Subsea 7 S.a. · OSL:SUBC
Subsea 7 — Investor Presentation (June 2019)
61 slides from Subsea 7's investor presentation, June 2019
Slide 1: Investor Presentation June 2019
Investor Presentation June 2019 1 © Subsea 7 - 2019 subsea7.com
Slide 2: Index
Index What we do Our differentiators Our priorities Our outlook Our financials Appendix 2 © Subsea 7 - 2019 subsea7.com
Slide 3: Subsea 7 – In Summary
Subsea 7 – In Summary Our vision is to lead the way in the delivery of offshore projects and services for the energy industry. In an evolving energy sector, we create sustainable value by being the industry’s partner and employer of choice in delivering the efficient offshore solutions the world nee
Slide 4: © Subsea 7 - 2019 subsea7.com
4 4 © Subsea 7 - 2019 subsea7.com
Slide 5: Our market segments
Our market segments Life of Field 2018 Revenue i-Tech 7 is a progressive and $4.1 billion pioneering subsea life of field partner delivering Inspection, SURF and Conventional Repair and Maintenance solutions Subsea 7 is a global leader in to offshore energy developments. offshore energy construction
Slide 6: SURF and Conventional
SURF and Conventional 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 com
Slide 7: Recent Operational highlights
Recent Operational highlights Snorre (Norway) PUPP (Nigeria) Ærfugl (Norway) West Nile Delta (Egypt) Hasbah (Middle East) Hornsea One (UK) Dolphin Energy ERPS PLSVs (Brazil) (Abu Dhabi) 7 © Subsea 7 - 2019 subsea7.com
Slide 8: Our PLSV activities offshore Brazil
Our PLSV activities offshore Brazil Servicing life of field and new construction needs for Petrobras in all water depths • Long-term day-rate contracts to 2021 / 2022 • Performing production maintenance and new construction activities • $0.9bn of firm backlog (Dec 2018) • July 2017: contract extensi
Slide 9: Life of Field
Life of Field • Leading Life of Field partner • Over 165 ROVs and a for clients throughout the oil fleet of ROV support and gas industry vessels • Over 35 year’s experience • Global business with operational bases in the UK, Brazil, the US and Australia 9 © Subsea 7 - 2019 subsea7.com
Slide 10: Life of Field: products and services
Life of Field: products and services Life of Field solutions built on core products and services • ROV Intervention • Diving • Survey, Inspection & Data Management • Well simulation & sampling • Tool Management & Engineering Solutions • Pipeline Repair & Tree Installation Highly skilled and experien
Slide 11: Life of Field track record
Life of Field track record Over 1000 successful Inspection, Over 18,000 intervention tooling Repair and Maintenance projects products designed, delivered and completed managed Over 300 successful ROV drill rig exploration hydrocarbon sampling missions support worldwide since 1976 using ROVs Global e
Slide 12: Renewables and Heavy Lifting
Renewables and Heavy Lifting 1991 SHL 2016 Beatrice 2018 SOC Joint Venture EPCI awarded acquired by established to Subsea 7 Subsea 7 2018 Comprehensive 2009 First 2013 Subsea 7 2017 SHL balance of plant Renewables increases its acquired by offering: T&I and EPCI Project for focus on SHL renewables S
Slide 13: Subsea 7’s Renewable energy focus
Subsea 7’s Renewable energy focus Subsea 7 is typically contracted to carry out, under its Seaway 7 brand: Wind Turbine 1. Design, procurement and installation Subsea 7’s Generators of foundation piles and jackets (SHL) (WTG) scope 2. Design procurement and installation of Inner Array Cables (SOC) O
Slide 14: Index
Index What we do Our differentiators Our priorities Our outlook Our financials Appendix 14 © Subsea 7 - 2019 subsea7.com
Slide 15: Our Differentiators
Our Differentiators We’re different from our competition because we’re more creative, more reliable, and more focused on what our clients really need. Culture Global team with expertise, passion and commitment to deliver. Creativity Ability to innovate through technology, processes and partnerships.
Slide 16: Creating the right technological solutions
Creating the right technological solutions Pipeline Bundles and Towed Solutions Flowline solutions Riser solutions EHTF 16 © Subsea 7 - 2019 subsea7.com
Slide 17: Digitalisation
Digitalisation • Strategy in development with new VP assigned. Focus areas within i-Tech 7, early engagement and Pipeline Bundles • Planning software made available by Schlumberger to Subsea Integration Alliance for early engagement • i-Tech 7 and Leidos have a 5 year digitalisation partnership agre
Slide 18: A modern and versatile fleet of 34 vessels
A modern and versatile fleet of 34 vessels Vessels by Ownership type Ownership Vessels by Age 0-5 years 6 Owned 10 10 6-11 years 28 14 Chartered 12+ years Vessels by Operational category Rigid-lay/Heavy Construction Diving support Life of Field Construction flexlay Renewables & Heavy Lift Hook up 0
Slide 19: 34 Vessels including 31 active vessels at end Q1 ‘19
34 Vessels including 31 active vessels at end Q1 ‘19 Under Construction Reel-lay Vessel to be named Seven Vega Long-term charter from a vessel-owning joint venture Stacked 19 © Subsea 7 - 2019 Chartered from a third party subsea7.com
Slide 20: Our People
Our People • 11,000 people in our workforce at end 2018, including over 1,700 engineers • We deliver projects based on our expertise and know-how • Our highly skilled and experienced workforce deliver projects safely and reliably • We recognise the importance of diversity and strive to achieve it 1%
Slide 21: Our Values
Our Values Our values define how we conduct our business Safety Performance Our goal is an incident-free workplace. We work every day, We are driven to achieve the outcomes our clients want. everywhere to make sure all our people are safe. We are trusted to achieve superior performance from every pr
Slide 22: Corporate Responsibility – Safety and Environment
Corporate Responsibility – Safety and Environment • We are committed to operating in a safe, ethical and responsible manner Clean Operations $3.1m costs Lost-time incident 5,000 saved 2019 Targets: Frequency rate (%) 3,600 - Lost-time incident 3,800 3,300 frequency rate <0.03 0.06 0.06 (target lower
Slide 23: Corporate Responsibility – Integrity, Diversity and Society
Corporate Responsibility – Integrity, Diversity and Society Offshore Onshore Female Female Over 67 community assistance 1% 12% events delivered in 2018 Gender mix Onshore Male Offshore 33% 91 Nationalities in Male 54% our workforce London – STEM girls in engineering day Operating in 33 Number of emp
Slide 24: Index
Index What we do Our differentiators Our priorities Our outlook Our financials Appendix 24 © Subsea 7 - 2019 subsea7.com
Slide 25: Flexible Solutions
Flexible Solutions Our clients require flexible solutions: Collaboration • Comprehensive integrated Model offering with alliance partners OneSubsea being developed in to a Joint Venture. Fully Standalone Integrated SURF • Successful collaboration models with certain independent clients including Ake
Slide 26: Our Partnerships
Our Partnerships • We have a collaboration model in Successful completion of the Volund Infill project for partnership with certain clients to Aker BP provide cost effective solutions based on long-term relationships. • Early engagement and long-term collaborative relationships with mutual benefits
Slide 27: Early Engagement
Early Engagement • Significant increase in early engagement activity in all Our supplier-led studies regions • Subsea Integration Alliance and Subsea 7 provide supplier-led solutions • Xodus Group provide client-led solutions • Large greenfield FEED awards to Subsea Integration Alliance by Woodside
Slide 28: Subsea Integration Alliance
Subsea Integration Alliance + = Enhanced production Reduced cost and risk Pore-to-shore perspective 28 © Subsea 7 - 2019 subsea7.com
Slide 29: Projects completed and awarded
2 8 70+ Projects Projects Integrated concept completed awarded studies and pre-FEEDs Completed and ongoing projects: • Murphy Dalmatian (completed) • BP Mad Dog 2 • TAQA Otter (completed) • Fieldwood Katmai • BP Manuel • ExxonMobil West Barracouta • Woodside SNE Phase 1 (FEED) • Woodside Scarborough
Slide 30: A leader in integrated projects
A leader in integrated projects Woodside FEED awards with commitment to proceed to EPIC pending FID SNE Phase 1 Scarborough Julimar • Integrated award • Integrated award • Offshore Australia • Offshore Senegal • Offshore Australia • 22km Tie-back • Flexible riser solution • 14” Lazy wave risers • 18
Slide 31: Competitive landscape for full life cycle integrated solutions
Competitive landscape for full life cycle integrated solutions EXPLORATION DOWN-HOLE / FEED SPS / EPIC LIFE OF FIELD/ DECOMISSIONING GEOPHYSICS DATA MANUFACTURE WELL SERVICES 31 © Subsea 7 - 2019 subsea7.com
Slide 32: Subsea 7’s approach and strategy through the cycle
Subsea 7’s approach and strategy through the cycle New-build vessels: PLSVs Seven Arctic Global alliance with Seven Kestrel Cost reduction Acquisition: Acquisition: KBR/ Granherne programmes Middle East Renewables 2015/2016 Investment: Early engagement 2015 2016 2017 2018 New rigid reel-lay Creation
Slide 33: Drivers of lower costs for projects
Drivers of lower costs for projects • Earlier engagement enables better engineering, introduction of Earlier engagement integrated and full lifecycle solutions and application of new Closer collaboration technology Leaner processes Supply chain deflation • Closer collaboration with alliances and par
Slide 34: 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 optimsiation Angolan Content Local Competition Sourcing Sourcing, Final price reduction content and specification specifications, So
Slide 35: Priorities for cash
Priorities for cash Invest in the business Targeted acquisitions to enhance our strategic growth areas Maintain investment $413 million net cash at 31 March grade profile 2019 $1.8 billion returned to shareholders Return to shareholders in special dividends and buybacks since 2011 35 © Subsea 7 - 20
Slide 36: Index
Index What we do Our differentiators Our priorities Our outlook Our financials Appendix 36 © Subsea 7 - 2019 subsea7.com
Slide 37: Recent awards - driven by our differentiators
Recent awards - driven by our differentiators • 22 offshore developments North Sea • Johan achieved FID in 2018 Gulf of Mexico Castberg • Vito • Subsea 7 were contracted • Nova • Katmai • Penguins to complete SURF work on • Manuel • IRM Equinor 7 of these developments • VCOW • Triton Knoll Renewable
Slide 38: Cyclical recovery in Oil and Gas
Cyclical recovery in Oil and Gas Re-engineered Projects Total Zinia Backlog BP Mad Dog 2 Increase Brownfield Tie-Backs Key Nexen Buzzard Vessel AKER BP Aefugl Utilisation Pricing Greenfield Construction Power SNE Phase 1 38 © Subsea 7 - 2019 subsea7.com
Slide 39: The outlook for offshore oil and gas projects is improving
The outlook for offshore oil and gas projects is improving Length of subsea pipelines to be installed Number of subsea trees to be installed per year, by pipeline type per year 4,500 450 4,000 400 3,500 350 3,000 300 2,500 250 2,000 200 1,500 150 1,000 100 500 50 - - Tie-back flowlines Infield flowl
Slide 40: Offshore Wind Market Trends
Offshore Wind Market Trends Cumulative GW Installations Levelised Cost of Energy Trend 156 140 160 140 133 120 120 LCOE dropping LCOE (Eur/MWh) 107 100 CAGR 16% 100 30% every 5 years 80 73 80 -30% GW 60 60 48 38 40 40 Actuals CAGR 12% 20 20 Forecast 0 0 2010 2015 2020 2025 2030 2018 2019 2020 2021 2
Slide 41: Business Unit Outlook
Business Unit Outlook SURF and Conventional ─ Tendering and award activity is increasing ─ Further large Greenfield market awards expected second half of the year Renewables and Heavy Lifting ─ Opportunities for T&I work in Taiwan ─ EPCI and T&I opportunities in Europe ─ Low level of work in backlog
Slide 42: Summary
Summary • Market award activity in offshore oil and gas has begun to recover • Subsea 7 has taken cyclical opportunities to grow and strengthen its business for the future and is positioned well for the next phase of the cycle • Subsea 7’s Values-driven strategy and strong financial position have su
Slide 43: Index
Index What we do Our differentiators Our priorities Our outlook Our financials Appendix 43 © Subsea 7 - 2019 subsea7.com
Slide 44: Our backlog and order intake
Our backlog and order intake Backlog of $5.2 billion, as at 31 March 2019 Backlog by Execution Date Backlog by Service Capability First quarter highlights • $1.1 billion new awards an escalations SURF SURF and and Conventional (2) 2021+ $4.4bn Conventional • Book-to-bill of 1.3x $0.8bn 2019 $4.2bn $
Slide 45: Income statement – Q1 highlights
Income statement – Q1 highlights Three months ended 31 March 2019 31 March 2018 In $ millions, unless otherwise indicated Unaudited Unaudited Revenue 859 809 Net operating loss (NOI) (10) (8) Loss before taxes (29) (29) Taxation 10 12 Net loss (19) (18) Adjusted EBITDA(1) 111 103 Adjusted EBITDA mar
Slide 46: First Quarter Business Unit performance
First Quarter Business Unit performance Revenue Net Operating Income ($8m) $859m $809m ($10m) $13m $53m $60m Renewables & Heavy $173m $4m Lifting $52m Life of Field ($3m) ($4m) SURF & Conventional $747m ($4m) $584m ($9m) Q1 2019 Q1 2018 Q1 2019 Q1 2018 Note: Corporate segment (not presented): net op
Slide 47: 2014 - 2018 costs overview
2014 - 2018 costs overview Maintaining cost discipline as the activity levels recover $ billion Vessels and other 7 costs(1): Including vessel 6.0bn costs, onshore facilities, IT 6 infrastructure and other 0.8 fixed overheads 5 0.4 4.2bn 3.9bn Depreciation and 4 2.0 0.8 3.4bn amortisation: excludes
Slide 48: Adjusted EBITDA progression
Adjusted EBITDA progression • 2019 EBITDA guidance for lower than 2018 in absolute terms but to remain double-digit percentage margin • Gradual margin recovery expected as market activity increases Average 32% Average 21% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2013 | 20
Slide 49: Our principal margin drivers
Our principal margin drivers Total vessel Number of projects Backlog value by Costs ($bn) utilisation >$300m completed year awarded 82% 72% 66% 61% 70% 2013 and 2.0 2014 earlier 1.4 2015 2016 1.0 1.0 2018 0.8 2017 0.8 0.8 0.6 0.5 0.5 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2
Slide 50: Liquidity and financial strength
Liquidity and financial strength Robust balance sheet • Net cash of $413 million – excludes lease liabilities of $412m Strong financial flexibility • Cash and cash equivalents of $666 million • Borrowings of $253 million • Five-year $656 million revolving credit facility undrawn As at 31 March 2019
Slide 51: Summary balance sheet
Summary balance sheet 31 Mar 2019 31 Dec 2019 31 Mar 2019 31 Dec 2019 Unaudited Audited Unaudited Audited In $ millions In $ millions Assets Equity & Liabilities Total equity 5,682 5,722 Non-current assets Non-current liabilities Goodwill 793 751 Non-current portion of borrowings 228 234 Property, p
Slide 52: Summary of first quarter 2019 cash flow
Summary of first quarter 2019 cash flow 6 (36) 111 $m (68) 765 (75) (6) (24) (8) 666 Cash at EBITDA Increase in Tax Capex Share Repayment of Lease payments Other Cash at 1 January 2019 net operating paid repurchases borrowings 31 March 2019 liabilities • Net cash of $413 million at 31 March 2019 – e
Slide 53: Summary of 2019 cash flow
Summary of 2019 cash flow $ millions Cash and cash equivalents at 31 Dec 2018 765 Includes increase of $6 million in net operating Net cash generated from operating activities 58 liabilities Net cash flow used in investing activities (46) Includes expenditure on PPE of $66 million Includes $75m on s
Slide 54: Financial guidance
Financial guidance Full year 2019 Guidance (including IFRS 16 adjustments) Revenue Broadly in line with 2018 Adjusted EBITDA (1) Lower than 2018, double digit percentage margin Net Operating Income Positive for the Group Administrative expense $260 million - $280 million Net finance cost $10 million
Slide 55: IFRS 16 ‘Leases’ guidance
IFRS 16 ‘Leases’ guidance • IFRS 16 ‘Leases’ became effective 1 January 2019. IFRS 16 2019 forecast impact • Requires the Group to recognise: Income Statement ➢ a right-of-use asset for long-term leases, to be amortised straight-line over duration of the Lease expense Decrease by $100m - $110m lease
Slide 56: Appendix
Appendix Major project progression Track record ADR Forward looking statement Contact details 56 © Subsea 7 - 2019 subsea7.com
Slide 57: Major project progression
Major project progression • Continuing projects >$100m between 5% and 95% complete as at 31 March 2019 excluding PLSV and Life of Field day-rate contracts Sonamet (Angola) WND GFR (Egypt) Announced Hasbah (Saudi Arabia) size of project Sole (Australia) Production Uplift Pipelines (Nigeria) Major Sno
Slide 58: Track record key
• Aasta Hansteen, Equinor • Beatrice wind farm, • Maria, Wintershall BOWL • Nova, Wintershall • Borkum II, Trianel • IRM Services, Equinor • Triton Knoll, Innogy • Johan Castberg, Equinor • Snorre, Equinor • Shearwater, Shell • Skogul, Aker BP • Buzzard ph. 2, Nexen • Aerfugl, Aker BP • Culzean, Mae
Slide 59: 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 8662492593 London: +44 207 547 6500 Hong Kong: +852 2203 7854 e-mail: db@astfi
Slide 60: 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 61: Contact: Isabel Green, Investor Relations Director
Contact: Isabel Green, Investor Relations Director eMail: isabel.green@subsea7.com Direct Line +44 20 8210 5568 Website www.subsea7.com 61 © Subsea 7 - 2019 subsea7.com