Q1 2015 Presentation Contents Highlights and material events - - PowerPoint PPT Presentation

Q1 2015 Presentation

Contents

• Highlights and material events
• Segment reporting
• Financial information
• Summary

Page 2

Group – Financial performance

Page 3

Q1 2015 highlights:

• Operating revenue of USD 240 million
• EBITDA of USD 71 million
• EBITDA-margin of 29 %
• EBIT of USD 34 million
• Profit of USD 18 million

Highlights and material events in Q1 2015

Page 4

Dividend and share buy-back program suspended

• In February 2015, the Board decided to suspend the annual dividend for the financial year 2014 due to

the significant weakening of market fundamentals and the re-contracting risk in the Company’s MODU

• segment. At the same time, the Board also decided to suspend the share buy-back program for the

same reasons.

Cost reduction programs

• The Group has implemented a series of measures to reduce cost levels throughout the organisation:
• The Group is in the process of optimising its support functions in order to provide more efficient

support services. During Q1 2015, about 60 onshore employees in Norway has been laid off.

• Further downsizing of the onshore organisation will be executed throughout 2015 to reduce future

cost level and other cost savings initiatives are in the process of implementation.

• A reorganisation of operational and technical support services has also been initiated to increase

efficiency and operational performance.

Page 5

Highlights and material events in Q1 2015 (cont.)

MODU

– Deepsea Aberdeen commenced on its 7-year drilling contract with BP on 21 April 2015 on the Quad 204 field development project West of Shetland, UK. – Deepsea Metro I has secured employment for Vietgazprom for approximately 20 weeks in

• Vietnam. Expected commencement is mid Q3 2015 and estimated contract value is USD 40
• million. In additon there are two options for approximately 90 days each.

– Deepsea Metro II finalized its contract with Petrobras in Brazil mid May 2015 and will be laid-up awaiting new employment.

Drilling & Technology

– During Q1 2015 approximately 60 employees in the Technology business area were made redundant following the downsizing communicated in Q4 2014 report. – Odfjell Drilling was awarded the drilling engineering sub contract for the Johan Sverdrup drilling platform topside and will be one of Aibel's major sub-contractors for their engineering, procurement and construction (EPC) contact for the Drilling Platform Topside for Johan Sverdrup in the Norwegian North Sea. The contract value is estimated to NOK 110 million.

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 in Q1 2015.

Segment reporting

• Mobile Offshore Drilling Units (MODU)

MODU

• Firm MODU contract backlog at 31 March 2015 of USD 1.6 billion
• Financial utilisation:
• Comments:

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 Bergen’s financial utilization in Q1 2015 was negatively impacted by 8 days off-hire in connection with challenges with the subsea equipment in February 2015. 3) Deepsea Metro I was free of charter in Q1 2015.

Page 6 MODU

• Modern fleet of UDW and

harsh environment drilling units

• Extensive drilling experience
• Provision of integrated

management services for drilling units

Financial Utilisation1 Q1 15 Q1 14 FY 14 FY 13 Deepsea Stavanger 99.0% 95.1% 96.5% 87.1% Deepsea Atlantic 99.1% 91.8% 92.1% 98.7% Deepsea Bergen2 90.2% 98.1% 98.7% 97.9% Deepsea Metro I3 n/a 96.7% 97.7% 98.7% Deepsea Metro II 94.3% 64.1% 75.5% 78.7%

Drilling unit Location /operator Current day rate (USD/day)1 Contract status

Deepsea Stavanger Angola BP Angola 545,000 Deepsea Atlantic Norway Statoil 566,371 Deepsea Aberdeen UK BP Exploration 450,000 Deepsea Bergen Norway Statoil 350,403 Deepsea Metro I Anchored in South Africa 255,000 Deepsea Metro II Brazil Petrobras 432,598 Deepsea Guarapari Brazil Petrobras 518,453 Deepsea Itaoca Brazil Petrobras 524,592 Deepsea Siri Brazil Petrobras 528,687

Contract Option Construction

2014 2015 2016 2017 2018 2020 2021 2019 4 4 4

1) Rates may include mix of currencies and fluctuate based on exchange rates. 2) Day rate is net of taxes 3) In addition to the day rate there is a bonus element of up to 10% linearly from 93% to 98% utilization. 4) 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

MODU - Dayrates, contract status and options

Page 7

3 2022 @ 350k 2

Segment reporting

• Platform Drilling and Technology

Platform Drilling and Technology

• Firm contract backlog of USD 0.5 billion at 31 March 2015

– Value of priced optional periods of USD 1.4 billion

• Platform Drilling contracts:

Page 8 Drilling & Technology

• One of the leading

contractors in the North Sea platform drilling market

• Drilling engineering services
• Established competence for

the latest generation technology

Customer Platforms Contract status 7 NO platforms1 Mariner (UK) Bressey (UK) Brage 6 UK platforms2 5 UK platforms3

2014 2015 2016 2017 2018 2020 2021 2019 2022 2023 2024 2025 2026 2027

Contract Option

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

Segment reporting

• Well Services

9

A leader in remote operated drilling technologies

Norway Saudi Arabia United Arab Emirates Turkmenistan Kurdistan

BASES : EUROPE

United Kingdom Holland Romania

BASES : MIDDLE EAST OPERATIONS BASE

Thailand

BASES : ASIA

Vietnam

Key figures

• ~525 employees
• Services from 11 bases
• Operations in more than

20 countries

Service offering

• Tubular runnng services
• Drill tool rental services
• Well intervention services

MODU

• The drilling market has continued weakening into 2015 and we expect a weak drilling market over the next couple of
• years. The soft market is due to continued delivery of newbuilds and oil companies’ increased cost focus and capital

discipline, resulting in an increasing number of stacked units and continued downward pressure on day rates.

• Several of the Group’s drilling units are exposed to re-contracting risk in the current or near term drilling market.
• Fierce competition for a limited number of contract opportunities in the market, and reduced day rates alone does not

clear the current market.

• The bifurcation between modern and older drilling units is expected to continue and scrapping of older units will

continue.

• In our opinion, the demand for modern UDW and HE units will slowly start improving throughout 2016 leading to

increased utilization and a subsequent improvement in day rates. Platform Drilling and Technology

• Platform drilling services is secured by medium to long-term contracts. The slowdown in the North Sea activity level has

led to postponement and cancellation of development- and upgrade projects. As a result the Group has further adjusted the manning within engineering services and further cost cuts and efficiency improvement programs are in the process

• f being implemented.

Market outlook

Exposed to re-contracting risk in a weak drilling market over the next couple of years

Page 10

Market outlook (cont.)

Well Services

• Well Services has experienced a further reduction in its activities on the Norwegian Continental Shelf (NCS) so far in
• 2015. This has partly been neutralised by continued growth outside the NCS.

General

• Due to the overall challenging market conditions, cost cutting and efficiency improvement programs have already been

implemented and further programs are in the process of implementation.

• In the longer term, we are of the opinion that the oil industry’s demand for drilling services will continue to be supported

by the need for reserves replacement and by continued spending on exploration and field-development in the main

• ffshore regions. The Group’s business segments will all benefit and will be well positioned for taking advantage of such

future market improvements.

Page 11

Total revenue backlog per year (for firm contracts and priced option periods)1

1) At 31 March 2015, includes pro-rata backlog figures in respect of Odfjell Drilling’s 40% ownership in Deep Sea Metro Ltd, but does not include any backlog for Odfjell Drilling’s share of Odfjell Galvão. Total backlog figures may not equal the sum of firm contracts and priced option periods for the year due to rounding. The Vietnam contract for Deepsea Metro I has not been included in the backlog figures above.

Earnings visibility through USD 3.6 billion order backlog

• Revenue backlog for Well Services, Technology and MODU Management is not included in the revenue

backlog above. Page 12

USD million

Firm contracts USD 2.1 billion Priced options USD 1.5 billion Total backlog USD 3.6 billion

Financial information

71 75 270 393 331 382 88 Q1 15 Q1 14 FY 14 FY 13 FY 12 FY 11 FY 10 240 274 1 088 1 174 1 094 1 057 782 Q1 15 Q1 14 FY 14 FY 13 FY 12 FY 11 FY 10

Financial performance highlights

Odfjell Drilling reports for Q1 2015:

• Operating revenue of USD 240 million
• EBITDA of USD 71 million
• EBITDA-margin of 29 %
• Net profit in the period of USD 18 million

Page 14 Group Operating Revenues (USDm) Group EBITDA (USDm) Note that the group includes the Deep Sea Metro figures applying the equity method

Group summary financials

Condensed consolidated income statement

Page 15

P&L - (USD million) Q1 15 Q1 14 FY 14 FY 13 Operating revenue 240 274 1 088 1 174 Other gains/losses 2 11 22 Share of profit/(loss) from joint ventures

• 15
• 2
• 82

Personnel expenses

• 107
• 136
• 501
• 547

Other operating expenses

• 48
• 63
• 246
• 256

EBITDA 71 75 270 393 Depreciation and impairments

• 36
• 38
• 141
• 145

Operating profit (EBIT) 34 37 129 248 Net financial items

• 11
• 10
• 50
• 77

Profit/(loss) before tax 23 27 79 171 Income taxes

• 5
• 4
• 36
• 102

Profit/(loss) for the period 18 23 42 69

Note that the group includes the Deep Sea Metro figures applying the equity method

MODU

Note that the MODU segment includes pro-rata 40% of Deep Sea Metro figures

1) Include drilling units, periodic maintenance and construction in progress 2) DSM = Deep Sea Metro Ltd Group 3) Before group eliminations and corporate overheads

Page 16

Key Financials (USD million)

Segment reporting

• MODU financials

Condensed P&L - (USD million) Q1 15 Q1 14 FY 14 FY 13 Operating revenue 165 180 748 762 EBITDA 78 73 331 338 Depreciation and impairments

• 34
• 36
• 203
• 134

EBIT 44 37 128 205 Book value own rigs1 2 186 1 624 2 159 1 632 Share of DSM2 non-current assets 531 629 537 645 Total book value MODU units (incl 40% DSM) 2 718 2 254 2 696 2 277 Revenue growth

• 8,2 %
• 2,9 %
• 1,9 %

9,8 % EBITDA growth 6,7 %

• 8,8 %
• 2,3 %

18,7 % EBIT growth 19,7 %

• 22,1 %
• 37,6 %

26,3 % EBITDA-margin 47,2 % 40,6 % 44,2 % 44,4 % EBIT-margin 26,6 % 20,4 % 17,1 % 26,9 % Share of group revenue 3 63,8 % 58,0 % 59,9 % 56,8 % Share of group EBITDA3 85,8 % 76,6 % 79,1 % 72,2 % Share of group EBIT3 93,8 % 74,3 % 73,9 % 70,2 %

165 180 748 762 Q1 15 Q1 14 FY 14 FY 13

Revenues

78 73 331 338 Q1 15 Q1 14 FY 14 FY 13

EBITDA

Drilling and Technology

Page 17

Key Financials (USD million)

Segment reporting

• Drilling & Technology financials

1) Before group eliminations and corporate overheads

Condensed P&L - (USD million) Q1 15 Q1 14 FY 14 FY 13 Operating revenue 54 78 302 352 EBITDA

• 3
• 1

2 25 Depreciation and impairments

• 1
• 1
• 6
• 5

EBIT

• 4
• 3
• 4

20 Revenue growth

• 30,6 %
• 11,9 %
• 14,0 %

11,2 % EBITDA growth

• 106,4 %
• 128,9 %
• 91,7 %

2,2 % EBIT growth

• 54,5 %
• 168,3 %
• 121,6 %

5,5 % EBITDA-margin

• 5,6 %
• 1,9 %

0,7 % 7,2 % EBIT-margin

• 7,6 %
• 3,4 %
• 1,4 %

5,7 % Share of group revenue1 20,9 % 25,1 % 24,2 % 26,2 % Share of group EBITDA1

• 3,3 %
• 1,5 %

0,5 % 5,4 % Share of group EBIT1

• 8,8 %
• 5,4 %
• 2,5 %

6,9 %

54 78 302 352 Q1 15 Q1 14 FY 14 FY 13

Revenues

• 3
• 1

2 25 Q1 15 Q1 14 FY 14 FY 13

EBITDA

Well Services

Page 18

Key Financials (USD million)

Segment reporting

• Well Services financials

1) Before group eliminations and corporate overheads

Note that FY 13 figures include the divested Mooring business up to 30 April 2013 with a revenue of USD 11.5 million, EBITDA of USD 9.5 million and EBIT of USD 6.7 million. Condensed P&L - (USD million) Q1 15 Q1 14 FY 14 FY 13 Operating revenue 40 53 198 227 EBITDA 16 24 85 105 Depreciation and impairments

• 9
• 8
• 36
• 38

EBIT 7 15 49 67 Book value of equipment 144 141 148 136 Cost price for equipment in use 381 374 384 359 Revenue growth

• 24,9 %
• 12,9 %
• 12,7 %

9,0 % EBITDA growth

• 33,0 %
• 16,7 %
• 18,7 %

10,3 % EBIT growth

• 54,2 %
• 11,5 %
• 25,9 %

26,8 % EBITDA-margin 40,3 % 45,2 % 43,1 % 46,3 % EBIT-margin 17,8 % 29,1 % 25,0 % 29,4 % Share of group revenue1 15,3 % 17,0 % 15,9 % 16,9 % Share of group EBITDA1 17,6 % 25,0 % 20,4 % 22,4 % Share of group EBIT1 15,0 % 31,1 % 28,6 % 22,9 %

40 53 198 227 Q1 15 Q1 14 FY 14 FY 13

Revenues

16 24 85 105 Q1 15 Q1 14 FY 14 FY 13

EBITDA

Group – Eliminations & Reconciliation

Page 19

Group

• Eliminations & Reconciliation

(USD million) Q1 15 Q1 14 FY 14 FY 13 Operating revenue

• 19
• 37
• 160
• 167

EBITDA

• 20
• 21
• 148
• 76

EBIT

• 13
• 13
• 42
• 44

EBIT for reportable segments 47 49 173 292 Corporate overheads

• 4
• 3
• 11
• 19

Gain from sale of Mooring business unit 20 Gain from sale of JV PSW Group AS 8 40% share of EBIT DSM Ltd 6

• 8

36

• 46

Share of profits from JV/disposals

• 15
• 2
• 82

Accounting differences 5 2 Group EBIT 34 37 129 248 Net financial items

• 11
• 10
• 50
• 77

Group profit before tax 23 27 79 171

Deep Sea Metro financials

Interest bearing debt: At 31 March 2015 the total interest bearing debt in the Deep Sea Metro Ltd. Group was USD 850 million.

Deep Sea Metro Ltd Group - Key financials (100% basis)

Page 20 Condensed figures - (USD million) Q1 15 Q1 14 FY 14 FY 13 Total income 37 80 345 359 Operating expenses

• 51
• 60
• 435
• 243

Financial items

• 19
• 22
• 91
• 93

Profit/(loss) before tax

• 33
• 2
• 181

23 Taxes

• 1
• 3
• 14
• 29

Profit/(loss)

• 34
• 5
• 196
• 7

Non-current assets 1 328 1 574 1 342 1 611 Cash 177 132 172 83 Current assets 25 83 48 57 Total assets 1 531 1 789 1 562 1 752 Equity 659 875 692 767 Non-current liabilities 394 830 394 467 Current liabilities 478 84 476 517 Total equity and liabilities 1 531 1 789 1 562 1 752

Summary statement of financial position

Group statement of financial position

• Group gross interest bearing debt was USD 1,783

million (net of capitalized financing fees) at 31 March 2015

• The remaining USD 110 million of the revolving

credit facility was fully utilised during Q1 2015

• USD 249 million in cash and cash equivalents at

31 March 2015

• Equity-ratio of 36 %
• In compliance with financial covenants at end of

Q1 2015

Page 21

Assets (USDm) 31 Mar 2015 31 Mar 2014 31 Dec 2014 Intangible assets 36 35 37 Property, plant and equipment 2 335 1 771 2 312 Financial fixed assets 292 403 308 Total non-current assets 2 663 2 209 2 657 Trade receivables 197 225 213 Other current assets 26 43 31 Cash and cash equivalents 249 221 191 Total current assets 472 489 435 Total assets 3 135 2 698 3 093 Equity and liabilities (USDm) 31 Mar 2015 31 Mar 2014 31 Dec 2014 Total paid-in capital 332 332 332 Other equity 794 814 784 Total equity 1 125 1 145 1 116 Borrowings 1 545 1 060 1 471 Post-employment benefits 68 66 77 Deferred tax liability 3 19 3 Other non-current liabilities 9 15 11 Total non-current liabilities 1 625 1 160 1 562 Borrowings 239 180 234 Trade payables 21 40 29 Other current liabilities 124 173 152 Total current liabilities 384 393 415 Total liabilities 2 009 1 553 1 977 Total equity and liabilities 3 135 2 698 3 093

Summary statement of cash flow

Group statement of cash flow

Page 22

Cash Flow - (USDm) Q1 15 Q1 14 FY 14 FY 13 Profit before income tax 23 27 79 171 Cash from operations 69 88 358 339 Interest paid

• 12
• 13
• 51
• 56

Income tax paid

• 12
• 19
• 68
• 37

Net cash from operations 46 55 240 245 Net cash used in investing activities

• 62
• 680
• 81

Net cash from financing activities 74

• 35

431

• 165

Net change in cash and cash equivalents 58 20

• 9
• 1

Cash and cash equivalents at period end 249 221 191 201

Summary Q1 2015

Page 23

• Earnings visibility through USD 3.6 billion order backlog
• MODU exposed to current and near term re-contracting risk for

several of its units

• Deepsea Aberdeen commenced its long-term drilling contract

in April 2015

• Deepsea Metro I secured new employment in Vietnam
• Platform Drilling secured by medium-to long term contracts
• Engineering capacity further adjusted to meet the reduced

demand for engineering services in the North Sea basin

• Well Services experiencing further reduction in activities on the

NCS so far in 2015. Partly neutralised by continued growth

• utside the NCS.
• Balance sheet with USD 1.1 billion in book equity

and book equity-ratio of 36 %

• USD 249 million in cash and cash equivalents

President & CEO Simen Lieungh EVP & CFO Atle Sæbø Investor relations Lasse H. Johannesen, laj@odfjelldrilling.com, +47 55 92 11 01 / +47 995 06 908 Press contact Gisle Johanson, gijo@odfjelldrilling.com, +47 414 40 050 Next event: Q2 2015 results to be announced on 26 August 2015 For more information see: www.odfjelldrilling.com