Subsea 7 S.A. · OSL:SUBC
Subsea 7 — Investor Presentation (September 2015)
48 slides from Subsea 7's investor presentation, September 2015
Slide 1: Investor Presentation
subsed 7 Investor Presentation
Slide 2: Forward-looking statements
Forward-looking statements Certain statements made in this announcement may include ‘forward-looking statements’. These statements may be identified by the use of words like ‘anticipate’, ‘believe’, ‘could’, ‘estimate’, ‘expect’, ‘forecast’, ‘intend’, ‘may’, ‘might’, ‘plan’, ‘predict’, ‘project’, ‘s
Slide 3: Subsea 7 – in summary
Subsea 7 – in summary Subsea 7 is a world-leading seabed-to-surface engineering, construction and services contractor to the offshore energy industry. We provide cost-effective technical solutions to enable the delivery of complex projects in all water depths and challenging environments. Our core v
Slide 4: Our markets
Our markets Engineering, Services over the life procurement, of a field’s production, installation and including inspection, construction (EPIC), repair and of Subsea Umbilicals, maintenance. Risers and Flowlines. Subsea 7 performs Subsea 7 targets this this work in Europe, segment globally. Africa,
Slide 5: Complemented by…
Complemented by… i-Tech A global leader in the supply of SHL JV ROV and intervention tooling solutions Seaway Heavy Lifting: EPIC services for offshore wind turbines and large offshore oil and gas structures and decommissioning of redundant offshore Renewables structures ROV and Intervention One of
Slide 6: Our key attributes differentiate us
Our key attributes differentiate us People Capability • Engineering and • Flexible and diversity project management of fleet of vessels and expertise ROVs Execution Local Presence • Strong track record of • Fabrication yards and project delivery on a facilities key for local global basis content Tec
Slide 7: Our focus on Technology
Our focus on Technology Strategic Technology Programme • Deeper water • High strength steels and composites Riser Systems • Improved fatigue performance • Integrity inspection and monitoring • Enhanced thermal performance • Cost-efficient solutions • Longer tie-backs • Active heating systems / Cold
Slide 8: Our competitive position remains strong
Our competitive position remains strong Competitors in SURF Global leaders in Subsea 7 Technip Saipem EPIC Alliance EMAS-AMC Heerema Allseas McDermott Alliance Petrofac Sapura Swiber Sea Trucks Kencana Regional Players Ocean Ceona Installer Small National Players Page 8
Slide 9: Increasing our reach though industry alliances
Increasing our reach though industry alliances Page 9
Slide 10: Collaborate on the Concept, Pre-FEED and FEED Engineering
Collaborate on the Concept, Pre-FEED and FEED Engineering to inject know-how and technology at the key early phases of a project Page 10 10-Sep-15 Page 10
Slide 11: Creative Solutions for Challenging Times
Creative Solutions for Technology Challenging Times • Early Engagement and Know-How with Clients • Opportunity to • Market Leading Front End inject Technology • Market Leading SURF Contractor Consultant to provide • Leading Life of Field Service • Proven tools and processes alternative provider solu
Slide 12: Improved return on investment through increased production
Improved return on investment through increased production, enhanced recovery and reduced cost The alliance between OneSubsea® and Subsea 7 covers the full spectrum of services: o Subsurface o Subsea Production and Processing Systems o Subsea Umbilicals, Risers and Flowlines o Life of Field Page 12
Slide 13: A seamless approach
A seamless approach OneSubsea and Subsea 7 working together offers: o An integrated project team o An integrated project schedule o Enhanced schedule management o Elimination of generic FEED o Avoids late integration and sub-optimisation o Enhanced design for installation A single interface to optim
Slide 14: Challenging market conditions
Challenging market conditions • Lower levels of market awards – Challenging conditions expected to persist short to medium term – Longer term fundamentals for deepwater oil remain intact • Project pricing is key to securing new business – Expertise and experience enables effective pricing – No chang
Slide 15: Strengthening our market position
Strengthening our market position Adjust organisation size to market trends while maintaining core expertise and strengthening capabilities to drive performance through the cycle and capture opportunities when the market improves Adjust headcount Engage earlier and fleet Drive project New organisati
Slide 16: Reducing our costs (2014 – 2016)
Reducing our costs (2014 – 2016) • Continue adjusting organisation size to market trend – Identified business slowdown in 2013 – 2014: headcount reduced to 13,000 from over 14,000 – 2,500 further headcount reduction to be implemented by early 2016 – 12 vessels identified for release (charter vessels
Slide 17: Financial impact of our cost reduction programme
Financial impact of out cost reduction programme • 2,500 workforce reduction by early 2016 – Annualised cost saving of around $400 million • $100 million charge recognised in Q2 related to the resizing • Forecast further charge of up to $40 million, mostly this year • 12 vessel reduction of the acti
Slide 18: 8 owned vessels to leave the active fleet by early 2016
8 owned vessels to leave the active fleet by early 2016 Rigid pipelay/ heavy lift vessels Diving support vessels Jack-up vessel Life of Field/ Light Construction Vessel Page 18
Slide 19: 4 chartered vessels to leave the active fleet by early 2016
4 chartered vessels to leave the active fleet by early 2016 Construction/vertical flex-lay Vessels Life of Field/ Light Construction Vessels or Page 19
Slide 20: Priorities for driving the business forward
Subsea 7: Priorities for driving the business forward • Work with clients and industry partners to reduce costs • Reduce capacity medium term • Offer competitive solutions for new awards • Insist on an acceptable project risk profile • Invest in innovation and technology • Execute projects effective
Slide 21: Second quarter results and financial tables
Second quarter results and financial tables Page 21
Slide 22: Q2 Results 2015 highlights
Q2 Results 2015 highlights FINANCIAL OPERATIONAL ORDER IN-TAKE OUTLOOK • Revenue • Good execution • Order backlog • Challenging $1.4 billion contributed to $7.2 billion business driving strong environment • $0.9 billion • Adjusted financial results persists order intake EBITDA • Global vessel includ
Slide 23: Q2 Backlog and order in-take
Q2 Backlog and order in-take • Backlog of $7.2 billion as at 30 June 2015, • $0.9 billion order intake • Included $0.5 billion of announced awards: – Maria, offshore Norway; Seven Seas PLSV, offshore Brazil Backlog by Execution Date Backlog by Service Capability Backlog by Hemisphere SURF (1) Northe
Slide 24: 2015 Business Unit outlook
2015 Business Unit outlook Northern Hemisphere and Life of Field • North Sea continues to be significantly impacted by the low oil price, particularly offshore Norway • Gulf of Mexico is active but highly competitive • Life of Field activity remains low as clients reduce offshore activity Southern H
Slide 25: Financial guidance for 2015
Financial guidance for 2015 • Group revenue expected to decrease significantly from record level in 2014 • Adjusted EBITDA margin expected to decrease compared to 2014 • Other net income related guidance: – Administrative expenses: $280-300 million – Net finance costs: $5-10 million – Depreciation a
Slide 26: Income statement – key highlights
Income statement – key highlights In $ millions, unless otherwise indicated. Three months ended 30 June 15 30 June 14(1) Unaudited Unaudited Revenue 1,352 1,905 Net operating income (NOI) 169 351 Income before taxes 137 363 Taxation (49) (98) Net income 88 266 Adjusted EBITDA 275 452 Adjusted EBITDA
Slide 27: Business Unit performance
Business Unit performance Northern Hemisphere and Life of Field Southern Hemisphere and Global Projects Q2 2015 Q2 2015 $707m $642m $105m $131m Revenue NOI Revenue NOI Northern Hemisphere and Life of Field Southern Hemisphere and Global Projects H1 2015 H1 2015 $1,324m $1,204m $153m $249m Revenue NO
Slide 28: Income statement – Cost breakdown
Income statement – Cost breakdown In $ millions. Three months ended 30 June 2015 Resizing Reported Underlying charge Operating expense (1,119) (84) (1,035) Administrative expense (79) (16) (63) Total (1,198) (100) (1,098) • $100 million charge relates to the planned 2,500 reduction in the workforce
Slide 29: Income statement – supplementary details
Income statement – supplementary details In $ millions Three months ended 30 Jun 15 30 Jun 14 (1) Unaudited Unaudited Administrative expenses (79) (67) Share of net income of associates and joint ventures 14 27 Net operating income 169 351 Net finance income/(costs) 5 2 Other gains and losses (36) 1
Slide 30: Summary of H1 2015 cash flow
Summary of H1 2015 cash flow $ millions Cash and cash equivalents at 31 Dec 2014 573 Includes decrease in net operating Net cash generated from operating activities 219 liabilities of $195m Includes capital expenditure of Net cash flow used in investing activities (333) $362m mainly on new vessel co
Slide 31: Summary balance sheet
Summary balance sheet 30 Jun 31 Dec 30 Jun 31 Dec 2015 2014 2015 2014 In $ millions Unaudited Audited In $ millions Unaudited Audited Assets Equity & Liabilities Non-current assets Total equity 5,775 5,562 Goodwill 1,328 1,322 Non-current liabilities Property, plant and equipment 4,717 4,565 Non-cur
Slide 32: Capital expenditure for vessel new-build programme
Capital expenditure for vessel new-build programme(1) # vessels under construction at 6 5 4 0 year end 262 $ millions 557 544 Forecast 348 Actual spend 230 to date Upto 31 Dec 2013 2014 2015 E 2016 E (1) Comprises four PLSVs being constructed for long-term contracts with Petrobras (including Seven W
Slide 33: New-build vessels joining our fleet
New-build vessels joining our fleet Pipelay support vessels (PLSVs) Diving Support Vessel (DSV) Heavy Construction Vessel contracted on 5 year term to Petrobras (HCV) Vessel name Delivery Vessel name Delivery Vessel name Delivery Seven Waves May 2014 Seven Kestrel Q1 2016 Seven Arctic Q1 2016 Seven
Slide 34: 2014 Operating expense overview
2014 Operating expense overview • People Expertise and experience are $0.8bn important differentiators • Procurement of materials and other direct project costs: $0.4bn $2.0bn Variable cost linked to volume of work and subject to project profile • Depreciation and amortisation Non-cash fixed cost •
Slide 35: Liquidity and cash returns to shareholders
Liquidity and cash returns to shareholders • Robust balance sheet • Preserve financial flexibility • Five-year $500 million revolving credit facility • Export Credit Agency backed secured term loan of up to $357 million • $200m share repurchase programme extended – $57m (5.3m shares) repurchased und
Slide 36: Major project progression
Major project progression Continuing projects >$100m between 5% and 95% complete as at 30 June 2015 excluding PLSV and Life of Field day-rate contracts Heidelberg (GOM) OFON 2 (Nigeria) Lianzi Surf (Angola) Lianzi Topside (Angola) Southern Hemisphere Erha North (Nigeria) Clair Ridge (UK) Northern He
Slide 37: Main projects in portfolio 2015-2016
Main projects in portfolio 2015-2016 • Catcher, Premier • Western Isles, Dana • Martin Linge, Total • Montrose, Talisman • Aasta Hansteen, Statoil • Laggan Tormore, Total • Oseberg Delta, Statoil • West Franklin 2, Total • Knarr, BG • USC & Pipelay, Shell • Maria, Wintershall • Enochdhu, Conoco • LO
Slide 38: Assets
One of the world’s most versatile fleets Assets Onshore infrastructure of pipeline spoolbases, fabrication and operations support yards Page 38
Slide 39: Rigid pipelay/heavy lift assets
Rigid pipelay/heavy lift assets (1) (1) (1) (1) Owned and operated by a joint venture Page 39
Slide 40: Diving Support Vessels
Diving Support Vessels Page 40
Slide 41: Construction/vertical flex-lay assets
Construction/vertical flex-lay assets (1) (1) (2) (1) (1) Long-term charter (2) Long-term charter from a vessel-owning joint venture Page 41
Slide 42: Construction/horizontal flex-lay assets
Construction/horizontal flex-lay assets (1) (1) (1) Long-term charter Page 42
Slide 43: Life of Field/Light Construction Vessels
Life of Field/Light Construction Vessels (1) (2) (2) (2) (3) (2) 2 (1) Long-term charter from a vessel-owning joint venture (2) Long-term charter (3) Call-out contract Page 43
Slide 44: Other assets
Other assets Jack-up vessel Trenching vessel (1) … and over 175 ROVs (1) Long-term charter Page 44
Slide 45: Our operational facilities
Our operational facilities Page 45
Slide 46: ADR details
Ticker: SUBCY ADR type: Sponsored Level 1 ADR Listing venue: OTC CUSIP: 864323100 Ratio: 1 ADR : 1 Ordinary Share ADR details Depositary bank: Deutsche Bank Trust Company Americas Contact details of the ADR broker helpline: New York: +1 212 250 9100 London: +44 207 547 6500 Hong Kong: +852 2203 7854
Slide 47: Contact
Isabel Green Investor Relations Director, Subsea 7 S.A. Contact eMail: isabel.green@subsea7.com Direct Line +44 20 8210 5568 Website www.subsea7.com Page 47
Slide 48: Updated September 2015
Updated September 2015 Page 48