Petrofac Limited · OTC:POFCY
Petrofac — Investor Presentation (November 2006)
85 slides from Petrofac's investor presentation, November 2006
Slide 1: Presentation to analysts
Presentation to analysts November 2006
Slide 2: Group overview
Group overview Petrofac is a leading international provider of facilities solutions to the oil & gas production and processing industry We provide project development, engineering, construction and facilities operation, maintenance and training services with capabilities across the lifecycle for
Slide 3: Group overview (continued)
Group overview (continued) Engineering & Construction Operations Services Resources Engineering, construction Facilities management Investment in upstream and procurement opportunities based on Operations and proved hydrocarbon Engineering services maintenance reserves and in oil & gas inf
Slide 4: Our vision
Our vision To become the global oil & gas industry’s premier facilities and infrastructure provider, admired by customers and employees for consistently delivering and rewarding excellence: − working to world-class standards − focusing always on customer satisfaction − respecting the environment a
Slide 5: Overview of Engineering & Construction
Overview of Engineering & Construction
Slide 6: Overview
Overview A leading provider of engineering & design services and lump sum EPC for upstream and midstream oil & gas sector in the UKCS, Middle East, CIS and Africa Engineering, procurement, Engineering & design services construction & commissioning Full-field development plans Facility design and
Slide 7: Primary areas of expertise, oil & gas
Primary areas of expertise, oil & gas Oil & gas gathering and production facilities Gas processing / separation / compression LPG / NGL recovery including turbo-expander plants Crude stabilisation High pressure water & gas re-injection Oil terminals & pumping stations Sulphur recovery
Slide 8: Areas of specialist expertise, refineries
Areas of specialist expertise, refineries Crude distillation units Vacuum distillation units Distillate and LPG treating units Catalytic reformers Hydrotreating units Isomerization units Alkylation units Acid gas removal units Sulphur recovery units Sour water stripping units C
Slide 9: Recently completed and current projects
Recently completed and current projects PROJECT COUNTRY PROJECT VALUE SCOPE Kashagan Field Development Kazakhstan US$ 1400mm EP&CM Kovykta Regional Gasification Project Russia US$ 1200mm PMC AGT Pipelines and Pumping stations Georgia & Azerbaijan US$ 1140mm EPC, JV Harweel Clusters Phase 2 A&B Facil
Slide 10: Execution model
Execution model Integrated EPC project management team (task force) Common infrastructure and Sharjah working methods Integrated electronic Business Management System (eBMS) Work placed where optimal Integrated Aberdeen project Mumbai technical offering exists along management with cost effi
Slide 11: Risk management
Risk management Business acquisition − portfolio approach to client and country − systematic contractual and commercial approach − thorough estimation and proposal preparation process − market diversification to counter cycles Project execution − depth of management / technical resources − perfo
Slide 12: Key messages
Key messages Excellent execution capability and track record Customer focus Rigorous risk identification and mitigation Managing resource challenges through relentless focus and through relationships with suppliers and subcontractors Positive demand outlook and positioning on programme dev
Slide 13: Sales & development
fA. VU S sae 2 w a Sales & development i H nH S oo 13
Slide 14: Industry overview
Industry overview Business historically cyclical − medium term outlook remains positive Driven by capital investment of international majors and national oil companies Current investment boom in core markets − Middle East − Africa − Kazakhstan Depth and quality of resources is key issue to t
Slide 15: Strategies for growth & risk management
Strategies for growth & risk management Geographic diversification − management of political risk − local presence as a differentiator Product and client diversification − markets served Execution model − FEED EPC O & M / Training − long term programmes of investment / repeat orders Synergie
Slide 16: Geographic diversification – risk management
Geographic diversification – risk management Main sales & development focus Middle East Qatar Saudi Arabia Kuwait UAE (Abu Dhabi) Iraq (long term) Oman Africa Algeria Nigeria Egypt Libya Tunisia CIS Kazakhstan Kashagan & Karachaganak programmes Russia Far East Thailand / Malaysia / Indonesia 16
Slide 17: Geographic diversification – risk management
Geographic diversification – risk management We aim for a balanced portfolio − 2005 mostly Middle East order intake − 2006 mostly Africa & CIS order intake Increase participation in long term programmes − less prone to energy price cycles − Kazakhstan − enhanced oil recovery − Oman 17
Slide 18: Product and client diversification
Product and client diversification Increased focus on National Oil Companies (NOCs) Counter oil & gas cycle − selective targeting − refinery − petrochemicals − offshore services Commercial mix − EPC lump sum turn key (LSTK) − EPCM lump sum (LS) − reimbursable with incentives 18
Slide 19: Product and client diversification (continued)
Product and client diversification (continued) Build on expertise in gas processing (especially sour in Middle East, Kazakhstan) Utility & offsites experience − transcends oil & gas, petrochemical & refinery Selective offshore modifications − synergy with Operations Services and Resources LN
Slide 20: Competition
Competition Move increasingly to “core” clients in order to compete with peer competition Differentiation through full service execution model Develop long terms positions with repeat business and negotiated awards Structural pricing advantage − high value / low cost engineering Brand valu
Slide 21: Medium term outlook
Medium term outlook Confident that awards in 2006 will exceed plan Positive outlook in Middle East, Africa and Kazakhstan − strong visibility of upcoming awards Solid platform for growth − execution model − geographic diversification − selective market diversification − risk management Main
Slide 22: Backlog progression
Backlog progression 2,250 30 2,000 25 1,750 1,500 20 Revenue months equivalent Revenue ($m) 1,250 15 1,000 750 10 500 5 250 - - H1 04 H2 04 H1 05 H2 05 H1 06 Revenue (6m) Backlog (at period end) Backlog/revenue (RHS) 22
Slide 23: Project Execution
Petrofac @ Project Execution 23
Slide 24: Project execution
Project execution Phases of a project Basic components of each phase Management of risk Controls and monitoring Feedback and lessons learned 24
Slide 25: Phase of a project
Phase of a project What is project execution? Proposal and bidding Contract realisation Handover Warranty 25
Slide 26: Proposal and bidding
Proposal and bidding Technical Proposal Contractual Commercial 26
Slide 27: Proposal approach
Proposal approach Proposals are the cornerstone of a good execution Manage the proposal as a project Mobilise the task force for the proposal Understand, analyse, dissect technical, contractual and commercial requirements Engage with client in clarification Identify third party involveme
Slide 28: Proposal approach
Proposal approach Technical / contractual submission Prepare and submit technical proposal including clear representation of understanding of requirements Prepare preliminary execution plans for the realisation phase including organisation, schedule, specifications and data sheets and basis of b
Slide 29: Proposal approach
Proposal approach Commercial proposal Zero pricing principle (no rule of thumbs, no estimation curves) Prepare TDR, BOM, PR and level 2 schedule Issue enquiries and obtain quotations Engage critical vendors in clarification and negotiations Evaluate data obtained against in house recent da
Slide 30: Conclusion
Conclusion Price with a high level of accuracy Preliminary execution plan allowing early start for critical activities Leadership that understand the project details & partially mobilised team Identification and alignment with subcontractors Clear identification and alignment of critical v
Slide 31: Project realisation
Project realisation Engineering Project Procurement services Project HSSE Construction realisation QA/QC Commissioning Project controls 31
Slide 32: Project realisation
Project realisation Extremely complex process of relations and inter-relations How do we ensure successful execution? − management principles − management approach − systems and procedures − monitoring and control − continuous feedback and enhancement 32
Slide 33: Project realisation
Project realisation Project management principles and approach Project controls Quality Assurance and control Health, Safety & Environmental Engineering & design Procurement Construction and commissioning 33
Slide 34: Project execution, approach
Project execution, approach Project management - approach Task force, with full in-house capability and competence Target driven schedules and plans QA and HSE are an integral part of the project activities Construction / commissioning driven schedule Decision making process based on techn
Slide 35: Project control
Project control Definition Control of schedule and budget (time & cost) Planning Checks and balances - independent functional head Planning − WPS packages with identified contractual time limits − identify critical mini milestones (forward indicators) − develop resources loading (human, financ
Slide 36: Project controls
Project controls Monitoring and control Structured progress reporting - daily, weekly, and monthly reports − data collection − progress measurement − up date of schedule − provide forecasts Structured project review meetings – bi-weekly, quarterly − functional head review − quarterly peer review
Slide 37: Quality Assurance & control
Quality Assurance & control Quality management principles Customer focused organisation Leadership and standard setting Involvement of right resources Process approach Continual improvement Factual approach to decision making Mutually beneficial supplier relationships 37
Slide 38: Quality Assurance & control
Quality Assurance & control Embedded within execution, not treated as a “bolt-on” Dedicated QA/QC teams and unique plan per project Clearly specified requirements to vendors and subcontractors Formal Business (Quality) Management System – procedures, audits, corrective action, lessons learne
Slide 39: HSSE - vision and commitment statement
HSSE - vision and commitment statement Vision Petrofac will be acknowledged by our industry as a standard setter in HSSE management, an expert in delivering high HSSE performance from diverse workforces in challenging operational environments. Commitment Petrofac Board of Directors has ultimate resp
Slide 40: HSSE
HSSE Differentiator Extensive in-house HSE capability - stand alone consultants Concept design / safety case / consequence modelling HSE studies - QRA / HAZID / HAZOP / SIL / ENVID / LAYOUT Detailed loss prevention design – passive & active Construction safety programmes / response procedu
Slide 41: HSSE
HSSE Principles / approach Identify project specifics and risk areas Develop programs and specific plans Set targets and KPIs across all levels of project staff Develop plans, monitor, report and improve Visible leadership Ensure execution plans embody safety Ensure method statements a
Slide 42: Engineering
Engineering Full in-house capability and control Cover all aspects from studies to detailed (Woking, Sharjah and Mumbai) Low cost operation centres - Mumbai, Chennai All disciplines / software Integrated data centric approach In-built Quality Assurance process Mature procedures and met
Slide 43: Engineering
Engineering 3D Computer Aided Design (CAD) Full multi-discipline 3D CAD capability − PDS and PDMS experience Formal model reviews / walk-though with client participation Constructability reviews / sequence planning Commissioning and start up input Early operations & maintenance input Acc
Slide 44: Engineering
Engineering 3D Computer Aided Design (CAD) (continued) Consistency & continuity / clash check / Quality Assurance Steelwork electronic export to fabrication – schedule & quality Piping Isometric electronic export to fabrication – schedule & quality Ease of revision / replication (second proc
Slide 45: Procurement
Procurement Integrated within project task force World wide capability - Europe, USA, Middle East offices Buying, inspection, expediting Deep understanding of market and vendors Use of client vendor lists Integrated material management system 45
Slide 46: Procurement
Procurement Centralised in Sharjah and strategic global work locations Over 100 highly experienced buyers, expediters, management and support staff Permanent procurement offices in Woking, Houston, Mumbai, Moscow and expediting centres In Italy and Korea Inspection through world wide frame a
Slide 47: Construction and commissioning
Construction and commissioning Construction principles Construction is subcontracted Early engagement of construction partner (during proposal phase) Ensure relationship is governed by an equitable contract Develop a complementary win-win relation Mobilise supervision early in the project
Slide 48: Construction
Construction Construction approach Experienced, hands-on construction management team − supervision, planning, quality, HSE, materials management − proper training and exposure Construction partner (local) − local materials, logistics, custom clearance, construction resources − local authorities
Slide 49: Commissioning
Commissioning Commissioning principles Use in-house resources Mobilise early enough to involve them in the formal reviews Input to engineering-equipment, model reviews Input to quality plans of vendors Early definition of commissioning handover systems/schedule Include vendor requirement
Slide 50: Commissioning
Commissioning Commissioning approach Preparation is key - detailed planning Early involvement of key commissioning personnel Align expectations with client Identify critical project activities Ensure quality vendor Factory Acceptance Testing (FAT) Establishment of robust preservation and
Slide 51: Handover
Handover Alignment with the client Structured system approach Output of project realisation Continuity and consistency from construction & commissioning Responsiveness and flexibility Team work and win-win relation 51
Slide 52: Warranty
Warranty Obtain back to back warranties Allow provisions − in-house resources − third party costs − materials Assign warranty coordinator (continuity) Responsiveness and problem solving Develop relations with the plant custodians Successful warranty is an output 52
Slide 53: Human resources & infrastructure
Human resources & infrastructure 53
Slide 54: Human resources – distribution
Human resources – distribution Current employee strength ~ 3,000 By location Manpower growth Manpower Growth By class 2,600 2,400 Sharjah 1,080 42% Engineering 1,275 49% Sites 700 27% 1,750 Construction 950 37% Mumbai 400 15% Procurement 70 3% Woking 240 9% Support & 305 12% others Russia 180 7% Tot
Slide 55: Human resources – challenges
Human resources – challenges Ability to recruit − awareness on educational campuses − integrated recruitment management system, CV databank & talent search − steps initiated to further enhance Petrofac brand and visibility in the job market − employee referral Ability to retain − industry best p
Slide 56: Infrastructure capability
Infrastructure capability Infrastructure is a great enabler for any growing organisation The business is supported by: − dedicated team to support all engineering/non-engineering software applications and the IT infrastructure − job sites connected to home office using latest communication techn
Slide 57: Infrastructure capability
Infrastructure capability The following initiatives are being implemented: − move to new building in Sharjah with state of the art facilities by mid 2008 − global Wide Area Network being finalised to improve efficiency and ease of operations − ERP being evaluated 57
Slide 58: Engineering & design services
Engineering & design services 58
Slide 59: Overview
Overview Providing consultancy, engineering and project implementation services to greenfield and brownfield hydrocarbons developments onshore and offshore Consultancy Services: − feasibility, conceptual design, field development planning − cost estimating, planning, technical & commercial risk
Slide 60: Consultancy
Consultancy Typically 1 man day to 10,000 hours work packages Ongoing client relationships are key to repeat business Process, risk and cost disciplines are dominant Primary business development activity: consultancy packages often convert into FEED and project implementation opportunities
Slide 61: Consultancy
Consultancy Ongoing studies and Conceptual Engineering for new and repeat clients: Statoil Algeria: Tinrhert Integrated GTL Project – Concept Studies & Cost Curves BG Tunisia: Hasdrubal Field Development – Concept Studies BG Egypt: Gaza Marine Field Development – Concept Studies BG Egypt: We
Slide 62: Hasdrubal Field Development
Hasdrubal Field Development Client: BG TUNISIA Scope: Conceptual Engineering Conceptual design of the offshore and on-shore facilities, including the subsea pipeline New 150 MMSCFD gas processing and treatment onshore facilities next to existing Hannibal plant 110km, 18 inch Multiphase Subsea
Slide 63: Engineering Services
Engineering Services Typically 20,000 to 100,000 manhours on a reimbursable basis or lump sum engineering scopes Woking-led, often with backup of Petrofac Sharjah, Mumbai or partner design services to maintain competitiveness Compressed project schedule often influences client to roll FEED sco
Slide 64: Engineering Services
Engineering Services OMV E&P – STRASSHOF DEVELOPMENT, AUSTRIA FEED – Oct ’06 to Jan ’07 Sour gas processing from two domestic Austrian fields Sulphur recovery, acid gas reinjection options being considered Includes multiphase gathering lines, gas & condensate export lines HYDRO – AZAR DEVELO
Slide 65: Projects
Projects Project execution encompasses full responsibility for delivery of project scope, on varied contractual basis: − PMC / EPCM − EP & CM − EPC Reimbursable, fixed/incentivised fees, selective lump sum arrangements Award normally through negotiation from concept or FEED stage 65
Slide 66: Projects
Projects LUNDIN – OUDNA FIELD DEVELOPMENT, TUNISIA PMC for deepwater FPSO project, following initial conceptual study and FEED work late ’04 Conversion and upgrade of existing FPSO; new subsea hardware & moorings Currently ramping up to full production BP IN AMENAS – IN AMENAS GATHERING SYSTEM
Slide 67: Brownfield
Brownfield Established 2004 as joint activity of E&C and OS divisions, to offer industry- leading capability to facilities management clients for modifications / refurbishment / upgrades / enhancement to operating facilities, mainly offshore Motto is “Designs that work and can be built” Team g
Slide 68: Wood & Gas Export Project (WaGE)
Wood & Gas Export Project (WaGE) Client: Talisman (nee Paladin Resources) Scope: EPC Initiated as concept study in 2003 after Petrofac awarded dutyholder contract on MonArb Petrofac undertook FEED & LLI procurement in 2004 and rolled into project execution in 2005 1,300 tonne compression modul
Slide 69: Strategy & risk mitigation
Strategy & risk mitigation Initial client alignment through Consultancy activities with value-adding propositions and solutions Leverage off breadth of Petrofac’s offering: equity, development, operations and training; enables continuous development of engineering services offering and our best
Slide 70: EPC project overviews
Petrofac @ EPC project overviews 70
Slide 71: Kashagan Field Development Project
Kashagan Field Development Project Project Details Project Kashagan Field Development Project Client AGIP KCO Location Kazakhstan Project Scope EPCM Contract Price Approx US$ 650 Million Start Date August 2004 Completion June 2008 Starting Point FEED Verification • Oil Treatment Unit : 2 X 165,000 B
Slide 72: Kashagan Field Development Project
Kashagan Field Development Project Key execution features Extensive work during proposal phase – continuity of team for execution Integrated execution focus - Sharjah & Mumbai - through task force concept Front end loading of key resources Rapid adoption / integration of FEED package and ass
Slide 73: Kashagan Field Development Project
Kashagan Field Development Project Key execution features (continued) Use of effective data management tool – DOCUMENTUM Regular design reviews HAZOP/ HAZID / SIL / PEER / constructability / maintainability Proactive vendor management – package approach Inspection coverage through resident i
Slide 74: Harweel Field Development Project
Harweel Field Development Project Client PDO (Shell) Project type Oil & Gas Production / Treatment Grass Roots / Tie-ins Scope Engineering, Procurement, Construction, Pre-Commissioning & Training Award Dec 2005 Schedule Approx three years Value Approx $ 1.0 billion 74
Slide 75: Harweel Field Development Project
Harweel Field Development Project Execution approach – management of risk Taskforce, full in-house capability / control QA and HSE embedded within execution Day 1 emphasis on commissioning & start-up deadline – focus on schedule Schedule for construction, engineering to meet commissioning &
Slide 76: Harweel Field Development Project
Harweel Field Development Project Key features High H2S in Wellhead Fluid (HSE) − Valve / Flange Minimisation − Plant Layout (QRA Modelling) − Construction Safety − Simops / (O&M) High H2S, CO2 − Corrosion / Metallurgy (CRA Overlay) High Pressure (Separation & Injection) – 100 Bar / 450 Bar
Slide 77: KOC Facility Upgrade Project
KOC Facility Upgrade Project Client: Kuwait Oil Company Project Type: Combination of fixed lump sum and re-measured brownfield project Contract Price: Approx $650 Million Award: May 2005 Completion Duration: Progressively from 26 to 32 months The project is part of the KOC development plan to meet a
Slide 78: KOC Facility Upgrade Project
KOC Facility Upgrade Project Key features Multiple brownfield sites Live facilities 90% of construction activities require Permit to Work (PTW) approval Manual excavation 78
Slide 79: KOC Facility Upgrade Project
KOC Facility Upgrade Project Key execution features Early mobilisation for pre-survey work Personnel familiar with existing facility inducted into project team Pre-bid agreement with construction subcontractor Nominated subcontractor had extensive experience with KOC Field engineering supp
Slide 80: Petrofac Operations Services International sales & development
Petrofac Operations Services International sales & development 80
Slide 81: Major milestones
Major milestones Acquisition of PGS Setup of PFMI GNPOC - Sudan KOC - Kuwait 2002 2003 2004 2005 2006 2007 SPGC - Iran DPE - UAE 81
Slide 82: International capabilities
International capabilities Operations support services Turnkey operations management Workforce development Well operations management Back-office support − finance & accounting − IT − HR − procurement − sales & marketing 82
Slide 83: Dubai Petroleum Establishment
Dubai Petroleum Establishment Scope of work Project Details - Operations Services Facilities manager during the transition stage - Life of Field - UAE Safety case holder during the transition stage Petrofac will employ the offshore staff and the onshore operations support group; around 1,100 e
Slide 84: Summary and close
Petrofac @ Summary and close
Slide 85: Key messages
Key messages Excellent execution capability and track record Customer focus Rigorous risk identification and mitigation Managing resource challenges through relentless focus and through relationships with suppliers and subcontractors Positive demand outlook and positioning on programme dev