Worley Limited · ASX:WOR
Worley — WorleyParsons — Investor Day (May 2017)
54 slides from Worley's investor day presentation, May 24, 2017
Slide 1: Disclaimer
5/23/2017 For personal use only 1 Disclaimer • The information in this presentation about the WorleyParsons Group and its activities is current as at 30 April 2017 and should be read in conjunction with the Company’s Appendix 4D and Interim Financial Report for the half year ended 31 December 2016.
Slide 2: Agenda
5/23/2017 Agenda For personal use only Registration Welcome and Context OneWay Moment Financial Update Strategy Update Q&A Morning Tea Saudi Arabia Belt & Road Initiative Heavy Oil New Energy Offshore Integrated Solutions / Refining Onshore Conventional Chemicals Q&A Wrap Up Lunch 3 Context: market
Slide 3: Context: our business is reshaped and resized
5/23/2017 Context: our business is reshaped and resized For personal use only • We have reshaped the business into four business lines reflecting our customers’ structures Reshaping the business over the last • We have significantly reduced overhead 3 years has us well • We are prepared for the cont
Slide 4: Financial Update
5/23/2017 For personal use only 7 Financial Update Tom Honan Group Managing Director, Finance / CFO 8 4
Slide 5: Introduction
5/23/2017 Introduction For personal use only • Market inflexion - backlog is increasing • Highly confident in meeting cost reduction targets • Staff numbers stabilised and utilisation on target Our business is leaner, • Cash collection measures starting to have an impact with lower overhead, more fo
Slide 6: Headcount stabilized
5/23/2017 Headcount stabilized For personal use only Staff Numbers - stabilised Staff Utilization – on target 11 On track to meet increased cost reduction target of $450 million 120 80 1,450 220 1,330 1,250 30 1,030 1,000 12 6
Slide 7: Focus on ensuring key overhead savings remain sustained
5/23/2017 Focus on ensuring key overhead savings remain sustained as the business grows For personal use only 13 Focus on ensuring key overhead cost areas remain right sized as the business grows • Investment in improved BD effectiveness Business Development • Global Sales and Marketing group operat
Slide 8: Working Capital Update
5/23/2017 Working Capital Update For personal use only • Update on $230m from four SOE • Cash received $17m • In transit $33m • Additional $32m expected next week • The balance is continuing in process • DSO improvements on underlying business • DSO reduced by 7 days from December 31 to April 30 • 1
Slide 9: Backlog is increasing
5/23/2017 Backlog is increasing For personal use only 36 month backlog ($B) Approximate timing of backlog ($B) 5.5 5.1 FY20 0.7 5 4.7 4.6 4.5 4.5 2.6 4.2 FY19 4 FY18 1.1 3.5 3 FY17 0.7 Dec 15 Mar 16 Jun 16 Dec 16 Apr 17 Backlog as at 30 April 2017 17 Backlog is increasing Backlog by region Backlog b
Slide 10: Backlog growth
5/23/2017 Backlog growth For personal use only Backlog by region Backlog by sector 6.0 6.0 5.0 5.0 0.0 0.1 0.7 0.1 0.0 0.8 4.0 4.0 A$'B A$'B 3.0 3.0 5.1 5.1 2.0 4.2 2.0 4.2 1.0 1.0 - - 19 Summary • Highly confident of achieving overhead reduction Business Metrics • Staff numbers stabilized Update Su
Slide 11: Strategy and Market Update
5/23/2017 For personal use only Strategy and Market Update Andrew Wood - CEO 21 Who we Where are we play Understanding our market How we How we win measure Our strategic pillars Our key metrics 22 11
Slide 12: Who we are, where we play, how we win
5/23/2017 Who we are For personal use only Where we play Understanding our market How we How we win measure Our strategic pillars Our key metrics 23 24 12
Slide 13: Business lines aligned to customer organisation structures
5/23/2017 Business lines For personal use only aligned to customer organisation structures Advisian Major Projects Integrated Solutions Services Australia Pacific Asia China Middle Europe US West & Canada & US (APAC) East & (EUR) Latin America East Africa (MEA) 25 Our markets Energy Hydrocarbons Pow
Slide 14: Bulk of our business is small projects and asset services
5/23/2017 Bulk of our business is small projects and asset services For personal use only Understanding the business – typical profile CAPEX VS OPEX 10 81 9 Major Projects Modification, Sustaining and small capex Opex Typical project < 12 Commercial model 85 15 duration months Typical order 6 – 36 R
Slide 15: Where we play: understanding our market
5/23/2017 Where For personal use only Who we we play are Understanding our market How we How we win measure Our strategic pillars Our key metrics 29 Biggest energy industry transition in 40 years, for which we are well positioned We help our customers Disproportionate growth in emerging meet the wor
Slide 16: Strategic priorities
5/23/2017 Strategic priorities For personal use only Acting concurrently on priorities across three horizons Horizon 3 Horizon 2 Emerging markets & products Growth Potential Horizon 1 • New Energy Core growth • Chemicals & Petrochemicals (Europe) • Digital (internal • Onshore Conventional capability
Slide 17: Under investment is creating a supply demand gap
5/23/2017 Under investment is creating a supply demand gap For personal use only • Three years of suppressed investment leads to a potential supply demand gap without significant increase in investment • To fill the gap, future annual approvals must exceed 21 billion barrels, greater than any averag
Slide 18: Global supply increasingly reliant on fields with higher decline
5/23/2017 Global supply is increasingly reliant on fields that have a higher rate of decline For personal use only Annual decline rates % for various field types and sizes 14 • Small fields typically decline twice as fast 12 as larger fields 10 8 • Global supply is increasingly reliant on 6 these hi
Slide 19: Strengthening Customer Capex Budgets
5/23/2017 Strengthening Customer Capex Budgets For personal use only • Trend indicates continued strengthening Source: Source: Factset. Broker consensus capex estimates for Anadarko Petroleum, BP, Canadian Natural Resources, Chevron, China Petroleum & Chemical, CNOOC, ConocoPhillips, Devon Energy, E
Slide 20: Long term relationships with top spending customers
5/23/2017 Long term relationships with top spending customers For personal use only Top Global Operator Spend: 3-year CAPEX & OPEX Spend (US$B): 2017-2019 at $50bbl/oil price 160 140 Existing long‐term 120 framework agreements 100 80 60 40 20 ‐ Source Rystad Energy: Exploration & Saudi PetroChina Pe
Slide 21: North American Shale is only one part of global energy need
5/23/2017 North American Shale is only one part of meeting global energy need For personal use only • Significant investment required in all regions • Onshore and Offshore • Greenfield and Brownfield • Conventional and Unconventional 3 key messages The hydrocarbons development activity will continue
Slide 22: Refined strategy architecture
5/23/2017 For personal use only Who we Where are we play Understanding our market How we How we win measure Our key metrics Our strategic pillars 43 Refined strategy architecture Pillar 2 Pillar 1 Pillar 3 All our value to all our customers • intensive group pursuit of large Key player in the Viable
Slide 23: Pillar 1: Viable and competitive business
5/23/2017 Pillar 1 For personal use only Viable and competitive business • ensuring performance discipline by every unit of the organization • maintaining a competitive cost structure and sustainable business (including GDC) • current performance = future business OPERATIONAL EXCELLENCE 45 Pillar 2
Slide 24: Pillar 2: All our value to all our customers
5/23/2017 Pillar 2 For personal use only Measurable Performance • Sprint programs focused All our value to all our on key priority areas customers • Co-ordinated by GSM / • intensive group pursuit of run by the businesses global large opportunities (Swarm) • Scorecard reports • intensive campaigns t
Slide 25: Pillar 3: Key player in the new world
5/23/2017 Pillar 3 For personal use only • New Energy • New resources for new economy • Digital automation and products • New world new commercial models Key Player in the new world • Participating in the emerging resources and energy arenas • Enhance how we work through automation and digitization
Slide 26: Results link to shareholder value
5/23/2017 Results link to shareholder value For personal use only Viable and competitive All our value Key player in the new business to all our customers world Metrics • Balance Sheet / DSO • Backlog • TSR • Margin • Customer satisfaction • EPS Growth 51 Results link to shareholder value and Execut
Slide 27: Key messages and Q&A
5/23/2017 Biggest energy industry transition in 40 years, for which we are well positioned For personal use only Disproportionate growth in emerging markets, where we have an enviable track record for impact Digital disruption of engineering putting a premium on innovative people with real world kno
Slide 28: Strategy in action
5/23/2017 For personal use only Strategy in action 55 Strategic priorities Acting concurrently on priorities across three horizons Horizon 3 Horizon 2 Emerging markets & products Growth Potential Horizon 1 • New Energy Core growth • Chemicals & Petrochemicals (Europe) • Digital (internal capability
Slide 29: Strategy in action
5/23/2017 Strategy in action For personal use only Krishnaswamy (Krish) Iyer Karen Sobel Neil Robertson Alan Gordon Regional Managing Director - Regional Managing Director - Regional Managing Director - Regional Managing Director - Services, Middle East and Africa Services, Canada and US East Servic
Slide 30: Saudi Arabia – A robust platform has been built
5/23/2017 Strategic priorities For personal use only Acting concurrently on priorities across three horizons Horizon 3 Horizon 2 Emerging markets & products Growth Potential Horizon 1 • New Energy Core growth • Chemicals & Petrochemicals (Europe) • Digital (internal capability • Onshore Conventional
Slide 31: Saudi Arabia – Growing together in our core markets
5/23/2017 Saudi Arabia – Growing together in our core markets For personal use only Growing capital and operational Successfully capturing the growth in expenditure across all Sectors spend across Saudi Arabia >60% growth in revenue in Saudi Arabia since 2014 Saudi Arabia Upstream Exploration and Pr
Slide 32: WorleyParsons Academy and Belt & Road Initiative
5/23/2017 Saudi Arabia - Investing in national transformation through the WorleyParsons Academy For personal use only • In support of Vision 2030 KSA has released the National Transformation Program 2020 (NTP) aimed at diversifying from oil and creating employment by remodelling supply chains • For
Slide 33: Belt & Road – Positioning for cross-sector investment
5/23/2017 Belt & Road – Positioning for cross-sector investment For personal use only SECTOR OUTLOOK OUR DIFFERENTIATED POSITION • Asia accounts for 60% of B&R investment • Proven MOU with China Harbors (CHEC) Infrastructure • Large focus on transport (ports and rail) • Low-cost Ports GDC in Chennai
Slide 34: Summary
5/23/2017 Summary Saudi Arabia For personal use only • Robust and diversified business built on strong delivery record • Significant investment across oil & gas, infrastructure, power & minerals & metal sectors in the next 5-10 years and well positioned to increase our market share • Leading the way
Slide 35: Strategic priorities
5/23/2017 Strategic priorities For personal use only Acting concurrently on priorities across three horizons Horizon 3 Horizon 2 Emerging markets & products Growth Potential Horizon 1 • New Energy Core growth • Chemicals & Petrochemicals (Europe) • Digital (internal capability • Onshore Conventional
Slide 36: CPC well pad video
5/23/2017 CPC well pad video here For personal use only 71 72 36
Slide 37: Canadian Oil Industry open for business
5/23/2017 For personal use only 73 45.6 Canadian billions of dollars Sector M&A – Oil Industry Last 12 Months Source: Canadian Media open for business SU SU CNB CVE PEM EMB 7GENS HF 74 37
Slide 38: Canadian Oil Industry comparisons
5/23/2017 For personal use only Encana IOL Cenovus Q1 2016 Canadian Industry Comparisons – Vermilion Q1 2017 Q1 2017 vs. Q1 Oil Industry 2016 millions of dollars open for business Source: Quarterly Results Release 75 37B Canadian Canadian 16B 2017 (F) Oil & Gas Oil Industry capital spending 2016 ope
Slide 39: New Energy – A Different Business Paradigm
5/23/2017 For personal use only 77 New Energy – A Different Business Paradigm 78 39
Slide 40: WorleyParsons in New Energy
5/23/2017 WorleyParsons in New Energy For personal use only Lake Turkana Wind Project • One of the largest, most difficult logistically in the world • Deep PMC & OE role • 365 Turbines over 160km2 • 600km from Nairobi, Kenya • 7M man-hours with an excellent safety record 79 WorleyParsons in New Ener
Slide 41: Bottom Line
5/23/2017 Bottom Line For personal use only • WorleyParsons executes small projects AND major projects • Opportunity in Canadian heavy oil improving • Our innovative solutions are recognized • We see the New Energy future • WorleyParsons is well placed to capture 81 41
Slide 42: Strategic priorities; ExxonMobil Hebron
5/23/2017 Strategic priorities For personal use only Acting concurrently on priorities across three horizons Horizon 3 Horizon 2 Emerging markets & products Growth Potential Horizon 1 • New Energy Core growth • Chemicals & Petrochemicals (Europe) • Digital (internal capability • Onshore Conventional
Slide 43: Offshore E&P Growth on the Horizon
5/23/2017 Offshore E&P Expenditure (BUSD) 600 Offshore Statoil: 35% 500 For personal use only Petrobras: 33% 400 E&P Growth on the Horizon ConocoPhillips: 19% Saudi Aramco: 16% Chevron: 10% 300 200 Source: Rystad Energy 100 Projected spend based on assumption of $50/bbl 0 2014 2015 2016 2017 2018 20
Slide 44: Offshore Diverse Expertise
5/23/2017 For personal use only Offshore Diverse Expertise Phases: Advisory Front End Design Construction Integration Installation Asset Life Cycle: Greenfield Brownfield/Asset Management Decommissioning Differentiators Conditions: Shallow Deep; Mild Harsh Geographies: Gulf of Mexic
Slide 45: BP Gulf of Mexico Portfolio
5/23/2017 BP Gulf of Mexico Portfolio For personal use only Delivering Sustainable Value in a Long-Term Relationship • Upgrades and maintenance for BP’s full fleet of deepwater assets in GoM • 2009-2017: Provider of engineering and Houston NaKika procurement Thunder Horse • February 2017: Awarded 5-
Slide 46: Offshore and Integrated Solutions Summary
5/23/2017 Hebron Summary For personal use only • Reputation of offshore excellence further established • Strong relationship with ExxonMobil reinforced Offshore • Well-positioned to capitalize on imminent growth in E&P spend • Deployable technology such as LM-FPSO enables greater market share Integr
Slide 47: Strategic priorities
5/23/2017 Strategic priorities For personal use only Acting concurrently on priorities across three horizons Horizon 3 Horizon 2 Emerging markets & products Growth Potential Horizon 1 • New Energy Core growth • Chemicals & Petrochemicals (Europe) • Digital (internal • Onshore Conventional capability
Slide 48: Onshore Conventional Oil & Gas: unstoppable trends
5/23/2017 Onshore Conventional Oil & Gas: unstoppable trends that will drive demand For personal use only 95 Onshore Conventional Oil & Gas 96 48
Slide 49: Onshore Conventional Oil & Gas opportunities for growth
5/23/2017 Onshore Conventional Oil & Gas Opportunities for growth For personal use only 5.2 4.6 3.8 4.1 97 Onshore Conventional Oil & Gas Kazakhstan 5.2 4.6 3.8 4.1 98 49
Slide 50: Chemicals: unstoppable trends that will drive demand
5/23/2017 Chemicals: unstoppable trends that will drive demand For personal use only 99 Chemicals: unstoppable trends that will drive demand 50
Slide 51: Chemicals; Target regions and key customers
5/23/2017 Chemicals; Target regions and key customers For personal use only Toronto CoE Polymers Houston CoE Beijing Petrochems China CoE’s Chengdu Shanghai Speciality Chemicals Target regions CoE – Centre of Excellence 101 Chemicals Our key differentiators This 102 51
Slide 52: Summary
5/23/2017 For personal use only Summary 104 52
Slide 53: Q&A Closing Remarks
5/23/2017 For personal use only Q&A 105 Closing Remarks Andrew Wood – CEO 106 53
Slide 54: Concluding Remarks
5/23/2017 Concluding Remarks For personal use only • WorleyParsons has been reshaped and Who we Where resized are we play o Our staff numbers have stabilized, our utilization rates are on target and our Understanding our market overheads are significantly reduced o We are winning more work, our back