Published on February 28, 2014
Maersk Drilling Annual Result 2013 28 February 2014
page 2 Legal notice This presentation contains certain forward looking statements (all statements that are not entirely based on historical facts, among others expectations to future financial performance, developments, resources growth and production levels). Those forward looking statements reflect current views on future events and are by their nature subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. We consider such forward looking statements reasonable based on the information available to us at this time, but the actual results etc. may differ materially from our reliance should be placed on such statements. Neither APMM, nor any other person, shall assume responsibility for the accuracy or completeness of the forward looking statements and do not undertake any obligation to update such statements except as required by law. This Legal Notice shall be governed by Danish Law. Any dispute arising out of or in relation to this Legal Notice which can not be solved amicably shall be decided by the Danish Courts.
Summary of 2013 • Profit of USD 528m • ROIC of 10.8% • For 2014 Maersk Drilling expects a result below the result for 2013 due to planned yard stays in 2014 and high costs associated with training and start-up of operation of six new rigs • Forward contract coverage is 94% for 2014, 70% for 2015 and 53% for 2016 • Revenue backlog of USD 7.9bn • The newbuild programme is on budget, however five of the eight rigs are delayed two to four months per rig due to interruptions in the delivery of certain equipment from sub suppliers • On track towards the financial ambition of delivering a NOPAT of USD 1bn to the A.P. Moller Maersk Group in 2018 page 3 page 3
page 4 Maersk Drilling result Financial Highlights (USDm, 2013) Highlights 2013 2012 1,972 1,683 Profit/loss before depreciation, amortisation and impairment losses etc. (EBITDA) 863 638 Depreciation, amortisation, and impairment losses 239 197 4 - 19 0 Profit/loss before financial items (EBIT) 647 441 Tax 119 94 Net operating profit/loss after tax (NOPAT) 528 347 Cash flow from operating activities 775 • Revenue increased to USD 1,972m in 2013 from USD 1,683m in 2012 • EBITDA increased to USD 863m in 2013 from USD 638m in 2012 • Profit (NOPAT) increased to USD 528m in 2013 from USD 347m in 2012 • The increase in profit of USD 181m compared to 2012 was mainly due to higher operational uptime, full utilisation of all rigs and higher dayrates and effective cost management for rigs in operation 597 • ROIC was 10.8% in 2013, up from 8.8% in 2012 -1,517 -555 • Operational uptime increased to 97% from 92% in 2012 5,320 4,283 • ROIC 10.8% 8.8% For 2014 Maersk Drilling expects a result below the result for 2013 (USD 528m) ROIC excl. assets under construction 15.9% 10.4% 97% 92% Revenue Gain on sale of non-current assets, etc., net Share of profit/loss in joint ventures Cash flow used for capital expenditure Invested capital Operational uptime
page 5 Operational uptime 100% 92% 97% 80% 96% 97% 95% 85% 60% 40% 20% 0% Maersk Drilling 2012 2013 Floating rigs Jack-ups
page 6 High forward contract coverage reflecting solid demand for Maersk Drilling´s high end assets Maersk Drilling forward contract coverage 100% 94% 80% 70% 60% 53% 40% 20% 0% 2014 Note: As per end 2013 2015 2016
page 7 Revenue backlog of USD 7.9bn with quality customers provides strong revenue visibility Revenue backlog, end 2013, USDbn Revenue backlog by customer, end 2013 2.5 Others BP ~2.3 2.0 ~2.0 ~2.0 1.5 Marathon ~1.5 1.0 Total 0.5 Det norske Statoil ExxonMobil 0.0 USD 7.9bn 2014 2015 2016 Note: Annual revenue backlog figures reflect upcoming yard stays 2017- ConocoPhillips
page 8 XL Enhanced 4 • • New investment in 2013 • Ultra harsh environment jack-up, XL Enhanced 4 • Total investment of USD 650m • Order backed by a firm 5-year contract with BP Norway with estimated contract value of USD 812m • Options for extending the contract up to a total duration of 10 years High-specification ultra harsh environment jack-up rig Delivery in 2016 • To be constructed at Daewoo (DSME), South Korea
page 9 Maersk Drilling signed several major contracts in 2013 Maersk XL Enhanced 4 Customer: BP Country: Norway Contract value: USD 812 million Duration: Five years Maersk XL Enhanced 2 Customer: Det norske Country: Norway Contract value: USD 280 million Duration: Two year extension Note: Original three year contract for Maersk XL Enhanced 2 was signed in 2011 Mærsk Giant Customer: Talisman Country: Norway Contract value: USD 137 million Duration: One year
page 10 Partnership agreement with BP signed in 2013 • In 2013, Maersk Drilling signed a partnership agreement with BP to develop conceptual engineering designs for a new breed of advanced technology offshore drilling rigs • 20K rigs will be critical to unlock the next frontier of deepwater oil and gas resources • 20K rigs will be designed to operate in high pressure and high temperature reservoirs (20,000 psi and 350 • BP estimates that application of this technology across its own global portfolio alone could potentially access an additional 10-20 billion barrels of resources
page 11 Strategy • Deliver on the financial ambition of Net Operating Profit After Tax (NOPAT) of USD 1bn in 2018 (ROIC >10%) • Conduct incident free operation • Grow the business within the ultra deepwater and ultra harsh environment segments • Leverage market leading position in Norway and build ultra deepwater positions in the US Gulf of Mexico and West Africa
page 12 Ultra deepwater market US • In 2014, the ultra deepwater market will experience intensified competition due to a number of uncontracted rigs entering the market while several operators have postponed commencement for a large number of the long term projects from 2014 to 2015 and beyond • Market characterised by full utilisation of capacity in 2013 but a slight oversupply of rigs will be seen in 2014 • Dayrates peaked at around USD 600,000 in 2013 and we see dayrates moving slightly lower in 2014 • Maersk Drilling retains our long term positive view on the ultra deepwater market Egypt Angola Fact box • Maersk Drilling´s ultra deepwater fleet consists of three semisubmersibles • Maersk Drilling has four ultra deepwater drillships under construction • Maersk Drilling has been operating in ultra deepwater since 2009
page 13 Fact box Ultra harsh environment jack-up market • • Currently there are nine jack-up rigs working in Norway and including the order of XL Enhanced 4, there are seven ultra harsh jack-ups under construction for the Norwegian market, all of which have secured long term contracts • Dayrate levels for newbuilds are currently at an all time high level of USD 425,000 and older jack-up rigs have secured rates just below USD 400,000 Norway Maersk Drilling has four ultra harsh environment rigs under construction • Most jack-ups are tied up in long term contracts reducing the near term availability of jack-up rigs in the market where the first rig is available in fourth quarter 2014 Maersk Drilling´s fleet consists of six ultra harsh environment jack-up rigs • Remains strong with full utilisation of capacity throughout 2013 • • Maersk Drilling has been operating in the ultra harsh environment market since 1990
page 14 International premium jack-up market North Sea • Continue to benefit from the fact that oil companies prefer newer rigs due to the safety and efficiency gains offered • Premium jack-up rigs enjoy high utilisation and dayrates have stabilised in excess of USD 200,000 in the North Sea and USD 170,000 in South East Asia • In general, demand for premium jack-up rigs looks set to remain healthy, with many long term duration projects commencing in 2014 Cameroon South East Asia Fact box • Premium jack-up rigs are capable of drilling in water depths >350ft • Maersk Drilling´s fleet consists of six premium jack-up rigs • Maersk Drilling has been present in the international jack-up market since 1972
page 15 Egypt • Leading operator in MENA-region with a fleet of four jack-up rigs and 64 land rigs • Operation in Egypt since 1976 • Financial investment, JV (50/50) • Profit contribution in 2013 amounted to USD 19m (USD 0m) Non-core assets • • • Leading drilling contractor in Venezuela with a fleet of 10 cantilevered drilling barges which in 2013 generated a revenue of USD 195m (USD 194m) • Operation in Venezuela since 1992 • Maersk Drilling has started to look into divesting its business activities in Venezuela No further investments planned • Venezuela Strong positions in respective markets Divestment if/when time is right
page 16 Maersk Drilling´s priorities for execution in 2014 • Take delivery and commence operation of six rigs without further delay • Complete the extensive yard stay programme on time and budget • Secure contracts for the third and fourth drillships under construction with expected delivery in mid- and end 2014
page 17 The newbuild programme is on budget, but delivery of five of the eight rigs will be two to four months delayed Ultra harsh jack-ups XL Enhanced Four ultra harsh jack-up rigs (CJ-70s) under construction. Three at Keppel FELS shipyard in Singapore and one at Daewoo in South Korea Delivery in 2014-2016 Ultra deepwater drillships Four ultra deepwater drillships under construction at Samsung Heavy Industries, South Korea Delivery in 2014
page 18 Extensive yard stay programme during 2014 Maersk Developer yard stay in Pascagoula, US 2014 Yard stays Heydar Aliyev* Q4 2013 5 year special survey + upgrade Mærsk Q4 2013 Developer* 5 year special survey Maersk Resolve Q2 2014 5 year special survey Mærsk Gallant Q2 2014 5 year special survey + lifetime extension Maersk Reacher Q2 2014 5 year special survey Mærsk Inspirer Q2 2014 5 year special survey Maersk Q3 2014 Completer UWILD (offshore) Maersk Q3 2014 Discoverer 5 year special survey Note: * was commenced in 2013 but will not be completed until early 2014
page 19 Commercial focus on securing work for the two uncontracted drillships Ultra harsh environment jack-ups Ultra deepwater drillships XL Enhanced 1 Customer: Total E&P Norge AS Country: Norway Contract value: USD 550 million Duration: 4 years XL Enhanced 2 Customer: Det norske Oljeselskab Country: Norway Contract value: USD 700 million Duration: 5 years Maersk Viking Customer: ExxonMobil Country: US GoM Contract value: USD 610 million Duration: 3 years Maersk Valiant Customer: ConocoPhillips/Marathon Oil Country: US GoM Contract value: USD 694 million Duration: 3 years XL Enhanced 3 Customer: Statoil Country: Norway Contract value: USD 620 million Duration: 4 years XL Enhanced 4 Customer: BP Country: Norway Contract value: USD 812 million Duration: 5 years Maersk Venturer Uncontracted Drillship 4 Uncontracted
page 20 Rig fleet Present in the most important oil and gas markets 3+4 Ultra deepwater floaters 6+4 Ultra harsh environment jack-up rigs 6 Premium jack-up rigs 1 Midwater floater 10 Drilling barges Financial investment Egyptian Drilling Company, Joint Venture (50/50)
page 21 Maersk Drilling Moving boundaries within offshore drilling
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