Subsea 7 S.a. · OSL:SUBC

Subsea 7 — Investor Presentation (June 2018)

65 slides from Subsea 7's investor presentation, June 2018

Slide 2: Index
Index What we do Our differentiators Our priorities Our outlook Our financials Appendix 2 © Subsea 7 - 2018 subsea7.com
Slide 3: Subsea 7 – In Summary
Subsea 7 – In Summary Subsea 7 is one of the world’s leading global contractors in seabed-to-surface engineering, construction and services to the offshore industry. We provide cost-effective technical solutions to enable the delivery of complex projects in all water depths and challenging environme
Slide 5: Our capabilities and scale in offshore energy
Our capabilities and scale in offshore energy Energy Lifecycle Offshore Worldwide Technology Developments services capabilities locations enablers • Oil • Concept • Pipe-lay • Conventional • Long-distance tie-backs • Gas • Design • Construction • Deepwater • Pipeline • Renewables • Engineer • IRM •
Slide 6: Our market segments
Our market segments 2017 Revenue $4.0 billion i-Tech Services Leading Life of Field partner for SURF and Conventional clients throughout the oil and Delivering subsea systems gas industry that connect seabed wellhead $2.7bn structures to surface (69%) production facilities $0.3bn (7 %) $1.0bn (24%)
Slide 7: Some of our activities
Some of our activities Sole (Australia) WND Ph.2/GFR (Egypt) Mad Dog 2 (GOM) Tyra (Denmark) Beatrice (UK) Oda (Norway) i Tech Services PLSVs (Brazil) 7 © Subsea 7 - 2018 subsea7.com
Slide 8: Our market segments: SURF and Conventional
Our market segments SURF and Conventional • Subsea Umbilicals, Risers and flowlines (SURF) • Connecting seabed wellhead structures to surface production facilities • Over 20 year track record: safe and efficient execution on over 1,000 projects • Operating in remote and harsh environments with compl
Slide 9: Our PLSV activities offshore Brazil
Our PLSV activities offshore Brazil Servicing life of field and new construction needs for Petrobras in all water depths • Long-term day-rate contracts 550t purpose-built vessels capable • Performing production maintenance of laying pipe in ultra-deep water and new construction activities • $1.2bn o
Slide 10: Our market segments: i-Tech Services
Our market segments i-Tech Services • Over 165 ROVs and a • Leading Life of Field partner fleet of ROV support for clients throughout the oil vessels and gas industry • Global business with • Over 35 year’s experience operational bases in the UK, Brazil, the US and • Bespoke ROV tooling Australia so
Slide 11: Our market segments: Renewables and Heavy Lifting
Our market segments Renewables and Heavy Lifting • Two specialist crane vessels Stanislav Yudin and Oleg Strashnov • Heavy lifting operations for oil and gas developments since 1990’s • Operations performed by Seaway Heavy Lifting (SHL), a wholly-owned • 10 year’s experience of wind farm subsidiary
Slide 12: Backlog and order intake
Backlog and order intake Backlog of $5.3 billion(1), as at 31 March 2018 • $829 million new awards Backlog by Execution Date Backlog by Service Capability and escalations awarded in the first quarter SURF SURF and and Conventional (2) 2020+ $4.4bn Conventional • Johan Castberg, (Norway) $4.4bn(2) $1
Slide 13: Our order intake
Our order intake Number of announced projects (>$50m) 4 4 Quarter 2 Statoil IRM (Norway) 3 3 Life of Field PUPP (Nigeria) 2 2 conventional Alligin (UK) 1 Pipe-in-pipe tie-back 0 0 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 13 © Subsea 7 - 2018 subsea7.com
Slide 14: Our shared Core Values
Our shared Core Values What is most important to us as we conduct our business. Safety Performance We are committed to an incident-free workplace We are predictable and reliable in our every day, everywhere. We continue to minimise performance. We always strive for the impact of our activities on th
Slide 15: Index
Index What we do Our differentiators Our priorities Our outlook Our financials Appendix 15 © Subsea 7 - 2018 subsea7.com
Slide 16: Our value proposition
Our value proposition Experience Creating value for our Clients through strong long-term relationships and excellent execution Expertise Creating value for our Shareholders by investing for the future while maintaining Scale a strong financial position Creating value for our People with Reliability
Slide 17: Competitive landscape for full life cycle integrated solutions
Competitive landscape for full life cycle integrated solutions EXPLORATION DOWN-HOLE / FEED SPS / EPIC LIFE OF FIELD/ DECOMISSIONING GEOPHYSICS DATA MANUFACTURE WELL SERVICES 17 © Subsea 7 - 2018 subsea7.com
Slide 18: Our People
Our People • We deliver projects based on our expertise and know-how 10,500 people in our workforce at end 2017 • Our highly skilled and experienced workforce deliver projects safely and reliably 4,400 6,100 Onshore people Offshore people 18 © Subsea 7 - 2018 subsea7.com
Slide 24: A modern and versatile fleet of 32 vessels
A modern and versatile fleet of 32 vessels Vessels by Ownership type Ownership Vessels by Age 9 7 0-5 years 5 Owned 6-11 years 27 Chartered 16 12+ years Vessels by Operational category Hook-up Heavy Lifting Horizontal flexlay Life of Field support Diving Support Rigid-lay / Heavy Construction Vertic
Slide 25: 32 Vessels including 29 active vessels at end Q1 '18
32 Vessels including 29 active vessels at end Q1 ‘18 17 vessels released since May 2015 Skandi Seven (returned to owner Q3 ‘15) Seven Polaris (recycled Q4 ‘15) Havila Subsea (returned to owner Q4 ‘15) Acergy Viking (returned to owner Q4 ‘15) Skandi Skansen (returned to owner Q4 ’15) Skandi Neptune (
Slide 26: Our Partnerships
Our Partnerships • We have formed partnerships with Recent successful completion of the Volund Infill project for several clients in an extension of our Aker BP collaborative approach to client engagement • Engage early and develop long-term collaborative relationships with mutual benefits • AKER BP
Slide 27: Local Presence
Local Presence Our local presence ensures we have in-country leadership teams and the capability to respond to our client’s needs in all the primary offshore energy regions 27 © Subsea 7 - 2018 subsea7.com
Slide 28: Index
Index What we do Our differentiators Our priorities Our outlook Our financials Appendix 28 © Subsea 7 - 2018 subsea7.com
Slide 29: Subsea 7's approach and strategy through the cycle
Subsea 7’s approach and strategy through the cycle New-build vessels: PLSVs Seven Arctic Global alliance with Seven Kestrel Cost reduction Acquisition: Acquisition: KBR/ Granherne programmes Middle East Renewables 2015/2016 Investment: Early engagement 2015 2016 2017 2018 New rigid reel-lay Creation
Slide 30: Subsea Integration Alliance
Subsea Integration Alliance + = Enhanced production Reduced cost and risk Pore-to-shore perspective 30 © Subsea 7 - 2018 subsea7.com
Slide 31: Subsea Integration Alliance current projects
Subsea Integration Alliance current projects • Mad Dog 2 project, US GoM • Fortuna project, Equatorial Equatorial Guinea • Integrated ways of working – Cost and schedule assurance • Lazy-wave risers – Risk mitigation • Includes IRM services • Swagelining technology • FID pending • Dalmatian project,
Slide 32: Increased focus on integrated solutions
Increased focus on integrated solutions The proposed joint venture will: 2018 Intent to develop Subsea Integration Alliance into a • Share access to parent company joint venture business resources and expertise 2017 Largest integrated award: the Mad Dog 2 project by BP Integrated award: the Otter pr
Slide 33: Integrated full field lifecycle joint venture value proposition
Integrated full field lifecycle joint venture value proposition Integrated optimized Improved EPIC economics: Integrated technologies to design of the entire lower cost, reduced risk and extend tieback distance and subsea facility shorter schedule improve recovery Reduced Total Cost of Ownership Cap
Slide 34: Strengthened early engagement capability
Strengthened early engagement capability • Engaging early provides our Clients with the right choices for cost-efficient solutions at the concept and design phase • In February 2018, Subsea 7 agreed to acquire 60% holding in Xodus Group, a leading energy consultancy, from Chiyoda, forming a joint ve
Slide 35: Investment in growth of offshore renewable energy
Investment in growth of offshore renewable energy • Offshore renewable energy installation market is forecast to grow at 11% CAGR to 2022 • Larger wind turbines and bigger offshore fields require specialist vessels and experienced contractors 2015: Award of the $1.3 billion Beatrice project to Subse
Slide 36: Drivers of lower costs for projects
Drivers of lower costs for projects • Earlier engagement enables better engineering, introduction of Earlier engagement integrated and full lifecycle solutions and application of new Closer collaboration technology Leaner processes Supply chain deflation • Closer collaboration with alliances and par
Slide 37: Drive business improvements to lower costs
Drive business improvements to lower costs Project A Actively adapt to industry conditions without losing focus on long term strategic priorities Initial price Concept optimsiation Angolan Content Local Competition Sourcing Sourcing, Final price reduction content and specification specifications, So
Slide 38: Adjusted EBITDA progression
Adjusted EBITDA progression • 2018 guidance: Revenue broadly in line, Adjusted EBITDA percentage margin significantly lower compared to 2017 Average 32% Average 21% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 | 2014 | 2015 | 2016 | 2017 | 2018 38 © Subsea 7 - 2018 subsea7.
Slide 39: Our principal margin drivers
Our principal margin drivers Total vessel Number of projects Backlog value by Costs ($bn) utilisation >$300m completed year awarded 82% 2012 72% 66% 61% and earlier 2.0 2017 2013 1.4 1.0 0.8 2014 0.8 0.8 0.6 2015 0.5 2016 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Reduction in offsh
Slide 40: Priorities for cash
Priorities for cash Invest in the business • Targeted acquisitions to enhance our strategic growth areas Maintain investment • $730 million net cash at 31 March grade profile 2018 • $1.5 billion returned to shareholders in special dividends Return to shareholders and buybacks since 2011 40 © Subsea
Slide 41: Index
Index What we do Our differentiators Our priorities Our outlook Our financials Appendix 41 © Subsea 7 - 2018 subsea7.com
Slide 42: Offshore oil & gas market outlook
Offshore oil & gas market outlook Offshore greenfield capex in approval year, by sensitivity to oil price USD Billion 250 Source: Rystad Energy Historical sanctions Sanctioned YTD <50 USD/bbl 50-60 USD/bbl >60 USD/bbl 200 150 100 50 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Slide 43: Offshore wind energy outlook
Offshore wind energy outlook • Technology advances are Offshore Renewables Installation Market by Region 8.00 leading to wind farm developments achieving 7.00 economic energy 6.00 production independent 5.00 of government subsidy US$bn 4.00 3.00 • Market analysts forecast 11% compound annual 2.00 gr
Slide 44: Business Unit Outlook
Business Unit Outlook SURF and Conventional Large gas projects in Mozambique, Australia, Middle East and India Saudi Arabia LTA North Sea tie-backs West Africa conventional and deep water Brazil pre-salt ultra-deep Renewables and Heavy Lifting Wind farms offshore the UK, Germany, France, the Netherl
Slide 45: Summary
Summary • Market award activity in offshore oil and gas has begun to recover • Subsea 7 has taken cyclical opportunities to grow and strengthen its business for the future and is positioned well for the next phase of the cycle • Subsea 7’s Values-driven strategy and strong financial position have su
Slide 46: Index
Index What we do Our differentiators Our priorities Our outlook Our financials Appendix 46 © Subsea 7 - 2018 subsea7.com
Slide 47: Q1 2018 results
Q1 2018 results FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS • Revenue $809 million • Lower activity levels due to • Adjusted EBITDA $103 million seasonality and market downturn • Adjusted EBITDA margin 13% • Vessel Utilisation • Diluted loss per share $0.03 Active: 58% Total: 52% • Order backlog $5.
Slide 48: Financial guidance
Financial guidance 2018 Guidance Revenue (1) Broadly in line with 2017 Adjusted EBITDA percentage margin Significantly lower than 2017 Administrative expense $260 million - $280 million Net finance cost $0 million - $5 million Depreciation and Amortisation $420 million - $440 million Full year effec
Slide 49: Income statement – Q1 highlights
Income statement – Q1 highlights Three months ended 31 March 2018 31 March 2017 In $ millions, unless otherwise indicated Unaudited Unaudited Revenue 809 897 Net operating income/(loss) (NOI) (8) 169 Income/(loss) before taxes (29) 206 Taxation 12 (60) Net income/(loss) (18) 146 Adjusted EBITDA(1) 1
Slide 50: Income statement – supplementary details
Income statement – supplementary details Three months ended 31 March 2018 31 March 2017 In $ millions Unaudited Unaudited Administrative expenses (74) (48) Share of net loss of associates and joint ventures (7) (7) Depreciation and amortisation (111) (99) Net operating income/(loss) (8) 169 Net fina
Slide 51: First Quarter Business Unit performance
First Quarter Business Unit performance Revenue Net Operating Income $169m $11m $809m $897m $220m Renewables & Heavy $173m Lifting $76m $52m $151m i-Tech Services SURF & Conventional $584m $602m $(8)m $13m ($4m) ($4m) ($4m) Q1 2018 Q1 2017 Q1 2018 Q1 2017 Note: Corporate segment (not presented): net
Slide 52: Segmental analysis
Segmental analysis For the three months ended 31 March 2018 Renewables & In $ millions (unaudited) SURF & Conventional i-Tech Services Corporate TOTAL Heavy Lifting Revenue 584 52 173 - 809 Net operating income/(loss) 13 (4) (4) (13) (8) Finance income 5 Other gains and losses (23) Finance costs (4)
Slide 53: Liquidity and financial strength
Liquidity and financial strength Robust balance sheet • Net cash of $730 million Strong financial flexibility • Cash and cash equivalents of $1 billion • Borrowings of $277 million • Five-year $656 million revolving credit facility undrawn As at 31 March 2018 53 © Subsea 7 - 2018 subsea7.com
Slide 54: Summary balance sheet
Summary balance sheet 31 Mar 2018 31 Dec 2017 31 Mar 2018 31 Dec 2017 Unaudited Audited Unaudited Audited In $ millions In $ millions Assets Equity & Liabilities Total equity 6,013 5,941 Non-current assets Non-current liabilities Goodwill 722 701 Non-current portion of borrowings 252 258 Property, p
Slide 55: Summary of first quarter 2018 cash flow
Summary of first quarter 2018 cash flow 103 (60) $m 1,109 (23) (78) (24) (20) 1,007 Cash at EBITDA Decrease in Tax Capex Acquisitions Other Cash at 1 January 2018 net operating paid 31 March 2018 liabilities • Net cash of $730 million at 31 March 2018 • $656 million of undrawn committed credit facil
Slide 56: Summary of 2018 cash flow
Summary of 2018 cash flow $ millions Cash and cash equivalents at 31 Dec 2017 1,109 Includes decrease of $60 million in net operating Net cash generated from operating activities 6 liabilities Includes expenditure on PPE of $78 million and Net cash flow used in investing activities (97) cash outflow
Slide 57: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA Net income to Adjusted EBITDA Three Months Ended 31 March 2018 Three Months Ended 31 March 2017 Unaudited Unaudited For the period (in $millions) Net income/(loss) (18) 146 Depreciation, amortisation and mobilisation 111 99 Net remeasurement gain on business combina
Slide 58: 2017 costs overview
2017 costs overview $1.5 billion cost savings on vessel and workforce since 2014: 50% reduction $ bn Vessels and other costs(2): Including 7 6.0bn vessel costs, onshore facilities, IT 6 infrastructure and other fixed overheads 0.8 5 0.4 4.2bn Depreciation and amortisation: excludes non-recurring imp
Slide 59: Appendix
Appendix Major project progression Corporate responsibility ADR Forward looking statement Contact details 59 © Subsea 7 - 2018 subsea7.com
Slide 60: Corporate Responsibility
Corporate Responsibility • At Subsea 7 we are committed to operating in a safe, ethical and responsible manner Number of employees Lost-time incident Clean Operations completing compliance Frequency rate (%) & ethics e-learning 5,000 3,544 3,699 0.06 0.06 3,800 0.05 3,300 1,750 2015 2016 2017 2015 2
Slide 61: Major project progression
Major project progression • Continuing projects >$100m between 5% and 95% complete as at 31 March 2018 excluding PLSV and Life of Field day-rate contracts Atoll (Egypt) Announced Catcher (UK) size of project Aasta Hansteen (Norway) Sonamet (Angola) Major (Over $750m) Culzean (UK) Very Large Beatrice
Slide 62: Projects and clients list
• Beatrice wind farm, BOWL • Aasta Hansteen, Statoil • Catcher, Premier • Maria, Wintershall • Culzean, Maersk • Snorre, Statoil • Callater, Apache • Aerfugl, Aker BP • Western Isles, Dana • Nova, Wintershall • Montrose, Talisman • Johan Castberg, Statoil • USC & Pipelay, Shell • SCIRM, BP • Al-Khal
Slide 63: ADR information
ADR information ADR Ticker: SUBCY ADR type: Sponsored Level 1 ADR Listing venue: OTC CUSIP: 864323100 Ratio: 1 ADR : 1 Ordinary Share Depositary bank: Deutsche Bank Trust Company Americas ADR broker helpline: New York: +1 8662492593 London: +44 207 547 6500 Hong Kong: +852 2203 7854 e-mail: db@astfi
Slide 64: Forward-looking statements
Forward-looking statements Certain statements made in this presentation may include ‘forward-looking statements’. These statements may be identified by the use of words like ‘anticipate’, ‘believe’, ‘could’, ‘estimate’, ‘expect’, ‘forecast’, ‘intend’, ‘may’, ‘might’, ‘plan’, ‘predict’, ‘project’, ‘s
Slide 65: Contact: Isabel Green, Investor Relations Director
Contact: Isabel Green, Investor Relations Director eMail: isabel.green@subsea7.com Direct Line +44 20 8210 5568 Website www.subsea7.com 65 © Subsea 7 - 2018 subsea7.com

Subsea 7 — Investor Presentation (June 2018) on 6ix

Subsea 7 — Investor Presentation (June 2018)

Slide 1: Investor Presentation June 2018

Slide 2: Index

Slide 3: Subsea 7 – In Summary

Slide 4: © Subsea Subsea 7 7 - - 2018 subsea7.com

Slide 5: Our capabilities and scale in offshore energy

Slide 6: Our market segments

Slide 7: Some of our activities

Slide 8: Our market segments: SURF and Conventional

Slide 9: Our PLSV activities offshore Brazil

Slide 10: Our market segments: i-Tech Services

Slide 11: Our market segments: Renewables and Heavy Lifting

Slide 12: Backlog and order intake

Slide 13: Our order intake

Slide 14: Our shared Core Values

Slide 15: Index

Slide 16: Our value proposition

Slide 17: Competitive landscape for full life cycle integrated solutions

Slide 18: Our People

Slide 19: Our technology focus areas

Slide 20: Riser Systems

Slide 21: © Subsea 7 - 2018 subsea7.com

Slide 22: Pipelines Bundles

Slide 23: Pipeline Bundles

Slide 24: A modern and versatile fleet of 32 vessels

Slide 25: 32 Vessels including 29 active vessels at end Q1 '18

Slide 26: Our Partnerships

Slide 27: Local Presence

Slide 28: Index

Slide 29: Subsea 7's approach and strategy through the cycle

Slide 30: Subsea Integration Alliance

Slide 31: Subsea Integration Alliance current projects

Slide 32: Increased focus on integrated solutions

Slide 33: Integrated full field lifecycle joint venture value proposition

Slide 34: Strengthened early engagement capability

Slide 35: Investment in growth of offshore renewable energy

Slide 36: Drivers of lower costs for projects

Slide 37: Drive business improvements to lower costs

Slide 38: Adjusted EBITDA progression

Slide 39: Our principal margin drivers

Slide 40: Priorities for cash

Slide 41: Index

Slide 42: Offshore oil & gas market outlook

Slide 43: Offshore wind energy outlook

Slide 44: Business Unit Outlook

Slide 45: Summary

Slide 46: Index

Slide 47: Q1 2018 results

Slide 48: Financial guidance

Slide 49: Income statement – Q1 highlights

Slide 50: Income statement – supplementary details

Slide 51: First Quarter Business Unit performance

Slide 52: Segmental analysis

Slide 53: Liquidity and financial strength

Slide 54: Summary balance sheet

Slide 55: Summary of first quarter 2018 cash flow

Slide 56: Summary of 2018 cash flow

Slide 57: Reconciliation of Adjusted EBITDA

Slide 58: 2017 costs overview

Slide 59: Appendix

Slide 60: Corporate Responsibility

Slide 61: Major project progression

Slide 62: Projects and clients list

Slide 63: ADR information

Slide 64: Forward-looking statements

Slide 65: Contact: Isabel Green, Investor Relations Director