Sbm Offshore Nv · EURONEXT:SBMO

Sbm Offshore Nv — H1 2018 Earnings Presentation

45 slides from Sbm Offshore Nv's earnings presentation, Aug 9, 2018

  1. Slide 1: Half Year 2018 Earnings Update

    Half Year 2018 Earnings Update August 9, 2018 © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com

  2. Slide 2: Disclaimer

    Disclaimer The companies in which SBM Offshore N.V. directly and indirectly owns investments are separate legal entities. In this presentation “SBM Offshore” and “SBM” are sometimes used for convenience where references are made to SBM Offshore N.V. and its subsidiaries in general. These expressions

  3. Slide 3: Leading Global FPSO Contractor

    Leading Global FPSO Contractor 1st > 50 2 FAST4WARDTM CONCEPT FLOATING PRODUCTION LARGE PROJECTS UNDER TO PROJECT AWARD SYSTEMS DELIVERED CONSTRUCTION > 300 years + 55% 15 CUMULATIVE OPERATING OIL PRODUCTION CAPACITY UNITS IN OPERATION EXPERIENCE SINCE 2014 WORLDWIDE © SBM Offshore 2018. All rights

  4. Slide 4: 1H 2018 Review

    1H 2018 Review Macro View Company Positioning 1H 2018 Financials Outlook © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com

  5. Slide 5: 2nd Success in Guyana

    2nd Success in Guyana FEED contract awarded for 2nd FPSO Liza field offshore Guyana Construction and Installation, Lease and Operate contracts awarded for a period of up to 2 years, subject to project sanction TM Making Fast4WardTM a reality Oil production capacity of 220,000 bbls/day > 4 billion bo

  6. Slide 6: Total Overview: 1H 2018 Financial Highlights

    Total Overview Directional1 1H 2018 Financial Highlights Revenue US$808 million Underlying EBITDA US$414 million Pro-forma Backlog US$16.1 billion Net Debt2 US$2.3 billion (1) Directional view, presented under IFRS8 Segment reporting, represents a pro-forma accounting policy, which assumes all lease

  7. Slide 7: Health, Safety and Environment

    Health, Safety and Environment 2017 Safety performance sustained during 1H 2018 Health & Safety 1 On track to meet 2018 Environmental targets Environment  Greenhouse gas emissions  Flaring  Energy consumption  Oil released in produced water Embedding Sustainable Development Goals SDGs (1) Includ

  8. Slide 8: Normalized Business Relations with Petrobras

    Normalized Business Relations with Petrobras Leniency Agreement with Start of internal US$240 million out- Resolution with US AGU1, CGU2 and investigation and of-court settlement DoJ resulting in Petrobras in line immediate remedial with Dutch payment of with US$299 measures Prosecutor’s office US$2

  9. Slide 9: Macro View

    1H 2018 Review Macro View Company Positioning 1H 2018 Financials Outlook © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com

  10. Slide 10: Supply Gap

    Supply Gap World Oil Supply and Demand Lack of investment since 2014 Million bbls/d Supply gap projected Investment required Existing supply + planned fields Extra recovery existing fields Demand range Not if, but when Source: IEA © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com 10

  11. Slide 11: Deepwater is Competitive

    Deepwater is Competitive 140 Oil Projects Cost Curve1 120 Deepwater Break-even Price 100 Deepwater continues to gain (bbl/US$) Traditional Shale 80 competiveness 60 40 20 0 0 5,000 10,000 15,000 >50% Deepwater projects Cumulative Peak Oil Production (kboe/d) more competitive than shale 60 Project Ec

  12. Slide 12: Overall FPSO Market

    Overall FPSO Market Historical and Estimated Total FPSO Market Awards 18 Four awards to date in 2018 16 14 12 Up to 10 awards expected in 7 10 2018 3 8 5 6 3 4 6 2019 acceleration anticipated 2 3 3 2 2 1 1 1 1 11 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 e2018e2019 SBM Offsh

  13. Slide 13: Company Positioning

    1H 2018 Review Macro View Company Positioning 1H 2018 Financials Outlook © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com

  14. Slide 14: Vision Statement

    Vision Statement SBM Offshore believes the oceans will provide the world with safe, sustainable and affordable energy for generations to come We share our experience to make it happen © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com 14

  15. Slide 15: We Commit to Optimize, Transform, Innovate

    We Commit to Optimize, Transform, Innovate Optimize Transform Innovate Best in Class Standardization Gas & Renewables floating solutions Operational Future excellence growth © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com 15

  16. Slide 16: Lease and Operate

    Lease and Operate Strong track record: 99% historical uptime Fleet Uptime 99.4% 99.1% 98.3% Producing ~10% of global 99.2% 99.1% 96.8% 97.0% Deepwater oil FPSO Capixaba life-time extension and maintenance 2012 2013 2014 2015 2016 2017 1H 2018 Leading operator © SBM Offshore 2018. All rights reserved

  17. Slide 17: Fast4Ward Philosophy

    Fast4Ward™ Philosophy TM Fast4Ward™ is based on five key principles Our ambition is to transform the 1. Client first business by reducing cycle time to 2. Standardization energy delivery, de-risking 3. Flawless execution projects, and improving quality & 4. Integrated supply chain 5. Enabling digita

  18. Slide 18: The Answer: Reducing Cycle Time

    The Answer TM Fast4Ward™ Better Performance, Delivered Faster Reducing cycle De-risking Enabling lower time projects break-evens Up to 12 months faster; Standardized hull and Lower Capex and Opex Up to US$1 bn NPV gain topsides Less engineering hours Integrated supply chain Greater safety and reliab

  19. Slide 19: Time is Money

    Time is Money 50% Time to First Oil Scenarios1 1 yr gain 40% Fast4WardTM accelerates first On time delivery oil up to 12 months Oil Company IRR 30% 1 yr delay 2 yr delay 20% 3 yr delay 10% Up to US$1 billion gain 0% 30 40 50 60 70 80 90 100 110 120 US$/bbl Improves break-even up to Estimated NPV Gai

  20. Slide 20: De-risking Delivery

    De-risking Delivery Delivery is challenging FPSO projects Fast4WardTM: lower risk and FPSO delivery delay (months) higher return 1.7 TM 1.5 Standardization and supply Deepwater chain integration 1.3 Profitability 1.1 0.9 0.7 Oil production sources 0.5 Experience matters 0.5 0.7 0.9 1.1 1.3 1.5 1.7 1

  21. Slide 21: Gas and Renewables

    Gas and Renewables FLNG FEED New Age new-build FLNG/LPG FEED Associated gas project offshore Cameroon Changing Energy Mix Source: IEA © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com 21

  22. Slide 22: 1H 2018 Financials

    1H 2018 Review Macro View Company Positioning 1H 2018 Financials Outlook © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com

  23. Slide 23: Total Overview

    Total Overview Directional1 Revenue (US$ millions) EBITDA (US$ millions) 835 808 647 431 Underlying 414 1H 2017 1H 2018 1H 2017 1H 2018 Pro-Forma Backlog (US$ billions) Net Debt2 (US$ billions) 16.8 16.1 2.9 2.3 FY 2017 1H 2018 FY 2017 1H 2018 (1) Directional view, presented under IFRS8 Segment repo

  24. Slide 24: Financial Performance per Segment

    Financial Performance per Segment Directional (US$ millions) Lease and Operate Turnkey Other segment: Underlying EBITDA 1H 18 US$(30) million vs 1H17 US$(29) million © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com 24

  25. Slide 25: Financial Highlights | P&L

    Financial Highlights | P&L Directional (US$ millions) Revenues 1,000 835 64 (90) 808 750 500 250 - 1H 2017 Revenues Turnkey L&O 1H 2018 Revenues EBITDA (underlying) 1,000 750 431 40 (55) 500 (2) 414 250 - 1H 2017 Turnkey L&O Other 1H 2018 EBITDA EBITDA Net Income (underlying) 200 150 28 4 (8) 81 100

  26. Slide 26: Sources and Uses of Cash

    Sources and Uses of Cash Directional (US$ millions) Cash from Operations Non-recurring: Other Turritella, Yme investing Cash balance Dec. 2017 878 Sources of cash 407 107 17 Cash consumed (37)1 1H18 (51) Uses of cash (197) (93) (19) (202) Cash balance 842 Jun. 2018 Debt redemption Interest Tax Divid

  27. Slide 27: Group Balance Sheet Directional

    Group Balance Sheet Directional (US$ millions) Dec-31-17 Jun-30-18 Variance Comment Property, plant & equipment and Asset recognition (IFRS 16) and FPSO Liza 1 project 4,692 4,792 100 Intangibles Capex partially offset by depreciation Investments in associates and 304 300 (4) JVs net result other fi

  28. Slide 28: Cash Flow Model and Dividend

    Cash Flow Model and Dividend Company Cash Flows * RCF may also be used for M&A and general corporate purposes Dividend Track Record 2015 2016 2017 Annual Dividend (US$/share) 0.21 0.23 0.25 Y-o-Y Dividend Increase - 10% 9% Share Repurchase (US$, millions) - 166 - © SBM Offshore 2018. All rights rese

  29. Slide 29: Outlook

    1H 2018 Review Macro View Company Positioning 1H 2018 Financials Outlook © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com

  30. Slide 30: Backlog and Borrowings Repayment

    Backlog and Borrowings Repayment As of June 30, 2018 (US$ billions) Pro-forma Directional Backlog1 Average of 63% of L&O backlog represents operating cash flow US$ 16.1 bn L&O Average Portfolio Duration: 11.4 years2 1.6 15.4 1.4 1.2 1 0.8 0.6 0.4 0.2 0.7 0 2H 2018 2020 2022 2024 2026 2028 2030 2032

  31. Slide 31: 2018 Guidance

    2018 Guidance 2018 Directional Revenue guidance of US$1.7 billion, adjusted from US$1.9 billion due to Company assuming Liza 1 remaining fully Company owned Lease & Operate Revenue reiterated at around US$1.3 billion Turnkey Revenue adjusted from around US$0.6 billion to around US$0.4 billion 2018 U

  32. Slide 32: Appendix

    Appendix © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com

  33. Slide 33: Lease and Operate P&L

    Lease and Operate P&L (US$ millions) Directional 1H 2017 1H 2018 Variance Revenue 745 654 (91) Gross Margin 262 218 (44) EBIT 250 208 (42) Depreciation, amortization and impairment (233) (219) 14 EBITDA 482 427 (55) Underlying EBITDA 482 427 (55) Comments Vessels In - Vessels Out Turritella, Yetagun

  34. Slide 34: Turnkey P&L

    Turnkey P&L (US$ millions) Directional 1H 2017 1H 2018 Variance Revenue 90 154 64 Gross Margin 25 51 26 EBIT (28) 238 266 Depreciation, amortization and impairment (5) (12) (7) EBITDA (23) 250 273 Underlying EBITDA (23) 17 40 Comments Projects In Liza II (FPSO) FEED/EPC, NewAge (FLNG) FEED Projects

  35. Slide 35: Group P&L

    Group P&L (US$ millions) Directional 1H 2017 1H 2018 Variance Revenue 835 808 (27) Gross Margin 288 268 (20) Overheads (96) (87) 9 Other operating income / (expense) 1 232 231 EBIT 193 414 221 Underlying EBIT 193 181 (12) Depreciation, amortization and impairment (238) (233) 5 EBITDA 431 647 216 Und

  36. Slide 36: Cash Flow Statement

    Cash Flow Statement (US$ millions) Directional 1H 2018 EBITDA 647 Addition/(release) provision and non-cash items (218) Changes in operating assets and liabilities (121) Income taxes paid (19) Net cash flows from (used in) operating activities 289 Capital expenditures (141) Other investing activitie

  37. Slide 37: IFRS 10 & 11

    IFRS 10 & 11 Lease Contract Joint Ventures SBM Share % Directional IFRS Type FPSO N’Goma FL 50% Proportional Equity FPSO Saxi Batuque FL 50% Proportional Equity FPSO Mondo FL 50% Proportional Equity FPSO Cdde de Ilhabela FL 62.25% Proportional Full consolidation FPSO Cdde de Maricá FL 56% Proportion

  38. Slide 38: Directional Group Net Debt and Borrowings

    Directional Group Net Debt and Borrowings (US$ millions) Directional Net Debt(1) Average Cost of Debt 1H18 Borrowings(2) 1H18 Undrawn Facilities + Cash 1H18 $2,988 Directional (1) Net debt as of June 30, 2018 includes a lease liability recognized for US$202 following the early adoption of IFRS 16. F

  39. Slide 39: Group Loans & Borrowings

    Group Loans & Borrowings (US$ millions) Net Book Value as of June 30, 2018 Full Amount IFRS Directional PROJECT FINANCE FACILITIES DRAWN FPSO Cidade de Paraty 574 574 291 MOPU Deep Panuke 233 233 233 FPSO Cidade de Anchieta 354 354 354 FPSO Cidade de Ilhabela 848 848 528 FPSO N’Goma FPSO 300 0 150 N

  40. Slide 40: Revised RCF Covenant Definitions

    Revised RCF Covenant Definitions Key Financial Covenant Definition Solvency Ratio Tangible Net Worth(1) divided by Total Tangible Assets(2) > 25% Leverage Ratio Consolidated Net Borrowings(3) divided by Adjusted EBITDA(4) – <4.25x at December 31, 2017 – <3.75x thereafter Interest Cover Ratio Adjuste

  41. Slide 41: Revolving Credit Facility

    Revolving Credit Facility Key Characteristics Covenant Calculations Historical and Estimated Awards Amount US$1.0 billion Tangible Net Worth divided by Total 6 years + one-year extension Solvency Tangible Assets Tenor Ratio Min FY17 1H18 Door-to-door maturity of 7 years 25% 32.5% 35.5% Accordion SBM

  42. Slide 42: SBM Lease and Operate Portfolio

    SBM Lease and Operate Portfolio L&O Portfolio Average Duration: 11.4 years1 Vessel Name Field Name Client Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 L

  43. Slide 43: Concentrated Industry Experience

    Concentrated Industry Experience 250 Cumulative Operating Experience (Yrs) 200 150 Unique track record in EPC, FPSO delivery and operations 100 3 800 kboepd 50 1 600 kboepd 0 1 6 11 16 21 26 31 36 41 Cumulated FPSOs Built (as main contractor) SBM Offshore’s unique experience = Industry peers, bubble

  44. Slide 44: Delivering the Full Product Lifecycle

    Delivering the Full Product Lifecycle Engineering Procurement 60 years of industry firsts Integrated supply chain Leading edge technology Global efficiencies Local sourcing Product Life Extension Construction Leader in FPSO relocation Strategic partnerships World class after sales Unrivalled project

  45. Slide 45: © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com

    © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com

SBM Offshore — H1 2018 Earnings Presentation on 6ix