Seadrill Limited · NYSE:SDRL
Seadrill — Howard Weil Energy Conference 2008
30 slides from Seadrill's conference presentation, April 2008
Slide 1: Howard Weil Energy Conference April 2008
Howard Weil Energy Conference April 2008 Kjell E Jacobsen - Seadrill Management AS New Orleans
Slide 2: Disclaimer
Confidential Disclaimer THIS PRESENTATION AND ITS ENCLOSURES AND APPENDICES (HEREINAFTER JOINTLY REFERRED TO AS THE “PRESENTATION” HAS BEEN PREPARED BY SEADRILL LIMITED. (”SDRL” , “SEADRILL or THE ”COMPANY”) EXCLUSIVELY FOR INFORMATION PURPOSES. THIS PRESENTATION HAS NOT BEEN REVIEWED OR REGISTERED
Slide 3: Contents
3 Contents Basic facts about Seadrill Strategy Critical success factors People Operations Newbuild execution Markets and contracts How long will the cycle last? Financial strategy Further opportunities West Phoenix Summary
Slide 4: Seadrill facts
4 Seadrill facts April 2005 April 2008 Employees 0 5,800 Rigs in operation 0 24+2 Newbuild orders 0 12 (20) Contract backlog 0 US$7.8bn Presence in countries 0 10 Market capitalization 0 US$10bn Enterprise value 0 US$14bn Built over the last three years through a series of newbuild orders and M&A ac
Slide 5: Fourth largest offshore driller
5 Fourth largest offshore driller (market capitalization) Source: Pareto
Slide 6: Strategy
6 Strategy Execute and complete current newbuild program Commence operations for newbuilds safely and efficiently Secure term contract at premium dayrates Financing structures geared towards capital repayment Return cash to shareholders through dividend Continue to grow the Company Open for consolid
Slide 7: Critical success factors - People
7 Critical success factors - People Current number of employees is 5,800 More than 25 different nationalities Recruited last 12 months 500 of which 290 for deepwater operations Planed deepwater recruitment 2008 619 people 50 people core crew 569 people non-core crew
Slide 8: Basic recruitment strategy
8 Basic recruitment strategy Units Core crew recruitment % complete West Phoenix 100% Core crews West Sirius 100% Internal and international West Hercules 100% recruiting West Polaris 100% West Aquarius 100% Crews generally West Capella 86% West Eminence 62% In the country we operate West Taurus 45%
Slide 9: Seadrill’s world-wide organization
9 Seadrill’s world-wide organization Regional headquarter Regional headquarter Regional headquarter Regional headquarters Current operations Future operations
Slide 10: Operations and newbuild projects
10 Operations and newbuild projects 3 drillships at Samsung Korea Norway - 5 units 3 Semis 1 Jack-up 1 Drillship 1 semi at Samsung Korea 2 semis at GOM - 1 unit Daewoo 1 Semi Korea 2 semi at Africa - 4 units Southeast Asia - 16 units Jurong 1 Semi-tender 4 Semi-tenders 1 Tender rig 7 Tender rigs Sin
Slide 11: Critical success factors - newbuild projects shallow water
11 Critical success factors - newbuild projects shallow water A total of 10 shallow water units 6 delivered on time & budget Remaining 4 are progressing as planned Deliveries on time and budget
Slide 12: Critical success factors - deepwater newbuild execution
12 Critical success factors - deepwater newbuild execution 10 deepwater units 2 delivered 1 within 30 days of plan 1 within 3 months of plan (due to customer initiated modifications) Remaining 8 are in the main progressing on schedule & budget
Slide 13: Seadrill newbuild characteristics
13 Seadrill newbuild characteristics Copies of existing units Proven technology Quality yards Delivery time reflects previous West Phoenix experience First units to be ordered Main yard installments to be paid on delivery Fixed price turnkey contracts West Sirius Newbuild construction strategy is pa
Slide 14: West Phoenix in transit to Norway
14 West Phoenix in transit to Norway
Slide 15: Modern floater fleet
15 Modern floater fleet Source: DnBNor Markets Average age floaters in 2010
Slide 16: Critical success factors - Markets and contracts
16 Critical success factors - Markets and contracts Extremely strong underlying fundamentals Shortage of deepwater capacity for start-up in 2008-2009 Excellent prospects for further organic growth in the tender rig market Jack-up market better than expected Strong market outlook
Slide 17: Floater demand worldwide
17 Floater demand worldwide 300 100% Utilization into 2011! 250 200 FLOATERS 150 100 50 ©2007 0 2004 2005 2006 2007 2008 2009 2010 Existing Contracts, Standard Floaters Existing Contracts, DW Floaters Options Standard Requirements Possible Standard Requirements Deepwater Requirements 22.08.2007 Poss
Slide 18: Ultra deepwater rig availability
18 Ultra deepwater rig availability Scares ultra-deepwater capacity next three years
Slide 19: Seadrill contract coverage
19 Seadrill contract coverage * 100 80 60 Percent 40 20 0 2008 2009 2010 2011 2012 2013 Deepwater units Tender rigs Jack-ups Strong order backlog of US$7.8bn * Options assumed exercised
Slide 20: Fixtures UDW units since 2006
20 Fixtures UDW units since 2006 US$ (’000) Source: DnBNor Markets
Slide 21: How long will this cycle last?
21 How long will this cycle last? Date Company Rig Rig type Operator Rate $'/day Old $'/day Duration Start-up 31.mar NE Paul Wolff 4GSS Petrobras 493 214 6Y nov.09 31.mar NE Roger Eason DS 1977 Petrobras 405 137 6Y mar.10 31.mar NE Leo Segerius DS 1981 Petrobras 351 125 6Y sep.09 31.mar NE Muravlenk
Slide 22: How long will this cycle last?
22 How long will this cycle last? Highly reputable companies are committing rigs up to and beyond 2015 Continued fleet renewal necessary No yard availability before 2011/2012
Slide 23: Financial strategy
23 Financial strategy Seek high gearing to support high equity return Monetize strong order backlog and sound credit ratings of customers Apply financing structures geared towards capital repayment Return cash to shareholders through dividend The Frontline/Ship Finance model Focus on equity return
Slide 24: Equity return
24 Putting shareholders money to work Two jack-ups currently on sale leasebacks; US$130-140m construction cost - sold for US$210m to Ship Finance Effectively > 100% leverage on project cost Full control of assets: BB-charter and purchase options Cash redeployed by SDRL in new projects/dividends Sale
Slide 25: The Frontline/Ship Finance model works
25 The Frontline/Ship Finance model works Relative Tanker Share Performance as of 8th of January 2008 (incl. Dividend reinvested) 35 Frontline Teekay A Shipping Corp Overseas B Shipholding Grp Omi Corp C 30 One dollar invested in each share 07.07.1997. Including dividends, re-invested at year-end ev
Slide 26: Dividends also works for offshore drillers
26 Dividends also works for offshore drillers Forward 12M P/E for Diamond Offshore Drilling (US) in USD as of 04/04/08 13.0 12.5 P/E 12 months …at Price/Book the forward pricing… difference is even 12.0 more dramatic! 11.5 11.0 10.5 10.0 9.5 9.0 8.5 Oct 2007 Nov Dec 2007 Jan 2008 Feb Mar Apr 2008 Di
Slide 27: Further growth opportunities
27 Further growth opportunities Further newbuilds? Acquisition of assets under construction, or Smaller newcomers? A sizable corporate transaction?
Slide 28: Seadrill hold (or have held) minority positions in other offshore drillers
28 Seadrill hold (or have held) minority positions in other offshore drillers Realized* Unrealized* Ocean Rig sold US$80m Aker Drilling sold US$8m Odfjell Invest sold US$5m Scorpion 21% US$19m SapuraCrest 16% US$12m PT Apexindo sold US$150m Seadrill will continue to be active * Approximate figures
Slide 29: Summary
29 Summary Delivery taken for the first two deepwater newbuilds Strong order backlog of some US$7.8 billion Continued strong market outlook Actively pursuing leveraged financing structures for existing as well as new assets Continue to look for consolidation opportunities but main focus is equity re
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