Paratus Energy Services Ltd. · OSL:PLSV

Paratus Energy Services — Investor Presentation (October 2023)

55 slides from Paratus Energy Services's investor presentation, October 2023

  1. Slide 1: Paratus Energy Services Investor Presentation

    Paratus Energy Services Investor Presentation October 2023

  2. Slide 2: Disclaimer

    Disclaimer This document and any information provided in this presentation (the "Presentation") has been prepared by Paratus Energy Services Ltd (the "Company") solely for the purposes of providing existing investors and other stakeholders with an update about certain limited aspects of the Company.

  3. Slide 3: Table of Contents

    Table of Contents I. Paratus Presentation 4 II. Appendix 20 a. Seabras JV Overview 21 b. SeaMex Overview 35 c. Archer Overview 45 3

  4. Slide 4: I. Paratus Presentation

    I. Paratus Presentation 4

  5. Slide 5: The investment opportunity – things to remember

    The investment opportunity – 3 things to remember Attractive exposure to rapidly tightening jackup and PLSV markets facing Serving NOCs in very potential supply shortages, while working for NOCs (with ~70% higher 1 attractive segments spending in the past 5 years relative to IOCs, demonstrating resi

  6. Slide 6: A different oil services company

    A different oil services company Paratus Other offshore services companies  Uncapped capacity for capital returns (subject to certain  Frequently a range of limitations, including mandatory cash Capital return tests), coupled with industry leading free cash flow yields, sweeps for debt repayments,

  7. Slide 7: Investment overview

    Investment overview 1 Strong and diversified asset base of 11 offshore assets, including 5 high-specification jack-up rigs and 6 pipe-laying support vessels, and a 24% stake in Archer, serving NOCs across the globe 2 Attractive end markets in jack-ups (with market utilization >90%) and PLSVs (with d

  8. Slide 8: Paratus at a glance

    1 Paratus at a glance Paratus is a holding company of a group of leading energy services companies inclusive of Seabras JV, SeaMex, and ~24% ownership in Archer LTM(1) LTM(1) Description Backlog Key peers revenue EBITDA Leading subsea services provider, with a fleet of six pipe-laying supply vessels

  9. Slide 9: Paratus by the numbers

    1 Paratus by the numbers(1) 2022A Revenue(2): 50% $410mm 50% ~$950mm ~57% ~51% Revenue Backlog as 2Q 2023 2022A EBITDA Margin(2) 2022A EBITDA - Capex Margin(2) SeaMex Seabras 2022A EBITDA(2): 41% $229mm 59% >96% ~10 yrs ~1.5k 2022A Technical Utilization Average Fleet Age Employees(3) SeaMex Seabras

  10. Slide 10: Attractive end market dynamics

    2 Attractive end market dynamics Brazil PLSV Supply-Demand Outlook Brazil is expected to experience a significant increase in PLSV demand, surpassing current available supply in the country Expected demand > Expected demand > identified available supply historically relevant supply 28 24 24 21 22 18

  11. Slide 11: Significant deleveraging from resilient cash flows through the cycle

    3 Significant deleveraging from resilient cash flows through the cycle… Continued accelerated deleveraging with full early retirement of Seabras Bank Facilities(1) and SeaMex Notes within 18 months post-Paratus Ch. 11 emergence Seabras(2) – historical net debt position and EBITDA $315 $321 $1,042 $1

  12. Slide 12: … and is well positioned to generate FCF today…

    3 … and is well positioned to generate FCF today… Illustrative 2023E free cash flow yield comparison(1)(2) Offshore Drillers w/ Energy Service Jack-Up Exposure Providers w/PLSVs 15.2% 13.7% 11.8% 9.7% 7.1% 3.1% 2.4% 1.1% $1,750 / share $2,250 / share $2,750 / share (4.5%) (6.6%) (7.8%) (1) Source: P

  13. Slide 13: …with a highly attractive cash flow growth potential

    3 …with a highly attractive cash flow growth potential Illustrative annual free cash flow / dividend potential sensitivity(1) Illustrative annual FCF / dividend potential per share (1)(7) Dayrate Scenario A B C D E $1,200 $1,095 Significant PLSV $200,000 $230,000 $260,000 $290,000 $320,000 $1,000 di

  14. Slide 14: Significant value accretion potential

    3 Significant value accretion potential Implied Paratus share price sensitivity (1)(2) ($ in millions) Illustrative Steel Value / Jack-Up $100 $120 $140 $160 $180 $240 $2,078 $2,402 $2,727 $3,052 $3,376 Illustrative $260 $2,273 $2,597 $2,922 $3,247 $3,571 Steel Value $280 $2,467 $2,792 $3,117 $3,441

  15. Slide 15: Flexibility to immediately deliver shareholder capital returns

    4 Flexibility to immediately deliver shareholder capital returns Shareholder capital returns are allowed subject to satisfying each of the below: Minimum cash  At least $20 million of unrestricted cash on a pro forma basis 2 quarters of cash interest payments  Paratus having paid Paratus Notes ful

  16. Slide 16: Group capital structure

    5 Group capital structure Paratus Capital Structure (as of June 30, 2023) Paratus Deleveraging since Ch.11 Emergence Paratus Ownership 100% 50% 100% (figures reflect 100%) (4) (1) Net Leverage Ratio(4) SeaMex Seabras JV Paratus Paratus Consolidated Facility N/A Esmeralda PES Notes 3.8x 2.5x Maturity

  17. Slide 17: Leadership

    Leadership Paratus and its group companies have a strong and diverse team with proven leadership, and decades of technical, operational, and financial expertise in various senior executive and management roles across the energy and maritime sectors globally Mei Mei Chow, Robert Jensen, James Ayers,

  18. Slide 18: Paratus has strong backing from its largest shareholder, Seatankers

    Paratus has strong backing from its largest shareholder, Seatankers Seatankers Group holds significant interests in oil services, shipping, and diversified industrials, incl. 15 listed companies with a combined EV of $35bn+ Seatankers’ Investment Philosophy Seatankers Group Current Strategic Compani

  19. Slide 19: Near-term priorities

    Near-term priorities Deleveraging &  Maintain a robust balance sheet and utilize free cash flow generated by SeaMex and Seabras JV to support deleveraging at Capital Returns Paratus and fund shareholder distributions Pursue Value  Actively pursue value accretive transactions that offer strong retu

  20. Slide 20: II. Appendix

    II.Appendix 20

  21. Slide 21: Seabras JV

    Seabras JV 21

  22. Slide 22: Seabras JV Overview

    Seabras JV Overview Seabras JV was founded in 2011 and is headquartered in Rio de Janeiro, Brazil, currently own and operate 6 MPSV/PLSVs  Seabras JV is a joint venture between Paratus and Sapura Energy Berhad (“Sapura”) (each having a 50% ownership stake) that employs over 1,000 people – Sapura is

  23. Slide 23: What is a PLSV?

    What is a PLSV? PLSV Overview  Pipe Laying Support Vessels (PLSVs) are specialized vessels used in offshore construction for the installation of subsea Click to play video flexible pipelines and umbilicals  Key features: – Large deck space for storing and handling flexible equipment – Dynamic posi

  24. Slide 24: Seabras JV Key Highlights

    Seabras JV Key Highlights Strong asset base of well-maintained, modern MPSV/PLSV’s with 20+ years remaining useful life Attractive cash flow profile with minimal working capital requirements and $490 million in backlog(1) via long-term contracts Low capital expenditures for its MPSV/PLSV fleet that

  25. Slide 25: Seabras JV Company History

    Seabras JV Company History Second Contract Awarded Full Repayment of Bank Facility Awarded its second Brazil Repayment of outstanding bank contract from Petrobras for facility >3 years earlier than an additional 3 PLSVs and 8 scheduled years of work Seabras JV Formed Onix Begins Operations End of Fi

  26. Slide 26: Seabras JV Management Team

    Seabras JV Management Team Seabras JV’s Management has decades of experience in the offshore subsea services industry, with longstanding commercial relationships and a proven track record of operational excellence 1 Name / Position Background  More than two decades of experience in the Brazilian oi

  27. Slide 27: Seabras JV Fleet Overview

    Seabras JV Fleet Overview Fleet Overview(1) Diamante Topazio Onix Jade Rubi Esmeralda Year Delivered 2014 2014 2015 2015 2016 2015 Yard IHC Merwede IHC Merwede IHC Merwede IHC Merwede IHC Merwede OSX Dimensions 146m x 30m 146m x 30m 146m x 30m 146m x 30m 146m x 30m 134m x 24m Flexlay 550t Flexlay 55

  28. Slide 28: Seabras JV Fleet Status Report

    Seabras JV Fleet Status Report Seabras JV Fleet Status Report(1) Contract Current Dayrate (in Vessel Location Flag (2) Client Contract Expiration Commencement thousands $USD) (3) Diamante Brazil Petrobras Oct-21 Apr-25 $140 Topazio Brazil Petrobras Mar-22 Mar-25 $140 Petrobras Sep-15 Sep-23 $263 Oni

  29. Slide 29: Seabras JV Industry Overview and Positioning

    Seabras JV Industry Overview and Positioning Seabras JV has large market share and one of the strongest fleets amongst competitors in the Brazilian PLSV market, which has high barriers to entry, in addition to having delivered on projects outside of a typical PLSV’s capabilities Competitive Position

  30. Slide 30: Seabras JV Industry Overview and Positioning (cont'd)

    Seabras JV Industry Overview and Positioning (cont’d) Brazilian PLSV Market  There are currently 19 PLSVs on contract in Brazil – 18 of which working under contract with Petrobras – A key aspect of Petrobras’ strategic plan for the next five years is investments in deep and ultra-deep waters, which

  31. Slide 31: Overview of Current PLSVs in Brazilian Market

    Overview of Current PLSVs in Brazilian Market Current Brazilian PLSV Market Contracts # Vessel Manager Contract End Client Flexlay (t) 1 Diamante Seabras JV 2025 550 2 Topazio Seabras JV 2025 550 3 Onix Seabras JV 2023 550 4 Jade Seabras JV 2024 550 5 Rubi Seabras JV 2024 550 6 Esmeralda Seabras JV

  32. Slide 32: Expected Tailwinds Driven by Increasing Brazil Offshore Spend

    Expected Tailwinds Driven by Increasing Brazil Offshore Spend In the coming years, Brazil is expected to experience a significant increase in offshore capex, with Petrobras accounting for a majority of the nearly $125 billion of Brazilian capex expected through 2027 Competitive Positioning Overview

  33. Slide 33: Seabras JV Historical Financials

    Seabras JV Historical Financials Net Revenue EBITDA $600 $496 $400 $446 $424 $321 $450 $300 $269 $358 $355 $254 $300 $200 $178 $172 $150 $100 $- $- 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Capex EBITDA less Capex $50 $400 $38 $316 $40 $29 $300 $259 $30 $224 $200 $165 $20 $133 $13 $10 $10 $5

  34. Slide 34: Seabras JV Capital Structure

    Seabras JV Capital Structure Seabras JV Capital Structure (As of June 30, 2023) ($ in millions) Amount Rate Maturity Vessels Pledged (1) Esmeralda Facility $108 3.8% 11/26/32 Esmeralda Total Debt (2) $108 (-) Cash and Restricted Cash (29) Net Debt $79 Notes: (1) 2.85% Local / 4.50% Foreign (2) Does

  35. Slide 35: SeaMex

    Ny % a © SeaMex aw! Fives

  36. Slide 36: SeaMex Overview

    SeaMex Overview  SeaMex Group, a wholly-owned subsidiary of Paratus, is an international offshore driller that owns a fleet of five high-specification jack-up rigs: Defender, Courageous, Intrepid, Oberon, and Titania  At present, all 5 Seamex jack-ups rigs are operating in Mexico, under firm contr

  37. Slide 37: SeaMex Key Highlights

    SeaMex Key Highlights Strong asset base of five high-specification jack-up rigs Highly visible revenue profile underpinned by $456 million backlog(1) via long-term contracts Significant demand for jack-ups in Mexico driven by favorable industry tailwinds, with ability to work and relocate jack-ups o

  38. Slide 38: SeaMex Fleet Overview

    SeaMex Fleet Overview Fleet Overview Defender Courageous Intrepid Oberon Titania Built 2007 2007 2008 2013 2014 Dimensions 243ft x 206ft x 26ft 234ft x 206ft x 26ft 297ft x 218ft x 26ft 231ft x 250ft x 31ft 231ft x 249ft x 31ft Specifications LeTourneau Super 116-C LeTourneau Super 116 LeTourneau Su

  39. Slide 39: SeaMex Fleet Status Report

    SeaMex Fleet Status Report SeaMex Fleet Status Report (as of 2Q23) Contract Contract Vessel Location Flag Client Dayrate Floor Dayrate Cap Dayrate(1) Commencement Expiration Defender Mexico PEMEX Mar-20 Jan-26 $109,000 $155,000 Market-indexed Courageous Mexico PEMEX Mar-20 Nov-26 109,000 155,000 Mar

  40. Slide 40: SeaMex Industry Overview and Positioning

    SeaMex Industry Overview and Positioning Strength in the oil and gas markets and various other factors have driven increased jack-up demand, utilization, and dayrates globally and within Mexico High Spec Jack-Up Historical Dayrates $150 Dayrates ($k/day) $140 $120 $90 $60 $30 $- Mexico – Semisub, Ja

  41. Slide 41: SeaMex Industry Overview and Positioning (cont'd)

    SeaMex Industry Overview and Positioning (cont’d) SeaMex’s five jack-ups are under contract with one of the largest worldwide jack-up Contractors Number of Jack-Ups per Contractor (as of July 31, 2023) As of July 2023, PEMEX had 28 jack-ups in operation (five of which belonged to SeaMex) 69 41 30 28

  42. Slide 42: SeaMex Historical Financials

    SeaMex Historical Financials Net Revenue EBITDA $300 $200 EBITDA decline in 2022 largely attributable to extraordinary downtime of the $240 $232 $234 $224 $150 Courageous and Oberon in Q4’22 $240 $206 $150 $135 $132 $133 $180 $107 $100 $120 $60 $50 $- $- 2018 2019 2020 2021 2022 2018 2019 2020 2021

  43. Slide 43: Historical Collections from Pemex

    Historical Collections from Pemex Since 2022, SeaMex has collected more than $600 million from Pemex Collections from Pemex Since 2022 ($ in millions) $601 $502 $475 $421 $386 SeaMex has collected an average amount of ~$100 million per quarter from Pemex over the last six quarters $113 $273 $113 $99

  44. Slide 44: SeaMex Capital Structure

    SeaMex Capital Structure SeaMex Capital Structure (As of June 30, 2023) ($ in millions) Amount Rate Maturity SeaMex Notes $46 12% PIYC 8/31/24 Total Debt(1) SeaMex Notes were fully $46 (-) Cash and Restricted Cash repaid on July 18, 2023 (121) Net Debt ($75) Notes: (1) Total debt reflected prior to

  45. Slide 45: Archer

    45

  46. Slide 46: Archer Overview

    Archer Overview Archer is an oilfield services company that was established in 2007  Archer provides oilfield products and services, including drilling and well services as highlighted below: – Drilling Services: Platform drilling, land drilling, modular drilling rigs, engineering services, and equ

  47. Slide 47: Archer Recapitalization

    Archer Recapitalization Pro forma for the Archer Recapitalization, Paratus holds approximately 24% of Archer  Since 2016, Archer has successfully reduced NIBD from $796mm to $395mm(1) pro forma for the Archer Recapitalization demonstrating strong ability to consistently deleverage, even during chal

  48. Slide 48: Archer Corporate Structure

    Archer Corporate Structure Archer Organization Structure(1) Hemen Paratus Others Holding Ltd ~24.2% ~20.4% ~55.4% Archer Limited (Bermuda) Consolidated subsidiaries including: • Archer AS Archer Assets UK Archer Norge AS • Archer UK Limited Limited • Archer Well Company, Inc. $265mm First Lien Facil

  49. Slide 49: Archer Overview & Industry Positioning

    Archer Overview & Industry Positioning Platform Operations Well Services Land Drilling Geothermal  Wide range of offshore drilling  High-end products and services aimed at  Drilling and workover services the entire  50% of Iceland Drilling, which has annual operations, engineering, and maintenan

  50. Slide 50: Well-Positioned in Segments with Attractive Long-Term Outlook

    Well-Positioned in Segments with Attractive Long-Term Outlook Business Segment Key Regions Sentiment(1) Outlook Platform Drilling North Sea / Global • Norwegian market set to be relatively stable and moderately increase over next few years with Archer becoming the late life partner for major operato

  51. Slide 51: Archer Overview & Industry Positioning (cont'd)

    Archer Overview & Industry Positioning (cont’d) Industry tailwinds, including strength in commodity prices, have improved sentiment and are expected to drive global activity in the sector beyond pre-pandemic levels Brent Oil Price ($ / bbl) E&P Free Cash Flow ($ in billions) $140 $1,500 $120 2022 E&

  52. Slide 52: Archer Overview & Industry Positioning (cont'd)

    Archer Overview & Industry Positioning (cont’d) Archer’s market-leading position in the North Sea is well-positioned to capitalize on industry tailwinds and expected future increases in spending within the region Market Positioning Archer Market Share Platform Operations(1)  Decade-long track recor

  53. Slide 53: Archer Historical Financial Performance

    Archer Historical Financial Performance Net Revenue Adjusted EBITDA (excludes exceptional items) $1,000 $890 $929 $936 $970 $150 $824 $750 $104 $99 $89 $93 $95 $100 $500 $50 $250 $- $- 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Capex Adjusted EBITDA less Capex $50 $150 $42 $40 $34 $32 $30 $10

  54. Slide 54: Archer Capital Structure

    Archer Capital Structure Archer Capital Structure (As of June 30, 2023)(1) ($ in millions) Amount Rate Maturity Revolving Credit Facility $100 S + 3.0-5.5% Cash 4/3/27 First Lien Term Loan 150 S + 3.0-5.5% Cash 4/3/27 Second Lien Bond 200 S + 5.0% Cash + 5.0% PIK OR S + 12.0% PIK 7/3/27 Other Loans

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