpaid receivables of NOK 111 million. As per 30 June 2015 Odfjell Drilling has recorded NOK 26 million (equivalent to USD 3.4 million) as loss on trade receivables. Well Services Due to the current market situation and a reduction of rigs in operation in Norway, Well Services – has downsized with approximately 30 offshore and onshore personnel year to date 2015. Despite fierce competition also outside Norway, Well Services has maintained its activity level and – margins in this quarter. Our equipment pool of remote operated tools and increased focus on well intervention services has strengthened our competitive advantage in a market with reduced overall activity. Page 6
Segment reporting - Mobile Offshore Drilling Units (MODU) MODU MODU Firm MODU contract backlog at 30 June 2015 of USD 1.8 billion • with additional priced options valued at USD 0.5 billion. Financial utilisation: • Financial Utilisation 1 Q2 15 Q2 14 YTD 15 YTD 14 Deepsea Stavanger 99.7% 98.7% 99.4% 96.9% Deepsea Atlantic 98.8% 77.9% 98.9% 84.8% Modern fleet of UDW and • harsh environment drilling Deepsea Bergen 94.3% 99.7% 92.2% 98.9% units Deepsea Aberdeen 2 96.7% n/a 96.7% n/a Extensive drilling experience • Deepsea Metro I 3 n/a 98.5% n/a 97.6% Provision of integrated • Deepsea Metro II 4 82.8% 82.7% 90.4% 73.4% management services for drilling units 1) Financial Utilisation is measured on a monthly basis and comprises the actual recognised revenue (encompassing different hourly day rates) for all hours in a month, expressed as a percentage of the full day rate for all hours in a month. Financial Utilization, by definition, does not take into account periods of non-utilisation when the units are not under contract. 2) Deepsea Aberdeen commenced its 7-year contract with BP in UK on 21 April 2015. 3) Deepsea Metro I was idle Q2 2015. 4) Deepsea Metro II ended its contract with Petrobras in Brazil on 16 May 2015 and has since been idle. Page 7
MODU - Dayrates, contract status and options Location day rate Drilling unit Contract status /operator (USDk/day) 1 Deepsea Angola 545 Stavanger BP Angola Deepsea Norway 566/300 6 X 6 months Atlantic Statoil Deepsea UK 450 Aberdeen BP Exploration Deepsea Norway 350 Bergen Statoil Deepsea Anchored in 2 255 Metro I South Africa Deepsea Anchored in n/a Metro II Brazil Deepsea Brazil 3 518 Guarapari Petrobras Deepsea Brazil 3 525 Itaoca Petrobras Deepsea Brazil 3 529 Siri Petrobras 2014 2015 2016 2017 2018 2019 2020 2021 2022 Contract Option Construction 1) Rates may include mix of currencies and fluctuate based on exchange rates. 2) Day rate net of taxes 3) In addition to the day rate there is a bonus element of up to 15% linearly from 93% to 98% utilization. Contract length for each of the units is 15 years from commencement of operations. The outcome of the ongoing restructuring of Sete and the Brazilian newbuild program is uncertain at present. This could potentially lead to this program being fundamentally restructured or cancelled, Page 8
Segment reporting - Platform Drilling and Technology Drilling & Technology Platform Drilling and Technology Firm contract backlog of USD 0.5 billion at 30 June 2015 • – Value of priced optional periods of USD 1.4 billion Platform Drilling contracts: • One of the leading • contractors in the North Sea platform drilling market • Drilling engineering services • Established competence for the latest generation technology 1) Grane, Heidrun, Njord, Sleipner A, Visund, Snorre A, Snorre B 2) Claymore, Clyde, Saltire, Piper, Tartan, Fulmar 3) Clair, Andrew, Bruce, Magnus, Clair Ridge Page 9
Segment reporting - Well Services BASES : EUROPE Norway United Kingdom Key figures Holland ~510 employees • Romania Services from 11 bases • Operations in more than • 20 countries BASES : ASIA Service offering Thailand Tubular runnng services • Vietnam BASES : MIDDLE EAST Drill tool rental services • Saudi Arabia Well intervention services • United Arab Emirates Turkmenistan Kurdistan BASE OPERATIONS A leader in remote operated drilling technologies 10
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