Sbm Offshore Nv · EURONEXT:SBMO

Sbm Offshore Nv — H1 2017 Earnings Presentation

50 slides from Sbm Offshore Nv's earnings presentation, Aug 9, 2017

  1. Slide 1: Half Year 2017 Earnings Update

    Half Year 2017 Earnings Update August 9, 2017 © SBM Offshore 2017. 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 FPSO Player Worldwide

    Leading FPSO Player Worldwide The Company Performance Headquartered in The Netherlands c. 300 years of cumulative operational experience 5 Regional Centers 99.0% total historical uptime 10 Operational Shore Bases >1.0 MM bopd actual production Lease & Operate Fleet Financials 1H17 (US$ billion, unau

  4. Slide 4: Experience Matters

    Experience Matters Performance Liza Award, in line with Yme Settlement, Guidance Sale Turritella Industry >1 million barrels Strategic Outlook daily production Positioning Directional Client Reporting Engagement © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com 4

  5. Slide 5: 1H 2017 Review

    1H 2017 Review Macro View Company Positioning 1H 2017 Financials Outlook © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com

  6. Slide 6: Award FPSO Liza

    Award FPSO Liza ExxonMobil FPSO lease contract award for next phase Liza project in Guyana confirmed on June 22nd, 2017 First major FPSO award in the industry over last 18 months Contract duration of 10 years with future source: ExxonMobil website extension options up to total of 20 years Expected s

  7. Slide 7: Total Overview

    Total Overview Directional (Unaudited) Revenue (US$ millions) EBITDA (US$ millions) 939 835 Underlying EBITDA 431 349 327 1H 2016 1H 2017 1H 2016 1H 2017 Pro-Forma Backlog (US$ billions) Net Debt (US$ billions) 17.1 17.0 3.1 3.0 FY 2016 1H 2017 FY 2016 1H 2017 © SBM Offshore 2017. All rights reserve

  8. Slide 8: HSSE

    HSSE Health & Safety 1.2 Record safety performance Total Recordable Injury Frequency Rate (per 200k man-hours) 1 0.8 0.6 0.4 SBM Offshore Life Day 0.2 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H17 Oil Majors Benchmark1 SBM Offshore Fleet Environmental Impact GHG Emissions2 Energy Consumption3

  9. Slide 9: Compliance Update

    Compliance Update Discussions with parties in Brazil ongoing Discussions with DoJ advancing SBM Offshore remains committed to engage with all relevant authorities No certainty can be given on timing or outcomes © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com 9

  10. Slide 10: Macro View

    1H 2017 Review Macro View Company Positioning 1H 2017 Financials Outlook © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com

  11. Slide 11: New Reality Deep Water

    New Reality Deep Water Average Deep Water Break-Even Decline Estimates Percent Change of Price Level 2015 vs. 2017 (projects coming online 2017-2025) Norway Johan Castberg UK c. US$ 43 c. US$35 Deep water break-even c. US$ 46 c. -55% prices reduced by up to 55% Ultra-deep water rig rate -50% on aver

  12. Slide 12: Deep Water Competitiveness: Liza

    Deep Water Competitiveness: Liza Illustrative 50.000 Net Liza Phase 1 Acre Delaware Basin Development Development Faster production ramp up Peak Production 120,000 BOED 120,000 BOED Peak Production Oil 120,000 BOD 78,000 BOD Initial Investment to Peak Production 3 Years 10+ Years Lower unit developm

  13. Slide 13: FPSO Market

    FPSO Market Average FPSO Contract Awards per Year Gradual recovery 14 7 Structurally smaller market 2010-2014 2017 forward 25 1 Major award 1H17 20 15 10 8 7 5 1 1 2 Cautiously 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 e2017e2018 optimistic outlook SBM Awards FPSO Awards FPSO Awa

  14. Slide 14: Project Delivery

    Project Delivery SBM Offshore delivered 10 out of 16 FPSOs * closest to schedule On-time delivery a rarity… * * * …but critical factor in upstream economics * Experience is key Non-SBM Offshore 11 month delay results in Contractors ~US$600 million lower project NPV1 * * * Experience matters N=50 -5

  15. Slide 15: Concentrated Industry Experience

    Concentrated Industry Experience 300 Cumulative FPSO Operating Experience (Yrs) 250 FPSO delivery and operations SBM track record Offshore 200 150 100 3 600 Learning from experience: kboepd standardization 2 600 50 kboepd 1 200 kboepd 0 1 6 11 16 21 26 31 36 41 Total number FPSOs built (Lease and EP

  16. Slide 16: Company Positioning

    1H 2017 Review Macro View Company Positioning 1H 2017 Financials Outlook © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com

  17. Slide 17: Floating Solutions Strategy

    Floating Solutions Strategy Optimize Our Current Business Transform Deep Water Projects Innovate Gas and Renewables © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com 17

  18. Slide 18: Production and Delivery

    Production and Delivery FPSO Firenze • Italy FPSO Cidade de Anchieta • Brazil FPSO Okha • Australia 14 days of >1million bbls production in FPSO Brasil • Brazil 1H17 FPSO Cidade de Paraty • Brazil FPSO II • Philippines FPSO II • Brazil FPSO Cidade de Maricá • Brazil >10% of total deep water oil prod

  19. Slide 19: Leveraging Experience

    Leveraging Experience Lifecycle learning Optimal design and Group Technical Standards (GTS) execution model Client functional specs Up to 30% Efficient, de-risked solutions Client MINIMAL cost saving specs potential Client specs Contractor specs Optimizing the model Source: SBM Offshore company rese

  20. Slide 20: Capitalizing on Experience

    Capitalizing on Experience First FPSO hull on order + Contracted SWS(1) • Work commenced July 2017 + = • Compatible with market prospects Phased yard expenditure • 2017 c. US$20 million • 2018 c. US$55 million 80s Discovery to FPSO Contract 90s FPSO Contract to 1st Oil 00s Transforming Fast4Ward FPS

  21. Slide 21: Leveraging Gas Experience

    Leveraging Gas Experience FLNG Generic – FEED SMR1 Petrobras – Twin Hull – Award DNE3 New Build - Generic - Niche DMR2 Prelude DNE3 Turret FLNG FEED award 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Concepts, designs and Encana– Deep Ichthys Sanha LPG FPSO Panuke Cash Maple - SM

  22. Slide 22: 1H 2017 Financials

    1H 2017 Review Macro View Company Positioning 1H 2017 Financials Outlook © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com

  23. Slide 23: Total Overview

    Total Overview Directional (US$ millions, unaudited) Revenue EBITDA EBIT 939 835 Underlying EBITDA 431 349 Underlying EBIT 327 193 146 124 1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017 © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com 23

  24. Slide 24: Lease and Operate P&L

    Lease and Operate P&L (US$ millions, unaudited) Directional 1H 2016 1H 2017 Variance Revenue 600 745 145 Gross Margin 183 262 79 EBIT 170 250 80 Depreciation, amortization and impairment (198) (233) (35) EBITDA 368 482 114 Directional Comments Vessels In FPSO Cidade de Saquarema and FPSO Turritella

  25. Slide 25: Turnkey P&L

    Turnkey P&L (US$ millions, unaudited) Directional 1H 2016 1H 2017 Variance Revenue 338 90 (248) Gross Margin 98 25 (73) EBIT 2 (28) (30) Depreciation, amortization and impairment (5) (5) - EBITDA 6 (23) (29) Directional Comments Projects Completed Ichthys and Prelude Turret offshore commissioning ph

  26. Slide 26: Group P&L

    Group P&L (US$ millions, unaudited) Directional 1H 2016 1H 2017 Variance Revenue 939 835 (104) Gross Margin 281 288 6 Overhead (106) (96) 11 Other operating income / (expense) (51) 1 52 EBIT 124 193 69 Underlying EBIT 146 193 47 Depreciation, amortization and impairment (203) (238) (35) EBITDA 327 4

  27. Slide 27: Directional Reporting

    Directional Reporting IFRS - Finance Lease recognizes result ahead of cash receipts Cash flow transparency Closer to cash Directional - consistent accounting treatment with IFRS as core basis Full consolidation Finance Lease IFRS based, audited Proportionate Consolidation 1 2 Operating lease Equity

  28. Slide 28: Group Cash Position

    Group Cash Position (US$ millions, unaudited) Directional Cash Flow 2,000 1,500 275 (187) 1,000 (47) (85) 823 (26) 752 500 0 Cash Cash from Repayment of Shareholder Net interest paid Other Cash Dec-31-16 operating borrowings and returns Jun-30-17 activities loans © SBM Offshore 2017. All rights rese

  29. Slide 29: Group Balance Sheet Directional

    Group Balance Sheet Directional (US$ millions, unaudited) Dec-31-16 Jun-30-17 Variance Comment Property, plant & equipment and 5,447 5,220 (227) Depreciation Intangibles Investments in associates and 328 313 (15) Net loan repayment, JV net result other financial assets Construction contracts 15 23 8

  30. Slide 30: Post-Period Events

    Post-Period Events Sale of Turritella Finance & accounting1 Cash implications1 • Directional gain c. US$120 million • Total of c. 1 billon cash proceeds • IFRS loss c. US$130 million • SBM Offshore cash proceeds share c. • Same life-time project result Directional and US$540 million IFRS • Net debt

  31. Slide 31: Outlook

    1H 2017 Review Macro View Company Positioning 1H 2017 Financials Outlook © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com

  32. Slide 32: Pro-Forma Backlog and Debt Repayment

    Pro-Forma Backlog and Debt Repayment As of June 30, 2017 (US$ billions) Pro-Forma Directional Backlog(1) US$ 17.0 bn 1.6 Average of 63% of L&O backlog represents operating cash flow L&O Average Portfolio Duration: 12.1 years(2) 1.4 16.9 1.2 1 0.8 0.6 0.4 0.2 0.1 0 Lease & Operate Turnkey 2H 2017 201

  33. Slide 33: 2017 Guidance

    2017 Guidance Reiterating 2017 Directional Revenue guidance around US$1.7 billion – Lease & Operate around US$1.5 billion – Turnkey around US$200 million 2017 Underlying Directional EBITDA guidance is updated from around to above US$750 million – Does not include: – the expected, non-recurring posit

  34. Slide 34: Experience Matters

    Experience Matters Performance Liza Award, in line with Yme Settlement, Guidance Sale Turritella Industry >1 million barrels Strategic Outlook daily production Positioning Directional Client Reporting Engagement © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com 34

  35. Slide 35: Appendix

    Appendix © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com

  36. Slide 36: IFRS 10 & 11

    IFRS 10 & 11 Lease Contract Joint Ventures SBM Share % Directional IFRS Type FPSO N’Goma FPSO 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% Propo

  37. Slide 37: Group Loans & Borrowings

    Group Loans & Borrowings (US$ millions) Net Book Value as of June 30, 2017 Full Amount IFRS Directional PROJECT FINANCE FACILITIES DRAWN FPSO Cidade de Paraty $ 669 $ 669 $ 338 MOPU Deep Panuke 294 294 294 FPSO Cidade de Anchieta 383 383 383 FPSO Cidade de Ilhabela 955 955 594 FPSO N’Goma FPSO 383 0

  38. Slide 38: 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 FY16 1H17 Door-to-door maturity of 7 years 25% 32.4% 34.2% Accordion SBM

  39. Slide 39: 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) – <4.50x at June 30, 2017 – <4.25x at December 31, 2017 – <3.75x thereafter In

  40. Slide 40: Pro-Forma Lease and Operate Portfolio

    Pro-Forma Lease and Operate Portfolio L&O Portfolio Average Duration: 12.1 years(1) 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 204

  41. Slide 41: Directional Group Net Debt and Borrowings

    Directional Group Net Debt and Borrowings (US$ millions) Directional Net Debt Average Cost of Debt 5,000 4.6% 4.8% 4,000 3,000 2,000 3,107 2,998 1,000 0 FY16 1H17 (1,000) FY16 1H17 Directional Directional Bridge Loans Revolving Credit Other Project Finance Cash 1H17 Borrowings(1) 1H17 Undrawn Facili

  42. Slide 42: Directional Balance Sheet

    Directional Balance Sheet bridge - step 1 of 2: Proportional Consolidation (US$ millions, unaudited) In the first step, Vessel JVs are each consolidated at SBM Offshore’s share of Unaudited, pro-forma ownership BS IFRS Step 1 BS Proportional Impact on equity accounted JVs: 2017 Q2 Proportional 2017

  43. Slide 43: Directional Balance Sheet

    Directional Balance Sheet bridge - step 2 of 2: Finance to Operating Lease (US$ millions, unaudited) In the second step, the Finance leases (FL) are accounted for as Operating Unaudited, pro-forma leases (OL) BS Proportional BS IFRS 2 Step 1 BSProportional BS Directional 2017 Q2 Fin to oper lease Pr

  44. Slide 44: Directional Cash Flow Statement

    Directional Cash Flow Statement bridge - step 1 of 2: Proportional Consolidation (US$ millions, unaudited) Unaudited, pro-forma CFS IFRS Step 1 CFS Proportional Similar to the step 1 with the balance sheet, in 2017 Q2 Proportional 2017 Q2 the first step, Vessel JVs are each consolidated at SBM Offsh

  45. Slide 45: Directional Cash Flow Statement

    Directional Cash Flow Statement bridge - step 2 of 2: Finance to Operating Lease (US$ millions, unaudited) Unaudited, pro-forma In the second step, the Finance leases (FL) are CFS Proportional Step 2 CFS Directional accounted as Operating leases (OL) 2017 Q2 Fin to oper lease 2017 Q2 EBITDA 316 115

  46. Slide 46: Cash Flow Model and Allocation

    Cash Flow Model and Allocation Lease & Operate Cash Generation Cash Flow After Debt Funds: - Dividends - Growth Long Term Debt at Project Level: - Model is project finance plus up to c.50% equity sell down - Capacity for 2 FPSO awards p.a. Turnkey Cash Generation - RCF provides bridge financing Disc

  47. Slide 47: Energy Mix Outlook

    Energy Mix Outlook Oil remains leading Changing Energy Landscape 20,000 18,000 16,000 14,000 Gas gains market share 12,000 mtoe 10,000 8,000 6,000 Renewables strong growth 4,000 2,000 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Oil Gas Coal Renewables1 Gas main transition fuel 1 Includes nuc

  48. Slide 48: Floating Wind

    Floating Wind Strongest winds are further offshore Offshore renewable energy generation SBM Offshore floating (example offshore Europe) potential and mooring solution 22% 57% 20% floating wind fixed wind other Source: World Wind Energy Association Source: Indicta 60 years SBM Offshore experience app

  49. Slide 49: 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

  50. Slide 50: © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com

    © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com

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