Subsea 7 S.A. · OSL:SUBC
Subsea 7 — Investor Presentation (May 2017)
62 slides from Subsea 7's investor presentation, May 2017
Slide 1: Investor Presentation May 2017
Investor Presentation May 2017 1
Slide 2: Index
Index • What we do • Our differentiators • Our priorities • Our outlook • Our financials • Appendix 2
Slide 3: What we do
• What we do • Our differentiators • Our priorities • Our outlook • Our financials • Appendix 3
Slide 4: 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 technical solutions to enable the delivery of complex projects in all water depths and challenging environments Our vision
Slide 5: Our market segments
Our market segments We operate across three major offshore segments Renewables and Heavy Lifting: We are experienced in the installation of offshore wind farm foundations, heavy lifting for oil and gas structures and decommissioning. SURF and Conventional: We are a global market leader in the Subsea
Slide 6: 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 7: Some of our SURF activities
Some of our SURF activities • Good execution sustained across the project portfolio • Successful ways of working and early engagement WND phase 1 Western Isles Callater (Egypt) (UK) (UK) Persephone 3 Stampede Beatrice (Australia) (US GoM) (UK) 7
Slide 8: Our market segments: i-Tech Services
Our market segments i-Tech Services • Inspection, Maintenance and Repair (IMR) of existing offshore infrastructure • Over 175 ROVs and a fleet of ROV support vessels • Bespoke ROV tooling solutions • Over 35 year’s experience • Global business with operational bases in the UK, Brazil, the US and Aus
Slide 9: Our market segments: Renewables and Heavy Lifting
Our market segments Renewables and Heavy Lifting • Installation of wind farm infrastructure • Heavy lifting operations for oil and gas developments • Decommissioning of redundant offshore structures • Two specialist crane vessels Stanislav Yudin and Oleg Strashnov • Operations performed by Seaway He
Slide 10: Our market segments: 2016 revenue and order intake
Our market segments • 2016 book to bill ratio of 0.94 times 2016 Revenue 2016 Order intake $3.6 billion $3.4 billion SURF and SURF and Conventional Conventional $3.0bn $1.8bn (84%) i-Tech (55%) i-Tech Services Services 0.1bn $0.4bn (3%) (11%) Renewables & Heavy Lifting $1.4bn Renewables & (42%) Heav
Slide 11: Backlog and order intake
Backlog and order intake • Backlog of $5.7 billion(1), as at 31 March 2017 Backlog by Backlog by segment Execution Date 2019+ SURF and Conventional(2) $1.2bn $4.1bn 2017 $2.7bn i-Tech Services 2018 0.4bn $1.8bn Renewables and Heavy Lifting $1.2bn (1) Includes addition of $0.3bn backlog recognised on
Slide 12: Our PLSV activities offshore Brazil
Our PLSV activities offshore Brazil Seven Sun Seven Cruzeiro Servicing life of field and new construction needs for Petrobras in all water depths • Long-term day-rate contracts Seven Waves Seven Rio • Performing production maintenance and new construction activities • $1.6bn of backlog of which ~85%
Slide 13: Our differentiators
• What we do • Our differentiators • Our priorities • Our outlook • Our financials • Appendix 13
Slide 14: Our competitive position remains strong
Our competitive position remains strong Current competitors in SURF: Global leaders in Subsea 7 TechnipFMC Saipem EPIC Allseas Heerema McDermott Regional SapuraKencana Sea Trucks Ocean Installer Players Small National Players Various competitors of Subsea 7 have gone into administration or exited of
Slide 15: Our key attributes differentiate us
Our key attributes differentiate us • People – Project delivery based on our expertise and know-how • Technology – Market driven and cost-effective solutions • Assets – A diverse fleet of vessels and strategically positioned global assets • Alliances and Partnerships – Collaborating to deliver optim
Slide 16: Our People
Our People • We deliver projects based on our expertise and know-how • Our highly skilled and experienced workforce deliver projects safely and reliably 8,500 people in our workforce at end 2016 3,700 4,800 Onshore people Offshore people 16
Slide 17: Our shared Core Values
Our shared Core Values What is most important to us as we conduct our business. • Safety We are committed to an incident-free workplace, everyday, everywhere. We continue to minimise the impact of our activities on the environment. • Integrity We apply the highest ethical standards to everything we
Slide 18: Our Strategic Technology Programmes
Our Strategic Technology Programmes Riser Market leading portfolio of riser systems Systems Flowline Developing flowline solutions enabling optimum Systems field architecture – Flow assurance Bundles Enhancing Pipeline Bundle technology solutions for the global market. Subsea Integrating compact sub
Slide 19: Our Technology programmes
Our Technology programmes 19
Slide 20: A modern and versatile fleet of vessels
A modern and versatile fleet of 34 vessels Ownership Vessels by Ownership type Vessels by Age 6 11 10 0-5 years Owned 6-11 years Chartered 12+ years 28 13 Vessels by Operational category Hook-up Heavy Lifting ROV Support Horizontal flexlay Rigid-lay / Heavy Construction Diving Support Vertical flexl
Slide 21: Vessels in our total fleet as at March 2017
34 Vessels in our total fleet as at March 2017 7 Diving Support Seven Atlantic Seven Falcon Seven Osprey Seven Pelican Rockwater 2 Seven Kestrel Rockwater 1 3 7 Rigid pipelay / heavy lift Seven Borealis Seven Antares Seven Oceans Sapura 3000 1 Oleg Strashnov Stanislav Yudin Seven Navica 3 11 Constru
Slide 22: Alliances and Partnerships
Alliances and Partnerships We are working collaboratively with industry partners and clients to develop and deliver optimal solutions Integrated Early Client solutions engagement partnerships 22
Slide 23: Subsea Integration Alliance – with OneSubsea
Subsea Integration Alliance – with OneSubsea New Integrated Integrated Integrated Technology Technical Project Development Collaboration Execution Plan Prepare our future Improve interfaces, Prepare execution differentiators lower common costs Prospects Tenders Business Development Prepare joint off
Slide 24: Subsea Integration Alliance – Awarded projects
Subsea Integration Alliance – Awarded projects • Mad Dog 2 project, US GoM • Integrated ways of working – Cost and schedule assurance – Risk mitigation • Swagelining technology • Dalmatian project, US GoM • Fully integrated award • Fit for purpose technology • Enhanced recovery • Reduced interface a
Slide 25: Engaging with clients early to deliver value
Engaging with clients early to deliver value Project from client’s perspective Faster progress to approval gates = Accelerated project development Earlier reduction of project budget Assurance of uncertainty envelope delivery within FID boundaries Gate 1 Gate 2 Budget FID uncertainty KG7 enabled Tra
Slide 26: Our Partnerships
Our Partnerships • We have partnered with some clients in an extension of our collaborative approach to client engagement • Engage early and develop long-term collaborative relationships with mutual benefits • AKER BP frame agreement is • ODA project awarded in an innovative solution with Q4 2016 by
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
Slide 28: Our priorities
• What we do • Our differentiators • Our priorities • Our outlook • Our financials • Appendix 28
Slide 29: Our focus on performance
Our focus on performance • We acted early to deliver through the downturn and position for long-term success in our core market segments: SURF and Conventional, i-Tech Services and Renewables and Heavy Lifting Delivering through the downturn Reduce Reduce Maintain Act early capacity costs capability
Slide 30: 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 Local Angolan Competition Sourcing Sourcing, Final price optimsiation content Content and specifications, reduction reduction specif
Slide 31: Cost reduction and resizing actions taken early
Cost reduction and resizing actions taken early • Resized and adapted to Workforce (‘000s) lower activity levels 14.4 • Retained capability and 8.5 core expertise • Embraced new ways of working to increase 2013 2016 efficiency and lower cost • Workforce reduced by Vessels 44 approximately 40% 5 34 •
Slide 32: 2016 expenses overview
2016 expenses overview $1.2 billion vessel and workforce cost savings since 2014 $ bn 7 6.0bn 6 0.8 5 0.4 4.2bn 4 2.0 0.8 3.0bn 3 0.4 0.6 2 1.4 0.4 2.8 1.0 1 1.6 1.0 0 2014 2015 2016 • Vessels and other costs(2): Including vessel costs, onshore facilities, IT infrastructure and other fixed overheads
Slide 33: Our Adjusted EBITDA margin performance
Our Adjusted EBITDA margin performance Adjusted EBITDA margin - Historical performance 32% 26% 21% 18% 18% 16% 2011 2012 2013 2014 2015 2016 2017e • Adjusted EBITDA percentage margin driven by: – Alignment of capacity and cost with activity – Project execution and de-risking – Mix of activity and ph
Slide 34: Our priorities for capital allocation
Our priorities for capital allocation 1. Invest to •Completion of new-build vessel programme grow and •Focused investment in technology and innovation strengthen our •Integrated solutions with OneSubsea business •Acquired remaining 50% of SHL 2. Maintain an •Net cash $1.0 billion at 31 March 2017 •$
Slide 35: Our outlook
• What we do • Our differentiators • Our priorities • Our outlook • Our financials • Appendix 35
Slide 36: Oil and Gas market outlook
Oil and Gas market outlook $ billion Subsea 7 order intake 12 • Industry conditions remain challenging in the near term 10 8 • Oil price in the $45-$55 range; 6 clients are reviewing plans to 4 sanction projects 2 0 • There could be an increase in 2013 2014 2015 2016 SURF project awards in the Oil a
Slide 37: Renewables and Heavy Lifting
Renewables and Heavy Lifting • Competitiveness of offshore wind continues to improve • First non-subsidised wind farms announced • Need for alternate power sources to replace aging generation capacity • Economies of scale and heavier lift requirements from increasing size of turbines • Improving pro
Slide 38: Business Unit outlook
Business Unit outlook SURF and Conventional • Remaining competitive, but with the right project risk profile • Active SURF project tenders include: • Zinia (Angola) • Golfinho (Mozambique) • Liza (Guyana) • KG-DWN, block 98/2 (India) • Skarfjell (Norway) • KG-D6, R-Cluster (India) • Pil and Bue (Nor
Slide 39: Summary
Summary • Industry conditions remain challenging in the near term; a gradual market recovery is anticipated • We are engaging earlier and executing well • We are investing and partnering strategically to extend and differentiate our services • Our differentiated service offering is competitive, vers
Slide 40: Our financials
• What we do • Our differentiators • Our priorities • Our outlook • Our financials • Appendix 40
Slide 41: Q1 2017 results
Q1 2017 results FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS • Revenue $897 million • Good execution and successful • Adjusted EBITDA $268 million project outcomes • Adjusted EBITDA margin 30% • Vessel Utilisation • Diluted EPS $0.41 Active: 65% Total: 55% • Fleet enhanced and modernised • Net debt $
Slide 42: Income statement – key highlights
Income statement – key highlights Three months ended 31 March 2017 31 March 2016 In $ millions, unless otherwise indicated Unaudited Unaudited Revenue 897 746 Net operating income (NOI) 169 194 Income before taxes 206 211 Taxation (60) (64) Net income 146 147 Adjusted EBITDA(1) 268 284 Adjusted EBIT
Slide 43: Income statement – supplementary details
Income statement – supplementary details In $ millions Three months ended 31 March 17 31 March 16 Unaudited Unaudited Administrative expenses (48) (53) Share of net income of associates and joint ventures (7) 16 Depreciation and amortisation (99) (90) Net operating income 169 194 Net finance income
Slide 44: Business Unit performance
Business Unit performance Revenue NOI Q1 2017 Q1 2017 $897m $746m $169m $194m $10m $220m $2m $15m $103m $11m $76m $641m $167m $602m $151m ($4m) 2017 2016 2017 2016 SURF & i-Tech Renewables & Conventional Services Heavy Lifting) Corporate segment: Net operating income Q1 2017 $11m (Q1 2016: $2m) 44
Slide 45: Segmental analysis
Segmental analysis For the three months ended 31 March 2017 SURF & Renewables & In $ millions (unaudited) i-Tech Services Corporate TOTAL Conventional Heavy Lifting Revenue 602 76 220 - 897 Net operating income 151 11 (4) 11 169 Finance income 5 Remeasurement gain on business 42 combination Other ga
Slide 46: Robust balance sheet
Liquidity and financial strength Robust balance sheet • Net cash of $1.0 billion Strong financial flexibility • Cash and cash equivalents of $1.9 billion • Borrowings of $858 million – $431 million convertible bond, – $301 million ECA facility, – $126 million term loan (Seaway Heavy Lifting) • Five-
Slide 47: Summary balance sheet
Summary balance sheet 31 Mar 31 Dec 31 Mar 31 Dec 2017 2016 2017 2016 In $ millions Unaudited Audited In $ millions Unaudited Audited Assets Equity & Liabilities Total equity 5,716 5,537 Non-current assets Non-current liabilities Goodwill 673 628 Non-current portion of borrowings 370 - Property, pla
Slide 48: Summary of first quarter 2017 cash flow
Summary of first quarter 2017 cash flow $m 268 (10) (31) (111) (194) 301 (27) 1,872 1,676 Cash at 31 Proceeds from EBITDA Tax Paid Capex Acquisition of Decrease in Net Other Cash at 31 December 2016 Borrowings Business Operating March 2017 (net of cash Liabilities acquired) • Net cash of $1.0 billio
Slide 49: Summary of first quarter 2017 cash flow
Summary of first quarter 2017 cash flow $ millions Cash and cash equivalents at 31 Dec 2016 1,676 Net cash generated from operating activities 65 Decrease of $194 million in net operating liabilities Included $111m cash outflow on acquisition of Seaway Heavy Lifting Net cash flow used in investing a
Slide 50: Business Unit financial reporting changes
Business Unit financial reporting changes • From 2017 Subsea 7 will report segmental results for three operational Business Units and Corporate segment • This change reflects the formation of a Renewables and Heavy lifting Business Unit following the acquisition of Seaway Heavy Lifting • Previously
Slide 51: Consolidation of Seaway Heavy Lifting
Consolidation of Seaway Heavy Lifting • Subsea 7 acquired the remaining 50% of Seaway Heavy Lifting (SHL) that it did not already own on 10 March 2017 • The consideration for this 50% was $279 million, plus an additional payment of up to $40 million in 2021 contingent on performance • SHL held $392
Slide 52: Re-presented segmental results 2016
Re-presented segmental results 2016 2016 re-presented segmental results by quarter (unaudited) In $ millions Revenue 2016 Q1 Q2 Q3 Q4 Full Year SURF & Conventional 641 866 801 705 3,013 i-Tech Services 103 93 97 85 377 Renewables & Heavy Lifting 2 2 30 142 176 Corporate - - - - - Total 746 961 928 9
Slide 53: 2016 Re-presented Summary Financial Information
2016 Re-presented Summary Financial Information For the year ended 31 December 2016 (unaudited) Renewables SURF & i-Tech In $ millions & Heavy Corporate TOTAL Conventional Services Lifting Revenue 3,013.3 377.4 176.0 - 3,566.7 Operating and administrative expenses (excluding (1,936.9) (290.3) (172.5
Slide 54: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA Net operating income to Adjusted EBITDA Three Months Ended Three Months Ended 31 March 2017 31 March 2016 For the period (in $millions) Unaudited Unaudited Net operating income 169 194 Depreciation, amortisation and mobilisation 99 90 Adjusted EBITDA 268 284 Revenue
Slide 55: Financial guidance
Financial guidance 2017 Guidance Revenue Broadly in line with 2016 Adjusted EBITDA percentage margin Lower than 2016 Administrative expense $210 million - $230 million Net finance cost $10 million - $15 million Depreciation and Amortisation $410 million - $430 million Full year effective tax rate 28
Slide 56: Appendix
Appendix • Forward looking statement • Major project progression • Corporate responsibility • ADR • Contact details 56
Slide 57: 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 58: Our global presence
Our global presence • Beatrice wind farm, BOWL • Catcher, Premier • Culzean, Maersk • Callater, Apache • Aasta Hansteen, Statoil • Western Isles, Dana • Maria, Wintershall • USC & Pipelay, Shell • Mariner, Statoil • SCIRM, BP • DSVi, Various • Mad Dog 2, BP • Stampede, Hess • Coulomb Ph2, Shell • Ho
Slide 59: Major project progression
Major project progression Continuing projects >$100m between 5% and 95% complete as at 31 March 2017 excluding PLSV and Life of Field day-rate contracts West Nile Delta P1 (Egypt) Clair Ridge (UK) Announced Aasta Hansteen (Norway) size of Stampede (GOM) project SLMP (Norway) Major (Over $750m) Catch
Slide 60: Corporate Responsibility
Corporate Responsibility At Subsea 7 we are committed to operating in a safe, ethical and responsible manner Lost-time incident Clean Operations Frequency rate (%) 3,800 3,300 0.06 3,000 0.05 0.06 2014 2015 2016 2014 2015 2016 Recordable Incident Carbon Dioxide Emissions Frequency Rate (%) (‘000 ton
Slide 61: 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: +1 212 250 9100 London: +44 207 547 6500 Hong Kong: +852 2203 7854 e-mail: adr@db
Slide 62: Contact us
Contact us: Isabel Green Investor Relations Director eMail: isabel.green@subsea7.com Direct Line +44 20 8210 5568 Website www.subsea7.com 62