S.d. Standard Etc Plc · OSL:SDSD
S.d. Standard Etc — S.D. Standard Drilling — Investor Presentation (November 2010)
35 slides from S.d. Standard Etc's investor presentation, Nov 23, 2010
Slide 1: S.D. Standard Drilling Limited
Managers: S.D. Standard Drilling Limited New equity issue of USD 42 million Investor presentation 23 November 2010 Solely for review in connection with the potential private placement of the shares – not for reproduction or distribution. The information contained herein may be subject to change with
Slide 2: Disclaimer
Disclaimer This Presentation has been produced by Standard Drilling Ltd (the “Company” or “Standard Drilling”) with assistance from First Securities AS (“First”) and Arctic Securities AS (“Arctic”), solely for use at the presentation to investors held in connection with the Equity Issue by the Com
Slide 3: Agenda
Agenda I. Transaction details II. Construction contract and yard III. Key financials IV. Jack‐up market 3
Slide 4: Transaction summary
Transaction summary Private Placement Timetable and key conditions Private placement of USDm 42 through the issue of Application period: 23 November 2010 at 09:00 CET – 30 42,000,000 new shares in the Cypriot registered November 2010 at 18:00 CET company, Standard Drilling Ltd Application peri
Slide 5: Executive summary - 400 ft KFELS B-Class Jack-up at attractive build cost and delivery
Executive summary ‐ 400 ft KFELS B‐Class Jack‐up at attractive build cost and delivery Investor group of Ferncliff AS, Gross Management AS and Solan Capital AS will subscribe for the whole equity Anchor investors in placement and a maximum of 50% of the equity placement will be sold to third party
Slide 6: Agenda
Agenda I. Transaction details II. Anchor investors III. Construction contract and yard IV. Key financials V. Jack‐up market 6
Slide 7: Presentation of investors group
Presentation of investors group Investor group profiles Øystein Stray Spetalen Gunnar Hvammen – Renowned Norwegian investor with extensive – Gunnar Hvammen was a rig broker in PF successful investment track‐record Bassøe/Loosbrock and Normarine Offshore – Detailed description of relevant track‐r
Slide 8: A selection of Ferncliff case studies
A selection of Ferncliff case studies Standard Drilling ASA/ Singapore Drilling Songa Offshore Ferncliff Drilling Founded in 2006 by Spetalen under Spetalen was a founder with a 37.5 % Founded by Spetalen in 2006 the name Standard Drilling stake in the acquisition of 2 semi‐ Ferncliff Drilli
Slide 9: A selection of Ferncliff case studies (cont.)
A selection of Ferncliff case studies (cont.) Global Tender Barges Offshore Rig Services Noble Denton Ferncliff participated in the refinancing Spetalen invested NOKm 67 in the Acquired in 2006 of GGS in 2007 start‐up phase of OFFRIG in 2005 Ferncliff had a 42 % stake at time of sale GGS a
Slide 10: Agenda
Agenda I. Transaction details II. Anchor investors III. Construction contract and yard IV. Key financials V. Jack‐up market 10
Slide 11: KFELS B-Class delivered by world leading jack-up construction yard
KFELS B‐Class delivered by world leading jack‐up construction yard KFELS B‐Class Keppel FELS track record The KFELS B‐Class jack‐up rig is a first class rig Established in 1967, Keppel FELS is today a design world leader in the design, construction, – Over 30 orders secured worldwide since desig
Slide 12: Rig specifications of 400ft KFELS B-Class (sister rig of West Juno)
Rig specifications of 400ft KFELS B‐Class (sister rig of West Juno) Specifications Length overall 234 ft ‐ 0 inches Breadth overall 208 ft ‐ 0 inches Depth of hull at side 25 ft ‐ 0 inches Total length of legs 517 ft ‐ 0 inches Diameter of spud cans (flat to flat) 47 ft ‐ 2 inches Center of fwd leg
Slide 13: Turnkey contract and two options from Keppel FELS
Turnkey contract and two options from Keppel FELS Timeline Order July Rig 1 date 2012 Exercise January Rig 2 (option) date 2013 Exercise April Rig 3 (option) date 2013 Construction contract Options Turnkey contract for one jack‐up with delivery in July Two independent options at fixed price with
Slide 14: KFELS Class B jack-ups delivered on/ahead of schedule on average
KFELS Class B jack-ups delivered on/ahead of schedule on average Keppel FELS – Delivery date vs. initial delivery date (months) Days ahead (‐)/over (+) original delivery schedule MSC CJ50-X100MC 10 Maersk Resilient Maersk Resolute KFELS MOD V B Maersk Resolve 8 Maersk Reacher Other (Bigfoot, Super B
Slide 15: Agenda
Agenda I. Transaction details II. Anchor investors III. Construction contract and yard IV. Key financials V. Jack‐up market 15
Slide 16: Project financing
Project financing Sources and Uses (USDm) Project cost1 Financing sources 2 Yard cost including interest compensation and drilling equipment 179,3 Project management 3,0 SG&A 0,5 Fees 1,2 Equity 42,0 Contingencies 1,4 Yard financing 143,4 Uses of Funds 185,4 Sources of Funds 185,4 1) Expected additi
Slide 17: Ferncliff fees
Ferncliff fees Ferncliff fees Charter commission: 1.00% If a contract is signed, Ferncliff be entitled to a charter commission of 1% of contract value Sales fee: 1.00% In case of a rig transaction, Ferncliff will be entitled to a sales fee of 1% of transaction price. Ferncliff sales fee will onl
Slide 18: Return on equity with high leverage to rig values
Return on equity with high leverage to rig values The right hand graph shows return on equity Equity return if sold in 2011* based on an assumption of a transaction during 245% 2011 250 % Rig 1 Rig 2 (Option) Rig 3 (Option) – Fees of USDm 1.2 and project management fees of USDm 2 are included in r
Slide 19: Proforma base case key figures
Proforma base case key figures The right hand table shows Earnings scenarios and valuation multiples earnings scenarios of one jack‐ DAY RATES USD/day 120 000 140 000 160 000 180 000 200 000 up unit Utilisation Daily opex 95 % 95 % 95 % 95 % 95 % ($55 000) ($55 000) ($55 000) ($55 000) ($55 000)
Slide 20: Agenda
Agenda I. Transaction details II. Anchor investors III. Construction contract and yard IV. Key financials V. Jack‐up market 20
Slide 21: Construction costs for premium jack-ups have moderated from approx. USD 220m to currently USD 170-180m
Construction costs for premium jack‐ups have moderated from approx. USD 220m to currently USD 170‐180m Construction cost jackups – long history (USDm) Construction cost jackups – 10y history (USDm) 250 200ft 250 200ft 250ft 250ft 300ft 300ft 200 >350ft 200 >350ft 150 150 Standard Drilling 100 100 50
Slide 22: Significantly less pronounced capacity additions within jack-ups compared to other oil service vessel categories
Significantly less pronounced capacity additions within jack‐ups compared to other oil service vessel categories Historical and projected fleet growth of various oil service vessels Comments 0% Expected fleet growth 2011-13 The jack‐up rig market has Floatels 21 % Growth 2005-2010 the second lowes
Slide 23: Number of JUs under order likely turned in 3Q10 - higher construction prices expected
Number of JUs under order likely turned in 3Q10 ‐ higher construction prices expected Quarterly jack‐up rig newbuild orders (#) Quarterly accumulated jack‐up order book (#) # USDm # USDm 80 Other 240 12 240 Quarterly JU orders Chinese yards Options 70 Other main (LTI, 220 Build cost 220 10 MIS, Dryd
Slide 24: Few available slots at high-end yards left - higher construction prices expected
Few available slots at high‐end yards left – higher construction prices expected Expected deliveries of jack‐up rigs at high end rig yards Comments # USDm Keppel’s next available slot 20 250 PPL Shipyard will imply a delivery in July 18 Keppel FELS 2013, at the earliest 16 Jurong Shipyard Pte Ltd
Slide 25: Also, significantly firmer market for new equipment than for the overall fleet
Also, significantly firmer market for new equipment than for the overall fleet Fleet utilization rigs built ‐> 1999 vs. rigs built 2000 ‐> Comments 100% Newer than 2000 Newer drilling rigs enjoying 100,0% Older than 2000 97,3% substantially better 90% 91,7% 93,0% utilization than older units 80% a
Slide 26: Upwards day rate trends for ultra premium jack-ups, current market level USD 130-140k/d
Upwards day rate trends for ultra premium jack‐ups, current market level USD 130‐140k/d Day rate fixtures for jack‐ups (>350ft, IC) Comments 300 >2y 1‐2y: 4 fixtures in Sep‐Oct, 1-2y including 2x SDRL fixtures in 185-365d 250 Vietnam (USD 116‐131 k/d) 90-185d 45-90d < 1y: 7 fixtures in Sep‐Nov,
Slide 27: Positive sentiment in JU market also reflected in latest relevant transaction: Transocean acquisition of PPL JU
Positive sentiment in JU market also reflected in latest relevant transaction: Transocean acquisition of PPL JU at USDm 195 Precedent transactions of jack‐ups (EV per rig, USDm) 8x Awilco 260 Of f shore 8x Sinvest 240 220 2x Standard Drilling PetroJack II PPL sale to Transocean 200 West Elara L240 O
Slide 28: The KFELS Mod V jack-up designed is renowned and currently in use by both supermajors and NOCs
The KFELS Mod V jack‐up designed is renowned and currently in use by both supermajors and NOCs as well as independents Contractors – KFELS MOD V* jack‐ups Current operators – KFELS Mod V* jack‐ups ESV ONGC Vietsovpetro ABAN IOOC SDRL Premier ConocoPhillips PV Drilling Saudi Aramco OGX Petroleo COSL
Slide 29: The established contractors have strong balance sheets and massive cash flow in 2011 to fund further fleet renewal
The established contractors have strong balance sheets and massive cash flow in 2011 to fund further fleet renewal Net debt US drillers (USDm) Aggregate cash flow (USDm) established listed drillers* 5 000 ATW RDC 20,000 EB ITDA 4 000 PDE Capex 3 000 NE 15,000 Op. FCF (EB ITDA -Capex) ESV 2 000 DO SU
Slide 30: Fleet renewal required for most of the US large cap offshore drillers
Fleet renewal required for most of the US large cap offshore drillers Average age jack‐ups (yrs) Jack‐up fleet by rig age (# of rigs) RIG 27 RIG 62 31 NE 28 NE 40 3 ESV 24 ESV 32 9 RDC 15 RDC 19 12 5 COSL 12 COSL 10 16 SDRL 3 SDRL 7 13 5 ABAN 14 ABAN 6 9 DO 30 DO 12 1 MAERSK 10 MAERSK 4 8 Older than
Slide 31: In particular RIG is facing headwinds in its jack-up operation
In particular RIG is facing headwinds in its jack‐up operation EBTIDA from jack‐up segment (USDm) Jack‐ups as % of company EBITDA 6,000 120% DO 5,000 NE* 100% ESV 4,000 RIG 80% RIG 3,000 60% NE DO 2,000 40% ESV 1,000 20% 0 0% 2008 2009 2010E 2011E 2008 2009 2010E 2011E Jack‐up EBITDA 2011E vs. 2008
Slide 32: Required day rate increases for upgrade investments
Required day rate increases for upgrade investments Required day rate increase (USDk/d) given 15% cash return hurdle rate for upgrade investment* 45 40 35 30 Rate increase 25 required for 15% annual cash return 20 (USDk/d) 15 10 5 0 10 20 30 40 50 60 70 80 90 100 Investment (USDm) *) Annualized EBIT
Slide 33: Risk factors
Risk factors Investing in Standard Drilling involves inherent risks. Prospective investors should consider, among other things, the risk factors set out below before making an investment decision. The risks described below are not the only ones facing the Company. Additional risks not presently know
Slide 34: Risk factors, cont'd
Risk factors, cont’d OPERATIONAL RISK Construction risk ¾ Standard Drilling is currently in the early stages of the construction of a jack‐up rig at Keppel FELS shipyard in Singapore. Delivery date and cost estimate are referred to in this Investor Presentation. Although the Company has thoroughly e
Slide 35: Risk factors, cont'd
Risk factors, cont’d COMMERCIAL RISK The Company may assume substantial responsibilities ¾ It should be emphasised that contracts in the offshore sector require high standards of safety, and it is important to note that all offshore contracts are associated with considerable risks and responsibiliti
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