Slide 1: Half Year 2016 Earnings Update
Half Year 2016 Earnings Update © SBM Offshore 2016. All rights reserved. www.sbmoffshore.com
Slide 2: Disclaimer
Disclaimer Some of the statements contained in this presentation that are not historical facts are statements of future expectations and other forward-looking statements based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual
Slide 3: Key Messages
Key Messages Industry Outlook Brazil Improved Settlement Cost Structure Solid Foundation Share Free Cash Repurchase Inflection Project Delivery (1) Directional view is a non-IFRS disclosure, which assumes all lease contracts are classified as operating leases and all vessel joint ventures are propor
Slide 4: No. 1 FPSO Player Worldwide
No. 1 FPSO Player Worldwide The Company Lease Fleet 5 Regional Centers 12 FPSOs; 1 FPSO under construction 13 Shore Bases / Operations Offices 2 FSOs 4 Site Offices 1 Semi-sub 7,020 Employees (as of 12/31/15) 1 MOPU Financials in US$ billion Performance 1H2016 2016 Directional(1) Rev. Guidance 2.0 2
Slide 5: Delivering the Full Product Lifecycle
Delivering the Full Product Lifecycle Engineering Procurement 50 years of industry firsts Integrated supply chain Leading edge technology Global efficiencies Local sourcing Product Life Extension Construction Leader in FPSO relocation Strategic partnerships World class after sales Unrivalled project
Slide 6: 1H 2016 Review
1H 2016 Review Macro View 1H 2016 Financials Outlook © SBM Offshore 2016. All rights reserved. www.sbmoffshore.com
Slide 7: Total Overview
Total Overview (US$ Millions) Revenue Directional(1) IFRS 1,572 1,457 1,066 939 1H 2015 1H 2016 1H 2015 1H 2016 EBITDA Directional(1) IFRS 430 327 302 322 1H 2015 1H 2016 1H 2015 1H 2016 (1) Directional view is a non-IFRS disclosure, which assumes all lease contracts are classified as operating leas
Slide 8: Compliance
Compliance On July 16, 2016 the Company announced the signing of a US$273 million Settlement Agreement with Brazilian authorities and Petrobras The Public Prosecutor’s Office has submitted the Settlement Agreement for approval of the Fifth Chamber of the Federal Prosecutor Service – Approval establi
Slide 9: HSSE Results – 1H 2016
HSSE Results – 1H 2016 Health & Safety Security Injury Frequency 0.26 (on target) Robust performance 0 work related security incidents Leading culture KPI’s: Mgmt. visits, training, observations & Awareness & training Life Saving Rule reporting on track Increased focus on travel security Env
Slide 10: Macro View
1H 2016 Review Macro View 1H 2016 Financials Outlook © SBM Offshore 2016. All rights reserved. www.sbmoffshore.com
Slide 11: What the FPSO Market is Telling Us
What the FPSO Market is Telling Us 14 12 10 8 Further downward adjustment across all 6 6 segments 4 4 3 3 No awards so far in 2016 2 1 0 2015 2016E 2017E Targeted Lost / Declined Non-Targeted Targeted Won Market Estimate – Bear Case Market Estimate – Bull Case Remain cautious on awards for the next
Slide 12: Oil Dynamics
Oil Dynamics $140 $120 $100 US$ / bbl $80 $60 $40 Supply side rebalancing $20 continues $0 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Activity is still falling Brent Crude globally, driving production declines 98 Barrels Per Day (Millions) 96 94 92 90 88 Situation improving, but uncertainty Total Supply Tot
Slide 13: Commitment to Oil
Commitment to Oil Big Oil CapEx $80 30% $70 20% CapEx Spend (US$ Billions) $60 10% $50 0% CapEx continues its decline $40 -10% $30 Seeking equilibrium between -20% dividends and reinvestment $20 $10 -30% $0 -40% 1Q 12 1Q 13 1Q 14 1Q 15 1Q 16 CapEx Y-o-Y Change Big Oil continues to preserve cash flow
Slide 14: Crisis Leaving its Mark
Crisis Leaving its Mark Change in Market Cap Last Three Years Industry Majors Oil Services Companies Co. 1 -98% Co. 1 -30% Co. 2 -97% Co. 2 -20% Co. 3 -83% Co. 4 -71% Co. 3 -19% Co. 5 -66% Co. 4 -7% Co. 6 -55% Co. 7 -45% Co. 5 -5% Co. 8 -44% Co. 9 -40% Co. 6 -4% Co. 10 -29% Co. 7 6% Co. 11 -19% SBMO
Slide 15: Field Development Economics
Field Development Economics Global Liquid Cost Curve 90 Brent Equivalent Break-even Price (US$/bbl) Oil Sands 80 Deepwater 69 70 65 60 Onshore Others Shale/Tight 54 Oil 50 46 49 Deepwater has a lower 43 break-even than Shale/Tight 40 Oil 30 30 Shelf Midwater 20 Producing Development costs have 10 de
Slide 16: Brazil Case Study
Brazil Case Study SBM delivered 5 out of 8 closest to schedule Efficiencies can be achieved through similar projects Similar projects do not guarantee success – need competent contractors -10 0 10 20 30 40 50 60 A six month delay results in Delivery vs. Schedule (Months) ~US$400 million lower Non-SB
Slide 17: Experience Matters
Experience Matters Cidade de Maricá / Cidade de Saquarema benefited from significant learnings on Cidade de Ilhabela Repeatability decreases cost, reduces man-hour – 25% fewer man hours intensity and improves time – 25% less time required to complete module to delivery integration Must retain expert
Slide 18: Today's Challenges
well Today’s Challenges OFFSHORE LOCAL CONTENT FASTER ‘ cost DELIVERY > DEEPER HEAVIER FIELD TOPSIDES ™ DEVELOPMENT MODULES NEXT GENERATION FPSO } COMPLEX LONGER g SUBSEA DESIGN LIFE LAYOUT CHALLENGING FLUIDS AND PROCESSING 18
Slide 19: The Fast4ward Solution
The Fast4ward Solution Adapting Design Maturity Ease of Standardization Hull & Utility Systems Topsides Water Topsides Oil Topsides Gas Mooring & Risers Accommodation Injection Processing Processing Negotiations are on-going with shipyards Aim to have a signed agreement for one hull + options by YE1
Slide 20: Standardized & Customized Solution
Standardized & Customized Solution 20
Slide 21: Key Takeaways
Key Takeaways Uncertainty remains; lack of final investment decisions Transformation of competitive landscape across the industry MACRO Deepwater economics must continue to improve New FPSO projects face more challenges than ever before Customized standardization essential in capturing experience EX
Slide 22: 1H 2016 Financials
1H 2016 Review Macro View 1H 2016 Financials Outlook © SBM Offshore 2016. All rights reserved. www.sbmoffshore.com
Slide 23: Underlying Directional Performance
Underlying Directional(1) Performance (US$ Millions) Directional(1) Revenue Directional(1) EBITDA Directional(1) EBIT 22 349 327 939 1H 2016 22 146 124 Reported Exceptional items Underlying Reported Exceptional items Underlying Directional(1) Revenue Directional(1) EBITDA Directional(1) EBIT 430 0 4
Slide 24: Turnkey P&L
Turnkey P&L (US$ Millions) Directional(1) 1H 2015 1H 2016 Variance Revenue 1,030 338 (692) Gross Margin 282 98 (184) Overheads (79) (68) 11 EBIT 171 2 (169) Depreciation, amortization and impairment (4) (5) 1 EBITDA 175 6 (169) Directional(1) Comments Projects In None Projects Out Cidade de Maricá 1
Slide 25: Lease and Operate P&L
Lease and Operate P&L (US$ Millions) Directional(1) 1H 2015 1H 2016 Variance Revenue 542 600 58 Gross Margin 168 183 15 Overheads (12) (13) (1) EBIT 149 170 21 Depreciation, amortization and impairment (167) (198) (31) EBITDA 316 368 52 Directional(1) Comments Vessels In Cidade de Maricá and end 201
Slide 26: Group P&L
Group P&L (US$ Millions) Directional(1) 1H 2015 1H 2016 Variance Revenue 1,572 939 (633) Gross Margin 450 281 (168) Overheads (150) (106) 43 Other operating income / (expense) (45) (51) (6) EBIT 255 124 (131) Depreciation, amortization and impairment (175) (203) (28) EBITDA 430 327 (103) Net financi
Slide 27: Cost Savings Ahead of Plan
Cost Savings Ahead of Plan Gross Cost Group Employee Benefits (Full-time employees, excluding contractors) ~$720 ~$(120) ~ $600 ~ $(120) $(270) ~$480 ~ $(30) MILLION ~$450 2014 (1) 2015 (1) 2016E (2) 2017E (2) Cost Savings Total announced expected savings of US$150 million Expect to realize US$270 m
Slide 28: Group Balance Sheet
Group Balance Sheet (US$ Millions) Dec-31-15 Jun-30-16 Variance Comment Property, plant and equipment 1,686 1,577 (109) Depreciation of assets Investments in associates and 4,052 5,742 1,690 Delivery of Maricá and net results of JVs other financial assets Two FPSOs under construction and delivery of
Slide 29: Development of Group Cash Position
Development of Group Cash Position (US$ Millions) IFRS Cash Flow Bridge $2,000 $1,050 $(51) $(547) $1,500 $(95) $(5) $(45) $1,039 $1,000 $217 $515 $500 $0 Cash Cash from New Loans Investments FL(1) Loan Interest Paid Other Dividends Paid Cash Dec-31-15 Operations Redemption to Shareholders Jun-30-16
Slide 30: Group Net Debt
Group Net Debt (US$ Millions) Proportional IFRS $8,000 $6,000 $5,208 $5,227 $4,000 $3,147 $3,079 $2,000 $0 ($2,000) FY15 1H16 FY15 1H16 Proportional Proportional IFRS IFRS Bridge Loans Revolving Credit Other Project Finance Cash 30
Slide 31: Group Proportional Borrowings Overview
Group Proportional Borrowings Overview (US$ Millions) 1H16 Borrowings(1) 1H16 Undrawn Facilities + Cash 1H16 1H16 $4,094 $2,060 Proportional Proportional Proportional Debt Repayment Profile(1) 54% of borrowings $500 $432 $433 $438 repaid by 2022 $403 $395 $400 $356 $339 $317 $300 $233 $217 $180 $188
Slide 32: Funding
Funding Undrawn Credit Facilities + Cash = US$2.1 bn Improvements in RCF Headroom Average cost of debt: FY15 4.1% v. 1H16 4.7% 32
Slide 33: Outlook
1H 2016 Review Macro View 1H 2016 Financials Outlook © SBM Offshore 2016. All rights reserved. www.sbmoffshore.com
Slide 34: Scheduled for Delivery
Scheduled for Delivery FPSO Cidade de Maricá Producing and on hire as of February 7, 2016 Initial charter contract of 20 years FPSO Cidade de Saquarema Producing and on hire as of July 8, 2016 Initial charter contract of 20 years FPSO Turritella Vessel in the U.S. Gulf of Mexico Ready for Start-Up e
Slide 35: Directional Backlog
Directional(1) Backlog(2) (US$ Billions) US$ 18.0 bn (as of June 30, 2016) 1H16 Revenue Lease & Operate Backlog Remaining Backlog 2.0 1.5 1.0 $17.7 bn 0.5 0.0 $0.3 bn Lease & Operate Average of 63% of L&O backlog represents operating cash flow(3) Turnkey L&O Average Portfolio Duration: 13.4 years(4)
Slide 36: Cash Management
Cash Management Commitments Options Share Debt Amortization Cash Dividend Repurchase Settlement Payments Inorganic MLP Growth Investment in Our Future Build War Internal Chest Investment Working Capital Unwind Organic Reserves for Restricted Cash Deleveraging Growth 36
Slide 37: Initiating Share Repurchase Program
Initiating Share Repurchase Program The Company plans to repurchase up to EUR 150 million of outstanding ordinary shares Executed under delegation provided by the Annual General Meeting of Shareholders of the Company held on April 6, 2016 – Beginning August 11, 2016 – Ending December 30, 2016 at the
Slide 38: Appointment of New CFO
Appointment of New CFO Douglas Wood nominated as new CFO – 45 years old, British, Oxford, Chartered Management Accountant (CIMA) – 23 years at Shell, extensive finance and oil & gas background – CFO of Showa Shell Shekiyu K.K. in Japan, listed in Tokyo Extraordinary General Meeting (“EGM”) to be hel
Slide 39: 2016 Guidance
2016 Guidance Reiterate Directional(1) Revenue guidance: At least US$2.0 billion – Turnkey: US$0.6-0.7 billion – Lease & Operate: US$1.3-1.4 billion Reiterate Directional(1) EBITDA guidance: Around US$750 million Directional(1) Capital Expenditure(2) guidance including the three finance lease vessel
Slide 40: Appendix
Appendix © SBM Offshore 2016. All rights reserved. www.sbmoffshore.com
Slide 41: IFRS 10 & 11
IFRS 10 & 11 Lease Joint Ventures Contract SBM Share % Directional(1) IFRS Type FPSO N’Goma FPSO FL 50% Proportional Equity FPSO Saxi Batuque FL 50% Proportional Equity FPSO Mondo FL 50% Proportional Equity FPSO Cdde de Ilhabela FL 62.25% Proportional Full consolidation FPSO Cdde de Maricá FL 56% Pr
Slide 42: Group Loans & Borrowings
Group Loans & Borrowings (US$ Millions) Net Book Value as of June 30, 2016 Proportional Full Amount IFRS (Business Ownership) PROJECT FINANCE FACILITIES DRAWN FPSO Capixaba relocation $ – $ – $ – FPSO Espirito Santo – – – FPSO Aseng – – – FPSO Cidade de Paraty 758 758 383 MOPU Deep Panuke 354 354 35
Slide 43: Revolving Credit Facility
Revolving Credit Facility Key Characteristics Covenant Calculations Historical and Estimated Awards Amount US$1.0 billion Tangible Net Worth divided by Total 6 years + one-year extension Solvency Tangible Assets > 25% Tenor Ratio Door-to-door maturity of 7 years – Solvency Ratio = 1H16 32.7% vs. FY1
Slide 44: Revised RCF Covenant Definitions
Revised RCF Covenant Definitions Key Financial Covenant Definition Solvency Ratio Tangible Net Worth(1) divided by Total Tangible Assets(2) > 25% Leverage Ratio Consolidated Net Borrowings(3) divided by Adjusted EBITDA(4) – <3.75x at June 30, 2016 – <4.25x at December 31, 2016 – <4.50x at June 30, 2
Slide 45: Floating Solutions
Floating Solutions Current: Future: Focus on top-end segment Leverage core competencies FPSOs Floating LNG (FLNG) Turret moorings Semisubmersible & TLP production units Turnkey Sale or Lease & Operate Brownfields; Operating and Maintenance 45
Slide 46: Competitive Landscape
Competitive Landscape Small Conversions – Large Conversions – <60,000 bbls / day 80,000-150,000 bbls / day Newbuilds – >200,000 bbls / day 46
Slide 47: SBM Lease Portfolio
SBM Lease Portfolio L&O Portfolio Average Duration: 13.4 years(1) Vessel Name Field Name Client Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 LEASE AND OPERATE FPSO 1 FPSO Cdde d
Slide 48: © SBM Offshore 2016. All rights reserved. www.sbmoffshore.com
© SBM Offshore 2016. All rights reserved. www.sbmoffshore.com