S.d. Standard Etc Plc · OSL:SDSD
S.d. Standard Etc — SD Standard Drilling — Investor Presentation (June 2011)
49 slides from S.d. Standard Etc's investor presentation, Jun 3, 2011
Slide 1: Presentation of SD Standard Drilling Plc
Presentation of SD Standard Drilling Plc 3 June 2011
Slide 2: Disclaimer
Disclaimer This Presentation has been produced by S.D. Standard Drilling Plc (the “Company” or “Standard Drilling”) solely for use at the presentation to investors and other stake holders and may not be reproduced or redistributed, in whole or in part, to any other person. This presentation is str
Slide 3: Q1 2011 Highlights
Q1 2011 Highlights 21 March 2011 The Financial Supervisory Authority of Norway approved the prospectus for the 42 mill shares in SD Standard Drilling Plc 23 March 2011 Board of Directors of Oslo Stock Exchange approved the listing of SD Standard Drilling Plc 25 March 2011 SD Standard Drilling
Slide 4: P&L Q1 2011
P&L Q1 2011 1 Jan - 31 2 Dec - 31 Mar 2011 Dec 2010 (All amounts in USD thousands unless otherwise stated) Administrative expenses -397 -86 Operating loss -397 -86 Finance income - - Finance costs - - Finance costs, net - - Loss before income tax -397 -86 Income tax expense - - Loss for the period -
Slide 5: Balance Q1 2011
Balance Q1 2011 As at 31 Mar 2011 As at 31 Dec (All amounts in USD thousands unless otherwise stated) 2010 Assets Non-current assets Rig - Capitalised expenses 40 179 37 308 Total non-current assets 40 179 37 308 Current assets Trade and other receivables 30 - Cash and cash equivalents 4 574 6 140 T
Slide 6: Subsequent events
Subsequent events 8 April the Company announced (subject to EGM approval): { Entered into a Share Purchase Agreement with Clearwater Capital Partners Fund III, LP Two jack up rigs under construction as well as two options at Keppel FELS { Private Placement of USD 330 million { Entered into a fra
Slide 7: Cont. subsequent events
Cont. subsequent events 14 April Announcement that Private Placement of USD 330 million was closed 15 April Private Placement of USD 330 million, 220 million shares at USD 1.5 per share, was allocated. { Increased the outstanding shares from 42 million to 262 million 4 May EGM approved the tra
Slide 8: Cont. subsequent events
Cont. subsequent events 16 May Announcement that first installment of each USD 38.6 million on behalf of each Offshore Driller 1 Ltd, Offshore Driller 2 Ltd , Offshore Driller 3 Ltd, Offshore Driller 4 Ltd had been paid to Keppel FELS and that the construction contracts was effective as of 13 May
Slide 9: Company presentation
Company presentation I. Summary and conclusion II. S.D. Standard Drilling Plc. ‐ Team ‐ Financing ‐ Yard ‐ Design III. Jackup market IV. Appendix Jack‐up market 9
Slide 10: Investment Summary
Investment Summary One of the leading pure Financial sponsors with a play jackup companies solid track record No management fee and The best yard for complete alignment construction of premium among investors jackups Unmatched delivery schedule and fully funded through July 2012 10
Slide 11: Unmatched Delivery Schedule
Unmatched Delivery Schedule Timeline ¾Q2 ¾Q3 ¾Q4 ¾Q1 ¾Q2 ¾Q3 ¾Q4 ¾Q1 ¾Q2 ¾Q3 ¾Q4 ¾Q1 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 July Rig 1 2012 Feb Rig 2 2013 May Rig 3 2013 July Rig Std 4Rig 3 (opt) 2013 Nov Rig 5 2013 Dec Rig 6 2013 May Rig 7 2014 Source: Company 11
Slide 12: Company presentation
Company presentation I. Summary and conclusion II. S.D. Standard Drilling Plc. ‐ Team ‐ Financing ‐ Yard ‐ Design III. Jackup market IV. Appendix Jack‐up market 12
Slide 13: Sponsors: Ferncliff
Sponsors: Ferncliff Ferncliff Ferncliff was established in 1995 as Tycoon Industrier AS, which was a pure trading company at the start Ferncliff has three business areas: Direct Active Investments, Ferncliff Finance and Ferncliff Property Investor Group ‐ Related Parties Øystein Stray Spetalen G
Slide 14: A Selection of Ferncliff Case Studies
A Selection of Ferncliff Case Studies Standard Drilling ASA Songa Offshore Ferncliff Drilling Founded in 2006 by Spetalen under the Spetalen was a founder with a 37.5 % Founded by Spetalen in 2006 name Standard Drilling stake in the acquisition of 2 semi‐ Ferncliff Drilling ordered a USDm 54
Slide 15: Sponsors: Clearwater Capital Partners
Sponsors: Clearwater Capital Partners Clearwater Capital Partners Established in December 2001, Clearwater Capital Partners (“Clearwater”) is an investment firm that manages over $2bn in AUM of investments in special situations and distressed or otherwise undervalued assets and securities located
Slide 16: A Selection of Clearwater Case Studies
A Selection of Clearwater Case Studies Griffin Coal Pacnet LDK Solar Griffin Coal is 1 of 2 coal mining companies in Pacnet is the owner/operator of the largest China‐based global leader in solar industry Western Australia with 250mm tons reserves, undersea cable network in Asia Pacific The
Slide 17: Construction Supervision Team
Construction Supervision Team Bjørn Bakken Ognian Todorov – Bjørn Bakken is a Technical Director, Naval – Ognian Todorov has more than 20 years experience in Architecture, Drilling Units, Marine & Offshore offshore construction, shipping and heavy industry. Engineering Strong management, organiz
Slide 18: Construction Supervision Team
Construction Supervision Team 18
Slide 19: Management – Head office in Limassol, Cyprus
Management – Head office in Limassol, Cyprus CEO ‐ Martin Nes Board of Directors ¾ Mr. Robert Petty, Managing Principal and Co-Founder of Clearwater Capital CFO ‐ Espen Lundaas Partners, has assumed the role of Chairman of the Board Office Manager ‐ Karina Irgens‐Hagevik ¾ Mr. Amit Gupta, Partner an
Slide 20: Open Ownership Structure
Open Ownership Structure Clearwater to own 29.9% post equity issue Ferncliff and associates to own approx. 9.0% post transaction Minority shareholders to own approximately 60% post capital raise Post deal market capitalization of USD 393m Source: Company 20
Slide 21: Fully Financed Until Delivery of First Rig
Fully Financed Until Delivery of First Rig Total Sources USD m Equity 372 Unfunded at Delivery 1,046 Sum 1,418 Total Uses USD m Yard Turnkey Contract Price 1,307 Project Management 14 SG&A 11 Equity Fee + Break Fee 11 Uplift Clearwater 42 Excess Cash / Working Capital 33 Sum 1,418 Source: Company 21
Slide 22: The payment schedule
The payment schedule Unit Paid-in Rest 2011 2012 2013 2014 Extras All-in B319 (July 2012) 35.9 143.4 4.0 183.4 B324 (February 2013) 36.0 144.0 4.0 184.0 B325 (May 2013) 36.0 144.0 4.0 184.0 B319 repeat 1 (July 2013) 38.4 153.6 4.0 196.0 B319 repeat 2 (November 2013) 38.4 153.6 4.0 196.0 B319 repeat
Slide 23: Attractive All-in Delivery Cost
Attractive All‐in Delivery Cost All‐in delivered cost of USD 1,385 million for the fleet, excluding ready to drill costs 4 option rigs exercised at yard contract prices of USD 192 million per unit* Implied average yard cost of approximately USD 196 million at issue price of USD 1.5 per share
Slide 24: Significant Equity Upside Potential
Significant Equity Upside Potential Dayrate Sensitivity Asset Value Sensitivity 24
Slide 25: Significant Equity Upside Only to Reflect Replacement Cost
Significant Equity Upside Only to Reflect Replacement Cost Average replacement cost of USD 211 per rig for the 7x unit Standard Drilling fleet { Estimated yard quote of USD 197m for Mod V‐B at KFELS if ordered today { Average time to market value of ~USD 9m per rig assuming day rates of ~USD 145,0
Slide 26: KFELS B-Class Delivered By the World's Leading Premium Jackup Yard
KFELS B‐Class Delivered By the World’s Leading Premium Jackup Yard KFELS B‐Class Keppel FELS track record The KFELS B‐Class jackup 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 design
Slide 27: Specification of the rigs
Specification of the 7 rigs, 5 copies of B319 and 2 with some upgrades Rig Owner B324 and B325 B319 and the four B319 repeat units Yard Keppel FELS Keppel FELS Design KFELS Class B KFELS Class B Operating water depth 400 ft 400 ft Drilling depths 30,000 ft 30,000 ft Hull size (l x b) 234 x 208 234 x
Slide 28: The KFELS Mod V jack-up design is renowned and widely used
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 *) Includes Mod V‐A, V‐B, V‐B Bigfoot, V‐Super B and V‐enhanced B Standard Drilling post transaction So
Slide 29: Agenda
Agenda I. Summary and conclusion II. S.D. Standard Drilling Plc. ‐ Team ‐ Financing ‐ Design ‐ Yard III. Jackup market IV. Appendix Jack‐up market 29
Slide 30: Global Offshore Oil Production
million barrels of oil per day 0 5 10 15 20 25 30 35 1930 1933 1936 1939 1942 1945 1948 1951 1954 1957 1960 1963 Offshore Deep 500+ 1966 1969 1972 1973 Source: Douglas Westwood 1975 1978 Offshore Shallow 100-120m Jackups 1979 1981 Growth in UDW, but Volume Shallow Water 1981 1984 1985 1986 1987 1990
Slide 31: Industry Jackup Revenue Expected to Increase
Industry Jackup Revenue Expected to Increase Estimated quarterly jackup industry revenue 4q10 of USD 3.2bn, compared to late 2007- early 2008 peak of approx. USD 4.9bn 6,000 Jackup market estimate (USDm) 5,000 4,000 3,000 2,000 1,000 0 1q04 4q04 3q05 2q06 1q07 4q07 3q08 2q09 1q10 4q10 3q11e 2q12e So
Slide 32: Jackup Demand Increasing Significantly – The Industry Need More Rigs
Jackup Demand Increasing Significantly – The Industry Need More Rigs Jackup demand Q4’09‐Q1’11 Jackup fleet age profile – the new rigs are the winners As the industry approach technical obsolescence for Firm tenders increased with 68% Y/Y many jackups effective supply may be less than it Open
Slide 33: Attractive Supply/Demand Balance
Attractive Supply/Demand Balance Visible employment opportunities 110 new known projects requiring jackups in 2011 Incremental demand coming from NW Europe, Middle East and Asia Limited premium jackup availability • Available supply of premium jackups likely to be absorbed by the increasing dema
Slide 34: New Rigs Win the Work Over Old Rigs
New Rigs Win the Work Over Old Rigs New jackup utilization Old jackup utilization Utilization for new rigs (less than 10yrs old) Utilization for older jackups has not recovered since the bottomed out October 2009 financial crisis started New rigs entering the market replacing old units Incre
Slide 35: Premium Jackups Have Better Economics
Premium Jackups Have Better Economics Well Drilling Cost Jackups The spread in dayrates and values is Old New based on: Dayrate USD 85,000 140,000 1. More efficient conventional Indirect daily drilling cost* USD 127,500 140,000 drilling from newer units 2. Inability of older jackups to handle high p
Slide 36: 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 jackups (yrs) Jackup fleet by rig age (# of rigs) Source: First Securities Equity Research, ODS Petrodata 36
Slide 37: US Drillers: Jackup Earnings Contribution Is Fading
US Drillers: Jackup Earnings Contribution Is Fading EBTIDA from jackup segment (USDm) Jackups as % of company EBITDA Jackup EBITDA 2011E vs. 2008 % of aggregate jackup EBITDA* * Shows share of aggregate jack‐up EBITDA for RIG, NE, ESV, DO, SDRL, RDC, ATW Source: First Securities Equity Research 37
Slide 38: Strong Balance Sheets and Massive Cashflow Support Consolidation
Strong Balance Sheets and Massive Cashflow Support Consolidation Net debt US drillers (USDm) Aggregate cash flow (USDm) established listed drillers* Net debt Transocean (USDm) *) Aggregate of Atwood, Diamond, Ensco, Fred Olsen, Noble, Pride, Rowan, Seadrill (pro forma incl Smedvig) and Transocean (p
Slide 39: The Orderbook is Getting Tight in 2013
The Orderbook is Getting Tight in 2013. Slots available for 2014 deliveries. Historical and projected jackup deliveries incl. options Comments Announced options are mostly with the high‐end yards: Keppel FELS (11x) Jurong Shipyard (7x) PPL Shipyard (2x ) Dalian SIC (5x) Keppel AmFELS (1x
Slide 40: The Key Singaporean Yards Are Set To Exceed or Repeat Peak Output from 2008
The Key Singaporean Yards Are Set To Exceed or Repeat Peak Output from 2008 Keppel FELS projected jackup deliveries PPL/Jurong projected jackup deliveries Source: First Securities Equity Research, ODS Petrodata 40
Slide 41: Orderbook Not Challenging
Orderbook Not Challenging Historical and projected fleet growth of various oil service vessels Comments The jack‐up rig market has the 2nd lowest fleet growth in the entire oil service vessel universe Expected fleet growth of jack‐ ups for 2011‐13 is currently at 13% (8% in mid Nov‐10) Fleet g
Slide 42: Summary - Check List For Investors
Summary ‐ Check List For Investors Team Impressive background and experience from sponsors, Ferncliff and Clearwater and building supervision team by Noble Denton 9 Financing Highly attractive 20/80 payment terms and fully funded by July 2012 9 Yard Keppel FELS Singapre is the world’s leading
Slide 43: Agenda
Agenda I. Summary and conclusion II. S.D. Standard Drilling Plc. ‐ Team ‐ Financing III. Jackup market IV. Appendix 43
Slide 44: Construction Costs For Jackups Have Started to Rise
Construction Costs For Jackups Have Started to Rise Construction cost jackups – long history (USDm) Construction cost jackups – 10y history (USDm) Standard Drilling Standard Drilling Yard cost of rigs has historically doubled every While current newbuildings are contracted at 10 years favourable
Slide 45: The orderbook is filling up and yard costs are increasing
The orderbook is filling up and yard costs are increasing Quarterly jackup rig newbuild orders (#) Quarterly accumulated jackup order book (#) # USDm # USDm 90 Options 240.0 Other Chinese yards 80 Other main (LTI, MIS, Drydocks) 220.0 PPL/JURONG 70 AMFELS KFELS 200.0 60 Build cost 180.0 50 40 160.0
Slide 46: Risk factors
Risk factors Investing in Standard Drilling involves inherent risks. Prospective investors should consider, among other things, the risk factors set out below as well as any additional risk factors set out in the Company’s prospectus prepared for the listing on Oslo Axess and available at www.standa
Slide 47: 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. Following the acquisition of Clearwater Drilling and exercise of 2+2 options, the Company will have 7 jack‐up rigs u
Slide 48: 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
Slide 49: Clearwater Capital Partners – Disclaimer
Clearwater Capital Partners – Disclaimer The information contained herein is provided for informational purposes only and may not be relied on as an offer to sell or a solicitation of an offer to buy an interest in any Clearwater Capital Partners, LLC managed entity (each, a “Fund”). Any offer or so
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