Seadrill Limited · NYSE:SDRL
Seadrill — Q1 2007 Earnings Presentation
37 slides from Seadrill's earnings presentation, 2007
Slide 1: First quarter results 2007 Conference call
First quarter results 2007 Conference call
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 1Q results 2007 Current operations Newbuilding program Contract status Market development and outlook Human resources Summary
Slide 4: Highlights 1Q 2007
Highlights 1Q 2007 Net income of US$168.2 million and EPS of US$0.44 All drilling units in operations with the exception of West Titania Jack-up sale and leaseback with Ship Finance for West Prospero at US$210 million Disposal of FPSOs Crystal Ocean and Crystal Sea with gains of US$123.3 million New
Slide 5: Condensed Income Statement 1Q 2007
5 Condensed Income Statement 1Q 2007 Actual Actual Unaudited accounts in USD million 1Q07 4Q06 Revenues Operating revenues 305.9 309.9 Reimbursables 28.2 48.8 Other revenues 145.1 28.4 Total revenues 479.2 387.1 Operating expenses Vessel and rig operating expenses 178.3 197.1 Reimbursable expenses 2
Slide 6: Condensed Consolidated Segment Information - Mobile Units
6 Condensed Consolidated Segment Information Mobile Units * Actual Actual Unaudited accounts in USD million 1Q07 4Q06 Operating revenues 174.1 178.3 Reimbursables 5.1 15.5 Other revenues 18.7 24.3 Total revenues 197.9 218.1 Vessel and rig operating expenses 92.1 106.1 Reimbursable expenses 4.4 14.0
Slide 7: Condensed Consolidated Segment Information - Tender Rigs
7 Condensed Consolidated Segment Information Tender Rigs Actual Actual Unaudited accounts in USD million 1Q07 4Q06 Operating revenues 52.9 44.9 Reimbursables 4.0 4.4 Other revenues 3.0 4.1 Total revenues 59.9 53.4 Vessel and rig operating expenses 20.4 19.3 Reimbursable expenses 3.8 4.2 Depreciation
Slide 8: Condensed Consolidated Segment Information - Well Services
8 Condensed Consolidated Segment Information Well Services Actual Actual Unaudited accounts in USD million 1Q07 4Q06 Operating revenues 78.9 86.7 Reimbursables 19.2 28.9 Total revenues 98.1 115.6 Vessel and rig operating expenses 65.7 71.7 Reimbursable expenses 18.8 28.4 Depreciation and amortisatio
Slide 9: Condensed Consolidated Balance Sheet
9 Condensed Consolidated Balance Sheet Unaudited accounts in USD million Unaudited accounts in USD million 31.03.07 31.12.06 31.03.07 31.12.06 Current assets Current liabilities Cash and cash equivalents 471.6 210.4 Short-term interest bearing debt 1,015.5 255.4 Receivables 408.8 463.5 Other current
Slide 10: Offshore drilling operations
10 Offshore drilling operations Norway - 4 units 2 Semis 1 Jack-up 1 Drillship Well Service activities Current Previous Future Southeast Asia - 12 units West Africa - 4 units 4 Semi-tenders 6 Tender rigs 1 Semi-tender 2 Jack-ups 1 Tender rig 2 Jack-ups Presence in key offshore drilling markets
Slide 11: 15 newbuild projects
11 15 newbuild projects 2 drillships at Samsung Korea 2 semis at Samsung Korea 2 semis at Daewoo Korea 3 semis at Jurong 2 tender barges 4 jack-ups in Singapore in Malaysia Singapore Building the most modern fleet at quality yards
Slide 12: Third ultra-deepwater unit ordered at Jurong
12 Third ultra-deepwater unit ordered at Jurong Fixed price turnkey US$532 million contract Copy of existing units under construction Delivery scheduled in April 2010 Favorable installment schedule ☺ 15% at signing, 20% end 2007, 15% end 2008 and 50% at delivery Creating significant shareholder valu
Slide 13: West E-drill
13 West E-drill
Slide 14: West Sirius
3 ANreS Sirius = =; = 1 = ee =. — ==
Slide 15: West Hercules
15 West Hercules
Slide 16: West Polaris
16 West Polaris
Slide 17: Seadrill newbuild characteristics
17 Seadrill newbuild characteristics Copies of existing units Proven technology Quality yards Delivery time reflects previous experience First units to be ordered Main yard installments to be paid on delivery Fixed price turnkey contracts
Slide 18: Newbuild deepwater program
18 Newbuild deepwater program Project phases Engineering Construction Commissioning % complete * West E-drill 86% West Eminence 47% West Sirius (J1) 81% West Taurus (J2) 58% West Hercules (D1) 52% West Aquarius (D2) 23% West Polaris (M1) 52% West Capella (M1) NA Main milestones reached according to
Slide 19: Newbuild deepwater projects
19 Newbuild deepwater projects Progress to date generally as planned Equipment component sub-contractors under severe workload pressure Individual component delays observed Focus on eliminating/mitigating critical line effects First in line … a clear advantage
Slide 20: Deepwater newbuild program
20 Deepwater newbuild program West E- drill and West Eminence West Sirius, West Taurus and West TBA Two semi-submersible rigs Three semi-submersible rigs Builder: Samsung Builder: Jurong Delivery: 1Q/3Q 2008 Delivery: 2Q/4Q 2008 & 2Q 2010 Design: DP Drilling Vessel Design: Friede Goldman ExD Rated w
Slide 21: Six shallow water newbuilds
21 Six shallow water newbuilds Three jack-ups at KFELS Two units to be delivered in 3Q07 One unit to be delivered in 2Q08 One jack-up at PPL KFELS MODV-B Delivery scheduled for 1Q08 Two tender rigs at Malaysia Marine & Heavy Engineering Delivery scheduled for 2Q07 & 2Q08 Assignments secured for five
Slide 22: Committed newbuild installments
22 Committed newbuild installments 2,000 1906 Commited newbuild installments 1,800 1,600 1,400 US$ million 1,200 1,000 765 800 579 600 447 428 374 400 219 268 200 64 0 Paid 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 2Q10 Committed newbuild installment schedule amounts to approximately US$5.1 billion The ins
Slide 23: Contract status floaters
23 Contract status floaters 2007 2008 2009 2010 2011 Customer 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Semi-submersibles West Alpha Statoil US$255,000 West Venture Norsk Hydro US$230,000 US$230,000 West E-drill 1 & 2 Total Newbuild - US$502M US$490,000 West Eminence 1 & 4 Newbuild
Slide 24: Contract status jack-ups
24 Contract status jack-ups 2007 2008 2009 2010 2011 Customer 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Jack-ups West Epsilon Statoil US$305,000 US$305,000 West Atlas (S1) 1 Coogee Newbuild - US$129M US$257,500 West Triton (S2) 1 ADA Newbuild - US$129M US$275,000 West Ceres (S3) To
Slide 25: Contract status tender rigs
25 Contract status tender rigs 2007 2008 2009 2010 2011 Customer 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Tender barges T3 1 PTT US$42' US$51,000 US$58,000 US$70,000 06.2012 T4 Chevron US$46,000 US$85,000 06.2013 T6 1 Carigali/CTOC US$64,000 US$85,500 T7 Chevron US$53,000 T8 Total
Slide 26: Active supply and demand worldwide
26 Active supply and demand worldwide FLOATERS 200 200 DW Demand 180 Shallow Water Demand 180 Active Supply 160 160 140 140 Number of Units 120 120 100 100 80 80 60 60 40 40 20 1st Q 1997: 2 nd Q 2007: 20 Share DW:23% Share DW:46% 0 0 97 98 99 00 01 02 03 04 05 06 07 13.04.07 ID: 202
Slide 27: Key current drivers
27 Key current drivers Oil prices around US$70/bbl Focus on infill drilling to mitigate production decline “Material Oil” strategies “Integrated Gas” strategies Significant further exploration required Long-term exploration drilling contracts
Slide 28: Deepwater market
28 Deepwater market Worldwide Deepwater Market (>3,000ft WD) 100% utilization Except for a limited number of available months for 2-4 units, the entire ultra deepwater fleet is fully committed through 2008 12 deepwater units have about 62 months available in 2008. Currently 48 floaters (+ 3 “standar
Slide 29: Deepwater market cont'
29 Deepwater market cont’ Worldwide Deepwater Market (>3,000ft WD) Eight operators have additional requirements for UDW units. In total these operators need some 10-13 units. Dayrate for UDW units has increased slightly during the first quarter of 2007 Total back-log for the entire deepwater fleet i
Slide 30: Ultra-deepwater demand supply
30 Ultra-deepwater demand supply 1999-2010 Contract Status & Expected Demand 1999-2010: 90 Ultra Deepwater Drilling Units (>7500feet) - Worldwide 80 70 60 50 40 30 20 10 0 jan.1999 jul.1999 jan.2000 jul.2000 jan.2001 jul.2001 jan.2002 jul.2002 jan.2003 jul.2003 jan.2004 jul.2004 jan.2005 jul.2005 ja
Slide 31: Demand supply Norway
31 Demand supply Norway Contract Status & Expected Demand Norway/Russia 2001 - 2011: Floaters 40 35 30 25 20 15 10 5 0 jan.2001 jul.2001 jan.2002 jul.2002 jan.2003 jul.2003 jan.2004 jul.2004 jan.2005 jul.2005 jan.2006 jul.2006 jan.2007 jul.2007 jan.2008 jul.2008 jan.2009 jul.2009 jan.2010 jul.2010 E
Slide 32: Deepwater dayrates
- Ja n. 40,000 80,000 120,000 160,000 200,000 240,000 280,000 320,000 360,000 400,000 440,000 480,000 520,000 560,000 9 Ap 9 r.9 Source: Fearnley Offshore Dayrate [USD] Ju 9 l.9 O 9 ct . Ja 99 n. 0 Ap 0 r.0 Ju 0 l.0 O 0 ct . Ja 00 n. 0 Ap 1 r.0 Ju 1 l.0 O 1 ct . Ja 01 n. 0 Ap 2 r.0 Ju 2 l.0 7500 + O
Slide 33: Expected global crew needs 2007 - 2010
33 Expected global crew needs 2007 - 2010 24% Floaters 27500 6600 growth 12.5% 3200 400 Tender rigs growth 20% Jack up rigs 32000 6400 growth 0 5000 10000 15000 20000 25000 30000 35000 40000 Existing Fleet New Builds Total industry requirement is approximately 13,400 people representing 21% growth
Slide 34: Human resources
34 Human resources Currently a pool of 5,200 employees as a basis More than 25 different nationalities Significant organic growth capacity Some 2,000 people to be hired over the next two years State of the art rig fleet An attractive employer long term
Slide 35: Financial strategy
35 Financial strategy Secure term contracts Maintain high financial leverage Employ various leverage structures such as sale/leaseback, MLPs etc. in addition to traditional bank debt High leverage to accompany high equity return
Slide 36: Summary
36 Summary Newbuilding projects are in the main progressing as planned Acceptable term assignments secured for five out of nine deepwater newbuilds Strong market outlook in all segments builds the order backlog Existing operations are running according to plan Actively pursuing leveraged financing s
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