Sed Energy Holdings Plc · OSL:ENH
Sed Energy — SeaBird Exploration — Investor Presentation (March 2018)
34 slides from Sed Energy's investor presentation, March 2018
Slide 1: SeaBird Exploration Company presentation
SeaBird Exploration Company presentation March 2018
Slide 2: Disclaimer and important notice
Disclaimer and important notice This company presentation (the “Presentation”) has been prepared by SeaBird Exploration PLC (“SeaBird ” or the “Company”). The Presentation has not been reviewed or registered with, or approved by, any public authority, stock exchange or regulated market place. No ind
Slide 3: Investment highlights
Investment highlights Targeting growing niche segments • 2D, source & shallow-water 3D specialist • SeaBird perfectly positioned to profit from the technology driven structural growth in ocean bottom seismic Global operating reach • Pre-approved by most oil majors • Track-record of work in all globa
Slide 4: Agenda
Agenda • Seabird Exploration – company overview – Management team & Board of Directors – Strategic positioning – Current fleet composition • Earnings scenarios and sensitivities • Market trends – Streamer seismic in early stages of recovery – potentially led by US offshore – Heading for a super cycl
Slide 5: Company management
Company management Christophe Debouvry has held the position as Chief Executive Officer of the company since January 2016. He has over 25 years’ experience in the Oil Services sector with a long track record in international offshore operations, strategy and finance.This includes years working with
Slide 6: Board of directors
Board of directors Arne Helland - Chairman – Has held a number of relevant positions in Norwegian seismic companies including serving as the CFO of TGS-Nopec and EVP Strategy and Business Development at Spectrum ASA Stig R. Myrseth - Director – Has a long-standing career as a financial analyst, fund
Slide 7: Strategy going forward
Strategy going forward • Develop a market leadership position in targeted niche segments – 2D-seismic acquisition – Source vessel services (seabed nodes, undershoot, wide azimuth) – Shallow-water 3D-seismic acquisition (4-6 streamers) • Expand the fleet towards ocean bottom seismic – Focus on hi-tec
Slide 8: Global service offering
Global service offering Scale & scope in operations Current vessel positioning Aquila Explorer Harrier Explorer Voyager Explorer Osprey Explorer Multi client library and surveys 8
Slide 9: A diversified blue-chip client base
A diversified blue-chip client base • Operational track-record ensures blue-chip client base • Company prequalified to work with most oil majors Major oil National oil Independent oil Seismic Surface Seabed 9
Slide 10: Fleet overview
Fleet overview Current fleet 2D and source vessels SW1)-3D vessels Aquila Explorer Osprey Explorer Harrier Explorer Voyager Explorer 2D - 1 X 12 Km 2D - 1 X 12 Km 2D - 1 X 12 Km 3D-SW - 4 X 6 000m Source Source Source 2D - 1 X 12 Km Source - Dual Source - Dual Source - Dual Source - Dual Propulsion
Slide 11: Operations & commercial activity
Operations & commercial activity • Voyager Explorer currently operating on a 8 month seabed seismic project in APAC, and is expected to remain on contract through Q1-18. Work scope was extended 3 months beyond original schedule • Osprey Explorer successfully completed a source contract in South Amer
Slide 12: Debt obligations and maturity schedule post restructuring
Debt obligations and maturity schedule post restructuring Pre 2017 restructuring Post restructuring Restructured 26 6 debt obligations 132 132 132 1 5 Q2 2017 Q3 2017 Q4 2017 Q1 2018 2017 2018 2019 Q2 2020 Interest Principal 4.8 3.9 4.0 Charter hire obligations May-Dec 2018 2019 2020 May-Dec 2018 20
Slide 13: Agenda
Agenda • Seabird Exploration – company overview – Management team & Board of Directors – Strategic positioning – Current fleet composition • Earnings scenarios and sensitivities • Market trends – Streamer seismic in early stages of recovery – potentially led by US offshore – Heading for a super cycl
Slide 14: Earnings sensitivity - break-even level
Earnings sensitivity - break-even level • Operating costs are substantially reduced compared to previous years • Based on maintaining two vessels in active use 70% of the time, SeaBird is fully funded going forward – ~66% average utilization in weak 2017 with two vessel equivalent – Stable cash posi
Slide 15: Earnings potential – normalized scenario
Earnings potential – normalized scenario • Seabird has significant operational leverage towards a return to normalized mid-cycle market conditions Assumptions: – Four vessels with 70% active utilization in source and/or 2D mode through the year • SW3D work excluded, offers upside to estimates if sec
Slide 16: Agenda
Agenda • Seabird Exploration – company overview – Management team & Board of Directors – Strategic positioning – Current fleet composition • Earnings scenarios and sensitivities • Market trends – Streamer seismic in early stages of recovery – potentially led by US offshore – Heading for a super cycl
Slide 17: Market trends
Market trends 2D • Traditionally muted interest for frontier exploration during downturns • Substantial reduction in reserve replacement fueling recent increase in exploration budgets • Potential opening of US offshore should create significant 2D seismic demand Source • Structural growth in the dem
Slide 18: Tender and bid activity
18 Tender and bid activity The seismic market has troughed, stable level of new tendering activity seen recent quarters 18
Slide 19: Dayrate environment
Dayrate environment 2D/Source dayrates (USD thousand) 140 120 115 100 90 80 80 80 80 60 50 50 40 40 20 0 2014 2015 2016 2017 High Low Source: Petrodata 2D and source rates have declined less than traditional 3D contract rates throughout the downturn, and have been stable since early 2017 19
Slide 20: 2D seismic industry leader, favorable supply side
2D seismic industry leader, favorable supply side Observations 2D market dynamics improving # vessels • Industry fleet size significantly reduced since 2015 • Competitive pressure from 3D vessel owners has eased • Older 3D vessels used in the 2D space now mostly redelivered, cold stacked or retired
Slide 21: Oil discoveries unsustainably low
Oil discoveries unsustainably low • 2017 all time low year for discovered Organic reserve replacement ratio resources • Declining reserve replacement rates continue to take effect • 2D seismic first tool in the box to find new offshore oil reserves "I am worried about being able to meet the supplies
Slide 22: US offshore areas potentially opening
US offshore areas potentially opening • Nearly all US offshore areas to be opened for O&G exploration under a new 5 year lease plan • Still subject to public hearings and reviews, with an uncertain implementation timeline • Demand for 2D seismic likely to be significant if implemented in current for
Slide 23: Source vessel demand expected to rise
Source vessel demand expected to rise… OBS expected market growth • Ocean Bottom Seismic is experiencing strong structural growth driven by technological breakthroughs and cost reduction • Source vessel demand tied to the growth in OBS – Vessels send signals which the ocean bottom receivers pick up
Slide 24: Continued OBS market share gains
…on the back of continued OBS market share gains OBS share of total seismic spending • OBS delivers superior data quality 20% compared to streamer seismic 18% 18% • Has systematically gained market 16% 15% share from 3D streamer seismic 14% 13% – Significant survey cost reductions Market share in %
Slide 25: Seismic vessel activity breakdown
Seismic vessel activity breakdown * * * * Source: IHS Markit OBS node-laying and source services accounted for ~30% of avg 2017 vessel activity – Year-end 2017 share of active fleet seen at 47% (source: Seisintel) *EM = electromagnetic ; OBC = ocean bottom cable ; OBN = ocean bottom node ; WAZ = wid
Slide 26: Source vessel supply is limited
Source vessel supply is limited • The seismic industry has mainly invested in larger 3D vessels over the last 10 years, ignoring the «low-end» segment • Current marketed fleet limited to around 10-12 vessels – Additional capable vessels could bring total available fleet to around 30 vessels in a mar
Slide 27: 4D market offer significant repeat business potential
4D market offer significant repeat business potential • 4D seismic increasingly done through OBS solutions – Repeat surveys on same area/reserves over a longer period of time – Primarily used on active fields for reservoir monitoring and increased oil recovery efforts • Hightened operational risks a
Slide 28: Outlook
Outlook • SeaBird’s operational and financial reorganization is completed. The cost structure, asset base and liquidity runway now aligned to current market conditions • The company expects to have 2 vessels on contract through most of Q1-18 • Market activity on the up, but decission processes and c
Slide 29: Appendix
Appendix SeaBird Exploration
Slide 30: Income statement Q4 2017
Income statement Q4 2017 CONSOLIDATED INTERIM STATEMENT OF INCOME Non- Quarter ended recurring 31 December Adjusted items All figures in USD millions (except EPS) 2017 2017 2017 2016 Contract 5.5 - 5.5 2.6 Multi-client - - - 0.9 Total revenues 5.5 - 5.5 3.5 • Adjusted cost of sales Cost of sales (4.
Slide 31: Balance sheet Q4 2017
Balance sheet Q4 2017 CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION As of 31 December All figures in USD millions (except for equity ratio) 2017 2016 Property, plant and equipment 28.4 47.5 Multi-client library - 3.1 Other non-current assets 0.1 0.1 Inventories 1.0 1.3 Trade receivables 1.2 2
Slide 32: Cash flow statement Q4 2017
Cash flow statement Q4 2017 CONSOLIDATED INTERIM STATEMENT OF CASH FLOW Quarter ended 31 December All figures in USD millions 2017 2016 Profit / (loss) before income tax (5.8) (6.9) Depreciation, amortization and impairment 2.7 3.6 Movement in provision (0.4) (2.3) Working capital (4.3) 10.2 Increas
Slide 33: Q4-17 cash flow and liquidity observations
Q4-17 cash flow and liquidity observations • Cash use in quarter four largely attributable to operational optimization and one- time items KEY Q4 OPERATIONAL CASH FLOW ITEMS USD millions Decommissioned vessels 1.1 Payable unwind 3.7 Financial advisory expenses 1.4 SG&A at previous levels 0.6 Total 6
Slide 34: Top 20 shareholders
Top 20 shareholders Date: 01.03.18 34
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