Petrofac Limited · OTC:POFCY
Petrofac — H1 2010 Earnings Presentation
27 slides from Petrofac's earnings presentation, Aug 23, 2010
Slide 1: Interim Results 23 August 2010
Interim Results 23 August 2010
Slide 2: Important Notice
Important Notice • This document has been prepared by Petrofac Limited (the Company) solely for use at presentations held in connection with the announcement of its interim results for the six months ended 30 June 2010. The information in this document has not been independently p y verified and no
Slide 3: Headlines
Headlines • Strong financial performance in 1H 2010, including US$126m gain on EnQuest demerger • Backlog of US$6.9bn at 30 June 2010, augmented by US$1.1bn of new awards in 2H 2010 to date; gives outstanding revenue visibility • Working towards conversion to the second phase of South Yoloten projec
Slide 4: Engineering & Construction – contract awards
Engineering & Construction – contract awards • US$600m award for gas sweetening facilities awarded by Qatar Petroleum in March 2010 • Two contracts awarded by Kuwait Oil Company since 1 July 2010: – US$400m, 23.5 month EPC contract for the installation of fuel gas and gas oil pipelines – US$430m, 36
Slide 5: Energy Developments – 'build and harvest'
Energy Developments – ‘build and harvest’ • EnQuest demerger demonstrates value of Energy Developments’ ‘build & harvest’ strategy – Project IRR of approximately 35%; capital gain of US$126m • Ongoing investments are performing in line with expectations; none are yet ready for ‘harvest’ • Seeking fu
Slide 6: Production Solutions – Dubai Petroleum contract
Production Solutions – Dubai Petroleum contract • A case study of our capability in transition management • Awarded contract by Dubai Petroleum in 2006; seamlessly transitioned to full operational responsibility by April 2007 • As service operator, we improved production efficiency and slowed the de
Slide 7: Production Solutions – Production Enhancement model
Production Solutions – Production Enhancement model • Market represents an area of significant potential growth over medium-term • Innovative contract structures to align us with our customers • Value generated through the investment and leveraging of our service capability and expertise • Tariff or
Slide 8: Production Solutions – Ticleni contract
Production Solutions – Ticleni contract • Ticleni and its eight satellite fields are located in southwest Romania • Fields encompass more than 1,000 wells (300 currently active) • Pilot water injection programme to be undertaken in selected sectors of field (upfront investment of ~ US$20m) – If succ
Slide 9: Training Services, Engineering Services
Training Services, Engineering Services • Training Services has seen improved performance in UK market, mixed performance in international centres – Focusing efforts on higher value projects – Significant investment in UK and international business development teams • Engineering Services continues
Slide 10: Offshore Engineering & Operations
Offshore Engineering & Operations • Activity levels increased due to 2H 2009 contract awards and general improvement in market conditions • Tendering activity remains at high levels, both in the UK and internationally • Success in securing extensions with major IOCs – Britannia operations and mainte
Slide 11: Income Statement
Income Statement 1H 2010(1) 1H 2009 US$m US$m Revenue 2,130.6 1,586.4 34% Operating profit 262.6 170.7 54% Profit before tax 263.0 174.3 51% Income tax expense (53.8) (28.8) Profit for the period 209.2 145.6 Profit for the period attributable to 206.3 145.6 42% Petrofac Limited shareholders EBITDA 3
Slide 12: Backlog
Backlog Backlog of US$6.9bn at 30 June 2010, augmented by US$1.1bn of new awards since 1 July: • Engineering g g & Construction backlog g US$5.4bn $ ((Dec 2009: US$6.2bn) $ ) – lower due to progress on portfolio of contracts; US$0.8bn of new awards since 1 July 2010 • Offshore Engineering & Operatio
Slide 13: Cash flow and gross cash balances
Cash flow and gross cash balances Cash position remains strong at US$1.1bn: • Net cash outflow from operating activities due to – increase in WIP (expected to be temporary) – advance payments on Engineering & Construction awards partially unwinding • Investing activities include US$78m of capex addi
Slide 14: Engineering & Construction
Engineering & Construction Continues to perform strongly: • Revenue K50% - high activity levels due to record order intake in 2009 (over US$6bn) • Net profit K49% - due to continued strong operational performance and first time profit recognition • Net profit margin maintained at 11 11.4% 4% R Reven
Slide 15: Offshore Engineering & Operations
Offshore Engineering & Operations Performed better in 1H 2010: • Net revenue K17%, net profit K34% – increased activity levels from major new contract awards in 2H 2009 – general improvement in market conditions • Net margin on net revenue improved to 1.6% Revenue (US$m) EBITDA (US$m) and Net profit
Slide 16: Engineering, Training, Production Solutions
Engineering, Training, Production Solutions Mixed results across the business units: • Revenue and net profit L12% due to continued subdued activity levels in Engineering Services and lower level of drilling management activities on Dubai Petroleum contract • Training Services beginning to show an i
Slide 17: Energy Developments
Energy Developments Growth in revenue and EBITDA: • Revenue K29% - primarily due to higher average oil prices – (Brent) oil price averaged US$77 per barrel for 1H 2010 (1H09: US$52) • EBITDA K49% - driven by increased production from the Don fields prior to the demerger and higher average oil prices
Slide 18: Summary and outlook
Summary and outlook • Strong 1H 2010 performance, with earnings growth of 42% • Backlog of US$6 US$6.9bn, 9bn augmented by US$1 US$1.1bn 1bn of awards in 2H 2010 to date date, gives outstanding level of revenue visibility for 2010 and beyond • Competitive position in our core markets, which have str
Slide 19: Appendices
Petrofac P mr) o © x) = 7) °. °. <x
Slide 20: Appendix 1: Largest current EPC contracts
Appendix 1: 12 largest current EPC contracts O i i l contract Original t t value to Petrofac Harweel EOR Customer key: plant, Oman NOC/NOC led company/consortium US$983m Joint NOC/IOC company/consortium In Salah gas compression Algeria compression, US$600m Jihar gas plant, Syria US$454m Mina Al-Ahma
Slide 21: Appendix 2: Effective tax rate
Appendix 2: Effective tax rate Tax charge by segment 1H 2010 2009 reported reported Engineering & Construction 17% 18% Offshore Engineering & Operations 27% 27% Engineering Training and Production Solutions Engineering, 0% 2% Energy Developments(1) 50% 31% • Engineering & Construction ETR marginally
Slide 22: Appendix 3: Segmental performance
Appendix 3: Segmental performance • Engineering & Construction earned 74% of revenue and 84% of net profit • Middle East and Africa: a keyy geographic g g p market for Engineering g g & Construction • Europe: activity principally in UK North Sea, where majority of Offshore Engineering & Operations r
Slide 23: Appendix 4: Employee numbers
Appendix 4: Employee numbers • 12,500 people in 6 key operating centres and 19 offices • EPC headcount includes the engineering g g offices in Mumbai and Chennai,, which although reported in ETSPS principally support E&C activities • Approximately 4,000 employee shareholders or participants in emplo
Slide 24: Appendix 5: Organisational structure
Appendix 5: Organisational structure ents Reporrting Offshore Engineering, g g Training g Services and Segme Energy Engineering & Construction Engineering & Production Solutions Developments Operations Business s Units Engineering & Engineering & Offshore Engineering Production Energy Construction C
Slide 25: Appendix 6: EPC risk management
25 Revenue recognition acceptance certificate Profit recognition Final Project risk Warranty phase acceptance Provisional certificate 100% Mechanical completion Robust Completio on systems to facilittate smooth startup Manage/ /support local construcction contractors (typically 2-4 years) Appendix 6
Slide 26: Notes
Notes • EBITDA means earnings before interest, tax, depreciation and amortisation and is calculated as profit from operations (excluding the US$125.6m gain on the EnQuest demerger) before tax and finance costs adjusted j to add back charges g for depreciation, p amortisation and impairment. p • Net
Slide 27: Contact information
Contact information: Jonathan Low Head of Investor Relations ir@petrofac.com