Pareto oil and offshore seminar - COSL Drilling Europe AS
Pareto oil and offshore seminar - COSL Drilling Europe AS
Pareto oil and offshore seminar - COSL Drilling Europe AS
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<strong>Pareto</strong> Oil & Offshore <strong>seminar</strong><br />
September 2006<br />
www.awo.no
Agenda<br />
1) Strong market fundamentals<br />
2) Awilco Offshore well positioned<br />
3) Premium <strong>Drilling</strong>/market outlook<br />
2
Agenda<br />
1) Strong market fundamentals<br />
2) Awilco Offshore well positioned<br />
3) Premium <strong>Drilling</strong>/market outlook<br />
3
80<br />
70<br />
60<br />
50<br />
40<br />
jul.08<br />
okt.07<br />
4<br />
Future <strong>oil</strong> price indicates mega cycle<br />
Baker Hughes Rig Count vs. 12m average Brent <strong>oil</strong> price + future prices<br />
5000<br />
4500<br />
4000<br />
3500<br />
3000<br />
2500<br />
2000<br />
1500<br />
1000<br />
500<br />
0<br />
jan.83<br />
okt.83<br />
jul.84<br />
apr.85<br />
jan.86<br />
okt.86<br />
jul.87<br />
apr.88<br />
jan.89<br />
okt.89<br />
jul.90<br />
apr.91<br />
jan.92<br />
okt.92<br />
jul.93<br />
apr.94<br />
jan.95<br />
okt.95<br />
jul.96<br />
apr.97<br />
jan.98<br />
okt.98<br />
jul.99<br />
apr.00<br />
jan.01<br />
okt.01<br />
jul.02<br />
apr.03<br />
jan.04<br />
okt.04<br />
jul.05<br />
apr.06<br />
jan.07<br />
Baker Hughes World Wide Rig Count (ex. Canada) 12m average <strong>oil</strong> price (Brent)<br />
Source: Enskilda Securities / Oil Companies<br />
30<br />
20<br />
10<br />
0
Oil companies strugling to replace reserves…<br />
R/R-ratio at lowest levels ever seen<br />
170%<br />
160%<br />
152%<br />
155%<br />
Organic Reserve/Replacement ratio - (1994-2005)<br />
150%<br />
140%<br />
130%<br />
120%<br />
110%<br />
100%<br />
90%<br />
80%<br />
70%<br />
102%<br />
110%<br />
128%<br />
123%<br />
110%<br />
112%<br />
103%<br />
95%<br />
85%<br />
78%<br />
76%<br />
60%<br />
50%<br />
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006E<br />
Source: Oil companies, Enskilda Securities<br />
5
…resulting in increased E&P spending<br />
Exploration <strong>and</strong> Production spending – massively on the rise<br />
E&P spending index (1998=100)<br />
220<br />
200<br />
180<br />
160<br />
140<br />
120<br />
100<br />
*1998=100<br />
88%<br />
Estimate 2003-2007<br />
(given 2 years ago)<br />
106%<br />
121%<br />
Estimate 2004-2008<br />
(given 1 year ago)<br />
58%<br />
32%<br />
62%<br />
80<br />
60<br />
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006E 2007E 2008E<br />
Source: Oil companies, Enskilda Securities<br />
6
A significant drop in the <strong>oil</strong> price will not hurt activity<br />
Oil companies’ long-term budgeting price<br />
USD/barrel<br />
40<br />
35<br />
30<br />
25<br />
20<br />
15<br />
10<br />
5<br />
0<br />
+ 80%<br />
1999 2000 2001 2002 2003 2004 2005 2006<br />
Source: Oil companies, Enskilda Securities<br />
7
OPEC is in control of the <strong>oil</strong> price
Negative growth in supply for 2004 <strong>and</strong> 2005<br />
World-wide jackup fleet by year of construction<br />
90<br />
80<br />
70<br />
60<br />
Average Fleet Age (yrs)<br />
DIAMOND OFFSHORE 27<br />
PRIDE 25<br />
TODCO 25<br />
NOBLE 24<br />
GLOBAL SANTAFE 21<br />
ENSCO 21<br />
ROWAN 21<br />
2004 2005 2006E 2007E 2008E 2009E<br />
Newbuilding 4 4 12 21 26 8<br />
Expected attrition -9 -8 -5 -5 -5 -5<br />
Net supply -5 -4 7 16 21 3<br />
As % of total fleet -1,3% -1,1% 1,9% 4,4% 5,8% 0,8%<br />
no. of units<br />
50<br />
40<br />
30<br />
20<br />
10<br />
4 21 26 8<br />
0<br />
0 0<br />
2010E<br />
2008E<br />
2006E<br />
2004<br />
2002<br />
2000<br />
1998<br />
1996<br />
1994<br />
1992<br />
1990<br />
1988<br />
1986<br />
1984<br />
1982<br />
1980<br />
1978<br />
1976<br />
1974<br />
1972<br />
1970<br />
1968<br />
1966<br />
Source: Petrodata, Enskilda Securities <strong>and</strong> Fearnley Fonds<br />
Jack ups<br />
9<br />
Newbuilds
Agenda<br />
1) Strong market fundamentals<br />
2) Awilco Offshore well positioned<br />
3) Premium <strong>Drilling</strong>/market outlook<br />
10
Awilco Offshore – strong earnings potential<br />
WilPower<br />
DELIVERED<br />
WilCraft<br />
Q4 2006<br />
WilSuperior<br />
Q2 2007<br />
WilBoss<br />
Q4 2007<br />
WilForce<br />
Q4 2007<br />
WilSeeker<br />
Q2 2008<br />
WilStrike<br />
Q2 2009<br />
1 option at PPL<br />
Exp. del 2Q09<br />
Port Rigmar<br />
Port Reval<br />
Contract coverage<br />
2006: 98%<br />
2007: 96%<br />
2008: 88%<br />
2009: 17%<br />
OffRig <strong>Drilling</strong> <strong>AS</strong>A 43 %<br />
2 semisubmersibles + 2 options<br />
<strong>Drilling</strong> contractor<br />
owned 50/50 with Sinvest<br />
Petrojack 18.5 %<br />
(approx. 37% together with Sinvest)<br />
2 jackup drilling rigs<br />
11
Fully funded – no need for further financing<br />
1400<br />
1200<br />
ACCUMULATED C<strong>AS</strong>HFLOW 1H 2009<br />
FIRM CONTRACTS<br />
1000<br />
800<br />
600<br />
400<br />
200<br />
0<br />
REMAINING<br />
CAPEX<br />
8 RIGS<br />
UNDRAWN<br />
DEBT<br />
FACILITIES<br />
12
OFRD design well recognized by BP, Stat<strong>oil</strong> <strong>and</strong> Exxon<br />
• 50% of construction<br />
costs compared to 6th<br />
generation harsh<br />
environment Rigs<br />
• Can cover >90% of the<br />
NS market<br />
• Full DP Equipment<br />
Class 3<br />
• Prepared for<br />
winterization<br />
13
OFRD strong Stavanger based organization<br />
Averaging more than 25 years in the industry<br />
OffRig <strong>Drilling</strong> <strong>AS</strong>A, Board of Directors<br />
Henrik A. Christensen (Chairman), Sigurd Thorvildsen, Jan Børge Usl<strong>and</strong>, Claus Mørch<br />
HSE&Q<br />
Hans K. Holmen<br />
Petter H. Tomren, President/CEO<br />
CFO<br />
Arnstein Hernes<br />
VP Projects<br />
VP Operations<br />
VP Business Dev.<br />
HR Director<br />
Kolbjørn Akselvoll<br />
Stig Hetlevik<br />
Stig Hetlevik<br />
Osvald Borgen<br />
Project Manager<br />
Nils Norheim<br />
Rig Manager<br />
Jarle Haugum<br />
Contracts Manager<br />
Stein Arild Hansen<br />
Administration<br />
Karina in’t Veld<br />
Vessel Management<br />
<strong>and</strong> crewing<br />
Polycrest <strong>AS</strong><br />
14
Yantai Shipyard – evolvong into a global <strong>offshore</strong> yard<br />
• Korean top management hired from Daewoo<br />
• Following equity issue (1q06) the yard is debt free<br />
<strong>and</strong> USD 80 mill is currently being spent on yard<br />
upgrades<br />
• Expected net profit USD 15 mill in 06 <strong>and</strong> USD 40 mill<br />
in 07. Orderbook increasing. Listing in Singapore<br />
underway<br />
15
Agenda<br />
1) Strong market fundamentals<br />
2) Awilco Offshore well positioned<br />
3) Premium <strong>Drilling</strong>/market outlook<br />
16
”We will buy the rigs from the Norwegian<br />
speculators when they don’t get contracts”<br />
(NN US driller CEO)<br />
18
Contract awards during first year of operation<br />
Client<br />
Area<br />
Duration<br />
Contract<br />
status<br />
ADC<br />
Saudi<br />
5yrs<br />
Firm<br />
Hardy<br />
India<br />
5 months<br />
Firm<br />
Shell Brunei<br />
Malaysia/<br />
Brunei<br />
16months+<br />
12m option<br />
Firm<br />
Reliance<br />
India<br />
18months+<br />
2x6m option<br />
Firm<br />
Pearl<br />
(Sebuku)<br />
Indonesia<br />
6months<br />
LOI<br />
Peak<br />
Australia<br />
13months+<br />
11m option<br />
LOI<br />
19
Office Locations <strong>and</strong> Market Areas<br />
OSLO<br />
HOUSTON<br />
INDIA<br />
SINGAPORE<br />
Brunei<br />
AUSTRALIA<br />
20
MC<br />
<strong>Drilling</strong> recruitment on schedule<br />
HSE<br />
250<br />
ET<br />
225<br />
CE<br />
200<br />
175<br />
150<br />
CM<br />
125<br />
BE<br />
100<br />
D<br />
75<br />
50<br />
25<br />
0<br />
jan.07<br />
nov.06<br />
sep.06<br />
jul.06<br />
mai.06<br />
mar.06<br />
jan.06<br />
nov.05<br />
nov.07<br />
sep.07<br />
jul.07<br />
mai.07<br />
mar.07<br />
mai.08<br />
mar.08<br />
jan.08<br />
21<br />
ARMD<br />
ARMN<br />
RM<br />
OM<br />
Personnel
Premium People<br />
22
Senior Management Team<br />
President <strong>and</strong> CEO<br />
Bill Rose<br />
Vice President<br />
Marketing &<br />
Contracts<br />
Mike Pope<br />
Vice President<br />
Health, Safety &<br />
Environment<br />
Mike Cadigan<br />
Vice President<br />
Operations<br />
Sunil Pangarkar<br />
Vice President<br />
Administration<br />
Steve Bradshaw<br />
Vice President<br />
Finance<br />
Sonny Ong<br />
Manager<br />
International<br />
Marketing<br />
Trevor Howard<br />
Supervisor<br />
HSE<br />
Duane Kelly<br />
Don Rankin<br />
Director<br />
Procurement <strong>and</strong><br />
Materials<br />
Melissa Herring<br />
Manager<br />
Human Resources<br />
Allan Gregorcyk<br />
Supervisor<br />
Accounting<br />
Thu Nguyen<br />
Director<br />
Singapore<br />
Projects<br />
Sachin Mehra<br />
Manager<br />
Engineering<br />
Steve Nowak<br />
Manager<br />
Operations<br />
Koi Kamar<br />
Bill Adams<br />
Bob DeVaney<br />
Bill Richmond<br />
Asim Bashir<br />
23
Offshore Industry Experience<br />
Name & Title<br />
Bill Rose -President & CEO<br />
Sunil Pangarkar - Vice President Operations<br />
Mike Cadigan - Vice President HSE<br />
Sonny Ong - Vice President Finance<br />
Mike Pope - Vice President Marketing & Contracts<br />
Melissa Herring - Director Procurement &<br />
Materials<br />
Sachin Mehra - Director Projects<br />
Steve Nowak - Manager Engineering<br />
Koi Kamar - Manager Operations<br />
Bill Adams - Manager Operations<br />
Total<br />
Industry<br />
Experience<br />
26 years<br />
21 years<br />
11 years<br />
25 years<br />
19 years<br />
27 years<br />
19 years<br />
23 years<br />
14 years<br />
29 years<br />
214 years<br />
Companies<br />
Worked For Prior<br />
to Premium<br />
<strong>Drilling</strong><br />
1<br />
1<br />
1<br />
1<br />
2<br />
1<br />
1<br />
1<br />
1<br />
2<br />
24
Ready for Work<br />
25
Rig Fleet<br />
Water Depth<br />
<strong>Drilling</strong> Depth<br />
Mud Pumps<br />
Top Drive Rating<br />
Main power<br />
Variable Load<br />
Accommodation<br />
Earlier generation KFELS MODV-B BMC P 375<br />
300 ft<br />
25,000 ft<br />
2 x 1600 bhp<br />
1,000 kips<br />
7,000 bhp<br />
3,500 kips<br />
100<br />
26<br />
400 ft<br />
30,000 ft<br />
3 x 2200 bhp<br />
1,500 kips<br />
10,750 bhp<br />
7,550 kips<br />
112<br />
375 ft<br />
30,000 ft<br />
3 x 2200 bhp<br />
1,500 kips<br />
12,900 bhp<br />
7,550 kips<br />
120
Market conclusions<br />
• Reserve Replacement remains well below historical<br />
norms<br />
• Field development economics are robust at a much<br />
lower <strong>oil</strong> price<br />
• The near term (+/- 2 yrs) has good visibility for<br />
dem<strong>and</strong><br />
• Supply is constrained by building capacity<br />
• Exploration <strong>and</strong> development is expensive <strong>and</strong> the<br />
added capability of high specification rigs is valuable<br />
27
Q&A<br />
Strong market<br />
fundamentals<br />
- E&P spending on the rise<br />
- Continued high energy prices<br />
- Dem<strong>and</strong> outstripping supply<br />
Awilco Offshore<br />
- Construction risk under control<br />
- Fully funded<br />
- Our goal is to create the basis<br />
for a leading international<br />
drilling contractor<br />
28
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