Slide 1: First-Half 2015 Earnings Presentation
First-Half 2015 Earnings Presentation August 5, 2015 © SBM Offshore 2015. All rights reserved. www.sbmoffshore.com
Slide 2: Disclaimer
Disclaimer Some of the statements contained in this presentation that are not historical facts are statements of future expectations and other forward-looking statements based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual
Slide 3: 2015 Update
2015 Update Industry Outlook Directional(1) Adaptation Revenue Down 9% Strategy Brazil Turritella Joint Memorandum of Understanding Venture US$1.6 bn Cidade de Saquarema Project Finance (1) Directional view is a non-IFRS disclosure, which assumes all lease contracts are classified as operating lease
Slide 4: No. 1 FPSO Player Worldwide
No. 1 FPSO Player Worldwide The Company Lease Fleet 5 Regional Centers 10 FPSOs; 3 FPSOs under construction 13 Shore Bases / Operations Offices 2 FSOs 4 Site Offices 1 Semi-sub 9,080 Employees 1 MOPU Financials in US$ billion Performance 1H2015 2015 Directional(1) Guidance 2.6 264 years of operation
Slide 5: Delivering the Full Product Lifecycle
Delivering the Full Product Lifecycle Engineering Procurement 50 years of industry firsts Integrated supply chain Leading edge technology Global efficiencies Local sourcing Product Life Extension Construction Leader in FPSO relocation Strategic partnerships World class after sales Unrivalled project
Slide 6: 1H 2015 Review
1H 2015 Review Macro View 1H 2015 Financials Outlook © SBM Offshore 2015. All rights reserved. www.sbmoffshore.com
Slide 7: Total Overview
Total Overview (US$ Millions) Revenue Directional(1) IFRS 2,797 1,729 1,572 1,457 1H 2014 1H 2015 1H 2014 1H 2015 EBIT Directional(1) IFRS 255 201 204 (41) 1H 2014 1H 2015 1H 2014 1H 2015 (1) Directional view is a non-IFRS disclosure, which assumes all lease contracts are classified as operating lea
Slide 8: Compliance
Compliance On March 16, 2015 SBM Offshore announced the signing of a Memorandum of Understanding with the Comptroller General’s Office (“CGU”) and the Attorney General’s Office (“AGU”) – Sets a framework for discussions on a potential mutually acceptable settlement and for the disclosure by SBM Offs
Slide 9: HSSE Results
HSSE Results Lowest recordable injury and HSSE Results lost time injury frequencies 0.6 since 2007 – Frequencies reduced by 30% 0.5 and 80%, respectively, Injury Frequency compared to last year 0.4 Frequency of potentially 0.3 severe incidents reduced by 80% since 2011 0.2 Volume of gas flared on SB
Slide 10: Macro View
1H 2015 Review Macro View 1H 2015 Financials Outlook © SBM Offshore 2015. All rights reserved. www.sbmoffshore.com
Slide 11: What We're Seeing
What We’re Seeing Brent Crude Pricing Life in the New Normal $140 2015-2017 is ‘survival mode’ $120 – Order intake down, pricing pressure up – CapEx budgets slashed US$ / bbl $100 – Earnings to struggle through 2017 $80 Companies are seeking savings primarily $60 through four initiatives: $40 – Redu
Slide 12: What Clients Are Saying
What Clients Are Saying Projects must be profitable at There are Cash is still lower oil price many king deepwater opportunities CapEx will be cut in 2015 and How can we do 2016 could be it cheaper? similar We’re engaging and here to collaborate with you to find cost- efficient technical and financi
Slide 13: What the Market is Telling Us
What the Market is Telling Us Historical and Estimated FPSO Awards 2015-2016 Commentary 14 Downward adjustment of 2015 and 2016 estimated awards by 8 and 3 awards, 12 12 respectively, across all segments 10 10 Near-term demand is uncertain because oil 10 companies are unsure of which projects to san
Slide 14: Prospects in Pursuit
Prospects in Pursuit Pre-Award Activity 20 Ex: Carryover of 2 projects from 2010 to 2011 (across all 16 project types) 15 13 10 10 10 7 5 0 2011 2012 2013 2014 2015E Turret ITT FPU FEED/ITT Previous Year Carryover Less common for FEED/ITT work to be compensated 14
Slide 15: How SBM is Rising to Meet the Challenge
How SBM is Rising to Meet the Challenge Turnaround Transformation Vision Work as One Crisis The Way Perform Odyssey24 Restructuring Management Forward Shape the Future JAN 2012 FEB 2013 SEPT 2013 DEC 2014 Q1 2016 JAN 2012 FEB 2013 SEPT 2013 DEC 2014 1H 2015 Adjust to New Client-centric Normal Macro
Slide 16: Sources of Resilience
Sources of Resilience Contractually secured, near record US$20.0 billion Backlog Not price or production volume(1) sensitive Release 1,500 positions to optimise cost base Capacity Adaptations As the market further develops, SBM Offshore will adapt accordingly Odyssey24, fleet maintenance, R&D activi
Slide 17: Directional Backlog
Directional(1) Backlog (US$ Billions) US$ 20.0 bn (as of June 30, 2015) 1H15 Revenue Lease & Operate Backlog Remaining Backlog 2.0 1.5 1.0 0.5 0.0 $19.1 bn 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Turnkey Backlog 1H15 Revenue Remai
Slide 18: Restructuring & Corporate Relocation
Restructuring & Corporate Relocation Eliminated approximately 900 permanent positions and 600 contractor positions – Total redundancy cost of US$57 million • US$8 million in 2014 • US$49 million in 1H 2015 – Expected annualized savings of US$80 million The Company continues to explore opportunities
Slide 19: 1H 2015 Financials
1H 2015 Review Macro View 1H 2015 Financials Outlook © SBM Offshore 2015. All rights reserved. www.sbmoffshore.com
Slide 20: Underlying Directional Performance
Underlying Directional(1) Performance (US$ Millions) Directional(1) Revenue Directional(1) EBITDA Directional(1) EBIT 430 0 430 1,572 255 0 255 1H 2015 Reported Exceptional items Underlying Reported Exceptional items Underlying Directional(1) Revenue Directional(1) EBITDA Directional(1) EBIT 1,729 2
Slide 21: Turnkey P&L
Turnkey P&L (US$ Millions) Directional(1) 1H 2015 1H 2014 Variance Revenue 1,030 1,208 (178) Gross Margin 282 199 83 EBIT 171 107 64 Depreciation, amortization and impairment (4) (7) 3 EBITDA 175 114 61 Directional(1) Comments Projects In Turritella 45% joint venture Projects Out N’Goma FPSO and Cid
Slide 22: Lease and Operate P&L
Lease and Operate P&L (US$ Millions) Directional(1) 1H 2015 1H 2014 Variance Revenue 542 521 21 Gross Margin 168 152 16 EBIT 149 139 10 Depreciation, amortization and impairment (167) (129) (38) EBITDA 316 268 48 Directional(1) Comments Vessels In Cidade de Ilhabela and N’Goma FPSO Vessels Out Marli
Slide 23: Group P&L
Group P&L (US$ Millions) Directional(1) 1H 2015 1H 2014 Variance Revenue 1,572 1,729 (157) Gross Margin 450 352 98 Overheads (150) (153) (3) Other operating income (45) (240) 195 EBIT 255 (41) 296 Depreciation, amortization and impairment (175) (139) (36) EBITDA 430 98 332 Net financing costs / loan
Slide 24: Overheads Breakdown
Overheads Breakdown (US$ Millions) Directional(1) Expense Bridge $200 $153 $(14) $6 $(2) $150 $7 $150 $100 $50 $0 1H 2014 General & Sales & Research & One-off Items 1H 2015 Administrative Marketing Development General & Administrative Sales & Marketing Research & Development One-off Items (2) Reduct
Slide 25: Group Balance Sheet
Group Balance Sheet (US$ Millions) 30-Jun-15 31-Dec-14 Variance Comment Property, plant and equipment 1,821 1,923 (102) Depreciation of assets Investments in associates and Net results of JVs and redemption of finance 4,197 4,288 (91) other financial assets lease financial assets Construction contra
Slide 26: Development of Group Cash Position
Development of Group Cash Position (US$ Millions) IFRS Cash Flow Bridge $1,500 $62 $5 $13 $(559) $49 $1,250 $587 $1,000 $(293) $750 $164 $452 $(89) $500 $389 $250 $0 Cash Cash from New Loans Equity Investment Other Disposal of Investments Loan Interest Cash 31-Dec-14 Operations Funding Funding PP&E
Slide 27: Group Net Debt
Group Net Debt (US$ Millions) Proportional IFRS $6,000 $5,159 $4,775 $5,000 $3,568 $4,000 $3,293 $3,000 $2,000 $1,000 $0 ($1,000) 1H15 FY14 1H15 FY14 Proportional Proportional IFRS IFRS Bridge Loans Revolving Credit Other Project Finance Cash The Turritella JV and Cidade de Saquarema financing are p
Slide 28: Group Proportional Borrowings Overview
Group Proportional Borrowings Overview (US$ Millions) 1H15 Borrowings(1) 1H15 Undrawn Facilities + Cash(2) 1H15 1H15 $3,988 $1,259 Proportional Proportional Proportional Debt Repayment Profile(1) $1,000 $800 $623 $574 $600 $449 $400 $301 $291 $326 $324 $326 $219 $193 $200 $107 $112 $104 $20 $19 $0 H
Slide 29: Funding
Funding Undrawn Credit Facilities + Cash = US$1,364 mn(1) FPSO Turritella Joint Venture(1) Cidade de Saquarema project finance: US$1.55 bn(1) Average cost of debt: 1H15 4.2% vs. FY14 4.2% (1) The Turritella JV and Cidade de Saquarema financing are post-period events that are not reflected in debt fa
Slide 30: Outlook
1H 2015 Review Macro View 1H 2015 Financials Outlook © SBM Offshore 2015. All rights reserved. www.sbmoffshore.com
Slide 31: Scheduled for Delivery
Scheduled for Delivery FPSO Cidade de Maricá Undergoing topside integration at our Brasa joint venture yard in Rio de Janeiro Expected delivery in first quarter 2016 Initial charter contract of 20 years FPSO Cidade de Saquarema Construction continues in China; sail away during 2H 2015 to yard in Mau
Slide 32: Project Overview
Project Overview Project 2011 2012 2013 2014 2015 2016 POC Type(1) 30/6/15 Percentage of Completion FPSO N’Goma FPSO FL <25% FPSO Cidade de Ilhabela FL 25%<50% Turret Quad 204 T Turret Prelude FLNG T 50%<75% Turret Ichthys T >75% FPSO Cidade de Maricá FL FPSO Cidade de Saquarema FL 100% FPSO Turrite
Slide 33: Odyssey24 Project Scope Update
Odyssey24 Project Scope Update Odyssey24 program ends September 2015, with minimal carryover into 2016 Project aimed at improvements in project execution, supply chain, controls, and organizational capabilities, supported by fit for purpose control and reporting tools – Payback of the two-year inves
Slide 34: 2015 Guidance
2015 Guidance Updated Directional(1) Revenue guidance: At least US$2.6 billion Turnkey: US$1.4 billion Lease & Operate: US$1.2 billion Proportional Net Debt guidance: Less than US$3.5 billion Directional(1) Capital Expenditure(2) guidance for the three finance lease vessels under construction: –
Slide 35: Appendix
Appendix © SBM Offshore 2015. All rights reserved. www.sbmoffshore.com
Slide 36: Directional vs IFRS: JVs During Construction
Directional vs IFRS: JVs During Construction The table below summarizes the accounting consequences under IFRS and Directional(1) of the participation by JV partners in a mature construction project, for a finance lease for a client IFRS Treatment Directional(1) Treatment Income The entire EPC is se
Slide 37: IFRS 10 & 11
IFRS 10 & 11 Lease Joint Ventures Contract SBM Share % New Directional(1) New IFRS Type FPSO N’Goma FPSO FL 50% Proportional Equity FPSO Saxi Batuque FL 50% Proportional Equity FPSO Mondo FL 50% Proportional Equity FPSO Cdde de Ilhabela FL 62.25% Proportional Full consolidation FPSO Cdde de Maricá F
Slide 38: Group Loans & Borrowings
Group Loans & Borrowings (US$ Millions) Net Book Value as of June 30, 2015 Proportional Full Amount IFRS (Business Ownership) PROJECT FINANCE FACILITIES DRAWN FPSO Capixaba relocation $ 61 $ 61 $ 49 FPSO Espirito Santo 75 75 38 FPSO Aseng 67 67 40 FPSO Cidade de Paraty 843 843 426 MOPU Deep Panuke 4
Slide 39: New Revolving Credit Facility
New Revolving Credit Facility Key Characteristics Covenant Calculations Historical and Estimated Awards Amount US$1.0 billion Tangible Net Worth divided by Total 5 years + two one-year extensions Solvency Tangible Assets > 25% Tenor Ratio Door-to-door maturity of 7 years – Solvency Ratio = 32.5% vs.
Slide 40: New RCF Covenant Definitions
New RCF Covenant Definitions Key Financial Covenant Definition Solvency Ratio Tangible Net Worth(1) divided by Total Tangible Assets(2) > 25% Leverage Ratio Consolidated Net Borrowings(3) divided by Adjusted EBITDA(4) < 3.75 At the request of the Company, the leverage ratio may be replaced by the Op
Slide 41: Floating Solutions
Floating Solutions Current: Future: Focus on top-end segment Leverage core competencies FPSOs Floating LNG (FLNG) Turret moorings Semisubmersible & TLP production units Turnkey Sale or Lease & Operate Brownfields; Operating and Maintenance 41
Slide 42: Competitive Landscape
Competitive Landscape Small Conversions – Large Conversions – <60,000 bbls / day 80,000-150,000 bbls / day Newbuilds – >200,000 bbls / day 42
Slide 43: SBM Lease Portfolio
SBM Lease Portfolio L&O Portfolio Average Duration: 14.5 years(1) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 09/30 09/32 11/14 11/26 11/29 04/22 04/25 12/22 12/27 01/16 01/22 01/31 06/23 06/28 12/24 12/28 11/26 11/31 06/33 11/14 11/3
Slide 44: © SBM Offshore 2015. All rights reserved. www.sbmoffshore.com
© SBM Offshore 2015. All rights reserved. www.sbmoffshore.com