Seadrill Limited · NYSE:SDRL

Seadrill — Q3 2007 Earnings Presentation

45 slides from Seadrill's earnings presentation, 2007

  1. Slide 1: Third quarter results 2007 Conference call

    Third quarter results 2007 Conference call

  2. Slide 2: Disclaimer

    Confidential Disclaimer THIS PRESENTATION AND ITS ENCLOSURES AND APPENDICES (HEREINAFTER JOINTLY REFERRED TO AS THE “PRESENTATION” HAS BEEN PREPARED BY SEADRILL LIMITED. (”SDRL” , “SEADRILL or THE ”COMPANY”) EXCLUSIVELY FOR INFORMATION PURPOSES. THIS PRESENTATION HAS NOT BEEN REVIEWED OR REGISTERED

  3. Slide 3: Contents

    3 Contents ƒ 3Q results 2007 ƒ Current operations ƒ Newbuilding program ƒ Contract status ƒ Human resources ƒ Summary

  4. Slide 4: Highlights 3Q 2007

    4 Highlights 3Q 2007 ƒ Net income of US$32.8 million and EPS of US$0.08 ƒ All drilling units in operations with the exception of one jack-up, West Larissa ƒ Four new contracts ƒ Mid-water semi West Alpha – 3Y at US$473,000 ƒ UDW semi West Aquarius – 3Y at US$523,000 ƒ UDW drillship West Capella – 5Y

  5. Slide 5: Highlights 3Q 2007 – cont’d

    Highlights 3Q 2007 – cont’d ƒ Divestment of the 1981-built jack-up West Titania for US$146.5 million (to be completed in 1Q08) ƒ Sale of 32% shareholding in PT Apexindo (to be completed in 4Q07) ƒ Well services division established as a separate entity, Seawell Limited ƒ NOK257 million raised in new

  6. Slide 6: Condensed Income Statement 3Q 2007

    6 Condensed Income Statement 3Q 2007 Actual Actual Unaudited accounts in USD million 3Q07 2Q07 ƒ Increased Revenues revenues and Operating revenues Reimbursables 323,6 30,9 307,9 44,3 EBITDA for all Other revenues 22,6 21,8 business units Total revenues 377,1 374,0 Operating expenses Vessel and rig

  7. Slide 7: Condensed Consolidated Segment Information

    7 Condensed Consolidated Segment Information ƒ Improved utilization Mobile Units Actual Actual Unaudited accounts in USD million 3Q07 2Q07 ƒ Lower opex as Operating revenues 175,5 166,7 drillship Chikyu Reimbursables Other revenues 6,9 19,6 11,9 18,7 returned to scientific Total revenues 202,0 197,3

  8. Slide 8: Condensed Consolidated Segment Information

    8 Condensed Consolidated Segment Information ƒ 100% utilization Tender Rigs Actual Actual Unaudited accounts in USD million 3Q07 2Q07 ƒ Higher average Operating revenues 60,6 55,9 dayrate Reimbursables 5,4 4,4 Other revenues 3,0 3,1 Total revenues 69,0 63,4 Vessel and rig operating expenses 24,7 23,

  9. Slide 9: Condensed Consolidated Segment Information

    9 Condensed Consolidated Segment Information ƒ All time high Well Services Actual Actual contribution Unaudited accounts in USD million 3Q07 2Q07 Operating revenues 87,5 85,3 Reimbursables 18,6 28,0 ƒ Reimbursable Total revenues 106,1 113,3 activities reduced with limited Vessel and rig operating ex

  10. Slide 10: Condensed Consolidated Balance Sheet

    10 Condensed Consolidated Balance Sheet Unaudited accounts in USD million 30.09.07 31.12.06 ƒ YTD investments of Current assets US$1,300 million Cash and cash equivalents 294,0 210,4 Receivables 505,9 463,5 Other investments 203,3 105,9 ƒ 3Q newbuild Total current assets 1 003,2 779,8 instalments of

  11. Slide 11: Condensed Consolidated Balance Sheet

    11 Condensed Consolidated Balance Sheet Unaudited accounts in USD million 30.09.07 31.12.06 Current liabilities ƒ New loan facilities Short-term interest bearing debt Other current liabilities 689,9 566,6 255,4 465,3 Total current liabilities 1 256,5 720,7 ƒ Two share issues Non-current liabilities

  12. Slide 12: Operations and newbuild projects

    12 Operations and newbuild projects 3 drillships at Samsung Korea Norway - 4 units 2 Semis 1 Jack-up 2 semis 1 Drillship at Samsung Korea 2 semis at Daewoo Korea 3 semis at Africa - 4 units Southeast Asia - 15 units Jurong 1 Semi-tender 4 Semi-tenders 1 Tender rig 7 Tender rigs Singapore 2 Jack-up 4

  13. Slide 13: West Phoenix

    13 West Phoenix Progress ƒ 96% complete ƒ On target for delivery* in February/March 2008 ƒ Commencement of operations in Norway within the second quarter 2008 ƒ In commissioning phase/ Integrated team Challenges ƒ AKMH support ƒ Commissioning ƒ Client TEPN NOCS operations Cost - On budget * Delivery

  14. Slide 14: West Eminence

    14 West Eminence Progress ƒ 80% Complete ƒ Delivery planned in the fourth quarter 2008 Challenges ƒ AKMH support ƒ Yard capacity ƒ Commissioning Cost - On budget

  15. Slide 15: West Hercules

    15 West Hercules Progress ƒ 85% complete ƒ Delivery planned in April/May 2008 ƒ Tightest schedule of all projects ƒ Commencement of operations in China within the second quarter 2008 Challenges ƒ AKMH equipment ƒ DAT cylinders, LIR and Derrick Cost - On budget

  16. Slide 16: West Aquarius

    16 West Aquarius Progress ƒ 70% complete ƒ Delivery planned in the third quarter 2008 ƒ Tightest schedule of all projects ƒ Commencement of operations in the third quarter 2008 Challenges ƒ AKMH equipment ƒ DAT cylinders, LIR and Derrick ƒ Commissioning Cost - On budget

  17. Slide 17: West Polaris

    17 West Polaris Progress ƒ 88% complete ƒ Delivery planned end June 2008 ƒ Commencement of operations in the third quarter 2008 Challenges ƒ Shaffer subsea system ƒ Commissioning Cost - On budget

  18. Slide 18: West Capella

    18 West Capella Progress ƒ 52% complete ƒ Delivery planned in the fourth quarter 2008 ƒ Commencement of operations in the fourth quarter 2008 Challenges ƒ Shaffer subsea system ƒ Commissioning Cost - On budget

  19. Slide 19: West Sirius

    19 West Sirius Progress ƒ 93% complete ƒ Delivery planned in February/March 2008 ƒ Commencement of operations in the GOM in the second/third quarter 2008 Challenges ƒ AKMH equipment ƒ Commissioning Cost - On budget

  20. Slide 20: West Taurus

    20 West Taurus Progress ƒ 74% complete ƒ Delivery scheduled in the fourth quarter 2008 Challenges ƒ AKMH equipment ƒ Commissioning Cost - On budget

  21. Slide 21: Status deepwater newbuild projects

    21 Status deepwater newbuild projects Percentage of total construction period, 1% ≈ 10 days Delivery overall progressing as planned

  22. Slide 22: Remaining risks

    22 Remaining risks ƒ Major component delays and/or failures ƒ Commissioning/testing ƒ Knock-on effects from other yard activities ƒ Sub-contractor support Risk mitigation and contingency plans in place

  23. Slide 23: Commissioning and testing

    23 Commissioning and testing Commissioning ---> yard responsibility

  24. Slide 24: Newbuild deepwater projects

    24 Newbuild deepwater projects • Progress to date generally as planned • Cost risk insignificant • Still schedule risks remaining First in line … a clear advantage

  25. Slide 25: Status shallow water newbuild projects

    25 Status shallow water newbuild projects 9 9 9 9 9 - 1Q08 - 2Q08 - 2Q08 - 1Q10 Deliveries on time and budget

  26. Slide 26: Committed newbuild installments

    26 Committed newbuild installments US$ million Commited newbuild installments 2 500 2194 2 000 1 500 1 000 874 808 571 435 427 500 155 69 18 18 0 34 0 Paid 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 ƒ Committed newbuild installment schedule amounts to approximately US$5.6 billion ƒ The i

  27. Slide 27: Contract backlog of US$7.7 billion

    27 Contract backlog of US$7.7 billion Deepwater newbuilds US$4,000 mill. Existing deepwater units US$1,725 mill. Jack-up rigs US$750 mill. Tender rigs US$1,200 mill. * * 100% owned units only

  28. Slide 28: Quality contract awards

    28 Quality contract awards Unit Customer Dayrate (US$/d) Term Contract value (US$ mill.) * West Sirius Devon 476,000 4 yrs US$ 695 mill. West Phoenix Total 512,000 3 yrs US$ 561 mill. West Polaris Exxon 538,000 3 yrs US$ 589 mill. West Hercules Husky 519,000 3 yrs US$ 568 mill. West Capella TBN 525,

  29. Slide 29: Contract status floaters

    29 Contract status floaters 2007 2008 2009 2010 2011 Customer 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Semi-submersibles West Alpha Statoil US$266,000 US$473,000 5 02.2012 West Venture Norsk Hydro US$259,000 US$259,000 1&2 West Phoenix Total Newbuild - US$502M US$512,000 US$497,00

  30. Slide 30: Contract status jack-ups

    30 Contract status jack-ups 2007 2008 2009 2010 Customer 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Jack-ups West Epsilon Statoil US$317,000 US$317,000 West Atlas 1 Coogee Newbuild - US$129M US$257,500 West Triton 1 ADA Newbuild - US$129M US$275,000 West Ceres Total US$166,000 Market rate West

  31. Slide 31: Contract status tender rigs

    31 Contract status tender rigs 2007 2008 2009 2010 2011 Customer 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Tender barges T3 1 PTT US$42' US$51,000 US$58,000 US$74,000 06.2012 T4 Chevron US$48,000 US$88,000 06.2013 T6 1 Carigali/CTOC US$68,000 US$93,000 T7 Chevron US$57,000 T8 Total

  32. Slide 32: Market status right now

    32 Market status right now ƒ UDW capacity shortage 2008/2009 ƒ Can 2008/09 commencement dayrates be pushed further up? ƒ A dayrate is not necessarily a dayrate ƒ Operating expenses ƒ Mobilization ƒ Modifications ƒ Tax ƒ Contract provisions

  33. Slide 33: Ultra deepwater units available before 2010

    33 Ultra deepwater units available before 2010 Source: Pareto Securities

  34. Slide 34: Floater demand worldwide

    34 Floater demand worldwide 300 100% Utilization into 2011! 250 200 FLOATERS 150 100 50 ©2007 0 2004 2005 2006 2007 2008 2009 2010 Existing Contracts, Standard Floaters Existing Contracts, DW Floaters Options Standard Requirements Possible Standard Requirements Deepwater Requirements 22.08.2007 Poss

  35. Slide 35: Ultra deepwater demand worldwide

    35 Ultra deepwater demand worldwide Contract Status & Expected Demand 1999-2011: Ultra Deepwater Drilling Units (>7500feet) - Worldwide 90 80 70 60 50 40 30 20 10 0 jan.1999 jul.1999 jan.2000 jul.2000 jan.2001 jul.2001 jan.2002 jul.2002 jan.2003 jul.2003 jan.2004 jul.2004 jan.2005 jul.2005 jan.2006

  36. Slide 36: Deepwater requirements

    36 Deepwater requirements 2008 2009 2010 2011 2012 # OPERATOR HE AREA WD J F MAM J J A SOND J FMAM J J A SOND J F M A M J J A S OND J F MAM J J A SOND J F MAM J J A SOND 1 EXXONMOBIL No Angola 6,000 2 PETROBRAS No Black Sea 8,000 3 AGR No/Yes Nigeria/Falk 8,000? 4 ONGC No India 10,000 5 MARATHON + 4

  37. Slide 37: UDW Market summary

    37 UDW Market summary ƒ The UDW market remains strong with 100% utilization ƒ First fixture of US$600,000 is confirmed (6 months) ƒ 65 units on order - 62 of these are DW units ƒ 46 already have a contract in place ƒ Strong undersupply of floaters next couple of years will lead to postponed drilling

  38. Slide 38: UDW Market summary cont’d

    38 UDW Market summary cont’d ƒ Market could see some sublet activity because operators have been forced to commit to units several years before drilling plans are firm ƒ Operators enter consortiums to secure rig capacity ƒ Strong demand for rigs allocated for exploration work ƒ Back-log months for a

  39. Slide 39: Status HR recruiting deepwater units

    39 Status HR recruiting deepwater units Units Core crew recruitment % complete West Phoenix 100% West Sirius 110% West Hercules 100% West Polaris 100% West Aquarius 71% West Eminence 35% West Capella 24% West Taurus 21% Core crew recruitment on plan

  40. Slide 40: HR – organizational development

    40 HR – organizational development ƒ Houston organization in place ƒ Recruiting hubs in Stavanger, Houston, Singapore and Lagos ƒ HR managers in place for Nigeria and China ƒ Established a Seadrill Engineering Program ƒ Management training conducted for 400 key offshore managers On track in building

  41. Slide 41: Strategy

    41 Strategy ƒ Execute current program as planned ƒ Divest older jack-ups ƒ Further develop market leader position in the tender rig market ƒ Financing structures geared towards capital repayment ƒ Open for consolidation Focus on shareholder value - equity return

  42. Slide 42: Well services company established

    42 Well services company established ƒ Seawell Limited established as a separate entity for our well services division ƒ Platform Drilling, Engineering Services and Well intervention ƒ US$50 million raised in private placement ƒ Seadrill retains 80% ownership for now ƒ OTC-listed (ticker SEAW) with

  43. Slide 43: Seawell strategy

    43 Seawell strategy ƒ Seawell seeks international expansion Seawell results 2002 – 2007 EBITDA US$ mill. ƒ Strengthen the core business US$ million ƒ M&A is key to the growth strategy 50 45 40 ƒ Recruitment of top talents where we 35 30 operate 25 20 37 38 15 28 ƒ GOM and Asia/Middle East presence i

  44. Slide 44: Summary

    44 Summary ƒ Newbuilding projects in the main progressing as planned ƒ Recruitment progressing as planned ƒ Acceptable term assignments secured for six out of ten deepwater newbuilds ƒ Continued strong market outlook deepwater ƒ Uncertainty regarding 2008 jack-up market ƒ Actively pursuing leveraged

  45. Slide 45: Slide 45

Seadrill — Q3 2007 Earnings Presentation on 6ix