Worley Limited · ASX:WOR
Worley — WorleyParsons — Investor Day (May 2018)
58 slides from Worley's investor day presentation, May 9, 2018
Slide 1: Disclaimer
For personal use only Disclaimer The information in this presentation about the WorleyParsons Group and its activities is current as at 30 April 2018 and should be read in conjunction with the Company’s Appendix 4D and Interim Financial Report for the half year ended 31 December 2017. It is in summa
Slide 2: Agenda; Context: Market fundamentals continue to improve
Agenda For personal use only Registration Welcome and Context OneWay Moment Company Update Strategy Update Q&A Offshore Oil & Gas Morning Tea Integrated Solutions Metals & Minerals Chemicals & Petrochemicals in Europe New Energy Digital Q&A Wrap Up Lunch 3 Context: Market fundamentals continue to im
Slide 3: Responsible business at WorleyParsons
For personal use only Responsible business at WorleyParsons Matthew Rowe Responsible business at WorleyParsons We have always taken a responsible and sustainable approach to our business. This year we have: 30+ 26% 3 delivered significant community social impact via Active Non-executive our active
Slide 4: Responsible business at WorleyParsons
Responsible business at WorleyParsons For personal use only Across our operations in 42 countries, ethical conduct is very important to us: our Code of Conduct applies to our contractors, agents, supply chain partners as well as our own people we prohibit the use of facilitation payments, and ha
Slide 5: Business update
For personal use only 9 Business update Tom Honan Group Managing Director, Finance / CFO
Slide 6: Our strategy architecture
Our strategy architecture For personal use only Pillar 2 Pillar 1 Pillar 3 All our value to all our customers Viable and competitive • intensive group pursuit of large Key player in the new opportunities (increasing market business share) world • ensuring performance discipline by • intensive campai
Slide 7: Business profile
Business profile For personal use only CAPEX vs. OPEX 11% 55% 34% Major Capital Projects Modifications, Sustaining and Small CAPEX OPEX Business Lines 12% 49% 20% 19% Advisian Services Major Projects Integrated Solutions Commercial Model 85% 15% Reimbursable Lump Sum / Fixed Price Sector 74% 16% 10%
Slide 8: Headcount and utilization
Headcount and utilization For personal use only Growth Growthin global in global headcount headcount Staff Utilization Headcount Headcount Change to Prior Month 87% 85% Utilisation % 83% 81% Target Monthly rate 79% 77% July Jan July Jan July Jan Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-1
Slide 9: Focus on ensuring key overhead cost areas remain right sized
Focus on ensuring key overhead cost areas remain right sized as the business grows For personal use only Investment in improved BD effectiveness Business Development Global Sales and Marketing group operating to ensure focus on priority opportunities and best practice sharing Sustainable impro
Slide 10: Backlog remains strong
Backlog remains strong For personal use only 36 month backlog ($b) Approximate timing of backlog ($b) Backlog as at 31 March 2018 6.5 6.0 FY18 1.1 5.5 5.0 FY19 3.1 4.5 6.0 6.0 4.0 5.1 4.7 FY20 1.3 3.5 3.0 Dec16 Jun17 Dec17 Mar18 FY21 0.5 19 Backlog remains strong Backlog by region Backlog by sector
Slide 11: UK Integrated Solutions integration update
For personal use only UK Integrated Solutions Integration update 21 UK Integrated Solutions integration Workstream Progress Achievements IT integration and global organizational alignment Organization, Systems & Processes completed on schedule. Other system implementation on track Cost Costs synergi
Slide 12: UK Integrated Solutions Acquisition
UK Integrated Solutions Acquisition Delivering core services through well established customer relationships For personal use only The UK Integrated Solutions business is providing key differentiated services across the MMO market: The leading UK North Sea service provider for the growing step-out
Slide 13: Summary
Summary For personal use only Strong operating and financial metrics Systems and processes to ensure Business Metrics performance discipline and operating Update Summary leverage Business Metrics Update Summary Bid activity is increasing and we are winning our share UK acquisition is deliver
Slide 14: Refined strategy architecture
Refined strategy architecture Pillar 2 For personal use only Pillar 1 Pillar 3 All our value to all our customers Viable and competitive • intensive group pursuit of large Key player in the new opportunities (increasing market business share) world • ensuring performance discipline • intensive campa
Slide 15: Strengthening customer capex budgets
Strengthening customer capex budgets Energy For personal use only Select Oil & Gas majors – global capex YoY growth (%) Trend continues to indicate increases in global hydrocarbons capex 10% 8% 4% 4% 0% 2018 capex still >40% below 2013 peak (10%) (20%) (23%) Source: FactSet as at 13 April 2018.
Slide 16: Our core energy markets remain attractive into the future
Our core energy markets remain attractive into the future For personal use only Contributions to growth of energy consumption 2016 -2040 Renewable % per annum Oil and gas are both Hydro forecast to grow to 2040 1.2 … as will renewables. Nuclear 0.8 0.4 Gas BPET BP Evolving Transition CNPC China Nati
Slide 17: Growing supply gap in oil and gas
Growing supply gap in oil …. For personal use only Global liquids capacity by development status Projects awaiting Final Liquid capacity (million b/d) 110 Yet to find Investment Decision (FID) 100 Other discoveries are needed to fill a supply gap 90 } Projects awaiting FID and US L48 future drilli
Slide 18: Supply gaps will contribute to project uptick
Supply gaps will contribute to project uptick For personal use only Project investment will almost triple $56B $147B 2017 2019 Source: Goldman Sachs, Top Projects 2018, April 9 2018 35 US shale now expensive relative to others Global liquid production in 2027, by breakeven OPEC dominate the low en
Slide 19: Our customers are leading expenditure
Our customers are leading expenditure For personal use only Top Spending Operators at USD60/boe Upstream CAPEX and OPEX (purchases) 2018-2021 (USDm) 120 Existing long-term Existing long term service framework agreements agreements with 10 of the 100 top 15 global operators 80 Strategic focus on
Slide 20: Renewables will grow greater than 4% p.a.
Renewables will grow greater than 4% p.a. For personal use only Renewables growth 2016 - 2040 % per annum 8 6 4 All sources forecast between 4-7% 2 0 annual growth in renewables IHS Statoil CNPC IEEJ EIA IEA OPEC XOM BP ET Source: BP Energy Outlook 2018 39 Electric vehicles still not seen as a game
Slide 21: Summary
Summary For personal use only Oil and Gas demand is growing Supply is tightening Now Now Now Customers have returned to financial health Business Metrics Update Summary CAPEX returning – upstream and downstream The Global Energy Transition will provide new opportunities We are well posit
Slide 22: Strategy in action
For personal use only Strategy in action Strategic priorities for FY19 Acting concurrently on priorities across three horizons Horizon 3 Emerging markets & products Horizon 2 New Energy Growth Potential (including power networks) Chemicals & Petrochemicals (Europe) Digital Horizon 1 (Internal and Ex
Slide 23: Strategy in action
Strategy in action For personal use only Geeta Thakorlal Chris Gill President Global Director INTECSEA Chemicals Offshore Oil & Gas Chemicals, Europe Chris Ashton Tony Frencham Group Managing Director Group Managing Director Major Projects & Integrated Solutions Power & New Energy Integrated Solutio
Slide 24: Strategic priorities for FY19
Strategicpriorities Strategic prioritiesforfor FY19 FY19 For personal use only Acting concurrently on priorities across three horizons Horizon 3 Emerging markets & products Horizon 2 New Energy Growth Potential (including power networks) Chemicals & Petrochemicals (Europe) Digital Horizon 1 (Interna
Slide 25: Offshore developments are cost competitive
Offshore developments are cost competitive For personal use only Other US (Lower 48) Global liquid production in 2027, by breakeven US (Lower 48) Tight oil Deepwater non OPEC Shallow water non OPEC 40% lower costs than in Shallow water OPEC Breakeven (USD/bbl Brent) 2014 for discovery and Tight oil
Slide 26: Important to our key customers' portfolios
…and important to our key customers’ portfolios For personal use only Offshore Exploration and Production Expenditure Projections (2018-2023) 160 140 Shallow Water Deepwater Ultra-Deepwater (<125m) (125m-1,500m) (≥1,500m) 120 100 Expenditure (billions USD) 80 60 “Top 12” 40 WorleyParsons Hydrocarbon
Slide 27: Positioned to capture brownfield CAPEX growth
Positioned to capture brownfield CAPEX growth For personal use only Pseudo Dry Gas Digital solutions Enduring customers Photogrammetry 2x+ tieback distance for Efficiencies gained through Our track record and deepwater stranded gas technology & innovation that reduce performance shown by our reserve
Slide 28: Integrated Solutions
For personal use only Integrated Solutions Chris Ashton Group Managing Director, Major Projects and Integrated Solutions 55 Strategic priorities for FY19 Acting concurrently on priorities across three horizons Horizon 3 Emerging markets & products Horizon 2 New Energy Growth Potential (including pow
Slide 29: For personal use only
Beautiful home For personal use only 57 Not so beautiful home 58
Slide 30: Integrated Solutions = Our MMO market offering
Integrated Solutions = Our MMO market offering For personal use only Operations Planning Maintenance Modifications & Operations Maintenance strategies Brownfield Projects Hook up and Late Life into Turn Arounds (TAR) Commissioning (HUC) Decommissioning Integrated Solutions’ strategy: Provide world c
Slide 31: MMO markets are large and growing
MMO markets are large and growing For personal use only Upstream OPEX (USD billions) Midstream & Downstream Maintenance (USD billions) 250 80 200 60 150 40 100 50 20 Hydrocarbons 0 0 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 Offshore Onshore Refining Petrochemical Gas processing LN
Slide 32: Integrated Solutions contract portfolio is strong
Integrated Solutions contract portfolio is strong Contract examples For personal use only BP Clair Ridge Hook-up & Commissioning BASF Ludwigshafen Brownfields Modifications Contract UCLA Energy Services Facility Tomago Aluminium Smelter Contract held since 2004 Starfish Hill Wind Farm Existing Int
Slide 33: Integrated Solutions strategy in action
Integrated Solutions strategy in action For personal use only Recent win BP Oman EPC 5 year contract Provide engineering, procurement and construction services for modification and sustaining capital works at the Khazzan facility in Oman Led from WorleyParsons’ Oman office 65 Summary Deep do
Slide 34: Minerals & Metals
For personal use only Minerals & Metals Adrian Smith Group Managing Director, Advisian 67 Strategic priorities for FY19 Acting concurrently on priorities across three horizons Horizon 3 Emerging markets & products Horizon 2 New Energy Growth Potential (including power networks) Chemicals & Petrochem
Slide 35: Global Mining & Metals industry
Global Mining & Metals industry Return to investment For personal use only Stronger financial Sustaining capital Start of commodity Return 1 2 focus continues 3 4 positions cycle of CAPEX Miners returning to Sustaining capital Drawdown of inventories CAPEX outlook increasing profitability co
Slide 36: Sustaining capital focus continues
Sustaining capital focus continues For personal use only Sustaining capital continues to represent the bulk of CAPEX increase Expected to grow as miners seek to retain market share Capital Expenditure (billions USD) 40 35 ~60% 30 of WorleyParsons 25 M&M revenue is 20 generated from 15 sustaining
Slide 37: Change to 2018 CAPEX Guide
Change to 2018 CAPEX Guide Return of CAPEX 30% 25% For personal use only 20% 15% Outlook for customer capex continues to 10% average strengthen underpinned by improved 5% market sentiment 0% Gold Corp Norsk Hydro Norilsk Nickel Rio Tinto Glencore McMoran Average Vale BHP Biliton Boliden Freeport N
Slide 38: Summary
Summary For personal use only Stronger financial positions Sustaining capex continues Start of commodity growth cycle Return of CAPEX Circling growth markets underpinned by strong outlook 75 Chemicals and Petrochemicals in Europe Chris Gill Global Director, Chemicals 76
Slide 39: Chemicals and Petrochemicals in Europe
Strategic priorities for FY19 For personal use only Acting concurrently on priorities across three horizons Horizon 3 Emerging markets & products Horizon 2 Growth Potential New Energy (including power networks) Chemicals & Petrochemicals (Europe) Digital Horizon 1 (Internal and External) Core growth
Slide 40: Key global customers headquartered in Europe
Key global customers headquartered in Europe For personal use only 40 of the world’s 100 largest chemical producers are headquartered in Europe chemical industry is one of Europe’s largest industrial sectors $ 70B capital expenditure of Europe headquartered companies, 2016 Sources: Cefic, Eurostat d
Slide 41: Chemical acquisition in Europe enhanced range of services
Chemical acquisition in Europe enhanced range of services For personal use only A milestone in the company’s global strategy to better meet the needs of chemical and petrochemical customers in Europe 80+ 2 services single team of chemical offices in Ludwigshafen include feasibility studies, industry
Slide 42: Europe critical piece in the global network
Europe critical piece in the global network For personal use only New offices in Ludwigshafen and Schwarzheide, Germany Toronto Centre of Excellence Houston Centre of Excellence China – Global Centre of Excellence Our European chemicals revenue has grown by 40% in the last 12 months 83 Summary Hea
Slide 43: New Energy
For personal use only New Energy Tony Frencham Group Managing Director, Power & New Energy 85 Strategic priorities for FY19 Acting concurrently on priorities across three horizons Horizon 3 Emerging markets & products Horizon 2 New Energy Growth Potential (including power networks) Chemicals & Petro
Slide 44: Fossil Power meets the Global Energy Transition
Fossil Power… For personal use only 87 …meets the Global Energy Transition… 88
Slide 45: ...and a New Energy future
For personal use only …and a New Energy future 89 The Global Energy Transition We are moving through the inflexion point Peak fossil power is 2018 $700B annual investment spend in the coming decade for power generation and power networks Gas will play a key role in the retirement of coal and
Slide 46: WorleyParsons is well positioned
WorleyParsons is well positioned For personal use only A long history in all forms of energy generation: Fossil Power Nuclear Power New Energy (geothermal; hydro; solar; wind) Energy management: H2 Storage (batteries; compressed gas; hydro; hydrogen) Smart Energy (digital; distributed ener
Slide 47: Our New Energy priorities
Our New Energy priorities For personal use only 1 EXPANDING ACROSS OUR BUSINESS LINES Advisian: world-class consultancy opening doors for other business lines Services: targeting delivery of larger and more complex New Energy projects Integrated Solutions: offering O&M beyond ANZ, NAM and SSA
Slide 48: Key recent New Energy announcements
Key recent New Energy announcements For personal use only USAid Power Africa project Madeira River Hydro Mining Re-Power project China Solar Thermal South Australia Hydrogen Harvard Energy Microgrid ESCRI Battery Energy Storage 95 Summary Global Energy Transition is here WorleyPars
Slide 49: Digital
For personal use only Digital Bradley Andrews Group Managing Director, Digital 97 Strategic priorities for FY19 Acting concurrently on priorities across three horizons Horizon 3 Emerging markets & products Horizon 2 New Energy Growth Potential (including power networks) Chemicals & Petrochemicals (E
Slide 50: Future of the project delivery process survey
WorleyParsons recently conducted a large survey of industry For personal use only and technology leaders/influencers, asking the following central question… What is the future of the project delivery process? How will disruptive technologies including digitization, advanced analytics, intelligent pr
Slide 51: Emerging patterns or forces
Emerging patterns or forces For personal use only Intent and Who leads Future Talent The sacrifice Competitive velocity pathways regulatory risk? development of automation advantage is culture The intent and velocity Industry and Government Universities are losing Cybersecurity (IT) to Multi-nationa
Slide 52: Digital ecosystem
Market Standardize External connection to internal projects For personal use only Augmented Digital Reality Mine IT/OT Integration Internet of Things Digitally Blockchain Enabled Disruption Machine Learning Data Automation Analytics Renewables Robotics AI Virtual Cyber- Reality security 103 Market S
Slide 53: Market Launch
Market Launch External connection to global industry problem For personal use only Bringing fugitive emissions under control using drones, artificial intelligence and data science. Fugitive gas detection - methane mapping system captures detailed methane and CO2 concentrations 105 down to parts per
Slide 54: Q&A
We help our customers meet the world’s Investor Day 2018 Q&A For personal use only changing resources and energy needs 107 Closing remarks Andrew Wood CEO
Slide 55: Concluding remarks
Concluding remarks For personal use only The financial position Biggest energy of our industry customers transition in 50 has improved years, and the focus for which is shifting we are well to growth positioned Demand for energy Consumption of energy and resources has continued and resources to
Slide 56: Andrew Wood: Chief Executive Officer
Andrew Wood: Chief Executive Officer Andrew was appointed as Chief Executive Officer effective 23 October 2012. With a tenure of 23 years For personal use only with WorleyParsons and over 35 years’ experience in the resources and energy industry, Andrew has extensive knowledge across the Group. His
Slide 57: Adrian Smith: Group Managing Director, Advisian
Adrian Smith: Group Managing Director, Advisian For personal use only Adrian is responsible for Advisian, WorleyParsons’ global advisory business. Adrian joined WorleyParsons in 1998 and has since held various senior leadership positions including operations management of regional businesses in Aust
Slide 58: Mark Trueman: Group Director Planning and Investor Relations
Mark Trueman: Group Director Planning and For personal use only Investor Relations Mark has recently taken up the role of Group Director, Planning and Investor Relations for WorleyParsons, based in Sydney. Prior to this Mark was based in Mexico City as Managing Director with responsibility for Worle