Slide 1: Full Year 2016 Earnings Update
Full Year 2016 Earnings Update February 9, 2017 © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com
Slide 2: Disclaimer
Disclaimer The companies in which SBM Offshore N.V. directly and indirectly owns investments are separate legal entities. In this presentation “SBM Offshore” and “SBM” are sometimes used for convenience where references are made to SBM Offshore N.V. and its subsidiaries in general. These expressions
Slide 3: Leading FPSO Player Worldwide
Leading FPSO Player Worldwide The Company Performance Headquartered in The Netherlands c. 300 years of cumulative operational experience 5 Regional Centers 99.0% total historical uptime 10 Operational Shore Bases 1.6 MM bopd throughput capacity/day Lease & Operate Fleet Financials FY 2016 (US$ billi
Slide 4: Key Messages
Key Messages © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com 4
Slide 5: FY 2016 Review
FY 2016 Review Macro View Company Positioning FY 2016 Financials Outlook © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com
Slide 6: Complex projects, delivered on time
Complex projects, delivered on time. FPSO Cidade de Maricá On hire as of February 7, 2016 Initial charter contract of 20 years FPSO Cidade de Saquarema On hire as of July 8, 2016 Initial charter contract of 20 years FPSO Turritella On hire as of September 2, 2016 Initial charter contract of 10 years
Slide 7: Total Overview
Total Overview Directional Revenue (US$ millions) EBITDA (US$ millions) 2,618 Underlying EBITDA 778 718 2,013 EBITDA 561 725 FY 2015 FY 2016 FY 2015 FY 2016 Backlog (US$ billions) Net Debt (US$ billions) 18.9 17.1 3.1 3.1 FY 2015 FY 2016 FY 2015 FY 2016 © SBM Offshore 2017. All rights reserved. www.
Slide 8: HSSE
HSSE Health & Safety Committed to HSSE 1.2 Total Recordable Injury Frequency Rate (per 200k man- hours) 1 Strengthening safety 0.8 culture 0.6 0.4 0.2 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Oil Majors1Benchmark SBM Offshore Lowering emissions Environment Environmental performance per product
Slide 9: Compliance
Compliance January 24, July 15, 2016 July 16, 2016 October 6, 2016 October 9, 2016 2016 Settlement with Brazilian After two years of Brazilian Fifth SBM Offshore remains Prosecutor’s office regarding negotiations, the Leniency Agreement is Chamber confirms decision committed to engage with all accus
Slide 10: Macro View
FY 2016 Review Macro View Company Positioning FY 2016 Financials Outlook © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com
Slide 11: Oil Industry Investment
Oil Industry Investment 250 200 150 Billion US$ 100 Capex bottoming out in 2016 50 0 2012 2013 2014 2015 2016 e2017 e2018 e2019 Oil Majors Capex 600 500 But slow ramp-up expected 400 2005-2016 Average 300 200 100 Gradual 0 2012 2013 2014 2015 2016 e2017 e2018 e2019 Global Subsea Tree Awards recovery
Slide 12: New Reality
New Reality Lowered project costs Break-even price per barrel of oil Johan Castberg Cost savings, smaller outlay Vito Libra Break-even prices decreased by ~30 to ~60 % Mad Dog 2 Liza US$30 US$90 Improving economics Source: Various media quotes, company presentations, Upstream Online © SBM Offshore 2
Slide 13: Overall Market
Overall Market 25 20 Rock bottom in 2016 15 10 Gradual recovery from 2017 5 6 5 2 2 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 e2017 e2018 SBM Offshore Awards FPSO Awards FPSO Awards Bear Case FPSO Awards Bull Case Cautiously optimistic outlook Source: EMA FPS Report – 1Q-2017 © S
Slide 14: Changing FPSO Landscape
Changing FPSO Landscape 30 Number of lease contractors with operating FPSO* 25 20 15 Number of FPSO contractors 26 8 23 decreased since 2009 10 14 16 5 10 0 2003 2006 2009 2012 2016 Active lease contractors Non-active lease contractors *joint ventures included Stable Lease market share Proportion of
Slide 15: Project Delivery
Project Delivery SBM Offshore delivered 10 out of 16 FPSOs ** * closest to schedule * On-time delivery a rarity * Average 11 months Non-SBM Offshore Contractors *Redeployment ..but key in Upstream * * Generation 3 FPSO economics * -5 N=50 5 15 25 35 1200 11 month delay results in Cost of project del
Slide 16: Non-delivery in Context
Non-delivery in Context 600 Oil Majors remain under pressure Upstream project economics remain close to break-even 500 400 ΔDebt = US$200 Bn US$ Bn 300 200 Project overruns have major financial consequences 100 0 2010 2011 2012 2013 2014 2015 e2016 Upstream capex Dividend Operating CF Debt Estimated
Slide 17: Concentrated Industry Experience
Concentrated Industry Experience 300 Cumulative FPSO Operating Experience (Yrs) 250 SBM Offshore 200 Unique track record in EPC, 150 FPSO delivery and operations 100 3 600 kboepd 2 600 50 kboepd 1 200 kboepd 0 1 6 11 16 21 26 31 36 41 Total number FPSOs built (Lease and EPC) = Industry peers, bubble
Slide 18: Company Positioning
FY 2016 Review Macro View Company Positioning FY 2016 Financials Outlook © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com
Slide 19: Floating Solution Strategy
Floating Solution Strategy Optimize Our Current Business Transform Deepwater Projects Innovate Floating at Large © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com 19
Slide 20: Lease and Operate Activity
Lease and Operate Activity 3 Total Recordable Injury Frequency Rate (per 200k 2 SBM Offshore Operations fleet oil production 1 man-hours) capacity Total name plate production 2.5 capacity [mln bbl/d] 1.5 2 1 1.5 1 0.5 0.5 0 0 2011 2012 2013 2014 2015 2016 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 21: Optimize for the Future
Optimize for the Future 12,000 800 Staff levels Cost savings on employee benefits (SBM staff excluding contractors) 10,000 700 Δ= -54% 8,000 Δ = US$ -280 mln 600 6,000 500 4,000 2,000 400 - 300 2013 2014 2015 2016 2014 2015 2016 2017E Permanent Contractors yard Cost Savings SBM Offshore delivered it
Slide 22: Making Deepwater Affordable
Making Deepwater Affordable Product range (proxy for level of complexity) Calm Buoy Deepwater Calm Buoy Turret FPSO Cost savings potential SBM Technical Standards Cost savings of ~20 to ~35% using SBM Offshore -30% specifications -20% -10% Starting Point: Full Client Technical Specifications Cost sa
Slide 23: Fast4ward Progress
FAST4WARD Progress Hull design approval LIGHTER Ready for award Advanced negotiations with Hull & Accommodation top tier Asian yards Design approval Pre-FEED FEED Detailed design Early EPC activity Today Topsides catalogue Game-changing SBM standards Enhanced design Early EPC activity program © SBM
Slide 24: Energy Mix Outlook
Energy Mix Outlook Change in total primary energy demand 2000 1990-2015 2015-2040 Oil remains leading 1500 Mtoe 1000 Gas gains market share 500 0 Coal Oil Gas Renew. 1 Coal Oil Gas Renew. 1 Renewables strong growth Oil share in energy mix 2015 2035 Gas main transition fuel 1 Includes nuclear energy
Slide 25: Gas Product Development
Gas Product Development 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 LPG FPSO Sanha LNG FPSO Twin Hull concept Prelude & Ichthys FLNG (Pre-) FEED FLNG turrets FLNG concept study Project (being) delivered PFC Deep Panuke Long history of delivering products and equipment in Upstream Gas
Slide 26: Floating Wind
Floating Wind Strongest winds are further offshore Offshore renewable energy generation SBM Offshore floating (example offshore Europe) potential and mooring solution 22% 57% 20% floating wind fixed wind other Source: World Wind Energy Association Source: Indicta 60 years SBM Offshore experience app
Slide 27: FY 2016 Financials
FY 2016 Review Macro View Company Positioning FY 2016 Financials Outlook © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com
Slide 28: Underlying Directional Performance
Underlying Directional Performance (US$ millions) Directional Revenue Directional EBITDA Directional EBIT 53 778 725 2,013 53 344 FY 2016 290 Reported Exceptional Items Underlying Reported Exceptional Items Underlying Directional Revenue Directional EBITDA Directional EBIT 157 718 561 2,618 157 348
Slide 29: Lease and Operate P&L
Lease and Operate P&L (US$ millions) Directional FY 2015 FY 2016 Variance Revenue 1,105 1,310 205 Gross Margin 342 423 81 EBIT 315 398 83 Underlying EBIT 279 398 119 Depreciation, amortization and impairment 352 425 (73) EBITDA 667 823 156 Underlying EBITDA 631 823 192 Directional Comments Vessels I
Slide 30: Turnkey P&L
Turnkey P&L (US$ millions) Directional FY 2015 FY 2016 Variance Revenue 1,512 702 (811) Gross Margin 447 142 (305) EBIT 231 (22) (253) Underlying EBIT 178 9 (169) Depreciation, amortization and impairment 8 8 - EBITDA 239 (14) (253) Underlying EBITDA 186 18 (168) Directional Comments Projects In No
Slide 31: Group P&L
Group P&L (US$ millions) Directional FY 2015 FY 2016 Variance Revenue 2,618 2,013 (605) Gross Margin 789 565 (224) Overheads (299) (209) 90 Other operating income / (expense) (298) (66) 232 EBIT 191 290 99 Underlying EBIT 348 344 (4) Depreciation, amortization and impairment (370) (435) (65) EBITDA
Slide 32: Overheads
Overheads (US$ millions) Directional Expense Bridge 350 307 299 (26) 300 (23) (14) 250 (28) 209 200 150 100 50 0 FY 2014 FY 2015 General & Sales & Research & One-off Items FY 2016 Administrative Marketing Development General & Administrative Sales & Marketing Research & Development One-off Items Red
Slide 33: Group Cash Position
Group Cash Position (US$ millions) IFRS Cash Flow 2,000 306 11 1,500 (252) (211) 603 (70) 1,000 500 904 515 0 Cash Cash from Cash from Other Interest Paid Shareholder Dutch Cash Dec-31-15 Operations(1) Financing Return Settlement Dec-31-16 Activities(2) (1) Includes dividends received from JV’s (2)
Slide 34: Group Net Debt
Group Net Debt (US$ millions) Proportional IFRS 7,000 6,000 5,000 5,207 5,216 4,000 3,000 3,147 3,128 2,000 1,000 0 (1,000) FY15 FY16 FY15 FY16 Proportional Proportional IFRS IFRS Bridge Loans Revolving Credit Other Project Finance Cash © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com 3
Slide 35: Shareholder Returns
Shareholder Returns US$211 million cash returned to shareholders over 2016 – Repurchase of 11.44 million shares for US$166 million – Dividend paid US$0.21/share; 25% of 2015 Underlying Directional Net Profit Proposed cash dividend of US$0.23/share – Growth year-on-year of +10% – Representing circa 3
Slide 36: Cashflow Model and Allocation
Cashflow Model and Allocation Lease & Operate Cash Generation Cash Flow After Debt Funds: - Dividends - Growth Long Term Debt at Project Level: - Model is project finance plus up to c.50% equity sell down - Capacity for 2 FPSO awards p.a. Turnkey Cash Generation - RCF provides bridge financing Disci
Slide 37: Outlook
FY 2016 Review Macro View Company Positioning FY 2016 Financials Outlook © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com
Slide 38: Directional Backlog
Directional Backlog(1) As of December 31, 2016 (US$ billions) US$ 17.1 bn (as of December 31, 2016) 1.8 1.6 1.4 1.2 1 17.0 0.8 0.6 0.4 0.2 0 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 0.1 Average of 63% of L&O backlog represents operating cash flow L&O Average Portfolio Duration: 13.0 years(2
Slide 39: 2017 Guidance and Dividend Proposal
2017 Guidance and Dividend Proposal 2017 Directional Revenue guidance around US$1.7 billion – Turnkey around US$0.2 billion – Lease & Operate around US$1.5 billion 2017 Directional EBITDA guidance around US$750 million Proposed cash dividend of US$0.23 per share over 2016, representing a c. 10% year
Slide 40: Key Messages
Key Messages © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com 40
Slide 41: Appendix
Appendix © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com
Slide 42: IFRS 10 & 11
IFRS 10 & 11 Lease Joint Ventures Contract SBM Share % Directional(1) IFRS Type FPSO N’Goma FPSO FL 50% Proportional Equity FPSO Saxi Batuque FL 50% Proportional Equity FPSO Mondo FL 50% Proportional Equity FPSO Cdde de Ilhabela FL 62.25% Proportional Full consolidation FPSO Cdde de Maricá FL 56% Pr
Slide 43: Group Loans & Borrowings
Group Loans & Borrowings (US$ millions) Net Book Value as of December 31, 2016 Proportional Full Amount IFRS (Business Ownership) PROJECT FINANCE FACILITIES DRAWN FPSO Cidade de Paraty $ 714 $ 714 $ 360 MOPU Deep Panuke 324 324 324 FPSO Cidade de Anchieta 396 396 396 FPSO Cidade de Ilhabela 1,005 1,
Slide 44: Revolving Credit Facility
Revolving Credit Facility Key Characteristics Covenant Calculations Historical and Estimated Awards Amount US$1.0 billion Tangible Net Worth divided by Total 6 years + one-year extension Solvency Tangible Assets Tenor Ratio Min 1H16 FY16 Door-to-door maturity of 7 years 25% 32.7% 32.4% Accordion SBM
Slide 45: Revised RCF Covenant Definitions
Revised RCF Covenant Definitions Key Financial Covenant Definition Solvency Ratio Tangible Net Worth(1) divided by Total Tangible Assets(2) > 25% Leverage Ratio Consolidated Net Borrowings(3) divided by Adjusted EBITDA(4) – <3.75x at June 30, 2016 – <4.25x at December 31, 2016 – <4.50x at June 30, 2
Slide 46: Group Proportional Borrowings Overview
Group Proportional Borrowings Overview (US$ millions) FY16 Borrowings(1) FY16 Undrawn Facilities + Cash FY16 FY16 $3,978 $1,850 Proportional Proportional Proportional Debt Repayment Profile(1) $500 $438 $438 $443 $408 $400 $400 $356 $344 $322 $300 $238 $221 $190 $200 $110 $112 $100 $41 $0 2017 2018
Slide 47: SBM Lease and Operate Portfolio
SBM Lease and Operate Portfolio L&O Portfolio Average Duration: 13.0 years(1) Vessel Name Field Name Client Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 LEASE AND OPERATE FPSO 1
Slide 48: Group Balance Sheet
Group Balance Sheet (US$ millions) Dec-31-15 Dec-31-16 Variance Comment Property, plant and equipment 1,686 1,474 (212) Depreciation of assets CDM/S and Stones 1st Oil in 2016 and net Investments in associates and 3,943 8,306 4,363 results of JVs and redemption of finance lease other financial asset
Slide 49: Funding
Funding Undrawn Credit Facilities + Cash = US$1.85 bn Average cost of debt: FY16 4.6% vs. FY15 4.1 % 49
Slide 50: Delivering the Full Product Lifecycle
Delivering the Full Product Lifecycle Engineering Procurement 60 years of industry firsts Integrated supply chain Leading edge technology Global efficiencies Local sourcing Product Life Extension Construction Leader in FPSO relocation Strategic partnerships World class after sales Unrivalled project
Slide 51: Oil Dynamics
Oil Dynamics 3 120 100 2 Net demand/supply change in million bbl/d 80 Oil price stabilization? Brent crude price US$/bbl 1 60 0 e1Q17 e2Q17 e3Q17 e4Q17 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 e2020 e2025 e2030 e2035 40 Market balancing but
Slide 52: Liquids Cost Curve
Liquids Cost Curve 1 100 Weighted average break-even price Oil sands Other onshore Shale/tight oil Brent Equivalent Breakeven Price $US/bbl 0.8 80 Deep water competitive Offshore shelf 63 66 0.6 60 52 50 49 0.4 40 43 32 43 Development costs decreased across the board OFFSHORE 50 Producing DEEP WATER
Slide 53: Industry Consolidation
Industry Consolidation 2016 announced business combinations/alliances Schlumberger/Ca meron M&A GE/Baker Hughes Technip/FMC BP/Aker Alliance/JV SBM leverages financial strength, market scope and Partnership backlog in niche position Supply Chain Construc- Reservoir Seismic Survey FEED Equipment Supp
Slide 54: © SBM Offshore 2017. All rights reserved. www.sbmoffshore.com
© SBM Offshore 2017. All rights reserved. www.sbmoffshore.com