Swedbank Nordic Energy Summit 2014 Stig - - PowerPoint PPT Presentation

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Swedbank Nordic Energy Summit 2014 Stig - - PowerPoint PPT Presentation

Oct 12, 2022 260 likes •645 views

CONFIDENTIAL Swedbank Nordic Energy Summit 2014 Stig Erik Kyrkjeeide +47 23 23 82 41 / +47 95 94 47 57 sek@swedbank.no

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CONFIDENTIAL

  • Swedbank Nordic Energy Summit 2014

Stig Erik Kyrkjeeide +47 23 23 82 41 / +47 95 94 47 57 sek@swedbank.no

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2

  • Source: Swedbank Research, ODS Petrodata
  • Contracted rig fleet set to continue upwards from new build deliveries
  • JU

454 416 9% 375 21% Floaters 282 270 4% 263 7%

  • JU

24 27

  • 11%

23 4% Floaters 44 32 35% 32 36%

  • JU

128 122 5% 110 16% Floaters 44 40 11% 41 9%

  • JU

32 35

  • 9%

38

  • 16%

Floaters 46 39 19% 32 43%

  • JU

46 41 12% 39 18% Floaters 46 47

  • 2%

42 9%

  • JU

8 6 33% 9

  • 10%

Floaters 71 81

  • 12%

86

  • 17%
  • 60%

65% 70% 75% 80% 85% 90% 95% 100% 100 200 300 400 500 600 700 800 900 Jan/85 Jan/90 Jan/95 Jan/00 Jan/05 Jan/10

Total Contracted Marketed Supply Utilisation r.a.

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SLIDE 3

15% 12% 8% 7% 8% 12% 4%

  • 10%
  • 3%

13% 9% 9% 12% 12%

  • 10%
  • 5%

0% 5% 10% 15% 20% 2009 2010 2011 2012 2013 2014 2015 OSV availability Rig activity

3

  • Source: Swedbank Research, ODS Petrodata
  • Note that risk resides on the downside for supply side growth in 2014, shifting into 2015
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SLIDE 4

4

  • Source: Swedbank Research, ODS Petrodata
  • Means utilization on OSV fleet is trending positively. Expect aggressive OSV demand in Mexico.

5% 1% 14%

  • 9%

19% 27% 7%

  • 15%
  • 10%
  • 5%

0% 5% 10% 15% 20% 25% 30% North Sea Med' West Africa South America USGOM Mexico Asia Rig activity OSV availability 1% 13% 5%

  • 11%

10% 23% 1%

  • 20% -10%

0% 10% 20% 30% …diff.

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SLIDE 5

10% 15% 20% 25% 30% 35% 40% Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 OSV Offshore rigs

5

  • Source: Swedbank Research, Company
  • But some uncertainty lately if all new demand capacity will all be additional demand
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SLIDE 6

10% 15% 20% 25% 30% 35% 40% Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 OSV Offshore rigs

6

  • Source: Swedbank Research, Company
  • In the case of a severe downturn, OSV impact is most likely felt in 2015

…if 50% of new floaters are just replacement

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SLIDE 7

5 10 15 20 25 30 35 40 45 2002 2004 2006 2008 2010 2012 2014

7

  • Heading for West Africa, Mexico, Trinidad and Brazil -> delayed recovery in other markets

Source: Swedbank Research, ODS Petrodata, Companies

Macondo sent rig activity to 10y low OSVs left for other regions

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SLIDE 8

5 10 15 20 25 30 35 40 45 2002 2004 2006 2008 2010 2012 2014

8

  • Unprecedented demand growth in USGoM means strong demand for US-built vessels

Source: Swedbank Research, ODS Petrodata, Companies

Rig activity from low to all time high Vessels steam to fill demand

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SLIDE 9

9

  • Capacity lost during 2012/13 and new demand will have to be filled by supply from North Sea/Asia
  • Source: Swedbank Research, Companies
  • Brazil to take delivery of

PSVs during 2014/15 Various tenders pending in WA for PSVs

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SLIDE 10
  • 10
  • Source: Swedbank Research, ODS Petrodata
  • Order book have to be adjusted for unlikely deliveries / significant delays
  • Brazil – unlikely to double output
  • US – yards struggling to keep up

with delivery times as yards are running at full capacity

  • China – difficult to achieve full

insight, but surprise if able to double

  • Norway – expect all vessels to

deliver (+/- 1 month)

  • Other Europe – similar to Norway

with minor delays

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SLIDE 11

5 10 15 20 25 30 35 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Planned Delivered

11

  • Source: Swedbank Research, ODS Petrodata
  • Slow start in January and February (). AHTS similar.

Planned (as of Feb) 45 Delivered 21 % of plan 47%

0% 20% 40% 60% 80% 100% 120% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 2011 2012 2013 2014

Deliveries to reach ordre book

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12

  • Source: Swedbank Research, ODS Petrodata, Swire Pacific
  • We expect various other projects to span over a longer period than assumed by “consensus”
  • PSV 5,000

Eisa, Brazil 4 PSV 3,700 Universal, Japan 6 PSV 5,000 Universal, Japan 4

  • PSV 5,000

Eisa, Brazil 2 2 PSV 3,700 Universal, Japan 2 4 PSV 5,000 Universal, Japan 2 2

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SLIDE 13

13

  • Source: Swedbank Research
  • 2013 was flat at 3.4x – several reasons why we could see a slight uptick in 2014
  • New regulations / ”North Sea

standard”

–

Standby operations

–

Environmental issues

  • Further from shore

–

More vessels to keep up the same frequency

  • Deeper

–

More riser, more mud, etc.

  • New regions with drilling ops
  • 2.0

2.5 3.0 3.5 4.0 4.5 92 94 96 98 00 02 04 06 08 10 12

3.00 3.10 3.20 3.30 3.40 3.50 3.60 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 2014

  • New and high-end vessels are

more efficient

–

Larger PSVs can carry more

–

Larger AHTS can work in more severe weather

  • Improved logistic operations /

co-operation

–

Oil co’s sharing capacity

–

Vessels serving various fields

  • Cost focus
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14

  • Source: Swedbank Research, ODS Petrodata
  • PSV intensity highly correlated with rig count, but AHTS impacted also by type of drilling
  • R² = 0.6588
  • 10%
  • 5%

0% 5% 10% 15% 20% 25%

  • 10%

0% 10% 20% 30% R² = 0.0015

  • 10%
  • 5%

0% 5% 10% 15% 20% 25%

  • 10%

0% 10% 20% 30%

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SLIDE 15

15 Source: Swedbank Research

  • 13% growth in the rig count in the North Sea, how much impact on PSV and AHTS demand...
  • 13%

12%

  • 5%
  • 6%
  • 4%
  • 2%

0% 2% 4% 6% 8% 10% 12% 14% NW Europe contracted rigs PSV demand AHTS demand

? ?

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SLIDE 16

16 Source: Swedbank Research

  • Discussion points: Efficiency, area of operations, exploration vs. production wells, pre-lay etc.
  • 13%

12%

  • 5%
  • 6%
  • 4%
  • 2%

0% 2% 4% 6% 8% 10% 12% 14% NW Europe contracted rigs PSV demand AHTS demand

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SLIDE 17

17

  • Source: Swedbank Research
  • Vessels are consistently taken out of the “core” duties ad converted to niche segments

– Typically vessels with good station capability and large # of beds

– Many examples leading up to 2008, but limited in recent years

– Less strict requirements – acquiring older tonnage out of the market – Expect significant activity in Europe in 2014 (AHTS and PSV)

– Short yard stay outfitting the vessel with crane, ROV and/or extra # of beds

– Long-term contract opportunities

Accommodation Offshore wind Well stimulation

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18

  • ~60% more floaters in 2014 from awarded contracts and more to come (but rates lower)

Source: Swedbank Research, ODS Petrodata

5 10 15 20 25 30 35 2011 2012 2013 2014 2015 US GOM W Africa Aus/NZ Asia Mexico NW Europe S America Unknown

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19

  • Source: Swedbank Research
  • Arctic outcome mixed: Kara and Pechora Sea set to commence 2014, Alaska cancelled
  • Drilling ops took place

in 2013

  • ~5 OSVs in support
  • BP 2016 start-up
  • Harsh environment
  • Ongoing operations
  • Large OSV/rig ratio ->

limited logistics

  • New drilling campaign

likely in late 14

  • One or more rigs
  • Most likely North Sea

rig and OSV capacity

  • Significant potential

long-term

  • ExxonMobil 2014

start-up

  • Kara Sea and Pechora

commencing in 2014

  • Alaska cancelled in ‘14
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20

  • 20 of 29 planned PSVs materialized in 2013 - several yards struggling with time line
  • Source: Swedbank Research
  • 5

10 15 20 25 30 35 40

67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

In service On order

  • Q4 reports confirm some

softness in USGOM region (but still the #1 market in terms of economics)

  • Rig deliveries will more

than double in 2014 into the region – should support continued tight market

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SLIDE 21
  • 21
  • Source: Swedbank Research
  • We already are aware of several vessels set to leave the North Sea region also in 2014

…was 15 in April ’13 …was 0 in Dec ’13

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22

  • Source: Swedbank Research
  • Limited outflow of rigs (drillship Stena Carron to WA and Polar Pioneer to TBA in 2014)
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23

  • Source: Swedbank Research
  • PSV demand growth has been running ahead of supply consistently for the last 11 months
  • 6%
  • 4%
  • 2%

0% 2% 4% 6% J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J 2012 2013 2014

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24

  • February spot earnings close to high-season 2013 average, should now impact term rates also
  • Source: Swedbank Research, ODS Petrodata. Note: Average based on 2003-2013

5,000 10,000 15,000 20,000 25,000 30,000 Jan Feb Mar Apr May Jun Jul AugSep Oct Nov Dec 2014 2013 Avg 2005-2013 86% 88% 90% 92% 94% 96% 98% 100% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average 2013 2014 Last observation

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SLIDE 25
  • 25
  • Source: Swedbank Research, ODS Petrodata
  • Expect shift towards historical average when term contracts commence next 4w period
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SLIDE 26

70% 72% 74% 76% 78% 80% 82% 84% 86% 88% 2003 2005 2007 2009 2011 2013

26

  • Source: Swedbank Research
  • ...but elevated expectations on AHTS earnings once again could cap the earnings (-> inflow)

75% 80% 85% 90% 95% 100% 1997 1999 2001 2003 2005 2007 2009 2011 2013

  • 78%

80% 82% 84% 86% 88% 90% 92% 94% 96% 98% 100% 2003 2005 2007 2009 2011 2013

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SLIDE 27

0% 5% 10% 15% 20% 25% 1995 2000 2005 2010 2015

27

  • Source: ODS Petrodata, Rystad Energy, Swedbank Research
  • 26% annual order book growth the last three years amongst leading subsea players

5 10 15 20 25 30 35 40 2q03 4q03 2q04 4q04 2q05 4q05 2q06 4q06 2q07 4q07 2q08 4q08 2q09 4q09 2q10 4q10 2q11 4q11 2q12 4q12 2q13 Saipem Technip Subsea 7

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SLIDE 28

28 Source: Swedbank Research, ODS Petrodata

  • Pipelay DP a lot related to awarded contracts in Brazil, DSV is complex segment to enter
  • 21

8 16 13 8 5 10 15 20 25 Pipelay DP Diving Support ROV Support (LOA>100m) Derrick Pipelay DP Multiservice 62% 9% 39% 45% 36% 0% 10% 20% 30% 40% 50% 60% 70% Pipelay DP Diving Support ROV Support (LOA>100m) Derrick Pipelay DP Multiservice

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29

  • Source: Swedbank Research, Companies
  • 2014 and 2015 should see similar trends, too early to make any meaningful assumption on 2016

37% 44% 41% 31% 33% 42% 39% 35% 34% 44% 48% 49% 50% 43% 36% 34% 35% 38%

20% 25% 30% 35% 40% 45% 50% 55%

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0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 HAVI SIOFF SOFF GLF REM HOS DESSC DOF EIOF Average

30

  • Source: Swedbank Research, Companies
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31

  • Source: Swedbank Research, Companies, Farstad Shipping
  • Slightly more active S&P market over the last 12m period, but not very liquid yet

50 100 150 200 250 300 0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Average PSV EBITDA-margin PSV valuation, 4.6k DWT , 1995

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32

  • Source: Swedbank Research, Companies
  • Capacity growth trend is set to be more moderate in the years ahead

26% 28% 30% 32% 34% 36% 38% 40% 42% 44% 1q06 1q07 1q08 1q09 1q10 1q11 1q12 1q13

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SLIDE 33
  • 33
  • Source: Swedbank Research, Reuters Ecowin, Companies
  • US OSV rallied on Jones Act, but set-back in recent months and now more aligned on P/B

Note that new depreciation scheme (IFRS) has no material impact

  • n current book

equity

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SLIDE 34

34 Source: Swedbank Research, Reuters Ecowin

  • Industry recovery and moderate expectations. Oil service sentiment
  • Oslo Stock

Exchange Oil service

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SLIDE 35

35 Source: Swedbank Research

  • Utilization is becoming fair, long-term contracts provide healthy returns – spot should be next
  • * IND = Industry
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36

  • Source: Swedbank Research
  • Demand growth running ahead of supply growth - > improved utilization
  • Supply side overstated, but watch any changes on demand side (drillers) -> key 2014/15 risk
  • PSV probably close to inflection point – look for breakthrough in Asia/Australia in 2014
  • AHTS experiencing structural headwind, but few new builds
  • Subsea steady and industry sources indicate solid demand for available capacity
  • OSV companies about to shift from aggressive capacity growth to capital distribution?
  • Buy back programs, dividend focus
  • Rig market slowdown – how many rigs will be heading to the beach?
  • Actual OSV deliveries vs. order book – any surprises on the up- or downside?
  • Petrobras tenders – especially AHTS 18 000 (important indication on OSV demand with fewer rigs)
  • Commodity shipping ordering activity – important to Asian appetite on OSVs
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SLIDE 37
  • 37

Source: