Oceaneering International, Inc. · NYSE:OII
Oceaneering International — Energize 2005: New Year, New Paradigms
49 slides from Oceaneering International's conference presentation, January 2005
Slide 1: Energize 2005: New Year, New Paradigms
Energize 2005: New Year, New Paradigms San Francisco - January 2005 Marvin J. Migura Sr. Sr. VP VP && CFO CFO Oceaneering Oceaneering International, International, Inc. Inc. Safe Safe Harbor Harbor Statement Statement Statements Statements in in this this presentation presentation that that express
Slide 2: Why Oceaneering?
WHY OCEANEERING? • Exposure to All Phases of the Energy Cycle – Leading Market Positions •• ROVs, ROVs, Umbilicals, Umbilicals, and and Inspection Inspection • Leveraged to Deepwater and Subsea Completions • Benefiting from Capital Expansion Initiatives • Strong Balance Sheet • Substantial Cash Flow
Slide 3: Earnings Outlook
Earnings Outlook 3.00 3.00 2.50 2.50 in $$ Share in 2.00 2.00 Per Share 1.50 1.50 Earnings Per Earnings 1.00 1.00 0.50 0.50 0.00 0.00 2001 2001 2002 2002 2003 2003 2004* 2004* 2005* 2005* 2006* 2006* ** OII OII Range Range Mid- Mid-Point Guidance Mid-Point GuidanceNovember November 2004 2004
Slide 4: 2004 Estimate
2004 Estimate 4thth Quarter Operating Environment … •• Improved Improved Subsea Subsea Projects Projects Profits Profits –– Hurricane Hurricane Ivan Ivan Inspection Inspection & & Repair Repair Work Work •• Increased Increased Subsea Subsea Products Products Sales Sales –– Umbilicals Umbilicals and
Slide 5: 2005 Estimate
2005 Estimate Depends on… • Escalation in ROV Contribution –– Increase Increase in in Floating Floating Rig Rig Demand Demand –– Full Full Year Year Contribution Contribution of of Stolt Stolt and and Fugro Fugro ROV ROV Acquisitions Acquisitions • Additional Subsea Products Profits –– Benefit Benef
Slide 6: 2006 Estimate
2006 Estimate Depends on… • Additional Subsea Products Profits –– Umbilicals Umbilicals & & OIE OIE Product Product Sales Sales • Escalation in ROV Contribution –– Increase Increase in in Floating Floating Rig Rig and and Construction Construction Service Service Demand Demand • Growth from Subsea P
Slide 7: OII Balance Sheet
OII Balance Sheet (in millions) Dec. 31, Dec. 31, Sept. 30, 2002 2003 2004 Equity $314 $359 $424 Debt 118 122 166 Deb/Cap 27% 25% 28%
Slide 8: Cash Flow from Operations
Cash Flow from Operations $160 $160 $140 $140 $120 $120 millions) ($ millions) $100 $100 $80 $80 ($ $60 $60 $40 $40 $20 $20 $0 $0 2000 2000 2001 2001 2002 2002 2003 2003 2004* 2004* 2005* 2005* 2006* 2006* Annual Annual Maintenance Maintenance CAPEX CAPEX Is Is Estimated @ $20 - $25 Estimated @ $20
Slide 9: Cash Flow from Operations Reconciliation to Net Income
Cash Flow from Operations Reconciliation to Net Income Cash Cash Flow Flow from from Operations Operations (CFFO), (CFFO), net net income income plus plus depreciation depreciation and and amortization amortization expense, expense, is is aa non-GAAP non-GAAP financial financial measurement. measure
Slide 10: EBITDA
EBITDA $200 $200 $180 $180 $160 $160 $140 $140 millions) ($ millions) $120 $120 $100 $100 ($ $80 $80 $60 $60 $40 $40 $20 $20 $0 $0 2000 2000 2001 2001 2002 2002 2003 2003 2004* 2004* 2005* 2005* 2006* 2006* Annual Annual Maintenance Maintenance CAPEX CAPEX Is Is Estimated @ $20 - $25 Estimated @ $20
Slide 11: EBITDA Reconciliation to Net Income
EBITDA Reconciliation to Net Income Earnings Earnings before before interest, interest, taxes taxes depreciation depreciation and and amortization amortization (EBITDA) (EBITDA) is is aa non-GAAP non-GAAP financial financial measurement. measurement. Oceaneering’s Oceaneering’s management management
Slide 12: Where We Are
Where We Are • Proven Performer • Accretive Acquisitions • Existing Assets Can Earn More • Significant Debt Capacity • Strong Cash Flow
Slide 13: Business Segments Revenue
Business Segments Revenue % of Oilfield ROV - 35% Products - 23% MOPS - 8% 83% Projects - 10% Inspection - 24% Oilfield Oilfield Non Non Oilfield Oilfield September SeptemberYTD YTD2004 2004
Slide 14: Deepwater Discoveries
Deepwater Discoveries Over 75% to be Developed 350 350 312 300 300 250 250 Fields of Fields 200 200 229 229 Number of 150 150 Number 100 100 50 50 91 91 83 83 00 Production Production Eval. Eval. // Dev. Dev. Source: Source: ODS-Petrodata ODS-Petrodata –– August August 2004 2004 Deepwater ≥ 2000 Fee
Slide 15: Subsea Completions - Worldwide
Subsea Completions - Worldwide Expected to Triple Completed Completed Estimated Estimated Completions Subsea Completions 4000 4000 3000 3000 Total Total == 3,378 3,378 2249 2249 of Subsea 2000 2000 1092 1092 1000 1000 Number of 426 426 1129 Number 87 87 1129 68 68 00 60s 60s 70s 70s 80s 80s 90s 90s
Slide 16: Revenue by Business Segment: Remotely Operated Vehicles
Revenue by Business Segment 29% 29% Remotely Operated Vehicles September SeptemberYTD YTD2004 2004
Slide 17: Stolt Drill Support ROV Acquisition
Stolt Drill Support ROV Acquisition • 34 Work Class ROVs -- 10 10 Observation Observation Class Class ROVs ROVs • $48 MM Purchase Price • February 2004
Slide 18: Fugro Drill Support ROV Acquisition
Fugro Drill Support ROV Acquisition • 10 Work Class ROVs • $17 MM Purchase Price • September 2004
Slide 19: Oilfield Work Class ROV Fleet
Oilfield Work Class ROV Fleet Ownership Profile OII OII 38% 170 170 ROVs ROVs 8% 8% 7% 7% OII OII Stolt Stolt Fugro Fugro Subsea Subsea 77 Sonsub Sonsub Others Others Source: Source: OII OII Estimates Estimates –– September September 2004 2004 –– 444 444 Vehicles Vehicles
Slide 20: OII Work Class ROV Fleet
OII Work Class ROV Fleet Geographical Profile 25 25 North North Am Am Brazil Brazil UK UK 67 67 Norway Norway 26 26 W. W. Africa Africa Asia/Pac Asia/Pac 27 27 12 12 13 13 170 170 Vehicles Vehicles September September2004 2004
Slide 21: Floating Rig and OII ROV Demand
Average Average ## of of Rigs Rigs or ROVs or ROVs 20 40 60 80 100 120 140 160 180 200 00 20 40 60 80 100 120 140 160 180 200 11QQ 0000 22QQ 0000 33QQ 0000 44QQ 0000 1 1QQ Floater 0011 2 2QQ 0011 33QQ 125 125 0011 98 98 44QQ Floater Demand Demand 0011 11QQ 180 180 0022 22QQ OII 0022 33QQ 0022 4 OII
Slide 22: ROV Financial Results
ROV Financial Results (Dayrate Is Not Sensitive To Fleet Utilization) Revenue Revenue // Day Day on on Hire Hire Fleet Fleet Utilization Utilization $6,000 $6,000 84% 84% $5,500 $5,500 80% 80% $5,000 $5,000 76% 76% $4,500 $4,500 72% 72% $4,000 $4,000 68% 68% $3,500 $3,500 64% 64% $3,000 $3,000 60% 6
Slide 23: ROV Financial Results
ROV Financial Results (Daily Profitability Is Sensitive To Utilization – Yet Has Held Up Well) Op Op Inc Inc // Day Day on on Hire Hire Fleet Fleet Utilization Utilization $1,400 $1,400 84% 84% $1,200 $1,200 80% 80% $1,000 $1,000 76% 76% $800 $800 72% 72% $600 $600 68% 68% $400 $400 64% 64% $200 $20
Slide 24: ROV Financial Results
ROV Financial Results Operating Income vs. Fleet Utilization Operating Operating Income Income ($000) ($000) Fleet Fleet Utilization Utilization $60,000 $60,000 84% 84% 80% $50,000 $50,000 80% 80% 75% $40,000 $40,000 76% 76% $30,000 $30,000 70% 72% 72% $20,000 $20,000 68% 68% $10,000 $10,000 64% 64%
Slide 25: Subsea Products: Multiflex Umbilical Manufacturing
19% 19% Revenue by Business Segment Subsea Products Multiflex - Umbilical Manufacturing • Required for Every Subsea 50% Completion –– For For Well Well Control Control // Servicing Servicing OIE OIE Multiflex Multiflex • Highly Engineered Product • Thermoplastic & Steel Tube • Worldwide Coverage Sep
Slide 26: Multiflex Products
Multiflex Products Steel Steel Tube Tube Umbilicals Umbilicals Thermoplastic Thermoplastic Hose Hose Umbilicals Umbilicals
Slide 27: Umbilical Market Overview
Umbilical Market Overview Annual Demand To Double Steel Steel Thermoplastic Thermoplastic Tree Tree Orders Orders 2,500 2,500 500 500 KM 400 Orders -- KM 2,000 2,000 400 Orders Tree Orders Umbilical Orders 1,500 1,500 300 300 Subsea Tree Umbilical 1,000 1,000 200 200 Subsea 500 500 100 100 00 00 200
Slide 28: Multiflex Umbilical Manufacturing Expansions
Multiflex Umbilical Manufacturing Expansions • $40 Million Capital Investment New Plant in U.S. with Steel Tube Manufacturing Capability New Steel Tube Cabling Machine in Brazil
Slide 29: OIE - Specialty Subsea Hardware
19% 19% Revenue by Business Segment Subsea Products OIE – Specialty Subsea Hardware • Product Categories 50% –– ROV ROV Tooling Tooling and and Work Work Packages Packages –– Valves Valves –– Field Field Development Development Hardware Hardware OIE OIE Multiflex Multiflex –– IWOCS IWOCS –– Pipe Pip
Slide 30: OIE Products
OIE Products ROV ROV Tooling Tooling & & Work Work Packages Packages Installation Installation Workover Workover & & Control Control Systems Systems Production Production Control Control Valves Valves Field Field Development Development Hardware Hardware Pipeline Pipeline Connectors Connectors & & R
Slide 31: Subsea Products Backlog
Subsea Products Backlog At Period-End 90 90 80 80 70 70 60 60 Millions In Millions 50 50 40 40 73 73 $$ In 30 30 61 61 50 50 47 47 20 20 10 10 23 23 00 2000 2000 2001 2001 2002 2002 2003 2003 Q3'04 Q3'04
Slide 32: Mobile Offshore Production Systems
Revenue by Business Segment 8% 8% Mobile Offshore Production Systems Ocean Ocean Producer Producer Ocean Ocean Legend Legend San San Jacinto Jacinto September SeptemberYTD YTD2004 2004
Slide 33: MOPS Contract Summary
MOPS Contract Summary • Ocean Legend - Five-year Contract –– Ending Ending May May 2006 2006 • Ocean Producer - Seven-year Contract –– Ending Ending October October 2008 2008 • San Jacinto - Rolling 120 day Contract. –– Expected Expected to to Continue Continue Working Working Through Through 2005 2
Slide 34: Income from Unconsolidated Affiliate
Income from Unconsolidated Affiliate Mobile Offshore Production Systems – Medusa Spar LLC • 37.5% Ownership • $45 MM Investment • Tariff Based Contract –– Life Life of of Medusa Medusa Fields Fields and and Surrounding Surrounding Areas Areas Medusa Medusa Spar Spar
Slide 35: Subsea Projects
10% Revenue by Business Segment 10% Subsea Projects Subsea IRM Diving September SeptemberYTD YTD2004 2004
Slide 36: Inspection
Revenue by Business Segment 20% 20% Inspection September SeptemberYTD YTD2004 2004
Slide 37: OII vs. OSX Net Income Relative to 2001
OII vs. OSX Net Income Relative to 2001 OII OII OSX OSX 190% 190% 168% 168% 160% 160% 128% 133% 133% 128% 130% 130% 146% 146% 100% 93% 93% 100% 101% 101% 70% 70% 76% 76% 70% 70% 40% 40% 2001 2001 2002 2002 2003 2003 2004 2004 Est Est 2005 2005 Est Est Source: Source: Bloomberg Bloomberg and and Firs
Slide 38: Trading Discounts
Trading Discounts 2004 Multiples* 2005 Multiples* P/E P/E P/CF P/CF EV/EBITDA EV/EBITDA P/E P/E P/CF P/CF EV/EBITDA EV/EBITDA OII 22.9x 9.1x 8.1x 18.3x 8.3x 7.2x OSX** 34.4x 17.2x 15.5x 22.8x 13.1x 12.2x OII Trading -32% -46% -47% -17% -35% -40% Discount *Source: *Source: Pritchard Pritchard Capital
Slide 39: Disclaimer Note
Disclaimer Note OII vs. OSX Net Income Relative to 2001 Historical net income per Bloomberg, excludes charges and gains. 2004 and 2005 estimates were calculated by Pritchard Capital, based on First Call estimates, and OII disclaims any responsibility for them, including any responsibility to update
Slide 40: Relative Price Performance OII vs. OSX
Relative Price Performance OII vs. OSX [Oilfield Service Index] 40 30 Annual % Change 20 10 0 OII OSX -10 -20 -30 -40 2001 2002 2003 2004* *Through *Through December December 27, 27, 2004: 2004: Source Source Yahoo Yahoo OSX OSX companies: companies: BHI, BHI, BJS, BJS, CAM, CAM, GLBL, GLBL, GSF, GS
Slide 41: OII vs. OSX Price Performance
OII vs. OSX Price Performance Relative to 2000 Close OII OII OSX OSX 200% 200% 190% 190% 160% 160% 144% 144% 127% 127% 114% 114% 120% 120% 80% 80% 98% 98% 70% 75% 75% 70% 69% 69% 40% 40% 2000 2000 2001 2001 2002 2002 2003 2003 2004* 2004* *Through *Through December December 27, 27, 2004: 2004: Sourc
Slide 42: OII Summary
OII Summary • Small-Cap Diversified OFS Company • Leading Market Positions in Technical Niches • Leveraged to Deepwater and Subsea Completions • Benefiting from Capital Expansion Initiatives • Significant Debt Capacity • Strong Operating Cash Flow • Share Price has Upside Potential
Slide 43: Engineered Products & Services
Engineered Products & Services
Slide 44: Supplemental Information
Supplemental Information
Slide 45: Key Macro Drivers - Oilfield Activity
Key Macro Drivers - Oilfield Activity • Increasing Hydrocarbon Demand • Accelerating Reservoir Depletion Rates • Growing Worldwide E&P Expenditures –– Greater Greater % % of of E&P E&P Spent Spent in in Deepwater Deepwater •• Technology Technology Has Has Lowered Lowered Costs Costs
Slide 46: Market Drivers – OII Activity
Market Drivers – OII Activity Business Segments ROV Subsea Subsea MOPS Inspection Products Projects Deepwater X • • Subsea Completions • X X Remote Field Production X Inspection & Maintenance • • X X X X == Primary Primary •• == Secondary Secondary
Slide 47: Field Life Cycle – OII Activity
Field Life Cycle – OII Activity Business Segments ROV Subsea Subsea MOPS Inspection Products Projects Exploration X Development X X X • X Production • • X X X X X == Primary Primary •• == Secondary Secondary
Slide 48: Relative Price Performance OII vs. SML
Relative Price Performance OII vs. SML [S&P 600 Small Cap Index] 40 30 Annual % Change 20 OII 10 SML 0 -10 -20 2001 2002 2003 2004* *Through *Through December December 27, 27, 2004: 2004: Source Source Yahoo Yahoo SML SML –– S&P S&P 600 600 Small Small Cap Cap Co mpanies Companies
Slide 49: OII vs. SML Price Performance
OII vs. SML Price Performance Relative to 2000 Close OII OII SML SML 190% 190% 190% 190% 160% 160% 144% 144% 127% 127% 148% 148% 130% 130% 114% 114% 123% 123% 100% 100% 106% 106% 90% 90% 70% 70% 40% 40% 2000 2000 2001 2001 2002 2002 2003 2003 2004* 2004* *Through *Through December December 27, 27, 2
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