Seadrill Limited · NYSE:SDRL
Seadrill — Corporate Update (December 2017)
34 slides from Seadrill's corporate update, Dec 18, 2017
Slide 1: SDRL – Seadrill Announces Updated Business Plan
Exhibit 99.1 SDRL – Seadrill Announces Updated Business Plan Hamilton, Bermuda, December 16, 2017 - On September 12, 2017, Seadrill Limited (“Seadrill” or the “Company”) filed a Form 6K, attached to which as Exhibit 99-1 was a presentation which included the Company’s business plan. In the ordinary
Slide 2: unanticipated events. New factors emerge from time to time, and it is not possible
unanticipated events. New factors emerge from time to time, and it is not possible for the Company to predict all of these factors. Further, the Company cannot assess the impact of each such factor on its business or the extent to which any factor, or combination of factors, may cause actual results
Slide 3: December 2017 Business Plan Update
Seadrill Limited Strictly Private & Confidential December 2017 Business Plan Update Subject to the disclosures, assumptions and qualifications set out in this presentation including, without limitation, the disclaimer set forth on page 2 December 2017
Slide 4: Disclaimer
Disclaimer We have prepared this document solely for informational purposes. You should not definitively rely upon it or use it to form the definitive basis for any decision, contract, commitment or action whatsoever, with respect to any proposed transaction or otherwise. The information contained h
Slide 5: Table of Contents
Table of Contents • Executive Summary • Updated Business Plan • Updated Components 1. Q3 Actuals 2. Movement in the USD LIBOR Swap Curve 3. Fearnley December 2017 Update 4. 2018 Budget, Rollover Cost and Other Assumptions • Appendix Cleansing Presentation Case vs December Delayed Dayrate Case 3
Slide 6: Executive Summary
Executive Summary 4
Slide 7: Executive Summary
Executive Summary The Business Plan, which forms the basis for the Recapitalisation Plan being negotiated with our creditors, has been updated to reflect: Q3 Actuals Movement in the USD LIBOR swap curve Revised Fearnley dayrate and utilisation assumptions (taken from the Fearnley December 2017 Adden
Slide 8: Updated Business Plan
Updated Business Plan 6
Slide 9: Updated Business Plan – December Financing Case
Updated Business Plan – December Financing Case Key Financials Delta to ($ in millions) 2017 2018 2019 2020 2021 2022 Total Cleansing Deck Cash Flow Items Revenue $1,892 $1,159 $2,152 $2,662 $2,939 $3,192 $13,997 ($1,406) Opex ($866) ($637) ($1,025) ($1,107) ($1,220) ($1,280) ($6,134) $724 G&A ($273
Slide 10: Key Metrics – New Business Plan vs Cleansing Deck
Key Metrics – New Business Plan vs Cleansing Deck UFCF $1,600 1,354 $1,400 28 $1,200 177 $1,000 98 $800 $600 1,326 172 1,085 $400 841 91 228 604 $200 425 48 43 186 $0 Cumulative 2017 2018 2019 2020 2021 2022 Reduction Revenue EBITDA 1,713 $3,500 $1,800 33 210 4 144 $3,000 $1,600 318 $1,400 165 $2,50
Slide 11: Updated Business Plan – Cashflow Bridge
Updated Business Plan – Cashflow Bridge $54 million decrease $2,100 $1,800 $1,728 $521 $1,674 ($45) ($86) $1,500 $1,200 $346 $900 ($790) $600 $300 $0 Impact of Cleansing Deck Impact of Q3 Impact of LIBOR Impact of Fearnley Cash Flow Sweep / Updated Business Budget & 2022 Ending Cash Actuals Update D
Slide 12: Updated Business Plan – Liquidity
Updated Business Plan – Liquidity Liquidity After Restructuring ($mm) Cleansing Deck Forecast Updated Business Plan $210mm in Reactivation Costs incurred in 1Q 2019 $2,000 $2,000 $1,800 $1,800 $1,600 $1,600 $1,400 $1,400 $1,200 $1,200 $1,000 $1,000 $800 $800 $600 $600 $400 $400 $200 $200 - - RigCo L
Slide 13: Updated Components – Q3 Actual
Updated Components Q3 Actual 11
Slide 14: Q3 Actuals
Q3 Actuals Key Financials Q3 2017 ($ in millions) Q3 Forecast Q3 Actual Delta Cash Flow Items Higher EBITDA due to higher uptime, Revenue $440 $468 $28 partially offset by higher operating (205) (209) ($4) Opex and G&A costs for the quarter relative G&A ($55) ($69) ($14) to forecast EBITDA $180 $190
Slide 15: Updated Components – LIBOR Curve
Updated Components LIBOR Curve 13
Slide 16: Change in LIBOR Curve
Change in LIBOR Curve 3.00% September LIBOR Curve December LIBOR Curve 2.80% 2.60% 2.40% 2.20% 2.00% 1.80% 1.60% 1.40% 1.20% 1.00% • The cleansed business plan at the point of filing used the prevailing LIBOR swap curve at the time • US interest rates have risen since then as shown above, leading to
Slide 17: Updated Components – Fearnley December 2017 Update
Updated Components Fearnley December 2017 Update 15
Slide 18: Overview
Overview Fearnley released a third addendum report in December 2017 to the original report on the offshore drilling market released in February 2016 Their updated report indicates weaker market conditions in the short to medium term and a slower recovery: Dayrate and utilisation forecasts are lower
Slide 19: Variance Analysis – Cleansing Presentation Case vs December Financing Case
Variance Analysis – Cleansing Presentation Case vs December Financing Case Operating Assumptions Variance: Floaters Operating Assumptions Variance: BE JU 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Uncontracted Dayrate Uncontracted Dayrate Jun 2017 $224 $315 $420 $435 $435 Jun 2017 $90 $97 $11
Slide 20: Updated Components – Impact of Budget & Rollover Assumptions
Updated Components Impact of Budget & Rollover Assumptions 18
Slide 21: 2018 Budget Update Impact
2018 Budget Update Impact Key Financials 2018 2018 2018 ($ in millions) Delta Fearnley Budget Cash Flow Items Lower EBITDA due to fewer assumed Revenue $1,426 $1,159 (267) operating units relative to Fearnley 2018 Opex (846) ($637) 209 forecast, partially offset by reduced G&A (220) ($164) 56 operat
Slide 22: Rollover Cost Assumptions – Opex
Rollover Cost Assumptions – Opex The Cleansing Presentation assumed rollover opex per rig of $130k/d in 2018, followed by a ramp-up of costs in line with the shape of Fearnley’s market utilisation assumptions. Normalisation was assumed to occur in 2020 2018 2019 2020 2021 2022 Opex 130k/d 135k/d 146
Slide 23: Rollover Cost Assumptions – G&A
Rollover Cost Assumptions – G&A The Cleansing Presentation had a flat G&A assumption throughout the forecast of $220 million per annum 2018 2019 2020 2021 2022 G&A $220m $220m $220m $220m $220m Ramp up % - - - - - The Updated Business Plan 2018 budget update shows G&A of $164 million, down from $192
Slide 24: Management Fees Related to SDLP and SeaMex
Management Fees Related to SDLP and SeaMex Seadrill provides management services to SDLP and SeaMex The fees charged by SDRL represent their respective allocations in G&A and certain onshore-related opex costs and are split as follows: 2018 Budget/Reported SDLP/SeaMex Related 2018 SDRL Net Opex $636
Slide 25: Rollover Cost Assumptions – LTM & Capex
Rollover Cost Assumptions – LTM & Capex The Cleansing Presentation’s LTM & Capex per unit (excluding 5-year SPSs) assumptions were: Asset Class LTM Capex Floaters US$4.0m US$2.0m Jack-ups US$1.5m US$0.5m The December revision reflects the Company’s actual experience over the past 3 years, which we b
Slide 26: Key Metrics – New Business Plan vs Cleansing Deck
Key Metrics – New Business Plan vs Cleansing Deck UFCF $1,600 1,354 $1,400 28 $1,200 177 $1,000 98 $800 $600 1,326 172 1,085 $400 841 91 228 604 $200 425 48 43 186 $0 Cumulative 2017 2018 2019 2020 2021 2022 Reduction Revenue EBITDA 1,713 $3,500 210 4 $1,800 144 33 $3,000 $1,600 318 165 $1,400 $2,50
Slide 27: Updated Business Plan – Liquidity
Updated Business Plan – Liquidity Liquidity After Restructuring ($mm) Cleansing Deck Forecast Updated Business Plan $210mm in Reactivation Costs incurred in 1Q 2019 $2,000 $2,000 $1,800 $1,800 $1,600 $1,600 $1,400 $1,400 $1,200 $1,200 $1,000 $1,000 $800 $800 $600 $600 $400 $400 $200 $200 - - RigCo L
Slide 28: Cash Hazards and Opportunities
Cash Hazards and Opportunities Entity Affected / Hazards Opportunities Beneficiary Newbuilds guarantee TBD - RigCo settlement Working capital buffer - +$50 million RigCo Support for JV’s -$40 million - RigCo Seadrill Partners distributions (1) -$40 million p.a. - IHCo Sapura deferred - +$95 million
Slide 29: Summary of the Business Plan Update
Summary of the Business Plan Update In conducting its annual budgeting process, the Company has updated its Business Plan to reflect its 2018 budget and updated dayrate and utilisation projections While dayrates and utilisation are generally lower than the Cleansing Presentation throughout the proje
Slide 30: Appendix – December Delayed Dayrate
Appendix December Delayed Dayrate 28
Slide 31: Variance Analysis – December Delayed Dayrate Case
Variance Analysis – December Delayed Dayrate Case Operating Assumptions Variance: Floaters Operating Assumptions: HE Jack-ups 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 Total Utilisation Rate Total Utilisation Rate Jun 2017 Financing 51% 77% 87% 89% 91% 91% Jun 2017 Financing 67% 67
Slide 32: Cleansing Deck Case vs December Delayed Dayrate Case
Cleansing Deck Case vs December Delayed Dayrate Case UFCF $1,600 1,354 $1,400 28 $1,200 177 $1,000 140 $800 1,326 $600 172 1,085 $400 799 825 $200 425 91 407 48 43 $0 7 2017 2018 2019 2020 2021 2022 Cumulative Revenue EBITDA Reduction 1,713 $3,500 210 4 $1,800 33 $3,000 $1,600 144 318 165 $2,500 1,8
Slide 33: Cleansing Deck vs December Delayed Dayrate – Liquidity
Cleansing Deck vs December Delayed Dayrate – Liquidity Liquidity After Restructuring ($mm) Cleansing Deck Forecast – Delayed Dayrate Updated Business Plan – Delayed Dayrate (1) (1) 1. Consolidated cash includes cash in RigCo, IHCo, NSNCo and SDRL Ltd 31
Slide 34: December Delayed Dayrate Case – Key Metrics
December Delayed Dayrate Case – Key Metrics Key Financials Delta to ($ in millions) 2017 2018 2019 2020 2021 2022 Total Cleansing Deck Cash Flow Items Revenue $1,892 $1,159 $1,916 $2,662 $2,939 $3,192 $13,762 ($1,641) Opex ($866) ($637) ($1,025) ($1,107) ($1,220) ($1,280) ($6,134) $724 G&A ($273) ($