Seadrill Limited · NYSE:SDRL
Seadrill — Howard Weil Energy Conference 2015
21 slides from Seadrill's conference presentation, March 2015
Slide 1: Howard Weil Energy Conference
Howard Weil Energy Conference Per Wullf, CEO March 2015
Slide 2: Forward Looking Statements
Forward Looking Statements The statements described in this presentation that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements which could be made
Slide 3: Presentation Agenda
Presentation Agenda 1 Seadrill Summary 2 Rising to the Market Challenge 3 Market Outlook 3
Slide 4: Executive Summary
Executive Summary Successful 2014, Expecting Challenges in 2015 Operational excellence – Three drillships taken into service in the fourth quarter Strong financial and operational performance during 2014 Secured 5 new contracts, adding $1.3 billion to contract backlog in 4Q Prudent action ta
Slide 5: Robust Backlog & Operational Excellence
Robust Backlog & Operational Excellence Quarterly EBITDA (Including Seadrill Partners) 897 865 Seadrill Group generated combined EBITDA of 900 842 768 788 $897 million for the fourth quarter 2014 800 652 665 663 700 5.6 Economic utilization for the Group’s floaters on a 600 US$ Millions combined bas
Slide 6: Rising to the Market Challenge
Rising to the market challenge Rising to the Market Challenge 6 6
Slide 7: Tough Times... But We Are Tougher
Tough Times... Tough times… but But we’re We Aretougher Tougher Approximately $17 billion in contract backlog Strong relationships with solid counterparties, built through strong operational performance Adjusted deliveries of our new builds to be better in line with market conditions Taken a
Slide 8: We're Having Very Difficult Conversations
We’re having Floater very Contract difficult conversations Coverage Seadrill Contract Coverage Marketed Floater Availability Until End of 2016 Contracted 40 63% 65% Uncontracted 44% 35 65% 60% 2015 84% 15% 30 55% 52% 85% 25 25 50% 50% 50% 20 2016 45% 37% 15 40% 63% 10 3 12 35% 2017 13 3 12 35% 5 8 6
Slide 9: Floater Stacking Increasing at Accelerated Pace
Rising to Floater the market Stacking challenge Increasing at Accelerated Pace Marketed Floater Age Stacking of Old Floaters 60 80% 70% 70% 50 29 60% 52% 40 50% 30 38% 40% 8 30% 20 33 • 54 floaters are currently stacked 31 18% 20% 10 10 • This is an increase from 34 one year ago 19 18 10% 3% • 15 fl
Slide 10: Floater Cash Flow Breakeven
Floater Cash Flow Breakeven 1 Year Ago 6 Months Ago Today “Typical Floater” “Typical Floater” “Typical Floater” 3 – 5 years 2 – 3 years 1 – 2 years $525,000 - $575,000 $475,000 - $525,000 $350,000 - $400,000 $120 $45 $25 $365 $245 $200 $175 Opex G&A EBITDA Breakeven Interest Expens
Slide 11: Jack-up Contract Coverage
Jack-up Contract Coverage Contract Coverage Marketed Jack-up Availability Until End of 2016 Contracted 30 100% Uncontracted 44% 90% 65% 2584% 90% 2015 85% 23% 20 80% 13 77% 3 24 2016 15 70% 48% 17 67% 13 60% 59% 10 60% 52% 15 15 12 2017 5 50% 47% 23% 5 4 4 0 40% 77% Paragon Hercules Rowan Ensco Shel
Slide 12: Jack-up Stacking Increasing As Well
Jack-up Stacking Increasing As Well Marketed Jack-up Age Stacking of Jack-ups 45 95% 100% 100% 40 90% 2 80% 35 16 75% 70% 30 62% 60% 25 50% 20 17 40% 35 5 31 31 • In 2010 133 jack-ups were stacked (56 cold & 15 26 37% 30% 77 warm) 10 20% • Both warm stacked and cold stacked 15 numbers are increasing
Slide 13: Jack-up Cash Flow Breakeven
Jack-up Cash Flow Breakeven 1 Year Ago 6 Months Ago Today “Typical Jack-up” “Typical Jack-up” “Typical Jack-up” 1 - 2 years 6 months - 2 years 1 well - 2 years $165,000 $145,000 $115,000 $40 $15 $10 $125 $85 $70 $60 Opex G&A EBITDA Breakeven Interest Expense Operational Principal C
Slide 14: New Builds: Adjusting Deliveries
New Builds: Adjusting adjusting deliveries Deliveries We have the benefit of being part of the bigger Fredriksen Group We’ve adjusted the delivery timings of our new builds in light of market conditions 4 JUs – pushed back 4 months 2 JUs – pushed back 8 months 2 JUs – pushed back 6 months
Slide 15: Continuing focus on cost
Continuing focus on cost Efforts we put in place in 2014 helped us deliver approximately $220 million in savings versus budget in CAPEX, personnel cost, G&A, and other operating costs To keep costs a focus in 2015, we have put in place a cost savings program to identify both short-term and long-
Slide 16: Market Outlook
Financial performance highlights Market Outlook Appendix: Seadrill Limited Financials 16
Slide 17: More capex for less production
More capex for less production Major oil companies production and upstream investment 2002-13 250 Combined USD FY 2013 1.4 trillion spent! 200 12 Annual Capex - USDbn 11 150 10 08 09 100 05 07 06 50 04 FY 2002 03 0 19 19.5 20 20.5 21 21.5 22 22.5 Source: Maersk; Evaluate Energy, RSPM mmboed producti
Slide 18: Challenging 2015 for Oil Services Companies
Challenging 2015 for Oil Services Companies Brent back to 2009 level 2015 E&P Spending Estimates 140 800 25 % 130 19% 700 20 % 15% 120 14% 15 % 600 Annual E&P spending growth (%) 110 Global E&P spending (USDm) 10 % 100 500 12% 5% 90 400 80 0% 2% 300 70 -5 % 60 200 -14% -10 % -9% 50 100 -15 % 40 Mar
Slide 19: Bifurcation is a Reality
Preferential Demand for Newer Rigs Bifurcation is a Reality Source: Fearnley Offshore Source: Pareto Securities AS 19
Slide 20: Aging Fleet & UDW Units Becoming the Standard
Aging Fleet & UDW Units Becoming the Standard Average floater age today: 17 years Operating Water Depth 12% 30 year + 31 % <=10 years >=10years 41% 50% 50 % 47% 26-30 years 11-20 years 6% 12 % 21-25 years Source: ODS-Petrodata, RS Platou Markets 1% Above 7,500 ft 4,500 - 7,499 ft Below 4,500 ft Sour
Slide 21: Well positioned for the future
Well positioned for the future Modern, industry-leading fleet Long-standing reputation among customers for reliable operations Deep commercial backlog and close relationship with customers Experienced management team with strong backing and engagement from the Board Ability to take tough d